NATIONAL INTELLIGENCE DAILY WEDNESDAY 9 OCTOBER 1985

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005500148
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 25
• Document Creation Date: June 24, 2015
• Document Release Date: September 9, 2010
• Case Number: F-2007-00450
• Publication Date: October 9, 1985

Director of
-11. Central
-spr-lik 6 Intelligence
az-IC*044,s_ _ _ f !23i X
?Tep-Seeret
(b)(1)
(b)(3)
APPROVED FOR RELEASED DATE:
07-22-2010
3 6 1.8
Top Secret
CPAS NID 85-236JX
9 October 1985
Copy 535
ri?
.410
C
Contents
1
2
3
USSR-Eastern Europe: Gas Pipeline Construction Delayed 4
Notes
China-USSR: Officials Comment on Relations
Uganda: Rebels Press Army
In Brief
Special Analyses
5
5
6
6
7
7
8
8
9
South Africa: The Zulu Factor 10
USSR: The Campaign Against Corruption 12
France: Socialist Party Congress 13
International: Impact of a Cutoff of Persian Gulf Oil 14
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Soviet-East European Joint Natural Gas Pipeline Projects
..ettott?I es et Este. a. Lett b. sr it 1..ites,
?.lo Is.9o.tet 01).. boutdats Pectof.nt.t.e.
Soviet Union
Pipeline existing
? Pipeline proposed or under construction
Iceland
708152 10 85
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9 October 1986
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USSR- Gas Pipeline Construction Delayed
EASTERN EUROPE:
Disagreements between the USSR and East Europeans over the
financing of pipeline construction threaten to delay Moscow's
gas export plans
The USSR is demanding that the East Europeans pay hard currency
for the pipe used on segments of the Progress gas pipeline assigned
to them, A Soviet demand that East
Germany make a lump-sum payment to the USSR for its pipe
contribution was rejected by East Berlin. The USSR has now agreed
to allow East Germany to buy the pipe on credit from West Germany,
but differences remain over delivery schedules.
Meanwhile, Romania and Bulgaria have delayed construction of the
transit gas pipeline to Greece in an attempt to force the Soviets to
reimburse them more for hard currency purchases of Western
equipment and for the services of Hungarian and Yugoslav
subcontractors.
Comment: Haggling over the terms of East European participation in
joint projects is common, but negotiations have to be completed soon
if the projects are to be incorporated into economic plans for 1986-90
and be finished by target dates in 1987. Long delays in constructing
high-priority gas pipelines might set back Moscow's plans for
Increasing gas shipments to Eastern Europe instead of oil and for
Increasing gas deliveries to the West to offset declining oil export
revenues.
The Soviets have said that joint investments are necessary if energy
deliveries are to be maintained, but East Europeans have been
unenthusiastic about the Progress pipeline because of the large
investment requirements and the vague terms for Soviet gas
deliveries. Large hard currency outlays, which may cost each country
several hundred million dollars, would undermine the fragile hard
currency positions of especially Poland, Hungary, Bulgaria, and
Romania.
4
-Top-SOWIt-
9 October 1985
CHINA-USSR: Officials Comment on Relations
Chinese officials are expressing pessimism about the prospects for
Sino-Soviet relations, probably to counter recent Soviet attempts to
portray ties as improving. According to a West German press
account, Deng Xiaoping indicated privately to Christian Socialist
leader Franz Josef Strauss last Friday that General Secretary
Gorbachev had failed to capitalize on "considerable possibilities" for
progress. Deng also disparaged Gorbachev's recent strategic arms
reduction proposal as not going far enough. The spokesman for the
Chinese party's International Liaison Department ruled out resuming
interparty relations with Moscow until progress is made on the "three
obstacles"?Afghanistan, Cambodia, and Soviet forces on China's
borders. The spokesman specifically discounted Soviet press
accounts of the recent meeting between the Soviet and Chinese
Foreign Ministers that su ested progress had been made on party-
to-party relations.
Comment: By speaking out during the current round of Sino-Soviet
talks, the Chinese appear determined to prevent the Soviets from
gaining leverage over the US before the meetings in Geneva in the
absence of concessions from Moscow.
