NEAR EAST AND SOUTH ASIA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00289R000200740001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 40
• Document Creation Date: December 22, 2016
• Document Release Date: June 21, 2011
• Sequence Number: 1
• Publication Date: January 31, 1986
• Content Type: REPORT

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Directorate of
Intelligence i
C~PYI
Nz T G1EVE U T
OR MAN 619
NESA NESAR 86-004
31 January 1986
Near East and
South Asia Review
440
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Near East and
South Asia Review
Articles Pakistan: Military Priorities for the Next US Aid Program~1
Pakistan wants almost $2 billion more in US military equipment for
the next multiyear aid program than in the fiscal year 1982-87
program, justifying this on the grounds of the continued threat from
India and Soviet forces in Afghanistan as well as the effects of
inflation. The Army would get the bulk of the funds
Najibullah: An Heir Apparent? 7
The Soviets appear to be grooming former intelligence chief
Najibullah to succeed President Babrak Karmal, but his elevation
would reinforce the regime's image as a Soviet-controlled police
state and might lead to the collapse of efforts to negotiate a
settlement of the Afghan question.
Iraq: Prospects for the Next Five-Year Plan 11
Economic development in Iraq will remain slow during the 1986-90
Five-Year Plan as long as the war with Iran and the sluggish world
oil market continue. Should world oil prices fall dramatically or the
war intensify, Iraq would reduce its development efforts further to
avoid unpopular cuts in consumer imports.
Iraq's Involvement in International Terrorism in 1985 15
Iraq limited its involvement in international terrorism in 1985,
sponsoring activity almost exclusively against Syria and Libya. In
1986 Baghdad will continue to encourage surrogate groups to target
Syrian and Libyan interests and may also support PLO attacks
against Israel.
Secret
NESA NESAR 86-004
31 January 1986
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Libya: Qadhafi's Objectives and Tactics in Chad
The level, pace, and timing of Libyan military activities in Chad will
be determined by Qadhafi's assessment of possible French and US
reactions and other foreign policy priorities, and his current crisis
with Washington probably will delay-but not deter-his pursuit of
a more aggressive military posture.
Libya: Impact of Economic Sanctions on the Civil Air Fleet
US economic sanctions against Libya have reduced Libya's access
to new aircraft and limited purchase of required spare parts and
maintenance, forcing Libyan leader Qadhafi to conduct a worldwide
search for alternative sources, with checkered results.
Tunisia: Politization of the Military
Tunisian soldiers are increasingly concerned about political issues
and are becoming more interested in involving themselves in
domestic politics as a result of financial stringencies, high-level
personnel changes, and foreign and domestic political developments.
Continued economic and political deterioration will breed further
discontent.
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Israel-Jordan: The Plight of the East Jerusalem
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The current financial plight of the East Jerusalem Electric
Company is the latest example of the difficulties faced by Arab
firms operating in the Israeli-occupied West Bank, and any
resolution of the company's financial troubles must consider political
realities as well as economic efficiency. No resolution is likely soon.
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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Pakistan: Military Priorities
for the Next US Aid
Program
Pakistan wants almost $2 billion more in US military
equipment for the next multiyear aid program than in
the fiscal year 1982-87 ' program now coming to an
end. Islamabad will only grudgingly reduce its
request. Pakistan's main interest is acquiring armor
and artillery to maintain rough parity in equipment
with the Indian Army along the border. The
Pakistanis probably will be willing eventually to cut
back Air Force and Navy requests. Other potential
suppliers are unlikely to meet Pakistan's desires for
sophisticated equipment on acceptable financial
terms. Equipment parity with the Indian Army would
make a war more costly for New Delhi, but the
Indians would still have overall military superiority.
The Military's Aid Request
According to US officials, Pakistani military officials
were extremely disappointed when they were told
during talks last November that they could expect a
new military aid package along the lines of the
current program. The $3.5 billion that the military
requested for Pakistan's FY 1988-92 program already
had been reduced from figures discussed in
preliminary talks last April, but it is still more than
double the $1.6 billion in the FY 1982-87 program.
military officials
hope for an increase of at least $2 billion in the US
military aid package. The officials believe that
increased aid is justified because of the continued
threat from India and Soviet forces in Afghanistan as
well as the effects of inflation.
The officials also want an increase in US aid to
improve their fledgling defense industries. Pakistan's
Army would like US funds and technical assistance to
produce ammunition for its modern artillery and to
construct a facility in Pakistan to rebuild US tanks,
The military and the Finance Ministry apparently
had not coordinated their positions before the talks.
Finance Minister Mahbubul Haq asked only for a
$2.6 billion military aid program as part of an overall
$6.5 billion economic and military package. Haq told
US officials that his request was unpopular with the
military. He commented that most officers have little
understanding of Pakistan's financial constraints. The
Finance Minister said that the new civilian-led
government would find it difficult to hold down the
military's demands because of the military's
continuing role as the arbiter of Pakistani politics.
Top Priority to the Army
Although Pakistani military officials were unwilling
to list their priorities last November, top Army
officers told US officials in March 1985 that the
Army will receive the bulk of the funds in the next aid
program. The Army officers attributed this to an
effort to balance the current aid program in which
over two-thirds of the funds was earmarked for 40
F-16s for the Air Force.
We believe the Army's first priority is the
modernization of its aging tank force. Pakistan has
about 750 operational Chinese-built Type-59 tanks,
about 200 US-built M-48A5 tanks, and about 150
US-built M-47 tanks, according to US officials.
Secret
NESA NESAR 86-004
31 January 1986
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MILITARY ASSISTANCE TO PAKISTAN
FISCAL YEARS 1955-1987b
1975 1980 1985 1990
(a) Military asststanos Includes
FMS financing asslsfancs.
MAP proofs, and IMET.
(b) 1955-1 88 actual, 1987 proposed
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Where Will the Cuts Come?
We doubt that Pakistan will significantly reduce its
requests for armor and artillery. Pakistani Army
officers have told US officials that they need new
tanks and artillery to cope with Indian armor
concentrations. There may be other considerations.
Last year a Pakistani Army officer told a US
counterpart that Islamabad wants additional tanks to
placate tank personnel to reduce the likelihood of a
coup attempt.
The Army, however, will eventually be forced to drop
most of its requests for advanced weapons. US
officials have told Islamabad that a number of the
systems on the Pakistani list are nonstarters because
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of their sensitive technology and because they have
not been fully integrated into US forces.
Islamabad will eventually make additional cuts in aid
requests for the Air Force, in our view. Air Force
officials told US officials in 1985 that they will
probably have to decide between more F-16s or
upgrading, with US assistance, the 200 Chinese
in a Chinese aircraft.
F-7s-Beijing's version of the Soviet MIG-21-that it
intends to purchase in the near future. Even a limited
upgrading program, however, may cost as much as
several hundred million dollars. Islamabad may be
unable to find a US company to participate in the
program because of low profit margins and questions
about the technical feasibility of putting a US engine
Although Pakistani officials submitted extensive arms
requests for the Navy, they will probably reduce their
proposed purchases because top military officials
consider the Navy to be the least important of the
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What If Pakistan Does Not Get
the Arms It Wants?
A new US aid program for FY 1988-92 similar to the
current program would allow the Pakistani Army to
maintain a rough parity in equipment with the Indian
Army along the Pakistani-Indian border. Both sides
have about an equal number of tanks, mechanized
vehicles, and artillery of comparable quality along the
border,
Islamabad, however, needs new Army equipment to
maintain this balance because the Indian Army is
gradually assembling three new Army divisions and
Such an aid program, however, would cause the
Pakistani Air Force and Navy to fall further behind
their Indian counterparts.
is acquiring
Mirage 2000s, Soviet MIG-27s, and perhaps
MIG-29s to augment its already substantial inventory
of MIG-21s, MIG-23s, and British Jaguars. These
advanced aircraft would outperform Pakistan's F-7s
that have not been upgraded and would probably
allow India to establish clear air superiority.
will gradually increase its 2.5-to-1 advantage in
warships and naval aircraft.
s close to purchasing a
second British aircraft carrier and will soon take
delivery of the first of six West German attack
submarines, six Soviet Kilo-class submarines, and two
Soviet Kashin-class destroyers. Pakistan's limited
naval purchases would allow the Indian Navy to
improve considerably its antisubmarine capabilities-
its highest priority-vis-a-vis Pakistan.
