NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030900010098-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 22
• Document Creation Date: December 20, 2016
• Document Release Date: September 18, 2006
• Sequence Number: 98
• Publication Date: November 30, 1978
• Content Type: REPORT

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I 'entral
Intelligence
National Intelligence Daily
(Cable)
State Dept. review completed
Top Secret
CG NIDC 78-0278C
er
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IRAN: Atmosphere of Unease . . . . . . . . . . . . 1
IRAN: Oil Production and Exports . . . . . . . . . 2
USSR: Defense Budget Announced . . . . . . . . . . 4
BOTSWANA: Guerrilla Activity . . . . . . . . . . . 5
CHINA: Crude Oil Dribbles into US . . . . . . . . 6
USSR: Rising Mortality Rates . . . . . . . . . . . 7
USSR: Continuing Slowdown . . . . . . . . . . . . 8
USSR: Oil and Gas Production . . . . . . . . . . . 9
INTERNATIONAL: Bumper Grain Crop . . . . . . . . . 10
BRIEFS . . . . . . . . . . . . . . . . . . . . . . 11
West Germany
East Germany
Turkey-USSR
FEATURE ARTICLES . . . . . . . . . . . . . . . . . 13
IRAN: The Disparate Opposition
INTERAGENCY MEMORANDUM
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IRAN: Atmosphere of Unease
Moderate Iranian Leaders have failed to find
a po,2 Zcal compromise. Wildcat strikes are causing some
disruption in Tehran and are contributing to an atmos-
phere of unease. The Saudis are expressing acute concern
about the situation in Iran.
Members of the opposition believe there is
little chance that a coalition government will be
formed soon. None of the various opposition moderates
has been able to devise a compromise acceptable to the
Shah, who has insisted on the retention of the monarchy
with substantial powers. The moderates had proposed that
the Shah be retained, but they stipulated that he would
have to turn over power to a regency council and abdi-
cate after two years in favor of his son.
I I Press reports indicate that Khomeini has
called for a general strike on Saturday, and the US Em-
bassy in Tehran reports that the overwhelming majority
of Iranians are girding for a major confrontation.
//A wave of politically motivated wildcat
strikes has already resulted in an increase in tension
in Tehran. Most of the city was without electric power
for several hours Monday night. Workers at the national
radio and television station, the Tehran oil refinery,
and the pipeline that carries oil products from Abadan
to Tehran walked out yesterday. The refinery at Shiraz
remains closed. These labor actions have resulted in
some fuel shortages; these have been aggravated by panic
buying in reaction to rumors that a massive oil strike
will occur during Moharram.//
Saudi Foreign Minister Saud expressed serious
concern about the deteriorating situation in Iran to US
officials this week. Saud was worried that, if the Ira-
nian military's loyalty falters, either the Soviets
might exploit the situation or a radical Shia state might
emerge led by Khomeini. Saud was particularly concerned
that Iran's oil production may cease if the Shah's op-
ponents destabilize the country next month.
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IRAN: Oil Production and Exports
//Iran's oil production and exports are ap-
proaching prestrike levels, according to industry
sources. The government will continue to face serious
economic problems, however, and the most pressing will
be rising inflation.//
//Yesterday, crude oil output reached 5.9
million barrels and exports 5.2 million barrels, compared
with figures of 6.1 million and 5.4 million barrels per
day respectively in September. The current production
level is some 600,000 barrels per day below prestrike
sustainable capacity, however, and some oil industry ob-
servers believe that Iran will find it difficult to
raise output to that level quickly because of technical
problems caused by the shutdown. Even maintaining output
at current levels may prove difficult.//
//The labor situation both in the oilfields
and at some refineries remains unstable, and many re-
turned workers are reported to be nonproductive. There
are reports that opposition leader Ayatollah Khomeini
has called on his supporters to stop oil exports during
Moharram, the month of mourning that begins on Saturday.//
//A strike by employees of the Central Bank
that began on 26 November is continuing, and confidence
in the banking sector remains critically low. Despite
the reduction in reserve requirements for banks and the
massive issuance of new notes, banks are facing a
liquidity crunch as depositors continue to keep their
assets in cash.//
//Some high-level Iranian economic offi-
cials are demonstrating a considerable lack of realism
regarding the seriousness of the economic problems they
face. They say the economy is returning to normal and
that earlier industrial stockpiling of goods will have
a beneficial effect by dampening inflation.//
//In fact, resurgent inflation is the most
critical near-term economic problem facing Iran. Unless
the government can quickly meet increased demand for con-
sumer goods generated by the recent round of wage hikes,
inflation will eat up a large share of those increases,
leaving workers with little real gain and raising the
prospect of further labor unrest.//
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//Because domestic industry will be hard-
pressed to meet even a small portion of the additional
demand for goods, sharply increased imports will be re-
quired. Financing such imports will not be a problem,
but getting them to consumers on a timely basis may be.
