STAFF NOTES: MIDDLE EAST AFRICA SOUTH ASIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000400010037-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 9, 2016
• Document Release Date: March 8, 2001
• Sequence Number: 37
• Publication Date: February 24, 1975
• Content Type: REPORT

V
Middle East, Africa, South aAsia+ f 24 F.el~ 75
/NQA/CQ 1 :bf
N0433/7,5
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Secret
No Foreign Discern
15:T&PP Kau~
Middle East
Africa
South Asia
1 '
`State Dept. declassification & release instructions on file
Secret
134
No. 0433/75
February 24, 1975
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No Foreign Dinsem/No Dissem Abroad
Baokgound Use GnZy,/ControZZed Disaem
Warning Notice
Sensitive Intelligence Sources and Methods Involved
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Classified by 005827
Exempt from general declassification schedule
of E. 0. 11652, exemption category:
S 5B (1), (2), and (3)
Automatically declassified
on: Date Impossible to Determine
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MIDDLE EAST - AFRICA - SOUTH ASIA
This publication is prepared for regional specialists in the Washington com-
munity by the Middle East - Africa Division, Office of Current Intelligence,
with occasional contributions from other offices within the Directorate of
Intelligence. Comments and queries are welcome. They should be directed to
the authors of the individual articles.
CONTENTS
Middle East: Egypt Asks PLO Participation in
Next Conference at Geneva . . . . . . . . . . . 1
Libya: Corruption on the Rise . . . . . . . . . 3
Bahrain: Foreign Policy Review . . . . . . . . . 5
Angola: Daniel Chipenda Joins National Front
for the Liberation of Angola . . . . . . . . . 8
Nepal: King Birendra Crowned . . . . . . . . . . 9
Feb 24, 1975
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Middle East
Egypt Asks PLO Participation in
Next Conference at Geneva
Egypt has called on the US and the USSR to
invite the Palestine Liberation Organization to
participate in the next session of the Geneva con-
ference. The proposal, surfaced in the Cairo press
on February 23, is a departure from the previous
Egyptian position that favored deferring the issue
of PLO participation until after the conference
reconvened.
The Egyptian move is designed to counter
Palestinian charges that President Sadat is sacrific-
ing the interests of other Arabs for the sake of con-
cluding a second-stage Egyptian-Israeli disengagement
agreement. PLO anxiety on this score apparently was
heightened by a letter Sadat recently sent to PLO
Chairman Yasir Arafat which, according to press
accounts, convinced Arafat that a new agreement was
likely to be concluded during Secretary Kissinger's
next visit to the Middle East.
Zn an interview with the Beirut press, the chief
of the Syrian-controlled PLO group, Saiqa, claimed
that Sadat has agreed to joint Egyptian-Israeli control..
of the strategic Sinai passes and the Abu Rudays oil
fields, and to a long-term peace agreement. The
Saiqa leader, Zuhavr Muhsin, labeled the alleged agreE:-
ment a conspiracy and declared than both the PLO and
Syria would actively work against it.
The prospect of a second-stage agreement evidently
has created new tension and division within the PLO
leadership. Saiga met
last week to discuss reports that PLO political spokes-
man Qaddumi had agreed to support Egyptian policy on
withdrawals and to authorize Egypt, rather than Jordan,
to negotiate with Israel on behalf of the PLO. At
the meeting, Saiqa leader Muhsin and Popular Demo-
cratic Front for the Liberation of Palestine head
Hawatmah condemned Arafat and Qaddumi. Syrian Foreign
(Continued)
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Minister Khaddam, who also attended, claimed that
Syria is getting fed up with Fatah. Khaddam called
on the Popular Democratic Front and Saiqa to try to
force Arafat to reject Egypt's position. The dis-
pute presumably was aired at a long PLO executive
committee meeting this weekend. (SECRET NO FOREIGN
DISSEM/NO DISSEM ABROAD/CONTROLLED DISSEM)
(143-6119)
Feb 24, 1975 2
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Libya
Corruption on the Rise
President Qadhafi, who prides himself--often
publicly--on the probity of his administration, will
have to do some serious housecleaning if he is to
maintain his credibility on this sccre. According
to US officials in Tripoli, graft, kickbacks, and
influence peddling--practices that were virtually
stamped out following Qadhafi's takeover in 1969--
are once again becoming the Libyan way of doing
business. The problem is likely to get worse over
the next year, inasmuch as the government intends to
spend well over $5 billion--the largest budget in
the country's history.
