NEAR EAST AND SOUTH ASIA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00289R000100150001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 46
• Document Creation Date: December 22, 2016
• Document Release Date: July 21, 2011
• Sequence Number: 1
• Publication Date: August 16, 1985
• Content Type: REPORT

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Near East and
South Asia Review
16 August 1985
NESA NESAR 85-018
16 August 1985
Copy 4 16
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Near East and
South Asia Review
16 August 1985
India: Growing Opportunities for Technology Diversion
India is likely to offer an increasingly attractive target for Soviet
science and technology collectors in the years ahead. Although India
apparently intends to protect sensitive US technology under a
Memorandum of Understanding signed last year, New Delhi will be
hard pressed to offer the degree of security Washington expects.
Prime Minister Gandhi's new textile policy aims at increasing
productivity, efficiency, and competition in India's largest industry
and is another indicator of his determination to modernize the
economy, but implementation will be difficult because of growing
resistance by labor unions and small-scale powerloom weavers.
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likely to allow it to escalate into a major confrontation.
Since April 1984 the Siachen glacier in northeast Kashmir has
emerged as a major flashpoint between the Indian and Pakistani
military, but both sides see the problem as containable and are not
Pakistan: Seeking International Financial Support I 11
Pakistan is seeking additional financial assistance from the US
Government and the International Monetary Fund to avoid a
foreign exchange crisis but is trying to avoid cutting government
expenditures and imposing new taxes, as President Zia is unwilling
to risk disapproval in the National Assembly and public unrest.
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Secret
NESA NESAR 85-018
16 August 1985
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Secret
Nuristan: Gateway to Northeastern Afghanistan
Nuristan, a rugged area bordering Pakistan, is typical in many ways
of the sparsely populated, remote regions of Afghanistan that are
not strategic but which provide the insurgents with a safe source of
supplies and transit, and the Soviets and Afghan regime are unlikely
to seek military domination of the area in the near term
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Through Cultural Centers Abroad
Iranian cultural centers and Islamic societies abroad play an
important role in the Khomeini regime's program to export the
revolution. They have a major impact on local Muslim populations
and present a serious challenge to the monitoring capabilities of host
governments.
The ultraconservative Hojatieh society has been an important source
of opposition to Aytollah Khomeini's views and policies since the
Iranian revolution. It is trying to get its nonclerical members into
government positions to influence the struggle for power after
Khomeini dies.
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The Shia-Palestinian war of the camps in the southern suburbs of
Beirut may have temporarily strengthened Amal chief Nabih
Barri's position among mainstream Shia groups, but by evoking the
hostility of Palestinians and other Sunni groups and increasing
Druze and Christian concern about future Shia demands, it has
sowed new seeds of conflict.
The Sudanese Communist Party has flourished in the open political
environment since President Nimeiri's ouster. Even though it will
probably support the victors in next year's elections to ensure its
influence in the resulting government, it will continue to undermine
rival parties and infiltrate the military to exploit any possible leftist
coup.
Corruption in Oman: The Seeds of Disenchantment
Corruption is not a serious political problem for Sultan Qaboos, but
the issue has become a source of discontent for young Omani
nationalists, and, if the Omani economy continues to decline and the
Sultan does not curtail the excesses of long-favored advisers, the
nationalists could form the nucleus around which opposition to
Qaboos could crystallize.
Some articles are preliminary views of a subject or speculative, but the contents
normally will be coordinated as appropriate with other offices within CIA.
Occasionally an article will represent the views of a single analyst; these items
will be designated as noncoordinated views.
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India: Growing Opportunities
for Technology Diversion
India is likely to offer an increasingly attractive target
for Soviet science and technology collectors in the
years ahead. Prime Minister Rajiv Gandhi has
introduced sweeping economic reforms that promise
to encourage imports of sophisticated Western
technology and boost India's ability to manufacture
its own high-technology products. Faced with
increasing difficulties in procuring Western high
technology elsewhere, Moscow almost certainly
anticipates reaping a bountiful harvest of controlled
technology once New Delhi begins to import it.
Although India apparently intends to protect sensitive
US technology under a Memorandum of
Understanding signed last year, New Delhi will be
hard pressed to offer the degree of security
Washington expects.
India as a High-Technology Target
India is poised for an unprecedented expansion of its
technological capabilities. After decades of slow and
uneven growth, India has built its heavy industrial
infrastructure and is moving increasingly into high-
technology areas such as electronics and computers.
We believe the scope for such expansion is vast-
India boasts a broad range of scientific activity and an
impressive reservoir of technically trained manpower.
Advanced technology is expected to play a central role
in Rajiv Gandhi's program to modernize India by
improving productivity and government efficiency.
India's technological expansion poses a double
challenge to the international trade control
mechanism. Imports of controlled technologies will
almost certainly increase significantly and offer
opportunities for diversion. Gandhi has already
liberalized key aspects of India's overregulated
economy-including rules on foreign joint ventures
and import/export policies-to fuel efforts to
modernize with new technology. New Delhi signed a
Memorandum of Understanding on technology
transfer with the United States last year-setting the
stage for a takeoff in US high-technology sales-and
several other Western countries are offering attractive
technology packages to gain a foothold in India's
burgeoning electronics market.
In addition, India's ability to produce indigenously
high-technology items of interest to the Soviets is
likely to increase significantly during the next decade.
Gandhi is eager to make Indian high-technology
goods competitive in world markets. The development
of software for export, for example, is receiving
particular emphasis. With an abundance of trained,
English-speaking software engineers and low labor
costs, India enjoys a comparative advantage in
software production that it is only beginning to exploit
on a large scale.
Although Western Europe and East Asia remain the
primary focus of Moscow's efforts to acquire high
technology, three major factors make India a
potential source:
? India's large, active, and capable scientific
community.
? The ease with which sensitive information can be
acquired in a developing country with democratic
traditions.
? New Delhi's close and longstanding relations with
Moscow.
Indo-Soviet Ties: A Special Concern
The USSR is uniquely positioned to acquire
technology in India because of its close and
longstanding relations with New Delhi. Although
their relationship is based on a congruence of national
Secret
NESA NESAR 85-018
16 August 1985
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interests and not ideological affinity, it allows the
Soviets to maintain a large official presence in India
that reinforces bilateral cooperation across a broad
front-political, economic, military, and scientific-
India's nonalignment and Gandhi's preference for
Western over Soviet technology have prompted New
Delhi to adopt a more evenhanded approach toward
the superpowers than in the past. Nonetheless,
Gandhi cannot afford to jeopardize the significant
economic and military benefits India receives from
Moscow as he seeks new ties to the West. Despite
recent attempts at arms diversification, India will
continue to rely on the Soviets for most of its
sophisticated weaponry for at least the rest of this
decade.
For the Soviets, India's growing interest in expanded
ties to the West and its quest for advanced technology
present both a challenge and an opportunity. Soviet
officials are aware that Moscow cannot compete with
the West in satisfying India's growing appetite for
high-technology goods.
Moscow is concerned tat an
increased Western share of the Indian electronics
market will erode Indo-Soviet ties by undermining the
Soviet contribution to India's economic development.
On the other hand, hardening attitudes in the
industrialized countries toward Soviet
illegal technology procurement activities have forced
the Soviets to seek alternative sources in the less
developed countries.
Acquisition Mechanisms
The Soviet Union acquires technology in India
through a variety of mechanisms, including legal and
illegal purchases, cooperation and exchange
agreements We have no
evidence that formal trade agreements themselves
promote illegal technology transfer. On the other
impossible to monitor.
hand, well-established bilateral cooperation over a
broad range of scientific disciplines enables Soviet
scientists to profit from access to their Indian
counterparts. Many scientists in India were trained in
the United States and have retained informal contacts
with colleagues-both US and Indian-in high-
technology fields. We believe these contacts-which
the Indian Government encourages-offer immense
scope for technical data diversions that are almost
We have persuasive evidence that some controlled US
technology-mainly computer-related items such as
software with both civilian and military
applications-has been transferred by Indian firms
and individuals to the USSR over the last decade. In
our view, these transfers occurred without the
approval of the Indian Government, although in some
cases employees of government-controlled institutions
have been implicated.
