NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030200010087-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 20, 2016
• Document Release Date: August 1, 2006
• Sequence Number: 87
• Publication Date: July 23, 1977
• Content Type: REPORT

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National Intelligence Daily Cable for Saturday, July 23 1977.
e NIL) a e is or a pur
pose o informing
senior otticials.
IRAN-USSR: Brezhnev May Visit
Page 4
ITALY: Slow Economic Growth
CHINA: Teng Reinstated
Page 4
Page 5
ETHIOPIA: Situation Report
MOROCCO: Moves Against Polisario
LEBANON: Situation Report
SYRIA: Asad's Tough Stance
Page 6
Page 7
Page 9
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USSR-CSCE: Changing Tactics
WEST BERLIN: Soviet Harassment
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Page 12
PORTUGAL: Agrarian Reform
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ether lands
USSR
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IRAN-USSR: Brezhnev May Visit
//The Shah earlier this week disclosed to a US
official that Soviet President Brezhnev may visit Iran. No
specific dates have been set, but the visit will probably take
place sometime before the Shah's trip to Washington in Novem-
ber.//
//The Shah said he will also make a swing in
late August to Poland and Czechoslovakia. He expects that oil
will be the most important topic of discussion in Warsaw and
Prague, in view of the Soviet Union's reduced ability to supply
Eastern Europe in the future.//
I //The Shah's pointed disclosure of these coming
events seems in ended to remind the US that he has considerable
room for maneuver in his relations with Moscow and its East
European allies. The timing of Brezhnev's proposed visit before
the Shah's meeting with President Carter also suggests the Shah
may be responding to continuing Soviet criticism of Iran's heavy
reliance on the US. Brezhnev's visit to Iran would be the first
by a top Soviet official since Premier Kosygin dedicated a
Soviet-built steel mill in 1973.//
//For its part, Moscow may see an opportunity to
exploit what it sees as the Shah's growing irritation with crit-
icism in the US Congress and the American press of Iran's per-
formance on human rights and its large purchases of US advanced
weaponry.//
//A substantial Iranian purchase of Soviet arms
last November suggested the Shah might look increasingly to
Moscow as a supplier of ground force equipment. The price tag
was $550 million, more than twice the size of any previous
Iranian-Soviet arms transaction, making the Soviet Union Iran's
second largest arms supplier after the US.
//Prime Minister Andreotti's austerity program an-
nounced Last winter has brought some improvement to Italy's
economy.//
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//The most important improvement has been the
slackening rate of inflation. This spring, consumer prices
stood almost 20 percent above what they were a year earlier,
but the annual increase could fall to 14 percent by December.
Weakening domestic demand, meanwhile, has cut the trade deficit
for the first five months of 1977 to only $1 billion. Tightened
credit controls and tourism have shored up the lira and raised
Bank of Italy currency reserves to $6 billion.//
//These improvements have been at the expense of
economic growth. Economic indicators point down, industrial
production is off sharply, and output is expected to stagnate
the rest of the year. Unemployment is climbing steadily. Rising
short-term foreign bank indebtedness could become a problem if
confidence evaporates, and Rome probably will ask to reschedule
heavy repayments due in 1978.//
//Cooperation between the Christian Democrats and
the Communists, embodied in the recent "programmatic accord,"
will add new weapons to the fight against inflation. Though it
dodges the thorny issue of wage reform, the accord does provide
for specific measures to improve Italy's public finances. The
economic portion of the accord is in line with International
Monetary Fund requirements for additional credits, which should
help the accord's passage in parliament. 25X1
I I
CHINA: Teng Reinstated
I The reinstatement of Teng Hsiao-ping this
week as party vice chairman makes him the third-ranking Chinese
leader behind Chairman Hua Kuo-feng and Vice Chairman Yeh Chien-
ying. Teng was also restored to his previous positions in the
government and army. He can now be expected to start making
regular appearances and meeting with foreign visitors in his
capacity as vice premier.
A plenary session of the party central committee,
held in Peking from July 16 to 21, restored Teng to all the
positions he held in the party, government, and army before
his ouster last year. The plenum also confirmed Hua in his
post as party chairman and expelled the "gang of four" from
the party.
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I The plenum this week did announce plans to hold a
party congress at an unspecified time this year, but decided
to restore Teng now "after earnest discussion"--suggesting this
may have been a controversial decision. Teng's supporters may
have wanted no further delays in his return to work and pressed
for a full restoration of his power at the plenum rather than
awaiting a decision by the party congress.
