NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030400010104-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 19, 2016
• Document Release Date: July 15, 2005
• Sequence Number: 104
• Publication Date: December 15, 1977
• Content Type: REPORT

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Thursday 15 December 1977 CG NIDC 77/290C
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National Intelligence Daily Cable for Thursday, 15 December 1977.
The NID Cable is for the purpose of informing
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USSR: Economic Plan and Budget.
FRANCE: Election Forecasts
TURKEY-CYPRUS-US: Relations
PERU: Economics Minister Removed
INTERNATIONAL: Copper Producers
Briefs
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USSR: Economic Plan and Budget
I nformation available so far from TASS indicates
that speakers at yesterday's session of the USSR Supreme So-
viet announced a Spartan economic program for 1978, reflecting
the leadership's expectations for continued slow growth. Na-
tional income will increase by 4 percent next year while real
per capita income is to grow by 3 percent.
Nikolay Baybakov, Moscow's chief economic planner,
said that industrial production is slated to increase by only
4.5 percent in 1978, a rate consistent with the average annual
rate of 4.3 percent over the past two years. Heavy industry is
to grow at a somewhat faster pace, and consumer oriented indus-
tries somewhat more slowly.
]The announced target for oil production in 1978--575
million tons--is down slightly from the original goal of 580
million tons that had been given for 1978 in the context of the
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1976-80 plan. Planned output of coal in 1978 has also been
pared down somewhat from the original goals of the five-year
plan, while the output of natural gas envisaged for 1978 re-
mains on track with the plan.
25X1 After giving a final figure on this year's grain
nounced output of 194 million tons--Baybakov announced a goal
for 1978 of 220 million tons of grain. This is unattainable
under normal weather conditions.
25X1 aybakov characterized 1978 as the year of "shock
labor." He criticized a number of industrial branches for their
inefficient performance in 1977 and said that labor productiv-
ity was not growing fast enough.
25X1 Investment in 1978 in new plant and equipment is
percent--less than one-half the annual rate of growth in 1971-
75. The continued slow growth planned for investment reflects
the leadership's intent to continue the program of concen-
trating resources on the renovation and modernization of exist-
ing assets and to place increasing emphasis on productivity
gains to stimulate economic growth.
25X1 Announcing budget figures for the coming year, minis-
ter of Finance Garbuzov said defense spending would remain at
its-1977 level of 17.2 billion rubles. This figure does not
reflect the real size of Soviet defense programs, nor does the
trend in announced spending figures match the trend of observed
Soviet defense activities. Published plans to keep defense out-
lays at the same level next year help buttress the prodetente
image the Soviets are attempting to project both at home and
harvest--195.5 million tons, slightly above the previously an-
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abroad.
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FRANCE: Election Forecasts
Three major French public opinion polls released last
The large number of undecided voters, plus uncertainty about
the strength of party discipline for the crucial second ballot,
week show that, although a plurality of French voters still
favor the Left, a growing number--26 percent--are unsure of how
they will vote in the two-round legislative election next March.
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make forecasting unusually hazardous. If the voting intentions
expressed in the polls are translated into votes, however, it
looks as if the Socialists, Communists, and Left Radicals will
win a majority in popular votes in the first round, but may
lose out to the governing coalition in the second round because
of insufficient discipline among Left voters.
The polls showed clearly that Jacques Chirac's Gaullists
dominate the right. Twenty-four percent of the voters favor the
Gaullists; only 21 percent favor the other parties of the govern-
ing coalition, including President Giscard's Republicans, which
are reported getting 13 percent.. An earlier poll that showed
the Republicans edging out the Gaullists apparently reflected
only a temporary improvement in the Republican image because of
Giscard's increased popularity over the last few months.
The Gaullist showing, which is just about what that
party polled in the last election in 1973, attests to the dura-
bility of the party's hold on the electorate. The strength of
the Gaullists reduces Giscard's chances of "re-balancing" the
governing coalition at Gaullist expense and should lessen specula-
tion about the gradual evolution of a center-left coalition in
France.
IThe Socialist Party, damaged by the quarrel with its
Communist partners in the Left Alliance and by the inroads of
the ecology parties, polled a disappointing 24 percent. Centrist
and undecided voters do not appear to be moving over to the
Socialists as party leaders had hoped in the wake of the split
in the Left. The polls confirm that centrist voters are more
inclined to abstain on the second round than to shift their votes
to the Socialists or Left Radicals.
The various groups that make up the French ecology move-
ment are gradually emerging as the jokers in the current politi-
tical deck. Polls suggest that the ecology movement groups will
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gain around 4 percent of the vote in the first round of voting.