Indian Security Practices
Indian officials believe their security procedures are
adequate to support assurances to the United States
and to deny the Soviets access to Western technology
within the government, the military, and public-sector
enterprises. Indeed, over the past two decades, the
Indian Government has demonstratedH
an ability to compartment and restrict
access to sensitive technologies, especially at military
installations. New Delhi is far less sanguine of its
ability to prevent diversions through the private
sector-where we believe they are most likely to
Good intentions aside, New Delhi will be hard pressed
to offer the degree of protection Washington expects.
licensing, enforcement, and security practices,
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however, India may be able to prevent actual
diversions of hardware and equipment.
requirements prove onerous. In the long run, we
believe only a coordinated position by COCOM
member countries on controlled high-technology
exports to India will prove effective in limiting
Protecting sensitive technical data will prove far more
Soviet collectors can locate US equipment protected
under the Memorandum of Understanding, we believe
that in time they can almost certainly gain physical
access to the machines and their technical dataF-
Perceptions and Prospects
We believe the Indian Government has become
sensitized to US concerns about unauthorized
diversions of sophisticated technology and is fully
committed to upholding its security obligations under
the Memorandum of Understanding. Both New Delhi
and Indian private industry fear loss of access to US
technology if illegal transfers occur and are
discovered because they recognize the importance of
high technology to India's economic development.
Nonetheless, New Delhi is concerned about o enin
Indian operations to US inspectors
Despite pledges to protect US technology as the price
of acquiring it, we believe India would resist strongly
any pressure from the United States to subscribe to
international technology controls or to restrict exports
of its own high technology to any country, including
the USSR. Indian officials would resent such pressure
as an attempt to undermine India's sovereignty, limit
its freedom of action, and prevent it from challenging
the West in world markets.
Although New Delhi clearly prefers US equipment
and technology, some West European and Japanese
suppliers are offering attractive alternative packages
with favorable financing and fewer restrictions on use
.or reexport India
would turn increasingly to these suppliers if US
technology diversions to the USSR.
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India: Untangling Textiles
Prime Minister Gandhi's new textile policy,
announced in June, aims at increasing productivity,
efficiency, and competition in India's largest industry
and is another indicator of his determination to
modernize the economy. We judge implementation
will be difficult because of growing resistance by
labor unions and small-scale powerloom weavers.
Even if fully implemented, the reforms will probably
not prove a panacea for the industry's longstanding
economic problems, but the improved regulatory
environment is likely to gradually increase production
and make Indian textile exports more competitive.
Economic Woes
Textile manufacturing is India's largest and oldest
industry. It generated over 12 million jobs and
accounted for over 20 percent of manufacturing
production as well as 12 percent of exports in 1983-
84. The industry is divided into three sectors
composed of large integrated textile cloth mills, small-
scale powerlooms, and handlooms.
Since 1970 textile production growth has been slow,
averaging less than 1 percent per year compared to an
annual rate of nearly 5 percent for manufacturing as
a whole. We judge that the poor performance has
been due to mismanagement, overregulation,
antiquated technology, and rising wage and raw
material costs.
The hardest hit sector has been the large traditional
textile mills. Strikes, high wages, discriminatory
taxation, and poor management have contributed to
the closing of 72 mills. One study estimates that over
25 percent of the weaving and 15 percent of the
spinning capacities of the remaining mills are
uneconomical.
The older mills' problems have been complicated by
the rise of powerlooms. First encouraged by the
government as a means of developing small-scale
enterprise, powerlooms now number an estimated
800,000 units and produce up to 45 percent of India's
cloth, according to press reports. In our view, the
powerlooms have thrived because they face fewer
regulations, pay lower taxes and wages, and can
respond rapidly to market demand.
New Policy
In accordance with the Gandhi government's plans to
modernize Indian industry, the new textile policy
announced in June is aimed at increasing production,
competition, and efficiency. The new policy is an
outgrowth of earlier reforms that attempted a phased
introduction of market forces into India's oldest
industry. The new policy will:
? Gradually remove all curbs on the expansion of
capacity, enable firms to close down unprofitable
units, and allow mills to produce blends and
synthetics to meet growing market demand.'
? Eliminate preferential tax treatment between mills
and powerlooms, lower raw material duties, and
require registration of powerlooms.
? Facilitate imports of textile machinery and create a
modernization fund to promote new investment.
Mixed Reviews
The textile industry's reaction to the new policy has
been mixed. The mills have welcomed the reforms
because their competitiveness will be enhanced with
the reduction in discriminatory regulations. Press
reports indicate that powerloom owners, on the other
hand, are almost unanimous in condemning the new
measures because they would lose many of their tax
advantages and gain little protection, compared to the
mill and handloom sectors.
India's powerful textile labor union leaders and union-
backed politicians have also been critical of the policy,
according to the press. A key union leader attacked
the policy as "antilabor" because it encouraged mill
closings and provided no relief for workers laid off
during a bitter yearlong textile strike in 1982-83.
' The policy notes that workers whose jobs are lost by mill closings
will receive compensation through a rehabilitation fund raised by a
tax on the industry.
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NESA NESAR 85-018
16 August 1985
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Even though the government is committed to helping
rehabilitate displaced workers, we judge that union
leaders fear the new policy because it will probably
lead to the loss of up to 100,000 jobs and a reduction
in union influence.
Export Hopes
With growing foreign payments problems expected
over the next few years, New Delhi hopes the new
policy will lead to continued export growth. Since
fiscal year 1970/71 (April/March) the value of
garment exports, for which the United States is
India's largest market, has increased at an annual
rate of over 26 percent compared to nearly 9 percent
for cloth exports. In FY 1983/84 textiles (garments
and cloth) accounted for nearly $1 billion in foreign
earnings. Although the new policy indicates support
for overseas market development, we judge that
future export growth is likely to be slow-outside
bilateral trade arrangements with the Communist
countries -because textile quotas in the United
States are nearly exhausted and price and quality
problems will limit sales to Western Europe.
Outlook
In our judgment, the ability to implement the new
textile policy will be a test of Prime Minister Gandhi's
commitment to economic modernization. New Delhi
will probably encounter stiff political pressure from
textile unions and politicians who will oppose closings
of uneconomic mills and powerlooms-particularly in
the riot-torn state of Gujarat, where many
unprofitable mills are in operation. When
unemployment rises as a result of closings, the Gandhi
administration will be hard pressed to refrain from
resorting to bailouts and subsidies.
In our view, even if fully implemented, the new policy
offers no immediate panacea for the textile industries'
woes. The reforms will improve the regulatory
environment but do little to eradicate longstanding
problems like mismanagement, inadequate raw
material supply, and energy shortages that stifle
productivity. Retooling and increasing capacity in the
antiquated mills will also take time and require
substantial financing.
Over the long term we believe the reforms are likely
to help the industry become more efficient and better
able to meet growing domestic demand for blends and
synthetics. A reduction of raw material duties is likely
to increase the production of higher quality textiles
and benefit farmers hurt by falling prices for fine
quality long-staple cotton. Even if the textile industry
becomes more efficient and competitive, a
protectionist international environment and stiff
competition are likely to limit Indian export growth.
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India-Pakistan:
Gunfire on the Glacier
Since April 1984 the Siachen glacier in northeast
Kashmir has emerged as a major flashpoint between
the Indian and Pakistani military. Both New Delhi
and Islamabad see their national prestige at risk in
the region, and their military planners consider
experience in Kashmir valuable. Because of its
remoteness and the severe local weather conditions,
the disputed area has little strategic value. We believe
that both sides see the problem as containable and are
not likely to allow it to escalate into a major
confrontation.
The Glacier Region
The Siachen glacier region, about 9,100 square
kilometers, contains peaks reaching 7,600 meters,
valleys at about 3,000 meters, and a rugged plateau
averaging 5,500 meters above sea level. The plateau's
high temperatures range from 4 degrees Celsius in
summer to -26 degrees Celsius in winter. Icy winter
winds often reach 240 kilometers per hour. Covered in
snow and ice all year round and with low
temperatures and scant precipitation, the plateau
experiences little significant seasonal change.F_~
adjustment to the cease-fire line after the 1971 Indo-
Pakistan war. The 1949 agreement traced the line
"east to the glacier area" and "thence north to the
glaciers." Given the area's remoteness at the time,
this imprecision presumably was not considered a
problem. After the 1971 war the cease-fire line was
adjusted to reflect actual control when the fighting
was halted. Since the war was fought in December,
neither side was likely to have had sufficient forces on
the glacier to require a more exact drawing of the
cease-fire line.
