NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030600010032-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 20, 2016
• Document Release Date: August 16, 2006
• Sequence Number: 32
• Publication Date: March 18, 1978
• Content Type: REPORT

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IA-RDP79T0097
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0p??`~oo ecret 219
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Saturday 18 March 1978 CG NIDC 78/064C
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Top Secret
tbecurity GlassiTlcation
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National Intelligence Daily Cable for Saturday, 18 March 1978.
a e is or a purpose or informing 125X1
senior officials.
CONTENTS
USSR-LEBANON:
Reaction to Israel
Page 2
SPAIN: Finance Minister Visits US
Page 2
UNITED KINGDOM: Defense Budget
Page 4
KENYA: Hard Line Against Somalis
Page 5
I
PANAMA:
RHODESIA:
Canal Treaty Reactions
Internal Settlement
Page 7
Page 8
BOLIVIA-CHILE: Relations
Page 8
AUSTRALIA:
PAKISTAN:
Uranium Supplies
Bhutto Found Guilty
Page 9
Page 10
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USSR-LEBANON: Reaction to Israel
The USSR's public response to the Israeli action in
southern Lebanon has not been particularly harsh thus far;
the Soviets have made no private representations. The Soviet
coverage of the Israeli attack suggests that the USSR wants
to retain the option of playing a role in securing an Israeli
withdrawal. Soviet media commentaries, however, have pointed
to US complicity.
A TASS statement on Thursday called for collective
action to stop the Israeli aggression--an endorsement of Arab
efforts to take the matter to the UN. TASS made only indirect
allegations about US support for the Israeli attack by stating
that the Israelis could not have launched their attack without
"at least tacit support" from those who provide arms to Israel.
Pravda on Thursday described the Israeli attack as
an "unprovoked criminal agression" against a sovereign state.
Its veteran commentator, Yuriy Zhukov, suggested that the Is-
raelis were following a long-calculated plan. Zhukov also ar-
gued that the US response indicates it had consented to the op-
eration and that Egyptian President Sadat's recent policies
were responsible for the self-confidence of the Israeli aggres-
sors.
Neither commentary referred to the Fatah terrorist
attack on 11 March, which the Soviets have played down as an
"armed clash" between Palestinian partisans and the Israeli
Army. The Soviets usually approve "legitimate" guerrilla op-
erations conducted inside Israel and the occupied territories
as opposed to "terrorist" operations against civilians outside
this area.
Spanish Finance Minister Francisco Fernandez-Ordonez
will talk with US Treasury officials in Washington on Monday
about the future of the Spanish economic austerity program--
known as the Moncloa Pact--and bilateral economic issues. The
Export-Import Bank, International Monetary Fund, and World
Bank are also on his itinerary. Fernandez-Ordonez was the main
survivor of Prime Minister Suarez' realignment of the Spanish
economic team Zate Zast month.
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I I Fernandez-Ordonez will attempt to clarify the course
of Spanish economic policy following the cabinet shake-up in
which Prime Minister Suarez replaced five ministers. Suarez
made the changes when it became clear that debate within the
cabinet over the austerity program was undermining its imple-
mentation.
The Finance Minister is likely to emerge as the key
economic policymaker on the new team. The official head of the
team, however, is former Deputy Premier Fernando Abril Martorell,
who has succeeded the chief architect of the Moncloa Pact,
Fuentes Quintana. Replacement of Fuentes Quintana and the min-
isters for industry, labor, agriculture, and transportation
was not so much to alter the economic program as to create
harmony within the cabinet.
Although the Moncloa Pact will continue to be the
basis for economic policy, adjustments probably will be made
to ease the problem of rising unemployment, now estimated at
more than 8 percent. Unemployment threatens to hit 11 percent,
or 1.5 million workers, before the end of the year. The leftist
parties can be expected to call for new measures that would
expand employment and increase benefits for the jobless.
Because continued slack investment and many business
failures would mean more unemployment, both the left and the
right will pressure Madrid for an easing of credit and a slower
paced austerity program. With the possibility of facing a na-
tional election later this year, Suarez is likely to be respon-
sive to such demands.
Besides clarifying Spanish economic policy with the
US, IMF, World Bank, and the press, Fernandez-Ordonez will raise
bilateral economic issues in discussions with US officials.
These are likely to include:
-- A request for reduction of US countervailing duties
against a number of Spanish products.
-- A request for individual import quotas on Spanish-
produced stainless steel bar.
-- An explanation of Spain's energy plan, which is now
under revision.
