NEAR EAST AND SOUTH ASIA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP05S02029R000300850001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 38
• Document Creation Date: December 22, 2016
• Document Release Date: May 2, 2012
• Sequence Number: 1
• Publication Date: November 21, 1986
• Content Type: REPORT

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Directorate of
Near East and
South Asia Review
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NESA NESAR 86-026
21 November 1986
326
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Near East and
South Asia Review
Articles Israel: Economic Pressures Threaten Reform Package
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The prospect of a sharp increase in Israel's budget deficit looms as
the major obstacle to Prime Minister Shamir's much-heralded
economic program. A failure to resolve conflicting economic policies
could disrupt Shamir's reform package and, in the worst case, lead
to a political crisis and a new election.
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Israel's leftist protest movements, academic groups, and political
parties all urge the Israeli Government to make far-reaching
concessions toward a peaceful resolution of the Arab-Israeli conflict.
Each advocates a different approach to peace, and all are likely to
increase their protests during Likud leader Shamir's term as prime
minister.
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The dispute over Western Sahara shows no sign of a diplomatic or
military solution. Morocco has improved its military position but
Algeria retains the diplomatic upper hand, and the most immediate
danger is that either party will seek outside help or attempt to
include Mauritania in the battle zone to break the deadlock.
The Iran-Iraq war and Iraq's need for Kuwaiti support have
influenced Baghdad to maintain good relations with Kuwait despite
unresolved territorial claims between the two countries. Once Iraq's
economy recovers and the threat from Iran recedes, Iraq is likely to
put more pressure on Kuwait as Baghdad tries to assume a
dominant role in the region.
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NESA NESAR 86-026
21 November 1986
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North Yemen's Tense Military Relationship With Moscow
Sanaa has recently intensified its efforts to replace Soviet military
advisers and restrict their access to military facilities in North
Yemen. President Salih is trying to counter Soviet pressures aimed
at discouraging Sanaa from supporting South Yemeni exile forces
and encouraging accommodation with the current regime in Aden.
India: The Succession Struggle in the Nuclear Establishment) I23
Prime Minister Gandhi will soon decide whether to appoint a new
head of India's nuclear program or keep its present chief for another
year. The future chief may not have much influence on decisions
about nuclear weapons, but the selection could give some clues to
the direction of India's nuclear policy.
The Pakistan People's Party: Pretenders to the Throne I 27
The Pakistan People's Party, the country's largest opposition party,
is trying to force a change of government in Pakistan, but its efforts
are hindered by factional infighting, rivalry from opposition parties,
and public indifference. If the PPP eschews violence and adopts
moderate tactics, it has a least an even chance of coming to power.
Pakistan: New Politics in Punjab) 33
The inability of opposition elements to spread disturbances into
Punjab from elsewhere in Pakistan has given President Zia and the
Junejo government a crucial degree of security. Punjab remains the
dominant province and the key to stability in Pakistan.
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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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Near East and
South Asia Review
Threaten Reform Package
The prospect of a sharp increase in Israel's budget
deficit looms as the major obstacle to Prime Minister
Shamir's much-heralded economic program.
Competing demands from labor, business, and even
members of his own Cabinet threaten to undermine
his attempt to contain the projected deficit. A failure
to resolve conflicting economic policies could disrupt
Shamir's reform package and, in the worst case, lead
to a political crisis and a new election.
A Tough Act To Follow
Shamir has inherited a much-improved economy as a
result of former Prime Minister Peres's initiatives, but
not without some costs. Tighter monetary policy and
stringent fiscal measures lowered the budget deficit
and slashed the inflation rate from triple-digit levels
in 1985 to about 20 percent this year. An 18.9-percent
devaluation of the shekel in July 1985-and
substantial US financial assistance-contributed last
year to the first positive foreign payments position in
over 30 years. These gains, however, were won at the
expense of higher unemployment-currently about 7
percent, a 25-percent increase over the preausterity
level-and a recession that has affected many
businesses, especially high-technology firms.
and privatization. At the same time, he intends to
resist policies-especially wage increases-that might
enhance his popularity with the electorate but
undermine the still fragile gains of the austerity
program.
In our judgment, Shamir has strong economic
incentives to implement some degree of tax reform
before the next election. Reducing Israel's heavy tax
burden-the average effective tax rate is 25 percent
of income-would spur industrial productivity and
growth, stimulate investment, and eliminate
distortions that hinder efficient economic activity.
Moreover, a political consensus is building within
government circles and in the private sector for tax
reform. Hoping to capitalize on Shamir's need for
popular accomplishments, the Federation of Israeli
Chambers of Commerce is lobbying the press, senior
government officials, labor, and members of the
Knesset for tax overhaul. Several government officials
share the impression that, unless a tax change is
made, many firms and individuals, especially highly
trained workers, will find it more profitable to move to
the United States, according to the US Embassy in
Tel Aviv.
Key Reforms
With an eye to the next election, which must be held
no later than the fall of 1988, Shamir knows he needs
economic successes to match those of his predecessor.
To put his imprint on the economy, Shamir has
introduced an amalgamation of earlier programs that
emphasizes both growth and austerity. As he made
clear in his inaugural address as Prime Minister to the
Knesset on 20 October, Shamir's strategy is to
improve the standard of living, increase employment
opportunities, and reduce the government's role
through tax reform, a restructured capital market,
Shamir and his Likud colleagues intend to move
ahead on capital market reform begun under the
Labor government. A restructuring of the capital
market is aimed at eventually breaking the
government's near stranglehold on available capital
and freeing badly needed money for private
investment. Tel Aviv dominates the capital market to
ensure that it has funds available to finance the
budget deficit. Moshe Nissim, Shamir's Finance
Minister, already won initial approval from the Peres-
led inner Cabinet for nine recommendations that
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NESA NESAR 86-026
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ISRAEL: INFLATION AND UNEMPLOYMENT
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1984 1985 1986'
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include restricting government acquisition of funds to
the exact amount needed to finance the budget deficit
and allowing private companies to raise money
directly. Just before Shamir's accession to the prime-
ministry in mid-October, several key Likud officials,
including Nissim, took a small step toward ending the
government monopoly by allowing banks to invest 10
percent of their deposits in private-sector bonds.
Shamir also is committed to privatization-selling off
or going public with government enterprises-as a
way to raise revenue and, if possible, rid Tel Aviv of
financially troubled companies that are an additional
drain on the budget. Last year joint government-
private concerns lost over $44 million, including $10
million in red ink posted by El Al Airlines. Tel Aviv
has turned down a bid from Canadian and US
investors for El Al because it believed the $316
million offer was too low, according to the press.
Nevertheless, the Israel Government Corporations
Authority plans to sell or go public with 11 other
companies this year. On the auction block are the
government's $80-100 million share of Paz, the
national gas company, and 74 percent of Mamen, the
management authority for Israel's airports. To
streamline the divestiture process, the government has
eliminated the need for further advisory or committee
approval once it has decided to sell at an established
price. The government also will attempt to sell equity
shares in foreign markets and on the Tel Aviv Stock
Exchange.
The Budget Deficit-A Conflict
The government is struggling to reduce this year's
budget deficit-the prerequisite for any major
economic reform. Shamir so far has extracted only
about half of the $480 million mandated reduction for
the fiscal year ending in March 1987 by taking
politically easy cuts in development programs and
government purchases of goods and services. He has
made no headway, however, on lowering expenditures
for programs that directly affect the populace, such as
social security and many transfer payments.
Moreover, cutting these budget items must have the
approval of the Knesset, whose members predictably
look to special interests first and will reject measures
that adversely affect their constituents. We do not
believe Shamir has the necessary backing to lower
spending to the targeted level. As a result, the budget
is likely to run a slight deficit this year despite about
$1.5 billion in additional revenue from a series of one-
time taxes.
An almost certain drop in revenue for the fiscal year
beginning 1 April 1987 helps assure that the budget
will have to be cut again if Shamir is to keep the
stabilization program on track. Automatic expiration
of the temporary taxes, including a car levy and a tax
on child allotments, will cost the government about
$170 million, according to the US Embassy. A
planned reduction in customs duties, in accordance
with an agreement with the European Community, is
scheduled to take effect this January. In addition,
employers will reduce payments to the National
Insurance Institute by $300 million. Overall, Tel Aviv
stands to lose as much as $670 million in FY 1988.
Shamir also is unlikely to see a repetition of the
economic breaks that helped Peres achieve his gains.
We judge that Shamir will not enjoy a drop in oil
prices similar to the roughly $14 per barrel decline
that occurred during the first three quarters of this
year and saved the government approximately $420
million in oil import costs. Nor is the balance of
payments likely to benefit from a decline in the value
of the dollar in Europe or a drop in foreign interest
rates. More important, Israel is not scheduled to
receive supplemental US aid beyond the $1.5 billion
allocated during 1985-86. Shamir's financial
problems are further compounded by repayments of
$3.7 billion in domestic debt the government must
make as a result of the stock market collapse of
October 1983.
Other developments have arisen to threaten the
stabilization program. Two major and unexpected
events are a widening of the trade deficit and a
resurgence in consumer demand, which increase
pressure for a currency devaluation or price hikes. To
curb the rise in consumer spending, Israeli officials
have decided to clamp down on private borrowing by
raising the interest rate on short-term loans. As a
consequence of the more expensive short-term credit,
the national management organization for Israel's
kibbutz settlements is seeking a rescue package of
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ISRAEL: THE GOVERNMENT BUDGET
Legend
EXPENDITURE
? DEFICIT
1983 1984 1985 1986 1987 2 1988 2
1for Israeli fiscal year ending March 31
2 estimate
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over $200 million to consolidate its debt, according to
the US Embassy. Israeli business has expressed
dissatisfaction with the higher interest rates as well.
Moreover, the interest rate increases will do little to
offset spending by consumers, who can still maintain
high spending levels by utilizing their considerable
dollar savings. Shamir's key advisers, however,
including the Finance Minister, are rejecting
proposals to devalue the shekel for fear of setting off a
round of price increases.
