MIDDLE EAST AFRICA SOUTH ASIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A000200210001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 15, 2016
• Document Release Date: August 9, 2004
• Sequence Number: 1
• Publication Date: January 24, 1975
• Content Type: NOTES

Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
Secret
N R.
Middle East
Africa
South Asia
Secret
No, 0416/75
January 24, 1975
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
25X1
 25X1 Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
 Approved For Release 2004/08/17s - T00865A000200210001-7
MIDDLE EAST - AFRICA - SOUTH ASIA
25X1
Iran: Requiring Harder Terms on Loans to
Developing Countries . . . . . . . . . . . . . 1
USSR-Ethiopia: Soviets See Positive Trends
In Ethiopia . . . . . . . . . . . . . . . . . 2
Angola: Problems on the Road to Independence . 3
India: Narayan Challenge Persists . . . . . . . 8
Jan 24, 1975
SECRET
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
 Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
SECRET
Iran
Requiring Harder Terms on Loans
to Developing Countries
Tehran may be requiring harder terms on its
loans to developing countries. The Shah has not
been especially easy on developing countries, and
the terms of the $200-million credit provided
Indonesia this week suggest an even tighter policy.
The credit reportedly will carry an 8-percent
interest rate, comparable to the return Iran gets
on its World Bank bonds and only slightly less than
on its Eurodollar investments. Repayment will be
over a 12-year period. These terms are harsher than
those of Iranian loans to Syria and Bangladesh last
year, and compare unfavorably with low-interest
loans that Indonesia received from the Western aid
consortium.
Iran apparently also has hardened its position
in negotiations with India. Tehran reportedly is
demanding the prevailing market rate of interest on
at least one quarter of a $900-million credit for
an iron ore development project. In earlier negotia-
tions, Iran indicated that it would grant a highly
concessionary rate of 2.5 percent interest.
Tehran is apparently trying hard to get the
highest possible economic return on its investments.
By 1979, Iran's large surplus may dwindle and its
favorable balance of payments may be reversed.
Tehran's aid policy will favor those countries and
projects that can provide Iran with raw materials,
industrial equipment, and technology.
Jan 24, 1975 1
25X1
Approved For Release 2004/08/17 : i~-LDp79T00865A000200210001-7
 Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
SECRET
USSR--Ethiopia
Soviets See Positive Trends in Ethiopia
The Soviet Union appears to be a bit more opti
Tistic in its assessment of political developments
in Addis Ababa and may be seeking ways to expand its
contacts and cooperation with the military government.
The Soviets, who were never able to establish
close ites with Haile Selassie, have been careful not
to get ahead of events since his overthrow. Soviet
media, however, have become increasingly positive in
their treatment of developments in Addis Ababa and
have given particular attention to the decisions of
the Provisional Military Administrative Council to
.nationalize various assets and to initiate social and
economic reforms.
Official contacts have also perked up somewhat.
The Soviet ambassador in Addis Ababa, at his own
request, recently met with the chairman of the mili-
tary council to discuss bilateral relations. Moscow
has been involved in several economic aid projects
over the years, and it was announced at the meeting
that the Soviet Union will give additional assistance
to Ethiopia's agricultural development. Earlier this
month the Soviets and Ethiopians agreed to renew their
cultural exchange program, which includes the training
of Ethiopian students in the USSR.
Because of the acute antagonism between Ethiopia
and neighboring Somalia., a recipient of considerable
Soviet military assistance, it is doubtful that Moscow
would offer Addis Ababa any significant aid--especially
military aid. A Soviet diplomat recently said that
it would be impossible for the Soviets to maintain
a good relationship with Somalia if the USSR became
a major arms supplier to Ethiopia,
Jan 24, 1975 2
SECRET
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
 Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
SECRET
Angola
Problems on the Road to independence
The accord signed last week in Portugal estab-
lishing a transitional government for Angola repre-
sents a reasonable approach to the territory's
political and economic problems. The accord,
however, leaves many complex questions for the
transitional government which is scheduled to be
installed on January 31. Moreover, the cumbersome
political apparatus established by the accord makes
a peaceful transition to independence next November
more dependent than ever on the willingness of the
three liberation groups to cooperate.
