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• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84S00556R000100010002-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: January 12, 2017
• Document Release Date: July 14, 2011
• Sequence Number: 2
• Publication Date: January 1, 1983
• Content Type: REPORT

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Directorate of -SeffeL.
Intelligence
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.t'LjcE ilir"rMrato of Secret
South Yemen: Loosening
the Soviet Bear Hug 25X1
This assessment was prepared byl
the Office of Near East-South Asia Analysis with a
contribution fro of the Office of
Soviet Analysis. Comments and queries are welcome
and may be addressed to the Chief, Persian Gulf
Division, NESA,
This paper was coordinated with the Directorate of
Operations and the National Intelligence Council
Secret
NESA 83-10002
January 1983
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South Yemen: Loosening
The Soviet Bear Hug
Key Judgments South Yemen's relations with the USSR have cooled over the past year.
Information available Longstanding Yemeni dissatisfaction with Soviet economic aid and more
as 4f lS December 1982 recent Soviet opposition to Western oil exploration in South Yemen lie at
d i
thi
was use
n
s report.
the root of present strains. Moscow clearly is unenthusiastic over the
policies of South Yemeni President Ali Nasir Muhammad al-Hasani.
Unable to obtain the aid he needs from the USSR and Eastern Europe, 25X1
Hasani has turned to Western Europe, Japan, and the Arab Gulf states. To
coax aid from Saudi Arabia and the other conservative oil shaykhdoms,
Hasani has moderated his foreign policy. South Yemen's curtailment of
support since last spring for the insurgency in North Yemen and its recent
reconciliation with Oman reflect this change in direction.
This shift by Hasani appears to be more than just tactical. We believe he
genuinely wants to reduce tensions with his neighbors and gradually reduce
South Yemen's dependence on Moscow. Saudi and Gulf aid would
strengthen his ability to do so. But we doubt that he wants to break
completely with the Soviet Union or will be strong enough to take such a
risk soon. Soviet influence remains strong in Aden's ruling party and in the
defense and internal security spheres. South Yemen, moreover, is heavily
dependent on the Soviets for arms, advisers, and spare parts for its almost
exclusively Soviet-equipped armed forces.
Ironically, the Soviets may be encouraging Hasani to woo the Gulf states in
the hope that this will reduce these regimes' reluctance to normalize
relations with Moscow. Soviet authorities, however, seem worried about
the prospect of South Yemen discovering oil. We believe they fear this
would give Hasani too much latitude to reduce South Yemen's dependence
on Moscow.
If the Soviets conclude that Hasani poses too great a threat to their
interests in Aden, we believe they will try to oust him. They may have tac-
itly approved recent abortive coup plotting. Hasani's survival, therefore, is
likely to depend on his ability to assuage Soviet concerns and to build
internal support for his new, more pragmatic policies.
Secret
NESA 83-10002
January 1983
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South Yemen's newfound moderation particularly affects US interests in
Saudi Arabia and Oman. Reconciliation will reduce the external threat to
these two nations. The diminished threat will impel some conservative
shaykhdoms to press Muscat to limit its military cooperation with the
United States. At the same time, it may cause the Saudis to withhold new
economic aid from the regime in North Yemen. Although the Saudis have
provided support to North Yemen when it has been threatened by Aden,
Riyadh basically regards the North Yemeni leadership as untrustworthy
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South Yemen: Loosening
the Soviet Bear Hug (U)
Seeds of Friction
Hasani came to power in April 1980 by ousting
President Abd al-Fattah Ismail-a committed Marx-
ist and Soviet favorite-in a bloodless coup. To gain
Moscow's trust and support, Hasani initially worked
closely with the Soviets and pro-Soviet radicals in the
region-especially Syria and Libya-to promote So-
viet objectives. Soon after taking power he dutifully
visited Moscow for consultations. Subsequently, he
endorsed Soviet President Brezhnev's proposal for an
Arab-Israeli peace settlement, Moscow's "Zone of
Peace" proposal for the Indian Ocean, and the Soviet
invasion of Afghanistan.
e also played a key role in promoting the
anti-US
Tripartite Alliance with Libya and Ethiopia
in August 1981
If Hasani expected to be rewarded for his efforts, he
has been disappointed. Libyan leader Qadhafi has
predictably promised more than he has delivered.
