NATIONAL INTELLIGENCE DAILY SATURDAY 3 MARCH 1979

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81T00368R000100030009-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 30
• Document Creation Date: December 22, 2016
• Document Release Date: February 8, 2012
• Sequence Number: 9
• Publication Date: March 3, 1979
• Content Type: REPORT

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't), Central
Li Intelligence
National Intelligence Daily
Saturday
3 March 1979
--T-ep-S 25X1
eeret---
CO NID 79-052.1/1V
1-3 March 1979
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Contents
Situation Reports
China-Vietnam-USSR
Iran
North Yemen - South Yemen
1
5
7
Briefs and Comments
USSR: Brezhnev on Disarmament
8
Poland: Pope's Visit
10
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Spain: Suarez' Victory
11
Italy: La Malfa's Failure
13
Libya: Government Changes
14
France: Nuclear Test
14
Morocco - Saudi Arabia: Hassan's Visit
14
Southern Africa: Frontline Summit
15
India-Pakistan: Nuclear Program
15
Special Analyses
Uganda: Government's Weakening Position
16
Iran: Foreign Suppliers Face Cutbacks
18
Overnight Reports
21
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SITUATION REPORTS
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CHINA?VIETNAM?USSR
1
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Withdrawal Rumors
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There are a number of stories that Chinese troops
have begun or are about to withdraw from Vietnam.
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public re- 25X1
ports from Western news agencies in Beijing have cited
unnamed Chinese sources, and yet another official, citing
the fall of Lang Son, has claimed the fighting would end
"soon." There are as yet no indications, however, that
Chinese troops have ceased their advance, much less begun
a withdrawal.
25X1
Vietnamese Statements
Vietnam has officially replied to China's proposal
to negotiate their border conflict. A vietnamese Foreign
Ministry note yesterday termed the proposal a "trick" but
accepted negotiations in principle. The Vietnamese
stated they are willing to negotiate if the Chinese "per-
manently" end their aggression and withdraw "immediately
and unconditionally" across the "historic borderline"
previously agreed to by the two sides. 25X1
Chinese officials have stated recently that after
withdrawing the troops Beijing will retain the option of
reentering Vietnam should Vietnamese activity make it
necessary, and China is unlikely to accept a precondition
that commits it never to cross the border again. Vietnam,
in its reference to the "historic borderline," appears to
be responding to rumors that Chinese troops will withdraw
to a border defined by China. 25X1
Hanoi leveled its strongest changes to date against
the US and its allies yesterday and on Thursday. The
Vietnamese claimed that during his recent trip to the US
and Japan, Deng Xiaoping won "approval and support" for
--continued
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Beijing's actions and accused the US and its allies of
"deliberately belittling" the seriousness of the invasion.
One broadcast called US collusion with China part of the
"sinister policy of the Carter administration."
Soviet Reaction 25X1
In his election speech yesterday, Soviet President
Brezhnev gave no indication of what action the Soviets
would take if China does not stop its attack on Vietnam.
He predictably condemned China's actions and demanded
"the immediate ending of the Chinese aggression" and a
total Chinese withdrawal. Brezhnev warned that "the en-
tire danger of any forms of connivance" with Beijing's
policies "is more evident now than ever before." These
comments are consistent with the Soviet Government state-
ment of 18 February. 25X1
Despite his reference to US collusion, Brezhnev sig-
naled a continuing Soviet desire to insulate the dialogue
with Washington on detente and strategic arms control 25X1
from the Sino-Vietnamese conflict. (Other aspects
of Brezhnev's speech are discussed on Page 8.)
Three hours after Brezhnev spoke, the Soviet Govern-
ment issued a second official statement on the Indochina
conflict. The new statement, like the earlier one, stops
far short of committing the Soviets to any military
course of action and fails explicitly to place the weight
of the USSR behind the warning that China's actions "can-
not leave uninvolved" those genuinely interested in
peace. Indeed, the statement seems designed more to put
pressure on unspecified states accused of "complicity"
with the aggression and to mobilize world opinion against
China than to warn the Chinese. The USSR-Vietnam Friend-
ship Treaty is not invoked.