Neither India nor Pakistan has a firm legal basis for
claims in the area. Islamabad considers the cease-fire
line to extend directly northeast from the last
mutually agreed upon point near the town of Khor to
the Karakoram Pass. New Delhi, possibly taking a
cue from the "north to the glaciers" language in the
1949 agreement, asserts that the line runs due north
from Khor-which would put about half the glacier
on the Indian side. This imprecise arrangement
seemed acceptable to both countries until recently.
Except for a few small settlements in the Nubra
Valley, the region is virtually uninhabited. No
motorable roads exist in the disputed area, and only a
few of the small number of trails are passable even by
animal transport. The nearest major roadheads and
airfields are about 130 kilometers away at Leh, in
India, and Skardu, in Pakistan. Winter storms often
block the roads to these forward bases.
What little strategic value the glacier area has lies in
its passes, which though remote and not easily
traversed, reach through the Karakoram Range into
China. To Pakistan, these are potential support routes
from an important ally. The Indians, therefore,
consider denying Pakistani access to these passes to be
a key strategic goal.
Disputed Claims
The glacier region was not specifically demarcated in
either the 1949 Kashmir cease-fire agreement or the
Military Operations
Some time after the 1971 war, Islamabad established
military observation outposts on the glacier and began
to sponsor foreign mountaineering expeditions to the
region. These tactics eventually secured international
acceptance of Pakistani control over the area. F
New Delhi did not directly. contest the Pakistani
actions until the Indian Army operations directorate
saw maps of the region in reputable foreign journals
showing it in Pakistan-occupied Kashmir. Indian
patrols subsequently began appearing on the glacier,
and fighting between the patrols and the Pakistani
observation posts quickly followed. Eventually, the
Indians decided to occupy the area.
Although both sides agree the current clashes began
in the Siachen region in the spring of 1984, their
Secret
NESA NESAR 85-018
16 August 1985
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Approximate
area of dispute. __,6, SJACHEW /
Jammu ~~`~9
Boundary representation is
not necessarily authoritative.
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versions of how they started differ. Pakistan claims
that the fighting began when its troops moved to
prevent the Indians from seizing some passes. India
maintains that the first clashes occurred when the
Pakistanis entered the disputed area and fired on an
Indian patrol. The Indians quickly gained ascendancy
in the region by seizing and occupying Pakistani
observation posts. Indian forces now command the
key passes on the glacier, and fighting seems to
revolve around Pakistani attempts to dislodge them.
The remote and forbidding area cannot sustain many
troops or extensive operations. Support efforts often
require hauling supplies, including artillery, piece by
piece on pack animals and using helicopters pushed to
their load and altitude limits. The nearest sizable
Pakistani garrison is an infantry brigade based at
Skardu. The headquarters of the nearest major Indian
unit-the 3rd Mountain Division, which is oriented
mainly toward China-is at Leh. The Indians appear
able to use the small landing strip and minor facilities
at Thoise, 50 kilometers closer to the glacier region
than Leh, only during the short summer period
Combat on the glacier is infrequent and low in
intensity. The fighting involves mostly small arms and
indirect weapons fire
Avalanches and cold weather injuries are far more
serious threats. Operations are virtually impossible in
the winter because of bitter cold and high winds, and
they are extremely difficult and dangerous in warmer
seasons because of crevassing and avalanches. Even
small tasks, such as preparing defensive positions and
laying minefields, become major endeavors on the
stark and drifting glacier.
The Indians have established a forward base inside
the disputed area, probably housing a brigade and a
maneuver battalion along with artillery and other
support elements.
Outlook
Neither India nor Pakistan are likely to allow
occasional firefights to reach the point where they are
not easily containable. For example, despite Pakistani
claims that they control both the Shyok and Nubra
valleys-both of which are more conducive to troop
activity and allow better access to the disputed area-
there is no evidence that combat has been extended
into these areas.
Moreover, neither side can support much more
military activity on the glacier. Clashes in the area
would only lead to heavier combat if both sides
allowed the situation to spill over to other parts of the
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cease-fire line. In our view, neither side will allow that
to happen in the foreseeable future.
Both countries will, therefore, be likely to pursue
military contact on the Siachen glacier within the
strict limits of geography and climate. Although New
Delhi may be eager to show, in one officer's words,
"that it is no longer possible to gnaw at our farflung
territories and then get away with no more than
filibustery at the United Nations" and Islamabad
probably sees its national prestige similarly
challenged, neither side seems willing to risk
heightened tensions or important agreements by
allowing the glacier combat to expand.
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Pakistan: Seeking International
Financial Support
Pakistan is seeking additional financial assistance
from the US Government and the International
Monetary Fund to avoid a foreign exchange crisis. At
the same time, Islamabad is trying to avoid cutting
government expenditures and imposing new taxes as
proposed by Washington and the IMF. We do not
believe President Zia is willing to implement major
economic reforms because of the risk of disapproval in
the National Assembly and public unrest. Without
additional assistance, Pakistan probably would
threaten to default on debt repayments and postpone
payments due the United States for Foreign Military
Sales (FMS) loans.
Dimensions of the Foreign Payments Problem
Pakistan's economic growth over the past seven
years-averaging 6 percent annually in real terms,
according to official statistics-has been outstanding
by developing country standards. GDP growth for
fiscal year 1985, which ended on 30 June, is estimated
by Islamabad at a record 8.4 percent, despite a severe
drought that cut hydroelectric power production
earlier this year, which in turn led to layoffs and
cutbacks in industrial production. Low river flows and
the lack of snowmelt could lead to shortfalls in key
cotton and rice crops, as well as another severe power
shortage next spring.
The current foreign payments problem had its origin
about two years ago with a disastrous cotton crop and
the beginning of a decline in remittances from
overseas workers. The government, in its attempts to
maintain the appearance of economic prosperity,
avoided import and other spending cuts that would
have mitigated at least some of the current troubles.
Instead, Islamabad spent the foreign exchange
reserves it had accumulated over several years-when
worker remittances were growing-to "buy"
economic stability and to modernize its military.
By the end of June 1985, Pakistan's foreign exchange
reserves declined to less than $700 million from a
peak of almost $2 billion in December 1983. Reserves
were equivalent to only about five weeks' imports.
Government projections for the current fiscal year
show a drawdown of only $5 million even without new
assistance, but we believe this estimate is overly
optimistic. The government has left untouched $600
million in gold reserves.
We estimate Pakistan suffered a record trade deficit
of about $3.6 billion for the fiscal year ending 30
June. Exports were hampered by the lingering effects
of the poor cotton crop a year earlier, stiff competition
from other textile exporters, and low commodity
prices. Expenditures for imports increased mainly
because of higher foreign prices and increased
purchases of wheat necessitated by two successive
wheat crops that fell below domestic consumption.
The government's forecast of a more than $400
million improvement in the trade balance for this
fiscal year assumes a 16-percent increase in exports,
based in part on substantially higher cotton prices,
and no growth in imports. We believe, however, that
world cotton prices are not likely to increase because
of large stocks carried over from last year and a
projected worldwide bumper crop this year. We are
also skeptical that imports can be held at last year's
level because of the adverse consequences for export-
oriented industries and agriculture.
Worker remittances in the last fiscal year were 12
percent below FY 1984 levels and $500 million below
the peak in FY 1983. The 8-percent drop in
remittances the Pakistanis project for this year
Secret
NESA NESAR 85-018
16 August 1985
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Secret
Pakistan: Balance of Payments a
Current account
-991
-1,610
-554
-1,028
-1,710
-1,535
Trade balance
-2,765
-3,450
-2,989
-3,334
-3,590
-3,185
Exports (f.o.b.)
2,798
2,319
2,627
2,668
2,540
2,945
Imports (f.o.b.)