I IThe plenum's action to confirm Hua as party chairman
was a departure from normal practice. Usually the party congress
formally elects the chairman, but this procedure may also have
been moved up to the plenum in order to give Hua the added stat-
ure of officially being appointed head of the party to balance
Teng's full return to duty.
All active members of the party's ruling Politburo
attended the plenum and were listed in their usual pecking
order. The coming party congress will elect a new central com-
mittee which, in turn, will name a new Politburo. Until that
time, Teng's return will probably be the only change in the
leadership. F_ I
ETHIOPIA: Situation Report
I IEthiopian forces remain under heavy insurgent pressure
in both Eritrea and the Ogaden, but there is little evidence
that the military as a whole or significant elements of it are
thinking seriously about turning on the ruling military council.
Loss of either or both regions would not, in the judgment of
the US embassy in Addis Ababa, signal the downfall of Chairman
Mengistu, though it could trigger reactions that would weakhi
his control.
Mengistu and the council have been building assets
outside the regular military forces. These include the popular
militia--which represents Mengistu's effort to mobilize the
people in defense of Ethiopia--and the newly created local ad-
ministrative units.
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It is unclear whether the militia can make a decisive
mpac on the battlefields. If it does, this would obviously
strengthen Mengistu's position. The local administrative units
have been assuming greatly increased responsibility in the
peaceful provinces and have considerable responsibility for law
enforcement in Addis Ababa.
Currently, there are no particular signs of new trou--
e in e capital. Political assassinations of low-level of-
ficials continue regularly and the number of night-time shoot-
ings has increased a notch, but the city shows a surface calm.
The embassy sees no evidence of heightened security measures.
I According to the embassy, there are no rumors of dis-
sension in the military council. Mengistu himself reportedly
appears confident.
Although the situation on the battlefronts is reaching
a difficult stage for the regime, it may well survive territorial
losses. Mengistu has skillfully played on Ethiopian patriotism;
should a showdown with the army ever come, he may be able to
draw on unexpected reservoirs of support among workers and peas-
ants. Mengistu is also in the best position to cultivate foreign
support, and he is likely to marshal as much military and polit-
ical backing as he can from the USSR, Eastern Europe, and var-
ious African states.
MOROCCO: Moves Against Polisario
The Moroccans have been searching for more effective
military tactics to use against the Polisario. They hope that
new tactics and increased cooperation with Mauritania's armed
forces will enable them to deprive the guerrillas of their
freedom of operation.
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Recent Polisario attacks on Nouakchott and Zouerate
demonstrated the guerrillas' ability to strike at any time and
any place. The Moroccans were able initially to drive the guer-
rillas from the larger towns they had occupied immediately after
the Spanish withdrawal, but the guerrillas have continued to
roam at will through the desert and maintain continual attacks
against Moroccan forces. The Polisario has the advantage of
familiarity with the terrain and the support of most of the
population in the areas where it operates.
Moroccan forces have generally stayed in the larger
towns and have alternated between undertaking large, generally
fruitless, sweeps of the countryside and relying on forays by
small mobile forces. Results have been mixed, and poor morale,
difficult terrain, and inadequate logistics have been persistent
problems.
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of their military actions.
In addition to its drive against the Polisario, Mo-
rocco is increasing its military cooperation with Mauritania.
The two recently signed an accord providing for coordination
I IThe Moroccans have changed tactics and the organiza-
tion of eir forces in Sahara before with little effect, but
the recent changes, and the increased cooperation with Mauri-
tania, may lead to increased effectiveness this time. The Mo- 25X1
roccans realize, however, that given the nature of the war and
terrain, they will never be able completely to seal off the
border.
LEBANON: Situation Report
A recent Palestinian initiative to defuse the situa-
tion in southern Lebanon has led to a series of meetings be-
tween representatives of the moderate Palestinians and the
Lebanese and Syrian armies. Until the Christians and the re-
jectionist Palestinians--the chief contending parties in the
south--take part in the talks, however, any agreement that
emerges is unlikely to hold.
apparently includes :mutual Christian and Palestinian with-
drawals to establish a demilitarized zone along the border;
a joint Lebanese-Palestinian military committee to supervise
the truce arrangements; and the deployment of Lebanese army
units in the south. A UN presence may also be under considera-
tion.
