NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A029100010026-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: December 20, 2016
• Document Release Date: May 8, 2006
• Sequence Number: 26
• Publication Date: July 16, 1976
• Content Type: REPORT

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NATIONAL INTELLIGENCE DAILY CABLE
Friday July 16, 1976 CI NIDC 76-166C
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
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State Dept. review completed Top Secret
(Securit Classification
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National Intelligence Daily Cable for Friday, July 16 1976.
25X1 he NID Cable is for the purpose of informing
senior o icials.
Palestine Liberation Organization chief Yasir Arafat
has apparently linked his agreement to travel today to Damascus
for talks to a Syrian withdrawal from both Sidon and Sawfar.
According to a leftist-oriented Beirut newspaper, Lib-
yan Prime Minister Jallud, who has long been trying to negotiate
a settlement, arrived from Damascus yesterday carrying a "Syrian
peace plan" to Arafat a::.d the Palestinian leadership. The plan
apparently contained no significant Syrian concessions.
Damascus specified that only after relations between
Syria and the Palestinians had returned to what they were in the
past--presumably a reference to previous restrictions on Pales-
tinian activity--would Syrian forces "concentrate in specific
areas."
Syria also indicated that it would not withdraw com-
pletely from Lebanese territory until Lebanese factions had
been reconciled and the country's institutions were once again
functioning.
Palestinian sources stated yesterday afternoon that
the Syrians had begun to withdraw from Sawfar--Syria's forward
position on the Beirut to Damascus road--as well. These ges-
tures may be sufficient to persuade Arafat that a trip to Da-
mascus could be undertaken without loss of face.
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I I The extent of the Syrian pullback is unclear. Damas-
cus will almost certainly remain in position for a hasty return
should negotiations fall through. The lack of a general outcry
against Syria at the Arab League meeting earlier this week has
given Damascus considerable flexibility; it probably feels that
it can lose nothing by making an effort to probe Arafat's will-
ingness to reach some kind of accommodation.
The Syrians can be expected to take a tough line in
any meeting with Arafat. They will, at a minimum, hold out for
full implementation of the Cairo accords controlling Palestin-
ian activity.
It is doubtful that Arafat could bring the rest
of the Palestinians, let alone the Lebanese leftist leadership,
along with him should he reach an understanding with the Syrians.
Christian leaders, meanwhile, are viewing the Syrian
withdrawals with alarm. A Christian delegation has nevertheless
returned from Damascus with reassurances from President Asad
that S ria intends to pursue its initiative "to the end."
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In a move apparently intended to keep the military
out of politics, the People's Assembly this week passed a bill
that effectively disenfranchises the military and the police.
Presidential and parliamentary elections are scheduled for
October.
President Sadat gave a series of speeches last spring
in w is e made it clear that the army should concern itself
only with military matters, and Gamasy late last year announced
that any military men who join the new political groupings in
the People's Assembly will be court-martialed.
By depriving military personnel of the right to vote,
the government undoubtedly hopes to render them a less attrac-
tive target for agitators interested in turning out a large
anti-government vote in the elections. Disenfranchisement, how-
ever, could cause more problems than it will solve.
With members of the military now de-
prived of the vote as a means of communicating their grievances,
some of them could be tempted to use extra-legal means.//
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leftist Beirut newspaper has reported that the So-
viet Union has cut off shipments of arms, ammunition, and spare
parts to Syria until it withdraws all its troops from Lebanon.
Quoting what it called reliable Arab diplomatic sources, the
paper alleged that Moscow had threatened to take other measures
as well if Syrian military intervention continued.
We cannot confirm reports of an arms cut-off and view
them with skepticism. According to Reuters, a Soviet embassy
source did not deny the report but said he doubted that the
USSR would go beyond political and diplomatic pressure.
0
The USSR might, however, delay some shipments to dem-
onstrate its displeasure with Syrian policy.
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President Morales Bermudez may benefit briefly from
the show of support he received from all major military com-
mands after the abortive revolt last week, but dissatisfaction
and lack of unity in the military may be more widespread than
was initially apparent.