Special Interests Limit Options
Any attempt to reduce spending or, as a last resort, to
raise taxes would meet stiff opposition within
Shamir's Cabinet. According to US Embassy
reporting, Finance Minister Nissim has ruled out a
tax increase to solve the deficit problem and is
pressing for tax reform. Ariel Sharon, the Minister of
Industry and Commerce and a strong supporter of
industrialists, already has proposed assisting exporters
with additional subsidies-on top of the $1.5 billion
already provided. Other big spenders have taken an
even tougher stand:
? The Ministry of Defense has announced it will seek
a $200 million increase in its budget requests for FY
1988. It will have the backing of Avraham Shapira,
the powerful chairman of the Knesset Finance
Committee, who is opposed to defense cuts.
? The Ministries of Health and Education probably
will draw the line on further budget reductions as
well. The Embassy reports that the Treasury
already has retreated from its insistence that the
education budget be trimmed $150 million this
fiscal year.
Not surprisingly, the private sector would object
strongly to any deficit-reduction measures that hurt
its interests or worsened unemployment. Eliminating
popular subsidies would alienate consumers, business,
and Histadrut, Israel's powerful trade union
organization. Although the populace is generally
satisfied with the government's handling of the
economy, it probably is not ready for another
unrewarded round of austerity. Recent Israeli press
reporting that suggests that a budget cut is not
necessary probably has weakened private resolve to
support further tough measures.
Histadrut, a Labor Party stronghold, has warned it
will not support the reform program if government
measures reduce the standard of living of its
constituents. As a result, the government has avoided
further subsidy reductions or tax increases that would
offend the unions and has found it virtually impossible
to implement a planned reduction in the government
payroll. Indeed, the government is using some of the
extra revenue from this year's temporary taxes to
subsidize the employers' contributions to social
security. The loss of key subsidies would trigger
compensating demands for higher wages and lead to a
spiral of price increases. The settlement of the recent
nurses' strike-whereby the nurses won a total
compensation package worth $24 million-
demonstrates worker sensitivity to price increases and
wage erosion.
No Resolution in Sight
Lacking strong political and popular support, we
assess that Shamir does not have the force of
personality necessary to win approval of controversial
spending cuts, the key to the success of reform. We
believe-and Israeli economic policy makers agree-
that the best Shamir can do is hold the line on
spending increases. Even if discretionary spending
were frozen, he still would face automatic spending
increases because of population growth and inflation.
This will force Shamir to adopt highly inflationary
measures of borrowing or printing money to cover the
deficit. Moreover, the prospect for a growing deficit
jeopardizes his reform package.
The impending financial crunch means Shamir
probably will have to accept a sharply curtailed
version of his tax reform proposal or perhaps even
postpone the plan altogether. Enough opposition exists
to kill any reform that is not linked to a simultaneous
reduction in tax rates. Unless Shamir can find ways to
replace all the lost budget income-an unlikely
event-he probably would not get a tax package
approved by the Knesset Finance Committee, which
must pass on all proposed financial legislation.
Finance Minister Nissim is not likely to press the
issue unless public opinion polls show a majority
supporting further reform.
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Without reducing the budget deficit, the Shamir
government has no chance of making significant
progress on capital market reform before the next
election. Instead, Tel Aviv again will need to tap the
capital markets for debt financing. Even if the
program were on track, the government would still
have to contend with vested interest groups that would
oppose and complicate the reform effort, according to
the Embassy. So long as it continues to dominate the
capital market, the government may raise the interest
rate it pays to more competitive levels.
Privatization will not come close to meeting the
government timetable because of a lack of suitable
purchasers, investor uncertainties over Israel's
bureaucracy and investment climate, and ministerial
opposition. Israel conservatively estimates that only
60 firms are eligible for sale out of a total of 190
government corporations, according to the Embassy.
Of these, several, including El Al, probably will
remain too financially troubled to attract offers close
to Israel's asking price. Most domestic companies do
not have the cash to buy a government enterprise.
Many foreign buyers will remain reluctant to
entertain Israeli offers because of concern over the
long-term prospects for the stabilization program, the
Arab boycott, and the possibility of another Arab-
Israeli war. Potential investors in public stock
offerings will remain cautious because of possible
government interference in corporate decision
making. Moreover, Tel Aviv probably will experience
protracted difficulties with ministers who do not want
to lose the political power that goes with government
ownership.
If Shamir approaches the election with no significant
economic accomplishments, he may come under
heavy pressure from his party to implement popular
measures such as wage hikes and subsidy increases.
Shamir may well acquiesce to head off maneuvering
by Sharon and Deputy Premier David Levi, his major
Likud rivals, who want to unseat him as Likud leader.
Shamir also is likely to attempt to pass some of the
blame for any shortcomings to Peres and the Labor
Party. In the worst case, failure to agree on an
economic policy that resolves the conflict between the
deficit and the reforms could lead to a political crisis
and a new election.
Implication for the United States
Israel almost certainly will turn to the United States
for additional aid to cover its budget shortfalls.
Shamir probably will argue in part that it would be
unfair for the United States to deny assistance to his
government after granting Israel $1.5 billion in
supplemental aid during Peres's tenure.
Tel Aviv is likely to press for additional money for a
wide range of specific projects in defense and high-
technology industries. The Israelis also will push to
sell large government enterprises on US markets.
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Israel's leftist protest movements, academic groups,
and political parties all urge the Israeli Government
to make far-reaching concessions toward a peaceful
resolution of the Arab-Israeli conflict. But their
similarity ends there. Each advocates a different
approach to peace, with some, like Netivot Shalom
and the Progressive List for Peace, advocating
autonomy for Palestinians on the West Bank, and
others, like Mapam, endorsing negotiations with
Yasir Arafat without first gaining the PLO's
acknowledgment of Israel's right to exist. Despite the
fact that their views are held by less than 20 percent
of the populace, these groups are unlikely to quit their
efforts. On the contrary, we believe that the leftist
groups will increase their protests to counter potential
hardline government policies during Likud leader
Shamir's term as prime minister.
Peace Movements
Peace movements in Israel, while usually small in
number, are tenacious and vociferous in expounding
their views. Each movement relies on its own
supporters to march in the streets or flood the
government with petitions to oppose a particular
government stance. During the 1982 war in Lebanon
and subsequent Israeli occupation, several protest
groups emerged urging the government to withdraw
Israeli troops from that country. They kept vigils
outside Prime Minister Begin's home and at the
Knesset. After the government announced its
intention to withdraw in early 1985, these single-issue
groups lost much of their appeal and momentum.
Peace Now, a better known and longer lived group
than most, began in the late 1970s as a single-issue
movement urging Begin to make peace with Egypt. It
gradually expanded its agenda to include protesting
increases in West Bank settlements, supporting Arab
civil rights, and advocating territorial concessions on
the West Bank.
During Labor leader Shimon Peres's term as Prime
Minister from 1984 to October 1986, no major issue
emerged to unite activists, and, consequently, protest
activity subsided. According to Israeli press reports,
Prime Minister Yitzhak Shamir's more hardline
policies for strengthening settlements on the West
Bank and Gaza Strip may provide a catalyst for
renewed protests.
Activist leaders assert that they are not
antiestablishment but hope to show that Likud does
not represent all of Israel in its nonconcessionary
security policy. They boldly and confidently shrug off
critics characterizing them as "crackpots" and
"traitors" condoning Palestinian terrorism.
Peace Now. Founded in 1978 by Army reserve
members as a one-time effort to press Prime Minister
Menachem Begin to make peace with Egypt and to
protest continued settlement of the occupied
territories, Peace Now is the largest and best
organized of the protest movements. It has resisted
internal pressure to become a political party and
maintains the ability to unite several leftwing parties
toward a common goal. Its membership is
predominantly Ashkenazi:
? Platform. Major territorial concessions on the West
Bank and Gaza Strip; peaceful coexistence of Jews
and Arabs; direct dealings with Arabs or
Palestinians-including the PLO-if they first
recognize Israel's right to exist and UN Resolutions
242 and 338.
? Financing. United States and European Jewish
community; 20 wealthy Israeli families are relied
upon for funding large operations.
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? Successes. Staged 1984 Tel Aviv demonstration-
attended by at least 400,000 people-to protest
massacres at Sabra and Shatila that led to the
ouster of Ariel Sharon from the Defense Ministry;
persuaded army officers to publicly protest army
brutality toward Arabs in Lebanon, which led to
military trial and conviction of four Israeli soldiers.
? Plans. Increase support in Sephardi-dominated
development towns and deprived city areas by
advocating that economic assistance be provided for
them rather than the occupied Arab territories; help
Arab citizens of Israel and Palestinians in the
occupied territories intensify political activity to
strengthen their civil rights
Hamizrah el Hashalom (East for Peace). Founded in
the early 1980s by Sephardi intellectuals, teachers,
and students, Hamizrah el Hashalom seeks to
promote peace and to discount the Ashkenazi claim
that Sephardim are rightwing fanatics:
? Platform. Coexist with Arabs; improve development
towns in the Negev desert; promote equal rights for
Arabs; and strengthen understanding between
Ashkenazim and Sephardim.
? Financing. Independent donations from the
Sephardi community.
? Successes. Formed the Committee for Israeli-
Palestinian Dialogue to meet regularly with leading
West Bank Palestinians; Neighborhoods Against
Racism and Youth Against Racism to protest Meir
Kahane's ultrarightwing Kach movement and the
Knesset law outlawing direct contact with the PLO.
Yesh Gvul (There Is a Limit). Founded in 1982 by
reserve soldiers denouncing the war in Lebanon and
demanding total Israeli military withdrawal, Yesh
Gvul's members are predominantly young, middle-
class Ashkenazim:
? Platform. Denounce the government's policy of
military reprisals in Lebanon as terrorism; oppose
annexation of the West Bank and Gaza; and
promote civil disobedience to abet the group's
protest activities.
? Successes. October 1986 demonstration outlining
the Green Line, or pre-1967 boundary between
Jordan and Israel, as a means of warning the Israeli
public against blind acceptance of the territories as
an integral part of Israel.
