MIDDLE EAST AFRICA SOUTH ASIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A001000350001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 12, 2016
• Document Release Date: May 31, 2001
• Sequence Number: 1
• Publication Date: May 30, 1975
• Content Type: REPORT

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Secret
No Foreign Dissent
14Z
Middle East
Africa
South Asia
Secret
140
Nos. 0683/75
lay 30, 1975
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No Foreign D:ssem/ControZZed Dissem
Warning Notice
Sensitive Intelligence Sources and Methods Involved
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Classified by 005827
Exempt from general declassification schedule
of E. 0. 1 1652, exemption category:
?513 (1), (2), and (3)
Automatically declassified
on: Data Impossible to Determine
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MIDDLE EAST - AFRICA - SOUTH ASIA
This publication is prepared for regional specialists in the Washington com-
munity by the Middle East - Africa Division: Office of Current Intelligence,
with occasional contributions from other offices within the Directorate of
Intelligence. Comments and queries are welcome. They should be directed to
the authors of the individual articles.
Egypt: Financial Problems . . . . . . . . . . . 1
Kenya: Kenyatta Gets Tough With His Critics . . 3
India-Pakistan: Nuclear Treaty Proposals . . . 5
Pakistan-Bangladesh: Modest Progress
Possible on Bihari Issue . . . . . . . . . . . 6
May 30, 1975
SECRET
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L_ I
Egypt
Financial Problems
President Sadat needs at least $500 million in
new aid to finance a prospective current-account
deficit and to repay long-term loans that come due
in 1975,. If he does not get the money, he faces
some painful adjustments. Cairo cannot cut back on
debt repayment without jeopardizing new credit in
the West and military support in the East; Cairo
may therefore be forced to slash imports to pre-1973
levels during the last half of 1975 to balance
accounts for the year.
Last year, Egypt's bill for imports doubled in
comparison to the years before the 1973 war because
of higher prices and increased volume. Arab aid
and Egypt's foreign exchange earnings paid for these
imports until the fall of 1974. Deepening depression
in the West then sharply reduced demand for cotton
and Egypt's other luxury-oriented exports and, at the
same time, the sums promised Egypt by Arab leaders
at the Rabat conference were not forthcoming.
At the end of 1974 Egypt's balance-of-payments
gap stood at about $250 million. It was financed by
short-term borrowing because the government was un-
willing to enforce austerity on a population whose
living standards were below mid-1960 levels. During
early 1975, Cairo continued to borrow, increasing
short-term obligations due before the end of next
month to more than $1 billion.
short-term obligations that cannot be paid, butua+v~
interest rates and other penalties are rising as
Egypt's credit rating falls. The government, accord-
ingly, is postponing some repayments, hoping to
secure the new aid required to discharge its short-
term obligations and support imports at current
levels for the rest of the year.
(Continued)
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Sadat is relying heavily on the possibility that
an Arab summit, now scheduled for June, will provide
Egypt grant aid.. If the summit fails to come across,
Sadat may still be able to obtain additional cash
from Saudi Arabia. Faysal's death and the advent
of new Saudi leadership have created considerable
uncertainty, however, particularly as to the condi-
tions that might be attached.
No assistance can be expected from the USSR,
whose insistence on higher debt repayments may create
a substantial flow of funds out of Egypt. Accord-
ingly, Sadat may have to depend heavily on the West
and such relat:i.vely new sources as Iran. (SECRET
NO FOREIGN DISSEM)
May 30, 1975
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SECRET
Kenya
Kenyatta Gets Tough With His Critics
President Jomo Kenyatta and his top advisers
are bracing for possible trouble on Sunday, a major
holiday on which the President is scheduled to
address a large crowd in Nairobi. On the few
occasions in recent months when Kenyatta has risked
public appearances in the capital he has been treated
with quiet hostility. The hard-pressed Kenyatta's
troubles may increase later in the week when the
parliamentary committee investigating the murder of
regime critic J. M. Kariuki is expected to issue
its report.
Kenyatta's chances for getting over these two
hurdles appear to have improved recently, however.
