NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030900010120-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 20, 2016
• Document Release Date: September 19, 2006
• Sequence Number: 120
• Publication Date: December 13, 1978
• Content Type: REPORT

r It ` 8 Release 2007/03/07: CIA-RDP79T00975AO309e JA~Rcret
en ra
Intelligence
National Intelligence Daily
(Cable)
13 December 1978
State Dept. review completed
Top Secret
CG NIDC 78-0289C
1918 25X1
13 December
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Copy ~ 3
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National Intelligence Daily (Cable)
IRAN: Situation Report . . . . . . . . . . . . . . 1
UK: Callaghan's Challenge . . . . . . . . . . . . 3
ITALY: Parliamentary Debate . . . . . . . . . . . 4
PORTUGAL : Government Program . . . . . . . . . . . 5
ANGOLA: Prospects for the Railroad . . . . . . . . 7
BRIEF . . . . . . . . . . . . . . . . . . . . . . . 8
Italy
FEATURE ARTICLE . . . . . . . . . . . . . . . . . . 9
ARGENTINA-CHILE: Background of Dispute
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IRAN: Situation Report
//Tehran was mostly peaceful yesterday, but some
terrorist incidents were reported and the violence that
broke out in Esfahan on Monday is still going on. The
continuing strike by oil workers has prevented an im-
provement in the oil production and export situation.//
Troops, conspicuously absent in Tehran during the
demonstrations on Sunday and Monday, were back patrol-
ling the streets yesterday. Most shops in northern and
central Tehran were open, and the airport resumed normal
service. Primary schools are expected to reopen today.
Both sides are continuing to claim victory for the
mostly peaceful Tehran demonstrations. Extremists are
talking of returning to the streets, however, and Army
hardliners are calling for a firm crackdown. II 25X1
//Several terrorist incidents have been reported
throughout the country. The most serious was at the
Lavizan military complex in Tehran where several ter-
rorists were reported to have shot up the dining hall
of the Imperial Guard. Several Guard officers
killed before the terrorists were routed.//
//The violence in Esfahan began late Monday when
demonstrators attacked banks, movie houses, hotels, and
restaurants. Troops finally moved in but could not pre-
vent widespread destruction. Military officers in
Esfahan are now saying that the demonstrators violated
their agreement to refrain from violence and that the
military will act forcefully to prevent further disorders.
There are reports that soldiers are smashing shop win-
dows displaying Ayatollah Khomeini's picture and that
anti-Shah forces are carrying out widespread looting and
burning.// II 25X1
The US Embassy has accounts that the city is a 25X1
"shambles."
//Striking oil workers have not returned to work
and they are unlikely to do so for at least several days.
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Production is hovering just above the 1 million barrel-
per-day mark; exports are about half that. Khomeini has
threatened to have his political supporters in Iran halt
oil deliveries and cancel export contracts with the US
and other countries that continue to support the Shah.//
D
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UK: Callaghan's Challenge
//UK Prime Minister CaZZaghan's minority Labor gov-
ernment faces another chaZZenge in Parliament today--the
most serious since it narrowly survived the vote on the
Queen's speech early Zast month. The government is ex-
pected to scrape through again; if it does not, the Con-
servative chaZZenge to CaZZaghan's economic policies
could Zead to the overnment's resignation and a general
election.// to
//The government has introduced a motion seeking
general Parliamentary support for its economic policies,
while the Conservatives have offered an amendment con-
demning the government for its use of sanctions against
firms that breach the 5-percent wage increase guide-
lines. A defeat on either measure would seriously under-
cut the government's economic initiatives and put pres-
sure on Callaghan to resign.// 25X1
//Even if defeated in Parliament, Callaghan could
try to carry on, although he probably would have to seek
a formal vote of confidence. In light of these possibil-
ities, the government's original motion seems of ques.-
tionable wisdom, unless Callaghan feels the need to de-
fend his record at the polls.// 25X1
//As with the vote on the Queen's speech, the gov-
ernment's chances depend on a handful of votes and ab-
stentions. Because the issue could lead to a confidence
vote, Callaghan should survive; the minor parties do
not want an election now and the Labor Party will be
present in force.//
//Even the Conservatives may be satisfied simply to
embarrass the government rather than to bring it down.
By showing how tenuous Callaghan's majority is on an
issue so critical to the government, the Tories would
keep the pressure on without forcing an election that
would be too close to call and for which they would re-
fer to be better prepared.//
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ITALY: Parliamentary Debate
The Italian Parliament is scheduled to resume de-
bate today on the government's decision to join the Euro-
pean Monetary System. Debate was suspended following
Prime Minister Andreotti's announcement yesterday in or-
der to give the parties more time to prepare positions.
