NATIONAL INTELLIGENCE DAILY SATURDAY 7 NOVEMBER 1987

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T01422R000100060010-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 24
• Document Creation Date: December 23, 2016
• Document Release Date: October 23, 2013
• Sequence Number: 10
• Publication Date: November 7, 1987
• Content Type: REPORT

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Director of
Central
Intelligence
National Intelligence Daily
Saturday
7 November 1987
up
- CPAS NID 87-260JX
7 November 1987
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Top Secret
Late Item
TUNISIA: President Bourguiba Ousted
Prime Minister Ben All deposed President Bourguiba early this
morning but is likely to continue the pro-Western diplomatic
course and the hard line against Islamic fundamentalists that
characterized his predecessor's rule.
In a nationwide broadcast early today, Prime Minister Zine el Abidine
Ben Ali announced he had removed Bourguiba from office for health
reasons. Ben Ali said that he undertook that step in accordance with
the constitution's provisions for presidential disability and declared
that he is assuming Bourguiba's office in accordance with that
document's provisions on presidential succession. Western wire
services report Tunis has remained calm during the transition of
power.
Comment: Bourguiba had grown more erratic and autocratic in
recent years, and his increasing insecurity had led him in less than
two years to remove two prime ministers. Ben Ali, however, had
already established a reputation as a tough Army general and police
official, and he had retained his positions as Interior Minister and
senior security official when Bourguiba appointed him as prime
minister five weeks ago. That strong power base helped him turn the
tables on Bourguiba.
Ben Ali reportedly favors strong ties with the US. He also has been a
vigorous opponent of Islamic fundamentalism and almost certainly
will take a hard line against that challenge to Tunisia's
pro-Western political establishment.
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Contents
Persian Gulf: Situation Report
1
Japan: Takeshita's Cabinet
2
Philippines: Threats to Americans Increasing
3
Italy: Government Under Pressure
4
USSR: Moscow Plenum To Decide About Yel'tsin
5
Western Europe-US: Space Agency Council Meeting
6
Notes
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Argentina: Debt Moratorium Averted
8
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Afghanistan: Masood Overruns Regime Garrison
10
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In Brief
11
Special Analyses
Arab States: Prospects for Amman Summit
12
Panama: Noriega's Options
14
Western Europe-US: Concerns About Falling Dollar
15
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PERSIAN GULF: Situation Report
Iranian Posturing
Iranian Prime Minister Musavi-Khamenei stated yesterday that Iran
had declared a "readiness week," which began Thursday, to mobilize
its forces to confront the US. Musavi also reaffirmed that Iran remains
willing to discuss UN Security Council Resolution 598 calling for a
cease-fire in the Iran-Iraq war. Musavi added, however, that Tehran
does not "entertain any hope of resolving the war issue" through the
UN.
Comment: Tehran is exploiting its confrontation with the US in the
Persian Gulf to help recruit soldiers for its ground war against Iraq.
The Iranians continue to make preparations for a large-scale offensive
sometime this winter.
Iran is unlikely to reject the UN cease-fire resolution as long as this
strategem appears to be impeding US efforts to get the Security
Council to invoke sanctions against Iran. Tehran insists that a
cease-fire can commence only after Iraq has been labeled the
aggressor and a tribunal to decide on the punishment for Iraqi
President Saddam Husayn has been created.
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JAPAN: Takeshita's Cabinet
Top Secret
Prime Minister Takeshita yesterday named a Cabinet that
reflects a careful balance among Liberal Democratic Party
factions and includes potential rivals in key posts, ensuring they
will share responsibility for his administration's policies.
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Takeshita announced the appointments after his election by a vote
of the full Diet. The new lineup includes five members from his own
faction, four each from the Nakasone, Abe, and Miyazawa groups,
two from the smaller Komoto faction, and one unaffiliated LDP
Dietman. Earlier in the week, Takeshita had filled the three top party
positions with a similarly balanced team.
The Prime Minister said that, with the exception of creating a new Diet
committee to investigate skyrocketing land prices, he will continue the
programs and policies of his predecessor,
The US Embassy reports hose programs range from
tax reform to easing trade friction.