5,563
5,769
5,616
6,002
6,130
6,130
Net services and transfers
1,774
1,840
2,435
2,306
1,880
1,650
Worker remittances
2,095
2,224
2,886
2,737
2,400
2,200
Long-term capital (net)
581
746
1,276
882
900
1,730
Gross disbursements
956
1,092
1,301
1,234
1,300
2,000
516
492
386
542
550
555
141
146
361
190
150
285
Other and short-term capital
772
629
390
-34
-30
-200
Financial gap
-362 c
235
-1,112
180
840
5
a Fiscal year ending 30 June of the stated year.
b Pakistani Government projections.
c Surplus for the fiscal year.
indicate the
net annual reduction in Pakistanis working abroad is
at least 1 to 2 percent. some
Pakistanis working in the Persian Gulf states are
taking pay cuts of 30 to 40 percent
Foreign debt service was about $1.2 billion last year,
up from $800 million in 1981. The debt servicing
requirements included at least $100 million in interest
payments on US FMS as well as repayment on other
military debts. The commercial debt service probably
will remain about the same, but repayments for
military purchases probably will be nearly $200
million this fiscal year. We believe Islamabad's
planned military purchases will lead to a rapid
increase in the estimated $1.5 billion in military-
related debt already accumulated. In addition, we do
not believe repayments for the military debt are fully
accounted for in the balance-of-payments data.
cotton prices and other adverse external developments
qualified it for a loan requiring only minimal
conditionality. During subsequent discussions with the
IMF in Washington, Pakistani officials were told that
a CFF would have to be nominal-less than $100
million-because of an increase in cotton exports.
Instead, Fund officials recommended a standby
program of about $350 million, contingent on
acceptance of a major devaluation of the rupee and a
$625 million reduction in the government's budget
deficit. An IMF team will visit Islamabad in early
September to continue talks.
World Bank officials also are proposing strict
conditions on loans to Pakistan. Islamabad has been
told that reforms will be required in the sectors where
Bank funding is used. Progress on future industrial
and agricultural loans also will depend on the
outcome of talks with the IMF. Last year Pakistan
borrowed $600-700 million from the World Bank-
the highest ever-and hopes to get at least as much
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Talks With the IMF, World Bank,
and the United States
In early July an IMF team visited Pakistan to review
Islamabad's request for a $330 million Compensatory
Finance Facility (CFF). Pakistan contended that low
this year.
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The US Government has already made available to
Pakistan about $150 million for wheat imports. Some
additional funds might be reprogramed, but there are
few prospects for new direct balance-of-payments
assistance. US officials endorsed talks with the IMF
on a standby program and encouraged Pakistan to
take steps toward economic reform.
Political Implications
The economic problems underlying the deterioration
in Pakistan's foreign reserve position could quickly
translate into political problems for President Zia. Zia
was able to maintain an atmosphere of domestic
prosperity during the presidential referendum and the
campaign for the national and provincial assemblies,
but an exit poll taken during the assembly elections in
February indicated that economic issues were the
second-most-important concern of the voters, next to
the implementation of an Islamic political-economic
system. The population has become more aware of
economic issues as a result of water shortages earlier
this year, longer and more frequent power cuts, and
fewer and lower paying new jobs in the Middle East
oil-producing countries. In addition, financial
constraints on government spending have led to
cutbacks in education and routine infrastructure
maintenance.
The government went out of its way to avoid popular
focusing on the economy and contentious economic
debate in the first session of the National Assembly
by not calling for major reforms in the new budget. It
backed off from proposing new taxes, offered more
subsidies to the agricultural sector, and promised that
there would be no supplemental budgets this year.
Many Pakistani economic officials believe the
government will not attempt to implement the
conditions laid down by the IMF because of the risk
of disapproval in the National Assembly and by the
public. To satisfy Fund prescriptions, Pakistan
probably would have to reduce government
expenditures, including subsidies and possibly defense
spending, and also introduce new taxes.
Outlook
We estimate that, without new aid or dramatic
domestic belt-tightening, Pakistan will draw down its
reserves by at least $200 million over the next year
(compared to a government projection of only $5
million), a reduction that would force Islamabad to
consider some critical and politically unappealing
policy choices. For example, it might delay ordering
part of the 1.6 million tons of wheat it plans to import
to rebuild its stocks, or restrict imports of oil and
electric-generating equipment needed to alleviate
anticipated power shortages early next year. Under
these circumstances, Pakistan probably would also
threaten to default on debt repayments and postpone
payments due the United States for FMS loans.
We do not believe that Zia will implement major
domestic revenue-raising measures because they
would create political hazards. Although conditions
set forth by the IMF are minor in scope compared to
those faced by many developing countries, Zia is
unlikely to risk general public unrest by supporting
subsidy-reduction measures that will result in higher
prices for food items such as wheat and cooking oil.
Taxes on business and agriculture and increases in
fertilizer prices are likely to face stiff resistance
because they threaten the interests of the strong bloc
of conservatives and landlords in the new assembly.
The conservative former Finance Minister, Ghulam
Ishaq Khan, retains considerable influence as
chairman of the new senate. Cuts in defense spending
would threaten the government's base of support in
the military.
Despite its impressive recent performance, Pakistan's
economy is too weak to generate economic growth for
a population of almost 100 million growing at 3
percent annually and still pay for expensive imports of
military hardware. The longer Islamabad delays
reforms needed to acquire aid, the more serious its
economic and political problems will become.
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Nuristan: Gateway
To Northeastern Afghanistan
Nuristan, a rugged area bordering Pakistan, is typical
in many ways of the sparsely populated, remote
regions of Afghanistan that are not strategic but that
provide the insurgents with a safe source of supplies
and transit. The Nuristanis are politically
independent and generally have remained outside the
conflict between the Kabul regime and the insurgents.
The Liberation of Nuristan
Nuristan comprises the northern half of Konarha and
Laghman Provinces in eastern Afghanistan. The area
is inhabited by about 100,000 Nuristanis, one of
Afghanistan's smaller ethnic groups. Most of the
region is extremely mountainous and well forested,
making it difficult for Soviet and regime forces to
penetrate, although armored vehicles can enter the
area's three main river valleys on primitive dirt roads.
The Nuristanis were the first ethnic group to take up
arms against the Communist regime in Kabul after
the April 1978 coup. They revolted after Kabul
authorities executed the Afghan Interior Minister-
the highest ranking Nuristani official in the Daoud
government-and arrested local Nuristani
government officials
During the summer and autumn of 1978,
they pushed the Afghan army and police out of the
area's main river valleys.
A government effort to reconquer the region in late
1978 failed. The government organized a militia
composed of about 20,000 neighboring Gujars (an
Indian people originally from the Gujarat area of
Punjab) and 15,000 Pushtuns-the Nuristanis'
traditional ethnic rivals-and promised them that
they could pillage Nuristani villages,
Reinforced by the regular army
battalions, the militia pushed its way back into the
main river valleys in October 1978 but was forced to
retreat in the spring. Several ineffective bombing
attacks by the Afghan Air Force against Nuristani
villages failed to intimidate the area's inhabitants.
other Afghan ethnic groups.
According to Western academics, the Nuristanis-
once considered to be descendants of the ancient
Greeks-are now thought to be related to an earlier
people from Central Asia. They tend to have lighter
features and to be less repressive toward women than
The Nuristanis were the last people to be conquered
by the Kabul authorities. They were converted
forcibly to Islam in 1895 by the King of Afghanistan,
who changed the name of their region from Ko iristan
(land of infidels) to Nuristan (land of light). The
Nuristanis were treated well by the King and proved
loyal subjects to him and his successors. Many rose
to prominence in the government and military.
The Nuristanis traditionally have been on poor terms
with their southern neighbors, the Pushtuns and
Gujars. According to Nuristani tradition, the
Pushtuns seized most of the best land in the Konar-
Kabul basin areas over the last several centuries and
forced the Nuristanis into the back valleys and
mountains. The Gujars, though less numerous than
the Pushtuns, also have been competitors for land.
Warfare between the Nuristanis and the Pushtuns
was frequent until the Nuristanis' conversion to
Islam in 1895.
Independence From Conflict
Since the expulsion of the Afghan army, Nuristan has
been important as an insurgent supply route.
Nuristan's main trails have been used by Tajiks as
one of several routes to the Panjsher Valley and to
northeastern Afghanistan
Tajiks from Badakhshan have also used the
Nuristan route more often since the Panjsher Valley
offensive in late 1982 to export gems, which they sell
in Pakistan to buy arms.
