NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A029200010052-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 16, 2016
• Document Release Date: December 15, 2004
• Sequence Number: 52
• Publication Date: August 31, 1976
• Content Type: REPORT

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NATIONAL INTELLIGENCE DAILY CABLE
Tuesday August 31, 1976
A&-
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
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National Intelligence Daily Cable for Tuesday August 31, 1 76
I The NID Cable is or the purpose o in orming
senior o icials.
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CONTENTS
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LEBANON: Situation Report
KOREA: Fishing Boat Seizure
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USSR: Samotlor Oil Field
USSR-SPAIN: Soviet Commentary
CHILE: Economic Picture
VENEZUELA: Large Foreign Borrowing
ARGENTINA-USSR: Wheat Purchases
CUBA: Sugar Production Down
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LEBANON: Situation Report
Arab League mediator Hasan Sabri al-Khuli returned
from Damascus to Cairo yesterday, presumably to consult with
Arab League officials on the status of the peace plan he has
been pushing for the past week.
25X1 According to press accounts, the plan provides for
mutually balanced withdrawals from the Mount Lebanon area by
both the Palestinians and the Christians--a provision that the
Christians are unlikely to accept, although they have held off
any final answer pending a Syrian response.
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Two Lebanese newspapers have reported that the Chris-
tian Phalangists and the Palestinians have agreed on a local
cease-fire in the Mount Lebanon area, regardless of what happens
on other fronts. Even if the two sides are serious about such
an arrangement, they will be hard put to implement it if extrem-
ists on either side are interested in escalating the fighting.
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I According to the Cairo press, 12 Arab League coun-
ries--one more than the necessary majority--have officially
indicated their willingness to attend an emergency summit meet-
ing.
The League has nevertheless moved back to September 4
the foreign ministers' meeting that is to prepare the summit
agenda and set a time and place. An Arab League spokesman said,
without elaborating, that the shift was made at the request of
"some" Arab countries.
A communique from the Palestinian Political Council
has been published requiring all Palestinian males between 18
and 30 to report for mobilization by today. This move is in ef-
fect an acknowledgment by the Palestinians of their difficult
military position. Conscription could reinforce Palestinian
ranks, but only with ill-trained and less effective soldiers.
The Palestinians may be hoping in part that the an
nouncement will persuade the Christians they are ready to fight
in the Mount Lebanon area if current negotiations to arrange a
withdrawal fall through.
There was fresh fighting yesterday around the north-
ern port of Tripoli, where Syrian and Christian forces are
tightening their siege of the city. The Syrians are reported
to have established checkpoints on all roads north of the city,
with the Syrian navy stopping fishing vessels off the coast.
25X1 Although Syrian forces north of the city are appar-
en y no advancing, Christian forces have been involved in
heavy fighting to the east and south. The Palestinians and
leftists are claiming to have repelled Christian attacks near
Alma and Bayt Awkar.
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I uIn Beirut, clashes occurred yesterday in the commer-
cial area, and there were reports of shelling along the usual
confrontation lines, particularly in the suburb of Ayn Rum-
manah. Artillery fire was exchanged in the mountains to the
east; the leftists say they pushed back a Christian infiltra-
tion attempt near Biskinta.
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25X1 The Syrians also seem to be reinforcing their posi-
tions near Jazzin. Syrian artillery fire on Palestinian and
leftist villages in the area is continuing, and they have now
occupied the village of Suhmur. Leftists assert they have
blocked a Syrian attempt to enter the village of Rum.
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KOREA: Fishing Boat Seizure
a South Korean fishing boat. The North Korean news agency de-
scribed the boat merely as an "unidentified ship" that intruded
into the North's coastal waters.
North Korea is playing down the seizure yesterday of
The North Koreans, at least initially, have apparently
eci e that this incident does not lend itself to exploitation
as another "war provocation" by South Korea and the US.
boats and crews at least for several months. The captain of the
last South Korean fishing boat seized, in February 1974, was
charged with spying and forced to sign a "confession," which
was broadcast by Pyongyang radio.
North Korea normally detains captured South Korean
25X1 I The seizure of the boat has had no effect on the cur-
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rent to ks at Panmunjom, but South Korea may at least urge the
US to suspend consideration of North Korean proposals regarding
the Joint Security Area until the boat and crew are returned.
