THE POLITICAL INSTABILITY QUARTERLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00986R000100070002-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 68
• Document Creation Date: December 22, 2016
• Document Release Date: November 2, 2011
• Sequence Number: 2
• Publication Date: May 1, 1987
• Content Type: REPORT

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Directorate of
Intelligence
The Political Instability Quarterly
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DI PIQ 87-002
May 1987
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Intelligence
The Political Instability Quarterly
This quarterly was produced by and coordinated
Secret
DI PIQ 87-002
Mat 1987
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The Political Instability Quarterly
The main objective of this quarterly is to provide timely warning of
significant instability in countries of key importance to the United States by
monitoring changes in key elements affecting their stability.
Significant instablity, in our definition, may include any one of a
combination of the following-irregular regime change, coup d'etat,
breakdown of order, major civil war, revolutionary upheaval, or major policy
reorientation toward a radical anti-US stance.
A select group of 30 countries is covered regularly in the quarterly. The
countries have been selected because they are key US friends or allies,
located near strategic choke points, major oil producers or debtors,
geographically close to the United States, or especially salient or influential
in the Third World. Periodically we include countries that are not part of
this group of 30, but which are nonetheless important to US interests. (See
the part 1 assessment on Ecuador.)
The time frame: This issue of the quarterly is based on an analysis of issues
and developments in the first quarter-for our purposes this is the
February-March-April time frame-and it projects our concerns about the
prospects for instability in the forthcoming second quarter-May-June-
July-as well. In addition, we include projections of our general levels of
concern over the medium and longer term for the select group of 30
countries.
This issue of the Political Instability Quarterly includes) 25X1
? Part 1: Special essays on selected countries in which there have been
developments of particular interest. Each assessment ends with specula-
tive, forward-looking, "Most Likely" and "Alternative" scenarios, and
lists of indicators to be watched with reference to those scenarios.
? Part 2: Brief assessments of the 30 selected countries, including the
prospects for instability in the basic set of countries, levels of concern
Secret
DI PIQ 87-002
May /987
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? Part 4: A special annex that provides a list of 85 questions key to our 24
indicators of instability.
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Preface
Summary: Levels of Concern
Part 1. Countries of Special Interest
ice of Global Issues
Part 2. Developments and Trends
The Philippines: Aquino and the New Democracy
The Oil Price Collapse: Avoiding Political Instability
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Status of Key Indicators
Current Assessment
and Prospects
Legend Serious concern
Substantial concern
Moderate concern
Low concern
Negligible concern
? Concern has increased since last quarter
? Concern has decreased since last quarter
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Prospects
Concern for
significant
instability
during next:
Latin America Argentina
?
?
A
C
C i
?
?
Brazil
A
A
C
A
A
Colombia
Guatemala
Honduras
Panama
i
-T-
--
C-
--
---
Peru
A
Venezuela
C)
C
)
C)
Europe Greece
C~
.)
O
C
Spain
?
C'
0
ii
t
C
Turkey
)
Near East and South Asia
?
fl
0
V
India
?
C)
C)
C)
A
-
Morocco
C..7
~
J
A
V
Africa Kenya
A
C
C)
?
C
-
Somalia
C
C
C) ?
A
A
C,
Zaire
?
Q
A
A
East Asia Indonesia
?
0
A
(J
C)
Philippines
A
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The Political Instability Quarterly I 25X1
Summary: The summary chart on the facing page highlights the countries where our
Levels of Concern concerns about political instability are the greatest.
l,lormation available
as of 20 April 1987 Over the past quarter, Brazil's indicators of instability show the greatest
was used in this report.
degree of deterioration. Although we do not believe a change of government
is imminent, the Sarney administration is now widely seen as unable to cope
with the nation's problems. In addition, President Sarney has become
increasingly dependent on the military to maintain order, and despite their
public support for him, some military leaders have begun to express concern
in private over Sarney's indecisiveness.
Elsewhere, our concern over military attitudes is on the rise in Argentina,
Peru, and Indonesia. In Argentina, civil-military tensions have been
heightened by the trials of officers accused of human rights abuses.
Austerity measures in Indonesia have increased the military's displeasure
with government policies, as their salaries have been frozen and living
allowances have been cut. In Peru, President Garcia's move to create a new
Ministry of Defense has led to substantial discontent in the armed forces and
civil-military relations are likely to become increasingly strained over the
next few months. Moreover, in Ecuador, the military-worried by leftist
agitation-is becoming increasingly politicized, and in our judgment, will
intervene in the electoral process if developments are deemed to be contrary
to its interests (see part 1 essay).
In the Iran-Iraq war, Iraq has earned at least a temporary respite by fending
off the Iranian offensive aimed at winning the city of Al Basrah. Intense po-
litical maneuvering continues in Iran in anticipation of Khomeini's death,
but we do not believe it will pose a threat to stability in the near term.
We judge that, since the Aquino government came to power last year, the
prospects for stability in the Philippines have steadily improved. The
I I May congressional elections, however, will produce a major realignment
of power in Manila because the new constitution provides the new legislature
with powerful checks on presidential authority (see part I essay).
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We believe the prospects for instability will remain high in several
countries that are already of serious concern. Student protests in South
Korea are likely to intensify during the May anniversary of the 1980
Kwangju uprising. In Pakistan, sectarian clashes have subsided, but
tensions remain high-particularly in Karachi-and new outbreaks of
violence are quite likely with little provocation.
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Part 1. Countries
of Special Interest
Ecuador:
Democracy
Under Pressure
? President Febres-Cordero's combative style and
Ecuador's serious economic problems sparked by
a sharp decline in oil revenues in 1986 and intensi-
fied by a devastating earthquake this March-have
sharply polarized and activated Ecuador's left.
? The far left, paying back the President's combat-
iveness in kind, has gained political stature by
attacking Febres-Cordero and it recently had con-
siderable success in mounting a nationwide strike
protesting austerity measures. In addition, leftist
national legislative deputies have begun impeach-
ment proceedings against the President-although
they lack the necessary two-thirds majority in
Congress to succeed-to embarrass and further
weaken the administration.
? The military, worried by leftist agitation and the
threat of former Air Force Commander Vargas-
freed in January by mutinous Air Force troops who
took the President hostage-has become increas-
ingly politicized. Some segments of the military
believe the extreme left provoked the Air Force
mutiny, seeking to discredit the armed forces.
Army Commander Asanza and other high-ranking
generals have reportedly warned the leftist-con-
trolled legislature against further attacks on the
President and the military and have threatened at
least twice to close it down.
Ecuador Under Febres-Cordero
After years of center-left rule, the 1984 election of
conservative Leon Febres-Cordero marked a major
transition in Ecuador's democracy. A combative and
shrewd politician, Febres-Cordero used highly con-
frontational tactics to outmaneuver his opponents
and implement his policies. Febres-Cordero initially
forged stunning successes on several fronts, especially
on the economic scene-curbing inflation, fostering
Tanker terminal
Oil pipeline
Boundary r.pneemeron is
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0 150 Kilometers
growth, and putting Ecuador's international financial
accounts in order. Last year, however, the collapse of
oil prices led to an economic downturn. Economic
problems, coupled with widespread charges of cor-
ruption and an Air Force mutiny, weakened the
President and the leftist opposition regained control25X1
of Congress. A second Air Force mutiny this Janu-
ary, during which Febres-Cordero was taken hostage,
has further polarized Ecuadorean politics.
The economy was again seriously undermined by a 25X1
major earthquake in early March, severing the na-
tion's oil pipeline and forcing the administration to
implement sharp austerity measures, which resulted
in rioting and a nationwide strike led by leftist
factions. Faced with rising unemployment and other
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economic and social consequences of the tragedy,
Febres-Cordero raised domestic gasoline prices by 80
percent, cut budgetary expenditures, and suspended
foreign debt payments in order to deal with an
expected billion-dollar deficit. Somewhat buoyed by
foreign assistance--primarily from Venezuela and
the United States----Febres-Cordero is moving toward
a more active role in confronting the opposition, but
his combative style is likely to add to the already
substantial polarization of the political environment.
Military backing of the President ensures that he will
continue in power for the remainder of his term,
which expires in August 1988, but prolonged and
intensifying clashes with the left will sap the govern-
ment's strength and increase its dependence on the
armed forces to fend off the opposition. We judge
that Ecuador's democratic succession will be jeopar-
dized by the politicization of the military, its mount-
ing resentment of the left's campaign, and the likeli-
hood of an electoral victory by the center-left in next
year's presidential election.
