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December 20, 2016
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October 22, 1976
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AAW AV AV AV Adw Aar Aar Aar Aar AAF ppr eeIdas- a ZOO71D2707-: 0 TC: NAME AND ADDRESS DATE INITIALS 2 4 0 3 ACTION APPROVAL COMMENT CONCURRENC DIRECT REPLY PREPARE REPLY DISPATCH RECOMMENDATION RETURN CIA-RDP79T00975AO294000 ? j6teCret (Security Classification) Access to this document will be restricted to those approved for the following specific activities: Friday October 22, 1976 CI NIDC 76-248C w NATIONAL SECURITY INFORMATION Unauthorized Disclosure Subject to Criminal Sanctions DIA review(s) completed. State Dept. review completed Top Secret J Approved For Release 2007/02/07 : CIA-RDP79T00975A029SOV~tO I s ification) 0 AW AW AW AW Aldir AAW 25X1 Approved For Release 2007/02/07 : CIA-RDP79T00975AO29400010036-6 Approved For Release 2007/02/07 : CIA-RDP79T00975AO29400010036-6 Approved For National Intelligence Daily Cable for Friday October 22, 1976. 25X1 The NID a e is for flie purpose of informing senior US o icials. LEBANON: Situation Report EGYPT: New Initiatives By Sadat CHINA: Situation Report SPAIN: Reform Bill ZAMBIA-RHODESIA: Nationalists Released LIBYA: Labor Problems OPEC: Price Increase USSR-MONGOLIA: Visit USSR: Navigation Satellite Purchases EC: Irish Block Progress on Fisheries FRANCE: Indian Ocean Fleet THAILAND: Split in New Council CHILE: To Go It Alone Page 1 Page 2 Page 4 Page 6 Page 7 Page 8 Page 8 Page 10 Page 11 Page 13 Page 14 Page 14 Page 16 Approved For Release 2007/02/07 : CIA-RDP79T009754 029400010036-6 Approved For LEBANON: Situation Report Lebanon's latest cease-fire has substantially re- duced e level of fighting, although each side has accused the other of violations. Artillery and rocket shelling continued intermit- en y in Beirut yesterday, but at a much lower level than on Wednesday. The Christians accused the Palestinians of shelling in the Mount Lebanon area near Bdadun, but most positions in the mountains east of Beirut seem to have been generally quiet. Approved For Approved For Release 2007/02/07 : CIA-RDP79T00971A029400010036-6 I lArab League secretary general Riyad yesterday ex- tended o icial invitations to Arab monarchs and presidents to attend a full summit conference on the Lebanon situation in Cairo next Monday. The summit is expected to extend a routine ratification of the agreement reached at Riyadh last weekend. It he Cairo summit will focus on recruiting participants for the expanded Arab League security forces. One result of this arrangement will be a delay in organizing the enforcement of the Riyadh agreement, leaving control of would-be trouble- makers in the hands of their respective leaders in the interim. I Lebanese President Sarkis--who has been given author- ity over he League forces--might, as a result, turn to Damas- cus to rein in Christian violators of the cease-fire, something that could cause strains between the Syrians and their Chris- tian allies. 25X1 EGYPT: New Initiatives by Sadat I I The reconciliation between Egypt and Syria during the Riyadh summit this week was an abrupt about-face for President Sadat, who now appears anxious to promote Arab solidarity and to refurbish his Arab leadership credentials before attempting to press the US to resume Middle East peace negotiations after the presidential election. I I Other moves by Sadat also seem designed both to mend ences in an effort to increase the Arabs' political strength and to put the US and Israel on notice that Egypt will press for new negotiations. --Egypt's call on Wednesday for the UN Security Council to discuss Israel's "repressive measures" in the occupied ter- ritories is a gesture of solidarity with the Arabs and a pressure tactic against the US. --The Egyptians efforts to arrange a meeting between For- eign Minister Fahmi and Soviet Foreign Minister Gromyko-- this would be the first in almost two years--are probably also intended in part to exert pressure on the US for early negotiating progress. Approved ForiRelease 2007/02/07 : CIA-RDP79T00975Ap29400010036-6 Approved For Sadat's reconciliation with Syria is the most signifi- cant of his recent moves. The UN initiative, the overture to the Soviets, and the approaches to Libya are all largely tactical steps that cost Sadat little. The rapprochement with Asad has involved important concessions and a radical departure from policies Sadat has pursued for the last year. I I Sadat has been able to carry off the