Secret
NESA NESAR 85-018
16 August 1985
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Secret
The Nuristanis have sometimes harassed the Tajik
insurgents but have not actively sided with Kabul.r
Nuristani groups, who claimed they represented an
independent Nuristan, were demanding transit fees
from insurgents.
lin 1985
that an important Nuristani leader, Mollah Afzal,
permits the passage of supplies to Panjsher Valley
leader Ahmad Masood but not to insurgents in
Baghlan Province.
Few Nuristanis have joined the regime's militia. The
government funded Sanwar Nuristani, the former
commander of the Kabul Central Garrison under
Prime Minister Daoud, and sent him to northern
Afghanistan in 1980 to raise a militia to interdict
insurgent convoys
Sanwar's militia disrupted several
insurgent arms caravans and commandeered some of
the lapis lazuli exports in 1980 but has not been a
major obstacle since then,
Kabul has recently renewed efforts to persuade the
Nuristanis to join the militia.
in Nuristan, Afghan and Soviet troops are located
only in the southern part of Konarha and Laghman
Provinces in Pushtun areas.
handicap the Nuristanis. The two main insurgent
leaders of the Nuristani interior, Mollah Afzal, the
leader of the Kati tribal group of upper Nuristan, and
Amin Anwuar Khan, the leader of the Kam tribal
group of lower Nuristan, have never cooperated
extensively with each other or with Jalal in
exchanging intelligence or in attacking Soviet or
Afghan forces. The Pushtun Hizbi Islami leader in
southern Nuristan, Mollah Rustam, has extended his
influence because of this lack of unity
Jamiat.
Outlook
Nuristan probably will continue to play only a minor
role in the insurgency. The Soviets and Afghan
Government are unlikely to seek military domination
of the area in the near term because of its remoteness,
rough terrain, and independent populace. Meanwhile,
the region will remain important as one of several
transit routes for the insurgents, especially the
Little Activity Against Soviet and Afghan Forces
Nuristani insurgents have been active only in the
upper Konar Valley, against the Afghan army outpost
at Barikowt. the
most active commander was Jaliatullah Jalal, who
began harassing the Afghan army outpost in 1981
with about 500 armed men and subsequently gained
control of several villages south of the outpost.
Other Nuristani insurgents have been inactive
because they are far from Soviet and Afghan forces.
With the exception of the upper Konar River Valley
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Secret
Iran:
Exporting the Revolution
Through Cultural Centers Abroad
Iranian cultural centers and Islamic societies abroad
play an important role in the Khomeini regime's
program to export the revolution. Tehran uses these
quasi-independent organizations to attract foreign
sympathizers and provide cover for the often illicit
activities of Iranian personnel,
Since the Islamic republic was founded in
early 1979, local governments have become
increasingly aware of the disruptive potential of
Iranian-backed cultural centers, and some have tried
to limit their activities. The Iranians have countered
by becoming better organized, and the centers
continue to have a major impact on local Muslim
populations and present a serious challenge to the
You intend to do things, in countries where you
are, that are in contradiction to their ruling
systems. To succeed, you must act so that it does
not become immediately apparent what is your
monitoring capabilities of host governments.
Worldwide Operations
Iranian centers-called Islamic societies, Islamic
student associations, Islamic World or Muslim Unity
organizations, and Iran Houses-operate throughout
the world. In some locations Iranians have taken over
established Muslim cultural centers that lacked
strong leadership; in other places Tehran has opened
new facilities. Some important centers are headed by
clerics close to Ayatollah Khomeini who have
substantial budgets and enjoy considerable autonomy
final goal.
Foreign Minister Velayati to a
conference in Tehran in March 1985 of
cultural officers assigned abroad.
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Canada and Mexico.
founded in the United States around 1964 by Dr.
Ebrahim Yazdi, a pro-Khomeini activist who later
served for a short period in 1979 as Iranian Foreign
Minister. The Islamic Student Society (ISS) was
taken over in 1980 by a capable leader who
expanded it significantly before returning to Iran in
1984 to take a post at Tehran University. The ISS
appears to consist of 57 "chapters," each of which
has at least four members, in 27 states as well as in
The ISS bureaucratic structure is headed by a
national board of "secretaries" who have overlapping
Secret
NESA NESAR 85-018
16 August 1985
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Secret
An official of Iran's
the US Consulate General.
cultural center in Lahore allegedly said earlier this
month that he "had not yet approved" proposals
from unspecified individuals to bomb the US
Consulate and America Center there, according to
? Pakistan. An influx of Iranians linked to the
Revolutionary Guard into the cultural center in
Karachi triggered a wave of aggressive propaganda
activity in October 1982
In March 1983 center personnel and well-
Pakistanis staged violent attacks on Iraqi
students in Karachi. After the Iranian Consul
General was expelled, the center became more
discreet. By 1985 the Iranians were again behaving
center were expelled from southern France.
center in Paris was closed by the French
Government and three Iranian Embassy staff
members were expelled because of activities
directed against anti-Khomeini Iranians, according
to press reports Two months
later several Arab extremists linked to the Iranian
? Belgium. A dozen pro-Khomeini activists expelled
from France in 1984 migrated to Brussels, where
they melted into the local Shia community,
according to the US Embassy. Subsequently,
moderate Muslim leaders in Belgium were reported
to be alarmed by the inroads made by radicals at
local mosques and study centers. A new Iranian
cultural center is planned for a Brussels
neighborhood where pro-Khomeini groups have
recently demonstrated.
Prospects
Efforts to export the revolution are an integral aspect
of the Khomeini regime and are unlikely to end
regardless of which clerical faction is in power in
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Secret
Tehran. Iranian leaders disagree about some of the
methods used-principally whether terrorism and
other violent methods are appropriate-but are all
convinced that they have a religious duty to spread
their ideology abroad, especially in the Third World.
Iran will continue to find fertile ground for its
activities. There is a ready market for Iranian
proselytizing among Muslim communities around the
world and among youthful rebels of many
nationalities who see violence as the only effective
means of making an impact. Despite increasing
awareness of the negative potential of Iranian cultural
institutions among foreign governments, Tehran will
continue to be able to use sympathizers within local
communities to act as frontmen for such centers and
to establish some plausibility to its denials of
sponsorship of the centers' activities. Iran will
continue to benefit from the reluctance of some states
to crack down on the centers. Many developing
countries. still seek Iran's oil-funded aid, and most
industrial states want to preserve economic ties to
Iran
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The Hojatieh: Rightwing
Opposition in Iran
The ultraconservative Hojatieh society has been an
important source of opposition to Ayatollah
Khomeini's views and policies since the Iranian
revolution. It also opposes radical efforts to increase
government control of the economy. The society is
trying to get its nonclerical members into government
positions to influence the struggle for power after
Khomeini dies. Some Hojatieh members also are
helping to organize antiwar protests to increase the
society's popular support, but these efforts have been
hampered by lack of a positive political program or a
charismatic leader. Nevertheless, the Hojatieh's
strong links to influential figures in government and
the bazaar make the society an important element in
the political equation
The Hojatieh society was founded in the 1950s to
combat the Bahai faith, an offshoot of Shia Islam
which Shias regard as heretical. The society is
composed of both clerics and laymen and has strong
support among bazaar merchants, the regular armed
forces, and certain segments of the educated elite.
What the Hojatieh Believes
Hojatieh members oppose Khomeini's belief that
clerics must play a direct role in politics. They reject
Khomeini's argument that the clergy must try to
establish an Islamic government to prepare for the
return of the 12th or "hidden" Imam, whom Shiites
believe will reappear one day to bring justice to the
world. Hojatieh members contend that trying to
create such a regime implies a rejection of the 12th
Imam's mission. As one critic of the society put it,
Hojatieh members "believe that every revolution
before the return of the Imam is heresy and the path
to hell." They believe that clerics should provide only
general guidance to the government to ensure it acts
in accordance with Islamic precepts.
The society also rejects Khomeini's view that the
supreme political as well as religious authority in an
Islamic government must be vested in a qualified
Islamic jurist. Members of the society believe that no
cleric, no matter how outstanding, can claim to be the
Imam's representative in political affairs. They argue
that the authority of Islamic jurisprudents is limited
primarily to religious matters and that all Islamic
jurisprudents, not just one, are deputies of the Imam.
