NATIONAL INTELLIGENCE DAILY FRIDAY 2 MARCH 1979

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81T00368R000100030006-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 26
• Document Creation Date: December 22, 2016
• Document Release Date: February 8, 2012
• Sequence Number: 6
• Publication Date: March 2, 1979
• Content Type: REPORT

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Director of
I
National Intelligence Daily
Friday
2 March 1979
Intelligence
Central op
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up Secret
CO Nil) 70-f)5//y
2 Adarch i979
Copy 392
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Contents
Situation Reports
China-Vietnam-USSR
1
Alert Memorandum
Iran
7
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Briefs
and Comments
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USSR-Iran: Soviet Position
USSR: Oil Export Problems
10
11
Special
Overnight
Chad: Military Situation
Morocco - Saudi Arabia: Hassan Visit
13
13
Venezuela: Oil Prices
USSR: Salyut-6 Update
Analysis
China: Youth Protests
Reports
14
15
16
19
The Overnight Reports, printed on yellow paper as the
final section of the Daily, will often contain materials
that update the Situation Reports and Briefs and
Comments.
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SITUATION REPORTS
CHINA-VIETNAM-USSR
China has formalized its offer, made earlier through
the media, to negotiate its differences with Vietnam. In
a note from the Chinese Foreign Ministry to the Vietnamese
Embassy in Beijing, China reiterated its call for "peace
talks" and suggested the two sides dispatch representa-
tives at the deputy foreign minister level to hold talks
"as soon as possible" at a mutually agreed upon location.
The Chinese note implies the negotiations would be re-
stricted to border problems. Vietnam has not yet re-
sponded to the proposal but almost certainly will reject
it; Hanoi has consistently refused to negotiate so long
as Chinese soldiers remain on Vietnamese soil. In the
event of a rejection, China will undoubtedly portray
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Vietnam as the intransigent party.
We continue to receive little reporting on the mili-
tary situation along the Sino-Vietnamese border, but 25X1
heavy fighting apparently is continuing in several areas.
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Leadership Speeches
Like the speeches of the Soviet leaders who preceded
him, Premier Kosygin's election speech yesterday provided
no clues as to how Moscow will respond to the Chinese in-
vasion of Vietnam. Kosygin's remarks were notable for:
-- His statement that Vietnam would not be
abandoned in its "time of trial."
Criticism of unnamed international forces
who take "an equal approach" to China's
invasion of Vietnam and events in Kam-
puchea.
The attack on "imperialist forces in the West
and the Far East" for encouraging "the Chi-
nese leadership's aggressive course" and
trying to make states renounce their efforts
to curb the arms race.
-- His reaffirmation of Soviet interest in
expanded trade and economic ties with the
US.
-- His conclusion that despite recent
developments, the trend toward relaxation
of tension remains "a leading one in in-
ternational life."
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Kosygin said, however, that in view of escalation
by the "militaristic aggressive forces" in the world, it
is necessary to maintain and strengthen the Soviet de-
fense potential. 25X1
--continued
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In stating that the "changes in Kampuchea are ir-
reversible," Kosygin implied that Moscow will continue 25X1
to resist efforts for a negotiated settlement of the
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conflict in Kampuchea.
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..Khamis Mushayt
Saudi Arabia
.Sharurah
North Yemen
Yemen Arab Republic
South Yemen
People's Democratic Republic of Yemen
Ethiopia-
Djibouti
624755 3-79
100 200
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ALERT MEMORANDUM
IRAN
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despite some progress in re-
storing economic activity. His government has not suc-
ceeded in restoring law and order, is beset by political
divisions in its own ranks, is troubled by nascent au-
tonomy movements in Kordestan and Azarbaijan, and is facing
a severe challenge from heavily armed and committed left-
ists.
Bazargan's problems may
be increased now that Ayatollah Khomeini has left Tehran
for Qom and has removed himself from the day-to-day con-
duct of governmental affairs.
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We believe there is a good possibility that the
Bazargan government may not survive the combined pres-
sures posed by internal friction and a sustained chal-
lenge from the left. Even if Bazargan is able to remain
in office, he probably will have to continue to make far-
reaching concessions to the left in order to retain power.
There is also the possibility that the Prime Minister may
be overthrown by more radical members in or outside of
his own government, and there is potential for civil war
if he decides to challenge the left militarily.
