NEAR EAST AND SOUTH ASIA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP05S02029R000300900001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 75
• Document Creation Date: December 22, 2016
• Document Release Date: June 21, 2012
• Sequence Number: 1
• Publication Date: March 13, 1987
• Content Type: REPORT

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2bAl
Directorate of
Intelligence
Near East and
South Asia Review
13 March 1987
S
Seeret
NESA NESAR 87-007
13 March 1987
Copy 3 2 8
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Near East and
South Asia Review
crisis.
Israeli Prime Minister Yitzhak Shamir will be constrained by both
the strictures of Israel's National Unity government and his own
cautious leadership style from making bold policy initiatives during
the next two years. Shamir's paramount goal is to complete his term
as Prime Minister, and he will try to avoid provoking a coalition
rightwing parties.
The radical Gush Emunim has spearheaded settlement of the
occupied West Bank since 1975, but it has failed to gain broad
popular support. Even so, the Gush is likely to continue to play a
noisy but limited role in support of agendas set by Likud and other
Egypt: Seeking Balance in Foreign Affairs
superpowers.
Cairo's foreign policy is anchored in the West, but aspirations to
Arab and nonaligned leadership and domestic criticism of
dependence on the United States are motivating Egyptian leaders to
expand ties to the Soviet Union and Eastern Europe, creating at
least the appearance of greater balance in Egypt's relations with the
issue to divert attention from domestic economic problems and to
bolster his negotiating position with Spain on other bilateral issues.
Moroccan nationalism has flared in the Spanish enclaves of Ceuta
and Melilla during the past year. King Hassan does not want to
precipitate a showdown over the enclaves, but he has exploited the
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NESA NESAR 87-007
13 March 1987
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Libya: Oil Industry Weathering Sanctions
The Libyan oil industry has been able to cope so far with US
economic sanctions, the withdrawal of US companies, and US
diplomatic pressure. In the absence of stronger West European
support for US policies, the Libyan oil industry should be able to
maintain exports at current levels for the foreseeable future.
Although Libyan leader Qadhafi has been relatively unsuccessful in
gathering political support in the Caribbean, he has recently
increased his efforts to strengthen ties to leftist and terrorist groups
in the region. Qadhafi regards US "imperialism" and French
"colonialism" as the chief impediments to his aims in the region.
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Sudan: The General Staff's Relationship With 31
The Sudanese armed forces General Staff tacitly supports the
civilian government of Prime Minister Sadiq al-Mahdi and appears
content to put distance between itself and domestic politics and
concentrate its attention on military affairs. Friction between the
General Staff and Sadiq may increase, however, and erode the
military's support.
Humiliated over its inability to recapture Fasht ad Dibal from
Qatar last spring and distressed by Saudi Arabia's reluctance to
play a more partisan role during that dispute, Manama is actively
seeking increased US weaponry and reduced dependence on Riyadh.
The Shias in Bahrain, however, are critical of the warming US-
Bahraini relationship
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Saudi Arabia: The Impact of Education Policy and Process on 39
Economic and Political Stabilit
Saudi Arabia has radically transformed its educational system over
the past 15 years, with more students attending school at every level
and more completing their education. Despite its successes, the
government has failed to attract Saudis to technical and vocational
education, and the country will have to continue to rely on
expatriates for economic growth.
Arab donors-both governmental and private-provide a significant
amount of financial support to the Afghan resistance. Arab donors,
however, are sometimes unreliable, and insurgent leaders often
resent the strings that are attached to the aid.
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Afghanistan: Defense of the Revolution Forces- 47
A Political Army
The Defense of the Revolution forces make up a directorate within
the Afghan Ministry of Interior supervising paramilitary forces
responsible for spreading the regime's Marxist ideology to outlying
regions and providing military support to regular army units. These
forces suffer from the same shortcomings plaguing most of Kabul's
armed forces.
India: Rajiv Gandhi Adjusting Foreign Policy Tactics
Indian Prime Minister Rajiv Gandhi is frustrated by the lack of
progress in implementing his foreign policy goals. The growing
influence of Gandhi's personal advisers and military and intelligence
officials over foreign policy matters-combined with his impatience
to get things accomplished-presages tougher tactics with India's
neighbors.
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Four state elections scheduled for this spring offer India's ruling
Congress Party its biggest electoral test yet during the Rajiv Gandhi
administration. The Congress Party will probably win the election in
Haryana, the most important of the contests, but the hard-fought
campaign underscores the party's difficulty in retaining its Hindi
core areas.
India: West Bengal's Government-Red Outside, 61
White Inside.
West Bengal is the only state in India with a Communist-led
government, but the difficulties of running a government have given
West Bengal's Communists a more practical bent than India's
national Communist parties. Although challenged from the left and
by Rajiv Gandhi's Congress Party, West Bengal's Communists will
probably be reelected.
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Karachi, Pakistan's largest city, is an uneasy mixture of ethnic and
religious groups cohabiting in a city already strained by
overcrowding, poverty, and drug abuse. This combination has
resulted in increasing intercommunal violence, and the city's
problems are eroding public confidence in the government's ability
to maintain domestic order.
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CPerPt
help ensure efficient use of foreign aid.
Low domestic savings, an inadequate tax base, and chronic trade
deficits have forced Bangladesh to rely on foreign aid to carry out its
development programs. Now that civilian rule is established, donors
will be pressing President Ershad to undertake economic reforms to
Arab States: Baghdad Payments Under Review
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Some articles in the Near East and South Asia Review 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 view of a single analyst; an item like this will be designated as a
noncoordinated view.
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Near East and
South Asia Review
Israel: Decisionmaking
Under Shamir
Israeli Prime Minister Yitzhak Shamir, in our
judgment, will be constrained by both the strictures of
Israel's unusual National Unity government and his
own cautious leadership style from making bold policy
initiatives during the next two years. The unity
government is full of checks and balances, and Israel's
Labor Party can use the evenly divided 10-man inner
cabinet to veto any major Likud proposal. Shamir's
paramount goal is to complete his term as Prime
Minister, and he will try to avoid provoking a
coalition crisis that would give Labor a pretext for
calling an early national election.
Shamir's innate caution and sensitivity to competing
power centers in the unity government have led him to
virtually abdicate responsibility for defense matters to
Defense Minister Yitzhak Rabin (Labor), and
economic affairs to Vice Prime Minister Shimon
Peres (Labor) and Finance Minister Moshe Nissim
(Likud-Liberals). Shamir's passive leadership style
also leads him to place greater reliance on his aides-
a team led by pragmatists with no longstanding
ideological ties to Shamir's nationalist Herut Party.
Shamir's Passive Leadership Style
Shamir's personality and career experience have
reinforced his tendency toward a tentative and low-
key approach to decisionmaking. He worked for years
in organizations shrouded in secrecy-first in the
extremist Irgun and Stern Gang undergrounds before
independence, and from 1955 to 1965 in Mossad,
Israel's external intelligence service.
Shamir is a taciturn man who is uncomfortable with
confrontation. US diplomats have described him as
deliberate, self-controlled, and dignified, and he
describes himself as not impulsive. Shamir has said he
prefers to study matters and evaluate a situation
carefully before deciding on a course of action. US
diplomats describe him as a fundamentally
conservative figure for whom it is out of character to
move quickly or to push for major policy changes.
Checks and Balances in the Unity Government
Shamir will not be able to make bold new initiatives
unacceptable to Labor during his term as Prime
Minister because Labor can veto such proposals in the
10-man inner cabinet. According to the guidelines of
the national unity agreement, either Peres or Shamir
can refer any issue they want to the inner cabinet,
which has five Labor and five Likud members. In any
major disagreement between the two blocs-such as
new settlements in the occupied territories or a
Middle East peace conference-this body would split
evenly along party lines, effectively blocking the
proposal.
There is likewise a near-even split in the full Cabinet,
with the outcome of any vote dependent on the issue.
Of the Cabinet's 24 members, 10 are from Labor and
10 from Likud, with the remaining four from small
middle-of-the-road and religious parties forming a
swing vote. We agree with the assessment of US
diplomats in Tel Aviv regarding the leanings of the
swing Cabinet members:
? Communications Minister Rubenstein is a nearly
certain vote for Labor on any key ideological issue.
? Minister Without Portfolio Yigal Hurvitz, who
entered the Cabinet under Labor Party sponsorship,
is a less certain vote because of his hawkish political
stance.
? Minister Without Portfolio Yosef Shapiro is a
prosettlement activist nearly certain to vote with
Likud.
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13 March 1987
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Labor Party Ministers (10)
Vice Prime Minister and Foreign Affairs-
Shimon Peres b
Agriculture-Aryeh Nehemkin
Defense-Yitzhak Rabin b
Economic Planning-Gad Yaacobi
Education and Culture-Yitzhak Navon b
Energy and Infrastructure-Moshe Shahal
Health-Shoshana Arbeli-Almoslino
Immigrant Absorption-Yaacov Tzur
Police-Haim Bar-Lev b
Without Portfolio-Ezer Weizman b
Likud Ministers (10)
Herut (6)
Prime Minister-Yitzhak Shamir b
Construction and Housing-David Levi b
Industry and Commerce-Ariel Sharon b
Labor and Social Warfare-Moshe Katzav
Transport-Haim Corfu
Without Portfolio-Moshe Arens b
Liberals (4)
Finance-Moshe Nissim b
Justice, Tourism-Avraham Sharir
Science and Development-Gideon Patt
Without Portfolio-Yitzhak Modai
Ministers From Other Parties (4)
National Religious Party (2)
Religious Affairs-Zevulun Hammer
Without Portfolio-Yosef Shapiro
Shinui (1)
Communications-Amnon Rubenstein
Ometz (1)
Without Portfolio-Yigal Hurvitz
a The post of interior minister as of 13 March is temporarily
vacant.
b Members of inner cabinet.
? Minister of Religious Affairs Zevulun Hammer is a
strong settlement supporter but also a thoughtful
pragmatist who wants the unity government to
continue. He is probably inclined toward Likud on
most ideological issues, but his vote is not a
certainty.
The unpredictable nature of a Cabinet vote on most
contentious issues will lead Peres and Shamir to use
the inner cabinet to veto objectionable proposals from
the other side.
On sensitive issues, the leading triumvirate of Peres,
Shamir, and Rabin has been the operative
decisionmaker. Press reports, for example, indicate
that the trio has set policy for relations with Iran and
South Africa.
This forum of current and former Israeli prime
ministers will continue to serve as the ultimate
authority on delicate topics or security matters that
require quick decisions. Nonetheless, the relationship
of trust and mutual respect that Peres and Shamir
established during the first half of the unity
government's term has been damaged severely by
heightened Labor-Likud tension over a proposed
international conference on Middle East peace. US
diplomats in Tel Aviv predict that worsening personal
relations between Shamir and Peres will make the
Prime Ministers' Forum a less effective policy
formulation group.
Delegating Responsibility on Defense and Economy
In two key areas of policy-security and the
economy-Shamir has virtually abdicated his
authority to other ministers of the unity government,
according to Embassy and press reporting. Defense
Minister Yitzhak Rabin of the Labor Party is the key
decisionmaker on all military issues-as he was
during the first two years of the unity government. On
the economy-a subject largely beyond Shamir's
interest and expertise-Shamir has let Finance
Minister Moshe Nissim shape Likud's stance.
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As Peres did from 1984 to 1986, Shamir has deferred
to Rabin's virtually unchallenged authority on
security issues. Both Shamir and Peres realized that
they had to treat Rabin deferentially because of his
political strength as the number-two man in the Labor
Party. Both also realized that Rabin brought unique
qualifications to the Defense Ministry by virtue of his
long career in the Israeli army, ending as Chief of
Staff in 1968.
Rabin is the chief architect of Israel's Lebanon
disengagement policy and sets the tone for Israeli
administration of the occupied West Bank and Gaza
Strip. In a range of other security-related issues-
including policy toward Syria, responses to terrorism,
and weapons development and procurement-Rabin's
opinion carries tremendous influence in the
government.
Similarly, Shamir has allowed Finance Minister
Nissim the leading role in shaping economic policy,
according to US diplomats in Tel Aviv, and accepted
continued deep involvement in economic affairs by
Peres since rotation of the premiership in October
1986. The lack of involvement by Shamir in economic
decision making encouraged competing Israeli
interest groups-unions, industry, and the Labor
Party-to reject key elements of his economic reform
proposals during recent policy debates, according to
US diplomats in Tel Aviv. His crisis-avoidance
approach to recent budget debates contributed to a
widening budget deficit that is heading the economy
toward renewed inflation.
Shamir's practice of delegating economic policy
making to Peres and Nissim has prompted sharp
criticism from Shamir's leading rivals in Herut-
Construction and Housing Minister David Levi and
Industry and Commerce Minister Ariel Sharon-
each of whom aspires to lead Likud at the next
national election now scheduled for November 1988.
As the next election approaches, Shamir is likely to
come under heavy pressure from Levi and Sharon to
implement politically popular measures such as wage
hikes and subsidy increases.
Shamir's mishandling of the debate on the economic
reform package has contributed to a sharp decline in
popular support for his leadership. A recent public
opinion poll shows that Israeli confidence in Shamir's
ability to manage the economy has plummeted to 42
percent from a peak of 73 percent last September.
Levi and Sharon, meanwhile, have made slight gains
in popular support.
Adverse changes in Israel's economic indicators will
further test the Prime Minister's ability to mollify his
critics. Since Shamir took office, Israel's trade deficit
has widened, real wages have increased, and economic
growth has stagnated-developments that may offset
the government's success in controlling inflation.
Before the election next year Shamir must
demonstrate that he has the resolve to tackle these
problems and to provide tangible economic gains.
Shamir's Inner Circle
Shamir's passive leadership style has increased the
importance of his advisory team, and Embassy
reporting suggests that Shamir's closest advisers have
had a major impact in shaping his instinctively
cautious thinking as Prime Minister. Shamir's top
three aides share a pragmatic approach and appear to
have been influential in promoting the more balanced
stance Shamir adopted early in his term against
additional West Bank settlements. Shamir also hinted
he would consider carefully circumscribed
international participation in Middle East peace talks,
a stance from which he has retreated in the face of
increasing pressure from Herut Party hardliners. We
believe the Prime Minister's advisers are intensely
loyal to Shamir and share his desire to avoid
politically risky moves that could cut short his term.
Shamir relies most heavily on a trio of former top
Foreign Ministry officials whom he recruited while
heading that ministry from 1980 to 1986. Chief of
Staff Yossi Ben-Aharon, Media Counselor Avi
Pazner, and Cabinet Secretary Eliyakim Rubenstein
are the closest to Shamir. None of the three are
ideologues, and none were Herut activists.
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Yossi Ben-Aharon
Director General, Office of the Prime Minister
Foreign service veteran who has served as Shamir's
top political aide for past six years ... tapped for his
grasp of complex policy issues and administrative
talents rather than party ties ... preeminent among
Shamir's policy advisers ... dominates inner circle,
having centralized office functions in his own hands
... coordinates with other ministries and drafts
Prime Minister's speeches ... despite shared hardline
political views, has tried to give Shamir's
administration more pragmatic tone ... 54.
Avi Pazner
Prime Minister's Media Adviser
Longtime Foreign Ministry press spokesman, has
served as Shamir's media aide since 1982... has
earned Prime Minister's confidence in his
professional judgment and has free hand in
performing his role ... enjoys good rapport with both
Shamir and press corps ... acts as buffer between
press and characteristically media-shy Prime
Minister ... has made some progress in turning
around Shamir's previously dull public image ... 49.
Eliyakim Rubenstein
Cabinet Secretary
Lawyer and seasoned civil servant ... probably
second most influential of Shamir's advisers ... has
direct access to Prime Minister despite office director
Ben-Aharon's assumption of coordinating power ...
no sign of friction between two aides to date ...
highly regarded by Shamir, whom he first served
while Foreign Ministry legal adviser (1982-85) ...
was Deputy Chief of Mission in Washington at time
of his selection as secretary ... influence, energy, and
ability ensure him important behind-the-scenes role
in shaping policy ... official duties include briefing
President and media on Cabinet proceedings ... 40.
Dan Meridor
Member of Knesset
Younger generation Herut Party activist ... has no
official position in Office of the Prime Minister but is
considered a confidant of Shamir ... also plays part
in Prime Minister's economic councils ... was highly
regarded Cabinet Secretary under Menachem Begin
and Yitzhak Shamir (1982-84) ... Jerusalem-born
lawyer with bright political future ... longstanding
personal ties to Menachem Begin and Begin's son
Benny ... 42.
Ehud Olmert
Member of Knesset
Articulate Herut Party activist and polished
spokesman for party positions ... member of
Shamir's circle of political confidants but holds no
formal position in Office of the Prime Minister ...
lawyer by training and onetime military
correspondent ... member of Knesset since 1973 ...
member of Foreign Affairs and Defense Committee
... considered rising star in Herut ... 42.
Ronnie Milo
Deputy Minister in the Office of the Prime Minister
Ally and confidant of Shamir ... served as his deputy
at Foreign Ministry, 1984-86 ... ambitious Herut
Party activist with family ties to Menachem Begin
and 10 years of Knesset experience ... nevertheless,
plays secondary role in Office of the Prime Minister,
suggesting standing with Shamir has diminished ...
hopes for important portfolio frustrated ... belatedly
put temporarily in charge of Ministry of Interior after
Minister quit ... Shamir's key lieutenant for internal
Herut Party affairs ... also has acted as Shamir's
negotiator with camp of Construction and Housing
Minister David Levi ... 37.
Tzahi Hanegbi
Director of the Prime Minister's Bureau
Personal assistant to Shamir since 1984 ... wields
influence as gatekeeper for Prime Minister ...
oversees agenda, appointments, correspondence ...
provides political input on media team ... son of
Tehiya leader Geula Cohen; father was former
classmate and comrade-in-arms of Shamir ...
established political career as extremist student
leader at Hebrew University ... led settler resistance
to 1982 dismantling of Yamit settlement in Sinai ...
viewed as effective grassroots organizer ... 36.
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Two promising young Likud Knesset members-Dan
Meridor and Ehud Olmert-have also increasingly
taken on informal advisory roles. Neither holds an
official position besides his legislative seat, but
Shamir has come to value their counsel greatly.
Two other Shamir aides who rose through party ranks
and are point men on intraparty manuevering in
Likud seem to have less influence on Shamir's policy.
