NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A029700010035-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 20, 2016
• Document Release Date: August 10, 2005
• Sequence Number: 35
• Publication Date: January 22, 1977
• Content Type: REPORT

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Saturday. January 22, 1977 CG NIDC 77-017C
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
On file Department of Agriculture
release instructions apply.
Top Secret
State Department review completed
(Security Classification)
w rl s flcatlon
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National Intelligence Daily Cable for January 22, 1977,
11
The NID Cable is for the purpose of informing
senior o icials.
USSR-EGYPT: Relations
USSR: Dissidents Marking Time
OAU-RHODESIA: Aid to Nationalists
USSR-POLAND: Increased Oil Deliveries
INTERNATIONAL: High Cocoa Prices
TURKEY: Foreign Trade
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I I Efforts by the Soviet media to exploit the antigov-
ernmen emonstrations this week in Cairo will do nothing to
improve Soviet-Egyptian relations. Moscow was far more circum-
spect in covering Egyptian internal disorders in 1972 and 1973.
Soviet broadcasts in Arabic have termed the "stormy
and oo y events" an indictment of recent Egyptian economic
policies. Tass has replayed foreign press accounts that say
President Sadat's tenure in office may be dependent on exter-
nal economic assistance and the renegotiation of foreign debts.
Soviet leaders, in fact, hope the debt problem has given them
some leverage over Sadat; a Soviet trade delegation that has
been in Cairo since Tuesday could discuss rescheduling Egypt's
debt to the USSR.
The media commentary has been consistent with Mos-
cow's efforts over the past several years to counter Cairo's
shift away from the "socialist path" of development. Soviet
statements have implied that aid to Arab countries will be
conditioned on their adherence to "progressive" social devel-
opment, and have pledged to struggle against "forces" that are
trying to push the Arabs off such a path.
The Soviets probably think that inter-
na pressures will reinforce Sadat's desire to negotiate a
settlement in the Middle East.
USSR: Dissidents Marking Time
I Soviet authorities have somewhat relaxed measures
agains certain prominent dissidents in Moscow while threaten-
ing sterner steps against others. Moscow's propaganda on the
human rights issue continues the twin lines of rejecting al-
leged Western interference in Soviet-internal affairs while
.claiming compliance with the Helsinki accords.
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A wide-ranging commentary in Pravda this week charged
that mounting Western publicity concerning dissidence in the
USSR and Eastern Europe is part of a continuous "slander cam-
paign" that also includes allegations of a Soviet military
threat. Simultaneously, official efforts are being made to
document Soviet compliance with the Helsinki agreements. The
chief Soviet emigration official, for example, recently said
that over 98 percent of those who want to leave the country
can do so.
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record on human rights as emphatically as possible. This fol-
lows particularly strong attacks by Italian Communists on the
Soviet record and on antidissident moves in Czechoslovakia.
In addition, two Soviet propagandists have been dis-
patched to Rome with the evident task of defending Moscow's
The Organization of African Unity has scheduled meet-
ings ..Late this month and in early February that could produce
substantially larger African assistance to the black Rhodesian
nationalists.
I I The OAU's African Liberation Committee, which funnels
aid to southern African liberation groups, has a regularly
scheduled meeting in Lusaka beginning on January 29. At the
behest of President Amin of Uganda, the OAU has set an extra-
ordinary session of its defense committee immediately after-
ward.
I I The defense session will consider what measures the
OAU should take to assist the five front-line states in sup-
porting the Rhodesian nationalists. A top OAU official told a
US embassy officer in Addis Ababa that the liberation committee
in its earlier meeting would endorse the decision by the front-
line countries to back Joshua Nkomo's and Robert Mugabe's Pa-
triotic Front as the principal black Rhodesian nationalist or-
ganization. This will put considerable pressure on the defense
committee to do the same.
25X1 I IThe OAU official also recognized the leading role
p.aye y the front-line presidents and asserted that their
actions were accepted by the majority of OAU members. A number
of OAU countries have in the past preferred to support various
liberation groups, but the OAU official said these were minis-
terial decisions which could be overruled.by their presidents.