? Plans. Protest what the group perceives as the
military government's favorable treatment of the
Gush Emunim and other settlement movements on
the West Bank and alleged army protection for
prosettlement demonstrations
Oz Veshalom and Netivot Shalom (Israeli religious
peace movements). Both groups were founded in 1983
by leaders of the Orthodox Jewish community to
oppose Meir Kahane's racist ideology:
? Platform. Promote dialogue between Arabs and
Israelis; foster religious and political tolerance by
returning to traditional Jewish religious precepts;
return the lion's share of occupied Arab lands
excluding East Jerusalem.
MA ANE (Response). An umbrella organization
founded in 1985 by former members of Peace Now
and Mapam, a leftwing political party, Ma'ane seeks
to coordinate opposition to Kahane's Kach movement:
? Platform. Gain Knesset legislation clearly
outlawing Kach as a terrorist group.
? Successes. In February 1986 drew attention to
Kach's violent methods by demonstrating in
Jerusalem after fighting broke out between the two
groups.
Academic Groups
Based in universities, academic groups hope through
the educational process to break down cultural and
social biases within Jewish society and between
Israelis and Arabs. According to US Embassy
reporting, Israeli universities have begun to lean to
the left after a brief pro-Likud period in the late
1970s and early 1980s. This does not reflect a
nationwide shift to the left. Politically active students
have long viewed participation and visibility on
campus as a potential foundation for a future political
career. Several Knesset members currently active in
both Likud and Labor emerged from university
political groups.
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International Center for Peace in the Middle
East. Founded in 1981 by former Foreign Minster
Abba Eban, this group functions as a political lobby
seeking to promote public acceptance of major Israeli
concessions as the price for peace and accommodation
with the Arab world. The group maintains
nonpartisan ties to Labor, Mapam, Shinui, the
Citizens' Rights Movement; has contacts with
prominent Palestinians on the West Bank; and enjoys
support and financing from wealthy European
benefactors:
? Platform. Educate Arab and Jewish children
together to reduce cultural barriers and strengthen
public support for territorial compromise on the
West Bank.
? Successes. Established the Jewish-Arab Council for
Peace, which holds frequent meetings with
Palestinian leaders in Israel and abroad.
Political Parties and Factions
Far-left political parties such as the Communist
Rakah party and the Progressive List for Peace have
removed themselves from Israel's political
mainstream by refusing to accept Israel as a Jewish
state. In coalition politics, the Labor Party looks to
Zionist leftwing parties such as Mapam, the Citizens'
Rights Movement, Yahad, and Shinui as potential
partners in government. Despite this advantage, the
smaller leftist parties are riven by internal feuding
and possess only limited electoral appeal.
Mashov. Yossi Beilin, political director general of the
Ministry of Foreign Affairs, and Nimrod Novik,
another close aide to Foreign Minister Peres, are
leaders of this dovish faction of the Labor Party:
? Platform. Gradual abolition of the civilian
administration in the West Bank and increased
Arab responsibility for municipal, economic, and
social affairs.
Yahad. Led by political maverick Ezer Weizman,
Yahad joined the National Unity government in 1984
and subsequently merged with the Labor Party.
Weizman became Minister Without Portfolio and was
active on former Prime Minister Peres's behalf in
seeking better relations with Egypt and Israel's Arab
community. In Shamir's government Weizman will
assume as yet undefined duties:
? Platform. Advocates equal rights for Arabs in Israel
and talks with any Palestinian group-including the
PLO-that first renounces terrorism.
Citizens' Rights Movement. A predominantly
Ashkenazi party founded in 1973 by Shulamit Aloni
as a feminist and antireligious movement, the
Citizens' Rights Movement has become a major
proponent of secular ideologies. Aloni proposes
establishing a UN Council of Democracies to cut
through the Arab-Israeli dispute and help reach a
peace agreement. Former Prime Minister Peres gave
Aloni tacit approval to explore her proposal, but, in
our judgment, her movement's limited electoral
appeal will continue to stymie Aloni's initiative:
? Platform. Urges the government to grant
Palestinians in the occupied territories self-
determination and guarantee Arab citizens of Israel
full civil rights.
Mapam. A member of the Labor Alignment, Mapam
refused to join the National Unity government in
1984. Several members met without party sanction in
Romania in November with PLO representatives
under the auspices of the Romanian Writers'
Association:
? Platform. Calls on Israel and Palestinians to
recognize each other's rights to exist and to self-
determination; peace negotiations should be
conducted by Israel, Jordan, and an authorized
representative of the Palestinian people, which could
be the PLO.
Mapam
? Financing. Primarily by Kibbutz Artzi, a group of
kibbutzim whose members are predominantly
Shinui. A remnant of a 1977 attempt to form an
independent centrist block, Shinui's members are
predominantly young, middle-class Ashkenazim.
Shinui garnered the majority of the Israeli Druze vote
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Secret
Peace Now. Most prominent; calls for territorial
concessions and Israeli dialogue with any Arab party
recognizing Israel.
Hamizrah el Hashalom. Only Sephardi-led group;
calls for Arab-Israeli coexistence, greater
understanding between Ashkenazim and Sephardim,
and development of Negev instead of the occupied
territories.
Yesh Gvul. Opposes military retaliation and
territorial annexation; promotes civil disobedience.
Mashov. Dovish faction in Labor close to Peres; urges
greater Arab responsibility in occupied territories.
Yahd. Three Knesset seats, merged with Labor
during current coalition; calls for equal rights for
Arabs in the territories and Israeli dialogue with
PLO if it renounces terrorism.
Citzens' Rights Movement. Four Knesset seats;
proposes UN Council of Democracies, a secular
Israeli state, and full civil rights to Arabs in the
occupied territories.
Oz Veshalom, Netivot Shalom. Two religious
movements; oppose Kach, call for return of all
occupied territories except East Jerusalem.
Ma'ane. Includes former members of Peace Now and
Mapam; calls for outlawing of Kach as terrorist
group.
International Center for Peace in the Middle East.
University-based intellectuals; believes education will
break down cultural biases and promote peace;
advocates territoral compromise.
Mapam. Six Knesset seats; calls for mutual
recognition between PLO and Israel, negotiations
with Jordan and PLO.
Shinui. Three Knesset seats; proposes electoral
reforms; maintains Druze support; remains open to
territorial concessions.
Progressive List for Peace. Two Knesset seats;
advocates Palestinian state on the West Bank with
PLO representation, secular Israeli state within pre-
1967 boundaries.
Rakah. Four Knesset seats; urges international
conference with Soviet participation, withdrawal
from all occupied lands, and recognition of the PLO.
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in the 1984 election because of its placement of an
Israeli Druze in the first place on its ticket:
? Platform. Advocates private enterprise and electoral
reform; remains open to the idea of territorial
compromise on the West Bank and Gaza.
Progressive List for Peace. Founded in 1984 in an
attempt to unite several leftist factions, the
Progressive List for Peace is a challenger to the
Rakah Communist Party for Arab support but
remains out of consideration for coalition building:
? Platform. Urges the Israeli Government to establish
a Palestinian state on the West Bank with PLO
representation and promotes a democratic, secular
state for both Jews and Arabs within pre-1967
boundaries.
? Successes. Organizes annual Land Day
demonstrations commemorating the confiscation of
Arab lands in Galilee in 1967 and maintains land
fund for displaced Arab farmers. Party leader
Mi'ari claims to have secured an agreement with
Arafat in June 1986 to resolve the Arab-Israeli
conflict through dialogue, not terrorism.
Rakah. A Soviet-oriented Communist party, Rakah is
unappealing to mainstream Israeli society, but for
years it has been the major proponent of Arab rights.
Like the Progressive List for Peace, Rakah is
unacceptable as a potential government coalition
member:
? Platform. Follows Soviet Communist line, calling
for an international peace conference on the Middle
East to include Moscow; Israeli withdrawal from all
occupied Arab territory-including East Jerusalem;
and recognition of the PLO
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The Western Sahara Conflict:
The Stalemate Continues
The dispute over Western Sahara shows no sign of a
diplomatic or military solution. Although Morocco,
Algeria, and the Algerian-backed Polisario guerrillas
publicly support a negotiated settlement, none are
ready to make the compromises necessary to end the
war. During the past two years Morocco has improved
its military position, but Algeria continues to hold the
diplomatic upper hand. Domestic factors probably are
not enough to encourage Morocco or Algeria to
intensify the fighting. The most immediate danger is
that either party will seek outside help or attempt to
include Mauritania in the battle zone to break the
deadlock. Such developments would heighten the risks
of direct conflict between Algeria and Morocco and
complicate efforts by Washington to expand ties to
both countries.
A War of Attrition
Eleven years of combat between Moroccan troops and
Algerian-backed Polisario insurgents for control of
Western Sahara have produced a stalemate. We
believe that military activity is at the lowest level in
years. The primary reason for the reduced activity is
that Rabat has completed the seventh portion of an
earth berm. The berm has helped King Hassan to
consolidate his hold on two-thirds of the former
Spanish colony, including all of the economically
useful territory. The berms give Moroccan troops a
shield for static defense. The guerrillas have engaged
in only periodic, small-scale raids that have cost both
sides only a handful of casualties and not changed
Morocco's territorial control. We believe that
Morocco's strategy has enabled it to control the
region but not to pursue an all-out military victory.
Although King Hassan fields about 80,000 troops in
the region against the Polisario's 3,000 combatants,
we believe that the Polisario, with Algerian support, is
capable of maintaining or expanding the current level
of fighting. Algeria provides sanctuary and economic
aid for Polisario troops, the Sahrawi refugees aiding
the insurgents, and the Saharan Democratic Arab
Republic (SDAR)-the Polisario government-in-exile.
Algiers also gives the insurgents an impressive array
of weapons. The dispute is at a political impasse as
well. No major diplomatic initiative has been
launched by either side in nearly two years. In early
1985 Algeria proposed that Morocco assume
sovereignty over the territory but allow the SDAR a
high degree of autonomy. Earlier this year UN
mediators engaged Moroccan and SDAR diplomats
in "proximity talks" in New York. They based their
initiative on a call by King Hassan last fall for a
unilateral cease-fire and a renewed commitment to a
referendum that would decide the status of Western
Sahara. Hassan probably made these gestures to pave
the way for his trip to Washington last summer-
subsequently canceled-and to quell criticism that
Morocco was not seeking a peaceful solution to the
dispute. The talks have foundered primarily because
the two sides cannot agree on the terms of the cease-
fire and a political settlement.
