NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030700010078-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 16, 2016
• Document Release Date: May 18, 2005
• Sequence Number: 78
• Publication Date: June 27, 1978
• Content Type: REPORT

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NATIONAL INTELLIGENCE DAILY CABLE 0
0 Tuesday 27 June 1978 CG NIDC 78/149C 0
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NATIONAL SECURITY INFORMATION
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National Intelligence Daily Cable for Tuesday, 27 June 1978,
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senior US o icials.
CONTENTS
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PAKISTAN: Movement to Nonaligned
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TURKEY: Debt Refinancing Delay
CEMA: Heads of Government Meet
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ICELAND: Election Results
Dissatisfaction with the economic program of Prime
Minister HaZZgrimsson's government was apparently the main
reason for the success of the Left in Sunday's parliamentary
election in Iceland. No party won a majority, and several weeks
of negotiations may be required before a new government is
formed. In the meantime, the HaZZgrimsson cabinet remains in
office on a caretaker basis. The moderately Leftist Social
Democrats, who made a striking comeback from their poor per-
formance in the national election four'years ago, appear likely
to play a prominent role in a new coalition government because
they could work with the parties of either the right or the
Left.
Repeating the left's strong showing in local elec-
tions held last month, both the Social Democrats and the People's
Alliance, Iceland's Communist party, substantially increased
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their parliamentary strength. The governing coalition parties--
Hallgrimsson's conservative Independence Party and the centrist
Progressive Party--each lost five seats.
I IThe Progressives are interpreting the outcome to mean
a their backers do not favor the party's participation in
a conservative-dominated government. This apparently means that
Hallgrimsson's two-party coalition will not be re-formed, even
though the two parties together would still have a parliamentary
majority. The Progressives have joined leftist coalitions in
the past and may be asked to do so again.
I IThe key to the formation of a new government appears
to be the Social Democrats, who increased their parliamentary
strength by nine seats to a total of 14 in the 60-seat parlia-
ment. The party could either join a coalition dominated by the
Independence Party or help form a government of the left.
The party was in coalition with the Independence Party in the
1960s, but in the process it lost many of its leftist members.
Joining with the Communists would be difficult because of dif-
ferences over defense policy, particularly Iceland 's member-
ship in NATO.
The Social Democrats will negotiate carefully with
both si es, and formation of a government could take weeks.
PAKISTAN: Movement to Nonaligned
and moving toward the nonaligned camp. The Pakistanis have been
disappointed with the CENTO alliance for years because, in their
view, it has not paid off in terms of aid against India. More
recently they have also become uneasy--especially since the
leftist coup in Afghanistan--about growing Soviet pressure on
them to withdraw from CENTO.
Pakistan may be taking the first steps toward dis-
engaging from the Western-sponsored Central Treaty Organization
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ence o nonaligned foreign ministers in Belgrade next month,
according to an announcement on Pakistani radio. If the applica-
tion is accepted, Pakistan would be participating at a non-
aligned meeting for the first time.
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tend plenary meetings, including those closed to the press.
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The difference between an observer and a guest is
vague. Neither can participate with full-fledged members in
drafting and working groups. Observers can make statements at
general meetings, but guests occasionally have also been per-
mitted to do so. Both observers and guests are allowed to at-
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ambiguously for many years. Military support against India--the
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primary reason for Pakistan's adherence to the pact that orig-
inally created the organization in 1954--has not been forth-
coming, at least in the quantities desired. Future US economic
as well as military assistance is uncertain as a result of the
present bilateral controversy over Pakistan's purchase of a
French plant for reprocessing plutonium.
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Previous threats by governments in Islamabad to leave
CENTO, however, have never been carried out, partly because of
fear of jeopardizing future aid from Washington and Tehran. The
Pakistanis probably would also encounter a negative reaction
from China, which has been their major source of military as-
sistance over the past dozen years and is a su porter of re-
gional organizations that oppose the Soviets.
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TURKEY: Debt Refinancing Delay
Short-term debt refinancing agreements between
Turkey and private foreign banks--amounting to $2.5 billion--
have been delayed and may not be signed for several weeks.
