NATIONAL INTELLIGENCE DAILY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A031400080001-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 15, 2016
• Document Release Date: April 6, 2004
• Sequence Number: 1
• Publication Date: May 9, 1979
• Content Type: REPORT

Directgraof Top Secret
Intelligence
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National Intelligence Daily
Wednesday
9 May 1979
State Dept. review completed , Top Secret
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Special Analyses
Panama-US: The Royo Visit . . . . . . . . . . . 7
Overnight Reports . . . . . . . . . . . . . . . . . . 13
The Overnight Reports, printed on yellow paper as the
final section of the Daily, will often contain materials
that update the Situation Reports and Briefs and Comments.
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PANAMA-US: The Royo Visit
President Ro.yo's visit to Washington this week co-
incides with a break in Panama's policy of public re-
straint toward what it regards as hostile US Congres-
sional actions on legislation to implement the canal
treaties. Royo--still very much the instrument of Na-
tional Guard commandant Torrijos--will convey a clear
message of concern. He wants reassurances of a strong
commitment to the treaties from President Carter, which
his government can use for both psychological and poZiti-
cal support. Torrijos is always capable of an outburst,
but for the time being Panama--if armed with strong re-
assurances--would probably return to a more controlled
level of reaction.
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Royo is an able man, but he speaks for no constitu-
ency of his own. His public letter of complaint to
President Carter on 27 April warning against any changes
in the treaties was clearly dictated by Torrijos. The
General, not Royo, has made the final decisions on treaty 25X1
implementation issues that have arisen in discussions
with the US. At this point, Royo is not politically
capable of independent initiatives.
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Domestic Problems
Royo faces both economic and political problems at
home, but neither-he nor Torrijos is anywhere near being
backed into a corner by domestic pressures on the treaty
legislation. Because Panama's gradual political liberal-
ization permits some open public debate, the administra-
tion may be more prone now than in the past to speak
out--especially on the implementation battle--than to
leave the field to its domestic political opponents.
This, however, is at least as much by choice as neces-
sity. For four weeks in March and April, for example,
the government chose to play down US Congressional ac-
tions, and there were no serious domestic political re-
percussions.
The government's chief political foe, three-time
President Arias, has tried to take advantage of the im-
plementation issue, but the opposition is still disorga-
nized and has not yet developed sufficient public support
to exert any major influence. The government is also
still able to deal with student groups despite the fact
that students stoned government buildings last week to
protest recent official food price hikes.
Reaction to the Congressional Debate
Until late April, Panama's restrained reaction to
the treaty implementation debate reflected a clear recog-
nition that its interests would best be served by not
being goaded into public debate. Panamanian press reac-
tion was balanced and muted, and the government limited
its efforts to augmenting its Washington Embassy with ex-
perienced personnel to lobby for Panamanian objectives.
Panama's stance was ublicl pegged to its faith in Pres-
ident Carter.
Torrijos, however, is never far from losing his
patience, and he has been increasingly irritated by suc-
cessive Congressional actions. The leak last month of
an unclassified US Embassy economic report that outlined
Panama's extremely heavy debt burden caused a major furor.
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In a broadcast last nignt, iff
top adviser Escobar Bet ancourt claimed the leaking of
the Embassy report was part of a deliberate anti-Panama
effort. Torrijos' design is primarily to put more heat
on the US executive and, secondly, to wave the flag at
home.
Royo's Objectives
Royo is seeking public assurances that the Carter
administration and Senate will fight unwarranted changes
in the treaties by the House of Representatives--assur-
ances Panama can use to ward off political embarrassment
at home. Royo is also seeking broader reiteration of
4- 1, US a t -+- to Panama Panama and its many credi-
m
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e comm
tors view the US stake in the country as so high that 25X1
Washington, in effect, underwrites all loans to the coun-
try. Thus, any sign of flagging US interest--and the Em-
bassy report was interpreted in this vein--sends shudders
through Panamanian official and financial circles.
Specifically, Royo will seek assurances that the
administration will fight hard to turn around the changes
proposed in the Murphy implementation bill, which would
widen US Congressional and military control over the
canal commission as well as all but preclude Panama's
receiving the $10 million annua'L contingency payment es-
tablished in the treaty. Royo will also want to be re-
assured that the White House will attempt to reverse or
ameliorate the recent Congressional moves to slash eco-
nomic and military aid to Panama.
Outlook
Both Torrijos and Royo wish to avoid jeopardizing
the implementation process and generally recognize that
any aggressive public actions by Panama would complicate
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the US. Torrijos' adviser Esco ar s speecn
for instance, avoided bellicose threats and expressed
the belief that the Senate would not permit violations
of the original treaties. Within the Panamanian hier-
archy, majority opinion--and Torrijos most of the time--
favors a watchful but reasonable pose for now. That will
not preclude occasional efforts to prod the US when Panama
feels its interests are being neglected or to provide a
low-level nationalistic distraction for domestic consump-
tion.