L Dissatisfaction in the army seems to be directed
against leftist Prime Minister and Army Commander Fernandez
Maldonado. Morales Bermudez has been under severe pressure for
several months to remove the Prime Minister--who is due to re-
tire in 1978--but so far the pressure has been only from indi-
vidual, moderate army officers.
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Aside from the military dissension, Morales Bermudez
faces problems of public order. After several days'of quiet
following disorders on July 1, protest riots against govern-
ment economic austerity measures broke out in two northern
cities. The government has now banned all unauthorized meetings,
prohibited strikes, and canceled national holiday parades, pre-
sumably including the traditional independence celebration on
July 28.
Morales Bermudez' economic program faces a test this
week in negotiations between a Peruvian financial delegation
and New York bankers. Citing the recent austerity measures, the
Peruvians hope to obtain a $400-million stopgap loan. Finance
Minister Barua has said he will resign if he does not get the
loan. The departure of Barua, a civilian who has been Morales
Bermudez' principal economic adviser for years, would reverse
the recent trend toward civilian participation in government.
I I Meanwhile, word of Peru's negotiations to buy sophis-
tica e oviet fighter-bombers has reached Chile, which will
probably publicize the prospective purchase in hopes of bolster-
ing its own efforts to buy arms. News of the expensive purchase
will not go over well in Peru, where the domestic austerity
measures are causing price increases and a decline in real
wages.
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The Dutch government will impose a wage settlement
for the second half of 1976 following the breakdown of govern-
ment-industry-labor negotiations. The settlement will boost the
monthly take-home pay of the average Dutch worker by about $15,
increasing industry's total wage bill slightly more than 9 per-
cent this year.
The Dutch Trade Union Federation had demanded an aver-
age $20-per-month raise, and Dutch labor has strongly protested
the government's decision to impose a settlement. The federa-
tion has appealed to Parliament, which generally supports the
government's move, and the leader of the Dutch Transport Workers
Union has threatened to strike.
QThe imposition of a wage settlement reflects the gov-
ernment s concern that a lengthy dispute between management and
labor, in addition to its adverse economic effects, would in-
crease tensions within Prime Minister den Uyl's fragile five-
party coalition. The government parties, already at odds over
a wide range of economic and political issues, are anxious to
maintain their coalition in the nine months remaining before
the national election.
The government has announced price restraints designed
to limit inflation to 8.5 percent. Price hikes will be restricted
to 2 percent for the remainder of 1976, increases in utility
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rates have been postponed, and professional fees have been fro-
zen at current levels. During the first half of this year, Dutch
prices rose at an average annual rate of 9.3 percent.
//The British government is apparently under
growing domestic pressure to end its opposition to an interna-
tional common fund to stabilize world commodity prices by devel-
oping buffer stocks of raw materials.//
//If Britain shifts its stand on commodity
policy, West ermany will be the only EC member still publicly
opposed to the fund. At the recent UNCTAD meeting, the UK,
West Germany, and the US objected to the common fund proposal
partly on the grounds that it would involve an open-ended com-
mitment of funds by the developed nations. They pressed instead
for negotiating agreements on a commodity-by-commodity basis.//
//Many British experts consider the establish-
ment of the common fund inevitable; most spokesmen believe it
would be difficult to modify the Group of 77's original proposal
for a common fund without running into strong resistance from
the developing nations.//
//Labor ministers are being accused by members
of t Heir own party of alienating the Commonwealth developing
countries as well as giving the UK a bad reputation in the
third world as a whole. Some British pressure groups argue that
London's free market stand on commodities is at variance with
the overnment's socialist policies at home.
With formal reunification completed, Hanoi is taking
a decidedly more flexible and conciliatory line in dealing with
its Southeast Asian neighbors.
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//The joint Vietnamese-Philippine communique
issued in Mania on Monday indicates that Hanoi has tempered,
and in some cases eliminated-, demands that have frustrated past
negotiations with Southeast Asian countries. The Vietnamese,
for example, dropped their demand for the return of war mate-
riel brought into the Philippines shortly after the fall of
Saigon last year and for placing specific limitations on US use
of foreign bases.// Remarks by Vietnamese officials, moreover,
suggest that Hanoi may even be softening its rhetoric in sup-
port of insurgencies in neighboring countries-.
