AFRICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01184R000200950001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 22, 2016
• Document Release Date: October 20, 2010
• Sequence Number: 1
• Publication Date: April 5, 1985
• Content Type: REPORT

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.ewce% Directorate of \nCrOt
SSW
Intelligence
~~ ~hFl TER "
Africa Review
ALA AR 85-008
5 April 1985
Copy `J 5 2
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Secret
Articles South Africa- Seeking Tighter Economic lManagemen1
Page
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The austere budget recently announced is an effort to fight
persistent double-digit inflation, but it also will add to tensions in
black townships and alienate some whites hit hard by higher taxes.
(Mozambique. Ethnic Dimensions of the Itnsurgency I 5
probably favor the government.
The Mozambique National Resistance has recruited heavily among
ethnic groups in central Mozambique to fuel its impressive
expansion and growth. To maintain the momentum, however, it will
have to gain support from other groups in the north and south who
Somalia. Siad's Growing Problems) 9
power for the near term.
Despite a growing array of political, military, and economic
problems, President Siad has capitalized on the inability of his
opponents to unite against him, and he probably will remain in
opening to regain lost influence
Radicals in the regime believe popular frustration with Ghana's
Western-supporting economic austerity program gives them an
Comoros: Coup Attempt Fizzles
Zambia: Army Unrest
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Articles have been coordinated as appropriate with other offices within CIA.
Comments and queries regarding this publication may be directed to the Chief,
Production Staff Office of African and Latin American Analysis] 25X1
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Secret
ALA AR 85-008
5 April 1985
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Secret
South Africa: Seeking Tighter
Economic Management
South Africa has announced an austere budget for the
fiscal year beginning 1 April 1985 in an effort to fight
persistent double-digit inflation. Pretoria's economic
management has suffered in recent years from
overbudget spending, overly optimistic revenue
projections, and rapid expansion of money available
for domestic borrowing. Finance Minister Barend du
Plessis, President P. W. Botha, and Reserve Bank
Governor Gerhard de Kock appear committed to
tightening Pretoria's economic management and
restraining growth in 1985, an economic strategy that
we believe will add to tensions in black townships and
alienate some whites hit hard by higher taxes.
Moving Targets
A major objective of South African economic policy,
in our judgment, has been to avoid funding consumer
imports through foreign borrowing, in large part
because Pretoria fears that a heavy foreign debt could
be used by foreign critics as leverage to extract
political concessions. This "pay as you go" philosophy
has made export earnings a key determinant of import
volume and economic growth. Export earnings,
however, vary considerably from year to year,
depending particularly on the amount of food
available for sale abroad and on the volatile price of
gold, which accounts for some 48 percent of foreign
earnings (see chart). As a result, economic policy
makers in South Africa often chase targets that can
shift direction rapidly.
Pretoria has frequently failed to balance the surge in
growth and imports that follow a gold price upturn
against the inevitable current account deficits that
follow a price decline. A short-lived rise in gold prices
from less than $300 per ounce in June 1982 to more
than $500 per ounce in January 1983 apparently
triggered an economic upswing despite a quick retreat
in gold prices and a third consecutive year of drought.
We believe that Pretoria misjudged the gold price
trend and the severity of the drought, and failed to
clamp down on the economy by raising interest rates
and reducing government spending.
The budget introduced in March 1984 was criticized
widely for making unrealistic assumptions about gold
prices and government revenues. Then Finance
Minister Owen Horwood predicted that the deficit
before borrowing would be held to 3 percent, the
guideline set by the IMF under South Africa's
standby agreement. The budget message included an
announcement that the general sales tax would be
raised 1 percentage point to 7 percent. Only three
months after the budget was presented to Parliament,
however, Horwood announced an additional 3-
percentage-point increase in the sales tax intended to
cover budgetary overruns and to slow imports by
reducing consumer spending. Even so, the final
budget deficit reached 3.6 percent.
A New Commitment to Restraint
Pretoria reacted to growing foreign debt and an
increasing rate of inflation in August last year by
pushing the prime interest rate to a record 25 percent,
imposing new restraints on government spending, and
tightening restrictions on consumer credit. As a result,
retail sales slumped in early September to 15 to 20
percent below business expectations, according to
press reports. The automobile industry was hit
hardest, with some 16,000 workers laid off in the
second half of 1984. Layoffs quickly spread to the
Secret
ALA AR 85-008
5 April 1985
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Secret
WORLD GOLD PRICE, 1982 - 1984
. US $ PER FINE OUNCE
in SOUTH AFRICAN RAND PER FINE OUNCE
metal and engineering industry, and later to the
furniture, clothing, textile, and construction
industries, according to US Embassy reporting.
Despite the economic slowdown and high prime
interest rate, domestic commercial lending continued
to expand rapidly until November. This growth in
liquidity was both a consequence and cause of
inflation; much of the lending resulted from debt-
financed spending by businesses and consumers, who
borrowed in order to purchase goods before prices
increased. As a result of heavy borrowing by the
private sector and the government, and the declining
exchange value of the South African rand, inflation
climbed steadily from 11 percent in August 1984 to
the prevailing 16 percent annual rate.
