NATIONAL INTELLIGENCE BULLETIN

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030000010006-1
• Release Decision: RIPPUB
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• Document Page Count: 19
• Document Creation Date: December 20, 2016
• Document Release Date: May 24, 2006
• Sequence Number: 6
• Publication Date: April 4, 1977
• Content Type: REPORT

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NATIONAL INTELLIGENCE DAILY CABLE
Monday April 4, 1977 CG NIDC 77-0770
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
State Dept. review completed
Top Secret
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National Intelligence Daily Cable for Monday, April
4. 1977-
CONTENTS
PANAMA: Canal Negotiations
Page 1
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ZAIRE: Situation Report
East - West Germany: Relations
KENYA: Kenyatta's Health
Fisheries Dispute
INDONESIA: Good Payments Prospects
BULGARIA-ROMANIA: Nuclear Reactors and Earthquake
NETHERLANDS: Caretaker Government
USSR-TUNISIA: Port Facilities
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Page 9
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PANAMA: Canal Negotiations
//Contradictory signals continue to come from
Panama concerning its position on canal negotiations. The
Panamanians are sending some clear public signals of flexi-
bility--perhaps in part to counter what they see as a US cam-
paign to cast Panama as inflexible. At the same time, recent
domestic and foreign policy initiatives by Chief of Government
Torrijos suggest continued tough bargaining. On balance, the
Panamanians are likely to demand--as they did in the February
negotiating round--a high price for any flexibility.//
//An unnamed prominent Panamanian official--almost
certainly chief negotiator Escobar--told the press on Wednesday
that Panama is now willing to sign an agreement with the US
guaranteeing the neutrality of the canal. This suggests an
important breakthrough on this major point.//
//Torrijos, moreover, has shown some caution in
is initTa dealings with the Carter administration. A US press
item in March misquoting US canal negotiator Linowitz as saying
the US would be in Panama "in perpetuity" received a relatively
low-key response from both Torrijos and his chief negotiator
when it could easily have touched off a major furor. Panama's
reaction to the unilateral release by the US of assurances for
Canal Zone workers under a new treaty was also reasonably mod-
erate.//
//On the other hand, Escobar has publicly suggested
the possibility that the canal administration might revert to
Panama in 1990--a proposal that has been forcefully rejected
by the US. By saying this, Escobar is making it more difficult
for Panama to back away from this proposal. His mention of the
1990 date so close to the public signal of compromise suggests
the Panamanians may continue to insist on a tradeoff, and they
certainly will push for major US concessions on returning ter-
ritory now under canal zone administration.//
//Even relatively moderate Panamanians like treaty
negotiator Lopez Guevara and Minister of Agriculture Paredes
recently have been making uncharacteristically hard-line state-
ments about the treaty talks and Panamanian willingness to pay
"a quota of blood" to obtain justice from the US. The controlled
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media, no longer strongly pushing the theme that 1977 must be
the "year of the treaty," have warned that US tactics are de-
signed to weaken Panamanian resolve and may result in protracted
talks.//
//Torrijos is apparently planning to try to increase
international pressure on the US--as evidenced by the Panamanians'
introduction of a political resolution on the canal at the UN
water conference last month.//
//Torrijos also has recently undertaken foreign
policy tives that could provide him with psychological
and financial boosts. Following the visit of a high-level dele-
gation to Libya in early March, Torrijos announced that he will
himself travel to Libya in mid-April. Torrijos is apparently
considering making the visit a major propaganda show--he will
be accompanied by a 50-man delegation.//
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//On the Latin American front, where Torrijos
has been sense ive to any weakening of support, two recent
developments will probably strengthen his confidence. Chile,
which had been cool to Panamanian requests for support on the
canal issue, has reversed itself in reaction to the US position
on the human rights question as well as Panamanian urging.
//Several of Torrijos' domestic actions already
suggest a Panama is prepared to see the negotiations stretch
out through this year, if necessary. If he receives significant
financial aid, he will be further inclined to push for substan-
tial US compromises in the treaty talks.
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ZAIRE: Situation Report
//In the absence of any significant change over
the past few days in the military situation in southern Zaire,
President Mobutu's regime in Kinshasa is resorting to publicity
stunts in an effort to counteract the decline in popular con-
fidence in the army and the government.//
Yesterday, a mass meeting in Kinshasa to show pop-
ular support for the army's efforts to repel the Katangan in-
vaders fizzled badly. The rally had been billed as the biggest
demonstration in Kinshasa's history, but a 40,000-capacity
stadium was less than half filled. Mobutu did not make an ap-
pearance, and an hour-long oration by a municipal official
drew only mild applause.