Comment: The balanced Cabinet and Takeshita's skill at building
consensus should encourage cooperation within the LDP and help the
Prime Minister to conduct government business. Takeshita's public
statements upon assuming office suggest no immediate departures
from Tokyo's current domestic and foreign policies.
The retention of Finance Minister Miyazawa and International Trade
and Industry Minister Tamura leaves the new Cabinet in a good
position to respond to developments in financial markets and on
trade policy issues. The appointment of Sosuke Uno, a senior
member of former Prime Minister Nakasone's faction, as Foreign
Minister suggests Takeshita intends to draw on Nakasone's expertise
on international affairs,
While Takeshita has divided the spoils among the factions, he has
also solidified his position. Naming his trusted lieutenant Keizo
Obuchi as chief of staff allows him to keep a close watch on all
Cabinet ministers. Takeshita is also likely to appoint his followers to
key vice ministerial and Diet committee posts and eventually will put
his own mark on policy directions and priorities.
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PHILIPPINES: Threats to Americans Increasing
The risk to Americans from the Communists as well as from other
groups is growing in a Philippine environment that is turning
increasingly violent.
The Communist-affiliated National Democratic Front issued a
statement yesterday warning that the US would pay a high price in
lives and property if it continued to meddle in Philippine internal
affairs. The statement also blamed the US for the government's
recent crackdown on leftist organizations. Although US Embassy
officials do not know whether the statement is genuine, they say
Manila newspapers received it from reaular Communist couriers.
Despite highly publicized police sweeps in Manila and around Clark
Air Base, Philippine authorities have no leads in the killings of three
Americans and a Filipino last week. Nor have the sweeps halted
assassinations in Manila, which most recently included the brother
of a leftist labor leader.
Since the murders, two US Embassy officers have received telephone
death threats, and one has noted surveillance of his residence.
According to the Embassy, several US businesses have also been
threatened.
Comment: The Communist threat is probably intended to warn the
US about supporting the Aquino government and to lay out a public
justification for assassinating Americans. Some of the other threats
may be attempts by criminals, political troublemakers, or rightist
factions to take advantage of the tense atmosphere.
Regardless of who is responsible for the murders and the subsequent
spate of threats, however, press allegations of US ties to military coup
plotters and to the rightwing opposition appear to have heightened
the impression that US officials are directing Philippine politics. As a
result, Americans are no longer exempt from political violence in the
Philippines.
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ITALY: Government Under Pressure
Prime Minister Goria's shaky three-month-old coalition is
struggling with growing political infighting between the
Socialists and the Christian Democrats that is threatening the
government's survival.
Goria will try next week to overcome objections from within the
coalition and from the trade unions to a package of tax and spending
changes aimed at curbing the country's enormous public-sector
deficit. This follows Socialist leader Craxi's rejection last week of the
government's original budget proposals on the grounds that they
were insufficiently restrictive.
The government must also iron out internal differences on legislation
to control disruptive wildcat strike activity in the public sector. Last
week, the Socialists embarrassed Goria with a last-minute rejection of
his proposal for regulating strikes.
Meanwhile, Socialist-sponsored proposals designed to limit nuclear
power plants and to strip judges of civil immunity appear headed
for victory in national referendums tomorrow, according to press
accounts. Although the Christian Democrats have reversed their
earlier opposition to these proposals, they continue to favor nuclear
power and judicial immunity and have publicly implied they will resist
drastic changes.
Comment: The Goria government has been on thin ice since its
inception. Both Craxi and Christian Democrat leader De Mita view it
as only a temporary solution to the conflict over who should lead the
coalition. Each undoubtedly recognizes, however, that he would have
little chance to secure the prime-ministership so soon after their bitter
disputes earlier this year, and both are likely to pull back from the
brink of confrontation, at least until spring. At the same time, Craxi's
politically motivated maneuverings?evidently designed to upstage
the increasingly popular Goria?and the emergence of difficult,
controversial issues are increasing the chances of a political
miscalculation that could produce another government crisis.