Mounting Challenge From the Left
The left has seized on the country's severe economic
problems to challenge the administration and has
organized violent and recently effective antigovern-
ment demonstrations. In March, for the first time
since Febres-Cordero took office, far leftists had
considerable success in attracting protesters and la-
bor support for a nationwide work stoppage that
virtually paralyzed Quito and other major cities.
According to US Embassy sources, leftist leaders
plan to follow up the strike with a new call for the
President's ouster----although they lack the 48 con-
gressional votes necessary to impeach Febres-Cor-
dero.
Even the center-left opposition-led by presidential
hopeful Rodrigo Borja-has exploited the massive
problems confronting the government, hoping to
translate the center-left's stance into crucial popular
support on the eve of the 1988 presidential election.
Borja supported his party's left wing in its censure of
Febres-Cordero and has more recently backed radi-
cal labor groups in their work stoppage.
Chronology of the Taura Mutiny
? President Febres-Cordero and his entourage--
including high-ranking military commanders and
personal std are taken hostage by Air Force
commandos during a ceremony at the Taura Air-
base near Guayaquil.
? Commandos demand release of former Air Force
Commander Vargas, imprisoned after the unsuc-
cessful mutiny last year, in exchange for the
President's freedom.
? Leftist opposition organizes demonstrations in Qui-
to against the President and calls for impeach-
ment, arguing that Febres-Cordero's disregard for
the legislature and the law sparked the Taura
rebellion.
? Febres-Cordero agrees to terms and issues amnes- 25X1
ty for Vargas and the mutineers.
? Febres-Corderofies to Quito and meets with
Army and Navy chiefs, who demand retaliation.
? Naval forces take Taura mutineers prisoner and
fly them to Army bases to await military trials.
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We believe that Febres-Cordero still has several
political strengths. One of his principal assets is the
national police, which have shown considerable pro-
fessionalism and effectiveness in containing leftist
violence. Moreover, they were responsible for dealing
the terrorist group, Alfaro Vive Carajo, devastating
setbacks last year, a feat that will most likely prevent
insurgency from adding to the government's prob-
lems. Febres-Cordero can also count on business
support and, most important, on that of the Army
high command. Nevertheless, the left will very likely
step up antigovernment activities, testing the govern-
ment's resolve and its remaining strengths.
Military Unease
The deep political divisions in Ecuador reopened by
the kidnaping of the President and the release of
former Air Force Commander Vargas have resulted
in strong military sentiment against the left, which
had supported Vargas. Vargas-who as long as he is
free remains a threat to the government-has exacer-
bated the military's unease and suspicions by going
into hiding and telling reporters he is willing to lead
a coup or head a leftist coalition in the 1988 election.
Army and Navy commanders, at first outraged by
Febres-Cordero's agreement to release Vargas, cur-
rently back the President
The military is an active player in the political fray.
At the height of the January mutiny, the military
warned the left against trying to oust Febres-Cor-
dero. During the general strike, Army Commander
Asanza put military units on alert and drew up
contingency plans to install martial law in support of
the government. Other high-ranking Army officers
have offered to install Febres-Cordero as a military
dictator, but the President has refused. We believe
the increasing politicization of the military makes its
more likely to intervene in the electoral process if
developments are deemed to be contrary to military
Potential for Conflict
Some Ecuadorean observers
have expressed fear that grow-
ing leftist strength and success in organizing violent
demonstrations could presage political chaos. They
view center-left support for the mounting attacks on
the government as evidence that the moderate oppo-
sition is ceding power to radicals. Although this
opinion exaggerates the strength of the far left, in
our view, this largely military attitude will contribute
to Ecuador's political tensions.
The left, in our opinion, will continue to exploit the
current political ferment in order to assail the Presi-
dent and boost its popular support. In this polarized
and confrontational environment, the far left will
seek to translate its recent successes and growing
political base into additional pressure on more mod-
erate forces in order to remove Febres-Cordero from
office. Lacking the unity and, most important, the
military backing to oust him, the leftists are unlikely
to be successful. Prolonged clashes, however, will
increase the political polarization and raise anxieties
in the Army, especially as leftist prospects for the
1988 election continue to improve.
Key Indicators To Watch
Most Likely Scenario: Febres-Cordero, backed by
the military, succeeds in holding the opposition at
bay for the remainder of his constitutional term, but
politicized armed forces increasingly become the
ultimate political arbiter in Ecuador:
? Center-left parties block impeachment proceedings
before the military reacts.
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? Security forces, primarily the police, contain strikes
and prevent widespread and sustained violence.
? Vargas and his Air Force supporters remain neu-
tralized.
Alternative Scenario: The armed forces close down
Congress and declare martial law:
? Popular dissatisfaction with the government boils
over into widespread, violent, and sustained demon-
strations that the police cannot control.
? The center-left backs impeachment regardless of
the political costs.
? Vargas stages another violent mutiny.
? The far left and Vargas unite in an electoral
alliance aimed at winning the presidential election
in January 1988.
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The Philippines:
Aquino and the New
Democracy
? The 1 1 May election for 24 Senate and 200 House
seats follows ratification of the new constitution in
February 1987 and is the second step in President
Aquino's attempt to rebuild national political insti-
tutions and restore democratic order. The voting
will be the most serious test of Aquino's political
skills and of the popular appeal of the conservative
opposition and the Communists.
? Since coming to power last year, Aquino's govern-
ment has become increasingly stable, but she has
had the option to rule by decree without a rival
source of constitutional power to challenge her
actions. The congressional elections, however, will
produce a major realignment of political power,
because the new constitution grants the legisla-
ture-which convenes on 27 July-powerful checks
on presidential authority and a key role in the
direction of national policy.
? Tensions between the civilian leadership and the
military have eased somewhat in recent months, but
many soldiers still believe Aquino is inattentive to
their concerns and that Armed Forces Chief of Staff
Ramos is her "yes man." Marcos loyalists and other
disgruntled elements within the military continue to
inspire periodic coup rumors.
South
China
Sea
?ndo esia
Less than 10 percent
10-30 percent
30 percent and above
Region boundary
Philippine
Sea
? The Communist insurgents, believing that the 60- 800895 (A02867) 5-87 25X1
day cease-fire that ended in February hurt their
cause, have renewed attacks on military targets.
Aquino has approved offensive operations and a foreign and domestic investors are still waiting for
rebel returnee program, but limited financial re- the political situation to gel before committing
sources and the absence of a coordinated counterin- substantial new funds.0 25X1
surgency plan are delaying progress.
The Elections: Back to Normalcy
? Manila and its commercial creditors agreed in Aquino is betting that her immense popularity will
March to reschedule payments on half of the Philip- transfer to her congressional candidates, ensuring a
pines' $27 billion foreign debt. However, adminis- strong government majority in the nationally elected
trative bottlenecks, Cabinet infighting, and Senate and at least a workable majority in the
Aquino's desire to leave key policy decisions for
Congress continue to delay her efforts to translate
economic plans into solid growth. Moreover,
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House. In our judgment, however, the President's
popularity conceals fundamental weaknesses in the
government camp, including ideological disunity,
weak political organization, and the absence of firm
political leadership. These factors are most important
in the House races, which will largely be won or lost
on the basis of local issues and personalities, in
contrast to the Senate races in which candidates are
elected at large. Despite its own problems with unity
and credibility, the opposition-comprising old-guard
politicians and disillusioned former Aquino support-
ers-presents a serious electoral challenge because of
the strength of its local political machines. Moreover,
the opposition stands to gain in races where multiple
pro-Aquino candidates are entered.
The 11 May elections represent the rebirth of tradi-
tional Philippine politics and, inevitably, the old rules
of the political game that will test the new govern-
ment's ability to ensure clean and peaceful elections.
Because of the high stakes, the voting is certain to
bring election-related violence, intimidation, and vote
buying
Depending on the extent of voting
irregularity and the publicity it receives, the Aquino
government may lose credibility or face charges that
it cannot control the conduct of elections.
Because of the diversity of parties fielding candidates
for the elections and the multiplicity of deals and
alliances that we believe will be made along and
across party lines, we expect the new Congress will
have many factions, and both the government and
opposition coalitions are likely to be ill defined. We
are not confident that the progovernment House
members will cooperate in shepherding through
Aquino's programs, particularly if her passive man-
agement style and aversion to traditional political
horsetrading keep her from building a coalition and
exercising aggressive leadership over it. Legislative
gridlock-typical of the pre-martial-law Congress-
may result, which would weaken Aquino's ability to
make and implement policies designed to deal effec-
tively with the country's problems.