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I I Fernandez-Ordonez also may indicate that Madrid is
considering reducing the capital requirements in present 1e i
lation to permit foreign banks in Spain. 25X1
1 -1
UNITED KINGDOM; Defense Budget
//Parliamentary approval this week of the British
overnmen s White Paper on defense policy reverses more than
a decade of cuts in arms expenditures. During two days of de-
bate, both left and right sharply but predictably attacked the
government's position. North Sea oil revenues and an improving
economic picture have enabled the government, which has been
under increasing pressure from NATO allies, to increase its
defense spending. //
//Although the British have made previously an-
nounced cuts in defense spending for the current fiscal year,
the government's plan calls for a 3-percent spending increase
in real terms each year through 1982. After 1980, the figures
are subject to review based on economic conditions and the
state of arms limitation negotiations.//
//Defense Secretary Mulley encountered heavy oppo-
sition rom the leftists in the governing Labor Party and had
a difficult time winning cabinet support for the new policy.
An unsuccessful move sponsored mostly by Labor's "Tribune"
group and other leftists called for Parliament to spend the
extra funds alloted for defense for pressing social needs.//
//Conservative leaders criticized the government
for not going far enough to increase military spending and de-
nounced the government for waffling on the low level of armed
forces pay. A government decision on pay is expected soon; in-
creases are expected to be in line with the anti-inflationary
10-percent ceiling.//
//The government agreed to continue support for
detente and arms control but argued that additional defense
spending is necessary to maintain Britain's commitment to NATO
in the face of a continuing threat from the Warsaw Pact. Other
NATO members have made it clear that they will no longer accept
the UK's argument that it must hold down military spending be-
cause it lacks funds. Much of the planned increase will be used
for beefing up tactical and conventional weapons and forces and
increasing manpower.//
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//The government also promised to improve the Po-
aris sys em but has yet to decide whether to produce a cruise
missile as an alternative. Both the cruise missile and neutron
warhead are under attack by Labor's left wing, which wants to
end Britain's nuclear role once Polaris is phased out. Prime
Minister Callaghan and Secretary Mulley have defended the neu-
tron warhead by citing the Soviet threat and hinting that the
weapon can be used to enhance deterrance.//
//The increase in defense expenditures is not
likely to become an important election issue, and as long as
the British economy continues to improve, the moderate annual
increases in defense spending are likely to continue whether a
Labor or Conservative government is in power.
KENYA: Hard Line Against Somalis
//Kenya shows no sign of easing its hard
line against Somalia. r__ I
e_jKenya may e zeve 2t can even ua y extract some con-
cessions from the Somalis in view of their weakened military
position.//
The Kenyan Government continues to excoriate the So-
mali Government and to voice support for Ethiopia. This week,
while receiving the Ethiopian Ambassador, Kenyan Foreign Min-
ister Waiyaki branded Somali President Siad the outcast of
Africa for not renouncing Somali territorial claims and pub-
licly welcomed news of Ethiopia's victory.
Another Kenyan Foreign Ministry official this week
said Nairobi could not accept any commitment by Siad to re-
spect Kenya's borders that is not announced publicly and rec-
ognized by both the OAU and the UN. He said any agreement with
Somalia would have to be "stronger and more specific" than the
agreement in 1967 that ended several years of Somali-supported
guerrilla activity in northeastern Kenya but did not require
Somalia to relinquish its territorial claims.
The Foreign Ministry official said that, even with a
Somali guarantee, Kenya would be unhappy if the US were to sup-
ply defensive arms to Somalia. The official questioned Somalia's
need for defensive arms and said most Kenyans would conclude
Somalia only wanted additional weapons to prepare for another
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attack on her neighbors. A high-level defense official echoed
this view, saying that the Kenyan military cannot contenance
the US sending arms to Somalia.
The US Embassy in Nairobi reports that several Kenyan
officials have made it clear that any US provision of arms to
Somalia would dampen Kenya-US relations, but any damage would
be limited by additional US cooperation in helping Kenya meet
its own defense needs. Kenyan Government officials, for example,
were pleased with the results of Vice President Moi's recent
trip to the US, especially with assurances by the US that it
'
s additional
would give sympathetic consideration to Kenya
security needs.
I I
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PANAMA: Canal Treaty Reactions
//Panama has indicated it will reserve final
judgment unt2 the US Senate concludes action on both canal
treaties, but the government is likely to go along reluctantly
with the amended neutrality pact on the presumption it can
avoid a second plebiscite. The situation is still fluid, how-
ever, and Chief of Government Torrijos is clearly unsure
whether he can get away with accepting the Deconcini reserva-
tion. The decision to make a measured public response must have
been an extremely difficult one for the volatile Torrijos.//
Panamanian chief treaty adviser Escobar, in a speech
Thursday following the US Senate vote, stated that his govern-
ment would have to study carefully the Senate modifications
but concluded by noting that the changes appear "fairly palat-
able". Some of the tougher language in the speech--warnings
that Panama will not accept any offense to its dignity--re-
flected bitter disappointment over some of the Senate altera-
tions. Panama may also want to ward off further Senate changes
in the second treaty.