More important, Yemeni officials have become in-
creasingly unhappy with Soviet indifference to their
economic needs. These include:
? Development Aid. The West German Ambassador
to Aden recently reported that South Yemen had
expected the USSR to finance as much as 40
percent of the new five-year development plan
(1981-85}-about $500 million. Moscow, however,
has made no significant economic aid disbursements
since Hasani took power and appears unlikely to do
so soon. The last large aid commitment ($90.5
million) was in 1978.
? Debt Rescheduling.
South Yemeni officials are bitter over the Kremlin's
reluctance in 1981 to reschedule Aden's $150-200
million commercial debt. The Soviets finally agreed
to a five-year moratorium but only after making
clear they would not renegotiate the debt again.
? Flood Relief. After South Yemen was hit by heavy
flooding last spring, Moscow was very slow in
providing emergency relief-in sharp contrast to
Franz Furst
President; Prime Minister (since 1971); Chairman,
Yemeni Socialist Party
Pragmatic, nationalist, nonideologue ... master of
political survival ... led nationalist uprisings against
the British, 1965-67 ... joined "moderate" national-
ist faction, 1967... supported former President
Rubayi Ali's efforts to moderate South Yemeni for-
eign policy, 1975-78 ... weathered Ali's ouster by
Soviet-backed Marxist, 1978... a former "yes-man"
who has emerged as a consummate politician and
strong leader.
some Arab states, including Saudi Arabia, which
gave $30 million. The World Bank estimates South
Yemen suffered $1 billion in damages.
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Oil Exploration
The most serious bone of contention between Aden
and Moscow has been over Western oil companies'
exploration efforts in South Yemen. Shortly after the
Italian oil company AGIP's operations began to show
promise last fall, the Soviets demanded a monopoly on
Hasani has resisted Soviet pressure and even granted
a new exploratory concession to a Brazilian firm. He
also is continuing to deal with British, French, and
US oil companies in spite of Soviet objections.
South Yemen's prospects of finding oil in significant
commercial quantities are uncertain. The Soviets' 10-
year exploratory efforts in the interior have been
inconclusive. AGIP announced a small offshore strike
last February-the first in South Yemen-but the
single well produced an initial flow rate of only about
3,000 barrels per day, less than one-third of South
Yemen's current domestic consumption. Further tests
are necessary to determine whether even
be sustained.
the Soviets want to block the discov-
ery of more oil for fear this would weaken Moscow's
hold over Aden. After the loss of their facilities in
Somalia and the erosion of their position in Iraq, the
Soviets, in our view, probably are worried about
Hasani adopting a more independent stance and
possibly diversifying South Yemen's sources of arms.
His efforts to purchase a small amount of arms from
China last spring doubtless have fed such concerns.
Turning Elsewhere
We believe Hasani is forced by economic consider-
ations to turn to other nations for help. His economic
programs to overcome South Yemen's deep-rooted
poverty face formidable obstacles. The country has
virtually no known natural resources, little trained
manpower, and limited arable land. Remittances by
Yemenis working in the Persian Gulf oil-producing
countries-the government's principal source of for-
eign exchange-have leveled off over the past year.
Rising South Yemeni debt service obligations, mean-
while, will become an increasing burden.
The government desperately needs substantial in-
creases in foreign aid and investments. Foreign aid
could be used to purchase advanced agricultural
technology that would increase agricultural output
and enable South Yemen to substitute cash crops for
subsistence crops. Aid also could be used to expand
South Yemen's internal communications network and
reduce transportation costs.
Moreover, Hasani knows his predecessor Ismail lost
domestic support in part because he failed to deal with
the economy. Hasani obviously wants to avoid the
same fate. To build political support, the President
has stimulated popular expectations that his economic
policies will work. And to buy time, he has relaxed
restrictions on consumer imports and lowered custom
duties on consumables-popular moves that increase
South Yemen's need for foreign exchange and, hence,
Frustrated with Moscow, Hasani has turned to the
West and to China.
he is pushing vigorously for expanded commer-
cial relations with Western Europe and Japan to
obtain technology as well as consumer items. Imports
from Western Europe and Japan-always greater
than those from the Soviet Union and Eastern Eu-
rope-have increased dramatically since Hasani took
power (figure 2). Hasani so far has squeezed domestic
sources of revenue and relied on credit to finance
South Yemen's increasing imports. To attract private
foreign investment capital, for example, Hasani has
introduced economic reforms, thereby loosening trade
restrictions and instituting some profit incentives in
the socialist-oriented economy. His economic czar,
Abu Bakr al-Attas, also signed a new economic
protocol with Beijing last May.
