CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030700010010-9
• Release Decision: RIPPUB
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• Document Page Count: 17
• Document Creation Date: December 20, 2016
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• Content Type: REPORT

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Wednesday 17 May 1978 CG NIDC '78/115C
NATIOINAL SECURITY INFORMATION
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National Intelligence Daily Cable for Wednesday, 17 May 1978
e Nil) Cable is or t o purpose of informing
senior S officials.
ZAIRE: Military Situation Report
ZAIRE: Fighting Damages Economy
PAKISTAN: Zia Lashes Out of Press
JAPAN: Auto Engine Technology
PERU: New Economic Austerity
ETHIOPIA-ERITREA: Government Attack
NATO
Dominican Republic
Colombia
Upper Volta
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ZAIRE: Military Situation Report
Zairian airborne commandos early yesterday counterat-
tacked Katangan rebel positions in KoZwezi in an attempt to
secure the town's airfield and to Zink up with Zairian troops
southeast of the city. Despite Zairian confidence, the opera-
tion will be difficult and could be complicated by the presence
of several thousand foreign civilians in the town. French and
Belgian diplomats in Kinshasa are pessimistic about the Zairian
Government's position and have recommended that their govern-
ments prepare to intervene militarily in order to protect and
to evacuate their citizens. It is generally quiet elsewhere in
Zaire.
Mobutu seems determined to retake Koiwezi, even if
he must weaken his defenses elsewhere in the region. Battalions
formerly assigned to Mutshatsha and Kamina have been ordered to
Koiwezi, along with elements of two battalions recently airlifted
to Lubumbashi.
Despite these moves, Belgian and French officials in
Kinshasa believe the Zairian force is too small and that the
counterattack could fail disastrously. They have told US
Embassy officials that the threat to the European community
in Koiwezi could increase if the Zairians attacked the residen-
tial sector.
French and Belgian Embassy officials are concerned by
the increasing indiscipline of the rebel soldiers. There are
unconfirmed reports that the rebels have killed at least
seven Europeans. The Belgian Charge has recommended that his
government develop plans for military intervention to assure the
safety and evacuation of Europeans, and the French Ambassador
may have made a similar recommendation to Paris. Both have told
the US Ambassador that they hope the US would join in such
planning. Most of the approximately 75 US citizens in the area
will probably be evacuated today.
A senior adviser to French President Giscard told US
officials in Paris that he is increasingly concerned about the
fate of French nationals in Kolwezi. He suggested, however,
that France would wait at least 48 hours to see if the current
Zairian attack is successful before acting itself. Unconfirmed
press reports claim that some French military transport aircraft
have been placed on standby alert, possibly because of the
Zairian situation.
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As in the past, Zairian forces will probably perform
poor y. a average Zairian soldier displays little desire to
stand and fight for Mobutu.
If the rebels are able to maintain their offensive
and perhaps attain additional successes, the Zairian Army's
resistance will probably degenerate, and there may be a break-
down of discipline and order. If this occurs and Mobutu is
unable to obtain external assistance in the form of troops
and materiel, the President would be under severe pressure to
seek a political accommodation with the invaders. This would
call into question Mobutu's ability to rule and could lead to
instability in Zaire's other troubled regions.
The internal situation elsewhere in Zaire apparently
remains calm. Government security forces in Lubumbashi and Kin-
shasa have taken precautions against civil disorder and have in-
creased their patrols. Rumors are rife, including those suggest-
ing that elements of the Zairian Army are in collusion with the
invaders.
The Zairian Government has said the invaders are Ka-
tangan rebels, but it has applied the term "Katangan" to anti-
Mobutu elements in general. The rebels' basic force probably con-
sists of tribal relatives recruited by the original Katangan
exiles, other political dissidents from Zaire, and some vagrant
Angolans. The rebel leadership itself describes its movement as
a popular anti-Mobutu uprising consisting of Zairians from all
regions.
ZAIRE: Fighting Damages Economy
Fighting in Zaire's Shaba Province is seriously dam-
aging the country's ailing economy. The Kolwezi area accounts
for 75 percent of Zaire's copper production, 90 percent of
cobalt production, and all zinc production. The rebel incur-
sion Last year fell short of major towns in the copper belt.
World copper consumers now have copper stockpiles
equal to five times Zaire's output, and even a total suspen-
sion of Zairian copper production would not cause any immedi-
ate hardship. Short-term reductions in cobalt output by Zaire,
however, could be serious because Zaire is the free world's
leading supplier. Consumers are already experiencing scarcities
and skyrocketing prices.