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USSR: Moscow Plenum To Decide About Yel'tsin
The political fate of Moscow party leader Boris Yel'tsin may be
announced at a meeting of the city party organization reportedly
scheduled for Monday and may provide further insight into the
extent of limits on General Secretary Gorbachev's reform
program.
Yel'tsin has been reprimanded publicly by two Politburo members
since he criticized Secretary Ligachev and other conservatives at the
Central Committee plenum on 21 October for putting the brakes on
reform. Secretary Lukyanov said Yel'tsin's speech at the plenum
"contained a number of assessments with which members of the
Central Committee did not agree." Secretary Yakovlev, in response to
a question about Yel'tsin, said, "We have our internal party affairs"
and "if someone breaks the rules, he must leave."
Gorbachev indirectly chastised Yel'tsin in his speech on Monday by
criticizing not only those who drag their feet on reform but also those
"who express dissatisfaction with the slow?in their view?pace of
change." Gorbachev is unhappy about Yel'tsin's behavior but does
not want him removed, according to the US Embassy in Moscow.
Comment: It appears entirely possible that Yel'tsin will be removed
from his Moscow job and later dropped from his position as
candidate Politburo member. He evidently violated Politburo
discipline by carrying a leadership dispute over the course of reform
into the arena of the Central Committee. Under this circumstance, it is
difficult even for those who have been his allies?including Yakovlev
and Gorbachev?to defend him, and Gorbachev may not want to use
his political capital to fight this particular battle.
Yel'tsin might be able to save his job, however, by bowing to criticism
and engaging in self-criticism when the Moscow party meets. His
survival would signal Gorbachev's continuing strength, but his fall
from grace would deprive reformers of a vigorous advocate in the
leadership.
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WESTERN
EUROPE-US:
Top Secret
Space Agency Council Meeting
Next week's meeting of the European Space Council is not likely
to endorse previously planned increases in spending on space,
and it may decide to reduce Europe's level of participation with
the US in the joint space station project.
The Director General of the European Space Agency Raimar Luest
has said he will ask the Council to increase the Agency's annual
budget from $1.7 billion to $3 billion by 1993. Most of the immediate
increase would cover projected $2 billion cost overruns on the
French-led Hermes spaceplane and the ESA Columbus module for
the US-led space station, Most of
ESA's 13 member governments have been asked to double or even
triple contributions. French leaders and Italian and Swiss space
officials have voiced their commitment to increase spending, but
several members?including West Germany, the UK, and Belgium?
have signaled their intent to cut funding for some projects.
The Council will reportedly consider ways to break the impasse
with the US on issues concerning the management and use of the
proposed space station. Well-placed observers appear pessimistic
about prospects for agreement. The West German space minister
reportedly said after October's midmonth negotiating round that the
parties are farther apart than ever, and last week's round left ESA's
members with no clear-cut strategy on the space station.
Comment: Council members are unlikely to offer major funding
increases, leaving some ESA projects vulnerable to significant
cutbacks. The Council is likely?with West German prodding?to
delay a decision on Hermes and to scale down participation in the
space station, perhaps by redefining or delaying one or more
components of the ESA package.
Scaled-down participation because of budgetary constraints may
induce the Council to soften its demands that the US agree to
arbitration of disputes and accept an autonomous European module.
The Council may also back away from its insistence that the US drop
language permitting national security use of the station. But states
that favor a more autonomous European space program?such as
the European neutrals?may still scuttle any agreement that does not
conform to their concept of a "genuine partnership."
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ARGENTINA: Debt Moratorium Averted
Too Secret
Buenos Aires has negotiated an agreement with the IMF that averts
radical debt action for now, but continuing financial and domestic
political pressures make further confrontations likely. The move will
allow the release of a $210 million loan to Buenos Aires despite
missed performance targets, according to a US Government official.
It will also trigger a $290 million bridge loan and a $500 million loan
from international banks, bringing Argentina's disposable reserves up
to about $1.5 billion by the end of this month, enough to cover more
than three months of imports.
Comment: The agreement staves off a liquidity crisis for the rest of
the year, but Argentina's relations with the Fund?which President
Alfonsin views as increasingly unsympathetic?will remain tense.