The statement focuses on China's alleged intention
to expand its military operations into Laos. Chinese
engineering troops have been present in Laos for years,
but we have no indication that the Chinese are planning
any military operations in or through Lao territory.
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--continued 25X1
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Soviet Army
Headquarters
Soviet Mobile4-'k-
Ulaanbaatay* Command Post
511 () n g .S umber
Saynshancr
Soviet Motorized
Rifle Division
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I RAN
Differences are continuing among Iranian political
and religious leaders over the timing for reestablishing
normal government activity, the type of government to be
decided by national referendum, and the treatment of
tribal minorities. 25X1
Minister of Information Minatchi has told a US Em-
bassy officer that the revolutionary committees will soon
be dissolved--perhaps as early as next week. The more
radical committee members are sure to resist any effort
to reduce their power, however. Prime Minister Bazargan,
who has been critical of the committees' role as a paral-
lel government, may not be able to abolish them despite
the tacit support of Khomeini in his effort to do so.
Even if the committee members agree to join the govern-
ment Bazargan may soon find them playing a dominant role.
25X1
There are also indications that the most prominent
religious leader in Tehran, Ayatollah Taleghani, is
beginning to separate himself from Khomeini on substan-
tive issues. He is not likely to break openly with
Khomeini, who remains near the peak of national power.
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Taleghani publicly stated that he and Khomeini did not
discuss important issues during their meeting prior to
Khomeini's departure for Qom. 25X1
5
--continued
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Saudi Arabia
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NORTH YEMEN - SOUTH YEMEN
25X1
A cease-fire went into effect this morning along the
border between North and South Yemen, according to press
sources. Details of withdrawals from the border area
25X1 will be worked out at the Arab League meeting now sched-
uled for tomorrow in Kuwait. 25X1
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Yesterday morning there was sporadic fighting re- 25X1
ported about 30 kilometers northwest of Al Bayda
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There was no satellite photography of the area wherP
the fighting reportedly took place, but photography of 25X1
Al Bayda yesterday showed tanks guarding the northern ap-
proach into the town and multiple rocket launchers de-
ployed inside North Yemen at a dirt airstrip southwest of
Al Bayda. The South Yemeni infantry brigade is still oc-
cupying the high ground nearby. Across the border in
South Yemen, photography shows a decrease in tanks, field
artillery, and multiple rocket launchers. A small convoy
towing field artillery was headed toward Al Bayda.
There are no reports of fighting near Qatabah yes-25X1
terday, but South Yemeni forces appear to be in control
of the area. The artillery pieces aimed toward Ibb on
Tuesday are gone, but tanks are deployed further west
guarding the approach to Qatabah. Vehicles appear to be
moving freely to the west--an indication that South
Yemeni - supported forces may be farther west toward Ibb
as the North Yemenis claim.
7
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BRIEF AND COMMENTS
USSR: Brezhnev on Disarmament
The highlights of Soviet President Brezhnev's
speech yesterday dealt with arms control.
25X1
Brezhnev called for SALT III to begin after the
entry into force of SALT II, a reflection of increasing
Soviet apprehension about prospects for US ratification.
In contrast, Soviet Foreign Minister Gromyko last May
called for SALT III to begin "immediately after the
signing" of SALT II. Brezhnev asserted that SALT III
would slow the creation of new weapons types and pro-
vide for further reductions "by both sides."
25X1
The Soviet leader also spoke at length about the
benefits of the prospective SALT II treaty and predicted
that it will "probably be signed during my meeting with
President Carter, hopefully in the near future." He
called the treaty a "reasonable compromise," but noted
that "not everything in it fully accords with our wishes."
He claimed that it would help revive the Comprehensive
Test Ban, Conventional Arms Transfers, and Mutual and
Balanced Force Reduction talks and improve the interna-
tional climate.
25X1
Brezhnev made the first reference by a top-level
Soviet official to reports about the possible deployment
in West Germany of "medium-range nuclear-missile weapons
aimed at the Soviet Union." He said such a development
would raise tension in Europe, exacerbate the arms race,
and drastically increase the danger to West Germany. He
offered to negotiate the reduction of nuclear missiles
and medium-range and other weapons in Europe "on the
basis of complete reciprocity," but said due account must
be taken of US bases there as well.
