NATIONAL INTELLIGENCE DAILY (CABLE) 29 NOVEMBER 1982

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T00301R000600010108-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 22, 2016
• Document Release Date: August 20, 2010
• Sequence Number: 108
• Publication Date: November 29, 1982
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/02/18: CIA-RDP84TOO301 R000600010108-2
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National Intelligence Daily
(Cable)
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CPAS NIDC 82-277C
1
29 November 1982
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 Contents
Brazil: Government in Control After Election . . . . . . 1
USSR: Possible Credit for Gas Project . . . . . . . . . . 2
USSR: TASS Claim MX Violates SALT II . . . . . . . . . . 3
Israel: Spending for Settlements in West Bank . . . . . . 3
Jamaica: Seaga Losing Public Support . . . . . . . . . . 4
Special Analyses
Honduras: Growing Threat From Radical Left . . . . . . . 5
International: New Competition for Markets . . . . . . . 8
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Despite impressive opposition gains, the government retains
control, particularly of the all-important presidential electoral
Nearly complete unofficial returns reported by the
US Embassy and press services show the government party
retaining its two-to-one edge in the Federal Senate but
losing its control--by a small margin--of the Chamber
of Deputies. It apparently won 12 out of 22 guberna-
torial races and gained pluralities in 13 of 23 state
legislatures.
The opposition parties received an estimated 62
percent of the national vote and fared impressively at
all levels in the country's economic heartland and most
populous areas. The opposition captured 10 governor-
ships, including the major states of Sao Paulo, Rio de
//Preliminary calculations give the government a
comfortable majority in the presidential electoral col-
lege, which is to select President Figueiredo's successor
in 1985.
Comment: The regime clearly intends to honor the
election results completely, including the potentially
troublesome election of leftist Leonel Brizola as governor
of Rio de Janeiro. The government probably will seek
accommodations with moderate opposition groups to retain
control of the presidential succession and the political
Top Secret
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 Top Secret
Western bidders may offer the USSR highly favorable inancin
terms for the large Astrakhan "sour" gas project.
Several US Embassies re-
port bidders are likely to offer official financing at
about 8 ,percent and that Moscow would find this accept-
The project, scheduled for completion in 1985, will
develop a special gathering system and processing plants
to extract sulphur and natural gas liquids from "sour"
gas.
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The French Minister of Research and Industry will
bring up the project during his visit to Moscow this
Comment: Fierce competition to provide credit could
crack the fragile OECD consensus on interest rates. The
Canadians evidently are considering a lower bid, and
the Japanese could come close to the Soviet requirement.
Some Western countries, in particular West Germany and
the UK, may raise contract prices to compensate for re-
The French apparently have not yet offered financing
below consensus rates. Paris, however, wants French
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 TASS's chief military analyst charged on Saturday
that deployment of the MX missile in a "dense pack" basing
arrangement will violate Article 4 of the SALT II Treaty--
which obliges each party not to build new fixed ICBM
launchers. He also claimed that the decision to proceed
with the MX indicates that the US no longer intends to
Comment: The TASS charge is more specific than that
made in a more authoritative Pravda editorial late last
week. It is part of a campaign aimed at heightening Con-
gressional opposition to the MX program and appealing to
US political forces still pushing for ratification of
SALT II. Technically, the MX does not need its silo for
launch since its launch control equipment is contained
A Knesset committee has approved an additional
$15 million to support Israeli settlements in the West
Comment: The new allocation was made to demonstrate
the determination of the government under Prime Minister
Begin to continue settlement activity. The additional
sum is small because the Minister of Finance is trying
to cut the government deficit. The current budget prob-
ably allocates $200 million to support the settlements.
 JAMAICA: Seaga Losing Public Support
A poll to be released soon by a usually accurate
local forecaster, reveals Prime Minister Seaga's ruling
party is losing popular support for the first time in
five years. The survey indicates 53 percent prefer
Michael Manley's opposition party to Seaga's. Since
1978 Seaga's party consistently has received the approval
of more than 50 percent in the forecaster's polls. The
next election does not have to be held before late 1985.
Comment: The poll reflects dissatisfaction with
Seaga's failure to deliver on his promises of new jobs
and higher income. If the trend continues, the important
"floating vote," which is crucial in Jamaican elections,
could shift to the opposition. Manley's camp is still
split, but it is showing more moderation in an attempt
to stage a comeback, and it may gain from the defection
 //Honduran terrorist groups, with major assistance from SaZva-
doMn insurgents, appear determined to continue the expansion of
their campaign of violence and subversion against the government.
They are supported by the Cubans and Sandinistas, who hope to re-
verse the country's pro-US, anti-Communist stance. Nevertheless,
President Suazo and Commander in Chief Alvarez are continuing to
take a hard line against the leftist opposition and to provide strong
support for both the Salvadoran military and the anti-Sandinista
insurgents.//
//The leftist radicals are reacting to the government's
growing cooperation with the Salvadoran military. The
Honduran Army recently provided a large blocking force
for a Salvadoran sweep operation along the border, and
it plans similar support for a probable offensive scheduled
to begin shortly. In addition, the Honduran Government
continues to support anti-Sandinista activities despite
//Salvadoran insurgents have already warned Tegucigalpa
that dangerous consequences would result from its actions.
