NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A029600010030-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 16, 2016
• Document Release Date: February 22, 2005
• Sequence Number: 30
• Publication Date: December 17, 1976
• Content Type: REPORT

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NATIONAL INTELLIGENCE DAILY CABLE
Friday December 17, 1976 CI NIDC 76-294C
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
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National Intelligence Daily Cable for December 18, 1976.
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senior o icia
OPEC: Price Comp
IRAQ-SYRIA: Mili
ls.
rom
tar
ise Reached
y Moves
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CHINA: Personnel Changes
USSR-OPEC: Tass Sympathetic
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Page 5
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MBFR: Negotiations
FRANCE: Government Challenge
POLAND: Domestic Critics
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OPEC: Price Compromise Reached
The oil ministers of the Organization of Petroleum
Exporting Countries at their meeting in Doha were unable to
agree to a single percentage on which to base an oil price. hike
effective January 1. Saudi Arabia and the United Arab Emirates
reportedly will confine the price rise on their crude oil to
5 percent. The other eleven OPEC members agreed to raise prices
by 10 percent for six months, and consider another price hike
in mid-1977.
I The agreement--an interim arrangement to prevent a
split in the oil cartel--evidently was adopted as a last re-
sort once it became apparent that Riyadh and Abu Dhabi were
not prepared to compromise with other OPEC members.
The divergence on pricing probably amounts to a test
of wills that can be decided only by the market. If the Saudis'
are insistent on a 5-percent increase for the cartel as a
whole, they can bring on stream more than 2 million barrels
per day in underutilized Saudi productive capacity in an ef-
fort to depress the market of the other producers; this would
make it extremely difficult for some of the others to maintain
a 10-percent increase.
In any case, we expect some softening of demand in
early 7 as companies draw down excess stocks built up in
anticipation of this price increase. This could reinforce the
Saudi position. We expect the next few weeks to be a period of
moderate instability for the cartel.
The price position of Saudi Arabia coming into the
OPEC ministers meeting and the subsequent walk-out by Saudi
Oil Minister Yamani were a culmination of Saudi diplomatic ef-
forts during the past two weeks.
I I Yamani flew home on Thursday when it became apparent
tnat a eadlock had developed on prices. He then returned to
Doha, evidently with instructions from his government.
These Saudi moves suggested to the other OPEC repre-
sentatives that not much room existed for amicably achieving a
sizable price increase immediately. A stalemate at Doha would
have played into the hands of the Saudis and stretched out the
current price freeze.
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IRAQ-SYRIA: Military Moves
Iraq is persisting in its efforts to weaken the re-
gime of Syrian President Asad.
Since the entry of Syrian regular troops in force
into Lebanon in June, Iraq has tried to undercut Syria's effort
to impose a settlement on the warring factions in Lebanon. Iraq
infiltrated some 4,000 troops and Baath Party militiamen into
Lebanon to support leftist and Palestinian forces against the
Syrian army and tried to deter further Syrian military inter-
vention by massing forces near the Syrian border.
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We doubt Iraq's ability to form a credible anti-Syr-
ian opposition front with the dissident exiles. A serious plot
to bring down Asad would require the collaboration of the Syr-
ian army, but Asad has thus far managed to curb dissident of-
ficers and appears to retain the loyalty of key commanders. In
view of Baghdad's unrelenting antagonism toward Damascus, how-
ever, Iraq will continue to assign high priority to toppling
Asad from power, no matter how slim the chances for success.
I //Parallel with its effort to create a Syrian op-
position front, Iraq is using terror and sabotage to create
disturbances in Syria.
Syria may already have retaliated in kind to i.scour-
h
age furt
er Iraqi-instigated terrorist operations in Syria.
Baghdad Radio charged that the explosion on Tuesday at Baghdad
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airport, which killed three persons and wounded others, was the work of the Syrian rprr; n,A
CHINA: Personnel Changes
I I Major personnel changes are in the offing in China's
finis ry of Foreign Affairs. Since the purge in early October
of four Politburo members and the appointment this month of
Huang Hua as minister, at least 19 Chinese ambassadors have left
or have been scheduled to leave their overseas posts, many of
them permanently.