The liberation groups have pledged to work
together, but the success of the transitional
government could easily be threatened by longstand-
ing rivalries among the groups, their lack of
political experience, and the personal ambitions
and conflicting political ideologies of their
leaders. The three groups often clashed during the
long years of insurgency, and similar incidents
could occur during the transition as the groups
seek to gain political allegiance of Angola's
widely-dispersed and politically uncommitted rural
population.
If the three groups take their responsibili-
ties seriously, the accord provides them with an
opportunity to share in decisions, and gives them
time to overcome old suspicion's and hostilities.
The terms of the agreement also seek to prevent an
unequal distribution of power, and place limits on
precipitate political or military action by any
individual group.
In the transitional government, executive
power will reside with a presidential council
composed of one member from each of the three
liberation groups, with the chairmanship rotating
(Continued)
Jan 24, 1975
SECRET
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
 Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
SECRET
among the groups. The authority of the Portuguese
high commissioner will be limited to representing
Lisbon's interests and voting on defense issues.
He will not have a vote in domestic political
matters.
No appointments have yet been made to the
transitional government. According.to some sources,
the leaders of the three liberation groups will not
participate and instead will assign their deputies
to the presidential council. Presumably the leaders
wish to remain free to build up the political
structures of their organizations.
The transitional government will set up a
central commission to organize elections for a
constituent assembly sometime before independence
next November. Preparations for the elections,
such as voter registration, will present the new
government with difficult obstacles.
The accord glosses over the issue of a presiden-
tial election. Presumably such an election will be
held, but details have been left to the constituent
assembly.
The accord recognizes the three liberation
groups as the only legitimate political organiza-
tions in Angola. The liberation groups have argued
that whites must no longer regard themselves as an
individual power bloc and must work through one of
the traditional liberation movements.
It is difficult to measure white receptivity
to this idea. The Popular Movement for the Libera-
tion of Angola will probably appeal to urban-based
intellectuals and middle-class liberals. its
Marxist image, however, is likely to limit its
appeal to wealthy whites.
The National Union for the Total Independence
of Angola has projected a moderate image by avoid-
ing any firm ideological stand. This image might
(Continued)
Jan 24, 1975 4
SECRET
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
 Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
SECRET
prove attractive to white moderates in Angola's
prosperous central highlands where the Union is
active. It reportedly is already receiving some
financial support from wealthy whites there.
The National Front for the Liberation of
Angola, the largest of the three groups, has a
reputation for racism that will probably limit
political support from whites, at least for the
time being. Nonetheless, the Front is winning
substantial political support from both blacks and
whites in northern Angola. Whites there have been
particularly impressed by the Front's ability to
maintain order in the area, known for banditry and
a generally high crime rate.
The military provisions in the accord are
likely to prove the most difficult to carry out.
They call for a defense commission composed of the
high commissioner, the presidential council, and a
joint general staff. The general staff will be
under the high commissioner and will consist of the
military commanders of the liberation groups and
the commanders of the three branches of the Portu-
guese armed forces in Angola.
The defense commission is charged with estab-
lishing a national army of 48,000 by September.
Portugal will supply half the total forces, and the
remainder will be provided equally by the three
liberation groups. The rest of Portugal's approxi-
mately 40,000 troops presently in the territory
will be withdrawn by the end of April.
The liberation groups are likely to have
problems raising the 8,000 men required to meet
this provision. At present, only the National
Front for the Liberation of Angola has a sizeable
well-trained military force inside Angola and a
respectable force in training in Zaire. It is also
the only group with significant logistical support
outside the territory.
(Continued)
Jan 24, 1975 5
SECRET
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
 Approved For Release 2004/08/17: CIA-RDP79T00865A000200210001-7
SECRET
These factors will give the National Front a
military advantage over the other two groups.
Until tIe national army is established, however,
the forces of the three groups are required to
remain in their present positions.
