NEAR EAST AND SOUTH ASIA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP05S02029R000300840001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 49
• Document Creation Date: December 22, 2016
• Document Release Date: May 9, 2012
• Sequence Number: 1
• Publication Date: October 10, 1986
• Content Type: REPORT

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Directorate of
Intelligence
Near East and
South Asia Review
NESA NESAR 86-023
10 October 1986
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Near East and
South Asia Review
Articles Libya: The Impact of Austerity
Rising popular dissatisfaction with shortages of consumer goods and
deterioration in social services brought about by sharply lower oil
revenues is spreading as economic hardships hit all levels of Libyan
society. Without support from the military, this disgruntlement will
remain only an indirect threat to the regime.
The Maghreb: After Oujda
King Hassan's decision to unilaterally abrogate Morocco's political
union with Libya-the treaty of Oujda--will not significantly alter
relations among the states of the Maghreb. The most likely outcome
will be Libyan sponsorship of terrorism against Moroccan interests
and renewed Libyan support for the Polisario
The Maghreb: Population Problems and Political Stability
Tension between a large, rapidly growing population and the meager
financial resources available to meet basic human needs is
producing serious social problems throughout the Maghreb. These
problems almost certainly will lead to major political challenges in
Algeria, Morocco, and Tunisia over the next decade.
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The Food Gap in the Middle East-A Growing Problem I 119
The Middle East will remain one of the world's largest markets for
imported food for the rest of this century. Although the food gap
between demand and domestic supplies will continue to widen, the
US share of the Middle East market will not increase because of
competition from other exporters.
Secret
NESA NESAR 86-023
10 October 1986
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Bahraini-Saudi Causeway: The Road to Better Relations?
The opening of the Bahraini-Saudi Causeway in November will
provide another avenue for Riyadh and Manama to repair the
strains in their relationship that developed during Bahrain's dispute
with Qatar last April. The causeway also will increase trade and
probably raise property values and lower consumer prices in
Bahrain.
Iran's Urban Working Class: Pillar of the Regime
The urban working class is the most important pillar of support for
Iran's clerical regime. Although no significant change in this
support is likely in the near term, urban workers could play an
important role in a violent post-Khomeini power struggle, with
radical clerics enlisting the urban masses on their side.
The recent terrorist hijacking in Karachi involving Indian citizens
may cause India to reexamine its relations with radical Middle
Eastern states and the PLO. Its most important relationships are
with Iraq, Iran, and Libya, while its ties to Syria and the PLO are
negligible.
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Relations between India and Nepal have improved somewhat in the
two years since Indian Prime Minister Rajiv Gandhi came to power.
Nepalese leaders believe Rajiv may be more willing than his mother
to consider their concerns.
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Some articles are preliminary views of a subject or speculative, but the contents
normally will be coordinated as appropriate with other offices within CIA.
Occasionally an article will represent the views of a single analyst; these items
will be designated as noncoordinated views.
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Near East and
South Asia Review
Libya: The Impact of
Austerity
Rising popular dissatisfaction with shortages of
consumer goods and deterioration in social services
brought about by sharply lower oil revenues is
spreading as economic hardships hit all levels of
Libyan society. Disgruntlement has even spread to the
military, which has suffered an erosion of its
perquisites.
graffiti, pamphlets, and even protests against
Qadhafi's economic policies are on the rise, especially
in urban areas and on college campuses. Nevertheless,
without support from the military, disgruntlement
over deteriorating living standards probably will
remain only an indirect threat to the regime because
of Qadhafi's pervasive and effective security forces.
from the wages of every gainfully employed adult to
purchase Kalashnikov rifles that the government will
store for the owner.
(civilian and military salaries are 25X1
now directly deposited in government banks to control
withdrawals. Moreover, Tripoli may have issued a
new payment calendar reducing the number of pay 25X1
periods to trim salary costs and clear up arrears on
civil servant salaries. 25X1
Decreased purchasing power is matched by the
reduced availability and quality of goods for sale.
Dealing with shortages of most goods has become a
way of life for most, and waiting lines are growing
longer and consumers more contentious
Living With Less
The Qadhafi regime has progressively implemented a
series of harsh austerity measures since 1980 to deal
with the 78-percent drop in oil revenues and the
accompanying 27-percent drop in real GDP. All
categories of imports have been slashed, economic
development is at a standstill, and severe restrictions
have been placed on travel abroad-previously a
release valve from austerity and a source of luxury
goods. Even Libyan participation in the hajj in Saudi
Arabia has become a luxury-Libyan attendance was
off by 50 percent this year-a situation that rankles
many devout Muslims.
Living standards have fallen off dramatically as
Tripoli has attempted to curtail domestic
consumption. Overall, net salaries may be down by 50
percent. many taxes
have been raised; housing and food subsidies reduced;
and a freeze placed on wages, fringe benefits, and
employment. a
$675 deduction in 10 monthly installments is planned
ration books have been issued
to control the distribution of basic commodities in
short supply. The need for such measures is supported
by trade statistics that show food imports last year
were at a seven-year low, while imports of consumer
goods fell to one-tenth the 1981 level. In particular,
imports of luxury items such as chocolate, sugar, fresh
meat, and apparel have all but dried up. Meanwhile,
since 1982, prices for these items are up as much as
300 percent when available in government stores, and
prices of many basic commodities are up over 100
percent
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Growin shortages have spawned a thriving black
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services depends on who you know, how much you are
willing to pay, and how long you will stand in line.
Most products are not available from government-run
stores, and store managers hoard goods for friends or
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NESA NESAR 86-023
10 October 1986
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Table 1
Libya: Direction of Imports, F.O.B.a b
1980 1981 1982 1983 1984 1985 First Second
Quarter Quarter
1986 1986
Japan 527 1,059 285 363 414 255 62 57
Spain 358 427 267 276 267 172 32 40
Norway 10 7 9 7 3 4 1 0
a Excludes military and commercial trade with the USSR and
Eastern Europe.
b Includes military imports from selected West European countries.
c Because of rounding, the components may not add to the
totals shown.
those willing to pay nearly double the official price. widespread, and most neighborhoods have an
So far the government has tolerated such activity, established drug dealer. Without this market,
and, in some cases, local police and military personnel virtually no luxury goods and many basic
are involved. Moreover, a true black market has commodities would be unavailable, and few
evolved to satisfy a growing demand for drugs, automobiles in operation.
alcohol, foreign currency, auto spare parts, and
cigarettes. Although less open and subject to harsher
penalties, traffic in such goods is
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Table 2
Libya: Composition of Imports, F.O.B. a b c
Total
8,311
13,344
6,661
6,058
5,353
3,777
Foodstuffs
966
1,256
600
652
605
468
Grains
300
395
271
214
262
218
399
901
188
192
208
102
338
278
238
177
213
110
a Excludes all military imports and trade with the USSR and
Eastern Europe.
b Excludes military imports from West European countries.
Because of rounding, the components may not add to the
totals shown.
Other social services also have declined as government occur randomly and are met with suggestions by
revenues have dwindled. Urban residents are often Qadhafi that Libyans return to using oil lamps.
required to dispose of their own garbage and to clean Health care in Libya is still good by regional
streets because of large reductions in the foreign work standards, but the system is heavily dependent on
force. In some cases the popular disdain for such work high-cost foreign doctors. In addition,
and Libya's already poor sanitation system have
compounded trash problems and hastened the spread
of plague in coastal cities. Water and power shortages
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Table 3
Libya: Sources of Imports-1985, F.O.B. a b c
Total
Trade
Foodstuffs
Raw
Materials
Fuels
Manufactures
Other
Japan
253
1
0
0
251
1
Italy
1,266
110
16
213
928
0
Spain
179
47
1
51
79
1
a Excludes all military imports and trade with the USSR and
Eastern Europe.
b Excludes military imports from West European countries.
Because of rounding, the components may not add to the
totals shown.
many prescription drugs have been militarized, with both sexes expected to
are in short supply in Libya, and, because of unpaid undergo military indoctrination. As a result, Libya's
bills to many European hospitals and restrictions on education system is in a shambles. Chaotic reforms in
exit visas, virtually no medical emergencies are being university curriculums have left students demoralized
sent abroad for treatment. and concerned about their future
Education has been an indirect target of Qadhafi's Not even the military is beyond the reach of austerity.
austerity program. Although imports of military hardware have been
the starting age for school children is being maintained-25 percent of total imports this year-
gradually increased in line with budget cuts and concessionary stores used by the military have been
Qadhafi's view that parents should bear a greater closed. In the past, such stores supplied goods
share of the burden of educating their children.0
all preschools and primary schools
already have been closed. Moreover, Libyan schools
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generally unavailable on the open market at reduced
prices and were considered an important military
perquisite. In addition,
since mid-July 1985, the mi itary has
been unable to provide daily meat rations to many of
its personnel because of nationwide shortages.
Moreover, the military's poor performance against
US airstrikes in April and the threat of additional
attacks has sapped morale. These conditions, coupled
with the undesirable prospect of service in northern
Chad, probably partly explain the rise in military
desertions in recent months.
Political Dimensions of Austerity
Soft oil market conditions since 1980 have eroded a
primary pillar of the Qadhafi regime-a strong and
growing economy. The equitable distribution of
Libya's oil wealth has been a hallmark of Qadhafi's
revolution and a source of his popular appeal,
especially among the young and the lower classes. The
sharp contraction in living standards over the past five
years, however, has created a sense of doubt in a
growing segment of the population about the future of
the economy and Qadhafi's revolution. The impact of
austerity is compounded by the relative youth of the
population, 60 percent of which is under 20 and does
not remember the widespread poverty before Qadhafi
came to power in 1969. As a result, widening austerity
probably has had the greatest impact on the segment
of Libyan society that has been one of the Libyan
leader's strongest constituencies.