The rising level of government expenditures in
a mixed economy where administrative inefficiency
and poor accounting practices prevail is providing
ample opportunities for enrichment to Libyan officials
and businessmen, many of whom have little regard for
Qadhafi, his socialist attitudes, and spartan life-
style. Western observers report that connivance
among government officials, local contractors, agents
of all sorts and foreign suppliers is now a regular
occurrence. The price of doing business is high; for
example, kickbacks of up to 20 percent of a given
contract are often required for closing a deal.
Venality of this sort would be a less threatening
problem for the regime if itwere confined to the
civilian sector of the economy, but the new wave of
corruption seems to have penetrated the sensitive
area of military procurements.
a shadowy organization called the
African Trade and Import Company is now brokering
many if not all armed forces' contracts. According
to one explanation, the company was set up to gen-
erate a source of clandestine funds for the Libyan
intelligence service and to monitor the activities
of foreign companies dealing with the Libyan defense
establishment. Other observers speculate that the
(Continued)
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company is simply a mechanism for laundering kick-
backs for military procurement officers. In any
event, the existence of the company is causing
embarrassment and concern in some government
quartars and poses a serious problem for foreign
firms seeking contracts.
Much of this activity is the result of a new
"get it while you can" mentality fostered in part by
greater delegation of authority throughout the
bureaucracy. Early in his career, Qadhafi relent-
lessly pursued the more venal elements of Libyan
society, but as the burdens of his office have
increased he has become less watchful. That cor-
ruption has increased as Prime Minister Jallud has
picked up the administrative slack is not surprising.
Jallud has a well-established reputation for having
profited considerably from his role as the regime's
chief oil and arms negotiator.
The Libyan media have hinted darkly that a
crackdown is in the offing, but Qadhafi will have
to move cautiously in cleaning up the military,
which is still his primary source of support. Should
he allow the problem to fester, however, he will
eventually be vulnerable to the same charges that he
used so successfully to bring down the regime of
King Idris. (SECRET NO FOREIGN DISSEM/NO DISSEM
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(143-6119)
Feb 24, 1975
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Bahrain
Foreign Policy Review
When Bahrain became independent in mid-1971
the UK terminated the treaty arrangement under
which it had guaranteed the island's security
and conducted its foreign policy. Since then Bahrain
has had considerable success in building foreign
relationships, giving it a renewed sense of protec-
tion and support. The US embassy gives Bahrain's
foreign policy high marks, and attributes this to
Manama's careful calculation of its vital interests
and its refreshing acceptance of the country's mini-
scule role in even regional affairs.
The keystone of Bahrain's foreign policy is to
maintain its currently good relations with Iran and
Saudi Arabia, and to encourage better ties between
Tehran and Riyadh, in order to avoid getting caught
in the middle should the two regional powers have a
falling-out. Manama recognizes Iran as the dominant
Persian Gulf power and the only country capable of
picking up the UK mantle for policing the region.
Bahrain mutes its dependence on Tehran, however,
because of pockets of anti-Iranian sentiment on
Bahrain. Iran lrtaintained a claim to the Persian Gulf
island until it renounced it in 1970. Sheikh Isa,
the ruler of Bahrain, is somewhat apprehensive that
Tehran might become less discreet and decide to play
a more aggressive role in the region, especially
after the Shah passes from the scene.