Deputy Minister Ronnie Milo and Bureau Chief
Tzahi Hanegbi appear to have been eclipsed by the
pragmatists surrounding Shamir.
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Gush Emunim's Impact
in Israel
The radical Gush Emunim (Bloc of the Faithful) has
spearheaded Israel's settlement of the occupied West
Bank since 1975, but it has failed to gain broad
popular support. The Gush is most unlikely to gain
sufficient political strength to transform Israel from a
pluralistic democracy into an aggressive, xenophobic
theocracy, despite theories by an American scholar
that such a trend might develop.
In an in-depth study entitled "Jewish
Fundamentalism in Israel," Dr. Ian Lustick contends
that the Gush Emunim is "the single most important
political force on the Israeli scene." He claims the
Gush has won major influence over rightwing parties
by unifying nationalistic secular Jews with
ultrareligious Jews through a religious Zionist
ideology. Lustick postulates that the Gush Emunim
may eventually "transform Israeli society following a
breakdown of parliamentary democracy" into an
aggressive theocratic state posing "a challenge to
American foreign policy and security interests at least
as profound as those resulting from the Islamic
revolution in Iran."
US Embassy reporting makes clear that the Gush has
lost much of its religious and moral fervor since the
group's heyday in the early 1980s because of:
? Exposure in 1984 of the Jewish terrorist
underground in which Gush members played
prominent roles.
? The predominance of nonideological settlers in most
West Bank settlements.
? The inability of the current National Unity
government to promote aggressively the
establishment of a large number of new settlements.
Reexamination of Methods and Goals
The exposure in 1984 of a Jewish underground with
several Gush Emunim members caused an ideological
upheaval within the Gush Emunim. Religiously
motivated and less militant members were appalled at
the machinegun attack by some members in 1983 on
Hebron University Palestinian students-one of the
Abraham Isaac Kook, who was appointed. first Chief
Rabbi for Palestine by the British in 1921, prophesied
that spiritual redemption depended on settling in the
heart of Eretz Yisrael-the biblical lands of Judea
and Samaria now generally called the West Bank.
Kook became the first to restate in modern terms the
Jews' spiritual tie to the physical land, and his views
eventually became the centerpiece of Gush
philosophy.
Following the Arab-Israeli war in 1967, Rabbi Tzvi
Yehuda Kook put his father's beliefs into concrete
terms by sanctifying Israel's possession of all the
newly occupied territories-the Gaza Strip, the Sinai
Peninsula, and, especially, the West Bank. Through
his teachings, Rabbi Tzvi Kook influenced a group of
young idealists who founded the Gush Emunim in the
early 1970s.
Moshe Levinger, a charter member and now leader of
the Gush, urges Gush members to support violent
means to advance the settlement cause. Levinger lives
with his wife and family in the old Jewish quarter in
the heart of downtown Hebron. He played a key role
in helping establish the large Qiryat Arba settlement
near Hebron in 1968.
underground's most notorious actions-and were led
to reevaluate their group's goals. Initially the Gush
Emunim experienced a deep division following the
shock of the disclosure. Some Gush leaders
disassociated themselves from the activities of the
suspects, while other activists called for official,
unified Gush support for terrorist methods aimed at
increasing Jewish settlement in predominantly
Palestinian areas on the West Bank.
Secret
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13 March 1987
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The Gush remains divided between those promoting
prosettlement political lobbying efforts and those
supporting terrorist activities against the Arab
population. According to US Embassy reporting,
Gush espousal of Jewish religious and historical
claims to the West Bank has not unified the group in
favor of violence aimed at encouraging the Palestinian
population to flee.
Inadequate Public Backing
As a settlement organization, the Gush Emunim
appears to have exhausted its reservoir of potential
settlers and is unlikely to significantly broaden its
following. Although in the late 1970s and early 1980s
the Gush played a key role in establishing small
settlements in areas densely populated by Arabs, it
remains essentially a band of middle-class
Ashkenazim-mostly religious-facing a lack of new
settlers. According to US officials in Tel Aviv, the
pool of ideologically motivated Israelis willing to
settle in heavily Arab-populated areas is drying up.
The majority of Jewish settlers now on the West Bank
are nonideological suburbanites residing in large
urban settlements within commuting distance of Tel
Aviv and Jerusalem. We estimate that only 15 percent
of the estimated 55,000 Jewish settlers on the West
Bank reside in settlements affiliated with Gush
Emunim. Continued suburbanization of the West
Bank means that Gush Emunim will become an even
smaller minority among the Jewish settlers.
Gush leaders have failed to attract support among
Israel's Sephardim. According to Israeli polls, the
traditionally more observant Sephardi immigrants
from Middle Eastern and North African countries in
general hold more nationalist views than the
Ashkenazim. But Sephardim generally do not
implement these views by moving to the occupied
territories, and few live in settlements. Sephardi
leaders claim that the hardline Likud bloc has focused
on the West Bank to the neglect of poorly funded
Sephardi-dominated urban slums and development
towns inside Israel proper.
Having exhausted its attempts to make deeper inroads
in the secular or the Sephardi populations, the Gush
in recent years has concentrated on promoting Jewish
emigration from the Soviet Union and recruiting new
Soviet immigrants to its ranks. But the number of
Soviet Jewish immigrants has yet to reach the volume
necessary to support the Gush goal of creating a mass
movement of settlers.
Political Influence
US Embassy reporting and Israeli public opinion polls
demonstrate that the Gush Emunim remains a
minority rejected by most Israelis, who are not
religious fundamentalists. Most of those who support
retention and settlement of the occupied territories do
so for nonreligious reasons, particularly security and
historical attachment. The relatively dovish Labor
Party and virtually all ultraorthodox Israelis reject
Gush goals and methods as nationalistic fanaticism.
Most Israelis supporting occupation of the West Bank
are politically represented by the right-of-center
Likud bloc, the ultranationalist Tehiya (Renaissance)
Party, and the National Religious Party. These three
groups together probably receive all the Gush vote.
A significant increase in public support for rightwing
religious parties is unlikely. Published research by
Israeli sociologists shows a clear trend toward
secularization among young, native-born Israelis.
Some religious voters have long voted for secular
parties and almost certainly will continue to do so.
Religious parties also have been unable to capitalize
on the growing pool of potential voters coming of age
in typically large ultraorthodox families due to the
traditionally lower level of political interest within this
inward-looking community.
Who Controls Whom?
In our view, the Gush Emunim is likely to continue to
play a noisy but limited role in support of agendas set
by Likud and other rightwing parties. The Gush goal
of massive West Bank settlement became a
fundamental aspect of policy during Menachem
Begin's term as prime minister. Although Begin's
Likud bloc was ideologically committed to the idea of
retaining the West Bank, it used the Gush Emunim to
promote settlement in order to reinforce Israel's
commitment to the territories. Begin needed and
manipulated the zealots of the Gush as a cadre of
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Although it originally supported the National
Religious Party, the Gush later abandoned support
for it after the party refused to support legislation
formally annexing the West Bank. The Gush has
since refused to identify formally with any political
party or to create its own. Members of the Gush
primarily are involved in and support three different
political groups-Likud, the National Religious
Party, and Tehiya. By our estimate, aside from
Tehiya-currently with only five Knesset seats-the
Gush is not a majority in any party. Some key Gush
leaders play particularly prominent roles in the key
Matzad faction of the National Religious Party led
by Yosef Shapiro-at present Minister Without
Portfolio-and Knesset member Chaim Drukman.
As the Gush became frustrated at its slow progress in
the political system, the group adopted more radical
methods. Drukman publicly criticized the Begin and
Shamir governments for failure to move more
aggressively to expand settlements in the territories
and for withdrawingfrom the Sinai Peninsula. In a
highly publicized action in the spring of 1982, Gush
member Israel Harel bitterly opposed Israeli
withdrawal from the Sinai by barricading his
settlement against the Israeli troops enforcing the
evacuation. Even after being forcibly removed, he
vowed to resist future government-approved
territorial concessions
The National Unity government's inaction toward
increasing settlements on the West Bank has further
inflamed Gush rhetoric. Harel has urged the
settlement community to fund unauthorized
settlements and to aid Jewish terrorists and their
families. Daniella Weiss, the Gush Emunim general
secretary, advocates that Jews head all West Bank
municipal councils-even in towns where Arabs are
the only residents. She also urges closure of all West
Bank universities on the grounds that Palestinian
students pose a threat to Jewish settlements.
young, enthusiastic pioneers, willing to settle in the
very places that were unattractive to other Israelis
because of the political controversy surrounding them.
Gush Emunim settlements near and even inside major
Arab towns like Nablus and Hebron-although
perceived by many Israelis as provocative-served the
Likud government as a necessary complement to its
plan to permanently retain the West Bank.
Like Begin, Likud leaders Ariel Sharon and David
Levi are using the Gush Emunim and the settlement
issue to court popularity with hardliners in their
party. Initial Gush Emunim support for Yitzhak
Shamir after he became Prime Minister last October
quickly faded when he deferred proposals for
establishing new settlements. Some Gush Emunim
leaders have even called for his resignation if he
continues to hold the line against establishing a large
number of new settlements.
Shamir's delay provides an opportunity for Levi and
Sharon to weaken party support for his leadership.
When settlement activists failed to win Shamir's
support for immediate establishment of the four
remaining settlements to be established under
coalition guidelines, Sharon urged increased
settlement during a rally in Jerusalem in January.
Levi has become more active on the settlement issue,
apparently to burnish his Likud credentials, by
formally submitting a proposal to the government for
six new settlements at a cost of $8 million, according
to the Israeli press. Bolstered by Gush activism, both
Sharon and Levi are likely to use the settlement issue
to try to attract more support from the Herut rank
and file during the Herut convention scheduled for
30 March 1987.
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Egypt: Seeking Balance
in Foreign Affairs
Cairo's foreign policy is anchored in the West, but
aspirations to Arab and nonaligned leadership and
domestic criticism of dependence on the United States
are motivating Egyptian leaders to expand ties to the
Soviet Union and Eastern Europe.' We do not believe
President Mubarak intends to fundamentally alter
Egypt's alignment with the United States or his
commitment to the Camp David accords in the
foreseeable future, but he appears determined to
create at least the appearance of greater balance in
Egypt's relations with the superpowers.
New Foreign Policy Initiatives
Over the last six months, Egyptian diplomacy has
become more active on a variety of fronts:
? After an extended period of standoffishness,
Mubarak has taken the initiative in seeking greater
acceptance in the Arab world, culminating with his
appearance at the Islamic Conference Organization
summit meeting in Kuwait in January.
? Mubarak has traveled extensively in Europe,
consulting with officials in France, West Germany,
and the United Kingdom on matters of mutual
concern, such as the Arab-Israeli conflict and
Egypt's economic situation.
? Egypt has expanded its ties to African neighbors
such as Ethiopia and Sudan, as well as to other
members of the Organization for African Unity.
? Trade and technical agreements have been initialed
with East European and Asian states, including
Yugoslavia, Czechoslovakia, and both Koreas.
The upswing in Egyptian contacts with the Soviet
Union is particularly notable. Both Moscow and
Cairo seem more determined to end the stalemate in
negotiations on key debt and trade issues than in
previous months. Recent discussions have centered on
interest payments on the outstanding Egyptian
military debt ($2-3 billion). The Egyptians also hope
to gain economic cooperation and cultural agreements
and renewed access to spare parts for some of Egypt's
Soviet-made military equipment. The Egyptian-Soviet
Friendship Society has been revived, and there have
been numerous exchanges of high-level visitors,
including a recent appearance by Anatoliy Gromyko.
In the meantime, the Egyptian press has become 25X1
steadily more critical of the United States, while it
has increased coverage of favorable developments
with Moscow.
These developments raise questions about the nature
of Mubarak's strategy and its implications for
Egyptian-US relations. What are the sources of
tension with the United States, and what benefits does
Moscow have to offer? How does Cairo view the
tradeoffs in its relations with the superpowers?
Egypt's US Connection: Extensive Benefits But
Increasing Costs
Economic necessity has pushed Cairo toward
Washington since President Sadat turned away from
the Soviets in the 1970s, but relations between Egypt
and the United States historically have covered a
much broader spectrum. Like Jordan and Kuwait,
Egypt has extensive cultural and trade links to the
United States and shares many Western values.
Although relatively few Egyptian students attend
school abroad, the large majority of those who do
choose Western institutions. Egyptian commerce with
Western states completely overshadows its trade with
Middle Eastern or other developing countries. A 25X1
similar trend in military assistance demonstrates a
dramatic shift from the years of close Soviet ties.
Secret
NESA NESAR 87-007
13 March 1987
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EGYPTIAN STUDENTS ABROAD BY REGION OF STUDY
1983-1984
JNITED STATES = 84%
USSR ANO
EASTERN EUROPE = 16%
Egyptian Students in the U.S., U.S.S.R. and
Eastern Europe in 1983/1984 = 2775
Mubarak has sustained the US connection initiated
by Sadat, and we believe he regards this relationship
as fundamental to his foreign policy. The US
connection has served Cairo well on a variety of issues
critical to the survival of the regime, especially
economic stabilization, infrastructure development,
and military modernization. Egyptian ties to the
United States entail costs for the regime, however, in
the areas of domestic and regional politics.
Economic Challenges. We believe the Mubarak
regime considers stabilizing Egypt's economy its first
priority. Mubarak, like his predecessor, has depended
on the United States-together with Western
financial institutions such as the International
Monetary Fund and the World Bank-to provide
sufficient economic assistance to ameliorate Egypt's
economic difficulties. Between 1979 and 1983,
Washington provided over $5.5 billion in aid to
Egypt-almost two-thirds in grants-and is currently
supplying over $2 billion annually. In addition to
funds, Mubarak expects the US Government to
encourage private American investment and tourism
in Egypt, according to the US Embassy in Cairo.
Despite major infusions of US aid, the gap between
population growth and available resources continues
to widen, and Egypt's middle and lower classes are
experiencing a decline in their standard of living. The
government has implemented some economic
measures successfully, and many improvements in
infrastructure have been made, but international
financial experts generally regard these efforts as
piecemeal and insufficient. The reform process is
hampered by fears of violent reactions to unpopular
austerity measures and by opposition from within the
archaic bureaucracy, which has a highly centralized
style of administration and is still dominated in some
offices by centrist-oriented economic thinkers.
Fairly or not, Egyptians will hold the United States
responsible for their nation's economic health. Over
10 years have passed since Sadat's realignment in
policy, and Egypt's economy remains in deep trouble.
Even where improvements in the daily life of many
Egyptians have occurred, the regime appears to
receive relatively little credit, and the scope of US
assistance is not always understood or appreciated.
Furthermore, cuts in that assistance could create the
impression of abandonment by the United States and
generate a strong anti-US backlash.
~Mubarak depends on the loyalty of the armed
forces to preserve domestic security. Their assistance
was most recently required to put down rioting by
security police in February 1986. These strong
bilateral military ties have a major stabilizing effect
on the overall US-Egyptian political relationship,
according to US Embassy officials.
Washington provides the Egyptian military with
equipment and training opportunities that bolster
morale and support modernization. Although there
are problems in day-to-day relations, Egyptian
military officers get along better with their US
counterparts than with earlier Soviet advisers, regard
US weaponry as superior to Soviet equipment, and
gain enhanced prestige from joint exercises, according
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ioo
too
EGYPTIAN IMPORTS BY ORIGIN
1979-1984
EGYPTIAN EXPORTS BY DESTINATION
1979-1984
. Middle East
^ Middle East
9R
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EGYPT
MILITARY ASSISTANCE AGREEMENTS
1980 - 1984
1960 ` $3.6j0.2 1981 ? $1.086 $3.291.1983 ` $2.419.1 ? $i 146.8
982 1984
EGYPT
MILITARY ASSISTANCE DELIVERIES
i980 - 1984
5980 $557 1981 ? $624.2 s $2. i74.8 $1.853.6 ? $1.680.2
1982 1983 1984
. France
^ France
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On the whole, Egyptian officers have been pleased
with the US-Egyptian military assistance relationship
and its role in rebuilding Egyptian defenses, although
some fear Egypt is becoming too dependent on the
United States. The military closely monitors the US
aid program for Israel to see that rough parity is
maintained with the program for Egypt.
Domestic Policy. Although the democratic trend
Mubarak has fostered provides an outlet for dissent
and a framework for resolving conflict, we believe it
also makes the regime more vulnerable to elite and
popular criticism. Many Egyptian nationalists still
blame the United States, Israel, and the Camp David
accords for depriving Egypt of its traditional role as
the foremost Arab state.
Moreover, Islamic radicals consider contact with
Western societies a corrupting influence and see the
economic liberalization policy as further evidence of
foreign domination of Egyptian affairs, raising the
specter of Egypt's colonial past. Consequently,
opposition groups can exploit public opinion to
challenge Mubarak on the issue of US-Egyptian ties,
placing a constant burden on him to prove that the
benefits of relations with the United States outweigh
the costs for Egypt.
Mubarak has responded to these domestic pressures,
in part, by reducing the visibility of his ties to the
United States and rebuilding Egypt's ties to the Arab
world. He has resisted an agreement for US basing
rights in Egypt, for example, because US facilities
could become a target for domestic dissent or even
terrorist attacks.
Regional Policy. Mubarak's interrelated goals of
achieving an Arab-Israeli peace settlement and
reintegrating Egypt into the Arab mainstream have
mixed consequences for his relations with
Washington. Mubarak sees Egyptian activism in the
peace negotiations as the primary vehicle to regain
leadership of the moderate Arab states, remove the
destabilizing potential of the Palestinian issue, and
mute domestic criticism. At the same time, he bears
both the burden of performing effectively as a broker
in the peace process and the stigma of US or Israeli
actions against Arab states.
Problems for Mubarak arise from important
differences between Egypt's peace policy and Israeli
and US positions, primarily over who will represent
the Palestinians and what is the appropriate role for
the Soviet Union in negotiating a settlement. One of
Mubarak's most public Arab initiatives is promoting a
reconciliation between Jordan's King Hussein and the 25X1
Palestine Liberation Organization to produce a united
Palestinian representation to the peace talks
acceptable to all parties. Mubarak has publicly
supported Hussein's proposal for an international
conference-to include participation by the Soviet
Union-to prepare the way for true peace talks.
relations.
