NEAR EAST AND SOUTH ASIA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01184R000301410002-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 42
• Document Creation Date: December 22, 2016
• Document Release Date: December 22, 2010
• Sequence Number: 2
• Publication Date: April 12, 1985
• Content Type: REPORT

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Near East and
South Asia Review
12 April 1985
NESA NESAR 85-009
12 Ap~tl 1985
Copy 416
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Secret
Near East and
South Asia Review ~~ 25X1
Articles Algeria Cools Its Ties With the Soviet UnionO 1 25X1
A shift in Algeria's ideological perspective and an interest in
diversifying its sources of military equipment have produced a
cooling of relations between Algiers and Moscow. These ties will not
be abandoned, however, because of Algeria's continued need for
Soviet arms and its desire to maintain its nonaligned credentials.
Algeria: A Changing Economic Strategy
With the strongest economy in North Africa, Algeria has
maintained an excellent international credit position that should
provide sufficient leeway to complete its current development plan,
but continued austerity to cope with the soft oil market will sharply
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The Future Israeli Tank Force 7 25X1
The Israelis continue to value the tank as the centerpiece of their
combined-arms force and have made the procurement of their
new~nk, the Merkava, their Army's top armament priority.
Iran: Status of Opposition Groups
The Khomeini regime is facing its greatest challenge since
consolidating its control of Iran in mid-1981, but organized
opponents of the regime-both within and outside Iran-appear to
lack sufficient strength to exploit the regime's problems.
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South Yemen: Setup for a Showdown?
The recent changes in the Yemeni Socialist Party Politburo and the
South Yemeni Cabinet do not significantly weaken the position of
South Yemeni leader Ali Nasir Muhammad but are probably
tactical moves helping him to prepare for a showdown with his
hardline rivals at the party congress scheduled for next October.
Discontent is building in the United Arab Emirates over the
indecisiveness and bickering among federation leaders. As the
UAE's political and economic situation stagnates, public
disillusionment with the federal government will encourage internal
instability and external meddling.
The Northern Emirates of the UAE: 25
Seeking FinancialIndependence
With the formation of the United Arab Emirates in 1971, Abu
Dhabi-the largest and wealthiest emirate in the UAE-took on the
financial responsibility for developing the five northern emirates,
but increased petroleum earnings in the north are reducing their
need for subsidies and weakening Abu Dhabi's power over their
policies.
Abdul Haq: A Capital Insurgent
Afghan insurgent commander Abdul Haq has been an important
player in keeping the insurgency active in the Kabul area, but recent
heavy Soviet and regime security measures and operations may be
reducing his effectiveness, already limited by ethnic, political, and
religious differences among the insurgents
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India: Security Problems in the Northeast
The planned raising of additional security forces in India's northeast
indicates that internal security problems there are probably
worsening, but these new measures together with political
concessions and economic aid should control the situation.
Nepal: Palace, Panchayats, and Democracy in 1985 ~~ 39
Nepalese King Birendra has flirted with a variety of democratic
experiments during recent years, but he maintains a firm hold on the
reins of power and will be able to contain demands for increased
democracy by playing competing factions against each other and
presenting the monarchy as the focus of national unity.
Some articles are preliminary views of a subject or speculative, but the contents
normally will be coordinated as appropriate with other offices within CIA.
Occasionally an article will represent the views of a single analvst; these items
will be designated as noncoordinated views. Comments may be directed to the
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Secret
Algeria Cools Its Ties
With the Soviet Union
Algeria's desire for better relations with the United
States has been accompanied by a cooling of ties
between Algeria and the Soviet Union. Principal
factors in this change are a shift in Algeria's
ideological perspective and an interest in diversifying
its sources of military equipment. The Bendjedid
regime, however, realizes that it cannot abandon
Algeria's longstanding ties with Moscow. Algeria will
continue to require access to sophisticated Soviet-
made arms and must ensure the continuation of
Soviet resupply and maintenance assistance.
Moreover, Algiers cannot appear too pro-West if it is
to maintain its credentials as a major nonaligned
Third World government.
Easing Away From Moscow
Limiting the influence of the superpowers in North
African politics has been one of Bendjedid's major
foreign policy objectives. Bendjedid and his advisers
often comment that Algeria will never become a client
of any power after having paid so heavily for
independence. In our view, the Bendjedid government
has made clear to Moscow that its version of
nonalignment includes improved relations with
Western Europe and the United States. In support of
its policy of nonalignment, Algiers has refused
Moscow's requests to establish permanent basing
rights or hold joint military exercises and has reduced
the number of Soviet advisers over the past five years
from a high of 2,500 to 1,200. According to the US
Embassy, Algiers has also made clear that it does not
want direct Soviet military involvement in the
Western Sahara conflict.
reduce Algeria's dependence on a single military
supplier. According to the US Embassy in Algiers, the
government also believes that the Soviet model for
economic development has failed to meet Algeria's
needs. The emphasis on heavy industry caused the
development of such sectors as agriculture and light
industry to languish. Moreover, the old system of
centralized control over state corporations produced a
cumbersome and inefficient bureaucracy. The
combination of these factors has prompted Algiers to
look to the West for technical and financial
assistance.
Bendjedid also has personal reasons for curbing
Algeria's close identification with Moscow. Bendjedid
almost certainly has not forgotten Moscow's efforts to
swing the 1979 presidential election in favor of a pro-
Soviet FLN leader to succeed President Boumediene.
