NATIONAL INTELLIGENCE DAILY (CABLE) 21 AUGUST 1982

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 05066181
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 14
• Document Creation Date: December 28, 2022
• Document Release Date: December 1, 2017
• Case Number: F-2016-01785
• Publication Date: August 21, 1982

Approved for Release: 2017/11/21 C05066181
Director of
Central
Intelligence
National Intelligence Daily
(Cable)
21 August 1982
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21 August 1982
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Contents
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Israel-Lebanon: Political Maneuvering
USSR: Alleged Use of Forced Labor on Pipeline
1
3
El Salvador: Military Initiatives
4
Iraq-Iran: Threats to Shipping
5
Australia: Early Election Probable
6
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China-USSR: Results of Chinese Official's Visit
7
France-US: Policy on Extraditing Terrorists
7
Special Analysis
Mexico: Increasing Economic Problems
8
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ISRAEL-LEBANON: Political Maneuvering
(Information as of 2330 EDT)
//Phalange leader Jumayyil reaffirms his candidacy. Beirut
remained generally quiet yesterday as preparations continued for
the beginning today of the evacuation of PLO fighters. There have
been two attacks by PLO groups on Israeli settlements in the Golan
Heights in recent daus.
A Soviet offictal has warned against a "massacre" of PLO
fighters during the withdrawal.//
Palestinians Shell Israeli Settlements
PLO forces shelled Israeli settle-
ments in the Golan Heights on Tuesday and Wrdnesday.
There were no casualties in either attack.
Israeli Detention Camp
the Israelis
have enlarged a detention camp in Lebanon near Ansar to
house additional prisoners captured since the invasion.
The camp now can accommodate 6,000 to 10,000 prisoners,
but the Israelis reportedly have set a ceiling of 7,000.
Although early reports indicated severe restrictions were
imposed on the prisoners, recent press reports claim
limited exercising is now allowed, enough water is avail-
able, and an infirmary has been set up.//
--continued
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Soviet Activity
The Soviet Charge in Washington on Thursday delivered
to the Department of State an "urgent" aide memoire claim-
ing the USSR has information indicating the Israelis plan
to take advantage of the PLO withdrawal from Beirut to
"massacre" the Palestinian fighters and leaders. The
note warned the US would bear full responsibility if it
failed to prevent the alleged Israeli move. Although
Moscow has not made the note public, Soviet media are
making similar claims.
The Soviet Foreign Ministry's senior Middle East
specialist is due to begin a trip to Jordan, South Yemen,
and probably Syria within the next week. All three
countries will receive PLO fighters.
The Soviet naval presence in the Mediterranean
remains only slightly higher than normal
Comment: The Soviets probably delivered the note
to put themselves in a position to blame Washington if
violence erupts during the PLO withdrawal or to claim
credit for deterring the US and Israel if it is carried
out peacefully. The note tacitly accepted the partici-
pation of US troops in the withdrawal, making official
what Soviet media have implied for the past week.
The Foreign Ministry official may use his visits to
meet with PLO leaders and provide a public indication of
Soviet concern for the future of the PLO.
saarcarSep evia.t
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USSR: Alleged Use of Forced Labor on Pipeline
The Soviets are denying widespread West European accusations
that political prisoners are being used to build the Siberian gas
pipeline to Western Europe.
The allegation, which has been given considerable
attention by West European media, evidently was first
made early this month by a human rights organization
based in West Germany. The French and West German Gov-
ernments have instructed their Embassies in Moscow to
determine the validity of the charge. The Soviets yes-
terday again denied the accusation in an article in
Sovetskaya Rossiya, calling it a "dirty lie" intended to
disrupt agreements with West European countries.
political prisoners are
not used on pipeline construction because they are not
eligible for parole. Paroled prisoners convicted of
bribery, robbery, or other crimes occasionally are
employed on such prolects as manual laborers or service
personnel.
parolees are used to help build
compressor stations but not to lay pipe, because that
requires mobile crews. The Ministry of Internal Affairs
is under strong pressure to provide parolees for pipeline
construction projects, which are particularly important
in national economic plans.
Comment: The Soviets are plagued by serious labor
shortages and may be using some of the 2 million people
in forced labor camps, as well as parolees, to perform
such unskilled tasks as clearing forests for important
pipeline construction projects. There is no evidence,
however, that any of the estimated 10,000 imprisoned
political or religious dissidents are being used for any
Phase of construction on the Siberian export pipeline.