reconciliation gracefully; Asad apparently did not during the Riyadh summit challenge Egypt's adherence to the second Sinai agreement, a principal bone of contention between the two, and the summit's cease-fire resolution on Lebanon was based on an Egyptian pro- posal. I Sadat nonetheless in effect recognized Syria's suprem- acy in Le anon. His policies toward both Syria and Lebanon have until now been governed by a refusal to concede this Syrian pre- eminence. Iraq to transfer arms to the Lebanese leftists and Palestinians. The most important factor was Sadat's realization-- somewhat belated--that only by cooperating with Syria could he expect to achieve progress in Middle East peace negotiations. I He has undoubtedly hoped throughout the last year to Dr g t the cooperation with Syria on his own terms, but with a new US presidential term about to begin he may believe Approved For R4 At Riyadh, Sadat pledged to end his arrangement with Approved For Release 2007/02/07 : CIA-RDP79T00975A0294~0010036-6 25X1 there is little time for this. It would be difficult for Sadat to present convincing evidence that the Arabs are ready for peace negotiations--and thus press the US into action--unless the Lebanese and the Eavptian-Syrian lems are resolved. I CHINA: Situation Report I IChina's official news agency last night referred to the appointment of Hua Kuo-feng as Chairman of the Central Committee of the Communist Party and of the party's Military Affairs Com- mission. It noted the promotion indirectly in a description of a mass rally held in Peking yesterday. The news agency also re- ferred for the first time explicitly to the antiparty clique of Wang Hung-wen, Chang Chun-chiao, Chiang Ching, and Yao Wen- yuan, saying Hua had smashed their conspiracy "with one stroke." I It is not clear why the Chinese chose this method of publicly confirming Hua's elevation. A major leadership meeting is apparently still under way in Peking. I There are signs that the purge of radicals earlier is month has virtually ended the protracted and contentious debate among China's leaders over foreign trade policy. I I The debate had centered on the extent to which China wou import foreign products and technology--the moderates arguing for gradually expanding foreign trade and the radicals for "self-reliance" and reduced imports. Approved For Release 2007/02/07 : CIA-RDP79T00975,~029400010036-6 Approved For I Earlier reporting had hinted that the dispute over oreign trade was in large part responsible for Peking's fail- ure to draw up the five-year plan that was scheduled to begin in January of this year. The elimination of opposition to rela- tively liberal foreign trade policies clearly has encouraged top officials to take a more optimistic stand on prospects for agreement on a plan. Although the removal of uncertainty in the trade sec- tor should expedite China's trade recovery, economic constraints that have limited trade growth since 1974 will continue to be a primary concern. Further improvement in the trade balance this year will permit an expansion of trade in 1977, but China's traditionally conservative financial policies will probably tie import growth to the pace of the country's exports. A signal that the Chinese may hope to move quickly, however, came on October 9 in an announcement of the opening of the autumn trade fair in Canton. Citing a statement made by Mao in 1949, the announcement said China hoped "to resume and expand international trade," and asserted that Chinese trade groups will "make wide contacts" with foreign businessmen, with a view to "increasing trade." These remarks are especially notable when compared wi coverage of the previous two Canton fairs--in October 1975 and April of this year--which opened to relatively brief reviews in the Chinese media that hasized internal developments rather than foreign trade. 25X1 Approved For F9elease 2007/02/07 : CIA-RDP79T0097PA029400010036-6 Approved Fort Release 2007/02/07 : CIA-RDP79T0097PA029400010036-6 I I The Spanish government is moving to protect its right flank as parliament begins consideration of constitu- tional reforms intended to set post-Franco Spain on a demo- cratic course. The government has taken a tough stand toward the major socialist faction--the Socialist Workers Party--by an- nouncing that it is withholding authorization for a party congress in early November until certain "defects" in the ap- plication to hold the meeting are corrected. Government and Socialist officials have been at loggerheads over the Social- ists' refusal to