Qadhafi almost certainly views economic stringency
as a useful tool to reshape Libyan society. The regime
has done little more than offer revolutionary
platitudes to soften the effects of economic adversity.
Qadhafi has repeatedly admonished the population to
consume less and work harder to achieve the goals of
his revolution. At the same time, the Libyan leader
extols the virtues of national self-sufficiency and the
need for higher taxes to raise domestic production and
aid revolutionary causes worldwide.
Protest against the regime's economic policies appears
to be taking a more demonstrative form in recent
months.
since the US airstrikes, there has been a growing
incidence of antiregime graffiti and leaflets appearing
throughout Libya, especially on university campuses.
Much of the criticism focuses on the failure of the
military to defend the country against US attacks
despite the large military budget and sacrifices of the
populace. Popular grievances are even causing a
resurgence in intertribal tensions as each group
scrambles to preserve its share of the shrinking
economic pie. Moreover,
Qadhafi has come under increasing pressure,
both from military officers and from high-level
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government officials, to renounce publicly some of the
more controversial aspects of Libya's revolutionary 25X1
policies and to promote economic liberalization in
order to win back popular support for the regime.
Outlook
It is unlikely, even with the recent $2.6 billion
windfall from the sale of Tripoli's equity share in Fiat,
that Qadhafi will significantly change course and ease
up on austerity. Despite growing disgruntlement,
Qadhafi probably retains a residual appeal among a
wide segment of Libya's population, especially among
the lower classes and bedouin who have benefited
most under his regime. At the same time, Qadhafi
probably will not be deterred by domestic grumbling
about his continuing to support radical Palestinian
groups and dissidents in northern Chad and the
building up of his military arsenal. Although growing
popular disgruntlement may increase the appeal of
anti-Qadhafi dissidents and the occurrence of civil 25X1
disobedience, the Libyan leader's still strong security
forces probably will prevent the development of
serious organized and popular opposition to the
regime in the near term. 25X1
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The Maghreb: After Oujda
King Hassan's decision to unilaterally abrogate
Morocco's political union with Libya-the Treaty of
Oujda-will not significantly alter relations among
the states of the Maghreb. The most likely outcome
will be Libyan sponsorship of terrorism against
Moroccan interests and eventual renewal of Libyan
support for the Polisario. The rupture between Rabat
and Tripoli, however, is a boon to US interests. It
removes a sore spot in Washington's ties to its closest
ally in the Maghreb and reinforces US claims that
Qadhafi is isolated in the Arab world.
Background
King Hassan announced the end of the Moroccan-
Libyan union in a nationwide television address on 29
August. He stated that his decision was in response to
Libyan and Syrian condemnation of the visit to
Morocco last July by Israeli Prime Minister Peres.
We believe, however, that Hassan was looking for a
pretext to end a relationship that had been under
strain since its inception two years ago. For Morocco,
the primary reason for the union was no longer valid.
King Hassan initiated the union because he wanted
assurances that Qadhafi would abide by a 1983
agreement with Morocco to curtail support for the
Polisario guerrillas fighting Morocco for control of
Western Sahara. By August 1986, Hassan saw
Qadhafi as increasingly weak at home and a
diplomatic liability for Rabat. Morocco is winning the
war with the Polisario and is probably less worried
about a resumption of Libyan support to the
guerrillas.
There also were secondary considerations for the
decision by Hassan. He may have detected Libyan
plans to retaliate against Morocco through terrorism
following the Peres trip. The bad feeling between the
United States and Libya also made Qadhafi a liability
to Hassan, who wants to improve ties to
Washington-especially whenever he detects a
warming in Algerian-US relations. Finally, Qadhafi's
growing economic woes probably have destroyed any
hope the King may have had of achieving further
economic benefit from the pact.
Domestic Implications for Morocco
There has been little domestic reaction to the King's
announcement. Nevertheless, King Hassan almost
certainly expects Qadhafi to try to cause trouble for
Rabat. We believe Tripoli never ceased its
machinations against Morocco during the life of the
treaty
For example,)
the number of Libyan visitors to
Oujda accord.
deport the nearly 18,000 Moroccan workers in Libya,
as it did the Tunisian workers last year. Such a move
would compound problems for a government already
grappling with severe unemployment and under
pressure from fore' n donors to implement additional
austerity measures.
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As a precaution, Moroccan security services are on
the alert for terrorism 25X1
The police have adopted aggressive 25X1
and highly visible measures, including tighter security
at airports and borders. 25X1
Moroccan press reports that the government has
apprehended four foreign nationals, allegedly 25X1
members of the Palestinian Fifteen May
Organization, who were planning acts of subversion.
Hassan could restrict the entry of Libyans, expel
Libyan residents, or impose restrictions on Libyan
diplomats. These actions would hamper Libyan
intelligence and terrorist operations in Morocco and
elsewhere, since Libyan intelligence operatives use
Morocco as a convenient point of transit.
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NESA NESAR 86-023
10 October 1986
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Effect on the Saharan War
Algeria's reaction to the King's announcement has
been muted, but the government almost certainly is
relieved that its two neighbors are no longer allied.
Nonetheless, relations between Rabat and Algiers are
not likely to undergo much change. Both sides are
concerned about stability and economic problems in
the Maghreb, but the Polisario question stands in the
way of significant cooperation and threatens peace '
between the two countries. Algerian aid to the
Polisario could lead to a resumption of the limited
border skirmishes that characterized Moroccan-
Algerian relations in the past. We do not expect
progress in the diplomatic arena in settling bilateral
differences or the Western Sahara dispute.
There is a strong possibility that Qadhafi will resume
military support for the Polisario.
the Algerians might approve
renewed Libyan aid to the Polisario, since it would
reduce the burden of economic support for the
Polisario's Saharan Arab Democratic Republic. The
major constraint on Qadhafi is that supporting the
Polisario would prompt Moroccan countermeasures,
including a renewal of Moroccan support for Chadian
President Habre and Libyan dissidents and possibly a
break in diplomatic ties. In any case, since the
Polisario already has more equipment than it can
effectively use, additional Libyan shipments are not
likely to affect significantly the military situation.
Several conceivable but unlikely developments could
produce an escalation of the Western Sahara conflict.
Algerian President Bendjedid is firmly in control of
his government, but his policies are being challenged
by radical hardliners. This opposition backs the
regime's overall stance toward Morocco, but it
supports a more aggressive military strategy for the
Polisario-including terrorism within Morocco-and
apparently is less sensitive to the risks of conflict with
Morocco. We doubt that the opposition is strong
enough to overturn Bendjedid's cautious policy on the
war, but the President may decide to accommodate
the hardliners and allow the Polisario to pursue more
aggressive tactics. These might include land or sea
commando raids deep inside Western Sahara or in
Morocco.
haven for the Polisario refugee population
In addition, Qadhafi eventually may try to expand his
influence with the Polisario, exploiting the
dissatisfaction of some insurgent leaders over
Algeria's conservative strategy in the conflict.
Qadhafi would hope that his deliveries of weapons
would strengthen the Algerian hardliners. Algiers,
however, would not relinquish its control over the
Polisario because of the risks that such a development
might pose for Algerian-Moroccan relations. The
Algerians provide the Polisario with the bulk of the
movement's military and economic resources and
The Fallout for Algeria, Libya, and Tunisia
During the past two years, Algeria's policy toward
Libya has gone from hostility to a more ambivalent
stance. The breakup of the Moroccan-Libyan union, a
key goal of Algiers, diminishes Algeria's fear of the
possibility of joint Libyan-Moroccan actions against
Algeria. Bendjedid thus has greater flexibility in
dealing with Qadhafi, especially because of the
Libyan leader's isolation.
President Bendje i believes that t o
possibility of increased Israeli and US support for
Morocco will require Algeria to improve ties to Libya.
He probably believes that closer military cooperation
between Morocco and the United States and Israel
will further strengthen the King's position in Western
Sahara. Bendjedid,
encouraged by hardliners, has agreed in principle to
attend a summit meeting with Qadhafi and Syrian
President Assad in which the Algerians would give
rhetorical support to Qadhafi in return for increased
Libyan aid to the Polisario.
In our judgment, Bendjedid will be reluctant to meet
with the Libyan leader any time soon because of his
concern over Algeria's image in the Arab world and in
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the West. The Algerians deeply distrust Qadhafi and
differ with him on a range of issues such as Chad and
Tunisia. Even though Algiers will try to reach an
accommodation with Qadhafi, President Bendjedid
will not go so far as to sign a political accord-as
some Algerian hardliners recommend-except in the
unlikely event that Qadhafi makes substantial
concessions on issues of bilateral interest.
Qadhafi, for his part, is eager to strengthen ties to
Algiers and to seek a rapprochement with Tunis
because of his international isolation since the US
airstrike last April. His principal interest is to prevent
Algeria from expanding relations with the United
States and to minimize Algerian support for exiled
Libyan dissidents. To achieve this, he may give the
appearance of greater receptivity to Algerian
conditions for reconciliation, including demarcation of
their common border, cessation of support for
Algerian and other dissidents, and settlement of
Tunisian claims against Libya. Qadhafi may also
respond favorably to a direct Algerian call for
assistance for the Polisario, even though he regards
such a posture as extremely risky. Unless Algeria
agrees to some form of union with Libya-a highly
unlikely development at this juncture-Qadhafi will
avoid commitments and do no more than necessary to
placate Algeria.
