NEAR EAST AND SOUTH ASIA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00289R000301280001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 86
• Document Creation Date: December 27, 2016
• Document Release Date: August 19, 2011
• Sequence Number: 1
• Publication Date: June 6, 1986
• Content Type: REPORT

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Directorate of 1
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l2 8
Near East and
South Asia Review
NESA NESAR 86-013
6 June 1986
Copy 4 4 2
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Near East and
South Asia Review
Articles Syria: The Terrorist Connection
Syria, long a major practitioner and patron of international
terrorism in the Middle East, is directly implicated in the attempt to
bomb an El Al airliner in London last April. Damascus could
temporarily lower its terrorist profile in response to the El Al
exposure, but it will not give up terrorism completely.
Syria: Internal Unrest and Regime Stability
The recent bombings and attempted bombings in northern Syria and
Damascus do not threaten regime stability but give it an opportunity
to crack down on domestic opposition groups and to deflect attention
from Lebanon, where the attacks probably originated, by charges of
Iraqi, Israeli, and US complicity
Syria: Government Resource Allocation and Political Stability
A review of Syria's five-year national development plans and annual
consolidated budgets for the past 25 years suggests that the Assad
regime has retained its hold on power not by reallocating resources
to traditionally disadvantaged groups but by avoiding changes in the
status quo and maintaining an effective internal security structure.
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Lebanese Banking: Keeping the State Afloat
As government authority in Lebanon has eroded, the banks have
begun to play an increasingly critical role in financing government
activities, bridging the gap between collapsing government revenues
and soaring government expenditures. Lebanon's financial crisis
cannot be overcome, however, without resolution of the political
deadlock
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NESA NESAR 86-013
6 June 1986
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Gaza and the West Bank: Recession Sets In 19 25X1
The economies of the West Bank and Gaza are feeling the effects of
the general recession in the Middle East. Although Jordan and
Israel have recently shown more interest in spurring development in
the territories, such efforts will take time to have effect. In the
meantime, the territories' economic outlook is bleak.
Algeria: The Fundamentalist Challenge
Islamic fundamentalism appears to be growing in Algeria, but
government security precautions along with the disunity of the
Muslim radicals are likely to prevent a serious fundamentalist
challenge to President Bendjedid for at least the medium term.
The Maghreb: Prospects for Soviet Inroads
The willingness of Soviet leaders to devote greater attention to the
Maghreb countries of North Africa-Tunisia, Algeria, and
Morocco-stems from political developments in these states and the
shifting power alliances in the region, but, over the medium term,
traditional ties to the West will work against Soviet interests.
Saudi Arabia-China-Taiwan: Riyadh's Awkward Triangle
Saudi Arabia and China are gradually improving ties despite the
lack of formal diplomatic relations, but the major stumblingblock is
Riyadh's longstanding relationship with Taiwan, which has
significant economic ties to the kingdom and depends heavily on
Saudi Arabia: Drugs and Security Worries
Saudi Arabia's role as a consumer of and transit point for illicit
narcotics has expanded despite official interdiction efforts, and
Riyadh fears that established routes for contraband narcotics may
become increasingly attractive as conduits into the kingdom for
weapons and other subversive materials.
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The current regime in South Yemen has failed to consolidate its
position and gain support either at home or abroad. Competing
ambitions and internal rivalries within the collective leadership
coupled with mounting security and economic problems may force
another change in the government lineup.
Kuwait: Ruling Family Faces Parliamentary Challenge) 41
The brief resignation in May of Kuwait's Education Minister may
be the opening salvo in a renewed battle between the government,
dominated by members of the Al Sabah family, and the often
obstreperous National Assembly. The Sabah government seems
unsure of how to respond to the Assembly's attacks.
Iraq's Shias: A Basic Population Assumption Questioned I 47
The long-held assumption that Shias account for 55 percent of
Iraq's population is probably incorrect. The proportion of Shias is
more likely in the 60- to 65-percent range and slowly increasing,
and, as the Shias come to realize this, they will demand a greater
share of power.
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Iran: Prevalence of Black Market I 49 25X1
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The Iran-Iraq war has placed enormous strains on the Iranian
economic system, fostering the development of an extensive black
market, but this unofficial, often illegal, economy has raised
problems of corruption and other complaints that over time could
erode popular support for the government.
Chernobyl' and Nuclear Programs in the Middle East and 53
Heavy publicity given to the Chernobyl' nuclear power station
accident in the USSR has increased concern in the Middle East and
South Asia about the safety of nuclear reactors, but it is unlikely to
set back significantly nuclear power programs in the region.
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The assault on the Sikh Golden Temple on 30 April by police and
paramilitary forces was better planned and executed than the Army
attack two years earlier, but the failure to capture extremist Sikh
leaders and continuing violence in Punjab have forced moderate
Sikhs to admit that the Army may again have to be called in to
maintain order.
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The Implications of Khalistan for Indian Defense Strategy) 161 25X1
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An independent Sikh state of Khalistan would seriously undermine
Indian defense strategy, cutting logistic routes to Jammu and
Kashmir and blocking the Indian Army's preferred invasion route
into Pakistan. If the Sikhs succeeded in seceding, India's strategy
toward Khalistan would resemble New Delhi's military posture
toward Nepal.
Soviet and Afghan airstrikes into Pakistani territory have increased
considerably during the past two months, but they are still confined
to the border area. Islamabad is likely to use the attacks to justify
requests for more advanced military equipment from the United
Afghanistan: Najibullah Settles In
Afghan party chief Najibullah is moving quickly to consolidate
power, strengthening the party and the army, using his tribal ties to
undermine the resistance, and launching a major effort to attract
refugees back to Afghanistan. Despite his efforts, the regime will
probably not make much headway because of party factionalism, a
weak military, and no popular support.
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Bangladesh: Implications of Parliamentary Election
The Bangladesh parliamentary election, although tainted by fraud
and violence, will provide some legitimacy for President Ershad as
he moves toward a presidential election and the lifting of martial
law later this year. Despite its unhappiness with the election
outcome, the army will continue its grudging support for Ershad.
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Sri Lanka: Insurgent Rivalries
The two largest Tamil insurgent groups are approaching a
showdown in the struggle for dominance of the separatist movement.
Even if New Delhi brokers a settlement between Tamil moderates
and the Sri Lankan Government, insurgent rivalries and increased
foreign support suggest that some insurgents will continue
antigovernment attacks.
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Briefs Egypt: Muslim Brotherhood Moving To Prevent Crackdown 81 25X1
India-Pakistan: Limited Antinarcotics Cooperation Foreseen 81
Some articles are preliminary views of a subject or speculative, but the contents
normally will be coordinated as appropriate with other offices within CIA.
Occasionally an article will represent the views of a single analyst; these items
will be designated as noncoordinated views.
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Near East and
South Asia Review
Syria: The Terrorist
Connection
Syria, long a major practitioner and patron of
international terrorism in the Middle East, is directly
implicated in the attempt to bomb an El Al airliner at
Heathrow Airport on 17 April. We believe the
decision to attack the El Al jet was taken at the
highest levels of the Syrian Government, although we
cannot establish President Assad's personal
culpability. We believe that Assad's lieutenants would
seek his approval before undertaking a major terrorist
operation like the El Al affair. It is possible, however,
that Syrian operatives acted without Assad's detailed
Syrian Bath Party officials on 4 February.
knowledge.
The Assad regime uses or supports terrorism as one of
several coercive instruments to advance Syrian goals.
Syrian involvement in the attempt to bomb the El Al
jet, however, is a departure from the methods
Damascus has employed in recent years. Damascus
has tended to use terrorism in a more disciplined
manner and increasingly has relied on surrogate
groups to avoid being directly implicated.
Syrian officials are concerned about the consequences
of being linked to international terrorism and fear
that Israel or the United States might attack Syria if
Damascus is implicated in additional terrorist acts
against Israeli or US targets. Assad's concern over the
exposure of the El Al incident could lead him to lower
Syria's terrorist profile, at least temporarily.
Damascus will not give up terrorism completely,
however, and will continue to target Arab and Israeli
interests that block the attainment of Syrian goals.
Motives
Syria's rationale for the El Al attack is unclear, but
we believe Damascus was attempting to avenge
Israel's interception of a Libyan jet carrying senior
the time, Assad said Syria would not act against
civilian airliners because to do so would make Syria
no better than the Israelis, whom he accused of air
piracy and international terrorism. More recently
Assad has blamed the United States as well as Israel
for the incident, which he called "humiliating ...
(and) ... dirty." The shootdown by Israel on 19
November of two Syrian MIG-23s in Syrian airspace
may also have figured in Syrian calculations.
The attempt probably reflects Assad's evolving
strategy of stepping up pressure on Israel to achieve
psychological, as well as strategic, balance.
Spectacular acts of terrorism against Israeli interests
undermine the image of invincibility earned by Israel
as a result of its stunning military victories over the
Arabs during the last four decades. Terrorism is a
component of the psychological war against Israel and
demonstrates the ability of Israel's enemies to exploit
its vulnerabilities.
Valley as evidence of weakening Israeli will.
The Syrians view terror as part of the struggle to
achieve parity with Israel and believe it has worked to
erode Israeli will, especially in Lebanon. Syria's
sponsorship last year of numerous suicide operations
against Israeli targets in the southern Lebanese
security zone did not spark Israeli retaliation.
Damascus apparently views Israel's failure to attack
Syrian missiles in Lebanon or to respond to gradual
Syrian military encroachment in the southern Bekaa
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NESA NESAR 86-013
6 June 1986
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Syrian officials may have been prepared to increase
pressure on Israel through a spectacular operation like
the El Al plot in the belief that they could get away
with it or absorb any retaliation if the Syrian role was
discovered. Assad probably calculates that Syria's
strong air defenses, the political risks of a Syrian-
Israeli war, Damascus's close ties to Moscow, and the
presence of US hostages in Lebanon insulate Syria
from major direct retaliation by Israel or the United
States.
An Israeli attack on terrorist training camps in
Lebanon, moreover, could provide Syria with an
opportunity to improve its strategic position in the
southern Bekaa Valley, where it has been cautiously
inching its lines closer to the Israeli-controlled
security zone. Last November, Assad exploited the
Israeli shootdown to deploy surface-to-air missiles in
and near Lebanon, which have effectively halted
Israeli air operations over eastern Lebanon since then.
He may believe he can repeat this success.
Patterns in Syrian Terrorism
The Assad regime uses or supports terrorism as one of
several coercive instruments to advance Syrian goals.
When diplomacy fails, Assad uses assassination and
intimidation to raise the cost to other states of
pursuing policies inimical to Syrian interests, to keep
opponents off balance, and to extract financial
support. Syrian involvement in terrorism has
undergone a fundamental shift in recent years as it
has moved away from direct involvement in terrorist
acts in favor of using surrogate groups that enable
Damascus to avoid being directly implicated
Before 1983, most Syrian-instigated terrorist
operations were carried out by Syrian operatives. The
principal targets of these operations were members of
the Muslim Brotherhood or other opponents of the
Assad regime at home and abroad. Attempts to use
the regime's personnel resulted in significant
embarrassment through bungled operations and
public exposure of direct Syrian participation. In
February 1981, for example, an attempt to assassinate
the Jordanian Prime Minister resulted in the televised
confessions of the would-be assassins-members of
the elite Defense Companies then under the command
of Assad's brother Rif`at.
The great majority of the 70 terrorist attacks
involving Syria from 1983 through 1985 were
conducted by surrogate groups and directed at
Jordanian, moderate Palestinian, and other non-
Syrian targets. Palestinian radicals have carried out
most of these operations with Syrian support and in
some cases at Syrian direction. We are aware of only
two attacks during this period that directly involved
Syrian operatives. These were assassination attempts
directed against individuals who allegedly changed
their allegiance from Syrian-supported radical
Palestinian groups to Arafat's Fatah.
The level of control exercised by Syria over
Palestinian radicals varies. Sai'qa, at one extreme, is
so controlled by Damascus that it is in effect an arm
of the Syrian state. At the other extreme is the Abu
Nidal group, which seeks to advance aims that
generally parallel Syrian goals but conducts its 25X1
operations in a largely autonomous fashion, including
selecting of its own targets.
Military intelligence personnel and Syrian diplomats
overseas play a significant role in terrorist operations.
Members of the staffs of Syrian embassies in Kuwait,
North Yemen, Morocco and Cyprus-and now the
United Kingdom and East Germany-have been
implicated in terrorist and related intelligence
activity. The Syrians use diplomatic facilities to
transport weapons, explosives, and other equipment
abroad. The Foreign Ministry has facilitated the
movement of terrorist squads into and out of target
countries, and Syrian missions abroad offer sanctuary
and security for planning and organizing operations.
Syrian support for surrogate groups abroad probably
is less extensive than in operations using Syrian
personnel, but Damascus provides weapons, travel
documents, and intelligence support for these groups.
The El Al Incident: Disturbing Anomalies
The El Al incident provides the first good evidence
linking Syria directly to a major terrorist operation
that could have resulted in the deaths of a large
number of non-Arab civilians. The most dramatic
prior incident against non-Arab civilians in Europe
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Syrian bombing of anti-Assad
newspaper office in Paris, April
occurred in September 1973 when Sa'iqa terrorists
hijacked an Austrian train carrying Soviet Jewish
emigres to a relocation camp.
sraeli policymakers were so riveted
on this incident that they overlooked indications of
Egyptian and Syrian war preparations.
Syrian involvement in the attempt to bomb the El Al
jet is a departure from the methods Damascus has
employed in recent years. In terms of support for
terrorism, the El Al incident follows patterns that are
typical of Syrian attacks against Arab targets, but the
target itself is atypical of operations carried out with
Damascus has tended to use violence in a fairly
disciplined manner-that is, carefully targeted
terrorist actions are designed to achieve specific ends.
Attacks on Israeli interests and citizens fall within
Syria's definition of acceptable targets. Had the El Al
attempt succeeded, however, it would have killed non-
Israelis as well-230 US citizens were on board-and
would have been more akin to the attacks at the Rome
and Vienna airports last December-acts from which
Syria has sought to distance itself.
In view of El Al's meticulous security procedures, it
was unusual for Syria to sanction such a bold attack.
The planners of the operation apparently believed the
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close Syrian support.
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The surviving terrorist from the attack on the
Rome airport in December 1985 has recently
the United States and encourage US restraint of
Israel. The Jordanian Prime Minister asked Assad if
it was possible that Syrian intelligence agencies were
engaged in significant operations that the President
did not personally know about. After a long pause,
Assad responded that he did not think so.
El Al: Part of a Trend?
The anomalies of Syrian involvement in the El Al
incident may be more apparent than real, indicating
that Damascus has in fact altered dramatically its
guidelines for the use of terror.
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spectacular nature of the act was worth the risks.
Moreover, they may have believed Libya would be
blamed if the bomb exploded and that the attack
would be viewed as a response to US actions against
Qadhafi.
Who Gives the Order?
We believe that Syrian support for or involvement in
terrorist operations is authorized-at least in general
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of detail Assad requires of his subordinates, and
security officials operating under general policy
guidelines may occasionally overstep their authority.
We believe that an operation of this magnitude,
especially one that involved Syrian diplomatic
personnel, was authorized at the highest levels of the
Syrian Government. Nonetheless, the many
anomalies surrounding the El Al incident raise doubts
about the extent to which senior Syrian officials,
including Assad, were informed about the operation.
Assad went to great lengths in a discussion of the El
Al incident with King Hussein to deny Syrian
involvement in the planning or execution of the
attack. Assad told the King that if the bomb had
exploded, it could have meant war with Israel-an
alarmist view that may have been intended to reach
To date there is insufficient evidence to confirm a
trend toward greater Syrian involvement in
international terrorism, but circumstantial evidence
appears to be mounting. According to press reports,
the surviving terrorist in the Rome airport attack last
December says he was trained in Syrian-occupied
Lebanon and escorted to the Damascus airport by
Syrian soldiers. Syrian support for the Abu Nidal
organization-which is bankrolled by Libya but
maintains offices in Damascus and training camps in
Syrian-controlled areas of Lebanon-raises the
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possibility of Syrian complicity in all acts carried out
by the group. We continue to believe that Abu Nidal
operates fairly independently in terms of selecting its
targets. Nonetheless, many Abu Nidal actions
parallel Syrian interests, suggesting that direction for
some operations comes from Damascus.
Outlook
The El Al incident-and the possibility of Syrian
complicity in other terrorist acts in Europe-raises
disturbing questions about Syria's use of terror as an
instrument of foreign policy. A decision made at the
highest levels of the Syrian Government to bomb the
El Al jet suggests Syrian willingness to become
directly involved in high-risk terrorist spectaculars
designed to maximize casualties. A decision taken at
lower levels raises questions about Assad's control and
oversight of his extensive intelligence network.
We cannot establish Assad's personal culpability in
the El Al incident, although we believe Assad's
lieutenants would seek his approval before
undertaking a major terrorist operation like the El Al
affair. Assad is a workaholic who for 15 years has
maintained a tight grip on all aspects of governing
Syria. He personally approves all military promotions
above the rank of major and receives daily updates on
Syrian oil production. We believe that Assad
continues to be firmly in control and do not see signs
that his health is interfering with his ability to govern.
Possibly he has chosen to delegate more
responsibility than in the past to trusted lieutenants
such as Muhammad al-Khuli and reduced his
oversight of some activities.
Syrian officials are alarmed about being caught red-
handed in the El Al affair and are worried about the
consequences of Damascus's being linked to
international terrorism. Following the US airstrike on
Libya, Syrian officials feared that Israel or the
United States might launch similar attacks on Syria if
Damascus were implicated in terrorist acts against
Israeli or US targets. The Syrian Army has been on
alert since the US airstrike on Libya in April.
Syria's future level of involvement in terrorism
against non-Arab targets almost certainly will depend
on Assad's estimate of the costs of the El Al incident.
We believe international censure is likely to influence
Assad to a greater extent than it does Qadhafi in his
terrorist behavior outside the Middle East.
Nonetheless, Syrian efforts to improve its image and
demonstrate its antiterrorist credentials are likely to
be cosmetic.
If Damascus is sufficiently concerned over the
exposure of the El Al incident, Assad might reduce
Syria's terrorist profile in Europe and against non-
Arab targets. As a first step, Assad could limit Abu
Nidal activities or at least increase control over
operations not directed at Arab targets. Assad has
stated publicly, however, that he will not restrict
public relations or cultural functions of any
Damascus-based Palestinian group.
As a result of the El Al exposure, Damascus may well
proceed cautiously in its sponsorship of future
terrorist attacks in Europe and against non-Arab
targets. We expect control of terrorist operations will
be increased, and it is unlikely that the Syrian hand
will be so clearly detected in the future as it was in the
El Al affair.
Damascus, however, will not halt its use and
sponsorship of terrorism as long as Syrian leaders
believe they run little political risk. Damascus will
continue to use terrorist tactics to maintain its
dominance in Lebanon, thwart substantive movement
toward peace negotiations between moderate Arabs
and Israel, exert control over the Palestinian
movement, and eliminate dissidents-actions that
Syria does not view as terrorism but as a legitimate
exercise of state power.
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Syria: Internal Unrest
and Regime Stability
A rash of bombings and attempted bombings,
primarily directed against public transportation, has
hit northern Syria and Damascus. We do not believe
these incidents pose a serious threat to President
Assad's otherwise stable and firmly established
regime. The Syrians have officially blamed Iraqi-
supported elements of the Muslim Brotherhood for
the recent bombings, although reliable information
indicates Syrian officials believe that Lebanese
Christian elements are responsible. Damascus
probably finds it more politically convenient to focus
its anger and rhetoric against its Iraqi enemy than to
stir up questions about its role in Lebanon and the
implications for Syrian internal security.