The appearance of US disarray in its Middle East
policy creates additional stresses on Egyptian-US
Nevertheless, Mubarak appears to have determined
that Egypt's opportunity to gain readmittance into the
Arab mainstream on its own terms has improved
dramatically
Mubarak's regional objective of
reintegration has gained momentum from the recent
Islamic Conference Organization summit meeting in
Kuwait, where he won praise for his leadership and
his handling of Syria's Hafiz al-Assad.
significant quantities of
financial assistance will also be forthcoming from the
Arab Gulf states, which seek to bolster Egyptian
stability and hope to rely on Egyptian military
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the Egyptian 25X1
Government believes that improving ties to Moscow
offers a range of specific benefits:
? Providing access to Soviet spare parts for industrial
and military equipment.
? Rescheduling Egypt's military debts and resolving
Moscow's blockage of funds in the Egyptian ruble
account.
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? Involving Moscow constructively in the Arab-Israeli
peace process.
? Improving Egypt's leverage with Moscow to lessen
aid to Libya and reduce its role in Afghanistan.
Recent changes in the Soviet approach suggest that
Moscow is considering making additional concessions
on the interest rate of Egypt's military debt. In the
past, the Soviets have dealt parsimoniously with Cairo
on economic matters to avoid setting a costly
precedent for their other creditor nations and out of
an apparent belief that Cairo will offer little in return.
Another round of talks is scheduled for mid-March.
The US Embassy does not expect a major
breakthrough immediately but anticipates that the
two sides will continue exchanging visits to improve
the climate for agreement. Mubarak may be counting
on the Soviets to decide that the political advantages
of improving relations with Egypt outweigh the
economic costs of compromising on terms. A
settlement whereby the Soviets forgive interest
payments on the debt would set an uncomfortable
precedent for Egypt's negotiations with the United
States on the Foreign Military Sales debt.
As far as economic assistance is concerned, we doubt
that the Soviets will match US aid levels. In 1957-74,
a period encompassing the heyday of Soviet economic
assistance to Egypt, Moscow's aid totaled less than
$1.5 billion. Cairo has also been actively exploring
ways in which the Soviets and East Europeans might
help revitalize Egypt's public-sector industries, many
of which were built with Soviet assistance
In the area of military assistance, we believe that
prospects for a full-fledged Egyptian-Soviet
relationship are limited in the near term, although
Egypt's pressing need to obtain spare parts for the
remaining Soviet equipment, which covers the entire
spectrum from trucks to aircraft to submarines, may
eventually resurrect this program in a limited way.
We believe the military remains strongly anti-Soviet
and remembers Moscow's slowness to resupply
Egyptian forces, and Soviet attempts to interfere in
As far as the Arab-Israeli conflict is concerned,
Mubarak has stated that the Soviets should be
included in negotiations in order to ensure Syrian
participation, and that Moscow could play a
constructive role, according to diplomatic reporting.
He also hopes that improving ties to Moscow will
balance Soviet equities in Syria and give the Soviets a
greater interest in the moderate Arab position.
Egyptian officials believe that the moderate Arabs
can contain possible Soviet mischief during peace
negotiations if they act together, according to the US
Embassy in Cairo.
Outlook for Egypt's Relations With the Superpowers
President Mubarak appears to be implementing a
strategy of balancing Egypt's already extensive ties to
the United States by expanding the scope of Egyptian
relations with the Soviet Union as well as with other
countries considered appropriate partners for trade or
technical cooperation. Improving ties to Moscow, in
addition to resolving outstanding bilateral questions,
has the added benefit of bolstering Egypt's declared
policy of nonalignment.
Nevertheless, Mubarak's efforts to expand the scope
of Egypt's foreign relations-including ties to the
Arabs, the Soviet Union, Eastern Europe, and Asian
countries-will result mostly in a change of style, in
our view. We have seen no indication that Mubarak is
planning to change Egypt's alignment. Egyptian
leaders will probably continue to find it politically
advantageous to create the appearance of more
balanced relations with the superpowers to quiet
domestic critics of dependence on the United States
and bolster Cairo's stature in the Arab world. In our
judgment, Egypt's heavy dependence on US economic
assistance, its military's preference for US equipment,
and its reliance on the United States as a key
participant in Arab-Israeli negotiations are
compelling incentives for continuing close ties to
Washington. We believe future Egyptian governments
will also give great weight to these benefits.
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Neither the domestic nor the regional factors that
strain the Egyptian-US relationship are likely to
disappear soon, however, even though these strains
will not necessarily redound to the Soviets' benefit.
Mubarak's ability to balance his policy toward the
United States and Israel with the precarious domestic
economic and political situation could be upset by a
continuing hardline Israeli stance on the peace
process, by a new Arab-Israeli conflict, by a sharp
jump in the influence of Islamic fundamentalists, or
by an Egyptian economic collapse.
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France
n~aor_"" o1a...~
Portugal *Madrid
ti} Spain
Spanish Enclaves in North Africa
main map
Morocco
Portugal
Spain
Gibraltar
(U.K.)
?
Ceuta
\(Spain)
Melilla
.(Spain)
Algeria
Morocco
*Rabat
Secret 18
0 50 I t00 Kilometers
0 .50 100Miles
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Morocco-Spain: Trouble
in the Enclaves
Moroccan nationalism has flared in the Spanish
enclaves of Ceuta and Melilla during the past year.
King Hassan almost certainly does not want to
precipitate a showdown over the enclaves. But he has
exploited the issue to divert public attention from
domestic economic problems and to bolster his
negotiating position with Spain on other bilateral
issues. The King, however, could stir up nationalist
sentiment that would be difficult to control.
Conflicting Claims
Melilla and Ceuta comprise an area of 32 square
kilometers and have a population of some 107,000.
Morocco claims the enclaves as its own and asserts
that Spain should have surrendered them when it
relinquished the rest of its colonial territories in
Morocco in 1955. Madrid has occupied and
administered the enclaves as part of the Spanish
realm since the 15th century. The question of
sovereignty is, therefore, a sensitive issue in Spain and
a highly charged rallying cry for nationalism and
anticolonialism in Morocco. Most Moroccans believe
that the enclaves have always been part of Morocco
and that Spain is an encroacher.
Hassan has tried to bolster his claim to the enclaves
by asserting that no one country should control a
passage as strategic as the Strait of Gibraltar. Hassan
has told the Spanish repeatedly since 1975 that, when
Spain regains control of Gibraltar from the British-
an effort Rabat supports-he will expect Spain to
surrender the enclaves soon thereafter. We believe
that, if Spain recovers Gibraltar, the Moroccan
Government would orchestrate strong public pressure
to establish Moroccan sovereignty over Ceuta and
Melilla, and the likelihood of military confrontation
between both countries would increase.
The King, however, has been in no hurry to resolve
the enclave issue. We believe that he does not want to
jeopardize Spanish-Moroccan relations and that he
has higher priorities he wants to achieve-most
notably a resolution of the Western Sahara issue.
Hassan's father, Mohamed V, said "every King of
Morocco shall be a liberator." Mohamed V had
Morocco proper, Hassan had Western Sahara,P
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Hassan Ups the Ante
Nevertheless, in recent months King Hassan has done
little to discourage local Muslim leaders from stirring
up nationalist sentiment. Spain angered the Muslim 25X1
community in April 1986 when it tightened residency
conditions for foreigners. Most of Melilla's Muslims
are Moroccan citizens. Although most probably
would have qualified for residency permits, others
almost certainly would have failed to satisfy the new
Spanish guidelines. Uncertainty as to just who might
be able to stay and who would have to leave generated
widespread fear and anger among Melilla's Muslims.
Some also resented Madrid's attempt to regularize
their status as reassertion of Spanish sovereignty over
the enclaves.
The Muslim community responded by staging a series
of increasingly violent demonstrations and strikes that
led to the death of a protestor, the arrest of several 25X1
Muslim activists, and the flight of the leader of the
Muslim community, Aomar Dudu. Tension remains
high, and we believe that one reason Madrid's efforts
to defuse the crisis have failed is that Hassan has
declined to support them as he did during earlier
tensions.
Indeed, the King escalated the issue in January when
he publicly suggested the creation of a "commission"
of wise men to study the question of the return of the
enclaves to Morocco. According to the US Embassy
in Madrid, the proposal is a potentially important
change in the Moroccan position because it unlinks
discussions about the enclaves from the resolution of
the talks on Gibraltar. Spanish King Juan Carlos
turned down the idea because it would imply a
willingness of Spain to discuss its sovereignty over the
enclaves.
Secret
NESA NESAR 87-007
13 March 1987
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To remove any doubt in Madrid that Dudu's activities
were sanctioned by Rabat, Hassan told Spanish
officials that Dudu is under royal protection and was
officially received in the Moroccan capital in October
1986. At the Feast of the Throne, Dudu took part in
the traditional swearing of allegiance ceremony. The
King added that, in his capacity as Morocco's
supreme religious leader, he could order Muslim
religious leaders in Ceuta and Melilla to offer prayers
for peace. We believe that through this comment
Hassan conveyed to the Spanish that they may wield
nominal political authority over the enclaves, but he
has the power to influence the thoughts and actions of
much of the enclaves' Muslim population.
Hassan has also announced that a royal visit in
September to northern Morocco-the first in 17
years-will include a trip to Nador, the Moroccan
city bordering Melilla, where Dudu is in self-exile. In
our view, whether or not Hassan chooses to publicly
reiterate Morocco's claims to the enclaves, both
Moroccans and Spaniards will see a connection.
The King's Motives
We believe that Hassan is exploiting the enclave issue
to divert attention from his troubled economy and to
provide an issue for the opposition-particularly the
oldest political party in Morocco, the Istiqlal-to
focus on. Diplomatically, he almost certainly is trying
to use the enclaves to exert pressure on Spain and
increase Morocco's leverage in an otherwise unequal
relationship. Hassan knows that Spain and the United
States are engaged in delicate negotiations over US
basing rights, and he may believe that the talks make
Madrid particularly vulnerable to pressure on the
enclaves.
In particular, the King would probably like to reduce
Spanish diplomatic support for Algeria's position on
the Western Sahara issue. According to the US
Embassy in Rabat, the King was unhappy last fall
when Spain once again voted against Morocco in the
United Nations on the Western Sahara question. We
believe he also hopes to use the enclaves to press the
Spanish to support Morocco on European Community
issues, particularly the export of Moroccan citrus to
Western Europe. In addition, he is urging the Spanish
not to establish a steamship line between Oran in
Prospects
We concur with the US Embassy in Rabat that
Hassan will not and cannot afford to let the enclave
issue long burden Moroccan-Spanish relations.
Nevertheless, he is playing a dangerous game. If the
issue drags on much longer, it could develop a
dynamic of its own and elicit widespread nationalist
support within Morocco.
In our view, both countries see it in their interests to
prevent the issue from becoming a serious
confrontation in the near term. Indeed, both have
clear incentives to preserve a highly lucrative and
mutually beneficial relationship. Fishing rights
granted to Spain off the Moroccan and Saharan coast
are profitable to both Madrid and Rabat. In addition,
last year the two capitals concluded an approximately
$220 million deal for the delivery of Spanish trucks
and military equipment to the Moroccan Army and
agreed to increased security cooperation with
enhanced joint military exercises.
Moreover, the King is aware that the enclaves are
important to the economy of northern Morocco.
Indeed, northern Moroccans display a closer affinity
to Spain than France, Morocco's principal economic
patron and other former colonial ruler, and northern
merchants and businessmen worry that they and their
region could lose economically if the enclaves are
incorporated into Morocco.
We believe that these considerations will lead Hassan
to avoid a confrontation with Spain. He is an astute
judge of the political climate within Morocco as well
as of diplomatic relations in the western Mediterrean,
and we doubt that he will overplay his hand or press
the enclaves issue beyond the point where he believes
he has extracted as much as he safely can from it.
Nonetheless, he is walking closer to the brink with
Spain than at any time in the past decade, and even
skilled political tacticians occasionally miscalculate.
Algeria and Melilla and Barcelona.
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Libya: Oil Industry
Weathering Sanctions
The Libyan oil industry has been able to cope so far
with US economic sanctions, the withdrawal of US
companies, and US diplomatic pressure on West
European governments to reduce petroleum trade
with Libya. The volume of Libyan petroleum exports
in 1986-about 1 million barrels per day (b/d)-was
essentially unchanged from 1985. Although oil
revenues plunged primarily because of the collapse of
oil prices, US pressures contributed to the slide by
forcing the Libyans to discount some oil sales. West
European and Asian companies, including numerous
foreign subsidiaries of US companies, continue to
provide oilfield equipment and services. Despite the
increased difficulty and cost of obtaining some
advanced technology and US-made computer parts,
procurement difficulties have not caused major
production problems. In the absence of stronger West
European support for US policies, the Libyan oil
industry should be able to maintain exports at current
levels for the foreseeable future.
Oilfield Operations
Despite discussion of a consolidation, Libya's oil
industry has remained essentially unchanged since the
departure of the US companies. The Libyan National
Oil Company has maintained five separate production
companies, although the names of the two formerly
American-directed companies have been changed.
AGIP of Italy is now the largest foreign producer-
currently pumping about 110,000 b/d-and is
developing an offshore field scheduled to begin
production later this year. OMV of Austria and the
West German firms Wintershall and Veba also
participate in production operations on shore.
Libya has experienced some operational difficulties
resulting from the US pullout and sanctions and a
reduction in investment caused by Libya's financial
troubles:
? A shortage of drilling and production equipment,
including workover rigs and downhole equipment.
pay a premium for equipment and spare parts. E
the Libyans must pay
a premium of 65 percent for pipeline inspection
materials. On the other hand, oilfield equipment
prices are at a rockbottom level because of the
depression in the world oil industry, and F_
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he Libyans generally o not have
major problems obtaining most equipment. Overall,
we estimate that the US equipment embargo has
added $25-50 million to the estimated $200 million
per year the Libyans spend on oilfield equipment and
spare parts.
Coping With Sanctions
Despite some problems, a surplus of productive
capacity has enabled Libya to meet its production
goals-recently cut to 948,000 b/d under the OPEC
quota agreement. On the basis of industry reporting,
we estimate that Libya could sustain maximum
production of nearly 1.6 million b/d despite some
deterioration in capacity over the last year.
The effectiveness of US sanctions has been severely
undercut by the widespread availability of essential
petroleum equipment. In most cases, Libya can
procure comparable equipment and services from
Secret
NESA NESAR 87-007
13 March 1987
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US economic sanctions against Libya have had only a
limited impact on Tripoli's ability to acquire US or
substitute technological goods, and no significant
impact on its oil production or ability to use
international banking mechanisms. Under the
sanctions, all direct trade, travel, financial, and other
business transactions by US firms and individuals
are prohibited. All Libyan assets, including bank
accounts, under the control of US citizens here or
abroad are frozen. Because only "direct" transactions
are prohibited, however, foreign companies are not
compelled to cooperate, nor are foreign subsidiaries
of US corporations. According to economic press
reports, more than 200 US corporations trade with
Libya via foreign subsidiaries and/or gfiliates
Direct US-Libyan trade had already been severely
reduced by three earlier rounds of US export
restrictions. Official US figures put the value of
direct trade at about $250 million between July 1985
and June 1986. The economic press reports that the
value of direct and indirect trade was about $1 billion
between July 1985 and June 1986. The reports
predict that the new sanctions will reduce the value to
suppliers-including US subsidiaries-in Western
Europe, Japan, and a number of newly industrialized
countries including Brazil, South Korea, and
Many foreign firms regard the
US sanctions as a windfall at a time of severe oil
industry depression and have filled in readily for
departing US firms.
The Libyans have taken other steps to reduce the
impact of sanctions:
the
Libyans have been stockpiling critical spare parts
for several years.
$265 million in the year ending in June 1987. The
value will not fall much beyond that because Libya
will still have a demand for some US goods and will
be able to find suppliers of parts abroad.
The asset freeze caused Tripoli to find new banks.
Libya now tends to deal with Arab-owned banks that
are less likely than Western-owned banks to impose
freezes. Locating new banks and shifting funds
imposed some inconvenience but have had no
significant effect on Libya's use offinancial markets.
Sanctions will probably have even less impact in the
next year unless wider support is gained-which is
unlikely. Historically, economic sanctions have been
most effective in the first six to 12 months. After that,
alternative suppliers are usually found. Although
lifting the sanctions would provide little economic
benefit, we believe that Qadhafi would portray
removal as a major defeat for US policy. He would
claim removal demonstrated that Libya's
commitment to its policies was stronger than US
determination to punish his country.
Foreign Work Force
A small cadre of well-trained Libyan nationals control
the top managerial positions, but the oil industry
remains heavily dependent on foreign technicians.
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North Americans and West Europeans provide most
of the technical and supervisory expertise, and Asians
perform a large part of the manual labor. Many
foreign workers remain because of the high pay and
the limited opportunities for employment elsewhere.
as of December 1986, over
petroleum workers were employed by Libya.
hundreds of French
remain in Libya. In addition,
substantial numbers of Pakistanis, South Koreans,
Filipinos, and Bangladeshis in Libya. Technicians and
workers from Communist countries do not play a
major role in the Libyan oil industry.
Petroleum Exports
Libyan exports averaged about 1 million b/d in
1986-about the same level as the previous year-
despite swings in sales during the year. Exports
reached a high of more than 1.3 million b/d last
summer before dropping to about 900,000 b/d in
September to conform with Libya's OPEC production
ceiling. Libyan exports rebounded in January 1987 to
over 1 million b/d, primarily as a result of the cold
snap in Western Europe. Libyan product exports have
grown to over 150,000 b/d as a result of the Ras
Lanuf export refinery coming onstream. Despite
maintaining exports at traditional levels, Libyan oil
revenues plunged from about $9 billion in 1985 to
under $5 billion in 1986 because of the collapse in
world oil prices.
Despite US diplomatic pressure, West European
countries accounted for about 85 percent of Libyan
petroleum exports-similar to previous years. Italy,
West Germany, and Spain were the largest importers
of Libyan petroleum during 1986 and accounted for
approximately 55 percent of all Libyan petroleum
exports:
? Italian imports increased to more than 300,000 b/d
in 1986, driven by attractive prices and strong
refinery demand for Libyan oil. Most was processed
at refineries in Sicily and Sardinia specially
equipped to handle waxy Libyan crudes.
