NEAR EAST AND SOUTH ASIA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01184R000301350002-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 44
• Document Creation Date: December 22, 2016
• Document Release Date: December 13, 2010
• Sequence Number: 2
• Publication Date: March 1, 1985
• Content Type: REPORT

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Directorate of
Intelligence
Near East and
South Asia Review
NESA NESAR 85-006
1 March 1985
418
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Near East and
South Asia Review
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Saudi Arabia is unlikely to support any negotiations that do not
address the Arab-Israeli conflict in its entirety, and, if Syria is
opposed, the Saudis will not even lend their support in their usual
behind-the-scenes manner.[
Over the past two years Jordan's King Hussein has cautiously taken
steps to strengthen his ties to the West Bank to increase his leverage
with PLO chief Arafat on Palestinian and Arab-Israeli issues and
ensure a Jordanian role in future political arrangements in the
occupied territories
The 1984 election results reaffirmed the dominant role of the Labor
Alignment and Likud, but the government will not undertake any
major foreign policy initiatives for fear of upsetting the coalition's
delicate balance and does not have the political will to launch tough
policies to solve the country's economic problems
Muhammad Husayn Fadlallah, a Shia fundamentalist cleric based
in southern Beirut, has become a key leader of the extremist
Hizballah movement and could eventually emerge as the dominant
Shia figure in Beirut and attempt to incite a revolt among
discontented Shias.
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Iran: The Clerical Opposition in Mashhad
Conservative clerics in Mashhad are increasing their opposition to
the Khomeini regime and maneuvering to gain support in
anticipation of a power struggle following Khomeini's death, but
they are hampered by the absence of a positive political program
and their belief that clerics should not take a direct role in secular
affairs.
Islamic Conference: New Leadership, Old Problems
Newly elected Islamic Conference Secretary General Sharifuddin
Pirzada faces formidable problems in advancing the organization's
influence and interests, for, even if he gives African and Asian issues
more attention, Arab issues will continue to dominate as long as the
Saudis pick up the lion's share of the organization's budget
"Independent" Dependency
Azad Kashmir, the region of Jammu and Kashmir that is under
Pakistan's control, has been given a fictitious independence by
Islamabad, but, in reality, it is ruled and financed directly by the
President Zia has accomplished his primary economic goal-
maintaining domestic prosperity and denying the opposition a
rallying point if the presidential referendum and the legislative
elections-but, if the foreign exchange outflow is not checked or
substantial new aid not obtained, serious foreign payments problems
will emerge.
Sir Lanka: Resettlement and Realpolitik d
Colombo plans to begin settling more than 30,000 armed Sinhalese
farmers in newly irrigated areas of north and east Sri Lanka in part
to strengthen its control in these areas and change the ethnic
composition of the local population. Militant Tamil separatists are
likely to react with violence against the new settlers.
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Prime Minister Gandhi has staked his political reputation on
defusing Sikh unrest in Punjab, but, unless he offers concessions to
strengthen the hand of moderate Sikhs, the deadlock between the
Sikhs and the government is likely to continue and even worsen, to
the detriment of Gandhi's image as well as India's stability.
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India: High Hopes for Probusiness PoliciesF---] 39
Indian businessmen enthusiastically anticipate major reforms in
economic policy over the next several months, but Prime Minister
Gandhi is still considering his options and so far has announced only
a few minor changes
The press of India is vibrant, sophisticated, has a large readership in
many languages, and is the nation's most important mass medium of
communication, which, while nationalistic and sensitive to foreign
criticism of India, is itself frequently critical of the government.
Some articles are preliminary views of a subject or speculative, but the contents
normally will be coordinated as appropriate with other offices within CIA.
Occasionally an article will represent the views of a single analyst; these items
will be designated as noncoordinated views. Comments may be directed to the
authors,
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Israeli Negotiations t
Saudi Arabia is unlikely to support any negotiations
that do not address the Arab-Israeli conflict in its
entirety. If Riyadh believes the Syrians are resolutely
opposed to negotiations or to a particular negotiating
strategy-such as the recent Arafat-Hussein
"framework" agreement-the Saudis are unlikely to
lend support even in their usual behind-the-scenes
manner. Moreover, the Saudis have not and are
unlikely to endorse negotiations between Israel and a
single Arab state.
The Hussein-Arafat Agreement
The Saudis probably are encouraged by the recent
Arafat-Hussein "framework" agreement to pursue a
continued dialogue on Middle East peace. Riyadh
believes divisions within Arab ranks hinder progress
toward a negotiated settlement to the Arab-Israeli
conflict, and a narrowing of differences between
Hussein and Arafat is viewed favorably by the Saudis.
Riyadh realizes that PLO participation in Middle
East peace negotiations is a nonstarter for the Israelis
of
several key steps in getting negotiations started, in the
Saudi view.
Riyadh has urged Arafat and Hussein to come to
terms in the past, but Saudi support has been limited
The Saudis have
influence with both the Jordanians and Palestinians,
but they have not used financial inducements-the
usual Saudi trump card-to extract concessions. The
Saudis believe Hussein and Arafat are important
' The author of this article has followed Saudi political
developments for several years, and his arguments are based on his
moderate Arab leaders, and Riyadh does not want
them to make precipitate moves that could jeopardize
their political positions.
The Saudis undoubtedly view the framework
agreement as having more form than substance, but
they believe that the appearance of cooperation
among the Arabs is necessary to gain an invigorated
US role. Moreover, the timing of the agreement
announcement strongly suggests that the Saudis had
foreknowledge of it and sanctioned its airing during
King Fahd's US visit.
The Syrian Factor
Riyadh's attitude toward peace negotiations is
strongly influenced by Syria
Nonetheless, Riyadh has a more fundamental reason
for ensuring that Syrian interests are protected at
each critical juncture of the overall peace process. The
Saudis believe that, without the support of the major
Arab confrontation state, any movement toward a
negotiated settlement is specious and likely to result in
failure. Events in Lebanon have demonstrated vividly
to Saudi officials the Syrian ability to thwart the
efforts of others when Damascus believes its national
interests are threatened. As evidence of the
importance the Saudis attach to keeping the Syrians
informed on important issues, Saudi Ambassador to
the United States Prince Bandar traveled to
Damascus to brief the Syrians on King Fahd's US
visit before going on to Amman, Baghdad, and
Algiers.
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NESA NESAR 85-006
1 March 1985
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Although the Saudis frequently are frustrated by
Syrian obstructionism, Riyadh probably sees benefit
in the Syrian role. Saudi insistence on the protection
of Syrian interests is a convenient way to camouflage
Riyadh's own interest in achieving maximum Arab
objectives. The Saudis may well use the Syrian role
for their own benefit-particularly when dealing with
the United States-and at times may only feign
dissatisfaction with Damascus. For example, Syrian
inflexibility on Lebanon and the Arab-Israeli conflict
allows the Saudis to point an accusing finger at
Damascus when privately attributing blame and
identifying obstacles to progress. At the same time,
however, Syrian unwillingness to compromise
reassures the Saudis that Arab objectives will not be
sacrificed because of external pressure.
Strong Syrian opposition to an Arafat-Hussein joint
position is likely to deter unambiguous Saudi backing.
Moreover, a demonstrated Syrian willingness to
undermine further Jordanian-PLO cooperation-for
example, by assassinating moderate PLO or
Jordanian officials-probably would prompt the
Saudis to avoid supporting the Hussein-Arafat
strategy even in their usual behind-the-scenes
manner. In these circumstances, the Saudis probably
would adjust their approach and seek greater PLO,
Jordanian, and US attention to Syrian interests.
A Comprehensive Settlement
Riyadh believes Arab negotiations with Israel should
only be carried on in pursuit of a comprehensive peace
settlement that addresses the questions of the West
Bank, Gaza, Jerusalem, and the Golan Heights.
Riyadh probably believes the momentum of an
Arafat-Hussein dialogue could prompt the United
States to exert pressure on Amman for bilateral
negotiations with Israel. The Saudis would not
endorse negotiations between Israel and any single
Arab state, however, because the Camp David
accords convinced the Saudis that the pursuit of a
separate peace is perilous-even for Egypt, the most
powerful Arab state. The Saudis believe the United
States violated its commitment to a comprehensive
settlement of the Arab-Israeli conflict when it
brokered the Camp David accords.
Saudi support for a comprehensive settlement stems
in part from an overall Saudi strategy of avoiding
involvement in inter-Arab rivalries that could
threaten Saudi security. The Saudis probably believe
that close identification with the interests of a
particular Arab faction increases the risks to them. In
encouraging comprehensiveness, the Saudis attempt
to ensure that all Arab interests are pursued in
negotiations.
The Saudis also are hesitant to support publicly a
negotiating formula that is not endorsed by the Arab
League. Riyadh's "Fahd Plan," which eventually was
adopted by the Arab League in 1982, was a set of
principles for peace and not a defined course of action.
Without an Arab League stamp of approval, the
Saudis would not support openly a joint PLO-
Jordanian negotiating strategy even if King Hussein
acquired a PLO mandate. The Saudi leadership is
well aware that an agreement between two Arab
leaders could disintegrate easily upon the removal of
one or both of them-a clear possibility if Arafat and
Hussein come to terms.
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Jordan and the West Bank:
Hussein's Balancing Act
Over the past two years Jordan's King Hussein has
cautiously taken steps to strengthen his ties to the
West Bank. Hussein's primary aim is to increase the
influence of pro-Jordanian Palestinian moderates who
he hopes will help press PLO chief Yasir Arafat to
establish joint positions with Jordan on Palestinian
and Arab-Israeli issues. Some of the King's
advisers-and Hussein himself-also believe that
fostering West Bank ties will ensure a Jordanian role
in future political arrangements in the occupied
territories and enhance the stability of the Hashemite
Kingdom.
Amman's ability to assume new responsibilities on the
West Bank is limited. The Jordanians want to avoid
moves that might provoke a confrontation with the
PLO or help sustain the Israeli occupation. Moreover,
Hussein's non-Palestinian Bank constituents will
continue to resist taking on the burden of assisting the
West Bank. West Bankers seeking Amman's backing
for their efforts to build a cadre of moderate
community leaders are likely to be forced to turn
elsewhere or rely on their own resources.'
Jordan's Role in the West Bank
The Israeli occupation of the West Bank in 1967 and
Arab designation of the PLO in 1974 as the sole
representative of the Palestinians eliminated most
Jordanian involvement in West Bank affairs. West
Bank residents are subject to regulations promulgated
by the Israeli military government. Although many
West Bank political leaders retain political
connections with Amman, the PLO and Yasir Arafat
have a far greater claim on the loyalties of West
Bankers.F__1
Amman, however, continues to provide limited
government services to the West Bank. It grants
permits and licenses, issues passports for Palestinians
traveling overseas, and pays the salaries of West Bank
municipal workers hired before 1967.
since 1979 virtually
all Arab subsidies to West Bank municipalities and
institutions have been supplied by the Jordan-PLO
Joint Committee from funds pledged by other Arab
states and administered by Jordan.
New Steps
President Reagan's Middle East peace initiative in
1982 and the internal crisis in the PLO in 1983
encouraged Hussein to revitalize relations with the
West Bank. Signs of Amman's increased interest in
the West Bank include:
? Recall of Jordan's parliament, suspended since
1976, thus restoring the formal presence in Amman
of duly elected West Bank representatives.
? Recruitment of prominent pro-Jordanian West
Bankers to lobby the PLO and other West Bank
leaders on behalf of PLO cooperation with Hussein.
? Consideration to chartering an Arab-owned bank in
Nablus to help rectify irregular financial
arrangements resulting from Arab refusal to use
Israeli banks.