Much will depend on the government's ability to keep
port and distribution facilities functioning smoothly.//
//The reordering of economic priorities and
the e imina ion of many costly industrial, military, and
nuclear projects will not fill short-term requirements
for funds to pay workers or finance agricultural and
rural development. Because many of these projects would
not have begun before the 1980s, much of the savings will
not be felt until then. In many cases, moreover, projects
now being officially written off had already been de-
ferred or reduced in scope--some as long ago as mid-1975.//
//The inability of Iranian planning offi-
cials to come up in advance with a development plan for
the period from 1978 to 1983 suggests that economic of-
ficials are unable to devise either meaningful near-term
spending plans or longer term goals. Even if a measure
of political stability is restored, the Iranian leader-
ship will have to cope with the same long-term economic
problems--but these problems will have been made more
complex by the events of recent months.
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USSR: Defense Budget Announced
Soviet Minister of Finance Garbuzov told the
Supreme Soviet yesterday that the USSR plans to spend
17.2 billion rubles on defense in 1979--the same figure
he announced for this year and last year. We believe
that this figure significantly understates actual So-
viet expenditures for defense.
The announced defense budget has been rela-
tive y static since 1969--which is inconsistent with
the changes that have occurred in the level of Soviet
military activities. Our estimate--which is based on
the direct costing of observed Soviet military pro-
grams--indicates that, since 1969, actual Soviet defense
spending in rubles has risen at an average rate of 4 to
5 percent a year in real terms.
I uIn 1977, Soviet spending for activities that
the would define as defense probably totaled 53 bil-
lion to 58 billion rubles in constant 1970 prices--more
than three times the announced figure. Using a broader
definition, which includes additional costs the Soviets
are likely to classify as spending for defense, estimated
Soviet defense s ending last year was 58 billion to 63
billion rubles.
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BOTSWANA: Guerrilla Activity
//Several terrorist incidents Late
Last month in northern Transvaal have prompted the South
African press to express concern over the danger that
Botswana may become a staging area for guerrilla activi-
ties in South Africa. The Botswanan Government, already
nervous about Rhodesian accusations that it has aided
the Zimbabwe African People's Union, has privately and
publicly assured South Africa that its policy of denying
guerrillas the use of Botswanan territory for transit or
sanctuary remains in force.//
I //Botswana has recently taken measures
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to stop guerrillas from transiting the county
e government as c ose a or er
post at Kazungula to holders of Tanzanian passports after
learning that guerrillas who clashed with South African
police last month may have traveled on Tanzanian pass-
ports. Botswanan authorities believe the South African
guerrillas have received arms and assistance from ZAPU
members active in Botswana, and perhaps as a result
ordered the ZAPU representative in Francistown out of
the country.//
L Because Botswana has only a meager security
2orce, it is limited in its ability to prevent guerrillas
from moving into and out of the country. South Africa
seems to recognize Botswana's difficult position and has
acted with restraint when border incidents have occurred.
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China's sale of 3.6 million barrels of crude
~z to a US firm on the West Coast, which reportedly will
process the crude into fuel oil, represents only a small
:xpansion of Chinese exports that already total about
265,000 barrels per day. Chinese export crudes are de-
$irable for fuel oil because of their low sulfur content.