Given the likelihood of prolonged instability in
Iran, there is little prospect that the Bazargan govern-
ment will be able or willing to develop effective coop-
eration with the US. The government will be preoccupied
with its own survival and maintaining the country's na-
tional cohesion; its reliability as an oil exporter will
be in doubt.
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While the Soviets have maintained a cautious and
conciliatory line toward Bazargan in most respects thus
far, clandestine radio has tacitly supported his leftist
--continued
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opponents on one key issue--their insistence that they
be allowed to retain the arms that enable them to force
concessions from him. Moscow is likely to increase co-
vert efforts to broaden its contacts among the leftist
factions while gradually becoming more open in support
for the Tudeh (Communist) Party's claim to a role in the
new power alignment. Should the situation degenerate
into open civil war, the Soviets are likely to funnel
covert support to those groups that then appear most
favorable to their interests, while professing noninter-
vention and continuing to warn the US against interven-
tion.
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USSR-IRAN: Soviet Position
Soviet leaders have been notably quiet about Iran,
and a Soviet Foreign Ministry official told a US Embassy
officer this week that the situation there is unclear.
The Soviets are undoubtedly concerned about Ayatollah
Khomeini's anti-Communist orientation, however, and prob-
ably hope to strengthen those forces?especially the
Tudeh (Communist) Party--they would prefer to see in 25X1
power.
The Soviet official indicated that the revolution
would not be stopped, although it might slow down or
take a conservative turn because the left is weak.
The Soviet media coverage of the government of 25X1
Prime Minister Bazargan, while reminiscent of the cau-
tious line toward the Shah before his fall, has been both
more positive and more extensive. The Tudeh Party and
the Soviet-supported clandestine radio, the "National
Voice of Iran," which had consistently attacked the Shah,
have expressed support for Khomeini.
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The Soviets, however, treat Khomeini's victory as
only the "first stage" in the revolution. While this
line can be defended as supporting the Bazargan govern-
ment, we believe it indicates the Soviets are hoping to
see movement toward a leftist regime. The "National Voice"
is calling on the revolutionary forces to retain their
arms despite the Bazargan government's efforts to disarm
the population. The "National Voice" argues that this
is necessary to guard the revolution against the threat
of imperialists and counterrevolutionaries. 25X1
The "National Voice" has also expressed support for
the Mujahadin, the terrorist group that defends Khomeini's
interests. We have no evidence of any open Soviet con-
tacts with either the Mujahadin or the Chariks, the left-
ist terrorist group. While both groups have probably re-
ceived assistance from Soviet-supported third parties,
the Soviets have generally avoided providing direct sup-
port to such extremist groups. It seems unlikely that
the Soviets would support any direct challenge to Kho- 25X1
meini and risk alienating him completely.
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USSR: Oil Export Problems
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Recent severe weather in the USSR has boosted oil
consumption and slowed oil production. It has also Zed
to oil transport difficulties, especially in rail move-
ments. Another problem is the four-month cut-off in
Iranian gas deliveries, which has forced the Soviets to25X1
substitute oil for gas in the Transcaucasus region, and
to cut back oil deliveries to the West. The prospect is
for a decline in total oil exports throughout 1979.
the USSR has cut
off oil deliveries of about 65,000 barrels per day to
Sweden for the past three or four months. India also
has reported delays in Soviet shipments of kerosene and
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diesel fuel.r
the USSR has also with-
drawn from the spot market in Rotterdami
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Central African
Errspire
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CHAD: Military Situation
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Forces loyal to President Malloum are abandoning
most of central and eastern Chad to rebel armies and
followers of Prime Minister Habre, a former rebel leader.