Tunisia will be the least affected by developments
between Morocco and Libya. The Bourguiba
government probably believes that Qadhafi's growing
problems and need for better ties to his neighbors will
strengthen Tunisia's hand in bilateral relations. Since
the rupture of diplomatic ties last year, Tunisia has
been seeking financial compensation for Libya's
abrupt expulsion of Tunisian expatriate workers, and
recent press reports indicate that Qadhafi is meeting
some of these Tunisian demands. Tunis probably will
be most concerned about signs of rapprochement
between Algeria and Libya, since closer ties between
these powerful neighbors might limit its own
diplomatic options. As long as Algeria maintains its
distance from Libya, Bourguiba can afford to adopt a
hardline position toward Qadhafi. A settlement of
differences between Libya and Tunisia would help
ease tensions between Algeria and Libya and reduce
somewhat the threat of overt Libyan aggression
against Tunisia. We doubt, however, that peace
between Tunisia and Libya would remove the danger
of Libyan subversion against the Bourguiba regime.
Implications for the United States
Hassan's move draws Morocco closer to the United
States and helps to isolate Libya. The King not only 25X1
hopes that the United States will reward him with
economic and military aid, but also that Morocco's
overall image in the West will improve, paving the
way for expanded financial credits from Western
governments and banks. His most important objective
probably is obtaining sophisticated military
equipment to replace Morocco's aging inventory of
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Bilateral relations probably will cool only moderately
if the King concludes that Washington is unwilling to
reward him sufficiently for his meeting with Peres
and the breakup of the Oujda accord. Hassan would
be tempted to broaden further Morocco's ties to
Western Europe-in particular France, Spain, and
Italy-and to expand contacts with the Soviet Union.
Since the abrogation of the Oujda accord, Moroccan
officials have held discussions with Italy's Defense 25X1
Minister Spadolini on military and security
allowed two Soviet naval combatants to visit
Casablanca--the first Soviet combatant port call in a
decade.
The principal concern for the United States would be
closer relations between Algeria and Libya. Such a
development would erode Tunisia's national security,
reduce Washington's access to Algeria, undermine
Algeria's willingness to maintain ties to Libyan
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dissidents, and make it more difficult for the United
States to help Algeria and Morocco achieve a
peaceful settlement of the Western Sahara dispute.
Closer US-Moroccan ties, and especially a decision by
the United States to increase military assistance to
Morocco, would give impetus to Algerian-Libyan
relations.
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The Maghreb: Population
Problems and Political
Stability
Tension between a large, rapidly growing population
and the meager financial resources available to meet
basic human needs is producing serious social
problems throughout the Maghreb.' These problems
are as apparent in leftist Algeria as in moderate
Morocco and Tunisia. In each country rapid
population growth undermines governmental efforts
to maintain social stability, equity, and living
standards for the population and limits further social
and economic development.' These problems almost
certainly will lead to major political challenges in
these countries over the next decade.
The Demographic Millstone
The Maghreb's explosive population growth of 2.8
percent annually is expected to continue with only
slight abatement well into the next century. High
population growth over the last 30 years has been
largely a result of a steady decline in mortality with
no comparable change in the birthrate. As a result,
about 1.5 million people were added to the population
in the past year alone. The United Nations projects
only a slight decline in the annual growth rate, to 2.4
percent in the year 2000, when the projected
population will be about 84 million-almost triple the
total during the late 1950s when these countries
achieved independence. We estimate that, even with
population growth held to only 2 percent annually-
an optimistic assumption-projected population in the
region would reach 71 million by the end of the next
decade.
'This article defines the Maghreb-Arabic for west-as Morocco,
Algeria, and Tunisia. These three countries have the same colonial
heritage and similar demographic problems. The article does not
include Libya because its small population and relative wealth
make it atypical in the region
I A demographer under contract to the CIA provided unclassified
population data and projections that served as the basis for the
judgments in this article. The contractor's estimates for population
in 1985 are based on UN adjustments to the Moroccan census of
1982, the Algerian census of 1977, and the Tunisian census of
1984. The contractor also used fertility and mortality trends to
Maghreb: Population Dynamics, Million person
1970-2000 a
Rural
Urban
310594 104* 25X1
LOA-1
Fertility control programs are not expected to
significantly alter these projections, since it would
take two decades under the best of circumstances to
stabilize lower birthrates. Moreover, the segment of 25X1
the population that will exert the greatest demand for
jobs and resources over the next 15 years is now in the
1 to 15 age group. The governments of the Maghreb
have all begun to recognize the need for population
Secret
NESA NESAR 86-023
10 October 1986
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Maghreb: Demographic Statistics, 1985 and 2000
Urban population (millions)
10.38
Annual urbanization rate (percent)
4.3
Urban population as a percentage
of total population
44
Unemployment and underemployment (percent)
25
25
22
NA
NA
NA
Demand for physicians b (number ofphysicians)
2,130
3,986
1,518
3,365
6,478
2,162
Literacy (percent)
28
35
62
58
65
79
Per capita GDP (US $)
490
2,230
1,136
NA
NA
NA
Average annual GDP growth, 1981-85 (percent)
2.5
4.3
3.9
NA
NA
NA
a Projected.
b Holding the patient-to-physician ratio constant- 11,100 patients
per physician in Morocco, 5,590 patients per physician in Algeria,
and 4,800 patients per physician in Tunisia.
control, but only Tunisia has allocated more than 1 or
2 percent of its health budget to family planning
programs. Indeed, a wide gap exists between the
stated goals of the regimes and their implementation
of such programs. According to the respective US
Embassies, Moroccan and Algerian officials have
publicly stated that their national economies can
accommodate twice the current population, but they
privately admit that rapid population growth is one of
their most urgent problems.
Jobs and Unemployment. The rapid surge in
population has contributed to increasing
unemployment. Since 1980, poor economic
performance has added to the problem. Regional
GDP growth of 3.6 percent over the past five years
was only marginally ahead of population growth and
down by almost half from the previous five-year
period, according to the International Monetary Fund
(IMF). As a result, unemployment and
underemployment have risen steadily, to an estimated
25 percent of the labor force. Even during the 1970s,
a period of strong economic growth, the Maghreb
states could not provide jobs for all new entrants to
their labor pool. We estimate that, to accommodate
the swelling number of entrants into the job market,
regional GDP would have to grow at an
unrealistically high average rate of over 9 percent
annually. Such a high level of growth would be
needed because the increasingly capital-intensive
economies of the future will create fewer jobs for a
given increase in GDP:
? Morocco will need to provide 320,000 jobs per year
for new entrants over the next 15 years.
? Algeria will have to provide 275,000 new jobs
annually.
25X1
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80,000 new job seekers each year.
Rising Urbanization. The rapid increase in population
and the limited job opportunities in rural areas, along
with improved education and broadening horizons for
youth, have fueled an enormous increase in
urbanization. Over 53 percent of the Maghreb's
population is already concentrated in urban areas.
Over the years, city residents have become a key
constituency for political leaders who have
consequently invested heavily in urban improvements.
Investment in urban food subsidies, piped water,
social services, and the protection of urban wages
further encourages rural-to-urban migration and has
led to a vicious cycle where each new increase in
urban population produces pressure for further
investments.
Constraints on Water, Land, and Food Supplies. We
believe that demands for water, land, and food-
commensurate with population pressures-will
become major political issues for the Maghreb before
the end of the century. Demand for water, already in
short supply, will probably double by the year 2000,
with limited options for expanding supplies, according
to the World Bank. We expect that urban areas will
especially feel the pinch as delivery systems are
already inadequate. In addition, the pressure for
government policies favoring irrigated agriculture will
intensify competition between rural and urban areas.
Land usage is a serious issue in the Maghreb because
less than 10 percent of the land is under cultivation.
As a result, the Maghreb is experiencing a growing
gulf between food production and demand, with
limited prospects for closing the gap. Roughly self-
sufficient in food at independence, IMF estimates
show that the region now imports over half of its food.
According to Moroccan and Tunisian Government
statistics, agricultural productivity has increased at
barely half the rate of population growth for the last
20 years. Poor government management, low farm
prices, and inadequate agricultural extension services
share much of the blame.
agricultural imports already account for 20 percent of
total imports and are a significant drain on foreign
Maghreb: Cereal Production Million n,ctric ton,
Gap, 1981-2000 a 25X1
(1 198I tit 83 84 85 95 2000
"CIA data. the data for 1986-2000 are projections
hAssumes 4-percent average annual growth
1'A,,urno 1.3percem average annual growih
dNo crow-th_
exchange. We estimate that the cost of annual food
imports will grow by at least 40 percent-$1 billion-
by the year 2000 if agricultural productivity is not
improved.
Political Strains in Maghreb Societies
Rapid population growth has eroded the old land-
based, family-oriented, traditional Islamic society of
the Maghreb faster than governments in the area
have been able to promote development of
economically advanced and urban-based societies.
The popular unrest fueled by this circumstance has
been aggravated by the economic slump of the past
several years. Public disturbances occasionally have
25X1
25X1
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Maghreb: Per Capita Index:
Cereal Production,
1981-2000 a
Morocco's
200
S
r
w S
Morocco
Algeria
I I I I I I I
0 1981 82 83 84 85 95 2000
'CIA data. The average annual growth in production for each country
during 1981-85 is maintained for the projection in 1986-2000.
occurred since 1980 in Morocco, Algeria, and Tunisia
as a result of discontent with austerity, and significant
restiveness exists among students, the unemployed,
and some religious fundamentalists. Islamic
fundamentalism and leftist philosophies probably will
have increasing appeal under conditions of growing
social adversity. We believe that managing these
challenges will tax already strained budgets and the
will of each country's political elite.