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25X1 The life expectancy of the USSR's Samotlor oil field,
its largest producer, may be shorter than had been previously
expected.
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During a recent visit to the US, a delegation of the
Soviet Ministry of the Petroleum Industry intimated that the
water-injection technique currently being used at that field to
maintain field pressure has resulted in an increased percentage
of water in the oil, thereby adversely affecting the flow of
oil. The delegation further suggested that the Samotlor wells
probably would never flow properly again.
The group expressed great interest in obtaining equip-
ment and technology for a major gaslift project at Samotlor,
implying that the Soviets feel an urgent need to consider sup-
plementary recovery techniques if the field's large reserves
are to be efficiently exploited. Gaslift is an effective tech-
nique for extracting oil. by injecting pressurized gas into the
well casing to force out. the oil more rapidly.
I I The Samotlor oil field, in the sub-Arctic region of
western Siberia, was discovered in 1965 and has become an in-
creasingly important source of Soviet oil. In 1975, it accounted
for 18 percent of Soviet: petroleum production and was largely
responsible for the increase in overall Soviet output. The
field's anticipated output in 1976 is 110 million tons and, at
current growth rates, would probably stabilize at 130 million
tons after 1978. It has an estimated 2.1 billion metric tons of
reserves.
Any failure of Samotlor to meet its production goals
would have serious consequences for Soviet energy planning, in-
cluding the intended export of oil as an important source of
foreign exchange.
25X1, The gaslift project outlined by the Soviet delegation
is probably the largest of its kind contemplated anywhere in
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the world; it would cost approximately $400 million to $500
million, of which $120 million would be allocated for gas com-
pressors alone.
I uIn view of increasing water content in the output of
amo or and other newly developed Soviet oil fields in western
Siberia, the Soviets will undoubtedly now consider the gas ft
method where gas is available.
USSR-SPAIN: Soviet Commentary
I I Recent Soviet assessments of developments in Spain
have been less negative than in the months immediately follow-
ing Franco's death. The Soviets now portray the situation as
heading in the right direction, with "democratization" spread-
ing throughout Spanish society.
Earlier this year Moscow had indicated disappointment
with the pace of liberalization and had tended to emphasize the
political continuity with the Franco past. The Soviets had some
unkind words for King Juan Carlos, but they were careful not to
go as far as Spanish Communist Party leader Carrillo did in
charging that the government was still Francoist.
L I One reason the Soviets may have moderated their line
is that, despite objections from the Spanish Communists, they
are interested in establishing diplomatic relations with Spain,
particularly since China maintains an embassy in Madrid.
Spain has been considering diplomatic recognition of
the USSR, but sees no urgency in moving ahead. Contacts with
the USSR take place through the Soviet commercial delegation,
headed by a diplomat with the rank of ambassador.
The Spaniards seem reasonably content with this rela-
tionship, but the Soviets have asserted that full diplomatic
relations would lead to increased economic benefits.
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1 Even in the absence of diplomatic relations, Soviet
ra e an economic relations are progressing favorably, and an
trade-
air agreement was signed in May; the first Aeroflot flights
from Moscow to Madrid began in July. 25X1
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Higher world copper prices have eased Chile's balance-
of-payments deficit and allowed the military government to fo-
cus on the priority problems of economic depression and triple-
digit inflation.
I ILast year, in the face of plummeting copper prices,
the government imposed a drastic austerity program to cut im-
ports and balance its international accounts. The austerity
program had a devastating effect on the domestic economy into
the first half of this year.
Chile will use most of the gain from higher copper
earnings to meet its scheduled foreign debt payments this year.
For the first time since 1971 it will not resort to debt re-
negotiation.
The government continues to rely mainly on the free
market and private enterprise in its efforts to resolve its
economic difficulties. Import incentives--particularly an 11-
percent revaluation of the peso in June--should sharply in-
crease foreign purchases from depressed first-half levels.
Improved import conditions, combined with lower taxes
and incentives for new investment, will probably succeed in in-
creasing industrial production during the remainder of this
year. Even so, both imports and industrial production will re-
main below 1974 levels.
With increased production, inflation should fall to
about 180 percent this year, down from 341 percent in 1975. In
addition, businessmen have promised to restrain price increases;
slower growth in the money supply and more favorable prices for
imported goods resulting from the new exchange rate policy will
also reduce inflationary pressures.