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//On the other hand, rumored counter-demonstra-
tions i not materialize, suggesting that popular discontent
with the Mobutu government remains unorganized.//
/On Saturday, the general who had been relieved
o his comman of government forces in Shaba because of his
poor performance told newsmen in Kinshasa that his troops had
killed Soviets, Cubans, and Portuguese who were helping the
Katangans. This--the most exaggerated version yet of Zairian
allegations that foreign troops are participating in the in-
cursions--was put forward to justify the army's failure to stop
the invaders, and also to support Mobutu's official appeals
for foreign aid. Mobutu, moreover, may have reasoned that he
had to allow the general to make a public appearance to quiet
widespread rumors that the general had been murdered
own troops.//
East - West Germany: Relations
I Chancellor Schmidt and party leader Honecker may be
seeking to impart new momentum to inter-German relations, which
have been on the decline since last December.
I An increase in high-level contact is possible, but
on the other hand we have seen no evidence that negotiators
from the two sides have made significant progress on outstand-
ing bilateral issues in recent weeks.
In the past, the two leaders have taken matters into
their own hands and arranged compromises. They last did this in
December 1975 when they agreed on a package deal to improve
transit routes, especially with regard to West Berlin.
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concerning West Berlin and seems prepared to give as much as
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Schmidt has been eager to make another package deal
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$80 million to the East Germans for various development proj-
ects. Bonn hopes that such an agreement will induce East Berlin
to be more flexible on related issues. Schmidt, for example,
would like to start negotiations on the construction of a new
Hamburg - West Berlin autobahn this year rather than in 1978
as originally scheduled.
During Honecker's tour of a West German exhibit at the
Leipzig Fair last month, he stated that political differences
should not impair the development of economic relations. He also
remarked that the political situation was not as gloomy as de-
picted by the West German media. If good sense and good will were
present, Honecker said, political and economic relations could
develop further.
KENYA: Kenyatta's Health
//Elections for senior positions in Kenya's
,
ruling party, scheduled to be held yesterday, have been post-
poned indefinitely, apparently because President Kenyatta's
continuing poor health prevented him from presiding over the
session.//
//Party leaders hope Kenyatta will soon recover
su icien y to preside over the elections. Although rival
party factions have shown no signs of acting outside constitu-
tional limits, the postponement will touch off rumors about the
health of the 85-year-old President and intensify maneuvering
among contenders for leadership.//
//For the time being, all factions will prob-
ably take advantage of the postponement to try to improve their
positions by wooing party delegates and pressing opponents to
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withdraw. A prolonged postponement would increase chances that
the politicking could get out of hand, especially if Kenyatta
should die before elections are held.//
/Elections for senior party positions, many
or which have long been vacant, would mark the culmination of
a year-long revitalization of the country's only political
party. The elections would enhance the prospects for a smooth
transfer of power after Kenyatta dies by establishing a party
mechanism for selecting a successor.//
/Should Kenyatta remain unable to preside
over e voting within the next month or so, party leaders,
fearing he may die before elections can be held, may go ahead
and hold them anyway. The leaders realize, however, that chances
for untroubled elections would be diminished without Kenyatta
in attendance. In addition to restraining factionalism and
tribal bickering, Kenyatta would confer a maximum amount l
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timacy on the process.
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JAPAN: Soviet Fisheries Dispute
The tough demands of the USSR in its current fisheries
negotiations with Japan have prompted a flare-up of anti-Soviet
sentiment in Tokyo.
25X1 I A highly publicized anti-Soviet rally was held in
Tokyo last week. The Japanese media have vigorously protested
Soviet "hegemony diplomacy," and all the opposition parties--
including the communists--have endorsed the Fukuda government's
resistance to Moscow's proposals. A visit to Moscow by Japan's
chief cabinet secretary, who was to carry a letter from Prime
Minister Fukuda proposing further talks on the fisheries problem,
was postponed this past weekend, according to the Japanese,
because of Soviet refusal to issue the necessary visa.
I The Russians insist that, if the Japanese want to
discuss fishing quotas within Moscow's recently declared 200-mile
fishing zone, Tokyo must first explicitly affirm Soviet sover-
eignty over the disputed northern islands and allow the Soviets
to fish within Japan's soon to be established 12-mile limit.
Some Japanese observers believe Moscow's tough stance
may be in response to Tokyo's handling of the MIG-25 incident
last year. Soviet economic motives, however, are probably more
important. The Soviets may be taking a hard initial position in
order to lay the groundwork for an agreement that will be as
favorable as possible to the USSR.