Morocco. We believe that the driving force behind
King Hassan's prosecution of the war is a strong
national commitment to the cause. Most Moroccans
support the King's goal of incorporating the region.
According to the US Consul in Casablanca,
Moroccans believe the war is an attempt by Algeria to
dominate Western Sahara as well as extend its
influence in the Maghreb, and that King Hassan
should pursue the conflict until Rabat's goals are
achieved. The war imposes relatively limited burdens
on Morocco. We believe the war costs at least
$500,000 each day, a price the regime has sustained
without undercutting urban living standards.
Although desert conditions impose hardships on the
troops, pay differentials and other benefits have
precluded widespread military dissatisfaction.
Algeria. Algiers, for its part, believes that Hassan's
control over the territory would mean Moroccan
dominance of the Maghreb. Algeria originally
supported independence for Western Sahara, but
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President Bendjedid has revised his government's
position because of Moroccan military gains, the
decline in Algerian oil revenues, and the burden of
supporting Polisario refugees. His new objective-as
suggested in his 1985 initiative-appears to be a face-
saving formula involving a semi-independent Western
Saharan state under a Moroccan flag.
The Polisario Front. The Polisario lacks the military
strength to attain independence. Bendjedid's publicly
announced willingness to accept less than total
independence for Western Sahara and his limits on
Polisario military activity have created tension within
the anti-Moroccan alliance. The Polisario hopes to
regain the military initiative by adopting more
aggressive tactics, including use of armor in
engagements, commando raids behind the lines, and
even terrorism against Moroccan interests.
Outlook
Diplomatic Initiatives. In our view, the chances of a
negotiated settlement in the next three to five years
are dim. Only a major change in players in Rabat
would cause us to revise this judgment. There are no
indications that King Hassan and President Bendjedid
are prepared to meet or even authorize low-level
meetings. As long as King Hassan has the upper hand
militarily, he will not agree readily to substantive
discussions with Algeria, let alone with the Polisario.
Third-party mediation by the United Nations has
proved feckless, and this organization is not likely to
find a solution acceptable to both sides any time soon.
Military Initiatives. Both sides want to avoid making
Algeria a full participant in the war. King Hassan is
likely to continue his current strategy, since it has
proved successful. We do not see any domestic
problems in the short term that would require him to
reconsider his tactics. Nevertheless, there are
developments that could lead the King to become
more aggressive:
? If outsiders, such as Libya, became involved,
particularly if linked to the Polisario's devising
tactics to penetrate the berm.
? A sharp decline in the Moroccan economy,
prompting Rabat to beat the war drums to head off
widespread unrest over declining living standards.
? A sustained campaign of Polisario commando or
terrorist raids deep inside Moroccan territory.
Algeria is likely to continue supporting the war at a
reduced level because of shortages of funds caused by
declining oil revenues and uncertainty over military
strategy against the berm. Nonetheless, Bendjedid
may have to take a more aggressive posture if:
? Algerian frustrations build over the lack of progress
toward a negotiated settlement.
? Elements opposed to Bendjedid's policy of
"moderation" gain greater influence in the Algerian
military or ruling party.
? A domestic and international perception develops
that Morocco, through the war, was gaining the
upper hand in the Maghreb.
Foreign Intervention. The absence of progress toward
a negotiated settlement increases the potential for
foreign intervention as a means to break the
stalemate.
Although we have no firm evidence that Morocco and
Algeria are seeking foreign assistance, the breakup of
the Moroccan-Libyan union raises the possibility of
renewed Libyan involvement in the conflict.
In our view, Algiers will allow Libya to resume aid to
the Polisario because of Algeria's economic problems
and the burden of supporting the conflict. Although
the Polisario could press Algeria to accept increased
military aid from Libya, Algiers will not allow Tripoli
to impose a military and diplomatic strategy on the
Polisario. Libya probably would accommodate Algiers
in the hope of forming closer ties to Algeria. Tripoli's
support to the Polisario also would signal Qadhafi's
displeasure over Hassan's abrogation of the
Moroccan-Libyan union. Nevertheless, because of his
own financial problems and interest in maintaining
ties to Morocco, Qadhafi is likely to provide less
sophisticated weapons than the armor and surface-to-
air missiles he sent to the Polisario in the early phases
of the war.
Morocco almost certainly would use resumed Libyan
support to the Polisario to press France and the
United States to join the fray. If Hassan is dissatisfied
with the response from Paris and Washington, he
might look to Israel. Algeria already believes-
erroneously, in our judgment-that the Israelis are
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supporting Morocco militarily in Western Sahara as a
result of the meeting between Hassan and the Israeli
Prime Minister last summer.
Morocco and Algeria may also attempt to change the
status quo by expanding the war into Mauritania.
That country represents the soft underbelly of the
Western Sahara war, given the lack of control by
Nouakchott over its northern frontier. Both countries
could try to bring Mauritania, which is neutral, into
its sphere of influence. Algeria and the Polisario see
northern Mauritania as a convenient base of
operations for expanded attacks on Moroccan forces.
For Algiers, such an option would avoid the danger of
Moroccan hot pursuit into Algerian territory and a
major military clash. At the same time, Hassan could
use hot pursuit into Mauritania to satisfy demands
within his military to respond aggressively to Polisario
assaults.
A less likely possibility is an attempt by Bendjedid to
influence Mauritanian President Taya to allow the
Polisario to base its forces in his country's northern
region. If Hassan perceived that Bendjedid were
following this course, he too might attempt to
undermine Taya's regime.
Rabat's reluctance to go this route would be based on
the likelihood of Algerian intervention. Hassan almost
certainly is aware that Algiers would justify such a
move under the joint defense provisions of its Treaty
of Fraternity and Concord with Mauritania.
Prospects for US Interests
Continuation of the stalemate gives Washington the
maneuvering room necessary to expand ties to Algeria
and to develop a more balanced relationship with the
principal players in the Maghreb. Hassan would like
to have the full support of the United States for its
position in the dispute, but he probably will be
satisfied with Washington's neutrality.
Hassan nonetheless wants further US military aid, in
particular armor and trucks. In the unlikely event that
Algerian intervention in the conflict turned the tide
against Morocco, Hassan almost certainly would
increase his pressure on Washington for more
sophisticated weapons such as the F-16 fighter
aircraft. Moroccan acquisition of the F- 16 would have
a limited effect on the war, however, because of
Algeria's overwhelming superiority in the air. To the
extent that Washington does not respond to Moroccan
needs, Hassan would turn to France.
Algerian-US relations are not likely to be affected by
the Western Sahara conflict, unless Algiers perceives
that a significant increase in US military assistance to
Rabat is responsible for a more aggressive Moroccan
posture. In such a case, Algiers almost certainly
would insist that Washington restrain Hassan or risk
a rupture in US-Algerian cooperation.
Algiers could also use increased US support for
Morocco as justification for giving the Polisario freer
rein to attack Moroccan positions along the berm or
civilian targets inside Morocco.
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Secret
Iraq-Kuwait: A Fragile
Alliance
The Iran-Iraq war and Iraq's need for Kuwaiti
support have influenced Baghdad to maintain good
relations with Kuwait despite unresolved territorial
claims between the two countries. Kuwait, more
fearful of a victorious Iran than an irredentist Iraq,
has provided Baghdad with financial, military, and
diplomatic support during the war. Baghdad has at
least temporarily shelved its territorial claims against
Kuwait, and consultations with Kuwait and other
Gulf states have become a regular feature of Iraqi
diplomacy. If the current regime in Baghdad remains
in power after the war, Iraqi moderation toward
Kuwait probably will continue for the short term.
Once Iraq's economy recovers and the threat from
Iran recedes, however, Iraq is likely to put more
pressure on Kuwait as Baghdad tries to assume a
dominant role in the region
Prewar Tension
Iraq's territorial designs on Kuwait were a repeated
source of tension between the two countries before the
Iran-Iraq war began. The dispute is based on
Baghdad's claim that Kuwait was an integral part of
Iraq under the Ottoman Empire and that Iraq, as
successor to this empire, should inherit the oil-rich
shaykhdom, including the islands of Bubiyan and
Warbah. Moreover, control of the disputed territory
has strategic significance for Baghdad. Iraq has only
80 kilometers of Gulf coastline, most of which are
marshy and unsuitable for construction of port
facilities. Before the war, most of Iraq's trade passed
through Basra, but Iraq built two alternative ports to
guard against an Iranian blockade-Umm Qasr for
general cargo, and Al Faw for oil exports. The
wartime closing of Basra has made control of the
Kuwaiti islands a strategic imperative for Iraq, since
Iran's blockade has cut off Iraq's access to the Persian
Gulf through the Shatt al-Arab and left Umm Qasr
the only port through which Iraq can export oil.
Historical Sparring Over Kuwaiti Territory
Immediately following Kuwait's independence from
the United Kingdom in 1961, then Iraqi Prime
Minister Qasim revived Iraqi historical claims and
declared Baghdad's sovereignty over Kuwait. Kuwait,
supported by the United Kingdom and the Arab
League, rejected Iraq's claims and tried to appease
Iraq by providing. financial assistance. Iraq
recognized Kuwait's existence in 1963, but the
common border is still disputed.
Tensions have erupted periodically since then. Iraqi
troops temporarily occupied Kuwaiti positions on
Bubiyan Island in 1971 and seized a Kuwaiti police
post overlooking Umm Qasr and a small strip of
adjacent territory in 1973. Iraqi forces occupied a
Kuwaiti border post at Samitah in 1975, and
Baghdad demanded the cession of Bubiyan and
Warbah in 1977, claiming that control of this
territory was essential for its national security. Iraqi
forces eventually withdrew from the border post but
retained the adjoining strip of Kuwaiti territory, on
which Iraq was already building military facilities.
In subsequent negotiations Iraq offered to drop all
claims to Kuwaiti territory if Kuwait agreed to
surrender a 20-kilometer strip of land near Umm
Qasr, the island of Warbah, and at least the northern
half of Bubiyan. Kuwait, sensitive to Iraq's history of
contesting border agreements but realizing the
strategic importance to Iraq of the two islands,
agreed to lease the territory around Samitah and the
two islands, provided Baghdad acknowledged
Kuwaiti sovereignty over the areas. Iraq refused, and,
despite several high-level discussions between Iraq
and Kuwait, a permanent solution to the territorial
dispute has not been found.