25X1
If Brezhnev was including Soviet medium-range mis-
siles, it would be the first time that Moscow has indi-
cated willingness to put them on the bargaining block in
arms control talks. Brezhnev seems to be encouraging the
West, especially the West Germans, to pursue the arms
control rather than force modernization track in con-
sidering NATO policy options. 25X1
8
--continued
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Brezhnev called for "something like a non-aggres-
sion pact"--an agreement on "not being the first to use
either nuclear or conventional arms"--among the signa-
tories of the Helsinki Final Act. The inclusion of con-
ventional arms is probably intended both as a response to
the French proposal for a European disarmament conference
focusing on conventional weapons and as an attempt to
capitalize on what Moscow perceives as frustration in
some West European capitals with the current pace of
European disarmament talks. 25X1
He also referred to the possibility of extending
the so-called military confidence-building measures in
the Helsinki Final Act to cover "all considerable troop
movements" and "major naval exercises." Brezhnev's
reference to naval maneuvers in this context is the
first authoritative Soviet statement on this subject,
although Soviet diplomats have privately expressed an
interest in pursuing this topic. 25X1
In discussing the Soviet defense effort, Brezhnev
said the USSR was allocating considerable means to
strengthen its security "both in the West and in the
East." He claimed that the USSR is spending as much as
is absolutely necessary. This statement was consistent
with several previous ones he has made and was in keeping
with what his Politburo colleagues have been saying.
Brezhnev's tack on military spending, like his 25X1
defensive remarks on the compromises by both sides at the
SALT negotiations, may have been in response to domestic
opposition to any concessions on Soviet defense. Except
for these issues, he betrayed few differences within
the Soviet leadership, judging by available summaries
of similar speeches by his colleagues during the past
month. The US Embassy in Moscow has pointed out that
Brezhnev and Gromyko are the only Politburo members who
addressed the US-Soviet relationship, suggesting indeci-
sion in that body and reflecting apprehension over
Sino-US normalization and Indochina.
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POLAND: Pope's Visit to Poland
The scheduling of the visit by Pope John Paul II to
Poland from 2 to 10 June--instead of 10 to 14 May as de-
sired by the Polish Church and the Vatican--is a Pyrrhic
victory for Polish party conservatives. Poles will be
keenly aware that the regime's intransigence prevented 25X1
the Pope from attending the important religious and na-
tional observances in May. 25X1
The Pope probably agreed to the schedule once he
became aware of the strength of the regime's insistence.
Had the church prolonged the negotiations until May, end-
ing any chance of a visit this spring, the prospects for
serious disturbances would have increased during the ob-
servance of the 900th anniversary of the martyrdom of
St. Stanislaw, Poland's patron saint. 25X1
The Polish Church will probably adopt a "more-in-
sorrow-than-in-bitterness" attitude when it explains the
postponement to its members. The observances in May will
draw huge crowds to Krakow and elsewhere, and disappoint-
ment over the Pope's absence will heighten the possi-
bility of trouble, despite church attempts to control the
situation. 25X1
The Pope, according to Western news services, will
meet with Gierek during the visit, and this should im-
prove Gierek's domestic stature. For its part, the re-
gime has agreed to a longer stay, nine days instead of
five.
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Seats Won by Spain's Major Parties and the Basque Parties in Lower House
Party
1977
1979
Union of the Democratic Center
165
167
Spanish Socialist Workers Party
118*
120
Spanish Communist Party
20
23
Popular Alliance/Democratic Coalition
16
9
Basque Nationalist Party
8
8
Basque extremists
1
4
(Based on 97 percent of votes counted)
*Subsequently merged with other parties to hold 122 seats.
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SPAIN: Suarez' Victory
25X1
Prime Minister Suarez emerged stronger following
Thursday's election, while his principal rivals, Felipe
Gonzales' Socialists, were weakened. The Communists in-
creased their seats in the lower house of parliament from
20 to 23, and the rightists lost heavily. Although
Suarez' Union of the Democratic Center fell nine seats
short of an absolute majority in the all-important lower
house, he should be able to form a one-party government.