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Figure 1
6~ack \
Sea Soviet
Union
ANKARA*
J u rke
NIYAft*
*
Saudi
Arabia
Caspian
Sea
ran
South
Yemen
Ethiopia
Names and boundary representation
are not necessarily authoritative.
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Figure 2
South Yemen: Imports
the Soviets are cha-
grined over Hasani's efforts to build political bridges
to some states where he seeks aid. South Yemeni
officials reportedly are interested in establishing party
ties with the Communist Chinese. Moscow probably
knows that the Chinese have over the past year
intensified their efforts to undermine Soviet influence
in several states traditionally aligned with the Soviet
Union, including South Yemen. South Yemen also
plans to open an embassy soon in Rome and, accord-
1981
estimate
Wooing the Gulf States
We believe Hasani has concluded that he must attract
more aid from Saudi Arabia and the other conserva-
tive Gulf states to help pay for growing imports.
Kuwait and the United Arab Emirates have provided
ing to a British Foreign Office official, to upgrade To elicit new aid, Hasani has moderated Aden's
diplomatic relations with Great Britain. Both Italy regional policies.
and Great Britain are important trading partners. F1 he has had to overcome stiff internal opposition
to curtailing assistance to National Democratic Front
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insurgents operating in North Yemen and ending
support for the Popular Front for the Liberation of
Oman as part of the recent reconciliation with Mus-
cat.
We suspect-but cannot prove-that these
moves are more than just tactical. Hasani appears
more pragmatic and far less interested than his
predecessors in promoting Marxist revolutions else-
where in the region. We believe he can best be
described as a nationalist social reformer
South
Yemen's pro-Western neighbors-especially the Sau-
dis and Omanis-were skeptical of Hasani's new-
found moderation. They doubted that he could move
away from the Soviets and suspected that he was
acting as a stalking-horse for Moscow.
At present only Kuwait has diplomatic rela-
Saudi leaders recently have begun exploring prospects
for improved relations with South Yemen. Saudi
Interior Minister Prince Nayif visited Aden last June
and recently received his counterpart in Riyadh.
efforts are focusing on promoting an alliance between
Hasani and the influential former Defense Minister
Ali Antar. We believe Antar is withholding full
support for the President in his struggle against his
principal rival and the leading opponent of his prag-
matic policies, Defense Minister Qasim. The Saudis
apparently believe that Antar's support would enable
Hasani to remove Qasim, who is known to be close to
the Libyans and the principal supporter of the North
Yemeni insurgents.
Hasani and the Soviets
Despite his differences with Moscow, we believe
Hasani wants to avoid an open breach with the
Table 1
South Yemen: Soviet-Supplied Military Equipment
T-54/55 250
T-34 125
30
80
190
50
Attack helicopters
MI-24/Hind
MI-8/HIP
Surface-to-surface missiles
Missile patrol boats
OSA-I I
Soviets and even sees advantages in maintaining good
relations. These advantages include:
? Security. South Yemen since independence in 1967
has looked to Moscow for protection and arms to
offset its virtual isolation in the region. Over the
past decade the USSR and its East European allies
have provided on easy credit terms about $1.2
billion in military equipment that Aden could not
have afforded otherwise. Despite Hasani's new mod-
erate direction, he and other South Yemeni leaders
probably are still deeply concerned over US inten-
tions and are reluctant to forgo Moscow's
protection.
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Table 2 Million US $
South Yemen: Sources of Foreign Aid, 1974-80
Total
439
664
USSR
149
149
Eastern Europe
73
73
222
222
352
International financial
institutions
71
71
a Includes Arab fund, Islamic Development Bank, OPEC special
fund, and bilateral aid.
? Economic. However disappointed South Yemen is
with Soviet aid, Aden still needs it. The Soviets and
East Europeans have provided about one-third of all
economic aid since 1974. In addition, they continue
to provide military and academic training and about
2,000 technicians who help fill South Yemen's
critical need for trained manpower.
? Leverage. Hasani knows the Saudis would pay little
attention to South Yemen if they did not regard
Aden's ties with the Soviet Union as a threat. He
undoubtedly regards this as an important card to
play in his attempts to extract aid from Saudi
Arabia and the other conservative Gulf shaykh-
doms.