Finance Minister du Plessis, who took office in July
1984, and Reserve Bank Governor de Kock appear
determined to maintain tighter economic restraint.
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Ssecrett
Based on the partial data available, government
outlays have remained within revised targets set in
September. Commercial lending slowed dramatically
in November, but picked up again somewhat in
February. Moreover, government spending is set to
rise in the new budget by only 13.9 percent, less than.
the current rate of inflation, while revenues are
projected to increase by 18.8 percent. In particular,
real defense spending is to be cut by about 8 percent,
the first decrease in several yews. The anticipated
SS 1.3 billion deficit represelu.s only about 2.2 percent.
of (iDP.
The assumptions underlying the budget appear
reasonably conservative. An average gold price of
about $300 per ounce (at current exchange rates) was
assumed, compared with an average price this week of
about %325 per ounce and widely held expectations of
a gradual upward trend. Tax revenue projections were
based on zero (GDP growth. Moreover, government
estimates of the 198`; corn harvest have been revised
upward from 5.5 million tons to 6.7 million tons since
the budget analysis was prepared.
Tax Increases
About one-third of the projected increase in revenues
is to be funded through higher tax rates implemented
with the new budget:
The general sales i ax was raised from 10 to 12
percent.
from 5 to 7 percent.
Surcharges on gold and diamond mining taxes were
raised from 20 to 25 percent, and a 15-percent
surcharge was added for companies mining
platinum, coal, and base metals.
Duties were increased on office machinery, certain
electronic devices, videocassette recorders, and cars.
Special taxes were added for large insurance
companies and banks.
Most of the remaining projected revenues reflect
changes in allowable business tax deductions
introduced last year and increases in personal income
tax collections that will result from inflation pushing
workers into higher income tax brackets.
Modest Concessions to Blacks
Blacks have suffered the most from South Africa's
current economic troubles. fiovernment data indicate
that nearly 80,000 blacks were laid off between
January and August 1984. The US Embassy
estimates that approximately 17 to 25 percent of the
black labor force is unemployed, including homeland
unemployment and underemployment. Moreover, we
believe that inflation and growing unemployment
have cut average real income for black families over
the past three years. Even relatively small increases in
rents, utilities, or transportation fares have triggered
unrest in black townships. A doubling of the sales tax
rate since February 1984 also has hit urban blacks
hard despite exemptions for many food items.
New budgetary concessions to blacks appear modest,
based on the sketchy data available. A reduction in
income tax is planned for lower-income workers to
offset partially the impact of higher sales taxes, and
some $50 million is earmarked for job creation and
relief programs. Real spending on black education, a
longstanding source of friction, is set to rise by about
8 percent, according to US Embassy reporting. Even
this moderate increase will not narrow the gap
between expenditures for black students and white
students, however, as a similar percentage increase in
real spending on white education is planned.
oak
The outlook for maintaining the economic austerity
implicit in the new budget, as well as in the recent
slowing of commercial credit, largely hinges on
movements in the world gold price and on du Plessis's
ability to restrain overbudget spending:
e A sudden but very short-lived climb in gold prices
would add little to revenues, but could significantly
increase demands that the government lower
interest rates and provide tax relief for middle-
income taxpayers. We believe that the government
would resist these demands unless it saw serious
erosion of its voting strength in key byelections, and
that it will count on vindicating its policies by
slowing inflation and cutting tax rates prior to the
next national election in 1988 or 1989.
A steady and sustained rise in gold prices could
induce the government to relax economic restraints
somewhat, although Pretoria would be wary of
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allowing too much expansion. The South African
economy grew at an estimated real rate of 4 percent
last year, largely as a result of debt-financed
spending. If some relaxation of economic austerity
appears warranted, de Kock probably would
advocate a reduction in interest rates to stimulate
investment rather than significant new government
spending or tax relief.
? Even though Pretoria probably will push ahead with
its economic austerity program, controlling the
deficit will again prove difficult. President Botha
has promised du Plessis more support in enforcing
the budget than his predecessor received, but
implementing the planned reductions in real defense
spending may be viewed as politically imprudent in
view of growing violence in the black townships.
Unless gold prices average more than about $330 per
ounce this year, or budgetary discipline slips, the
South African real economic growth rate for 1985 is
unlikely to exceed 1 percent. Many private South
African economic forecasters expect the inflation rate
to rise further and reach a peak annual rate of 17 to
20 percent by midyear. Foreign debt should not rise
significantly as some short-term loans are repaid and
the current account registers an annual surplus.
Falling real income for blacks is likely to add to a
generally tense atmosphere, especially in eastern Cape
Province.