Hojatieh members are committed to a thorough
Islamization of Iranian society.
they have criticized Khomeini
for not going far enough in implementing Koranic
law. The society's image of religious fanaticism has
led to a popular joke according to which the Hojatieh
tried to pass legislation forbidding non-Muslims from
going outside when it rains to prevent the water-
which Muslims would later use for drinking and
bathing-from being contaminated. Hojatieh
members, nevertheless, oppose the Khomeini regime's
use of gangs of "moral police" to roam the streets
punishing those whose dress or conduct is deemed
improper. They believe that education and Islamic
courts are the proper instruments for instilling Islamic
principles.
The society opposes efforts by radicals to centralize
government control over the economy and redistribute
property. Hojatieh members believe proposals for the
nationalization of foreign trade and land reform, for
example, threaten the traditional social and economic
order of Iran and violate the Koranic injunction on
the sanctity of private property. The large bazaari
presence in Hojatieh ranks undoubtedly also has
influenced the society's opposition, since traditional
merchants stand to lose from the radicals' proposals.
Secret
NESA NESAR 85-018
16 August 1985
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Hojatieh members would pursue a very different
foreign policy from that of the current regime. They
oppose the continuation of the war with Iraq and the
export of the revolution through violence. They are
more anti-Communist than their radical opponents,
oppose any ties to Communist regimes, and urge the
destruction of all Iranian Communists to prevent a
contagion of atheism from infecting Muslims.
Hojatieh members believe Iran can deal with the
United States and Israel because both Christians and
Jews are "people of the book." They share the
radicals' concerns about the danger of contamination
by Western culture but argue that Iran can expand
economic ties to the West and acquire Western
technology without harming Iran's Islamic values.
Cabinet members with links to the society.
A Threat to the Regime?
Khomeini does not take lightly either the Hojatieh's
influence or its threat to the kind of regime he is
trying to establish. In a speech in July 1983,
Khomeini warned the Hojatieh by saying that those
who wished to hasten the coming of the 12th Imam
should either join the mainstream of the revolution or
have their hands broken. The leader of the Hojatieh,
the reclusive cleric Sheikh Halabi, publicly
announced that the society was suspending its
activities in response to Khomeini's criticism.
Khomeini's supporters continued to denounce the
society publicly, however, and in August Prime
Minister Musavi asked for the resignations of two
policies.
Despite Khomeini's proscription, the society resumed
overt organizational activities last fall, according to a
respected Iranian journal. The society may have been
emboldened to reappear by the strong conservative
showing in last summer's election to the Consultative
Assembly. Khomeini's failure to attack the society
directly for its renewed activity is consistent with his
efforts over the last year to accommodate conservative
views to temper a growing backlash against radical
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The society is trying to take advantage of growing
popular unhappiness with the war to win broader
The society also has sought to align itself with Grand
Ayatollah Qomi, one of the most outspoken clerical
opponents. The Hojatieh selected Qomi as a source of
spiritual guidance shortly after resuming overt
activity last year, according to Iranian press reports.
The society's longstanding spiritual leader, Ayatollah
Khoi, though widely revered, has not criticized the
Khomeini regime during its six years in power.
Ayatollah Qomi, under house arrest since calling for
antiwar protests in 1983, has supported the Hojatieh's
efforts by publicly calling for the clergy to struggle
against the regime and condemning the war as un-
The existence of Hojatieh members or sympathizers
at the top level of the armed forces could become
particularly important after Khomeini's death. These
officers have little political influence now, but a
prolonged and possibly violent power struggle might
create an opportunity for the regular armed forces to
Islamic.
Outlook
The ultraconservatives are likely to have only limited
success in inspiring the kind of mass appeal that
brought Khomeini to power. Ayatollah Qomi has been
hampered by a reputation for being against
everything and in favor of nothing. The Hojatieh also
has not offered a positive political program to serve as
an alternative to Khomeini's vision of an Islamic
republic.
The Hojatieh's ties to conservatives in the parliament
and the bazaar and its success in placing members
throughout government, however, should allow the
society to exercise considerable indirect influence over
regime policies, especially after Khomeini's death. A
government dominated by the Hojatieh philosophy
would be receptive to expanded ties with the United
States and might be led by a pro-Western moderate
layman, such as former Prime Minister Bazargan.
fill a leadership vacuum.
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Lebanon:
War of the Camps
Although the Shia-Palestinian war of the camps in
the southern suburbs of Beirut during May and June
may have temporarily strengthened Amal chief Nabih
Barri's position among mainstream Shia groups, it
also sowed new seeds of conflict. Barri's militia failed
to seize control of the refugee camps, but it has since
been bolstered with Syrian military supplies. Amal
has evoked the hostility of Palestinians and other
Sunni groups and increased Druze and Christian
concern about Shia demands in the future.
Background
Palestine Liberation Organization (PLO) fighters
loyal to Yasir Arafat have been returning to the
Lebanese refugee camps since their forced withdrawal
from Lebanon following the Israeli invasion of June
1982 in an effort to reestablish their political and
military infrastructure. This move is opposed by the
Shia Amal and Palestinian radicals, who fear that
Arafat forces will return to Shia-dominated southern
Lebanon. Amal used the buildup of PLO fighters in
the camps as an excuse to attack Palestinian positions.
Arafat's move toward a joint peace initiative with
Jordan last February disregarded Syria's role in the
peace process and angered President Assad, who is
determined to ensure that any settlement of the
Palestinian problem takes into account Syrian
interests. Eradication of the pro-Arafat Palestinians
in Lebanon was given top priority by the Syrian
Amal, for its part, sees the Palestinians as a threat to
its control of South Lebanon and the southern suburbs
of Beirut, and it is concerned that an active PLO may
encourage increased Israeli interference in Lebanon.
Both Amal and Syria view the elimination of pro-
Arafat forces as an initial step in controlling
Lebanon's warring factions, ensuring for themselves
the dominant position, and bringing political and
economic stability. In the process, Amal is becoming
more dependent on Syrian support.
The Syrian Hand
Through selective and shifting support of Lebanese
factions, Syria is trying to maintain a balance of
weakness that does not threaten Syrian preeminence.
the camp war began as
Syria encouraged Barri's Amal to assault PLO units
loyal to Yasir Arafat in Burj Al-Barajinah refugee
camp. Assad's manipulation of Lebanese politics at
least partly depends on his control of the Palestinians
and the exclusion of Arafat and his loyalists.
On 17 June, a shaky cease-fire was worked out in
Damascus calling for the disengagement of all forces
around the camps. A security force, consisting of
members from various factions within Lebanon, was
assigned security at the camps. The cease-fire
agreement was a classic Lebanese compromise that
was deliberately vaguely drafted so that both sides
could declare it unworkable when they decided to
renew fighting.
On 22 June, officials of the Syrian-created Palestinian
National Salvation Front (PNSF) met in Damascus to
discuss plans for providing relief to the camps and for
a possible move against fighters loyal to Yasir Arafat
still in the camps. The PNSF expressed concern that
Fatah would use the cease-fire to rebuild its position
within the camps. the
PNSF suspects that some Amal members may decide
to cooperate with pro-Arafat Palestinians to reduce
PNSF influence among camp residents.
Syria paid a price for the camp war in its relations
with its Palestinian allies and other Arab states.
There has been a growing regional consensus that
Syria did not do enough to halt the fighting in the
camps. The Syrians persistently rejected an
international or Arab League role in ending the
fighting, maintaining that this was "a Lebanese
internal matter."
Fatah's Goals
Though unable to prevail militarily against Amal, the
Palestinians succeeded in forcing Barri into a
stalemate. Confronted by superior firepower,
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NESA NESAR 85-018
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Palestinian fighters denied Amal total victory and
sought to improve their position in future
negotiations. The focus has now shifted south to Sidon
as Arafat supporters arm and rebuild in anticipation
of new Shia attacks.