3
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,EL SALVADOR: Military Initiatives
//The Salvadoran Army has begun a major offensive amid signs
of increasing dissension in the military, and the guerrillas also
are preparing new attacks.//
//The military operation in northern San Vicente
Department is designed to weaken guerrilla forces that
have often cut the Inter-American Highway. The of
is led by one of the Army's best field commanders
and includes all three US-trained battalions as well as
one trained by a Venezuelan Army team.//
//Minister of Defense General Garcia reportedly is
under heavy criticism from military hardliners for not
making an all-out attempt to defeat the insurgents.
Garcia uncovered efforts to replace him
early this month. His opponents have ties to riqhtwing
political leader D'Aubuisson.
The insurgents are receiving large amounts of ammu-
nition in preparation for an offensive.
some 200,000 rounds of M-16 ammuni-
tion are to be distributed to various guerrilla groups.
Additional rifle rounds and rocket grenades are being
delivered to insurgent strongholds in central and eastern
El Salvador.
//The guerrillas continue to demonstrate the ability
to avoid major losses, recover quickly, and hit isolated
government units. Early this month, they overran a small
town in San Miguel Department and ambushed relief units,
killing or wounding about 50 soldiers and capturing
another 16.//
Comment: //The Army has mounted a steady series of
large and small offensives designed to keep the initia-
tive. Since early July, none has succeeded in seizing
large amounts of supplies or caused heavy casualties,
although together they have helped keep the guerrillas
off balance. Garcia probably hopes a major victory will
silence his critics, but he will have to keep a close
eye on them in the future.//
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IRAQ-IRAN: Threats to Shipping
The Iraqis are using a variety or tactics to restrict commer-
cial shipping near Iran.
Last week Iraqi President Saddam Hussein expanded
the restricted military zone at the head of the Persian
Gulf and announced Iraq will attack all vessels appearing
in the zone, including those near Khark Island. The
Minister of Information reiterated Saddam's warning to
merchant ships calling at Iranian ports after Iraqi war-
planes conducted bombing attacks on Khark Island. On
9 August the Iraqis sank one Greek and one South Korean
ship off Bandar-e Khomeini.
The reaction in the maritime industry thus far has
been limited. Insurance rates, which doubled in July
following Iranian attacks on Al Basrah, are starting to
rise again.
Comment: Most ships are reluctant to call at Bandar-e
Khomeini, which is deep in the exclusion zone, and some
may be shifted to other ports. With three attacks on
Khark Island in little over two months, however, oil ex-
ports may begin to suffer.
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AUSTRALIA: Early Election Probable
//Prime Minister Fraser on Tuesday presented the
federal budget for the 1982-83 fiscal year that includes
major cuts in personal income taxes and increased expen-
ditures on social programs. The new budget, combined
with previously announced investment incentives, is
designed to stimulate the stagnant economy.//
Comment: //Fraser may be putting himself in posi-
tion to call an early election, probably by November.
The government forecasts further economic deterioration
over the next year and fears the Labor Party plans to make
government economic management the principal campaign
issue. In his campaign, Fraser is likely to blame
international economic developments for Australia's
recent poor performance. According to the US Embassy,
he also may blame US economic policies.//
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""rens-Se cr et
CHINA-USSR: Results of Chinese Official's Visit
Chinese officials have told the US Embassy in Moscow
that they detect no changes in Soviet views on bilateral
relations as a result of the recent 10-day visit to Moscow
by the Chinese Foreign Ministry's Director for Soviet
Affairs. This was the first visit of an official of this
rank since 1979. The talks were informal and covered
bilateral and multilateral Issues.
Comment: The Chinese probably will continue such
political contacts as well as their selective expansion
of academic, cultural, and economic exchanges. The agree-
ment this week with the US over Taiwan is unlikely to
change this effort, which aims to reduce tensions with
the USSR and to demonstrate to US and other audiences
some flexibility in dealing with Moscow.