Youth and Students. In all three countries, unmet
rising expectations among the burgeoning, better
educated youthful population are becoming a major
source of discontent, according to US Embassy
reporting. Social scientists of the region say that
young people are increasingly blaming their
governments for mismanagement of the economy and
are refusing to make sacrifices. The US Embassy in
Rabat says that crime in urban slums is rising at an
alarming rate as a result of the growing number of
unemployed youths.
educational system is not geared to providing the
skills needed for technical and industrial jobs and
contributes instead to urban unemployment-a
condition that we believe also prevails in Algeria and
Tunisia. Student strikes protesting shortages in
educational services have led to violence, especially in
Morocco and Tunisia. Such protests have increased
over the past several years, despite the governments'
stationing of police on campuses. The US Embassies
in Rabat and Tunis report that the police presence has
increased unrest among most students
Some socially and intellectually uprooted young
people are starting to turn their backs on
modernization and, as a corollary, to reject the United
States and other Western countries that they see as
principal agents of change. This impulse has been the
driving force behind the recent spread of Islamic
fundamentalism in the region, according to regional
scholars. On the other hand, others-we believe a
smaller number-are discontented that their
governments are not doing more to promote change,
and this group is the recruiting ground for radical
leftists.
Islamic Fundamentalism. Rapid population growth
and related social change are contributing to the
appeal of militant fundamentalism, which calls for a
return to Islamic principles. The movement extends
well beyond the youth and consists of two principal
currents.
The first, "fundamentalists of conviction," is
composed of fairly well-off intellectuals. They are
generally dissatisfied with what they consider to be
social and economic injustices, and they see that
ruling cliques are running the North African
countries on the basis of favoritism and corruption.
This group agrees that the path of reform lies in strict
adherence to the Koran, and some share the
widespread fundamentalist belief that the West must
be rejected because of its association with Israel.
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The second group, "fundamentalists from
frustration," is made up of unemployed or
underemployed urban residents who are denied access
to wealth or positions in society. A group of Moroccan
scholars has recently argued that rapid population
growth has aggravated this problem. Frustrated
individuals of this sort frequently do not have an
intellectual appreciation of Islam but hope that
fundamentalism will improve their bleak prospects.
To date, class and education differences have kept the
two groups from cooperating.
Although fundamentalism and leftist agitation have
been fed by rapid population growth, they have not
reached dangerous proportions. There are clear signs,
however, that these movements pose a potential
threat:
? Morocco experienced violent outbursts in
Casablanca in 1981 and nationwide rioting in 1984
over reduced food subsidies. This violence resulted
in several hundred deaths after the military was
called in to restore order. During the riots in 1984,
Islamic fundamentalists helped foment unrest by
distributing tracts attacking the King's economic
mismanagement. Last fall the US Embassy in
Rabat reported that King Hassan's decision to
enlarge the royal palace by demolishing adjacent
neighborhoods in Casablanca set off new
demonstrations. In our view, harsher austerity
mandated under Morocco's next IMF and debt
rescheduling programs will increase discontent.
With limited economic options, we believe the King
will be forced to be more repressive, calling on his
security and military forces more frequently and
quickly to quell dissent.
? Algeria's inability to meet the demand for basic
social services in urban areas-primarily housing-
caused riots in the Casbah last summer. Violence
also erupted in several rural communities last year
as farmers clashed with local authorities over land
and water reforms, according to the US Embassy in
Algiers. We estimate that the sharp drop in oil
prices threatens to halve foreign exchange earnings
this year and to undermine Bendjedid's program of
economic liberalization. Despite its pervasive
security apparatus, the regime will have to move
cautiously to avoid further unrest and criticism by
remaining hardliners opposed to President
Bendjedid's reforms, in our view.
? Tunisia also was rocked by riots in 1984 that were
brought on by a sharp hike in the price of bread.
Islamic fundamentalist agitators helped to fan the
protests of disadvantaged workers in poorer rural
areas, which spread to urban centers, according to
the US Embassy in Tunis. In our view, falling prices
for Tunisia's chief exports-oil, phosphates, and
agricultural products-and a rising debt service
burden will continue to limit the government's 25X1
ability to deal with unemployment and the needs of
a rapidly urbanizing society. We believe President
Bourguiba and his successor will become even more
repressive as economic options diminish.
Obstacles to Improvement. We believe that Maghreb
leaders will face growing difficulty mobilizing the
financial resources needed to tackle the social and
economic problems resulting from population growth.
An inadequate fiscal base will make it especially hard
to revitalize food production. Most farmers cannot
afford needed investments in agricultural technology
and expertise, and government budget deficits will
continue to curtail subsidies for new equipment. We
believe, moreover, that leaders will be reluctant to
dismantle inefficient government organizations that
control food production, prices, and distribution
because they provide an important source of
patronage and political control. Leaders also
recognize that eliminating the current system of
subsidizing urban consumers would produce unrest in
the cities.
Water will remain a key constraint to infrastructure
development. According to social scientists, many
existing sources of water are already overused,
leading to salt water encroachment, pollution of
aquifers, and reduced supplies. Improving the
efficiency of current water resources-through
methods such as emphasizing drip irrigation and
water-efficient crops-will require a significant
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improvement in education and changes in traditional
farming methods. Development of new water
resources will entail even greater expense and require
significant foreign expertise to achieve
The Maghreb region's harsh environment is likely to
increase the impact of these shortcomings. Much of
the remaining uncultivated land is in semidesert zones
that receive barely sufficient rainfall even in good
years. If the population projection of 84 million in the
Maghreb by the turn of the century is correct,
regional agricultural productivity would have to
increase by an average of 8.2 percent annually-6.3
percent in Morocco, 11.2 percent in Algeria, and 7.1
percent in Tunisia-to achieve a balance between
cereal production and demand
Outlook
We believe that, regardless of their different political
complexions, the Maghreb governments are
committed to reducing population growth, and we
expect them to try to develop more successful family
planning programs. At the same time, Moroccan and
Algerian leaders in particular, and even Tunisian
leaders to a lesser extent, will continue to worry that
promoting population control aggressively could
offend the traditional values of many of their citizens.
The governments' concerns with minimizing that
potential source of political unrest are likely to hinder
their population control programs for some years to
come.
These governments, moreover, have only limited
resources at their disposal. Regional leaders are
already well aware that demographic problems do not
yield to quick fixes and that the payoff from expensive
and socially sensitive programs to lower population
growth rates will not be apparent for a decade or
more. They are also likely to continue to believe that
their most immediate and overriding concern must be
to ensure political stability and their continuance in
power. That concern is likely to exert sustained
pressure on them to divert attention and scarce
resources from treatment of the root cause of their
demographic crisis-rapid population growth-to
treatment of its more politically pressing symptoms,
such as unemployment and urban slums.
In the meantime, the demographic crisis and the
increased social and economic problems flowing from
it almost certainly will continue to grow and to fuel
Islamic fundamentalist and leftist unrest. Political
leaders who fail to accommodate or co-opt either
fundamentalist or leftist aspirations are likely to have
increasing difficulty governing. Those leaders who
lean too far toward either fundamentalism or leftist
radicalism, however, will probably stir up opposition
from the other quarter. We doubt that any Maghreb
leader can arrive at a fully satisfactory resolution of
these challenges. Fundamentalism and leftist
radicalism point ultimately in very different political
directions, and the underlying conflict between them
means that politics in the Maghreb countries will
become increasingly turbulent.
Implications for the United States
We believe that Morocco, Tunisia, and possibly
Algeria will try to exploit that fact by making
increased demands for financial assistance from the
United States over the next 15 years. As the Maghreb
governments struggle with the economic and political
consequences of rapid urban growth, they are likely to
call upon the United States to provide more financial
aid for the cities and assistance in urban policy
formation.
In addition, the United States may be asked to help
governments improve agricultural yields and alleviate
food crises. US assistance in establishing agricultural
extension networks, introducing more productive crop
and livestock varieties, and cooperating in the
management of intermittent food shortages could
reach a broad segment of society. Maghreb leaders
would press for such aid on concessional terms. In
general, although US aid could win some good will,
highly visible US aid will increase the risk that
Washington will be blamed either for failing to
provide sufficient assistance to solve immense
problems or for exerting too much influence over
domestic policies
Maghreb governments almost certainly will view
Washington's response to requests for assistance as a
measure of US commitment to their needs and-in
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the case of Morocco and Tunisia-an indication of
Washington's reliability as an ally. We believe that
the Soviet Union could benefit from a perceived
shortfall in US assistance, especially if growing
disgruntlement or unrest undermine vulnerable pro-
Western regimes. The Soviet Union most likely will
continue to play a lesser role than the United States in
Morocco and Tunisia, however, since Moscow-
because of its own economic problems-probably will
be unwilling or unable to fill any gap left by the
United States.
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REPRESENTATIVE CASE OF A MIDDLE EASTERN
FOOD IMPORTER
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The Food Gap in the
Middle East-A Growing
Problem
The Middle East will remain one of the world's
largest markets for imported food for the rest of this
century. A food gap-an excess of demand over
domestic supplies-appeared in the 1970s and has
widened greatly. We believe the gap will continue to
widen and that nearly all countries in the region will
be further from self-sufficiency in food in 1988 than
they were in 1985. Imports will be readily available
because there are large stockpiles of many of the most
frequently traded food items. Although the market
will remain large, the United States will probably not
regain the share it had five years ago because there
are more exporters and they are competing vigorously
for sales.
Demand for Imports
The Middle East is the least food self-sufficient region
of the world. Every country of the region was a net
food importer in 1985, according to the US
Department of Agriculture. Food imports make up 60
percent or more of total food consumption in at least
eight countries of the region
Middle Eastern food imports were worth about $30
billion in 1985, a slight decrease from 1984. For many
Middle Eastern countries, the quantity of imports
increased in 1985, but precipitously falling food prices
more than offset this increase. We believe that
quantities of food imports may well increase for the
foreseeable future; values will depend upon prices-
which are falling rapidly.
