NATIONAL INTELLIGENCE BULLETIN
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CIA-RDP79T00975A030700010086-6
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T
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18
Document Creation Date:
December 20, 2016
Document Release Date:
December 4, 2006
Sequence Number:
86
Case Number:
Publication Date:
July 1, 1978
Content Type:
REPORT
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NATIONAL INTELLIGENCE DAILY CABLE 0
0 Saturday 1 July 1978 CG NIDC 78/153C 0
0 0
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
DIA review(s) completed. State Dept. review Top Secret
completed 1 1.9
f
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~i1 assca on
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National Intelligence Daily Cable for Saturday. July 25X1
The NID a e is for the purpose of informing
senior US officials.
CONTENTS
NORTH YEMEN: Status Report
CZECHOSLOVAKIA: Sign of Flexibility
P age 1
Page 3
NETHERLANDS: Government
SPAIN: Draft Constitution
CANADA: Fiscal Conservatism
CHINA: 'Crop Growing Conditions
JAPAN: Yen Continues Climbing
BRIEFS
Dominican Republic
France-Spain
United Nations
China
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NORTH YEMEN: Status Report
/North Yemeni officials are apprehensive--in the
wake of the upheavals in both Yemens over the past week--about
South Yemen's ultimate intentions toward Sana. At the same
time, many North Yemeni officials appear inclined toward some
dramatic move of their own against the South to avenge Presi-.
dentGhashmi's death, although it is not yet clear that this
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angry mood will be translated into action. North Yemen appears
generally stable under the new four-man Presidential Council
that took power following Ghashmi's assassination last Satur-
day. The new leaders are supported by the majority of North
Yemen's diverse population, although an upsurge of maneuvering
for government positions is under way.//
//Many North Yemenis are convinced that a con-
trontation with the Aden regime is inevitable. Officials in
Sana have suggested that they are considering, perhaps even
planning, retaliation against South Yemen for the killing of
Ghashmi. The North Yemenis almost certainly would seek Saudi
help for any military move, although the Saudis recognize the
difficulties and risks involved in such a venture and would
probably caution restraint.//
//Despite the mood in North Yemen, it is question-
able that the North Yemenis would now initiate a retaliatory
operation against South Yemen. Tensions between the two
countries will remain high, however, and an upsurge of clashes
along the border between irregulars cannot be ruled out.//
//North Yemen plans to present its case about
South Yemeni involvement in Ghashmi's death to an Arab League
foreign ministers' conference set to convene in Cairo today.
Sana apparently hopes to persuade the League to expel and in-
stitute a boycott against South Yemen.//
North Yemeni officials also are expressing increased
concern about possible Soviet machinations against them in
light of Moscow's strong support for the Aden regime; some
officials have stated flatly that the Soviets must now be
"exposed" and thrown out of North Yemen.
In recent years the North Yemenis have tried to
balance their relations with both East and West. They receive
some military supplies from the Soviets, and about 100 Soviet
military advisers are in the country. While we are uncertain
what action North Yemen might take against the USSR, Soviet
assistance to the Yemeni military is important and may mili-
tate against a complete break with Moscow. North Yemeni of-
ficials have reminded US officials that they are looking to
Washington for help in countering Soviet and South Yemeni
moves in the Arabian Peninsula.
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//While dealing with these issues, North Yemen's
new leadership group must also cope with domestic pressure
from prominent tribal and leftist opportunists who are seeking
influential posts in government. Both Abdall.ah al-Ahmar, the
conservative head of the large Hashid tribal confederation,
.and Mujahid Abu Shawarib, an ambitious tribal leader sometimes
affiliated with the Yemeni left, apparently are unhappy about
being excluded from the new government. Barring another dra-
matic upheaval in the country, however, the Sana regime seems
likely to maintain its generally conservative orientation.
Saudi Arabia, moreover, will use its influence in North Yemen
to ensure the continuation of a compatible leadership.//
CZECHOSLOVAKIA: Sign of Flexibility
'
dents at he will investigate complaints about the police
The Czechoslovak attorney-general has promised dissi-
beating of one of their number in mid-May, 25X1
This shows unusual flexibility by the
regime and suggests that it may be willing to use moderation
in addition to its usual harsh methods to forestall dramatic
dissident acts on the anniversary in August of the Soviet-Zed
invasion of 1968.
In a written response to a dissident letter, the at-
torney-general reportedly said he would set up a commission in
the Ministry of Interior to investigate the circumstances
surrounding one of four instances of beatings. This is the
first time the regime has even acknowledged a letter from
dissidents, let alone promised to act on a complaint. Neither
letter has been made public.