Bahrain openly pursues its relationship with
Saudi Arabia, its other mainstay. King Faysal has
in the past provided generous help in various ways,
,and Bahrain knows its economic well-being is closely
linked to the Saudis. Bahrain's oil refinery which
p\?ovides a significant share of the island's income
is largely dependent on Saudi crude oil and Manama
rec\ogn?zes that its economic future will be enhanced
if ,~.t can continue to provide food, goods, and ser-
vice\s for Saudi Arabia's booming Eastern Province.
Bahrain would like to have the security of
an exaanded Saudi role in the Gulf.
(Comcinued)
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Bahrain's relations with other. Persian Gulf
countries are more complex. The Bahrain ruling
family likes and respects the Sabahs, its Kuwaiti
counterpart, alt-.houcIh it occas-ionall becomes vexed
when liberal Kuwaiti policies cause adverse reactions
in Tehran and Riyadh. When the Khalifas began
receiving oil revenue in the 1930s, they were gener-
ous in their aid to the Sabahs, who then ruled a
relatively impoverished desert sheikhdom; this gener-
osity has been returned manyfold since Kuwait became
affluent.
In 1971, Bahrain chose to remain aloof from the
UK-sponsored United Arab Emirates, but now looks
sympathetically toward some form of increased coopera-
tion with its Gulf neighlx)r_s. This will probably take
the form of economic and social ties and not have
any political ramifications. The Khalif as fear
being submerged by the UAE's greater oil revenue and
population.
Bahrain's relations with Qatar are somewhat
strained;
The two
countries also have a territorial dispute over Hawar
Island, now under Bahraini control despite its proxi-
mity to Qatar.
The demon closest to hand, in the Bahraini view
The Bahraini leadership unequivocally identifies
the Soviet Union as the major threat to a peaceful
and prosperous Gulf. Bahrain has rebuffed Moscow's
bids to establish a diplomatic presence in Manama.
On the strategic level, Bahrain looks to the US to keep
Moscow at bay, and to do so away from the Gulf. The
Khalifas are also concerned about the long-range impact
of Soviet scholarship offers to Bahraini' youth.
(Continued)
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Bahrain shows no inclination to see its present
relations with the UK diminished. In fact, accord-
ing to the US embassy, the desire for a special link
to the West seems to have intensified. The government
is eagerly receptive to close official relations with
the US, not at the expense of the UK, but as a comple-
ment to its relations with London.
Two aspects of the US-Bahrain relationship
trouble the Khalifas. One is the effect on this
relationship of the Middle East problem. The Bahrainis
are anxious that US efforts to achieve an Arab-Israeli
settlement proceed apace and show signs of success.
They fear that a renewal of hostilities will require
Manama to follow frontline Arab opinion, and lead to
a rupture of ties with the US.
The other thing causing the Khalifas some trouble
is the US Navy presence in Bahrain. They are, for a
price, prepared to harbor the US Navy's Middle East
Force, but the Khalifas are anxious that bilateral
relations be broadened and become more active, so as
to de-emphasize the US navy presence. The Bahrainis
are looking for more US technical assistance, as
well as an expansion of US private business activity
in Bahrain. (SECRET NO FOREIGN DISSEM/BACKGROUND USE
ONLY)
25X1A (143-7228)
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Angola
DahieZ Chipenda Joins National Front
for the Liberation of Angola
Daniel Chipenda, a former leader of the Popular
Movement for the Liberation of Angola, announced on
February 21 that he and his 2,000 to 3,000 troops
will join Holden Roberto's National Front for the
Liberation of Angola. The move will give the
National Front an important advantage over the
rival Popular Movement. Both organizations are
weak in the east and draw much of their support
from northern Angola.
Trouble is likely to develop when Chipenda
begins campaigning on behalf of'the National Front.
This could put severe strains on the truce that is
supposed to hold the transitional government together
until independence next November.