Units of the Chadian Army appear to be withdrawing south
to a line extending roughly from Am Timan to Mongo to
Ndjamena. Habre's army controls many of the towns in the
center of the country, including Oum Hadjer and part of
Ndjamena. Rebels led by Goukouni, the most influential
of the Muslim rebel chieftains, appear to have substanti-
ally strengthened their position and now control Mao
and Arada and most of the territory north. Goukouni's
forces and rebels allied with them also control most of
the Lake Chad region. By pulling back to the south,
Malloum undoubtedly hopes to retain administrative con-
trol over the most populous and wealthiest part of the
country where he also has his primary base of tribal
support. Goukouni, on the other hand, is taking ad-
vantage of the situation to strengthen his bargaining
position in the peace negotiations scheduled to take
place next week in Nigeria. 25X1
MOROCCO - SAUDI ARABIA: Hassan Visit
King Hassan is to visit Saudi Arabia next Monday,
according to the Saudi Ambassador in Rabat. Hassan may
request Saudi assistance in reopening direct Moroccan-
Algerian talks on Western Sahara. French efforts to
facilitate such contacts last month apparently were un-
successful. The war is going badly for Morocco, and
Hassan needs a political settlement. He will also dis-
cuss regional developments with the Saudis and request
renewed Saudi financial support. Saudi aid, other than
that tied to specific projects, has been generally
blocked for more than a year largely because of Moroccan
unwillingness to accept effective monitoring of its end
use.
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VENEZUELA: Oil Prices
President Perez has assured US Ambassador Luers
that Venezuela--despite the advice of his Minister of
Energy and despite having raised residual fuel oil prices
yesterday--will not change its crude oil prices before
current contracts with US oil companies expire on 31
March. We believe Perez will keep his word. Neverthe-
less, the inauguration on 12 March of President-elect
Herrera--who has already praised the recent round of
price increases--as well as growing internal pressure
to take advantage of current market trends, will doubt-
less bring an increase in crude prices when current con-
tracts expire on 31 March.
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USSR: Salyut-6 Update
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Two Soviet cosmonauts who boarded the Salyut-6
space station on Monday have activated and performed
an initial checkout of the station's equipment. They
are giving special attention to the station's life sup-
port, thermoregulation, and power supply systems. Al-
though some replacement of parts is necessary, the cos-
monauts stated that their preliminary examination indi-
cates the station is capable of supporting a continued
mission. It is likely that the Soviets later this month
will launch an unmanned Progress resupply vehicle.
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SPECIAL ANALYSIS
CHINA: Youth Protests
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Chinese leaders seem to recognize that, in the long
term, the success or failure of their drive to modernize
the nation depends in part on how effectively they can
harness rising public expectations. In recent months,
the leadership has been fairly tolerant of peaceful demon-
strations by young people impatient for the improved
living conditions they associate with modernization.
The disruptive protests by urban youth in Shanghai early
last month, however, prompted swift but measured action
to restore order and to prevent similar outbreaks else-
where.
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In early February, youth who had been resettled
in rural areas in lieu of college or factory employment
took advantage of liberal leave and travel policies
during the Lunar New Year celebration to return to Shang-
hai and protest the refusal of local leaders to approve
their permanent transfer back to the city. Students
blocked rail service to the city, damaged streetcars,
tied up traffic, and surrounded the municipal offices.
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The central authorities responded swiftly. Public
security officials warned the protesters to cease, and
after a series of meetings and the receipt of a hastily
telephoned directive from Beijing, the disruptions ended.
According to the city's radio service, only two of the
protesters were detained.
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Problems with Resettled Youth
The Shanghai protests, while the most violent, are
not the first involving disgruntled resettled students.
Protests by the students--unhappy about their educational
--continued
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or urban job prospects--have occurred throughout the
history of the "down-to-the-countryside" program. Modi-
fications of the program announced at a national con-
ference last fall heightened expectations that real im-
provements were just around the corner and led the stu-
dents and urban youth to demand immediate improvement
in their living condition and transfers home. Beijing
had tried to avoid the impression that changes would come
swiftly; the conference held that, while it was possible
to "modify the policy and improve methods," the end of 25X1
the program and the solution of related problems could
come only after modernization--that is, slowly.
The most successful and widely publicized protest
came in late December when a group of 28 students from
the border areas of Yunnan went to Beijing and demanded
a meeting with top officials. Although Premier Hua
Guofeng and Vice Premier Deng Xiaoping apparently did
not meet with the group, Vice Premier Wang Zhen, who once
had responsibility for the resettlement program, and
the Minister of Civil Affairs did. They sharply rebuked
the students for leaving their workposts and warned that
such behavior could seriously damage China's moderniza-
tion effort.