I I While no decisions have yet been announced, specula-
ion among Chinese diplomats abroad centers on prospective re-
assignment of two senior diplomats to posts in New York, Wash-
ington, or Moscow.
Ambassador to Japan Chen Chu is apparently slated to
become China's permanent representative to the UN. Chen served
in the UN as a deputy permanent representative under Huang Hua
before going to Tokyo in 1973.
Chen seems well suited to the assi
nm
t
g
en
, which will
give him ample opportunity to use his experience in dealing
with the USSR. He had been head of the Soviet and East European
affairs department of the Ministry of Foreign Affairs and a min-
ister to the Chinese embassy in Moscow in the late 1950s.
I The other diplomat who reportedly will be transferred
to a key post abroad is Ambassador to Canada Chang Wen-chin.
Chang's years of intimate involvement in developing Sino-US re-
lations as a Ministry of Foreign Affairs official and aide to
Chou En-tai make him a fitting candidate to succeed Huang Chen,
who has headed the liaison office in Washington since it opened
in 1973 and could be due for reassignment.
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An alternative but less likely possibility is that
Chan Wen-chin will go to the UN 25X1
an Chen Chu will return
to MOSCOW.
I I In either case, the appointments of Chang and Chen to
posts ea ing with Sino-US and Sino-Soviet relations would not
signal changes in Chinese policy toward either Washington or
Moscow.
USSR-OPEC: Tass Sympathetic
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zation of Petroleum Exporting Countries in. Qatar has been
sympathetic to the call for a price increase for oil.
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Tass wire service transmissions on Wednesday noted
that crude oil prices have not changed for more than a year
and that the real income of OPEC countries has dropped be-
cause of the effects of inflation in the capitalist countries.
Tass accused the US of putting pressure on the OPEC countries
to prevent a decision on a price increase.
Soviet radio broadcasts in Arabic have cited the
"progressive" policies of such Soviet clients as Algeria, Iraq,
and Libya to justify an increase. The Soviets accused Saudi
Arabia, which called for a six-month freeze in oil prices, of
working with the "imperialist forces," particularly the US.
Higher oil prices will be a mixed blessing for the
Soviets. On one hand, Soviet hard-currency earnings will rise
because of the higher prices Moscow will be able to charge its
European oil customers. There were reports that the Soviets
were already holding back on new oil delivery contracts with
some East European countries until a decision was reached in
Qatar.
feel the effects of any economic downturn in the West caused
I On the other hand, the Soviets will be hurt by higher
Arab of prices, although Soviet purchases from the OPEC coun-
tries are relatively small. The Soviet trade balance will also
by an increase in world oil prices.
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MBFR: Negotiations
//The Western side at the force reduction talks
in Vienna presented updated data on Western forces Wednesday,
having reached an agreement with the French on exclusion of
their forces from new Western figures.//
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on e move until they have had an opportunity to study
the data, but noted that the West's figures are at variance
with Eastern estimates and do not include all Western forces
in the reduction area.//
25X1 //The East, which presented figures on its forces
for the first time last June, has been insisting on updated
Western figures as a prerequisite for entering into detailed
discussions of the existing balance of forces in Europe.//
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//The present negotiating round ended day;
talks will resume in late January.
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FRANCE: Government Challenge
French Prime Minister Barre seems determined to re-
sist a oris demands for wage increases in 1977. He has said
that these increases would seriously undermine the govern-
ment's efforts to control inflation.
Barre reportedly hopes to set a precedent for pri-
vate-sector wage negotiations between labor and management by
taking a hard line with public-sector unions in contract ne-
gotiations early next year. In the last few years, the govern-
ment has set a bad example for private sector employers by
granting wage increases of over 15 percent to public employees.
The public-sector negotiations will probably be delayed until
March or April, when the government hopes the rate of infla-
tion will have visibly declined.