25X1 //Many African leaders have been concerned
over the raids into Mozambique by the Rhodesian security forces,
and Mozambique's inability to protect either itself or the guer-
rilla camps near the Mozambique-Rhodesia border. The front-line
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presidents, in particular, have been seeking substantial Afri-
can assistance since last November 25X1
Most OAU members, however, do not have the resources
to prove e troops or other substantial forms of assistance.
Some, such as Ghana, still support a negotiated solution to
the Rhodesia problem.
A significant number of African countries nonetheless
are likely to make at least limited commitments of financial
aid or military supplies. The front-line presidents, who con-
trol the delivery of military supplies, will see to it that
the forces of Nkomo and Mugabe receive the bulk of any new
assistance.
I Moscow has agreed to increase its deliveries of crude
of and oil products to Poland without exa
liveries from Poland in "hard" commodities
I The agreement was reached in the recently concluded
Session of the Polish-Soviet Economic and Scientific Com-
mittee, the chief task of which was to work out the operational
details of general economic accords reached during Gierek's
visit to Moscow last November.
I IBalancing trade in "hard" goods--products with a
ready mar et in the West--has always been a vexing problem in
trade among Communist countries. Each country generally at-
tempts to obtain as much of these goods as possible while
making payments in "soft" commodities, which are either unmar-
ketable in the West or salable only at heavy discounts.
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Poland reportedly will receive 63 million metric tons
o crud e oil under the revised 1976-1980 trade agreement. This
is 13 million tons more than originally scheduled, including 4
million tons associated with Poland's building of the Polotsk
pipeline in the USSR. Poland also will be receiving 12 million
tons of petroleum products--an increase of 5.5 million tons
over deliveries originally scheduled for 1976-1980.
At the same time, scheduled deliveries of Polish coal
and coke to the USSR will not be increased above the 1971-1975
level. Although there will be a significant increase in Polish
deliveries of sulfur, a Polish official believes that increased
deliveries of textiles and consumer goods, along with additional
amounts of basic machinery and equipment, would constitute the
main offset items. Poland also will be able to draw on a 1-bil.-
lion ruble ($1.3-billion) credit reportedly granted last Novem-
ber to help cover deficits in trade with the USSR.
I IThe agreement will allow Poland to save considerable
hard currency that it would otherwise have to spend for oil on
the world market, and will thus provide some relief to its
hard-currency balance of payments. It will also free Poland
from having to divert coal and coke sales from the West, where
these earn hard currency. It is unlikely, however, that Poland
will be able to greatly increase exports of consumer goods be-
cause of chronic domestic shortages.
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//Dissension is again spreading among the Ethio-
plan armed forces in Eritrea in the wake of recent defeats.//
//Two isolated army posts were overrun re-
cent y, and e latest effort to lift the four-month siege at
Nacfa has failed. Eritrean rebels also are active south of
Eritrea along the Sudanese border, where they are cooperating
with followers of the Ethiopian Democratic Union, a guerrilla
organization led by prominent political exiles. One important
post has already fallen to the two groups
Suc-
cess in these operations wou considerably ease the movement
of supplies to the Eritrean insurgents.//
The center of dissension in Eritrea is at Keren,
where a government relief force for Nacfa ended its retreat
after obtaining safe passage from the insurgents. A delegation
that supposedly represents all of the government troops in the
Keren area has gone to Addis Ababa to demand that the regime
negotiate a peaceful settlement of the Eritrean problem.
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Relations between the troops in Eritrea and the rul-
ing military council in Addis Ababa have undergone periodic
stress, sometimes resulting in minor mutinies. Many troops are
weary of a war they believe cannot be won, and some are dissat-
isfied with the council's radical socialist policies. The sit-
uation quieted late last year after the replacement of top mili-
tary commanders in the province, but recent military setbacks
have rekindled antigovernment sentiment.
I IThe government lacks the resources to improve its
military position, especially now that it apparently faces a
growing threat from the Ethiopian Democratic Union in western
Ethiopia and from Somali-supported insurgents in the south.