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Secret
Mozambique. Ethnic Dimension
of the Insurgency
The Mozambique National Resistance (RENAMO) is
a rural-based insurgent group with 17,000 or more
armed guerrillas operating in all 10 provinces of
Mozambique the
insurgents have recruited heavily among ethnic
groups in central Mozambique to fuel their impressive
expansion and growth. To maintain the momentum,
however, in our judgment, RENAMO must gain
support among other groups in the northern and
southern provinces who probably favor the
government. Internally, we believe that RENAMO
must cope with an apparently growing split between
its racially divided political and military wings.
Ethnic Origins
The heartland of popular support for RENAMO rests
in the central provinces of Mozambique where the
insurgent group began guerrilla operations in about
1977. At that time, several small groups opposed to
the ruling FRELIMO party merged with Rhodesian
assistance to form RENAMO. The group established
guerrilla bases in Sofala Province's rough and thickly
forested Gorongosa region and recruited among the
Shona-speaking tribes there,
The insurgents lost their Rhodesian
sanctuaries and support when Robert Mugabe came
to power in Zimbabwe in 1980, but soon recovered
with South African assistance. Under pressure in the
central provinces from the Mozambican Army, the
insurgents began to expand into northern and
southern Mozambique,
and Sofala Provinces joined willingly when they were
told that the FRELIMO government was dominated
by members of the rival Shangan tribe of southern
Mozambique.
RENAMO has
aspired to become a multiethnic national movement.
The group has apparently muted its narrow ethnic
appeals, and now stresses broad grievances of the
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peasantry such as the Marxist government's disregard
for traditional customs and leadership, and its
attempts to impose collectivization of peasant
agriculture. The insurgents have also sought to 25X1
capitalize on the past three years of severe droughts
and floods by distributing to needy peasants food and
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These methods apparently have gained RENAMO
some measure of rural support beyond Mozambique's
Shona-speaking central provinces.
in 1982 that the insurgents were
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Despite its geographic expansion, RENAMO
continued to recruit primarily among Shona speakers
from central Mozambique,
Several Europeans held prisoner by
the insurgents for a period that year said they
observed RENAMO recruiting on an ethnic basis,
according to US Embassy reporting. They said young
men from the Shona-speaking Ndau tribe in Manica
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Notwithstanding the success RENAMO has had at 25X1
recruiting beyond its base of support in central
Secret
ALA AR 85-008
5 April 1985
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Position
Guerrilla leaders
Alfonso Jacama
President and commander in chief
Black from central provinces
Raul Domingos
Southern commander, former chief of staff
Black from central provinces
Mario (LNU)
Domingos's deputy, former regional
Black
commander
Henrique (LNU)
Regional commander
Black from central provinces
(FNU) Variera, aka Ferreira
Regional commander
Black from central provinces
Bernardo Alufai, aka Jimo Phiri
Responsible for operations in Malawi and
Black
Zambesia
New chief of staff, possibly on National
Black from Zambesia Province
Council
Jacama's bodyguard and aide, possibly on
National Council
Political leaders
Evo Fernandes
Secretary general
Portuguese-Goan
Jorge Correia
Acting secretary for information, spokesman
Portuguese
for Europe
Secretary for external affairs (since early
Black from Manica Province
1985)
Official in Kenya, former secretary for infor-
Black from Zambesia Province
mation
Vincente Zacarias Ululu
Deputy secretary for external affairs
Black from Cabo Delgado Province
Seifulaziz Lean Milas
Official in Kenya
Black
Influential backers not
on National Council
Paulo Oliveira
Spokesman in Portugal
Portuguese
Portuguese
Portuguese
Mozambique, we believe the insurgent group will
encounter strong opposition from ethnic groups in
northern and southern Mozambique who have been
traditionally hostile to Shona speakers from the
central provinces. FRELIMO probably can count on
a residue of support among such groups in northern
Niassa, Cabo Delgado, and Tete Provinces where it
established liberated areas during the war for
independence from Portugal. Moreover, the Maconde
tribe in Cabo Delgado, with a reputation for ferocity
and independence, will make it difficult for the
insurgents to operate there. In the south, the
Shangans, well represented at senior levels in the
government and ruling party, are likely to resist what
they see as an attempt by Shona speakers to take over
in Maputo. Because it is less agricultural than other
regions, southern Mozambique probably has fewer
grievances against the government. FRELIMO has
not been oppressive there in attempting to collectivize
the peasants, and the south has suffered less from
recent droughts.
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Racial Divisions Within RENAMO
While RENIAMO attempts to overcome ethnic
barriers to continued expansion, and takes time to
develop an organization needed to consolidate its
control of territory, growing differences between
RENAMO's racially distinct political and guerrilla
wings will endanger internal cohesion. RENAMO
president and Commander in Chief Alfonso Jacama,
along with his chief of staff, regional commanders,
and the overwhelming majority of the guerrillas, are
Mozambican blacks. They have little in common with
RENAMO's predominantly white political cadres
and influential backers located in Europe, Brazil, and,
until recently, South Africa. Secretary General and
chief political spokesman Evo Fernandes, for example,
was born in Mozambique of Portuguese and Goan
parents.
