CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A027100010032-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 21, 2016
• Document Release Date: May 2, 2006
• Sequence Number: 32
• Publication Date: April 19, 2000
• Content Type: REPORT

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Top Secret
11"1101 1
National Intelligence
Bulletin
State Dept. review completed
Top Secret
N?_ 654
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National Intelligence Bulletin
November 6, 1974
CONTENTS
ISRAEL: Rabin rejects conclusions of Arab summit and
rules out negotiations with PLO. (Page 2)
PORTUGAL: Treatment of conservative parties casts doubt
on prospects for free elections. (Page 3)
UK-MBFR: London urges careful examination of Soviet
MBFR proposal. (Page 6)
USSR-CEMA: Soviets examine future prices for crude oil
exporte to Eastern Europe. (Page 9)
IRAN: Substantial reserves will finance increased lend-
ing and investment. (Page 10)
WESTERN EUROPE: International monetary developments.
(Page 11)
ANGOLA: Portuguese army troops occupy key installations
in Cabinda. (Page 12)
FOR THE RECORD: (Page 13)
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National Intelligence Bulletin November 6, 1974
Prime Minister Rabin said yesterday that Israel com-
pletely rejects the conclusions of the Arab summit meeting
in Rabat and rules out any negotiations with the Palestine
Liberation Organization about the West Bank. Last night,
the Knesset voted to back Rabin"s decision.
Repeating a theme heard more often in Israel since
the summit, Rabin said his government would not be intimi-
dated into negotiating by Arab military pressure. He
warned Arab leaders not to think that the threat or use
of force could lead to a political solution.
Rabin did stress that his government remains pre-
pared to conduct talks with Egypt, Jordan, and Syria,
and "to take risks"--presumably make territorial conces-
sions--in the search for a peaceful solution. He re-
peated the standard Israeli position that the Palestinian
issue can be worked out only in negotiations with Jordan.
The Israelis apparently are still uncertain about
the details of the Arab position on negotiations after
the summit and thus are not prepared to make new proposals.
Rabin doubtless wishes to await his talks tomorrow with
Secretary Kissinger before drawing conclusions about the
summit that might force Israel to rethink some of its
negotiating positions.
At the moment, Rabin is not optimistic. He has said
that, in light of the decisions taken at the conference,
he doubts Jordan would be willing to negotiate a quick
West Bank agreement without PLO participation. The Prime
Minister believes that talks with Egypt hold the greatest
promise of success, but after Rabat he is no longer sure
President Sadat is prepared to pursue separate negotia-
tions. Rabin also said he sees little room for an in-
terim arrangement with Syria.
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National Intelligence Bulletin November 6, 1974
PORTUGAL
The sacking of the Lisbon headquarters of the mod-
erately conservative Social Democratic Center party
(CDS) on Monday evening casts new doubts on the prospects
for holding free elections in Portugal.
Some 500 leftist militants associated with the
Movement for the Reorganization of the Party of the Pro-
letariat (MRPP) stormed the CDS headquarters after met-
ropolitan police had frustrated their attempt to disrupt
a CDS youth group rally. Repeated calls by the CDS to
the Armed Forces Movement's Operational Control and
Command Center for protection earlier in the day went
largely unanswered. The handful of police that were
on the scene fled when the crowd arrived.
Command Center forces appeared 30 minutes after
the pillage began and were observed loading office
equipment into army vehicles. It is possible they were
placing these items in "protective custody." It will
be much more difficult to explain, however, why Com-
mand Center forces did not respond to earlier appeals
for increased security protection, in view of the fact
that MRPP pamphlets distributed throughout the city on
Monday clearly signaled the MRPP's intention to clash with
the CDS.
CDS leaders were scheduled to discuss the incident
yesterday with Prime Minister Goncalves. They want the
government to pay for the damages, issue a condemnatory
statement, and allow the CDS five minutes of prime tele-
vision time to explain its view of the incident. The
CDS leaders also want the government to ban the MRPP,
in accordance with the new legislation that outlaws
political parties and other groups that advocate
violence.
The government's response to these demands will
provide an insight into how sincere Lisbon is about
fostering an atmosphere in which all parties will be
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National Intelligence Bulletin November 6, 1974
free to contest for votes prior to the elections next
March. Two parties to the right of the CDS were sup-
pressed after President Spinola's ouster in September.
