NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030100010012-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 16, 2016
• Document Release Date: February 3, 2005
• Sequence Number: 12
• Publication Date: May 7, 1977
• Content Type: REPORT

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NATIONAL INTELLIGENCE DAILY CABLE
Saturday may 7, 1977 CG NIDC 77-106C
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Top Secret
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National Cable for Saturday, May 7, 1977.
ITe NID cable is tor a purpose i
senior US o icials.
JAPAN: Possible Trade Surplus
USSR-ETHIOPIA: Mengistu's Visit
WEST GERMANY: Unemployment
PAKISTAN: Demonstrations
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USSR-SWEDEN: Fishing Dispute
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JAPAN: Possible Trade Surplus
//Japan is well on its way to a record $13-billion
trade Burp us this year. Tokyo may step up efforts to slow ex-
port growth, lower selected import barriers, and allow some
further appreciation of the yen, but these measures will come
too late to trim this year's surplus appreciably. Japan's sur-
plus with the United States will at least match the 1976 level
of $5 billion and may even exceed $6 billion.//
//Japanese exports should exceed $77 billion this
year, 17 percent above 1976. More than half the increase will
reflect higher prices, particularly for cars and consumer elec-
tronics.//
I apanese imports will reach $64 bil-
lion, 14 percent above 7;72 Even if Japan achieves its 6.7-
percent growth target for the 1977 fiscal year, which began on
April 1, import volume will increase only 8 percent in calendar
year 1977. Oil imports should increase about 5 percent in volume
and roughly 17 percent in value. Prospects are dim for a re-
vival in machinery or consumer goods imports at this time be-
cause of the low level of domestic confidence in Tokyo's re-
flation efforts.//
//Japan's heavy dependence on developed countries
to absorb exports this year will ease because of Tokyo's sensi-
tivity to complaints by other industrial countries, new trade
barriers by these countries, and reviving import demand in less
developed countries. In the first half of 1976, sales to the US
and Western Europe accounted for nearly all of Japan's increase
in exports; by the end of the year the share had slipped to 70
percent, and it was under 50 percent for the first quarter of
1977. So far this year, sales to less developed countries are
outpacing the growth in Japan's total exports.//
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I //Japan's surplus with the United States in 1977
will be at least as large as the $5.2-billion imbalance in
1976 and could surpass $6 billion if Japanese machinery imports
remain sluggish during the rest of the year. Japanese sales to
the US will likely exceed $18 billion, 15 percent above last
year. Moderate volume gains for cars will be bolstered by higher
prices. Toyota, Nissan, and Mazda have already announced their
second round of price hikes on 1977 models; Honda is expected
to follow suit.//
//Japanese TV exports will continue to do well
is year even if Japan agrees to US demands to hold color TV
exports to the US to 1.5 million units in 1977--half of the
1976 level. Part of the drop will be offset by higher prices
resulting from the recent US customs court decision requiring
Japanese firms to post a 5-percent to 20-percent bond on all
Japanese color TVs exported to the US. By midyear, most pro-
ducers will begin marking up merchandise because of the yen's
recent appreciation.//
//Japanese imports from the US are expected to
reac i lion. Any increase above this level will depend
on Tokyo's ability to boost business confidence enough to spur
investment and machinery imports. Roughly 30 percent of US sales
to Japan are capital goods. Food and raw material imports will
increase only 3 to 5 percent in volume and probably less in
price.//
//Tokyo is moving slowly in several areas in re-
sponse to pressure from major trading partners regarding its
large surplus. It is considering lowering some nontariff import
barriers, though not enough to boost imports much.//
//Tokyo seems to be moving more forcefully on the
export . The government is tightening its already extensive
oversight procedures on Japanese export industries. Tokyo is
concerned because existing procedures did not predict last year's
surge in Japanese TV shipments to the US. Even so, Japan prob-
ably will not take unilateral action without some form of re-
ciprocity from its trading partners.//
//For example, Tokyo is willing to accept volun-
tary export restraints in exchange for a US pledge to drop all
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actions against Japanese TV imports. Without this type of agree-
ment, Tokyo may retaliate. It is already examining the potential
impact of higher tariffs on US exporters of semiconductors to
Japan.//
//Japan's large trade surplus has meant continu-
ing upward pressure on the yen. In the past few weeks, however,
Tokyo's move to cut interest rates as part of a reflation ef-
fort has pushed the yen down about 2 percent, to 278 to the
dollar. Once interest rates settle, the yen will likely move
back to the 270 level, at which Tokyo will actively intervene
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USSR-ETHIOPIA: Mengistu's Visit
I //Ethiopian military leader Mengistu's cur-
rent state visit to the USSR has resulted in the signing of a
joint political document setting forth each side's commitment
to developing bilateral relations. Mengistu probably values the
document primarily for its likely negative impact on Ethiopia's
arch rival, Somalia. The Ethiopians and Soviets also signed
economic, cultural and scientific, and consular agreements.//
I IThe political document presumably is similar to agree-
ments Moscow has reached with many other Western and third-
world countries. These usually contain statements of principles
on the two sides' willingness to work for closer political, eco-
nomic, and sometimes military relations.
J The Soviets signed such documents prior to concluding
their friendship treaties with Angola and Mozambique, and this
document could set the stage for an eventual Soviet-Ethiopian
friendship treaty. At present, however, Moscow probably is re-
luctant to go this far--even if Ethiopia were willing--for fear
of further antagonizing Somalia.