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The moderate Palestinians presumably hope to escape
from the constant threat of Israeli intervention inherent in
a continuation of the current situation. As long as a with-
drawal from the border area did not confer a military advantage
on either the Christians or the rejectionists, the moderates
would lose nothing by such a move; they may reason that a UN
or Lebanese army barrier to any Israeli move would give them
greater freedom of activity a bit farther north.
I The moderates may also hope that the proposal, whether
successful or not, will improve their image internationally,
in Arab circles, and with the inhabitants of south Lebanon,
whose lives have been severely disrupted by the continual shell-
ing there.
The meetings have generated considerable optimism on
the part of the Lebanese and Syrian press, but even if the
parties now represented in the talks do reach agreement--a
real possibility--the accord will be doomed without Christian
acquiescense. So far, the Christians have taken a hard line.
General Khoury, the commander of the Lebanese army,
fears the army will splinter if it is forced to cope with Chris-
tian-Palestinian fighting.
SYRIA: Asad's Tough Stance
I I Syrian
President Asa calls Israeli rime Minister Begin 's peace plan
a "non-starter," Asad characterizes the plan as an attempt to
legalize Israeli occupation and to "bury the rights of the
Palestinian people," which he says are still the basic issue
in the conflict.
I Asad takes a very tough stance toward negotiations.
He denies any interest in negotiating a separate Israeli pull-
back on the Golan Heights and rejects as a basis of discussion
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any Israeli proposal for a semiautonomous West. Bank, which
would have security links with Israel and economic ties with
Jordan.
I IThe Syrian President reiterates his opposition to
establishment of diplomatic relations or any other Arab steps
to normalize relations with Israel as a quid pro quo for Israeli
territorial withdrawals?
I Asad asserts that President Carter needs to hold fur-
ther discussions to attempt to gain a "clearer vision of the
problem." If the US is sincere in its desire to promote peace,
Asad says it is enough if it adopts a "neutral. stance." Asad
presumably means that the US should suspend military and eco-
nomic assistance to Israel.
Turning to Lebanon, Asad estimates that Syrian forces
might have to stay there at least another year. 25X1
I
USSR-CSCE: Changing Tactics
I /The second-ranking member of the Soviet dele-
gation at the Belgrade Conference on Security and Cooperation
in Europe has backed off from Moscow's threat to block the fall
meeting if no firm closing date is established. The threat, made
by delegation chief Yule: Vorontsov in a table-pounding, but in-
formal, discussion Tuesday, was contradicted by his deputy, S. A.
Kondrashev, in private remarks to members of the US delegation
later that day. Kondrashev, who is a staff officer of the KGB,
also made an appeal for a Soviet-US "understanding" on the tone
and level of mutual criticism at the senior-ZeveZ review confer-
ence this faZZ0//
//By seeking such an advance understanding, the
Soviets are using a tactic similar to one they employed earlier
this year in bilateral appeals to West European CSCE principals
for a "constructive" conference. The Soviet delegation showed
flexibility in its recent acceptance of most of the guidelines
drawn up by the neutral countries for the fall session. In addi-
tion to softening its insistence on a firm closing date for the
fall meeting, Moscow has moved closer to the neutrals' proposals
on the number and duration of sessions of the working bodies.//
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//In private remarks to US officials, both Voront-
sov and on ras ev have commented on Soviet tactics for the fall
conference. Vorontsov said on Thursday that Moscow would go to
the fall review conference with "relatively few" new proposals.
He specified that the Soviet proposal on non-first use of nuclear
weapons would not be one of them.//
//Kondrashev noted on Tuesday that the Soviet
delegation to the opening session in the fall will be headed
either by First Deputy Foreign Minister Kuznetsov or Deputy For-
eign Minister Kovalev. In either event, Vorontsov will resume
his current position as head of the d legation after the opening
meeting.//
WEST BERLIN: Soviet Harassment
The US mission in West Berlin reports that the Soviets
recently have increased their military vehicle traffic in West
Berlin to about 100 vehicles per week, about two and a half
times the number of tours by the three Western Allies in East
Berlin.
The Soviets and East Germans have stated for several
months that the Allied patrols in East Berlin are an annoyance
and an outdated operation that should be discontinued. They
have told the Allies that the USSR might increase its patrols
in West Berlin if the Allies continue "provocative" tours in
East Berlin.
The USSR may hope that the Allies will seek an agree-
ment reducing both Western and Soviet trips. The increase in
Soviet trips to West Berlin is a sign that the USSR does not
intend at this time to countenance any harassment of Allied
visits to East Berlin. The Soviets may use the increase to seek
to persuade their East German allies that they are still work-
ing to eliminate or cut back Allied vehicle movements in East
Berlin.
