NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030500010088-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: December 16, 2016
• Document Release Date: March 7, 2005
• Sequence Number: 88
• Publication Date: February 24, 1978
• Content Type: REPORT

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TD: NAME AND ADDRESS DATE INITIALS
APPROVAL I RECOMMENDATION
COMMENT --~(--TILE_ DISPATCH T RECOMMENDATION
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Access to this document will be restricted to
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Friday 24 February 1978 CG NIDC 78/045C
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Top Secret
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Cable for Friday, 24 February 1978.
The NID Cable is o e purpose
senior US officials.
CONTENTS
USSR: 60th Anniversary Speech
VIETNAM-CAMBODIA: Relations
WEST GERMANY: The Neutron Weapon
CHILE: Foreign Investment
NEPAL: Koirala Released
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USSR: 60th Anniversary Speech
Soviet Defense Minister Ustinov strongly advocated
progress'on arms control measures in his speech commemorating
the 60th anniversary of the Soviet Army and Navy Wednesday.
He singled out the Strategic Arms Limitations Talks and the
Mutual and Balanced Force Reduction negotiations as particularly
important, and asserted the defensive purpose of the Soviet
armed forces. Ustinov added to the current campaign embellish-
ing President Brezhnev's military record by fulsomely praising
Brezhnev's wartime and present role. He referred to Stalin's
wartime performance, and indicated Moscow's poor relations
with Peking by briefly but harshly condemning the Chinese
Zeadership's foreign policies.
Ustinov spoke with confidence about the military
capability of Soviet armed forces, but his tone was generally
conciliatory. He opened the international section of his speech
by pledging to stop the arms race and to "deepen and consoli-
date" detente and to make its development "irreversible." This
formulation has been used in the past by Soviet officials to
signal their support for detente, but has been only occasionally
used in the last 18 months. He cited numerous Soviet disarmament
proposals, and singled out SALT and MBFR as particularly im-
portant--thus giving the MBFR negotiations an unusual pride of
place.
The Defense Minister's remarks castigated "forces of
reaction and aggression" in the capitalist world and stressed
that Moscow could match the production of such lethal weapons
as cruise missiles and "neutron bombs." His remarks, however,
lacked the sharp focus and relative harshness of the lengthy
Pravda editorial on 11 February that attacked "forces in the
United States" for creating obstacles to a SALT agreement.
His conciliatory tone may have been intended in part to provide
a balance to the foundering European security negotiations in
Belgrade and to 'emphasize a desire to move ahead on other
points.
I IUstinov seemed somewhat defensive about Moscow's
military posture, repeatedly stressing its allegedly defensive
nature and denying that the USSR intended to use its military
might for expansionism or for advancing international Commu-
nism.
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I I Ustinov did, however, clearly refer to the theoret-
ica basis for Soviet military control over Eastern Europe. He
called the Soviet armed forces "the embodiment of socialist
internationalism," and asserted that their defensive capacity
"consolidates the positions of the world socialist system."
I Ustinov also went to great lengths to enhance Brezh-
nev's a ready exaggerated reputation as a military leader. He
detailed Brezhnev's military contributions from his wartime
activities at the front to the present time. Ustinov emphasized
that Brezhnev "gives daily attention to questions of military
building," and stated that "the might of the Soviet armed forces
is inseparable from the name of Leonid Ilich Brezhnev."
The Defense Minister also made a rare public: refer-
ence to Stalin's wartime role in mobilizing Soviet forces to
rout the enemy--a statement applauded by the audience. The re-
marks were within the bounds of the current Soviet treatment
of Stalin, which allows him credit for his wartime contribu-
tion in spite of his other excesses. In praising early Soviet
military heroes, however, Ustinov also included Marshal
Tukhachevskiy, who was executed during Stalin's purges and who
has since been politically rehabilitated.
The only country specifically criticized was China.
Ustinov charged that the Chinese leaders were inciting inter-
national hatred, opposing peace initiatives, and acting in
concert with world reaction--unusually harsh language for a
Politburo member--and emphasized that there is little hope now
for constructive changes in Peking's anti-Soviet policies.