? West German imports from Libya fell more than 25
percent, primarily as a result of the pullout of US
companies from Libya.
? Spanish imports from Libya jumped dramatically
during the summer as Spanish refiners maximized
gasoline output for reexport. Libyan imports
subsequently fell to traditional levels as Spanish
refiners switched to heavier crudes for the winter
heating season.
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Belgium became a significant new importer of Libyan
crude as a result of the South Korean firm Daewoo's
purchase of a Belgian refinery to process Libyan
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French imports from Libya dropped in 1986 as
government-controlled oil companies ceased buying
Libyan oil.
The Soviet Union increased its liftings of Libyan oil in
1986 to over 80,000 b/d, although most was resold to
refiners in Eastern and Western Europe. Sales to
Bulgaria and Romania also rose, and Libya delivered
crude and product to a greater variety of Third World
countries, including Ethiopia, Saudi Arabia, Sudan,
and North Yemen-mostly for political reasons-but
volumes were relatively small.
Marketing Tactics
Libya's sales organization, Brega International,
successfully used special pricing discounts and
netback deals to offset the loss of the US companies' 25X1
previous role in marketing Libyan oil. These schemes
enabled Libya to limit selling on the spot market,
where prices for Libyan crudes consistently lagged
prices of competing crudes by $1 or more throughout
much of 1986, in large part because of US pressure on
major US oil companies and West European
governments to avoid purchasing Libyan oil. Barter
and countertrade deals-primarily with the USSR,
Italy, and South Korea-and liftings by foreign
equity crude producers also accounted for large shares
of Libyan crude oil. Despite Libya's marketing
success, we estimate US efforts to limit Libyan oil
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Although the average Libyan has had to endure
severe economic disruptions since oil prices collapsed
last year, current conditions are the worst to date.
Domestic economic difficulties are worsened by the
cost of the conflict in Chad perhaps as much as $10
million a day. Nevertheless, Qadhafi appears
unwilling to draw on the country's $7.3 billion in
reserves. As a result, the burden is apparently being
borne by the Libyan population.
food shortages in
Libya, always chronic, have become serious. Fresh
dairy products, bread, and pasta are unavailable;
fruits and vegetables are hard to find; and meat, when
available, is extremely expensive and of poor quality.
At least part of the problem can be traced to poor
distribution of available food, which encourages
hoarding. Rationing has not eased difficulties
because most grocery stores have little or no food on
the shelves.
commodities such as cigarettes, spare parts, gasoline,
and natural gas also are in short supply. Indeed, even
common household items such as light bulbs, soap,
and shampoo cannot always be found. Moreover,
what is available-shoes, bedding, and some
clothing-is of inferior quality. As a result, the black
market is rapidly becoming the principal source of
most goods.
(financial
stringencies are hurting the Libyan populace in other
ways:
? Potable water is in short supply in the cities, while
waste removal is sporadic and sanitary conditions
are extremely poor.
? Electricity in affluent sections of Tripoli is off for
several hours a week, while in the poorer
neighborhoods it is often off for several days at a
time.
? Housing is becoming increasingly scarce because
financing for new construction is extremely hard to
find.
? Education, the hallmark of Qadhgfi's revolution, is
suffering under budgetary cutbacks.
? Civil service salaries have not been paid since
November 1986, while military paychecks have not
been distributed since October.
Libyans resent such deprivations, most of which they
attribute to the conflict in Chad. Many do not
support or understand this increasingly costly
military action, and mounting casualties are
compounding these frustrations,
students are further increasing tensions.
There have been no organized economic protests so
far. Discontent, however, is growing sharply over the
increasing hardships, rising Libyan casualties, new
conscriptions, and Qadhafi s foreign adventurism.
Qadhafi
already has lost virtually all popular support outside
of a small cadre of revolutionaries-including the
powerful revolutionary committees-and his security
services. The ability of these groups to cope with
increasing disgruntlement could weaken their resolve
and provide the opportunity for disaffected military
elements to move against the regime.
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sales cost Tripoli $150-200 million last year, adding
marginally to Libya's already pressing economic
difficulties
Looking Ahead
Libyan oil prices have rebounded this year as a result
of the recent OPEC accord. In line with other OPEC
countries, Libyan netback contracts are being
converted to fixed price contracts, and Libyan prices
are averaging about $18 per barrel. If prices remain
firm this year and exports average about 900,000 b/d,
the dollar value of Libyan oil sales will rise to about
$6 billion. So far, industry reporting has not indicated
any falloff in Libya's planned export program of
about 850,000 b/d.
West European governments continue to show little
inclination to join the US ban on petroleum imports.
Barring further evidence of Libyan terrorist activity,
Europeans will continue to buy Libyan crude and
product as long as the Libyans are responsive to
market price conditions. Libyan oil is valued by
refiners because of its attractive refining
characteristics and its proximity. In addition, equity
crude offtake and debt repayment are powerful
incentives to continue lifting Libyan crude. Customers
had to be turned away durin the fourth quarter.
Despite some recovery in oil prices from 1986 levels,
the most significant problem the Libyan petroleum
industry faces continues to be the low level of world
oil prices. Lower oil revenues have forced a sharp
cutback in capital investment, reduced maintenance
work, and led to increased indebtedness to foreign
contractors. Underinvestment in the petroleum sector
could seriously restrict Libya's productive capacity by
the end of the decade
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Libya: Continuing Initiatives
in the Caribbean
Although Libyan leader Qadhafi has been relatively
unsuccessful in gathering political support in the
Caribbean, he has recently increased his efforts to
strengthen ties to leftist and terrorist groups in the
region. Qadhafi's latest approach included the
appointment of a liaison official to the Caribbean to
oversee and develop policy in the region. Qadhafi is
also employing traditional Libyan methods of
subversion, including the Islamic Call Society,
financial and military aid, and conferences for
propaganda indoctrination.
Qadhafi hopes to increase his freedom of movement
and use Paramaribo as a hub for Libyan subversive
activities in the Caribbean. Qadhafi regards US
"imperialism" and "French colonialism" as the chief
impediments to achieving his broader leadership aims
in the Third World, including the Caribbean., In
addition, should the war in Chad escalate, the region
is rich in French assets that he could target
Background
Over the past several years, Qadhafi has shown
renewed interest in the Caribbean. English-speaking
Caribbean leftists turned increasingly to Libya for
financial help. In return, Tripoli urged Caribbean
leftists to take violent actions against US interests in
the region. The leftists resisted, reluctant to
jeopardize their standing as legitimate politicians in
their home islands and, to a lesser extent, mindful of
Cuban concerns about Libyan meddling and US
retaliation in the region.
By the spring of 1986 the relationship began to sour,
highlighted by the feeble support of the Caribbean
clients for Libya after the US airstrikes. The most
obvious indication came in a newspaper article by
George Odlum, a leftist in St. Lucia and longtime
Libyan client. Although other clients continued in the
Libyan camp, Odlum accused Libya of insensitivity
toward the region and urged leftists to look to Havana
Toward the end of 1986, Libya revised its program in
the region. The new program, a product of Libyan
disappointment with the English speakers and
perceived opportunities in the domestic situation of
the islands, expanded its focus to include the French
territories in the region. One of Qadhafi's first moves
was to assign Abd al-Salam Ashur, Kusa's chief
deputy, temporarily to the Libyan People's Bureau
(embassy) in Panama. In January 1987 Ashur moved
to Suriname on permanent assignment to become the
Libyan public affairs attache for the Caribbean and
South America. In early February, the Bouterse
government responded to US pressure and asked
Ashur to leave Suriname.
Ashur traveled to Trinidad, where he was confined to
his hotel until his departure for Venezuela the next
day. Venezuelan authorities detained Ashur when
they discovered subversive documents in his
possession. After confiscating the documents,
Venezuelan authorities deported Ashur to Panama.
We believe that those documents and other evidence
reveal extensive Libyan subversive planning for the
Caribbean.
Secret
NESA NESAR 87-007
13 March 1987
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The Appointment of Ashur
We believe Ashur's assignment to the Caribbean was
an outgrowth of a broader policy reassessment. By
having a key operative work directly with local
leftists, Qadhafi hoped to rectify earlier mistakes of
funding radical groups without supplying guidance
and broader ideological instruction.
The Suriname Connection
Libya's determination to expand its involvement in
the Caribbean has also resulted in renewed interest in
the region.
other provisions, Qadhafi will probably ask that
Paramaribo allow Libya to use Surinamese facilities
to transport military aid to "liberation movements" in
In addition, in hopes of keeping a significant Libyan
presence in Suriname, Libyan authorities advanced
the official opening ceremonies of the Surinamese
nrv
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Islamic Call Society in Paramaribo from April to
March, immediately following Ashur's departure
Conferences
Qadhafi uses conferences to promote his "collective
struggle" against imperialism and encourage radicals
to act. In so doing, he hopes to expand direct contact
with leftist and radical groups. Furthermore, the
Libyans hope to improve coordination among the
leftist and radical groups so they can better allocate
Libyan resources for subversion and terrorism. For
example, during a series of conferences in September
1986, the Libyans met with several radical
delegations from the Caribbean to express
disappointment at their lack of support in the wake of
the US airstrikes. The Libyans nonetheless provided
some financial aid, albeit small, to several Caribbean
groups to reward their "good behavior" and increase
Libyan influence.
More recently, citing the successful bombings in
Guadeloupe in November and December 1986 by the
Caribbean revolutionary alliance against French
colonialism, the Libyans believe that the political
atmosphere is favorable for increased anti-US and
anti-French propaganda in the Caribbean.
Outlook
We believe that Libya's aggressive meddling in the
Caribbean will continue to have mixed results.
Qadhafi suffered a setback with the departure of
Ashur from the region, but he will probably continue
to work with groups in the French territories to foster
successful subversive and terrorist operations against
US and French assets. Qadhafi will most likely find a
replacement for Ashur, but, until then, the
Surinamese Islamic Call Society and the Libyan
People's Bureau give Qadhafi mechanisms to set up a
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subversive network.
In our view, Ashur was a key Libyan operative whose
departure will temporarily postpone subversive and
terrorist action in the Caribbean.
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Libya has better prospects for inciting violence in the
French territories than in the English-speaking
islands. Not only has Qadhafi learned to keep a
tighter rein on his aid, but we believe he also is more
cautious and certainly more savvy in picking his
targets. We believe Qadhafi will increase his attention
to the radical French Caribbean groups because of
their willingness to use more militant tactics. If
Qadhafi succeeds in establishing a sophisticated
clandestine network, the probability of successful
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Relationship With
Prime Minister Sadiq
The Sudanese armed forces General Staff tacitly
supports the civilian government of Prime Minister
Sadiq al-Mahdi and appears content to put distance
between itself and domestic politics and concentrate
its attention on military affairs. Friction between the
General Staff and Sadiq may increase, however, and
erode the military's support for the government. The
General Staff will continue to guard against civilian
intrusions into military affairs, such as Sadiq's
attempts to increase his control and surveillance of the
armed forces.
Differences in objectives and goals in the southern
insurgency may arise and create tension between the
General Staff and Sadiq. The General Staff, whose
members generally acknowledge that a political
solution is needed to end the war, shares Sadiq's
determination to seize the military initiative against
the southern insurgents, but this unity in purpose may
erode if the military begins to suffer major setbacks,
increasing the military's incentive to pursue a
negotiated settlement.
Tensions between the General Staff and Sadiq may
also increase over foreign policy. Both parties
probably will continue to support a hard line toward
Ethiopia. The General Staff, however, is likely to push
for stronger relations with Egypt and the United
States in hopes of obtaining military assistance. This
may harm relations with Libya-which Sadiq may be
unwilling to risk. Libya's capability to support
destabilizing elements in western Sudan, to resume
support of the southern insurgency, or to support acts
of terrorism in Khartoum will continue to weigh
heavily in Sudanese decisionmaking.
Background
In September 1986 Sadiq dismissed the five members
of the General Staff and appointed replacements. The
rearrangement was probably intended, in part, to
increase the military's loyalty to the Prime Minister.
Sadiq's candidates for the positions, however, had to
be approved by the Democratic Unionist Party-a
coalition partner of Sadiq's Umma Party in the
government and the political arm of the Khatmiyyah
sect, the traditional rival of Sadiq's Ansar sect. As a
result of this party's deliberations-probably intended
to strengthen its influence in the General Staff at the
expense of Sadiq-Abd al-Azim Sadiq Muhammad
was named Chief of Staff rather than Deputy Chief of
Staff for Operations, the post filled by Al-Sir
Muhammad Ahmad.
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promoted to full general, while the Chief of Staff and
three principal Deputy Chiefs of Staff were promoted
to lieutenant general. The promotions were
commensurate with the positions in the chain of
command and eliminate previous abnormalities such
as the Chief of Staff being outranked by the head of
the medical corps,
Several major generals who had seniority over those
promoted were given the choice of retiring or
remaining on active duty as subordinates
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believed the former Commander in Chief and the
former Chief of Staff should have retired as originally
promised when the Transitional Military Council
turned over the government to civilians. Others
believed the Army had been performing poorly
against the southern insurgents and a change in
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Civilian-Military Relations
The General Staff appears content to put distance
between itself and domestic politics and let the
civilian government rule.
and all impressed him as essentially nonpolitical,
focused on military affairs, and supportive of Sadiq,
Secret
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Gen. Fawzi Ahmad al-Fadl
Commander in Chief
Member Khatmiyyah sect ... respected by officers
who regard him as tough, decisive, and fair ... served
as military attache to Cairo (1976-77) during period
of close Sudanese-Egyptian ties ... regards Libya
and Soviet Union as threats to Sudanese security.
Lt. Gen. Al-Sir Muhammad Ahmad
Deputy Chief of Staff for Operations
Career intelligence officer who had tour as Director
of Military Intelligence (1982-83) ... long considered
by US officials as one of Sudan's most capable
officers ... has criticized United States for not
granting more assistance to Sudan ... favored
Sudan's past close relationship with Egypt and
regards Libya as particular threat to Sudanese
security.
Lt. Gen. Faysal Mansur Shawir
Deputy Chief of Staff for Administration
Has impressed US officials as knowledgeable and a
shrewd officer ... attended six-month training course
in Soviet Union (1969) and served as military attache
to Moscow (1978-80) ... unpleasant experience in
Soviet Union and Moscow's refusal to supply Sudan
with spare parts for its Soviet-built equipment have
left him strongly anti-Soviet.
who has tried to appease the military with efforts to
procure foreign military assistance and equipment.
cooperation with the United States.
Civilian activities that the military views as
encroachments into its affairs, however, may erode
the General Staff's support for Sadiq. Sadiq's
relationship with the General Staff, for example,
probably deteriorated with his decision to request the
removal of pre-positioned US equipment from Port
Sudan. Commander in Chief Fawzi was shocked to
learn of the Foreign Ministry's request and
immediately sought a meeting with Sadiq to register
his concern, The
General Staff was no doubt irritated by the unilateral
decision, particularly at a time when it seeks greater
In our judgment, Sadiq has also strained his
relationship with the General Staff with attempts to
increase his control and surveillance of the military.
? The General Staff refused to follow a
recommendation by Sadiq to transfer certain
officers from the provinces to Khartoum.
? Sadiq had a younger brother reassigned to the
armored unit at Al Shagara to monitor the
politically strategic unit. Sadiq also aroused General
Staff ill feeling by arranging for this brother to
attend the Jordanian military academy. The Staff
believed the opportunity should have been offered
on a competitive basis.
? Sadiq's use of the Umma Party security
organization to monitor the military is apparently
causing dissension among officers.
Southern Insurgency
Lt. Gen. Muhatassim Saraj Ahmad The General Staff shares Sadiq's determination to
Deputy Chief of Staff for Logistics seize the military initiative against the southern
Able officer who has been described as interested in nsurgents this winter, but a rift may develop over the
politics ... believed to favor close ties to Egypt.
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pursuit of negotiations. US Embassy reporting
suggests that Deputy Chief of Staff for Operations
Al-Sir is optimistic that the armed forces will succeed
in reopening surface routes throughout the south and
regain the initiative against the rebels. Chief of Staff
Abd al-Azim has also expressed optimism to US
officials
The government's successful resupply of its besieged
garrison at Bor in early January probably has
reinforced the General Staff's optimism and
contributed to the planning for more aggressive
operations against the insurgents.
Despite the General Staff's military campaign against
the insurgents, its members probably seek a
negotiated settlement to the war. Lt. Gen. Al-Sir, for
example, has conceded that only a political solution
could bring peace but has argued that insurgent
leader Col. Garang must be countered militarily
before he will be ready for serious negotiations.
Sadiq, in the future, may resist negotiation efforts
longer than the General Staff might prefer, creating a
rift between the parties.
Foreign Relations
The General Staff probably will continue to support
Sadiq's hard line toward Ethiopia, given Addis
Ababa's support for the southern Sudanese insurgents
and its periodic air attacks in Sudan.
showing signs of success as the Ethiopians, in their
assessment, have become more circumspect in their
dealings with Sudan.
The General Staff, however, will continue to be leery
of Sadiq's overtures toward Libya. Despite Tripoli's
past military assistance to Khartoum for its fight
against the insurgency, the General Staff is suspicious
of Libyan intentions and aware of the political strings
attached to Tripoli's assistance.
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Sporadic and conditional Libyan military assistance
probably has contributed to the General Staff's
incentive to look to Sudan's traditional allies for
sustained assistance. The Staff in general is favorably
disposed to the United States and Egypt and,
wants stronger
relationships with Washington and Cairo. The
military believes that Sadiq will not get meaningful
support from Iran, Iraq, or the Soviet Union and that
Sadiq's solicitations for assistance from these
countries jeopardize military support from the United
States and Egypt. Egypt has resumed military
assistance and training to maintain close ties to the
Sudanese military, according to the US Embassy in
Cairo.
The General Staff successfully persuaded Sadiq to
reaffirm Sudan's commitment to the Sudanese-
Egyptian defense treaty during his recent visit to
Cairo The
General Staff argued that the treaty is an effective
deterrent against Ethiopian aggression. The military,
however, realizes that Egypt is unlikely to take
military action against Ethiopia under the treaty but
may have used this argument to exploit Sadiq's
animosity toward Ethiopia to encourage him to pursue
increased Egyptian military assistance.