I The Soviets have been hard hit by the proliferation
of 0 -m, e fishing zones. Restrictions on fishing within the
zones recently established by the US, Canada, the EC, and others
could reduce the Soviet catch by one quarter or more unless new
fishing grounds are found. Fish provide roughly 15 percent of
the animal protein in the average Soviet diet, more than in any
other developed country except Japan and the Scandinavian nations.
I I Soviet fishing grounds, for their part, are extremely
va u e to the Japanese. Last year the Japanese caught 12 per-
cent of their total catch within 200 miles of the Soviet Union.
Over half of the animal protein consumed by the Japanese comes
from fish; Tokyo has committed itself publicly to ensuring an
adequate supply for domestic consumption.
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Fukuda has set in train plans for Japan to declare a
200-mile fishing zone of its own. The Japanese probably have
few other options. The US embassy in Tokyo reports that the
Japanese appear to believe that, if challenged, their coast
guard would be hard pressed to keep Soviet trawlers out of
Tokyo's proposed 12-mile limit, and that Japan would have to
rely on the international courts to back their claims.
INDONESIA: Good Payments Prospects
I I Indonesia's balance-of-payments position will be
fairly strong for the next several years, despite debt prob-
lems and weakened incentives for oil exploration.
Our analysis suggests that slower growth in oil pro-
auction is more likely than a decline, and that foreign-exchange
earnings will be sufficient to cover debt service and a substan-
tial increase in imports through 1980.
Indonesia's balance of payments greatly improved in
Exports rose 16 percent, reflecting higher quantities
and prices for oil sales and economic recovery abroad. At the
same time, renegotiations of the debt of the state oil company,
Pertamina, sharply cut amortization obligations.
Imports were held to a 6-percent growth by restric-
tive monetary and fiscal policies as well as by the residual
impact on investor confidence of the problem that arose in 1975
when Pertamina was unable to pay its debts. Foreign exchange
reserves more than doubled to $1.5 billion.
In 1976, government demands for a larger share of
1 company revenues substantially reduced cost recov-
ery allowances and profit margins for foreign oil contract op-
erations. Payments to the government were made retroactive to
January 1, 1976, bringing a $640-million increase in revenues
to Jakarta for the year.
Reduced cash flow and the burden of retroactive pay-
ments led the contractors to cut back on expensive exploration
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operations and to concentrate on development of proven oil re-
serves. Fearing that future production was endangered, the gov..
ernment recently proposed measures to induce the companies to
resume large-scale exploration, but no new revenue-sharing
formula has yet been adopted.
I I Continuing development of known reserves will enable
crude output to reach 1.9 million barrels per day in 1980, com-
pared with the present 1.6 million. Exports of liquefied natural
gas, which should start this year, will become a significant
source of foreign exchange. Oil and liquefied natural gas ex-
ports together are likely to rise from $6.7 billion in 1976 to
about $9.9 billion in 1980.
I Government oil revenues should rise from $3.3 billion
Ilion. Non-oil earnings will be boosted by expected
price rises for timber, rubber, and tin, and should nearly dou-
ble in the coming four years. Nickel exports will rise sharply
next year as new facilities begin production.
I I Net service payments will rise at an estimated aver-
aye of more than 14 percent between 1977 and 1980.
A large part of the increase will stem from rapidly rising
profit repatriation.
Multilateral and bilateral aid flows will continue
U11 Lu the present scale. If official aid should diminish,
Indonesia probably could increase borrowing from foreign com-
mercial sources.
The expected large increase in foreign exchan
e earn-
g
ings should enable Indonesia to boost imports rapidly, especially
after 1977, while maintaining a healthy foreign exchange re-
serve level.
BULGARIA-ROMANIA: Nuclear Reactors and Earthquake
I IBulgarian and Romanian nuclear reactors continued to
operate normally after the earthquake of March 4, which regis-
tered 7.2 on the Richter scale and caused widespread damage in
both countries. This is the first time that nuclear reactors
have been involved in a severe earthquake.
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None of the reactors--two Bulgarian power reactors
an a Romanian research reactor--was located near the quake's
epicenter in Romania, but because of the depth and strength of
the earthquake there was significant damage to other facilities
near the reactor sites.
I IThe Romanian reactor, located outside Bucharest, is
an open-p of reactor commonly used in nuclear research. The two
Bulgarian reactors, located at Kozloduy, are pressurized-water
reactors. The USSR supplied all three reactors.