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moderate policy toward them.
interests more closely with those of its Gulf Arab
neighbors and will motivate Baghdad to continue its
Arab Gulf states.
Iraq's quest for a regional leadership role also may
discourage subversive efforts against the moderate
Baghdad appears to realize that
Wartime Cooperation
Iraq's invasion of Iran in September 1980 challenged
Kuwait's renowned ability to play off its two hostile
neighbors against one another. Kuwait initially
proclaimed its neutrality but soon assumed a pro-Iraqi
tilt. Kuwait felt constrained to support Iraq because it
perceived a victorious Iran as a greater and more
immediate threat. At the same time, it tried to
accommodate Iran to avoid military retaliation or
subversion of Kuwaiti Shias, who constitute over 40
percent of the native population.
Kuwait has provided generous financial, political, and
logistic support to Iraq since early in the war. This
support includes:
? Over $10 billion in economic aid.
? Transshipment facilities for Iraq-bound cargoes,
including Soviet-supplied military equipment.
? Increased oil production to help meet the needs of
Iraq's customers and to generate revenues for long-
term, interest-free loans to Iraq.
? Diplomatic support in the United Nations, the Arab
League, the Nonaligned Movement, and the Islamic
play into the hands of Iran.
attempts to overthrow the Gulf regimes might only
Nonetheless, barring a change of regime in Iraq,
Baghdad probably will become more demanding in its
dealings with Kuwait after the war and will renew
efforts to dominate regional politics. There are several
contentious issues that could lead Baghdad to revert
to its prewar bullying of Kuwait. Iraq has made little
effort to reconcile its border dispute with Kuwait,
despite Kuwait's generous wartime assistance.
Baghdad will not cede the small strip of Kuwaiti
territory that it appropriated in 1973, in large part
because it has built a major naval base at Umm Qasr.
Saddam also has asserted that Iraq needs Bubiyan
and Warbah to protect the naval base and to help
keep open its Gulf oil lanes in the event of another
war. We believe, however, that Iraq will not try to
seize the islands because the political costs would be
too high. Moreover, the smaller Gulf states have long
been wary of Iraq's hegemonic ambitions and would
probably cut aid to Baghdad if it seriously threatened
Kuwait. Nevertheless, Baghdad is unlikely to forget
its longtime territorial claims and may renew them
periodically to remind Kuwait that Iraq is still a force
to be reckoned with.
Conference Organization.
Postwar Relations
The war has made Baghdad realize that in an all-out
confrontation with Iran, Iraq lacks strategic depth
because of the vulnerability of its trade routes. Iraq's
major preoccupation after the war will be to rebuild
its crippled economy and position itself for a possible
renewal of fighting. To accomplish these goals,
Baghdad will need allies in the Gulf. The alternative
oil outlets that Iraq has developed, such as the
pipeline through Saudi Arabia, are intertwining Iraq's
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North Yemen's Tense Military
Relationship With Moscow
Sanaa has recently intensified its efforts to replace
Soviet military advisers and restrict their access to
military facilities in North Yemen. President Salih is
trying to counter Soviet pressures-including the
threat of an arms embargo-aimed at discouraging
Sanaa from supporting South Yemeni exile forces and
encouraging political accommodation with the current
regime in Aden. It is unlikely that Salih can reduce
his reliance on Soviet military aid, but he probably
hopes his overtures to moderate Arab states will
secure additional non-Soviet aid and cause Moscow to
be more generous with new arms. In any event,
tensions between Sanaa and Moscow are likely to
increase in the near term.
Baiting the Bear
Salih's recent moves to replace Soviet advisers have
angered the Soviets.
arrive in early
October to fill Soviet teaching positions at North
Yemen's new staff officer college.
Salih has solicited additional military assistance from
Egypt, including replacements for its Soviet-made
weapons
In another snub at Moscow, the North Yemeni Air
Force recently began unprecedented training
involving both US- and Soviet-trained and -equipped
combat aircraft squadrons without consulting the
F-5s soon will conduct similar exercises with MIG-21s
based closer to the South Yemeni border. Three
North Yemeni pilot instructors from the F-5 squadron
have been assigned to each of the three Soviet-
equipped squadrons.
The Trouble With Ivan
Salih's latest efforts to replace Soviet military
advisers and arms probably are intended primarily to
counter Moscow's attempt to use military aid as a
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has refused to consider Sanaa's request for new
military assistance and has threatened to substantially
increase military aid to South Yemen.
the Soviets are delaying the delivery of
previously promised equipment such as additional
SA-3 surface-to-air missiles
Recent public remarks by Salih have given the Soviets
cause for concern. Salih used his National Day
address on 26 September to call for an end to North
Yemen's reliance on one nation for military aid-
remarks that surprised the Soviets,
Although the Saudis have not
promised North Yemen major new military aid, the
defense attache in Sanaa reports the Soviets are
concerned that Salih's recent meeting with King Fahd
may have produced a commitment for major military
aid for Sanaa and its program to support the exiles.
military advisers in North Yemen
that Soviet military advisers were removed from
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North Yemeni units near the South Yemeni border
and on several occasions were barred from airfields at
Sanaa and Taiz.
military advisers to monitor South Yemeni exile
activity or North Yemeni military sites near the
border. Salih may also seek Arab pilot instructors and
technicians to support intensified crosstraining
between his US and Soviet aircraft squadrons. In
addition, he may try to obtain Arab air defense
personnel to augment or selectively replace Soviet
advisers serving in the Marib oilfields, where Sanaa
plans to deploy its first SA-3 missiles to reduce its
vulnerability to South Yemeni air attack. Salih,
however, will be unable to completely replace Soviet
advisers in the Air Force or air defense forces, and
North Yemen will continue to rely heavily on Soviet
maintenance and logistic support in those services.
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Salih's moves probably have been facilitated by
dissatisfaction in his armed forces with Soviet advisers
and training.
crashed in early October, killing its pilot. Accidents
have claimed six of North Yemen's Soviet combat
aircraft this year, Sanaa
attributes the mishaps to poor Soviet flight training
and shoddy maintenance. The North Yemenis
strongly prefer US-supplied F-5 fighter-bombers,
an impression
that was reinforced in mid-October when the F-5s
found and intercepted an unidentified aircraft after
MIG-21s had been scrambled and failed to do the job.
Outlook
Financial constraints will limit Salih's ability to make
significant reductions in the Soviet military presence
in Sanaa, but he probably will be able to use the issue
to exert increased leverage on Moscow. The Saudis
probably are willing to subsidize a small number of
additional advisers from Arab states such as Egypt
and Jordan. Riyadh, however, is unlikely to subsidize
major military assistance to Sanaa without imposing
political conditions that Salih would find unpalatable.
Nonetheless, Salih probably will try to use even low
levels of assistance from moderate Arab states to
show Moscow that he has lined up potential non-
Soviet sources of aid and that an arms embargo by
Moscow could only reduce Soviet influence in North
Yemen. At the same time, Salih may try to obtain
new arms from Moscow by promising to refrain from
supporting South Yemeni exile operations, even
though he remains opposed to the current Aden
regime.
In any event, we believe that tensions between
Moscow and Sanaa will increase over the short run as
Salih continues to restrict the ability of Soviet
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India: The Succession
Struggle in the Nuclear
Establishment
Prime Minister Rajiv Gandhi will soon decide
whether to appoint a new head of India's nuclear
program or keep its present chief, Raja Ramanna, for
another year. The future chairman may not have
much influence on decisions about nuclear weapons,
but the selection could give some clues to the direction
of India's nuclear policy. According to US Embassy
reporting at least four Indian
scientists are in the running to replace Ramanna, who
passed retirement age in February 1985 but continues
to lobby hard to remain as chairman.
The Role of the Chairman
The offices of Secretary of the Department of Atomic
Energy (DAE) and Chairman of the Atomic Energy
Commission are traditionally held by the same
person. He serves as a national lobbyist and
spokesman for the nuclear establishment. The next
chairman's effectiveness will be judged by how
quickly India can develop its nuclear power
capabilities and achieve the DAE's goal judged
optimistic by the US Embassy-of 10,000 megawatts
(MW) of power by the year 2000. (Current capacity is
about 1,330 MW, with projects under construction
slated to increase capacity to 2,270 MW by 1992.)
The DAE Secretary's official capacities include
overseeing the design, construction, commissioning,
and operation of India's atomic power stations. He
oversees the Bhabha Atomic Research Center in
Bombay, the Research Reactor Center in Kalpakkam,
the Nuclear Fuel Center in Hyderabad, the Heavy
Water Project in Bombay, and the Power Projects
Engineering Division in Bombay.
emphasis on opponents' mistakes and their own
accomplishments as managers and are all but ignoring
differences about nuclear weapons. Nevertheless, both
foreign and Indian observers probably will see
Gandhi's choice as a strong indication of whether
India will decide to build a nuclear arsenal.
The future nuclear chief, who presumably will be a
technocrat, is not likely to have an extensive personal
role in decisionmaking about nuclear weapons 25X1
programs despite the DAE's role in planning and
implementing nuclear policy. Gandhi holds the
defense portfolio and has the final say on such
programs, according to US Embassy officers. That
decision will almost certainly depend largely on
India's perceptions of Pakistani nuclear development
and on how the political establishment-led by
Gandhi-chooses to respond to these perceptions.
Embassy officers note that the chairman would sit on
one of the two committees Gandhi would look to for
advice and support:
? The Atomic Energy Commission. This body, 25X1
including Ramanna, oversees atomic energy efforts.
Five of its eight members have technical/ nuclear
positions.
? The Political Affairs Committee. Composed of five
senior Cabinet officials-none of whom have
technical backgrounds-this committee advises
Gandhi on a whole spectrum of national and
international issues.