We believe that demand for food in the Middle East
will continue to surpass the region's ability to supply
it. Demand increased rapidly during the 1970s
because of increased oil revenues, worker remittances,
and economic aid. Rapid population growth-
averaging about 3 percent per year-will add to the
demand for food. Moreover, virtually every Middle
Eastern country heavily subsidizes food consumption,
adding to the quantity demanded. Governments will
be reluctant to reduce these subsidies for fear of
touching off unrest. Riots occurred in Tunisia,
Algeria, Morocco, and Egypt when the government
tried to reduce food subsidies. We believe that similar
riots might occur in these or other countries if
subsidies were reduced.
Domestic Production
The Middle East's production of food is slipping.
Regionwide per capita production in 1985 was 96
percent of the level of 1976-78, according to the US
Department of Agriculture. Only Saudi Arabia,
which has used its vast oil revenues to provide grossly
inefficient farm subsidies, has achieved significant
increases in production. Physical constraints will limit
supplies of food. Lack of water is-and will remain-
the most important constraint. Rainfall is
inadequate-often less than 100 mm per year-
throughout the region, which is one of the most arid in
the world. Much of the limited water is lost to
evaporation before it can be used for irrigation. 25X1
Limitations imposed by the lack of water will become
increasingly severe in the near future, according to
most assessments by geographers. Much of the water
used in agriculture is being drawn from nonrenewable
pools. There is evidence that in some countries the
water table is falling significantly. Salty sea water,
unsuitable for agriculture, is intruding into water
tables in such countries as the United Arab Emirates.
Ample Foreign Supplies
Middle Eastern countries will find large amounts of
food available for import because, worldwide, there
are large-and increasing-stockpiles of many food
items. The US Department of Agriculture forecasts
that the worldwide wheat crop for 1986/87 will be
510 million metric tons. Despite a record utilization of
wheat, much of the new crop will be added to
stockpiles. By the end of the current season, wheat
stockpiles will contain more than 130 million metric
tons, more than has ever been traded by the entire
Secret
NESA NESAR 86-023
10 October 1986
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FOOD IMPORTS AS A SHARE OF TOTAL CONSUMPTION
IN SELECTED COUNTRIES
1986
K~Wait V A'E 1 abia
Said
IfBQ Egypt, A19e~ia
world in a single year and equal to about five years of
total imports by the Middle East. Although the
amounts involved are not as great as with wheat, there
were also large stockpiles of corn and soybeans even
before this year's harvest, which will probably be at or
near record levels, according to press reports. F_~
The food market is-and will remain-a buyer's
market in many cases. Importers are in a position to
play off one exporter against another to get more
favorable prices. We share the view, expressed in
reliable economic press reports, that buyers are
deferring purchases because they are confident they
will be able to secure better deals in the future.
Libya Dania
MaNjf
Implications for the United States
Although food imports by Middle Eastern countries
will remain high, the US share of the market is
decreasing, according to the US Department of
Agriculture. We believe there is little chance that the
United States can regain the share it had five years
ago. The value of US food sales to the Middle East
fell about 14 percent, or by about $429 million,
between 1983 and 1985, while EC sales increased
about 14 percent, or about $824 million. The trend
toward an increasing EC share may continue because
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Food Imports in the Middle East
Million US $
(except where noted)
of the Europeans' aggressive marketing techniques Middle Eastern markets, have been adversely
and heavy subsidization of agricultural exports. The affected. Nonsubsidizers have recently banded
appearance of new sellers such as Argentina and even together to lobby for an end to US and EC subsidies.
India and Saudi Arabia in some Middle Eastern We believe the subsidy issue will contribute to
markets may also erode the US share. 0 tensions between the United States and
nonsubsidizing states so long as producers are faced
Washington's attempts to make high-priced US food with unloading large stockpiles of food items.
exports competitive with those of subsidized rivals
have been highly controversial with other producers.
Bilateral relations with allies such as Australia, which
does not subsidize exports and has lost shares of some
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MIDDLE EAST FOOD PRODUCTION
(1976/1978 = 100)
200
100
100
170
100
100
110
110
120
110
100
00
00
70
00
00
40
2p
20
10
0
Par Capita Food
Projmtlon
Total Food
production
00
Par Colts Food
Production
Total Food
production
200
tad
170
100
100
140
100
120
110
no
ao
00
70
00
a
40
00
?Production Food
100
Total Food
S
170 ISO
Produetion
In
00
100
10 140
00 100
20
10 1l0
00 100
ao
00 a0
70 70
00 a0
0o a0
40
2p
20 on
10
Per Capita Food
Production
.Total Food
Production
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MIDDLE EAST FOOD PRODUCTION
U976/1978 = 100)
040
02D
300
700
240
220
200
120
100
140
120
Per Cpita Food
Prad?tim
Total Food
Pradoctim
Par Cpita Food
Production
^ Total Food
Fr0duetim
200 ? Per Capita Food no
!00 prpyyai 100
1 ^ Total Food 1I70
100 Produuatfan 100
100 100
l40 140
10D 190
170 170
110 110
100 too
00 30
OD 00
70 70
0D 00
w 00
40 40
00 00
20 20
t0 to
0 0
1001 1000 1000 1004 1000
For Cpita Food
Production
. Total Food
Production
Par Capita Fad
Production
. Total Food
Production
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Low food prices have relieved-and will continue to
relieve-pressure on Middle Eastern leaders who
might otherwise feel compelled to reduce popular
subsidy programs to relieve budget deficits. Regimes
both friendly and hostile to the United States have
benefited from being able to avoid the unrest that
would probably occur if subsidies were reduced. Low
food prices, however, have allowed some of these
leaders to postpone budget cuts and economic reforms
that would contribute to brighter economic prospects
in the long run.
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Next 2 Page(s) In Document Denied
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Gulf Cooperation Council States
ETHIOPIA,
*MANAMA
a.
Arabia
Bahrain
tiaw8r
Island
Disputed between
Bahrain and Qatar
Janan0
Island
25 Kilometers
i t
25 Mites
Fasht ad Dibal
(reef)
Qatar
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Bahraini-Saudi Causeway:
The Road to Better
Relations?
The opening of the Bahraini-Saudi causeway in
November will provide another avenue for Riyadh
and Manama to repair the strains in their relationship
that developed during Bahrain's dispute with Qatar
over Fasht ad Dibal last April. The causeway
symbolizes Riyadh's military and political
commitment to Bahrain and the Al Khalifa regime,
although Manama is not certain that Saudi support is
reliable. Improved relations between Manama and
Riyadh would enhance US interests in the Gulf by
strengthening the Gulf Cooperation Council (GCC)
against potential Iranian aggression. The causeway
also will increase trade between Bahrain and Saudi
Arabia and probably raise property values and lower
consumer prices in Bahrain.
Uneasy Street
Riyadh views the causeway as a symbol of its
commitment to Bahraini security. The Saudis first
proposed the causeway in 1981 following a coup
attempt against the Amir of Bahrain. The Saudis
probably believe that a land link to the island will
facilitate any military action Riyadh might be forced
to take to bolster the Al Khalifa-Bahrain's Sunni
ruling family-in the event of serious domestic unrest
or external aggression. The Saudis would view the
overthrow of the Al Khalifa by radical Shias as a
serious threat to Saudi oil production in fields that lie
just 30 kilometers from Manama.
Bahrain has long viewed Saudi Arabia as the ultimate
guarantor of its security, but Manama's belief that
the Saudis failed to support its position during the
Fasht ad Dibal dispute caused the Bahrainis to seek
increased purchases of US weapons to reduce their
dependence on Riyadh. According to US Embassy
reporting, however, Manama's reliance on Saudi
largess for budgetary support and military purchases
hinders Bahrain's ability to pursue this strategy.
Although Saudi aid to Bahrain declined to $900
million last year, down more than 20 percent since
End of an Island
Riyadh hopes the causeway will help ease tensions
with Manama, but the Saudis are worried about the
security implications of the new roadway. A primary
concern is that the causeway will allow the better
organized Bahraini Shias greater access to the
400,000 Saudi Shias in the kingdom's Eastern
Province, increasing the threat of subversion. The
public corporation in charge of the causeway includes
the Saudi and Bahraini Ministers of Interior, who are
also responsible for their respective security services.
The Saudis probably will control customs and
immigration because the Bahrainis have no
experience with land borders.
Manama shares Riyadh's security concerns but
probably is more worried about the effect the
causeway will have on the island's character. The US
Embassy reports that Bahrain fears that Saudi
cultural and economic influence will threaten its
distinct national identity. Bahrainis also are
concerned that increased Saudi tourism will lead to an
increase in drunk driving as some Saudis take
advantage of the relaxed social atmosphere in
Manama. Others fear the land link will encourage the
Saudis to press Manama to ban alcohol.
A Street Paved With Gold
The average Bahraini probably is most worried about
the economic ramifications of the causeway. Some
Bahraini merchants are afraid they will be unable to
compete against Saudi firms with larger volumes and
lower profit margins, according to the US Embassy.
They have become accustomed to large markups and
fear that the causeway will enable Bahrainis to shop
more cheaply in Saudi Arabia, particularly for
consumer durables and products such as gasoline that
are heavily subsidized in Saudi Arabia but not in
Bahrain.
1984, Manama relies heavily on this assistance as
other sources of revenue have decline
Secret
NESA NESAR 86-023
10 October 1986
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The final section of the Bahraini-Saudi causeway was
anchored in April 1985, and Bahrain-at least in
theory-was no longer an island. When the causeway
opens for commercial use in mid-November,
commuters will be traveling over a remarkable piece
of engineering.
