NATIONAL INTELLIGENCE DAILY (CABLE)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A031000020001-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: December 15, 2016
• Document Release Date: April 12, 2004
• Sequence Number: 1
• Publication Date: January 9, 1979
• Content Type: REPORT

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Intelligence
National Intelligence Daily
(Cable)
State Dept. review completed
Top Secret
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COPY
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National Intelligence Daily (Cable)
Contents
Situation Report
Iran . . . . . . . . . . . . . . . . . . . . . 1
Briefs and Comments
Nicaragua: Anniversary Protests . . . . . . . 3
Nigeria: Political Trouble in Kano . . . . . 3
Spain: King's Speech to Military .
Special Analysis
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he US Embassy in Tehran reported yes-
tempt to seize power have probably been increased.
cers who are pressing for a harsh crackdown on the
at-
opposition. The chances that these officers will
r-
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military and police forces continues to mount as violent
demonstrations occurred yesterday in Tehran, Tabriz,
and other cities.//
Jam's departure will severely weaken and embarrass
the Bakhtiar government. Jam was the one prominent
figure in a cabinet consisting mostly of political un-
knowns. We believe Jam's departure will also erode
Bakhtiar's ability to deal with hardline military offi- 25X1
terday that retired General Jam has refused to become
Minister of War in Prime Minister Bakhtiar's government
and intends to return to London as soon as possible.
After a meeting with the Shah, Jam reportedly concluded
that the Bakhtiar government is a hopeless proposition.
Debate on the new cabinet in the lower house of the
legislature has been delayed until Thursday; the Senate
will consider it on Friday. Meanwhile, pressure on
The Shah's apparent unwillingness to give Jam the
power to control the military raises the possibility
that the Shah does not really want the Bakhtiar govern-
ment to succeed. The Shah--or at least his hardline
advisers like Ambassador Zahedi--may in fact hope that
if Bakhtiar fails to restore order the stage will be set
for a military crackdown. 25X1
Demonstrations continued yesterday in Tehran,
Mashhad, Esfahan, Abadan, and other cities. In Tabriz
rioters burned eight theaters and up to 100 stores. An
estimated crowd of 10,000 listened to speeches in Shiraz
by political and religious opposition leaders.
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Concern by religious and political opposition
leaders that further provocations might lead to a back-
lash by military units has led them to take a more
cautious and conciliatory attitude toward the Army and
the police. Two leading religious figures--Ayatollah
Taleqani in Tehran and Ayatollah Dastgad in Shiraz--
yesterday urged demonstrators not to take he law into
25X1 their own hands. 17 f
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NICARAGUA: Anniversary Protests
//The Somoza government and its opponents are braced
for a confrontation during protest activities this week
in commemoration of opposition martyr Chamorro, whose
murder last January touched off events that led to the
civil warfare in September. The most likely flashpoints
will be a youth rally this afternoon and a massive march
to Chamorro's gravesite tomorrow. The National Guard
has warned that the march will not be allowed unless
the organizers obtain a permit, which they seem disin-
clined to do. Other protests probably will include
a general strike of one day or more and demonstrations,
including a possible march on the US Embassy, by Managua
slum organizations.
Nigerian police officials are increasingly con-
cerned over the serious conflict developing in northern
Kano State, according to the US Embassy. The trouble
has included several clashes between two Muslim-based
political parties and has led to a number of arrests.
Major political violence is most likely to occur here
as electioneering intensifies and the country draws
closer to a scheduled changeover to civilian rule next
October. Similar situations are likely to crop up
elsewhere in Nigeria, testing the government's ability
to keep order and its resolve to proceed toward civilian
government. F77 I
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SPAIN: King's Speech to Military
King Juan Carlos, in a speech to the military on
Saturday, appealed for discipline and solidarity in the
face of terrorism. In unusually explicit language, he
denounced the lack of discipline displayed by some
officers after the funeral mass late last week for the
slain military governor of Madrid. Although the speech
has eased tensions within the military, more occasional
outbursts are likely, and discipline problems could gLow
if Basque terrorists kill more high-ranking officers.
The King also praised Defense Minister General
Gutierrez Mellado, who has become highly unpopular among
the military for his role in bringing needed reforms to
25X1 the armed forces.