Royo's visit does reflect an underlying but very
real worry about the Carter administration's ability to
avoid unacceptable dilution of what Panamanians regard
as their treaty victory. Torrijos is occasionally deeply
frustrated at being forced into an unaccustomed "do-noth-
ing" posture, in part by his genuine admiration for Pres-
ident Carter. As long as Torrijos remains in power,
therefore, there is an outside chance that sudden irri-
tation will provoke him into a hasty and inappropriate
public response.
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(The items in the Overnight Reports section have not
been coordinated within the intelligence community.
They are prepared overnight by the Office of Current
Operations with analyst comment where possible from the
production offices of NFAC.)
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France-Iraq
A Western news service quotes French officials as
having said yesterday in Paris that Iraq will soon sign
a $1.5-billion deal to purchase 100 Mirage F-1 fighter-
bombers and other sophisticated arms from France in ex-
change for oil. Final negotiations were held during
Iraqi Defense Minister Talfah's recent visit to Paris,
and the head of the French Defense Ministry's division
for international arms sales reportedly will go to Baghdad
to sign the contract. 25X1
EC-Turkey
According to a Western wire service report, a
spokesman for the Foreign Ministers of the EC Nine after
their meeting in Brussels yesterday announced their
agreement to a series of measures aimed at helping bail
Turkey out of its economic problems. They reportedly
will propose to Ankara a new fi-e-year financial pro-
tocol described only as larger than the current one,
which is said to provide $410 million; around $100
million in nonrepayable "exceptional" assistance; and a
five-year freeze on Turkish tariff-cutting obligations
to EC member-states.
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West Germany - UK
The US Embassy in Bonn reports that Chancellor
Schmidt, Foreign Minister Genscher, and Finance Minister
Matthoefer will go to London tomorrow for talks with
Prime Minister Thatcher and her cabinet. Both British
and West German sources of the Embassy have said that
the consultations will be more than a get-acquainted ef-
fort. The West Germans hope to leave London with some
idea of the broad outlines of Tory thinking on EC, secu-
rity, and international economic topics.
UK-Rhodesia 25X1
The US Embassy in London has reported that the ap-
pointment of Lord Carrington as Foreign Secretary met
with an almost audible sigh of relief from the local
Africanist establishment, since he is well-versed in the
complexities of southern African issues and sympathetic
to nationalist aspirations. The Embassy expects Lord
Carrington cautiously to pursue a new policy line toward
Rhodesia by encouraging Bishop Muzorewa to expand the
constitutional basis of the government and by holding
out the prospect of eventual recognition and the lifting
of sanctions. The Tories, the Embassy added, will be
watching closely the development of US policy, particu-
larly the President's determination on the fairness of
the Rhodesian election and the prospect of Congressional
action on the sanctions issue.
Italy
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The government's interministerial security committee
will convene today, the first anniversary of Aldo Moro's
death, in special session to consider antiterrorist meas-
ures. The US Embassy in Rome reports that Prime Minister
Andreotti is likely to announce some decisions enhancing
the position--or at least the image--of the government 25X1
in its fight against terrorism. Two proposals under dis-
cussion are the use of the military to strengthen security
during the current election campaign and the allotment of
over $260 million to modernize the police forces.
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Peru-Argentina-Chile
Peru announced this week that President Morales
Bermudez will make his often deferred visit to Argentina
the middle of next month, thereby returning President
Videla's trip to Lima of 1977. The US Embassy in Lima
notes that Morales Bermudez, until early this year, had
been under some pressure to pursue a policy of detente
with Chile that would have implied a need to meet sep-
arately with Chilean President Pinochet if a trip to
Argentina were made. The Embassy comments that Peruvian
policy has now changed to a clearly pro-Argentine tilt,
with both countries sharing a military concern regarding
Chile.
Australia-Indonesia
Australian Prime Minister Fraser and Indonesian
President Suharto, who have not met since 1977, will con-
fer on Bali this weekend. Australian Embassy officers
in Jakarta said Fraser is seeking a general discussion
of the regional situation, including Indochina, China,
the refugee problem, and international economic affairs
related to the current meeting of the UN Conference on
Trade and Development in Manila--which Fraser, but not
Suharto, is attending.
The Communist Party's congress opens today. The
five-day meeting apparently will be dominated by the is-
sue of whether to continue the political alliance with
France's Socialists.
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Afghanistan
The US Embassy in Kabul reported yesterday that the
Indian and Pakistani consuls in Jalalabad, the capital
of Nangarhar Province across the Khyber Pass from Paki-
stan, have described the province's security situation
as going from bad to worse, with daily antigovernment
violence. The consuls--as of last week--thought there
was a shortage of Afghan troops in the province, and
noted that untrained civilians were assuming some secu-
rity functions. The Embassy believes the Afghan Govern-
ment would strain every resource to keep the road from
Kabul through the province to Pakistan open for security,
prestige, and economic reasons. F77 I
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