His decision has heightened political tensions, but party
Leaders appear reluctant to permit collapse of the gov-
ernment over the monetary issue. I
Before the debate, Andreotti will attempt to smooth
over differences in a meeting with leaders of the five
parties supporting his government in Parliament. Most
Christian Democrats, Social Democrats, and Republicans
support Andreotti's decision, but the Socialists and Com-
munists apparently still have reservations. The Social-
ists have argued for a phased entry into the monetary
system, and the Communists have insisted that membership
would be disadvantageous for the nation without more EC
25X1 development aid.
We still have no details on Andreotti's contacts
Monday with West German Chancellor Schmidt and French
President Giscard. Speculation continues, however, that
Andreotti may have obtained some assurance of increased
support from Paris and Bonn and intends to use this to
ease reservations about the economic consequences of
25X1 Italian participation.
US Embassy sources in Rome say the government will
not call for a confidence vote after the debate and that
none of the parties will insist on one. Christian Demo-
cratic officials say the debate may end with a vote on
a resolution designed to permit the Communists to save
face; they would be able to vote in favor of the first
part--reiterating Italy's commitment to European unity--
while abstaining or voting against a second part specif-
ically a rovin the government's stand on the monetary
system.
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PORTUGAL: Government Program
Portuguese Prime Minister Mota Pinto's nonparty
government got through its first test yesterday when its
program was passed by the Assembly. The nature of the
vote makes it clear, however, that the government will
face ma or problems in surviving until the election in
1980.
The new government is the most conservative since
the 1974 revolution and is the first since then not to
have a leftist member. The Communists voted to reject the
program and were opposed by the small Center Democratic
Party and the larger Social Democratic Party. !,lost
Socialists abstained.
In spite of this tenuous support in the Assembly,
Iota Pinto made it clear that because of the country's
economic difficulties, his government does not plan to
be a mere caretaker. The program indicates that the gov-
ernment will largely maintain the economic policies of
its two immediate predecessors. Although the program's 25X1
vague wording will permit some flexibility, the conserva-
tive cast of the cabinet suggests that at some time Mota
Pinto may be confronted by Socialist opposition.
The Socialists--the largest party in the Assembly--
will therefore be the key to determining the government's
staying power. The other two democratic parties would
find it difficult to join with the Communists in over-
turning Mota Pinto and do not have enough strength to
carry out their own censure motion.
Socialist leader Soares, who is not eager for the
election that might result from Mota Pinto's fall, told
the US Ambassador that he had unexpectedly easy going
with his party's left wing in getting a decision to ab-
stain. He appears willing to cooperate with the govern-
ment when necessary, while generally acting as a selec-
tive opposition party. Still smarting from heavy losses 25X1
to the Communists and Social Democrats in two recent
municipal elections, Soares hopes to take advantage of
a spell outside the government to regain lost ground.
Both Soares and Mota Pinto have an interest in avoid-
ing a clash. Soares told the Ambassador that his party
will not cause problems if the government pursues policies
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the next scheduled election in 1980.
Communists to vote down the government some time before
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not dramatically opposed to those of the Socialists.
Mota Pinto could in fact reach many of his goals by
applying existing laws many of which were initiated by
Soares' government. II
Several issues, however, are likely to arise in the
next few months--the budget, labor legislation, and agrar-
ian reform, for example--on which grass-roots sentiment
will make Socialist abstention difficult. Thus it seems
a good possibility that the Socialists will join with the
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ANGOLA: Prospects for the Railroad
The Angolan Government faces numerous economic and
logistic problems in fulfilling its commitment to reopen
all of the Benguela Railroad. The most serious immediate
threat to the rail Zine, however, comes from insurgents
of the National Union for the Total Independence of An- 25X1
goZa who apparently are determined to keep it from op-
erating completely. The government probably cannot re-
store full operations in the short to medium term.
IUNITA has stepped up
its attacks against the railroad- much of which passes
through territory in which the insurgents continually
operate. We believe UNITA will retain the capability to
attack trains or to sabotage the line at will along
large sections of the 1,347-kilometer route. 25X1
The insurgents already have stockpiles of military
supplies inside Angola. UNITA probably believes that its
credibility--both in Luanda and internationally--would
be damaged if it did not impede railroad operations.
UNITA leader Savimbi is concerned over the Angolan Gov-
ernment's recent diplomatic and political gains and may
opt to inflict heavier damage on the railroad if he be-
lieves his position is deteriorating. II 25X1
Continued UNITA attacks on the rail line could lead
Angolan President Neto to charge that either Zairian
President Mobutu or Zambian President Kaunda is aiding
the rebels, thus jeopardizing the recent Angolan-Zairian
rapprochement.
We doubt that the Benguela Railroad can be restored
to full use until Luanda reaches a modus vivendi with
UNITA or defeats the insurgents militaril neith
er of
which appears likely in the near future.
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 Italy
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The Italian A129 lightweight antitank helicopter
now under development could become one of the best non-US
antitank helicopters on the market in the mid-1980s. The
Agusta aircraft firm has completed the design of the A129,
and the Italian Government has evidently funded construc-
tion of three prototypes. The first test flight is to
take place in 1981,
The A129 could have a design weight as low as 3,300
kilograms. Antitank missiles are to be its primary arma-
ment. The manufacturer is reportedly also considering a
gunship variant to be armed with a 30-mm rapid-fire can-
non, which would be well suited to air-to-air combat and
could also be used in an antiarmor role.