Little Impact on Afghan Border Defenses
Because the Pakistani military considers India to be a
greater threat than Soviet or Afghan forces,
Pakistan would make extensive improvements in its
defenses along the Afghan border even if it received
most of the requested equipment. Islamabad would
not make a major effort to establish a comprehensive
radar system or better roads and airfields along the
Afghan border. We believe that as long as Soviet and
Afghan air violations are limited to the border area
and do not approach Peshawar and Quetta-
Pakistan's two major western cities-most new
military equipment will continue to be deployed
primarily against India.
Outlook
The Pakistani military will probably grudgingly
accept a US aid package along the lines of the $1.6
billion program for FY 1982-87 because it has few
alternatives. Other potential sources-China and
we do not believe that
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Western Europe-are either unwilling or unable to
provide sophisticated equipment at acceptable
financing and prices
only two major purchases from West European
countries in recent years-50 to 100 Swedish RBS-70
ground-to-air missiles and less than 30 French
Exocets, Other
negotiations have foundered because Pakistan could
not afford the credit terms.
Nonetheless, Pakistani military officials will drag
their feet until US officials present what the
Pakistanis perceive as the best offer. Even then, the
military probably will try to arrogate to itself more
than half of any aid program or claim that spending
on defense industries, such as a tank rebuilding
complex, should be considered economic aid.
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Najibullah:
An Heir Apparent?
The Soviets appear to be grooming former intelligence
chief Najibullah to succeed President Babrak
Karmal. Najibullah would bring vigor and
decisiveness to the Afghan regime's leadership, but,
unless handled carefully, his elevation could mean
more headaches for Moscow. Najibullah's further
advancement, moreover, would imply that Moscow
placed little faith in the prospects for a negotiated
solution to the Afghan question.
New Opportunities
Najibullah's appointment in November as a secretary
of the People's Democratic Party of Afghanistan's
Central Committee appears designed to give him a
much broader role in the regime and to expand his
already considerable power. Diplomatic sources of the
US Embassy in Kabul report that he will oversee the
Ministries of Defense and Interior as well as the
Afghan intelligence service, KHAD-giving him the
chance to consolidate control of all of the regime's
security forces.
In addition, Najibullah's new position should give him
broader experience in party affairs and increase his
visibility, already considerable for a secret police
head. Moscow may see such experience as essential in
preparing to assume the top post in the regime.
similarity between Najibullah's rise and Yuri
Andropov's movement from KGB chief to party
secretary to General Secretary. (Babrak is currently
party General Secretary as well as President.)
The Man From KHAD
Najibullah brings numerous professional, party, and
personal assets to his position. As chief of KHAD
after the Soviet invasion, Najibullah presided over the
growth of the secret police into a powerful and feared
organization, which has at times even overshadowed
the party. He also built a personal reputation for
An Ahmadzai Pashtun ... probably born in Kabul
... graduated Kabul's Habibia High School in 1964
... longtime medical student at Kabul University ...
uses title "Doctor, " but not known if he graduated
... known for running spies and informers as a 25X1
student ... imprisoned briefly in 1970 for leading
demonstrations against visit by US Vice President
Agnew ... briefly in military, civil service ... briefly
Deputy Minister of Interior after April 1978 coup ...
exiled as Ambassador to Iran by Khalqis ... accused
of plotting to kill Khalqi leader Taraki ... fled to 25X1
Eastern Europe, joining Babrak and other Parchamis 25X1
... may have received intelligence training there ...
organized KHAD in wake of 1979 Soviet invasion ...
elected full Politburo member June 1981 ... holds
rank of lieutenant general.
speaks Urdu, some Russian, English, French,
German ... married, at least one child ... about 38.
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NESA NESAR 86-004
31 January 1986
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He moved trusted members of his Parchami wing of
the party into key positions and, when necessary,
ignored the formal chain of command to bypass
members of the rival Khalqi faction.
Najibullah adroitly balanced his bid for domestic
power with acquiescence to Soviet control of his
organization.
he met daily with KGB advisers and
major decisions in KHAD.
___Najibullah has traveled frequently
to the USSR for consultations. A fervent Communist,
he has impressed those around him as fanatically pro-
Soviet in outlook.
Najibullah, while no longer formally in charge of
KHAD, should have little difficulty maintaining the
power base he has built there. His successor, Lt. Gen.
Ghulam Faruq Yaqubi, has been a key lieutenant of
Najibullah since 1980 as well as his friend and
confidantd while
Yaqubi administers day-to-day operations, Najibullah
is involved in all major decisions.
Parchamis and Other Strangers
Links to others in the party hierarchy could ease
Najibullah's rise to power. As an early party
activist-he was a student organizer for Babrak
Karmal in the late 1960s-Najibullah has
longstanding ties to most high-ranking members of
the Parchami faction. His relations with Babrak,
while not always smooth, have traditionally been
Najibullah's links to other Parchami luminaries also
go well back in the party's turbulent history. Along
with Nur Ahmad Nur, Anahita Ratebzad, Mahmud
Baryalai, and Babrak Karmal, Najibullah was sent
into ambassadorial exile by the Khalqis in 1978.
As the regime's chief
emissary to Pashtun tribal leaders, Najibullah has
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also worked closely with Solayman Laeq, the Minister
Najibullah's impressive personality should also assist
hard worker who often sleeps in his office at night,1
Problems Ahead?
Despite his many assets, Najibullah will have to
overcome his reputation as violently anti-Khalqi to
become the successful, effective leader the Soviets
apparently want. as of
1983, Najibullah became angry even at the mention
of the Khalqi faction and refused to greet Khalqis at
Outlook
The Soviets appear to be grooming Najibullah for
Party leadership, probably because they deem him
most capable of molding Afghan security forces and
the Party into a more effective, cohesive unit. The
Soviets probably hope such a new, improved regime
would prove capable of shouldering a greater share of
what they expect to be a long, grinding struggle-
permitting, in effect, an "Afghanization" of the war.
Najibullah will probably be given a long period-
possibly from six months to two years-to grow into
his new Secretariat position, a time during which he
will presumably work to bring the Interior and
Defense Ministers under his control and improve the
overall efficiency and performance of the armed
forces. If he succeeds, the Soviets may gradually
expand his sphere of authority, possibly making him
party General Secretary while retaining Babrak as
figurehead President. Finally, if the Soviets believe he
is fully prepared, they could allow him to replace
Babrak. The further elevation of Yaqubi or other
KHAD proteges of Najibullah to high party and
government posts would be important indicators of
We believe that a Soviet diplomat's assurance to the
US Embassy in Kabul that Najibullah enjoys
widespread support among Khalqis contains a large
dose of wishful thinking. In his new post, Najibullah
is expected to supervise both the Interior Ministry,
which Gulabzoi heads and has maintained as a Khalqi
stronghold, and the heavily Khalqi armed forces. To
invigorate the security forces, Najibullah will have to
win at least the acquiescence of many rank-and-file
Khalqis-something his past behavior will make
difficult.
In molding the party into a more effective governing
body, Najibullah may also encounter resistance from
the party's old guard. The Politburo is hardly a
Kremlin-style gerontocracy, but seven of the 12 full
and candidate members are a full decade older than
the new secretary and may resent his rapid
advancement. Even the mutual loyalty between
Najibullah and Babrak may not stand the strains of
power.
Najibullah's progress.