25X1
The results are a personal triumph for Suarez and
for his electoral strategy aimed at the center and center-
left. He now has time in the post-electoral period to
unify and strengthen his party. Important tests lie
ahead, but Suarez should be able to get by with ad hoc
majorities--at least until a resolution of the regional
autonomy problem frees him to form a coalition with one
or more regional parties. 25X1
The Socialists' failure to improve on their showing
in the previous election will strengthen radicals within
the party who oppose Gonzalez' moderate line. The party
may veer to the left--as it did in the closing stages of
the election campaign--to consolidate its base prior to
the party congress in May. This switch is likely to be
reflected in more aggressive tactics by the Socialist 25X1
labor union.
The Communist Party, by contrast, will be buoyed by
its gain and the Socialists' poor showing and will be
looking for further gains in next month's municipal elec-
tions.
25X1
The emergence of several new regional parties in
parliament signals difficulties ahead on autonomy nego-
tiations. In the Basque region particularly, the win-
ning of four seats by two extremist parties linked with
ETA terrorists will stiffen the demands of Basque Na-
tionalists.
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ITALY: La Malta's Failure
25X1
President Pertini will meet with party leaders next
week, in the wake of Prime Minister - designate La Malfa's
failure to form a government, before deciding whether to
appoint a replacement for La Malfa or dissolve parlia-
ment and call an early election. 25X1
La Malfa was unable to break the deadlock resulting
from the Communists' insistence on cabinet seats and the
Christian Democrats' refusal to support any government
that met these demands. His proposal included posts for
Christian Democrats, Social Democrats, and his Repub-
lican Party. It would have relied for its parliamentary
majority on abstention by the Communists and Socialists.
25X1
The Communists evidently rejected this alternative,
and the Socialists were reluctant to commit themselves
to a government unacceptable to the Communists. Communist
chief Berlinguer did suggest that his party might consider
backing a government composed of technicians--including
independents elected to the current parliament on the
leftist ticket--but this proposal ran into stiff
25X1
Christian Democratic opposition.
Although the Christian Democrats and Communists
seem unwilling to alter their respective positions,
Pertini may decide to appoint another prime minister -
designate--probably a Christian Democrat such as party
president Piccoli or Foreign Minister Forlani--in what
would likely be a final attempt to avoid a new election.
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SOUTHERN AFRICA: Frontline Summit
25X1
Angolan President Neto has invited the presidents
of the frontline states to Luanda this weekend to dis-
cuss the Namibian situation. The Mozambican and Botswanan
presidents have accepted, but we do not know if the Zam-
bian and Tanzanian presidents will attend. The presi-
dents probably will consider the UN Secretary General's
recent report on Namibia--particularly his proposal that
UN liaison offices be situated in Angola, Zambia, and
Botswana to facilitate monitoring Namibian guerrillas
in these countries after a cease-fire. Neto also wants
to discuss the situation in Rhodesia and has invited Rho-
desian nationalist leaders Joshua Nkomo and Robert Mug-
abe to Luanda as well. Nkomo and Mugabe have refused to
meet with each other recently, and neither may choose to
attend.
25X1
INDIA-PAKISTAN: Nuclear Program
25X1
The Indian Foreign Minister has for the first time
stated publicly that Pakistan is pursuing a nuclear de-
velopment program that "may not be entirely for peaceful
purposes." There is mounting concern in the Indian Gov-
ernment that Pakistan is pursuing a nuclear capability.
An official Indian disclosure of Pakistan's possible
movement toward such a capability will severely limit
New Delhi's maneuverability in negotiations with the US
over safeguards and other bilateral nuclear problems.
Any policy that might appear to foreclose Indian options
for response to this perceived new threat could even
threaten the cohesion of the ruling Janata coalition.