The black guerrillas, who live a dangerous and
spartan existence in the jungle, believe that the
mainly while politicians and supporters living well in
exile are motivated primarily by personal ambitions,
In our judgment,
many of the politicians in exile simply want to recover
wealth and positions they lost at independence.
excluded dos Santos from an important leadership
meeting last October and replaced him as Secretary
for Information,
Dos Santos recently favored allowing a splinter group
to rejoin RENTAMO, something that Fernandes
strongly opposed,
was Bernardo Alufai, who
=is the leader of a group of guerrillas from
Zambesia Province that he led into joining
RENAMO some, years ago. Zimbabwean officials
believe Alufai's followers are an influential faction in
RENAMO today.
Outlook
RENAMO exploited ethnic divisions to gain support
for its rapid growth and expansion in the early 1980s,
and its persistent image as a tribal group is likely to
slow the pace of further expansion. As long as
RENAMO is seen by northerners and southerners as
a group of central Mozambicans, it cannot rely on
tribal sympathies and existing hierarchies to mobilize
support. If RENAMO cannot transform itself from a
tribal group to a national movement, the Mozambican
insurgency may bog down into a protracted civil war.
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Jacama distrusts
guerrilla commanders, while
Fernandes tries to prevent any political
cadres of her than himself from contacting Jacama.
Fernandes complains that the guerrillas refuse to
compromise with FRELIMO because they believe
they can force government concessions,
The guerrillas, for
their part, believe that Fernandes opposes the creation
of a grassroots political organization because it might
enable blacks in RENIAMO to gain political power at
the expense of whites and Goans,
There is some disagreesmeni within both wings, but
the guerrillas in the field appear unified behind
Jacama's unchallenged leadership. Among the
politicians, a significant faction located in Kenya is
n jade up of Mozambican blacks who are increasingly
resistant to positions and tactics favored by
Fernandes. Armando dos Santos, one of the blacks in
Kenya, probably is most critical of Fernandes, who
RENTAMO's uneasy marriage of black guerrillas and
predominantly white political spokesmen and backers
threatens the group's internal cohesion. The
politicians in exile articulate the group's goals and
negotiation positions, but many of them probably seek
only their own enrichment. It is the guerrillas who
hold real power within RENAMO, and their so-far-
unarticulated aspirations may shape Mozambique's
political future,.
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ecrer
Somalia. Siad9s Growing
Problems
The government of President Siad is beset by a
growing array of political, military, and economic
problems that slowly are undermining its stability,
We believe, however,
that despite the difficulties, Siad probably will remain
in power for the near term. He is a master of
manipulation and has capitalized on the inability of
his opponents to unite against him.
groups that oppose the regime. These actions have
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population and fueled anti-Marehan sentiment.
are resentful of the fact that promotions and
assignments are based upon tribal connections rather
than competence. In addition, after a series of
antiregime demonstrations in Issaq-dominated
northern Somalia in 1982, Siad transferred Issaq
troops from the north to other regions and placed their
officers into insignificant positions because he
suspected their loyalty. We concur with the
granted the United States military access rights in
1980. The West's failure to meet these expectations
has stirred unrest among midlevel and junior officers
and increased pressure on Siad to produce more
tangible benefits, We
believe Siad has managed to contain any immediate
threat by placing loyal officers in command of key
units in the capital and skillfully playing his
opponents against each other. This maneuver,
however, treats only the symptom, not the cause, of
the problem, and clearly has not prevented the spread
of disaffection.
Tribalism, which is endemic to Somali society, also
has developed into a problem of growing concern to
the government. In recent years, according to
Embassy reporting, Siad's once broad tribal support
base has narrowed to his Marehan clan and its tribal
allies, which probably make up less than 35 percent of
the Somali population. This group has used its ties to
Siad to enhance considerably its political and
economic domination of Somalia. Moreover, Embassy
reporting indicates that Siad uses the Army to support
the Marehan in tribal fighting or to punish tribal
The Economic Factor
Siad has been reluctant to address the country's
growing economic problems for fear of alienating his
supporters who have enriched themselves under the
current system, according to US Embassy reports.
The steady decline of the economy last year, however,
forced him to initiate major reforms to obtain a
crucial one-year $22 million credit from the IMF. The
government devalued the shilling, ended price
controls, abolished almost all export and import
licensing, and instituted several other reform
measures. We believe these moves carry serious
political risks for Siad, who expects the West to
provide the financing needed to turn the economy
around quickly.
The Dissidents
Armed opposition to the government comes from two
groups that receive military and economic support
from Ethiopia and Libya, but our analysis indicates
Secret
ALA AR 85-008
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that neither organization has been able to expand
beyond its narrow tribal base. Indeed,
one of them-the Somali Democratic
Salvation Front (SDSF)- is suffering severe problems
as a result of ideological, tribal, and personality
conflicts. We believe these problems and a highly
successful government amnesty program have
reduced its strength to approximately 1,500 troops.