Moscow has been careful not to give Mengistu any bet-
ter treatment than that accorded Somali President Siad during
his last state visit to the USSR. Moscow's concern about West-
ern and moderate Arab efforts to profit from the USSR's troubles
with Somalia was evident in President Podgorny's speech at his
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dinner for Mengistu. Podgorny blasted unnamed "imperalists" for
using some Arab countries, above all Saudi Arabia, to try to
establish control in the Red Sea region.
I //Mengistu's visit probably will nonetheless
offend Somalia an could further reinforce President Siad's
determination to loosen his ties to the Soviets by improving
relations with the West and the Arabs states.//
One incident that marred Mengistu's stay in Moscow
was a demonstration by anti-Mengistu Ethiopian students at the
Ethiopian embassy in Moscow. The demonstration was quickly
suppressed by Soviet officials, who have said nothing publicly
about the incident. Mengistu left Moscow yesterday and will be
spending a few days traveling about the USSR before returning
to Addis Ab b.a
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WEST GERMANY: Unemployment
//West German unemployment in April remained
a ove the politically sensitive 1-million ZeveZ, dashing the
government's hope of reducing average unemployment for the
year to 850,000. Chancellor Schmidt may face increasing domestic
criticism over the continued high ZeveZ of unemployment, which
will add to his numerous other problems at home.//
I //West Germany's seasonally adjusted unemployment
increase ast month, reversing a general trend of small but
steady declines. Private West German economic projections see
unemployment at between 950,000 and 1 million this year, nearly
4.5 percent of all wage and salary earners.//
//The slight increase probably reflects some slow-
ing in e country's economic growth rate from the 6 percent
registered in the fourth quarter of last year. Receipt. of new
orders and the growth of industrial production have slowed in
recent months. Investment demand remains sluggish, and retail
sales are not showing the strength expected by the government.//
/While exports remain the principal growth factor
in the economy, the current-account balance in the first three
months of this year was down sharply from the corresponding
1976 period, largely because of increased service and transfer
payments. Reflecting the generally worsened business outlook,
private West German economic researchers have scaled back their
projections of 1977 gross national product growth to between
3.5 percent and 4.5 percent. Our analysis indicates that a 4.5
percent growth rate is feasible.//
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//Bonn's much-acclaimed $5-billion to $6-billion
medium-term investment program is not likely to contribute to
economic growth and employment this year, unless the govern-
ment decides to increase substantially its request for 1977
spending authority under the program. Finance Minister Apel
already has introduced a supplemental budget requesting spending
authority for $220 million in cash outlays and requesting the
authority to place orders totaling $1.6 billion. The effect of
even the very modest increase in spending authority was to be
neutralized, however, by offsetting cuts in other expenditures.
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I I Demonstrations yesterday in Pakistan do not appear
to have been serious enough to present an immediate threat to
Prime Minister Bhutto's ability to stay in office. They may
nevertheless have been sufficiently successful to encourage
the opposition to continue its campaign against him.
The opposition was able to stage demonstrations in
most large cities, including the three largest, where martial
law and a curfew were in effect. The most serious incident ap-
parently was in Lahore, where troops fired on demonstrators,
killing three. There were also clashes in Hyderabad, Sukkur,
and Lyallpur.
official announcements have always tended to play
down the level of violence, and with censorship in effect
there is no other source of current information on events out-
side the few major cities where there are foreign officials
and newsmen.
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Mozambique Nationalization
I Mozambique's largest oil company was nationalized
nZs 000, in what the government termed an effort to intensify
the struggle for economic independence. The new state-owned
oil company will be run with Romanian technical and managerial
assistance.
Before nationalization, the company was owned by a
rorr_UgU(R-_,,_A businessman, a French company, and the Mozambican
government. The company operated the country's only refinery,
with a capacity of 11,000 barrels per day, and held 40 percent
of the commercial petroleum sales market. The takeover decree
reportedly calls for compensation.
About 14 Romanians arrived in Maputo last week to
assume managerial and technical positions in the new company,
with another 16 expected within a month. The British and French
personnel who have been running the company are likely to de-
part within 30 days.
I I Local managers of Caltex, a US company, and Shell/
ri is etroleum do not expect their companies to be nation-
alized soon. State oil pricing policies could lead to a steady
drop in business, however, for the remaining foreign operations.
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USSR-SWEDEN: Fishing Dispute
The Swedish government recently submitted a bill to the legisla-
ture that would permit the country's fishing zone to 200 nauti-
cal miles. If the bill is passed, Sweden may claim 45 percent
of the Baltic fishing area, compared with the 10 percent it
claims at present.
The USSR and Sweden are at odds over delineating a
fishing boundary in the Baltic Sea between the two countries.
Sweden wants its zone to extend to a line equidistant
from the USSR and the Swedish island of Gotland, 80 miles east
of the Swedish mainland. The Soviets contend that the limit
should be drawn between the two mainlands, as provided for in
the 1973 Gdansk Convention, which regulates fishing between
coastal states. In that case, the delineation would lie less
than 12 nautical miles east of Gotland.
In recent discussions, Soviet and Swedish delegations
agreed that negotiations on Baltic Sea fishing should be re-
sumed soon. The head of the Swedish delegation has indicated
that if no agreement is reached soon, however, Sweden may uni-
laterally declare a fishing boundary between the two countries.
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