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\Tororo4:-,
ported mutiny r
Ugandan troops
KAMPALA
Ugandan territory ti
by Tanzanian fee-es- r;
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SPECIAL ANALYSES
25X1
UGANDA: Government's Weakening Position
25X1
The government of President Amin may be near col-
lapse. Amin's fall would initially bring a period of
social and economic turmoil in Uganda that could be dif-
ficult for the Tanzanians to handle. 25X1
Rebelling Ugandan troops apparently took
of the town of Tororo late yesterday. Tororo
road and rail links with Kenya over which all
25X1 fuel and other supplies flow. The Kenyan Army has gone
on alert
control
controls
of Uganda's
25X1
/ Nyerere may delay any
decision on further advances into Uganda until he knows
more about the extent of the rebellion among Ugandan 25X1
forces.
Effects of Amin's Fall
25X1
Amin's fall would have the immediate effect of ac-
celerating instability in Uganda. Military indiscipline
and turmoil would intensify as new loyalties were sorted
out and the remaining players settled old scores resulting
--continued
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from endemic tribal, religious, and ethnic animosities.
All of this could be too much for the Tanzanians to handle.
We do not have detailed information on Tanzanian plans
for a successor government in Kampala. 25X1
At this point we see little chance that other neigh-
boring countries would attempt to intervene. They
would, however, be nervous about a total breakdown of
order in Uganda but would probably be most concerned that
any turmoil not spill over into their territory and ag-
gravate their own domestic problems. The Libyans, despite
their ties to fellow Muslim Amin, would probably not be
inclined to stay around and attempt to repair the situa-
tion; they only reluctantly came to Amin's aid last
month. 25X1
The Soviets would probably quickly try to cultivate
whatever regime emerges after Amin's fall. They would,
however, remain sensitive to the concerns of Nyerere,
who like Amin has received the bulk of his military sup-
plies from the USSR. We know of no close Soviet ties to
the various Ugandan exile groups, but the Soviets have
long believed that their role as chief supplier for the
Ugandan military has given them connections that would
survive Amin's departure.
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IRAN: Foreign Suppliers Face Cutbacks
25X1
25X1
The political crisis in Iran already has curtailed
imports and triggered cancellations of some major con-
tracts for future delivery. Even if the new government
succeeds in restoring order, imports are unlikely to re-
turn to anything like the $18-billion annual rate of a
few months ago. Foreign exchange constraints as well as
new economic priorities point to a much smaller Iranian
market for foreign goods.
25X1
The developed countries have provided 85 percent
of Iran's total imports--most of which were manufactured
goods, with capital-intensive products predominating.
In 1977 and 1978, the US supplied 24 percent of Iranian
imports from the major developed countries; West Germany,
22 percent; Japan, 18 percent; and the UK, Italy, and
France together, 23 percent.
25X1
Iran as an Export Market
Exports from the US to Iran grew from $2.7 billion
in 1977 to an annual rate of $3.7 billion in the first
nine months of 1978, accounting for 2.7 percent of total
US exports. The US aircraft industry sold nearly 8 per-
cent of its commercial exports to Iran, the largest
share for any US industry. Should Iran cancel orders
for commercial aircraft, the impact would be softened
by the industry's strong order backlog and a willingness
of other customers to move up their delivery dates.
US firms signed a minimum of $4.5 billion in new 25X1
contracts during 1977 and 1978. The largest contracts
were for military goods and services, communications
networks, and construction projects. In addition, joint
French-US ventures won contracts valued at about $2.7
billion for highway construction. 25X1
Military suppliers have been hardest hit by contract
cancellations. The ousted government of Prime Minister
Bakhtiar canceled roughly $7 billion in outstanding con-
--continued
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tracts with the US for weapons purchases to save foreign
exchange and to curb the large military buildup. Iran
will initially pay termination and default charges on
contracts it cancels from a trust fund it has established
with the US Government. If weapons originally ordered
by Iran can be sold to other buyers, Iran could receive
some repayment. 25X1
West German exports to Iran of $2.7 billion in 1977
and $2.5 billion in the first three quarters of 1978 rep-
resent about 2 percent of its total exports. More than
300 West German companies with a total of 10,000 West
German employees operated facilities in Iran. Loss of
the Iranian market would be particularly troublesome for
the depressed steel and nuclear reactor industries. Few
companies, however, would lose money on existing contracts
because of export and investment insurance financed by
the West German Government. 25X1
Japan, which sold goods to Iran worth $1.9 billion
in 1977 and $2.2 billion in the first nine months of 1978,
stopped issuing export credits to Iran last month, and
no goods destined for Iran have been shipped since then.