The Philippine communique--and the message that Dep-
uty Foreign Minister Phan Hien is promoting elsewhere on his
current swing through the area--reflects the "four principles"
enunciated by party chief Le Duan earlier this month in cere-
monies commemorating formal reunification:
--Mutual respect for sovereignty and independence.
--Prohibition on use of foreign military bases to attack
Vietnamese soil.
--Improvement in economic and cultural cooperation.
--Settlement of disputes through negotiations.
The establishment of formal ties between Vietnam and
the Phi ippines promises important political dividends for both
countries. President Marcos views the move as another step to-
ward his goal of reducing Philippine identification with the US
and promoting some balance in Manila's foreign relations, and
probably assumes it will help avoid confrontation over islands
in the Spratlys. The communique, for example, pledges that nei-
ther party will permit its territory to be used for "aggres-
sion" against the other. Manila may intend to use this provi-
sion to underscore its demand in the current renegotiation of
the US bases agreement that Filipinos be given veto power over
US military activities staged from the bases.
For their part, the Vietnamese almost certainly view
the provision on the use of bases as an indication of Filipino
de-emphasis of security cooperation with the US and as an ex-
ample for the Thai to follow if they wish to establish formal
relations with Hanoi.
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0 Hanoi is using its more conciliatory negotiating po-
sition to enhance its position among the nonaligned countries
at their summit conference next month and increase its support
for admission to the UN this fall.
Vietnam's moderation and flexibility will also net
some immediate assistance from its neighbors to help reconstruct
its economy. The Vietnamese would like to reduce their heavy
reliance on the USSR and China, and they probably hope that a
more pragmatic approach may eventually help pave the way for
assistance from the US.
The Vietnamese delegation visited Kuala Lumpur before
going to Manila, and it will also stop in Singapore, Jakarta,
and Rangoon. These stops already have produced commitments for
limited economic assistance; Malaysia has offered to aid the
Vietnamese rubber industry; Singapore, the Philippines, and
Indonesia have said they will explore ways to help Vietnam's
oil exploration efforts; and Burma plans to provide some help
to develop co-tage industry and medical assistance.
II Thailand is the only Southeast Asian country that has
not yet established formal ties with Vietnam and the only ASEAN
country not included on the delegation's itinerary. Both Hanoi
and Bangkok announced last week, however, that a Thai delega-
tion led by Foreign Minister Phichai will visit Hanoi in August.
Given Hanoi's more conciliatory foreign policy line, the estab-
lishment of Thai-Vietnamese relations in the near future seems
probable.
If it follows the pattern set in Manila, Hanoi prob-
ably wi not insist that the Thai return war materiel brought
into Thailand after Saigon's collapse. Hanoi is also now con-
vinced that Bangkok is serious about restricting the US pres-
ence in Thailand. The Thai, for their part, are likely to be
encouraged by Hanoi's muting of its support for insurgencies.
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II //The discovery by the Burmese government of a
budding coup plot and the subsequent arrest of some of the
army's brightest junior officers is apparently sowing fear and
confusion at senior levels of the government.//
//A number of junior officers assigned to key
mili ary leaders have been arrested so far. The coup plotters
were apparently motivated by opposition to the corruption of
their superiors and by concern over economic stagnation in
Burma. A number of senior officers may fear that the attention
this incident focuses on corruption within the government will
place them in jeopardy, particularly in view of President Ne
Win's continuing anti-corruption campaign and the President's
tendency to deal harshly with offenders.//
Under Ne Win's leadership, the Burmese military main-
tains tight control over the government; in the past it has
not hesitated to crush any emerging opposition that seemed to
threaten it. Senior officers may try to use the present oppor-
tunity to eliminate all officers they think have been involved
in the recent plot before any testimony endangers their own po-
sitions. Because of the good reputation of the officers involved,
however, heavy-handed action against them could make them mar-
tyrs within the Burmese military. In any case, the public image
of a mon likely to be
damaged.