Since then, the Portuguese Communist Party and the Pop-
ular Democratic Party, which the Communists are trying
to lure into a front, have held large political rallies
without incident.
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National Intelligence Bulletin November 6, 1974
The British are trying to persuade the other allies
not to criticize the new Soviet troop reduction proposal
at the plenary session on Thursday. London probably
wants to keep its options open, pending governmental de-
cisions on the connection between MBFR and the current
UK defense review.
The Soviets presented the proposal informally on
October 15. Basically, it is an expansion of the sym-
bolic reductions proposed by Moscow at the start of the
talks. The proposal now calls for the reduction in
1975 of 20,000 men on each side, along with their arms
and combat equipment. US and Soviet forces would be
reduced by 10,000 men each. West Germany and Poland
could each reduce their forces by 5,000 men, and the
remaining reductions on each side would be absorbed by
the other direct participants.
US and Soviet reductions would be taken in the first
half of 1975, while reductions by the other direct par-
ticipants would come in the second half of the year.
The British agree with the criticisms of the propo-
sal that the allies have made informally. The allies
have said that the proposal does not recognize the supe-
rior numbers of Warsaw Pact ground forces and tanks in
Central Europe and does not take sufficiently into ac-
count the fundamental differences between the US and the
USSR on the one hand and the remaining direct partici-
pants on the other.
Now that the Soviets have presented their proposal
formally in a plenary session, however, the British are
arguing that it should not be dismissed out of hand be-
cause it is the first formal proposal the Soviets have
made since their basic proposal of November 1973. The
British are probably reluctant to shut the door on it
completely, since it could allow substantial UK reductions
to be made rapidly.
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National Intelligence Bulletin November 6, 1974
Many observers think that the British government's
defense review, due to be completed by the end of the
year, will call for reductions in the forces the UK has
committed to NATO. Since the government would probably
prefer to make these cuts in the context of MBFR, Foreign
Office officials have been pondering ways in which the
Western negotiating position in Vienna might be modified
to allow British reductions to take place soon. On
several occasions, these officials have talked of merging
the two reduction phases presently proposed by the allies
so as to permit reductions in UK troops from the outset.
The British may well decide to go along with the
rest of the allies on this occasion and thus avoid the
first serious break in allied unity since the negotiations
began. If the defense review turns out as expected, how-
ever, London--previously one of the most cautious Western
participants in the negotiations--will have an urgent
interest in moving the talks toward a conclusion that will
permit timely UK reductions.
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National Intelligence Bulletin
USSR-CEMA
November 6, 1974
The USSR is close to setting its pricing policy
for crude oil exports to the East European CEMA mem-
bers for the period 1976-80. A senior Soviet economist
has stated that the price will be based on the average
of world market prices over a three-year period, either
1971-73 or 1972-74.
The latter period would be more lucrative for the
Soviets, and they appear to be leaning toward it as the
base. This could result in an approximate doubling of
the price East Europeans now pay for Soviet oil.
Although the Soviets are interested in getting a
better return from Eastern Europe for their oil, they
are aware of the potential economic and political im-
pact of higher prices. The Soviet economist claimed that
with a three-year base period, the East Europeans would
still pay less than the international market price for
crude. He also said Eastern Europe would be guaranteed
a fixed quantity for the next five years.
The economist expressed the hope that Soviet oil
deliveries to Eastern Europe would be increased by about
30 percent between 1976 and 1980. To fulfill this goal
and simultaneously maintain exports to the West, however,
the Soviets will have to overcome some of the difficul-
ties they have experienced in increasing oil production.
Despite Soviet moves to mitigate the effects of
the price increase, the rise will still cause difficul-
ties in the energy-poor East European countries. As
these countries are compelled to export more goods to
the USSR in exchange for oil, they will become even more
closely tied to the Soviet economy. At the same time,
they will still have to purchase some oil on the open
market, which will reduce the amount of hard currency
they have available to pay for imports from the West.
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National Intelligence Bulletin
November 6, 1974
By the end of this year Iran will have some
$9
bil-
lion in reserves, giving the Shah a comfortable
for increased lending and investment.
cushion
Massive oil receipts of some $17 billion will more
than offset Iran's substantial imports of defense and
developmental equipment and other financial outflows.