IMF to hold him to economic reform, while exploring
ways to lessen the negative impact of the program on
his supporters. We believe Siad will also attempt to
find alternate sources of economic assistance. His
current efforts toward resuming diplomatic ties with
Libya almost certainly are intended to garner
economic aid and a pledge from Qadhafi to lessen
support for anti-Siad insurgents.
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police posts, but its threat has diminished seriously
over the past two years.
The approximately 3,000-man northern-based Somali
National Movement (SNM), in contrast, has
increased its operations in an effort to capitalize on
dissatisfaction over the regime's repressive measures.
According to the US Embassy, several Issaq groups
were willing to provide safehaven and intelligence
support to the rebels because of the Somali Army's
heavyhanded tactics including the summary
execution of approximately 70 Issaq-after several
SNM incursions late last year. The Embassy further
reports that the guerrillas were able to recruit large
numbers of volunteers, who were taken to training
camps in Ethiopia. Many Issaq, however, remain
reluctant to support the group openly out of the fear
of additional harsh reprisals.
Short-Term Prospects
Siad almost certainly views the military as the key to
his survival. We believe he is aware, however, that the
Army-heavily involved not only with defending
Somalia's borders but also with maintaining internal
security lacks the capability to perform these
functions effectively under present conditions. In our
opinion, the President will look more and more to his
allies to provide the military assistance needed to prop
up his regime.
Siad's commitment to the IMF program appears far
from firm. US Embassy sources state that he expects
an immediate rejuvenation of the Somali economy to
deflect the criticism of the program's critics. If this is
not forthcoming, Siad will test the tolerance of the
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Extreme Left
Head of State Jerry Rawlings is likely, in our view, to
come under mounting pressure from the extreme left
in the coming months to reverse the moderate policies
that lie has followed since 1983. Radicals-led by
Dojo Tsikata, the regime's Marxist-oriented security
adviser believe popular frustration with Ghana's
Western-supported economic austerity program gives
them an opening to regain lost influence, according to
the US Embassy. Rawlings's search for
accommodation with the West, cooperation with the
IMF, and reduction of Ghana's enthusiasm for the
Soviet Bloc and Libya has prompted the extreme left
to charge him with betraying the original principles of
the "revolution."
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We believe Rawlings will try to stick to his moderate
policies, but that he will revert to his earlier
radicalism if necessary to preserve his position. If he
does so, we judge that economic reform would slip,
radical models for restructuring Ghana would
reemerge, and foreign policy would regain a distinctly
anti-Western tone. Should Rawlings be ousted or
resign, we believe Ghana would enter a prolonged
period of instability, affording the Soviets, Libyans,
and Cubans new opportunities for exploitation and
influence.
The Setting
Rawlings, a former flight lieutenant who seized power
in a 1981 coup, initially launched Ghana on a radical
domestic and foreign policy track that tried to revive
his short-lived populist regime in 1979. In renewing
what he termed his "holy war," Rawlings pledged to
distribute wealth more equitably and announced a
campaign against mismanagement, corruption, and
black-marketeering as part of a new social, economic,
and political order to reverse Ghana's 25 years of
decline. He was highly critical of the West, and
publicly blamed the United States and Britain for
supporting the country's incompetent and corrupt
Limann administration, which had ruled from 1979 to
1981.
The record shows, however, that Rawlings's
preoccupation with his personal survival and
consolidation of power prevented much headway on
his reform program. He found himself in an uneasy
partnership with radical factions that had helped
return him to power. Rawlings provided the charisma
and mass appeal that the radicals lacked, while they
brought needed expertise in intelligence and security.
The partnership was uneasy, however, because
Rawlings consistently rejected the radicals' more
extreme policies.
At the same time that Rawlings was trying to work
out an accommodation with the radicals, the ruling
military council was paralyzed by indecisiveness,
particularly on the economic front. Rawlings failed to
attract sufficient financial assistance from the Soviet
Union and Libya. US Embassy reporting indicated
that Moscow declined to commit substantial resources
to an unstable regime with a questionable
commitment to Soviet-approved development and
foreign policy positions, while Tripoli-faced with
falling oil revenues- offered oil credits and food aid,
but refused to subsidize chronically poor Ghana.
Secret
ALA AR 85- 008
5 April 1985
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Rawlings's economic needs, therefore, caused him to
seek improved relations with the West. Ghana signed
an agreement for IMF support in 1983 that resulted
in one of the toughest austerity programs in Sub-
Saharan Africa. In public forums, Rawlings also
toned down his anti-Western rhetoric and emphasized
his commitment to "nonalignment."
Since taking those steps in 1983, the record shows
that Rawlings has pursued more pragmatic domestic
and foreign policies, and demonstrated a better grasp
of policy planning and goals. He also has managed to
attract some important, Western-leaning officials to
the regime, placing them in economic management
while removing some hardline Marxists.
The Growth of Moderation
Rawlings's more pragmatic outlook, in our view,
underscores his maturation in office, greater grasp of
reality, and improved self-control. He now privately
admits his earlier errors, according to the US
Embassy, and he recently told the US Ambassador it
was "too bad that the marginals and incompetents"
had played such a large initial role in the revolution.