Such a show of moderation seems intended to throw
the dissidents off balance and perhaps also to dissuade them
from pursuing extreme tactics during the anniversary. It could,
of course, have the opposite effect and strengthen their re-
solve. The dissidents initially viewed the regime response as
"something of a victory" for them; they are arranging a strategy
session to ponder its implications. The regime could also be
trying to use the promise of an investigation to counteract the
bad publicity it received as a consequence of the beatings.
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The establishment of an investigating commission
seems an overly elaborate 'way to accomplish either of these ob-
jectives and also suggests there may be some unhappiness within
the party leadership over recent secret police handling of the
dissidents. The beatings of the dissidents were the most serious
examples of police brutality since the inception of the Charter
77 movement in January 1977.
I Meanwhile, the dissidents have stepped up efforts to
recruit new members and have renewed the practice of holding
private university-level seminars. A group of Chartists also,
in an open letter to the Christian Peace Conference that met
this week in Prague, appealed for support for the release of
four imprisoned dissidents.
The dissidents apparently still intend to issue a
condemnation of the 1968 Soviet invasion, but many plan to
leave Prague when the anniversary.approaches in order to es-
cape anticipated precautionary arrests. Some activists are
contemplating emigration, and one spokesman plans to resign
in September.
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/The government of Netherlands Prime Minister
I
van Agt won parliamentary support yesterday for fulfilling a
commitment by the Dutch - British - West German Urenco con-
sortium to ship enriched uranium to Brazil. This removes a
major roadblock to the deal and ends nearly two years of Dutch
indecision. Van Agt's strength in Parliament has grown steadily
during this session. Many observers, especially leaders of the
previous Labor government, had shown public skepticism that
van Agt's precarious six-month-old coalition could survive.//
//In January a parliamentary resolution, supported
by oppose ion members, as well as by members of van Agt's Chris-
tian Democratic Party, instructed the government to amend the
original Urenco contract. Parliament called for both tighter
safeguards for storage of plutonium from the reprocessed fuel,
and firmer guarantees that it would be used only for peaceful
purposes, before sending enriched uranium to Brazil. Neither
Brazil, the UK, nor West Germany would renegotiate the deal,
and the last two indicated that, if necessary, they would go
ahead without the Dutch.//
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//In an effort to keep the Dutch involved in the
deal, the Prime Minister got all participants to agree on two
alternative means of storage, which he said would satisfy the
spirit of parliamentary concern even though neither one goes
as far as the legislators had originally demanded.//
//The participants will attempt to arrange storage
based on statutes of the International Atomic Energy Agency.
If no such arrangement has been agreed upon at least two years
before Brazil starts reprocessing spent fuel--probably in 1985--
the parties will establish an ad hoc system of plutonium stor-
age. Implementation of plans to expand the Dutch uranium en-
richment plant at Almelo, the Netherlands, partly in order to
accommodate the Brazilian deal, will now proceed in earnest.
The transition to democracy in Spain passed another
important milestone on 20 June when the constitutional commit-
tee of the Lower house of parliament approved the draft consti-
tution. The satisfaction of the principal parties with the com-
promise-document seems to assure approval--probably after some
intense debate--by the full Congress of Deputies and Later by
the upper house. A national referendum on the constitution will
probably take place this faZZ.
I The desire of party leaders to reach a consensus facili-
tated the difficult task of drafting the constitution. Above
all, there was general agreement that the constitution must
permit any of the major parties to govern and that the document
itself should not become a political issue. Only the Basque
Nationalist Party and the rightist Popular Alliance appear to
have such serious objections to the draft that they might cam-
paign against approval.
The consensus on the constitution, which involved com-
promises by all parties concerned, contains vague language on
controversial articles, which will make them susceptible to
different interpretations. The committee also avoided some dif-
ficult decisions by leaving some disputed articles to be settled
in the normal course of legislation.
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I Perhaps the most important compromise involved provi-
sions for election to parliament. The leftist parties won an
explicit reference to the proportional representation system
for election to the lower house. But there is also a provision
for assigning to each province a "minimum representation," after
which the remaining seats will be distributed on a population
basis--as the government desired.
The Basque Nationalists are unhappy with the formula-
tion dealing with the statutory rights of the Basque region.
Although the Basque representatives on the committee joined in
unanimously approving this provision, Basque Nationalist Party
leaders have expressed reservations about supporting it. If the
nationalist leaders--concerned about losing influence to the
more radical Basque parties that will oppose the constitution--
decide to campaign against the constitution, they could ensure
its defeat in at least two Basque provinces and complicate the
grant of autonomy to the troubled area.