//The ability of reactors to withstand earthquakes
has become a matter of increasing concern because so many are
now in various stages of construction around the world. Although
a typical Soviet nuclear power station does not include special
seismic design features, the reactors are inherently resistant
to seismic effects.//
I //The Soviets use vast amounts of concrete and
heavily reinforced structural steel to build their reactors
and firmly anchor them on bedrock. They assert that the type of
materials used and conservative construction design allow the
reactors to be shut down safely during a local earthquake of
3.7 to 4.3 on the Richter scale.//
/Only one Soviet nuclear power station has been
esigne especially for operation in a highly seismic region.
The Yerevan nuclear power station in Armenia includes special
shock absorbing features, damping devices, and a specially re-
inforced concrete foundation to mitigate the dangers of earth-
quake damage. The Soviets assert that the Yerevan reactor is
designed to withstand local earthquakes rated as high as 6.2
to 6.7 on the Richter scale.//
NETHERLANDS: Caretaker Government
ntil the Dutch national election this may, Prime
Minister den Uyl's caretaker government will be preoccupied
with political issues arising from its premature resignation
last month. There is little indication that foreign policy will
be affected.
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I ICaretaker governments in the Netherlands have had
imi e omestic strength in the past, and den Uyl will have
great difficulty obtaining passage of controversial socialist
legislation important to his Labor Party. Although early read-
ings give den Uyl a good chance of remaining in office after
the election on May 25, recent opinion polls suggest that the
Christian Democrats could control the next government.
The Christian Democrats were the most important of
the four parties that were aligned with Labor in the coalition
government. They probably would force Labor to accept a watered-
down version of its program.
Den Uyl's recent active role in foreign policy will
improve his stature as a statesman and help to obscure his in-
ability to push through key Labor legislation at home. This will
give him added weight in the coalition bargaining that will
follow the election and should help to ensure his retention of
the Prime Ministry if Labor remains in the government.
Coalition governments are a fact of life in the Neth-
erlands. Fourteen parties acquired enough votes in the 1972
election to gain at least one seat in the current parliament.
More than 70 political parties have so far registered for the
May election. Only three, however, can be considered mass par-
ties--the socialist Labor Party, the centrist Christian Demo-
cratic Appeal, and the rightist Liberal Party.
I The Christian Democratic Appeal is the largest party--
and the one with the greatest internal problems. The party is a
recent union of Protestant and Catholic parties.
The Christian Democrats' leader, Justice Minister
Dries van Agt, alienated important factions of the party when
he almost single-handedly brought down the den Uyl government
last month. The cabinet was split temporarily over a land re-
form bill that was not supported by the Christian Democrats.
Van Agt, vacillating first toward support of the bill and then
toward support of his party's position, managed to anger both
sides.
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(C) Finally, Van Agt resigned from the government, and
in the interest of party solidarity the other Christian Demo-
cratic ministers followed. Van Agt's performance, coupled with
bad publicity he has consistently received during the past
year, could jeopardize the unity of the party.
(C) The Christian Democrats will be reluctant to replace
van Agt as their leader, however, since he still has a popular
following among those who see him as a man of principle. Find-
ing a successor, moreover, could create further internal ten-
sion. On the other hand, Labor may refuse to enter a coalition
with the Christian Democrats if van Agt remains.
(C) Most Christian Democratic and Labor politicians ap-
parently favor forming another center-left coalition. If the
Christian Democrats hold together, recent polls indicate their
party should be the senior partner after the election, but one
of the Labor conditions for joining probably would be the re-
tention of den Uyl as prime minister.
(C) A minority group in the Christian Democratic Appeal
favors a center-right coalition, and this possibility has been
strengthened by the friction between members of the current co-
alition. The Liberal Party is anxious to get back into the gov-
ernment and would be willing to join a center-right grouping.
Liberals and Christian Democrats will be competing for some of
the same votes, however, and wounds inflicted during the cam-
paign will tend to reduce support for such a coalition. I
I I Tunisia has refused a Soviet request for more Soviet
naval s ip visits to Tunisian ports, according to senior Tuni-
sian defense officials. They say Admiral Gorshkov, the com-
mander in chief of the Soviet navy, sought permission for in-
creased port calls by Soviet naval ships operating in the
Mediterranean during his six-day visit in Tunisia last month.
The Soviet navy-makes about six port visits to
- - - --
Tunisia each
ten days each
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I I The Tunisians said they told
uorsn ov'L= at tne present number of visits was about right but
that each visit was too long. They noted that visits by US
naval ships are for five days or less.
I The Tunisian officials observed that Gorshkov seemed
preoccupied with the Soviets' limited port visits around the
Mediterranean and brought the subject up frequently during his
visit.
IThe Soviets lost their access to the port and
industrial repair facilities at Alexandria, Egypt, about a
year ago. This complicated logistics for their naval opera-
tions in the Mediterranean by making them more time-consuming,
expensive, and inconvenient.
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