Not many will make it into the second round, and the fate of
many candidates of other parties will hinge on where the ecology
vote goes. Until recently it appeared that the Left could count
on about two-thirds of that vote, but the percentage now has
apparently dropped to about 50 percent.
Prospects for Communist-Socialist cooperation in the
second round have also decreased. Only about 42 to 45 percent
of Socialist voters would now support the Communists in the
second round, although around 72 percent of the Communists would
still vote for the Socialists. In both cases most of the other
voters would abstain. Crucial to Left cooperation--and to the
Left's chances of victory--will be the Communists' decision on
whether to sign an electoral pact with the Socialists. This may
be decided at the Communist Party convention scheduled for 7
and 8 January.
25X1 /Turkey announced yesterday that it intends to
withdraw a out 700 of its estimated 31,000 troops occupying
the northern zone of Cyprus. The decision may presage further
conciliatory gestures aimed at improving US-Turkish relations
and securing approval of the US-Turkish Defense Corporation
agreement. The precariousness of the coalition government in
Ankara and the Turks' reluctance to part with their gains in
Cyprus, however, continue to limit Prime Minister DemireZ's
ability to take significant new initiatives, despite Turkey's
urgent need for military and economic assistance.//
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//The announcement indicated that Turkey already
had reduced its troop strength by some 30 percent, or 13,000
men. Previous announcements of troop withdrawals, however, were
never fully implemented. Thus, the actual number of troops
withdrawn since the 1974 intervention is probably between 6,000
and 10,000 rather than the number the Turks asserted yesterday.//
]//Turkish troop strength on the island has fluc-
tuated because of normal rotations but has hovered around 30,000
during the last year. This is more than enough to give the Turks
overwhelming military superiority over the Greek Cypriots.//
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//The announced troop withdrawal was preceded by
conciliatory Turkish statements calling for a resumption of the
long-stalled intercommunal negotiations. The Turks have also
been cooperative in the US-mediated effort to form a joint com-
mittee under International Red Cross auspices to deal with the
problem of Cypriot missing persons resulting from years of in-
tercommunal strife.//
//For the most part, however, Turkey has been pre-
occupied with shoring up its faltering domestic economy and
trying to cope with the International Monetary Fund's demand
for stringent austerity measures. This, together with the losses
suffered by Demirel's Justice Party in municipal elections on
Sunday, is creating strains within the coalition and in his own
party that leave him with little leeway on the Cyprus issue.//
L
//Both UN Secretary General Waldheim and the Greek
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Cypriots insist that the next move is up to the Turks, and they
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are reluctant to participate in new talks unless Ankara gives
assurances that the Turkish Cypriots will be responsive on the
question of territory; the Greek Cypriots have already presented
their proposals on this issue. Waldheim and the Greek Cypriots
thus are not likely to see much that is helpful in the announce-
ment of Turkish troop withdrawals.//
//It is doubtful the Turks will address the sensi-
tive territorial question, but they have indicated that they may
soon refine their earlier proposals on a constitution for Cyprus.
This, together with other possible conciliatory gestures such as 25X1
a compromise on the missing persons issue, might be sufficient
to reactivate the intercommunal talks after the Cypriot presiden-
tial election in February.
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PERU: Economics Minister Removed
//Peruvian President Morales Bermudez has removed
the chief opponent of his economic policies from the cabinet by
assigning him to the Washington-based Inter-American Defense
Board. General Gaston Ibanez O'Brien's departure will not guar-
antee success for the President's economic program, but it should
lessen official opposition to the austerity measures that Morales
Bermudez believes are necessary to arrest the country's downward
economic spiral.//
]//Morales Bermudez is said to have increasingly
viewed the politically ambitious Ibanez as a rival for power.
Since last spring, Ibanez had led cabinet opposition to an aus-
terity program necessary to obtain crucial balance-of-payments
loans and to restore stability to an economy wracked by growing
inflation, high unemployment, and stagnating industrial growth.//
//The opposition group in the cabinet seriously
complicated Peru's negotiations with the International Monetary
Fund for a standby loan when it forced the resignation of former
Finance Minister Piazza in July. Piazza's removal followed wide-
spread public unrest over the implementation of harsh economic
measures. The agreement with the IMF was finally concluded last
month.//
//More recently, in response to pressure from
Peruvian industrialists, Ibanez reportedly has been insisting
that the government take action to alleviate insufficient finan-
cial liquidity and permit salaries to rise so that consumer buy-
ing can rejuvenate industry.//
//Ibanez' removal comes at a time when there re-
portedly are increasing doubts among middle-level economic offi-
cials that the government can see the austerity program through
to its conclusion. Even though Morales Bermudez may now be more
likely to get cabinet approval for tough new measures to be en-
acted next year, he still will face strong opposition from the
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labor sector, which has grown increasingly more restive over
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the government's handling of recent strikes.
