NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A031400150002-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 15, 2016
• Document Release Date: April 6, 2004
• Sequence Number: 2
• Publication Date: May 17, 1979
• Content Type: REPORT

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National Intelligence Daily
(Cable)
17 May 1979
Top Secret
Top Secret
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National Intelligence Daily (Cable)
Contents
Briefs and Comments
OPEC: Oil Market Developments . . . . . . . . .
Warsaw Pact: Foreign Ministers' Meeting .
Portugal: Budget Issue . . . . . . . . . . . . 5
Spain: Socialist Party Congress . . . . . . . . 6
Special Analysis
Egypt: Stance for Autonomy Negotiations . . . . 8
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BRIEFS AND COMMENTS
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OPEC: Oil Market Developments
Oil market pressures are enabling members of the
Organization of Petroleum Exporting Countries to command
prices well above official levels for contract and spot
sales. Iran, Venezuela, and Abu Dhabi recently increased
contract prices for the balance of the second quarter by
60 cents per barrel, and Libya by 70 cents per barrel.
Many spot sales are being made at premiums of $8 to $10
over contract prices.
OPEC members can be expected to capitalize on the
tight market situation and buyer uneasiness by further
increasing their official prices at OPEC's ministerial
meeting next month in Geneva. The price increase, while
short of spot price levels, is likely to be substantial.
The ability of the more moderate members to influence
price decisions has decreased sharply.
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WARSAW PACT: Foreign Ministers' Meeting
The final communique of the Warsaw Pact foreign
ministers' conference, which concluded on Tuesday in
Budapest, set forth the Pact's agenda on disarmament
issues for the period prior to the European security
review conference to be held in Madrid next year. The
latest proposals are actually a compendium of previous
Soviet and Warsaw Pact disarmament initiatives as also
reflected in the Warsaw Pact summit declaration last No-
vember and Soviet President Brezhnev's election speech
The communique reiterated Brezhnev's call for a
treaty among participants in the Conference on Security
and Cooperation in Europe on no first use of either nu-
clear or conventional weapons. It also advocated an ex-
panded discussion of so-called military confidence-build-
ing measures among the signatories of the 1975 Helsinki
agreement, including possible prenotification of lar e-
scale ground, naval, and air force exercises.
The document also proposed the convening this year
of a European conference "at the political level," with
US and Canadian participation, to discuss "practical
measures for lessening military confrontation" and sub-
sequently reducing arms and armed forces in Europe.
This would appear to be an elaboration of the Warsaw
Pact proposal for "special consultations on military de-
tente" advanced in October 1977 at the European security
The Soviets and their allies, however, may also see
the current proposal for a new European disarmament forum
as a partial response to the French interest in convening
a Conference on Disarmament in Europe. Romania is the
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PORTUGAL: Budget Issue
The Portuguese legislature is likely to react nega-
tively to Prime Minister Mota Pinto's revised austerity
budget, but the Largest political parties and President
Eanes will probably work to assure its passage when it
comes to a vote Late this month. Ironically, victory
will accelerate Mota Pinto's downfall because the absence
of a budget is one of the final obstacles to his early
ouster. 1 -1
For the Socialists and Social Democrats, the conces-
sions to them in the new proposal came too late. They
have come to view Mota Pinto's political grandstanding--
evident first in his attacks on the Communists and subse-
quently in his pointed criticism of all the parties--as
threatening. His disclaimers notwithstanding, Mota Pinto
seems increasingly eager to assume leadership of the
various incipient movements opposing the existing party
structure. As the parties with the largest and most
amorphous bases, the Socialists and Social Democrats are
the most vulnerable.
Mota Pinto's controversial performance as an inde-
pendent Prime Minister places the parties in a good posi-
tion to oust him, but there are compelling reasons for
them to wait until the budget is in place. The Social-
ists--who will figure prominently in the formation of a
successor government--recognize that the budget's strin-
gencies are necessary for a new agreement with the In-
ternational Monetary Fund and continued investment from
abroad. By allowing the budget to pass now, the Social-
ists can contribute to the financial health of the next
government without bearing direct responsibility for the
unpopular aspects of the plan.
Eanes' public refusal to call an election before
the budget passes is also holding the parties back.
Without a new election, the parties would be forced to
endure Mota Pinto as a caretaker while Eanes moved at
his leisure to find a replacement. Furthermore, without
the President's mediation, it would be very difficult for
the parties to reach their own agreement on a successor.
Thus the President and the parties are agreed that the
budget must pass.
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SPAIN: Socialist Party Congress
The 28th congress of Spain's Socialist Workers'
Party, which opens today in Madrid, should provide clues
as to how the party will deal with a number of pressing
problems? many of which stem from the party's lackluster
showing in the election this spring. Party leader Felipe
Gonzalez will have to defend his moderate policies against
demands for change from party radicals. The congress
probably will also try to define the party's relationship
with the Communists--who are yoked with the Socialists
in many local administrations--and with the government.