By emphasizing that the Senate additions do not alter
the essence of the original treaties, Escobar was probably lay-
ing the groundwork for a contention that a second plebiscite
in Panama is unnecessary.
Torrijos' final decision on the treaty package will
be influenced by his inner group of advisers and his reading of
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public sentiment for a second plebiscite. Students--who repre-
sent some of the most vocal and potentially violent opposition
to the treaties--are on vacation until 10 April, giving the
government some respite from pressure from that sector.
RHODESIA: Internal Settlement
The presidents of the African frontline states are
meeting 2n Mozambique this weekend to plan their response to
the internal settlement agreement announced earlier this month
by Rhodesian Prime Minister Smith and black leaders inside
Rhodesia. The meeting will be marked by a heightened sense of
frustration stemming from a Zack of clear alternatives to the
internal settlement.
The presidents have been unable to persuade Patriotic
Front coleaders Joshua Nkomo and Robert Mugabe to be more co-
operative on the Anglo-American plan for a Rhodesian settle-
ment. They also are frustrated over the continued refusal of
the two leaders' military organizations to mount a joint offen-
sive against the Smith regime.
Mozambican President Machel in particular believes
only a concerted military effort can disrupt the settlement
process under way in Rhodesia. To that end he is willing to let
both groups operate from Mozambique even at the risk of further
Rhodesian retaliation.
Unless the presidents decide to assume direct control
over the guerrillas--which Tanzanian President Nyerere has sug-
gested in the past--the meeting is not likely to result in any
greater effectiveness in the campaign against the internal set-
tlement plan.
BOLIVIA-CHILE: Relations
Bolivia yesterday broke diplomatic relations with
Chile, a move probably designed to quell increasing domestic
criticism of th.e failure of President Banzer's government to
reacquire the access to the sea that Bolivia Zost to Chile 99
years ago as a result of the War of the Pacific.
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As the 9 July Presidential election draws near, the
government's controversial diplomacy concerning the sea outlet
has become a major campaign issue. Critics of presidential can-
didate Juan Perada, hand-picked by Banzer to be his successor,
claim that Banzer has been maneuvering to surrender Bolivian
territory for an inadequate strip of Chilean coast. La Paz's
declaration is no doubt aimed at setting forth the government's
position on the issue.
I
1962; ties were restored in 1975.
0
AUSTRALIA: Uranium Supplies
I //Australia may be unable to supply one-fourth of
the uranium it has agreed to provide to other countries through
the mid-1980s because of delays in bringing new mines into op-
eration, according to a statement last week by Deputy Prime
Minister Anthony. In addition to threatening the country's
future foreign exchange earnings, Australian production diffi-
culties could result in a tight world market for uranium and
force consumers to scramble for alternative supplies.//
//Australia is committed to supplying its cus-
omer countries nearly 11,000 tons of uranium between now and
1986. Actual production may fall short of this goal by about
2,700 tons, primarily because of delays in opening new mines
in the uranium-abundant Northern Territory.//
//Bureaucratic footdragging is now the primary
cause for the delays, as the Australian Council of Trade Unions,
which earlier opposed the opening of new mines, gave the go
ahead to increased production in February. In addition, finan-
cial and technical difficulties plague the only mine now in
operation.//
//The shortfall could force Japan, the major pur-
chaser of Australian uranium, to look elsewhere to meet its
requirements. Unless Canberra gives speedy approval to new
mining ventures, other countries now looking to Australia as
a future source of uranium oxide also would be forced to turn
to other suppliers.//
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//It takes two or three years for a newly commis-
sioned mine to become fully operational. With all of its mines
in full operation by 1985, Australia could provide about one-
fourth of the output of the Western world outside the US.//
//Failure to meet its commitments could further
damage Australia's reputation as a reliable supplier and could
cost Canberra billions of dollars in export earnings during
the next decade. Australia expects its export earnings from
uranium to offset about half of its annual $1 billion to 2
billion oil import bill in the 1980s. 25X1
PAKISTAN: Bhutto Found Guilty
A Pakistani court early today convicted former Prime
Minister Bhutto of conspiracy to commit murder and sentenced
him to death.
There has been no reaction yet from Bhutto's follow-
ers, but it was widely expected that they would take to the
streets. The government in the past few weeks has banned all
political activity and jailed hundreds of activists in Bhutto's
party in an effort to limit violence. The party still has sig-
nificant popular support, and the US Embassy believes that a
sustained confrontation could force changes in the military
government's leadership.
J Chief Martial Law Administrator Zia-ul-Haq, who has
sought B utto's removal from politics, clearly wanted a guilty
verdict. Given the longstanding independence of the Pakistani
judiciary, however, the verdict was probably not the result of
political pressure.
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