The Appointment of Mayors
Amman has agreed to consider Tel Aviv's proposal to
appoint new Arab mayors in key towns to replace men
the Israelis expelled or ousted. The Jordanians believe
that this could be used to enlarge Amman's role in
West Bank affairs. Amman has not yet accepted the
Israeli offer because it fears that some aspects are too
favorable to the Israelis. Israelis and West Bankers
supporting the plan hope that Amman's blessing will
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help deflect charges that the new mayoral appointees
are Israeli collaborators. The Israelis would balk at
any overt sign of a PLO role in selection of the
mayors, but they would probably cooperate if they
believe the men chosen by Amman are moderates who
might resist PLO or radical Palestinian pressure to
openly oppose occupation officials.
Prime Minister
Obeidat told pro-Jordanian West Bankers last fall
that the government would use the mayoral
appointments (along with the naming of pro-
Jordanian chambers of commerce and Islamic
officials in Jerusalem) to promote a new leadership
group on the West Bank that would advance
Jordanian policy objectives. City mayors are the most
prominent Arab political leaders on the West Bank.
They are also key figures in planning community
development projects and channeling Arab funds to
West Bank communities.
Arafat is probably ambivalent about the scheme.
Despite past PLO support for the deposed mayors,
Embassy reports suggest that Arafat may support the
appointment of acceptable Arab moderates in the
belief this would help strengthen his position on the
West Bank. Nevertheless, Arafat and other Fatah
leaders are suspicious of Jordanian intentions. Fatah
officials have cautioned their cadres on the West
Bank to protect their claim to leadership of the
Palestinians against Jordanian encroachment.
Constraints on Jordanian Policy
Domestic political considerations and Jordan's
meager financial resources also impose severe limits
on Amman's ability to satisfy the needs of West
Bankers. Vest Bank
members of the Jordanian parliament are frustrated
and disillusioned by the failure of either the
government or their fellow legislators to respond to
their appeals to relax restrictions on Jordan River
crossings, marketing of West Bank goods, and
employment of West Bank residents. Jordanian
officials have also flatly rejected West Bank appeals
for economic development assistance, claiming that
the government has no money.
Amman's attempts to foster pro-Jordanian sentiment
on the West Bank will require considerable skill in
handling its complicated relationships with both the
Israelis and the PLO. The Jordanians want to avoid
major friction with the PLO so that Hussein's
courtship of Arafat will not be disrupted and existing
Jordanian support in the West Bank not undermined.
Amman will continue to need the funds of the Jordan-
PLO Joint Committee to subsidize West Bank
municipalities, but these resources are likely to shrink
rather than grow because of increasing unwillingness
of contributors to continue the payments. According
to Embassy reporting, the Jordanian Minister for
Occupied Territories told a US diplomat in early 1984
that the fund was currently receiving only $45 million
(the Saudi and Kuwaiti portions) of the original $100
million pledged.
Jordan's West Bank Prospects
We believe Hussein is likely to continue low-key
efforts to enhance Jordanian commitments and
influence on the West Bank, but he may avoid
ambitious new schemes while he pursues his dialogue
with Arafat. He may reason that West Bank
moderates are unlikely to be more persuasive with
Arafat than they have been in the past, and attempts
to create a larger and more influential group of
Jordanian loyalists could provoke a PLO backlash.
Although some of his advisers continue to suggest that
Hussein might call on pro-Jordanian West Bankers to
represent Palestinian interests if he decided to enter
peace negotiations without the PLO, we believe that
he recognizes this option is unrealistic as long as most
Arab states-and most West Bankers-continue to
support Arafat.
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Israel After the 1984 Election:
A Conference Summary F_
Leading US academic specialists on Israel met
recently to discuss the domestic and foreign policy
implications of the Israeli national election of 23 July
1984. In their view, the election results reaffirmed the
dominant role of Israel's two major political
groupings-the Labor Alignment and Likud--and
their growing convergence on key issues. The
specialists believe the religious parties retained an
important measure of their political influence-
despite their largely superfluous position in the
present unity government-because of their
potentially pivotal role in forming the next ruling
coalition. The election outcome also strengthened
small leftist parties and the ultranationalist Tehiya-
Tzomet party.
The election results demonstrated the continued
support of most Sephardi Jews for Likud despite
widespread dissatisfaction with the party's economic
policies, the unpopular war in Lebanon, and the
political demise of Menachem Begin. The academic
experts noted, however, that their loyalty to Likud is
not an indication of support for the party's hardline
attitude toward the Arabs and the occupied
territories. Rather, the bulk of the Sephardi electorate
voted for Likud to consolidate the economic gains
made during the previous seven years of Likud rule.
The academic specialists believe the Israeli
Government will not undertake major foreign policy
initiatives during the coming year because of
conflicting party interests. In the view of some
experts, Peres will shy away from any peace
initiative-even one launched by Jordan's King
Hussein-to avoid upsetting the government's
delicate balance.
even at the cost of rising unemployment and reduced
living standards. The scholars, however, do not believe
that the government has the political will to take the
necessary decisions.
Domestic Political Trends
According to the academic specialists, Israel is
undergoing a crisis of political legitimacy because of
the inability of both Labor and Likud to gain broad
public acceptance for their interpretations of Zionism.
The experts believe the absence of a dominant
political ideology may lead Israel to abandon the
traditional Zionist goal of being "a light to the
nations" and focus instead on being a "normal"
nation like any other country.
The absence of a unique Zionist vision is reflected in
the growing convergence of Labor and Likud on key
issues. Labor today is more conservative than it was
during the party's heyday in the early 1970s, and
Likud also bears little resemblance to the self-assured,
nationalist party it was when Israel invaded Lebanon
in June 1982.
Labor. The academic specialists agreed that Labor is
in its best shape since its defeat in 1977 despite its
failure to undertake the leadership and policy changes
demanded by many party supporters.' Labor has
ended the endemic party infighting that plagued it
during its seven years in opposition. Peres and
longtime rival Defense Minister Rabin are working
well together. Other potential contenders for party
leadership-such as Deputy Prime Minister Navon
and Health Minister Gur-have reined in their
ambitions, although they are probably waiting for 25X1
Peres to stumble.
The economic experts argued that Israel must
institute tough, highly controversial policies to solve
the country's economic problems. Israel must cut
government spending, real wages, and consumption
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Likud. The alliance of the Herut and Liberal parties
in the Likud bloc is beset by serious factional and
leadership struggles, which led some experts to argue
that Likud has practically ceased to function. Finance
Minister Moday heads the principal faction in the
Liberal Party, but his leadership is challenged by
several rivals, including Minister of Science Patt and
Justice Minister Nissim. The academic specialists
believe a government failure to revive the economy
could provide the pretext for a new bid to dump
Moday. Prime Minister Peres, meanwhile, is
assiduously cultivating Moday in the event the
Liberals split and Moday and his supporters join
Herut's leadership struggle received the greatest
attention among the specialists, who agreed that Vice
Prime Minister Shamir maintains a tenuous hold on
the party leadership. Minister of Industry and
Commerce Sharon and Deputy Prime Minister Levi
are attempting to emulate Begin's populist style in
their efforts to undermine Shamir, but neither has
attracted the wide popularity Begin achieved. Sharon
used his suit against Time magazine to portray
himself as a victim of the "blood libel" against the
Jewish people-a theme manipulated by Begin with
considerable success. Levi has opposed extensive
budget cuts in social welfare programs to project an
image as defender of the interests of all working
people, not only of Sephardim. In the view of the
academic experts, Sharon and Levi have not been
bound by a sense of national responsibility or loyalty
to their party's leader or the policies of the
government
The Religious Parties. The academic experts agreed
that the fragmentation of the religious parties has not
lessened their likely influence in a future coalition.
The national unity government does not depend on the
religious parties for its parliamentary majority, but
Labor and Likud are wary of alienating them because
of the near certain need to gain the support of one or
more of the religious parties to form the next
government. In our view, Likud is particularly
concerned with cultivating the religious parties, but
its efforts have been hurt by its inability to deliver on
promises of government support for legislation on
areas of concern to the religious parties. These parties
sharply criticized Likud when the Knesset recently
defeated the religious parties' bill revising the criteria
for defining "who is a Jew."
The experts disagreed, however, over the importance
of religion in Israeli politics. One specialist argued
that religion is the most important political and social
force in Israel today. Others asserted that it is
misleading to view the displays of greater religious
observance by some politicians and many Sephardim
as an indication of the growing importance of religion.
In our view, if it were true that religion is the political
touchstone in Israel, this would be reflected in greater
support for the religious parties in elections. In fact,
the electoral strength of the religious parties as a
group has remained fairly stable at 10 to 15 percent of
the vote since the first Knesset election in 1949. In the
last two elections, they won about 11 percent of the
Other Minor Parties. According to the academic
experts, the election results and the process of forming
the national unity government encouraged the
coalescence of a new Zionist left bloc and the
increased strength of the ultranationalist Tehiya-
Tzomet party. In the specialists' view, many
traditional Labor and Likud supporters were
alienated by the ideological compromises their parties
made to woo undecided voters and to accommodate
each other and the religious parties within the unity
government framework.
The loose alliance of two moderate left parties,
MAPAM and the Citizens' Rights Movement, has 10
seats in the Knesset and would become an influential
partner in a future Labor-led coalition without
Likud's participation. Its electoral appeal, however, is
uncertain, in our judgment. MAPAM last entered
elections as an independent party in 1965, and its
traditional base of support in the country's
agricultural cooperatives is dwindling
Tehiya-Tzomet benefited in the 1984 election from its
co-opting former Army Chief of Staff Eitan and his
supporters. It has strong ties with leading figures in
Herut-particularly Ariel Sharon-and is a likely
future partner in a Likud-led coalition.
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Moving to the Right?
The academic specialists noted that the fulcrum of the
Israeli political balance has been moving to the right
in recent years. Nonetheless, it does not necessarily
reflect an overall hardening of voter attitudes, in our
view. Israeli attitudes on key Arab-Israeli issues-as
measured in opinion polls-have remained fairly
steady for the past 15 years. Attitudes have fluctuated
depending on the political context in which the
questions were asked and the popularity of the
incumbent ruling coalition. For example, polling data
indicate that public opposition to returning the
occupied territories is about as prevalent today as in
1969. About 90 percent of the respondents in both
1969 and late 1984 favor returning none or only a
small part of the territories, although the trend has
moderated slightly as the popularity of Peres and
Labor has risen since the election.
Nor do the results of recent elections indicate a shift
in political power to the right, in our judgment. The
portion of the electorate voting for rightwing parties,
including Likud, decreased in this election. The center
and moderate left parties, on the other hand, drew
more support. What has changed since 1977 to
enhance the political power of the right wing is the
emergence of a religious bloc that finds it easier to
deal with Likud on ideological and religious grounds
than with Labor. Even so, the religious parties-
except for the ultranationalist Morasha-probably
would be equally open to cooperating with either
Labor or Likud to form a narrow coalition if the unity
government falls.
The Sephardi Vote
Political pundits in Israel and abroad are inclined to
see continued Sephardi loyalty to Likud as evidence of
their hardline and anti-Arab attitudes.' The academic
experts believe this is an inaccurate portrayal of the
Sephardi electorate. They argue that the strong
support of Sephardim for Likud has little to do with
their cultural background or anti-Arab character but
rather with their present position in Israeli society.
' Extensive academic research in Israel and public opinion polls are
virtually unanimous in concluding that Sephardim in Israel
generally display stronger anti-Arab sentiments and advocate
tougher foreign policy options than do Ashkenazi Jews. The
hawkish attitudes are consistent across time and within each social
and educational category. The most hostile attitudes toward Arabs
Although Sephardim overwhelmingly supported the
then ruling Labor Party in the 1950s and 1960s, they
began to abandon Labor a decade ago. They revolted
against what many believed was an arrogant and
paternalistic system that was contemptuous of their
origins and closed to their participation. According to
the specialists, the Sephardi vote for Likud in 1977,
when Labor was turned out of office, was more a
protest against Labor's record than a vote of
confidence in Likud
Sephardim continued to support Likud in the 1981
and 1984 elections largely to consolidate the economic
gains made during the previous Likud governments.