Syrian official reaction to this wave of attacks has
been swift and apparently effective. Security forces
moved against the usual suspects, including
Palestinians and Christians, arresting many
individuals suspected of antiregime activity whether
or not they were suspected in the bombing incidents.
The Syrians also prepared to launch a major
campaign against Christian elements in Lebanon in
response to these attacks,
but postponed the attack when Syria's
The Wave of Terrorist Bombings
After several years of relative freedom from terrorist
attacks on its own soil, terrorist bombings of public
transportation vehicles, frequently carrying military
personnel, struck Damascus and northern Syria this
spring. Rumors of bombs and explosions were thick in
Damascus in late April, and, although some of these
reports were untrue, evidence indicates that the
bombings were extensive:
? 13 March-A refrigerator truck exploded under a
bridge in the Al Qabun district of Damascus as a
chartered bus carrying personnel from the Military
Officers' College crossed.
? 14 March-The US Embassy in Damascus reported
persistent rumors of a second, smaller car bomb
explosion in the Qabun area.
? 16 April-Several incidents were reported by the
press, the US Embassy,
with more than 100 people killed:
- Three buses carrying military personnel
exploded near Hims.
- Two buses carrying military personnel exploded
in Tartus.
- Two buses carrying both civilian and military
personnel exploded in Aleppo.
- One bus exploded in Latakia.
- A bomb went off on a train between Aleppo and
Latakia.
- Two bombs were defused in President Assad's
residence compound in Damascus.
- Explosions were reported, but not confirmed, in
Tartus, Baniyas, and Safita.
- A bomb was disarmed in the Damascus souk.
? 21-22 April-The US Embassy reported another
round of rumors about terrorist attacks, including:
- One bus between Damascus and Dara (near the
Jordanian border) exploded.
- One bus in a northern Damascus suburb
exploded.
- A bomb went off on a train between Damascus
and Dara.
- Two satchels of explosives were discovered at
Damascus University.
- A bomb inside a portable cassette recorder at a
Damascus movie theater was defused.
- Bombs were discovered and disarmed on two
school buses in Damascus.
? 3 June-The US Embassy reported that a large
bomb exploded in the Damascus central shopping
area at the Gulf Arab Tourism and Travel
Organization Building.
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6 June 1986
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many as 70 percent of those struck by the attacks
were Alawites, most of them members of the Syrian
armed forces, although other individuals were also
killed or wounded. In all, according to Syrian public
comments, more than 150 people were killed in the
attacks.
The Scapegoats
Syrian security forces are clearly concerned about the
ability of the perpetrators to continue these actions.
According to the US Embassy, Syrian authorities are
angered over the bombings but apparently do not
believe there is a serious threat to the regime.
There have been
show trials, and one man, who claimed that Iraqi
intelligence was behind the plot, was hanged for his
involvement in the 13 March Al Qabun bombing. We
believe these trials are primarily intended to generate
support for Assad's foreign policies, especially his
backing of Iran in its war with Iraq, which is not
popular in Syria.
In assessing blame for the incidents, Damascus
probably feels compelled to counter rumors that any
internal group was responsible in order to protect the
illusion of the Assad regime's overriding popularity,
deflect speculation that any group in Lebanon was
responsible to protect Syria's policies and primary role
in that country, and pin the blame on Iraq to further
justify Syrian support for Iran. The Syrian press was
quick and vehement in its attack against the Iraqi
Government after the Al Qabun attack, but initial
Syrian public opinion reflected considerable
skepticism-including the idea that the incident was a
government setup-according to the US Embassy.
The show trials of Muslim Brothers supposedly
responsible for the mid-April bombings are part of the
political theater staged to highlight Iraqi Government
support for antiregime activities in Syria. In a classic
case of Syrian paranoia, the 16 April bombings have
been officially attributed to Muslim Brothers
supported by Iraq and used by Israel and the United
States as part of their preparations for retaliation
against Syrian support for terrorism abroad.
Syrian Reaction-Behind Closed Doors
After conducting a series of searches and making
numerous arrests, the Syrian Government became
convinced that the Phalange and the Lebanese Forces
were behind the recent bombings. In light of suspicion
that the small Maronite Christian community in
Syria aided the Lebanese factions in the bombings
beginning on
24 April, Syrian security forces conducted a house-
by-house search of the predominantly Christian
districts of north-central Syria. A large number of
Christians were arrested, and many fled before the
search began, further fueling official suspicions.
aftermath of the bombings the Syrian authorities set
up a new network of security checkpoints on major
highways to screen vehicles for explosives, to control
personnel movements, and to provide a visible and
presumably reassuring sign that the security forces
are working to prevent further incidents.
Since late April there have been intense security
patrols in the areas of Damascus heavily populated by
Christians and Palestinians. The US Embassy
reported a "major shootout" in southern Damascus on
26 April, when security forces discovered a nest of
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Syria's Christian Minority
a quarter of Damascus's population-but now the
urban Christian-Muslim balance is closer to the
national one. There have been occasional hints of
Lebanese Christian subversive activities inside Syria
in the last decade, but the recent bombings are the
best indication to date of any success. Nonetheless,
probably only a small minority of Syrian Christians
Christians compose about 10 percent of Syria's
population; the rest are Muslims. The Christian
community is divided among 12 sects including
Maronites, Greek Orthodox, and Greek Catholics.
Traditionally, Syria's Christians were found
primarily in urban areas-at independence they were
attempt to take control of the PLO, and Syrian
backing for Lebanese Shia Amal attacks on
Palestinian camps in Lebanon have given Palestinians
in Syria grounds for action. Moreover, Syria's Muslim
Brotherhood has been brutally repressed over the past
several years, particularly in Assad's bloody campaign
in Hama in 1982.
What Next?
The recent wave of terrorist attacks against
transportation may give rise to further Syrian
housecleaning of opposition groups that may be even
remotely implicated in antiregime activities.
Additional crackdowns on suspected Christian,
Palestinian, and Muslim Brotherhood supporters in
Syria are likely. The Syrian Government has
have ties to the Lebanese Christian militias.
in late April. Those plans have been postponed,
probably because Syria's Muslim allies in Lebanon
Given the conviction of Syrian security officials of
Lebanese Maronite responsibility for the attacks,
Damascus is determined to retaliate. Damascus
planned a large-scale, coordinated attack against the
Maronite Christian enclave in Lebanon to take place
were not eager for the offensive.
The government has good reason to blame the
Lebanese Christians, as they have numerous
grievances that could lead them to carry out terrorist
actions. Syrian support for the tripartite security
agreement in Lebanon and the shelling of Christian
communities by Syrian surrogates has no doubt
encouraged the formation of radical Christian
factions willing to operate against the Syrian
Government. Other external elements may have
assisted the Christians for their own reasons. Assad's
refusal to deal with PLO chief Arafat, Damascus's
believes are responsible for the bombings.
apparently already arrested many more people than it
The current campaign against Iraq, Israel, and the
United States in the Syrian press comes at a time
when already strained relations between Syria and
Israel have been worsened by indications of Syrian
complicity in an attempt to bomb an El Al aircraft in
London. The Syrians apparently fear repercussions
from this incident and have repeatedly referred to the
internal bombings as the first part of a retaliation
conspiracy by Israel and the United States. The fear
of retaliation, compounded by deep-seated concerns
over possible Israeli attack, will keep Syrian internal
security and military forces on high alert for some
time, perhaps making future bombings more difficult.
In the meantime, Lebanon is experiencing a spiral of
terror and retaliation as the Syrians and their
surrogates contend with the Christian Lebanese
Forces. For the past several weeks anti-Christian
activity in Beirut has increased notably. For example,
a car bomb exploded in East Beirut on 23 May killing
six people and wounding 55 others.
Although it is unclear whether the increased violence
is in direct response to Syrian suspicions of Lebanese
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Christian involvement in the bombings or in response
to general Christian unhappiness with Syria's
Tripartite Agreement for Lebanon, the trend is likely
to continue and perhaps increase in severity. As the
Lebanese Forces' response becomes more intense, so
will Damascus's ripostes, perhaps leading the Syrian
military to step in and attack the Christian enclave.
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Syria: Government Resource
Allocation and Political
Stability
A review of Syria's five-year national development
plans and annual consolidated budgets for the past 25
years suggests that a major aspect of the conventional
wisdom on President Assad's minority Alawite regime
is false. Analysts have long assumed that Assad has
retained his hold on power in part by reallocating
resources to traditionally disadvantaged groups. The
documents, however, tell a different story. The regime
claims a preponderant role in investment for
development but has mobilized few resources to
redistribute wealth. Assad has benefited from the
stabilizing consequences of the redistributive efforts
of his predecessors, but, at best, he has been able only
to maintain a steady state in the welfare of rural and
minority groups.
The portrait of Assad that emerges from these
documents is of an intensely conservative leader
preoccupied with security. Assad's Alawite regime so
far has added nothing to the values and policies it
inherited when it seized power. Ironically, its only
innovation has been mild corrections to the radical
Ba`thist measures implemented in the 1960s. Syria's
postindependence social and political revolution took
place before Assad's arrival on the scene.
Strengthened by the security organs he has
constructed, the regime's political and social
orientation is likely to survive his passing.
Government and Resource Allocation in Syria
The state has claimed a preponderant share of
investment in the Syrian economy since the early
1960s. In the First Development Plan (1961-65), the
government claimed 63 percent of investment, leaving
the private sector 37 percent. In the Second Plan
(1966-70), the public-sector share increased to 70
percent. It increased again in the Third Plan (1971-
75), to 80 percent, and has remained at about that
level for the Fourth (1976-80) and Fifth (1981-85)
Plans. This is an extraordinary share of development
investment to be in the public domain.
Adjusted for inflation, the amounts represented by
these shares suggest the regime has accomplished
little in the role it has arrogated to itself. The last
three five-year plans have projected slowing, then
stagnant, national development. Real planned
investment per capita is roughly the same in the Fifth
Plan as in the Fourth, given both inflation and an
annual population growth rate of over 3 percent. In
any event, no plan has ever achieved its targets, and,
despite the more modest goals, it seems unlikely that
the Fifth Plan will attain even the declining levels of
its two predecessors.
A look at the annual consolidated budget-which
provides the means for implementing the development
plans-points to one source of the regime's poor
record in development investment: the diversion of
resources to other uses. By far the largest share of the
budget has been expended for national security, with
the levels rising dramatically in each five-year period
since 1970. In contrast, a decreasing share of the
consolidated budget has been devoted to
development-diminishing to 43 percent in 1984.
In other words, as reflected in the planning
documents, the Syrian Government-which claims a
preponderant role in investment for development in
the national economy-is committing a diminishing
share of a diminishing pi.. to development. When
adjusted for population growth, expenditures per
capita since 1980 have decreased by 23 percent, and,
given its diminishing share of the whole, the
decrease in development expenditures would be
correspondingly greater.
When 55 to 60 percent of current expenditures are
absorbed annually by the Ministry of Defense, when
many other government expenses are fixed or
inelastic, when a large portion of the labor force is
tied up in nonproductive activity, and when
infrastructure is damaged seriously and territory lost
in war, it is easy to see how the regime may have had
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few resources to distribute. Added to all this, when
inflation rates are high, when foreign aid fluctuates,
when the population growth is steadily one of the
highest in the world, and when the productivity of the
economy slows and then declines, a compelling
combination is created for developmental stagnation.
The Assad Regime in Historical Perspective
The record of Syrian Government performance in
development and resource reallocation suggests that
Assad has not maintained stability through
redistributive allocations to disadvantaged groups. On
the contrary, looking over a longer timespan, Assad
appears to have avoided disturbing in any
fundamental way the allocations he inherited. The
stability of the Syrian political system under Assad,
the record suggests, has been built at least in part on
the stabilizing consequences of redistributive
allocations carried out before Assad's arrival on the
scene. The destabilizing consequences of these
redistributive allocations had been largely played out
by the time Assad took over.
Periods of political stability and instability in recent
Syrian history can be matched fairly closely with the
intensity of government efforts to reallocate resources
in society:
? The Syrian regime controlled relatively few
resources from independence until its entry into
political union with Egypt in 1958. The political
changes of this first decade amounted to contests
over who would control the instruments governing
the allocation of resources. There were multiple
constitutions and numerous turnovers from within
an established elite.
? The nine years immediately after the termination of
the union with Egypt, from 1961 to 1970, were the
most disturbed in modern Syrian political history.
Almost the whole political system was implicated,
and anarchy was near. Concurrently, great and
rapid changes in the sectoral shares of national
investment occurred. These were the years of land
and tenancy reform, of expropriation, of
nationalization, of new controls and regulations, and
of the destruction of the power bases of the old
oligarchy. These, in short, were the years of drastic
redistribution.
? That redistribution was "corrected" in 1970 with
Assad's coup and the installation of the minority
Alawite regime. Sheer momentum and the lagging
process of implementation carried the earlier
reforms forward for a few years. But, beginning in
the mid-1970s, their redistributive features
gradually faded until they have almost disappeared.
Since about 1980 the regime has barely sustained
even the preceding distributions. Looking at the
record, one sees this as the period of Syria's greatest
political stability.
Assad has benefited from the efforts of his
predecessors on several counts: Syria's revolution was
largely accomplished by the time of his takeover, he
could pragmatically "correct" some of its remaining
abuses, and the regime could then devote a large
share of the available resources to higher priorities of
defense and security.
A Portrait of Hafiz al-Assad
Assad's "revolutionary" credentials are thin to
nonexistent. The Alawite regime has not expanded the
land reforms introduced by its predecessors, nor has it
extended the nationalization of other means of
production. As indicated by resource allocations to
key social sectors, education, and health,
maldistributions between urban and rural settings and
among rural ones continue.
The portrait of Assad that emerges from a review of
policies during his tenure is of an intensely
conservative leader preoccupied with security. In
effect, these documents suggest the peasant in Assad.
Although his cool brinkmanship, sophisticated mien,
and ability to survive hardly suggest a dull, plodding,
risk-adverse tiller of the soil, in fact the regime reveals
a good many peasant-like qualities in its leader:
? The conservatism of the Alawite regime is apparent
in its failure to add anything to the values and
policies it inherited when Assad seized power. Its
only innovation has been to retreat from some of the
more radical policies implemented by Assad's
predecessors.
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? Innumerable events document the regime's
pervading pragmatism. The loss of a war and Syrian
territory to Israel were interpreted less as a
humiliating defeat than as an opportunity to
rebuild, with better armaments, and to improve
training and strategy. Deals have been struck with
improbable partners for needed aid and resources.
The regime can make marginal adjustments, accept
incremental solutions, and bide its time. This last
characteristic, patiently waiting for the right
moment, has been the hallmark of Assad's regime.
? Remarkably, through all the wheeling and dealing,
no one has been permitted the impression that the
Alawite regime is a puppet or a dependent regime.
It has been truculently autonomous. Although it has
had to go back to the Soviet Union and Eastern
Europe repeatedly for aid and replenishment of lost
armaments, it has remained independent.
Implications for Stability in Syria
Syria's social revolution-the "second Arab
awakening"- took place in the years before Assad's
takeover, creating a social order that will survive
Assad's passing from the scene. Assad's health is
uncertain, and the destabilizing effect of a succession
struggle has already been illustrated in the open
confrontation between Rif`at al-Assad and his
opponents in 1984. Such a struggle, however, would
be brief and confined to the regime's own
establishment.
Again, a historical frame of reference is useful:
? Upon independence in 1946, Syria displayed most of
the economic, social, and political consequences of
colonialism. A small population, based mainly in the
urban centers of Damascus and Aleppo and
consisting principally of Sunni Muslims, owned or
controlled most things valued in Syrian society:
land, trade, education, status, opportunity, and well-
being. They were the regime.
? In the meantime, a political revolution has occurred,
one not so much achieved as conserved by the
present Alawite regime. The regime's loyalists
occupy the dominant positions of power. The old
Sunni landowner/mercantilist/urban power
structure has been sundered. Plausible challengers,
such as the Muslim Brotherhood, have been crushed
or intimidated. The internal security system
operates with devastating effectiveness. Popular
discontent with official corruption exists, but it is
subdued and the regime is taking steps to control it.
The structure of the regime that replaced the Syrian
order as it existed at the time of independence has
been conserved under Assad and can be passed on to
his successors. The three main centers of political
power are the presidency, the military, and the Bath
Party. The only effective center is the Bath. But it is
hardly a monolith. It is a highly pluralistic body
consisting of members with widely divergent
backgrounds and political views. The military is as
open as universal compulsory service indicates.
Anyone can, and must, serve. Anyone may also rise
through it.
The pluralistic character of the regime strengthens
the possibility that once Assad departs the scene, the
key players remaining will fight briefly among
themselves for predominance, but the basic order will
remain unchanged. The government is constitutional,
with legislative, executive, and judicial branches,
albeit with formidable powers allocated to the
presidency. The president is elected by referendum,
the legislative People's Council is chosen by universal
suffrage, local governments with elected councils
exist, and a High Judicial Council affords some
protection to the independence of judges. Political and
civil rights are regarded as sufficiently precious to be
afforded constitutional status. In the spectrum of
developing nations, this is an uncommonly responsive
and responsible political format.
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Lebanese Banking:
Keeping the State Afloat
As government authority in Lebanon has eroded, the
banks have begun to play an increasingly critical role
in financing government activities. Over the past three
years, commercial banks have assumed a larger role
in financing Lebanon's growing budget deficit
through expanded treasury bill subscriptions. Political
stalemate and the poor security situation have
reduced the government's sources of revenue, while
spending, especially for current consumption, has
continued to grow. As external financing has dried up,
internal financing has gained importance and put the
banking system in a crucial position.
The breakdown of authority and political discipline in
Lebanon accounts for the present financial crisis.
Revenues are devastated, and the Gemayel
government is powerless to enforce their collection:
? Tax collection has fallen as most companies refuse
to pay taxes unless the government provides basic
services. Virtually the only group paying taxes is
government employees.
? Smuggling has slashed customs revenues-once
accounting for half the government's revenues-to
practically nothing. Illegal ports, including the
largest at Tripoli and Juniyah, now handle the bulk
The government's increasing appetite for private
savings has increased tension between the Treasury
and the Central Bank. Expanded regulations and
government intervention in Beirut's foreign exchange
market have weakened several Lebanese banks and
actually driven down the Lebanese pound's exchange
rate. A recent compromise between bankers and
government authorities, however, points to greater
stability in the industry and a partial return to more
liberal bank regulations.
Weakened Government Finances
Despite 10 years of civil war and a shrinking domestic
product, Lebanon's banking sector has many
strengths, but recent government measures threaten
those strengths. Beirut's resourceful banks continue to
attract funds, and pound-denominated deposits in the
banks remain high at over 60 billion pounds. In
addition, Embassy reports indicate dollar deposits in
Lebanon of about $3 billion and dollar holdings by
Lebanese abroad of $10-20 billion. Despite these
potential assets, the government is experiencing a
severe financial crisis, sharpened by its inability to
address the problem. The government's growing fiscal
deficit and reckless intervention in the foreign
exchange market have reduced foreign exchange
reserves to about $300 million. The pound has fallen
dramatically since April, and the Central Bank is
refusing to honor Treasury checks.
of Lebanon's imports.
Meanwhile, government spending has skyrocketed,
mainly because of extensive subsidies for wheat and
petroleum and a bloated government payroll. Despite
a lower oil import bill, Central Bank officials estimate
a 9-billion-pound petroleum subsidy for 1986,
according to Embassy reporting. The civil servant
payroll also remains intact, although only about half
of the state's employees report to work. The budget
problem was compounded in April when wages for all
state employees were increased by an average of 25
percent retroactive to January 1986.