Aquino and the Military: A Tense Relationship
Aquino's gradual adoption of the military's hardline
approach toward the Communist insurgents has im-
proved relations with the military. The length of time
required for her to reach this decision, however, and
her hesitancy in addressing the military's concerns
about government management, have convinced many
officers and enlisted men that she still does not
understand the Communist threat and that she dis-
trusts the military as an institution. These disgruntled
soldiers, some of them diehard Marcos loyalists, will
probably continue to float coup rumors as a means of
forcing Aquino to either demonstrate the kind of
aggressive leadership they feel the country needs or
place the military at the center of national
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policy making. They will expect Ramos and Defense
Secretary Ileto to subtly pressure Aquino toward the
same goals. If Aquino does not take the military's
position into account on policy decisions and fails to
fulfill its operational needs, disillusionment within
the ranks is likely to increase and could lead to more
serious coup plotting.
Aquino's support within the military is partially
dependent on her ability to ensure that the civilian
side of the government pulls its weight in counterin-
surgency efforts. To that end, she has approved rebel
amnesty, rehabilitation, rural development, and land
reform programs aimed at addressing some of the
insurgency's root causes. A scarcity of government
resources and managerial expertise, however, is cer-
tain to slow implementation of these programs and
delay results. Moreover, the military continues to
distrust-and views as incompetent-several Cabinet
members responsible for getting these programs
under way.
The Communists: Getting Their Act Together
After being left on the defensive when it refused to
extend the cease-fire, the Communist Party of the
Philippines (CPP) will try to renew and strengthen its
claim to national leadership over the next several
months. Because of persistent disagreements within
the party about the proper tactical balance between
military and political efforts, the Communists are
pursuing a two-pronged strategy against the Aquino
government that combines escalating insurgent at-
tacks with intensilied propaganda efforts and front-
group participation in the elections. The Communist
New People's Army is trying to demoralize the
Philippine military with coordinated attacks and
undermine popular support for the Aquino adminis-
tration by striking local government facilities, such
as town halls and police outposts. In the meantime,
the Partido ng Bayan-the Communists' legal politi-
cal party-is fielding numerous congressional candi-
dates and also hopes to forge alliances with pro-
government politicians.
The Communists will continue to have the tactical
advantage as long as the government makes little
progress in counterinsurgency planning and in train-
ing and equipping its troops, and until economic
recovery is more vigorous. On the other hand, the
recent proliferation of anti-Communist civilian self-
defense groups indicates that escalating violence and
forced taxation may be backfiring on the insurgents.
Although the violence may alienate some voters and
undermine the party's political efforts, we believe
that some Communist or Communist-controlled can-
didates will probably be elected to the House, where
they will try to direct debate toward controversial 25X1
social justice issues-such as land reform and mili
tary human rights abuses-and highly nationalistic,
anti-US positions. 25X1
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Key Indicators To Watch
Most Likely Scenario: Aquino's candidates win con-
trol of Congress, but her reform program continues to
be delayed; military-insurgent clashes increase with
no clear winner; Communist strength continues its
slow but steady growth:
? Aquino captures a comfortable majority in the
Senate, but only a small majority in the House. Her
supporters have difficulty uniting against the oppo-
sition challenge in both houses.
? Politicians on all sides, including Aquino and the
congressmen, become preoccupied with the local
elections scheduled for August 1987.
? The military attacks known rebel strongholds after
this May's congressional elections which had mixed
results.
? The Communists exacerbate civil-military tensions
by escalating terrorist operations in Manila and
elsewhere.
? Persistent disillusionment with Aquino's progress
limits rebel surrenders and facilitates Communist
recruiting.
Alternative Scenario: Aquino's popularity dominates
the election results and her social and economic
programs move forward; the military shows its mettle
against the insurgents; the Communists' popular ap-
peal wanes:
? The opposition captures only a few seats in the
Senate and a small, manageable minority in the
House. Nearly all Communist-backed candidates
are defeated. Progovernment congressmen unite be-
hind Aquino's legislative program.
? Popular support for the government remains high
and the local elections renew Aquino's mandate.
? The military routs the insurgents in a few areas,
improving troop morale, civil-military relations, and
popular support for the Armed Forces.
? The Communist propaganda campaign is increas-
ingly discredited and the CPP's internal divisions
grow.
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Colombia:
Guerrilla War
Heating Up
? Guerrilla violence has intensified since President
Barco took office last August, and the level of
conflict is likely to escalate during 1987.
? Leaders of the Revolutionary Armed Forces of
Colombia (FARC), Colombia's largest rebel
group-which has a tenuous three-year-old cease-
fire with Bogota----have rejected Barco's demand for
demobilization by next year. Mounting tension be-
tween the government and the insurgents has in-
creased the likelihood of a return to full-scale
guerrilla war. Resumption of a full-scale war would
not threaten Barco's government, but it would dis-
rupt his social and antidrug agenda and would carry
heavy military and economic costs.
? Drug enforcement could provide a flash point for
expanded conflict between the government and
FARC. Rebel leaders have warned that planned
government attacks on cocaine laboratories in their
territory would end the cease-fire.
? Meanwhile, the government faces widespread in-
timidation by drug traffickers and escalating at-
tacks by a Cuban-backed alliance of guerrillas
outside of the truce with FARC. Concentration of
government forces to protect the nation's major oil
pipeline in the northeast has left many other areas
unprotected.
New Phase in an Old Insurgency
President Barco faces an insurgency very different
from the sporadic violence that plagued Colombian
leaders less than 10 years ago. The four major
insurgent groups, once isolated bands of guerrillas,
increasingly coordinate their antigovernment attacks.
Rebel leaders now emphasize political activity, both
in the legitimate arena and through penetration of
organized labor and other interest groups. Cuban
President Fidel Castro has taken advantage of the
cease-fires negotiated by the last Colombian adminis-
tration to promote the formation of a united guerrilla
Caribbean Sea
Barranquilla is
Cartagena
front including all of the major Colombian insurgent
groups. Moreover, some Colombian insurgents--un-
like other Andean guerrillas-have developed close
ties to narcotics traffickers.
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This evolution has magnified the threat posed by the
insurgency and eroded Bogota's ability to maintain
effective control over its vast undeveloped areas. The
US Embassy reports that more guerrillas are active
throughout Colombia and the level of political vio-
lence is higher than at any time since the civil war of
the 1950s. The rebels do not place the government in
imminent danger, but we believe continued govern-
ment losses would eventually undermine the stability
of the Colombian democracy.F____1 25X1
Aruba NoIherlanda Antilles
(Neth.)/~~ (Neth.)
) ( t C:~rnO~ o~BOarc .
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Colombia: Insurgency Casualties,
January 1986- March 1987
\umher ul rusuallies
35(1
Jan 86 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 1987
The insurgency has become increasingly expensive
for Bogota during the past year, in human and
economic terms.
Besides coping with FARC-the most formida-
ble of the rebel factions-Barco must also contend
with the National Guerrilla Coordinator (CNG), an
alliance of smaller groups that refuses to participate
in peace talks with the government. CNG includes
the National Liberation Army (ELN), the 19th of
April Movement (M-19), and the People's Liberation
Army (EPL). Efforts to curb increasing attacks by
these groups require a substantial security force
commitment in several regions of the country. The
economic impact of the insurgency is also growing:
the ELN, probably the most dangerous member of
the alliance, is waging a determined campaign
against the nation's major oil facilities and has
inflicted more than $50 million damage within the
past year.
Truce With FARC Unraveling
The key to FARC's strategy is the legal protection
provided by its truce with Bogota; the cease-fire has
shielded the rebels against government prosecution
and has allowed them to consolidate their control in
large areas of rural Colombia.
FARC includes 3,500 to 4,500 com-
batants and an additional 5,000 armed supporters-a
substantial increase since the truce was signed in
1984. After Barco took office last year, he had little
choice but to prolong the truce in order to strengthen
his overstrained security forces.
Barco recently demanded demobilization of all
FARC military fronts before scheduled March 1988
elections, when Colombians will elect mayors by
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16AN~! 16ANf~1
AN6- L'M!N@
Colombian drug traffickers pose an increasingly seri-
ous threat to Bareo's administration, even if they do
not threaten government stability. The cocaine cartel
has systematically murdered or tried to kill key
antidrug figures, including a Supreme Court justice,
legislators, prominent journalists, an airline security
chief, and the former top narcotics officer. The drug
mafia also publicly threatened President Barco per-
sonally after he broadened military and police drug
control powers. Its international reach was demon-
strated in February 1987 when it attacked the Co-
lombian Ambassador in Budapest-a former justice
minister and successor of Rodrigo Lara Bonilla,
whose murder in 1984 sparked afar-reaching crack-
down on the drug trade. Moreover, the US Embassy
has recent reports alleging that the M-19 has con-
tracted with traffickers to kill proponents of drug
control programs, including US Embassy personnel.