The council, however, is still reluctant to offer concessions
that might induce the rebels to negotiate a political settle-
ment. 25X1
Developing countries that are not members of the or-
ganization of Petroleum Exporting Countries last year achieved
their first substantial improvement in international financial
reserves since the oil price hikes of 1973 and 1974. Reserves
for the group reached an estimated $37 billion, more than
double the 1971 level and $6 billion higher than the 1974 peak.
The improvement reflects higher demand for develop-
ing countries' exports, official policies restraining import
growth, large-scale borrowing on international capital markets,
and continued balance-of-payments assistance from the Interna-
tional Monetary Fund.
The current reserve level is equal to little more
than three months of imports. A three-month reserve/import ra-
tio for the group as a whole through the 1960s was often cited
as a norm. This ratio was surpassed in 1972 and 1973 with the
boom in developing countries' commodity exports. It fell back
in 1974 and 1975 because of increasing oil prices and the
global recession.
I Some of the more advanced developing countries such
as Sout Korea and Brazil have borrowed extensively from private
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capital markets. These countries last year managed to attain
again or exceed the comparative reserve strength of the 1960s.
Mexico was a conspicuous exception; the peso came under per-
sistent speculative pressure and, despite a strengthening to-
ward the end of the year and borrowing abroad, the government
probably was able only to sustain a reserve/import ratio
roughly half that of 1975.
I I Most other developing countries, by contrast, have
been unable to borrow as freely or to adopt other means to
maintain reserve/import ratios. The development plans of these
countries could not attract sustained private capital flows,
in large part because their economies are not sufficiently di-
versified. Their low and volatile reserve/import ratios simply
reflect the changing relationship between their import require-
ments and their export earnings.
I IReserve patterns for this year are especially diffi-
cu o orecast because of the greater uncertainty in such di-
verse factors as the impact of the oil price hike on import
bills, the performance of primary commodity prices in world
markets, the pace of economic recovery in industrial countries,
and the availability of international capital market funds.
I uIn any event, the current-account balance for these
countries is likely to deteriorate by $3 billion this year.
Maintaining the 1976 reserve/import ratio could entail a large
increase in the developing countries' total debt.
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INTERNATIONAL: High Cocoa Prices
Short cocoa supplies, poor crop prospects, increased
consumer demand, and high coffee prices probably will continue
to drive up already high cocoa prices.
25X1 New York cocoa prices, which have averaged $1.65 a
pound so far this year, currently are 57 percent above the
level in May 1974, when a record high was established.
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Last month, the US Department of Agriculture predicted
that world cocoa bean production for the marketing year ending
September 30, 1977, would reach only 1.4 million tons, 7 per-
cent below what it was last year. This will be the second con-
secutive annual decline.
I Poor weather and other production problems in West
A rica, w ere two thirds of the world crop is grown, may lead
to a further reduction in this year's estimate. Output this
year is also down slightly in Brazil, the only major producer
where production has generally increased since 1972.
The decline in African output since 1972 stems largely
from low fixed producer prices. In addition, most governments
have done little to help small farmers improve cultivation
practices and eradicate disease. Only in Ivory Coast is the
government trying to stimulate production.
I I In Nigeria, even though the cocoa price at 48 cents
per poun is higher than in the four other cocoa-producing Af-
rican countries, farmers are turning to work in the cities.
Producer prices in Ghana, the world's largest producer, are
fixed at 29 cents per pound for the current crop, giving the
government the bulk of the benefits from higher world prices.
Brazil's long-run outlook for production is favorable.
Despite disease and weather problems in recent years, cocoa
plantings have been expanding. Producers are permitted to sell
directly to private exporters and are responding to higher
prices as well as government production and marketing programs.
Nevertheless, production will expand only gradually because
new plantings require about eight years to reach maturity.
We believe that the decline in stocks since 1964,
generally rising demand, and a poor production outlook are the
basic reasons for current high prices. Speculation and weakness
in the pound sterling--factors often cited by the press--have
had only limited short-run effects on the price rise.
World cocoa stocks by the end of the current market-
ing year are likely to fall to a level of 350,000 to 400,000
tons, about three months' supplies. Supplies will remain tight
at least through most of 1977, and prices over the longer term
will remain high until stocks can be rebuilt.