The elevation of the former secret police head, in our
view, would reinforce the regime's image as a Soviet-
controlled, narrowly based police state. KHAD will
almost certainly continue to grow in power as its
longtime head advances in the regime. If Najibullah
is pushed into the top spot too quickly-perhaps in the
event of Babrak's death or his refusal to cooperate in
his gradual replacement-we would expect to see
more purges of Khalqis, further desertions and
disaffection in the military, and a regime that, while
perhaps more cohesive and vigorous, would be even
more narrowly based than the present one.
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In any event, a regime led by Najibullah would
almost certainly complicate Afghanistan's relations
with Pakistan and might even ensure the collapse of
diplomatic efforts to reach a solution to the war.
Efforts to destabilize Pakistan can also be expected to
continue with Najibullah's rise to power.
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Iraq: Prospects for the
Next Five-Year Plan
Economic development in Iraq will remain slow
during the 1986-90 Five-Year Plan as long as the war
with Iran and the sluggish world oil market continue.
Press reports indicate that Baghdad is preparing two
versions of its development plan for release this
spring. The alternatives depend on when the war ends.
Under either plan, we expect Iraq will give priority to
production rather than social services-for example,
oil pipeline expansion and natural gas development,
electrical power generation, agriculture, and
expansion of nonoil industry. Should world oil prices
fall dramatically or the war intensify, Iraq would
reduce its development efforts further to avoid
unpopular cuts in consumer imports. Iraq's desire to
use advanced technology to accelerate growth will
foster expanded economic ties to the United States
and other Western countries. The Soviet stake in Iraqi
development is likely to remain in oil and electrical
Table 1
Iraq: Composition of GDP
power development.
Economic Development Since 1970
Iraq's tightly controlled economic development has
been aimed at industrialization and diversification
away from oil. Objectives common to the three five-
year plans since 1971 have been reducing dependence
on oil, developing alternative exports, increasing local
manufacture of consumer goods, increasing
agricultural production, and improving infrastructure
and social services.
Despite its stated goals, Iraq failed during the two
five-year plans in the 1970s to reduce its dependence
on oil or to significantly diversify the economy. In
1980 oil accounted for 99 percent of merchandise
exports, up from 94 percent in 1971. Despite heavy
industry growth-iron, steel, petrochemicals, and
aluminum-the rise of oil prices and oil industry
development caused manufacturing as a share of
GDP to decrease from 14 percent in 1970 to 6 percent
in 1980. Similarly, despite development allocations of
close to $9 billion, agriculture's share of GDP fell
from about 17 percent in 1970 to 7 percent in 1980.
Mining (including 30.9 67.0 54.9
petroleum)
Iraq's ambitious economic development plan for 1981-
85, based on the runup in oil prices in the late 1970s,
was slowed by the war with Iran. With foreign
exchange reserves of nearly $35 billion at the start of
the plan, Iraq decided to plunge ahead with new
industrial and infrastructure projects despite the war.
As the war continued, however, and as annual oil
revenues slumped from $25 billion in 1980 to $9.5
billion in 1982, the government switched to tightly
controlled spending. The five-year plan was shifted to
a year-by-year basis, projects under construction were
slowed, and many planned projects were canceled or
postponed. Partly as a result, imports fell from $22
billion in 1982 to $11 billion in 1983. Since 1983,
more careful budgeting, continued large inflows of aid
from Arab allies, and foreign debt reschedulings have
enabled Iraq to continue this slower pace of economic
development. Priorities during the past two years
include:
? War-related military projects such as ammunition
and small-arms plants.
? Foreign-exchange-earning projects such as the
Saudi-Iraqi oil pipeline.
? Projects financed by supplier credits such as the
Baiji fertilizer plant.
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Iraqi military production consists mostly of small-
arms and ammunition plants, while larger military
equipment and aircraft are imported, primarily from
the Soviet Union and France. Although Baghdad
started an ambitious military industries program in
the late 1970s, most projects have been delayed since
the beginning of the war because of financial
difficulties. Over the longer term, Baghdad hopes to
develop a comprehensive arms industry to reduce its
dependence on foreign suppliers. Iraqi efforts,
however, will be hindered not only by foreign
exchange shortages but also by a shortage of skilled
workers.
Development During the 1986-90 Economic Plan
Press and Embassy reporting indicate the Iraqi
Government is acutely aware that the course of
economic development during the next five years will
depend on the war with Iran. The new plan has not
been released, but press reports suggest that the
government has prepared two development plans. One
assumes that the war will continue indefinitely, while
the other assumes it will end within two years, after
which development can be accelerated. We suspect
that neither plan takes into account the possibility of
an increase in the level of fighting nor a large fall in
world oil prices. Press and Embassy reports indicate
that the priorities in both plans are:
? Further development of oil and gas reserves, with
special emphasis on pipeline expansion and greater
domestic use of natural gas.
? Expansion of power generation and distribution.
? Increasing agricultural output and productivity,
particularly of grain, poultry, and dairy products.
? Further development of Iraq's industrial base,
particularly in food processing, textiles, and
building materials.
Oil Industry Development-Top Priority
Petroleum remains Iraq's lifeblood despite the stated
objective of successive development plans to diversify
the country's economic base. Petroleum accounts for
85 percent of government revenues, and this
preeminent role assures its priority during the next
five years. According to the US Embassy in Baghdad,
the plan will call for 60 new petroleum projects.
Arabia from 500,000 b/d to 1.6 million b/d.
Top priority will go to pipeline expansions through
Turkey and Saudi Arabia. The second phase of the
Iraq-Turkey pipeline will consist of a 500,000-b/d
crude oil pipeline parallel to the existing 1-million-b/d
line. The 640-km pipeline is expected to be completed
sometime in 1987 at an estimated cost of $500
million. Phase two of the Saudi-Iraqi pipeline-
estimated to cost $1.5 billion-will consist of a 750-
km pipeline from pumping station three on the Saudi
Petroline to Yanbu, as many as 12 new pumping
stations, and a separate Iraqi offshore loading
terminal at Yanbu on the Red Sea. The project would
raise Iraq's capability to export oil through Saudi
Greater utilization of natural gas-85 percent is now
flared-is both an energy and industrialization goal.
New electrical generating plants will be gas fired, and
Baghdad plans to develop a domestic distribution
system to provide gas to industrial users. The first
major natural gas project scheduled is a gas gathering
and distribution system. Preliminary design work has
been prepared by Soviet engineers, and the project is
scheduled to take two years to build.
Power Generation and Distribution-
Fulfilling Previous Goals
During the 1986-90 plan, Iraq will continue the
massive power generation expansion program that
was begun in 1981 but was delayed by the war and
financial problems. The program includes several
thermal power stations, further development of
hydroelectric power, and expansion of Iraq's
transmission system. The centerpiece of the program
is the construction of several 1,200-MW thermal
power stations. Increased generating capacity during
the last five-year plan barely kept pace with demand.
In addition, smaller stations are scheduled to be built,
including one near the Turkish border. to export
power. Although Iraq is seeking bids to provide
generating facilities at the proposed $1 billion Bekme
Dam, we suspect construction of this costly project
will be delayed until the war ends.
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Agriculture: Aiming To Reduce Imports
Iraq's agricultural goal is to reduce food imports. In
1984, Iraq's food import bill totaled $3.1 billion,
about 25 percent of imports. The government is
pushing for output increases in grain-primarily
wheat, barley, and rice-as well as poultry, eggs, and
dairy products. Iraq will continue work on the 22,000-
hectare Dujaila agroindustrial complex, where
capital-intensive agricultural techniques are being
developed. Originally envisaged to provide nearly a
quarter of the country's crop and animal products
output, shortfalls have been blamed on the war and
financial difficulties. Other projects are likely to
include land reclamation, alleviating soil salinity
problems, and dam building to provide water for
irrigation.
To increase agricultural productivity, we believe Iraq
will offer increased incentives for the private sector.
According to press reports, marketing rules already
have been changed to allow farmers to bypass the
State Organization for Agricultural Marketing and
sell selected crops and products directly to public
wholesale markets or licensed private wholesale shops.