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For Zaire, the loss of a sizable portion of mineral
revenues would be crippling; Shaba mineral output accounts
for at least 70 percent of government revenues and foreign ex-
change earnings. The full impact of production cutbacks on
revenues and export receipts will be delayed six to eight
weeks as a result of the shipments made before the outbreak
of fighting.
The fighting has further postponed disbursements of
a private foreign loan of more than $200 million that had been
suspended during last year's invasion. The loan is part of an
agreement initially worked out in 1976 between Zaire and for-
eign private creditors aimed at easing critical foreign ex-
change shortages that have plagued the country for the past
several years.
Zaire's economy was troubled before the fighting
began in Shaba. Despite stringent import controls and finan-
cial aid from the International Monetary Fund and other cred-
itors, Zaire ran balance-of-payments deficits of $337 million
in 1976 and $300 million in 1977. Zaire has asked the IMF for
another standby loan this year and will probably ask for a
reconvening of the Paris Club--major public creditors--to re-
schedule its public debt. The fighting will undoubtedly affect
all these meetings.
Thus far, there is no word on how much military and
economic aid Zaire can expect this year as a direct result of
the Shaba fighting. The cost of last year's war was covered
by military aid from France and Morocco combined with economic
assistance from Western Europe, the US, Japan, and Saudi
Arabia.
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INTERNATIONAL: Oil Production
//Saudi Arabia has announced a cut in oil pro-
duction that will generally please other producers of the or-
ganization of Petroleum Exporting Countries. The decrease will
apparently involve a further reduction in production of Arab
Light oil from the Ghawar field.//
//Saudi Arabia's lower production ceiling
should enable most other members of OPEC to increase output
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this year compared with last year. Although total OPEC produc-
tion in 1978 will probably decline by about 1 million barrels
per day, the Saudi ceiling represents a drop of nearly 1.5
million barrels per day from last year's Saudi average.//
//The new restrictions should not create any
problems for the international oil market until at least the
fourth quarter of this year, when seasonal factors and specula-
tion in expectation of an oil price rise in January will push
up demand. Even then, some flexibility on the part of either
Kuwait or Saudi Arabia would suffice to meet demand.//
//The Saudi move is evidently linked to an
agreement among OPEC countries to limit oil production volun-
tarily in order to reduce the present surplus on the world
market. In exchange, the Saudis expected the others to forgo
calls for a price increase this year. Kuwait's Oil Minister
has announced that his country will also cut production. The
Saudi cut, however, will probably be the only significant one.//
//Following the OPEC meeting in Kuwait last
week, Oil Minister Yamani announced that Saudi. Arabia had de-
creased production to 8.0 million barrels per day as part of a
policy to reduce the world oil market surplus. Saudi crude out-
put averaged only 7.9 million barrels daily in the first quarter
of this year, largely because of slack market demand. Last
year, Saudi output averaged 9.2 million barrels per day.//
//It is uncertain how such operating rules as
the quota which restricts average Arab Light crude output to
65 percent of total Aramco production have affected production
since late February. Reducing the quota for Arab Light would
ensure that overall production cutbacks are concentrated at
the giant Ghawar field. Slowing the oil withdrawal rate would
help to restore pressure in reservoirs while bringing the
ratio of light crude production more in line with existing re-
CHAD: More French Reinforcements
//France may be sending additional combat troops
o a to strengthen Chadian garrisons against possible at-
tacks by Libyan-backed Muslim insurgents. French and progovern-
ment forces have recently had some success in scattered, small-
scale engagements with the rebels, but there has been little
heavy fighting during the past two weeks.//
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//The US Defense Attache in Ndjamena reports that
150 more French Foreign Legionnaires are on their way to Chad.
This will bring the total French military presence there to at
least 1,650 men, most of them combat troops. The reinforcements
will probably be sent to one of the garrisons along the Moussoro-
Ati-Abeche defensive line.//
//Several sources have told the Defense Attache
that Legionnaires in Mongo clashed with rebels over the weekend,
killing at least 20. No French losses were reported. The battle
was in an isolated incident, perhaps the result of a limited
rebel probe to test French defenses.//
//Early last week, a rebel group that had switched
its support to the government recaptured the outpost of Guereda,
occupied by the insurgents since mid-April. Guereda is the only
town retaken from the rebels this year.