Managing Expectations
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The Shanghai protests, and similar disturbances
in Hangzhou and Nanchang, reflect potential contradic-
tions in China's overall drive toward modernization. The
relaxation of restrictions on the public airing of griev-
ances last fall was aimed largely at generating popular
enthusiasm for modernization. The regime's open commit-
ment to change and, more specifically, to the improvement
of living conditions already appears to be resulting in
rapidly rising levels of expectation and a degree of pro-
test clearly unacceptable to the regime. 25X1
How successful Beijing is in balancing popular ex-
pectations against realistic goals will be an important
factor determining the long-term success or failure of
its modernization effort. Beijing's response to the re-
cent protests, in fact, suggests a deep awareness of the
long-term implications of such unrest.
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--continued
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The leadership has taken strict action only against
a small number of instigators. More important, it has
not attempted to sweep the recent disturbances under the
rug. Instead, it has widely publicized the Shanghai
protests as a means of forcefully restating its basic
policy that "socialist democracy" is necessary but that
it cannot be permitted to disrupt the modernization ef-
fort. The leaders have begun to drive home the sobering
point that improved conditions, both political and so-
cial, depend on how successful the drive is to boost pro-
duction and modernize China.
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OVERNIGHT REPORTS
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(The items in the Overnight Reports section have not
been coordinated within the intelligence community.
They are prepared overnight by the Office of Current
Operations with analyst comment where possible from the
production offices of NFAC.)
Spain
According to official projections of results of yes-
terday's legislative election announced late last night,
Prime Minister Suarez' Union of the Democratic Center
will win about 170 of the 350 seats in the lower house
of the legislature--five seats more than it won in 1977
but short of a majority. The Socialists of Felipe
Gonzalez have about 116 seats. As anticipated, ab-
stentions rose to over 30 percent, giving a boost to
the Communist Party, which will probably increase its
20 seats in the current legislature to about 25. The
rightist Democratic Coalition may slip from 16 to eight
seats.
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COMMENT: Suarez' party appears to have won a sur-
prisingly clear victory. King Juan Carlos is virtually
certain to nominate Suarez to form another government.
Parliament must approve Suarez' appointment; because he
lacks a majority there, Suarez may delay government
formation, perhaps until after the municipal elections
on 3 April.
UK
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The opposition Conservative Party yesterday won two
byelections held in districts traditionally "safe" for
the Tories. The Conservatives promptly called for a
general election. According to Western news services,
official results of the referendum on devolution in
Scotland and Wales will not be known until tonight. A
poll conducted after the referendum by Britain's com-
mercial television network indicated that voters in Wales
overwhelmingly rejected devolution. Those voting in
Scotland approved devolution, but voter turnout
was low. The network projected that the measure would
consequently fail to meet the requirement that 40 percent
of the electorate approve it.
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--continued
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Italy
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According to the US Embassy, Prime Minister -
designate La Malfa has proposed the formation of a
government composed of the Christian Democrats,
Republicans, and Social Democrats that would be sup-
ported by the Socialists and Communists. The three
prospective coalition members support the proposal.
The Socialists and Communist Party leader Berlinguer
have not commented, but the Communist daily L'Unita has
ruled out the proposal as a possibility. The Embassy
believes that the Socialists are trying hard to convince
the Communists to go along with La Malfa and at the same
time are attempting to decide whether they can risk
supporting him if the Communists do not. Christian Dem-
ocratic and Communist leaders met yesterday; they re-
portedly did not resolve their differences. La Malfa
will consult with leaders of all the parties and then re-
port to President Pertini.
Namibia
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The US Embassy in Ethiopia reported yesterday that
South-West Africa People's Organization (SWAPO) Presi-
dent Sam Nujoma, upon arriving in Addis Ababa on Wednes-
day, publicly accused the US and other "imperialist coun-
tries" of subverting the UN plan for Namibia while
working toward the creation of a South African puppet
regime in the area. Although Nujoma restated SWAPO's
desire for a UN-supervised election, he advocated active
participation by the Organization of African Unity in
the implementation of the plan and strongly rejected the
inclusion of NATO or Australian forces in the proposed
UN peacekeeping contingent for Namibia. Ethiopia's
acting Foreign Minister Dawit informed the US Ambassa-
dor that Nujoma is giving serious consideration to boy-
cotting the election. The Embassy commented that Nujoma's
trip to Addis Ababa reflects his intention to maintain
close connections with the East as insurance against
failure of the UN plan.
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