In 1977 Japanese sales to Iran accounted for 7 percent
of its metal manufactures exports.
25X1
In 1977 and 1978 Japan received $1.1 billion in re-
ported contracts from Iran; it is anxious to reestablish
economic links with the new government to avoid contract
cancellations. The Japanese, however, will probably
more than make up losses from the Iranian modernization
cutback by switching to China as a major market for iron
and steel exports. 25X1
The UK's exports to Iran exceeded $1 billion in 1977
and again in 1978, accounting for about 2 percent of total
British exports. Iran was Britain's largest arms client,
and half of the $700 million in new contracts in 1977
and 1978 were for military goods. Plans for most of a
$1.5-billion British-built complex at Esfahan to manu-
facture guns, ammunition, and spare parts for tanks were
suspended by the Bakhtiar government. British arms ex-
port contracts totaling nearly $2 billion also are in
--continued
19 To Secret
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Top Secret
jeopardy. In 1977, sales to Iran accounted for 6 percent
of British motor vehicle exports. Chrysler UK has laid
off 1,500 workers because exports to Iran have been dis-
rupted.
25X1
Italy's sales to Iran have been running at about $1
billion, or 2 percent of total exports, over the last
two years. Italian construction and engineering firms
have orders totaling $6 billion. The Italian firms are
accustomed to political unrest, strikes, and bureaucratic
delays, and are not panicking. Although payments delays
are causing cash flow problems work on most projects is
continuing. The Italians are hoping that the new govern-
ment will not abandon public works projects already under
25X1
way.
France's economic stake in Iran has been comparatively
small, but recently it has led the developed countries in
signing contracts with Iran. In addition to the joint
French-US ventures, French firms won $6.5 billion in new
contracts, most signed in 1977. Roughly half were for
electric power facilities, primarily nuclear.
The nuclear power plant contracts with Framatome, 25X1
valued roughly at over $2.5 billion, were recently can-
celed by the Bakhtiar government. Although most direct
financial losses will be covered by the French Foreign
Trade Insurance Company, Framatome already is in financial
trouble because of the slowdown in France's own nuclear
program and a decline in orders from other countries.
Even though Framatome recently signed a letter of intent
to build two similar plants in China, cancellation of the
Iranian project will seriously set back company plans.
20 Top Secret
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Declassified in Part - Sanitized Copy Approved for Release 2012/02/08: CIA-RDP81T00368R000100030009-1
Top Secret
OVERNIGHT REPORTS
25X1
(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 )
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25X1
21 Toi Secret
Declassified in Part - Sanitized Copy Approved for Release 2012/02/08: CIA-RDP81T00368R000100030009-1
Declassified in Part - Sanitized Copy Approved for Release 2012/02/08: CIA-RDP81T00368R000100030009-1
Top Secret
France-Mexico
25X1
On the final day of his visit to Mexico, French
President Giscard announced yesterday that France would
provide Mexico with any technology that it requests to
exploit peaceful uses of nuclear energy "regardless of
the pressures or actions which might arise." Giscard
said a basic Franco-Mexican agreement would include
provisions concerning prospecting for and treatment of
uranium, finding ways to guarantee a supply of enriched
uranium, and training technicians to operate nuclear
power plants. According to the joint communique signed
by Giscard and Mexican President Lopez Portillo, France
will provide a credit of $240 million to finance Mexican
purchases of French technology and agreed to support
Mexican plans to float bonds in the EC.
22 Top Secret
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Declassified in Part - Sanitized Copy Approved for Release 2012/02/08: CIA-RDP81T00368R000100030009-1
Declassified in Part - Sanitized Copy Approved for Release 2012/02/08: CIA-RDP81T00368R000100030009-1
11./p IJCLI CIL
Top Secret
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- Declassified in Part - Sanitized Copy Approved for Release 2012/02/08: CIA-RDP81T00368R000100030009-1