5
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UGANDA: Rebels Press Army
Insurgent leader Museveni has returned to Uganda from Tanzania to
command his forces as the rebels besieae three aovernment
garrisons in the southwest,
Government resupply and reinforcement efforts at Masaka, 80 miles
(130 kilometers) southwest of Kampala, have failed, and the rebels
have reaained control of Mitvana 35 miles (55 kilometers) west of the
capital, The government continues to
ferry troops to Kampala from the north. Meanwhile numerous reports
persist of Army brutality toward civilians.
Comment: The rebels are likely to expand and intensify their
operations soon. A major attack on Kampala is not Imminent, but the
Insurgents may attempt a dramatic military move today?the 23rd
anniversary of Uganda's independence. The government of President
Okello lacks popular support and is beset by military defeats,
economic difficulties, and internal divisions. Its prospects for survival
are dwindling.
8
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9 October 1985
In Brief
South Asia
Europe
more than 300 Soviet troops killed during
operations in Paktla Province, Afghanistan, last month... number
probably overstated, but indicate heavy casualties
and large amounts of equipment destroyed.
? Poland on Monday became first East European country to sign
agreement with USSR on trade in 1986-90... calls for balanced
trade by 1988 by increasin exports faster than imports .. . export
goals probably optimistic
3 e;) 6
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9 October 1985
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3069117 1045
Gatsha BUTHELEZI
Age 57 ... KwaZulu Chief Minister since
1970 . . . president of Inkatha, a group
founded in 1928 which Buthelezi
transformed into a vibrant, well-disciplined
organization . . . enjoys great support
among South Africa's 6 million Zulus, the
largest ethnic group in the country .. .
advocates peaceful change through
negotiation with Pretoria... supports US
policy in southern Africa ... pragmatic,
articulate, dynamic.
-T-op-Seeret-
9 October 1985
36 9-4
(;)
Special Analysis
SOUTH AFRICA: The Zulu Factor
Chief Buthelezi and his powerful Zulu-dominated Inkatha
organization are growing increasingly isolated on the black
political scene because of their consistent moderation toward
the government in a year of growing black militancy. Clashes
between inkathe supporters and members of other nonwhite
groups are likely to become increasingly violent as the unrest
continues.
Buthelezi's position as Chief Minister of the KwaZulu homeland has
earned him the reputation of a progovernment collaborator and the
enmity of some nonwhite protest groups, which also dislike his vocal
opposition to international sanctions against Pretoria. In addition,
many black activists believe that, because virtually all of Inkatha's
1 million members are Zulus, it reinforces Pretoria's goal of
preserving?and exploiting?tribal distinctions.
Most black groups and the white opposition all view Buthelezi as a
force still to be reckoned with, despite his aberrant views. Many black
groups loathe lnkatha but respect its Influence among the Zulus who
are quick to display their warrior heritage when challenged.
The Progressive Federal Party, the official white opposition, has
persuaded Inkatha to join its new "convention alliance," designed to
unite antiapartheid groups. The African National Congress and the
United Democratic Front so far have not joined the alliance, which
severely limits its effectiveness. Their reluctance reflects continued
antagonism toward groups with ties to the apartheid system
Relations With ANC and United Democratic Front
Buthelezi, a former member of the ANC, has had stormy relations with
it since a falling out in 1979. He repeatedly has alleged that the ANC
wants to kill him, and he also has denounced the two-year-old Front,
echoing government allegations that it is closely linked to the ANC.
Buthelezi blasted the ANC in a recent speech, warning that its armed
struggle would result In a humiliating defeat against the superior
might of the government.
ANC officials have countered Buthelezi's recent diatribe with charges
that he is out of step with the evolving political situation. The ANC
also bombed three shops in Durban late last month on the eve of the
Zulu rally, claiming later that the attacks were in support of a black
continued
Top Cecret-
10 9 October 1985
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consumer boycott of local white stores?an action Inkatha opposed.
The timin of the o erations suggests they were intended to undercut
Buthelezi.
The struggle between Inkatha afid groups affiliated with the United
Democratic Front in Durban's black townships?especially
Lamontville?often has resulted in violence this year. At least eight
blacks were killed in Lamontville late last month when Inkatha
members battled local residents who earlier had attacked several
Inkatha youths.
Outlook
The government probably will try to capitalize further on black
differences and move to cement its relationship with Buthelezi,
although recently It has sent him mixed signals. Last month it
proposed adjustments to KwaZulu's boundaries that anaered
Buthelezi, according to press reports.
