NATIONAL INTELLIGENCE DAILY (CABLE)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A031000130002-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: December 15, 2016
• Document Release Date: March 31, 2004
• Sequence Number: 2
• Publication Date: January 22, 1979
• Content Type: REPORT

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an ra
National Intelligence Daily
(Cable)
State Dept. review completed
Top Secret
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National Intelligence Daily (Cable)
Contents
Briefs and Comments
Vietnam: Changing Economic Aid
Re Zationships . . . . . . . . . . . . . . .
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Bangladesh: Economic Gains . . . . . . . . . 5
Botswana: Meeting on Guerrillas . . . . . . . 6
Peru: Moves Against Chile . . . . . . . . . . 6
UNCTAD: International Wheat Negotiations 7
Special Analysis
USSR: DoZZar Defense Activities Comparisons 8
Overnight Reports . . . . . . . . . . . . . . . . . 11
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VIETNAM: Changing Economic Aid Relationships
Vietnam's invasion of Kampuchea will force Hanoi
to rely increasingly on Soviet economic assistance, now
estimated to be at least $500 million annually. The
diversion of manpower and materials for military opera-
tions in Kampuchea and heightened readiness along the
China-Vietnam border have boosted demand for imported
food and fuel and will further slow Vietnam's economic
performance.
Western donors are reassessing their aid programs
to Vietnam, both in protest against Hanoi's military
moves and in deference to relations with China. Japan--
Vietnam's most important non-Communist aid and trade
partner--is reviewing its aid agreement signed last
month for 150,000 tons of rice and $70 million in loans
and grants. The Dutch are considering freezing $25
million in unspent aid from previous programs. Although
Sweden has reportedly boosted its aid commitment for
1979 from $88 million to $92 million, Swedish Prime
Minister Ullsten said last week that Vietnam risks a
"reconsideration" of the aid it receives from Nordic
countries, and the aid question is likely to come up
for additional debate. Other Western donors and multi-
lateral a ncies are likely to reevaluate their programs
as well. e
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Among Communist countries, the USSR's closest East
European allies may feel compelled to increase their
estimated $125 million in annual aid to Vietnam by a
token amount and to give symbolic aid to the new
Vietnamese-backed government in Kampuchea. Several East 25X1
European countries have picked up some Chinese projects
in Vietnam in the wake of China's termination last year
of its estimated $300 million in annual aid to Hanoi.
Yugoslavia and Romania have been critical of Viet-
nam's military move, but may reluctantly continue their
$5 million aid program to Hanoi. F7 I
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Because Israel would lose control of more than one-
third of its water supply if it withdrew from the West
Bank, Prime Minister Begin will almost certainly stand
by his promise to retain Israeli control over water
rights in any resolution of the West Bank controversy.
Israel already uses more than 95 percent of its fresh
water supply, and the most feasible and least expensive
means of augmenting that supply could only partiaZZ
meet growing demand over the next several years. I
Of Israel's total usable water resources, more than
half is provided by groundwater, mainly from two large
aquifers--water-bearing underground zones. The larger
of these lies under both the West Bank and Israel proper.
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Agriculture will continue to be predominant in the
West Bank economy, and improved irrigation systems are
essential to its growth. If the Israelis did not con-
trol the use of water, such improvements would lower the
water table in nearby parts of Israel, dry up Israeli
wells, and increase salt water intrusion under Israel's
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coastal plain.
Israeli experts have determined that the only sig-
nificant and relatively inexpensive supplementary source
of water is recycled sewage. Treated sewage from the
Tel Aviv recycling facility, now in operation about two
years, can be used on selected crops at one-eighth the
cost of desalinated water. Projected annual production
from this facility eight years from now is only 100
million cubic meters, less than 7 percent of present
resources. The only other proposed facility, at Haifa,
is not yet even in the detailed planning stage.
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Bangladesh is now into its fourth year of good
economic performance. Favorable weather, greater poZiti-
cal stability, and continued large-scale support from
foreign aid donors have contributed to agricultural and
industrial progress. Nonetheless most Ban Zadeshis re-
main desperately poor. 25X1
President Ziaur Rahman has emphasized rural pro-
grams and population control and has directed a gradual
reduction in government regulation of imports and
prices--except in foodgrain marketing. In the indus-
trial sector, the government has emphasized better use
of manufacturing capacity, completion of projects, and
a greater role for the private sector. Zia has had
trouble, however, getting economic policies fully imple-
mented because competent officials are scarce and admin-
istrative structures inadequate.