Sadiq, however, may resist further General Staff
efforts to establish strong military relationships with
the United States and Egypt, given his nonaligned
foreign policy. Closer ties to Washington and Cairo
risk retaliatory actions from Libya, including
resumption of support to the southern insurgency, the
arming of tribes in western Sudan, or the sponsorship
of terrorist attacks in Khartoum. Although the
military almost certainly recognizes these risks, the
General Staff may be more inclined than Sadiq to
believe that they are outweighed by the benefits from
closer relations with the United States and Egypt.
Outlook
In our view, the General Staff tacitly supports Sadiq
and appears to prefer to concentrate its efforts on
military affairs. We believe the military, for the near
term, will continue this support, barring a major crisis
sparked by civil disorder in which the General Staff
may feel immediate responsibility to intervene. In the
longer term, however, friction between the General
Staff and Sadiq could sufficiently erode the military's
support for the government to prompt the General
Staff to contemplate intervention. Conversely, Sadiq,
to preempt the military, might try to replace members
of the General Staff to make it more responsive to his
agenda
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Government Pleased,
Shias Critical
Humiliated over its inability to recapture Fasht ad
Dibal from Qatar last spring and distressed by Saudi
Arabia's reluctance to play a more partisan role
during that dispute, Manama is actively seeking
increased US weaponry and reduced dependence on
Riyadh. The Shias in Bahrain, however, are critical of
the Bahraini-US relationship, and increased US
visibility risks upsettine the current political balance
on the island.
Will the United States Be a Panacea ...
Manama's decision to expand its relationship with the
United States and increase its military capability
stems from its dispute with Qatar over the Fasht ad
Dibal reef. Manama was confident that Riyadh would
extend military and diplomatic support after Qatar
attacked the reef in April 1986. But Saudi Arabia
failed to act decisively on Bahrain's behalf, and
Manama apparently believes that Riyadh can no
longer be considered a reliable ally.
The ruling Al Khalifa family has justified recent
purchases of US weapons as necessary to improve
Bahrain's military posture in the turbulent Gulf.
According to the US Embassy, Manama believes its
dispute with Qatar has weakened the collective
defenses of the Gulf Cooperation Council (GCC)
against Iran. The ruling family probably doubts that
the smaller Gulf states are committed to the security
of Bahrain
Manama's campaign to increase US weapons
purchases is generally couched in terms of deterring
Iranian aggression, but the weapons it has
requested-M-60 tanks, TOW antitank missiles, and
155-mm howitzers-suggest that Qatar remains
Manama's primary military concern. The Hawar
Islands, which are controlled by Bahrain but claimed
by Qatar, are a likely future battleground
Bahrain. The commander of the Bahrain Defense
Force, Crown Prince Hamad bin Isa Al Khalifa, is
firmly committed to a strategic military relationship
with the United States, according to the US Embassy,
but has tied a favorable decision on Bahrain's request
for F-16 fighter aircraft to acceptance of the US
Central Command's request for pre-positioning
materiel on the island.
... Or a Catalyst?
The increased visibility of Bahraini-US relations risks
upsetting the current political balance on the island.
The US Embassy reports that the Shia community in
Bahrain-over 70 percent of the population-is
increasingly critical of Bahraini-US ties. Many Shias
apparently believe that Washington is building a US
base on the island-probably a reference to work by
the US Corps of Engineers on Bahrain's new Suman
airbase. Although the Shias cannot influence the
government to put distance between itself and the
United States, Manama's growing relationship with
Washington will almost certainly be a rallying cry of
Shia opposition groups. The ruling family, however,
has demonstrated an ability to stay in power,
terrorist acts from occurring on the island.
almost completely segregated. The Sunnis hold nearly
every important position in the public sector and
dominate the Bahraini upper class. There are about
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between the poorer Shias and the government, and, in
return for their loyalty and support, the regime has
given these families lucrative business opportunities
and some positions in the government
From Bahrain's perspective, support for the regime's
military development program will be a major test of
US credibility and will probably determine how
cooperative Manama will be to future US use of
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increase the possibility for unrest
with an already depressed economy, would prompt
major criticism from both Shias and Sunnis and
The Outlook for Bahrain
Manama apparently is willing to risk the increased
visibility of Bahraini-US relations because of a
growing belief that Iran may win the war with Iraq.
Manama understands that with its 70-percent Shia
majority it would be a likely target for increased
Iranian aggression and subversion. Bahrain, however,
can never hope to defend against an all-out Iranian
attack, and the recent weapons purchases risk
increasing subversion and do little to deter the risk of
aggression.
The cost of Manama's continuing arms buildup is
having the greatest impact on Bahrain's economically
neglected Shia majority. Manama can afford the
military purchases it is contemplating only with
continued support from the GCC and sharp cuts in
domestic spending. Reduced expenditures, coupled
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Saudi Arabia: The Impact of
Education Policy and Process
on Economic and Political
Stability
Saudi Arabia has radically transformed its
educational system over the past 15 years. More
students attend school at every level, and more
complete their educations. Although a smaller
proportion of women attend school in Saudi Arabia
than in other Arab states, female enrollment has
increased-especially at the university level. The
government has built seven universities-often at
great expense and using excessive architectural
standards. The government has vastly extended the
number of courses offered in the universities.
Saudi Arabia had spent over $30 billion through
FY 1980 developing its educational system. Annual
expenditures increased from $148 million in FY 1970
to $6.4 billion in FY 1980. The government called for
an additional $38 billion to be disbursed by 1985.
Government spending on higher education rose from
12.2 percent of the total education budget in FY 1970
to 36.5 percent in FY 1980. As the budget ax fell in
the early 1980s because of declining oil revenues,
education was spared the deep cuts that affected
Despite some successes, the government's efforts to
modernize the educational system have been
insufficient to fulfill its goals for replacing expatriate
workers with Saudis. Little or no progress has been
made to attract Saudis to technical or vocational
education-areas that would help the government to
replace expatriate workers and promote economic
growth. As a result, economic development in the
kingdom probably will continue to depend on the
ability of Saudi Arabia to hire large numbers of
expatriates. At the same time, the kingdom faces
challenges arising from a more educated population-
particularly from women shut out of the work force
for cultural reasons and from Saudis who cannot find
work because of the economic slump.
Increased Focus on Education But Mixed Results
The kingdom's educational system languished well
into the 1970s under the highly bureaucratic and
lethargic leadership of the Ministry of Education. The
government began to restructure the Ministry of
other sectors.
Education in the mid-1970s, increased spending on
education, and instituted major educational reforms.
Ministry officials concentrated on providing more and
better classroom facilities, raising the quality of
teaching materials, and lowering student-teacher
ratios. Student enrollments in all areas except
technical education increased by 20 percent annually
in the late 1970s and continue to rise.
Major problems persist. The pattern of recent
expenditures on education reflects the government's
efforts to overhaul the educational system while
giving short shrift to efforts to modernize
curriculums, raise standards of student performance,
or encourage students to pursue fields most critical to
Saudi Arabia's economic development, such as
engineering, finance, computer programming, and
management.
An illiteracy rate that probably still exceeds 50
percent is another measure of the kingdom's
educational shortcomings. This partly reflects the
government's lowering of standards in primary
education to allow more students to get through the
system. The Saudi Government also must strengthen
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Secret
standards for higher education. Before the economic
slowdown, it was common for a university graduate to
be given a high-paying job at a level hardly higher
than his academic background. The government-by
far the largest employer in the kingdom-used to
dispense high-level jobs with little or no concern for
ability. A university diploma virtually guaranteed
employment. In some cases, ill-prepared students have
been allowed to graduate
Rigorous
examinations would be needed to eliminate those who
seek higher education merely for the sake of status.
Economic Implications
Academic performance and educational
diversification have become even more important with
lower oil revenues and slower economic growth. To
some extent, the Saudi Government's efforts to
improve the educational system over the last decade
will help to promote economic growth. The quality of
teachers continues to improve, and more young Saudis
are receiving basic and higher education. Educational
improvements also have enhanced the capability of
the economy to absorb some modern technologies.
Saudiization of the labor force is proceeding with
renewed vigor because of the economic slowdown and
the government's concern over a large foreign worker
presence. The policy of indigenization has had only
qualified Saudi nationals is insufficient to maintain
and operate many areas of the modern economy. The
kingdom continues to depend heavily on a large
expatriate labor force, particularly in critical
technical areas such as computer operations,
electronics, the petrochemical industry, and
telecommunications. Saudi Arabia also depends
heavily on foreign labor for administrative, clerical,
teaching, and transportation services.
New technical and vocational institutes have been
opened to help Saudi nationals fill employment
opportunities in technical fields-positions that are
held mostly by foreigners. Enrollment, however, is
well below expectations. Status, prestige, and
tradition play major roles in the failure to attract
students to technical and vocational fields. Saudi
students still prefer to pursue a university degree or
secondary baccalaureate designed to prepare them for
white-collar jobs even if such jobs are becoming
difficult to secure. Saudis view a technical or
vocational degree as leading to a job involving
demeaning manual labor. Students are further
disenchanted by technical and vocational schooling
because working conditions and wages in these fields
fall below their expectations. For these reasons, Saudi
Arabia probably will continue to rely on foreign labor
for decades to come to maintain the industrial sector
and to operate imported technology.
Political Implications
Teaching methods in Saudi Arabia tend to be highly
structured and outdated,
limited, however, and there is little in the present
Saudi educational system that would stimulate a
desire for greater political freedom. A spirit of inquiry
and skepticism is unlikely to flourish in an
environment where most students learn by using rote
memorization.
Political tensions arising from the inability of
women-often highly educated-to assume a
productive role in the economy probably will increase.
Saudi women increasingly have access to education at
all levels and consistently get better grades than men.
Women often remain in school longer and progress to
higher levels than men largely because there is little
else for them to do. Many Saudi women do not want
to stay home, but they are denied working
opportunities except in teaching and certain other
areas deemed appropriate. As a result, a growing
number of educated Saudi women are pressing for
more employment opportunities and a wider range of
occupational choices. Their defiance is muted, taking
place largely within the family. Their efforts are
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Females as Percentage of Total Students
in Saudi Educational System,
1970/71-1980/81
Vocational, technical, 48
and teacher training
serious, however, and conflict with other trends
toward Islamic fundamentalism and traditional
values, which work to keep Saudi women in their
present status and erode some of their already hard-
won advances.
Conclusions
The kingdom's improvement of the educational
system still falls far short of what is required for
Saudi nationals to have a more direct hand in future
economic and political development. The rapid inflow
of oil money in the 1970s made it possible for Saudi
Arabia to leapfrog generations of educational
deprivation, but the wealth has done little to hasten
improvements in the quality of Saudi Arabia's labor
force. As a result, Saudi Arabia may be destined to
become a nation that contracts for its future. Whole
segments of the economy may become permanent
preserves of foreign workers.
An extensive reordering of educational priorities is
necessary for Saudis to assume a more active role in
the work force. Saudi Arabia needs to shift from
quantitative improvements to a concentration on
qualitative changes-from the rapid physical growth
of the 1970s to a review of present educational
policies, which are inappropriate in view of the
pervasive shortages of national manpower.
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Arab Aid to the Afghan
Resistance- Benefits
and Drawbacks
Arab donors-both governmental and private-
provide a significant amount of financial support to
the Afghan resistance. Arab funding of the insurgents
has become more centralized and efficient, and donors
are channeling aid to all parties rather than following
their previous policy of funding only favored,
conservative groups. Arab donors, however, are
sometimes unreliable, and insurgent leaders often
resent the strings that are attached to the aid. Despite
these drawbacks, resistance groups will continue to
rely heavily on Arab funds to meet vital needs,
including transportation expenses and medical care.
Arab aid levels are likely to be constrained, however,
because of reduced oil revenues.
Arab Aid '
Arab aid to the Afghan resistance comes from both
governmental and private sources. Major donors
include Saudi Arabia-the primary source-Egypt,
Kuwait, and the United Arab Emirates (UAE).
Official Arab aid is often carefully camouflaged, with
a significant portion channeled through private
humanitarian organizations. Because of the blurred
distinction between governmental and private aid it is
difficult to make hard estimates of the amount of such
Where the Aid Goes
Arab donors provide the insurgents assistance in a
number of fields, including some military equipment.
resistance groups are
receiving at least some military equipment directly
from private Arab sources. Other areas receiving
Arab support are transportation, medical care,
education, and food.
Transportation. Although Arab subsidies for
transportation expenses probably represent only a
small portion of the total funds available to the
resistance for this purpose, they are nevertheless an
important source of finance for individual
commanders. We believe most Arab money intended
for transportation comes from private sources, such as
the Saudi Red Crescent Society. Donations from
individual Arabs generally are made directly to
insurgent commanders.
aid.
Private assistance comes from virtually every corner
of the Arab world. Much of the aid is channeled
through Islamic humanitarian organizations such as
the Red Crescent societies. Other donors-most often
conservative Arabs belonging to the Wahhabi sect or
the Muslim Brotherhood-subsidize the insurgent
groups directly, often traveling to Pakistan or into
Afghanistan to make their donations in person.
estimate that Afghan resistance groups receive more
than $100 million annually from nonofficial sources.
we
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Medical Assistance. A large portion of official and
private Arab aid goes to medical assistance for the
insurgents and refugees in Pakistan. The Saudi and
Kuwaiti Red Crescent Societies, for example, have
established hospitals, clinics, and mobile medical units
in the refugee camps in Pakistan
private Arab donors distribute
medical supp ies to insurgent groups in Afghanistan.
Arab organizations also sponsor tuberculosis clinics,
medical training programs, hepatitis studies, dental
programs, and the spraying of refugee camps to halt
Education. Private Arab donors provide the Afghan
resistance considerable assistance in the field of
education, in part because they view such aid as an
excellent means of propagating their religious views.
Most of their efforts have been targeted at the Afghan
refugee population in Pakistan.
the Wahhabis have set up schools
in Pakistan's North-West Frontier Province and are
paying Afghan parents to send their children there.
Conservative Arabs have also attempted to buy the
loyalty of members of the resistance alliance
education committee to get their views incorporated
into the textbooks. Although the Arabs' generous
bribes are often accepted, we see little evidence that
the Wahhabis have achieved notable success in
winning Afghan students to Wahhabism. Arab
governmental donors provide only limited aid in the
sphere of education. Saudi Arabia, for example,
arranges stipends for some 160 Afghan students at
Pakistani universities but does not provide educational
assistance inside Afghanistan, according to the US
Embassy in Islamabad.
Food. Arab donors provide food or cash subsidies for
food to insurgent groups in Afghanistan and the
refugees in Pakistan. According to the US Embassy in
Islamabad, Saudi Arabia donates 3,000 metric tons of
dates annually to the World Food Program's relief
program for Afghan refugees in Pakistan. Riyadh,
Dubai, and Kuwait also make direct donations of food
to Islamabad for the refugees. Private donors such as
the Saudi Red Crescent Society often give insurgent
commanders cash subsidies to help defray the cost of
food for their men
Changing Trends
In our view, there has been some effort in the past
year to improve the efficiency of the collection and
allocation of funds for the Afghan resistance.
According to the US Embassy in Cairo, the Egyptian
Ministry of Social Affairs heads a committee
designed to act as a clearinghouse for private
Egyptian donations to the resistance. The committee
collected more than $500,000 for this purpose last
year. Riyadh has also attempted to centralize
fundraising for the insurgents, with much private aid
being channeled through the semiofficial Saudi
Afghanistan Relief Committee, according to the US
Embassy in Riyadh
To foster insurgent unity and improve the
effectiveness of the resistance, some donors are
channeling aid to all resistance parties rather than
following their previous practice of funding only
favored conservative factions. According to the US
Embassy in Riyadh, Saudi King Fahd channels Saudi
governmental assistance through the resistance
alliance or through the Government of Pakistan.
Sayyaf previously received the bulk of Saudi aid.
Many private donors have also changed their policy
and are assisting all seven parties,
Nevertheless, a wide disparity
in the amount of aid received persists, with
fundamentalist groups the principal beneficiaries of
the Arab largess. We believe the trend in funding all
parties will continue with Arab governmental donors
but that a substantial portion of private aid will
continue to be erratically and unevenly dispensed to
groups with religious views most compatible with the
donors'.
Arab financial support for the resistance has also
become more public recently. In late 1986, Oman
announced that it would provide, for the first time, a
grant of $100,000 for Afghan refugees in Pakistan.
The UAE Red Crescent Society also announced its
first large-scale project for Afghan refugees last year
when it set up an office in Quetta. Individual private
donors have also been more active. More Arabs were
seen dispensing funds in the Peshawar area last year
than in any previous year,
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The Drawbacks
Arab aid-particularly from private sources-has
some drawbacks. Some commanders complain that
Arab donors are unreliable and often promise aid that
never materializes. Others complain of lengthy delays
involved in receiving funds. Because the Arabs insist
on physically inspecting each convoy before providing
transportation funds, many of the convoys must wait
weeks and sometimes months before they can
transport their goods
Resistance leaders also charge that some Arab
organizations-for example, the Saudi Red Crescent
in Quetta-have been infiltrated by the Afghan secret
police.
=convoys subsidized by this organization in late
1986 had extremely high attrition rates shortly after
entering Afghanistan, leading insurgent leaders to
believe that Soviet and regime forces had forewarning
of these convoys, very likely as a result of a
penetration of the office's staff. As a result, some
commanders have decided to forgo the Saudi
The Wahhabis, whose members include the ruling
house in Saudi Arabia, come mainly from Saudi
Arabia and the smaller Gulf states and are backed by
the Saudi clergy. They preach a conservative brand of
Islam based on a strict interpretation of the Koran.
they tend to
regard Afghan Muslims as superstitious and strongly
oppose some Afghan religious practices. A significant
portion of Wahhabi financial support comes from
princes of the royal house of Sa'ud, channeled
through 12 ulemas who serve as their spiritual
advisers. In conducting their support for the Afghan
resistance, the Wahhabis act more like missionaries
than political activists. In the past, their criterion for
supporting a particular resistance group was religious
orthodoxy rather than military effectiveness.
they are more
although the largest share still goes to
fundamentalist groups.
subsidies rather than risk leaks.