//Jamaican opposition leader Edward Seaga has
told the US embassy that the government's actions under the
present state of emergency have so demoralized his party that
it might not contest the coming national election.//
//Seaga, head of the Jamaican Labor Party, said
an extraordinary party conference on July 25 will make the de-
cision on whether to participate. The election must be held by
next May, but Seaga believes Prime Minister Manley will set the
date for this September. Seaga said he sees no hope for his
party in an election held under state of emergency conditions;
he indicated that a "dramatic collapse" of the opposition is at
hand.//
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//Seaga's despondent mood is in sharp contrast
to his initial reaction to the state of emergency declared by
Manley on June 19. Soon after the first arrests of Labor Party
leaders, he expressed confidence that public opinion was turn-
ing against the government because of its blatantly partisan
tactics. He now says the government has continued to arrest
Labor Party candidates and has taken other measures that make
campaigning impossible. Seaga disclosed that he had asked for-
mer prime minister Shearer to replace him as party leader but
that Shearer refused.//
//Seaga has reason to be dispirited. Before the
state of emergency was implemented, the Labor Party stood a good
chance of winning a fair election. The government's actions, re-
flecting Manley's willingness to take any measures necessary to
ensure his re-election, have greatly weakened Seaga's party.//
//Seaga is given to emotional ups and downs but
has always been a fighter, and it is out of character for him
to be throwing in the towel so early in a game with high stakes
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Aparicio Mendez Manfredi, a 72-year-old law professor;
has been named president-elect of Uruguay. He is expected to
continue Uruguay's friendly attitude toward the US and be re-
sponsive to direction from the military hierarchy.
Mendez was appointed by the Council of the Nation--a
military-civilian body that was assigned the task of selecting
a new chief of state. He apparently will assume office on Sep-
tember 1. Mendez succeeds Interim President Alberto Demicheli,
who was named by the military in June to replace ousted presi-
dent Bordaberry.
An expert in administrative law and the president of
the Council of State that replaced the national congress in
1973, Mendez was responsible for developing the legal rationale
behind the removal of Bordaberry. He says that his administra-
tion will lead the country back to representative democracy.
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Despite a strong recovery in demand this year, the
worl copper industry is still operating far below capacity.
Barring strikes and other supply interruptions, the industry
will easily cover consumption requirements through 1978 and
probably through 1980. Prices nonetheless may continue to rise
in the months ahead.
In 1975, the copper industry faced the widest gap be-
tween supply and demand since World War II. The recession in
major developed countries reduced consumption to 5.5 million
tons, compared with 6.9 million tons in 1973. Despite large
production cuts, copper stocks reached 1.5 million tons toward
the end of 1975.
Prices on the London Metals Exchange sank to 50 cents
per pound, down from a peak of $1.52 in April 1974. Efforts by
members of the Intergovernmental Council of Copper Exporting
Countries to moderate the price decline proved ineffectual,
given the magnitude of the fall in demand and their inability
to organize supply. Although demand has rebounded over the past
six months, the industry is still operating far below capacity.
Present consumption patterns suggest that require-
ments for refined copper could reach about 6.9 million tons this
year--25 percent above last year's low level but still well be-
low capacity. Copper demand should reach 7.4 million tons by
1978 if the major industrial countries follow the same growth
patterns they have in earlier recovery periods.
We expect refining capacity to stand at 8.9 million
tons. The industry could satisfy a demand of 7.4 million tons
while operating at 83 percent of capacity. This margin of spare
capacity should enable the industry comfortably to handle tem-
porary demand peaks. With no prolonged interruptions in mining
operations, copper ore supplies should be adequate to support
refinery requirements throughout the period.
If consumption increases sharply, many of the expan-
sion plans now shelved can be revived in time to avoid capacity
constraints even assuming more rapid growth in demand. At pres-
ent, reasonably sure estimates of additions to refining capacity
between 1978 and 1980 total 420,000 tons; projects involving
another 320,000 tons have been postponed.
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The absence of refining constraints does not mean
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prices will remain low. With demand improving, prices on the
London Metals Exchange have risen from 54 cents in January to
76 cents currently. The price rise has been helped along by
speculative purchases associated with declines in the British
pound earlier this year and with expectations of further price
hikes. Price movements will also remain highly sensitive to any
supply interruptions caused by strikes, transport problems, or
political instability in any of the major producing countries.
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