Foodgrain production has grown at a 3.3 percent
annual rate since fiscal year 1975, but Bangladesh will
be hard pressed to keep long-term foodgrain output ahead
of population growth. Despite record grain production,
per capita availability of foodgrain in Fiscal Year 1978
was probably lower than in the early 1970s. Many poor
people cannot afford adequate food--a more intractable
problem than growing or importing sufficient supplies.
Foreign donors and Bangladeshi officials have had diffi-
culty balancing the conflicting goals of high prices for
farmers, low prices for consumers, reduced budaet subsi-
dies., and lower grain imports.
Economic recovery has not eased Bangladesh's severe
balance-of-payments problems. Imports are still two to
four times as large as exports, and foreign aid continues
to finance the bulk of investment and part of current
consumption. Bangledesh has also come to depend on grow-
ing remittances from overseas workers in Middle Eastern
countries. The gains in foreign exchange, however, have
been offset by a loss of trained personnel.
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BOTSWANA: Meeting on Guerrillas
the use of Botswana by guerrillas as a staging area.
//Botswanan, Rhodesian, and South African officials
are scheduled to meet in Pretoria this week to discuss
South Africans and Rhodesians will no doubt ?_)ress Bot-
swana to enforce more rigorously its announced policy
of denying its territory for sanctuary and transit by
guerrillas. Botswana has but meager security forces,
and the government will find it difficult--if not
impossible--to comply with such demands.//
Peru: Moves Aqainst Chile
Peru on Saturday declared Chilean Ambassador to Peru
Bulnes persona non grata and called home Peru's Ambassador
to Chile. The Peruvians also announced the execution
that day of a former Peruvian Air Force sergeant accused
of having engaged in espionage for Chile. After the
Chilean Foreign and Interior Ministers reportedly met
at length, the Chilean Government Saturday night expressed
regret at Peru's action and asserted that any acts of
espionage were "isolated individual actions" not based
on higher orders. These developments are surprising,
although longstanding Chilean-Peruvian tensions are
likely to be heightened this year by the centennial ob-
servance of the War of the Pacific. Peru's security con-
cerns are genuine, but the resort to such serious moves
may also reflect a desire by the military government to
divert attention from pressing domestic problems.
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UNCTAD: International Wheat Negotiations
The UN Committee on Trade and Development negoti-
ating conference for a new International Wheat Agreement
will reconvene today in Geneva. In the three months
since the last negotiating conference, the US and the
EC have agreed on international wheat price support
levels, the more important of the two issues on which
they deadlocked. They will now attempt to obtain a con-
sensus among other participating countries on this part
of the agreement. The negotiations, which have been
going on for a year, are of major importance to wheat-
importing countries because of their implications for
guaranteed access to supplies, as well as to wheat ex-
porters Primarily because of their price stabilization
goal.
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USSR: Dollar Defense Activities Comparisons
The following is an abridged version of an unclassi-
fied paper presenting the CIA's latest comparison, in
dollar terms, of US and Soviet defense activities. The
mission definitions follow the guidelines in the De-
fense Planning and Programming Categories issued by the
Department of Defense in November 1978.
The military establishments of the USSR and the
US are difficult to compare because they differ so much
in missions, structures, and characteristics. Any com-
mon denominator used for comparative sizing--such as
dollar costs--is imperfect, and this analysis should
not be used alone as a definitive indicator of the
relative effectiveness of US and Soviet military forces.
The data presented here are expressed in constant 1978
(midyear) dollars so that trends in the cost estimates
reflect changes in military forces and activities rather
than inflation. The US figures have been converted to
calendar year outlays and adjusted to achieve compara
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For the 1968-78 period, the cumulative estimated
dollar costs of Soviet defense activities exceeded US
outlays by over 10 percent. Estimated in constant
dollars, Soviet defense activities increased at an ave-
rage annual rate of 3 percent, with growth rate fluctua-
tions reflecting primarily the phasing of major pro-
curement programs for missiles, aircraft, and ships.
Evidence on weapon systems currently in production
and development, continuing capital construction at
major defense industries plants, and the increasing
costs of modern weapons indicate that the long-term
growth trend in Soviet defense activities will prob-
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In contrast, the trend in US defense outlays in con-
stant dollars has been downward for most of the period.
US outlays declined continuously from the Vietnam peak
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of 1968 until 1976. They increased slightly in 1977 and
grew by 3 percent in 1978 as increases in procurement
and research and development offset continuing declines
in personnel costs. As a result of these diverging
trends, the estimated dollar costs of Soviet defense ac-
tivities caught up with US defense outlays in 1971 and 25X1
exceeded them by a widening margin until 1977. In 1978
the Soviet total was about $146 billion, nearly 45 er-
cent higher than the US total of $102 billion.