This new system has eased supply bottlenecks and is
likely to encourage local farmers to produce more.
Low-interest loans by Iraq's Agricultural Cooperative
Bank have been successfully used to increase private
production of poultry-nearly 85 percent of Iraqi
poultry meat is produced by the private sector.
Baghdad probably will use similar policies to increase
private production of livestock, eggs, and dairy
products
Industrial Development-Import Substitution
Industrial projects that minimize foreign exchange
expenditures will have priority in the 1986-90
development plan because of Iraq's tight foreign
exchange situation. The Iraqis appear particularly
interested in industries that use locally available raw
materials, such as food processing, textiles, and
construction materials. Mixed-sector companies will
continue to play a role in industrial development.
Baghdad hopes to channel private capital into light
industry by increasing their participation. Heavy
industry development, such as fertilizer and cement
plants, is likely to remain under government control,
Table 2
Iraq: Leading Sources
of Nonmilitary Imports, 1984
A Primarily foodstuffs.
b Primarily agricultural goods.
however, because of Bath Party philosophy and the
need for large expenditures that exceed private
resources.
Prospects
We see no likelihood that Iraqi economic development
can accelerate in the early years of the next five-year
plan because of the war with Iran and weak oil prices.
If the intensity of the war with Iran persists and world
oil prices fall only slightly, Iraq is likely to pursue a
reduced development program, giving priority to
projects that receive supplier credits or have an
immediate foreign exchange payoff, such as oil export
pipelines. If the level of fighting increases or world oil
prices fall dramatically, Iraq will probably cancel or
delay most development projects to minimize cuts in
consumer goods imports that could lead to domestic
unrest.
If the Saudi and Turkish oil pipelines are completed
as scheduled in the next two to three years, this will
add about 1.5 million b/d to Iraq's oil export capacity.
Barring a large decline in oil prices that could offset
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Iraq Seeks Improved Technology
According to the US Embassy in Baghdad, raising
the level of scientific knowledge and technology in
Iraq is a major goal of the new five-year plan. These
efforts will be coordinated under the Scientific
Research Council (SRC), created in 1980 to establish
a scientific and technical base for industry,
agriculture, and engineering. The SRC oversees eight
research centers involved in petroleum, electronics
and computers, agriculture and water resources,
construction, biology, solar energy, space and
astronomy, and scientific documents.
According to the US Embassy in Baghdad, Iraq in
particular will be seeking to expand the use of
computers and related equipment. The government is
focusing on applications such as bar-code retail
systems, computer-aided design and manufacturing
systems, robotics, computerized process controls for
assembly plants, and computer-controlled production
systems for the Dujaila agroindustrial complex in
southeastern Iraq.
these increased exports, the additional revenues late in
the 1980s could enable Iraq to boost development
expenditures and increase the pace of economic
development in the 1990s.
Implications for the United States
Iraqi-US economic relations will continue to expand
during Iraq's five-year plan. According to press
reports, Baghdad is seeking to increase ties to US
firms to obtain US technology and has encouraged
several US firms to bid on planned development
projects. Iraq is particularly interested in acquiring
US computers, communications systems, medical
equipment, and oilfield equipment. According to the
US Embassy in Baghdad, Iraq believes closer
economic ties will strengthen relations with the
United States and help offset differences on political
issues such as US support for Israel.
Iraqi-Soviet economic cooperation probably will grow
slower than Iraqi-US ties during the 1986-90 plan.
This will stem in part from Iraqi dissatisfaction with
Soviet civilian technology. Nonetheless, the Soviet
Union will continue to be involved in Iraqi power
generation and oil development. According to press
reports, recent economic agreements with the USSR
involve projects worth nearly $1 billion in the coming
years. The Soviets also are likely to remain Iraq's
principal arms supplier.
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Iraq's Involvement
in International Terrorism
in 1985
Iraq limited its involvement in international terrorism
in 1985. Iraqi-sponsored terrorist activity last year
was targeted almost exclusively against Syria and
Libya to increase the cost to those states of their
support of Iran, dissident Iraqi Shias, and Kurdish
rebels. The evidence indicates that Iraq supported
pro-Arafat Palestinian attacks against Syria and
assisted Libyan dissidents. Although there have been
glimmers of a possible reconciliation between
Baghdad and the two radical Arab states, we believe
that Iraq is pessimistic about the chances for a
rapprochement and will continue to encourage
surrogate groups to target Syrian and Libyan
interests.
Baghdad may also support attacks by the Palestine
Liberation Organization (PLO) against Israel in the
coming months. Iraq significantly increased its
support of Yasir Arafat in 1985 to counterbalance
growing Syrian dominance of the Palestinian
movement. Toward the end of the year, Baghdad
allowed several hundred additional PLO fighters to
move to Iraq, but it probably is not eager to allow the
establishment of PLO political or military
headquarters on its territory. We believe Arafat will
continue to sanction operations inside Israel and the
West Bank. Baghdad may be drawn into providing at
least indirect support for these attacks. To protect its
relations with the United States, we believe Iraq will
limit its involvement in PLO operations against Israel
and probably will not countenance attacks outside
Israeli territory. Moreover, Baghdad almost certainly
will continue to withhold support from radical, non-
PLO Palestinian terrorist groups
Recent Activity
In 1985, Iraqi-backed terrorism focused almost
exclusively on Syrian and Libyan targets:
? Iraqi and PLO officials last summer discussed joint
operations against Syrian and Libyan Embassies
and other facilities abroad,
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Central Security apparatus opened three offices in
Baghdad and the leader of the apparatus was
planning attacks against Syria in coordination with
Iraqi officials. The operations were to be staged
from Iraq.
? According to Libyan and Iraqi press reports,
Baghdad increased its support of Libyan dissidents
after Baghdad broke relations with Tripoli last
June. Baghdad also allowed Libyan dissidents to
broadcast anti-Qadhafi radio programs from Iraq.
Other Iraqi-backed terrorist activity last year
included:
? The arrests in August of four Iraqi nationals in the
United Kingdom for attempting to bomb a
consignment of war materiel destined for Iran,
according to defense attache and press reports.
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? The granting of asylum in late October, despite
protests from the United States, to Palestine
Liberation Front leader Muhammad al-Zaydan
(Abu Abbas), the mastermind of the Achille Lauro
hijacking. Iraq rejected US requests to extradite
Abu Abbas to the United States.
Efforts To Stymie Radical Palestinian Groups
In the face of continued pressure from the United
States and moderate Arab states, Baghdad continued
in 1985 to prevent radical, non-PLO Palestinian
terrorist groups from operating out of Iraq:
? Iraq withheld support from the 15 May
Organization and inhibited the group's operations.
Two terrorists carrying explosives-laden suitcases,
however, were arrested in Rome in October after
arriving from Baghdad. The two claimed they
intended to attack US targets in Italy. Although
many details of this incident are unclear, we believe
the terrorists were members of 15 May. We do not
believe that the Iraqi leadership was aware of the
operation. It is possible that Iraqi security officials
facilitated the operation-without the approval of
their superiors-by allowing the terrorists to take
the explosives aboard the aircraft.
Arab states, according to the US Embassy in
Baghdad. Press reports indicate Iraqi officials met
with a Syrian delegation last October and a Libyan
delegation in November. Nonetheless, in our
judgment, Baghdad is pessimistic about the chances
for rapprochement with Damascus and Tripoli and
will continue to encourage surrogate groups-Libyan
dissidents, the PLO, and possibly the Muslim
Brotherhood-to attack Syrian and Libyan targets.