Political Moderates in Ascendancy
Rawlings has relied increasingly on the moderate,
Western-leaning officials to run the day-to-day
operations of government, according to the US
Embassy. Moderates now gaining prominence include
Dan Annan, a former chief justice who serves in
Rawlings's absence as acting chairman of the ruling
Provisional National Defense Council, and Dr. Kwesi
Botchway, who as Secretary of Finance and Economic
Planning is the architect of Ghana's IMF-supported
economic austerity program . Rawlings's purge of
radicals has included removing the extreme leftists
who dominated the lower and middle levels of
government. The US Embassy reports that one of the
most dramatic signs of moderation was last year's
restructuring of the previously radical "defense
committees," which the extreme left had used to
monitor and indoctrinate the Army and potentially
troublesome civilian groups.
Economic Reform
In his first two years, Rawlings pursued largely
rhetorical policies that failed to halt the economic
deterioration, according to US Embassy reports. For
example, he exhorted farmers to produce more,
temporarily placed restrictions on bank withdrawals,
and called on market traders to lower their prices,
while rejecting badly needed devaluation and other
long-overdue reforms.
Falling production of cocoa-the principal source of
export earnings-together with rising inflation and
food shortages, declining industrial production, and
swelling unemployment, finally prompted Rawlings to
depart from these ineffective ad hoc economic policies
and to cooperate with Western-backed international
lending institutions and donor countries. According to
the US Embassy, since 1983, with IMF and World
Bank support, Accra has:
? Devalued its currency five times.
? Reduced the budget deficit.
? Emphasized the rural sector and food production.
? Reorganized some inefficient state enterprises.
? Reduced urban consumer subsidies.
? Devised a new investment code to encourage private
enterprise and foreign investment.
The US Embassy indicates that these measures,
although politically unpopular, produced some
positive results last year. Inflation fell to 35 percent-
from 115 percent in 1983. As a result of good rains,
Ghana had its best corn crop in 10 years, and real
GDP growth was 5.5 percent-one of the hi hest
growth rates since independence.
Limits to Economic Reform
In our judgment, recent economic growth-largely
the result of increased cocoa and wood exports-has
had little impact on the average Ghanaian. The US
Embassy observes that the urban and working classes
have not benefited directly from the new economic
policies and have been hard hit by falling real wages.
At best, according to the US Embassy, Ghana is only
"at the beginning of the beginning of economic
recovery." Cocoa production-though up-is far
behind its record production of 400,000 tons in 1964.
Ghana, once the world's largest cocoa producer, is
expected to be only in fifth place this year, according
to an industry analyst. Only 10 to 15 percent of the
country's industrial capacity is being utilized as a
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a ecrer
result of spare parts shortages. And, despite an
impressive corn harvest last year, Ghana must still
import foodstuffs.
Longer term prospects are bleak and, in our view, pose
a challenge to Rawlings or any successor government.
Ghana spends almost half of its foreign exchange
earnings on oil imports, and the US Embassy reports
that prospects are not encouraging for discoveries of
local crude in quantities to cover more than a small
fraction of the country's energy needs. Moreover,
officials of international lending institutions believe a
debt bulge will occur in 1987 or 1988, when debt
service payments will equal 40 percent of exports.
Beyond these adverse economic developments, census
data indicate that Ghana's population of 13 million is
growing by 3 percent annually, and the urban
population is growing at a 5 percent average,
Challenging the government's ability to create enough
jobs and provide sufficient food.
Challenges to Stability
While Rawlings has brought more pragmatists into
the government and adopted more moderate policies,
we agree with recent US Embassy reports suggesting
that the extreme left is seeking to exploit what it
perceives as growing popular frustration with
economic austerity. In our judgment, neither the
regular armed forces nor militant exiles pose a
substantial threat to Rawlings at present.
The Left, in our judgment, radicals will try to exploit
any failure of Rawlings's economic program to yield
tangible results. We agree with US Embassy
reporting that hardships would follow further
substantial currency devaluations, possibly catalyzing
leftist-led opposition to Rawlings. US Embassy
reporting emphasizes that extreme leftists, both
within the government and those who lost their posts
in earlier purges, are waiting for the opportunity to
regain their influence. Radicals still control three key
positions: Kojo Tsikata is the chief of security and
counterintelligence; Obed Asamoah is the Secretary
for Foreign Affairs; and Kofi Djin is Secretary for
Internal Affairs.
We believe Tsikata may pose the greatest challenge to
Rawlings's moderate course and possibly to the
regime itself. In the past year, according to the US
Embassy, Tsikata has consolidated control over the
security apparatus and, with Soviet Bloc assistance,
established an effective counterintelligence
organization. The US Embassy reports that this
security force---and not the military-was responsible
for the impressive series of arrests last year of
dissidents involved in at least one abortive attack by
exiles and several coup plots.