The large US market for fuel oil is along the East Coast,
but Chinese oil cannot be shipped there economically be-
cause the Panama Canal is unable to accommodate super-
i.ankers.
Additional Chinese sales of crude to US compa-
nies are a reasonably good possibility; the amounts go-
ing to the continental US, however, are certain to remain
small. Because of the oil glut on the US West Coast, US
Firms will continue to market most Chinese crudes in
countries such as Japan, South Korea, and Australia.
The sale to the US firm does not significantly
improve China's oil export prospects. Our latest projec-
Lions, through 1985, indicate that China will be able to
increase exports only gradually. The Sino-Japanese Long
Term Trade Agreement signed in February 1978 commits Ja-
pan to increase gradually its imports of Chinese crude
through 1982. By that year, Japan will be importing
300,000 barrels per day of the 500,000 barrels per day
that we expect China to have available for export.
China faces an uphill struggle to find markets
for the rest and may resort to barter arrangements, such
as the 1978 contract with Brazil to swap oil for iron
ore. Even if China disposes of all its available oil
through 1982, Chinese oil would still represent only 1
or 2 percent of the oil moving in international trade.
The Chinese believe that they can use oil to
help pay for their ambitious ten-year economic develop-
ment plan. We believe Chinese supplies of oil for export
will at best level off and possibly decline after the
early 1980s. The economic development plan is spurring
growth of domestic demand for all forms of energy. On-
shore oilfield development promises to bring into pro-
duction three or four large fields in the next few years,
but much of their output will be used to compensate for
a decline in the rate of growth of older fields.
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To use oil to pay for modernization projects,
China will have to develop offshore oil fields faster
than the CIA and the US oil companies now negotiating
with Peking believe is likely.
USSR: Rising Mortality Rates
The Soviets have omitted age-specific death
rates from the recently published 1977 Soviet statistical
handbook, indicating the regime's sensitivity to the con-
tinued slow pace of Soviet population growth. Data by
age group on births and deaths had appeared in every
annual handbook since the 1970 census, and their omission
this year is tacit acknowledgment that unfavorable trends
are continuing or worsening.
The Soviet mortality rate rose from 6.9 per
thousand in 1964 to 9.5 per thousand in 1976. Much of
this increase is the rise in infant mortality, which
jumped from 22.9 per thousand in 1971 to 27.9 per thou-
sand in 1974, the last year for which these figures were
released. More recent data for children under four indi-
cate that this trend continues. More teenage brides,
inferior prenatal care among Muslim minorities--which
account for an increasing share of births--and the harm-
ful effects of multiple abortions on later pregnancies
probably contribute to the increase.
The other major component in the increased
mortality average is the rising death rate for 25- to
40-year-old males, probably because of increasing cardi-
ovascular diseases, malignacies, and alcoholism. Life
expectancy for males at birth dropped from 66 years in
1966 to 64 years in 1972, the most recent published
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USSR: Continuing Slowdown
Soviet orders for Western machinery and equip-
ment have declined by 25 percent this year from last
;year's already depressed level and show no sign of recov-
:ring despite the improvement in the USSR's hard currency
r)osition. A sharp slump in equipment orders for the chem-
ical and petrochemical industries more than accounts for
':his year's decline, but contracts for certain industrial
sectors--notably oil and gas--are again on the upswing.
The continuing slump in orders seems to reflect
Soviet financial conservatism, Western distaste for com-
pensation agreements, and problems in assimilating the
machinery already purchased. A number of major industrial
projects scheduled for the 1976-80 five-year plan--which
presumably would have been backed by long-term credits--
reportedly were postponed by the Chairman of the USSR
State Bank until the next five-year plan.
The Soviets have insisted on including compen-
sation arrangements in major projects involving large
purchases of Western equipment and technology, and this
has led to a slowdown in new orders because Western firms
are becoming reluctant to accept many Soviet products.
I The West European chemical industry, for exam-
p , worried about absorbing large flows of Soviet
chemical fertilizers and petrochemicals stemming from
earlier compensation agreements. Such reluctance was not
the case previously, when fuel and raw material shortages
shade long-term supplies of Soviet products attractive to
Western firms.