Arafat's objectives have been to return as many of his
fighters as possible to Lebanon, particularly to the
south, and to strengthen Fatah's ability to resist
efforts by Syria to manipulate the Palestinian
Unruly Proxies
Syria knows well from experience the unpredictability
of its Lebanese and Palestinian surrogates. The
Syrian-supported Abu Musa Palestinian faction
refused to remain neutral as reports of attacks on
Palestinians came from the camps. Abu Musa forces
began shelling Amal neighborhoods of West Beirut
from their positions in the Druze-controlled Shuf
mountains. The Druze Progressive Socialist Party
(PSP), while proclaiming its loyalty to Damascus and
its alliance with Amal, collaborated with the
Palestinians. During these events, PSP leader Walid
Jumblatt faithfully repeated the Syrian line for a
solution in Lebanon, reflecting Syrian pressures on
him. He lauded the "traditional" Syrian-Shia-Druze
alliance against the "forces of Zionism" in the region
and against separatism within Lebanon.
As the situation deteriorated, Lebanese leaders called
for the return of Syrian troops to separate the warring
factions. In retrospect, these appeals by Jumblatt and
others appeared primarily to be gestures designed to
gain favor with Damascus. They also demonstrate the
tendency of Lebanese leaders to look to a foreign
power, most recently Syria, to solve their problems.
PSP/Amal Clashes
On 10 June, while Druze leaders continued to give
lipservice to the PSP/Amal alliance,. Syrian-backed
PSP fighters clashed with Amal forces near Beirut.
These confrontations may be a precursor of future
battles between the two militias. The Druze have
extended their control from the Shuf mountains, their
traditional homeland, to the coastal strip south of
Khaldah. The Shias view this area as a vital corridor
connecting the Shia population in Beirut's southern
suburbs with the major Shia population centers in
South Lebanon. Control of the area between the
mountains and the sea is considered vital by both
Druze and Shias.
The Druze, with only about 7 percent of Lebanon's
population, see themselves unlikely to prevail against
Shia designs without external support and strategic
internal alliances. Khaldah could become a vital link
have been able to control the flow of arms into
Lebanon, but now the Soviets and others can supply
the PSP directly through Khaldah. The PSP can then
resupply the Palestinians, easily circumventing Syrian
controls.
Outlook
Despite the recent cease-fire agreement, the Shia-
Palestinian struggle has not been resolved. The
potential for armed confrontation has risen in the
south, where Shia-Palestinian fighting may erupt in
Sidon. Syria is seeking to avoid another inter-Muslim
conflict such as those that have diluted Syria's
previous efforts to eliminate Arafat forces. To do this,
Assad has sponsored a so-called National Unity Front
made up of the major Lebanese factions coupled with
Syrian military muscle and leadership to ensure
cooperation.
Assad's apparent desire to eliminate Arafat from
Palestinian politics probably will dominate his actions
in Lebanon in the near term. Syria is likely to become
a target for Palestinian terrorism in retaliation for
these acts.
In its attempt to eliminate Fatah, Syria demonstrated
its willingness to sacrifice the interests of its own
Palestinian proxy, the PNSF, to back the Amal
movement. These actions will haunt Syrian-
Palestinian relations for years to come.
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The Shias are striving for the preeminent position in
Lebanon, and the Syrians believe that, with time,
Amal will be forced into the Syrian camp. The key,
Assad believes, is the elimination of pro-Arafat forces,
the initial hurdle in molding a more stable pro-Syrian
Lebanon.
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Sudan: A New Role for
the Communist Party
The Sudanese Communist Party (SCP) has flourished
in the open political environment since President
Nimeiri's ouster. The Communists continue to
function as a secret organization, recruiting among
governmental, military, and political organs, in
addition to operating as a legal political party.
Although the Communists have no hope for a strong
showing in elections scheduled for next April, they
will use their political sophistication during the
current political crisis to enhance the party's support
and will probably throw their weight behind the
victors to ensure themselves a voice in the resulting
government. At the same time, the party will continue
to undermine rival parties and infiltrate the military
to place itself in a position of influence in the event of
a leftist coup.
Background
The Sudanese Communist Party, led by a small group
of middle-class intellectuals, was probably the largest
and best organized in Africa and the, Middle East in
the 1960s. In the first few months after Nimeiri came
to power in 1969, the party was given considerable
influence over governmental programs and had strong
support in Sudan's universities and trade unions.
Once Nimeiri crushed conservative opposition groups,
he moved against the Communist Party, which
threatened his control over the Revolutionary
Command Council. In response, the Communists
staged a coup in July 1971 but held power for only
three days before Nimeiri regained the upper hand.
Before the coup was defeated, the USSR and its allies
recognized the group-a gesture that embittered
Nimeiri toward the Soviets. The party was then
forced underground, and its leading members were
periodically arrested and executed. By 1982 the
Communist threat to Nimeiri appeared minimal.
Although the extent of the Communists' role in the
general strikes that led to Nimeiri's overthrow last
April remains unclear, party members took advantage
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of the upheaval to organize demonstrations and
promote the Communist line.
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Organization and Leadership
Sudanese Communist Party organization is similar to
that of other Communist parties, consisting of a
Politburo, a Secretariat, and a Central Committee.
Although the Sudanese party follows a Marxist line, it
is primarily a nationalist party. Before the coup, party
membership was estimated at over 10,000 and
possibly was as high as 17,000. Since April this
number has increased.
The Communist Party began an intensive drive
immediately after the coup to increase its support and
to recruit new members among students and
professionals.
Secret
NESA NESAR 85-018
16 August 1985
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Muhammad Ibrahim Nujud
Muhammad Nujud, a lawyer by training, was elected
Secretary General of the Communist Party in 1971
and has served as one of its chief theoreticians.
Educated in Czechoslovakia and Bulgaria, Nujud
has been described in a Communist Party publication
as a highly efficient leader who knows how to adapt
party ideology to Sudanese culture. He has served
primarily in legal and propaganda capacities for the
Ali al-Tijani al-Tayyib Babikar
Al-Tijani al-Tayyib, according to Embassy sources,
may hold the real power in the Communist Party. In
1958 conflicts with then Secretary General Mahjub
precluded any future leadership ambitions. Al-
Tayyib, 59, has since worked within the party and
has slowly become a threat to Nujud's leadership.
Generally labeled a leading party member, al- Tayyib
serves as the secretary of the Communist Party's
Khartoum Provincial Committee. Imprisoned by
Nimeiri for several years, he is viewed by some as
more militant and more nationalist than Nujud. Al-
Tayyib has served as editor of the party's newspaper
and several Communist journals.
The Communist Party has been trying to improve its
public image and promote its views through several
propaganda techniques: the party's daily newspaper,
al-Maidan, has reappeared on the newsstands;
Communist Secretary General Muhammad Ibrahim
Nujud has been interviewed in other publications; and
several rallies and demonstrations have been held.
The US Embassy in Khartoum reports that the
Communists have spread misinformation about the
United States, and members have disrupted rallies to
discredit rival parties. Nonetheless, the Communist
Party's efforts have met with little success.
The Communists take a Third World Marxist line on
the Sudanese economic situation, opposing increased
economic privatization. The party's platform includes
a program for the revitalization of the Sudanese
economy, to be used in campaigning for next year's
national elections. The Communists will probably
focus on economic issues during the campaign,
playing on the Sudanese mistrust of the private sector
and any austerity program imposed by the
International Monetary Fund.
Relations With the Government
The Communist Party has been able to function
openly since the legalization of political parties by the
new ruling Transitional Military Council. The open
political climate in Khartoum has given the
Communists freedom to criticize the government and
to demand a more equitable distribution of power
between the government, the Military Council,
political parties, and the trade unions
The party's major vehicle for influencing Sudanese
politics has been the Gathering, the umbrella
organization of the major political parties and trade
unions that serves as a lobby to both the Military and
Civilian Councils. The trade and professional unions
in the past have been the traditional base of support
for the Communists. When first established, the
Gathering was dominated by leftist professionals, and
six of seven members of the General Secretariat were
either Communists or sympathizers. The party has
lost much of its influence since two leading offices
have been allotted to moderate parties. The
Communists, however, believe that their power base
remains intact and that by improving their image and
relaxing the confrontational style of the Gathering,
they will be able to play a greater and more
constructive role in the transitional period.F--]
Relations With Other Parties
The Communists recognize that their public support
is not great enough to win a majority in next year's
elections, and, therefore, they have sought to
influence the elections through other means.