INTERNATIONAL: Copper Producers
25X1 Developing countries that depend to varying degrees
on copper exports for foreign exchange earnings failed again
last week to agree on effective measures to raise severely de-
pressed copper prices.
25X1 At a meeting in Indonesia of the Intergovernmental
Council o Copper Exporting Countries, Zambia p p
members cut output next year by 15 percent in order to raise
prices. The proposal would reduce total output by about 370,000
tons annually, or 6 percent of the output of non-Communist coun-
tries, and would bring production into balance with estimated
consumption. Chile, the largest producer, refused to go along
with the proposal, but Zambia, Zaire, Peru, and Indonesia said
they would proceed anyway.
25X1 I Chile's unwillingness to cooperate foredooms the ef-
fectiveness of the proposed cut. Zaire, Peru, and Zambia--the
latter has virtually a one-commodity economy--are unlikely to
adhere to production cuts for very long while Chile benefits
at their expense. Should Chile change its position, however,
and if the cuts are rigidly adhered to, chances are good that
a substantial price rise could be achieved.
25X1 Council members need production cuts to raise prices.
They cannot, however, afford the lost foreign exchange earnings
and unemployment among mine workers that would result while the
market. gradually returns to better balance.
25X1 Copper production has exceeded consumption nuthefnon-
Communis world every year since 1973, creating a surplus
2 million tons. Prices have fallen close to the operating costs
of many producers, and some marginal operations have closed.
The prognosis for slow economic growth in developed countries
means there is little chance that consumption will recover
enough in the next several years to take up the slack in pro-
duction capacity.
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The failure of an earlier attempt to restrict produc-
tion illustrates the copper-exporting countries' problems. In
1975 the Council agreed to reduce exports by 15 percent, but
producers soon began violating cutback goals and then abandoned
them altogether. Some members have even expanded their opera-
tions during this period. Chile has increased mine output by
270,000 tons--a 37-percent rise--while Peru undertook an ambi-
tious expansion program that will result in a 150,000-ton in-
crease this year with more to come. 25X.1
BRIEFS
Turkey
I ITwo more deputies reportedly resigned yesterday from
Prime Minister Demirel's Justice Party. If the resignations in
fact occurred, this means that Demirel's coalition has lost its
parliamentary majority. Three Justice Party legislators bolted
from the party on Sunday in apparent protest against Demirel's
leadership.
Despite this serious setback, Demirel could still
remain in power unless ousted by a vote of no-confidence. The
question remains open as to whether or not opposition leader
Ecevit can muster the 226 votes necessary 1-n firing down Demirel's
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//Ecuador is losing interest in its membership
in the Organization of Petroleum Exporting Countries because
of the country's inability to affect OPEC decisions. Ecuador's
impotence was underlined last December when it was passed over
for its scheduled turn to fill the Secretary General post. The
Ecuadoreans recently skipped an important OPEC meeting and have
cut down other OPEC-related trips to reduce administrative ex-
penses.//
//OPEC Secretary General Jaidah is now in Ecua-
dor in an et tort to boost Quito's failing enthusiasm. The cartel
is especially concerned with maintaining a unified front during
this period of excess world oil supply.//
Ecuadorean ambivalence toward OPEC is aggravated by
the country's inability to sell oil on the glutted world market.
The arrival of Alaskan crude on the US west coast--Ecuador's
main market--has forced Quito to reduce production below 150,000
barrels per day from its normal level of 200,000 barrels per
day. Withdrawal from OPEC would give Quito more freedom to work
with foreign oil companies to set prices that maximize produc-
tion and revenues.
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25X1 North Korea will unveil its 1.978-1984 economic plan
at t e st session of the newly elected legislative assembly
that opens today in Pyongyang. According to Pyongyang radio, a
plenum of the Central Committee of the ruling Korean Worker's
Party :heard a report on the plan by President Kim Il-song on
Tuesday.
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Details of the plan may provide some insight into
question"; this usually is a reliable indication that some
changes in the leadership will. be disclosed at the legislative
assembly.
North Korea's economic difficulties stemming from its heavy
foreign debt. The plenum also discussed "the organizational
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