NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A028600010036-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 20, 2016
• Document Release Date: September 12, 2006
• Sequence Number: 36
• Publication Date: February 23, 1976
• Content Type: REPORT

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Top Secret
Imam w- M-
~,ffi M,
National Intelligence
Bulletin
State Dept. review completed
DIA review(s) completed.
Top Secret
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National Intelligence Bulletin
February 23, 1976
CONTENTS
TURKEY-GREECE: Turksschedule
air and naval exercise . . . . . . . . . . . . . . . . . . . . . 1
CYPRUS: Latest round of
Vienna talks accomplishes little . . . . . . . . . . . . . . . . . 2
USSR - MIDDLE EAST: Soviet
official discusses Geneva conference . . . . . . . . . . . . . . . 3
CHILE-PERU: Chilean concern
over military moves near border . . . . . . . . . . . . . . . . . 5
YUGOSLAVIA-USSR: Treatment
of Soviet party congress . . . . . . . . . . . . . . . . . . . . 6
PORTUGAL: Economic situation . . . . . . . . . . . . . . . . 7
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National Intelligence Bulletin
February 23, 1976
Turkey has scheduled an air and naval exercise for Wednesday and Thursday
near the Greek island of Lesbos, raising the possibility of an incident in the Aegean
this week.
The Greeks claim a ten-mile air space; the Turks recognize only a six-mile limit
and have indicated to Athens that the exercise area would come to within eight
miles of the western coast of Lesbos. Greek-Turkish negotiations on air space rights
and other matters under dispute in the Aegean ended recently without progress, and
this may heighten the possibility of a coin fi-ontati on.
Last May, the Turks conducted a similar exercise without incident, although
the Greeks were prepared to intercept Turkish planes with anti-aircraft guns and
aircraft. Greek pilots at that time were under orders not to open fire without the
approval of the defense minister.
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National Intelligence Bulletin
February 23, 1976
The latest round of Cypriot intercommunal talks, which ended in Vienna on
Saturday, again failed to produce a breakthrough on major issues, but the
atmosphere was reasonably positive.
The negotiators for the two sides had been committed to an exchange of views
on all issues at stake-including the territorial question, which the Turkish Cypriots
had refused to consider in earlier rounds. These issues were discussed, but the
five-day meeting produced few results.
Secretary General Waldheim did succeed in securing agreement on a
compromise formula for future negotiations. This formula commits both parties to
exchange written proposals on pending issues in Nicosia within the next six weeks.
The negotiators will meet with Waldheim in Vienna in May to establish agreements
in principle on the various issues, following which the points will be referred to
mixed committees in Cyprus to iron out details.
Earlier attempts to shift the focus of negotiations to Cyprus have ended in
failure, however, and the prospects for progress in the period before the next round
in Vienna are poor. Mutual suspicions, the reluctance of either side to be the first to
make concessions on issues of interest to the other, and domestic political
considerations, particularly on the Turkish side, will probably prevent the
presentation of reasonable proposals that could form the basis for successful
negotiations.
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National Intelligence Builletin February 23, 1976
The chief of the Foreign Ministry's Near East department, M. D. Sytenko, told
Ambassador Stoessel in Moscow on Friday that a Geneva conference on the Middle
East should be resumed "without preconditions." His assertion suggests that
Moscow is groping again for a formula for representation at such a meeting.
Sytenko said that the question of mutual recognition by Israel and the
Palestine Liberation Organization should be postponed and that all parties should
meet in Geneva without reference to any UN or other resolutions. Sytenko said he
thought that the PLO would go to Geneva under such circumstances. He also
criticized Israel for insisting on too many preconditions to negotiations but
professed a belief that Tel Aviv's demand for PLO recognition of Israel's right to
exist could be overcome.
Sytenko refused to be drawn out on the reason why Foreign Minister
Gromyko's recent letter to UN Secretary General Waldheim failed to refer to PLO
attendance at the Geneva conference from its inception. Sytenko also would not
elaborate on what Gromyko had in mind when he mentioned preparations for such a
conference.
Sytenko was vague about possible informal negotiations before any resumption
of the Middle East peace conference, and avoided mention of any bilateral talks with
the US. The Soviets will soon have an opportunity to consult with the PLO on
Geneva conference matters. The Palestinians have announced that they will send a
delegation to the Soviet party congress--the first time they have done so-and there
are rumors in Moscow that it will be led by Palestinian "foreign minister" Qaddumi.
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National Intelligence Bulletin
February 23, 1976
The Chilean military are anxious over recent reports of Peruvian troop and ship
movements near Chile's border. Last week's adoption of the Kennedy amendment
by the US Senate has apparently added to their concern., since it probably would
prevent the long-anticipated delivery of F-5E aircraft to Chile and would help
preserve the military advantage of the Peruvian armed forces.
Activity in the border area reportedly includes a southward movement of three
Arequipa-based army battalions; two infantry battalions are moving to the
Tacna-Moquegua area, and one armored battalion is moving to the port area of I lo.
In a possibly related event, the US embassy in Lima reported on Friday the
unloading of Soviet equipment-perhaps including tanks-at the ports of Ilo and
Matarani.
Chilean concern over the significant military movements stems mainly from
Peru's noncompliance with an unwritten agreement between the two countries to
give prior notification of any military activity in the sensitive border region.
The present activity is probably related to the activation of a new base in the
southern region near Locumba; past reporting had indicated that the units to occupy
the base would most likely come from Moquegua and Ilo. The reported Soviet tanks
may go to the Sixth Division in Tacna which is also expected to occupy the base.