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The party's principal rival is the Islamic National
Front, Hassan El-Turabi's faction of the Muslim
Brotherhood, labeled by the Communists as a fascist
organization. Several clashes between Communist
Party supporters and Muslim Brothers have been
reported, primarily because of Communist opposition
to the continuation of Islamic law. This friction will
most likely continue until a decision to reverse Islamic
The Communists have publicly supported Col. John
Garang's Sudanese People's Liberation Movement
and see him as a necessary part of any solution to the
southern conflict.
Any step toward negotiation
viewed as a result of Communist action will not only
increase the party's support among the Sudanese
population, but may also help recruitment efforts in
the south. The Communists fear that continuation of
the southern conflict will make it difficult to hold
national elections and may provide an excuse for the
military to take full control of the government.
Foreign Support
Although the Sudanese Communist Party claims to
receive no direct financial support from Communist
states, members receive training in the Soviet Union
and other Communist countries. The Communist
Party supports Soviet policy but is nationalistic.
Despite claims of no foreign assistance, the party has
received aid from Libya, Ethiopia, and South Yemen
in the past and most likely continues to receive
support from these countries. The Communist Party
has demanded normalization of relations with these
countries as well as with all of Sudan's neighbors. The
Communists, however, have been accused by other
parties of conspiring with Libya to take over Sudan
and bring it under Soviet influence.
The Communist Party mistrusts and has campaigned
against favorable public opinion toward the United
States. In interviews in foreign media, the
Communists have resorted to misinformation on the
pre-positioning of US military bases in Sudan and an
agreement between Nimeiri and Vice President Bush
on the use of Sudan as a dumping ground for nuclear
waste. The party's platform maintains that steps
should be taken to prevent US interference in Sudan's
internal affairs.
The Communists see Egypt and Saudi Arabia as their
principal rivals on the international scene, accusing
both countries of interfering in Sudanese internal
affairs, and have as a stated objective the prevention
of future interference. The Communists have heavily
criticized participation of pro-Western Arab countries
in the Bright Star 85 joint exercises. The party
especially condemns Egypt for the alleged expansion
of its border into Sudanese territory and advocates
reconsideration of Sudan's 1982 Integration Charter
with Egypt, specifically abrogation of the Joint
Defense Agreement of 1976, which it incorporates.
Outlook
he Communists have two concurrent strategies to
(teal with the Sudanese political future-an overt side
(the party operation) and a covert one. The party
leadership is both shrewd and realistic; Communist
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tactics address their role and participation in national
elections as well as the possibility of a coup
sympathetic to their organization.
The Communists' realistic view of their influence and
potential support, along with their skill at working
with other parties, will help keep the party within the
structure of almost any government that is likely to
take shape after the elections. The Communists are
using their influence in the Gathering to exert
pressure on the Cabinet and Military Council in the
interim period. They are openly supporting national
elections next April to give the party a more moderate
image. The party will also attempt to help solve the
southern conflict, reorganize the Gathering, and try to
establish coalitions with other parties. These efforts
will help allay the Sudanese mistrust of Communists
and may allow them to play a greater role in a future
civilian government.
The Communists, at the same time, are preparing to
take advantage of the political fluidity in Khartoum
and look for an opportunity to lead a coup. If the
Military Council fails to address the grievances of
younger military officers, the Communists may
attempt to use these disgruntled officers as a means to
overthrow the Military Council and guarantee a role
in the resulting government. In the event of
suspension of the proposed national elections and the
prospect of a return to full military rule, we believe
that the Communists would probably revert to being
an underground organization, possibly using armed
tactics as well as continuing its efforts to infiltrate the
military to foment dissent leading to an eventual coup.
Finally, even if civilian rule resumes as planned, the
Communists will probably continue covert efforts to
increase their power by discrediting other parties and
stirring up dissent in the labor force.
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Corruption in Oman:
The Seeds of
Disenchantment
Corruption is not a serious political problem for
Sultan Qaboos, but the issue has become a source of
discontent for young Omani nationalists. The
members of the nationalist group within the
government use the corruption issue to build support
for their reform agenda and to jockey for political
advantage. If the Omani economy continues to decline
and the Sultan does not curtail the excesses of long-
favored advisers, the nationalists could form the
nucleus around which opposition to Qaboos could
crystallize.
How Big Is the Problem?
Corruption in Oman is not on the same scale or as
prevalent as in some Arab states. Nevertheless, senior
officials are major shareholders in virtually every
large construction or trading company in the country
and use their access to inside information for their
own profit. Middle-level Omanis
regard the dominance of senior officials in
businesses that profit from the government as unfair,
primarily because they want more of the action for
themselves. The young nationalists, however, view the
involvement of senior officials in such activities as an
intolerable conflict of official and private interests.
Holding government office while running a private
business is not perceived as corrupt in Oman.
Qaboos believes private
enterprise would divert man's most capable citizens
,from public service, so he permits government
employees to have business interests while holding
office.
The use by officials of inside information to gain
business for their private firms is officially
discouraged but not prohibited. Omani law requires
foreign firms to have an Omani company as a local
agent, and government officials have eagerly taken
advantage of this statute. Nevertheless, officials are
considered corrupt-especially by the nationalists-
if their firms provide equipment or services to their
own ministries, particularly if a contract is awarded
outside the legal bidding process. Those involved in
such conflicts of interest are disciplined only if their
actions are flagrant and embarrass the Sultan.
Excess profitmaking-in Omani terms this means
more than a 15-percent commission-from business
with the government is perceived to be more serious.
Insider deals that bilk the government are the most
We judge that the young nationalists-many of whom
have benefited from Qaboos's generosity-are
tolerant of minor corruption, such as petty bribery of
minor officials and small-scale conflicts of interest.
This group is primarily concerned that corruption
among those closest to Qaboos is too blatant and will
undermine the social progress Oman has made since
1970. The most effective charge the young
nationalists use against the Muscat Mafia-a small
circle of British and Omani advisers to Qaboos-is
that corrupt officials have acted with little concern for
Oman's national interests.
A handful of senior Omani officials who enriched
themselves through their personal relationships with
Qaboos are the targets of the young nationalists.
egregious, and hence, politically sensitive.
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We believe the young nationalists' aim is to reduce
corruption, not to replace Qaboos. The group
concentrates on the need to convince Qaboos to
restrict the business dealings of government officials.
Halfhearted Anticorruption Measures
Qaboos has taken only halfhearted measures to
reduce corruption. A 1974 law forbade officials from
using their government positions for personal gain,
but it was not vigorously enforced. In 1982 Qaboos
issued a vaguely worded royal decree that, like the
1974 conflict of interest law, called for an end to some
forms of corruption. Many Omani officials hoped that
the provisions of the 1982 decree against using
government positions to garner business for one's own
firms or to favor others would stem criticism of the
government. The decree probably caused some senior
Omanis to divest themselves of controversial
businesses, but its effect was short lived. The US
Embassy reported later that year that the conflict of
interest law had been partly suspended and indicated
in 1983 that new interpretations further diluted its
prohibitions.
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that this state of affairs could change should Qaboos
not support the nationalists' anticorruption initiative,
and they could ultimately decide that he should go.
consummated without an Omani middleman.
defense contracts will be on a government-to-
government basis and, wherever possible, will be
During the five-year plan that begins next year all
the lowest bidder,
1985 all government contracts will go through a
government tender board that will award business to
Qaboos has also taken steps to stop the flow of inside
information from the government to businesses owned
by senior officials. The Sultan decreed in 1984 that
expatriates who hold government positions will be
prohibited from working for Omani firms that do
business with their respective ministries for two years
after they leave the government. After 15 November
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Political Implications
Corruption is a long-term threat to Omani stability. If
the Omani economy continues to slow as a result of
the soft oil market, public discontent with the
government's handling of economic issues will
increase, including criticism of Qaboos for not
combating corruption more actively. Under these
conditions, we would expect the Muscat Mafia to be
increasingly blamed for questionable financial
dealings. We judge that the chances are about even
that Qaboos will continue to dispense largesse to
favored advisers and frustrate the young nationalists.
Although they probably are not a threat to the
Sultan's rule in the near term, the young nationalists
could become more deeply disenchanted with Qaboos
and form a nucleus around which internal opposition
to his rule crystallizes.
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