Those who abandoned Likud in the last election did so
because they feared the deteriorating economy
threatened those gains. But they did not return to
Labor. Rather, the majority voted for the new
Sephardi religious party, SHAS.
The academic experts maintain that the anti-Arab
attitudes displayed by Sephardim are superficial and
have not been reflected by their voting preference for
rightwing parties. The experts point out that only
about 3 percent of Sephardi voters supported Tehiya-
Tzomet in the last election. Moreover, few Jewish
settlers on the West Bank are Sephardim. As one
expert commented:
... most of the inhabitants who settled in the
West Bank did so out of religious and
ideological reasons. The majority of Oriental
youth in Israel today are neither religious nor
ideological.... The anti-Arab attitude in
Israeli society is not inherent in the Oriental
character, although it became an implicit
condition for the Orientals' acceptance in the
society. It is more accurate to state that anti-
Arab sentiment is shared today by a majority of
Israeli youth.
Foreign Policy
The national unity government is unlikely to make
bold foreign policy initiatives in 1985, according to
the scholars. This is partly the result of the dynamics
within the unity coalition, particularly the divergent
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positions of Labor and Likud on the peace
negotiations. In addition, the academics noted that
the trend toward immobilism in foreign policy is
reinforced by Israeli skepticism that diplomacy can
succeed in settling the Arab-Israeli conflict. Many
Israeli leaders are said to believe that there is little
Israel can do on its own to advance the peace process
because the other parties to the conflict prefer the
current stalemate to the risks involved in reaching an
agreement.
The experts agreed that Israel's experience in
peacemaking since the Camp David accords and the
peace treaty with Egypt has added to the sense of
disillusionment on the value of peace agreements with
its Arab neighbors. This has encouraged public
support for greater military vigilance rather than for
diplomatic overtures. In the academics' view, Israeli
diplomacy will remain on the defensive, particularly if
faced with external pressure to be more conciliatory.
The Economy
The scholars argued that Israel's current economic
problems are rooted in economic shocks suffered as a
result of the 1973 Arab-Israeli war. Higher defense
costs and rising oil prices, for example, should have
forced Israeli governments to make painful choices.
Continuously rising domestic and external deficits
demonstrate, however, that the Israelis chose instead
to live beyond their means. Their reluctance to cut
back was due, in part, to fear that a recession as deep
as that in 1966-67 would lead to increased emigration.
The specialists also stressed that the political will to
enforce economic austerity is lacking. One expert
argued that the complexity of the Israeli economy
does not preclude using normal policy measures to
combat disequilibrium. The few attempts by the
government to use traditional fiscal and monetary
policies to rein in the economy were proving somewhat
successful before they were cut short by the approach
of the July 1984 election. The scholar also was less
critical than most economists of some institutional
arrangements prevalent in Israel, such as indexing
wages to the inflation rate. While indexing has
dampened the government's enthusiasm to attack
inflation, it has not been the driving force of inflation,
in his view.
Facing the Future
The experts agreed that the nature and outcome of
the succession struggle within the Herut component of
Likud will be the most important development to
watch in Israeli politics in the near term. It will
determine whether the party will be identified with
the ultranationalist and religious right, retain the
loyalty of Sephardim, and secure the support of
religious and nationalist parties for future coalitions.
One academic argued that Likud's prospects for
surviving in its present form are poor unless Moshe
Arens succeeds Shamir as leader of Herut. Although
Arens's policies are no more moderate than his two
major rivals-Sharon and Levi-his leadership style
is more likely to appeal to the Liberals. The academic
predicted that Shamir eventually will support Arens
because of Sharon's and Levi's persistent efforts to
undermine Shamir's position.
The experts believe that Sharon or Levi or both may
bolt Likud if they do not come out on top. Sharon has
a natural home in Tehiya-Tzomet, and neither Arens
nor Levi would be sorry to see him go. Levi could
make the Sephardi TAMI party a force to be
reckoned with by rallying his own extensive Sephardi
constituency.
The future leadership of Peres over Labor and of
Moday over the Liberal faction of Likud hinges
directly on their ability to demonstrate effective
leadership in resolving Israel's economic crisis,
according to the academics. If they can turn the
economy around, Peres may be able to build a Labor-
dominated coalition with those Liberals who would
follow Moday out of Likud. A conspicuous failure to
prevent economic disaster, on the other hand, could
prompt Rabin to try to replace Peres
Without major electoral reform to raise the minimum
percentage of the national vote required for a party to
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Secret
win representation in the Knesset-currently only 1
percent-the religious and other minor parties have
little incentive to merge. Their existence is guaranteed
through the patronage and other benefits that Labor
and Likud provide. The religious parties, in
particular, will continue to play a key role in the
formation of coalitions, and their ability to extract
concessions on religious legislation is likely to
increase, even in Labor-led governments. The experts
agreed that in the long run the polarization between
the religious and the secular segments of the Israeli
population poses a greater threat to national unity and
domestic tranquillity than do ethnic divisions.
The scholars believe that Sephardim probably will
continue to support Likud overwhelmingly in future
elections, given their deep-seated rejection of the
Labor establishment. Nonetheless, Sephardi voting
patterns may show greater flux in the future if the
economic and social gains made in recent years
deteriorate sharply. This will not necessarily lead to
renewed support for Labor. Sephardim could, for
example, set up a new ethnic political grouping under
the leadership of Levi and other Sephardi politicians
who got ahead in Likud. In their support for Likud
and the new Sephardi religious party in the 1984
election, Sephardi voters demonstrated their ability to
exploit their demographic advantage to promote their
interests
The experts believe the Israeli Government will not
respond favorably to peace initiatives launched by
others because of its concern for maintaining the
delicately balanced coalition and the domestic
consensus. The government probably will conduct
much of its foreign relations through discreet,
informal diplomatic channels, as has been the pattern
in the past
On economic reform, the scholars do not hold out
much hope that Israel will make the necessary hard
decisions-such as cutting government spending, real
wages, and consumption. The government will be
constrained, in their view, by the increased
unemployment, reduced living standards, and greater
emigration that such tough economic measures would
be likely to cause.
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Lebanon's Khomeini:
Muhammad Husayn Fadlallah
Muhammad Husayn Fadlallah, a Shia
fundamentalist cleric based in southern Beirut, has
become a key leader of the extremist Hizballah
movement and is attracting the support of increasing
numbers of Lebanese Shias. He visits Iran frequently,
maintains ties with high-level members of the
Khomeini regime, and advocates the establishment of
an Iranian-style Islamic state in Lebanon. He is a
charismatic orator who could eventually emerge as
the dominant Shia figure in Beirut and attempt to
incite a revolt among discontented Shias.
Fadlallah was born in 1935 in the Shia holy city of An
Najaf in Iraq, but his family came from a village in
southern Lebanon. He studied Islamic jurisprudence
until 1966 in An Najaf, where he may have come
under the influence of Khomeini, who arrived there in
1964. He then returned to Lebanon and began to
develop a following among Lebanese Shias seeking a
return to Islamic values)
Fadlallah's goal is to spark a Shia revolution in
Lebanon that would overthrow the present
government and replace it with a Shia-dominated
Islamic republic. He rejects the National Pact of
1943, upon which the Lebanese political system is
based, because it favors Christians over Muslims.'
Fadlallah argues that Shias now form a majority in
Lebanon and should establish a government based on
Islamic law
Increasing Influence
Fadlallah has become one of the most prominent
figures in the pro-Iranian Shia fundamentalist
movement in Lebanon. He maintains extensive
contacts with Iranian leaders and has traveled to
Tehran twice this year and met with Ayatollahs
Khomeini and Montazeri, Foreign Minister Velayati,
' The National Pact allocates Lebanese Government positions on
the basis of the population of each religious sect, according to the
national census of 1932. Christians and Sunni Muslims hold most
of the key positions. Demographic changes since then, however,
and Assembly Speaker Rafsanjani. He professes
allegiance to Khomeini and his concept of political
leadership by a senior cleric and has stated that the
Iranian revolution is his model for Shia activism.
Fadlallah operates primarily through the Muslim
Students Union, a radical organization that he
commands in the predominantly Shia southern
suburbs of Beirut. Its members proselytize and
propagandize in the name of Islamic fundamentalism.
The Union, which functions both as a militia and as a
political and religious group, almost certainly serves
as a front organization for the covert Lebanese branch
of the militant Da'wa Party.
last year that the
Muslim Students Union had at least 300 full-time
members)
Fadlallah's influence, however, extends far beyond the
Muslim Students Union. Observers describe him as a
fiery orator whose sermons attract large audiences to
his mosque in southern Beirut. Poverty,
unemployment, and a widespread feeling of political
disenfranchisement are making many Shias in the
slums of Beirut receptive to Fadlallah's rhetoric.
Increasing numbers of them view him as their
primary spiritual leader
Fadlallah has enlarged his base of support through
social welfare programs aimed at the Shia masses.
The Muslim Students Union, for example, provides
financial assistance, schooling, and other charitable
programs for poor Shia families,
Terrorism as a Political Weapon
Fadlallah plays an important role in the Hizballah
terrorist network that is waging a campaign of
violence against US, West European, and Israeli
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Fadlallah conceals his radical ideology behind
moderate-sounding language when speaking to
personnel and facilities in Lebanon. He serves as a
spiritual leader and a coordinator of radical Shia
activities in Beirut. Fadlallah recently claimed he
could put 6,000 armed Hizballah fighters on the
streets of West Beirut at any time,
Fadlallah has been linked to nearly all of the major
acts of anti-US terrorism in Lebanon during the past
four years. Fadlallah and his adherents almost
certainly continue to plan attacks against Westerners.
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Secret
AA
IMP-ft
and quiescent-has been spurred to action in recent
years mainly by the inflammatory rhetoric and
activism of strong religious leaders. Fadlallah's
popularity and following almost certainly will grow in
the next few years as long as most Lebanese Shias
remain bitter and dissatisfied with their political and
economic situation.
Fadlallah is a particularly dangerous radical Shia
figure because he operates successfully as a
fundamentalist religious leader and masks his role as
coordinator of terrorism. His pronouncements clearly
have the capability to incite young Shias to violence
and other forms of radical political activism. (__-]
An analogy between Fadlallah and Khomeini may be
premature, but there are important similarities.
Fadlallah's role in the Lebanese Hizballah movement
is almost as central as that of Khomeini in the Iranian
revolution. If the Shia radicals continue to gain
strength, Fadlallah may lead the dominant majority
political movement in Lebanon within a few yearsF_
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Fadlallah also works closely with Hizballah leaders
based in the Bekaa Valley. He recruits potential
suicide commandos from among his followers and
sends them to Islamic Amal camps in the Bekaa,
Fadlallah uses terrorism as a political weapon in his
quest for an Islamic state. He has thus far targeted
foreign interests because his ideology postulates that
the first step in the Shia revolution must be the
removal of Western influence from Lebanon. It is
likely that Fadlallah and his adherents will eventually
expand their campaign of violence to include
Lebanese Government-particularly Christian-
officials and institutions.
Implications
The continued growth of the radical Shia movement
in Lebanon depends to a large extent on the
charismatic leadership of clerics such as Fadlallah.
The Lebanese Shia population-traditionally passive
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Secret
Iran: The Clerical
Opposition in Mashhad
Conservative clerics in the northeastern Iranian city
of Mashhad are increasing their opposition to the
Khomeini regime. Led by Grand Ayatollah
Tabatabai-Qomi, they are maneuvering to gain
support in anticipation of a power struggle following
Khomeini's death. The Mashhad clerics want both to
block the selection of Ayatollah Montazeri as
Khomeini's successor and to promote a regime in
which clerics play a more limited role. The regime's
efforts to bring traditionally independent Mashhad
under control have been a major source of friction.