Wry comment on the truce from Bogota's leading
daily: "What s happening buddy?" "We are in a
truce, buddy."
popular vote for the first time. The demand, promptly
rejected, brought Barco into a deadlock with the
rebels. It also spurred a move by the FARC's political
front, the Patriotic Union-which fielded a candidate
in the 1986 presidential election and won minority
representation in both houses of Congress-to protect
rebel political gains by publicly distancing itself from
FARC.
The fate of the truce in part hangs on Bogota's ability
to sidestep a major clash with FARC over its involve-
ment in narcotics production, particularly in the
southeastern jungle where many large cocaine pro-
cessing facilities are located. Patriotic Union leaders
have warned President Barco that strikes on FARC-
associated drug facilities would end the truce, accord-
ing to the US Embassy To avoid an
on-the-ground confrontation with FARC, Barco has
ordered the police to conduct raids on guerrilla-
associated cocaine labs by air, without coordinated
ground assaults.
Over the longer term, rising violence and a freer
operational climate for drug traffickers in Colombia 25X1
could render the judiciary totally ineffective. It has
already been seriously weakened by intimidation and
bribery. Bogota's extradition treaty with Washington,
which took effect in 1982, is particularly jeopardized.
Colombia's Supreme Court, which must rule on
extradition requests, has borne the brunt of trafficker
intimidation and continues to challenge the treatys
constitutionality. The recent extradition of Carlos
Lehder-on a 1984 warrant-has not been chal- 25X1
lenged by other members of the drug mafia, possibly
because Lehder is out of favor with the rest of the
cocaine cartel. Other top traffickers are likely to
remain secure unless Barco can break the current
impasse over the treaty's legality.
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Guerrilla Unity Increasing
Disagreements among the major guerrilla factions
are common
ORDEN POBLICO
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- ~oA]
sponsor of Colombian insurgents-is primarily re-
sponsible for the continued viability of the CNG
alliance. Castro's hand is also apparent, in our view,
in talks between alliance leaders and the FARC,
which have already produced a fledgling political
alliance and are likely to further operational coordi-
nation among the four major insurgent groups.
In our judgment, if the truce breaks down, the
FARC is likely to try to assert its leadership over
other insurgent groups.
he CNG-clearly benefiting
from FARC's example-has begun its own efforts to
build political support through legitimate political
activities and infiltration of labor unions and other
interest groups. If this trend continues, Bogota will
encounter new challenges from the political left.
Strong Support for Counterinsurgency Efforts
Bogota appears to have widespread public support for
expanding its initiatives against the rebels. Erosion of
support for dialogue with the CNG insurgents was
dramatically accelerated by M-19's November 1985
takeover of the Bogota Palace of Justice. FARC-
largely through the measure of legitimacy gained by
the Patriotic Union-still retains a vestige of its
image as an organization that should eventually be
reintegrated into society. However, sympathy for the
rebels has waned as peace talks have produced few
results and truce violations have become more bla-
tant. Moreover, Patriotic Union leaders have lost
considerable credibility by declaring that guerrilla
warfare is a valid means of achieving social change
in Colombia.
Drive To Improve Security Forces
The Colombian military is intent on regaining the
initiative against the insurgents, but more effective
counterinsurgency and antidrug efforts would require
an expansion of the security forces, an effort that will
require several years. Top military leaders estimate
they will need at least 15,000 more troops if the
truce ends; the Embassy reports that Bogota may
eventually try to expand the Army by as much as
two-thirds, to a strength of 100,000. A recent US
Embassy assessment illustrates the urgency of this
task: in the southeastern jungle, where FARC is
strongest, the ratio of government forces to guerril-
las-believed to have weapons as good as the
Army's-is roughly one to one.
Barco has also launched a new defense plan designed
to combat the CNG. The plan attempts to concen-
trate government forces where the guerrillas are most
active-a major challenge for widely scattered troops
with serious mobility problems. Barco has apparently
authorized selective reprisals against FARC units
that violate the cease-fire, but as long as FARC has
a truce with the government, Barco will have to use
reactive, ad hoc tactics against this group and the
drug traffickers associated with it.
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Key Indicators To Watch
Most Likely Scenario: FARC keeps its political
front in Congress and accelerates efforts to build
support for mayoral elections next year; the rebels do
not openly renounce the truce, but government-
insurgent clashes increase; the expanding conflict
disrupts the government's social and economic pro-
grams; the truce finally ends:
? The Patriotic Union mounts a substantial electoral
challenge in areas where FARC is strong, but its
overall credibility wanes.
? The government makes some progress against the
CNG, but is unable to deploy new resources
against the FARC. Barco retaliates against guerril-
la units that flagrantly violate the truce and accel-
erates efforts to improve the government's counter-
insurgency and antidrug capabilities.
? Barco authorizes more aggressive military action
against FARC-associated cocaine laboratories, but
continues to emphasize air assaults to avoid major
confrontations with the guerrillas.
? The expanding conflict with FARC disrupts the
government's social and economic programs and
eventually forces a halt in raids against insurgent-
associated cocaine laboratories; ultimately the truce
ends.
Alternative Scenario: FARC disavows the truce and
heavy fighting breaks out; Barco expels the Patriotic
Union from Congress unless its leaders condemn
guerrilla violence; the escalation of violence strains
security forces and economic damage spirals:
? A few leftist leaders--angered by assassinations of
Patriotic Union members since last year's national
elections--denounce the FARC and join forces
with liberal mainstream politicians, especially in
local alliances.
? Desperate fighting occurs in FARC's heartlands,
especially in the southeastern jungle, placing heavy
demands on military and police resources.
? New demands on the security services force the
government to halt antidrug operations and to
abandon counterinsurgency efforts against the
CNG. The nation's major oil facilities, particularly
the largest pipeline, are left unprotected; drug
production increases; and foreign investors may
begin to pull out of the northeastern oil region.
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The Oil Price Collapse:
Avoiding Political
Instability
The upheaval in the oil market over the past 18
months had a severe impact on the economies of the
oil-exporting less developed countries (LDCs), and yet
it had little impact on their overall stability. Although
previous research has shown that deteriorating eco-
nomic conditions alone are not a dominant cause of
political instability, analysts believed the magnitude
of the oil revenue loss and the speed with which it
occurred could have led some countries to political
ruin. Analysis of the eight oil-exporting LDCs moni-
tored in this quarterly, however, shows that the
governments of these countries have met this chal-
lenge with relative success thus far; and while in some
cases we are concerned about the potential for insta-
bility, our concern does not stem primarily from the
ramifications of the oil price collapse.
The Economic and Political Costs
World oil prices, which stood at $26.50 per barrel in
December 1985, slid precipitously last year as OPEC
engaged in a pricing war designed to recapture a
larger share of the world oil market. Prices bottomed
out in July 1986 at about $11 per barrel. OPEC's
move to regain its market share carried a high
economic cost for both OPEC and non-OPEC oil
exporters as collective revenues fell by almost 50
percent. A series of OPEC accords have since pushed
prices back up to nearly $18 per barrel, but even if
prices hold, oil export revenues will be no more than
two-thirds the level they were before the price war.
World Oil Prices
by Quarter
Legend
Serious concern Low concern
Substantial concern Negligible concern
Moderate concern
Nov Feb May Aug Nov Feb Maya
1985 1986 1987
The political ramifications of last year's massive
revenue loss could have been disastrous. For the
exporters that had already undergone several years of
austerity, the implementation of additional adjust-
ment measures was particularly risky. Moreover, vir-
tually all of the policy options facing these govern-
ments were politically sensitive-drawing down
reserves, cutting imports, reducing government spend-
ing, taking on more foreign debt, or turning to the
International Monetary Fund (IMF) for assistance.
Egypt
Indonesia
O
Q
Q
Q
Q
Iran
Q
0
Iraq
Mexico
0
Nigeria
Saudi Arabia
Venezuela
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Contrary to expectations, however, most governments
through a combination of factors-delaying reforms,
taking advantage of diversions of greater importance
such as the Iran-Iraq war, implementing palliative
measures, and drawing on inherent political and
economic strengths-have been able to preserve their
positions. A review of the LDCs' response to this
external shock underscores the resiliency of most
political systems and their ability to maintain political
stability in the wake of a single calamitous event.