FRANCE-US: Policy on Extraditing Terrorists
//President Mitterrand's determination to root out
international terrorism apparently has not led to a
change in French policy on extraditing foreign terror-
ists. The French Appeals Court decided this week
against extraditing Vicken Tcharkhutian to the US, where
he is wanted for two bombing attempts in Los Angeles in
May. The only charge that could be levied against him
under the Franco-American extradition treaty of 1909 was
arson, which the court ruled did not apply. Tcharkhutian
an Iraqi who admits membership in the leading Armenian
terrorist group, was immediately released.//
Comment: //Paris has refused to cooperate with its
allies in extradition cases that might complicate its
foreign policy, anger French leftists, or provoke ter-
rorist reprisal. It argues its hands are often tied
in such cases, because French law does not treat ter-
rorist activities as special crimes. In the latest case,
France probably felt particularly vulnerable to reprisals
by Armenian terrorists, who threatened to attack French
targets if Tchalhutian were not released.//
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SPECIAL ANALYSIS
MEXICO: Increasing Economic Problems
//The Mexican Government will soon have to make severe cuts in
domestic economic programs and to take other painful steps if it is
to obtain IMF support and regain the confidence of the international
financial community. The indecisiveness of a Zameduck President and
the difficulty of gaining a political consensus in support of a pro-
gram that is bound to hurt many interest groups make it likely any
policy adjustments will be reluctant, tentative, and slow. Even-
tually the economy will achieve a new stability because there is
little choice.//
//Mexico's failure to deal resolutely with mounting
economic problems has led to more frequent private busi-
ness failures, another substantial devaluation, inflation
soaring to near a 70-percent annual rate, and a liquidity
crisis. Mexico has virtually run out of foreign exchange
and has a foreign debt of $80 billion, including more than
$30 billion due to be repaid within a year.//
//Service obligations on long-term debt alone total
nearly $1.75 billion per month, or nearly 90 percent of
export earnings. If short-term debt cannot be refinanced--
and banks have become reluctant to do so--debt service
obligations will soon double to $3.5 billion a month.//
//Mexico has secured some $2.5 billion in emergency aid
from the US and major central banks and has obtained per-
mission from commercial banks to suspend debt repayments
to them temporarily. Those measures are designed to give
Mexico time to negotiate with the IMF on economic stabili-
zation and with the commercial banks on long-term debt
rescheduling.//
Necessary Measures
//Economic stabilization will carry
ruptive political ramifications. Mexico
8
potentially dis-
City began to
--continued
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--151T-Seczet
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//The Finance Minister--a close associate of President-
elect de la Madrid--has announced the recent moves, but
he lacks the stature among Mexicans to build a consensus
for an austerity program that is widely seen
necessary and equitable.//
as both
//De la Madrid is involved in the program but prob-
ably will not accept a leading role, in order to avoid
limiting his future policy options. He also wants to
protect the mandate he won in the election.//
//Labor is the largest source of support for the
ruling Institutional Revolutionary Party, but the unions
also could mobilize popular protest. Mexico City cannot
risk alienating them.//
//Major labor groups are demanding price controls,
and others have called for wage hikes. Negotiations for
the annual wage increases on 1 January are slated to
begin next month. Meanwhile, labor is taking a wait-and-
see attitude.//
//Business has already suffered the most from the
halting austerity measures, and it is likely to welcome
the greater policy predictability inherent in an IMF pro-
gram. As business failures mount, however, policies on
prices, credit, and trade that are part of the austerity
package will come under fire.//
//Opposition parties have an unprecedented oppor-
tunity to increase their popular appeal. Because the
ruling party is politically astute and it is willing to
use force, however, it will put up a strong defense
gainst any challenges.//
//The public has to be convinced the situation is
serious enough to warrant the measures the government
is proposing. Foreign creditors will be looking to see
whether the government has the will to take the necessary
steps.//
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--continued
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ileaticir�Secret
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Crucial Time Factor
//Developing and negotiating a comprehensive policy
package will be time consuming and will be affected by
several important events in the next few months. Most
price controls will expire this month, Lopez Portillo
will deliver his final state-of-the-nation address on
1 September, Mexico has to reach an agreement with the
IMF by mid-October, and the new administration takes
office on 1 December. Until the implications of these
developments become clear, foreign creditors will remain
nervous, and Mexico's financial situation will be pre-
carious.//
//Civil unrest is a possibility at every stage. The
longer the delay before the scope of the austerity pro-
gram is apparent, the greater the likelihood of social
and political turmoil.//
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