Serious bottlenecks have developed in the USSR
as officials try to construct facilities needed to house
Western equipment. The Soviets are also finding it diffi-
cult to supply manpower for new plants because of labor
shortages and a lack of technically qualified workers.
The slowdown in orders should have a mixed im-
pact on prospective US equipment sales. The USSR prefers
US-produced oil and gas equipment, and Soviet orders for
such products are on the rise. The lack of US Government -
backed credits and US export licensing requirements, how-
ever, will continue to limit such sales to key items. So-
viet orders for nonenergy equipment are likely to remain
d3epressed.
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I //The USSR, in an effort to speed
offshore oil and gas discovery and production, has estab-
lished a Main Administration for Exploration and Develop-
ment of Offshore Oil and Gas Fields in the Ministry of
the Gas Industry. The new organization will be responsi-
ble for all offshore exploration, construction, drilling,
and production activities. These functions were previously
fragmented among several ministries.//
Centralization of offshore operations reflects
Soviet concern over the slow progress in developing off-
shore hydrocarbon resources. Growth potential for Soviet
oil production beyond the mid-1980s rests largely in the
Arctic offshore regions and in deep structures in the
Caspian Sea. Timely development of these areas will re-
quire effective internal planning and administration, as
well as incorporation of Western technology, equipment,
and services.
]//The new administration will be
headed by Yuriy Zaytsev, an engineer with a strong tech-
nical background in petroleum exploration and production.
Zaytsev has experience both in the oil and the Gas Minis-
tries and will control an organization of about 80,000
workers.//
//The restructuring of offshore
oil and gas responsibilities has been in the works for
about a year and has apparently involved considerable in-
ternal politicking over who should head the new organiza-
tion and how much autonomy it should have.//
//The decision to place the new
agency in the Gas Ministry--which has done no offshore
work--rather than in the more experienced Oil Ministry
appears politically motivated and a vote of confidence
for Sabit Orudzhev, Minister of the Gas Industry. 25X1
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INTERNATIONAL: Bumper Grain Crop
//CIA forecasts a rise in world grain pro-
dIuction for 1978-79 to a new high of 1,160 million tons,
80 million tons more than Last year and 38 million tons
;above the previous record set in 1976-77. Production is
Likely to equal or exceed Last year's in every major re-
gion of the world; the EC and USSR will register the
largest gains.//
//This optimistic global production fore-
cast takes into account the fact that very favorable
growing conditions existed this year and the fact that
grain farmers planted larger areas than usual. Although
the estimates concerning Northern Hemisphere crops are
relatively firm, those for Southern Hemisphere producers
are still tentative.//
//Plentiful grain supplies, rising incomes
and population in developing countries, and expanding
livestock programs will push consumption of both wheat
and coarse grain to new highs in 1978-79. Consumption
will still be less than production, particularly for
coarse grains, and stocks in non-Communist countries
will increase for the sixth consecutive year. It is also
possible that the USSR will significantly increase its
wheat stocks and that China may add a small amount to
its stocks, if their imports approximate our forecast.
The US share of stocks of all grains in the non-Communist
world will stay at 40 percent.//
//Despite the outstanding production year,
we forecast that global grain trade in the current mar-
keting year ending 30 June 1979 will be slightly above
Lhe previous high of 156 million tons set in marketing
year 1978. Although US exports will face stiffer competi-
Lion, the US share of the world wheat market is likely
Lo hold at about 45 percent. Foreign demand for US wheat,
,urrently stronger than a year ago, can be expected to
:slacken by early next year as larger Southern Hemisphere
supplies become available and the EC continues to sub-
3,idize wheat exports.//
//Total world trade in corn during market-
ing year 1979 will probably be up slightly; lower Soviet
imports will more than offset larger Chinese purchases.
The US will probably be able to export 45.4 million tons
of corn in marketing year 1979. It exported slightly
more the previous year.