Troubles in Mashhad
Opposition clerics sponsored antiregime protests in
Mashhad, Qom, and Tabriz last November. The
demonstrations were called to commemorate the
death of Grand Ayatollah Shirazi, the senior cleric in
Mashhad, and to protest the deteriorating economic
situation. The government responded harshly against
demonstrators in Mashhad, killing between 50 and
200.
During the demonstrations Grand Ayatollah Qomi of
Mashhad, one of only five grand ayatollahs in Iran
besides Khomeini, publicly called on all Shia clergy to
struggle against the Khomeini regime and condemned
clerical dominance of the government as un-Islamic.
Several relatives of Qomi were arrested in Mashhad
for organizing the demonstrations. A respected
Iranian political journal recently reported that the
ultraconservative Hojatieh society, whose stronghold
is Mashhad, has resumed its organizational
activities-stopped since Ayatollah Khomeini spoke
against it early last year-and declared its support for
Qomi. The Hojatieh is said to be strong among
bazaaris and regular military officers throughout
Iran.
The Hojatieh society probably has resumed its
activity now to try to build support in anticipation of a
power struggle following Khomeini's death. The
conservatives oppose Khomeini's heir apparent,
Montazeri, who they believe will continue Khomeini's
policies. The Hojatieh probably is reacting as well to
its loss of influence in the Majles (parliament)
following last year's election.
Mashhad long has been a center of opposition to the
regime. Qomi and the late Ayatollah Shirazi
organized demonstrations there in 1983 to protest
economic conditions and what they saw as radical and
inept regime policies. Opposition press sources have
reported an undercurrent of unrest in Mashhad
throughout the past year. Attempts to conduct
demonstrations last spring were suppressed by the
Revolutionary Guard. US diplomats have learned
from a source with family ties in Mashhad that
Qomi's supporters in the region have been in a state of
unrest since the latest demonstrations in November
and are "waiting for something to happen."
A key feature in the recent demonstrations in
Mashhad, and a source of concern to the regime, is
the growing role of the bazaar merchants. A Mashhad
native told US diplomats in Abu Dhabi that most of
the protesters in Mashhad were bazaaris. The regime
probably worries that disgruntlement among
merchants there will spread to other cities. Bazaar
merchants throughout Iran played a key role in
bringing Khomeini to power by providing money and
other resources. Their unhappiness with the
deterioration of the economy and with the regime's
strict implementation of Islamic law has been
growing, but, until the demonstrations at Mashhad,
they have rarely taken to the streets.
Ayatollah Tabatabai-Qomi
Qomi has publicly opposed the regime since at least
1981. He delivered a speech that spring in which he
labeled all governmental policies as un-Islamic. Qomi
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and Shirazi issued a joint statement that same year
accusing the government of engaging in torture,
arbitrary trials, and confiscations. Later that year
Qomi sent an open letter to the government
condemning the ouster of President Bani-Sadr and
calling for a boycott of the second presidential
most important in Iran
last year the government became worri
Resentment toward Khomeini's actions as well as
philosophical differences apparently are important
factors behind Qomi's opposition. In February 1979,
the month the Iranian revolution took place, Qomi
spoke with great bitterness to US diplomats on how
Khomeini had "sat under an apple tree in Paris
issuing edicts" while he and Shirazi were trying to run
Mashhad, where the Shah's government had ceased to
function. The fighting in Mashhad during the
revolution was probably the most violent in the entire
country, including Tehran. Qomi related that during
the worst of the fighting against the Shah's troops-
some 2,000 were killed in four days-bodies of the
victims were stored in his house until they could be
washed and secretly buried. Qomi asked, "Where was
Khomeini during all this?"
While Qomi did not take an active part in planning
anti-Shah activities in Mashhad, he supported them,
and his son provided active leadership. Qomi had
spent several years in jail or internal exile during the
1960s and 1970s for his opposition to the Shah.
During the protests against the Shah's land reform in
1963, Qomi hid Khomeini in his basement.
Another cause of Qomi's resentment has been the cult
of personality built up around Khomeini and the
depiction of him as the preeminent cleric in Shia
Islam. The title of ayatollah is not a formal one but is
based on a consensus of the clerical community. At
the time of the Iranian revolution, the consensus of
the clergy was that Khomeini ranked lowest among
the six most senior ayatollahs, among whom was
included Qomi
about the influence of local clerics on Friday prayer
leaders and began having its propaganda office
dictate the content of Friday sermons throughout
Iran.
According to one scholar, Khomeini also has tried to
force bazaaris and others throughout Iran to pay their
required religious donations to the Friday prayer
leaders in each city-who are appointed by the
regime-rather than to local clerics of their choice.
by last
spring contributions to ayatollahs such as Qomi who
have spoken out against the regime were increasing
sharply, while other ayatollahs who had remained
silent were not receiving such support.
Khomeini's Representative in Mashhad
Following the revolution, Qomi and Shirazi lost much
of their political power to a lesser cleric, Hojjat ol-
Eslam Abas Vaez-Tabasi, whom Khomeini had
appointed as his representative in Mashhad. Tabasi
uses his position as superintendent of the Mashhad
Shrine of Imam Reza, the eighth Imam of Shia Islam,
to try to secure clerical loyalty to the regime. The
shrine has property holdings worth millions and
receives large sums in donations from the hundreds of
thousands who make the annual pilgrimage. Tabasi
uses this money to support politically sympathetic
clerics throughout Iran.
Vaez-Tabasi very quickly antagonized Qomi.
Immediately upon assuming his position in 1979,
Tabasi began ordering arrests, trials, and executions
of those he believed had worked for the Shah's regime
or collaborated with it. Within a month such actions
by Tabasi and other Khomeini supporters led Qomi
publicly to denounce "unauthorized arrests and hasty
executions."
Vaez-Tabasi has continued to exercise his power in an
arbitrary manner. According to exile press reports in
1983, Tabasi's men temporarily kidnaped Grand
Ayatollah Khoi's representative in Mashhad for
Tehran and Mashhad: Sources of Friction
To undercut the influence of opposition clerics in
Mashhad, the Khomeini regime has forbidden them
to teach at the theological school there, one of the
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allegedly refusing to give money to politically active
theological students. Khoi's representative reappeared
after three days shorn of his beard-an act designed
to insult and humiliate him. Last year, when Tabasi
was broadcasting a Friday sermon at the Mashhad
television station, he misjudged the intentions of a
technician approaching to adjust his microphone and
shot and killed him. Station employees went on strike
for several days to protest the murder, but Tabasi
apparently was not disciplined.
Outlook
The opposition clerics in Mashhad are likely to
become a rallying point for bazaaris unhappy with the
deteriorating economic situation and therefore will
pose an increasing challenge to the regime. Their
ability to organize dissent is hampered, however, by
the absence of a positive political program and by
their belief that clerics should not take a direct role in
secular affairs. The perception that Qomi opposes
everything and favors nothing will be an obstacle as
well.
The principal aim of Qomi and the Hojatieh society is
to block efforts by the radicals to have Montazeri
named as Khomeini's successor. Qomi and other
senior clerics hope to force the regime to create a
leadership council of three to five clerics-an option
allowed by the Constitution-after Khomeini dies
that would include some senior conservative clerics.
Their goal is the eventual emergence of a regime led
by capable laymen to whom the clerics would provide
only general guidance
Should central authority break down in Iran after
Khomeini's death, Mashhad is likely to be one of the
first areas to break free. The city's geographic
isolation-1,000 kilometers east of Tehran-and its
tradition of independence will make it almost
impossible to control without massive resort to force.
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Islamic Conference:
New Leadership, Old Problems
Newly elected Islamic Conference (OIC) Secretary
General Sharifuddin Pirzada, a Pakistani Shia, faces
formidable problems in advancing OIC influence and
interests. Although the OIC conference last
December produced some results, notably the return
of Egypt to the organization, prospects for the OIC to
play a constructive role in the Muslim world's most
contentious issues-the Iran-Iraq war, Afghanistan,
and the Arab-Israeli dispute-remain slim. Pirzada
also must cope with a restless Afro-Asian membership
unhappy with the OIC's Arab focus.
Progress at Sanaa
The OIC foreign ministers' conference in Sanaa,
North Yemen, last December was encouraging to the
moderate members:
? Egypt, expelled from the OIC in 1979, was restored
to full membership despite the opposition of Syria,
Iran, Libya, and South Yemen.
? Kuwait led a successful effort to secure passage of a
tough antihijacking resolution.
? A consensus was achieved for the first time on a
resolution calling for continued OIC mediation of
the Iran-Iraq war, although the Iranian Foreign
Minister later denied Iran had accepted a new OIC
effort.
New Leadership Style
Pirzada, who served as Pakistan's Attorney General
and Minister of Law and Parliamentary Affairs in
Zia's government, appears intent on being a more
effective leader than his Tunisian predecessor, Habib
Chatti. According to the US Ambassador to Saudi
Arabia, Pirzada makes a more favorable impression
than Chatti, who had a reputation as a dilettante. An
aide close to Pirzada lamented that Chatti insisted on
making statements on too many subjects and overused
the press. A Jordanian delegate said that there also
was considerable discussion in the corridors at Sanaa
about corruption in the OIC and the alleged
profligacy of Chatti and his Tunisian "Mafia."
Pirzada and Key Issues
Pirzada believes that his Pakistani origin will make
him a more creditable interlocutor in OIC efforts to
mediate between Iran and Iraq. A Gulf foreign
minister said that, because Pirzada is a Shia, he
probably would be more positively received by the
Iranians than Chatti, a Sunni and an Arab.
In mid-January Pirzada told the US Ambassador to
Saudi Arabia that he was encouraged by the Iranian
attitude toward the Sanaa conference. First, unlike
the OIC Casablanca summit a year ago, Iran did not
boycott the meetings; second, Iranian Foreign
Minister Velayati had a more flexible attitude toward
discussing conditions for ending the war. Velayati also
told members of the Pakistani delegation that the
OIC no longer seems so pro-Iraqi. Despite Pirzada's
optimism, we judge that any OIC Iran-Iraq peace
initiatives are almost certain to fail while Khomeini is
alive.
Pirzada has been described as well disposed toward
the United States, but he is not likely to stray from
the OIC line on Middle Eastern issues. He recently
told US diplomats that he was "realistic" about the
US role in the Middle East, but his public comments
since his election reflect standard Arab views. For
example, he said that Israel must withdraw from all
Arab territory, including Jerusalem, and the
Palestinians must get back their homeland.
Pirzada told the US Ambassador in Riyadh that he
was encouraged by his discussions with King Hussein
of Jordan and PLO chief Yasir Arafat and was
optimistic that the two would agree on a peace plan to
present to other Arab states and the United States.
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Despite Pirzada's intentions to seek deeper OIC
involvement in Afghanistan, we judge that the
conference will remain ineffective because of limited
options. On the one hand, Pirzada will avoid offending
Soviet-leaning Arab states, and on the other, he is
likely to keep in step with the Pakistani Government's
measured approach to the Soviet occupation.
African and Asian Discontent
Some Asian and African delegates claimed that the
OIC was concerned only with Arab issues and gave
African and Asian concerns and culture short shrift.
The delegates charge that, because the Arab League
has been unable to convene a summit, OIC meetings
have evolved into a forum for discussing Middle
Eastern issues. Non-Arab delegates also resented the
fact that Chatti remained in office more than a year
after his term expired.
The claims of the non-Arab Muslims have some
credibility. The final communique issued at Sanaa
had no resolutions dealing with the problems of South
and Southeast Asia-the home of more than half of
Islam's 900 million adherents-and only three on
Africa: support of Namibia and condemnation of
apartheid in South Africa; emergency food aid to the
drought-ridden Sahel; and support for the Federal
Islamic Republic of the Comoros:
? Thirteen resolutions dealt specifically with the
Middle East, emphasizing Arab-Israeli issues and
criticism of the United States.
? Three resolutions were not specific to any region,
dealing with hijacking, UNESCO, and closer
cooperation between member states.