Refinancing terms sketched out in April were still undetermined
when talks ended yesterday between representatives of eight
major banks and the Turkish Government. New credits also are
proving elusive for Turkey; none is likely to be announced at
the informal Organization for Economic Cooperation and Develop-
ment consortium meeting that begins today in Paris, and private
banks probably will provide $200 million at most in the next
few months.
I I The refinancing stalemate may mean that the eight
banks could not persuade enough of the smaller banks involved--
more than 200--to accept the terms the eight had approved'.
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Turkey may also have been asking for more lenient terms. A so-
lution apparently will require several more weeks of difficult
i=nternational bargaining; new private credits will be delayed
'1ntil the refinancing has been completed.
Turkey will probably ask for, but not obtain, re-
c eau ing of privately held overdue trade credits and a re-
sumption of official export credits at the OECD consortium
meeting. Consortium participants believe. their governments
already have extended themselves as much as possible on
'T'urkey's behalf.
An ad hoc group of the country's OECD creditors re-
scheduled about $500 million in government-guaranteed trade
arrears last month..The OECD group also agreed to reschedule
$600 million worth of other obligations, such as debt service.
Members, moreover, are faced with domestic legislative con-
straints on foreign lending.
Although Turkey has resumed regular import payments
,is a result of a disbursement by the International Monetary
Fund in May, an additional $1 billion will be needed to cover
this year's expected basic balance-of-payments deficit. Cur-
rent rescheduling agreements give the country no more than
three years in which to strengthen its balance of payments
enough to cover annual debt repayments of $1 billion or more,
and there remains $2 billion in short-term debt for which no
specific rescheduling plans exist.
The heads of government of the countries belonging
:o the Soviet-Zed Council for Mutual Economic Assistance begin
Their annual meeting today in Bucharest. They will discuss
(ong-term plans to coordinate production in key sectors of
their countries' economies, review relations with non-CEMA
,members, and perhaps discuss a Soviet proposal to revise CEMA
voting procedures.
I The participants will probably endorse three longterm
target programs approved at a meeting of CEMA's Executive
Committee last month. These programs, which are expected to
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run for 10- to 15-year periods, deal with production and de-
livery of fuel, energy, raw materials, and basic. food products
and with specialization and cooperation in the machine-building
industry.
_4The program on fuel, energy, and raw materials has
probably been the most difficult one to hammer out. The Soviets
may still be unwilling to provide specific figures on oil ex-
ports to CEMA partners until five-year bilateral trade proto-
cols are negotiated for the 1981-85 period. These negotiations
are unlikely to begin for at least another year.
The participants will review the slow pace of dis-
cussions between CEMA and the European Community on establishing
official ties between the two organizations. They may endorse
measures to expand CEMA contacts with Vietnam, Laos, and Angola.
The Soviet proposal to require only majority approval
instead of unanimity in CEMA votes on nonpolicy issues would
make it easier to implement projects that have won the general
agreement of interested parties. The change would not be nearly
as politically sensitive as a blanket change in CEMA's voting
rules, but the Romanians and perhaps others may still want to
avoid situations in which they must abide by a majority vote.
Portugal-Angola
I I Presidents Eanes of Portugal and Neto of Angola
signed an agreement in Guinea-Bissau yesterday after three
days of talks to improve strained bilateral relations. The
meeting was scheduled to end on Sunday, but the leaders de-
cided to continue their discussions for an extra day.
In addition to pledges of increased economic, sci-
entific, and cultural ties, the agreement also allows Angolan
nationals who fled to Portugal during the bitter postindependence
civil war to return to Angola whenever they wish. Further dis-
cussions will be held on the release of Portuguese under de-
tention in Angola, some of whom were arrested before the end
of the colonial period. Neto and Eanes also voiced support for
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.independence for Namibia and Zimbabwe in accord with resolu-
tions of the UN and the Organization of African Unity.
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Neto did not expect their meeting to have immediate specific
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25X1 //Disagreement over procedural matters con-
tinues to delay Peking's evacuation of ethnic Chinese from
Vietnam. Each side blames the other for the
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