Chipenda quit the Popular Movement over a year
ago after a bitter dispute with its president,
Agostinho Neto. He may have some trouble getting
all of his supporters to make the switch to the
National Front. A spokesman for Neto announced in
Angola on Saturday that a number of Chipenda's
officers have returned to the Popular Movement.
(CONFIDENTIAL)
(143-4380)
Feb 24, 1975
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Nepal
King Birendra Crowned
King Birendra, 29-year old ruler of the world's
only Hindu theocracy, was formally crowned on
February 24 in Kathmandu. Birendra ascended the
throne in early 1972 following the death of his
father, but by custom had to await the day royal
astrologers deemed most auspicious for his corona-
tion.
The young King is somewhat of an enigma. Edu-
cated in India and the West, his experience and
exposure would seem to have groomed him to take
his essentially feudal country into the twentieth
century. In three years, however, he has taken few
positive steps to boost the living standards of his,
12 million subjects. Although publicly committed
to social and economic change and liberalizing the
political system, he seems to believe a strong monarchy
is both essential to Nepal's identity and independence
and necessary to keep the country's ethnically diverse
society together.
Birendra's political sytle is emerging slowly
and reflects growing self-confidence. He has begun
to consult other more experienced officials rather
than merely to command. Like his father, he is clearly
adept at manipulating politicians and members of the
royal family. The King retains the loyalty of all
security forces and currently faces no significant
challenge to his authority. He does, however, face
several serious domestic and foreign problems that
will test his leadership.
Popular dissatisfaction is growing as the promised
changes fail to materialize and economic conditions
worsen. Although Nepal is a food surplus country,
people are grumbling about the King's inability to
ease shortages of other consumer goods, to stem infla-
tion--currently about 20 percent--and to check corrup-
tion within the government and royal family. Many
also seem to feel that they are cut off from the
palace and that no one in Kathmandu is representing
their interests.
Feb 24, 1975
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These frustrations are compounded by the lack
of distinct lines of authority within the Nepalese
bureaucracy. Ministers have little or no power.
All significant decisions are made or can be over-
ruled by the King and a few close advisers. Because
bureaucrats are reluctant to make decisions even on
the most routine matters almost nothing gets done
quickly.
Although there is considerable disgruntlement,
especially among educated city 1wellers who seek a
share of power, moo-- Nepalese support and want to
retain the King. There is recognition that external
economic factors--the skyrocketing cost of oil and
imported consumer goods--have compounded Birendra's
problems and hampered his efforts to effect change.
Birendra, for his part, knows that while his
position is now secure, a sharp erosion of public
confidence in his regime could lead to a serious
deterioration of law and order. Furthermore, such
a situation would encourage exiled extremist elements
of the banned Nepali Congress Party to launch a ter-
rorist campaign designed to force the adoption of a
political system under which the King's authority
would be severely limited. The party demands the
total abandonment of Nepal's system of indirect
democracy--four levels of elected councils or
panchayats from village to national--in favor of a
weak constitutional monarchy with a parliament directly
responsible to the people. The party is the only
viable opposition group, and its leader, former prime
minister B. P. Koirala, is the only nationally known
opposition figure with enough stature to cause the
King any concern.
Party leaders have enjoyed safe-haven 'in India
since 1960. New Delhi has allowed the party rela-
tively free rein over the years, but claims to have
seriously hampered the group's activities by tighten-
ing restrictions on''i.ts movements in recent months.
The Nepali Congress Party poses no real threat to the
regime in Kathmandu so long as New Delhi continues
to restrain the politically active exiles. They only
(Continued)
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number a few hundred and have limited amounts of
arms. A somewhat larger number in Nepal sympathize
with the party's aim, but they are fragmented and
disorganized. Party leaders are complaining about
the Indian restrictions and that their organization
is running out of money.