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differences among senior nuclear officials. Views on
nuclear weapons are only one of many factors that
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determine positions on most nuclear issues. Opposition
to Soviet nuclear power plants, for example, results
partly from fear that Soviet-imposed safeguards will
hinder the production of weapons, but it is also
because of personal rivalries, a belief that accepting
foreign help hurts the prestige and reputation of
India's nuclear program, the incompatibility of Soviet
reactors with some aspects of the Indian program, and
concern about the safety of Soviet reactors.
We believe that many doves in the nuclear
establishment would go along with a weapons
program if convinced that Pakistan had a nuclear
arsenal. Public statements by doves opposing weapons
may reflect the official government line more than
Ramanna's Tenuous Prospects
Ramanna reached the mandatory retirement age in
January 1985 but received an extension from Prime
Minister Rajiv Gandhi.
Ramanna is now pressing Gandhi to further
extend his term as DAE Secretary.
Ramanna has tried to convince Gandhi
that he has too little time to make a selection and that
Ramanna's election as President of the International
Atomic Energy Agency Conference for the coming
year requires that he remain in his position.
Ramanna's detractors dispute both claims.
Ramanna's stalwart, effective opposition to nuclear
safeguards and the nonproliferation treaty often
places him in opposition to US nuclear proliferation
policy. He has told Embassy officers that he believes
US nuclear nonproliferation policy is anachronistic
and unnecessarily limits low-level technology transfer.
These officers also say that Ramanna, who was the
architect of India's "peaceful nuclear explosion" in
1974, is clearly frustrated by the lack of US
cooperation in the export of spare parts and enriched
fuel. He opposes accepting Soviet offers of nuclear
power plants, in part because the offers require
implementing safeguards,
Growing Problems for Ramanna
Gandhi blames mismanagement by the current
nuclear establishment for a number of setbacks over
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have included design problems that may result in the
decommissioning of one reactor, a four-month
shutdown of another for a generator replacement and
the spillage of tons of heavy water when the reactor
was restarted, design problems that delayed the
startup of a third reactor, and a well-publicized
explosion and fire at a heavy water plant. Ramanna
has countered with regular public speeches about the
program's accomplishments, especially the
development of a breeder reactor and a uranium
enrichment capability.
The Candidates
Although Ramanna seeks to preserve his power, at
least four other scientists are contenders for the
appointment:
? M. G. K. Menon, Science Adviser to the Prime
Minister. Menon, 58, who holds two of the most
strategic posts in the Indian science and technology
establishment, is a favorite contender in DAE
circles, His
detractors note that he is nearing mandatory
Menon's office as science adviser to the Prime
Minister is modeled on the White House Office of
Science and Technology Policy. His views on
nuclear weapons presumably are close to those of
Gandhi. Menon has worked extensively on sensitive
Indo-US technology transfer cases. Embassy
officers say Menon has "great appreciation" for US
science and technology and has helped to foster
bilateral cooperation in this area. An internationally
recognized physicist, Menon spent years researching
cosmic ray and elementary particle physics.
? Vasant Gowarikar, Secretary, Department of
Science and Technology. Although we do not know
Gowarikar's views on nuclear weapons development,
we believe he would favor channeling Indian nuclear
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energy into peaceful projects. As cochairman of the
Indo-US Subcommission on Science and
Technology, he has pressed for quick and tangible
progress on cooperative projects. We believe he
would bring the same attitude to India's push for a
rapid increase in nuclear energy generation.
Gowarikar, 53, is 4 candidate because of his
managerial ability.
Gandhi's respect for Gowarikar is indicated by
his appointment to the non-DAE committee
investigating the explosion at the heavy water
factory. Although the space program is far behind
its launch schedule, Gandhi probably has not
blamed Gowarikar, who has been Science and
Technology Secretary only since July 1986. US
Embassy officers say Gowarikar, a specialist in
propellant rocket engines, is one of India's most
knowledgeable science and technology advisers and
the most valuable contact for new Indo-US
activities in this area. He is the only one of the
contenders who is not a member of the Atomic
Energy Commission.
? M. R. Srinavasan, Chairman, Nuclear Power
Board, Atomic Energy Commission, and Director,
Power Projects Engineering Division, DAE. Early
this year Srinavasan was quoted in the press as
stating, "We are not in favor of using nuclear
energy for manufacturing bombs ....We are using
(it) for peaceful purposes only." During his tenure as
Nuclear Power Board Chairman, Srinavasan has
emphasized creating an indigenous capability for
manufacturing nuclear equipment and components.
? P. K. Iyengar, Director, Bhabha Atomic Research
Center. We believe Iyengar, 55, a friend and protege
of Ramanna, would share his mentor's hawkish line
on nuclear proliferation. Iyengar received India's
second-highest civilian award for his role in the
1974 nuclear test. He heads India's premier center
for nuclear energy research and development. The
Bhabha Atomic Research Center has at least four
research reactors on its premises. He is an expert in
materials with specialization in neutron and reactor
physics and solid-state physics.
Outlook
A year ago Iyengar appeared to be the almost certain
choice to replace Ramanna. Iyengar and Ramanna,
however, have received more of the blame than
Srinavasan for setbacks in the nuclear program.
Srinavasan may now be the favorite, but the setbacks
have also increased the chance that Gandhi will pick
someone like Menon or Gowarikar from outside the
nuclear establishment. Who Gandhi chooses could
significantly affect how well the nuclear power
program is run and how effectively it can compete
with other government programs for resources, and, to
a lesser extent, this could influence decisions about
questions such as whether India should accept
extensive foreign nuclear assistance. Gandhi's choice
is likely to have little impact on whether India builds
nuclear weapons.
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he is the leading proponent of
accepting Soviet reactors, arguing that India cannot
meet its long-range electricity production goals
without foreign help.
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The Pakistan People's Party:
Pretenders to the Throne
The Pakistan People's Party (PPP), the country's
largest opposition party, is trying to force a change of
government in Pakistan, but its efforts are hindered
by factional infighting, rival opposition parties, and
public indifference. We do not believe it has more
than a slim chance of forcing Zia out of office by
violent demonstrations. The party still has
considerable drawing power, however, with a
reputation as the party for Pakistani peasants, urban
slumdwellers, leftist students, and other have-nots.
The memory of former Prime Minister Zulfikar Ali
Bhutto, embodied in his daughter, party leader
Benazir Bhutto, also keeps the party together. We
believe that, if the PPP abandoned violent tactics and
was given the opportunity to compete in fair elections,
it would have at least an even chance of coming to
power. A Bhutto-led PPP government would try to
maintain cordial relations with the United States but
would also probably take a more accommodating
stance on the Afghanistan issue.
The Party of Bhutto
The Pakistan People's Party was organized in 1967 by
Zulfikar Ali Bhutto, a wealthy landlord from Sind.
The party's slogan, "Islam Is our Faith, Democracy
our Policy, and Socialism our Economy," was
designed to appeal to as broad a spectrum of
Pakistanis as possible. It drew supporters from rural
laborers, urban migrants, and leftist students.
Bhutto's Sindhi background also was attractive to
those Pakistanis who felt alienated by what they saw
as increasing Punjabi domination of the country's
political and economic life
Bhutto and the PPP came to power in late 1971
following the failure of the previous martial law
regime to prevail in the war with India or prevent the
secession of East Pakistan (now Bangladesh). His
socialist policies alienated powerful groups such as
businessmen and Islamic fundamentalists, according
to scholarly studies. The PPP won the 1977 national
election, but Bhutto's opponents charged him with
rigging the polls and organized a movement to force a
new election. With disorder spreading, the Army
removed Bhutto from power and established a martial
law regime headed by Chief of Army Staff Zia-ul-
Haq, a Bhutto appointee.
Bhutto was executed in 1979 after being convicted of
conspiracy to murder a political opponent. Leadership
of the PPP fell to his wife, Nusrat, and daughter,
Benazir.
Revival in 1986
After eight years of muted political activity under
martial law, PPP activity has picked up since the
restoration of civilian rule in December 1985 and
Benazir Bhutto's return to Pakistan in April 1986.
Bhutto returned with the goals of reviving the PPP,
leading a new opposition movement to force Zia's
removal, and holding a new national election to
replace the government of Prime Minister Junejo and
the Pakistan Muslim League. As reported by the US 25X1
Consulate in Lahore, the PPP's "Action Plan" to
topple Zia is summarized by the slogan "Throw Zia
out, Bring in Democracy." Bhutto has been vague in
her policy pronouncements, relying instead on
general, populist themes designed to retain her
father's political constituency.
Bhutto told US diplomats after her return that there
would be three stages to the PPP's campaign for
political change. The first would be a series of Bhutto-
led PPP rallies across Pakistan in April and May that
would demonstrate the popularity of the PPP. The
second phase would be to reorganize the PPP and 25X1
build up party enthusiasm and morale. The third
stage was to be a nationwide campaign of nonviolent
civil disobedience-fasts, labor strikes, and
demonstrations. She predicted to US officials that the
government would be pressed to announce new
elections by fall 1986. Her campaign, however, went
off course in August when the government reacted to
illegal PPP demonstrations with mass arrests of party
leaders, including Bhutto.
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Benazir Bhutto is known for her sharp intellectual
and rhetorical skills. Her aggressive and
authoritarian style and lack of deference to party
elders have alienated many people. In the past,
Bhutto has relied excessively on her own strength and
done little to cultivate members of the National
Assembly or the military. Her recent failures,
however, have forced her to reassess her strength and
the efficacy of her strategy of popular agitation.
Bhutto, 33, first emerged in the limelight in 1972,
when she accompanied her father to negotiations with
India after the 1971 Indo-Pakistani war. After
receiving B.A. degrees in government from Radcliffe
College (1973) and in political philosophy and
economics from Oxford (1977), she returned to
Pakistan to see her father discredited by opposition
politicians, tried for political murder, and eventually
executed by President Mohammed Zia-ul-Haq's
regime. After attempting to mobilize public support
for her cause, she spent the following years under
house arrest. She was released in January 1984 and
went into exile in Europe. Her return to Pakistan last
April produced a massive outpouring of admirers and
curiosity seekers
Policy Positions of the PPP
The PPP has not issued a comprehensive program
recently, but party leader Benazir Bhutto has
enunciated a series of positions designed to appeal to
the PPP s natural constituency of Pakistani have-
nots:
? Domestic:
- Resignation of President Zia and new party-based
elections.