VIETNAM-CAMBODIA: Relations
I Vietnam's public criticism of Chinese support
for Cambodia zn e Vietnamese-Cambodian border conflict prob-
ably reflects Hanoi's frustration in its attempts to force
Phnom Penh to negotiate. Cross-border shelling and small unit
incursions continue, but the border has been relatively quiet
since the Vietnamese peace proposal of 5 February. Vietnam will
probably intensify its propaganda and diplomatic pressure on
Cambodia before resorting to significant new military actions.
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On Monday and Tuesday, Vietnamese media for the first
time sharply criticized China--without mentioning it by name--
for supporting Cambodia in the conflict. Hanoi radio said Phnom
Penh "could not conduct its anti-Vietnam campaign alone," and
insinuated that Peking has been supplying Cambodia with the
means to continue the border conflict--including long-range ar-
tillery and warplanes the Cambodians did not have before 1975.
The Soviet press has repeated these charges.
Vietnamese criticism of Peking no doubt reflects
Hanoi's frustration at China's unwillingness to use its leverage
to bring Phnom Penh to the negotiating table. Although the Chi-
nese favor a negotiated settlement that would prevent any fur-
ther deterioration in relations with Vietnam, they are clearly
not prepared to risk alienating their only ally in the region
by employing the ultimate sanction, a cessation of support.
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Vietnam's criticism of China runs counter to its
broader effort to establish a balance between Moscow and Peking.
Although Hanoi has not repeated its charges against Peking over
the past week, it may raise them again on occasion publicly to
display its displeasure.
//Despite its threats of force if Phnom Penh con-
'A tinues to rejits peace proposal, Vietnam seems more intent
on stepping up political pressure on Cambodia. Hanoi sent a
copy of its proposal to the UN, where it was informally circu-
lated, and one Vietnamese official said his country would re-
quest a UN mission to inspect the border. Vietnam has not yet
undertaken any further initiatives at the UN.//
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WEST GERMANY: The Neutron Weapon
//The West German Government announced yesterday
that its decision on the deployment of neutron weapons in
Western Europe would depend on the outcome of East-West dis-
armament talks. The statement appeared to adopt a position
similar to that outlined by the Free Democratic Party, the
junior partner in the two-party coalition with the Social Demo-
crats.//
//The Free Democratic resolution stated that the
decision to produce the weapon is up to the US and if Washing-
ton decides to go ahead the neutron weapon should be :_ntroduced
into arms reduction negotiations that would devote as much as
two years toward reaching a force reduction agreement.. Presum-
ably, Bonn would engage in NATO discussions on deployment of
the weapon in Western Europe only if those negotiations
failed.//
//The government's action may have been inspired
by a recent resolution of the opposition Christian Democratic
Union/Christian Social Union that urged the-government to sup-
port a US decision to produce a neutron weapon for eventual de-
ployment in Europe as part of the NATO defense force. By taking
the lead on this matter, however, the opposition may also hope
to stimulate a dispute within Chancellor Schmidt's Social Demo-
cratic Party over this emotionally charged issue.//
//The Social Democrats avoided taking a position
on the neutron weapon at their conference in Hamburg :Last year,
resolving only that they hoped East-West negotiations would
make such a weapon unnecessary. Some of the party's young lib-
eral spokesmen, however, rejected the neutron weapon entirely.
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Many social democratic left-wingers oppose the weapon, but the
position of some may be softening. Egon Bahr, who appears to be
trying to act as the left's unofficial spokesman on the matter,
may be seeking to guide them away from total rejection of the
neutron weapon concept. Bahr said earlier this week that the
coalition parties agree on the principles of the neutron
weapon issue and on election of the "unrestricted yes"
of the opposition.
CHILE: Foreign Investment
The resumption of loans and direct investment in
Chile by foreign bankers and businessmen is ZikeZy to stimu-
late other potential investors. Such outlays have been tow
since the military intervention that toppled the Marxist govern-
ment in 1973. The increase in capital inflow--resulting from
improvement in Chile's credit standing abroad--has enabled San-
tiago to relax its austere economic policies at home.