As revenue has declined, the government's
expansionary fiscal policies have been financed
primarily through increased public debt. Total public
debt in March reached 53 billon pounds, a 17-percent
increase since last December. Because commercial
bank purchases of debt have not increased this year,
Central Bank funding of the fiscal deficit-through
treasury bill purchases and rediscounting of existing
debt-has moved from 25 to 44 percent of the total,
according to the US Embassy in Beirut. We estimate
inflation was about 70 percent by the end of 1985, and
it will be much higher this year if the government is
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Lebanon's Public Finance System
Public debt serves many purposes in the Lebanese
economy. It absorbs excess liquidity in the banks and
nominally supports the exchange rate by raising
interest rates for Lebanese pound deposits. The
Treasury is charged with financing public-sector
deficits by borrowing from the Central Bank or
issuing securities to the public via the commercial
banks. Short-term treasury bills offer bankers one of
the few remaining fairly secure and legal means for
profit, and in 1985 commerical banks covered the
entire government deficit of 18.1 billion pounds,
according to the IMF.
In 1980 the government began promoting treasury bill
sales to Lebanon's commercial banks by offering
relatively high yields, which were fixed periodically
by a special committee. There is presently a
controversy between the Central Bank, which wants
to raise interest rates to attract more funds, and the
Treasury, which wants to limit debt service costs.
According to preliminary IMF data, interest costs on
outstanding debt in 1985 exceeded total government
revenues. Political stalemate has stalled an increase
in the treasury bill rates presently about 21 to 22
percent-to compensate for high inflation.
Commercial banks have responded to the uneconomic
rates by cutting purchases of treasury bills in the past
six months, forcing the Central Bank to buy billions
of pounds of the shortfall,
forced to print money rather than borrow to cover the
spending. The government's growing appetite for
borrowed funds has created controversy between the
Treasury and the Central Bank, which in turn has put
pressure on the commercial banks:
? Lebanon's 1986 government budget was never
approved by parliament. Without a budget, the
Central Bank is refusing to honor government
checks where there are no funds in ministerial
accounts.
? Central Bank loans to the public sector reached
their legal limit (18 billion pounds) in May. Despite
parliamentary approval to increase the limit, Bank
Governor Niam has publicly refused further
advances.
? Central Bank efforts to manage the fiscal deficit
have resulted in coercive measures to oblige
commercial banks to expand purchases of treasury
As the government financial apparatus has bogged
down, there has been a concomitant decline in the
Lebanese pound-from about 20 to 31.5 per US
dollar since January. Central Bank intervention to
support the pound has only weakened it further,
because its dollar reserves are inadequate to
effectively bid up the value. The fall mainly
represents the banking sector's eroding confidence in
the government's ability to break the political
stalemate and control spending. In addition to fueling
speculation against the pound, the situation has
encouraged many Lebanese to hedge by converting
pound-denominated bank deposits into dollar
accounts.
The Commercial Banks' Role
The Lebanese Government has traditionally relied on
its strong banking system to absorb budget deficits.
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Commercial banks are the sole intermediary for the
government's principal form of debt-short-term
treasury bills-and most large banks' portfolios are
dominated by treasury bills. The US Embassy in
Beirut estimates that nearly 37 billion pounds of the
60 billion in deposits in Lebanese banks are held in
the form of treasury bills
As economic activity has declined and most foreign
banks have left Beirut, an increasing share of
Lebanon's commercial bank pound deposits have gone
into government securities. Treasury bills now
represent virtually the only active capital market in
Lebanon for banks to invest pound-denominated
deposits. In addition to holding debt, many smaller
banks have sought profits through currency
speculation or financing illegal trade. Banks continue
to receive substantial capital inflows, including
Palestinian funds, external support for militias,
remittances from overseas Lebanese, and receipts
from illegal exports to Syria and drug trafficking.
Over the past year, banks have been reluctant to
continue financing public debt. Commercial banks
already hold about 60 percent of their portfolios in
treasury bills, but the relatively low yields of about 22
percent-in light of 70-percent inflation-have forced
banks to look elsewhere for profits. As a result,
Central Bank authorities have tried to force banks to
maintain treasury bill purchases through higher
reserve requirements and treasury bill subscription
requirements of up to 70 percent for large banks. The
Central Bank's intention is to decrease bank liquidity
used to speculate against the pound and to shore up
the exchange rate and prevent capital flight.
The Central Bank's strong-arm approach against the
banks has been largely ineffective. The unanticipated
response to the cut in bank liquidity was a fall in
treasury bill purchases. According to the US Embassy
in Beirut, treasury bill subscriptions have fallen by 1.5
billion pounds this year. In addition, banks have
circumvented regulations and boosted liquidity
through interbank loans and reduced purchases of 12-
month treasury bills in favor of more liquid three-
month bills. The regulations actually destabilized the
banking system by reducing credit available for
industry and possibly forcing some banks to call good
Bank Crisis Resolution?
The banking conflict peaked with the Central Bank's
move in February to sell treasury bills directly to the
public, bypassing the banks to capture extra funds
outside the financial system. This was an unrealistic
alternative, however, because the government does not
have the facilities for selling debt to the public
without bank intermediation. Moreover, banks could
simply increase interest rates paid on deposits to
retain private savings because the difference between
bank deposits and treasury bill yields is relatively
small.
According to Embassy reporting, an agreement was
reached on 29 May between the Central Bank and
commercial banks to loosen restrictions and allow
banks greater flexibility to manage their assets:
? Reserve requirements were reduced from 22 to 10
percent in cash with no interest.
? Penalties on reserve shortfalls were reduced from
365 percent to 120 percent.
? Rediscounting was resumed to allow banks to
absorb interest rate fluctuations.
? Large banks-those with over 1 billion pounds in
deposits-are required to hold 30 percent of deposits
in treasury bills rather than 70 percent as specified
previously. Smaller banks must hold 15 percent.
Outlook
The banking system will probably be unstable as long
as government finances remain out of control. The
government's budget deficit and the falling pound will
probably put further pressures on commercial banks.
We believe the pound will continue its slide as bankers
and speculators anticipate the Central Bank's
intervention efforts. Moreover, in our judgment, the
weakened pound will continue to induce many
Lebanese to convert pound deposits to dollar deposits,
putting further pressure on Central Bank reserves.
loans to raise liquidity.
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Lebanon's financial crisis cannot be overcome without
resolution of the political deadlock. Authorities must
restore bank confidence in government fiscal and
monetary policies before Lebanese assets begin to
flow back into the country. In the near term, interest
rates would have to float or be raised to a more
realistic level to attract more funds. It is unlikely the
parliament and the Treasury would be willing to
endure the unsettling effects of economic reform, and
necessary measures are likely to be rejected.
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Gaza and the West Bank:
Recession Sets In
The economies of the West Bank and Gaza are feeling
the effects of the general recession in the Middle East.
Economic growth has stagnated, unemployment has
increased, and remittances from abroad have
declined. High unemployment in the professional
classes is particularly troubling, especially in light of
the possible return of more Palestinian workers from
the Persian Gulf states. Jordan is preparing a five-
year development plan for the West Bank, but its
impact on the territory is likely to be small because
Jordan's own economic difficulties leave it only
meager funds to spend across the Jordan River.
Continued Economic Decline
Although the economies of the occupied territories are
intricately linked to that of Israel, the Bank of Israel
tries to maintain separate statistics for the West Bank
and Gaza. Because these statistics exclude the
activities of Jewish settlements in the territories, they
reflect, at best, the trends in the Palestinian sector of
the economies. This sector has stagnated because of a
drop in demand in both local and export markets
caused by the recession in Israel, Jordan, and the
Persian Gulf states.
A recent survey by the Bank of Israel states that real
GDP growth in the West Bank and Gaza averaged
only 1 percent per year from 1983 to mid-1985. Per
capita GDP suffered a substantial decline, however,
because the population growth rate during this period
was estimated at 2.9 percent per annum and
emigration to the Persian Gulf states dropped
considerably.
Exports from the territories-almost two-thirds going
to Israel and one-third to Jordan-declined 22
percent in 1984 in large part because of a fall in sales
of Gaza products. Exports probably fell further last
year, but at only a fraction of the decline suffered two
years ago.
Imports to the territories-90 percent from Israel-
also declined in 1984, but at half the rate of the fall in
exports. Imports last year were probably at about the
same level as in 1984, causing further deterioration in
the territories' balance of payments.
According to Israeli estimates, 85,000 people from the
territories now work in Israel as day laborers, a 7- to
10-percent decline from the number employed two
years ago. These workers include approximately half
of the Gaza labor force and about 30 percent of the
West Bank labor force. The earnings of these workers
constitute an important source of income for the
territories and contribute to the healthy surplus in the
services balance with Israel. This surplus totaled $281
million in 1984 but declined to $206 million last
year-a reflection of the austerity program in Israel,
which caused an erosion of real wages and a cutback
in the construction industry, in which many West
Bank and Gaza Palestinians work.
Another source of income, remittances from
Palestinians working abroad, also has declined in
recent years, as have other unilateral transfers such as
Jordanian funds to West Bank municipalities and
money provided by the PLO to both the West Bank
and Gaza. A recent Bank of Israel study estimated
that worker remittances alone fell about 5 percent in
the period from 1983 to mid-1985. The decline in
remittances has probably been even greater during
the past year.
Unemployment Becoming a Problem
The recession not only reduced incomes but also
caused increased unemployment. According to Israeli
statistics, unemployment on the West Bank increased
from 3.7 percent in 1984 to 5.3 percent for the first
nine months of 1985. Palestinian sources estimate
West Bank unemployment at closer to 10 percent for
1984. Unemployment in the Gaza area is usually 1 to
2 percent below that of the West Bank.
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Unemployment in the professional ranks, especially
academics, is a particularly troublesome problem on
the West Bank. Academics continue to graduate from
West Bank universities at a rate of about 6,000 a year
and to return from study abroad, but there are no jobs
available for them. The Israeli market is closed to
them, there are no jobs for their skills on the West
Bank, and the recession in the Gulf states has closed
employment opportunities for them there.
The problem probably will worsen this summer. Bir
Zeit University, near Ramallah, has announced plans
to lay off professors because of budgetary constraints.
Other West Bank universities and vocational
institutions are also facing financial problems because
of a withdrawal of support by the Jordanian-PLO
Joint Committee. The committee itself is not
receiving most of its promised aid from the Persian
Gulf states.
The most serious potential problem facing the
territories is the return of a large number of
Palestinians now working in the Gulf states. An
estimated 25,000 Gazans and 50,000 West Bankers
are employed in the Gulf region. We have no
information on the number of Palestinians seeking to
return to the territories, but the continued recession in
the Gulf states will probably force many to return
over the next two to three years. Press reports have
stated that Israel's civil administration in the
territories is preparing contingency plans to provide
work for returning expatriate Palestinians, but these
make-work programs probably will absorb only a few
thousand, mainly nonprofessional, workers. Moreover,
according to recent press reports, some returning
workers are being denied entry into the West Bank by
Jordanian authorities.
Reasons for the Decline
Although recession in neighboring countries and the
fall in aid and remittances from the Gulf are the main
causes for the economic decline in the territories,
these areas have other problems. In Gaza a drought
over the last two years has cut citrus production as
Israel has restricted water use. Shrinking export
markets have also hurt. According to published
reports, Israel discourages Gazan citrus exports to
Europe, competition from Cuba has cut into East
European demand, and the Iranian revolution ended
exports to that country. Jordanian import quotas and
restrictions on marketing Gazan produce in Israel
have further aggravated the situation.
Fishing, Gaza's other main occupation, has also
deteriorated because Israel-citing security
concerns-has limited fishing to a 12-by-24-kilometer
zone and restricted hours of operation. Egypt also has
refused permission for Gaza fishermen to operate in
some of its waters. According to press sources, Gaza's
fish catch has declined from about 3,800 tons in 1968
to 420 tons in the first eight months of 1985.
West Bank agriculture, which produces 27 percent of
the area's GDP, also has been hurt by drought over
the last two years and by production and marketing
restrictions set by Israel and Jordan. Industry, which
provides less than 7 percent of West Bank GDP, also
faces severe marketing restrictions in neighboring
countries.
Politics Complicate the Situation
As with most issues in the Middle East, politics
expand these problems beyond their normal
dimensions. Typical of the situation is the position of
the East Jerusalem Electric Company. Israel recently
put this company into receivership for failure to pay
its debts to the Israel Electric Company, from which
it was forced to purchase electricity because of a lack
of alternative suppliers. Meanwhile, the company has
four new generating units unconnected to its grid
because it lacks permission to install them. The
company operates inefficiently, in part because of
featherbedding by a strong pro-PLO union.
Jordan refuses to bail out the company for fear that
its mandate may not be extended and its operations
may be taken over by the Israelis after its debts are
paid. Jordan would like to see management and
worker reforms in the company, but these would be
difficult to monitor from Amman. Israel would like to
find a way to connect to the national grid the Jewish
settlements now served by the East Jerusalem
company.
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Other political factors have hurt the occupied
territories. Because of a perceived lack of West Bank
political support for King Hussein's peace initiative
with the PLO, Jordan has reduced funds flowing to
West Bank municipalities, clamped down on travel
between the West Bank and Jordan, and frozen some
West Bank funds in Jordanian banks. Jordan also
does not allow the import of West Bank goods
produced at factories built in the territory after 1967
or goods manufactured in the West Bank that include
Israeli-produced materials. Jordan also insists that
foreign capital goods and materials for new West
Bank investment projects be imported through
Jordan.
Israel for its part put little money into West Bank
development until the first Likud government of
1977-and then only to strengthen Israel's connection
with Jewish settlements there. Published reports claim
that infrastructure development was on an east-west
axis connecting Jewish settlements to the Israeli
heartland rather than the north-south axis that would
have benefited the Palestinian inhabitants of the West
Bank. The Israeli Government has discouraged, to the
point of obstruction, investment projects on the West
Bank that would compete with Israeli industries.
Outlook
The economic outlook for the West Bank and Gaza is
directly tied to that of Israel. As long as Israel sticks
with its austerity program, the territories will gain
relief from high past inflation rates, but there will be
little likelihood of any economic rebound in the near
term. Coupled with probable continued declines in
remittances and aid, unemployment will increase at a
time when there probably will be more workers
returning from the Gulf region. High unemployment
in the professional ranks may be especially
troublesome, as it will create a class of educated and
disaffected individuals who may aggravate the
political situation in the West Bank.
Jordan has prepared a new five-year development
plan for the West Bank that offers some hope for
renewed investment and development of the area.
Jordan is struggling with its own recession and lack of
funds, however, and has higher unemployment than
the territories. The plan thus will probably provide
only seed money for West Bank projects.
The plan nonetheless suggests that Amman is taking
more interest in the area and may be more willing to
undertake quiet, cooperative efforts with Israel.
Israel, at least under Labor Party Prime Minister
Peres, also seems more interested in spurring
development in the territories and has recently put
more money into support for government hospitals in
the West Bank and Gaza.
Although these trends are encouraging, development
efforts-if they occur-will take time to have an
effect. In the meantime, the economic outlook for the
territories is bleak.
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Algeria: The Fundamentalist
Challenge
Islamic fundamentalism appears to be growing in
Algeria. There are clear signs that the government
takes the development seriously-the trials of 139
fundamentalists in April 1985, the strong measures
taken in the wake of a raid on a police training
barracks in Soumaa last September, and the
presidential speech to the FLN party congress in
December emphasizing Islam. The government allows
the fundamentalist organizations to operate, but the
security services keep a watchful eye on the most
extreme elements. These precautions, along with the
disunity of the Muslim radicals, are likely to prevent a
serious fundamentalist challenge to President
Bendjedid for at least the medium term.
The Fundamentalist Challenge
Algeria's closed society and pervasive security
apparatus make difficult an evaluation of the
country's fundamentalist movement. Nevertheless,
informed observers report that mosque attendance,
family religious observance, and the popularity of
Islam with postindependence youth are all increasing.
We believe that the failure of the Algerian state to
deliver the secular, Western-style social and economic
benefits that it had promised has contributed to the
growth of fundamentalism. Algeria has a young and
expanding population-half are under 15, and two-
thirds were born after independence. Many of them
have known only inadequate housing, poor education,
and scant job prospects. Government promises of a
better life sound stale at best and false at worst
against the backdrop of austerity policies that restrict
imports of consumer goods. These frustrations may
grow further-and Islamic fundamentalism along
with it-as the recent sharp drop in world oil prices
puts more pressure on Algeria's already strained
social services. Although material frustrations have
spawned recruits for Islamic fundamentalism, the
movement's indictment of Algerian society-and its
implied criticism of the government-goes deeper
than that. Fundamentalist leaders charge that
Algeria's principal problem is that it is already too
materialistic and that the attempt to imitate Western
modernization and industrialization has led it to lose
The Trial of Fundamentalists
The government's sensitivity over the fundamentalist
movement was evident in the trial of 139
fundamentalists in April 1985. According to Embassy
and press sources, the fundamentalists were skilled
tradesmen, unionists, merchants, artisans, instructors,
professors, and unemployed youth. Some were on trial
for killing a gendarme, others for conspiracy, and
nearly a hundred arrested for participating in
assemblies and meetings. They were tried in the
Algerian state security court, which is reserved for
cases of "attacks against the state." Most received
generally lenient sentences, except for two who
received 20 years and three who were tried in absentia
and got life sentences
According to the US Embassy, the light sentences
reflected the government's decision to attempt to co-
opt Islam by pursuing a temperate policy that would
not create martyrs. The government publicized the
results of the trials, although not the proceedings, to
dispel rumors and discredit the fundamentalists.
Government statements highlighted the
fundamentalists' dissidence and desire to exploit
social and economic tensions.
The Soumaa Raid
Mustapha Bouali, one of the three sentenced in
absentia in May to a life term, led a raid of about 25
fundamentalists on a police armory on Soumaa. He
and his followers seized numerous weapons and then
fled 50 kilometers south into the mountainous Larba
region. Government forces pursued them, but despite
the government's enormous advantage in firepower-
it used helicopters, armored vehicles, and automatic
weapons-it sustained greater losses of life and could
capture or wound only four raiders. Although the
government's failure probably was due to the rough
terrain and the local support for the fundamentalists,
the heavyhanded attack was an embarrassment to the
Bendjedid regime.
sight of Islamic principles and beliefs.
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Bouali is
44 years old, was a guerrilla in the Algerian
Liberation Army, and has a criminal record. He
advocates the use of violence to establish an Islamic
republic and has attempted to organize a movement
with clandestine cells, similar to the wartime FLN.
He was born in the Larba region, which was popular
among Algerians during the Independence War
because of its numerous grottoes, caves, and hiding
places. Larba has maintained an antiestablishment
posture since independence and in recent years has
become a refuge for fundamentalists. Bouali and his
followers probably are being harbored and supported
particular, Bendjedid has tried to rally Islamic
sentiment against the Marxist ideologues and strict
statists of the Boumediene era who are entrenched in
the universities and government-controlled trade
unions. The President's review of the national
charter-a document in which Boumediene set forth
the country's socialist ideology in 1976-has placed
heavy emphasis on Islamic values and themes.
Bendjedid probably believes Muslim support is a
useful counterweight against pro-Soviet elements
because the Islamists are for the most part small
entrepreneurs who dislike state control of the
by local followers.
The US Embassy in Algiers reports that Bouali is not
unique and that other fundamentalist groups are
springing up.
they are small in number, fragmented, and lack a
charismatic leader able to unite them.