? One dealt with Afghanistan, calling for "further
efforts to safeguard the independence of
Afghanistan as a nonaligned Islamic state." The
resolution did not mention the Soviet occupation.
We believe that non-Arab states will view Pirzada's
statements in a recent press conference in Bangladesh
as indicating interest in their regions. Pirzada said
that, although the Iran-Iraq war, the Middle East
situation, and Afghanistan had top priority, other
problems such as the Ganges water dispute and Bihari
refugees in India were among the issues also needing
prompt attention.
Pirzada's recent choice of a Malaysian-former
Ambassador to France Rahman Jalal-instead of a
Turk, as the assistant secretary general to represent
Asia indicated his willingness to pay more attention to
issues outside the Middle East. We believe that
nomination of the Turk would have been seen by
Asians and Africans as "business as usual."
In addition to the Asian position, Pirzada filled two
other assistant secretary general positions. (The only
holdover is Fuad al-Khatib, a Saudi, as the assistant
for political affairs.) Pirzada avoided annoying the
Saudis-the OIC's chief financial backer-by
selecting a Mauritanian, instead of a Libyan, to
represent the Arab region. To represent Sub-Saharan
Africa he named the candidate from Guinea-Bissau,
who had been agreed upon at Sanaa.
Prospect
We believe that, even if Pirzada establishes a new
leadership style at the OIC, the conference will not be
able to assume a major role in key Third World
issues. Pirzada will probably give Asian and African
issues more attention, but Arab issues will continue to
dominate as long as Saudi Arabia picks up the lion's
share of the OIC budget. Increased Asian and
African Muslim disaffection would further undermine
the effectiveness of the organization.
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Azad Kashmir:
A Portrait of Pakistan's
"Independent" Dependency
Azad Kashmir, the region of Jammu and Kashmir
that is under Pakistan's control, has been given a
fictitious independence by Islamabad. In reality, it is
ruled and financed directly by the Pakistani
Government. Some Kashmiri activists are agitating
for complete independence from both Pakistan and
India, but it is likely that Pakistan will retain control
over Azad Kashmir. Elections for Azad Kashmir's
parliament, scheduled for April 1985, will not change
Islamabad's dominant role.
A Legacy of Partition
Azad ("Free") Kashmir, an arc-shaped area of
approximately 13,000 square kilometers with a
population of 2 million, is the part of the former
princely state of Jammu and Kashmir that was seized
by Pakistan during the 1948 war with India. Pakistan
has since insisted that only a UN-sponsored plebiscite
should determine the fate of all Jammu and Kashmir.
Thus, while India has absorbed its portion of Kashmir
and made it one of India's 19 states, Islamabad has
never formally annexed its section, insisting that all of
Jammu and Kashmir is disputed territory.
The boundary between Azad Kashmir and Indian-
held Kashmir has been the scene of numerous border
incidents and shootings between Pakistani and Indian
troops stationed on the 1971 cease-fire line. Although
few casualties have resulted from these incidents,
border tensions heighten Pakistani sensitivities to the
Kashmir dispute. Mountainous terrain and adverse
weather work against a major escalation of hostilities
in the area.
Arrested Political and Economic Development
Since 1947, Azad Kashmir has been allowed the
trappings of independence by Islamabad, pending
resolution of the Kashmir dispute. Azad Kashmir has
been granted, for example, its own president,
assembly, supreme court, constitution, flag, and
anthem. Its "capital" is in Muzaffarabad.
Internal policy is dictated by Islamabad; Pakistani
President Zia-ul-Haq has the power to remove and
replace the state's president. Although Azad
Kashmir's cabinet ministers are native Kashmiris,
most of the senior civil servants are from other parts
of Pakistan. A Ministry of Kashmir Affairs in
Islamabad coordinates relations between Azad
Kashmir and the Pakistani Government.
Islamabad has paid little attention to the economic
development of Azad Kashmir, and the area lags
other parts of Pakistan. From 1947 to 1965 it was
excluded from federal development funds because of
its "independent" status. Local tax and customs
revenues flow directly to Islamabad, and the local
budget is provided entirely by the Pakistani
Government.
Foreign aid donors are reluctant to undertake
development projects in Azad Kashmir because of its
unresolved political status. Only China and Poland
have undertaken projects in the area.
Open Politics
Although Azad Kashmir's 40-seat Assembly has been
dissolved since 1977 because of its support for the late
Prime Minister Zulfikar Ali Bhutto, Zia has refrained
from extending martial law there. His ban on political
parties does not apply to Azad Kashmir. To apply
martial law and the party ban to Azad Kashmir
would, in Pakistan's view, imply that it has
incorporated the state, thus implicitly recognizing
India's annexation of its own portion of Kashmir.
Azad Kashmir's two dominant political parties are the
All Jammu and Kashmir Muslim Conference
(AKMC), led by Sardar Abdul Qayyum Khan, and
the Azad Kashmir Peoples' Party (AKPP), headed by
Secret
NESA NESAR 85-006
1 March 1985
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Pakistan
_...,.._... International boundary
--?- Province boundary
Q National capital
o Province capital
-------- Railroad
Road
Track or trail
0 100 200 Kilometers
0 100 200 Miles
100
Yecheng
AKor9illk)
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Pir All Jan Shahau. The AKMC is a conservative,
religious-based party, while the AKPP is a branch of
the opposition Pakistan People's Party. Both parties
call for the "liberation" of Indian-held Kashmir and
its incorporation, along with Azad Kashmir, into
Pakistan.
An offshoot of the AKMC is the Kashmir Liberation
Organization (KLO), formed in 1984 and headed by
retired Lt. Gen. Faiz Ali Chishti. The KLO,
according to US Embassy sources, seeks to organize
international support for Kashmiri self-determination.
Although it has advocated nonviolent methods,
Embassy sources of undetermined reliability allege
that the KLO has approached Western governments
for arms and material aid.
According to US Embassy sources, Islamabad will
allow elections for Azad Kashmir's Assembly in April
1985, after the national parliamentary election is
over. These sources say that Zia has assured local
politicians that the Assembly elections will be held on
a party basis.
The most likely winner in any Azad Kashmir election
is the AKMC. US Embassy reports indicate that
Sardar Abdul Qayyum Khan has a high reputation
among local inhabitants and that his party is much
better organized than the AKPP. Islamabad would
probably welcome an AKMC victory since the party
has supported Zia's Islamization program.
Kashmiri Separatism
While politics in Azad Kashmir is still dominated by
the AKMC and the AKPP, US Embassy reports
suggest that there is growing separatist sentiment
among the local populace. Although traditional Azad
Kashmir political groups call for eventual unification
of all of Kashmir with Pakistan, separatists are calling
for complete independence from both India and
Pakistan. Organized movements have formed, some of
which espouse armed revolt to achieve their goals.
The most extreme of these movements is the Kashmir
Liberation Front (KLF), which advocates the use of
force to achieve an independent Kashmiri state. The
KLF claimed responsibility for the abduction and
murder of an Indian diplomat in London in 1984.
India retaliated by executing the imprisoned Maqboul
Butt, founder of the KLF. The popularity of Kashmiri
separatists is growing, especially among the young,
according to US Embassy sources.
The KLF's efforts to liberate Kashmir will be aided
by the increased arms that flowed into Pakistani-held
Kashmir throughout 1984, according to US Embassy
sources. Most of these weapons probably originate
from Afghan refugees and insurgents located in
Pakistan's North-West Frontier Province.
The KLF is not strong enough to threaten Indian or
Pakistani control of their respective portions of
Kashmir, but the increased availability of arms may
encourage it to strike at targets and stir up agitation
among the Muslim majority in Indian-held Kashmir.
This, in turn, would lead to more border incidents in
the Kashmir region. We expect Islamabad to
maintain its surveillance of the KLF and other
separatist activities to keep border tensions with India
to a minimum.
Implications for Indo-Pakistani Relations
Pakistan will continue to assert control over Azad
Kashmir while maintaining the fiction that it is
independent. Pakistan still officially demands that a
plebiscite be held in all of Jammu and Kashmir, but
since 1971 it has minimized the issue in favor of
stabilizing relations with India. We do not believe
that the Zia government will more vigorously press
Pakistan's claim to the disputed territory.
India is very unlikely to give up control of its portion
of Kashmir, which it considers to be an integral part
of the country. In New Delhi's view, surrendering
Kashmir would encourage separatists in other parts of
India and weaken its strategic position against both
Pakistan and China. Moreover, Kashmir is the
ancestral home of the Nehru family.
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Economics
President Zia, we believe, has accomplished his
primary economic goal-maintaining domestic
prosperity and denying the opposition a rallying point
in the presidential referendum and the elections for
the national and provincial assemblies. His economic
record has been generally strong, and preliminary
data indicate the economy is growing at a record pace
this year.
Zia, however, will have to contend with several
economic problems in the postelection period. An
antiquated tax system, heavy subsidies on food and
other basic commodities, increasing defense spending,
and the domestic debt burden are leading to greater
government budget deficits. With remittances now
declining and spending on imports rising rapidly,
Pakistan's current account also is deteriorating. If the
brakes are not applied to the foreign exchange outflow
or if substantial new aid is not forthcoming, serious
foreign payments problems will emerge in the next 18
months.
Economic Performance Under Zia
The government is predicting record real growth of
9.9 percent in FY 1985 '-up sharply from the 3.5-
percent growth in FY 1984 and well above the 6-
percent annual average of FY 1978-83. The relatively
poor performance in FY 1984 primarily reflected bad
weather, some mismanagement in the agricultural
sector, and shortfalls in public- and private-sector
financing. Government concern over lingering
problems in the economy became apparent last
November when Planning and Development Minister
Mahbubul Haq announced that the five-year
economic development plan for 1984-88 would be
replaced by a "rolling" three-year plan.
A spectacular recovery this year in agriculture and
last year's poor performance makes the official
economic growth estimate for this year plausible.
Growth in the agricultural sector, which accounts for
about one-fourth of GDP and employs over half the
work force, is predicted to rise 12.6 percent in FY
1985 following a 6.2-percent drop in FY 1984:
? Government and industry officials estimate the
cotton crop may reach 970,000 metric tons, more
than double last year's disastrous harvest.
? Favorable weather has encouraged government
officials to predict record wheat and rice harvests. A
recent government decision to increase the
procurement price for wheat this April should
prompt farmers to use costlier inputs-particularly
fertilizer and pesticides-resulting in increased
yields.
The government also is projecting an 1 1.5-percent
growth in industrial production.
? The bumper cotton crop should buoy domestic
cotton processing and textile manufacturing, the
country's largest industry.
? The Planning and Development Minister claims
new capacity in the jute, vegetable oil, beverage,
and electronics industries will boost output.
? Several new oil discoveries are creating a miniboom
in the domestic petroleum industry. Oil output
averaged almost 26,000 b/d in December, twice the
average for 1983.
Preliminary evidence indicates consumer price
increases may be in the double-digit category this
year, but the government has done a relatively good
job of shielding the domestic population from higher
prices for basic items. It has released commodities
from government stocks and imported basic items in
short supply. Islamabad has absorbed most of the
increase in the cost of imported cooking oil. Heavy
subsidies on wheat prices continue. No announcement
Secret
NESA NESAR 85-006
1 March 1985
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Pakistan: Agricultural Production, 1981-85-
Note scale change
Wheat
Million metric tons
Rice
Million metric tons
Sugar Cane
Million metric tons
Cotton
Thousand metric tons
17;,i,, arc 1 ,r lis:nl years ceding AI June nt the st,,tcd -,tr
I.inn,,tcd
has been made on how much, if any, of this year's
proposed higher wheat procurement prices will be
passed on to the consumer.
Cost of Buying Stability
Because the government steadfastly refuses to either
reform the tax structure to bring in new revenue or
expand the money supply, the budget deficit continues
to grow. The deficit in FY 1984 was 24 percent higher
than in FY 1983, and we expect it to rise again this
year. The US Embassy reports that fixed
expenditures such as defense and debt servicing are
taking half the current budget. Pressure on the budget
is causing spending cutbacks in education and in
routine maintenance of the country's infrastructure.