signal their participation in the govern- ment's political reform program by applying for legalization prior to the congress. The government, however, seems to have settled for delaying the congress--rather than flatly prohibiting it-- until after parliament has considered the reform bill, and reportedly has made a deal with the Socialists to this end. On Tuesday evening, Socialist leader Felipe Gonzalez announced that his party would accept the postponement. While trying to mollify the right, the government has ma e it clear that it will brook no significant opposition from parliament on constitutional reform. According to Second Deputy Prime Minister Osorio, the draft bill setting up a bi- cameral legislature must be approved virtually intact or the Cortes will be dissolved and a direct referendum will be held. Such a move would require the King to issue the ap- propriate decrees, thus linking the future of the monarchy to the success of the referendum. The questionable legality of decreeing a referendum without recourse to parliament could also weaken support from the military, which reportedly insists that adoption of the reforms follow the prescribed path through the institutions of the Franco era. I I The government still believes it can win the battle in parliament, but officials admit it will be close. According to one estimate, about 90 of the deputies strongly support liberalization, another 90 are die-hard opponents of any re- form, and the remaining 300-odd are "floaters" who may be sus- ceptible to pressure from the government. Approved ForiRelease 2007/02/07 : CIA-RDP79T00971A029400010036-6 Approved For Fielease 2007/02/07 : CIA-RDP79T00975A Government officials have been particularly con- cerned that the newly formed Popular Alliance led by former in- terior minister Fraga and assorted rightists could make strong inroads into the "floaters" vote and gut the program. The Al- liance is a disparate and fragile grouping, however, and its members will have trouble mounting a concerted and effective attack., Part of the Cortes debates on the reform bill-- which the government hopes will be over by mid-November--will be televised nationally, and few ambitious politicians are likely to risk ap ring before the public as opponents of democratization. Zambia released on Wednesday Zimbabwe African Na- tional nion defense chief Josiah Tongogara and three other ZANU officials who were on trial in Lusaka for the murder of a rival last year. Tongogara has wide influence among ZANU guerrillas an us could play a major role in the Rhodesian settlement discussions in Geneva. Zambia had released four other ZANU of- ficials not directly implicated in the murder case last week- end. Approved For Release 2007/02/07 : CIA-RDP79T00975Ap29400010036-6 Approved Fort Release 2007/02/07 : CIA-RDP79T0097PA029400010036-6 /Tongogara is expected to participate in a ZANU congress t a begins in Lusaka today. Mugabe apparently will be elevated to ZANU's presidency, but Tongogara could become a serious rival for power within the faction now that he is free.// Libya's decision to extend the military draft to oil- field workers and certain foreign nationals employed there un- doubtedly will disrupt the economy if it is enforced. Earlier this year, the government ordered all com- panies to advise their Libyan wnrhers under the age of 35 to register for military service. 25X1 the government has called up a number o ese emp oyees. sso has complained to the government that the call-up will force a cutback in operations. Other companies reportedly have the same problem. The oil sector--the country's sole source of foreign earnings--has the largest reservoir of skilled and semi-skilled Libyan workers. If a large number are ordered to military serv- ice, the government will have trouble meeting plans to boost oil output, which it is counting on to help finance its ambi- tious new development plan. //Government officials from member states of the Organization of Petroleum Exporting Countries are now talking more openly about the price rise expected on January 1. They are suggesting that the increase will probably be greater than 10 percent.// Approved Fo Approved ForiRelease 2007/02/07 : CIA-RDP79T0097gA029400010036-6 //Fearful that the OPEC countries will prohibit excessive iftings immediately preceding the price hike, oil companies are lifting larger volumes now. The resulting ab- normal market conditions are tending to strengthen the convic- tion of many in OPEC that a large price hike is warranted.