The press also reported that, at the same time, Pretoria may invite
Buthelezi and the Zulus to join a regional power-sharing government
In Natal Province. Many white proponents of the plan, however,
believe Pretoria risks losing Buthelezi if it does not meet his
prerequisite for talks by providing a general blueprint of its reform
plans. They also believe they must grant him some concessions to
show that his moderate approach is productive.
Buthelezi probably will continue to preach the futility of confrontation,
thereby ensuring he will remain at odds with the Front and the ANC.
He will occasionally allow attacks by his supporters against Inkatha's
rivals on the black political front, while continuing to put himself in a
position to take advantaqe of any major concessions by the
government.
11
3 b '50
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9 October 1985
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op ecret
41:
Special Analysis
USSR: The Campaign Against Corruption
Building on the program started by his political mentor, Yuriy
Andropov, General Secretary Gorbachev has revived the
campaign against corruption and made it a major program of his
regime. He is using it to remake the bureaucracy, strengthen his
control over regional officials, and irmidate those who might
resist his policies
Gorbachev has removed a number of corrupt provincial leaders and
has indicated that freedom from corruption would become a criterion
for holding political office. In his first weeks in office, he dismissed the
Minister of Power and Electrification, who had been implicated in a
scandal, uncovered while Andropov was in office, involving the
diversion of state funds to build a villa.
Eduard Shervardnadze, known for his tough anticorruption stance, is
said to have been brought in as Foreign Minister over other
candidates when the KGB found the Foreign Ministry to be a major
haven of corruption. There have also been rumors that Moscow party
chief Grishin is vulnerable to charges of corruption. An article by the
Moscow leader in Pravda last April was defensive on this score, which
suggests he is feeling some heat.
The earlier crisis in Poland may have been an object lesson for the
Soviets. Soviet media had suggested that corruption by high officials
in Poland was the chief cause of the gulf between workers and the
party and of the disaffection and turmoil there.
Gorbachev hopes that the publicity endorsina stronaer anticorruotion
measures will Improve the regime's image.
earlier the party's tolerance and use of corruption for its nwn nain hari
caused it to lose support across a broad spectrum.
The General Secretary knows that trying to stop political corruption
altogether would require extending KGB involvement in affairs as
Stalin had done. This would needlessly raise fears even among his
supporters. Rather than try to destroy the hydra of corruption
altogether, Gorbachev has more limited goals in mind. He will use the
campaign to further his objective of remaking the bureaucracy and
strengthening his control over officials outside Moscow. He will have
an easier time bringing officials who fight his policies Into line because
almost all are vulnerable to charges of corruption
Gorbachev probably can count on the support of several key
segments of the elite for expanding the anticorruption campaign?the
KGB, your n nartv members An
pr for ar vancement, and economic
i
reformers.
12
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?
Ton Soor
Special Analysis
FRANCE: Socialist Party Congress
Shaken by their poor electoral prospects and internal rivalries,
the French Socialists gather on Friday to decide their strategy for
the legislative election next spring. Moderates probably will lose
to the left wing, further weakening the party.
With polls Indicating that only 23 percent of the electorate intend to
vote for the Socialists, the party is debating how to revive its support.
The left and center have rallied behind First Secretary Jospin, who
wants to mobilize party militants and leftist sympathizers throughout
the electorate with a hard-hitting, partisan campaign. The party's left
has never been comfortable with a policy that accepts unemployment
as the price of modernization. Rather than defend the government's
policy of austerity, they would prefer to stress the dangers of a return
to power by the conservatives. Jospin wants the party to maintain the
purity of its principles by refusing electoral alliances with either
Communists or centrists; he would accept defeat rather than
compromise.
For the first time since 1979, the Socialists will not be unanimously
backing a motion on party policy because of a rival motion by former
Agriculture Minister Rocard. Under his leadership, the party's right
wing will strongly endorse the austerity policy being carried out by
Prime Minister Fabius. Rocardhopes that by stressing responsible
management of the economy the Socialists can make allies of centrist
forces and retain a share of power by entering a coalition. The party
leadership was jolted when Rocard's alternative motion garnered
nearly 30 percent of the vote in regional meetings preceding the
congress.
President Mitterrand wants to appear nonpartisan as he faces the
prospect of governing after the election with a legislature dominated
by his opponents, and he probably will not intervene publicly in the
debate over party strategy.