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West Germany
The economic stimulation package promised by
Chancellor Schmidt at the economic summit in Bonn in
July has now been passed by both legislative houses. r
I I The stimulation program had been stalled since
September by demands from the opposition parties, which
control the upper house, for additional social expendi-
tures and more tax relief both for individuals and for
businesses. State governments also objected to the pro-
gram because it cancels some taxes that have provided
revenues to the states. In the end, 1979 outlays were
raised $400 million beyond Schmidt's original proposal.
I The approved package will provide net stimula-
tion of about $7 billion in 1979, equal to just over 1
percent of GNP. For next year, the program apparently
embraces a $5.5 billion reduction in personal income
taxes, a $3 billion increase in government expenditures,
and an offsetting $1.4 billion increase in the value-
added tax. The plan also includes adjustments to offset
state revenue losses caused by canceled federal taxes.
Additional tax cuts and spendin increases will be ef-
fective in 1980 and 1981.
East Germany
The series of new economic agreements between
East Germany and West Germany will boost transfer pay-
ments to East Germany by 60 percent. The East Germans
will be able to reduce substantially their current ac-
count deficit with West Germany and avoid contemplated
cutbacks in sorely needed imports from the Federal Re-
public.
]Beginning in 1980, these payments--which con-
sist mainly of transit fees and payments for construction
services--should provide East Germany with about $400
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million in hard currency annually, equivalent to 18 per-
cent of East Germany's present imports from West Germany.
Other direct West German payments to East Germany should
bring in at least another $200 million annually over the
life of the new agreements.
During the first half of 1978, the East German
trade deficit with West Germany was about $200 million,
largely because of a continued rise in imports and a
leveling off in exports. The poor quality of East German
products and increasing East German export commitments
to trading partners in the Council for Mutual Economic
Assistance have been holding back East Germany's exports
to West Germany. As a result, West German transfer pay-
ments have become increasingly important as East Germany
attempts to maintain a reasonable balance in inter-German
trade.
Turkey-USSR
Two Soviet naval vessels visited Istanbul from
16 to 20 November. The visit was in keeping with an agree-
ment made by Turkish Prime Minister Ecevit during his
visit to Moscow in June and was the first to a Turkish
port by Soviet warships in 40 years. Two Turkish naval
vessels will visit the Soviet port of Odessa next month.
I IAlpaslan Turkes, chairman of the neofascist
National Action Party, condemned the visit: other poli-
tical leaders and the media, however, were silent. An
unruly crowd, organized by the Maoist Turkish Worker-
Peasant Party, caused some damage at the Soviet Consulate
General while protesting the ships' presence, but several
hundred heavily armed militia prevented violence at a
mass demonstration sponsored by the Maoists in Istanbul's
Taksim Square.
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IRAN: The Disparate Opposition
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The opposition to the Shah of Iran is a complex
movement composed of many disparate individuals, groups,
and political philosophies. The opposition shares only
one common goal--the removal of the Shah from a decision-
making position. Extremists on both the Left and the
right are determined to oust the Shah; moderates would
Like to find a compromise that Limits his power, but
they feel intimidated by the radicals.
I I Although exiled Muslim fundamentalist Ayatollah
Khomeini is the most influential opposition voice, there
is no single leader of the movement that has shaken Iran
since the trouble begain in January. Nor is there any
overall organization of the anti-Shah forces. The real
strength of the opposition is the widespread popular sen-
timent in Iran that things must be changed and changed
quickly. While there are widespread differences over
what type of government should replace the present one,
there is almost a national consensus that a new order is
essential.
Iran's Shia clergymen who have spearheaded the
unrest this year are divided between moderates and ex-
tremists, but the moderates now appear unable to resist
Khomeini's hardline views.
The majority of the clergy is responsive to
Khomeini's adamant line that the monarchy must be abol-
ished. It is Khomeini who rallies the greatest number of
supporters among the lower classes--a reflection both of
the clergy's longstanding animosity toward the Shah and
the ability of the clergy to disseminate propaganda, re-
lay instructions, and provide a place for meetings in
the mosques.
The Islamic terrorist group, the People's
Strugglers, has long had ties to Khomeini. There has
been some limited cooperation between the Strugglers and
Marxist terrorists.