High-Risk Cases
The Egyptian Government, virtually paralyzed by its
fear of political violence, refused to undertake a
comprehensive reform program to counter falling oil
prices and thus far has staved off government-threat-
ening instability. The bread riots of 1977 made a
lasting impression on President Mubarak, and his
desire to avoid a repeat of such activity has been a
primary factor in delaying implementation of even
piecemeal austerity measures. The oil price decline
has forced many of Egypt's expatriates to return
home, placing additional strains on the government's
resources and raising fears that this new pool of
unemployed could become politically disruptive. We
judge that renewed financial assistance from some
Arab Gulf states has probably convinced Mubarak
that he has gained some maneuvering room. More-
over, Mubarak has made some progress in persuad-
ing Egypt's foreign creditors and the IMF to agree to
softer terms, but the price of IMF assistance will
almost certainly be implementation of the politically
risky measures he has sought to avoid. In the face of
certain further economic deterioration and increasing
religious activism, we believe Mubarak will find it
difficult to maintain control and prevent domestic
unrest.
Nigeria, which earns 95 percent of its foreign ex-
change from oil, found itself in a particularly sensi-
tive political dilemma when oil prices fell. In late
1985, the Nigerian public had gone on record-
through a series of debates at the local level-
opposing any agreement with the IMF, and President
Babangida believed he could not survive the political
fallout of the reforms an IMF program would re-
quire. To cushion the impact of declining oil reve-
nues, Nigeria opted to stop making payments on
much of its $19 billion foreign debt. In an attempt to
gain more Arab financial aid, Nigeria joined the
Islamic Conference, a move that backfired politically
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and heightened domestic religious tensions that ulti-
mately resulted in rioting. Babangida recently intro-
duced a comprehensive reform program, and in early
February the IMF' approved a standby arrangement.
Babangida has pledged not to actually draw funds
from the IMF, but continued foreign exchange prob-
lems may force him to reverse his position later this
year. Despite heightened social tensions and pressing
economic troubles, we do not believe these factors will
cause the government to falter over the short term. In
fact, Babangida's relatively secure position has been
underscored by the political calm that prevailed dur-
ing his monthlong absence in February when he had
back surgery in France.
Drawing on Strengths
Saudi Arabia, bolstered by large foreign exchange
reserves, was in a much stronger position than most
countries to meet the needs of its people once oil
prices began to fall. While relying heavily on a
massive drawdown of foreign exchange reserves-
more than approximately $20 billion last year-to
compensate for lost revenues, the Saudis have also cut
government spending. Riyadh, however, has been
careful to maintain a high level of social services-a
politically sensitive issue-and continues to shield key
interest groups from deep budget cuts. In an effort to
co-opt fundamentalists, the government is giving pri-
ority to funding religious universities and development
projects at the mosques in Mecca and Medina. The
Saudis have also tried to protect civil servants and the
military from the full brunt of austerity in an effort to
head off dissension. Even with lingering economic
difficulties, we believe the resiliency of the Saudi
political system will ensure continued stability.
While Venezuela's economic slump was exacerbated
by the collapse of oil prices, its economic troubles
posed little threat to the stability of the entrenched
democratic government. Caracas responded to its
falling revenues by implementing measures designed
to conserve foreign exchange and to limit imports.
The Lusinchi administration was criticized by ele-
ments within its own Democratic Action Party for
adopting an economic adjustment program that close-
ly resembles that of an IMF-supported program. The
popularity of Lusinchi's ruling party has been
eroded by Venezuela's economic woes, and the econo-
my has become the main political issue in campaign-
ing for the 1988 presidential election. Nonetheless,
despite his failure to revive the economy, we judge
that Lusinchi remains politically powerful and public
support for Venezuela's political institutions remains
high.) 25X1
The institution framework and the strength of the
Institutional Revolutionary Party (PRI) in Mexico
have helped the country maintain stability while
suffering a disastrous revenue loss. By adopting a
restrictive monetary policy and keeping the peso
undervalued in 1986, Mexico was able to reduce 25X1
drastically its imports and increase its nonoil exports.
Moreover, the restrictive monetary policy also forced
businessmen to repatriate $1-2 billion of capital need-
ed to cover operating costs, thereby helping Mexico to
rebuild its foreign exchange reserves. The Mexican
Government also moved to placate organized labor--
its key interest group and a potentially disruptive
force--by granting an unprecedented third wage in-
crease in 1986. In 1987, Mexico will supplement its
lost oil revenues by relying primarily on foreign
lending. The September 1988 presidential election 25X1
makes continuation of restrictive economic policies
politically untenable.
the government now plans to undertake expansionary
fiscal policies, including job creation programs, prior
to the election. We believe the Mexican Government's
concerns about domestic political unrest were largely
assuaged by its belief that the United States would
step in with assistance before any unrest could get out
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Indonesia had already suffered through three years of
austerity when oil prices collapsed, and despite the
government's pragmatic countermeasures such as
budget cuts and devaluations, the economic slide is
continuing. The strength of the Soeharto regime, its
ability to suppress dissent, and the lack of an orga-
nized opposition have, however, combined to keep the
incidents of political unrest at a minimum. After three
years of budget cuts, there is little fat left in the
Indonesian budget, and Jakarta is at the point
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where continued austerity will come at the expense of
groups that had been previously protected, such as
the military. Moreover, Jakarta's access to foreign
credit-which could have provided a potential safety
valve-has been reduced as its ability to repay its
debts has eroded. Indonesia has now begun to draw
down its foreign exchange reserves-dropping from
$11 billion to below $9 billion to help compensate for
lost revenues. Indonesia is also likely to reschedule
some of its $40 billion foreign debt this year in order
to ease its payments burden. We believe the govern-
ment is concerned that antiregime activity such as
rioting and criticism of the Soeharto family will
increase, but it is confident that it has the force to
quell such outbursts. Nonetheless, the growing frus-
trations of the urban poor make outbursts of local-
ized violence increasingly likely.
Iran-Iraq: The War Takes Precedence
While both Iran and Iraq face serious economic
hardships because of the collapse in world oil prices,
their political stability hinges largely on their perfor-
mances in the war. As a result of declining oil prices
and the declining value of the dollar, Iran's purchas-
ing power fell by two-thirds in 1986, forcing the
government to slash imports and government spend-
ing. The import-dependent industrial sector bore the
brunt of these cuts while war spending remained
untouched. Food, durable goods, and heating fuel
shortages caused an increase in demonstrations, pub-
lic dissatisfaction, and disregard for authority. Nev-
ertheless, unrest did not reach a level that threatened
the government or the war effort. The Iranian people
are now facing their fifth straight year of falling
living standards, but as long as Tehran can claim to
be making military progress, public disgruntlement
will be quieted over the short term. We believe
discontent over depressed economic conditions will
become a primary consideration in Iran only if the
war ceases to be a major rallying point for the
government
While Iraq's military performance remains Bagh-
dad's chief political vulnerability, the deteriorating
economy has increased pressures on the government
as the people feel the sting of new austerity mea-
sures. Plunging oil revenues forced Baghdad to aban-
don its "guns-and-butter" policy and to slash
nonmilitary spending as subsidies were reduced, tax-
es were increased, and development expenditures
were cut. Moreover, Arab aid-a source of financing
that gives Baghdad a leg up on Tehran-decreased
slightly in 1986. The Iraqi people will see little
improvement in living standards this year. Despite
consumer discomfort, however, austerity is unlikely
to provoke major instability. Baghdad has been
largely successful in its efforts to convince Iraqis that
they must accept sacrifices, and the Iraqi security
forces are ruthless in preventing any antiregime
elements from trying to exploit the country's econom-
ic troubles. In our view, a major setback in the war is
more likely to promote instability than continued
austerity, although the regime remains wary of im-
posing additional economic hardships on the Iraqi
people.
The Bottom Line
While many experts believe that economically in-
spired instability is most likely to occur after an
abrupt interruption in economic growth, we see little
evidence to support this in the wake of the oil price
collapse. Once again, the relationship between eco-
nomic deterioration and political instability, at least
in these eight countries, appears to be indirect.
The authoritarian style of government in many of
these countries undoubtedly improved their ability to
deal with the oil crisis. The governments' ability to
redirect resources; rule by decree; and, when neces-
sary, repress dissension will continue to enable most
of them to remain in power. In those cases where we
indicate serious concern for the leaderships' future
prospects, the causes of instability go beyond eco-
nomic factors.
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Part 2.
Developments and Trends
21 Secret
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Argentina:
Selected Instability Indicators
President Alfonsin's efforts are focused on civil-military tensions
over the trials of officers for human rights abuses. A garrison
mutiny in April forced Alfonsin to call for a state of siege, and the
government is trying to reach a political solution acceptable to all
sides. On the economic front, Argentina reached an agreement with
its bank steering committee to refinance $30 billion in debt and to
obtain $2 billion in new lending. Alfonsin's new measures-designed
to stabilize the economy and boost his party's prospects in national
elections this September-have so far failed to curb inflation.