Links to Other Dissident Groups
There are no indications the fundamentalist groups-
armed or otherwise-have joined forces with other
dissidents. Their isolation, however, may not last
much longer. Exiled former Prime Minister Ahmed
Ben Bella and his opposition group, Le Mouvement
Pour le Democratie en Algerie, panders to the
Ben Bella's group is badly split by personal rivalries
and ideological arguments over the use of violence
against the regime, and these divisions are likely to
hamper close cooperation among fundamentalist and
opposition groups.
Bendjedid Stresses Islam
At the same time that the government has struck back
at fundamentalist critics of the regime, it has tried to
win over religiously observant Algerians and to use
them against opponents of liberalization.' In
economy.
In addition, the President has attempted to blunt
fundamentalist discontent by including more Islamic
provisions in the Constitution and by trying to build
an Algerian national identity based on a combination
of Islamic, socialist, and Western values. In a major
speech last December to the FLN congress, Bendjedid
stated that it was necessary to demonstrate the "close
links" that unite Islam and socialism "in order not to
furnish an opportunity for questionable elements who
hide behind Islam to sow doubt on our options, or for
extremists who attempt to question the ability of
Islam to realize social justice."
Bendjedid also is taking other measures to undercut
the appeal of fundamentalism by:
? Deemphasizing Boumediene and elevating
revolutionary heroes whose religious credentials are
more acceptable to the fundamentalists.
? Building new mosques. The current five-year plan
foresees the building of 160 "pilot" mosques and
Koranic schools.
? Setting up Islamic academies in Algiers and Oran
and opening up cultural centers in each prefecture.
? Increasing state support and control of religious
personnel, especially the imams who have civil
servant status and receive a comfortable salary.
In a related cultural move, the government is
promoting to Algeria's cultural leadership Arabic-
speaking intellectuals who have generally taken a
backseat to their French-speaking counterparts. It is
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also permitting well-known Islamic theorists and
scholars to publish books that deviate slightly from
the state version of Islam.
Outlook
Islamic fundamentalists will probably continue to
gain support among students and urban youth, but we
believe they are a long way from becoming a serious
threat to the regime. Bendjedid's skillful carrot-and-
stick tactics, combined with the regime's effective
security network, reduce much of the potential
challenge. The fundamentalist movement lacks
leadership, has no clear strategy, and is likely to have
trouble working with Algeria's other opposition
groups, particularly the Marxists and the Berbers.
The latter resent the fundamentalists' efforts in behalf
of Arabic as the sole language in schools. The
regime's effective security network closely monitors
the fundamentalists and further reduces their threat.
In our view, the current lack of sympathy with
fundamentalist ideals by a majority of Algerians is
the greatest deterrent to the spread of the movement.
We believe Algerians are more attracted by
consumerism than by the ascetic lifestyle espoused by
the fundamentalists. Even though economic
stagnation and a lack of opportunity may have
produced frustration with the regime and helped
increase support for fundamentalism, we believe that
most Algerians support Bendjedid and are confident
of his ability to govern the country. Only if social and
economic conditions worsened appreciably for an
extended period could fundamentalism, in our view,
become a catalyst for generating widespread
antiregime activity.
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The Maghreb: Prospects
for Soviet Inroads
The willingness of Soviet leaders to devote greater
attention to the Maghreb countries of North Africa-
Tunisia, Algeria, and Morocco-stems from political
developments in these states and the shifting power
alliances in the region. Dissatisfaction with US aid in
Tunisia and Morocco presents opportunities for Soviet
influence. The risks and gains for Moscow in Morocco
are less clear-cut, but King Hassan's troubles with the
United States because of his ties to Libya could give
the Soviets some leverage. Algeria's gradual turn to
the West for economic and military assistance
threatens longstanding Soviet access. Each Maghreb
country views relations with the USSR as a way to
bolster its nonaligned credentials and as a means to
gain increased aid from the United States. It also sees
Moscow as a possible mediator in the Middle East
peace process. Over the medium term, however,
traditional ties to the West, and particularly France,
will work against Soviet interests.
Tunisia, respectively, have strained Washington's ties
to the region. Bilateral contacts between the Maghreb
countries and the USSR have increased, and there are
persistent reports that Foreign Minister
Shevardnadze will travel to these countries sometime
this year. On the other hand, Moscow's association
with Libyan leader Qadhafi and heightened concerns
by the Maghreb states over Libya's foreign
adventurism pose an image problem for Gorbachev.
Tunisia
Tunisian-Soviet relations have improved since the
Israeli airstrike on the PLO headquarters in Tunis
last October. The raid embarrassed the regime of
President Bourguiba, given the country's traditionally
close ties to the United States and France, and it is
widely believed in Tunisia that the United States was
at least aware of the raid. In addition, the Israeli
attack raised new doubts in Tunis about the
willingness of Washington to defend Tunisia against
Background
In recent years, the Maghreb has been an Arab
backwater for Moscow. North Africa does not
compare with the Levant and Persian Gulf regions in
terms of strategic importance, although Algeria and
Libya have been important clients for Soviet arms
exports. The Algerian political leadership has looked
to Moscow as a model for internal economic
development and has supported the Soviets in the
international arena. Algiers has also allowed Moscow
important transit rights for military flights to Africa.
In addition, Algeria has granted the Soviets limited
access to port facilities for naval vessels, while Tunisia
has opened its ports for repairs mainly of Soviet
noncombatants. Nevertheless, each of these North
African states, and particularly pro-Western Tunisia
and Morocco, remains highly suspicious of the
Soviets. Even Algeria has been careful to guard
against Soviet subversion. No senior Soviet leader has
visited Morocco, Algeria, or Tunisia.
During the past year, events in the Maghreb proved to
be a two-edged sword for Moscow. On the one hand,
the US and Israeli airstrikes against Libya and
Libyan aggression.
Since last fall, the Tunisians have attempted to court
the Soviets:
? The Soviet naval Chief of Staff visited Tunis last
December in what the Tunisian Government
describes as an attempt to bolster military
cooperation.
? A senior Tunisian diplomat traveled to Moscow
following the Israeli raid to offer his government's
thanks for Soviet support.
? In February, the two governments held their first
joint economic commission meeting and signed a
long-term trade agreement.
? In March, Tunisia's ruling socialist party attended a
Soviet party congress for the first time.
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We believe Bourguiba wishes to win Moscow's
consent to press Qadhafi to stop threatening his
regime. Tunis also might hope that its dealings with
Moscow will serve as a gesture toward Algeria, which
has drawn closer to Tunisia during its crisis with
Soviet development projects, commercial activities,
and delegations receiving more attention than
previously in the local press.
Libya.
Algeria
The impetus for closer Soviet-Algerian relations is
coming more from Moscow. The Soviets are
concerned about President Bendjedid's efforts to
loosen Algeria's traditional economic and security
links to the Soviet Union and Eastern Europe in order
to obtain expanded contacts with the West. According
to the US Embassy in Moscow, the Soviets devoted
lavish attention to Bendjedid during his visit to
Moscow in late March. The Soviets offered $350
million worth of economic projects on favorable credit
terms. he two
sides agreed to their first arms agreement since
1980-which we estimate to be worth about
Algeria, nevertheless, continues to seek a more
balanced position between East and West.
the Algerians are
finding the Soviet Union less able than Western
countries to contribute to the country's economic and
social development. In addition, the resurgence of
Islamic values has diminished the attractiveness of the
Soviet model for Algerians. More specifically,
Bendjedid and his advisers appear concerned that
Soviet support for Libya, for the rebel leadership in
South Yemen, and for pro-Syrian Palestinian leaders
undermines the Middle East peace process and
regional stability. Moscow and Algiers, moreover, are
competing for sales of natural gas in Western Europe.
Morocco
The Soviets have made the least progress with Rabat
because of King Hassan's strong political, economic,
and military links to the West. The US Embassy in
Rabat reports, nonetheless, that Soviet visibility in
Morocco has increased during the past year, with
Hassan's motives for expanding contacts, in our view,
are more opportunistic than those of Bendjedid and
Bourguiba. He probably hopes to use the Soviets to
promote his role as leader of the Arab League and his
efforts to achieve a Middle East settlement. In
addition, Hassan also wants to encourage the Soviets
to maintain their neutral position toward the Western
Sahara dispute.
Hassan approached Moscow for military assistance in
mid-1985. We believe this approach was designed to
preempt attempts by Algiers to gain greater Soviet
military support for the Polisario and challenge
Morocco's military dominance in the conflict. We
believe the King's move may also have been
attributable to his concern over US security
commitments in light of his political union with
Libya.
Outlook and Implications for the United States
Prospects for Soviet influence in the region will
continue to be limited for the short to medium term.
Other than their links to Arab states, the Maghreb
countries have their strongest cultural, commercial,
and ideological ties to the West. Morocco and Tunisia
are suspicious of the Soviet Union's willingness or
ability to supply needed economic and military
assistance, while Algeria, which has purchased large
quantities of Soviet arms, nevertheless wants to
diversify its weapons inventory and expand economic
ties to the West.
In our view, Morocco and Tunisia-and to a much
lesser extent Algeria-are more likely in the future to
attempt to use the Soviets as a tool for extracting
more aid from the United States and demonstrating
their commitment to nonalignment. In the near term,
each will want to maintain access to Moscow to lobby
against a closer Soviet relationship with Qadhafi.
Rabat and Tunis would not want to jeopardize ties to
Washington, but we cannot discount the possibility
that they could resort to brinkmanship in their efforts
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to obtain more US aid. Tunis, for example, could offer
Moscow expanded access to port facilities, while
Morocco could purchase light weapons or other
military equipment.
In the short to middle term, a number of
developments in the region could adversely affect
Soviet interests. A further expansion of Soviet-Libyan
ties could complicate Moscow's relations with the
other Maghreb states. Algeria and Tunisia in
particular have been concerned about Libya's
machinations in the region and may be prone to see a
Soviet hand in Qadhafi's actions. Algerian-Libyan
rapprochement-which the Soviets probably are
encouraging-would frighten Morocco and Tunisia
and compel them to look more to the United States
for support. We believe any Soviet bid to enhance
relations with Algeria, Morocco, or Tunisia would be
seen negatively by the other two states
Prospects for the Soviets would improve if any of
these three countries, and especially Tunisia,
perceived that the United States or West European
countries failed to provide vital economic or security
assistance. Further confrontations between the United
States and Libya, at a minimum, would encourage
them to be more neutral in their relations with
Washington, possibly to the advantage of the Soviets.
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Saudi Arabia-China-Taiwan:
Riyadh's Awkward Triangle
Saudi Arabia and China are gradually improving ties
despite the lack of formal diplomatic relations and
Riyadh's traditional standoffishness toward
Communist governments. Riyadh has had occasional
low-key contacts with Beijing for several years, but
Saudi economic difficulties and the hope of increased
trade benefits may be leading the kingdom to expand
the relationship. The Saudis also are encouraged by
what they judge is China's growing tolerance toward
its small Muslim minority as well as Beijing's political
pragmatism and sympathy to Arab goals in the
Middle East
The major stumblingblock for the Saudis is Riyadh's
longstanding relationship with and loyalty to the
government on Taiwan, which has significant
economic ties to the kingdom and depends heavily on
Saudi oil. The Saudis are not likely to abandon
Taiwan, but they may be willing to curtail their close
cooperation to allow greater room for diplomatic
flexibility, particularly if China and Taiwan renew
contacts
Saudi
Arabia is eager to expand economic ties to Beijing.
Saudi
petrochemical sales to China were increasing both in
volume and diversity. The Saudi Basic Industries
Corporation, a quasi-government organization, is
negotiating directly and through third parties to sell
methanol and other petrochemicals to the Chinese.
Last November a 16-member Saudi trade delegation
visited China, ostensibly to explore the possibility of
economic and technological cooperation.
another Saudi trade delegation is to
Saudi Arabia and China had
been negotiating primarily on economic issues
through their respective ambassadors in Washington
for several months and that China hoped the
expanded economic contacts could be parlayed into
Earlier Contacts
Although Saudi Arabia has avoided economic and
political dealings with Communist governments, for
the past several years it has quietly maintained a
channel of communication to Beijing. The Saudis
appreciate China's generally pro-Arab stance on
Middle Eastern issues-particularly its strong support
for the PLO and sharp criticism of Israeli policies.
The Saudi leadership considers China more
pragmatic than most Communist states and less
hostile to conservative Arab regimes
There have been occasional contacts between officials
of the two governments since at least the mid-1970s.
The principal channel has been meetings between
Saudi and Chinese ambassadors in Washington
Foreign Minister Saud visited Beijing in December
1982 with an Arab League delegation and discussed
China's interest in expanding ties
Contacts have also expanded over the last several
years through the Saudi-funded World Muslim
League, largely because of Riyadh's perception that
China had adopted a more tolerant attitude toward its
15 million Muslims. The two countries have
exchanged several delegations of Muslim officials
since 1982, and China agreed to permit the
publication and dissemination of Islamic books in
Muslim-populated areas of China, to accept a small
number of Muslim teachers to teach at two Chinese
Secret
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6 June 1986
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Islamic institutes, and to send Chinese Muslim
students to study in Saudi Arabia. The number of
Chinese who participate in the hajj, the annual
pilgrimage to Mecca, has increased steadily over the
last several years to more than 1,000. In contrast, only
a handful oviet Muslims make the trip each year.
Despite these gestures, Riyadh has been reluctant to
develop a more formal relationship with China. The
Saudi Government is strongly anti-Communist and
sensitive to the potential opposition to such a step
from powerful conservative elements in the kingdom.
economic exchanges receive minimal coverage in the
Saudi press. King Fahd probably believes that
renewed ties would be a significant diplomatic
windfall for Beijing, and he will want to ensure that
Saudi Arabia receives comparable benefits.
Ties to Taiwan
The major obstacle to renewed ties is Saudi Arabia's
close relationship with and strong sense of loyalty to
Taiwan. Embassy reporting earlier this year indicated
the government in Taiwan is concerned about the
rapprochement between Riyadh and Beijing, and the
Saudis recognize the importance Taiwan places on its
ties to the kingdom. Saudi Arabia is one of Taiwan's
major trading partners and one of the most important
of the handful of countries with which Taipei still has
full diplomatic relations.
Both countries benefit substantially from their
extensive economic links, managed largely through
the Saudi-Taiwan Joint Economic Commission.
According to Embassy reporting, Riyadh provides
more than one-third of Taiwan's oil, and press reports
last November indicated Saudi Arabia was preparing
to extend for three years a contract under which
Taiwan purchased 60,000 b/d of Saudi crude oil.=
Taiwan
may have concluded a netback agreement with
Riyadh for substantial additional purchases of crude.
The two countries also have joint projects in areas
such as science, technology, communications,
agriculture and fisheries, construction, medicine, and
trade. There are about 7,000 skilled workers from
Taiwan in the kingdom, including 1,000 medical
personnel.
Prospects
Despite their close ties to Taiwan and their traditional
reluctance to deal directly with Communist
governments, the Saudis probably are considering the
establishment of formal ties to China. Although the
economic advantages may not be significant over the
short term, there would be immediate political
benefits from such a move. Riyadh would weaken the
impression of being too closely linked to the United
States, but with less risk than would come from
renewing relations with Moscow. Improved relations
with China would be more acceptable to conservative
elements in the kingdom than a move toward the
USSR, which the Saudis believe continues to deny
basic religious freedoms to its Muslim population. It
also would send Washington a subtle signal of
independence in the wake of recent tensions over arms
sales and US policies in the Middle East
Although there are diplomatic advantages and long-
term economic opportunities from relations with
China, the Saudis probably are unwilling to cut all
ties to Taiwan if Beijing insists on such a step. Riyadh
is sympathetic to Taipei's precarious diplomatic
situation and will not want to deepen its diplomatic
isolation as long as the Taiwanese continue to play a
crucial role in Saudi Arabia. If the Saudis can open
formal relations with Beijing while maintaining
reduced, informal ties to Taiwan, Riyadh will be
much more likely to move in that direction.
Orlyi,
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Saudi Arabia:
Drugs and Security Worries
Saudi Arabia's role as a consumer of and transit point
for illicit narcotics has expanded despite official
interdiction efforts. Drug seizures have increased
throughout the kingdom, and there is evidence that
narcotics abuse affects a growing number of Saudis.
Riyadh fears that established routes for contraband
narcotics from Iran, Syria, and Lebanon may become
increasingly attractive as conduits into the kingdom
for weapons and other subversive materials. The
Saudi Government has responded to the problem by
seeking cooperative antinarcotics agreements with its
neighbors, reassessing government security programs,
and requesting further technical support and training
from the United States. Increasingly, the Saudi
response to narcotics trafficking reflects Riyadh's
rising awareness that failure to limit narcotics
movement through the country is a weak link in its
national security.
the only drug abuse in the kingdom was among
foreign workers who brought drug habits with them
from their native countries, particularly Pakistan and
India. But, last April
Saudi Crown Prince Abdallah said that the problem
of illicit drugs is much greater than the government
openly acknowledges and that he is seeking to redirect
the state security services to handle the threat. This
spring leading Saudi newspapers began to run stories
for the first time about the successes of the canine
contraband detector program and the opening of drug
detoxification facilities at leading hospitals.
We believe that the primary reason for the recent rise
in drug treatment facilities in the kingdom is the
increasing number of young Saudis exposed to drugs
in Europe and the United States who return to the
kingdom and propagate within their peer group the
An Increasing Narcotics Challenge
Saudi Arabia's drug problem remains small in
comparison with other Middle Eastern states, but the
increase in the number and size of recent drug
seizures and the expanded interdiction efforts on the
part of the Saudi Government suggest the problem is
increasing. the
amount of heroin seized in the kingdom during March
1986 nearly equaled the amount seized in the previous
two-year period.
narcotics seizures during the first week of the Muslim
holy month of Ramadan this May at Riyadh's
international airport increased dramatically.
traffickers apprehended in the
kingdom are using more professional and
sophisticated concealment techniques to bring drugs
through customs.
Rising narcotic seizures and a growing domestic
population of drug abusers have pushed Riyadh to
more openly address the problem of drug use among
Saudi citizens, a step the government strongly
rejected until recently. Until last year Saudi officials
continued to tell US Embassy officials in Riyadh that
lifestyle they enjoyed abroad.
many affluent Saudis regularly abuse
valium, amphetamines, and heroin.
physicians treating such cases report the
embarrassment to the families.
The Narcotics-Weapons Linkage
Smuggling of all types of contraband has been a
chronic problem for Riyadh, but the Saudi
Government appears more worried than ever that
subversive elements can use the same networks to
move weapons, explosives, and terrorist materials.
The country has long, unguarded borders-parts of
which are undefined or located in outlying desert
regions-that allow large amounts of contraband to
enter Saudi Arabia each year unobserved. Much of
this material, such as foreign currency, consumer
goods, and common drugs, is not related to security,
but over the last several years Saudi state security
Secret
NESA NESAR 86-0/3
6 June 1986
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Saudi Arabian Drug Seizures
1978-1984
1981
Years
(a) Primarily hashish, but includes substantial
amounts of opium, heroin. and some cocaine.
0 KGs/Thousands (a)
(b) Includes captagon, amphetamines.
barbiturates, and other prescription drugs.
services have become aware of an increasing volume
of contraband weapons and explosives entering or
transiting the kingdom:
? A large convoy of contraband weapons and other
goods moved through the empty wastes of the
Eastern Province toward an unknown destination
in mid-1983,
? Riyadh criticized the other members of the Gulf
Cooperation Council in early 1984 for their lax
interdiction and security practices,
? Security officials in the United Arab Emirates
seized three shipments of contraband arms being
smuggled through Saudi Arabia to North Yemen in
1983,
? Riyadh submitted a demarche to the Government of
Jordan in mid-1984 demanding that Amman
investigate the involvement of Jordanian officials
with a ring of drug and weapons smugglers running
contraband into the kingdom,
? Riyadh banned the entry of foreign refrigerator
trucks in 1985, according to the US Embassy in
Jordan, charging that smugglers use false bottoms
and walls in the sealed vehicles to bring in drugs and
weapons.