- Release of all political prisoners.
- Full restoration of 1973 constitution.
- Raising the minimum wage to 1,000 rupees ($63)
per month.
- Rehiring of workers fired from government
enterprises.
- Mixed economy; no further nationalization of
industries.
- Ceiling on landholdings.
- Reduction of taxes for small farmers while
imposing agricultural taxes on large landowners.
? Foreign:
- Genuinely nonaligned foreign policy.
- Equally good relations with the United States
and the Soviet Union; aid with no strings
attached.
- Withdrawal of Soviet troops from Afghanistan
and return of Afghan refugees (PPP is publicly
silent on issue of direct talks with Kabul).
- Gradual normalization of relations with India on
basis of 1972 bilateral Simla accords.
PPP Organization
The PPP has a centralized party organization, with
power concentrated at the top. Benazir Bhutto and
Nusrat Bhutto are cochairpersons, althou h Benazir
wields effective control because Nusrat is
living in exile in Europe. The party's general
secretary, Tikka Khan, runs day-to-day party
operations under Bhutto's orders. There are PPP
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Pakistan's four provinces. US diplomatic reporting
indicates that the PPP has effective organizations in
Sind and Punjab but is relatively weak in Baluchistan
and the North-West Frontier Province. Although
membership data are unavailable-the PPP refuses to
register with the government-we believe, on the
basis of US diplomatic reports, that the PPP has the
largest membership of all Pakistani political parties.
Besides the regular party apparatus, the PPP has
several auxiliary organizations that act in a
supporting role for the party's activities. The Pakistan
Student's Federation (PSF) is the PPP's student wing
and has branches at most colleges and universities in
the country,
US diplomatic reporting indicates that the
PSF is often involved in antigovernment and anti-US
demonstrations. The PPP also established in 1985 a
youth wing called People's Youth with the goal of
providing ideological training in preparation for
future party activities.
Disorganized in Reality
Despite its size and popularity with important
segments of the population, the PPP is fractured and
disorganized. Serious cleavages emerged in May when
Bhutto arbitrarily dismissed Ghulam Mustapha Jatoi,
the PPP leader in Sind. US diplomatic reporting
indicates that Bhutto distrusts the older PPP landlord
types, represented by Jatoi, and wants to replace them
with younger persons she considers more loyal to her
goals. In response, Jatoi and his followers organized in
August the National People's Party, a moderate
opposition party made up largely of anti-Bhutto
politicians. Bhutto is
concerned that other disaffected PPP members will
defect to Jatoi's party.
The PPP is also divided between moderates and
radicals. The radicals are pressing Bhutto to adopt
more confrontational positions on domestic and
foreign policy issues. Sources of the US Consulate in
Lahore reported in May that People's Party leftists
were criticizing Bhutto for her relatively moderate
stance toward the United States.
Strained Ties to Other Parties
Another one of the PPP's Achilles' heels is its
difficulty in cooperating with other opposition parties.
The smaller parties of the Movement for the
Restoration of Democracy (MRD), a loose coalition of
opposition parties organized in 1981, often complain
about the PPP's highhandedness and tendency to
ignore their opinions. One member of the MRD, the
Tehrik-i-Istiqlal party, withdrew from the coalition in
October after the PPP criticized its decision to
register with the government-run election
commission. The US Embassy reports that MRD
moderates resent the fact that Bhutto dragged them
into a premature and counterproductive confrontation
with the government last August.
The PPP also has had trouble with far-left parties in
the MRD, which are pushing for more radical
approaches. The US Consulate in Peshawar reported
that a rally jointly held by the PPP and the leftist
National Democratic Party in May turned unruly
when the leftists accused the PPP of "tilting" toward
the United States. US Embassy reporting indicates
that at an MRD meeting in June, six leftist parties
proposed a resolution over the PPP's objections
condemning the United States for "prolonging the
Afghan war and endangering Pakistan's security."
The PPP has also strained ties to MRD parties that
are agitating for more provincial autonomy. The
Awami National Party, led by veteran leftist
politician Abdul Wali Khan, promotes separatism for
the Pushtun-speaking people of the North-West
Frontier Province. The Pakistan National Party, led
by Ghaus Bakhsh Bizenjo, similarly pushes for more
autonomy for Baluchistan. Although Bhutto calls for
less federal interference in provincial affairs, she has
reaffirmed her belief in the country's territorial
integrity to win support in Pakistan's dominant
Punjab province.
Aftermath of the August Unrest
The failure of the PPP's agitation last August to force
Zia's removal and a new election has widened
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provincial disagreements within the PPP. At a PPP
Central Committee meeting in Karachi in September,
Sindhi PPP members berated Punjabi members for
their alleged lack of support for the antigovernment
agitation in Sind, according to US Embassy reports.
Bhutto said she felt deceived by local Punjabi party
leaders who had failed to produce promised large
crowds in support of the PPP, according to Embassy
sources.
Probably the most noticeable sign of intraparty
dissension, however, was the surprise resignation in
October of Sind PPP leader Makhdoom
Khaliquzzaman. According to sources of the US
Consulate in Karachi, Khaliquzzaman was forced to
resign by Bhutto because he had publicly criticized
Punjab PPP leader Jahangir Badar for his failure to
rally Punjabis in support of PPP demonstrations in
Sind. Although others in the party have also criticized
Badar's leadership, Bhutto refused to dismiss him for
fear of dividing the party in Punjab.
Bhutto has resumed holding mass PPP rallies across
Pakistan to regain momentum and improve party
morale. She told US diplomats in October she was
planning tours of Sind and Punjab through early
December. In a recent press interview she said that
the purpose of the rallies would be "to prove that the
opposition won't go away." During her late-October
tour in Punjab, however, Bhutto attracted relatively
small crowds compared with the masses that turned
out to hear her last spring after her return to
Pakistan, according to the US Consulate in Lahore.
Prospects for the PPP
Benazir Bhutto realizes that the PPP was unprepared
for the August confrontation and, for now, appears to
be disavowing confrontation in favor of improving
party organization. She acknowledged in a recent
press interview that she has abandoned her fall
groups in its quest for power.
Opponents of Benazir Bhutto and the PPP, including
President Zia, have publicly insinuated that Bhutto
and her supporters are receiving foreign support. Zia,
in a June press interview, said he believed Bhutto was
receiving money from India, although he admitted he
had no proof.
A foreign leader close to Zia also expressed
concern to US officials that Bhutto was being
"sponsored" by Iran because her mother is a Shia
from Iran.
We have no evidence corroborating these claims. In
our view, Bhutto neither needs nor desires foreign
funding. She probably can finance her party's
activities through contributions from sympathetic
Pakistanis at home and abroad as well as her own
family's considerable financial assets. She also
probably realizes that public revelation of foreign
financial support-especially from India-would
smear her as a "tool" of foreign powers and set back
her campaign.
The Army, still the key to power in Pakistanis
largely conservative and Punjabi dominated.
Army officers are suspicious
of Benazir Bhutto and fear that she would exact
revenge on them for her father's execution if she came
to power. In our view, senior Army generals would
reimpose martial law if PPP-led agitation spread from
Sind to the vital Punjab province.
The PPP is also faced with the determined opposition
of the Jamaat-i-Islami, a well-organized Sunni
Islamic fundamentalist party that led the 1977
agitation against Zulfikar Ali Bhutto. The Jamaat
opposes Bhutto because she is both a woman and a
secularist. US Embassy reports indicate that the
Jamaat would take to the streets to prevent Bhutto
and the PPP from coming to power.
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Nonetheless, we believe the PPP has at least an even
chance of coming to power in the next several years if
it eschews violence and adopts moderate tactics.
Bhutto's recent statements suggest she may be trying
to steer the party toward a less confrontational path.
An important indicator of future PPP moderation will
be if it decides to participate in local elections
scheduled for September 1987. In our view, a patient,
longer term strategy for gaining power by the PPP
represents more of a threat to the government than
violent bursts of activity that can arouse public
disfavor and provide a rationale for government
repression.
Bhutto remains a charismatic figure to many
Pakistanis, and, given time, she may be able to
capitalize on the inability of the government to deal
with deep-rooted social and economic problems. If she
came to power as the head of a PPP government, she
would probably try to maintain cordial relations with
the United States-including the continuation of US
aid. In our view, however, bilateral ties would be
strained, as Bhutto would also try to appease the anti-
US leftists in her party. A PPP government would
probably diverge from US policy interests on issues
such as Afghanistan, narcotics, and nuclear
nonproliferation.
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Pakistan: New Politics
in Punjab
The inability of opposition elements to spread
disturbances into Punjab from elsewhere in Pakistan
has given President Zia and the current Junejo
government a crucial degree of security. Punjabis are
unwilling to challenge the Punjabi-dominated Army
while Pakistan faces external threats from
Afghanistan and India. They also recognize that,
economically, times have been good for them since the
fall of the Pakistan People's Party in 1977. Urban
social groups-bazaar merchants, Sunni clerics, small
industrialists, the "Islamic middle class"-whose
opposition would quickly tip the balance against the
current regime give active behind-the-scenes support
to President Zia.
A Bulwark of Stability
Punjab remains the dominant province and the key to
political stability in Pakistan. No group or political
party has a chance of gaining power in Pakistan
unless it has a strong footing in Punjab or in the
central institutions dominated by Punjabis. The
province accounts for 56 percent of Pakistan's
population and provides an estimated 75 percent of
the personnel in the Army and federal bureaucracy,
the country's most powerful central institutions. By
virtually every measure, Punjab is the most developed
province. It produces the great part of Pakistani
wheat, the country's main food staple, and cotton, its
major export crop, and has a large share of Pakistani
industry.
Punjab is the cultural arbiter of the country,
providing most of its books and films and housing the
largest proportion of its universities and religious
seminars. Punjab has the highest rural literacy rate of
any province, although Karachi-in Sind-is the
most literate city.
Politics to the Fore
The election of February 1985, ending of martial law
in December, and return of Benazir Bhutto in April
1986 significantly altered the shape and the stakes of
politics in Punjab. Political activity is back to the
Punjabi norm of energetic, highly personalized, high-
stakes politicking.