Iraq may also reluctantly support PLO attacks
against Israel in the near future. The Iraqis strongly
oppose Israel, but they recognize that their support of
terrorism against Israel will damage their relations
with the United States, whose technology and support
for an arms embargo against Iran is greatly valued by
Baghdad. Nonetheless, Baghdad believes increased
support of pro-Arafat Palestinian factions is necessary
to counter Syria's efforts to dominate the Palestinian
movement. We believe PLO terrorists will continue to
mount operations against Israeli targets, and Iraq
may be drawn into providing at least indirect support
for these attacks to bolster Arafat.
in Israel and the occupied territories
Some 2,000 PLO fighters now live and train in Iraq,
and, according to the US Embassy in Baghdad,
Arafat has been transferring additional units to Iraq
from North Yemen, Sudan, and Tunisia. In addition,
the US Embassy in Amman reported that, in mid-
October, the Jordanian Government asked some 35
members of Fatah's Western Sector apparatus to
leave Jordan; these operatives planned to move to
Baghdad. The Western Sector has been responsible
for planning and executing the bulk of Fatah's attacks
Arafat told the leaders of
Future Trends
In our judgment, Iraq will continue to use terrorism
primarily to undermine and isolate its Arab enemies,
Syria and Libya. Baghdad is eager to end Syrian and
Libyan military support for Tehran and for Kurdish
and Shia dissidents in Iraq. To this end, Iraq will
simultaneously seek reconciliation-with the radical
Kuwait and North Yemen that he planned to move
PLO headquarters to Baghdad from Tunisia,
although Iraqi officials told US diplomats in late
October that the PLO had not yet made such a
request.
Fatah operatives almost certainly will try to plan and
stage attacks in Israel and the occupied territories
from Iraq. Baghdad, however, will try to prevent the
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PLO from using Iraqi territory as a staging area for
such operations to limit the damage to its relations
with the United States and reduce the risk of Israeli
retaliation. Baghdad is also likely to discourage PLO
attacks conducted against Israeli targets outside
Israeli territory. The Iraqis are sympathetic to the
Palestinian cause, and Baghdad probably will directly
support such operations only if the position of Arafat's
moderate faction would otherwise erode. Moreover,
Iraq will continue to withhold support from radical
non-PLO groups like the 15 May Organization and
the PFLP-SC.
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Libya: Qadhafi's
Objectives and Tactics
in Chad
Libyan leader Qadhafi's current crisis with
Washington probably will delay, but not deter, his
pursuit of a more aggressive military posture in Chad.
The level, pace, and timing of Libyan military
activities will be determined by Qadhafi's assessment
of possible French and US reactions and other foreign
policy priorities. Competing demands for decisions
relating to Libya's support for subversion in other
regions have often forced Qadhafi to put Chad on the
back burner for lengthy periods. In any case, Qadhafi
is not likely to do anything to increase military
activity until he is reasonably confident that the
current confrontation with Washington is behind him.
Military Developments
Libyan efforts to rebuild its eroding military position
in Chad began in mid-1985 when Qadhafi began
reassessing his military options. He soon appointed
Col. Abd al-Hafiz Masud, one of his chief military
advisers, as Libyan commander in Chad. Masud
immediately initiated a program designed to repair
Libyan relations with Chadian dissident groups,
which had been strained by Tripoli's reluctance to
provide them with food, fuel, vehicles, and
ammunition. He also began strengthening Libya's
forces in the north, which had been plagued by poor
morale and logistic and maintenance difficulties.
Masud was replaced last October by Col. Ali
Sharif-the most experienced of Libya's Chad
commanders. Sharif's arrival, in our view, signaled
initial preparations for renewed Libyan-supported
completed at Ouadi Doum airfield, providing Tripoli
with an initial capability to send fighter aircraft deep
into southern Chad, including N'Djamena. Ouadi
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including armored vehicles an air defense missiles,
has been moved into northern Chad as recently as this
month.
Libyan Political Objectives
Qadhafi almost certainly regards a pro-Libyan
government in N'Djamena as a key to destabilizing
other moderate governments in Sub-Saharan Africa.
Libya is
working to create a network for subversion in
northern Nigeria, Cameroon, the Central African
Republic, and Niger. In addition, Qadhafi probably
believes a pro-Libyan government in N'Djamena
would ensure Libyan access to the uranium resources
of northern Chad. Foreign survey teams are
continuing to survey uranium resources in this region.
pose a security threat to southern Libya.
Heightened discontent inside Libya probably has
increased Qadhafi's concern that the United States,
France, or Algeria may try to use northern Chad as a
base for stirring up unrest among tribesmen in the
Libyan province bordering Chad-an area
traditionally resistant to government control. Qadhafi
apparently expressed concern over the possibility of
increased US involvement in Chad during his talks
with French President Mitterrand in Crete in
September 1984, according to press sources. Public
statements by Libyan Foreign Secretary Turayki at
about the same time indicated that Libya's reneging
on its troop withdrawal agreement with France was
motivated in part by its perception that a Libyan
withdrawal would open the door to Habre's recapture
of northern Chad-an event Turayki implied would
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"encirclement" by pro-US regimes.
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Qadhafi's satisfaction with the status of Libyan
influence in increasingly nonaligned Sudan has
prompted his heightened interest in subverting
N'Djamena.
probably is trying to undercut arguments by
nationalist Libyan officers that Qadhafi's ambitions
in Chad are unrelated to Libyan interests. On the
other hand, Qadhafi's public statements over the past
year repeatedly emphasize his belief-probably
stemming from his Bedouin upbringing-that control
over water resources is the key to domination in
various regions.
When Will Qadhafi Strike?
Early Libyan military action is not certain, despite the
continued strengthening of forces in Chad. In our
view, a more aggressive Libyan military posture will
only be initiated when Qadhafi becomes personally
engaged because he recognizes that any
miscalculation might prompt French military
retaliation. Competing demands for decisions
involving Libyan support for terrorism and subversion
in other regions, as well as Qadhafi's sense of political
opportunities or threats from foreign and domestic
enemies, might distract him for a lengthy period as it
has in the past
In our view, Qadhafi would speed up his timetable for
military action if he decided that Mitterrand's
preoccupation with French legislative elections next
March minimized the chances of a French military
response. The Libyan leader probably would consider
moving sooner if there were clear indications that
French conservatives-perhaps more inclined to
challenge Libya-were strengthening their prospects
for gaining power in Paris.
against Chadian Government positions. Such
incursions would be similar to last December's probe
at Koro Toro, which resulted in a brief skirmish with
government forces. Such attacks would be designed to
keep Habre off balance and stretch N'Djamena's
already limited forces. In our view, they also would be
intended to achieve quick, morale-raising victories
and help Qadhafi assess the effectiveness of his own
forces in Chad.
These limited encounters involving Libyan-backed
rebels provide Qadhafi with a barometer to measure
French intentions. He began testing French reactions
by ordering overflights of Chadian Government
positions and briefly deploying SU-22 fighter aircraft
to Ouadi Doum airfield last October. Paris responded
with a temporary augmentation of troops and aircraft
in the neighboring Central African Republic. Qadhafi
probably has drawn comfort from recent statements
by Mitterrand that France has no defense agreement
with Chad and is not the "policeman" of Africa.
A failure by Paris to immediately and decisively
signal its resolve probably would prompt additional
attacks, which could escalate in scope and intensity.
We believe that France would have to return forces to
Chad or conduct a limited airstrike on Libyans and
Chadian rebels to deter Qadhafi from continuing to
increase military pressure on Habre.
In the absence of French military intervention or a
strong response by Habre's forces, Tripoli might
become more open in its involvement in rebel attacks
south of the 16th parallel. We anticipate initially the
use of Libyan SF-260 light strike aircraft and as
many as two battalions of armor or artillery. The
taking of isolated Chadian Government positions or
seizure of territory might temporarily satisfy Qadhafi
if he perceives that Habre's political position had been
weakened enough to stimulate coup plotting against
him. We believe that Qadhafi might also consider
moves such as relocating the rebel "capital" from
Bardai in the Aouzou Strip to a captured Chadian
stronghold to underscore Habre's defeat.
Likely Course of Fighting
When Qadhafi gives the go-ahead, we believe that
military action will initially result in probing attacks
by mixed groups of Chadian rebels and Libyans
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A decision by Qadhafi to adopt a more aggressive
posture-including a march on N'Djamena-would
depend on his assessment of the French reaction.