Stepping Up Enforcement
Riyadh's response to rising narcotics and border
security problems has been to expand its interdiction
efforts, to seek Western expertise in improving
customs facilities, and to increase the penalties for the
smuggling or possession of contraband. King Fahd
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has issued decrees against the abuse of specific drugs
and has changed the previous system of nominal fines
for abuse to mandatory t for
possession of illicit drugs,
Overall management of the national drug interdiction
effort is the responsibility of the Department of
Customs within the Ministry of Finance. This office
has received training and technical advice through its
liaison with the US Customs Service. According to
US customs officials familiar with this program,
Riyadh has attempted to increase the effectiveness of
the program by:
? Creating watchlists of suspicious persons, flights
favored by smugglers, and cargoes likely to be
carrying contraband.
? Introducing a canine detector corps capable of
identifying a wide range of contraband weapons and
narcotics.
? Putting increasing numbers of Saudi Government
officers in direct charge of program components.
Riyadh also is reordering the government
departments involved with customs and security
matters. Riyadh's desire to "Saudi-ize" the personnel
of major security and customs programs-replacing
contract laborers with Saudi nationals-reflects this
effort. The General Director of the Department of
Customs has increased the membership of the
national Interagency Cooperating Committee to
include all five of the major services involved in
monitoring the movement of goods and people into
and out of the country.
In our view, the initiative to enhance coordination
between security and customs services in the country
comes from Minister of the Interior Prince Nayif.
According to US Embassy reports, he has made
numerous administrative changes to streamline the
Saudi bureaucracy and to overcome the widespread
bureaucratic reticence to share information and
techniques. Moreover, Prince Nayif has been active in
promoting the value of joint or regional customs
training programs among the Persian Gulf states.
The US-Saudi joint Canine Enforcement Program is
the keystone of an extensive customs project aimed at
increasing Riyadh's ability to intercept contraband of
all sorts. Established under the auspices of the US-
Saudi Joint Commission on Economic Cooperation,
the program trains dogs and handlers to detect a wide
range of weapons and illicit drugs at all the major
airports and most ground entry points in the
kingdom. Dogs and handlers are put through
extensive training in the United States, and US
officials monitor the program in Saudi Arabia.
US officials say Riyadh was initially reticent about
assigning Saudi nationals to the program, claiming
no proper Arab would agree to work with a dog, an
animal traditionally considered unclean by orthodox
Muslims. Most of the initial candidates for the
program have been Malaysian contractors. But Saudi
nationals have participated in the US training
program and returned to the kingdom, where several
serve as administrators in the national Canine
Enforcement Program.
Narcotics: A Growing Factor in Regional Relations
Riyadh has voiced its concerns about the growing
connection between narcotics and security issues in
regional forums and seeks to increase the level of
coordination and cooperation among its neighbors.
As a member of the Arab League, the Islamic
Conference Organization, and the Gulf Cooperation
Council, Saudi Arabia has encouraged each group to
review the possibility of increased cooperation in
antinarcotics operations. According to US Embassy
and press accounts of these meetings, however, none
of these organizations has yet introduced a workable
proposal for multilateral antinarcotics cooperation.
Riyadh has initiated bilateral programs with some of
its immediate neighbors to gain greater control over
narcotics and illicit weapons smuggling.
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he Saudi Ministry of Finance began
a program in late 1985 to create facilities for local
training in many of the contraband interdiction
techniques currently performed in Saudi Arabia by
foreign contractors. The long-range goal of the
program is to provide standardized customs training
to the members of the Gulf Cooperation Council.
Nonetheless, we believe Riyadh faces serious
constraints in encouraging neighboring states to
institute security measures equivalent to the Saudi
program.
Riyadh's smaller Gulf neighbors were growing
increasingly resistant to Riyadh's heavyhanded
approach to multilateral programs-including
antinarcotics initiatives that are perceived to serve
? Push joint antinarcotics initiatives in regional and
international forums.
? Increase criminal prosecution and punishments for
trafficking and drug abuse.
? Replace foreign contract labor with Saudi nationals
in key security positions.
We believe, however, that Riyadh's efforts to improve
antidrug and contraband interdiction programs will
fall short. The Saudi Government's self-serving
approach to regional cooperation has offended many
of the neighboring states whose support Riyadh will
need to initiate successful contraband interdiction
efforts. Domestic constraints also will limit the
success of Riyadh's antinarcotics efforts:
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only Saudi ends.
Outlook
Drug trafficking into Saudi Arabia and domestic drug
abuse are likely to rise over the next several years.
Even with the economic cutbacks that Riyadh faces
from falling oil prices, Saudi citizens will continue to
have relatively high levels of disposable income, and
numbers of Saudis will continue to study in the West,
where they will pick up the taste for recreational
drugs. There is the possibility that affluent Saudis,
accustomed to trafficking small amounts of drugs for
their personal use, will smuggle large quantities of
illicit narcotics into the kingdom for resale to offset
reduced incomes.
Continued political, economic, and social tensions in
the Gulf and among Riyadh's neighbors to the north
and south are likely to lead to a rise in demand for
contraband arms in the region. The growing arms
market will provide an impetus for drug traffickers to
become involved in running weapons and other
subversive contraband. We believe that such
contraband will find a ready market inside Saudi
Arabia among radical Shias, disaffected youth, and
criminal elements, each with the potential to disrupt
Saudi Arabia's normally placid environment.
Riyadh will continue to strengthen its drug and
weapon interdiction programs. It will:
? Increase coordination among national security
agencies.
? The unwieldy Saudi bureaucracy, characterized by
a lack of cooperation among ministries, will be an
obstacle to effective antinarcotics enforcement
efforts.
? Riyadh has come to rely heavily on foreign expertise
and complex technical means to intercept illicit
drugs and weapons. The technology the kingdom
will need to ensure its goal of maximum border
security is likely to be prohibitively expensive, given
falling oil revenues and competing high-priority
programs.
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South Yemen: Not Even
a Nice Place To Visit
The current regime in South Yemen seized power
almost four months ago, but it has failed to
consolidate its position and gain support either at
home or abroad. Competing ambitions and internal
rivalries deeply divide the collective leadership, and no
dominant leader has emerged capable of forming a
stable, broadly based government coalition. Such
tensions, coupled with mounting security and
economic problems, appear to be generating sufficient
momentum to force another change in the government
lineup, possibly within the next few weeks. The US
position in Aden probably will not improve should a
new regime come to power. The odds are that any new
leadership would be as pro-Soviet as its predecessors,
given Aden's dependence on Soviet military and
security assistance and longstanding ties between the
two countries.
A Grim Picture
The economy, in serious trouble before the coup, is
now almost stagnant. he
government cannot provide basic goods and services,
and living standards have deteriorated sharply since
the coup. According to US Embassy reporting from
North Yemen, inventories in most stores are low and
food is in short supply. In addition, the recent fighting
devastated the country's health services. There is a
critical shortage of qualified medical personnel and
supplies, and the incidence of infectious disease is on
the rise.
delegation since the fighting-was scheduled to visit
South Yemen last month, however, and a resumption
of relations with the bank would encourage other
funding agencies to follow suit.
The security situation, especially in Aden, remains
unstable. Reports of unrest, revenge killings, and
continuing detentions are commonplace. A US official
reports that as of late May the regime was still
arresting suspected supporters of former President
Hasani and conducting daily executions in the middle
of Aden Square
refugees continue to stream across the
The Leadership Puzzle
The uneasy government and party coalition appears to
be breaking down under the strains of often violent
personal rivalries and policy disagreements. The
leadership has been unable to overcome traditional
provincial and tribal differences to form a coherent
and effective ruling group. Reports of assassination
attempts against prominent officials increased
dramatically last month. The many contentious policy
issues facing the leadership-such as not being able to
disprove allegations of foul play in the death of party
godfather Ismail, the failure to obtain foreign
diplomatic and financial support, and disagreements
over how to deal with Hasani's supporters-also are
providing fuel for another political blowup.
Although the Aden oil refinery-a key source of
foreign exchange- escaped serious damage and has
returned to precoup operating levels, the government
is facing a serious economic crisis.
he regime is trying to increase revenues by
e ucting a substantial portion of public employees'
salaries for the reconstruction of Aden and has
imposed a 4-percent tax on worker remittances.
the regime also has
made drastic cuts in nonessential imports and delayed
the reconstruction of buildings, roads, and other
infrastructure. A World Bank team-the first such
There are as many factions jockeying for power as
there are issues to fight over. Each faction is
dominated by a strongman contriving to control South
Yemen, but the most powerful man at the moment
appears to be Yemeni Socialist Party Secretary
General al-Bidh. He heads a faction of hardline party
members with the support of government technocrats
led by fellow tribesman, President Attas. Other key
Secret
NESA NESAR 86-013
6 June 1986
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players in the struggle for supremacy are the party
deputy secretary general-his boss's rival on both a
personal and tribal level-the Ministers of Defense
and State Security, a former Minister of State
Security known for his brutality, and the new armed
forces Chief of Staff and his deputy.
The Missing Piece of the Puzzle
A critical unknown in the leadership struggle is the
role of the USSR, about which there is a lack of hard
evidence. According to US Embassy reporting,
relations between Aden and Moscow are cool. The
South Yemenis apparently resent the fact that the
Soviets have not rushed to rebuild Aden, resupply the
military, or send high-level Kremlin leaders for an
official visit. There are indications the factional
infighting and resistance to Soviet mediation efforts
have caused Moscow to seriously question the Aden
leadership's viability. The new nonresident Soviet
Ambassador to Muscat recently told the Omanis that
Moscow considers the situation in Aden unstable and
expects more violence.
Moscow probably is working covertly to line up a
more acceptable alternative to the regime in Aden.
Moscow is pressing South
Yemen to allow Hasani's followers back into the
government to create a more stable, broadly based
ruling coalition. The Soviets may be delaying
economic and military assistance to force Aden to
acquiesce to their demands. Moscow also may be
trying to maneuver into position a single leader who
can control South Yemen's competing factions and
with whom they can work.
Troubled Foreign Relations
South Yemen continues to have only limited success
in reestablishing normal foreign relations, even with
traditional allies such as the USSR, Eastern Europe,
Libya, and Syria. In a recent interview, Libyan leader
Qadhafi acknowledged his friendship with Aden but
qualified his remarks by adding that South Yemen's
leaders were "unknown" to him. Ethiopia has direct
contact with Aden, but the issue of amnesty for
Hasani's supporters continues to be a stumblingblock
to better relations.
South Yemen's relations with its Gulf neighbors
remain tentative, but some progress has been made
toward more workable arrangements. Oman, having
sought Soviet assistance early on to determine the new
regime's intentions, has been the most willing to
resume business as usual with Aden and hopes to open
border talks soon. Even Saudi Arabia, the country
most opposed to the new regime outside of North
Yemen, has returned its Ambassador to Aden.
Nonetheless, the Persian Gulf states probably will not
offer the financial assistance Aden desperately needs
because of their continuing doubts about the regime's
stability and its future orientation.
unleash the exiles against South Yemen.
Relations between North Yemen and South Yemen
remain tense. According to the US Embassy in Sanaa,
North Yemen continues to refuse to normalize
relations unless South Yemen grants unconditional
amnesty to South Yemeni exiles and removes radical
North Yemeni opponents and dissidents from
leadership positions-conditions that Aden so far has
firmly rejected. Sanaa has softened its position only to
the extent of supplying humanitarian assistance and
conducting limited talks with Aden. Another source
of continuing tension between the two countries is the
presence in North Yemen of a South Yemeni exile
force of over 5,000 that is being trained and supplied
by Sanaa. President Salih is trying to force
concessions from the Aden regime by threatening to
Outlook
In our judgment, growing hostility between competing
factions in the Aden leadership, coupled with
mounting economic and security problems, will soon
lead to the resumption of open conflict, possibly
within the coming weeks. Deeply divided and
increasingly prone to violence, the ruling elite
probably will not be able to cope with the many
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pressing problems facing it. In addition, it is equally
unlikely that Aden will be able to convince Moscow or
the Gulf states in the near term to provide the levels
of assistance necessary to ameliorate current
economic hardships
Should fighting break out in Aden, the outcome
would be highly uncertain, given the fragmented
nature of the South Yemeni leadership and the armed
forces. Moreover, Hasani's exile forces would be likely
to intervene. Although they might be able to establish
a foothold in northern Abyan Province, their ability to
affect the outcome of hostilities in Aden is
questionable without substantial outside military aid.
It is doubtful Soviet behind-the-scenes maneuvering
will be able to prevent an outbreak of hostilities in
Aden, but the degree of Soviet involvement would
have a major impact on the outcome.
The extent to which the Soviets would be willing to
commit themselves to protect their equities in Aden
and to risk further damage to relations with other
states in the region is problematic. We do not believe,
however, that Moscow would be forced to make such
a choice. The next government in Aden is likely to be
as pro-Soviet as the current regime and may even be
more vulnerable to Soviet manipulation because of its
relative youth and inexperience.
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Iraq's Shias: A Basic
Population Assumption
Questioned
For 40 years analysts of Iraq have known that Shia
Arabs are a majority in Iraq and, lacking accurate
data, estimated them to be somewhat more than half
the population, or 55 percent. We believe 55 percent is
too low and that the proportion of Shias in Iraq is in
the range of 60 to 65 percent and slowly increasing.
We cannot prove these figures, however, and would
need additional information to be able to do so.
Nonetheless, extrapolation from available data
supports the higher percentage. As Shias come to
realize that they account for nearly two out of three
Iraqis, they are likely to demand a greater share of
power. Barring an Iranian victory in the war, they
have little chance of gaining power in the short term,
but their long-term prospects may slowly improve as
they become an ever larger majority in Iraq.
The Effects of Different Birth Rates
According to UN estimates, Iraq's population has
grown by about 3.2 percent annually since the 1947
census. Shias-among the lower social strata of the
population in Iraq and elsewhere in the Arab world-
traditionally have had a higher birth rate than the
wealthier Sunni and Christian Arabs. The Sunni
Kurds, also poor, probably have a growth rate higher
than the Sunni Arabs, but we suspect it is lower than
the Shias for cultural reasons and because of limited
access to medical facilities. Assuming a Shia growth
rate of 3.5 percent annually since 1947 and thus a rate
of nearly 2.9 percent for the other ethnic groups-
together these rates produce a 3.2-percent overall
growth rate-Iraq's Shias would now account for 63
percent of the population. The percentage would be
still higher if the initial 55 percent estimate were too
low.
Other indicators of the Sunni/Shia ratio support the
argument that the Shias make up more than 55
percent of the population. Most observers estimate
that Shias account for about 75 percent of the armed
forces.
Iraq's manpower shortage leads the
government to conscript all available non-Kurds. The
Kurds, an estimated 18 percent of the population, are
exempt. If the Army is composed of Sunnis, Shias,
and Christians in proportion to their numbers in the
overall population-a reasonable assumption, in our
view-this would indicate that Shias account for
about 62 percent of all Iraqis (that is, 75 percent of
the 82 percent of the non-Kurdish population).
Although a few wealthier and better educated Sunnis
and Christians secure educational deferments and
perhaps even escape military service, we doubt this
alters the statistics significantly.
Similar Data Questions Elsewhere in the Persian Gulf
Estimates of the number of Shias in Bahrain, Saudi
Arabia, and Kuwait have been revised upward since
the Iranian revolution focused attention on them. The
US Embassy in Bahrain estimates that Bahraini
Shias, long believed to number 55 percent of the
island's native population, account for at least 70
percent. Before the war, most estimates held that
Saudi Shias accounted for one-third of the natives of
the Eastern Province. The US Consulate in Dhahran
now estimates that they constitute nearly half the
natives. Similarly, conventional wisdom held that
Kuwaiti Shias accounted for 30 percent of Kuwait's
natives. the
Kuwaiti Ministry of Interior estimated in 1984 that
the Shias account for at least 42 percent of the native
population. (Native Kuwaitis constitute only 40
percent of the total population.) Analysts of the Gulf
states caution that these population estimates are not
based on firm data. They believe, however, that the
estimates are more accurate than earlier figures,
which probably reflected a desire by the Sunni ruling
families to minimize the size of their Shia
populations. We suspect that the same
underestimation of Shias has persisted in Iraq.
Secret
NESA NESAR 86-013
6 June 1986
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1946 1956 1966
YEARS
Iraq: Alternative Estimates ofShia Population Measured as
Implications
The psychological impact of acknowledging that
Shias are nearly two-thirds of the Iraqi population
rather than slightly over half probably will be as great
on Shias as it will be on the dominant Sunni Arabs,
who may comprise only 17 percent of all Iraqis. We
believe that the ruling Bath Party will continue its
efforts to appear to share power by providing Shia
Ba'thists with prominent party and government posts.
The Sunnis, however, are unlikely to relinquish
control of critical government, security, and military
positions voluntarily. Barring an Iranian victory in the
war, Shias have little chance of gaining control in
Baghdad in the short term, but, because of their
higher birth rate, their long-term prospects may be
slowly improving.
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Iran: Prevalence of
Black Market
The Iran-Iraq war has placed enormous strains on the
Iranian economic system, with consumers carrying
the heaviest burden. Chronic shortages, a stringent
rationing system, rising prices, low pay scales, and
widespread unemployment are undercutting support
for the regime's handling of the war. The development
of an extensive unofficial, often illegal, economy has
reduced some of the economic strain, but this black
market has raised problems of corruption and other
complaints that over time could further erode popular
support for the government.
Iran's Rationing System
At the beginning of the war with Iraq, the Iranian
Government instituted a comprehensive rationing
system to provide each family with a minimum
allotment of basic goods and a "fair" share of non-
necessities. The rationing system employs two
separate distribution networks-the banks and the
mosques. Coupons issued by banks cover staples such
as rice, sugar, and cooking oil. Those issued by the
mosques cover perishables such as meat, eggs, butter,
and milk. The price of bread is subsidized by the
government and in early 1986 was available in
unlimited quantities. According to a parliamentary
report, the bread subsidy costs the government $1
million per day. The government also fixes the prices
and controls the distribution of automobiles, rugs,
appliances, and many other everyday items.
In rural areas the rationing system has brought great
popularity and support to the Islamic government
among the poor. For the average urban family,
however, the rations frequently have been inadequate
or unavailable. These urban problems have worsened
as the war has continued, and the black market has
mushroomed to provide needed goods
War Breeds Black Market
Recognizing the need for relief from wartime
austerity measures, Tehran has tolerated a flourishing
black market. The black market enables Iranians-
particularly in urban areas-to supplement the
inadequate supplies of necessities available through
the rationing system and provides access to scarce
luxury goods. The black market also enables business
firms to obtain scarce materials and parts as well as
vital foreign exchange. The black market is firmly
entrenched.
virtually anything is available for the right price.
black-
marketeers obtain their goods mainly by smuggling
from the Arab Gulf states or by diversion from
official channels. A sizable number of private
investors choose to import goods for the black market
rather than invest in domestic industry because of the
substantially higher profit and the relative lack of
government interference. Indeed, as the war grinds
on, government officials have been increasingly
willing to profit by diverting rationed goods to the
black market.
on interviews with an
Iranian emigrant in Europe states that some of the
most popular luxury goods that are available only on
the black market are US-made vacuum cleaners,
washing machines, and freezers
that even items that are banned by the government,
such as alcohol and some prohibited medicines, are
available at exorbitant prices.