I I We expect increasing industrial and mining production
to result in growth of about 5 percent in real gross national
product in 1976, compared with the staggering 15-percent de-
cline last year. Agricultural production, which has stagnated
because of a shortage of imported fertilizers and pesticides,
will not benefit from the new policies until 1977.
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VENEZUELA: Large Foreign Borrowing
Several US and European banks are competing for a
c Nance to lend Venezuela $1 billion, the first tranche in a
foreign borrowing program that could total $8.5 billion by
1980.
I I Recently enacted legislation covering the financing
tor enezuela's Fifth National Development Plan specifies that
$4.5 billion needed for new development programs is to be bor-
rowed from foreign sources. Autonomous government agencies will
be authorized to borrow an additional $1 billion. Because of
the limited local capital market, most of the loans are likely
to be placed abroad.
25X1 The Venezuelan Investment Fund is to provide $5 bil-
lion for development projects. We expect that $3 billion of
this amount will probably be borrowed abroad to minimize the
risk to Venezuelan foreign exchange reserves--more than half
of which are held by the Fund.
I IVenezuela is having little trouble attracting
large oil export earnings.
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Actual borrowing may be substantially less than the
amount authorized. Venezuela's development plan calls for pub-
lic investments totaling $27.7 billion in petroleum, petro-
chemicals, metals, and public construction projects, but
limited administrative resources probably will delay im lemen-
tation of many projects.
25X1 I lAccording to a Buenos Aires economic journal, the
USSR has offered to buy Argentine wheat surpluses for the next
10 years at "prices adjustable to the world situation."
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I lOfficial Argentine sources have denied that any con-
tracts have been signed. The Soviets will need wheat imports
for the foreseeable future and may be interested in long-term
contracts.
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Argentina should have ample supplies of wheat for ex-
Port. Domestic requirements are likely to remain under 5 million
tons and the harvest this fall could reach 10 million tons if
weather remains favorable.
Moscow bought 739,000 tons--about half of all Argen-
tine wheat exports--in :1975 and has purchased 719,000 tons so
far this year. It has become the second-largest customer for
Argentine goods, trailing Italy in 1975 and Brazil in the first
quarter of 1976. The USSR exports little to Argentina.
Although the Argentine government no longer directly
controls grain sales, the strongly anti-communist military re-
gime probably would urge trading companies not to sign long-
term, large-scale contracts with the USSR if purchasers more
ideologically compatible were available. The government almost
certainly would insist on cash sales.
If the Soviets are prepared to buy on a large scale,
they are likely to pressure Buenos Aires to buy more Soviet
goods to help balance bilateral trade. The USSR has sold Argen-
tina power-plant equipment and would like to sell more heavy
machinery. The Argentines prefer US and West European equipment
on technical grounds, but might consider a wheat-for-equipment
barter arrangement, particularly if the USSR offered good terms.
F77 I
CUBA: Sugar Production Down
25X1 I IReduced earnings from sugar exports will help push
u a s ride deficit to more than twice the level of 1975.
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We estimate Cuba's sugar production from the 1976
harvest at 6.0 million tons--7 percent below last year and only
slightly higher than 1974. Cane production remained stable, but
sugar content declined as a result of a prolonged drought that
delayed planting and because of abnormally heavy rains during
the harvest.
25X1 I I The drop in sugar output was held to a minimum by
improve arvesting and transporting of the cane to the mills.
Approximately one third of the crop was harvested mechanically,
compared with one quarter in 1975.
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The reduced sugar harvest, coupled with lower world
sugar prices, should cut total export earnings this year by 11
percent to about $3 billion. With imports increasing, we expect
the total trade deficit to exceed $850 million. The deficit with
non-communist countries should rise 10 percent to $770 million,
despite an expected 10- to 15-percent decline in the value of
imports from the West.
The trade deficit underscores Cuba's continuing de-
pendence on
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mass
ve foreign economic assistance despite the
brief respite caused by soaring world sugar prices in 1974. In
addition to an estimated $1.2 billion in Soviet subsidies for
sugar and petroleum, Havana will need $90 million in communist
trade credits and $220 million in hard currency balance-of-
payments support from Moscow. Drawings of $550 million in West-
ern trade credits will cover the remaining deficit.
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