The 25-kilometer causeway was agreed to in mid-
1981, and construction began later that year.
Although the project was originally estimated to cost
$600 million, over $1.2 billion has been spent. The
causeway consists of alternating sections of bridge
and embankment-five bridges and seven embank-
ments-plus two artificial islands. The four-lane
tollway runs from Bahrain's west coast to Al Khobar
on the Eastern Province coastline of Saudi Arabia,
just south of Dhahran.
The first job of the contractors-Ballast Nedam of
the Netherlands-was to construct an extension to an
island located off the coast of Bahrain. The extension
serves as the site of camps for the 1,500-man work
force, workshops, offices, and plants needed to make
the necessary 325,000 cubic meters of concrete. Next,
they built a second, larger island by dumping rocks in
a ring and then filling the circle with sand sucked up
from the seabed by dredgers. This island, located at
the midpoint of the causeway, will serve as a
checkpoint for immigration and customs officials.
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Nonetheless, the new causeway already has had some
positive economic effects in certain sectors. There are
signs that the depressed real estate market in Bahrain
has improved because many Saudis have rented office
space and apartments there. Sales of luxury items
probably will increase as wealthy Saudis furnish their
weekend retreats. Bahraini merchants may see profits
reduced marginally, but this should be alleviated in
part by greater access to Saudi markets.
Implications for the United States
The commercial opening of the causeway in
November will promote increased dialogue between
Manama and Riyadh, which will be favorable for US
interests in the region. We believe Manama will not
allow its displeasure with Saudi handling of the Fasht
ad Dibal dispute to interfere with efforts to
reestablish a close political, economic, and military
relationship with Riyadh. This should help ease Saudi
concern over the expanding US-Bahraini relationship.
Improving relations also indicate that Manama and
Riyadh are committed to a united front- under the
GCC umbrella-against Iranian aggression in the
Gulf.
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Iran's Urban Working Class:
Pillar of the Regime
The urban working class is the most important pillar
of support for Iran's clerical regime. The urban poor,
the so-called disinherited, were clear losers under the
Shah and have gained considerable political and
social status since the revolution. Despite the
substantial decline in Iran's overall economic activity,
most of the urban working class have experienced only
a relatively small decline in their standard of living.
Only a minority of workers employed in the modern
industrial and construction sectors have suffered a
large setback in their economic welfare. We do not
expect significant change in working-class support for
the war or the government unless the regime suffers a
severe military defeat or there is no progress in the
war over the next year. Nonetheless, occasional
strikes and the concentration of industrial workers
indicate they are a potential threat to the clerical
regime. Moreover, urban workers could play an
important role if a post-Khomeini power struggle
turns violent and radical clerics bring urban masses
into the streets on their side.
Background
Workers in the modern industrial and construction
sectors played a pivotal role in the Shah's overthrow.
The urban labor force had grown rapidly in the oil
boom years after 1973 as rural dwellers flocked to
large cities in search of jobs created by the Shah's
industrialization drive. Despite increased benefits and
wages, many urban workers had become disenchanted
with their lot by the beginning of 1978. Rising
expectations were being stifled by the economic
downturn, increased unemployment, and the
deterioration of living conditions in overcrowded
cities. As the anti-Shah movement built up steam in
the second half of 1978, workers in government
ministries, factories, and the vital oil sector walked off
their jobs. The government's weakness in the face of
worker protests encouraged additional strikes.
The foot soldiers of the revolution were the masses of
the poor and workers in traditional trades inhabiting
urban ghettos, especially in southern Tehran.
Continuing rural migration and rising unemployment
just before the revolution expanded the numbers of
the disinherited. The Shah generally ignored their
problems and even tried to remove them by
eradicating squatter settlements. The urban poor were
offended by the government's secularism and by
ostentatious displays of wealth by industrialists and
high government officials. They responded
enthusiatically to Khomeini's call for revolution,
which included a pledge to redistribute the nation's oil
wealth.
Working Class Gains and Losses
Most of the urban labor force strongly supports the
regime. Despite severe economic problems, urban
workers have experienced little decline in their
standard of living. Indeed, the majority of city
dwellers are immigrants from poor rural areas, many
of whom probably have seen some improvement in
their lifestyles. the poor are
favored over the wealthy in education, housing, and
public services. The clerical regime, moreover,
provides hitherto unattainable economic mobility to
the illiterate and unskilled poor. The urban poor's
fervent devotion to Islam, support for the war, and
fealty to Khomeini allow the regime to ask great
sacrifices of them. The poor believe they are the
"winners" of the revolution and readily accept
propaganda blaming their ills on the war, agents of
the former Shah, and foreign-especially US-
meddling.
The clerical regime has maintained this support by
redistributive economic programs and a strong
mosque network that reaches down to the block level.
Food is provided through local mosques, and other
goods and services are subsidized by the government.
The Foundation for the Oppressed, which took over
assets from the former Shah and his supporters, sells
discounted items to the poor. The Foundation's
properties initially were worth $8 billion, and it
controls at least 900 companies and agribusinesses,
Secret
NESA NESAR 86-023
10 October 1986
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Government make-work programs and the operation
of many nationalized firms even at a loss helps limit
unemployment. Former Plan and Budget Minister
Taqi complained in April 1986 that "false
employment"-make-work projects-and
unemployment together account for 39 percent of
Iran's 12.3-million person work force, according to the
Iranian press. many
workers laid off from nationalize rms continue to
draw salaries. According to official figures,
unemployment in Iran is running at 19 percent.
Under the Shah many of the urban poor with no skills
or education saw few opportunities for advancement,
but the current regime rewards the loyal and the
religiously devout.
hundreds of thousands of civil service jobs have been
created for the lower classes. The lower ranks have
also found substantial opportunities in the myriad
revolutionary committees controlled by clerics. These
auxiliary religious police have proved useful to
radicals in eliminating leftwing opponents and, in our
judgment, are used to intimidate conservative
religious and political leaders. Many who hold
important positions had nothing before the revolution
and thus have a large stake in the Islamic republic's
survival
The zeal of the disinherited to serve and martyr
themselves in the war with Iraq is cemented by largess
on the home front
war "volunteers" are recruited through
promises of gifts (promotions, raises, or other financial
incentives) and threats to take away jobs or be
subjected to clerical harangues. Wives or parents of
the war dead receive $280 a month plus $56 per child,
and $118 per month is set aside for each child until it
turns 18. Families of the war dead and disabled
veterans get preference in obtaining goods, jobs,
education, and travel discounts. Workers with six
months or more of war experience get preference in
promotions.
Despite the urban poor's support for the regime, we
believe that the clerics face a serious long-term
problem of overcrowding in the cities because of rural
migration. The population of all major cities has risen
dramatically faster than birthrates, according to
Iranian Government figures. Between 1979 and 1986,
Tehran's population has more than doubled, to at
least 9 million-one-fifth of Iran's population. We
believe that programs favoring the urban poor are
responsible for the increased rate of rural migration
since the revolution. Government efforts to stem the
flood of rural immigrants have foundered because of
the large gap between rural and urban incomes and
the political necessity of maintaining urban welfare
programs. Rapid urbanization and its consequent
social and economic difficulties were major factors in
the Shah's downfall.
Overpopulation is straining public services and
increasing social problems such as crime and drug
abuse. The Iranian press reports that traffic problems
and air pollution in Tehran are becoming intolerable.
Gridlock is a common feature of Tehran's rush hour,
and Revolutionary Guards describe their traffic
duties in the capital as nearly as dangerous as fighting
at the front. The shortage of adequate housing in
major cities is acute, causing rents and property
values to soar. Regulations on land use, construction,
and sales have only hampered private-sector home
construction and spawned tremendous corruption.
Modern Industrial Sector
We believe that industrial workers generally support
the regime but represent a potential threat because
they are more dissatisfied with the economy than the
rest of the working class. Although workers in large
industrial workshops-those employing more than 10
workers-represent only about 10 percent of the
urban work force, they command greater political
importance because large modern factories make it
easier to organize workers and concentrate economic
power.
The industrial sector has been harder hit by import
cuts than most other sectors of the economy, idling
workers and ending many of the benefits enjoyed
under the Shah. Iran depends on imports for about 95
percent of its machine spare parts and 75 percent of
its raw materials. In 1985, war expenditures
combined with a weak oil market limited industrial
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imports to about one-third of those needed to
maintain production at prerevolutionary levels,
recognition for their union. Nonetheless, no large
independent unions or national workers' organizations
have emerged, and most strikes have focused on
specific work-related issues. This is the result, in part,
of the Shah's strong repression of unions that left little
The large fall in oil
prices at the beginning of this year forced large-scale
factory closures and layoffs. Most workers' salaries
have increased little since the revolution, despite high
inflation. In many factories, deteriorating equipment
is allowed to wear out or is operated without proper
maintenance, making working conditions dangerous
and uncomfortable.
resentment.
unions and employers must provide quotas of basij-
irregular militia-for duty at the front. Employees
refusing to go lose their jobs.