Arab donations have also had a divisive effect on the
resistance in some instances. According to the US
Embassy in Islamabad, an education committee
funded by Wahhabis has sought to undermine the
influence of the resistance alliance education
committee. Arab interference also caused a serious
rift within the Jamiat-i-Islami Party last summer
between those who had come under Arab influence
and those who opposed it,
the Wahhabis have been
successful in winning some converts in the ranks of
the resistance, particularly within the Jamiat-i-Islami,
Ittihad-i-Islami, and Hizbi Islami parties. Other
commanders fiercely oppose the Arab interference,
refusing to accept funds or allow them to preach
among their men. Most insurgents, however, merely
accept funds without altering their traditional forms
of worship.
Some Afghans resent the proselytizing that often
accompanies Arab donations. A significant portion of
private Arab aid-particularly from Saudi Arabia
and other Persian Gulf states-comes from members
of the Wahhabi sect
many resistance leaders complain that
Wahhabis are trying to gain influence over the
resistance and to alter the way the Afghans worship
by pressing resistance commanders and their men to
embrace Wahhabi beliefs in exchange for financial
support. The Wahhabis, for example, will offer to
fund education programs on condition that Wahhabi
The anti-Western propaganda preached by some
private Arab donors has caused difficulties with
Western humanitarian organizations aiding the
resistance in Afghanistan and Pakistan. Wahhabi
campaigning against the presence of Western medical
teams-especially female ones-in Afghanistan
resulted in a reduction in the number of Western
medical teams inside the country last year,
Arab organizations
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in Pakistan.
personnel at a Kuwaiti hospital in Peshawar caused
problems for the ICRC hospital there by telling
wounded insurgents that amputations were "non-
Islamic." The US Embassy in Islamabad reports that,
in another incident, Saudis connected with the Red
Crescent Society bribed Pakistani border guards to
send patients to the Saudi Red Crescent hospital in
Quetta rather than to the ICRC facility. Although the
situation with the Saudis has apparently been
resolved, the US Embassy claims that the Kuwaiti
Red Crescent Society still occasionally competes with
the ICRC for patients.
Outlook
We believe official and nonofficial Arab donors will
continue to provide substantial aid to the Afghan
insurgents, although assistance levels may decline
slightly because of budgetary constraints caused by
reduced oil revenues. The US Embassy in Kuwait
reports there was a "small but significant" reduction
in Kuwaiti aid levels last fall because of the country's
economic difficulties. Resistance leaders in Peshawar
also claim that some Saudi money has dried up
recentl
We expect the trends toward centralized collection
and allocation of funds and the funding of all
insurgent parties to continue as long as the resistance
alliance remains intact, with little public infighting. A
significant upsurge in resistance factionalism or the
disintegration of the alliance would probably lead
most Arab donors to revert to their former practice of
channeling funds only to favored parties, mainly the
conservatives
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Afghanistan: Defense of the
Revolution Forces-
A Political Army
The Defense of the Revolution forces make up a
directorate within the Afghan Ministry of Interior
supervising paramilitary forces responsible for
spreading the regime's Marxist ideology to outlying
regions and providing military support to regular
army units.
we believe they encompass two
paramilitary organizations:
? Revolution Defender units, which consist of poorly
armed tribal militias in each province. They are
nominally responsible for securing their villages
against insurgent attacks.
? Soldiers of the Revolution units-first seen in
1985-consisting of party members or candidate
members who act as armed propagandists for Kabul
in rural areas. We believe their function is almost
entirely propaganda, although
groups. Although their functions in this period are not
clear, intensifying resistance to the regime prompted
the army to enforce local participation in the units in
early 1979. After the Soviet invasion in December
1979, the units were apparently consolidated under
the Ministry of Interior as an independent directorate.
We believe that this move led to an infusion of regime
support for the Defense of the Revolution forces, and
Revolution Defender militias
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counterinsurgency and local defense operations by
1981. Defense of the Revolution operations battalions,
which had been deployed to all 29 provincial capitals,
were colocated with sarandoy (police) battalions by
early 1982.
In late 1985, probably as part of its effort to put more
emphasis on paramilitary forces, Kabul reactivated
the Defense of the Revolution forces' offensive
capability. Soldiers of the Revolution units were also
After 1983 the Defense of the Revolution forces
began to assume a lesser role. We believe this may be
the result of a regime decision to consolidate their
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Defense of the Revolution forces to supporting the
The Defense of the Revolution Forces suffer from the
same shortcomings that plague most of Kabul's armed
forces-manpower shortages, uncertain loyalties, and
outdated equipment-and we believe their
effectiveness in the counterinsurgency effort is at best
limited. Their primary role seems to be to expand the
ruling party's role in the provinces and identify
promising recruits for party membership.
the party's continuing inability to establish a presence
outside Kabul suggests they have not made much
headway
Background
The People's Democratic Party of Afghanistan
(PDPA) created Defense of the Revolution village
self-defense units shortly after it came to power in
1978 as a means of expanding the party's influence
outside its urban strongholds. The units were modeled
on the Cuban Committees in Defense of the
Revolution, and Cuban advisers helped set up the first
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well-armed urban party members or activists in the
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Democratic Youth Organization.
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deployed throughout the country.
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believe that they have not independently engaged
insurgent forces in combat. Units have been primarily
deployed in noncritical assignments such as static
guard posts and to provide a regime presence in
outlying areas. Revolution Defender units now include
about 8,000 to 10,000 troops,
We judge that the size of the militia
probably has decreased considerably because of
desertions that affect all of Afghanistan's armed
been deployed out of area to reduce the chance they
will collaborate with the local insurgents
In the fall of 1986, for example, a
string of 40 to 45 militia posts along the Sorkh Rud
Valley in Nangarhar Province was manned by 12-
man squads of Revolution Defenders from Qandahar
Province In August
1985
Defense of the Revolution forces were responsible
or efending the regime outposts in Peshghowr that
fell to Masood's insurgents that month.
Some Soldiers of the Revolution units have been
deployed in keeping with their aim of increasing party
influence in outlying areas-with mixed results, in
our view. In the fall of 1986
::::::]Afghan paramilitary forces-
apparently from Soldiers of the Revolution units-
based in Badakhshan Province were rounding up local
youngsters from 10 to 15 years old for ideological
instruction, but the youths were apathetic and often
escaped. Other Soldiers of the Revolution units have
been deployed in support of army operations.
a Kabul-
based unit was sent to Herat last summer to aid in
relieving besieged regime forces. In February 1987
the regime announced the deployment of a second
Soldiers of the Revolution unit to the eastern frontier
provinces, according to the US Embassy in Kabul.
? A headquarters section under the command of a
Ministry of Interior lieutenant colonel, with a chief
of sta/ffrom the sarandoy ranks. Interior Ministry
officers with the rank of major oversaw the
operations, reconnaissance, technical, signal, and
cipher departments. Sarandoy officials were
responsible for the logistics and political
departments. The political department was
apparently the largest, consisting of sections for
propaganda, indoctrination, and youth
organization. All company political officers were
subordinate to the political department.
? The combat forces of the battalion consisted of
three militia companies, one machinegun platoon,
one armored personnel carrier company, and one
mortar company. Six hundred privates, 33 officers,
and 52 noncommissioned officers were authorized
for a battalion, although only 400 privates were
actually stationed. The ranks of the officers and
noncommissioned officers were probably also
undermanned.
three BTR infantry fighting vehicles and six BRMD
reconnaissance vehicles, in addition to five jeeps
and over 30 trucks. Six BMP armored personnel
carriers were authorized but never delivered. The
battalion's arsenal consisted largely of 600 AK-47
assault rifles, 30 light machineguns, nine mortars,
and three rocket-propelled grenade launchers.
Command and Control
The Defense of the Revolution forces are under the
command of Maj. Gen. Mohammad Azim Zormati, a
member of the Khalqi faction of the PDPA and a
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We believe that the operational
authority for the forces parallels that of the sarandoy,
where the provincial government supervises the
deployment of Revolutionary Defender units in the
field. We suspect, however, that Soldier of the
Revolution unit activity is directed by party officials
in Kabul all Defense of the
Revolution forces are organizationally linked to the
National Fatherland Front,
probably restricted to some training of Soldiers of the
Revolution units.
the Soviets in 1984 were training as many as
2,000 "revolutionary defense forces" in the Soviet
cities of Dushanbe and Tashkent. Soviet adviser
presence is probably limited to the Interior Ministry
headquarters, and we have no evidence of Soviet
advisers serving with Defense of the Revolution units.
of the Revolution units to acquire weapons and then
desert. As early as 1982, those units had failed to
meet required personnel levels in Nangarhar
Province because of desertions.
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insurgents do not consider the Defense of the
Revolution forces a threat. Like most of the regime's
paramilitary units, the forces suffer from severe
problems curtailing their effectiveness, including:
? Disloyalty and desertions. Most Defense of the
Revolution forces consist of either tribal elders or
teenagers who have yet to be drafted by the army,
local insurgent forces to leave each other alone,
Some
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Secret
? Lack of supplies. Most Defense of the Revolution
units are poorly equipped. They are often armed
with antiquated weapons. A recent photo in the
government-controlled press, for example, showed a
Nangarhar-based defender group equipped with
British single-shot rifles and World War 11-era
Soviet submachineguns. Ammunition for these
weapons is probably in short supply. Soldiers of the
Revolution units are better armed,
Outlook
Kabul is likely to continue supporting the Defense of
the Revolution forces as an inexpensive means of
maintaining a presence in outlying areas, freeing
regular army forces for combat, and as a vehicle for
propagating the regime's ideology and recruiting new
members into the party. Like most of the regime's
paramilitary units, the Defense of the Revolution
forces are likely to be only marginally effective
politically and militarily because of their outdated
equipment, manpower shortages, and low morale.
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Secret
India: Rajiv Gandhi Ad'ustin
Foreign Policy Tactics
Indian Prime Minister Rajiv Gandhi is frustrated by
the lack of progress in implementing his foreign policy
goals-particularly vis-a-vis Pakistan and Sri Lanka,
but also the United States and the Soviet Union. He
has had only limited success in attracting advanced
technology from the United States, the Soviet Union
did not make firm public pledges of support for India
in its recent confrontations with Pakistan and China,
he has been unable to improve relations significantly
with Pakistan, and his Sri Lankan mediation effort
appears stalled. Gandhi's frustration has led to some
angry outbursts during recent crises and abrupt
firings of senior foreign policy officials.
Because he has few attractive alternatives, Gandhi
remains personally committed, in our judgment, to
strengthening relations with the United States while
maintaining close ties to the USSR. He also is
dedicated to securing New Delhi's preeminence in the
region by using diplomacy to reduce tensions with
India's neighbors. The growing influence of Gandhi's
personal advisers and military and intelligence
officials over foreign policy matters-combined with
his impatience to get things accomplished-probably
presages a period of more hardline tactics with India's
neighbors. The United States should be prepared for a
period of high-risk Indian brinkmanship in April and
May over the China-India border dispute if military
and intelligence officials call the shots. Indo-Pakistani
relations have improved somewhat following the
recent border crisis, but India will be looking for
concrete steps from Pakistan to improve relations and
help control the Sikh problem. India may also become
less understanding concerning delays in the provision
of advanced US technology. A harder line toward
Pakistan and difficulties with the United States may
not, however, translate into Soviet gains, since New
Delhi is also likely to be looking for firm evidence of
Soviet support, particularly if Sino-Indian relations
deteriorate this spring.
Gandhi shows signs of being worn down by the
responsibilities of leading India both in foreign affairs
and in solving domestic problems:
? He appears frustrated by his inability to improve
relations with Pakistan and to get Islamabad to
curtail its support for Sikh separatists, slow its
nuclear weapons program, and reduce its requests
for sophisticated US military equipment. His harsh
public claims in January that Pakistani military
deployments threatened India suggest he is inclined
to think the worst of Pakistan.
? His recent abrupt firings and public criticism of
senior politicians and government officials involved
in foreign policy reflect his growing exasperation
with their failure to advance his goals.
? Domestically, Gandhi is under growing criticism for
his failure to solve the Sikh problem and faces
criticism for mismanaging the recent border crisis
with Pakistan.
? On the personal level, his predilection for fast
driving and a recent experiment with parasailing to
escape his bodyguards suggest he is frustrated with
his job as well as with the security restrictions
required after his mother's assassination and the
attempt on his own life last October.
Feeling the Pressure
Gandhi's intemperate reactions over the past six
months to three incidents involving Pakistan-the
Indo-Pakistani war scare in January 1987, the
attempt on his life in October 1986, and the hijacking
of a Pan Am airliner in Karachi in August 1986-
demonstrate his frustration with his inability to
improve bilateral relations. Gandhi's visceral response
to the alarms of Indian intelligence that Pakistan
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the assassin in New Delhi was to lash out against
Pakistani President Zia or to give the green light to
military commanders eager to counter Pakistani troop
movements with more deployments of their own.
Gandhi's initial reactions during each crisis have been
softened and glossed over by a resumption of
conciliatory comments, but they suggest that he is
prone to erupt angrily at the onset of crise
The growing impatience of Gandhi with the
performance of Cabinet and senior government
officials in foreign policy has resulted in several
abrupt firings and resignations in recent weeks,
lessening the influence of longtime professional
diplomats in the Ministry of External Affairs. He has
drastically reduced his contacts with the Indian
foreign policy establishment
apparently deciding that few in
these circles have vision or can be trusted to represent
his views. Gandhi has on short notice dismissed one
foreign minister, one foreign secretary, and fired
G. Parthasarthy, his mother's principal foreign policy
confidant.
Gandhi also appears to be turning to high-risk
physical activities-probably to escape his tight
security and the frustrations he feels in his job as a
result of failures in foreign and domestic policy. He
has told the press that he misses his privacy and time
with his family and resents the intrusion of security
officers and procedures. Press reports say he enjoys
driving at excessive speeds to outrun his bodyguards,
and, in early January, on the spur of the moment and
over the objections of his security officers, he tried
parasailing at a local airfield. He seems to savor, if
only for the moment, being free of restraints.
Gandhi's Staff and Decisionmaking Style
From the beginning Gandhi has been an impulsive
decisionmaker on foreign policy who prefers to act
promptly on reading a briefing paper or after hearing
As a consequence of his growing impatience with the
Ministry of External Affairs and other members of
the foreign policy establishment, Gandhi is consulting
only a handful of people on his personal staff and in
the military and intelligence organizations for advice
on key foreign policy questions and appointments,
The
Secretariat staff members most frequently mentioned
as being close to Gandhi include G. K. Arora, recently
named "Special Secretary," according to US
Embassy reports; Satish Sharma, a crony from airline
days; and Mani Shankar Aiyer, his public relations
specialist. Junior Cabinet officials Natwar Singh,
P. Chidambaram, and Rajesh Pilot are also identified
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as enjoying Gandhi's
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confidence. Officials in military and intelligence
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our judgment, to take a hard line on India's relations
with its neighbors, believing that the projection of
military power and covert action can advance
Gandhi's goals of reducing tension in the region and
asserting India's preeminence.
former
Foreign Secretary Venkateswaran lost his job when
he refused to defer to Arora. According to the Indian
press, Venkateswaran complained about the growing
influence of the Prime Minister's staff and the
Research and Analysis Wing, India's external
intelligence service, in foreign policy matters.
Gandhi's staff convinced the Prime Minister that
Venkateswaran's angry confrontation with Defense
Ministry officials, who excluded the Ministry of
External Affairs entirely from the initial briefing on
Indo-Pakistani border deployments, merited his
dismissal.
Gandhi's Foreign Policy Goals Unchanged
Despite his foreign policy problems, Gandhi shows no
signs of abandoning his basic goals-strengthening
relations with the United States while maintaining
longstanding ties to the Soviet Union and securing
India's preeminence in the region. Gandhi probably
sees no attractive policy alternatives, given what New
Delhi views as encouraging but limited success in
attracting technology from the United States. He also
values Moscow's promises of continuing support for
New Delhi but is concerned about Soviet overtures to
Islamabad and Beijing.
We believe that Gandhi may begin using new tactics
to achieve these foreign policy goals. His impatience
with traditional channels of communication on foreign
policy matters suggests he may turn more frequently
to hardliners in the Research and Analysis Wing and
the military to help get things done, particularly when
dealing with neighboring states. At the same time, we
believe he will stick with his preferred personal style
of nonconfrontational diplomacy. Gandhi's appeals to
senior US officials to use their influence with
Islamabad one week before the Indo-Pakistani
mobilization and his invitation to Pakistani President
Zia to attend a cricket match in February indicate
that he prefers personal diplomacy conducted in a
nonconfrontational manner.
Outlook
Gandhi's frustrations are unlikely to cause dramatic
changes in Indo-US relations, but we believe India
may become more impatient with what it regards as
US delays in supplying advanced technology,
particularly in regard to US participation in India's
Light Combat Aircraft project. New Delhi is
signaling the United States either to make concrete
offers or back out of the project. At the same time,
Gandhi probably is buoyed by US offers to advance
the launch date for India's INSAT 1-D
communications satellite and by progress in the sale
of a US-made supercomputer.
Relations between India and Pakistan have improved
as a result of the recent disengagement agreement,
but India will be looking for Pakistan to take
additional steps to improve relations. Gandhi would
be especially encouraged by progress in implementing
the agreements on trade and antinarcotics measures
that he and President Zia discussed during their
meeting in late February or in measures to control
Sikh infiltration. If there is no improvement in
relations over the coming months, we believe Gandhi
will become increasingly susceptible to those advisers
who favor supporting dissidents in Pakistan.
We should be prepared for a period of high-risk
brinkmanship over the Sino-Indian border this April
and May, given Gandhi's behavior and the rising
influence of the military and the external intelligence
service at the expense of professional diplomats. We
expect that Indian military officers will advise taking
an aggressive stand against the Chinese along the
contested border. The new Foreign Secretary, K.
Menon-most recently Ambassador in Beijing-
probably will have few fresh proposals to break the
negotiating deadlock. If the situation gets too hot,
Gandhi may ask the United States to provide both
sides with detailed satellite maps of the contested
border to defuse the crisis.