Qadhafi almost certainly recognizes that the
vulnerability of Libyan forces to French attack would
make such an offensive extremely risky. At the same
time, he would have to weigh the impact of French
military action and even a limited defeat of his forces
on his already deteriorating domestic position.
If Qadhafi becomes convinced that the French will
not intervene, we believe the Libyan force in Chad
will signal its intentions before it undertakes such an
invasion. The force does not yet have the strength it
achieved during the final stages of its invasion in
1983, when the deployment of French troops to Chad
prompted a cease-fire. On the basis of the
preparations for the 1983 invasion, we believe that
Qadhafi is unlikely to launch a major offensive
without strengthening Libyan air defenses and
deploying fighter aircraft to northern Chad. He also
probably will augment Libya's approximately 20 tank
transporters in Chad with about 80 more. Warning
time for such an offensive would be significantly
reduced if Tripoli used deception methods similar to
those employed when it hid its forces from the French
in fall 1984.
Political Maneuvering Likely
Qadhafi at each stage of military activity will review
his diplomatic options. The strengthening of Libyan
forces in northern Chad has been accompanied by
political posturing. For example, Qadhafi's visits to
Senegal and Mali in late November and early
would seriously undercut Habre's authority and
international prestige and possibly prompt coup
plotting in N'Djamena.
In the event of a French attack on Libyan and rebel
positions, we believe Qadhafi will focus his diplomacy
on obtaining international condemnation of Paris and
regional acquiescence in a "peacekeeping" force
comprised mainly of Libyans. Such maneuvering
would be intended to legitimize the continued
presence of Libyan forces north of the 16th parallel
while making it difficult for Paris to justify additional
attacks. He might also retaliate by targeting French
personnel and facilities for terrorist attacks.
Implications for the United States
Qadhafi will be watching for indications of US
willingness to step in for the French in Chad if Libya
and the rebels defeat government forces. A US refusal
to intervene, in our judgment, would encourage
Qadhafi's aggressiveness by convincing him that
Washington is unwilling to counter Libyan
expansionism directly. A more assertive reaction from
Washington probably would prompt Qadhafi to slow
down his timetable for subversion in Chad. Qadhafi
will not abandon his attempts to install a pro-Libyan
government in N'Djamena, however, anticipating that
Washington and Paris will decide at some point that
the price of supporting Habre is unacceptably high.
December were accompanied by public
hints that he was receptive to a negotiated settlement
with Habre,
In our view, Qadhafi will periodically play his
diplomatic cards to try to exploit any reluctance by
Mitterrand to confront Libya militarily in Chad. We
believe Qadhafi hopes the French can be persuaded to
reduce their support for Habre in exchange for an
agreement by Tripoli to at least temporarily forgo
additional military action. In our judgment, Qadhafi
views backtracking by Paris on its support for Chad
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Libya: Impact
of Economic Sanctions
on the Civil Air Fleet
US economic sanctions against Libya have had some
impact on the operation of Tripoli's civil air fleet.
Although the financial cost to Libya of the US
embargo is not known, the sanctions have reduced
Libya's access to new aircraft and limited the
purchase of required spare parts and maintenance.
The sanctions have forced Qadhafi to conduct a
worldwide search for small amounts of essential
replacement parts and maintenance-with checkered
results.
The US embargo of Libya in March 1982 limits
Libya's access to spare parts for its fleet of Boeing
707, 727, and Lockheed C-130/L-100 aircraft. The
embargo prohibits Libyan purchase of new US
aircraft or of foreign aircraft with substantial US
content. The sanctions halted the delivery of eight
Lockheed C-130 transport aircraft from the United
States and 10 European-made Airbus aircraft with
substantial US content. The embargo also stopped the
direct sale to Libya of essential aircraft maintenance
parts-notably engines and electronics.
transports with the assistance of a West German
The C-130/L-100 Hercules has long been the
Libyans' favorite transport aircraft, and Tripoli has
gone to great lengths to try to circumvent US export
controls to obtain them. Until last May's delivery,
however, Qadhafi had succeeded in bringing in only
one aircraft.
Even with air-refueling equipment, Libyan crews
would need considerable training to perform the
precision flying required for in-flight refueling. Libya
may be using the additional spare parts that came
with the two new L-100s to put back into operation
some of the 11 C-130s and L-100s it already owns.
Successful Purchases of Aircraft
Nevertheless, Libya has managed to acquire three
new Netherlands-made aircraft, two Lockheed L-100
transports, and several used US-manufactured jets:
? In 1983, Libya purchased three used Boeing 707s
from a Luxembourg firm that had obtained the
aircraft from Air France. The sale was limited to
three aircraft because of US diplomatic pressure on
both France and Luxembourg.
? In 1984, the Libyans contracted for eight Dutch
Fokker F-28 passenger aircraft. The contract was
canceled after intensive US consultations with
Fokker and the Dutch Government. Three aircraft
had been delivered. The US content of F-28s is less
than 20 percent.
Aircraft Leases
Although the 1982 US sanctions require permission
for leasing US-manufactured aircraft to Libya,
Tripoli has leased US-made aircraft from at least two
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countries. Leasing allows Libya to augment its civil
fleet and to free Libyan-owned aircraft from
commercial tasks for more sensitive work:
? In 1983, Libyan Arab Airlines leased a Boeing 707
from Romania's Tarom Airlines. The aircraft was
hijacked to Malta in June 1983, exposing the lease.
US diplomatic contacts with Romania resulted in
the lease being canceled.
? Icelandic Eagle Air has periodically leased Boeing
707s to Libya. Although a lease signed in 1981 was
allowed to lapse shortly after the sanctions took
effect in 1982, one Icelandic 707 has been leased to
? Since 1983, Libya has been leasing a Boeing 707
from West Coast Airlines of Ghana. West Coast
Airlines was incorporated in 1980 as a charter
company and acquired two 707s from Luxembourg
firms. We believe that Libya or Libyan nationals
may have financial interests in this airline
Aircraft Maintenance
The 1982 embargo has severely hindered Libyan
aircraft maintenance efforts.
about six of Libya's 17 Boeing 707s are in good
repair. Ten Boeing 727s used by Libyan Arab Airlines
for regular commercial service to Europe, however,
continue to be maintained in France and Belgium,
and Libyan 707s have been repaired in Turkey and
Yugoslavia:
? An Italian firm canceled its C-130 maintenance
contract with Libya after US diplomatic contacts in
1983.
Libyan Boeing 727s continue to receive
regular maintenance from Air France at Orly
Airport in Paris and that major overhauls are
performed at Toulouse Airport-also by Air
France.
? According to press reports, a Libyan Boeing 707
cargo aircraft was repaired in mid-1984 in Istanbul
by THY Turkish Airlines.
The Financial Cost of Sanctions to Tripoli
The financial cost to Libya of the US embargo is not
known. Because they do not have access to new
aircraft maintenance parts and service when needed,
the Libyans must purchase several used aircraft for
every one actually made operational. In addition,
Libya has actively searched for reliable sources of
parts worldwide with modest results. In some cases-
Argentina being the most recent-Qadhafi has felt
obliged to offer sweeteners, such as offers to buy other
arms, in deals involving evasion of the US embargo.
These tactics increase the cost of any goods received.
Libyan
Arab Airlines has a difficult maintenance situation
with its 707s, largely as a result of the US embargo.
The airline often resorts to tricks to obtain spare
parts. On occasion a defective part is deliberately put
into a plane before a flight so that, upon landing at an
international airport, the pilot can request and obtain
emergency help from the local airfield. This practice
probably increases the cost of individual parts
substantially. In addition, the safety of the aircraft is
placed in jeopardy for the portion of its flight from
Libya to the proposed servicing point.