Earlier this year the Salvadorans, working with local
radical groups, bombed both a Honduran power plant and
the offices of several US subsidiaries. More such attacks
//Of the six known Honduran leftist groups, the two
most active are Lorenzo Zelaya and the Cinchoneros, both
of which are small and lack public support but have been
//The Cinchoneros, established in mid-1980 as a radical
offshoot of the orthodox Honduran Communist Party, report-
edly have been aided by Salvadoran guerrillas on numerous
occasions. These include a kidnaping in 1980, an airplane
--continued
 hijacking last year, and the seizure of high-level hostaaes
during a meeting last September.
//The Communist Party of Honduras, at Cuban urging,
adopted a more radical strategy early this year. This
shift has caused considerable internal dissension and a
decline in membership and morale. If it receives greater
foreign support, however, the party may be able to develop
a more effective terrorist arm.//
//Several other radical leftist groups occasionally
have been involved in subversion. These include the
Maoist offshoot of the Communist Party and the local
branch of the regional Revolutionary Workers' Party.
These groups, however also lack numb s and significant
popular support.//
//Havana is giving new attention to the Honduran left-
ists because of its belief that Tegucigalpa is acting in
//Nonetheless, the Honduran leftist groups so far have
failed to coalesce. Bitter rivalries, tight budgets,
lack of experience and training, and internal dissension
over adopting a more radical strategy have plagued coordi-
nation efforts. This apparently has forced the better
organized Salvadoran insurgents to assume a major role
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 //Havana and Managua are determined to make the gov-
ernment under President Suazo pay for its strong anti-
Communist stance, and they will continue to encourage
increased terrorism. In addition to bombings and sabotage,
there probably will be more hostage seizures, kidnapings,
and robberies. US businessmen and government officials
may be singled out as targets to Publicize' the US presence
in Honduras.//
 INTERNATIONAL: New Competition for Markets
Brazil, Mexico, Singapore, South Korea, Taiwan, and the British
colony of Hong Kong are moving rapidly into direct competition with
the US and other industrial countries in the manufacture and sale of
technically advanced products. Their drive to manufacture new
products for which there are growing markets will add to unemployment
in industrial countries. As they compete more aggressively, they
will become more active participants in the GATT and other groups.
They also may become an alternative source of technically advanced
The progress of the leading newly industrialized
countries has heightened the competition in several ex-
port markets that in the past have been dominated by
industrial countries. The British Trade Minister attend-
ing the GATT ministerial meeting said last week the newly
industrialized countries are causing major stress in
world trade.
Hong Kong and Taiwan are rapidly becoming established
exporters of low-priced computers, mostly counterfeits of
popular brands. Taiwan has made significant inroads into
the market for automatically controlled machine tools,
an industry that has been dominated by Japan.
South Korea and Brazil are becoming major competitors
to the US, West Germany, and Japan in world markets for
standard and specialty steel products. In addition,
South Korea and Brazil are now among the world's major
The five newly industrializing countries and Hong
Kong no longer enjoy an advantage in producing textiles,
footwear, and the other labor-intensive exports that had
helped them develop economically. Growing shortages of
labor have increased the costs to produce these exports.
The competitive advantage has shifted to India, the
Philippines, Pakistan, China, and other countries where
 Top Secret
The four Asian and two Latin American competitors
are placing new emphasis on industries that require more
capital, skills, and technology. This emphasis is caus-
ing labor productivity to rise in Singapore and South
Korea and is attracting more foreign investment, par-
ticularly in Singapore.
Brazil is acquiring a reputation for reliable design
and manufacture of small computers, Singapore for preci-
sion engineering products and electronics, and Taiwan for
machine tools. Mexico is behind the other five, but its
The newly industrializing countries probably will
continue to develop their steel, shipbuilding, and auto-
mobile industries. They also will make more of the
components used in the electrical products they produce
and in other light manufactured goods.
In addition, the newly industrializing countries
are likely to make substantial inroads into machine tools,
telecommunications equipment, small computers, and other
low- and medium-technology growth industries. They prob-
ably will become centers for financial, business, trans-
How quickly each of the six countries becomes com-
petitive in these fields depends on the economic vitality
of the more advanced industrial countries. To succeed,
the newly industrializing countries have to cope with
growing shortages of skilled labor; develop marketing,
spare parts, and servicing networks; and build a research
and development capability. With their more stable econ-
omies and advanced industry, the newly industrializing
countries in Asia probably will do better than Brazil
 Implications of New Competition
The US and other advanced industrial countries may
benefit somewhat as the six develop their technical pro-
duction capacity. The demand for US capital equipment
and technology will increase, and there will be new op-
portunities for investment, licensing, and credit trans-
actions.
These benefits will be outweighed by the losses in-
curred, however, as the new competitors make inroads in
profitable markets and secure access to raw materials
that are in limited supply. The tensions that have
developed between industrial and developing countries
over the manufacture and sale of labor-intensive products
will extend to low- and medium-technology products.
The new competitors are likely to use GATT rules to
protect their markets for commodities they have been
selling for many years, at the same time exploiting them
to secure favorable or at least nondiscriminatory tariff
treatment. They also will use GATT and other interna-
tional institutions to protect their domestic markets
from sales by less developed countries. The six also
may become a source of supply to the USSR for low- and
medium-technology products, including computer equipment
and software, microelectronic products, telecommunications
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