Moreover, Buenos Aires's need to raise at least another $1.6 billion
next year to cover its projected $4 billion current account deficit may
readily provoke conflict with other members of the international
financial community. Alfonsin has come under increasing domestic
pressure to take a tougher stand on debt ever since the Peronist
victory in recent off year elections. He is now less likely to accept
international creditor demands for unpopular economic reforms.
Moreover, the role being played by Minister of Foreign Affairs Caputo
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AFGHANISTAN: Masood Overruns Regime Garrison
Insurgent forces under Ahmad Shah Masood overran the Afghan
Government garrison at Koran va Monjan in southern Badakhshan
Province on 29 October, according to US Embassy sources.
Masood's force?approximately 500 guerrillas from his
Jamiat-i-lslami and Abdul Rasul Sayyaf's Islamic Union for the
Liberation of Afghanistan?killed 30 government troops, captured
some 250 more, and seized a large stock of arms and equipment,
including howitzers, mortars antiaircraft ?uns assault ifl
radios.
. I*
US Embassy sources indicate Masood
drew units from Baahlan, Takhar, and Badakhshan Provinces.
Comment: Koran va Monjan has long been one of Masood's
objectives because it sits astride a major insurgent supply route from
Chitral in Pakistan to the Panjsher Valley. The capture of
Koran va Monjan and the recent withdrawal of the understrength
Afghan infantry regiment at Peshghowr will strengthen Masood's
control of the Panjsher Valley. The windfall of arms, equipment, and
ammunition will help Masood equip his rapidly expanding
organization.
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In Brief
Europe
? Yugoslav Navy received six Soviet Helix A helicopters,
state-of-art helicopter augments
22 older Soviet-made models for antisubmarine warfare.. . with
purchase of MIG-29s, will reduce trade surplus with USSR.
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Anticipated Summit Results
Iran-Iraq War
? Criticism of Iranian attacks on Gulf Arab states' interests and call for an end to the
conflict; no explicit call for sanctions against Iran.
? Encouragement of greater international diplomatic effort to end war.
Arab-Israeli Conflict
? Renewed endorsement of fundamental Arab League positions on terms for an
Arab-Israeli settlement.
? Reaffirmation of the PLO as sole representative of Palestinian people.
? Condemnation of continued Israeli occupation of Arab lands and unwillingness to
participate in international peace conference.
? Call for greater US and Soviet activity in the search for peace.
Renewal of Baghdad Pact Aid
? Deferral of decision on formal renewal of Baghdad Pact aid to Syria, Jordan, and the
PLO until regular summit in Riyadh, probably next year.
? General pledge by Saudi Arabia, Kuwait, and the UAE that aid flows will continue at or
near current levels.
Egypt's Reintegration
? Continued Egyptian suspension from League.
? Allowance for individual states to decide on renewal of bilateral ties to Cairo.
? Appreciation for Egypt's contribution to collective Arab security.
Lebanon
? Support for Syrian efforts to maintain Lebanese stability.
? Condemnation of Israeli presence in southern Lebanon.
? Call for a halt to the camps war and for the safety of Palestinian refugees.
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Top Secret
Special Analysis
ARAB STATES: Prospects for Amman Summit
Saudi King Fahd's decision not to attend tomorrow's Arab League
summit in Amman has dampened moderate Arab hopes of
forging a united position critical of Iran and will be interpreted
as Saudi unwillingness to push forcefully on key issues. The
gathering will do little to narrow differences on the Iran-Iraq war,
Lebanon, and the Arab-Israeli conflict, but Arab leaders probably
will be able to reach at least some common ground on major
issues. Syria is probably prepared to endorse some criticism of
Iran in exchange for pledges of financial assistance from the Gulf
Arabs, support for Syrian policy on Lebanon, and Egypt's
continued suspension from the League. The meeting will
probably reinforce King Hussein's role as leading spokesman for
the moderates and mediator among the Arabs, but the gathering
will also allow Syria to thwart strong united Arab action against
Iran, permit PLO leader Arafat to return to Amman,
Hussein and most of his fellow Arab leaders have limited objectives
for the summit and probably expect no major breakthroughs. In
addition to Fahd, Libya's Qadhafi and possibly Morocco's King
Hassan plan to send high-level representatives. The meeting will last
only one or two days. The large ceremonial gatherings will be less
important than the side meetings where most candid discussions
among leaders will occur.