Tsikata and
Rawlings--though fellow Ewe tribesmen-are
drifting apart over the course of Ghana's revolution.
We believe that, while Rawlings is a fervent
nationalist who seeks an "African" solution to
Ghana's woes, Tsikata-who lived in Cuba in the late
1960s is impressed with Soviet Bloc models and
favors a Marxist-Leninist revolution. Moreover,
Tsikata did nothing to prevent the publication and
distribution by radical organizations of anti-Rawlings
tracts earlier this year, which accused him of
betraying the regime's revolutionary goals. We
believe Rawlings probably finds it safer to include
Tsikata in the regime-where he can be watched-
rather than to have him outside the system where he
could pose a greater threat.
A key unknown in the Tsikata-Rawlings drift is which
can garner the loyalty of the 180=.man Force Reserve
Unit. Rawlings
and Tsikata each regard the Cuban-trained unit as
the regime's primary line of defense against coups by
exiles and the regular military. Its leader, Major
Quashigah, is a rival of Army Commander Major
General Quainoo, a key associate of Rawlings. We do
not know where his loyalties would lie should there be
a confrontation between Rawlings and T'sikata.F--
The Military. For its part, the regular military
appears to lack the unity and the leadership to
challenge Rawlings directly. Nonetheless, should
serious intraregime conflicts erupt, we believe Army
elements in the vicinity of the capital would be
tempted to intervene, not necessarily on behalf of
either Rawlings or Tsikata. Army Commander
Quainoo has been portrayed by US defense attache
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reporting as consistently trying to limit the influence
of regime radicals over the regular military, and to
curb the influence of radical officers and
noncommissioned officers in the armed forces.
portions of both the enlisted ranks and officers, and
played a leading role in the recent restructuring of the
previously radical-dominated military defense
committees.
Exiles. We believe exiles based in neighboring Togo,
Ivory Coast, and Nigeria are likely to remain a minor
irritant rather than a major threat to Rawlings.
Indeed, the US Embassy reports that Tsikata's
effective intelligence and security apparatus has
penetrated the exiles' ranks. Moreover, the exiles are
divided by differences between officers and enlisted
men, tribal rivalries, and ideological outlook,
according to the US Embassy.
Foreign Influences
We suspect Rawlings will come under growing
pressure from the extreme left to foster closer ties
with the Soviet Union, Libya, and Cuba especially if,
as we expect, links with the West do not result in a
substantial improvement in the Ghanaian economy.
As a consequence of this pressure, we believe
Rawlings will try to maintain his ties with the Soviet
Bloc and Tripoli to preserve his revolutionary image
and secure continued access to intelligence and
security training
The USSR. Since 1982, Accra has accepted limited
arms from the Soviet Union and intelligence training
from its allies.
Rawlings allowed a Soviet merchant ship to
deliver small arms and ammunition to Accra,
probably for Tsikata's security forces. The US
Embassy reports that 100 to 200 Ghanaian
intelligence officers selected by Tsikata-have been
sent to Bulgaria, East Germany, and Cuba for
security training. Rawlings,
continues to reject a wider military
relationship with the USSR and appears to us to be
more concerned about Moscow's intentions and aid
offers than is Tsikata.
Educational assistance programs afford the USSR
some opportunities for influence that, in part,
compensate for Moscow's inability to cement a deeper
some 1,000 Ghanaian students
are currently in the USSR on scholarship. Past US
Embassy reporting put the number of Ghanaian
students in Moscow at the time of Rawlings's coup at
650.
Moscow's economic assistance has been limited to a
$10 million loan extended in 1982. According to the
US Embassy, this loan will be used to complete Soviet
projects begun before the overthrow of the late
President Nkrumah in 1966, including a gold refinery
at Tawarka and a technical institute at Tema. A small
number of Soviet technicians are in Ghana to help
reactivate the projects, according to the US Embassy.
Trade between the two countries is limited to barter
deals, predominantly Ghanaian cocoa for Soviet
agricultural equipment, machinery, and medicine. We
believe the general low priority accorded West Africa,
plus continuing Soviet caution in dealing with
unstable African populist regimes, limits its economic
commitments.
Libya. In our judgment, the Libyans-in their quest
for regional influence will seek better relations with
Ghana, and Accra may be responsive in order to
placate the extreme left. The US Embassy
reported that, after
the 1981 coup, Libyan efforts to cultivate Accra
included a $95 million oil credit, food aid during
Ghana's drought, and military supplies-including
small arms, ammunition, uniforms, and military
vehicles.
Ghana's relations with Libya cooled in 1983 and
1984, due largely to Rawlings's suspicions of
Qadhafi's intentions and inability to attract
meaningful development aid. In 1983, the US
Embassy reported that Rawlings rejected a mutual
defense pact that would have allowed Libyan troops to
be based in Ghana. Libya responded by cutting off
badly needed credits for oil supplies, according to US
Embassy reports.