Tensions between Peru and Chile have diminished substantially since President
Morales Bermudez took office last August. Nevertheless, troop movements in
southern Peru will likely continue to cause concern because of Chile's weaker
military posture.
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National Intelligence Bulletin
February 23, 1976
Belgrade's handling of the Soviet party congress suggests that President Tito is
going out of his way not to antagonize Moscow at this time.
Stane Dolanc, Tito's official substitute in party affairs, heads a strong party
delegation to the congress. By selecting Dolanc, Tito responds in kind to General
Secretary Brezhnev's dispatch of Andrey Kirilenko, Brezhnev's unofficial deputy, to
the Yugoslav congress in May 1974. Two other full Presidium members and three
lesser officials accompanied Dolanc to Moscow yesterday.
Notably absent from the delegation is Aleksandr Grlickov, party secretary for
interparty relations. As the Yugoslav party's spokesman in helping to stalemate
preparations for a European communist party conference, Grlickov may well be in
disfavor with the Soviets. Several of his deputies are in Dolanc's delegation.
The Yugoslavs have also postponed the trial of four pro-Soviet subversives
whose eventual conviction will probably revive speculations about Soviet meddling
in Yugoslav affairs. The trial will resume in early March after the Soviet party
dongress.
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National Intelligence Bulletin
February 23, 1976
The Sixth Provisional Government under Prime Minister Aze'vedo has taken a
number of actions to restore order to Portugal's chaotic economy.
To avert a foreign-payments crisis, Lisbon has lined up substantial Western
financial assistance and enacted measures to bolster the current account. At home,
the government has made tentative moves to stimulate private economic activity and
to inject life into the big nationalized sector. Azevedo is giving top priority to
restoration of civil order and worker discipline. More permanent solutions to
Portugal's deep-seated economic problems will have to await a return to political
stability following parliamentary and presidential elections this spring.
Recent borrowing, progress in other loan negotiations, and new measures to
improve the balance of payments indicate that substantial gold sales can be delayed
at least until midyear. Foreign reserves fell roughly $1 billion in 1975, to about $1.4
billion at the end of the year.
Largely because of Portugal's swing toward political stability, Lisbon's quest
for credits has scored several notable recent successes. The West German central
bank has agreed to lend $250 million against gold collateral for a period of six
months to two years. Switzerland has loaned $50 million on similar terms. Lisbon
has borrowed $85 million from the IMF oil facility, and negotiations for loans from
the Bank of France and from the Bank for International Settlements have been
reported. In addition, the US has extended or is actively considering various
assistance measures that would total about $100 million in the current US fiscal
year.
In January, a team from the European Investment Bank tentatlively accepted
proposals from Lisbon for a dozen projects to be financed by the $175 million in
concessionary loans the EC authorized for Portugal last year. Disbursements could
begin before the end of April. In addition, the Community agreed in principle to
expand Portugal's regular borrowing rights by nearly $60 million and is studying
several possible food aid arrangements. Negotiations are now in progress to expand
the preferential treatment of Portuguese exports to the EC and broaden Portuguese
access to EC technology.
Lisbon has obtained little help frcm the communist world, notwithstanding
numerous official visits and cultural exchanges, an increase in trade, and a variety of
new accords.
The Azevedo government has enacted wide-ranging measures aimed at
improving the balance of payments:
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National Intelligence Bulletin
February 23, 1976
--To cut imports, it has boosted gasoline prices to the highest levels in Western
Europe and extended temporary surcharges on non-oil imports through the
first quarter.
--To promote foreign sales, it has offered exporters insurance against exchange
rate fluctuations and production cost increases.
--To revive emigrants' remittances, it has authorized banks to set up special
foreign exchange accounts.
--To raise tourist receipts, it has set up an Institute for Tourism Development.
--To attract foreign capital, it has enacted a code of rules for foreign
investment.
The government has imposed tax and wage measures to discourage
consumption so that imports can be reduced and resources freed for export or
domestic investment. Wage rates have been frozen through this month, but with
elections coming up the governing parties will agree to extend this unpopular
measure only with great reluctance. An attempt to suspend food subsidies and free
prices already has been aborted because of adverse popular reaction encouraged by
leftist parties.
Azevedo has budgeted more than $1 billion-a 90-percent increase over
1975-for public works, housing, and other investments. After months of neglect,
the government has moved to organize the direction of nationalized industrial and
financial enterprises and reportedly is planning to return to private owners some 300
small and medium-size businesses that were taken over by their employees. A few
prominent industrialists and financiers already have returned.
Azevedo's initiatives will not cure Portuguese economic problems. Western
financial assistance should, however, permit the country to avoid a major
devaluation, large gold sales, or a domestic economic crisis in the next few months.
Restoration of labor discipline and civil calm appears to be the key to success
at this time. Thus, Lisbon may be justified in putting off a sharp devaluation that
would help the payments situation because it could be a heavy price to pay in terms
of worker discipline and the popularity of non-communist governing parties.
To stabilize the agricultural situation, the government has promised not to
expropriate land north of the Tagus River in central Portugal or farms under 75
acres elsewhere. Most land in Portugal remains in private hands, with nearly 40
percent of the total acreage divided into units of 50 acres or less.
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National Intelligence Bulletin
February 23, 1976
The encouragement so far offered to private businessmen and foreign investors,
however, may have little impact. Government guarantees and incentives are
undermined by the inadequacies in the foreign investment code and the uncertain
links between the public and private sectors.
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