=a majority of workers resent "volunteering" one
day of work each month without pay for the war
effort
Labor Unrest and Government Response
Dissatisfaction over eroding wages and working
conditions has led to strikes in large factories
throughout Iran, particularly in late 1984 and early
1985. In November 1984 the largest strike since the
revolution occurred when at least 18,000 workers
struck at the Esfahan steel works-the largest
industrial complex in Iran-to protest working
conditions and threatened layoffs
Sympathy strikes followed in
factories throughout Iran
strikes over the past two years in
most major cities including Tehran, Tabriz, and
Shiraz, and unrest in virtually every industry,
including the critical oil sector
disgruntled workers have
Some activists have tried with little success to use
labor unrest to create independent unions or a
national opposition movement
locations have been coordinated.
the exile opposition press report that the
Solidarity Committee of Iranian Workers was
involved in the Esfahan steel strike and that a
principal demand-unmet by the government-was
tradition on which organized labor could build.F25X1
The government has been able to control workers
through a combination of intimidation and
conciliation. Strikes have frequently been met with
violence and arrests, and
this has frightened many into forgoing
open protests. For example, Revolutionary Guards
killed 10 demonstrators at a rally for striking cement
workers in Shiraz in early 1985. Leftist political
parties that hope to organize workers-principally the
Mojahedin, Fedayeen, and Tudeh-have been
brutally suppressed. Moreover, the regime plays on
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widespread religious devotion and its ability to provide 25X1
promotions and other rewards to cultivate loyalty in
workshops.
In selected cases the government has at least partly
capitulated to striking workers. The Esfahan steel
strike ended with some compromise by the regime
after violence and arrests failed to end the work
stoppage. In January 1985 the government
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counterrevolutionaries; and encourage volunteers and
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politicized prompted the Labor Minister to publicly
warn the new councils that "storms caused by
wrongdoing could endanger them as well."
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response to Islamic councils as only lukewarm.
Outlook
In our judgment, the regime will be able to provide
the food and other basic goods needed to maintain the
support of the working class. Although dissatisfaction
with the economy is increasing, the war and threats
from outside enemies will probably be sufficient to
rally the people, especially while Khomeini lives.
More important, there remains no opposition group
with a significant following among the urban poor.
Nevertheless, we believe a military defeat or a lengthy
deadlock could eventually turn Iran's working class-
which provides the rank and file of the Revolutionary
Guard-against the war. If widespread unrest
develops, it will probably begin with industrial
workers who have a demonstrated potential to
mobilize quickly large numbers across the country.
Should significant unrest develop among the urban
poor, the regime could be forced to shift its focus at
least temporarily from the war.
Initially, workers will rally to Khomeini's putative
successor, Ayatollah Hosein-Ali Montazeri. With the
restraining influence of Khomeini gone, however,
economic hardships could turn the working class
violently against the bazaar and the middle class.
Black-market profits reaped by bazaar merchants
make them ready scapegoats for failed economic
policies. The higher standard of living and continued
rejection of Islamic values by the middle class also
make them targets of wrath. Islamic radicals and
Communist agitators have already tried to tap
working-class resentment for political purposes by
attacking the government's removal of urban
squatters, hoarding by bazaar merchants, and policies
allowing members of the middle class to recoup
property lost after the revolution.
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India's Ties to Radical
Middle Eastern States
and the PLO
The recent terrorist hijacking in Karachi involving
Indian citizens may cause India to reexamine its
relations with radical Middle Eastern states and the
PLO (Palestine Liberation Organization). New Delhi
maintains ties to Iran, Iraq, Libya, Syria, and the
PLO to protect its economic interests, to assert its
leadership in the Nonaligned Movement, and to
assure its 80 million Muslim minority population that
it is sensitive to its views. Its most important
relationships are with Iraq, Iran, and Libya. New
Delhi's relations with Iraq are the most extensive and
the least troubled. India buys more oil from Iraq than
from any of the other states and maintains its largest
overseas military training operation in that country.
Relations with more radical Iran and Libya tend to be
strained, in part because New Delhi is wary of efforts
by these two states to arouse Islamic revivalist
sentiments in India. Indian diplomatic, economic, and
military ties to Syria and the PLO are negligible.
With the possible exception of Libya, New Delhi
would probably respond cautiously to a US initiative
asking that India publicly denounce any one of these
Middle Eastern states for its support of international
terrorism. The Indians most likely would assure the
United States that they abhor state-sponsored
terrorism but would decline to take a public position,
saying they have insufficient evidence to link the
Middle Eastern states to specific incidents. New
Delhi's unhappiness with Qadhafi's harangue against
the Nonaligned Movement at the summit meeting in
Harare in September and Indian suspicions that
Libya may have been involved in the Karachi
hijacking, on the other hand, indicate growing Indian
impatience with Qadhafi.
The Iraqis are disappointed, however, that India has
not taken a more pro-Iraq stance on the war. Of the
four radical states and the PLO, Iraq has the largest
diplomatic staff in India. New Delhi, in turn,
maintains an embassy in Baghdad and a consulate in
Al Basrah.
Indian-Iraqi economic relations are based primarily
on New Delhi's imports of oil and remittances from
Indian workers and contractors in Iraq. India imports
about 50,000 barrels of oil per day from Iraq-about
16 percent of its oil imports. Lower oil prices and the
prolonged war with Iran have forced Baghdad to slash
spending on economic development projects, reducing
opportunities for Indian firms and Indian workers in
Iraq-there were an estimated 25,000 Indian workers
in Iraq in 1985. Iraq owes India $200 million this year
for past services performed by Indian companies. New
Delhi recently agreed to accept oil as payment for 60
percent of the debt repayable this year. The balance
has been deferred for three years. Because of the
agreement, India will pay cash for only half of its oil
imports this year. Mirroring the high level of
economic activity, Air India has two flights a week to
Baghdad, and Iraqi Air flies to India twice a week-
one flight to Bombay and one to New Delhi.
India's most extensive overseas military training
program is in Iraq. About 70 Indian military
instructors provide armor, artillery, and flight
training and teach at Iraqi staff colleges. Some have
helped with damage assessments and tactics to
counter Iranian Scud rocket attacks. An Indian
civilian firm is involved in clearing some of the
damage caused by these attacks. Other Indian firms
have acted as suppliers or brokers in the sale of
chemical precursors for the Iraqi production of nerve
New Delhi's Ties to the Radical States and the PLO
Iraq. Relations with Iraq have been generally free of
contention. Baghdad publicly welcomed former
Indian Foreign Secretary Bhandari's 1984 shuttle
diplomacy in the name of the Nonaligned Movement
to secure a negotiated settlement of the Iran-Iraq war.
gas. India probably has also supplied small amounts
of conventional munitions to Baghdad.
Secret
NESA NESAR 86-023
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Iran. India maintains relations with Iran as part of its
role as a leader of the Nonaligned Movement and to
check Iranian efforts to export Islamic
fundamentalism to India. Indian-Iranian diplomacy
in recent years has centered on efforts by India, as
chairman of the Nonaligned Movement, to sponsor
negotiations to end the Iran-Iraq war. Iran has been
less receptive than Iraq to Indian attempts to broker a
settlement to the war. It has pressed New Delhi to
abandon its neutral position in favor of support for
Iran.
India, for its part, is wary of Iranian interest in
exporting its brand of Islamic fundamentalism. The
Indians closely monitor the activities of Iranian
nationals in India with an eye to their proselytizing
Indian Muslims and promoting conflicts within the
India wants to avoid foreclosing future economic
opportunities with Tehran. Iran accounts for about
3 percent of India's foreign trade and supplies about
12 percent of India's oil imports. Indian exports to
Iran are primarily vehicles and iron ore. New Delhi
has been pushing Iran, with little success, to increase
imports of Indian goods to offset a major trade deficit.
Most of the Indian workers in Iran have settled
permanently and probably remit little of their
earnings. India owes Iran about $300 million for past
loans, and Iran retains a share of a government-owned
oil refinery and fertilizer plant in Madras. Iran Air
has two flights per week between Tehran and
Bombay.
Military ties between India and Iran are negligible.
Fewer than a dozen Iranian military officers receive
training in Indian technical and staff colleges. India
has provided jeeps and possibly some maintenance for
Iran's British-made tanks.
Libya. Indian officials
want to protect India's economic
India receives approximately 8 percent of its foreign
remittances-totaling some $2.5 billion-from Indian
workers in Libya. About 15 companies have been
working on 62 projects in Libya valued at $1.3 billion,
and the 40,000 Indians employed there send home
about $200 million annually. Over 400 Indian
technicians and engineers are employed by the
International Airport Authority of India on the
construction of at least one military airfield. Many
Indian workers and companies, particularly those
working on engineering and construction projects,
probably will be returning soon because low oil
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India's imports (million US $) 530 400
Share of total Indian 4 3
imports (percent)
Share of India's oil 16 12
imports (percent)
Share of total Indian .04 1
exports (percent)
Air India flights abroad 2 None
(per week)
Foreign carrier flights to India 2
(per week)
70 instructors
providing tactical
advice
400 techni- None
cians build-
ing airfield
revenues have forced Libya to halt most development
projects. At the end of the Indo-Libyan Joint
Commission meeting in New Delhi in early July,
however, the two countries signed a protocol
reiterating their commitment to strengthen relations
and agreed to cooperate in new areas of industry,
trade, and commerce. The commission meeting
appears to be an Indian effort to stay in Libya to
recover the money it is owed and to protect the limited
number of jobs remaining
Palestine Liberation Organization. India, as a
leading member of the Nonaligned Movement, has
long given diplomatic support to the Palestinian
cause. This position has helped to bolster the
government's image at home with the country's
Muslim population. India has full diplomatic relations
with the PLO; the PLO has a four-person embassy in
New Delhi. India's Foreign Secretary has met with
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Arafat during his swings through the Middle East in
search of a settlement to the Iran-Iraq war. PLO
leader Yasir Arafat addressed a Nonaligned
Movement-sponsored student conference in New
Delhi in November 1984 and also met with Gandhi
and Indian President Zail Singh. India has no
economic or military ties to the PLO.
Syria. New Delhi's ties to Damascus are minimal.
Although some Indian Foreign Ministry officials
claim that Syria's and India's close defense ties to the
Soviet Union draw them together,
Total commercial
trade is probably less than $10 million annually.