Expenditures on food subsidies, military spending,
and debt service have also cut into development
programs. Development spending, which has been
declining as a share of the total budget since Zia took
power, fell in real terms last year. With the slowdown
in capital investment, Pakistan is losing ground in its
effort to provide jobs for its rapidly growing
population. The lack of domestic funds for
development also hinders the utilization of foreign
aid, most of which is tied to projects that require some
government funding. There currently is a large
backlog in the aid pipeline
The government probably will find the deficit even
more difficult to finance over the next year. Declining
overseas worker remittances and the move to interest-
free "Islamic" banking probably will reduce funds
available to the government. Recently, about half the
deficit, for example, has been financed through small
savings deposits in government-sponsored schemes
that paid attractive rates of interest.
Bad News for Balance of Payments
Pakistan's foreign payments position is deteriorating
rapidly because of a projected record trade deficit,
declining remittances, and a growing debt service
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Current account
-991
-1,610
-554
-1,028
-1,038
1,650
-1,600
Trade balance
-2,765
-3,450
-2,989
-3,334
-3,482
3,700
-3,500
Exports (f.o.b.)
2,798
2,319
2,627
2,668
3,126
3,000
3,600
Imports (f.o.b.)
5,563
5,769
5,616
6,002
6,608
6,700
7,100
Net services and transfers
1,774
1,840
2,435
- _-
2,306
2,444
2,050
1,900
Worker remittances
2,095
2,224
2,886
2,737
2,740
2,400
2,400
Long-term capital (net)
581
746
1,276
882
999
1,000
1,200
Gross disbursements
956
1,092
1,301
1,234
1,418
1,420
1,600
Amortization
-516
-492
-386
-542
-520
-520
-550
Other
141
146
361
190
101
100
150
Other and short-term capital
772
629
390
-34
-236
-250
-300
Financial gap
-362 e
235
1,112 e
180
275
900
700
a Fiscal year ending 30 June of the stated year.
n Government projections made last October.
CIA projection.
CIA projection that assumes no new import quotas, debt
rescheduling, or significant new foreign assistance.
Surplus for the fiscal year.
burden. In the first half of FY 1985, Islamabad drew
down foreign exchange reserves by an estimated $700
the same time, import costs rose by 15 percent- 25X1
mainly because of price increases--pushing up the
trade deficit.
million.
Pakistan's foreign debt repayment burden is likely to
exceed $1 billion this year. Most of this is owed to the
consortium of Western countries and multinational
institutions that have lent money to Pakistan at
concessional rates; the United States is the major
contributor. In addition, payments to the
International Monetary Fund are projected at $225
million, and interest payments on US Foreign
Military Sales (FMS) credits will grow to an
estimated $66 million.
Despite a push, export earnings during the first half of
FY 1985 dropped by over 6 percent from the first half
of FY 1984. About half the drop was attributed to the
lingering effects of the disastrous crop in FY 1984. At
Remittances and Overseas Workers
Remittances received through the banking system for
the first half of FY 1985 were 13 percent below the
same period in FY 1984. A Planning Ministry official
believes the decline has bottomed out for the year,
but, even if he is right, we estimate that remittances
will still fall about $500 million below the peak in FY
1983. According to the Minister of Planning and
Development, Islamabad did not anticipate the
decline in remittances or a return of overseas workers.
In fact, the five-year plan assumed an average annual
growth in remittances of nearly 9 percent and a net
outflow of workers.
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Some government planners are now assuming a net
return of 10,000 to 15,000 workers annually of the 1.5-
2 million Pakistanis working abroad, but the recent
rate of return suggests that the planners are too
optimistic. Nearly 70,000 Pakistani workers left
Saudia Arabia last year, and another 10.000 have left
thus far this year,
Another study shows that returnees from Abu
Dhabi exceeded new hires during the first nine
months of 1984 by 50 percent.
Although most of the returning workers are not likely
to find good jobs, they probably will not be a serious
political liability. They are small in number compared
to the total work force, and most of them have some
savings. A massive return of workers is not likely,
because Saudi Arabia as well as the other Gulf states
still need a large foreign work force to maintain a
high standard of living, and the Pakistani military
plays an important role in many of these countries.
Domestic Prosperity
Economic conditions were not a major political issue
in the presidential referendum or the elections for the
national and provincial assemblies, in part because a
large segment of the population is relatively
prosperous:
? Zia's consumer-oriented spending policies have
reduced the burden of potential price increases for
most of the population.
? Farmers have enjoyed rising incomes because of
good weather and higher government procurement
prices.
? The economic health of many lower-class Pakistanis
continues to be sustained by family members in the
Middle East.
? Bazaar merchants, traders, and owners of cottage
industries and service establishments have seen their
fortunes improve because of the growin urchasin
power of the Pakistani population.
The Coming Financial Crunch
The improving domestic economy will probably give
Pakistan only a little breathing room with its foreign
payments problems. Increased exports are not likely
to completely compensate for declining worker
remittances and a growing debt service burden:
? Cotton is in ample supply worldwide, and global
textile competition is holding down prices of cotton
textiles.
? Because the wheat crop will not be harvested until
spring, it will be mid-1985 before export gains can
be realized.
? Rice export earnings will be limited because prices
in Asia have been falling.
? Some of the import savings from increasing
domestic oil production and declining world crude
oil prices will be offset by rapid growth in domestic
energy demand.
Thus, Zia must soon turn his attention to resolving the
country's balance-of-payments problems if Pakistan is
to avoid a financial crunch. If reserves fall at the pace
of the first half of FY 1985, they could be down to
$300 million by the end of the fiscal year-equivalent
to less than three weeks of imports.
We believe that, before the end of FY 1986, Pakistan
will need additional foreign assistance to shore up its
shaky international payments position or will have to
institute a domestic austerity program including a
cutback in imports. The Planning and Development
Minister has already made veiled comments about
balance-of-payments problems when giving his good
news about economic growth
Pakistan recently requested an advance on its 1985
FMS loan to avoid falling behind on FMS interest
payments. In a related move, Islamabad indicated a
willingness to accept concessional financing for future
FMS loans after rejecting earlier US proposals on the
grounds of preserving its nonaligned status. The
decision came too late to be considered for the funds
they expect to receive in 1986.
Zia probably will first approach the United States for
additional financial assistance if the foreign payments
situation continues to deteriorate. If Pakistan turns to
the International Monetary Fund and other Western
aid donors, they probably will insist Islamabad move
faster to reform its tax structure, increase domestic
energy prices, and reduce consumer subsidies-issues
deferred by Zia in his quest for domestic tranquillity.
25X1
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Sri Lanka:
Resettlement and Realpolitik
Colombo plans to begin settling more than 30,000
armed Sinhalese farmers in newly irrigated areas of
north and east Sri Lanka, in part to strengthen its
control in these areas and change the ethnic
composition of the local population. Announcement of
the settlement scheme in late January put another
nail in the coffin of a politically negotiated resolution
of Sri Lanka's ethnic tensions. Militant Tamil
separatists are likely to react with violence against the
new settlers, resulting in another round of bloodshed.
Colombo's resettlement plans risk international
censure. The lands involved in the resettlement
scheme are included in a massive international
development program designed to improve the living
standard of a large portion of the country's agrarian
population, both Sinhalese and Tamil. The decision
also underscores longstanding Tamil claims that
Colombo has withheld the benefits of international
development programs from the Tamil community.
Colombo may hope to use the threat of politically
motivated settlement as a bargaining chip in
requesting anti-insurgency assistance from the United
States and other aid donor countries.
The Plan
In January, President Jayewardene announced that,
after a three- to four-month preparation period, the
government would begin gradually moving Sinhalese
farmers into the newly opened sections of the
Mahaweli Project bordering Tamil majority areas.
Security forces in the region will also be increased,
according to Minister of National Security Lalith
Athulathmudali, and specially trained members of a
new Special Task Force drawn from the national
police will take over anti-insurgency responsibilities
for the region. The settlers will be trained in small
arms and provided with weapons.
Several factors influenced Jayewardene's decision to
make public his plan-hinted at for several months:
? Tamil militants rejected his proposal for settling
communal problems in late December.
? Insurgent attacks against Sinhalese civilian targets
escalated through January.
? Athulathmudali made a much-publicized trip to
Washington to discuss security matters, thereby
emphasizing US interest-and potential
involvement-in Colombo's efforts.
Although Athulathmudali touted several successes by 25X1
the security forces during the first two months of
1985, insurgent control of the north and east has
increased in recent weeks. The Jaffna peninsula has
been closed to foreigners since 19 January, and Sri
Lankan citizens now must have passes to travel
anywhere in the north. Distribution of food, gasoline,
and other supplies has been disrupted, and there is no
likelihood of a quick resumption of rail or private
Development and Political Coercion
Jayewardene has toyed with the idea of using
allotment of Mahaweli lands as a lever against the 25X1
Tamil insurgents for nearly two years, according to
diplomatic reporting. Colombo permitted conservative
Buddhist nationalist groups to recruit and settle tens
of thousands of landless Sinhalese peasants in the
Mahaweli area following the communal riots of July
1983 to test the waters but backed off later in the face
of massive protests by local Tamils. Illegal Sinhalese
encroachment continued through 1984, however, and
provided Jayewardene with the opportunity to solve
the problem by decreeing that all future settlers on
state lands would be chosen according to ethnic group
affiliation in order to maintain communal harmony
Secret
NESA NESAR 85-006
1 March 1985
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In 1985 Sri Lanka is realizing the first benefits of the
Mahaweli Project, one of the world's most extensive
development programs. Named after the largest river
in the area, the program calls for damming and
diverting most of the major rivers of the eastern half
of the island, impounding their waters, constructing
large hydroelectric facilities, and developing
subsidiary downstream systems to support irrigation
and water needs of several hundred thousand
farmers.
The areas to be developed formed part of the
classical Sinhala kingdoms of Anuradhapura and
Polonnaruwa. Drought, malaria, and foreign
domination had driven most farmers from the area
centuries ago, leaving the region uninhabited except
for a few tribal groups and wild animals. With the
restoration and upgrading of the ancient irrigation
system, the area is expected to provide more than
500,000 tons of paddy rice annually, potentially
making Sri Lanka one of the region's largest rice
exporters.
The United States, in coordination with the
International Monetary Fund, the United Nations,
and the World Bank, has been one of the largest
supporters of the project and has played a critical
role in the development of the portion that will be
first opened for settlement. The US contribution to
this portion has been more than $200 million, mostly
for preparing downstream infrastructure for the
resettlement of local farmers displaced by the
construction and for the expected influx of new
settlers to the region.
Under these conditions the Sinhalese, who comprise
nearly 75 percent of the population, will eventually
dominate the Mahaweli Project lands and be able to
divide the region currently claimed by the Tamil
minority as their traditional homeland.
scheme particularly sensitive. Political control of this
section has passed back and forth between Tamils and
Sinhalese for centuries. Tamil separatists claim that
the low-lying lands from north and east of
Anuradhapura to south of Batticaloa form the heart
of the eastern section of the traditional Tamil
homeland, and their propaganda describes the area as
an essential part of the proposed independent Tamil
state of Eelam. The region also includes the
strategically important port at Trincomalee.
On the other hand, the Sinhalese majority is raised to
consider the region as the cradle of Sinhala culture.
Sinhalese schools use history texts that refer to the
great Sinhala kings who repulsed invasions by Tamils
from south India and the kingdom of Jaffna in these
areas.
We believe Jayewardene and Athulathmudali hope to
use armed Sinhalese settlers to disrupt the Tamil
insurgents' increasing control of the eastern portion of
the country. The proposed agricultural villages will
serve as a first line of defense against further
insurgent encroachment in the area and facilitate
extending Colombo's military dominance of the
troubled region. The program has three further
effects of almost equal importance to Jayewardene:
? Dividing this Tamil-dominated area with bands of
Sinhalese villages.