More fundamentally, the party leadership faces the task
of ensuring unity and organizational strength as a left-
of-ranter
Disappointing results in the national election in
March, added to indications that the labor union asso-
ciated with the Socialists is losing out to the Commu-
nist-dominated Workers Commissions, form a stark contrast
to the atmosphere of 1977, when the party believed it was
headed for success on all fronts. Gonzalez is likely to
have no trouble keeping his job as party secretary gen-
eral, but some of his moderate associates on the executive
committee may be dropped. There is considerable grass-
roots feeling that party leaders have devoted too much
attention to parliament duties and not enough to build-
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On ideological questions, about 100 local groups
have submitted draft programs, most of which advocate a
tough, Marxist line in contrast with the party's moderate
orientation. One party member says the leadership plans
to clothe an essentially moderate program in Marxist
rhetoric, but it is an open question whether the radicals
will buy this tactic. This approach will also cause
problems with the moderate leftists, whom the Socialists
must attract if they are to win votes.
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SPECIAL ANALYSIS
EGYPT: Stance for Autonomy Negotiations
Negotiations between Egypt and Israel on the estab-
lishment of a self-governing authority for the West Bank
and Gaza, with US participation, are scheduled to begin
late this month. The talks are to be completed within
one year and be followed by elections to choose members
of the Palestinian authority. Egyptian officials are
likely to assume a hardline stance with Israel and prob-
ably will not be willing to risk domestic criticism and
further alienation in the Arab world by softening their
Egypt's primary negotiating team will include Prime
Minister and Foreign Minister Mustafa Khalil as chairman,
Defense Minister Kamal Hasan Ali, Minister of State for
Foreign Affairs Butrus Ghali, Undersecretary Usamah al-
Baz, and Military Intelligence Chief Labib Shurab.
The Cairo press indicates that Egypt's negotiators
will argue that:
All Palestinian territories occupied in
1967, including East Jerusalem, must re-
ceive full autonomy.
The Palestinian authority should be estab-
lished by direct and free elections and
should enjoy political, legislative, se-
curity, administrative, and judicial
powers.
Israel's military rule and civilian admin-
istration in the West Bank and Gaza must
be abolished upon establishment of the
Palestinian authority.
An Israeli troop withdrawal should take
place from the West Bank and Gaza; Is-
raeli troops remaining should be osi-
tioned in specific areas.
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Additional Egyptian demands include the abolition
of all Israeli settlements in the West Bank and Gaza
and--reportedly--the establishment of a strong Palestinian
police force. These points are intended to stress Egypt's
determination to obtain more than mere administrative
powers for the Palestinian authority.
//Israeli Prime Minister Begin's government agrees
to an eventual election for a self-governing authority
but otherwise would find all of the Egyptian points unac-
ceptable because.they could give the autonomy regime real
authority and, over time, lead to an independent Pales-
tinian-state. The Israelis insist that autonomy must ap-
ply only to Arab inhabitants of the West Bank and Gaza
and not to the territories themselves, that the status of
Jerusalem is not negotiable, that the autonomy regime
must have only selected administrative prerogatives, and
that the Israeli military regime will remain in charge of
the crucial issues of land and water rights, internal se-
curity, and Israeli settlements which Begin is committed
to expand in size and number.
Egypt's tough stance is motivated by several factors.
Sadat wants to:
Counter hardline public statements by Is-
raeli officials and establish Cairo's
strong initial bargaining position.
Demonstrate to Arab critics that Egypt's
goal is a comprehensive settlement that
satisfactorily addresses the sensitive
issues of Jerusalem and Palestinian self-
determination.
-- Undercut criticism,of.tho peace, treaty by,
the Egyptian opposition and avoid. an ero-
sion of support among backers of the
peace agreement.
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To avoid additional censure from fellow Arabs, Egypt
may tie the pace and tenor of further moves to normalize
relations with Israel--agreed in the peace treaty--to
progress on the question of Palestinian autonomy. Prime
Minister Khalil, for example, has consistently advocated
a deliberate approach to the normalization process.
Khalil recently argued that, while some symbolic steps
might occur in the near future, substantive progress
toward normalization would take time. Khalil probably
hopes to use the process as a lever on Israel during the
West Bank - Gaza negotiations. Sadat may not have en-
dorsed this approach yet but Khalil and perhaps Vice
President Mubarak will urge him to do so
Egypt badly wants to induce Palestinians who have a
credible claim to being representative to join the peace
process. Egyptian officials are uncomfortable negotiat-
ing for the Palestinians, in part because this highlights
Egypt's isolation, and would like to relinquish responsi-
bility to Palestinian representatives. Such Palestinians
will be difficult to find, however, unless the early
stages of the talks suggest that substantial gains for
West Bank and Gaza residents are possible. In order to
create a suitable climate for Palestinian entry into the
talks, Egypt is pressing Israel to release Palestinian
political detainees in the West Bank and Gaza and to per-
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