Throughout the month of May Kenyatta and his aides
have made a concerted effort to demonstrate that the
President holds the reins of power and still enjoys
popular support. Publicity has been given to meetings
he has had with numerous delegations of officials
pledging loyalty. Politicians from the President's
southern branch of the Kikuyu tribe have been holding
rallies in provincial towns at which Kenyatta's
parliamentary critics have been denounced as rogues
undermining the country's independence. On May 24
and 26 Kenyatta used tough police measures against
anti-government students at the University of Nairobi
and then closed down the university. Organized labor
has been at least temporarily pacified by a wage
increase, announced in early May.
(Continued)
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SECRET
Some committee members have responded to the
pressure on them by urging a tough final report.
Other members fear such a report would cause
Kenyatta to take reprisals against them, or even
to disband parliament. (SECRET NO FOREIGN DISSEM/
CONTROLLED DISSEM)
May 30, 1975
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India-Pakistan
Nuclear Treaty Proposals
Continuing Pakistani uneasiness about India's
nuclear intentions led Islamabad to propose, at
bilateral talks in mid-May that New Delhi join its
South Asian neighbors in a multilateral declaration
affirming the intention of the parties to use
nuclear energy for peaceful purposes only. India
reacted unfavorably to the proposal, claiming only
Pakistan is dissatisfied with India's oft-repeated
statement to this effect.
Nonetheless, the Indians counter-offered to
negotiate with Pakistan a bilateral treaty that would
contain a self-denying nuclear weapons declaration.
New Delhi suggested this could be accomplished either
as part of a broad non-aggression pact between the
two states--a long-standing Indian proposal that is
unacceptable to Pakistan--or in a special treaty
limited to the question of nuclear weapons. The
latter would be no more than a reaffirmation of Prime
Minister Gandhi's assurances to Prime Minister
Bhutto conveyed in a letter sent shortly after India
exploded a nuclear device in May 1974.
Each side agreed to consider the other's pro-
posal, but clearly the next move is up to Islamabad.
Pakistan, as the weaker of the two countries, usually
seeks to internationalize its problems with India
while New Delhi tries to keep matters on a bilateral
basis. The Pakistanis reportedly intend to lobby for
regional support for their multilateral proposal;
they hope to receive a favorable response at least
from Sri Lanka and Nepal. It seems likely, however,
that most South Asian governments will be wary of
being drawn into a move that could strain their
relations with India, though they may privately share
Pakistan's suspicions about India's nuclear intentions.
(CONFIDENTIAL)
May 30, 1975
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SECRET
Pakistan-Bangladesh
Modest Progress Possible on Bihari Issue
Pakistan is considering plans for absorbing up
to 30,000 more of Bangladesh's unwanted Biharis, or
non-Bengalee Muslims. The two countries, nonetheless,
remain far apart on the Bihari issue, as well as on
the complex problem of how to divide the assets and
liabilities of Pakistan before its east wing became
independent Bangladesh in 1971.
Dacca has long claimed that Pakistan should
accept several hundred thousand Biharis who sided
with Islamabad during the Bengalees' independence
struggle and have since expressed a preference to
migrate to Pakistan. Many of these people have been
living in isolated enclaves where conditions are even
worse than elsewhere in Bangladesh. Pakistan so far
has reluctantly accepted around 140,000 Biharis but
is not anxious to take on many more. Most are
destitute and lack skills needed in Pakistan.
The additional transfers now under consideration
in Islamabad probably will not occur before autumn,
if at all. Pakistani officials say there will be no
room for these refugees until some 40,000 Biharis now
living in Pakistani refugee camps can be resettled
in new housing. Moreover, although Prime Minister
Bhutto voiced some willingness in February to discuss
additional transfers, he apparently expects Bangladesh
to propose talks on the matter. Dacca, however,
appears reluctant to take the initiative.
Although there has been progress in apportioning
debts owed to third countries, the problem of dividing
assets and other.liabilities appears even more com-
plicated and intractable than the Bihari question.
Because of the lack of progress on these two issues,
other aspects of relations between Pakistan and
Bangladesh have remained frozen; they have not followed
up their formal recognition of each other last year by
(Continued)
May 30, 1975
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establishing diplomatic ties or direct trade links.
Their stalemate has in turn affected major power
relationships in the area. Peking, Islamabad's
principal big-power supporter, has not yet established
relations with Dacca and consequently has not been
able to challenge Indian and Soviet influence in
Bangladesh. (CONFIDENTIAL)
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Secret
Secret
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