// //This is in accord with earlier statements by United Ara Emirates Oil Minister Utayba; Saudi Arabia and the UAE are regarded as leading price moderates within OPEC. The Venezuelan finance minister said last week that the price rise would be no less than 15 percent, based on a consensus of the 13 OPEC members.// //This may, in part, be a psychological game that the OPEC states are playing with the industrialized countries to prepare them for the increase, to make them feel relieved when the rise is not larger, and possibly to extract some political and economic concessions along the way.// //The speculative surge in demand for OPEC crude in e pas several weeks is unquestionable. Most OPEC states are producing exceptionally large volumes--Iran is at near record levels, and Saudi Arabia, Kuwait, the UAE, and Venezuela are at or close to government-set production ceilings.// //Companies seeking to increase liftings or con- clude new purchase agreements in the fourth quarter of this year are often being rejected. Crude and product prices in major international spot markets have strengthened, while volumes available for spot sale are drying up.// //The petroleum industry must pay several costs in order to lift crude oil before the price hike: --Monthly interest costs for financing crude oil are esti- mated at about 8 cents per barrel. OPEC states have recently shortened payment terms because of the tight crude market, posing potential financing problems for some companies not immediately planning to process the crude. --Monthly storage costs are also about 8 cents per barrel. These are likely to increase as tankage facilities become tight. Approved Fort Release 2007/02/07 : CIA-RDP79T0097gA029400010036-6 Approved For --Surges in crude liftings tend to raise spot tanker rates, which add to per-barrel costs.// //Based on these factors, each barrel lifted this month for speculative reasons will cost an additional 50 cents, and other factors will further reduce the per-barrel savings.// //Some OPEC countries that offer price discounts to ormer concessionaires may not extend these terms for sales above a given volume. For example, additional liftings by British Petroleum in Kuwait will cost the company 15 cents per barrel more than those under its long-term arrangement. //Higher spot prices, which directly affect only a small portion of crude oil and products traded, raise pro- ducing governments' calculations of crude oil values and encourage them to raise prices by adjusting crude differentials.// //On balance, the cost of speculative buying will be considerable, but the practice will still be profitable 25X1 the oil price hike is 10 percent or more. 25X1 I lAt a dinner in honor of visiting Mongolian party boss se en a on Monday, General Secretary Brezhnev said that the two leaders were giving special attention to Asian problems. He also expressed Moscow's willingness to engage in a "construc- tive dialogue" with anyone willing to work to resolve these problems. Approved For Pelease 2007/02/07 : CIA-RDP79T009754029400010036-6 Approved For Brezhnev's language was similar to that he has used when discussing his Asian collective security idea, but in this instance we think he was seeking to set the stage for--or per- haps to reinforce--possible private Soviet messages to China's new leaders on the need for some sort of high-level meeting. Brezhnev emphasized that Moscow was prepared to improve relations with other Asians step by step and to respect the equality and sovereignty of other states. Tsedenbal usually visits the USSR three or four times a year. This latest occasion was billed as an official party- government visit, and presumably was in return for Brezhnev's trip to Ulan Bator in 1974. For the Soviets, the most significant accomplishment ot se en al's trip probably was the conclusion of a new border treaty. The earlier one had been signed in 1727. It did not take into account the Soviets' annexation in 1944 of a large area of northwestern Mongolia that broke away from Mongolia at the end of the Manchu Dynasty early this century. I We do not know precisely what lay behind Moscow's de- cision o update the treaty at this time. The Soviets may have been prompted by the periodic need to redemarcate the border, most of which lies in rugged, sparsely populated terrain. The Soviets could also, however, have been trying to signal the Chinese that Moscow can be reasonable in border negotiations. For the Mongolians, the principal accomplishment of the trip probably was the signing of new aid agreements detail- ing