One of the key problems for the regime caused by the
proliferation of the black market in consumer goods is
the diversion of basic necessities from the official
market to the black market where prices are much
higher. This redistribution between markets causes
shortages and forces consumers to pay the higher
black-market price because even their minimum
allotments are not available through the rationing
system. According to press reports, staples such as
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NESA NESAR 86-013
6 June 1986
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rice often sell on the black market for as much as 12
times the official price. As long as the government
ignores this transfer, basic goods will continue to flow
to the black market and will be unavailable to those
Spare Parts for Truck Repairs
holding ration coupons
Industrial Products
Construction materials and mechanical spare parts
are rationed by the government, and shortages have
caused a black market in these materials as well.
Official requests for such building materials as
structural beams, pipe, tiles, faucets, and water
heaters must be accompanied by a construction
permit. orders have
taken as long as two to three years to be filled. Spare
parts for automobiles, trucks, tractors, and combines
can be purchased officially only with ration coupons.
These coupons are issued in "spare parts booklets" by
industrial cooperative organizations that were formed
by the government to assist in distributing goods.
Purchases from the cooperatives routinely require a
long wait; the only alternative is the black market.
Although the rationing system was intended to bring
order to the distribution of goods, its coupons and
permits have instead become part of the black market
just like other commodities.
trading in permits for factory
construction is common. Approximately 19,000
construction permits have been issued since the
revolution. Each permit allows the purchase of foreign
exchange at official rates; some cover imports of raw
materials on a continuing basis. The government
allows these permits to be transferred to other
"entrepreneurs," and this has allowed them to be
traded regularly.
Shortages of industrial goods on the official market
have been caused by tight import restrictions and the
failure of Iranian industry to meet anticipated
production levels.
in Western Europe indicate that
there have been chronic shortages of raw materials
and spare parts for machinery and that industrial
output has fallen steadily. Some of the domestic
production problems have been caused by scarce
imports of raw materials and spare parts. The war
To obtain a part for the repair of a truck motor, the
owner must first contact the Truck Transportation
Cooperative, which administers the distribution of
spare parts. A letter from the Truck Transportation
Cooperative to the local highway department is
required and must be accompanied by a certificate
from a mechanic stating that the part needs
replacement. These documents are forwarded from
the local highway department office to the provincial
highway department, which then issues a letter to the
Truck Transportation Cooperative authorizing
issuance of the part. It is only after this authorization
is received that the cooperative checks with its
suppliers to determine if the part is in stock. Unless
the truck owner has already arranged to pay the
supplier the black-market rate for the part, the
supplier is likely to inform the cooperative that the
part is not in stock, even if it is available. Parts that
are not purchased in this time-consuming manner
cost even more on the black market
with Iraq has depleted foreign exchange reserves, and
the recent reduction in oil revenue has decreased the
government's access to foreign exchange even further.
Resulting import restrictions have been applied across
the board to finished goods and raw materials for
industry.
Foreign Currency Black Market
The black market for goods and permits is matched
by a thriving underground foreign currency market.
The government has tried to enforce an artificially
low exchange rate-86 Iranian rials to the dollar-
that is one-seventh the free market rate. Businesses
technically are required to purchase foreign exchange
at official rates, but this requires the appropriate
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permit. Since few enterprises are awarded new
permits, firms must buy either the permits or the
foreign currency on the black market.
business representatives are routinely requested by
black-marketeers to sell hard currency at substantial
markups. Although the government has attempted to
stop these exchanges, black-market currency trading
is so common that it occasionally is even used by
government agencies.
Outlook
We expect the black market to increase in importance
because we do not foresee any easing in shortages of
foreign exchange, industrial materials, and consumer
goods. Moreover, the high prices and profits found on
the black market have made official corruption more
common, and we doubt this will be reversed any time
soon. Decreased industrial imports make it unlikely
that Tehran can reverse the fall in factory production
of recent years. Private investors are likely to continue
using their resources for profitable black-market
import businesses, rather than investing in domestic
production. Although worsening shortages and official
corruption will continue to fuel the black market and
slowly undermine support for the government, we do
not expect this to pose a significant threat to the
foreign
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Chernobyl' and Nuclear
Programs in the Middle East
and South Asia
Heavy publicity given to the Chernobyl' nuclear
power station accident in the USSR has increased
concern in the Middle East and South Asia about the
safety of nuclear reactors, but it is unlikely to set back
significantly nuclear power programs in the region.
the press that, unlike Soviet reactors, Indian reactors
have all safety features. He also claimed that the
Indian reactor operators are much better qualified
than their counterparts in advanced countries. India
has had more safety problems than these statements
suggest, with a number of radiation leaks and
equipment breakdowns reported
Egypt is the only state in the region in which officials
have publicly expressed doubts about the safety of
nuclear power. On 7 May Prime Minister Lotfy
announced that Egypt had not yet made a final
decision on bids submitted for its first power reactor
because of concern about "health." Two weeks later
he told the press that no plant will be built if there is
even a 1 percent chance of danger. Lotfy's statements
reflect President Mubarak's longstanding reservations
about the safety of nuclear power. Since the
Chernobyl' accident, the well-publicized mishandling
of some radioactive cobalt at Cairo University has
heightened Egyptian concerns. To make room for
examinations, the cobalt had been carelessly moved to
a courtyard, where the lead shielding was stolen.
The US Embassy believes these problems may delay a
decision about building a power reactor. Nevertheless,
the Embassy notes that Egyptian officials are still
making positive statements about nuclear power, and
it expects Egypt to go ahead with the nuclear power
plant if difficult financing problems can be solved.
The vice chairman of the Nuclear Power Plant
Authority has told Western bidders that reaction to
the Chernobyl' accident will fade and that he expects
the selection process to be completed by 26 June, the
day bids expire.
In India, the government indicated its intention to
continue its nuclear power program when it reacted to
the Chernobyl' accident by emphasizing the safety of
Indian reactors. On 8 May Prime Minister Gandhi
told members of Parliament that Indian reactors are
"100-percent safe" and no accident is possible.
Atomic Energy Commission Chairman Ramanna told
Gandhi, as a result of the Chernobyl'
fire, has decided against purchasing a Soviet reactor
at this time, but such a purchase was far from certain
even before the Soviet accident.
The chairman of the Pakistan Atomic Energy
Commission publicly stated that international
inspections confirm the safety of Pakistan's power
reactor and that additional safety measures are being
taken at nuclear installations. Privately, the
Pakistanis may be less confident-they have asked
Canada, which built Pakistan's only power reactor,
for help in checking its safety.
There is no evidence of a slowing of nuclear programs
Iran and Iraq have not mentioned
publicly the safety of their nuclear programs-which
are not likely to make significant progress until the
Iran-Iraq war ends, in any case. According to the US
Embassy, Syria still plans to acquire a Soviet research
reactor and is considering obtaining a power reactor.
In our view, the Middle Eastern and South Asian
countries are going ahead with civil nuclear power
programs primarily because they need electricity for
economic development. All are probably more
concerned about nuclear safety than they admit
publicly, but they see no alternative to nuclear power
over the long term. In most countries, decisionmakers
Secret
NESA NESAR 86-013
6 June 1986
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may assume that the public will have forgotten the
Chernobyl' accident by the time any major decision
about nuclear power has to be announced. The
cautious Egyptian reaction may have been dictated in
part by the need to deal publicly with an important
nuclear decision while the accident at Chernobyl' was
still in the headlines
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Golden Temple
The assault by police and paramilitary forces on the
Sikh Golden Temple on 30 April was better planned
and executed than the attack that took place two
years ago as part of Operation Blue Star. The latter
attack involved large numbers of Army troops with
artillery and tanks against a sizable force of heavily
armed Sikh militants that had been allowed to
become well entrenched in and around the temple and
culminated in heavy casualties and much destruction.
This year's sweep was carried out by police and
paramilitary units under local control. Careful
preparations by the authorities before the sweep
prevented the militants from building up their forces
in the temple, rendering them far less prepared to
resist. As a result, the well-directed search-and-clear
operation produced few casualties and no damage to
the premises. The recent operation, however, failed to
capture extremist leaders, and continuing violence in
Punjab, particularly Sikh extremist attacks on
Hindus, has forced moderate Sikh leaders to admit
that the Army may eventually have to be called in to
maintain internal security.
Operation Search
Open sources report the Punjab state government
ordered a sweep, designated Operation Search, of
Amritsar's Golden Temple and its surrounding
buildings on 30 April to clear them of Sikh militant
elements. The militants had been occupying these
buildings since January and had proclaimed the
establishment of an independent Sikh homeland-
"Khalistan"-the previous day. An estimated 1,000
to 2,000 people were on the premises when the
security forces moved in. Julio Ribeiro, Director
General of the Punjab State Armed Police and the
official in charge of the operation, commanded 3,000
men from the Punjab police, the Border Security
Force (BSF), and the National Security Guard (NSG).
Ribeiro preceded the action by reinforcing the BSF
observation posts overlooking the temple and
surrounding buildings, deploying BSF units in a
cordon around the premises, and broadcasting appeals
to those inside to come out. Only a few inhabitants
At about 1650, according to open sources,
plainclothes police entered the hostel complex, a
cluster of offices and resthouses just east of the temple
complex. They gave everyone five minutes to clear out
and then began searching the offices of the militant
factions inhabiting the premises. About 20 minutes
later, about 200 uniformed police and NSG members
moved in to assist in the search, and some 200 people
were rounded up.
These same sources report that at 2230 about 600
NSG personnel moved into the temple complex and
entered the Parikrama, the walkway around the pool
in the center of which is the Golden Temple. About an
hour later, some 125 to 150 inhabitants of the temple
complex had taken refuge in the Golden Temple
under the warning shots of the security forces.
Although there was no exchange of fire reported,
those who took refuge in the Golden Temple refused
to come out until they were persuaded to do so by a
senior temple priest.
Ribeiro held a news conference at 0800 on 1 May at
which he declared that the goals of the operation had
been met. The security forces had captured one rifle,
one 12-bore gun, one revolver, one pistol, 15 swords,
10 spears, and 20 cartridges, in addition to having
arrested the 200 people in the hostel complex. One
person was killed and three others injured in the
operation; there were no casualties among the security
forces. The operation's success was attenuated in that
the militant leaders who had made the Khalistan
announcement fled the temple complex before
security forces entered and escaped arrest.
Ribeiro revealed that two other Sikh temples in the
Amritsar area had been entered by the police
simultaneously with Operation Search. He also said
some police and paramilitary elements would remain
in the hostel and temple complexes for the next few
left.
Secret
NESA NESAR 86-013
6 June 1986
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H
EL
V 1
COMPLEX
I 1 AKALI DAL
OFFICES
la
GURU NANAK NI WAS
I~ '
n OFFICES OF SGPC A G
Ix ITEJA SINGH SAMNDARI HALL
OFFICE OF WOMEN'S
Iy AKALI DAL
t' i water tower
G GURU RAM DAS SARAI
AKA.L
I NEW AKAL REST
EST HOUSE
HOUSE G
Tower
LANGAR (18c.)O
(DINING HALL)
Private property
Hostel Complex and Temple Complex
boundaries
Gate
Barbed wire
Water
days to complete a survey of escape routes before
returning the buildings to the Sikh temple
management committee. These forces finally began
withdrawing on 1 June
Operation Blue Star
The Army assault on the Golden Temple two years
ago was much bloodier. On 5 June 1984
approximately 1,500 Army troops supported by
paramiltary forces, tanks, and artillery stormed the
hostel and temple complexes, occupied by about 650
armed Sikh dissidents as well as 3,000 pilgrims and
others trapped on the premises under the Army's two-
day-old curfew, and cleared the area after an intense
24-hour battle, according to open sources. A confused
and protracted stalemate between the authorities and
the dissidents, along with lax security in Amritsar,
S.A. DAL TALWANDI
OFFICE
~
n,, /~
11TT
HOTEL
TEMPLE
VIEW
AMRITSAR
Mrs Gandhi's Last Battle
had allowed armed Sikhs to fortify and stockpile the
two complexes. On 2 June New Delhi ordered Army
and paramilitary forces in Punjab to carry out
Operation Blue Star and remove the dissidents. Firing
broke out around the temple, and the Army threw up
a cordon around the area and began seizing some of
the temple outbuildings. Securing the area proved
more difficult, and a full assault was ordered against
the two complexes. The Army blasted and stormed
the dissidents' last stronghold in the Akal Takht the
evening of 6 June after a full day of slow maneuvering
and repulsed attacks that resulted in over 900 soldiers
and militants being killed and severe damage being
done to the temple buildings and grounds.
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The Contrast
Our analysis shows the security forces' performance
in Operation Search contrasts sharply with Operation
Blue Star. Security preparations kept Operation
Search a relatively low-key police action against only
a few temple inhabitants, a very different operation
from the bloody assault the Army eventually was
forced to mount in Operation Blue Star. The security
forces' tight cordon around the area before Operation
Search helped prevent large numbers of well-armed
Sikh militants from establishing control over the
premises, as they did in 1984. This cordon and the
establishment of outposts on surrounding buildings
before Operation Search was an improvement over
Operation Blue Star, when police had been ordered
not to come within 180 meters of the temple complex,
and neighboring vantage points were held and heavily
fortified by Sikh dissidents, according to open sources.
Moreover, firing started a full four days before forces
began entering the complexes in 1984, compromising
the operation's surprise. Press reports say police have
entered the complexes four times for minor raids in
the two years since Operation Blue Star, and we
believe the general efficiency and lower profile of
Operation Search indicate that the security forces had
access to much better intelligence on both the
premises and the dissidents than in 1984. We also
believe that effective security preparations and
operational prudence helped keep casualties and
damage to a fraction of what was suffered in
Operation Blue Star.
In our judgment, the execution of Operation Search
exhibited sounder planning and better economy of
force than Operation Blue Star. The April action was
a carefully planned and executed clearance of sections
of the hostel and temple complexes by small, well-
trained groups of police and paramilitary personnel.
The security forces this time cleared the hostel
complex first, isolating the militants in the temple
complex. They also did not repeat the excesses of
using tanks, artillery, and large numbers of troops and
even took pains to remove their shoes before entering
some of the sacred buildings in deference to Sikh
sensibilities. In 1984 Army and paramilitary forces
stumbled through at least five different plans of
action before securing the complex. At first the
Central Reserve Police attempted to frighten the
J. F. Ribeiro, new Punjab police director general,
outside Jalandhar courts after ambush on his
policemen
militants into surrendering by firing into the complex.
When this failed, Army units arrived the next day in a
show of force and engaged in firefights with the
militants, hoping to frighten them into surrendering.
Having twice underestimated the determination of the
militants, the Army planned a simultaneous assault
on the hostel and temple complexes. Paratroopers
were assigned the task of advancing along a narrow
alley behind the Akal Takht. Although the Army
succeeded in seizing the hostels in their first assault,
the paratroopers were driven back. The Army then
planned a frontal assault on the main entrance of the
temple complex, which also failed. A final assault on
the entrance supported by tanks firing directly at the
Akal Takht eventually succeeded.
Political Conditions
Political conditions were more favorable this time for
a successful and low-cost action. New Delhi took
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A lathi-wielding police force
with bolt-action rifles: unequal
to the challenge
pains to cultivate a largely united moderate Sikh
government in Punjab. This helped produce a single
authoritative Sikh voice at the state level that could
respond to the problem without New Delhi's heavy
hand and better assuage Sikh sensibilities in the
process. State control also allowed Operation Search
to remain solely a police and paramilitary operation.
Operation Search began only after the Punjab state
cabinet had reiterated its resolve to defeat secessionist
elements inside the Golden Temple, helping gain
support for the operation. According to open sources,
Punjab Chief Minister Surjit Singh Barnala met
secretly in New Delhi with senior federal officials on
the evening of 29 April to discuss the Punjab situation
in light of the militants' declaration of an independent
Sikh state. Upon his return to Amritsar, Barnala held
a closed door meeting with Ribeiro and senior police
and paramilitary officers. Meanwhile, 51 of 73
Punjab legislators who belonged to the Akali Dal, the
Sikh religious party, formally announced their
backing of the temple sweep, presenting the action as
a logical consequence of their party's resolution of 16
February calling on Barnala to free the Golden
In 1984 Punjab was under presidential rule after
Delhi had successfully used Sikh extremist leader
Bhindranwale to undercut moderate Sikhs in the
state. New Delhi ran the state directly, following the
advice of P. S. Bhinder, then head of the Punjab
police and a trusted Gandhi lieutenant. Bhinder
feared a Sikh peasant uprising and treated the
extremists with kid gloves. This allowed
Bhindranwale to live in the temple complex for two
years and to take three months to fortify it before
Operation Blue Star. Sikh dissidents occupied the
temple complex this year only since late January.
Implications for Internal Security
The successful operation, albeit against weaker
resistance than two years ago, probably has improved
the morale and effectiveness of the Punjab police and
the paramilitary forces. Open sources indicate that
Ribeiro has taken a strong lead in improving the
effectiveness of the Punjab police, 80 percent of whom
are Sikhs. Over the last five years, about 70 policemen
Temple from the militants.
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The National Security Guard
is better armed and trained for
internal security missions.
have been killed and over 100 firearms have been lost
to Sikh extremists. One hundred policemen have been
dismissed for active complicity with terrorists. The
Punjab police have suffered from a lack of
appropriate weaponry-most are armed with Enfield
rifles-poor living conditions, ineffective leadership,
and low morale. Ribeiro was brought in on Barnala's
insistence to turn the situation around, according to
open sources. Ribeiro has played an active role,
publicly arguing that the Punjab police-not the
Army or the paramilitary forces-must handle the
extremist problem.
The recent temple operation, in our judgment, also
has given a boost to the morale of the National
Security Guard, India's newest paramilitary force.
Created in the wake of Indira Gandhi's assassination
and patterned after West Germany's GSG 9
antiterrorist unit, the NSG has reached a strength of
about 2,600,
These same reports indicate, however, that
bureaucratic squabbling between the Army and the
paramilitary forces and between Arun Singh, de facto
Defense Minister, and Arun Nehru, Internal Security
Minister, have resulted in morale problems and a low
level of training. Army cadres who control
recruitment and training have failed half of the
paramilitary volunteers sent to them by the BSF and
the Central Reserve Police, causing those
organizations to stop sending potential recruits. Arun
Singh has taken advantage of the predominance of the
Army to attempt to control the NSG but has thus far
failed.
Arun Nehru, we speculate, may have urged use of the
NSG in the temple operation to improve morale by
giving the unit what amounted to a realistic training
operation. The NSG had been used in force only once
before-to guard the homes of members of
Parliament in August 1985 after one member was
assassinated.
The success of the temple operation has not
significantly reduced the level of violence in Punjab.
About 85 persons died in communal violence in May,
leading Barnala to comment publicly that use of the
Army to maintain civil order has not been ruled out.
Open sources indicate that about 200 companies of
paramilitary forces have been committed to Punjab,
but this is at best a temporary arrangement that New
Delhi cannot sustain if large-scale communal violence
breaks out elsewhere in the country.
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The Implications of
Khalistan for Indian
Defense Strategy
An independent Khalistan, the name radical Sikhs
give to a sovereign Sikh state, would seriously
undermine Indian defense strategy, one of several
important reasons New Delhi will make every effort
to hang on to Punjab. The removal of Indian forces
from this key state would sever India's principal
logistic routes to Jammu and Kashmir, leading to the
redeployment of most Indian forces opposite Pakistan.