I he Popular Alliance and its leader Manuel Fraga are
concerne that Prime Minister Suarez has made too many conces-
sions to the left in many of the "progressive" formulations on
controversial issues. Fraga may try to use the issue against
the government party in both the legislative debates and the
referendum.
The Popular Alliance and the Basque Nationalist Party
have been careful to keep as much maneuvering room as possible.
Neither party is strong enough to upset the consensus on the
constitution, but the other parties might have to make some
concessions to keep these two from sitting out the referendum
or campaigning against the constitution.
I //Fiscal outlays by the Canadian provinces--which
now account for about 10 percent of national GNP--will show
ZittZe or no real gain this fiscal year. The slowdown in pro-
vincial spending dims Ottawa's hopes for improved economic
growth.//
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put to Canada's real GNP growth, grew rapidly during the decade
beginning in 1965. In 1976, provincial outlays accounted for
30 percent of total government spending in Canada. Since then,
the provinces have cut down the rise in spending because of
concern over inflation and growing indebtedness.//
//Federal and provincial first ministers agreed at
a meeting in February to restrain the growth in spending to
combat inflation and to put greater emphasis on expansion of
the.private sector. An upturn in private spending seems unlikely
this year, and we estimate that the realignment in provincial
spending and revenue Patterns will cut GNP growth by almost half
a percentage point.
//Provincial spending, traditionally a strong in-
CHINA: Crop Growing Conditions
//Growing conditions have gradually improved
throughout most of China's major agricultural areas. Prospects
for the early harvest, which accounts for 40 percent of total
grain production, are brighter than they were early this spring,
and the summer crops appear to be growing well.//
//The intense drought in North China broke early
in June as the season's first significant rain moved into the
area. Subsequent rains of varying intensity have been reported.
The winter wheat harvest in North China, completed early this
year, appears to have exceeded last year's poor crop. Because
of unusually good weather last fall and winter, an even larger
harvest had seemed likely, but high temperatures and the pro-
longed drought this spring cut yields.//
The dry
weather in late May and early June in most areas speeded crop
maturation and permitted uninterrupted harvesting and thresh-
ing.//
//Summer crop field conditions also improved with
the breaking of the drought in North China, where about 15 per-
cent of the late-harvested crops are grown.
the reservoirs remain at a dangerously low
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level in most of the major agricultural. areas. Reservoirs were
drawn down when the prolonged drought necessitated extensive
preplanting irrigation. Field conditions should continue to
improve as the summer rains intensify, but the reservoirs will
probably remain at low levels unless there are unseasonably
heavy rains.//
//Conditions have also improved in South China.
Early in the spring, cool, wet weather and overcast skies de-
layed the winter grain harvest and slowed development of the
early and intermediate rice crops. With the return of more
normal conditions, the rice crops have largely recovered. The
delay apparently did not affect the winter grain harvest, which
is now complete. The crop planting delays of early spring,
however, could slow the planting of late rice.//
//Elsewhere in China, there have been favorable
weather con itions. In Northeast China, spring planting has
been completed. In Szechwan and in the Yangtze River Plain,
soil moisture reserves are generally normal, and the spring-sown
crops are doing well. The harvest of winter crops has been com-
pleted, and most early press reports claim substantial increases
over last year's winter grain output.
JAPAN: Yen Continues Climbing
I //Japan faces a protracted period of upward pres-
sure on the yen because of its inability to cut its current
account surplus or boost GNP growth and because of continuing
large US trade deficits. Exchange market speculation in advance
of the economic summit scheduled for Bonn in mid-July may force
Prime Minister Fukuda to make a strong pitch to the US at the
summit for concerted action to stabilize the yen-dollar rate.//
//Since early June, the Japanese yen has appreci-
ated 5 percent against the dollar, hitting a postwar high of
205 yen to the dollar. The recent upward push follows an an-
nouncement on.19 June that the current account surplus had in-
creased to an annual rate of $17.5 billion. European currencies,
on the other hand, have appreciated less than 1 percent since
the beginning of the month. The recent yen appreciation comes
on top of a 30-percent increase over the past 18 months.//
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//Japan's response to the appreciation thus far
has been limited to small-scale intervention and jawboning.