Over the 1968-78 period, the level of Soviet activ-
ity for strategic forces (exclusive of research and de-
velopment) measured in dollars was two and a half times
that of the US. Soviet activities showed a slight dip
in the early 1970s with the completion of third-genera-
tion ICBM deployment programs, but they rose in the mid-
1970s with the deployment of fourth-generation systems.
US activities declined steadily until 1976, when they
began growing at a slow rate. In 1978 the Soviet level
was about three times that of the US. 25X1
Estimated dollar costs of Soviet activities for
general purpose forces (exclusive of research and
development) have exceeded comparable US outlays since
1970, and the gap widened every year until 1978. For the
1968-78 period, the Soviet total for this category was
about 35 percent higher than the US total. The US
level of support activities has exceeded that of the
Soviet Union over the 1968-78 period by approximately
35 percent when measured in dollar terms, but the
difference has narrowed significantly over the period.
Support activities account for 50 percent of the total
US defense outlays and some 30 percent of the total
estimated dollar cost of the USSR's defense activities
for the entire period.
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Soviet and US defense activities can also be
compared in terms of major resource categories: mili-
tary investment, operating costs, and research and
development costs. 25X1
The trends in military investment followed closely
those for total defense costs in both countries. The
Soviet investment estimate showed an upward trend but
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displayed cycles in annual growth rates that were re-
lated to the phasing of major procurement programs--
especially those for missiles and aircraft. The esti-
mated dollar cost of Soviet investment programs was
fairly constant during the early 1970s, rose in the
mid-1970s, and declined slightly in 1978. This dip
occurred because several major procurement programs
have ended or are nearing completion. New systems
are expected to enter production in the next year or so,
however, resulting in another cyclical increase. The
US investment figure fell continuously from 1968 until
1975 and then increased at a slow rate before jumping
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The estimated dollar cost of Soviet military in-
vestment exceeded comparable US spending by about 75 or
80 percent in 1975-77 and by about 65 percent in 1978.
For the entire period it was 30 percent higher.
Measured in dollar terms, operating costs made up
the largest share of the total defense costs for both
countries. Estimated Soviet dollar costs in this
category grew continuously during the period, reflect-
ing growing force levels, and exceeded those of the US
by a widening margin after 1971. By 1978 they were 25
percent above comparable US outlays. US outlays de-
clined rapidly after 1968 until the mid 1970s, reflecting
the reduction and eventual end of the Vietnam involve-
ment. Since that time the increase in operations and
maintenance costs has offset the continued decline
of personnel costs so that operatin costs as a whole
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(The items in the Overnight Reports section have not
been coordinated within the intelligence community.
They are prepared overnight by the Office of Current
Operations with analyst comment where possible from
the production offices of NFAC.)
Portugal
The US Embassy reports that the Lisbon Office
Workers' Union--the largest, best-financed, and best-
organized union in Portugal--appears to have voted last
Thursday to affiliate with the non-Communist General
Workers' Union (UGT) rather than the Communist-led In-
tersindical, which has been predominant on the Portuguese
labor scene. The Embassy now sees a "bright" future for
the non-Communist association, which has its first con-
gress this week, as a viable alternative to the Inter-
sindical.
COMMENT: The non-Communist labor organizers had
been expected to do well among such white-collar workers.
Trade union activity in Portugal is especially signifi-
cant for its influence on the productive sectors of the
economy, and there the Communists clearly do have the
greatest support. The non-Communist association's pros-
pects will also be affected by the often stormy relations
between its political backers, the Socialist Part and
the Social Democratic Party.
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USSR-Italy
Foreign Minister Gromyko today begins a five-day
official visit to Italy, where considerable controversy
has developed over President Brezhnev's recent letter to
Prime Minister Andreotti warning against Western arms
sales to China. The letter has been published in Italy,
and the Socialist-leaning newspaper La RepubbZica, for
example, yesterday termed it "rude interference in the
sovereign affairs of a nation." The Communist Party
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in a dispatch filed from Moscow. Gromyko is scheduled
to confer Wednesday with Pope John Paul II; he had papal
audiences with Paul VI in 1966 and 1974.
--continued
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Algeria
The government announced yesterday that a successor
to President Boumediene, who died on 27 December, will
be elected on 7 February. The only candidate to be voted
on will be selected at the congress of the ruling National
Liberation Front that opens Saturday.
King Hussein begins an overnight visit to Saudi
Arabia today. According to Amman radio quoting an offi-
cial Jordanian source, Hussein will confer with King
Khalid and other senior Saudi officials on "Arab affairs
in light of the recent developments in the area."
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