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Continuing protests by newsmen in Pakistan reflect
growing unhappiness with government restrictions on political
activity and cou.Zd create significant problems for the mili-
tary government.
The journalists claim more than 100 have been ar-
rested thus far for participating in such activities as hunger
strikes protesting the closing in March of a Lahore newspaper
that supported former Prime Minister Bhutto. The government
has tried to solve the problem by handing out increasingly
stiff sentences--including flogging--to those arrested. The
result, however, has been a growth in support for the newsmen,
even from a few politicians who have no reason, to favor Bhutto.
The government increased restrictions on press and
political activity in March to prevent Bhutto's followers from
creating serious disturbances after he was sentenced to death
for a political murder There was little trouble then but, as
a final decision on Bhutto's appeal approaches, his supporters
may be more inclined to confront the government.
The Supreme Court begins hearing his appeal this
weekend and, if it upholds the verdict as expected, Chief
Martial Law Administrator Zia-ul-Hag will have to decide
whether Bhutto is to be hanged.
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JAPAN: Auto Engine Technology
//The Japanese have embarked on a program to use
ceramics, which are resistant to high temperatures, in diesel
automobile engines. The engine design eliminates the need for
cooling components, such as radiators and fans, and probably
will lead to the development of simple, low-cost, reliable
diesel engines for passenger cars by the early 1980s.//
//Ceramics will be used for engine parts exposed
to high temperatures under low or compressive loads, such as
pistons, cylinder liners, ports, and manifolds. The Japanese
have already demonstrated the feasibility of these components
in diesel engines. This use of ceramics, despite their brittle-
ness, will not require any major changes in the design of en-
gines or parts, but it will permit a significant reduction in
cost because ceramics can be more economically formed and
worked than metals.//
//Diesel engines are inherently more fuel-efficient
than conventional gasoline engines. We know of no program paral-
lel to the US effort further to improve diesel engine fuel ef-
ficiency. The US effort is focused on large truck engines and
seeks to increase fuel efficiency through very high operating
temperatures and more expensive and sophisticated ceramics
techonology than the Japanese effort.
PERU: New Economic Austerity
The Peruvian Government has enacted harsh austerity
measures in a calculated gamble to obtain an $80 million loan
necessary to keep the country's failing economy afloat until
it can satisfy International Monetary Fund requirements for
additonal debt service loans. The new measures are likely to
trigger widespread popular unrest that could bring about can-
cellation of the constituent assembly election scheduled for
4 June.
Official price hikes--a substantial rise in the cost
of gasoline, the virtual elimination of food subsidies, and a
major increase in public transportation fares--were announced
late Sunday evening with a dramatic suddenness that took even
government economic officials by surprise.
President Morales Bermudez had been planning to with-
hold imposition of the harsh measures until after the June ball-
oting. Government leaders apparently became convinced, however,
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that the hesistancy of international lenders to provide the
bridge loan--which Peru desperately needs because it has only a
few days' worth of cash reserves remaining--made an earlier an-
nouncement unavoidable.
The increases--coupled with the new fiscal measures
announced last week and the naming of two well-qualified civil-
ians to key cabinet economic posts last Friday--should improve
Peru's chances in its negotiations with private banks. Steering
groups from both US and international banks met yesterday, fos-
tering optimism in Peru that it may obtain the loan within days.
The austerity measures were greeted on Monday with a
few spontaneous outbreaks of unrest. Disturbances in Lima and
other major cities resulted in dozens of arrests and an unde-
termined number of injuries, but the worst violence undoubtedly
is yet to come. Labor unions and leftist groups, also taken by
surprise, have had little time to mount organized protests.
The price hikes are considerably greater than the ones
e government tried to implement last summer. That attempt re-
sulted in rioting in 15 urban centers that finally became so
severe the government had to back down.
This time, government leaders are said to be hoping
that public anticipation of the election, the first to-be held
in Peru since 1963, may dampen protest activity. It seems un-
likely, however, that either interest in the election or the
modest wage increases announced by the government on Monday will
lessen the strong feelings of resentment among the Peruvian
people, who are already feeling a severe economic squeeze.
Should public protests force the government to cancel
the election, it would be a serious--perhaps fatal--blow to
Morales Bermudez' plan to return the country to constitutional
rule by 1980.
ETHIOPIA-ERITREA: Government Attack
Ethiopian Government forces in Eritrea apparently
have aunched a new attack on insurgent positions west of
Asmara. It is unclear, however, whether this presages a large-
scale offensive throughout the province.