The strong influence of the Soviets and their allies in
the ruling Yemeni Socialist Party, the military, and
the security apparatus also limits Hasani's maneuver-
ing room. The Soviets presently have about 1,000
advisers in the armed forces; the Cubans have 500 in
the People's Militia; and the East Germans have 75
with the internal security services. Hasani, we believe,
has not forgotten that former President Salim Rubayi
Ali's flirtation with the Saudis in the mid-1970s and
attempt to put greater distance between himself and
Moscow provoked a strong Soviet reaction that con-
tributed to Salim's downfall
In any event, Hasani has stepped carefully. We
believe that he has continued to reject West Germa-
ny's conditions for aid (including recognition of
Bonn's ties to West Berlin) because he knows that
would antagonize both the Soviets and East Germans.
Perhaps that is also why he chose not to respond to a
recent US overture
The View From Moscow
The Soviets will keep a wary eye on Hasani. They
clearly have misgivings about his shifts in policy,
judging by the cool reception he received during his
visit to Moscow in mid-September. Neither President
Brezhnev nor Premier Tikhonov met or saw off the
South Yemeni leader at the airport as is the custom.
The joint communique's statement that party ties
were simply being "maintained" also was a discreet
sign of Soviet dissatisfaction with Hasani.
Moscow, however, appears to be as eager as Hasani to
avoid an open breach. Both sides have recently
stressed the positive aspects of their relationship.
Hasani has been very laudatory of the Soviets since
his return to Aden and attended Brezhnev's funeral to
pay his respects to the new Soviet leadership.
We can only guess at the reasons for Soviet caution. It
may be that the Soviets still regard Hasani's efforts to
improve relations with the moderate Arabs as com-
patible with their own interests, as we have already
noted. But they may also be unsure of their ability to
oust Hasani and afraid such an attempt might back-
fire and jeopardize their position in Aden. Indeed,
they may have been surprised by the ease with which
Hasani squelched the recent coup plotting and subse-
quently replaced several of former President Ismail's
pro-Soviet supporters in key government positions
with his own.
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Figure 3. South Yemeni Presi-
dent Ali Nasir Muhammad a!-
Hasani with Soviet officials.
Moscow apparently wants to maintain a working
relationship with Hasani for now, but we believe the
Soviets would not hesitate to try to remove him if they
thought he posed a threat to their interests in Aden.
The Soviets value South Yemen both for the fact that
it is the sole state in the Middle East ruled by a
Marxist government and for its strategic location.
Since Moscow lost access to Somali facilities in 1977,
South Yemen's air and port facilities have become
significantly more important to Soviet strategists. The
Soviets have used South Yemeni port facilities to
supplement logistic support for their Indian Ocean
Implications for the United States
Hasani's policy of expanding South Yemeni ties to
other countries almost certainly will generate more
friction with the USSR. In our view, these strains over
time could sow further distrust between the two
Marxist allies and weaken Aden's commitment to
serve Soviet interests in the Persian Gulf-Indian
Ocean region.
Aden's ties to Moscow.
The moderate Arab oil producers and Western states
such as the United Kingdom and Italy are especially
well placed to exploit South Yemeni-Soviet differ-
ences. They have the money and the technical re-
sources to help Hasani deal with South Yemen's
severe economic difficulties. Both London and Rome
have scored points for the assistance they have al-
ready given and for their willingness to keep a low
profile in Aden-which we believe Hasani regards as
essential in the near term to avert a Soviet move
against him. In our judgment, foreign aid from mod-
erate Arab and selected Western sources would
strengthen Hasani's position against the pro-Soviet
elements in his government and thus help him loosen
Further moderation in Aden would particularly affect
US interests in Saudi Arabia. It would ease Riyadh's
sense of encirclement. But by so doing, it may cause
the Saudis to withhold new aid commitments to the
financially strained regime in North Yemen. In the
past, Riyadh's interest in supporting North Yemen
has waned when the threat from South Yemen subsid-
ed.
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Table 3
Soviet Naval Ship Visits to South Yemen
1974-81
Year
Number
Port Days
1974
45
345
1975
35
487
1976
28
218
1977
35
266
1978
72
989
1979
42
725
1980
83
829
1981
75
606
Aden's more moderate course also could create new
pressures on Oman within the Gulf Cooperation
Council to limit military cooperation with the United
States. It would strengthen the position of Kuwait,
which brokered the recent South Yemeni-Omani
reconciliation and opposes Oman's granting the Unit-
ed States access to its facilities. We believe GCC
pressure would almost certainly strengthen officials in
Muscat trying to extract a higher price from the
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Secret
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