We believe that harassment by exiles or a coup
attempt might cause Rawlings to turn to Tripoli for
new military assistance. Libya, in our view, probably
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will offer small military and economic aid packages
from time to time, but is unlikely to offer the low cost,
long-term oil credits Ghana seeks. Libyan leader
Qadhafi probably will continue his close relationship
with Tsikata, who has visited Tripoli on several
occasions, as a means of influencing Ghana. We note
that Ghana has not criticized Libya's African policies,
including its de facto annexation of northern Chad.
C'uhn, I lavana's most important role is the provision
of intelligence training and academic scholarships.
Ghanaian students were enrolled in Cuban schools
last year. We believe that the Cuban-Ghanaian
relationship rests largely on Tsikata's admiration for
the Cuban revolution and on Havana's proven
security expertise. US F,mbassy reporting indicated
Tsikata at one time favored the stationing of Cuban
troops in Ghana. We have no evidence that Cuban
troops or military advisers are now present.
Cuban economic influence is minimal, and we do not
expect it to increase. The US Embassy reports that
Havana has been providing limited technical aid and
training to the Rawlings regime for some time, mainly
in the areas of agriculture and health.
Outlook
We believe Rawlings will try to maintain his current
moderate policies in the near term to preserve aid and
trade relations with the West. In our view, however,
he will back off, if necessary, to protect his position
rather than lose all popular support or risk a total
break with the radicals, whose security expertise he
needs. In our view, should Rawlings return to his
earlier radicalism, Tsikata, the Soviets, the Libyans,
and the Cubans would be afforded new opportunities
for influence at the expense of the regime's moderates
and the West. Economic reforms would slip, radical
models for social and military restructuring would be
revived, and Rawlings would lash out at the West,
particularly the United States, to demonstrate his
revolutionary zeal. We believe, however, that an even
more radical Rawlings would still require massive
Western economic assistance to keep the country
afloat, thus helping to temper some of his actions.
Should Rawlings be removed in a palace coup,
assassinated, or resign, we strongly believe that a
prolonged period of instability would ensue. In our
view, there is no immediate alternative to Rawlings,
including Tsikata, who could build as broad a popular
base or who possesses as much ability to stir popular
support. Both the extreme left and the factions in the
military representing diverse ideological and tribal
aspirations probably would jockey for power. In our
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Should Tsikata come to power, he probably would
rule by force of arms, providing he received quick and
substantial Libyan and Cuban military support and
had the loyalty of the Force Reserve Unit. In our
view, however, a T sikata-led regime would prove more
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~C6A V, &
Africa
Briefs
growing indiscipline and disloyalty within the Army
Senior Zambian officials are increasingly concerned over what they perceive as
Since the beginning of the year, there have been numerous reports of
pace with the country's 20-percent inflation rate and,
discontent over living conditions within the military. Army pay has failed to keep
there are instances when the Army has been unable to provide new recruits
with quarters or uniforms.
replace him,
Most senior officers hold Army commander Masheke personally responsible for
the problems, but the Ministry of Defense has given no indication that it intends to
There is no evidence of coup plotting at present, but, despite
President Kaunda's personal popularity among officers and men, we believe
government inability to address Army grievances could escalate eventually into a
direction until he could replace them with Marxist-oriented leaders.
Security forces thwarted a coup attempt in early March by disgruntled members
of President Ahmed Abdallah's presidential guard while the President was out of
the country. One of the alleged coup leaders, Moustapha Said Sheikh, is the head
of a small Comoran Marxist-Leninist movement that may have connections to the
French Communist Party. A source of the US Embassy reports that he used
narcotics to entice 12 disgruntled guard members into the plan, which called for
assassinating the European mercenary leaders of the presidential guard and the
Minister of Defense. According to Embassy reporting, subsequent interrogation of
the 12 plotters led to the discovery of a dissident printing press and documents
implicating 200 civilian and junior government officials, who also have been
arrested. Among those implicated are two rightwing former ambassadors under
the previous regime-one a Comoran and the other a Frenchman-who have
resided in France for the past several years. The source of the US Embassy reports
that Said Sheikh intended to install the former ambassadors at the head of an
interim government to reassure the West that Comoros would retain its pro-West
17 Secret
ALA AR 85-008
5 April 1985
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According to press reports, documents found in Said Sheikh's possession indicate
that he had been planning a coup since at least 1980. Coup plotters probably hoped
to capitalize on mounting tensions in the presidential guard caused by the
preferential treatment and status accorded to the white mercenary leadership that
installed Abdallah in 1978.
Despite the friction in the security forces, Abdallah appears confident that the
mercenaries can contain any attempts to destabilize the regime. His political
opponents lack the President's national stature, and their influence was
undermined further in a cabinet shuffle in January that consolidated Abdallah's
authority. Moreover, external opposition to the regime is fragmented and what
little internal support this opposition may have had probably has eroded in the
aftermath of the coup plot. In our judgment, Abdallah faces no serious challenge
to his hold on power, although any moves on his part to increase the size of the
mercenary contingent could lead to renewed expressions of discontent by Comoran
elements in the presidential guard.
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