The Moderate Agenda...
Despite the setback because of Fahd's absence, moderate Arabs will
work hard to prevent a collapse of the meeting, which would give Iran
a propaganda windfall. Iraq, Jordan, and Gulf Arab states will focus
on forging a consensus critical of Iranian unwillingness to respond
positively to the UN Security Council's call for a cease-fire. They
believe full Arab League support would greatly increase chances for
UN sanctions against Iran.
The moderates also will try to enlist Syria in broad condemnation of
Iranian attacks against Kuwait and neutral shipping in the Persian
Gulf. Iraq and Kuwait will push?probably unsuccessfully?for full
League endorsement of the Western naval presence in the Gulf, and
the possibility of a UN peacekeeping role may be raised.
The moderates realize they will have to pay a price for even minimal
Syrian cooperation on the Iran-Iraq war. Saudi Arabia and some other
Gulf Arabs probably are prepared to make general pledges to
continue providing economic aid to Syria?and to Jordan and the
continued
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Total Baghdad Pact Payments by Donors
Million US $
1980
Total: 2,964.3
Qatar
230.0
Saudi Arabia
999.0
400.0
UAE
250.010
Iraq111111)
Kuwait
Algeria
535.3
550.0
a Includes additional contribution to cover Libya's nonpayment in 1979.
1986
Total: 1,209.0
Kuwait
145.0
UAE
65.0
Saudi Arabia
999.0
The Baghdad Pact aid commitments, agreed to during an
Arab League summit in November 1978, were intended to
strengthen?enconomically and militarily?the confrontation
states still officially at war with Israel and to discourage other
Arab states from joining Egypt in recognizing Israel. Annual
payments of $3.5 billion in three equal installments were to
continue for 10 years.
Baghdad Aid: Commitments and Payments by Recipient, 1979-86
Million US $
?Committed
? Actual payment
PLO
2,000
1,500
1,000
500
Jordan
2,000
1,500
Syria
2,000
500
_1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 I 1 1 1
0 0
1979 80 81 82 83 84 85 86 87b
1979 80 81 82 83 84 85 86 876 121 1979 80 81 82 83 84 85 86 87b
b Estimated /projected.
314398A 11-87
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,
PLO?after the Baghdad Pact subventions expire next year, but they
probably will resist a formal renewal of the allotments. Saudi Arabia,
Kuwait, and the UAE will try to control the timing and size of aid
payments, hoping to link them more directly to recipient?particularly
Syrian?policies on regional issues.
Jordan and the Gulf Arabs probably realize that Syrian and radical
Arab opposition will block Egypt's readmission to the League.
Hussein probably sees very little chance of winning endorsement of
his formula for an international conference on the Arab-Israeli
conflict, and he will concentrate on preventing any action that might
further tie his hands on the peace process. The moderates will
probably join in criticizing the US decision to close the PLO
Information Office in Washington and US Congressional efforts to
close the office of the PLO's UN Mission.
... and the Syrian Bridle
Syria considers its participation in the summit essential to secure
needed financial aid from Gulf Arab states, and President Assad
probably is prepared to go along with some criticism of Iran in
exchange for promises of financial assistance. But Fahd's absence
will make Assad wary of any Saudi commitment, and the Syrian
leader will probably push to have the issue of Baghdad Pact payments
put on the agenda for the long-delayed regular Arab League summit
scheduled for Riyadh. It is highly unlikely Assad will take any step that
would signal a shift in Syrian olic on the Iran-Ira. w
In exchange for minimum Syrian cooperation on the Gulf war, Assad
probably will win endorsement for his policy on Lebanon. Assad might
also agree to a resolution that would give individual Arab states the
opportunity to renew bilateral ties to Egypt. Assad may see limited
Egyptian rehabilitation as helping deter Iranian belligerence against
Gulf Arab states, reducing Arab pressure on Syria and countering
growing Iraqi influence among moderate Arab states.