Moscow's contribution to Mongolia's development over the course of the next five-year plan. According to the Mongolians, Moscow's contribution will be double that provided under the previous plan and will involve construction of some 250 new enterprises. USSR: Navigation Satellite Purchases //The Soviets are buying dual-channel navigation satellite receiver systems from the US that could be used to improve the accuracy of future long-range submarine-launched ballistic missiles. Approved Fo 25X1 Approved For R Iease 2007/02/07 : CIA-RDP79T0097 A029400010036-6 //Soviet survey ships known to be using the re- ceiver systems can determine their positions at sea more pre- cisely and therefore can collect more accurate gravity and ocean-depth data. The data could reduce errors in Soviet sub- marine navigation and in missile alignment and trajectory.// //At present, such data would result in only minor improvements to the low-quality Soviet navigation and missile systems, but would become more important if these systems are significantly improved.// 25X1 //The Soviets could also use the US receivers to evaluate their own navigation satellite system and to improve other navigational calculations.// //DIA believes that the significance of the sale ot US navigation satellite receivers to the Soviets has been exaggerated. If the Soviets did not receive such equipment from the US, several options would be available to them.// 25X1 //They could purchase comparable equipment from other western manufacturers, produce their own receivers using 25X1 US sets as a model, or use their own navigation satellite system. Their satellite system is now assessed as being capable of suf- ficient accuracy to support their SLBM program. 25X1 Approved F Approved F Ec: Irish Block Progress on Fisheries Policy //EC foreign ministers this week failed to agree to establish at the end of the year a 200-nautical-mile zone for Community fishing or to approve related guidelines for negotiating fishing agreements with third countries.// //An accord was impossible because of Irish in- sistence at the EC Nine simultaneously agree on the major elements of an overall internal EC fisheries policy. Strong pressures will be brought to bear on the Irish to break the deadlock when the foreign ministers meet in special session at The Hague on October 29 and 30.// //The Irish are holding out for a zone of up to 50 nautical miles for exclusive individual-country jurisdiction, as opposed to the 12-nautical-mile zone proposed by the Com- mission. Ireland also seeks EC financing for enforcement meas- ures and modification of the proposed quota system, which would allocate the fish catch among EC members, to take into account the anticipated expansion of Ireland's fishing in- dustry.// //The UK has been an equally strong advocate of a 50-nautical-mile zone but doubts the EC will resolve the internal fisheries problem before the end of the year. The British place a higher priority on declaring a 200-nautical-mile zone for the Community and on initiating negotiations with third countries; London wants internal fisheries issues to be negotiated separately.// //With the exception of Ireland, all EC members-- led by Wes Germany, which catches two thirds of its fish out- side Community waters--fear that, unless negotiations start soon, they will be prevented from fishing in Norwegian, US, and Canadian waters when those nations declare 200-nautical- mile zones early next year. //A resolution of the issue is particularly im- portant to. the UK, which is worried that a new "cod war" could break out if the Community is unable to reach agreement with Iceland befo the current UK-Iceland accord expires on November 30. Approved Fc Approved For Release 2007/02/07 : CIA-RDP79T0097 FRANCE: Indian Ocean Fleet I //The French have added a support ship to their fleet in the Indian Ocean--another indication of France's de- termination to maintain its sizable naval presence in the area.// //US defense attaches in Paris report that the and repair ship Jules Verne, previously assigned to the Atlantic, has been sent to Djibouti in the French Terri- tory of the Afars and Issas. Djibouti is France's only remain- ing major naval base on the Indian Ocean.// //France may be asked to leave the base in Djibouti after the FTAI achieves its independence next year. If so, the Jules Verne and the remainder of the Djibouti detachment will probably relocate to La Reunion or Mayotte--French island pos- sessions in the South Indian Ocean.