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I Cocoa product prices have not fully reflected the in--
cocoa bean quotations. Manufacturers have been able
to hold the line on retail prices because prices for sugar--an
important ingredient in cocoa products--have fallen sharply
since 1974, and the use of cocoa substitutes and lower quality
cocoa beans is up.
USSR: Nuclear Policy
There is some evidence of differences within the So-
viet ureaucracy on their position that any future comprehen-
sive nuclear test ban should not impose greater restrictions
on peaceful nuclear explosions than now exist under the 1976
treaty on peaceful nuclear explosions.
Georgi Arbatov, head of the USA Institute, report-
e y suggested that the USSR might agree to a five-year mora-
torium on peaceful nuclear explosions in order to achieve a
comprehensive ban on nuclear weapons tests. Other influential
members of the Soviet Academy of Sciences also oppose such ex-
plosions, although they have not specifically favored a five-
year moratorium. They are more skeptical of the potential bene-
fits of peaceful nuclear explosions than is the State Committee
for Utilization of Atomic Energy.
The official Soviet view is that nuclear test ban
treaties must not preclude the future peaceful application of
nuclear explosions. The USSR believes such explosions are valu-
able not only for engineering applications but also in their
view as a means to discourage the proliferation of nuclear
weapons by providing peaceful nuclear explosion services to
non-nuclear weapon states.
I The deputy chairman of the State Committee for Utili-
zation of Atomic Energy, I. I). Morokhov, is the most forceful
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proponent within the Soviet bureaucracy of peaceful nuclear ex-
plosions. Morokhov managed the Soviet negotiating team for the
Threshold Test Ban and Peaceful Nuclear Explosions treaties and
would probably play a prominent role in any comprehensive test
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TURKEY: Foreign Trade
I IA disagreement over foreign trade policy has developed
Between the principal members of Turkey's "nationalist front"
government, underscoring the coalition's instability and fore-
shadowing a major point of contention during the coming parlia--
mentary election campaign.
In previous years, foreign trade policy has been rou-
tinely approved by the cabinet. This year it has become a po-
tentially explosive political. issue between Prime Minister
Demirel and Deputy Prime Minister Erbakan. The Prime Minister
wants to continue a policy of gradually lifting trade restric-
tions, particularly with respect to the EC, but Erbakan is op-
posed. Parliamentary action on the 1977 budget cannot proceed
until a compromise is reached.
I ISince last fall, Erbakan and Demirel have tried to
uuzao eac other in persuading the electorate of their commit-
ment to Turkish industrial development. They have crisscrossed
Turkey to attend foundation-laying ceremonies for various in-
dustrial facilities. Some projects that Erbakan has pushed have
not been in the budget.
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With the election to be held no later than October,
Erbakan has concluded that he must make sure funds are available
for all the factories he has already dedicated. He demanded that
money be allocated for some of his pet projects in the draft
1977 budget.
Demirel acquiesced despite the resulting increase in
the budgetary deficit, but it has become apparent to Erbakan
that Demirel's concession could prove illusory as long as Dem-
irel controls the disbursement of funds and regulates imports
of capital goods through his party's control of the ministries
of finance and trade.
Demirel has attempted to play down the current dis-
agreement with Erbakan, as he has often in the past. Guided by
the belief that it is in his interest to hold the government
together until election time, Demirel may be willing to yield
some ground to Erbakan on trade policy. He is sensitive, how-
ever, to critics in his own. party who say he has been too con-
ciliatory in dealing with Erbakan. He is, moreover, determined
to prevent Erbakan from taking credit for the government's ef-
forts to spur industrial development.
I I Erbakan has often threatened to withdraw from the gov-
ernment a a means of getting his way. He has won sometimes,
but just as often he has stepped back from the brink. This time,
with an eye on the coming election, he may be willing to push
a bit harder. He may view a cabinet crisis or even the collapse
of the coalition as a useful first step toward cultivating a
separate identity for his National Salvation Party. Observers
in Ankara have assumed that Erbakan would wait to make his move
until after the budget is approved on March 1, but his maneu-
vers regarding trade policy could be giving them some doubts.
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