The company, Italy's major helicopter manufacturer,
currently produces and markets worldwide a popular util-
ity helicopter of its own design, makes under license
several types of US-designed Bell and Sikorsky helicop-
ters, and runs a consortium licensed to build Boeing Ver-
tol CH-47 helicopters.
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FEATURE ARTICLE
ARGENTINA-CHILE:. Background of Dispute
The dispute between Argentina and Chile over the
Beagle Channel and related territorial claims is typical
of many South American boundary problems that stem from
early, ambiguously worded agreements and treaties formu-
lated before accurate maps were available. Recent ef-
forts at negotiation and arbitration have failed, largely
because neither side is prepared to accept any compro-
mise on the major issues. 25X1
The Beagle Channel serves as an alternate route to
the Strait of Magellan and to the course around Cape
Horn for travel between the Atlantic and the Pacific
Oceans. A treaty negotiated in 1881 stipulated that the
boundary between Argentina and Chile should run north-
south through Tierra del Fuego, dividing Isla Grande
into two parts, with Argentina getting the eastern part
and Chile the western part. All islands along the At-
lantic coast were to belong to Argentina;. those south of
the Beagle Channel as far as Cape Horn and all along the
Pacific coast were to belong to Chile. I 25X1
The Chileans soon claimed that the north-south line
dividing Isla Grande was to stop at the northern shore
of the Beagle Channel, so that the channel itself as well
as all territory to the south belonged to Chile. The
Argentines countered that the north-south line reaches
midchannel and that a portion of the channel belongs to
them. The Chileans also held that the channel extends
eastward as far as Cabo San Pio, making the small is-
lands of Picton, Lennox, and Nueva theirs; the Argentines
claimed that the channel turns southward to the west of
Picton and Lennox, and the islands are, therefore, Ar-
gentine.
Picton, Lennox, and Nueva have no more than a dozen25X1
or so Chilean residents and no Argentines. With the pos-
sible exception of some nitrate deposits, they contain
no known mineral or other resources of significance.
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In recent years, however, the importance of Tierra
del Fuego has grown. Oilfields and enormous sheep
ranches occupy the northern part of the region. In the
south, Ushuaia, Argentina, has grown to a town of 6,000
inhabitants, with an airfield, a naval base, a hydro-
electric plant, and a road that allows access to the
northern part of the island.
Chile maintains a small naval base at Puerto
Williams, south of the Beagle Channel on Isla Navarino.
The town has an airstrip, a radio station, a hotel, and
a civilian population of about 700.
A series of incidents, including one in 1967 in
which a Chilean PT boat was fired at by an Argentine
patrol ship, led Chile to seek British arbitration of
the lingering channel dispute. Argentina rejected the
idea but signed a treaty in 1972 submitting the claim
to the International Court of Justice. The Court's ver-
dict would go to the British for approval or disapproval.
0
In May 1977, the Court decided that the Beagle
Channel should be divided between the two countries and
the disputed islands awarded to Chile. Implementation of
the decision, which was accepted by the British, was set
for February 1978. In December 1977, however, Argentina--
which had already indicated it would not accept the
Court's ruling--began a press campaign and a number of
economic and military moves to prompt concessions from
Chile.
Presidents Videla and Pinochet met in Mendoza, Ar-
gentina, in January 1978 and in Puerto Montt, Chile, in
February and signed agreements creating a joint commis-
sion and outlining a phased negotiating process. The
first phase ended in April without any significant prog-
ress.
In the second phase of negotiations, attention
shifted away from the islands in the mouth of the Beagle
Channel to a number of smaller islands to the south, in-
cluding Evout, Barnevelt, and Hornos. Argentina wants a
boundary line that would run through these islands be-
fore the line turns south along the Cape Horn meridian
or, better yet, a boundary that would place one or more
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of the islands entirely in Argentine territory. Intru-
sion of the Chileans into the Atlantic is resented by
the Argentines, who feel that it breaks a gentlemen's
agreement between the two countries that Argentina should
be an Atlantic power and Chile exclusively a Pacific
power.
Argentina is particularly concerned about the ef-
fect the Court's awards to Chile might have on control
of ocean resources; both countries claim sovereignty
over resources within 200 miles of the coast. Continental
shelf petroleum and coastal fisheries are the resources
of greatest interest, but the value and the extent of
these in the area are unknown. I 25X1
An additional Argentine concern is that the Court
ruling will adversely affect Argentina's Antarctic claim,
which overlaps that of Chile. Argentina presumably fears
that any extension of Chilean territory eastward into
the Atlantic will lend weight to Chilean claims to ter-
ritor directly to the south on the Antarctic Peninsula.
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