Difficulties in India's relations with the United
States, Pakistan, or China will not necessarily
translate into gains for the Soviets
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it views as inadequate Soviet diplomatic support
during recent tension with Pakistan and China. If the
Sino-Indian border heats up this spring, the Indians
are likely to look to Moscow for strong public support
that the Soviets may not be willing to provide
Gandhi's frustrations are increasingly likely to color
diplomatic exchanges with the United States-and
others-during crises or periods of uncertainty. We
can anticipate impulsive, angry outbursts from
Gandhi in a future crisis as doomsayers in the
military and intelligence services outline worst case
senarios or bring him reports that outsiders-
including the United States-wish him ill. Gandhi's
impatience with Ministry of External Affairs
bureaucrats suggests that the United States probably
will have to continue to depend heavily on contacts at
the highest level of Gandhi's administration to
maintain and strengthen ties. Institutionalizing
improved relations will be a slow process as long as
Gandhi continues to fire and shuffle top foreign policy
officials
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Secret
Congress Party
Four state elections scheduled for this spring offer
India's ruling Congress Party its biggest electoral test
yet during the Rajiv Gandhi administration. The
Congress Party will probably win the election in
Haryana, the most important of the contests, although
we expect heated competition at the polls. The hard-
fought campaign in Haryana underscores the
difficulty the Congress Party faces in retaining its
grip on Hindi-speaking states across northern India,
which have sustained the party's national electoral
supremacy while regional parties have prevailed in
fringe states. The Congress Party is campaigning hard
to increase its leverage over its coalition partners in
the Kerala and the Jammu and Kashmir elections,
but the party will probably suffer heavy losses against
West Bengal's Communist-led ruling coalition
India's electoral commission scheduled elections for
23 March in Jammu and Kashmir, Kerala, and West
Bengal. The commission agreed to a request from the
Congress Party to delay the Haryana election,
although it must be held before the term of the
current assembly expires on 23 June, unless
Parliament decides to extend the life of the assembly.
Haryana: The Key Election
We believe Gandhi needs an electoral victory in
Haryana to prove to Congress Party officials that his
efforts to appease India's diverse ethnic groups have
not damaged the party's standing among its
traditional supporters. Congress Party officials see the
Haryana election in part as a grassroots referendum
on whether Gandhi's conciliatory attitude toward
regional ethnic groups will cost the party votes in
states with Hindi-speaking majorities traditionally
supportive of the party. Of the four ethnic accords
signed by Gandhi-Jammu and Kashmir, Assam,
Punjab, and Mizoram-the latter three have resulted
in Congress Party losses at the polls. Congress Party
officials are concerned that this trend will spread to
Haryana, where Hindu voters have yet to see benefits
from the Punjab Accord and believe Gandhi is bowing
to pressure from Sikh extremists at the expense of
Congress Party supporters in Haryana.
The Haryana election is also a test of whether
regionalism in India-the increasing appeal of
regional parties and issues at the expense of national
concerns-has taken root in areas traditionally
supportive of the Congress Party. Growing
regionalism in India intensifies the problems Congress
Party candidates face-even in Hindi-speaking
states-competing against candidates with platforms
more keyed to local interests. Congress Party
candidates, tied to their party's platform of secularism
and national unity, often lose out to non-Congress
politicians, who can enhance their electoral appeal by
exploiting regional ethnic and religious prejudices.
Election Issues. The most important local issues in
the Haryana election include agriculture, the Punjab
Accord, and caste:
? Agriculture. The election hinges on which party can
convince Haryana's large farming population of its
commitment to ensure enough water for the state.
? Punjab. The Congress Party's opposition in
Haryana has trumpeted the failure of Gandhi to
curb Sikh extremism and implement the accord's
provisions as proof of the Congress Party's lack of
commitment to Haryana's Hindu farmers.
'The Punjab Accord, signed in 1985, awarded Chandigarh to
Punjab in exchange for as yet unspecified land for Haryana. The
accord also addressed land and water rights disagreements between
Secret
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0 Pune
and fJa~3r `+aw~h Nagpur
Populated places
O 5,000,000 and over
2,000,000 to 5,000,000
o 1,000,000 to 2,000,000
? Under 1,000,000
State or union territory
boundary
400 Kilometers
-.tom
400 Mnes
RANGOON*
ndhra
radesh
China
ANDAMAN
ISLANDS
Caimbature t#' Pondicherry
NICOBAR
ISLANDS
Boundary representation is
not necessarily authoritative.
- States with elections)
States with Hindi-speaking majorities
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Haryana-Facts and Figures
Haryana forms part of India's Hindi Heartland, a
belt of northern states populated largely by Hindi
speakers who have long served as the backbone of
Congress Party support. The Indian Government
conferred statehood on Haryana in 1966 when
Punjab was divided to accommodate Sikh demands
for a state with a Sikh majority. Most Sikhs
remained in Punjab, while many Punjabi Hindus
migrated to Haryana. The city of Chandigarh
remained the capital of both states. Haryana is
currently under Congress Party rule, with Bansi La!
as chief minister.
? Caste. The election also depends in part on which
side can capture voters from the Jat caste, which
makes up about 30 percent of the state's population.
The Congress Party's Opposition in Haryana. The
Congress Party's most formidable opposition in
Haryana comes from the Haryana Sangarsh Samiti
(HSS), a coalition led by the Lok Dal Party and the
Bharatiya Janata Party (BJP). The Lok Dal has
strong support among Jat caste farmers. The BJP
appeals to Hindu chauvinists-often merchants-who
point to Gandhi's inability to contain Sikh extremists
and implement the Punjab Accord as proof of their
allegations that the Congress Party-led federal
government is pandering to Sikh interests in Punjab.
Who Will Win in Haryana? We believe the Congress
Party will win a narrow victory over the HSS in the
election:
? The Congress Party will gain the advantage over the
opposition HSS if, as we expect, the commission
that was organized to decide a water rights dispute
between Haryana and Punjab releases a report
favorable to Haryana before the election. According
to the US Embassy in New Delhi, the commission
has recently submitted its report to the government,
and rumors in New Delhi indicate that the decision
favors Haryana. Haryana Chief Minister Bansi Lai
A victory in Haryana would affirm Hindu voter
support for Gandhi and give him a limited mandate
to risk additional concessions to strengthen the
moderate Sikh state government in Punjab. Gandhi
might consider releasing Sikh detainees held without
trial or offering land concessions to Punjab's farmers
to offset a pro-Haryana decision on water sharing. A
defeat for the Congress Party in Haryana, however,
would limit Gandhi's negotiating position with Sikh
moderates. In our judgment, without strong Hindu
backing, Gandhi would not offer Punjab key
concessions on land or water-the main points still to
be implemented from the 1985 accord-at the
expense of Haryana.
has already claimed that the state will get a larger
share of the disputed waters of Punjab's Ravi-Beas
Rivers, according to the Embassy.
? According to the Embassy, the Congress Party will
probably win a majority of Harijan (outcaste) voters,
who make up about 20 percent of the population.
The Harijan vote had been tightly contested until
last January, when the Congress (J), a Congress
Party splinter group with strong support in the
Harijan community, reunited with the parent party.
? The Congress Party has more money to spend on the
election. According to US Embassy sources, it is far
outspending its opposition in the media. Gandhi,
who has traveled to Haryana several times to
campaign for the party, has backed the party's
"Congress for Development" slogan by handing out
a $300 million federal grant during one of his visits.
Finally, the Congress Party has the funds to buy
local votes with patronage jobs and development
projects
The Other Elections
We believe Gandhi and the Congress Party have less
at stake in the three other state elections-West
Bengal, Jammu and Kashmir, and Kerala-than in
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Secret
Haryana. Voters from these states, which are outside
the Hindi heartland, regularly elect non-Congress
majorities in state elections. The Congress Party is
nevertheless mounting strong campaigns in these
states, running hard to maintain parity with its
coalition partner in Jammu and Kashmir and increase
leverage over its running mates in Kerala. We believe
the ruling Congress Party/National Conference (F)
coalition will easily control the polls in Jammu and
Kashmir. Meanwhile, the Congress Party probably
will gain dominance within Kerala's coalition
government, but it will almost certainly lose to the
West Bengal ruling coalition led by the Communist
Party of India/Marxist.
Jammu and Kashmir. The recently installed coalition
state government, led by the National Conference (F)
and the Congress Party, will almost certainly win the
Jammu and Kashmir election. The coalition's
candidate for chief minister, incumbent National
Conference leader Farooq Abdullah, has the support
of most of the state's Muslims, according to the
Embassy, and his party can probably gain enough
electoral backing to dominate the coalition. Abdullah
is perceived as an honest and effective politician, and
his father is by far the most popular and charismatic
leader the state has ever known. Abdullah's brother-
in-law, G. M. Shah, leads the rival National
Conference (K), but we believe Shah's poor political
performance as a onetime chief minister in Jammu
and Kashmir makes him the underdog with Kashmiri
voters. We expect that Shah will win only enough
seats in the state assembly to constitute a vocal
minority.
Kerala. The Congress Party will probably lead the
state's ruling United Democratic Front (UDF)
coalition to victory, according to the Embassy. Party
officials, responding to complaints that the
domineering attitude of the Congress Party's chief
minister had irked coalition partners, have tried to
mediate the disputed selection of seat assignments for
the election. UDF partners disagree on which
candidates should be given tickets and how seats
] For further details on West Bengal, see "India: West Bengal's
Government-Red Outside, White Inside?" in this issue of the
should be allocated among the coalition factions. At
the same time, Gandhi visited the state in January,
announcing financial assistance for the state to rally
support for the state government's "Cooperation
Instead of Confrontation" election slogan. According
to the Embassy, the Left Democratic Front, a
Marxist-led opposition party, has little chance for
success in the election, although the coalition has
allocated numerous seats to young candidates to win
the youth vote. Other smaller parties are wielding
disproportionate amounts of power because they offer
swing votes in an election where voting splits among
multiple castes and ethnic groups will narrow the
Congress Party's margin of victory
Implications
We believe a Congress Party victory in Haryana
would bring major short-term political gains for
Gandhi and help him overcome criticism that he lacks
national and party leadership skills. A victory will
enable Gandhi to argue that he can continue
conciliation with contentious ethnic groups without
damaging the Congress Party's appeal at the polls.
If the Congress Party wins only a slim electoral
mandate in Haryana, as we anticipate, we expect the
opposition in the state assembly to lobby against
perceived Congress Party failures in implementing the
Punjab Accord and battling Sikh extremists. A large
and vocal minority in the assembly would probably
keep Gandhi from offering more than limited
concessions to Punjab. In our view, this slim mandate,
coupled with the uneasiness Haryana Hindus feel
about violence in neighboring Punjab, will probably
force any Congress Party-led government in Haryana
to oppose federal actions Hindus perceive as inimical
to their interests.
A Congress Party loss in Haryana will leave Gandhi
with an uphill battle to regain his credibility within
the party. Gandhi's opposition and his critics within
the Congress Party will accuse him of pandering to
troublesome ethnic minorities and of alienating the
party's Hindu supporters. We expect that the
opposition and press would pounce on a loss as
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evidence that Gandhi and his party were nearing the
end of years of dominance over the Hindi-speaking
states. We doubt that the repercussions of the election
alone would presage a national loss of power in the
1989 parliamentary election for either Gandhi or the
Congress Party.
We believe Gandhi and the Congress Party would
easily weather losses in other states, although
unexpected setbacks in Jammu and Kashmir and in
Kerala would spur localized and short-term criticism
of Gandhi from party dissidents. Judging from the
muted reaction to the recent Congress Party loss in
the Mizoram election, we believe additional Congress
Party losses in fringe areas would provoke only
limited negative reactions from Congress Party
leaders and Indian political commentators.
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India: West Bengal's Government-
Red Outside, White Inside?
West Bengal is the only state in India with a
Communist government. The Communist Party of
India/Marxist (CP/M) has ruled there for the past 10
years. The difficulties of running a state
government-particularly of providing jobs for West
Bengal's teeming masses-have given the CP/M state
government a less ideological bent as compared with
the strong Marxist ideology of the national CP/M
and the Communist Party of India (CP/I). These
differences have led to backbiting among India's
Communists. Relations are also strained between the
central government in New Delhi and West Bengal,
and the relationship is becoming more tense as the
CP/M and the Congress Party begin final
campaigning for state assembly elections.
Local CP/M Leadership Under Attack From the Left
Stalin's description of the Chinese Government as
"red on the outside and white on the inside" could
also apply to the Communist government of West
Bengal. The CP/M of West Bengal, under the
leadership of Chief Minister Jyoti Basu, is more
pragmatic than other Communist parties in India.
The CP/M of West Bengal follows neither the pro-
Soviet line of the CP/I nor the Maoist ideology of the
CP/M at the national level. Instead, Basu has
attempted to bend the party's ideology to deal with
local political and economic problems, prompting
criticism from the CP/I national leadership and other
hardline leftists.
High unemployment in urban areas along with New
Delhi's reluctance to give financial assistance to West
Bengal has prompted Basu to emphasize private
investment as a means of expanding the state's
industrial capacity and creating jobs. Measures
initiated to attract private companies to establish
industries in West Bengal include:
? Establishing free trade zones.
? Assisting multinationals to secure import licenses
from the central government.
? Offering preferential rates on power.
? Exempting firms from import duties.
When India was partitioned in 1947, Bengal was split
into east and west. The former became part of
Pakistan (now Bangladesh), and the latter became the
Indian state of West Bengal. The state extends from
the Bay of Bengal to the foot of the Himalayas. It is
slightly larger than Maine but has a population
density per square kilometer 25 times that of Maine.
Although Bengal is one of India's most industrialized
states, agriculture contributes 50 percent of the
state's income and employs 90 percent of its labor
force. Calcutta, the intellectual as well as political
capital of the state, has long been India's center for
Marxist ideology and political experimentation.
Basu's reluctance to take over ailing local industries
has spurred criticism from his own party. He has
refused to support financially inefficient firms such as
those engaged in the manufacture of jute products. In
our view, Basu hopes that continued competition will
prompt the firms to modernize and increase product
quality and output through better management of
resources and manpower.
Politically, the CP/M and the CP/I disagree over the
CP/M's manipulation of state elections. According to
press reports, the CP/I accuses the CP/M of limiting
the number of seats the CP/I could win in the West
Bengal assembly election scheduled for this month.
According to press reports, the local CP/M keeps a
tight rein on seats in the state assembly, using
intimidation and force to cow opponents, including
CP/I candidates.
Challenged by Congress Party in State Election
Although the government of West Bengal supports
Prime Minister Rajiv Gandhi's foreign policy, it
disagrees with New Delhi over domestic and
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13 March 1987
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Secret
Basu, 72, is one of the deans of the Indian opposition.
He dominates both the CP/M and the left coalition
government of West Bengal headed by the CP/M.
According to Indian press reports, West Bengal voters
regard Basu as a "cultured gentleman" and a
statesman. Basu, who is more a political opportunist
than an ideologue, has argued that India's
Communist parties "cannot bring about fundamental
changes (in the country's economic and social
systems) until we get power at the center."
Basu has his Communist roots in Britain, where he
studied and was eventually called to the bar. He
never used his legal training, choosing instead to
work full-time with the CP/I after his return to New
Delhi in 1940. Basu rose through the party ranks,
eventually concentrating on trade union organization
as a railway union spokesman. He was first elected to
the West Bengal state assembly in 1947 and was
reelected to almost every assembly until 1971. He is
a member of the CP/M Politburo. Basu suffered a
stroke in December 1983.
economic issues, according to US Embassy reports.
Both the CP/M and the Congress Party, which rules
on the national level, are actively involved in a gutter-
style campaign to elect delegates to the state
assembly. Gandhi has called the government of West
Bengal "the most incompetent in India." Basu has
responded by accusing New Delhi of running its
campaign on a "pack of lies":
? New Delhi accuses the state government of
misappropriating funds by overspending on public
relations and underspending on industry and
agriculture, according to Indian press reports. The
CP/M government complains that New Delhi is
withholding development funds allocated to West
Bengal.
? New Delhi claims that enforcement of the Black
Laws, which ban strikes in the public sector, are
necessary for the welfare of the state. The West
Bengal government, on the other hand, claims New
Delhi is using the laws to prevent the state
government from expressing its dissatisfaction with
New Delhi by conducting public employee strikes.
? Although the national government defends its
longstanding open-door policy between Nepal and
West Bengal, the state government is urging New
Delhi to curtail Nepalese immigration.
CP/M at Odds With New Delhi Over the Gorkhas
In our judgment, the most serious issue between the
government of West Bengal and New Delhi is the
demand by Gorkhas living in West Bengal for a
separate state within the Indian union. Since
Gorkhaland would have to be carved from West
Bengal, the CP/M advocates a tough line against
Gorkha agitation. Gandhi, however, probably sensing
an issue that he can use to weaken the CP/M
government and strengthen the Congress Party in the
state, has been more sympathetic to Gorkha
complaints and critical of the West Bengal
government.
Violence between GNLF followers and the CP/M
steadily increased until Rajiv Gandhi negotiated an
agreement last January, according to US Embassy
reports. GNLF leaders agreed to curtail violence in
return for citizenship for ethnic Nepalis and the
establishment of an Indian Army regiment of Indian
Gorkhas, according to US Embassy reports. This
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The Gorkha National Liberation Front (GNLF) was
founded in 1980 by its present leader, Subash
Ghising. GNLFfollowers are of Nepalese origin but
live in West Bengal and believe that only through a
separate state-Gorkhaland-can they guarantee
their rights and privileges. The Gorkhas-
approximately 500,000, according to Indian
Government estimates-live mainly in the Darjeeling
area near the Bhutan and China border
maneuver on the part of New Delhi benefited both the
government of West Bengal and New Delhi in that it
curtailed Gorkha agitation and removed it as a major
campaign issue. We believe, however, that state
Congress politicians around Darjeeling will continue
to appeal for Gorkha support by denouncing Basu's
handling of the Gorkha issue.
Outlook: CP/M Will Meet the Challenge
We expect the CP/M to win the March state election,
even though the Congress Party has increased its local
popularity. Jyoti Basu is a well-respected and
charismatic leader. His controversial economic
reforms have contributed to a minor spurt in
industrial growth that should win him votes. He also
has retained his popularity among the rural
population. With the installation of a new subway and
phone system, he has improved his image in the urban
areas of Calcutta, where his popularity had
diminished.
We believe, however, that GNLF agitation will
reappear after the election and that incidents will
become more violent and more frequent. According to
local press reports, the movement is increasing in size
and is being supplied with small arms, and the
present, more accommodating leadership's popularity
is declining. More radical Gorkha leaders, who
advocate armed revolt in their pursuit of an
independent Gorkhaland, are emerging.