Possible Surprises
As host of the summit and a major proponent of Arab unity, Hussein
probably will strive to prevent a public display of the deep antipathy
between several leaders?for example, between Assad and Arafat
and between Assad and Iraqi President Saddam Husayn. The right of
individual Arab leaders to raise any issue of their choosing leaves
open the possibility the meeting might become contentious and widen
differences. A major flareup in the Gulf or in the camps war in
Lebanon, for example, would heighten emotions and animosity and
might even lead to collapse of the conclave.
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Top Secret
Special Analysis
PANAMA-US: Noriega's Options
The Panamanian regime is prepared to endure further
deteriorating relations with the US?including a complete aid
cutoff?rather than make significant concessions to the
opposition. Many of the alternatives to US aid that Panama is
considering probably are intended to be costly to US foreign
policy objectives.
The regime continues to reject US calls for the military to withdraw
from politics despite concern about US legislation that could
permanently cut off economic and military aid. The General Staff
fears that Panama's military relationship with the US has suffered
irreparable damage from the political crisis, 25X1
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me opposition, is continuing its anti-US criticism. 25X1
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Regime leaders may be considering attempts to strengthen the
financial position of the banking system by exploiting the military's
longstanding tolerance of drug money laundering in Panama.
Noriega is also threatening to turn to Moscow for military aid and to
grant it increased commercial access to Panama?a longstanding
Soviet goal. According to the US defense attache, Panama's limited,
but positive, experience with East European equipment and its need
for flexible financing are leading the Defense Forces to consider
requesting Soviet materiel should US military aid cease. The US
Embassy reports Noriega has softened his opposition to granting
Aeroflot landing rights, a move that potentially would offer Moscow a
toehold in Panama and provide financial benefits to the regime.
Panamanian diplomatic maneuvering is sure to increase if legislation
halting US aid appears imminent. The first move probably would be to
place greater limits on the activities of US military and diplomatic
officials, particularly their contacts with the opposition. In a more
serious case, the regime might expel midlevel US personnel on
charges of participation in opposition activities. The regime might
expel the Ambassador or break relations if there is a total US aid
cutoff and anti-Noriega opposition in Washington intensifies.
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Special Analysis
WESTERN
EUROPE-US:
Concerns About Falling Dollar
West European leaders are worried more about the damage a
falling US dollar can do to their economies than about the effect
of last month's stock market plunge and have begun to lower
interest rates. They are likely to link other reactive measures to
moves by Washington to trim its deficit and to cooperative efforts
by the Group of Seven to prevent the dollar from falling further.
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the stock market decline does not 25X1
oy itseir pose a serious Threat to West European economies. The
effect on West European economic growth will probably be less than
in the US, where stocks account for a larger share of household
wealth. 25X1
West European leaders now fear a sharply weaker dollar will dampen
their exports, and they are increasing cooperation among themselves
to protect their economies. Bonn and London have lowered key
interest rates, while Paris has raised its rates to stabilize the European
Monetary System
Since the market dropped, the dollar has fallen 8 percent against the
deutsche mark, a decline of the dollar
by as much as 20 percent would reduce West European growth next
year from 2.3 percent to about 1.5 percent. Such a dollar decline
might slow West German growth even more sharply, forcing Bonn to
reexamine its policies. If negotiations in the US to reduce the budget
deficit prove unsatisfactory to the market, rising US interest rates
might accompany the fallin dollar and aggravate the situation for
Western Europe.
West European governments would accept a further decline of the
dollar to help solve global trade imbalances, but they undoubtedly
prefer a gradual, limited fall to minimize harm to their exports. If the
dollar continues to slide, the West German Bundesbank may be
willing to offer a small cut in its discount rate in the context of an
agreement among the Group of Seven countries to stabilize the
dollar. West European leaders would want such an agreement to
include a commitment by Washington to cut its deficit beyond the
currently mandated $23 billion. They also would want a pledge of
coordinated intervention to promote a gradual slide to aoreed levels
rather than risk a free-fall of the dollar.
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