The King seems to be moving slowly toward
adopting some moderate political reforms. He has
recently encouraged open debate, albeit within limits,
on constitutional reform. This month he announced
the formation of a six'-member constitutional reform
commission that is to report within six months. The
inclusion of one moderate former leader of the Congress
Party could signal a possib].L- future reconciliation
between the palace and moderate opposition elements.
This would isolate Koirala even further.
Internationally, Birendra adheres to a policy
of neutrality and friendliness toward all countries.
His main concern is to maintain friendly ties with
Nepal's giant neighbors, India and China. Birendra
would like to lessen Nepal's economic dependence on
India, but realizes that geography makes this diffi-
cult. He knows Nepal has much more to lose than
India if relations sour. New Delhi either supplies
or controls the passage of almost all of Nepal's
essential imported commodities. Certain key commodi-
ties, paid for in rupees rather than hard currency,
fall under an annually-reviewed trade and transit
agreement. New Delhi is also one of Nepal's principal
aid donors. Furthermore, the King is painfuily aware
that India in effect holds the reins on the Nepali
Congress Party.
India, for its part, views landlocked Nepal as
a crucial buffer to China. New Delhi wants a politi-
cally stable government in Kathmandu that is respon-
sive to Indian wishes. At the same time, India
favors political changes in Nepal that would weaken
the monarchy and establish a parliamentary system
similar to India's. The Indians are highly sensitive
to political events in Nepal and to any moves they
interpret as endangering the special relationship
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that has existed between the two countries nince the
early 1950s. Despite i.tn proclaimed commitment to
non-interference in Nepalesev, affairs and nupport for
the monarchy, New Delhi at times uses economic and
political pressure to influence Nepalene policies.
At present, bilateral relationn are uneasy.
l3irendra was shaken by India's tightening of its
control over the Indian protectorate of Sikkim last
summer and probably gave tacit approval to anti-
Indian demonstrations that eccur.rod in Kathmandu.
The Indifinn reacted sharply, recalling their ambag-
nador for over two months. The King in con,.-orned
that India's pique over these eventn--which apparently
ccntinuen?--may signal the begtnnintt of an economic
squeeze designed to force C=ompliance With New Delhi's
political desires. He fears the Indians will drive
a harder bargain in negotiations for a new trade and
transit acireement--the current one expires in April-
possibly including higher pricer, lower quantities
or hard currency payments for key commcxlir_ies. Al-
thoucth New Delhi at thin time probably does not plan
to do more that pass on Its own increased rants and
restrict export of cottmmoditien in short supply in
India, the outcome of the negotiations will be greatly
affected by the gen-vral state of bilateral relations.
The King will try to diversify trade to reduce
dependence; on India. Nis room for maneuver in limited,
however, even if he can f end other nourc-n of supply.
Nepal is essentially an aagriruiturai econc1y that
produces few commodity expor to that. can Compete on
world markets. Additionally, the great bulk of imports
still will have to transit India, gthereby prenervinct
New Delhi's leveracte.
China remains ttirendra'n only real re)untc-rbalaanee
to New Delhi's power and assert ivrnenn. The Kinat will
probably try to play on India's warinenn of China in
order to ensure Indian restraint toward sepal. Ile
will hope to convince- the Indians that the Chinese- are
a ouaa7'aantor of Nepaalc-ne- sovereionty. Dr'sp tutee public
assurances of "firm nuppor t" aeta i.n,t "for- ion inter-
vention" the Chinese clearly have indicated that they
will provide only political and economic ha(-Vino.
(Continued)
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China'n ald I'rojecta, however, are n ranatnnt
reminder to India or i'ekf,ncj' n interent in maintain-
ing a hirlhly vinibie pren nce in Nepal. China clearly
had New Delhi in mind when it agreed earlier thin
month to undertake, a major road prt*ject in Nepal.
Thin will be tho lartlent foreign aid project and will
probably makr_ China 'tepal'n largest aid donor.
(CONS ID1'.NT1AL)
(143-6062)
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