Loss of Punjab would also require the Indian Army to
abandon its preferred invasion route into Pakistan and
concentrate more military forces for a strike into the
lower half of Pakistan's Sind Province. In the unlikely
event Sikh separatists succeeded, India's strategy
toward Khalistan would closely resemble New Delhi's
military posture toward Nepal. Sikhs would remain
an important source of manpower for the Indian
Army, and New Delhi would consider Khalistan part
of its inner security zone.
with defending against Pakistani incursions by
limiting territorial losses and launching
counteroffensives in conjunction with forces in
neighboring Haryana. The loss of Punjab probably
would require withdrawing these divisions into
Haryana and Himachal Pradesh, moving India's
forward defense line to within 125 kilometers of New
Delhi.
The Indian Air Force would lose four key airfields-
Adampur, Halwara, Pathankot, and Bhatinda-
where four MIG-23 and four MIG-21 squadrons are
based. The Indian Air Force might also find it
prudent to move the two Jaguar and two MIG-21
squadrons at Ambala and the two MIG-21 squadrons
at Chandigarh, which would be perilously close to
India's new western border. Relocating these fighter
aircraft, particularly the shorter range MIGs, farther
east would greatly reduce their ability to operate over
Losing Punjab
New Delhi's opposition to an independent
Khalistan-based primarily on fears that a successful
secession would lead to the gradual disintegration of
the Indian Union-probably also includes an
assessment of what an independent Sikh state would
mean for India's defense posture toward Pakistan.
Sikh extremists have offered contrasting views of
Khalistan's geographic boundaries-ranging from a
state incorporating most of northeastern India to a
narrow entity stretching from Himachal Pradesh to
the Rann of Kutch. We believe that even a much
smaller Khalistan that included only the territory of
Indian Punjab would require significant changes in
India's defense posture.
Indian military forces stationed in Punjab form an
essential link in New Delhi's defenses against
Pakistan. As part of India's forward defense strategy,
four infantry divisions, one mountain infantry
division, one armored division, and two independent
armored brigades are deployed in Punjab, some
within 30 kilometers of the border. The approximately
100,000 men and 675 tanks in these units are tasked
northern Pakistan.
Isolating Jammu and Kashmir
The most important military result would be to make
indefensible Indian-held territory in largely Muslim
Jammu and Kashmir, whose status is the key
territorial dispute between Pakistan and India. The
key logistic line to the approximately 110,000 men
and 480 tanks located there runs from central Punjab
to Jammu. It runs perilously close to the Pakistani
border, and Indian military planners expect it will be
a prime Pakistani wartime target. There are no
alternative land routes, and Indian military air
transport assets-some 200 aircraft-cannot
adequately supply these forces year round. Indian loss
of Punjab would accomplish Pakistan's goal without
firing a shot. Indian press articles assert that Indian
intelligence believes the Pakistani Army has trained
and equipped Sikh extremists with the objective of
isolating Jammu and Kashmir.
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Alternative land routes could be built through
Himachal Pradesh, but Indian forces there might also
be isolated. Their logistic line runs through
Chandigarh, which is scheduled to be turned over to
Punjab as part of a boundary settlement with
Haryana. If this key city became part of Khalistan-
its population is overwhelmingly Sikh-Indian forces
in Himachal Pradesh could be supplied only through
air transport until new roads were built.
Invading Pakistan
We believe the loss of Punjab would require the
Indian Army to change its preferred route for
invading Pakistan.
he probable route for an Indian advance into
Pakistan lies through southern Punjab and northern
Rajasthan, from Bhatinda and Suratgarh in India
toward Bahawalpur and Multan in Pakistan. This
route over the open desert sidesteps the builtup urban
areas near Lahore and the numerous rivers or canals
that would impede an advance into Pakistani Punjab
farther north.
would be exposed. With or without Khalistan's
approval Pakistani units probably would attempt to
drive through the southwestern corner of Khalistan
and attack Indian rear areas in northern Rajasthan.
This probably would force the Indians to pay more
attention to mounting a shorter advance through
southern Rajasthan, from Jaisalmer to Rahimyar
Khan or Sukkur in Pakistan, although the Indian
logistic system is not as well developed for supporting
an invasion along this route.
Dealing With Khalistan
In the unlikely event New Delhi could not prevent the
formation of an independent Khalistan, we believe its
military strategy toward the new state would
approximate its military posture toward Nepal.
Sandwiched between China and India, Nepal is
regarded by Indian military planners as falling within
India's inner defense ring. We believe Indian military
planners would regard Khalistan's western border as
India's strategic frontier, just as it does Nepal's
northern border. India would forcefully oppose the
occupation of Khalistan by Pakistan just as it would
In our judgment, an independent Khalistan would
make this route untenable for the Indian Army.
Without firm control of Punjab, the right flank of the
main Indian Army force deployed against Pakistan
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oppose any Chinese attempt to invade Nepal. It would Depending on the circumstances that led to the
also oppose Pakistani influence and work to extend creation of an independent Khalistan, it is not
Indian hegemony in Khalistan.~ inconceivable that those Sikhs who chose to remain in
New Delhi also would expect Khalistan to have a
defense establishment similar to its small northern
neighbor, in our judgment. Nepal's population of 17
million is almost identical to that of Punjab;
Kathmandu maintains an army of 30,000 men. The
principal wartime mission of the Nepalese Army,
the Indian Army could be covered under a similar
agreement between Khalistan and New Delhi.
is to secure
su cient time to mobilize international support in the
event of either a Chinese or an Indian invasion. The
Nepalese plan to rely on their mountainous terrain,
extensive road and bridge demolitions, minefields, and
antitank and antiaircraft weapons to forestall an easy
We speculate that the emergence of an independent
Khalistan would draw enough of the more than
100,000 Sikh soldiers in the Indian Army to fill a
30,000-man force or the more modest 10,000-man
army called for by some Sikh extremists. We believe
the long history of Sikh regiments in the Indian and
British colonial armies would provide the base for a
highly motivated and well-disciplined defense force.
Organized into infantry battalions and armed with
sizable quantities of antitank missiles and small
numbers of armored vehicles, a Sikh army probably
could take advantage of the area's numerous water
obstacles and urban areas to present a defense capable
of making an occupation costly for either Pakistan or
India. Khalistan could also establish dual capitals, one
in Amritsar and another in Patiala or Chandigarh, to
prevent seizure of its seat of government in a short
cross-border operation.
We believe that even after the creation of an
independent Khalistan, large numbers of Sikhs would
remain in the Indian Army. Soldiering is an
important part of the economy in Punjab, as it is in
Nepal. Kathmandu permits the Indian Army to
recruit 100,000 Gurkhas for the Indian Army.
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Afghanistan-Pakistan:
Air Attacks
Soviet and Afghan airstrikes into Pakistani territory
have increased considerably during the past two
months, but they are still confined to the border area.
Although the airstrikes mainly reflect the increasing
tempo of Soviet and Afghan military operations in
eastern Afghanistan, they may also be meant to apply
political pressure on Islamabad. US-supplied F-16
aircraft and missiles have improved Pakistan's air
defenses but have not deterred the attacks. As long as
Soviet and Afghan ground activity continues near the
border, we expect airstrikes will continue at high
levels. Islamabad is likely to use the continuing
attacks to justify requests for more advanced military
equipment from the United States.
Cross-Border Air Violations Increase
Aircraft from Afghanistan have violated the Pakistani
border at a substantially increased rate. According to
the Pakistani Foreign Ministry, aircraft have crossed
the border about 380 times so far this year compared
with about 275 incidents in all of 1985 and only about
100 in 1984. Although we do not have precise
statistics, airstrikes during the first few years of the
war in Afghanistan almost certainly did not exceed
the 1984 level. Roughly one-fourth of the air
violations last year were bombing or rocket attacks,
usually lasting less than 15 minutes. The others were
probably reconnaissance flights in search of insurgent
camps, or accidental overflights in the wake of
bombing runs on the Afghan side of the border,
airstrikes this year have caused increased
casualties-mainly among Afghan refugees-and
that airstrikes, which previously consisted only of four
to six aircraft, now sometimes involve as many as 15
airplanes. The most aggressive attack so far occurred
in January when several helicopter gunships strafed
and rocketed a small Pakistani airfield and nearby
farm houses at Parachinar for more than one hour.
The attacks have been confined to the border area.
Most attacks-as well as most overflights-have not
penetrated Pakistani territory more than 9 kilometers,
The deepest
attack, 25 kilometers, occurred in May 1985. The
deepest overflight occurred in October when an
airplane flew 100 kilometers into Pakistan, but the
aircraft was experiencing a navigational malfunction,
Aircraft from both the Soviet and Afghan Air Forces
are violating the border, in our view. Pakistani border
guards regularly distinguish between Afghan MIG-
21s and Soviet MIG-23s. Cross-border attack
missions in support of Soviet ground operations near
the border are almost certainly flown by Soviet pilots
We believe that the cross-border airstrikes are
intended to support Soviet and Afghan ground
operations in eastern Afghanistan. Nearly all the
attacks have occurred along major insurgent
infiltration routes into Afghanistan,
We believe that the attacks have
increased significantly because Soviet and Afghan
army units are operating more often near the border.
A secondary purpose of the attacks is to put pressure
on Islamabad to reduce its support for the insurgents,
in our view. Cross-border air attacks usually increase
moderately during UN-sponsored negotiations at
Geneva, although always in the context of ground
operations near the border. A Pakistani Foreign
Ministry official told the US Embassy last April that
Soviet and Afghan aircraft have recently begun to
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Pakistan has had mixed success with its new defenses.
Pakistani F-16s shot down at least two intruding
aircraft, and possibly another, with five AIM-9L
missiles in two incidents in April and May 1986,
Islamabad's New Defenses and Tactics Achieve Mixed
Results
Pakistan has deployed
new air defense missiles and adopted more aggressive
tactics in the face of the increased air attacks:
? Islamabad began deploying surface-to-air
missiles-Stingers, Redeyes, SA-7s, and French
Crotales-to supplement its heavy machineguns
beginning in mid-1985.
? Pakistan's F-16s began flying random patrols with
AIM-9L infrared air-to-air missiles along the
border last February.
? The quick reaction of Pakistani forces suggests that
permission from the Defense Ministry before
attacking intruding aircraft is no longer required.
? Islamabad purchased 50 to 100 Swedish RBS-70
laser-guided missiles in 1985 and seven Swiss
Oerlikon radar-controlled air defense guns this year.
units fired 16 Stingers-with only one confirmed kill
and possibly a second-before withdrawing the
missiles from the border in April because of technical
problems. Pakistani border guards also have fired at
least 15 Redeyes and SA-7s without success,
Pakistan has shot
down three aircraft with heavy machineguns since
1978,
Soviet and Afghan air attacks.
border violations have continued
immediately after each air loss. The most aggressive
attack to date-the helicopter gunship strike against
the airfield last January-occurred soon after the first
shootdown of an aircraft by Stinger surface-to-air
missiles.
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Nonetheless, we judge that Islamabad believes its
greater aggressiveness has served important purposes:
? The Pakistani military has shown the Soviets and
Afghans that they cannot bomb the border area
with impunity.
? Islamabad may believe that its new air defense
missiles discourage deeper attacks.
? Pakistan has demonstrated-at a time when a
second aid package is under consideration-that the
Pakistani military can and will use US-supplied
weapons to defend its airspace.
Outlook
Air violations are likely to remain at higher levels as
long as Soviet and Afghan ground activity continues
near the border area. We believe Soviet and Afghan
fighters will begin to accompany ground attack
aircraft more regularly to protect them from the
F-16s and may try to lure an F-16 into Afghan
airspace. The US Embassy reports that the Pakistanis
believe that Soviets and/or Afghans attempted to lure
Pakistani F-16s into ambushes over Afghan territory
early this year. Soviet and Afghan aircraft are armed
Soviet and Afghan air violations probably will remain
confined to the border area. We doubt the Soviets and
Afghans will attack Pakistani military targets or
insurgent headquarters in Peshawar and Quetta-
cities that are 40 and 100 kilometers, respectively,
from the border-because of concern about the US
response and the likely international outcry. We
believe that Moscow and Kabul calculate that the
greatest utility of air attacks will continue to be
against insurgent supply lines that are close to the
border. Moscow and Kabul also probably believe that
their sabotage campaign in the Pakistani border
area-which caused about 50 deaths and 150 injuries
last year-is as effective as deeper cross-border air
attacks in intimidating Islamabad and harassing
insurgents. In our view, the Afghan insurgents may be
more influenced by the sabotage campaign than by
the punishment inflicted by a bombing campaign.
Because the campaign is occurring in areas that have
a more direct impact on Pakistani citizens, it affords
more opportunities to weaken Pakistani support for
the insurgents.
with radar-guided infrared missiles that have a longer Implications for the United States
range than the AIM-9Ls but are less accurate. Islamabad will ask the United States for increased
If Pakistan begins to use its surface-to-air missiles
more effectively, Soviet and Afghan aircraft probably
will fly higher-as they sometimes do in
Afghanistan-to avoid the missiles. This tactic would
reduce bombing accuracy and make the aircraft more
vulnerable to Pakistani radar detection.
military assistance to counter the airstrikes, in our
view. Pakistani officials will almost certainly renew
their requests for more AIM-9L missiles, and they
may ask for the Stinger Post-an advanced version of
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the Stinger scheduled to enter the US inventory next
year-because they still probably believe that it is a
technologically superior missile. Islamabad may also
formally request the E2-C Hawkeye airborne
surveillance aircraft and the Improved-Hawk, a
medium-to-high-altitude air defense missile system
that would enable Pakistan to attack nearly all
intruding aircraft. Because of the E2-C's and
I-Hawk's high price-about $200 million-
Islamabad may renew its request for supplementary
aid outside the regular foreign military sales program.
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Afghanistan:
Najibullah Settles In
New Afghan party chief Najibullah is moving quickly
to consolidate power, although opposition within the
ruling People's Democratic Party remains. He is
focusing on strengthening the party and the army,
using his good tribal ties to undermine the resistance,
and launching a major effort to attract refugees back
to Afghanistan. Despite his efforts, the regime
probably will not make much headway against the
insurgency because of the government's longstanding
problems-party factionalism, a weak military, and
the absence of popular support.
Removing Babrak Karmal
Babrak Karmal's ouster as party chief came amid
signs of growing impatience in Moscow at his
inability-after more than six years of war-to build
an effective party apparatus, broaden popular
support, or strengthen the Armed Forces. Babrak was
also removed because he did not believe his
government could survive the withdrawal of Soviet
troops, and said as
much to Gorbachev. At the 27th Soviet Communist
Party Congress in February, Soviet leader Gorbachev
announced that the Soviet Union and Afghanistan
had worked out a timetable for Soviet troop
withdrawal. Karmal made no reference to this during
his speech to the congress and instead suggested that
Afghanistan was not ready to stand on its own.
Although we doubt that the Soviet Union is ready to
leave Afghanistan any time soon, there probably is
considerable tension between Kabul and Moscow over
the peace negotiations in Geneva and the sensitive
issue of a withdrawal timetable. Officially, Babrak
requested to be relieved of his party duties because of
poor health.
Najibullah was probably selected by Moscow in hopes
that he could build a more effective regime. He is a
proven administrator who, as head of the Afghan
intelligence service, increased its size and
effectiveness dramatically, orchestrated two highly
publicized tribal councils, and masterminded Kabul's
destabilization program in Pakistan's border regions.
Najibullah, moreover, is close to the KGB and, as an
ethnic Pashtun, knows how to manipulate
Afghanistan's eastern tribes.
The Transition
Despite Moscow's apparent support for Najibullah,
the transition was contentious. The Central
Committee plenum that elected Najib met amid tight
security for three days-an indication that some high-
level party leaders were opposed to the move.
Demonstrations by students and women also
occurred. Anahita Ratebzad-Babrak's mistress and
a Politburo member who heads the national women's
organization-was opposed to his removal. Scattered
protests continued for a week or so in Kabul,
according to the US Embassy.
Strong party opposition to Najibullah's advancement
may have prompted the Soviets to keep Babrak on the
Politburo and as President of the Revolutionary
Council. senior
party members concerned about Babrak's extended
visit to Moscow in April threatened Soviet supervisors
working in their ministries with bodily harm unless
the Soviets returned Babrak to Kabul. Regime media
are portraying the transition as a move to a
triumvirate, with Najibullah as party head, Babrak
Karmal as chief of state, and Prime Minister Soltan
Ali Keshtmand as head of government.
Nevertheless, the transition has proceeded fairly
smoothly-there was no bloodshed-and security in
the capital is back to normal. According to the US
Embassy in Kabul, most Politburo members-with
the exception of Babrak and Anahita Ratebzad-
were dispatched to the provinces in mid-May to
explain the change in leadership to concerned party
members. Najibullah's other major opponents-
Interior Minister Gulabzoi and Defense Minister
Nazar Mohammad-have either publicly endorsed
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Najibullah or appeared by his side at public
ceremonies since his promotion, indicating at least
tacit acceptance of his new status.
statements suggest that Najibullah will intensify
Babrak's effort to broaden the social base of the
regime by appealing to tribal leaders, ethnic
representatives, and clergymen-with whom he has
We believe the leadership triumvirate will gradually
shrink as Najibullah puts his own team in positions of
power. Babrak and Keshtmand are rarely seen in
public. Foreign
Minister Shah Mohammad Dost, Defense Minister
Nazar Mohammad, and Education Minister
Qayyumi are slated for removal in the next several
weeks.
Najibullah's Agenda
Najibullah's most formidable challenge will be to
build strong institutions of state control, especially the
army. He will almost certainly try to meet Soviet
demands that the Afghan Armed Forces assume more
of the burden of fighting the war. Najibullah will also
be under pressure to repeat the army's success in
April in overrunning an insurgent base camp in
eastern Afghanistan.
Najibullah's ability to subvert border tribes in order
to interfere with resistance resupply activities will be a
major factor in determining the success of this
strategy. Most observers believe that Najibullah's
Pashtun heritage and proven ability as intelligence
chief to work with border tribes suit him to the task,
but tribal loyalties are notoriously fickle and he will
probably make only limited gains
Kabul and Moscow are sure to continue their
campaign of military pressure and sabotage against
Pakistan-which Moscow almost certainly views as
the weak link of the insurgency. Air violations of the
Pakistani border have escalated markedly in recent
months, and bombings in Peshawar occur frequently.
Najibullah also has a mandate to widen the public
appeal of the regime, in part by improving party
discipline and performance. Soviet media coverage of
Najibullah's early public statements highlight his
attacks on party laxity, corruption, and ineffectiveness
at the local level. In particular, "faulty
implementation" of policies aimed at tribal minorities,
students, and businessmen was cited. These
already met.
Apparently as part of this effort, Najibullah said in a
speech in late May to religious leaders in Mazar-e
Sharif that the government would establish a
bicameral legislature, or shura, in the next few
months. The legislature is to consist of a council of
nationalities-with equal representation of all ethnic
groups in Afghanistan-and an elected council of
representatives of the people. Najibullah invited
resistance participation in the election, presumably in
the hope of encouraging resistance defections.
Kabul is also trying to lure refugees back to
Afghanistan to gain political legitimacy. In late May
Najibullah directly appealed to the refugee
community, calling for reconciliation with "those of
our countrymen who are wandering abroad in
misery." His statements follow earlier reports
indicating that Kabul has established a commission to
oversee land distribution to returning refugees and
has instructed its embassy in India to encourage
refugee return.
Prospects
The longer it takes to unify the party around its
leadership, the more difficult it will be for Najibullah
to address the regime's serious weaknesses-a
demoralized army and ineffective local party control.
Najibullah's appointment has brought to the surface
serious divisions within even the dominant Parchami
wing of the party, and his reputation for ruthlessness
against the rival Khalqi faction suggests that
opposition to his appointment in the military, where
Khalqis dominate, is bound to arise. In this
environment, he will be hard pressed to raise morale
in the army and improve its effectiveness.