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Brazil:
Selected Instability Indicators
We believe that
Sarney's lack of decisionmaking is eroding his congressional back-
ing, and an unruly Constituent Assembly may shorten his term of
office when it drafts the new constitution.
system in March.
Many view the Sarney administration as being unable to cope with
Brazil's problems, and the debt moratorium has done little to restore
public confidence. Sarney
has become more dependent on the military to deal with paralyzing
strikes such as those that closed the nation's ports and banking
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Chile:
Selected Instability Indicators
Buoyed by the Pope's visit in April, Chilean moderates are making
headway in their efforts to mount a free elections campaign.
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Communist leaders are temporarily playing
down terrorism in order to restore ties to the moderate parties but
will continue to launch violent protests. Military support for Presi-
dent Pinochet may decline dramatically if he fails to quiet his junta
critics and assuage senior officers' worries that the revelations about
high-level official involvement in the murder of former Foreign
Minister Letelier are damaging the armed forces' reputation.
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Colombia:
Selected Instability Indicators
President Barco is bracing for a major confrontation with the
Revolutionary Armed Forces of Colombia (FARC), Colombia's
largest insurgent group, whose tenuous three-year truce with the
government is unraveling. The rebels rejected Barco's demand that
they demobilize by next year, and the President is hurrying to
improve his limited counterinsurgency capabilities. At the same
time, fearing guerrilla attacks, he is increasing military protection of
the country's major oil facilities. We believe Barco will also try to
maintain pressure on cocaine traffickers without provoking a major
clash with insurgents involved in drug production.
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El Salvador:
Selected Instability Indicators
Military irritation over the suspension of emergency powers since
January because of a legislative boycott by the right wing is likely to
subside. The ruling Christian Democrats and a conservative party
have negotiated an end to the stalemate in the Legislative Assembly,
which allows the government to secure passage of important legisla-
tion. Despite a general decline in rebel activity since February, a
successful guerrilla attack on a brigade headquarters on 31 March
demonstrates continuing Army vulnerability to well-planned and
well-executed surprise attacks.
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Guatemala:
Selected Instability Indicators
theless,
The military remains concerned that President Cerezo's failure to
strengthen the economy will provide opportunities for leftist ad-
vances, and rumblings of coup plotting have been reported. None-
the 25X1
military is unlikely to risk a cutoff of US assistance by moving
against the President. The high command will remain on guard
against civilian interference, however, as illustrated by the decision
to oust General Letona as Chief of Staff in February-barely a
month after Cerezo appointed him.
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Honduras:
Selected Instability Indicators
Continued stability appears likely, but President Azcona probably
will face intense criticism for rising unemployment and failure to
replace weak Cabinet officials. Azcona reportedly is irritated by a
proposal in the US Congress to reduce aid to Honduras and worries
that Tegucigalpa is being penalized for its past support of anti-
Sandinista rebels. Meanwhile, Honduran security forces-stung by
public criticism of their failure to stem a recent rise in criminal
activity-are cracking down on subversive activity, but their heavy-
handed behavior may fuel charges of human rights abuses.
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Mexico :
Selected Instability Indicators
The ruling Institutional Revolutionary Party is contending with a
leftist faction that is challenging the legitimacy of the country's
succession process by calling for greater democracy. Although this
has created some party squabbling, Mexico's leaders appear pre-
pared to accommodate some of the group's concerns to avoid a
major internal split. As the September 1988 election approaches, the
government is once again concerned with the military's needs. We
believe Mexico's recent bank agreement and a steady repatriation of
capital will produce the modest economic recovery President de la
Madrid has promised for 1987.
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Panama:
Selected Instability Indicators
The government missed a 1 April World Bank deadline to ratify
reforms of the social security system, required for release of the
second half of a structural adjustment loan. President Delvalle's
failure to forge a consensus on this politically sensitive issue has
provoked grumbling within the General Staff, but Defense Chief
Noriega appears unwilling to persuade the military's allies in the
ruling coalition to support Delvalle. Nonetheless, according to US
Embassy reports, Panama's economy remains relatively healthy, and
Delvalle and Noriega probably will delay action on the reforms until
they can assure broad political backing.
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Peru:
Selected Instability Indicators
President Garcia's move to establish a new Ministry of Defense has
created substantial discontent in the armed forces, and civilian-
military relations are likely to become increasingly strained over the
next few months. Sendero Luminoso insurgent attacks are also
increasing, including some notable attacks on foreign business
personnel and property, which adds to the pressures on Garcia to
take stronger action. Meanwhile, inflation has become more serious,
reaching a 100-percent annual rate last quarter; and we judge a
growing budget deficit is likely to push it still higher.
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Venezuela:
Selected Instability Indicators
Despite his failure to revive the economy, President Lusinchi
remains politically powerful. Venezuela recently won concessions
from its creditor banks-an achievement that will temporarily mute
criticism of the government's debt management. Opposition to
austerity policies and debate on various political topics, including
relations with Cuba and Nicaragua, will intensify as the 1988
presidential election nears. Lusinchi's primary adversary, former
President Carlos Andres Perez, is beginning to campaign aggressive-
ly, and we believe he can be expected to dust off his credentials as
both a populist and a major Third World spokesman.
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Greece:
Selected Instability Indicators
Prime Minister Papandreou appears to have regained his confidence
and sense of direction after the Cabinet reshuffle in January. His
strong stand against Turkey during the crisis in March over the
Aegean continential shelf rights has also helped restore his stature.
Nevertheless, we expect problems such as the Greek Orthodox
Church's stand against the redistribution of its land and the ruling
party's poor showing in recent student elections-which may be
reflective of general discontent with PASOK-will continue to nag
Papandreou over the next quarter.
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Spain:
Selected Instability Indicators
Recent unrest, while more widespread than usual, is unlikely to
affect significantly the prospects of the governing Socialist Party in
the local elections this June. Prime Minister Gonzalez's prudent
economic policies have helped bring down inflation, improve the
current account, and boost foreign investment, but they have also
spurred unemployment to over 21 percent and slowed the pace of
social reform. Students, workers, farmers, and others have respond-
ed by staging a series of demonstrations, but the opposition remains
divided and weak. Opinion polls indicate that Gonzalez is still
popular among the electorate.
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Turkey:
Selected Instability Indicators
Prime Minister Ozal, buoyed by successful heart bypass surgery,
remains secure politically but we believe he faces stiff challenges as
he leads Turkey toward further democratization. Tensions with
Greece remain high over the Aegean continental shelf issue and
Turkey's imminent application to the European Community (EC).
The Kurdish insurgency, a chronic problem, will complicate plans to
lift martial law in the volatile southeastern provinces as Turkey tries
to show a return to normalcy in order to increase the prospects for a
positive EC response to its application.
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Egypt:
Selected Instability Indicators
Egypt's near-term economic outlook appears to have brightened
somewhat with incremental moves toward a more realistic exchange
rate regime, higher oil prices, and financial aid from the Gulf Arab
states. Nonetheless, we believe basic weaknesses in the economy
remain, and despite his party's healthy showing in the April
parliamentary elections, Mubarak will be reluctant to address them.
Although he may undertake some economic reforms in the next
quarter that would further raise prices on some basic commodities,
we believe he probably will reverse himself at the first sign of unrest.
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India:
Selected Instability Indicators
Waning public confidence in his leadership and honesty and in his
management of Indo-Pakistani relations has Gandhi on the defen-
sive at home His Congress Party
recently lost two of three state elections to the opposition, and by
June he must submit his policies on Sikhs to an electoral test in the
predominantly Hindu state of Haryana. Meanwhile, India faces a
likely military challenge from China over disputed territory this
summer that will test not only the Indian military but also Gandhi's
ability to rally domestic support for his policies.
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Iran:
Selected Instability Indicators
Iran's key lower class constituencies continue to support the govern-
ment in the war against Iraq. There are reports of sporadic protests
over the war and economic conditions, however, and the regime has
difficulty recruiting in some regions of the country. Stepped-up
activity by the Islamic Marxist opposition group, Mujahidin-e
Khalq, has forced the regime to beef up security in parts of the
country. Intense political maneuvering continues as leaders jockey
for position in anticipation of Ayatollah Khomeini's death, but we
believe this politicking does not pose a threat to regime stability in
the coming months.
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Iraq:
Selected Instability Indicators
Baghdad has earned a temporary respite on the battlefront by
blocking a determined Iranian attack aimed at seizing the key city
of Al Basrah. The pause may be short lived, however, because Iran
maintains large troop concentrations at the front and could resume
attacks with little warning. Meanwhile, Iraq's Air Force has
resumed attacks on Iran's economic targets in an effort to force
Tehran to the negotiating table. We expect Kurdish rebels again to
step up guerrilla activities with the arrival of spring, putting another
burden on the government's resources.