? Demonstrating to his Sinhalese constituency that
Colombo is taking a hard line toward the Tamil
insurgents while guaranteeing the fruits of
development for the Sinhalese.
? Signaling Tamil separatists based in southern India
as well as New Delhi that Colombo is willing to
institute drastic, long-term measures to defeat the
insurgency.
Implications for the United States
and Other Project Donors
We believe Colombo expects a negative international
reaction but probably calculates that organizations
and countries including the United States-
providing financial backing to the Mahaweli Project
will not jeopardize its overall success by condemning
the settlement scheme. Colombo may even hope that
The allocation of state lands in Sri Lanka historically
has been an emotionally charged issue, with the area
in Jayewardene's recently announced settlement
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the settlement scheme. Colombo may even hope that
the project's success will make donor governments
more willing to aid efforts to contain the insurgency.
At the same time, in discussions with US officials in
Colombo and again during his January visit to
Washington, Athulathmudali held out the possibility
that Colombo could be persuaded not to implement
the plan if the insurgency is brought under control
between now and the planned arrival of the first
settlers in late April. We believe he intended to imply
that the right kind of anti-insurgency aid from the
United States could help head off this drastic
measure.
31 Secret
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India: Stalling on Punjab
Prime Minister Gandhi has staked his political
reputation on defusing Sikh unrest in Punjab, but we
believe he confronts major obstacles, some of which
result from his government's stance. The absence of
conciliatory moves from New Delhi has heightened
Sikh alienation, with the growing breach between the
government and moderate Sikhs and sporadic violence
by Sikh extremists complicating prospects for
negotiating Sikh demands. Unless Gandhi offers
concessions to strengthen the hand of the moderates,
the deadlock is likely to continue and even worsen, to
the detriment of Gandhi's image as well as to India's
stability and its relations with Pakistan and the
United States.
Growing Rift
Differences between Sikhs and the national
government have broadened since Rajiv Gandhi
succeeded his mother. Independent public interest
groups have charged that Congress Party officials
helped instigate Hindu reprisals against Sikhs after
her assassination. The US Embassy in New Delhi
reported that even progovernment Sikhs saw Rajiv's
unwillingness to authorize an official investigation as
a decision to barter justice for Hindu votes in this
month's state elections.
Sikh outrage was compounded when three of the
politicians allegedly involved were permitted to run
for parliamentary seats as Congress Party candidates,
and two subsequently were given important party
posts
Several widely publicized incidents associated with
Rajiv's national election campaign doubtless have also
alarmed Sikhs. Gandhi allowed the Sikh mayor of
Delhi, a member of the Congress Party, to be shouted
down at a public meeting in November
Some Congress election posters
depicted Indira Gandhi's assassins in turbans that
identified them as Sikhs. A full page political
advertisement for the party, carried nationally in both
the vernacular and the English-language press, raised
thinly veiled questions about Sikh patriotism.F__1 25X1
New Delhi's foot-dragging on negotiations, in our
view, has further diminished Sikh confidence in
Rajiv's professed good intentions. Their concern
appears to be justified.
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The continuation of sporadic violence by Sikh 25X1
extremists in Punjab, despite the massive presence of
government security forces, is both an embarrassment
to New Delhi and a threat to Sikh reconciliation. It
could also force New Delhi to halt the phased transfer
of security responsibilities from the Army to
paramilitary troops. Since December there have been
attacks on two Sikh high priests who indicated their
willingness to hold talks with New Delhi, as well as
sabotage. The ability of the extremists to strike in
virtually every district of Punjab probably reflects at 25X1
least tacit support for their activities among many
Sikhs in Punjab.
In our view, the vacuum left by the detention of
moderate Sikh leaders since last June, together with
the ability of the extremists to target proponents of
conciliation, is once more giving radicals the upper
hand. US Embassy reporting notes that the
disenchantment of Sikh moderates with the
government probably will make them even less willing
to oppose the extremists
Secret
NESA NESAR 85-006
/ March 1985
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The jive high priests of the
sacred Golden Temple in
Punjab, whose recent emer-
gence as political spokesmen
breaks a tradition of priestly
New Delhi's Equities
Gandhi is aware that, to maintain his credibility, he
will have to show progress toward defusing Sikh
unrest in Punjab, which he has described as the
leading threat to India's unity and security. As
opposition leaders have been quick to point out, the
Congress Party's landslide parliamentary victory in
December affords Gandhi little excuse for failure.P
Gandhi's image as an evenhanded secular leader also
rides on his ability to conciliate the Sikhs. His
campaign promise to work for an end to communal
and caste strife has focused attention on the issue.
Although Rajiv probably has written off Sikh support
for the near term, the minority Muslims and
untouchables whose votes contributed to the Congress
Party's landslide victory are likely to see his handling
of the Sikh issue as a benchmark of his attitudes
toward all minorities. Some Hindus also have publicly
appealed to Rajiv to put the equitable treatment of
Sikhs before other political considerations.
We judge that New Delhi's concern over the strategic
implications of Sikh unrest in a key state on the
border with Pakistan will continue to provide the
statements by senior government
officials echo Indira Gandhi's suspicion that
Islamabad has taken advantage of and even instigated
antigovernment activities in Indian Punjab. Both
Indian and Pakistani officials have acknowledged that
Pakistan's alleged involvement with the Sikhs remains
the major obstacle to improved relations.
The Prime Minister doubtless also is concerned about
the adverse effects of the Army's occupation of
Punjab on military morale. Senior officers have
publicly voiced fears that the Army's prominent
security and political role since last summer has
antagonized the majority Sikh population in a
potential staging area on the border with Pakistan. F
Gandhi also has reason to worry about the effect of
the Army's involvement in Punjab on combat
readiness.
the Army's national security duties
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Harchand S. Longowal,
leader of the Akali Dal
Party, remains in
defense mission. India may have hoped the large
seasonal exercises close to the border with Pakistan
that began in January would remind Islamabad that
the Indian military's combat capabilities have not
been weakened by its policing duties in Punjab.F_
The effect of Hindu-Sikh tensions on Sikhs in the
military-where they comprise about 1 1 percent of
the enlisted ranks and at least 20 percent of the
officer corps-could be one of the most important
problems resulting from the Army's role in Punjab.
Revolts in June by some 1,000 Sikh troops across the
country raised New Delhi's fears that the loyalties of
Sikh military personnel were divided. Since the armed
forces are having difficulty retaining skilled
personnel, India's military leaders would certainly
view with dismay a sudden increase in resignations by
Sikhs from the military-particularly the officer
corps. Such concerns may explain recent reports that
the military has given some Sikh officers the
promotions due them, after initial delays.
Government Response and Options
We judge that Gandhi's decision-despite the far-
reaching implications of Sikh discontent-to delay
action on the issue until after the state elections in
March in part reflects his calculation that
consolidating Congress Party control over key states is
immediately attainable, whereas progress on the
Punjab problem will be slow at best. Gandhi's public
moves since the national election in December have
been limited to appointing a Cabinet-level commission
The objectives of Sikh demands have varied from
secession to economic, political, and religious
concessions that would increase Sikh dominance in
Punjab. Demands articulated by moderate Sikh
leaders before the government's crackdown in Punjab
last summer included:
? Annexation of Punjabi-speaking areas of adjacent
states.
? Sole control for Punjab of Chandigarh, the state
capital now shared with Haryana.
? Formal declaration of Amritsar as a holy city.
? Sole control of river waters now shared with
neighboring Haryana and Rajasthan.
? Separate religious codes for Sikhs, who are now
governed by Hindu marriage and property codes. F_
Other demands supported by many Sikhs include:
? The grant to Punjab of total autonomy, with New
Delhi retaining control only over defense, foreign
policy, communications, currency, and railways.
? Reversal of New Delhi's 1980 decision to recruit
Army personnel on the basis of a state quota
system. The Akali Dal alleged the new rule would
reduce Sikh representation from its current 15
percent to 1.5 percent.
to explore options and reiterating his refusal to
negotiate longstanding Sikh demands for more
autonomy in Punjab.
In our view, New Delhi probably is working behind
the scenes for further moves immediately after the
state elections.
that the government may hold trials in March of Sikh
extremists arrested in the course of last year's
crackdown in Punjab. Over the past two months,
government representatives have undoubtedly visited
the jailed Akali Dal leaders for exploratory talks, but
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it is doubtful that they will be receptive to government
contacts so long as they remain jailed and isolated
from one another.
A conciliatory gesture by Rajiv after the state
elections could still ease tensions and facilitate
resumption of a dialogue. Indian commentators have
suggested that Rajiv could, for example:
? Publicly exonerate the Sikh people of responsibility
for his mother's assassination if-as seems to be the
case-the investigation implicates only three
individuals and disproves earlier rumors of a broad
Sikh conspiracy.
UK-based Jag/it S. Chauhan,
self- proclaimed leader-in-exile
of the Sikh nation of Khalistan,
whose extradition is sought by
? Initiate an impartial investigation of the November Punjab will have to be resolved as part of the broader
riots. issue of states' rights now under government review.
? Ensure that Sikh victims receive promised
compensation.
? Grant Sikh demands that Chandigarh-which
serves as the capital of both Punjab and Haryana
states-be ceded outright to Punjab.
? Unconditionally release moderate Akali Dal leaders
detained under special national security provisions
since June.
? Drop his insistence that Sikh demands for greater
autonomy be omitted from all negotiations.
? Hold preliminary talks with a range of moderate
Sikhs, including the five high priests, members of
the temple management organization, former
Congress Party politician Amrinder Singh, and the
Akali Dal leaders, to bolster their unity.
Prospects
We judge that, unless New Delhi demonstrates
enough flexibility on Punjab to win the good will of
Sikh moderates, Gandhi's efforts to restart
negotiations are likely to fail. The government's
unwillingness so far to distinguish between moderates
and extremists almost certainly will work to the
advantage of the latter. At any rate, disarray among
the moderates could give extremists a virtual veto over
prospective talks.
More sporadic violence is likely, and prolonged delays
in restarting a dialogue could greatly increase the
magnitude, reviving the specter of civil war in Punjab
and spreading Hindu-Sikh tensions throughout India.
If the government responded to increased trouble by
returning Punjab to full Army control, Sikh support
for the extremists probably would grow, as would the
risk of assassination attempts against senior
government officials, including Gandhi and President
? Expeditiously announce new state elections as a first
step toward restoring civil rule in Punjab-even at
the risk of an Akali Dal victory.
Most observers agree, however, that New Delhi will
have to deal cautiously with Sikh demands for greater
state autonomy lest they set off a chain of similar
demands from around the country. The status of
Singh.
Renewed strife in Punjab probably also would strain
relations with the United States, Pakistan, Canada,
and the United Kingdom. New Delhi would probably
press Washington, Ottawa, and London to curb
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proextremist activities by their Sikh residents. More
violence almost certainly would rekindle Indian fears
of Pakistani involvement. Sikh extremists might
welcome such an end to the good will generated in
New Delhi by Pakistani President Zia's announced
intention of bringing Sikh hijackers to trial in early
March.
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India: High Hopes
for Probusiness Policies
Indian businessmen enthusiastically anticipate major
reforms in economic policy over the next several
months. Prime Minister Rajiv Gandhi is still
considering his options, however, and so far has
announced only a few minor changes.'