The danger for Prime Minister Junejo and President
Zia is that somehow the political process will slip out
of control, forcing the Army to resume an overt
political role. Prolonged urban violence led by the
Pakistan People's Party very likely would bring the
Army back, but so might a loss of confidence in
Junejo's handling of affairs brought on by the kind of
Sunni-Shia violence recently seen in Punjab.
The Junejo Coalition
Prime Minister Junejo depends primarily on a rural
coalition of locally influential landlords who appear
bent on using patronage and their lawmaking powers
to enhance their political standing and to ease the
entry of their class into large-scale industrial and
commercial ventures. The key alliance appears to
combine landlord and bureaucratic interests, with a
junior partnership accorded to urban middle-class
groups.
Internal stresses exist within the Junejo coalition.
Competition for investment resources and basic
disagreements over the balance between public and
private investment could produce an urban middle-
class defection from the Junejo coalition.
Recent attempts in the Punjab provincial assembly to
undermine Chief Minister Nawaz Sharif suggest that
the rural-urban cleavage in the Junejo coalition is
' This paper was prepared by an outside contractor. It was not
coordinated within this Agency. The views expressed are those of
the author.
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Along with the North Indian Muslims who migrated
to Pakistan in 1947 (muhajirs), the Punjabis are the
Pakistani cultural group most thoroughly identified
with Pakistani nationalism. Innately conservative,
they have always rallied to the center when
threatened by external powers and have been prone to
interpret minority demands for autonomy as
antinational conspiracies, probably abetted from
abroad. Along with Karachi, Punjab has gained the
most from the development policies pursued by
successive regimes since independence. Punjabis have
been the most prone to spread out from their own
province as internal colonizers, gaining much of the
newly irrigated land in Sind and Baluchistan. They
have followed the military, the police, and the
bureaucracy into inner Sind and the underpopulated
regions west of the Indus, establishing Punjabi
colonies as traders, teachers, small entrepreneurs,
and government contractors.
Pakistan has always been ruled by a coalition of
interests that includes Pushtuns, Punjabis, muhajirs,
the landed elite of Sind, and a section of the Baluch
Sardars. This alliance, and the underlying interest
groups that support it, provides stabilizing linkages
that cut across provincial and ethnic identities.
Although this alliance remains intact, greater
numbers of Punjabis have been emerging in key
positions, particularly since the 1977 coup.
widening. Sharif represents urban business and
industrial interests, while those who oppose him in the
ruling Pakistan Muslim League (PML) are rural
members of the provincial assembly led by
Makhdumzada Hassan Mahmud, an old pro at
factional infighting. Mahmud is a political ally and
relative by marriage of the Pir of Pagaro, Junejo's
spiritual and political mentor. The anti-Sharif faction
accuses the chief minister of protecting students of the
Jamaat-i-Islami's student group arrested in bloody
clashes with members of the PML-backed Muslim
Students' Federation in Lahore. It also accuses Sharif
of complicity in the recent Sunni-Shia riots-the
worst in Punjab since independence-by abetting
Sunni and Jamaat interests.
Punjabis generally do not act self-consciously as
Punjabis in the minority provinces, although their
culture, their propensity toward nepotism, and the
petty corruption of the lower bureaucracy are
irritating to non-Punjabis. Patron-clientism as a way
of life among Punjabis clashes with, and undermines,
the traditional tribal cultures west of the Indus. In
Sind, where traditional identities imbue patron-
clientism even more than in Punjab, the grip of
Punjabis on the police and the bureaucracy are seen
as tools to drive Sindhis into rural backwaters,
contain them there, and open more of the productive,
irrigated land to Punjabis.
Demography and Punjabi entrepreneurship suggest
that the Punjabi expansion is inevitable and
unstoppable. Caught between the industrial engine of
Karachi and the dominant province to the north, the
Sindhis' push for autonomy probably will become
more intense, possibly even following established
models of rural guerrilla resistance (the Hur
Rebellions of the 1890s and the 1940s). In the end,
however, unless an outside power intervenes, the
Sindhis will have to come to terms with Punjabi
dominance, perhaps surviving as the Welsh have in
Great Britain as a culturally rich minority.
The factionalism emerging in the ruling Muslim
League, while typical of League politics, will probably
undermine the confidence of the public and the Army
in Junejo. The urban-rural division within the ruling
coalition is fueling speculation about a "President's
Group" and a "Prime Minister's Group" in the
Muslim League. There may be some truth to such
speculation. Having lost out in the elections, the
urban and Islamic-minded groups may be seeking to
regain their influence by appealing to President Zia,
an old ally, or possibly to a group of hardline generals
behind the scenes.
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The PPP Challenge
The return of Benazir Bhutto to a tumultuous
welcome in Punjab in April 1986 reestablished the
Pakistan People's Party as the primary political
alternative to both Zia and the PML. The crowds
showed that the PPP's basic constituency of the urban
and rural poor remains intact and most likely would
bring the party to power both at the national and
provincial levels in an open election.
Nonetheless, the failure of the PPP's civil
disobedience campaign in August, which briefly
landed Bhutto in jail, showed that:
? Critical urban opinion in Punjab does not support
political change through violence. Few Punjabis
want a return to Army rule, the most likely
consequence of disturbances in Punjab. Fear of the
Soviets and/or the Indians exploiting domestic
unrest, particularly when strong regional demands
are again being heard, makes Punjabis reluctant to
support violent political change.
? PPP organization in Punjab is weak and lacks a
capacity to sustain a confrontation in the streets.
Although the poor can make their numbers count in
an election, they lack the resources to support a
mass movement. Much of the lower- and middle-
level party leadership is reaching middle age, and
the PPP evidently has failed to attract major
support among the students-the shock troops of a
mass movement.
? Despite the size of PPP demonstrations, important
interest groups-beyond those that have always
opposed Zia-are not coalescing around Benazir's
leadership. The evidence suggests the PPP leader
has alienated elements both in the PPP and the
broader Movement for Restoration of Democracy
(MRD) that could have been useful to her. By trying
to go it alone, she isolated herself from the broader
opposition and moved to cooperate only after the
August failure.
? By allying with the left wing of her party, including
Sindhi regionalists, and in calling for a budget
whose distributive programs would be highly
inflationary, she has abandoned the middle ground
in Pakistani politics and frightened off the urban
middle class in Punjab and Karachi.
? Her leadership is questioned by some in the PPP.
Benazir probably weakened the party by replacing
leaders of her father's generation with younger,
more radical figures, which triggered the most
serious split in the PPP so far.
The emergence of the National People's Party under
Ghulam Mustapha Jatoi has provided Zia and the
generals with a moderate and credible alternative
should Prime Minister Junejo falter badly. The new
party provides a vehicle for pragmatic PPP elements
to bid for power. Although it probably will not cut
into PPP support among the urban and rural poor, it
has gained the support of influential landed notables
in Punjab.
Outlook
President Zia is a formidable adversary and will not
be easy to unseat. Not only is he a remarkably adept
political player in his own right, but behind him stand
institutions less pervious to mass political
phenomena-the Army and bureaucracy. Key rural
and urban interest groups have a major stake in
peaceful, evolutionary change. They may have little
love for martial law, but they would back the Army if
the alternative is a descent into urban unrest or a
return of Bhuttoism.
The main dilemma for Benazir Bhutto is how to force
a confrontation in Punjab that leads to a transfer of
power either directly or through elections. The groups
currently in the ascendancy in the Punjab PPP might
press for a general strike or a "stop the wheels"
campaign that probably would lead to violence and
would most likely bring about a return to direct Army
rule. Bhutto understands this and has been more
cautious since the failure of the mid-August
campaign. She has moved to cooperate more closely
with the MRD and in October quietly dropped her
demand that midterm polls be held this fall. She has
also accepted the resignation of her recently appointed
Sind PPP president, an indication that she wants to
mend fences with the old guard.
The emphasis now in the PPP probably will be on
organization and preparations to contest the local
elections in late 1987. The Punjab PPP President has
already announced that thousands of local officials all
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over the province have applied for membership in the
PPP, an indication of the party's strength in rural
Punjab. The PPP will be hard to beat if the elections
are held and if there is no considerable vote
manipulation by the Pakistan Muslim League and the
district commissioners. A PPP victory in the local
elections would indicate the direction of public
opinion in Punjab and put considerable pressure on
members of the National Assembly and Punjab
provincial assembly to loosen their ties to Junejo and
start making deals with the PPP.
Prime Minister Mohammed Khan Junejo will remain
the most politically exposed leader in Pakistan. Junejo
has yet to credibly demonstrate his independence
from President Zia and the senior civil service. His
Pakistan Muslim League is being reorganized from
the top down and has little popular support. With a
national election scheduled for 1990, Junejo has the
nearly impossible task of pulling together a center-
right coalition, including the Islamic parties, that can
take on the PPP/MRD candidates in head-to-head
contests. Should he fail to stave off a PPP victory in
the local elections in 1987, Zia may decide it is time
to remove the Prime Minister.
For now, President Zia holds the strongest cards.
Along with his senior advisers in the Army and higher
bureaucracy, he will decide whether and on what
terms the Pakistan People's Party will be permitted to
contest for power. So far Zia apparently has Army
backing for his strategy for civilian rule, although he
has moved to strengthen his support in the
cantonments in the aftermath of Benazir Bhutto's
tumultuous reception in Punjab. His position would be
threatened should widespread urban disturbances
break out in Punjab. In that event, with or without
Zia, the Army would be the key to how events turned
out.
Looking Further Ahead
Perhaps the most significant development, in our
view, is the emergence of an urban Islamic middle
class as the balance wheel of Punjabi politics. We
expect that this grouping will grow along with the
country's economy and that it will become a more
discrete and organized political force. Its capacity to
dominate Punjabi politics, however, will be limited
unless it can develop an alliance with the rural
smallholders and find the means to roll back an ever
more pervasive bureaucracy. For now, an alliance
with the large landlords and bureaucracy provides
protection from the demands of the urban workers
and poor for a thoroughgoing redistribution of wealth.
Should this grouping eventually decide to throw in its
lot with the urban masses and the peasant holders of
the heartland and canal colonies, Punjabi politics
might never be the same.
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