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Morocco:
Selected Instability Indicators
We judge that King Hassan faces no immediate challenges to his
regime. He continues to consolidate his military hold on Western
Sahara, despite an escalation of attacks on Moroccan troops by
Algerian-backed Polisario guerrillas in recent months. Although he
still has formidable long-term demographic problems, the economy
has improved over the short term, in part because a good harvest
and lower oil prices have reduced the cash crunch. In addition,
Rabat has obtained a new IMF agreement and has rescheduled a
portion of its foreign debt.
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Pakistan:
Selected Instability Indicators
The sectarian clashes that have rocked Pakistan have subsided, but
tensions remain high-particularly in Karachi-and we believe new
outbreaks of violence are likely. Meanwhile, the general populace
increasingly blames the Afghan refugees for domestic woes. The
upsurge in Soviet-Afghan cross-border attacks and sabotage bomb-
ings in the border provinces is increasing tensions between the
refugees and local residents. Moreover, several recent terrorist
bombings in the Punjab Province have raised fears that the sabotage
campaign may be moving into major Pakistani population centers.
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Saudi Arabia:
Selected Instability Indicators
Riyadh appears confident that its strategy to boost oil prices is
working and is optimistic that production and price discipline among
OPEC members can be maintained. Although we believe the Saudi
economy is likely to remain depressed, Riyadh will continue to avoid
taking drastic austerity measures. Saudi concern over an escalation
in the Iran-Iraq war has lessened following Iraq's successful defense
of Al Basrah, and continued efforts by Riyadh and Tehran are
reducing tensions between their two countries. The regime also has
eased its heavyhandedness in dealing with its Shia minority, helping
to mute popular criticism.
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Sudan:
Selected Instability Indicators
In our view, Prime Minister Sadiq most likely will continue to avoid
the tough decisions that his enemies could use to mobilize opposition
against him, but the foundering economy keeps the potential for
demonstrations and strikes alive. Intermittent Libyan and Ethiopian
military action in Sudan held public attention in the first quarter,
raising public and military concerns about Sadiq's competence.
Sadiq's efforts to strengthen his control over military decisions
appear to be weakening military support for his leadership, although
we judge that a coup is probably not imminent.
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Kenya:
Selected Instability Indicators
President Moi remains firmly in control, despite growing interna-
tional concern about his increasingly autocratic methods. Moi's
standing at home was bolstered by his visits to the United States and
Britain in March. Nonetheless, falling revenues from Kenya's two
most important foreign exchange earners-coffee down one-third
over the last six months and tourism down one-fourth-indicate that
Nairobi's fragile prosperity is eroding. These trends are likely to
complicate Moi's political agenda, but we believe they do not pose
an immediate danger to his continued rule.
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Nigeria:
Selected Instability Indicators
Religious riots in northern Nigeria last March, which resulted in a
dozen deaths, have heightened tensions but, in our view, are unlikely
to threaten the regime's stability. Religious issues in the Muslim-
dominated north are never far below the surface, however, and new
clashes are possible, which-at a minimum-would distract Lagos
from pressing economic issues. Nevertheless, President Babangida's
relatively firm grip on power was underscored by the political calm
that prevailed during his monthlong absence last February for back
surgery in France.
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Somalia:
Selected Instability Indicators
President Siad probably weakened the position of Ali Samantar as
his designated heir by removing him as Minister of Defense and
appointing him Prime Minister with ill-defined authority. Samantar
is further jeopardized by the appointment of members of Siad's
Marehan tribe-Samantar's opponents-to key party and defense
ministry posts. The moves appear designed to prevent Samantar
from usurping power, while deflecting pressure from Marehans to
cashier him. Samantar's opponents, however, will probably continue
to press Siad to install a Marehan or a more acceptable figure as his
successor.
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South Africa:
Selected Instability Indicators
Despite Pretoria's vigorous enforcement of the nationwide state of
emergency-including a heavy security force presence in the town-
ships, press restrictions, and detentions-black townships remain
highly volatile with frequent outbursts. Opposition groups increas-
ingly are turning to the labor movement and civil disobedience
campaigns as alternatives to large-scale public demonstrations. We
believe a cross-border strike at African National Congress facilities
is quite likely following recent signs of an increase of ANC activity,
including sporadic bombings and landmine and grenade attacks.
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Zaire:
Selected Instability Indicators
We believe President Mobutu's political position remains firm
despite Kinshasa's new economic austerity measures and problems
with neighboring Angola. The government increased domestic fuel
prices and devalued the currency in March to clear the way for a
new IMF standby agreement, while attempting to deflect domestic
criticism by granting a significant wage increase. Meanwhile,
Kinshasa retaliated against Angolan cross-border raids on suspected
UNITA rebel bases last February, and we believe more low-level
attacks are likely. Both countries, however, appear to want to avoid
a major confrontation.
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Indonesia:
Selected Instability Indicators
The "stage-managed" parliamentary elections in April, intended to
reaffirm the Soeharto regime's legitimacy, underscore the lack of a
legal channel for voicing dissent. We believe criticism of Jakarta's
management of the deteriorating economy is likely to increase if
further budget cuts are made now that the elections are over. The
military's discontent is also rising, as its salaries have been frozen
and living allowances have been cut. Concerned by Indonesia's
falling foreign exchange reserves, banks are considering reducing
credit lines, and unabated drawdowns could force Jakarta to
reschedule its debt.
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Philippines:
Selected Instability Indicators
President Aquino's candidates in the 11 May congressional elections
face a serious challenge from conservative old-guard oppositionists
who are better organized at the local level. In our view, Aquino's
permissive management style and the inevitability of a fractious
legislature suggest that she will have difficulty pushing her reform
program through even with nominal majority support. Meanwhile,
some soldiers remain dissatisfied with Aquino's leadership and that
of Chief of Staff Ramos.
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South Korea :
Selected Instability Indicators
With universities back in session, the door closed to constitutional
revision, and a harder line opposition party in the making, we believe
the potential for unrest remains high. President Chun's decision to
end the deadlocked constitutional debate and to declare that his
successor will be elected-as early as December-under the current
system gives opponents a focal point. We believe Chun's moves
could enlarge student protests-with harsh anti-US overtones-in
May during the anniversary of the 1980 Kwangju uprising. Opposi-
tion unity remains elusive, with Kim Dae Jung and Kim Young Sam
competing for control of their breakaway party.
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Part 4. Special Annex
The following indicators were used in our examina-
tion of each of the countries treated in this publica-
tion. While these factors-especially if taken individ-
ually-may not be predictive of instability for any
single given country, they have been associated with
political instability in the past.
Social Change/Conflict Indicators
Demonstrations and Riots
1. Are demonstrations/ riots increasing in frequency,
scale, and scope?
2. Is the government taking a more permissive view
of the demonstrations/riots? If so, does this account
in part for the increase? Or is it having a calming
effect?
3. Are government repression and opposition violence
escalating?
4. Is the violence in demonstrations/riots indiscrimi-
nate? Is it being directed against the government, a
scapegoat minority or religious community, or other
group?
5. Are demonstrations starting to assume a general
antiregime tone, or do they focus on one specific
issue, a minority group, or a particular region?
6. Does a demonstration attract a larger crowd than
originally predicted? Does a demonstration called by
one opposition group attract the genuine-not ma-
nipulated-support of other groups not previously
involved, such as labor groups in support of student
marchers?
7. Are the media:
? Becoming more critical of the government or sup-
portive of the demonstrators/rioters?
? Ignoring government guidance in their reporting of
the incidents?
8. Are there indications that elements of the political
elite or the security forces are beginning to sympa-
thize with the demonstrators/rioters?
9. Is the government making concessions to the
demonstrators/ rioters for the first time? If so, are
these having a calming effect, or are they seen as a
sign of weakness?
10. Are the demonstrators/ rioters disrupting any
area of the economy? If so, does the concerned sector
blame the government or the demonstrators/rioters?
Are the disruptions affecting the government's ability
to provide goods and services, patronage, and so
forth?
Strikes and Other Job Actions
11. Are job-related protest activities such as strikes,
slowdowns, sit-ins increasing in number, frequency,
and location?
12. Do the strikers have political objectives apart
from economic motivations? If so, are these directed
against the government?
13. Are labor groups that oppose the government
forging links to nonlabor opposition groups?
14. Are the strikes and other job actions drawing
increasing support from the general public?
15. Is the government starting to meet the workers'
demands despite sound economic reasons that it not
do so? If so, have the concessions persuaded workers
to return to work?