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Tunisia:
Politization
of the Military
an increasing concern
among Tunisian soldiers about political issues and
interest in becoming involved in domestic politics.
growing morale
problems in the military because of financial
stringencies, high-level personnel changes, and foreign
and domestic political developments. These concerns
reflect in part a broader public disenchantment with
the government and malaise stemming from economic
decline and festering social problems. Recent coup
rumors probably exaggerate the willingness of officers
to intervene at this time. Nevertheless, the continuing
economic and political deterioration in Tunisia will
breed further discontent within the ranks. Even
though the Tunisian military has a heritage as an
apolitical institution, officers would be emboldened to
take power in the event of a loss of legitimacy by the
current government or its successor. The events most
likely to provoke intervention include government
inability to control widespread public disorder or
paralysis of the regime before or after President
Bourguiba's demise.
Background-The Straight and Narrow
Tunisia is unusual in the Arab world because its
soldiers have not played a significant political role
either before or after the country became independent
in 1957. In addition, there is little evidence of plotting
by officers against President Bourguiba, who has
ruled the Tunisian republic since its inception.
Several factors account for the military's secondary
role in Tunisian politics. Bourguiba has been popular
for much of his career as chief executive, and he has
endeavored to keep the military out of politics. His
popularity is in part attributable to the country's
success in obtaining independence from France
without force of arms. In addition, economic
development has been fairly strong since
independence, and social and demographic pressures
on the largely homogeneous population have been
minimal, at least until recent years. On the external
front, Tunisia has had few serious disagreements with
its larger and militarily more powerful neighbors,
Libya and Algeria. Tunisia also has enjoyed fairly
close military ties to France and the United States
because of the country's pro-Western orientation.
Governments in Tunis consequently have not devoted
significant financial resources to the military. The
country's inventory of weapons is modest, especially in
comparison to its neighbors. Government financial
parsimony toward the military also has stunted the
growth of a professional and highly skilled officer
corps.
Into the Fray
Since the late 1970s, the Tunisian military has
become more visible in the government of the country.
The impetus for involvement has come from the
government rather than from the officer corps.
Demonstrations and violence in 1978 as a result of the
faltering economy and differences between
government and labor compelled Bourguiba to call on
his security organs to restore order. More widespread
and serious disturbances in early 1984, sparked by a
rise in bread prices, were not quashed until the
government called in combat units.
Military police action during the 1984 "bread riots"
led senior officers to complain to civilian leaders
about their newfound role and the danger of placing
troops between the government and the citizenry.
Senior officers were concerned that soldiers might
hesitate to act during similar crises in the future.
Presumably they were also concerned about the
declining popularity of the Bourguiba regime and the
changing character of the conscripts and junior
officers, whose views reflect those of the general
population.
Secret
NESA NESAR 86-004
31 January 1986
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Issues Affecting the Troops
Since the disturbances in 1984, there have been
reports indicating that the military rank and file
increasingly are affected by the economic, political,
and social problems troubling Tunisian society. F_
Economic Trends.
junior and middle-grade
officers are complaining about salaries, poor facilities,
lack of equipment and training, a surplus of officers to
enlisted men, and increasing isolation and signs of
corruption on the part of senior officers. According to
a source of the US Embassy in Tunis, some enlisted
men and noncommissioned officers wrote letters to
Defense Minister Baly last April expressing
unhappiness over the lack of salary increases. They
threatened to boycott the Independence Day parade
on 1 June and harm the Defense Minister.
We believe disgruntlement within the military due to
finances is likely to continue, especially because of the
stagnation in defense spending associated with a cut
in the overall government budget. The 1986 defense
budget of $295.9 million shows little change from the
1985 budget. Moreover, 80 percent of the defense
procurement portion of the budget totaling $156
million will be devoted to paying debts on loans from
the United States and other Western arms suppliers.
Foreign Relations. Crises with Libya and Israel
during 1985 increased tensions within the ranks
rather than heightened morale. Libya's threats and
the subsequent Tunisian military alert between
August and November revealed the limitations of
equipment and inadequacies of training, especially
within the Air Force. The inability of the military to
blunt possible Libyan aggression or repel the Israeli
airstrike last October against the headquarters of the
Palestine Liberation Organization humiliated officers
and probably tarnished their image with the public.
The government's efforts to buttress national security
by expanding military contacts with Algeria also
equipment and troops divided Tunisian officers. Some
wanted assistance at all costs, while others worried
about potential opportunities for subversion on the
part of Algeria. Turmoil among officers over this issue
led the government to decline Algeria's offer to
station troops in Tunisia.
Social Factors. Sociological developments also are
undermining the cohesiveness of the officer corps.
differences
of personal contacts over merit
of opinion over Algerian aid followed generational
lines. The more senior officers, who typically have had
more extensive contacts with Western counterparts
than younger soldiers, were opposed to expanded
cooperation with Algiers. Younger officers were
either neutral or ambivalent about the new
relationship. The younger soldiers also fear restricted
opportunities for promotion and the rising importance
that soldiers redeployed to
southern Tunisia-increasingly a hotbed of religious
and labor dissidence-during last year's alert suffered
poor working conditions and were considered
outsiders by local Tunisians.
Coup Rumors
There are signs that the country's malaise has
affected the senior ranks-as well.
senior officers are embroiled
in the intrigue, nepotism, and political maneuvering
that have long been endemic among the civilian elite.
The evidence of political activity among senior
proved unsettling.
Algerian offers last fall to provide military
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Tunisian officers is sketchy, and there is no firm
evidence that the maneuvering is symptomatic of
political infighting among civilian leaders.
Nonetheless, there is a widespread impression among
officers that politicking within the military is on the
rise and that it may be a reflection of civilian rivalries.
These unconfirmed rumors, in our judgment, are
fueled by the transfer or retirement from senior
positions of four officers last November under
mysterious circumstances. Early that month, the
government dissolved the military's training
command, unceremoniously dismissed its chief, and
dispersed various schools to the different branches of
the armed services.
Later in the month, the government retired three
other officers, including Ferchichi, the former head of
the Air Force Colonel Machta, and the former
Director of Military Sports Colonel Kallel.F_
held religious beliefs.
and highly popular-were involuntarily removed
because of illegal business dealings or because
Baraket and Kheriji viewed them as real or potential
rivals. Although the allegations against Baraket and
Kheriji are unconfirmed, the government appears to
have engaged in a widespread campaign against
officials supposedly involved in corruption. The
removal, especially of Ferchichi, worsened morale
problems. Ferchichi was a hero in the "Battle of
Bizerte" with the French in 1961 and is widely
regarded by the troops for his competence and deeply
Minister Mzali. Some believe that Mzali, as well as
Baly, are not exerting authority in reforming the
military and are unwilling to address the problem of
declining financial resources. They also worry that
Mzali may be using his position to place sympathizers
in key positions without any consideration for merit or
morale.
and Washington.
The government's search for new sources of military
assistance, in our view, could become another bone of
contention between Mzali and the officers. Senior
officers have been informed that the government
intends to expand military contacts with China and
North or South Korea to explore alternative sources
of weapons. The government may be considering
Soviet arms as well. Although there is no evidence of
discord over the pursuit of new foreign military
relationships, we believe some senior officers may look
with disfavor upon a turn toward the Soviets because
of the risks of alienating traditional patrons in Paris
The Military's Future Political Role
In our view, Tunisian officers are likely to become
more visible in the country's politics in the coming
years. Economic woes alone will encourage officers to
express their concerns more readily with the
government to protect the military's interests. Even if
officers are reluctant to act forcefully, the
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government's poor image and declining authority will
make it imperative for Mzali to turn to the Army for
support during future public disturbances or violence
resulting from a bitter succession struggle.
There already is some indication of the military's
growing role and authority vis-a-vis civilian leaders.
Most notable in this regard is the political rise of Col.
Zine Labidine Ben Ali, Minister Delegate to the
Prime Minister. Ben Ali received his Cabinet-level
post in September during a minor shuffle of ministers.