// //The addition of the support ship will improve the fleet's ability to operate independently of the extensive shore facilities at Djibouti. It will be able to perform at sea most routine maintenance and repair tasks needed by French surface ships in the area, but major overhauls or repairs will still have to be made at French bases or at ports with support facilities.// //The French Indian Ocean Fleet, the largest West- ern flee in the area, strengthens France's image as a world power able to influence events and protect French interests in both Africa and the Middle East. The fleet, normally consisting of about 15 ships, also helps to protect key oil transport routes to.the West and maintain surveillance activity in the region. THAILAND: Splits in New Council //Thailand's National Administrative Reform Council increasingly shows signs of losing its cohesiveness, largely because of maneuvering by General Yot, the deputy army com- mander and recent commander of the First Army. Admiral Sa-ngat, chairman of the council, clearly fears he is losing control.// Approved Forl Release 2007/02/07 : CIA-RDP79T00975A02g400010036-6 Approved For R~ Iease 2007/02/07 : CIA-RDP79T00971AO29400010036-6 I iSa-ngat's decision to put together a civilian admin- istration rapidly was intended largely to frustrate Yot. A cabinet made up largely of civilian technocrats has been ap- pointed. The new civilian foreign minister, Upadit Pachariyang- kun--currently ambassador to the US--apparently was chosen with an eye toward fostering better relations with Washington. I I Prime Minister Thanin has dealt thoroughly with his twin o sessions--communism and corruption--in his first speeches to the nation, and the ruling military council has already begun arresting leftist activists. The left's potential for making trouble is fairly limited, but if the round-up is carried to excessive proportions, it could swing public opinion against the government. I lUnder a new government decree, the authorities are arresting individuals known to have supported leftist and commu- nist causes, purging bookstores and educational facilities of "subversive" publications, and closing down some newspapers and magazines, including some important ones. 25X1 w 1 e known anuses have been ew, the oppor unity exis s or se fling private scores. I IThus far, the purge seems to have fairly widespread public approval. Initial fears that substantial numbers of stu- dents and other urban activists would join the rural insurgency appear to have been exaggerated. Although a few students have reportedly gone to Laos for training, most of the students who had been politically active seem more interested in clearing their names and remaining in school than in opting for the rigors of the jungle. Approved For RoIease 2007/02/07 : CIA-RDP79T00975AOP29400010036-6 ? 25X1- Approved For I IChile has informed US officials that it will no longer seek new US aid. In a recent speech, President Pinochet said that Chile had rejected a US loan that he described as "linked to political conditions." Although Santiago claims to be rejecting new aid, it is, nonetheless, seeking a $15-million loan, under PL 480 Title I, to bolster wheat supplies in view of another projected poor harvest. The object of criticism for human rights abuses, Chile sees itself as increasingly isolated from its traditional allies outside South America. Last week, in its report to the UN General Assembly, the Ad Hoc Group on Human Rights Recom- mended that member nations restrict trade and aid with Chile after Santiago's refusal to admit the Group's on-site investi- gation team. I I Encouraged by improved export earnings this year, Chilean economic managers apparently are now gambling that Chile's international financial obligations can be met without further debt rescheduling and with minimal reliance on foreign economic aid. This year, for the first time since 1971, Chile managed to forego debt renegotiations. A 33-percent increase in overall export earnings and 25X1 renewed foreign private loans have led to a dramatic improve- ment in Chile's foreign reserve position--gross reserves tripled to $445 million during the first eight months of 1976. Approved For 25X1 Approved For Release 2007/02/07 : CIA-RDP79T00975AO29400010036-6 Next 2 Page(s) In Document Exempt Approved For Release 2007/02/07 : CIA-RDP79T00975AO29400010036-6 AAPF A roved For Release 2007/02/07 CIA-RDP79T00975AO29400010036-6 .0 Top Flecret (Security Classification) 0 0 0 0 0 0 0 0 0 0 0 Top Secret (Security nLf~ Ii& q Release 2007/02/07 : CIA-RDP79T00975AO29400010036-6 1 J