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16. Are the strikes and other protest activities start-
ing to hurt the economy?
Maintenance of National Unity
17. Do increasingly large numbers of the public tend
to sympathize with the demonstrators/rioters?
18. Is effective government control over some areas
outside the capital being eroded? Are local officials
increasingly unwilling or unable to implement direc-
tives from or to perform services, such as tax collec-
tion, for the central government?
19. Is the government starting to carry out policies
that change the political or social status of any
group; for example, is it increasing religious intoler-
ance and suppressing the use of a minority language
or culture? If so, are the policies compelling those
affected to oppose the government in any way?
20. Is the middle or merchant class starting to
withdraw its support for the government?
21. Are religious leaders increasingly critical of the
state of the nation? If so:
? Are religious leaders becoming active in antigov-
ernment activities?
? Is the general public beginning to support these
activities and agree with the criticisms?
Economic Stability Indicators
22. Is the government losing its ability to generate
revenues? If so, is it finding difficulty in providing
public services or maintaining popular subsidies?
23. Is the government increasingly turning to money
creation to finance its operations?
24. Is the general public blaming the government for
the deteriorating economy?
25. Are sudden price rises or drops in food or energy
supplies likely or increasing?
26. Is the international economic situation starting to
depress the local economy? If so:
? Is only one sector affected, or is the populace
hurting across the board?
? Do popular perceptions tend to blame pernicious
international forces or countries?
27. Have remittances from expatriates assumed an
important place in the economy?
28. Is the government's ability to obtain foreign aid
and investment starting to decline?
29. Does the economy include a traditional sector,
such as subsistence agriculture and barter, that
remains isolated from the modern economic sector
and that could provide a safety valve in times of
crisis? If so, is this being eroded by overpopulation,
landlessness, crop specialization, and so forth?
30. Do the country's reserves or the free market
exchange rate reflect capital flight? If so, is the
capital flight the result of economic reasons, such as
lack of return on investments, or because of political
fears?
31. Is the government unlikely to meet its debt
service repayment obligations? If so, are the govern-
ment's creditors willing to reschedule all or part of
the debt?
32. Is the government starting to implement its own
or IMF-supported austerity measures? If so, can it
withstand pressures from opposing domestic
interests?
33. Are the government's economic policies benefit-
ing only a small segment of the population, such as
the elite and associated groups?
34. Conversely, are attempts to redress inequality
through taxation, land reform, anticorruption drives,
or other economic measures alienating important
elements of the elite, such as the military or clergy?
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Opposition Groups Indicators
35. Are opposition groups coalescing against the
government? Are they increasingly able to mobilize
large numbers of people for antiregime activities?
36. If opposition groups are organized along class,
ethnic, religious, or regional lines, are these factional
forces and their attraction growing?
37. Is any opposition group representing itself as the
embodiment of the national identity?
38. Is a polarization of forces taking place-that is,
are centrists and moderates increasingly compelled to
choose among radical positions?
39. Is separatism a growing issue?
40. Is there an opposition leader whose charisma is
increasingly recognized even by those who oppose
him'?
41. Are opposition parties increasingly claiming that
the violent overthrow of the government is the only
way to bring about change?
42. Are the intellectuals becoming alienated from the
system? Is so, does this lend strength to the
opposition?
43. Are incidents increasing in frequency and intensi-
ty'? If so, what has been the rate of increase in:
? The number of incidents?
? The number of cities or provinces in which inci-
dents occur'?
44. Are the terrorists or saboteurs being indiscrimi-
nate or selective in their targets? If selective, who are
the targets-government supporters, the opposition,
perceived traitors to one or another side, or others?
45. Is terrorism or sabotage starting to deter any part
of the general public from supporting the
government?
46. Is terrorism or sabotage starting to hurt the
economy? If so:
? Is production declining in key areas such as
energy?
? Is the government's ability to provide goods, ser-
vices, and patronage being reduced?
Military Attitudes and Activities Indicators
47. Are there any signs of antiregime or coup
plotting?
48. Are there indications that elements in the mili-
tary and security services, particularly senior person-
nel, are becoming discontented over government ac-
tions or policies?
49. Are the corporate interests or dignity of the
military being assaulted or threatened?
50. Are there elements in the military that are
discontented over career loss, pay, or other benefits?
51. Are there signs of a split within or between
military or police leaders?
52. Are the military or security services becoming
less disciplined? For example, are desertions and acts
of disobedience, increasing?
53. Are the security services being reorganized fre-
quently or to an extent that affects their efficiency
and morale?
54. Are expenditures for the military and security
services a strain on the budget?
55. Is the government trying to upgrade the efficien-
cy and morale of the military and police through
such measures as:
? Better recruitment, pay, leave, and promotion
policies?
? Increased training in dealing with civil
disobedience?
? Better equipment?
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56. Are foreign influence and aid being viewed
negatively by the public and by influential power
groups'? If so, is this starting to hurt the regime?
57. Is the opposition receiving increased aid from
radical foreign sources? Is the increased aid improv-
ing the recipients' capabilities, or is it evoking nega-
tive responses from any groups, indicating that they
feel their interests are threatened?
58. Are neighboring countries or other external influ-
ences beginning to affect sectarian or regional groups
in a way that is eroding loyalty to the government?
59. Is the government under threat of incursions or
subversion by foreign elements?
60. Are other countries starting to pose a military
threat'? If so, does this enable the government to
"wrap itself in the flag" and rally support it might
otherwise have lost'?
61. Is the public's mind being taken off deteriorating
domestic conditions by the government's overseas
adventures? Or, is the government's meddling abroad
unpopular at home'?
62. Is an influx of foreign refugees creating
problems'?
Repression of the Opposition
63. Does the general public increasingly see the
government as more responsible than opposition
groups for perpetrating domestic violence?
64. Is the government increasing the use of repres-
sion to counter opposition activities? Is there more
torture, imprisonment without trial, banning of polit-
ical parties, press censorship, or school and university
closings'?
65. Are the regular police having difficulty putting
down demonstrations or riots? If so, is the govern-
ment increasingly using paramilitary police units,
hired thugs, or military forces?
66. Are government officials talking about the possi-
bility of declaring martial law or perpetuating it?
67. If the government uses mass force, does this
disrupt opposition groups and make them less effec-
tive? What is its effect on the general public-is it
seen as a necessary sign of firmness, or is it seen as
brutal and repressive?
68. Are there indications that the public sees the
government as inconsistent? For example, does the
average citizen complain that he has "no way of
knowing what he can or cannot do to stay out of
trouble?"
Government Leadership and the Ruling Elite
69. Is conflict breaking out or increasing among
groups that make up the ruling elite or between the
ruling and supporting elites?
70. Are there indications that government leaders are
doubting their major policies or their ability to rule?
71. Are there any indications that the ruler may be
considering stepping down because of factors such as
age, ill health, a shift in public opinion, or personal
tragedy? If so, is the political elite gearing up for an
obvious succession crisis?
72. Is the ruler's style changing in such a way that
lessens his ability to rule? Is he increasingly isolated
in the "palace," becoming erratic, or losing his
party's loyalty?
73. Is a weak coalition government leading to legisla-
tive paralysis?
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74. Has the ruler shown that he is prepared to use
the security forces to suppress activities such as
demonstrations, riots, or strikes? If so, is he prepared
to take extremely tough measures before the situa-
tion gets out of hand?
75. Is the government introducing reforms? If so, is
it doing so under pressure or at its own initiative, and
is it prepared to enforce them?
76. Are media criticism of and jokes about the ruler
and the government becoming more direct and open?
Government Bureaucracy
77. Is the bureaucracy becoming less loyal to the
leadership because of differences such as divergent
political views, or distaste for the government's
policies?
78. Is effectiveness being eroded because the leader-
ship is firing competent officials as scapegoats?
79. Has the government shown ineptitude in coping
with natural disasters such as earthquakes, floods,
crop failures?
The Education System
80. Is the education system turning out too many
graduates in relation to employment opportunities'?
81. Are students becoming restive because of govern-
ment repression or because of restrictive policies in
the educational area'?
82. Are fundamentalists or other religious groups
starting to set up schools in opposition to the public
school system, or is enrollment increasing at such
schools already in existence?
The Business Sector
83. Is the business sector starting to be hurt by
specific government policies? If so, are losses suffi-
ciently serious to make businessmen increasingly
critical of these policies?
84. Are conditions in the country generally deterio-
rating to such an extent that the business sector is
expressing doubt about the government's ability to
rule?
85. Is a substantial segment of the business sector
starting to support the opposition'? If so, is this
support political, financial, or both?
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Secret
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