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The organized political opposition to the Shah
is centered around the National Front--a coalition estab-
lished by former Prime Minister Mossadeq in 1949 on a
program of opposition to Britain's exploitation of Iran's
oil. After the Shah removed Mossadeq from power in 1953,
the Front went into a long decline. It existed tenuously
with parts of it splitting off only to rejoin later. It
has reappeared in the last year as a loose association
of intellectuals and political activists.
The Front includes a wide range of parties
from moderate to radical leftist, but not Communist. The
Front's political and economic theory is fuzzy; ideologi-
cal differences and personal feuds, some of them decades
old, weaken its cohesion.
]The National Front has not put forward a pro-
gram other than its call for a return to the 1906 consti-
tution. This means that the Shah's powers would at a
minimum be greatly reduced. The demands of the various
components of the Front have vacillated between aboli-
tion of the monarchy and acceptance of a figurehead mon-
arch. Since early November, some leaders in the Front
have moved closer to the views of Khomeini.
Among the many men associated with the National
E'ront the following are noteworthy:
-- Karim Sanjabi, who was arrested earlier this
month as he prepared to issue a statement call-
ing for the end of the monarchy, has long been
a middle-of-the-road critic of the Shah. Until
his arrest, Sanjabi acted as the principal
spokesman of the Front.
-- Darioush Foruhar, recently re-arrested, has
spent 15 of the last 20 years in jail. He is
connected with the right wing of the Front, has
espoused a militantly nationalist viewpoint and
is strongly anti-Communist.
-- Shahpur Bakhtiar, a moderate who favors a non-
aligned foreign policy, is close to students.
-- Muhammad Beheshti, the Front's principal contact
with Khomeini, is generally considered to be in
the left wing of the Front.
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-- Mehdi Bazargan, also said to be in touch with
Khomeini, leads the Iran Liberation Movement.
He has often been accused of having secret ties
to the Shah.
I The ultraleft in Iran is composed largely of
disaffected students. It has highly dedicated and in
some cases well-organized clandestine groups. Marxist
and even Maoist in orientation, some of the radical left-
ists have trained with the Palestinians.
There is no one organization of the left, and
its leadership is largely anonymous. At least one ter-
rorist group--the People's Sacrifice Guerrillas--draws
some support from leftists on campus.
t is unclear how much support the Communist
Tu e ar y has. Illegal since 1949, the party has
worked hard at developing a covert apparatus inside Iran.
Tudeh publications are reported to have surfaced at all
the major universities in recent months. The leadership
has been in exile in Eastern Europe and Moscow for years.
Party leader Iraj Eskandrai has publicly supported the
current unrest against the Shah and called for collabora-
tion with Khomeini.
There is a large uncommitted opposition in Iran
composed of intellectuals and middle-class groups. Essen-
tially moderate and concerned about the drift of recent
events, this opposition wants an end to the past abuses
of the monarchy but it is inarticulate, leaderless, and
unclear about its specific demands.
It is probably safe to assume that many in the
opposition are willing to reach an accommodation with
the Shah but are intimidated by Khomeini. There seems
little likelihood that the moderates can organize an in-
dependent power base or form a coherent political organ-
ization in the near future.
The opposition groups, especially the student
militants, apparently are obtaining more arms. Pamphlets
on building Molotov cocktails are circulating widely.
Even more violent demonstrations are thus possible.
The disorganized opposition movement is probably
incapable of putting together a durable government if the
Shah falls or abdicates. The differences within the move-
ment would almost certainly tear it apart.
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//The Daily prints the key judgments of an
-interagency inteZZigence memorandum, "Sino-Soviet Com-
petition in Indochina."//
//Indochina today is divided into two camps,
with the USSR backing Vietnam and Laos, and China back-
ing Kampuchea (Cambodia). This development is largely the
result of the conflicting national ambitions of China and
Vietnam, each of which wishes to exercise paramount in-
fluence in the area. This competition, although muted
during the Vietnam war, has deep roots and is likely to
intensify.//
//The immediate cause of the present Sino-
Vietnamese confrontation is the escalating border war
between Vietnam and Kampuchea. China believes Vietnam is
determined to replace the Pol Pot government with one
responsive to Hanoi's direction. Although China is un-
happy with some of the policies of the present Khmer re-
gime, it considers an independent Kampuchea allied with
Peking an essential buffer against the expansion of Viet-
namese, and by extension Soviet, influence in the area.