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Karachi: Pakistan's Hotbed
of Ethnic Strife
Karachi, Pakistan's largest city, is an uneasy mixture
of ethnic and religious groups cohabitating in a city
already strained by overcrowding, poverty, and drug
abuse. This combination has resulted in increasingly
violent ethnic and sectarian riots-some 200 deaths
occurred in recent months-and the city will continue
to be a flashpoint for communal violence. In our view,
Karachi's problems are eroding public confidence in
the national, provincial, and local governments'
ability to maintain domestic order. These
governments lack the political and financial resources
to alleviate the city's deep-rooted ethnic and social
tensions. Karachi's violence probably will not spread
to other parts of the country because the city's ethnic
diversity is not found elsewhere.
From Port Town to Overgrown Metropolis
After the partition of India in 1947, Karachi grew
dramatically in population and commerce. Before
partition, Karachi had been a port city of about
300,000 people, mainly Sindhis, who are indigenous to
the region, and Baluchis who emigrated from areas
west of the city over the past century. Growth was
relatively stable. After independence, hundreds of
thousands of Muhajirs (Muslim immigrants from
India) flocked to Karachi-both a water and rail
terminus. Businesses such as shipbuilding and textiles
grew because Karachi was Pakistan's only developed
port. Karachi also served as Pakistan's capital from
1947 to 1959.
Karachi's population is now about 8 million,
according to US Consulate estimates. In addition to
the Muhajirs, the city has become a mecca for other
Pakistani ethnic groups, such as Pushtuns and
Punjabis seeking jobs and economic opportunity.
More recent arrivals include several hundred
thousand Afghan, Iranian, and Bangladeshi refugees
escaping turmoil and persecution in their native
Sources of the Consulate estimate that Karachi's
annual population growth rate is about 5.6 percent-
as compared with the national rate of 3 percent-and
almost half of the population is under 18. A Pakistani
demographer, using data from the 1981 Pakistani
census, estimates that Karachi's population will
double to 16 million by the year 2000.
Growing Sectarian and Ethnic Violence
The influx of various religious and ethnic groups into
Karachi has strained communal relations, often to the
breaking point. Sectarian violence between Sunnis
and Shias-many of Pakistan's minority Shia
population live in Karachi-in February-April 1983
caused some 20 deaths and damage to both Sunni and
Shia neighborhoods, according to press reports.
Ethnic fighting, however, has been more frequent and
enduring. Fighting between different groups occurred
periodically in the city during the 1950s, 1960s, and
1970s, mainly between Sindhis and newly arrived
Muhajirs. In the past several years we have noticed an
increase in ethnic violence involving other groups and
often causing more deaths. According to US
Consulate reports, at least 130 persons were killed
during April 1985 in fighting between immigrant
Biharis from Bangladesh and Pushtuns from
Pakistan's North-West Frontier Province
The worst outbreaks of ethnic violence, however,
occurred between Pushtuns and Muhajirs over a
three-month period from late October 1986 to
January 1987. US Consulate reporting indicates that
at least 165 people died in the fighting; press reports
say the toll probably exceeded 200. The fighting
began in October, when Muhajirs commandeered
buses and trucks in a Pushtun neighborhood to attend
a political rally. The disturbances continued
intermittently over the next three months, spreading
countries
Secret
NESA NESAR 87-007
13 March 1978
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Secret
Peshawa
% CaDitat Ter
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era Ismail
Khan
Mirpur
Khan
Muzafla(aba
1Nowshera
L\
China
-Simla
.Ludhiana
Pakistan
International boundary
- - Province boundary
Q National capital
0 Province capital
Railroad
Road
- - - - Track or trail
0 100 200 Kilometers
0 100 200Miles
Names and bocnda,v ep,esenIaton
a,e no, neceasa,dy awno.~iai~~e
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Secret
KARACHI'S CLASHING COMMUNAL GROUPS
Muhajirs--50%
Sri Lankans--.5%
Afghans--1%
Iranians--2.5%
Baluchis--4%
Sindhis--6%
to several other cities in Sind Province. Many of the
combatants were well armed.
many rioters were using automatic
weapons and even RPG-7s. The federal government
authorized the dispatch of Army troops to Karachi
several times to restore order. Curfews were imposed
on most of the city, and President Zia and Prime
Minister Mohammed Khan Junejo visited in
November to meet with local officials and appeal for
calm.
Roots of the Violence
In our view, ethnic violence in Karachi originates with
social and economic problems such as overcrowded
urban conditions, drug abuse, poor public facilities,
and an influx of foreign refugees as well as from
differences in language and culture. For example, the
US Embassy in Islamabad estimates that more than
one-third of Karachi's population lives in crowded
slums and shantytowns that lack such basic amenities
as electricity and running water. Unemployment,
illiteracy, and disease in these areas are chronic. The
slums are demarcated along ethnic lines, and, when
seemingly minor incidents occur involving two or
more ethnic groups, such as a traffic accident or a
police arrest, tensions can quickly explode into
intercommunal violence.
Drug trafficking and abuse also contribute to
communal tensions. US diplomatic reports point to
Karachi as a center and transit point for illegal
narcotics-mainly heroin-that are produced in and
shipped from the North-West Frontier Province. A
Pakistani journalist estimates that there are more
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Secret
than 30,000 heroin addicts in one Karachi
neighborhood alone. The effort by Karachi police last
December to clean up a major drug dealing center in
a Pushtun neighborhood was the catalyst for ethnic
fighting. Many Muhajirs charged that armed Pushtun
"Drug Mafia" gangs terrorized Muhajir
neighborhoods to enforce a Pushtun-led strike in
protest against the police action.
The unrestricted influx of refugees from neighboring
countries is often cited in the Pakistani press as a
major cause of ethnic tensions. Press reports indicate
that Afghan refugees are often singled out by Karachi
residents as being involved in the city's illegal drug
and arms trafficking, even though the US Consulate
reports that it is generally Pakistani Pushtuns, not
Afghan refugees, who run these illicit activities. In
response to rising antirefugee sentiment, the Pakistani
Government is relocating many of the Afghans to a
in Karachi during hostilities in November, they were
turned back by angry patients and doctors protesting
government inaction during the riots.
The Karachi violence has also exposed tensions
between the local and provincial governments. The
mayor of Karachi, Abdul Afghani, and about 100
municipal officials were arrested on orders of the Sind
provincial government on 12 February after they led a
protest demanding that the province turn over to the
city the authority for collecting motor vehicle taxes.
The Sind government dissolved the city government
for six months and appointed a provisional
administrator. Mayor Afghani has argued that the
city needs more revenues to improve social and
economic conditions, according to the US Consulate.
refugee camp outside Karachi.
The lack of adequate public transportation in the city
has also increased ethnic enmity. According to
Pakistani press reports, Pushtuns have gradually come
to dominate Karachi's public transport sector as bus
and truck drivers. Many Karachi residents, however,
charge that the Pushtuns are incompetent and often
reckless and have little regard for traffic laws or
safety because most do not have families in Karachi.
Incidents involving Pushtun drivers injuring Muhajir
pedestrians have sparked several ethnic disturbances
in the last two years. Local Muhajir officials have
tried to restrict the number of driver's licenses
granted to Pushtuns, so far without success.
Political Ramifications of Karachi Violence
The local, provincial, and federal governments have
all lost credibility with the public because of their
inability to prevent ethnic violence or alleviate
Karachi's urban problems. Muhajirs complained that
the local police-who are primarily Punjabis and
Pushtuns-dealt more harshly with them than with
Pushtuns, while others accused the police of being
corrupt and in league with Karachi's drug and arms
smugglers. The Governor of Sind Province and the
Sind provincial cabinet resigned in December 1986 in
the wake of the communal rioting. When President
Zia and Prime Minister Junejo tried to visit a hospital
Opposition politicians have tried to exploit public
dissatisfaction with the federal government's
performance during the riots. Benazir Bhutto said
that the violence proved the need for a new national
election, and her Pakistan People's Party set up
collection drives for victims of the riots until the
government shut them down. Other opposition leaders
have publicly suggested that the Army was behind the
carnage in order to undermine Junejo's civilian
government and bring on another period of military
rule.
Some Pakistani officials have attempted to blame
some of the recent rioting in Karachi on foreign
subversion. During a parliamentary debate in January
on the Karachi riots, Interior Minister Aslam
Khattak suggested that "a foreign hand" was behind
the disturbances and said that "foreign powers" were
preaching separatism for Pakistan's ethnic groups.
former Sind Governor
Jahan Dad Khan said last December that there was
evidence of Indian and Soviet money being paid to
foment the rioting. Senior Pakistani officials told US
diplomats in January that the Soviets were exploiting
the Karachi riots to erode support for Islamabad's
sheltering of Afghan refugees
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Outlook
Karachi will continue to be subject to sudden and
violent ethnic and sectarian fury. The frustrations of
living there will probably increasingly be expressed in
violence instigated by young men, many of whom are
poorly educated, out of work, and with few other
outlets for their anger. Although we do not believe the
disturbances will be repeated on the same scale
outside Karachi-its multiethnic diversity is not
found elsewhere in Pakistan-they will almost
certainly contribute to public disillusionment with the
local, provincial, and national governments. The
ruling Muslim League's performance at the polls in
nationwide local elections scheduled this fall could be
adversely affected.
We expect continued competition for scarce city
resources to increase the militancy of ethnic groups.
In particular, we believe the Muhajirs in Karachi will
become better organized and increasingly aggressive
in their confrontation with other groups such as the
Pushtuns. The US Consulate reports that a Muhajir
interest group called the Muhajir Quami Movement
has grown in numbers since last year's riots and is
probably now the single largest party in Karachi.
In our view, the Pakistani Government is at an
impasse in dealing with ethnic violence in Karachi. It
lacks the financial resources to significantly improve
housing, sanitation, and job opportunities, and it will
be reluctant to use police force to crack down on drug
and other criminal elements for fear of inciting
violence against local authorities. Repeated use of the
Army to quell disturbances will, in our view, convince
many Pakistanis that the civilian provincial and
federal governments are incapable of running the
country. Official inaction, however, will increase the
public impression that the authorities are either
apathetic about law-and-order problems or are in
league with criminal elements.
Consequently, we expect government spokesmen to
increase efforts to shift the blame for ethnic riots to
unnamed "foreign" subverters. Although we do not
rule out the possiblity of foreign involvement in the
recent disturbances, we believe such charges by
Pakistanis ignore the real social and economic causes
of ethnic violence.
Future drug interdiction efforts in Karachi will
probably increase local anti-American sentiment due
to the popular perception that the United States is
forcing Pakistan to stem the trafficking of illegal
narcotics. The linkage of the United States to the war
in Afghanistan will also lead many Karachi residents
to blame Washington for unrest yerceived to be
caused by Afghan refugees
US citizens in Karachi-numbering about 200-run
the risk of being caught in the crossfire of civil
disturbances. The US Consulate has not been
subjected to violence so far, but it is in the main
business section of the city and vulnerable to attack.
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Bangladesh: A Foreign Aid
Bazaar
Low domestic savings, an inadequate tax base, and
chronic trade deficits have forced Bangladesh to rely
on foreign aid to carry out its development programs.
Disbursements of nearly $1.3 billion in FY 1986,'
were the equivalent
of 50 percent of investment, 47 percent of government
revenues, and 55 percent of imports. Because most aid
to Bangladesh is in the form of grants or highly
concessional loans, Dhaka's debt service burden is still
manageable. Now that the parliamentary and
presidential elections that were part of the transition
to civilian rule are over, donors will be pressing
President Ershad to undertake economic reforms to
help ensure efficient use of foreign aid.
Aid Programs
Bangladesh receives aid from more than 50 nations
and international organizations. The International
Development Association is the largest donor,
providing about $460 million a year in economic
assistance, according to press reports. Japan is the
largest bilateral donor, followed by the United States,
Canada, the United Kingdom, West Germany, and
the Netherlands. These six countries account for
nearly 53 percent of aid disbursements. Other donors
include several Middle Eastern countries, led by
Saudi Arabia and Kuwait, and various Communist
countries. Aid commitments from Middle Eastern
donors, however, have declined in response to falling
oil prices.
35 percent of total
aid commitments in FY 1986 were grants. The
remainder were soft loans. Bangladesh has not been
forced to borrow heavily from commercial lenders, so
its debt service ratio is low.
Composition of Aid
Project aid accounts for the bulk of aid commitments,
but only 50 percent on average has been disbursed,
creating a large backlog. Many projects are delayed
Japanese assistance-estimated at $260 million
annually, according to the US Embassy in Dhaka-
is one of the few programs that do not emphasize
policy reform and structural adjustment. Japanese
aid officials do not initiate projects. They solicit and
then respond to project proposals initiated by the
Bangladesh Government. Japanese businessmen,
however, play an informal but nonetheless prominent
role as the aid program takes shape and is executed
to ensure that the Japanese private sector benefits.
According to the US Embassy in Dhaka, grants-
comprising nearly one-third of Japan's aid
program-are tied to purchases of Japanese
equipment and raw materials, raising the
procurement costs of development projects by 15 to
20 percent. Moreover, most of the projects focus on
capital-intensive sectors that serve Japan's
commercial interests and generate spare parts orders
for its equipment. Even so, the US Embassy in Dhaka
projects Japanese assistance to double by the end of
the decade-a policy in line with Tokyo's goal of
doubling total aid disbursements to all Japanese aid
recipients-and the composition of aid funded
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domestic procurement. For example, the foundation
stone for the Buriganga bridge-a project that has
been on the books since the 1950s-has been laid, but
work has stopped until a location has been decided.
The Rooppur nuclear plant and the Jamalganj coal
projects have yet to be implemented despite support
from donors.
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Food aid-comprising on average about 9 percent of
Bangladesh's foodgrain consumption-has varied over
the last five years, reflecting fluctuations in domestic
food supplies. Still, even with generous aid prompted
by a devastating typhoon in 1985, commercial
borrowing has been required in recent years to meet
food needs. According to the US Embassy in Dhaka,
given the expected rise in the debt service ratio for FY
1987 that will tie up limited foreign exchange
resources, the Bangladesh Government is asking for
supplements to the FY 1987 food aid allocation as
well as multiyear agreements from its donors to avoid
additional commercial borrowing.
Commodity aid relieves some of the demand for
scarce foreign exchange by allowing procurement of
items other than luxury or military goods. According
to the US Embassy in Dhaka, most items-such as
turboalternators for tea estates and steam turbines for
power generators-are procured to maintain or
increase the production capacity in industries set up
by aid donors.
Donor Pressures for Reform
Bangladesh officials get high marks from the donor
community for recent steps toward economic
reform-elimination of subsidies on some fertilizers,
improvement of the foodgrain distribution system,
and increased private-sector participation in the
economy-according to US Embassy reporting, but
much remains to be done. Corruption is a major
problem, and local officials feel hamstrung by donor
demands for efficient use of resources on one hand,
and, on the other, by requirements that aid be tied to
equipment and commodity purchases from the donor
countries. In many cases purchases could be made
more cheaply elsewhere, and equipment received from
a variety of countries makes for a lack of
standardization. Meanwhile, there is a lack of
coordination among donors on priority projects.
Bangladesh officials are sensitive to donor concerns.
The US Embassy reports that the major impetus for
the return to civilian rule last year was that many
donors felt uncomfortable dealing with a martial law
administration.
Debt Burden
With more than 90 percent of Bangladesh's external
debt on highly concessional terms, according to the
US Embassy, Dhaka has maintained a manageable
debt service ratio-18 percent last year-even though
outstanding foreign debt has increased by almost two-
thirds since 1981, to $6.4 billion in 1986. The ratio is
expected to rise to 20 percent in FY 1987 and FY
1988-assuming exports hold up-as debt incurred
during the first years of independence, commercial
loans to finance food imports, and repurchase
obligations to the International Monetary Fund fall
due, but the ratio will decline thereafter, according to
World Bank projections, assuming no new
commercial borrowing in the interim, which would
increase interest and principal payments in the short
term.
Outlook
The relatively low cost of foreign aid is a buffer for
poor export performance and inadequate domestic
resource mobilization, contributing to continued
dependence on aid. The Third Five-Year Plan
(FY 1985-90) calls for heavy reliance on external
assistance to finance the capital imports required for
transportation, industry, and electricity. Dhaka is
negotiating for multiyear agreements with several
COMPOSITION OF AID COMMITMENTS
1982-1987*
=Food aid
? Comodity aid
MProject aid
1983 19e4 1985 1986 1987k
Fiscal Year
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donors to help alleviate shortfalls caused by bad
weather and declining remittances. Worker
remittances are expected to fall to $500 million in
FY 1987, down from $550 million in FY 1986,
according to World Bank projections, because of
falling wage rates in the Gulf states and increased
competition for the small number of jobs.
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Near East and
South Asia Brief
Arab States Baghdad Payments Under Review
The system of aid payments to Syria, Jordan, and the PLO agreed to in Baghdad
in 1978 by seven Arab states-Saudi Arabia, Kuwait, the United Arab Emirates,
Qatar, Iraq, Libya, and Algeria-runs out next year but is likely to be replaced by
ad hoc aid arrangements. Under the agreement that was signed following the
Camp David accords, Syria, Jordan, and the PLO were to receive combined
annual payments of $3.5 billion from the Arab donors. Payments were to be used
by states confronting Israel and to discourage other moderate Arab states from
joining Egypt. It was only during the early years, however, that donor countries
came close to fulfilling their commitments. Saudi Arabia so far is the only state
that has met all of its obligations. Other countries, including Kuwait, the United
Arab Emirates, Qatar, and Iraq, have not fully paid their commitments since at
least 1982, according to US Embassy reporting. Algeria made payments in 1980
and 1981, but Libya has never contributed
Baghdad Aid Payments
3.6-r
3.4 -~
Billions of US Dollars
commitment
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In our view, the donors will not renew the agreement because of their own
financial constraints. Saudi Arabia and Kuwait are the only countries likely to
continue giving significant amounts of aid. Even so, the Saudis probably will
replace the current aid system with a discretionary one, similar to one that Kuwait
implemented unilaterally in 1984. Riyadh is likely to continue to assist its
traditional recipients as well as use aid disbursements to try to persuade its more
radical neighbors to take more moderate positions on issues of concern to the
kingdom
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