Spokesmen of the Eritrean Liberation Front assert
that the attack involves some 20,000 government troops supported
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by tanks and airstrikes and that it is the beginning of the
Mengistu regime's long-awaited Eritrean offensive. Only in-
surgent accounts of the fighting are available, however, and
there is no indication that the Ethiopian military has actu-
ally begun a province-wide campaign. Chairman Mengistu implied,
however, in a speech on Monday that a major offensive was about
to begin.
In statements yesterday, ELF spokesmen said govern-
ment forces had retaken several insurgent-held villages near
Asmara. The ELF said it did not have any evidence of Cuban
involvement in the new fighting.
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CUBA-USSR: Increased Economic Aid
//Soviet trade representatives in Havana have con-
firmed to the US Interests Section that the USSR will increase
its economic assistance to Cuba this year.//
//The increase reflects a continued Soviet commit-
ment to the 'Cuban economy and underscores the closeness of bi-
lateral political relations. According to the Soviets, Moscow
will:
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-- Increase the price it pays for Cuban sugar from about
31 cents per pound to about 40 cents per pound.
-- Purchase an additional 360,000 tons of sugar above the
2.7 million tons originally programmed in the 1978
trade protocol.
-- Purchase with hard currency an additional 500,000 tons
of sugar outside the protocol.
-- Provide an additional $200 million in Soviet goods to
help offset lagging Cuban imports from the West.//
//Contrary to previous Cuban and Soviet assertions,
however, Mowcow will reportedly increase the price of petroleum
to Cuba by about 20 percent, approximately equal to the increase
to Eastern Europe.//
//The USSR, recognizing the fundamental weakness
of the Cuban economy, has extended the equivalent of $9.9
billion in economic aid since 1961. Although approximately
half of this must be repaid, it has enabled the Cubans to con-
sume more than they produce. Such assistance--primarily in the
form of subsidies for sugar and petroleum--will reach a record
$2.3 billion this year.//
//The Soviet purchase of an additional 500,000
tons of sugar will help to alleviate Cuba's serious hard-
currency shortage. The Soviet purchase will probably be counted
as a Cuban sale to the free market--as it has been in past
years--and thereby help Cuba to justify its 2.0 million ton
export quota under the International Sugar Agreement--the
largest quota assigned to any country.
//Defense ministers of those NATO countries that
participate in the integrated military command--all except
France and Greece--meet in Belgium beginning tomorrow for the
semiannual session of the Defense Planning Committee. They are
likely to endorse the long-term defense program that President
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Carter proposed one year ago. The NATO summit in Washington at
the end of this month will also focus on the long-term defense
program.//
//The ministers will review NATO force goals for
the period from 1979 to 1984, noting under that heading the
recent turnaround in NATO members' defense-spending plans.
Since the last Defense Planning Committee ministerial meeting
in December, most members have acceded to the US call for at
least a 3-percent annual real increase in national defense
spending.//
//Other important topics include the Airborne
in the production and procurement of weapons.
Warning and Control System--the US is seeking preliminary
commitments to go ahead with the system, which is intended
to counter the threat of low-flying missiles and aircraft--and
efforts to improve West "European and North American cooperation
Dominican Republic
Unofficial returns later today should indicate a
the most hotly contested presidential race in over a decade.
trend in the Dominican Republic's most peaceful election in
recent years. Official results of yesterday's voting probably
will not be tabulated before the weekend. Supporters of both
three-term President Joaquin Balaguer and his chief opponent,
Antonio Guzman, are confidently predicting victory following
The bus drivers' strike in Colombia on Monday reduced
public transportation by about 50 percent but, for the most
part, Bogota and other major cities were able to conduct busi-
ness as usual. Military troops stationed along thoroughfares
and intersections kept acts of violence to a minimum. The
government workers' union, meanwhile, is apparently continuing
with its plan to stage a strike later this week.
Upper Volta
General Lamizana, Upper Volta's pro-Western military
leader who assumed power in 1966, failed to win an absolute
majority in the presidential election on Sunday, which was
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held as part of a phased plan to return the country to civilian
rule. A civilian politician, Macaire Ouedraogo, received enough
votes to force a run-off election on 28 May.
Ouedraogo broke from the political party supporting
amizana earlier this year. His unexpectedly strong showing
may have resulted from his appeal to the country's youth. The
low voter participation--only 35 percent of those registered--
may also have helped him. The run-off election is likely to be
close.
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