-- China hopes to thwart Vietnamese ambitions by
providing strong support for Kampuchea while
undertaking a diplomatic and propaganda cam-
paign to portray Vietnam as a Soviet cat's-paw
and arouse suspicions about Hanoi among non-
Communist Southeast Asian states.
-- China is the principal source of military and
economic aid to Kampuchea. It has several thou-
sand advisers in Kampuchea and has increased
military aid since the escalation of the
Kampuchean-Vietnamese border war. China's termi-
nation of all aid to Vietnam earlier this year
will trouble but not cripple the Vietnamese
economy because Chinese aid had already been
reduced after the end of the Indochina war.
China also supplies economic aid to Laos. North-
ern Laos has been a Chinese sphere of influence
for many years as the result of a roadbuilding
project in the area.
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-- China is trying to encourage the Pol Pot govern-
ment to moderate its domestic and foreign pol-
icies in order to improve its international
standing.//
//Vietnam over the long term would like to
establish a special relationship with Kampuchea similar
to the one Hanoi has with Laos. Over the short term, how-
ever, Vietnam could tolerate a government in Phnom Penh
with close ties to China so long as it ceased provocative
actions along the Vietnamese border.
-- Vietnam is unlikely to launch an all-out invasion
of Kampuchea, although it might be tempted to
move if there were an open breakdown of politi-
cal order in Kampuchea. In the event of such a
Vietnamese attack, China would have only limited
ability to aid the Phnom Penh regime. Despite
the excesses of the Pol Pot government, few
Khmer would welcome Vietnamese intervention,
and Vietnam would probably become bogged down
in a guerrilla war.
-- Vietnam is more likely to pursue its present
policy of trying to secure its borders against
Kampuchean attacks while seeking to raise an
antigovernment insurgent movement inside
Kampuchea.//
//The USSR is the most likely to benefit,
at least over the short term, from the developing situa-
tion in Indochina. The Soviets will take advantage of
the opportunity to try to make Vietnam dependent on Mos-
cow, thereby establishing a sphere of influence on China's
southern boundary.
-- Laos and Vietnam are the only countries in South-
east Asia to allow the Soviets more than a token
presence. The Soviets probably hope that their
position in Vietnam will aid them in extending
their influence elsewhere in the area. If the
Southeast Asians believe that Vietnam is acting
as a Soviet stalking-horse, however, it will
harm rather than help Soviet interests.
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-- Vietnam has already moved closer to Moscow by
signing a friendship and cooperation treaty and
joining the Council for Mutual Economic Assist-
ance. The Soviets are the major source of aid
to Vietnam, but most of it is still economic.
Soviet military shipments do not appear to have
increased since the confrontation with China,
but this may change in the near future. The
Soviets will take over some of the formerly
Chinese aid projects.
-- The USSR may hope eventually to obtain access to
Vietnamese military facilities. Vietnam is un-
likely to grant the Soviets formal base rights
but might permit the Soviets access to air or
naval facilities under certain circumstances.//
//The non-Communist states of Southeast Asia
are concerned about the consequences of intensified Sino-
Soviet competition in the area, although they draw comfort
from the prospect of Communist countries fighting among
themselves. Thus far the main impact on the countries in
the Association of Southeast Asian Nations has been an
intensive diplomatic campaign to court their favor by all
sides. Since September a top official from each of the
four major parties to the dispute has visited Southeast
Asia.//
//Vietnam's deteriorating relations with
China have increased Hanoi's interest in establishing
diplomatic ties with the US. Vietnamese leaders believe
an American embassy in Hanoi would serve as a symbol of
Vietnam's international acceptance. Vietnam is also seek-
ing aid and foreign investment from the West to help bal-
ance aid from the Soviet bloc.
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