Reflecting the paucity of trade, India planned to drop
its commercial first secretary from its Embassy staff
in Damascus last year. Syrian Arab Airlines operates
one flight per week to New Delhi and one to Bombay.
Political relations between the two countries are
limited. Damascus has five diplomats in New Delhi,
while the Indians have 11 representatives in Syria.
The Syrians have given only nominal support to
India's leadership of the Nonaligned Movement,
India's support for
Arafat probably is an irritant in Indo-Syrian
relations.
Can Washington Get New Delhi To Curtail Relations?
New Delhi may be somewhat more receptive to a
request by Washington that India reexamine its links
to radical states in the Middle East following the
Karachi hijacking and the recent assassination
attempt on Gandhi. The Karachi hijacking, involving
hundreds of Indian citizens and passengers of Indian
origin, has drawn New Delhi further into dealing with
the implications of international terrorism. Previously,
New Delhi's experience was limited to Sikh
extremists' hijackings in South Asia, the bombing of
the Air India aircraft that exploded off the coast of
Ireland, and several attacks on Indian officials
abroad. New Delhi has asked Islamabad for a full
report on the hijacking, indicating an interest in the
hijackers' ties to the Middle East as well as Pakistan's
handling of the threat posed to Indian citizens.
Gandhi, in particular, is likely to listen more closely to
an approach on Libya. His frustration with Qadhafi
at the Nonaligned Movement summit meeting and
Indian suspicions, on the basis of press coverage, that
Libya may be implicated in the Karachi hijacking
indicate growing concern.
We believe that evidence of Libyan involvement in the
hijacking could prompt the Indians to reevaluate
Libyan diplomatic ties with an eye to reducing Libyan
representation and activity in India. The Indians,
however, probably will be reluctant to curtail their
economic relations with Libya, Iran, or Iraq, given
their dependence on oil imports, hard currency
remittances, and interest in future opportunities.
New Delhi is likely to ask Washington for increased
intelligence sharing on international terrorism-along
the lines of the successful bilateral cooperation on
Sikhs. Embassy officials in New Delhi reported such
Indian interest last March following a US demarche
on Libyan People's Bureau personnel. In view of the
recent assassination attempt on Gandhi, New Delhi's
critique of Pakistani security procedures during the
Karachi hijacking, and chronic Indian concern about
its own capabilities, the Indians are likely to take up
earlier US offers of enhanced VIP security training.
They also may ask for additional airport security
equipment and training.
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Nepal: Living With India
Relations between India and Nepal have improved
somewhat in the two years since Indian Prime
Minister Rajiv Gandhi came to power. King
Birendra's visit to New Delhi in September 1985-
the first by a Nepalese monarch since 1977-
produced no new policy initiatives but gave both sides
a chance to demonstrate a new cordiality in bilateral
relations. It also allowed the Nepalese to present their
concerns-principally about New Delhi's support for
King Birendra's enemies and rivals-directly to
Prime Minister Gandhi. Nepalese leaders believe
Rajiv may be more willing than his mother to consider
their concerns.
Differing Views of Bilateral Relations
Nepal is sandwiched between two powerful neighbors,
India and China, and has historically struggled to
balance the regional interests of each while at the
same time seeking to affirm its independence. Nepal's
most significant ties-geographic, cultural, and
economic-have been with India, giving rise to a
historic fear of Indian domination. Southern Nepal
is part of the Gangetic Plain-open to the Indian
heartland-while in the north, the Himalayas divide
Nepal from China.
Kathmandu has long tried to assert its independence
from India in foreign relations. Since 1974, King
Birendra has solicited international support for his
efforts to declare Nepal a Zone of Peace-an effort
supported by almost 80 countries including China, but
not India. Nepal has also taken a high profile in the
South Asian Association for Regional Cooperation
(SAARC), lobbying successfully to have Kathmandu
made the seat of the SAARC Secretariat
New Delhi views Nepal as a strategic buffer on its
sensitive northern frontier with China and is less than
enthusiastic about Nepalese efforts to chart an
independent foreign policy. India has sought to limit
Chinese influence and presence in the kingdom,
especially in the Terai, Nepal's southernmost region.
We believe that India interprets secret agreements
that accompanied the 1950 bilateral Treaty of Peace
and Friendship as giving New Delhi the right to enter
Nepal in force without Kathmandu's consent if Indian
national security is threatened. '
Areas of Cooperation
India and Nepal cooperate in a number of defense and
national security areas. Also, India has agreed to
maintain 100,000 Nepalese Gorkhas in its Army, and
Indian Army officers recruit several times a year in
Nepal. The remittances sent home by these recruits
The two countries have a Treaty of Trade and
Commerce, which allows Nepal to import and export
commodities through Indian ports without paying
tariffs. India is Nepal's largest trading partner,
accounting for almost half of Nepal's trade, according
to US Embassy reporting.
New Delhi has provided substantial assistance for
Nepalese development projects such as road and
factory construction, hydroelectric power plants, and
irrigation schemes. Economic relations received a
boost earlier this year when India agreed to furnish
additional loan and grant assistance during the July
visit of Indian President Zail Singh to Kathmandu,
Other areas of cooperation include a recent decision
by India, Nepal, and Bangladesh to begin water-
sharing discussions. Nepal is the source of much of
' Under the terms of the 1950 Treaty of Peace and Friendship, each
country agreed to acknowledge and respect the sovereignty,
territorial integrity, and independence of the other; to maintain
diplomatic relations; to grant unimpeded migration for citizens of
each country to the other; and to grant rights to immigrants equal
Secret
NESA NESAR 86-023
10 October 1986
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Secret
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the water that flows to Bangladesh and parts of India,
and a water-sharing agreement between the countries
has been discussed for several years. Additionally,
under the auspices of the SAARC, India and Nepal
plan to coordinate antiterrorism and antinarcotics
programs.
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Secret
India withheld
substantial last-minute campaign funds, probably
because of the impressive countercampaign launched
against Indian-backed candidates by promonarchy
elements. As a result, fewer Indian-backed candidates
were elected than in previous elections. King Birendra
then moved quickly to neutralize-at least
temporarily-the influence of the pro-Indian camp in
the national parliament by securing unanimous
parliamentary approval of his nominee for prime
minister, a palace loyalist.
The King is also concerned over India's strong
influence generally in the Terai. Many Indians take
advantage of the liberal immigration laws between
the two countries to move to the agriculturally
productive Terai from economically depressed regions
of northern India. This has created fierce competition
between native Nepalese and Indian immigrants for
land and jobs
The Terai has been the scene of Sino-Indian rivalry at
Nepal's expense. In summer 1985, under
heavyhanded urging from New Delhi, Kathmandu
reneged on an agreement with Beijing to build an
important section of Nepal's east-west highway in the
Terai. Instead, the Nepalese accepted an Indian offer
on less favorable terms. New Delhi had reservations
about the prospect of a massive, sustained Chinese
presence close to India's border and about possible
Chinese espionage activities, according to Embassy
reporting
Outlook
Nepal has little choice but to remain on good terms
with New Delhi while trying cautiously to maintain
some independence in its foreign and domestic
policies. The King is likely to continue to pursue
improving relations with New Delhi while at the same
time, in order to balance Delhi's influence, seeking a
high profile in SAARC and other nonaligned forums
and resorting to traditional courting of Beijing. New
Delhi's willingness to meet with Nepal and
Bangladesh simultaneously on the water-sharing issue
and to allow the SAARC Secretariat to locate in
Kathmandu will help to ease Nepalese resentment.
The debacle last year over the Chinese roadbuilding
agreement, however, will make the King cautious 25X1
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Local elections in Nepal early next year will probably
spark Nepalese rhetoric over the activities of the
Indian-based antimonarchy group and the perenially
divisive issues such as cross-border migration. New
Delhi might take steps to limit activities of Indian-
based Nepalese exile groups to demonstrate its good
will toward the kingdom
A possible future irritant between the two countries
concerns Delhi's problems with the Gorkha separatist
movement in the Indian state of West Bengal on
Nepal's eastern border. The Gorkhas-about 500,000
in all, according to Indian Government estimates-
are ethnic Nepalese living in the Darjeeling district of
West Bengal. Many came to the region in the early
1800s, while some migrated more recently under the
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special permits.
Leaders of the Gorkhaland separatist movement
argue that the West Bengalis treat all Gorkhas as
immigrants, failing to distinguish between those
whose families have lived in India for generations-
and therefore have the right of Indian citizenship-
and those who have migrated in recent times. The
separatists have demanded the establishment of a
separate state called Gorkhaland as part of the Indian
Union, recognition of Nepalese as an official language
in India, and revocation of the clause in the 1950
Peace and Friendship Treaty allowing citizens of each
country to work and reside in the other without
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To date, the Nepalese Government has maintained
official silence on the Gorkhaland issue. Allegations
of royal palace involvement with the separatists have
been made in both the Nepalese and Indian press in
recent months, while the ruling Communist
government in West Bengal has alternately accused
Nepal, China, and the United States of interfering.
New Delhi has officially rejected the separatists'
demand for abrogation of the 1950 treaty. In West
Bengal, eight new checkpoints will be set up on the
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Although pressure on the Government of Nepal to
take a position in the issue is intensifying from
Gorkha separatist leaders and the Nepalese press, it is
unclear what action, if any, the King is
contemplating. The two countries are unlikely to take
major steps to limit the large-scale cross-border
migration of workers between them, despite demands
from Gorkhaland separatists to revise the 1950 Peace
and Friendship Treaty. New Delhi views the Gorkha
issue as an internal affair, not a matter for discussion
between India and Nepal.
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