CENTRAL INTELLIGENCE BULLETIN

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NATIONAL INTELLIGENCE DAILY CABLE
Friday 8 September 1978 CG NTT)C 78/0
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
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National Intelligence Daily Cable for Friday. 8 September 1978.
The NID Cable is for the purpose of informing
senior US officials.
SYRIA: Khaddam's Trip to Africa
Page 1
USSR-JAPAN: Reaction to Treaty
Page 5
CANADA: Fall Election Unlikely
UK: Callaghan Speech
BRIEFS
USSR
North Korea
Sri Lanka
Page 7
Page 8
Page 10
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SYRIA: Khaddam's Trip to Africa
Syrian Foreign Minister Khaddam's visit to Libya and
Algeria this week is probably intended to remind the US and
Egypt that Syria's position on Middle East questions must be
taken into account by the Camp David summit participants. Khad-
dam's statement in Algiers that Arab hardliners should sign a
mutual defense pact with the USSR if the US enters into a treaty
relationship with Israel may have been designed to warn the US
against trying to impose a settlement.
//Khaddam is making his visit to ar=range a
third summit of the Arab "Steadfastness Front," which was
formed last December to oppose the Egyptian peace initiative.
Discussions between Syrian and foreign officials in
Damascus indicate that the Syrians do not expect the Camp David
talks to make any significant progress on the issues dividing
the Arabs and Israel. The Syrians nonetheless expect President
Carter will not allow the summit to fail completely and will
probably persuade President Sadat not to give up his peace ini-
tiative at this time.
//In recent speeches, President Assad has
argued that the Egyptian initiative has resulted in no substan-
tive concessions for the Arabs from Israel. Assad has reiter-
ated Syria's commitment to the peace process but warned that
Syria will reject any effort to impose a settlement on the Mid-
dle East.//
Khaddam's comments in Algiers--which had not been re-
peated on Damascus' official radio as of last night--were prob-
ably intended primarily to dissuade the US from signing a de-
fense pact with Israel or offering to station troops in the
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Middle East as part of a settlement. Khaddam often exaggerates
in his public appearances, and we have no information that the
Syrians have raised the topic of a defense pact with the Soviets.
In fact, the Syrians have resisted occasional Soviet efforts to
secure a friendship pact with Syria similar to the one the USSR
has with Iraq.
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USSR-JAPAN: Reaction to Treaty
Soviet Premier Kosygin has strongly criticized the
Sino-Japanese Peace and Friendship Treaty signed last month
but has indicated that Moscow wants to maintain good relations
with Tokyo, especially in the economic sphere. White there are
other indications that the Soviets want Long-term cooperation
on trade and Siberian development, Moscow may retaliate against
Japan in coming months by postponing final agreement on joint
fishing ventures.
in made his remarks on Wednesday to a Japanese
Kos
yg
parliamentary delegation in Moscow on a goodwill visit, the
first Japanese group to meet a Soviet official since the sign-
ing of the treaty with China. He stressed the need for economic
cooperation and hinted that the USSR is counting heavily on
Japanese capital and technology in the development of Siberian
resources. This is the first major indication that the Soviets
do not intend to let their anger over the Sino-Japanese accord
impede efforts to secure Japanese investment in the USSR.
Soviet Fisheries Minister Ishkov told
before
The da
,
y
the same group that five joint fishing ventures in the Soviet
which had been scheduled to begin last
zone
fishin
il
200-
,
g
e
m
month, should be abandoned this year. Ishkov proposed that the
projects be discussed at the meeting of the Japan-Soviet joint
fishery committee to be held sometime after 15 November.
Japanese Foreign Ministry sources have, however,
Ishkov's statement. For the
d down the significance of
l
.
aye
p
most part, Tokyo believes that Moscow's words and deeds in the
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wake of the Peace and Friendship Treaty have been restrained
and that, overall, the Soviets have yet to make any significant
retaliation against the Japanese.
There was some positive movement on the trade front
last week, when four major Japanese steel firms negotiated a
price increase for large-diameter pipe to be exported to the
USSR later this year. While the firms apparently did not get
the 20-percent price rise they had requested, compromises by
both sides apparently resulted in some increase.
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CANADA: Fall Election Unlikely
//Canadian Prime Minister Trudeau probably will
not call an election this fall. The latest opinion poll sug-
gests that Trudeau's Liberal Party is still doing poorly in
the key province of Ontario. Last week, Trudeau announced
that additional byeZections will be held in mid-October,
probably a further effort to measure his party's strength
before the next national election, which must be held within
a year. //
//The secretary to the Canadian cabinet told Am-
bassador Enders that the lack of a positive public response to
the new economic measures announced last month makes a general
election unlikely this fall. Other officials close to the.
Prime Minister have acknowledged that the government is facing
a serious credibility problem, largely because presentation of
the proposals left an impression of improvisation, poor staff
work, and inadequate coordination.//
/The timing of the announcements made the economic
measures appear to be primarily a preelection tactic to garner
voter support. The measures are likely. to have little impact
on the country's economic problems.//
//The most recent opinion poll indicates that the
Liberals have improved their general lead over the opposition
Progressive Conservatives. It also shows, however, that one-
third of the voters are still undecided, that the bulk of
Liberal support is concentrated in Quebec, and that party
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strength in the key province of Ontario has dropped consider-
ably since the last federal election in 1974. Liberal leaders
have indicated that their own observations and private sampling
confirm these negative signs.//
//The Liberals can be expected to concentrate their
efforts on the byelections. Although they could lose all
15 and still retain their parliamentary majority, they, as
well as other political parties, will view the byelections as
atest of political strength. Nearly half of the byelections
UK: Callaghan Speech.
