That very clearly looks like rust. Pinholes in the paint allow oxygen in, and rust keeps pushing to the path of least resistance. A self-etching primer should do the trick, but starting with a smooth frame pays dividends in the end finish. Any roughness should be sanded out level with the surrounding steel, and any pits filled with body epoxy.

For peace of mind, you can use a phosphoric acid rust converter in the frame tubes to arrest rusting there, and convert the rust to an inert and somewhat protective iron phosphate.