Jospin almost certainly will command a majority of the delegates at
the congress. Socialist moderates are likely to accept the decision of
the congress, but their lack of enthusiasm probably will further
weaken the party's campaign. Fabius and Rocard?who almost
certainly have accepted the inevitability of defeat in 1986?will bide
their time until after the election. Then, with an eye on the 1988
presidential race, they probably will blame the discredited leftist
strategy for the Socialist defeat
13
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9 October 198
Oil Disruption Scenarios Million barrels per day
Event
Demand Lost Available Surplus
capacity productive (shortfall)
capacity
Precrisls
Cutoff of Iranian
exports
Cutoff of exports
from Iran, Iraq,
and Kuwait
Loss of Saudi
Persian Gulf
exports
Cutoff of all Persian
Gulf exports and
Interruption of Iraq-
Turkey pipeline
44.1
54.7
10.6
44.1
2.3
52.4
8.3
44.1
4.8
49.8
5.7
44.1
5.9
48.7
4.6
44.1
13.7
40.9
(3.2)
?Tee-Seeret-
9 October 1985
r.114')
To secret
Special Analysis
INTERNATIONAL: Impact of a Cutoff of Persian Gulf Oil
Iraq's recent attacks against the Khark Island oil export terminal
increase the risk that Tehran may move to interdict oil shipments
from other Persian Gulf states. The oil market could easily
absorb a loss of exports from Iran, Iraq, and Kuwait; a serious
problem would arise only if Saudi exports were also cut.
Persian Gulf countries are now exporting about 7.5 million barrels per
day, accounting for about one-fifth of total non-Communist oil
supplies. Of this, some 6 million b/d flow through the Strait of
Hormuz, with the remainder shipped through pipelines from Saudi
Arabia and Iraq to the Mediterranean and the Red Sea. In the first
quarter of 1985, Western Europe, Japan, and the US relied on the
region for about 18 percent, 58 percent, and 4 percent, respectively,
of their total oil imports.
Excess productive capacity and weak demand currently provide
considerable?but possibly ephemeral?protection against an oil
supply cutoff. Surplus capacity available to offset a supply shortfall
currently is about 11 million b/d, but only about 3 million b/d of this
lies outside the Gulf region. Commercial inventories, moreover, now
provide only a small cushion against an interruption, because
companies have reduced usable stocks to about 100-200 million
barrels, the equivalent of no more than four days of total consumption
needs, as compared with a level of about 20 to 25 days in the early
1980s. Compulsory inventories held by companies in Europe and
sizable government-owned stocks in the US, Japan, and West
Germany could provide an additional cushion in the event of a cutoff.
Likely Market Reaction
The impact of a disruption of Persian Gulf oil exports would depend
on its severity, duration, the availability of supplies from other
producers, and the use of strategic stockpiles. If Baghdad knocks out
the Khark terminals and Iran retaliates by severing Iraq's pipeline
through Turkey and by interdicting Kuwaiti exports, nearly 5 million
b/d of export capacity would be lost. Although other countries could
replace these lost supplies by raising their outit mi tnh rEf the
existing surplus capacity would then evaporate.
14
continued
Top Secret
9 October 1985
..e
Under these circumstances, the uncertainties surrounding the
duration of the disruption and the fear of a much more serious
shortage resulting from a cutoff of Saudi exports would cause spot
prices to rise. As long as Saudi export capabilities remained intact,
however, the market would retain a substantial ability to adjust
without a major price increase.
The elimination of all oil exports from the Persian Gulf, coupled with
the Interruption of oil flow through the Iraq-Turkey pipeline, would
entail the loss of nearly 14 million b/d of productive capacity.
Denial for a prolonged period would cause a net supply shortfall of
3-4 million b/d, almost double the size of the shortage caused by the
Iranian revolution in 1979. Under these circumstances, prices would
increase sharply and the global economic recovery would be
Interrupted.
Implications for the US
The US is far less dependent on Persian Gulf oil supplies than its allies
but has a large stake in the continued flow of oil from the region. The
US could not insulate itself from a major disruption because it would
share the burden of a net oil supply shortage as prices rose and as oil
companies diverted supplies in response to market pressures.
Moreover, if an emergency caused oil supplies to be allocated
according to the International Energy Agency's sharing agreement,
there could be a significantiversion of oil from the US market to
4T1
Western Europe and Japan.
TOP Sacra
15 9 October 1985