His promotion was a reward for effective service as
Secretary of State for the Interior, head of the
National Police, and chief of the Directorate of
National Security-positions he retains. Even though
Ben Ali does not command troops, he controls key
police, security, and intelligence units. President
Bourguiba and Mzali have come to rely on Ben Ali
not only as the coordinator in charge of national
security, but also as a troubleshooter on other
domestic matters as well. We believe Ben Ali has
more authority than most other Cabinet ministers and
that he is well placed to launch a bid for power either
in cooperation with Mzali or against him
Senior military leaders or a cabal of junior officers
probably will be reluctant to intervene in the political
process before President Bourguiba's death.
Bourguiba still has enough political stature to make
any coup attempt risky. Bourguiba's death and
Mzali's succession to the post, however, would provide
opportunities for intervention, especially if Mzali
failed to consolidate power quickly and enhance his
appeal. Any attempt at reform by the Prime Minister
that would involve a relaxation of government
restrictions on political parties could create greater
domestic turmoil and thus have the same effect on the
military.
Implications for the United States
The Tunisian military generally is well disposed
toward the United States, but its expanded influence
in the political process would not necessarily mean a
more favorable government attitude toward
Washington. Senior officers, unlike much of the
public, continue to support the United States, even if
they disagree with Washington's Middle East policies.
Attitudes within the officer corps, however, are
changing, to the detriment of US and Western
interests. Junior officers are not as enamored as their
seniors with France and the United States and
probably favor nonaligned policies that would place
greater distance between Tunis and Paris and
Washington. To the extent that senior officers have a
voice in politics, they, too, will be compelled to take
account of strong currents of anti-Americanism and
Islamic fundamentalism in formulating positions on
domestic and foreign policy.
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Israel-Jordan: The Plight
of the East Jerusalem
Electric Company
The current financial plight of the East Jerusalem
Electric Company (EJEC) is the latest example of the
difficulties faced by Arab firms operating in the
Israeli-occupied West Bank. With the political status
of the West Bank in limbo, no party-Israeli,
Jordanian, or Palestinian-is willing to provide the
capital needed to upgrade the company. The problems
of EJEC are particularly important as it is the largest
Arab industrial enterprise in East Jerusalem and the
West Bank.
Any resolution of the company's financial troubles
must consider political realities as well as economic
efficiency. The Israeli Government is troubled by the
security implications of an Arab firm-it is owned
almost exclusively by Jordanian citizens-providing
power to Jewish neighborhoods and military
installations. Even though this argument has faded in
importance as EJEC's reliance on Israeli-produced
electricity has grown, Israel continues to thwart Arab
influence and control over EJEC. Jordan must choose
carefully between greater cooperation with Israel and
protecting Palestinian interests in the West Bank and
East Jerusalem. The Jordanians are reluctant to
concede control of EJEC to the Israelis, even though
it is proving costly to keep the company afloat.
Background
The origins of EJEC date back to Turkish rule, with
the company's operations continuing under a 40-year
concession granted by British mandatory authorities
in Palestine in 1928. The partition of Jerusalem in
1948 divided the company's electrical network,
although EJEC remained in charge of supplying
electricity to both parts of the city. The company's
only power plant, however, was on the Israeli-
controlled side of the city. The Jordanian-controlled
sector temporarily relied on kerosene until it could
establish its own source of power from small, diesel-
powered generators.
By the Arab-Israeli war of 1967, the city had two
separate power networks. The Israeli side was far
more efficient, as it was linked to the Israeli national
grid. The Arabs were still depending on their outdated
generators. Despite the inefficiency of EJEC, the
Israeli Government continued to allow the company to
supply electricity to Jerusalem-on the condition that
it supply Jewish households in East Jerusalem, Israeli
military bases, and Israeli settlements on the West
Bank. The small generating capacity of EJEC forced
it to begin purchasing power from the Israel Electric
Company (IEC).
In the late 1970s, the Israeli Government sought to
buy EJEC, claiming it was too small and inefficient to
meet growing demands. Moreover, the firm was in
arrears on outstanding debt to the Israelis. Numerous
Arab protests against Israel's move claimed the action
was the latest of many attempts to prevent the
formation of any sizable economic or political power
base in the Arab sector. The Israeli Supreme Court
intervened to resolve the conflict, ruling that the
government was entitled to purchase the company's
concession in East Jerusalem, but not in the West
Bank. The Supreme Court, however, urged the
government to reconsider any purchase decision
because of the political implications. In addition,
Jordan in 1979 agreed to provide the funds needed to
pay the company's debts to forestall an Israeli
takeover.
Problems Continue
EJEC failed to take advantage of the Jordanian
assistance to address its problems. The company now
generates only 7 percent of the electricity consumed
by its approximately 400,000 customers-compared
to 33 percent six years ago-and purchases the rest
from IEC. The large debt owed to IEC for these
purchases has grown to about $5.5 million and has
placed a severe squeeze on the company's cash flow.
Secret
NESA NESAR 86-004
31 January 1986
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In early October 1985 the director of EJEC, Anwar
Nusseibeh, requested permission from the Israeli
Ministry of Energy to connect EJEC with the
Jordanian power grid to ease the supply problems.
Israel denied the request, claiming that Jordan would
not be a reliable supplier because of its limited
production capacity. Jordanian Prime Minister Rifa'i
also ruled out the connection, arguing that the price of
Jordanian electricity would not solve the company's
financial problems. Furthermore, Rifa'i believed the
timing was not right politically, as Jordan was striving
to improve relations with Syria.
Nusseibeh than traveled to Amman in December to
seek financial help. Nusseibeh obtained about $7.5
million to bail out the company-$5.5 million to cover
obligations to IEC and the rest as a short-term
operating subsidy. The grant, however, was
conditioned on the implementation of cost-cutting
measures:
? The company must cut wages by at least 20 to 30
percent and abolish salary bonuses.
? Current staffing levels are to be reduced from about
500 to 320 employees.
? The company must eliminate the practice of
supplying free electricity to company employees,
although discounts might be acceptable.
The Jordanian Government also insisted that Israel
provide rate relief for EJEC, either by reducing prices
about 15 percent for electricity sold to the company,
or by allowing EJEC to increase prices about 20
percent for electricity sold in the West Bank.
According to the US Embassy in Amman, the Israelis
rejected the request for lower electricity prices and
are unlikely to grant the company a rate increase,
given the already strained economic climate prevalent
in the West Bank settlements. Despite this setback,
Jordanian Prime Minister Rifa'i has said the
Jordanians would be willing to provide the grant as
long as EJEC adopts the cost-cutting measures.
The board of directors of EJEC met in mid-January
to discuss the cost-cutting measures recommended by
the Jordanian Government. The board announced
that the union representing the company's employees
had tentatively agreed to lay off about 10 percent of
the work force and accept a 20-percent reduction in
wages for the remaining employees. Agreement on
these reductions hinges on several key points:
? The granting of severance pay for dismissed
workers.
? The timing of disbursements of Jordanian financial
relief.
? The hope that the Israelis will soon reduce the cost
of power to EJEC.
Work actions by company employees to protest
Jordanian demands, however, may hinder reform
actions.
Outlook
EJEC's problems are unlikely to be resolved soon, and
the issue may not come to a head until 1988 when the
company's concession expires. Israel's solution may
already have been outlined by Minister of Energy
Shahal, who has stated that he would prefer not to
extend the company's concession and is
recommending the formation of a joint venture
between IEC and EJEC. Shahal notes that some of
the company's problems might be ameliorated if it
improved relations with the settlers and proposes that
the company hire some Israeli settlers as one way to
do this.
Jordan is trying to take a more active role in West
Bank affairs, despite the strain on its limited budget.
Thus, Amman is again providing the company with
short-term financial assistance to forestall an Israeli
takeover. Jordan has few other options at the moment.
Its best bet is to help keep Arab interests alive on the
West Bank until the Arab-Israeli conflict is settled. In
the meantime, Arab firms such as EJEC remain in
the middle of this political tug of war.
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