/British Prime Minister Callaghan's unexpected
announcement yesterday that he will not call an immediate gen-
eral election will put his minority Labor government in a pre-
carious position when Parliament reconvenes in October. The
government will have to show sustained economic improvement to
retain the confidence of major segments of rank-and-fi~'.e trade
unionista and to survive opposition attempts to topple it.//
//The Conservatives will be trying to form a
united front of opposition parties in an attempt to force the
government's hand. They will probably test the government's
strength immediately with the vote on the Queen's speech, which
outlines the government's program, at the opening of the new
parliamentary session in late October.//
//Callaghan will apparently reconvene Parliament
with no formal support from other parties to shore up the gov-
ernment's minority position. The Liberals, who control 13 seats
in Parliament ended their pact with the government last. spring.
The Scottish Nationalists, who have 11 parliamentary seats, are
rumored as an alternative source of support, but some of the
party's parliamentary spokesmen reportedly oppose a pact with
the government despite encouragement from the party's executive
in Edinburgh. There appears to be little prospect that a firm
agreement can be struck with the Ulster Unionists.//
//Chancellor of the Exchequer Healey and Callaghan
appear con ident that the rate of inflation can be kept below
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8 percent, if wage settlements during the next round of nego-
tiations hew to the government's 5-percent ceiling. They believe
this, and the growing benefits of North Sea oil revenues, will
ensure a continued rise in the standard of living.//
//Most economic experts, however, believe that
double-digit inflation is again likely by the early next year.
The resulting loss in purchasing power, and an unemployment
rate that will probably hover around 6 percent, could spell
trouble for the government, especially among critical blue
collar and trade union voters.//
//Callaghan, however, may find it difficult to
control restive labor unions, which. oppose the government's
wage guidelines. Callaghan was warmly received at the recent
annual conference of the Trades Union Congress, but the dele-
gates overwhelmingly rejected the government's tight wage con-
trols and, as they did last year, endorsed free collective
bargaining. Callaghan will continue to stress that union op-
position to his program will increase the chances of a Conserva-
tive government's coming to power.//
//The government has picked up some popular support
during the past few weeks, but opinion polls continue to show
that an election would be a toss-up. Callaghan is gambling that,
if the economy continues to improve, the Labor Party will gain
in the polls. The government also hopes that a delay will give
the Liberals, who draw support away from the Conservatives,
time to recoup the serious loss of support they have suffered
during the past eight months.//
//The Labor Party will also try to capitalize on
a recent decline in support for the Scottish Nationalists by
playing up the government's role in pushing through Scottish
devolution. Callaghan also hopes that the government will be
strengthened in the spring when a new, updated register of
voters is published; this usually favors the Labor Party.//
//The Conservatives have condemned Callaghan's
move, arguing that the British people should have the oppor-
tunity to install a majority government. According to opinion
polls, 70 percent of British.voters favored an election this
fall.
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Coal production in the USSR during the first seven
months of 1978 has not kept up with Soviet goals, and Soviet
officials are expressing concern. The USSR has lowered the
original 1978 goal of 750 million tons to 746 million tons, but
production probably will be at least 20 million tons short of
the reduced plan.
The industry's performance has been deteriorating
since the'outset of the 10th. Five Year Plan (1976-80), and pro-
duction in 1980 will be far below the target of 805 million tons.
Coal Minister Bratchenko indicated early this year that the
long-range goal of 1 billion tons by 1990 would not be achieved
before the year 2000.
Bratchenko attributes the industry's poor performance
to inadequate. preparation of new coal faces, shortages of labor
and mining equipment, and poor mine management. Other reports
indicate that shortages of rail cars to transport the coal are
hampering production and that construction of new mines is lag-
ging.
Coal production problems have resulted in inadequate
deliveries of coking coal to the steel industry, according to
Bratchenko. Other shortages are likely to show up during the
winter.
North Korea on Saturday will mark the 30th anniversary
of its founding. It will use the ceremonies to push the theme
of economic progress during the first year of its ambitious
seven-year economic plan, despite the country's continuing de-
fault on its foreign debt. President Kim 1l-song has already
attended ribbon-cutting ceremonies at a number of longstanding
construction projects, including an east-west expressway from
Pyongyang to Wonsan.
Chinese Politburo member and senior Vice Premier Teng
Hsiao-ping heads the long list of foreign visitors, swelled by
Pyongyang's willingness to provide air service. Soviet
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representation will be unusually low--Moscow's way of showing
its pique at North. Korea's more open support for China in recent
months on a range of international issues.
A new constitution went into effect in Sri Lanka
yesterday, and President Jayewardene appointed a new cabinet.
The constitution provides for the replacement of Sri Lanka's
parliamentary system with.a strong presidency. This change
was actually made in February, when the old constitution was
amended, and Jayewardene moved from the prime ministership to
the presidency.
The changes in the cabinet are fairly minor; some
new ministers have been added and others have changed jobs.
The most significant new appointment may be that of a
representative of the Tamil minority, apparently an effort
to bridge the gap between the Tamils and the Sinhalese
majority. Tamil extremists have been responsible for several
acts of terrorism, which may include the destruction on
the ground of a Sri Lankan airliner yesterday. The cabinet
remains essentially the same, however, despite local criticism
of the government's performance and of the competence of some
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