Iran probably will prepay about $1.5 billion of its
high-interest debt and disburse an estimated $2 billion
in credits, investments, and advance payments for in-
dustrial installations.
Unlike Kuwait and some of the other established
Middle East lenders and investors, Iran has only just
begun to develop the institutions and experience for its
new-found role. In August, Iran established a subministry
for investment and foreign aid within the Ministry of
Economics and Finance. It probably will be little more
than an advisory and bookkeeping organization, however--
the Shah will continue to determine how and where Iran's
money will be spent.
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National Intelligence Bulletin
November 6, 1974
Short-term interest rates for most Eurocurrencies
have dropped in recent weeks because of the widespread
economic slowdown, the relaxation of US monetary policy,
and the continuing influx of oil money. Even though the
reduction in Eurocurrency rates is easing the downward
pressure on the dollar, its value continues to fall.
The Eurodollar rate has led the decline, slipping
from 14 to 10 percent as short-term US rates have mod-
erated. Eurocurrency rates for three-month deposits
of sterling, French and Swiss francs, and guilders range
from 15 to 9 percent. Growth of bank loans has slowed
in most European countries; economic slack has reduced
loan demand, and the larger Eurocurrency banks have be-
come more selective in extending credit. The short-term
deposits of oil exporters now exceed the demand for
short-term loans by customers deemed credit-worthy.
Short-term rates have already dropped in the Nether-
lands. West German rates may soon fall, since the central
bank cut some short-term rates half a percentage point
late last month.
Central banks probably are tolerating or even seek-
ing an easing of European short-term interest rates to
keep their currencies from becoming overly attractive
relative to the dollar. The aim of maintaining compete-
tive trade positions is thus conflicting with anti-infla-
tion goals. Although most European central bankers have
indicated they want to continue their tight monetary
policies, if dollar rates continue to decline they prob-
ably will permit further reductions in other rates to
limit the upward pressure on their currencies.
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National Intelligence Bulletin
November 6, 1974
The US consul general in Luanda reports that Portu-
guese army troops garrisoned in Cabinda, supported by in-
surgents from the Popular Movement for the Liberation of
Angola, last weekend occupied key installations in this
Angolan exclave and arrested the local governor and his
staff. A representative of the military junta that governs
Angola is in Cabinda investigating the situation.
The action was taken by junior officers without prior
approval from Luanda, apparently in response to minor
fighting late last week between a Cabindan separatist or-
ganization and the Popular Movement. The officers seemed
eager for an excuse to oust the governor, who was a sup-
porter of the separatists. The exclave is presently ad-
ministered by the commander of the local garrison, who
claims he had no role in the take-over.
Cabinda could easily become a hotly contested area.
Legally it is a district of Angola, and the Portuguese
would like to see it remain that way after Angola becomes
independent in hopes that Lisbon will continue to have
access to the exclave's rich oil deposits. Angola's three
rival insurgent organizations all support Cabinda's legal
status.
Separatist sentiment in Cabinda was overshadowed dur-
ing the decade of Angolan insurgency, but was reasserted
after the coup in Portugal last April. At present, the
weak Cabindan separatist movement has two rival factions,
one based in the Congo and one in Zaire.
The separatists, according to press reports, were
supported in last week's fighting by black special forces
troops recruited locally by the Portuguese during the An-
golan insurgency. These troops are well trained and well
armed, and their continued support could give the separ-
atists a much-needed boost.
Junior Portuguese officers in the territories have
gone off on their own on numerous occasions since the coup
in Lisbon. On this occasion, their action squared with
the policies of the governing juntas in Angola and Lisbon.
Their penchant for independent action, however, hints at
a lack of discipline that could prove disruptive in Angola,
especially if political disagreements become more wide-
spread and more people begin choosing sides.
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National Intelligence Bulletin
November 6, 1974
USSR: The Soviet helicopter ship Leningrad and its
escorting guided-missile destroyer--en route home from
mine-clearing operations in the Red Sea--are making a
port call in Equatorial Guinea. Equatorial Guinea is
a recipient of Soviet military and economic aid, and
Soviet naval ships have called there previously. The
Leningrad and the destroyer visited Port Louis, Mau-
ritius, from October 14 to 19. They are also expected
to visit at least one other port--Dakar, Senegal--before
returning to the Black Sea. The ships made no stops on
the way to the Red Sea last summer.
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