One of the major problems facing the transi-
tional government will be untangling the territory's
economy from Portuguese control. Angola's economy
is based on export-oriented development of commer-
cial agriculture and. mining. Whites in both Angola
and the metropole own virtually all major industrial
and transport facilities and conduct most private
.commerce. The liberation groups have agreed to
respect the property of white residents in the
territory.
The accord provides for a mixed commission to
carry out the transfer of assetp located outside
Angola to the new government. It also obliges
Lisbon to assist the territory in setting up an
independent central. bank.
Sorting out the assets held by the Bank of
Portugal and the Bank of Angola will be time-
consuming. The process could also prove to be
contentious if Portuguese financial interests, long
viewed with suspicion by the liberation groups,
give the appearance of not providing an honest
audit.
The transitional government will also face
complex economic renegotiations with other foreign
countries. The US, Britain, Japan, France, West
Germany, and South Africa are all deeply involved
in mineral and petroleum exploitation, transportation,
and power projects.
The most immediate economic problem for Angola
may be presented by some of the territory's 500,000
whites. The role of the whites in Angola--unlike
(Continued)
Jan 24, 1975 6
SECRET
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
 Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
SECRET
other former European colonies in Africa--is not
restricted to management, investment, and technical
skills. They also account for virtually all white
collar employment and large number of semi-skilled
and unskilled workers.
Although whites with much-needed technical
skills probably feel secure, a majority of whites
remain unconvinced that the new government will
protect their interest. They believe their jobs
will be up for grabs when the transitional govern-
ment faces the task of providing employment for
Angola's blacks.
So far, Angola's whites have shown little
inclination to oppose the transitional government.
Middle-class whites will be able to leave Angola if
they find their positions jeopardized, Many whites,
however, cannot afford to leave the territory.
Their lack of skills will make them unwelcome in
Rhodesia, South Africa, and Portugal. Resentment
by these whites could lead to serious racial dip-
turbances that may mar the transition to indepen-
dence .
Jan 24, 1975 7
SECRET
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
 Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
SECRET
Narayan Challenge Persists
The ten-month-old protest movement led by
India's most influential reformer, J. P. Narayan,
has entered a new phase that confirms his deter-
mination, despite ill health and the age of 72,
to mount a nationwide drive against the government
of Prime Minister Gandhi.
Narayan recently began a tour of the country
to enlist support for a non-violent "total revolu-
tion" in India. Although his plans still lack
specifics, Narayan clearly has moved beyond his
earlier goal--dissolution of the "corrupt" govern-
ment in Bihar state--toward a major overhaul of
India's political, economic, and social system.
Moreover, he has ruled out further talks with Mrs.
Gandhi, whom he holds responsible for governmental
inefficiency and corruption. He charges she has
seriously weakened Indian democracy by amassing
power and disregarding civil liberties guaranteed
by the constitution.
With the cooperation of numerous small, mostly
rightist political parties, Naryan is seeking to
establish state committees that will select inde-
pendent candidates to run against Mrs. Gandhi's
Congress Party in future state and national elections.
Narayan recognizes that opposition leaders who have
joined farces to support his movement are largely
motivated by the desire to defeat the Congress Party.
He expects their differences will lose importance,
however, if there is a massive popular demand for
drastic changes in the system. The first important
measure of Narayan's support will come on March 6
in a protest march on parliament in New Delhi.
So far, Narayan.'s supporters are largely middle-
class urban dwellers and students whose lives are
adversely affected by the declining economic situa-
tion. Narayan's key to success, however, lies in
(Continued)
Jan 24, 1975 8
SECRET
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
 Approved For Release 2004/GE'BETA-RDP79T00865A000200210001-7
the millions of villages where most Indians live.
Support for the Congress Party and resilience to
adversity are traditionally strong among villagers.
Nonetheless, Narayan's immense personal prestige,
his convincing concern about abuses in the political
system, and the general popular appeal of the ideal-
ism of Mahatma Gandhi espoused by Narayan, all add
up to a unique challen e that Mrs. Gandhi may soon
have to face s uarel .
Jan 24, 1975 9
SECRET
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
 Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7
Secret
Secret
Approved For Release 2004/08/17 : CIA-RDP79T00865A000200210001-7