Chilean officials evidently sharply distinguish between the
attitudes of US businessmen and those of the US Government,
which they perceive as hostile toward Chile. Interest in en-
ticing a continued flow of external capital will probably re-
main a key element in the government's economic recovery pro-
gram.
Major investments have resulted from growing foreign
confidence in the government's ability to manage the economy.
I I The Chilean Central Bank and state corporations raised
nearly 150 million in new loans and credits last year, compared
with $450 million in 1976. Medium-term loans obtained in world
We ex ect private capital flows to amount to $1 billion
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to $1.2 billion in 1978--more than double the funds made available
in 1976. International bankers began increasing loans to Chile
in 1977, and could syndicate as much as $1 billion in new loans
for the Chilean Central Bank and state corporations in 1978.
Loans to Chile, at a rate of 2 percent over the London Interbank
Rate, are currently very profitable in the world money market,
where developing countries are refinancing past debts at less
than 1 percent over the London rate. Foreign corporations are
also increasing direct investment outlays and are likely to
invest at least $200 million this year.
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money markets accounted for 55 percent of the total. The overseas
branches of US banks arranged the bulk of the Euromarket syndi-
cations, while major New York commercial banks controlled direct
foreign bank lending. Supplier credits comprised the remainder,
mainly from non-US banks to finance capital goods imports.
Known direct investment by foreign corporations totaled
$150 million in 1977, up from $80 million in 1976. Approximately
80 percent of these investments were by US corporations, the
largest being the acquisition by Exxon Minerals International
of the Disputada de las Condes copper mines for $110 million in
December.
These increased outlays are in large part a result of
Chile's prompt payment of foreign debts and revitalization of
the economy under the junta's stabilization and reform program.
Last year, for example, Chile's real gross national product
grew by an estimated 8 percent, compared with nearly a 13-percent
decline during 1975.
Chile's elimination of direct investment barriers is
also paying dividends. In October 1976, Chile withdrew from the
Andean Pact, thus freeing itself from restrictive foreign in-
vestment regulations, and in March 1977 the government liberal-
ized the Foreign Investment Statute.
I J Increased private capital flows enabled the Chilean
regime to avoid renewed payments problems last year. Despite
60-percent decline in official loans--resulting from growing
international disapproval of the government's human rights
practices--total capital inflow reached $1 billion, compared
with $900 million in 1976. The greater flow of credit from
private sources enabled Chile to relax its austere incomes
policy and greatly expand imports while also covering part
the $1 billion in debt amortization payments due in 1977.
The Nepalese Government announced yesterdapj that King
Birendra has approved the release from prison of ailing former
Prime Minister and political activist B. P. Koirala, who is
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on trial on seven counts of treason and sedition. Although
Koirala is free to seek medical treatment abroad, he has de-
cided to remain in the country to complete his trial.
I Koirala is a leader of the proscribed Nepali Congress
Party, w ich governed Nepal in 1959 and 1960 before former King
Mahendra abandoned his brief experiment with democracy. Koirala
voluntarily and unexpectedly returned to Nepal in late 1976.
He had spent eight years of self-imposed exile in India, from
where he and other party members issued occasional calls for
the overthrow of the monarchy and reinstatement of the demo-
cratic process. The Nepalese Government alleges that the party
also conducted guerrilla forays into Nepal's border regions and
staged terrorist attacks against government officials, includ-
ing the King.
Koirala was arrested immediately upon his return to
Nepal and charged with treason and sedition, but was released
last summer to undergo an operation in the US. He was rearrested
on his return to Kathmandu last November.
By approving Koirala's release for the duration of
his trig , King Birendra perhaps hopes to fend off further
pressure from India and the US on the human rights implications
of Koirala's case. Although the charges are being heard by a
one-man tribunal in camera, Koirala's trial seems to have been
fair so far--he has already been acquitted on four of the seven
charges. His lawyers apparently believe that the evidence
against him for the last charge is more substantial, however,
and could result in a conviction next week.
Should Koirala be convicted, King Birendra will prob-
ably try to arrive at an understanding with the aging politician
that would permit a full pardon. Birendra usually does not deal
harshly with politibal dissent as long as it does not threaten
the existence of the monarch or inhibit his plans to modernize
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