The Bank of Japan has purchased no more than $100 million in
any one day in an effort to ease rather than prevent the upward
yen movement. The Bank of Japan's Director General, however,
threatened large-scale dollar purchases if the yen approached
200 to the dollar.//
//Japanese officials say foreign sales of dollars--
mainly by US banks--started the initial run on the yen and that
Japanese banks and trading companies have been neutral. 25X1
the overseas sub-
sidiaries of the trading companies have been dumping dollars
since the trade data were announced.//
//Upward pressure on the yen is likely to persist
at least until after the economic summit. This reflects in part
a concern by dealers that Japan will be the target of interna-
tional pressure because of its massive trade surpluses. Pre-
liminary trade data point to another large surplus in June;
the June figures will be announced shortly before the Bonn
meetings.//
//A dramatic turnaround in Japan's current account
surplus is unlikely.
IT he trading companies are now projecting a $15 billion
to $20 billion current account surplus this year.
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Dominican Republic
Legal challenges by diehard supporters of Dominican
President Balaguer continue to block official certification of
Antonio Guzman's victory in the presidential election on 16 May.
The challenges--pushed primarily by National Police Chief Neit
Nivar--have not affected the widespread popular belief that
Guzman won fairly. Official results will probably be announced
next week.
//The prolonged legal battle may, in fact, repre-
sent less of an effort to reverse the presidential vote than
to shift control of the influential Senate to Balaguer's party.
In any case, the faction-ridden military apparently has no
plans to intervene.
France-Spain
//Spain has signed a contract to buy 48 additional
French Mirage Fl fighter aircraft as part of a long-term effort
to upgrade its air combat units. Spain already has 14 Fls, and
10 more from a.previous contract are scheduled for delivery
over the next few months.//
//The Fls will probably replace Spain's older
Mirage III and F-5 fighters. It is unclear, however, how the
new purchase will affect Spain's long-term aircraft purchases.
The Spanish have been considering replacing their US-made F-4
fighters with F-16s in the 1980s and, only last week, high-
ranking Spanish officials informed the US air attache that they
still intend to buy a US aircraft as.a replacement.//
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/The F1 is an all-weather, multipurpose fighter
best.suited as an interceptor. Foreign demand for the aircraft
is growing, and delivery of this new order will not be made
soon. France produces about six Fls a month and already has a
backlog of orders from several countries. 25X1
//The UN Special Session on Disarmament concluded
yesterday, two days behind schedule, after adopting a single
final document by consensus. As mandated by the preparatory
meetings, the document includes a declaration on disarmament,
a program of action, and a section on the reform of disarmament
machinery. An Iraqi resolution condemning military assistance
to Israel was referred to the regular autumn session of the
General Assembly, thus avoiding a divisive vote. All other res-
olutions were withdrawn, including one sponsored by India call-
ing for a moratorium on nuclear testing.//
//The delay in reaching agreement on the final
document resulted when the nonaligned states insisted that the
program of action include strong language on nuclear disarma-
ment and nonuse of nuclear weapons. The document now calls for
"urgent" negotiations of agreements to end the production and
improvement of nuclear weapons systems and to reduce nuclear
stockpiles. The nonaligned states also succeeded in emphasizing
the right to develop nuclear energy for peaceful purposes.//
//The document takes note of the agreement reached
by the US, USSR, UK, and France to establish a reconstituted
Committee on Disarmament in Geneva as the principal multilateral
forum for disarmament negotiations. The document also resurrects
the long-dormant UN Disarmament Commission as a deliberative
body that will include all UN members.
China
//China has developed a 17-meter-long air cushion
vehicle that can carry 35 passengers at speeds of up to 50
knots. It has both civilian and military applications.//
//This relatively sophisticated vehicle incorporates
no foreign designs or parts and is a significant accomplishment
for Chinese technology. Easy field maintenance was apparently
a major design factor; the vehicle has a conventional internal
combustion engine rather than a more complicated gas turbine
engine often used in non-Chinese air cushion vehicles.//
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//In addition to civilian passenger use, the vehi-
c e has a military potential for amphibious assault or river
patrol operations. The Chinese might be particularly interested
in using air cushion vehicles along the lengthy river border
with the USSR, as the Soviets already do. Such a vehicle would
also give the Chinese a quick-interceptor capability in coastal
waters, including marshy and very shallow waters, and would en-
able them to conduct more thorough shipping and coastal patrols.//
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//At a meeting last weekend in Brussels, leaders
of Socialist Parties from the European Community countries, as
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well as Spain and Portugal, adopted a political declaration as
the basis for their party platforms next year during the first
direct elections to the European Parliament.//
//The declaration stresses economic growth and re-
structuring to reduce unemployment, enhance workers' rights,
and create a fairer distribution of income. It also supports
EC enlargement and calls on Western Europe to take a stronger
global role in promoting detente, economic development, and
human rights.//
//The accord shows that the Socialists feel pres-
'
a show of unity as the elections approach, despite
sure to make
their inability to agree on a detailed common platform.
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