Bendjedid's consolidation of power during his first
term as President included the careful weeding out of
many pro-Soviet holdovers to weaken Moscow's
ability to influence Algeria's decisionmaking process.
Algiers also is suspicious of Libya's ties with the
Soviet Union. The US Embassy in Algiers reports
that the Algerians were extremely troubled by
Qadhafi's public threat last year to grant Moscow
access to Libya's military facilities. Algiers probably
views the union between Libya and Morocco as
providing an opportunity for the Soviets to improve
relations with Rabat. Algiers almost certainly would
view any attempt by the Soviets to sell more
An important factor in Algiers' moving away from
Moscow has been widespread dissatisfaction with the
quality of Soviet military assistance and the desire to
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NESA NESAR 85-009
/ 2 April / 985
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sophisticated weapons to Libya or supply military
equipment to Morocco as threatening regional
stability and undermining Algeria's desire for
regional leadership.
These negative aspects of the relationship should not
mask the fact that the Bendjedid regime works with
Moscow in a number of areas:
? Algeria continues to grant the Soviet Union access
and transit rights to its ports on a case-by-case basis
and allows Soviet overflights into Sub-Saharan
Africa.
? Algiers continues to send students and some
military personnel to the Soviet Union for training
and education and participates in such Soviet-
sponsored activities as the Afro-Asian People's
Solidarity Organization and Moscow's annual
International Youth Conference.
? Low-level Soviet-Algerian exchanges take place
yearly to sign cooperation agreements and discuss
bilateral issues.
? Soviets participate in some Algerian development
projects, such as building a steel plant in Jijel and
parts of the gas pipeline to Hassi R'Mel, and have
nearly 5,500 economic technicians in Algeria,
although Algiers restricts their access to the local
population.
? Algeria's voting pattern in the United Nations often
mirrors that of Moscow, but this reflects Algiers'
nonaligned orientation rather than support for the
Soviet Union. The Bendjedid government did
surprise most UN observers, however, by abstaining
on the UN resolution condemning the Soviet
invasion of Afghanistan.
Continued cooperation in these areas supports
Algiers' commitment to nonalignment. More
important, Algeria wants to preserve the option to buy
sophisticated military equipment. The Algerians
realize that a sudden and complete shift to Western
military suppliers could result in the loss of Soviet
maintenance, equipment, and spare parts. This would
reduce dramatically Algeria's military capabilities-a
key factor in Algeria's pretensions to regional
leadership.
Outlook
Algiers will be cautious not to alienate Moscow or
jeopardize the Soviet arms flow as it expands its ties
to the West, particularly the United States. Algeria
almost certainly will continue to grant Soviet air and
naval forces limited transit and port visits as well as
overflight privileges. Algerians also will refrain from
publicly criticizing Soviet policies that they believe
are outside Algeria's interests, such as Soviet support
for Nicaragua or increasing Soviet involvement in
Syria. At the same time, Bendjedid is unlikely to
approve longstanding Soviet requests for military base
rights or to sign a friendship treaty with Moscow,
which would be viewed by the current regime as
compromising Algeria's nonalignment.
Nevertheless, Moscow is concerned about Bendjedid's
turn toward the West. The Soviets have been trying to
prevent a further erosion in relations with Algeria
through a series of high-level visits from Moscow over
the last seven months. They probably will urge
Bendjedid to visit Moscow after his trip to
Washington. They are not likely to initiate a break or
even cool relations with Algeria
Relations between Algiers and Moscow, however, will
continue to be strained. Moscow probably recognizes
that Algeria will be dependent on Soviet arms for the
near future and-under present circumstances-is
unlikely to offer more lenient terms for military and
economic assistance. Algiers has already experienced
stringent Soviet repayment schedules and insistence
that repayment be in hard currency and not oil. The
Soviets may calculate that, as the price of oil declines
and as Algeria's oil supply diminishes over the next 10
years, Soviet terms will remain more attractive than
the West's. If Algiers buys sophisticated military
equipment, such as fighter aircraft-from the West,
Moscow may ease repayment terms to curb such
purchases
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Algeria:
A Changing Economic Strategy
With the strongest economy in North Africa, Algeria
has maintained an excellent international credit
position through prudent financial management, and
this should provide it sufficient leeway to complete its
current development plan. The vicissitudes of the oil
and gas market and the limited prospects for gas sales
to Western Europe will be the main factors affecting
the government's ability to meet development
spending goals. Moreover, continued austerity to cope
with the soft oil market will, despite Algeria's
pervasive security forces, sharply increase the
likelihood of unrest.
Petroleum: The Economic Mainstay
Oil and gas account for nearly all export receipts, 30
percent of GDP, and 40 percent of government
revenues. In contrast, despite heavy spending in
industrial development, nonoil heavy industry
provides only 15 percent of GDP. A limited oil reserve
base is causing Algeria-with the fifth-largest gas
reserve in the world-to rely increasingly on gas
exports for foreign exchange. Crude oil production
capacity peaked in 1978 at more than 1 million b/d
and is declining about 10 percent annually. ~~
New Development Plan
Algeria has embarked on a $110 billion 1985-89
development plan that emphasizes agriculture-a
major break from past policy. More important, the
plan reveals President Bendjedid's growing ability to
direct the economy-over the objections of remaining
socialist hardliners. The evolution toward amarket-
oriented economy will exclude the priority areas of
petroleum and heavy industry.
As part of the new development plan, the government
has offered free state land to small farmers around
Algiers probably to help raise agricultural production
through conversion of collective farms to private
Algeria: Hydrocarbon Production
and Exports
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