Barring a collapse of external support for the
resistance, it is unlikely that Najibullah will be able to
make serious inroads against the insurgency in the
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near term. His appeal for resistance participation in
the legislative election will have little effect, in our
view, because the insurgents consistently reject
participation in a Communist-dominated government.
Nevertheless, Najibullah will probably capitalize on
the regime's recent marginal gains in some urban
areas and in northern Afghanistan to redirect military
forces to and increase pressure in the east,
particularly against insurgent resupply and
operations.
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Bangladesh: Implications
of Parliamentary Election
The Bangladesh parliamentary election on 7 May,
although tainted by fraud and violence, will provide
some legitimacy for President Ershad as he moves
toward a presidential election and lifting martial law
later this year. Ershad plans to use progovernment
forces in parliament to pass a constitutional
amendment ratifying his actions during four years of
martial law. We expect the amendment to be
approved; the leftist Awami League failed to gain the
necessary seats to block it. The other major opposition
party, the centrist Bangladesh Nationalist Party
(BNP), boycotted the election and plans to pursue a
disobedience campaign. The Army is unhappy that
the progovernment party did not win more seats but
will continue its grudging support of Ershad.
Parliamentary sessions are likely to reflect the chaotic
nature of Bangladesh politics, with Ershad's proposals
for economic reform and privatization taking a back
seat to political horsetrading and grandstanding.
Ershad pulled off the parliamentry election after
months of wrangling with the Awami League and the
BNP. According to US Embassy reporting, Ershad
secured the Awami League's agreement to participate
in the election in return for relaxing martial law,
moving back the election date, and promising to
remain neutral during the campaign. The BNP
refused to compromise with Ershad and boycotted the
election, charging that the polls would be rigged by
both the progovernment Jatiyo Party and the Awami
League.
Election day was marred by violence and massive vote
fraud by the Jatiyo Party and, to a lesser degree, the
Awami League, according to US Embassy and press
reports. Bangladesh officials admitted that 12 were
killed in election violence, but press reports claim 20
dead and 500 injured. US Embassy officers reported
seeing ballot boxes being stuffed and polling agents
kidnaped. Midway through the vote count, the
government stopped reporting results. It later
announced that voting for 36 seats would be
completed on 19 May because of "irregularities." The
US Embassy estimates voter turnout at a maximum
of 30 percent.
Winners and Losers
The Jatiyo Party, which Ershad helped organize from
smaller parties about a year ago, emerged from the
election with a small majority (183 out of 330 seats).
US Embassy reporting indicates that Ershad wanted
a two-thirds majority so that he would have the
necessary votes-220-to pass a constitutional
amendment to legitimize the actions of the four-year-
old martial law regime.
The leftist, pro-Indian Awami League won 76 seats,
and seven smaller parties allied with the League
together won 21 seats. The fundamentalist Jamaat-e-
Islami won 10 seats, the conservative Muslim League
received four, the leftist National Socialist Party took
four, and independent candidates won 32. The Awami
League's showing was better than in the last
parliamentary election, held in 1979, but below the
111 seats that Awami leader Sheikh Hasina needed to
block Ershad's constitutional amendment.
Sheikh Hasina considered boycotting parliament
because she suspected vote tampering prevented her
party from winning even more seats, according to US
Embassy reporting.
=Hasina is now demanding that, in return for the
Awami League's taking its seats in parliament,
Ershad must restore the suspended 1972 Constitution,
try the accused killers of four Awami League leaders,
and declare Mujib Ur Rahman-the first President of
Bangladesh and Hasina's father-as the "father of
Bangladesh."
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Ershad's Strategy
After getting the new parliament to legitimize his
martial law actions, Ershad intends to win the
presidency and then lift martial law, according to US
Embassy reporting. We believe he plans to hold a
presidential election by November when his term as
Chief of Army Staff expires. In the meantime,
Ershad
intends to issue a martial law order declaring himself
president on the basis of a March 1985 referendum.
Ershad recently told US Embassy officials that he
will also choose a prime minister in consultation with
Jatiyo Party members of parliament.
Ershad has told US Embassy officials that martial
law cannot be completely lifted until his position as
president has been secured, either through a popular
election or martial law decree.
Army Concerns
Senior Army officers, who often heavily influence
Bangladesh politics, have been critical of Ershad's
heavyhanded efforts to advance his political goals and
make deals with civilian politicians. We believe,
however, that the most disgruntled Army officers are
too disorganized to act against Ershad, while others
see him, for all his faults, as an adequate protector of
the military's interests.
Army generals
have expressed fears that the Awami League may be
able to block passage of the constitutional amendment
and leave them open for prosecution for acts taken
under martial law. Ershad responded that, if the
League obstructed passage of the amendment, he
would use his martial law powers to dissolve
parliament.
some Army officers are
concerned that Ershad might cut a deal with the
Awami League in return for the League's not
contesting the presidential election. The military,
which is politically conservative, distrusts the leftist
platform of the Awami League.
Outlook
We expect the parliament to convene sometime in
July. To maintain the military's support, Ershad is
unlikely to show any flexibility on Sheikh Hasina's
key demands for restoration of the Constitution, trial
of the accused killers of Awami League leaders, and
honoring of Mujib Ur Rahman. He calculates,
probably correctly, that the Awami League will agree
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300 of the 330 seats were up for election.
The Jatiyo Party gained the additional 30
seats by winning a majority.
eventually to take its seats in parliament to forestall
another possible military coup and the potential
defection of party members who would be upset at the
prospect of losing hard-won seats. The Army will
remain suspicious of Ershad's dealings with the
Awami League but will probably not move against
him except in the improbable event of an Ershad-
Awami League alliance. If Ershad dissolves
parliament and reimposes martial law, which we
consider unlikely, the Army would have few
alternatives to continuing to support him.
We believe Awami Leaguers and independent
members of parliament eventually will go along with
the constitutional amendment in return for restoration
of the 1972 Constitution and a timetable for the
lifting of martial law.
independent legislators are already being bribed to
vote with the Jatiyo Party on the amendment.
Constitutional Role of Bangladesh's Parliament
Bangladesh's parliament, called the Jatyo Sangsad
or House of the Nation, is a unicameral body
consisting of 330 seats. Three hundred seats are
popularly elected, while the remaining 30 are
reserved for women and go to the majority party as
bonus seats. According to constitutional amendments
passed in 1975, the parliament is elected every five
years, meets twice yearly, and any legislation it
passes may be vetoed by the president without any
override provisions. A constitutional amendment,
however, requires the consent of two-thirds of the
members.
Probable Jatiyo Party factionalism will hinder
Ershad's efforts to build and maintain support for his
legislative intitiatives.
We believe that the BNP, by its boycott of the
election, will gradually lose public support and 25X1
become only a nuisance to Ershad once parliament
gets down to business. The BNP has canceled plans to
hold demonstrations to disrupt parliament because of
a lack of organization and finances,
its leader, Begum Zia, against Ershad in the
presidential election
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Relations between Ershad and parliament will be
strained if, as now seems likely, he delays the lifting of
martial law until after the presidential election.
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Sri Lanka:
Insurgent Rivalries
The two largest Tamil insurgent groups are
approaching a showdown in the struggle for
dominance of the separatist movement. Both groups
are less dependent on Indian support, jeopardizing
India's ability to negotiate a political settlement
between the Tamils and Colombo. The Sri Lankan
Government is likely to face increased Tamil attacks
against Sinhalese civilians and economic targets as
the two insurgent groups compete with each other,
and smaller insurgent groups seek to demonstrate
their fighting capability. Even if New Delhi brokers a
settlement between Tamil moderates and the
government, insurgent rivalries and increased foreign
support suggest that at least some insurgents are
government installations, and refusing to commit its
forces in large-scale fighting.
PLOTE may launch a preemptive strike
The Tiger push for dominance has also severely
weakened the insurgents' fragile alliance, the Eelam
National Liberation Front, composed of the Tigers,
TELO, and two other insurgent groups. Although the
alliance has been plagued with disagreements and
difficulties since its inception in 1984, the problems
peaked with the clash between the Tigers and TELO.
likely to continue antigovernment attacks.
Rivalries Heat Up
The longstanding rivalry between the two largest
Tamil insurgent groups has greatly increased in
recent weeks. The Liberation Tigers of Tamil Eelam
(Tigers), the second-largest group, have undertaken
operations to gain control of the Tamil separatist
movement. A four-day battle in early May between
the Tigers and another group-the Tamil Eelam
Liberation Organization (TELO)-resulted in
de facto Tiger domination of the Jaffna Peninsula and
severely weakened TELO's fighting strength. The
battle was preceded by a series of abductions and
executions by both sides, culminating in the Tiger
attack on TELO strongholds and the execution of
TELO leader Sri Sabharatnam.
The only group capable of challenging the Tigers' bid
for control of the insurgent movement is the People's
Liberation Organization of Tamil Eelam (PLOTE),
the largest insurgent group.
PLOTE is already preparing to fight
the Tigers. PLOTE leader Uma Maheswaran believes
the Tigers' next step will be to launch an all-out
attack against his organization to ensure and
consolidate Tiger supremacy over the Tamil liberation
movement. PLOTE has been husbanding its
resources, carrying out only limited strikes against
Press reports indicate that the Tigers have withdrawn
from the coalition, having become fed up with the
political infighting and lack of discipline among the
group's members
Tiger leader Prabakaran no longer believes in the
alliance as a vehicle to achieve a meaningful solution
to the ethnic problem, stating that internal problems
and divisions hinder progress. Prabakaran believes
that he is the only leader-and the Tigers the only
organization-that can resolve the ethnic crisis to the
lasting advantage of the Tamil people.
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If the Tigers abandon the alliance, New Delhi's
mediation role will become even more difficult. The
Tigers have consistently been the most militant
members of the insurgent coalition, usually dissenting 25X1
against the group's decisions. Although the alliance
without the Tigers would probably be less rigid
regarding conditions for a peace settlement, a
separate Tiger group could prove more debilitating in
the long run. Acting on their own, the Tigers will 25X1
surely try to sabotage any settlement that does not 25X1
provide for a separate Tamil state by increasing its
terrorist attacks on Sinhalese civilian areas and
economic installations.
Secret
NESA NESAR 86-013
6 June 1986
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Main Tamil Insurgent Groups and Leaders
People's Liberation Organization of Tamil Eelam
The People's Liberation of Tamil Eelam is the
largest insurgent group, with an estimated 10,000
members. The group is led by Uma Maheswaran, 41.
Since escaping from a Sri Lankan prison in 1983,
Maheswaran has tried to gain power within the
insurgent movement. Until 1980, he and Tiger leader
Prabakaran were allies, but Prabakaran allegedly
murdered a woman Tamil activist close to
Maheswaran, touching off a bitter personal rivalry. E
Maheswaran's group is
committed to organizing a mass guerrilla movement
aimed at establishing an independent, socialist Tamil
state in Sri Lanka.
New Sources of Support
Both the Tigers and PLOTE are diversifying their
sources of arms and funding to ensure independence
from Indian control. The Tigers have declared
publicly that "the Eelam struggle is now ... freeing
itself from Indian diplomacy and striking out on its
own." Tiger spokesman Balasingam said in a recent
press interview that the group had reduced its training
camps in India from 10 to one and that they planned
to move Tiger headquarters from Madras to Sri
Lanka.
Liberation Tigers of Tamil Eelam
Velupillai Prabakaran, about 31, is the leader of the
second-largest insurgent group, the LTTE or Tigers,
which we estimate is 5,000 strong. He is a loner with
an authoritarian leadership style and insists on
approving all major Tiger decisions. Unlike
Maheswaran, he favors terror tactics to force the
government to allow an independent Tamil state. He
has feuded with or attempted to absorb members
from all major insurgent groups.
come under Tiger control.
Other groups include the Tamil Eelam Liberation
Organization, now in disarray but probably retaining
a membership of 2,000; the Eelam People's
Revolutionary Front, with an estimated strength of
1,500; and the Eelam Revolutionary Organization of
Students, probably about 1,500 strong but likely to
Tiger
guerrillas are receiving training in Nicaragua from
Sandinista and Cuban instructors, and
ew Delhi suspects, but cannot
confirm, that the Tigers are acquiring arms from
unidentified radical states in the Middle East. The
Tigers also use at least one large ship to receive arms
shipments at sea from larger vessels and transport
them to their base camas in southern India. (-
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The Tigers receive substantial income from their
drug-smuggling operation in Jaffna,
pne kilogram of heroin will
net $2,500 for sale in Sri Lanka-enough money, we
estimate, to maintain a moderate-size insurgent
training camp for a month. A single drug-trafficking
run to the Middle East can yield $55,000.
PLOTE, too, has given India notice that, although it
welcomes New Delhi's aid, it will not become
dependent on Indian support. PLOTE has established
offices in Europe, Canada, and the Middle East and
has demonstrated its ability to procure and transport
arms independent of India.
in early 1985 the Indian Government
intercepted a PLOTE munitions shipment from
Singapore as it was being unloaded in Madras.
Maheswaran recently warned Indian officials that, if
New Delhi did not start supporting PLOTE, his group
would seek increased assistance from friendly socialist
states abroad and could smuggle arms into south
India through corrupt state government and customs
officials. We believe PLOTE is capable of continuing
operations even if New Delhi curtails or limits its
support for Tamil insurgents
Indian Concerns
The Indians are alarmed over the ferocity of the
infighting among the Tamil insurgent groups.
Although the Tigers were formerly the favored
children of New Delhi, their attack on TELO has
forced India to reconsider its support for them.
India is concerned
that the Tigers may soon be beyond Indian control,
and it therefore plans to rearm TELO and three other
groups to counterbalance Tiger power. Indian efforts
may be too little, too late, however, in light of the
Tigers' success in securing non-Indian sources of
support.
We believe New Delhi has good reason to be
concerned about insurgent disunity. Inability to
present a united front during peace negotiations will
make it virtually impossible for India and the Tamils
to wrest meaningful concessions from Colombo.F-
A protracted insurgency, compounded by internal
divisions, will also have long-term negative effects in
southern India. Already,) Ithe 25X1
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begun to take its toll on the resources of the Indian LORI
state of Tamil Nadu and on the patience and good
will of its citizens.
New Delhi's reaction to Sri Lanka's stepped-up
operations in mid-May against Tamils in Northern
Province, although critical, was noticeably restrained.
Prime Minister Gandhi urged President Jayewardene
not to abandon efforts for a negotiated settlement and
appealed to the government to end attempts for a
military solution, noting that such action would only
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talks came to an abrupt halt in late May, however, 25X1
when New Delhi announced that it was suspending
negotiations for the time being. Despite this
announcement, we doubt that the Indians will let up
on efforts to secure an agreement between moderate
elements of the two sides. We believe they may begin
to focus their peace efforts on Sinhalese moderates.
Colombo's Response
Following the Tiger/TELO fighting, President
Jayewardene saw an opportunity to inflict a decisive
blow on the weakened militants while at the same
time reasserting government authority in the Tamil-
controlled north.
jJayewardene also hoped to demonstrate to the
Sinhalese public that the government was not
impotent in the face of increasing Tamil terrorism.
Government forces launched a "road-clearing
operation" on 17 May, w:iich was, in fact, a military
strike at the Tamil heartland.
Government spokesmen claimed the operation
achieved its road-clearing objective, but the militants
remain in control of Northern Province, and
government troops remain stationed in their base
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Colombo's handling of the Tamil problem has met
with increasing criticism from the Sinhalese
community and from New Delhi.
the President is under fire from his own
party and from the Sinhalese electorate for his
inability to counter the growing Tamil terrorist
threat. The stagnation of the peace talks, coupled with
the new insurgent strategy targeting economic
installations and Sinhalese civilians, is likely to steer
Colombo more toward a military solution of the
Continued insurgent rivalry will give Colombo a
pretext and an opportunity for new military offensives
against Tamils, which, in turn, will probably lead to a
new round of Tamil violence against Sinhalese. The
increasing factionalism within the government is
fueling speculation of a possible rift between
Sinhalese hardliners and moderates, and it is likely to
further confound the peace process.
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dispute, much to New Delhi's dismay.
Outlook
Both the Tigers and PLOTE have considerable
resources to expend, and both would probably do their
utmost to ensure victory in the event of a clash
between them. We believe, however, that neither
group could decisively defeat the other.
We believe that, even if India cracks down on the
Indian-based Tamil groups by denying arms, training,
and funds, it could still not contain the Tigers. The
Tigers could regroup on the Jaffna Peninsula
relatively quickly; plans to relocate their operational
headquarters are already under way.
If New Delhi manages to secure an agreement
between Colombo and Tamil moderates, it could
probably force the smaller Tamil militant groups to
accede to the proposals. We doubt, however, that the
Tigers will be a party to any settlement that does not
provide for a separate Tamil state, and they will
probably attempt to confound any settlement by
increasing terrorist attacks against civilian targets.
Colombo could face widespread anti-Tamil rioting in
Sinhalese areas, including the capital.
PLOTE is the insurgent group most likely to take part
in a negotiated settlement with Tamil moderates,
especially given PLOTE's long-term goal of an
islandwide socialist revolution. Even if PLOTE
acceded to a settlement, we expect it to continue
antigovernment or antimoderate operations and to
continue courting Sinhalese leftists
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Near East and
South Asia Briefs
The Muslim Brotherhood is trying to dampen government fears of a militant
takeover of the organization following the death last month of Brotherhood leader
Umar Talmassani. The Brotherhood may allow interim leader Muhammad Hamid
Abu Nasir, a moderate, to remain in office indefinitely without a formal election.
This follows the pattern of leadership succession that brought Talmassani to power
in 1974. Abu Nasir, the most senior mender of the Brotherhood's Guidance
Council and a follower of Talmassani, is likely to be acceptable to the various
Brotherhood factions as well as the government. In addition, Mustafa Mashur, the
leader of the militant faction and a former official in the Brotherhood's secret
militia, is minimizing the prospects for a power struggle, according to Egyptian
press reports. Last March, militants nominated Mashur to succeed Talmassani,
leading the government to warn Brotherhood moderates privately that it would not
tolerate a more confrontational organization,
Most Brotherhood members probably believe the organization should continue its
moderate tactics to avoid a crackdown by the government. Cairo is growing wary
of fundamentalist groups of all stripes because of the surge of Islamic militancy
over the last several weeks. The US Embassy in Cairo says that some high
government officials are hardening their attitudes toward political involvement by
religious groups.
New Delhi and Islamabad have made halting steps toward cooperation in
antinarcotics programs, but both sides face powerful political constraints to
making the changes required to affect significantly narcotics trafficking in the
region. Both Pakistan and India put a low priority on narcotics control but hope to
enhance their claim to South Asian leadership through cooperating on relatively
noncontentious issues such as joint antinarcotics programs. We believe that the
proposed joint border patrols and the sharing of smuggling information and
intelligence reports have the potential to reveal embarrassing details of poor border
security, local official corruption, and cross-border movement of militant Sikhs
and other antiregime elements. Senior Indian and Pakistani officials have assured
US diplomats that they are committed to seeking better bilateral cooperation, but,
since the announcement last February of a six-point bilateral antinarcotics
program, US Embassy reports chronicle the failure of both sides to attend
scheduled meetings or to institute proposed programs. We believe the slowdown in
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NESA NESAR 86-013
6 June 1986
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bilateral antinarcotics efforts this spring parallels a general downturn in Indo-
Pakistani relations. Middle and lower level antinarcotics officials on both sides, no
matter how well-intentioned, are unlikely to get ahead of national leaders in an
area of such political sensitivity. In our view, Indian and Pakistani officials will
continue to drag their feet on joint antinarcotics cooperation, reflecting both New
Delhi's and Islamabad's unwillingness to place a higher priority on drug control
matters and the strength of outstanding political problems between the two states.
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