In fact, however, the Soviet increase strengthens
the Allied position by providing evidence of the four-power
status of greater Berlin, something the Soviets have declared
obsolete.
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PORTUGAL: Agrarian Reform
Portugal's Largest opposition party., the centrist
Social Democrats, sided with the ruling Socialists yesterday
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to secure passage of a controversial agrarian reform bill. Spec-
ulation in Lisbon earlier was that the opposition parties might
try to use the opportunity to bring the government down. Voting
on remaining issues will probably go quickly as the legislative
assembly prepares to adjourn until October. The Socialists at
that time may have to take into account the opposition parties'
desire to participate in the government.
The Socialists were forced to make concessions in
o er areas in order to obtain the Social Democrats' support
on the agrarian bill. The two parties announced that they will
hold regular consultations on policy matters. The Social Demo-
crats want a voice in overall political and economic policy,
more influence in the media, and a greater role in local govern-
ment.
Remaining measures before the assembly, including
compensa ion for nationalized industries and authorization of
foreign loans, are likely to be approved. More contentious
issues, like the Socialists' mid-term economic program, will
probably be delayed until the October reopening.
I J The government could face serious problems if it does
not keep its commitment to consult with the Social Democrats.
Social Democratic Party leader Sa Carneiro is maneuvering to
gain a role in the government--some say he has his eye on the
prime ministry. He may attempt to turn his party against the
Socialists, although moderates in his party will probably fight
any effort to bring down the government.
The leader of the conservative Center Democrats,
Freitas do Amaral, has hardened his party's position against
the Socialists, in part because party members are pressing him
to move to the right. He also believes that this is the time to
show the Socialists how vulnerable they are in a minority gov-
ernment and to convince them to agree to a coalition with the
Social Democrats and the Center Democrats.
The Socialists are not likely to be moved by Freitas
do Amaral's proposal that they should turn to the right and for-
sake their image as the party that can deal with both sides of
the spectrum. The Socialists' wide-ranging support has won them
pluralities in three elections, and they are unlikely to change
their stance. They are also unlikely to renounce their campaign
pledge to form no alliances.
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I The Socialists, however, realize that they must be
more flexible in dealing with opposition parties if they want
to remain in power. They may try to ease the pressure for a
coalition in the fall by including some independents in the
government.
I The ruling party may run into problems from the Commu-
nist Party. The Communists are angry that the Socialists have
undercut their influence in agrarian affairs and may be planning
to retaliate. Communist leader Cunhal has promised to make it
difficult for the government to implement the agrarian reform
measures, which include handing back land illegally taken by
Communist-led mobs in 1975. The Communists can stir up trouble,
but security forces should be able to handle any disturbances.
Queen Juliana has asked prominent Dutch politician
Willem Albeda to try to work out differences between the cen-
trist Christian Democrats and the socialist Labor Party over a
controversial profit-sharing bill so that negotiations to form
a government can be resumed.
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I This is the third phase of the effort to form a govern-
ment after the election on May 25. The first phase, an attempt
by caretaker Prime Minister and Labor Party leader den Uyl,
lasted 44 days and ended in deadlock over the profit-sharing
issue.
The second phase was short-lived. Justice Minister
van Agt, leader of the Christian Democrats, refused to try to
form a government, saying that den Uyl gave up too easily.
Albeda is a leader of the Christian Democrats, a mem-
ber of the upper house and regarded as "wise men"
in Dutch politics.
USSR:
Soviet President and party leader Brezhnev, now vaca-
tioning in the Crimea, will evidently hold a series of bilateral
meetings again this year with the "vacationing" leaders of Mos-
cow's close allies.
Brezhnev met with his East German counterpart, Erich
Honecker, on Tuesday and with Czechoslovak President and party
boss Husak yesterday. Pravda has also noted that Mongolian chief
of state and party leader Tsedenbal has arrived in the USSR "on
vacation" at the invitation of the Soviet party Central Commit-
tee.
The communique-like announcements of Brezhnev's meet-
ings with Honecker and Husak were routine in tone and unexcep-
tional in content; they made no mention of major international
issues save a standard reiteration of the Soviet - East European
position on the Conference on Security and Cooperation in Europe.
From 1971 through 1973, the summer gatherings in the
Crimea took place on a multilateral basis, but for the past
three years each leader has met individually with Brezhnev at
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