Barre has said wage restraint in 1977 is essential
to improve corporate profitability--which has not fully re-
covered from the recession--and thereby boost the still lag-
ging rate of private investment. In effect, one goal of Barre's
austerity program is a shift from consumption to investment by
temporarily halting the usual. rapid increase in real wages.
When Barre announced his austerity program in Sep-
tember, he said wages should be allowed to increase next year
only enough to offset inflation, which he anticipated at around
6.5 percent. Wages have been a key inflationary factor in re-
cent years, rising at a rate of 15 to 20 percent annually. If
prices should rise more than 6.5 percent in 1977, the govern-
ment presumably would authorize additional compensating wage
increases during the year.
Barre's stance negates a clause added five years ago
to some of the collective bargaining agreements in the public
sector. That clause, in mining, gas, and electricity workers'
contracts, guaranteed an automatic minimum 2 percent increase
in real wages each year unless either side abrogated the agree-
ments.
In his recent book, President Giscard cited those
collective bargaining agreements as a model for labor-manage-
ment relations in the "advanced liberal society" he hopes to
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create in France. Consequently, the government may indicate
that it hopes to suspend the agreements only for 1977. Paris
might also try to mollify the unions by offering a special
bonus to workers, to be paid next year if the wage-price guide-
lines are adhered to.
I I Barre's intention will provoke many confrontations
between he union and employers, both public and private, and
between the government and left opposition parties. The result
may well be a compromise economic situation that would favor
neither side in the upcoming elections. The left would lack a
clear target to campaign against, but at the same time the gov-
erning parties would be denied the clear economic success that
could revive their chances at the polls.
Labor leaders have been calling sporadic strikes to
protest the wage issue and other elements of the Barre plan for
several weeks. Workers, who are concerned about job Security,
have not turned out in the numbers anticipated by labor leaders.
Strike participation has been greater, however, among the pub-
lic-sector employees, of whom Barre now hopes to make an ex-
ample.
Aside from their economic motivations, the two major
a or federations are militantly leftist and believe that the
Giscard
ov
g
ernment has shifted the burden of the austerity pro-
gram and the nation's economic troubles unfairly onto the work-
ers. These unions and the leftist politicians with whom they
are in agreement plan to do what they can to emphasize these
defects in the government's policies before the municipal
elections in March and the legislative elections in 1978. They
will not want to appear overly militant in this pre-election
period, however.
On the other hand, the government hopes to profit
1 e voters by maneuvering leftist unions and politicians
into activities that will alienate voters. Its efforts in this
regard in the public sector are complicated somewhat because
the Force Ouvriere, a moderate labor federation, is sympa-
thetic to the leftist protests for the first time in several
years. It has staked its reputation on the continuation and
effectiveness of the collective bargaining process.
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Management, too, is skeptical about the Barre plan--
which in fact is not off to a good start. Despite Barre's price
controls, inflation continued unabated in October and November
at an 11 percent annual rate, and the trade deficit worsened
considerably. Moreover, any OPEC oil price increase promises
additional problems on both the inflation and trade fronts.
In the face of all this, business optimism has taken
an extraordinary plunge since spring. Businessmen now foresee
a production downturn in the next few months and a further de-
cline in their real investment spending in 1977.
I The Polish regime has taken the case against its
more outspoken domestic critics a step further.
An article in the major party daily on December 13
for the first time names the Workers' Defense League as the
chief anti-government group at home and abroad and attempts
to undercut the League's claim to speak as a legitimate repre-
sentative of the workers.
I The party daily belittles the influence of the dis-
si en s w o belong to the League, calling them only a dozen
or so individuals whom the foreign press calls "intellectuals."
The article asserts that such opponents of the regime enjoy
the support of only scattered students and the "naive" trust
of a few Western literary figures.
I IThe article appears to be a thinly veiled effort by
party o icials to sow discord and mistrust between the intel-
lectual-based League and its adopted working constituency.
There is no indication that party leader Gierek plans to move
more decisively against the League at this time--a step that
would only increase general antagonism against the regime.
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