Spanish media have termed the speech necessary and
appropriate, and the King's intervention has probably
given pause to many in the military who are unhappy with
the government. Despite the continuing danger terrorism
25X1 poses to'military discipline, most key command positions
a l n l otya l to t he
r
in
r
-4P4:4
L _ l '
ce
s w
o
e
by rat
King and are fully aware of the problem.
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Several leftist labor groups, including the in-
fluential General Workers' Confederation, plan to start
a three-day general strike today. More moderate unions
are not participating, at least for now, which could
limit the strike's effectiveness or force it to be post-
poned. Any widespread work stoppages would pose major
economic and political problems for the military govern-
25X1 ment.
The left is trying to capitalize on the workers'
growing frustration over the worsening effect of infla-
tion. Last week's official price hikes on gasoline,
rice, and bus fares seem to have provided the final in-
centive for calling a strike, which labor leaders have
warned could be extended indefinitely unless their de-
mands are met. Previous general strikes have all but
25X1 closed the city of Lima.
The government is taking a tough line to prevent
or hamper the strike, but stern measures could affect
the military's timing in implementing its promise to re-
turn power to civilian hands by 1980, a delicate process
that has been under way for some months. Leaders of
Peru's major political party, which backs the moderate
labor group, see a chance to come to power when the of-
25X1 ficers return to the barracks. -Party leaders may fear
loss of popular support, however, if they do not soon
stand up to the government on bread-and-butter issues.
F I
Prolonged or widespread work stoppages could worsen
the already precarious economic situation by disrupting
copper production--a key earner of foreign exchange.
The strike could also damage Peru's shaky international
financial standing by forcing the government to back
away from its agreements with the International Monetary
25X1 Fund. F7 I
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IRAN AND THE WORLD OIL MARKET
Despite continuing turmoil in Iran, the world oil
market picture has changed little since November. Pro-
duction by other producers is up, and stocks are suffi-
cient to meet world demand through the winter. If Iran
does not resume exports by spring, however, the market
will tighten, and stockpilers will occupy the key posi-
tion.
The most important development has been a substan-
tial production increase in other OPEC countries. Most
member states would have increased their oil exports in
the fourth quarter of 1978 in any case because of high
seasonal demand and speculative purchases in anticipation
of the oil price hike on 1 January. The reduction in
Iranian supplies has further stimulated demand for crude
from other OPEC countries.
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Iraq, Kuwait, Nigeria, and other OPEC members have
increased production by another 500,000 barrels per day
and are also producing at near capacity levels. Non-
OPEC production increased by only about 100,000 to
200,000 barrels per day, slightly less than we had ex-
pected.
Iranian Production
Iran now is producing less than 300,000 barrels of
oil daily, compared with a normal production of 5.5 mil-
lion to 6 million barrels. It has exported no oil
since 27 December.
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If Iranian exports are completely shut down through
the winter, the oil market will tighten even with other
suppliers producing at capacity. The gap between supply
and demand will be about 2 million to 3 million barrels
per day. Competition for available supplies will inten-
sify, spot shortages of some oil products will occur
and spot market prices will rise.
Current world inventories--equal to 70 days' con-
sumption--would nevertheless remain adequate to meet
overall demand. If production shortfalls continue after
the winter, oil companies will have a difficult time re-
building inventories sufficient for next winter- F
A key question is whether holders of stocks would
release them to cover production shortfalls. If stock-
holders hang on to their inventories, as happened after
the 1973 embargo, consumption cutbacks will be necessary.
Thus far, middlemen and consumers have accepted the cur-
tailment of Iranian exports calmly, but their mood could
change quickly if a prolonged su ly disruption appeared
likely.
//Some oil-producing countries might try to push up
their prices unilaterally if there is a prolonged Iranian
shutdown and subsequent market tightness. Moreover,
should spot market prices rise, these countries would be
especially sensitive to any indication of profiteering
by middlemen. If the OPEC countries became convinced
that oil companies and brokers were making excessive
profits by reselling oil, even if the volumes were small,
the price hawks among them could be counted on to lobby
for a further boost in official sales prices beyond those
25X1 set last month.//
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