Rajiv Gandhi's public statements hint at substantial
liberalization of government restrictions on private
industrial production. He told businessmen recently
that the "problem will not be with government
constraints ... this government ... [will be] moving
faster than you." Some industrialists already report
that bureaucratic approvals can be obtained more
quickly than in the past. According to the publisher of
a major business magazine, Rajiv's economic advisers
are unusually receptive to advice from outside the
government. New Delhi's initial decontrol moves,
however, have been limited. For example, paper and
vehicle manufacturers may vary their product mix
without seeking official permission but only if no
additional investment or foreign support is needed.P
Speculation about radical changes in foreign trade
policy is rampant in the Indian press and business
community. A new government study recommends
additional subsidies and concessional loans for export
industries such as commercial vehicles, machine tools,
and diesel engines, but it also welcomes imports that
compete with domestic production. Rajiv told a
business group that he prefers to provide protection
from imports through tariffs rather than through
licensing and will move quickly to streamline import
procedures for the electronics industry. New Delhi is
even considering a controversial proposal that would
permit Indian bottlers to buy Pepsi-Cola soft drink
concentrate. The government hopes to improve India's
image among foreign businessmen who remember the
well-publicized forced exit of Coca-Cola in the late
Whatever the reduction in government restrictions
and increase in exposure to foreign competition, the
central government will retain a major economic
policy role under Rajiv. Embassy officials report a
consensus among businessmen, economists, and
journalists that Rajiv should not and will not
completely abandon the interlocking system of
controls and regulations in the Indian economy. We
believe businessmen will become even more dependent
on official decisions if, as rumored, government
financial incentives for production and exports are
restricted to industries that bureaucrats believe are
most likely to succeed. Moreover, Rajiv has recently
instructed the Planning Commission to retain
ambitious targets for public-sector investment, even
though he recognizes that financial resources are
evaded voluntary price controls.
As the new government moves to more specific
economic policy recommendations, unrealistically
high hopes among businessmen will probably be
deflated. Both Rajiv and his Finance Minister have
already hinted that new taxes will be imposed, and
some businessmen apparently have been shocked by
the discovery that payoffs to government officials no
longer influence excise tax recommendations.
Moreover, Rajiv's proposed campaign against tax
evasion, even if only temporarily effective, will limit
the funds available to businessmen. In addition, press
reports suggest that New Delhi is reconsidering its
late 1984 decision to permit private manufacture of
some telecommunications equipment and is
investigating television manufacturers who have
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The press of India is vibrant, sophisticated, has a
large readership in many languages, and is the
nation's most important mass medium of
communication. India inherited from the British a
well-developed press with relatively high journalistic
standards, adequate equipment, technical skills, and a
working distribution system. The press is nationalistic
and particularly sensitive to foreign criticism of India,
especially when it involves national security, but it is
itself frequently critical of the government, generally
on domestic issues.)
Newspapers and Periodicals
The number of Indian newspapers and periodicals and
their circulation have grown steadily since
independence. According to the 26th annual report of
the Registrar of Newspapers, as of 1981 there were
19,144 newspapers and periodicals-1,264 of the
newspapers were dailies, 5,624 were weeklies, and
12,256 were periodicals.
The Hindi press has the largest circulation.
Newspapers in Hindi had a circulation of 13,984,000
(27.4 percent) in 1981 followed by the English-
language press with a circulation of 11,039,000 (21.6
percent). Four of the 12 leading dailies were in
English, compared to two each in Hindi, Bengali, and
Malayalam, and one each in Tamil and Telugu.
Registered periodicals and newspapers were published
in 87 languages. Press in other languages had a
circulation of less than 10 million copies.F
Newspapers owned by joint stock companies claim the
largest part of India's circulation (38.4 percent) in
1981, although the majority of publications in India
are individually owned. Four of the major groups are
the Times of India group, Indian Express group,
Hindustan Times group, and Ananda Bazar Patrika
group. In 1981 the four largest chains distributed a
majority of the daily newspapers throughout the
country and accounted for a large percentage of the
circulation of dailies in metropolitan areas.F_~
The central and state governments published 597
newspapers and periodicals in 1981, and political
parties published I 1 1. The largest number of
government publications-117-was concerned with
news and current events, followed by social welfare,
agriculture, commerce and industry, education,
literature and culture, and transport and
communication
The Hindi and English Press
Compared to most developing countries, India has an
unusually sophisticated press. This is especially true
of the leading English-language papers, which
subscribe to wire and photo services, maintain staffs
of first-rate feature writers, and buy articles from
abroad
The English daily press concentrates primarily on
national and international news but also provides
regular coverage of sports, women's features, and
commercial activities. Crime, entertainment, and
human interest are generally given only limited
attention. Most newspapers, particularly the larger
publications, gear their reporting to the interests of
middle- and upper-class educated urbanites who form
the bulk of their readership. The newspapers with the
widest circulation tend to be relatively conservative.
The Hindi daily press at one time had a reputation for
sensationalism, but many Hindi publications have
become more sophisticated and devote substantial
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Table I
Major Newspapers and Periodicals
Daily newspapers
Indian Express
Malavala Manorama
(Ma/avala Delight)
Times of India
Language
English
Malayalam
English
Bangalore, Madras, Madurai,
Hyderabad, Cochin, Ahmed-
abad, Vijayawada
Bombay, Delhi, Ahmedabad,
503,858
Probusiness, somewhat critical
Navbharat Times
Bengali
Hindi
Lucknow
Calcutta
Delhi, Bombay
396,224
377,985
of the United States
Nationalistic, nonpartisan, anti-
Communist
Belongs to Times ofIndia, lead-
(New India Times)
ing Hindi-language paper
Mathrubhunti
Malayalam
Calicut
351,441
The Hindu
English
Madras, Bangalore, Coimba-
348,547
Conservative, generally pro-
Jugantar (New Epoch)
Bengali
tore, Hyderabad, Madurai
Calcutta
325,585
West
Neutralist, sensationalist, pro-
Thanthi(Telegraph)
Tamil
Bangalore, Madras, Coimba-
280,492
Congress
Sensationalist, tabloid type,
Telugu
tore, Salem, Cuddalore,
Madurai, Tiruchi, Tirunelveli,
Vellore
Tinupati, Visakhapatnam,
271,647
generally neutralist
English
Vijayawada
Delhi
257,749
Objective, relatively liberal,
The Tribune
Weeklies
Ma/ayala Manorama
English, Hindi, Punjabi
Malayalam
nationalist
Weekend edition; literary and
Kumudam (Lotus)
Tamil
Madras
579,559
cultural
Literary and cultural
Rani
Tamil
Madras
385,297
Literary and cultural
Blitz
English
Bombay
353,766
Tabloid news weekly, generally
Employment News
Hindi, Urdu, English
Delhi
280,000
pro-Communist, anti-West
Labor trends
Sunday Loksatta
Marathi
Bombay _
276,583
Probusiness, pro-West
Ananda Vikatan
Tamil
Madras
256,386
Literary and cultural
Dharmavug
Hindi
Bombay
212,433
News and current affairs; week-
(Religious Era)
end edition of Navbharat Times
Chitralekha
Gujarati
Bombay
210,000
Similar to Life magazine
New Age
English
Delhi
205,000
Central organ of the Commu-
nist Party of India
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T
able 1 (continued)
Daily newspapers
Other
Chandamama
Hindi, Gujarati, Telugu,
Madras
452,000
Children's monthly
English, Kannada, Bengali,
Punjabi, Assamese
359,522
Monthly, scandal and crime
Santa
Hindi
Delhi
280,688
stories
Women's fortnightly
India Today
English
Delhi
192,477
Fortnightly, similar to
Newsweek
coverage to political, economic, religious, and ethnic
affairs at the national, regional, and local levels. They
still, however, give relatively little coverage to
international affairs. The Hindi press, generally less
well endowed than the English press, often takes more
journalistic liberty. The Hindi press reflects the pro-
or anti-government viewpoints of owners of individual
Regional News Agencies
There are a number of news agencies and regional
news services supplying news features and
background material to Indian newspapers. The four
leading press services are the Press Trust of India
(PTI), Hindustan News (Hindustan Samachar-HS),
the United News of India (UNI), and Samachar
Bharati. The PTI and UNI supply news in English,
and the other two operate in Hindi and other Indian
languages.
PTI started its operation in 1949. Over 200
newspapers in India subscribe to the PTI service, as
do All India Radio, central and state governments,
commercial establishments, universities, and public
institutions. Press Trust of India also operates the
Non-Aligned News Agencies Pool for India. The UNI
started its operation in 1961 and has recently started
a Hindi service. Like PTI, the UNI maintains a
resident correspondent in Moscow but appears less
prone to Soviet influence. Both PTI and UNI depend
largely upon arrangements with foreign international
news agencies for collection of news from abroad.
The Communist Press
The Communist Party of India publishes 28
newspapers and controls two major news services-
the India Press Agency (IPA) and the Central News
Service (CNS). Among the more popular newspapers
and periodicals that carry Soviet-inspired stories are
Daily Patriot, Daily National Herald, Weekly Blitz,
Weekly Link, Weekly News Age, Weekly New Wave,
Weekly Peoples Democracy, Weekly Current, and
Daily News Today
The Soviets maintain frequent contact with elements
of the Indian press. The news agency PTI has a news
exchange program with TASS, keeps a resident
correspondent in Moscow, and is a frequent conduit
for the placement of Soviet disinformation. A favorite
tactic is to plant a story in a friendly newspaper; have
the TASS representative in India pick up the story for
the Soviet media; and then have Indian news agency
correspondents in Moscow (PTI in most cases) close
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Table 2
Newspapers and Periodicals
by Language
Daily
Newspapers
Triweekly
and Biweekly
Newspapers
Total
Newspapers
and Periodicals a
Hindi
409
26
5,329
English
105
8
3,583
Urdu
128
7
1,299
Bengali
41
8
1,463
Marathi
120
17
1,098
Gujarati
39
3
696
Tamil
99
4
804
Malayalam
101
2
766
Telugu
31
546
Kannada
77
3
611
Punjabi
22
407
Oriva
10
0
Sindhi
4
Assamese
3
Sanskrit
2
0
30
Bilingual
31
12
1,506
Multilingual
350
Other
3
268
11 1981 data.
the loop by printing the story in India-often in
reputable newspapers. The Soviets pay particular
attention to the vernacular press, which is more
vulnerable because of its weak economic base. The
Soviets provide the vernacular media with material,
bribes, lavish entertainment, and the promise of paid
advertising either from commercial firms trading with
the USSR or directly from the Soviet Embassy. The
Soviet Union and other Communist countries offer
senior journalists visits to the Soviet Union and
Eastern Europe with side trips to more sought-after
places like London and Paris. Other inducements
include the promise of scholarships to the sons and
daughters of low-ranking journalists, promises of jobs
within the country through Soviet and Communist
Party contacts, and a regular supply of duty-free
goods
Press Relations With the Government
Press freedom is guaranteed under Articles 13 and 19
of the Constitution. The press has the right to publish
proceedings of Parliament without being subjected to
censorship or the fear of civil or criminal action.
Article 19, which guarantees the right to freedom of
speech and expression, was suspended in June 1975
when Indira Gandhi's government declared a state of
emergency. Earlier that year, New Delhi enforced a
merger of the existing news agencies to facilitate news
censorship, and Samachar, the state news agency, was
established. Precensorship was declared illegal by the
courts in September 1975, and censorship of foreign
correspondents ended in September 1976. In 1978
Samachar was dissolved and the earlier news agencies
reestablished. In March 1979 a National Press
Council was established to uphold freedom of the
press and maintain and improve journalistic
standards
In normal times, the government exerts considerable
indirect influence over the news media. New Delhi
generally prefers subtle persuasion to more direct
measures, such as newsprint supply regulations and
restrictions on industrial and communication
hardware. Many small publications, in particular, rely
heavily on government press releases and background
stories to fill much of their space. The government has
encouraged the growth of small and medium-size
newspapers through control of import licenses for
newsprint, the placement of advertising, and financial
arrangements
The Press Information Bureau (PIB) is the main
agency used by the government to inform the people
about its policies and programs. PIB serves dailies,
periodicals, news agencies, and radio and television
organizations, both Indian and foreign; arranges
publicity for government policies, programs, and
activities; provides feedback on how these policies and
activities are received; and advises the government on
information policy. PIB issues material in English,
Hindi, and 16 other languages.
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