NATIONAL INTELLIGENCE DAILY (CABLE) 6 JULY 1982

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T00301R000400010082-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: December 20, 2016
• Document Release Date: August 31, 2007
• Sequence Number: 82
• Publication Date: July 6, 1982
• Content Type: REPORT

Central
Intelligence
National Intelligence Daily
(Cable)
Top Secret
6 July
Copy
Approved For Release 2007/09/13 : CIA-RDP84TOO301 R000400010082-3
 Honduras: Bombing of Power Plants . . . . . . . . . . . . 6
Special Analysis
Pakistan: Zia's Political Prospects . . . . . . . . . . . 7
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 Beirut became quiet again yesterday following a cease-fire
that ended three days of intensive artillery and tank battles be-
tween Israeli and Palestinian forces in the southern outskirts of
the cit Prime Minister Wazzan said he would end his mediator
role. 25X1
^
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Comment: The Israelis are consolidating their posi-
tions south of Beirut and trying to push the Palestinians
back into West Beirut. The heavy bombardment of the
Burj al Barajinah refugee camp suggests that this Pales-
Prime Minister Wazzan said yesterday that he was
ending his mediator role because of the Israelis' contin-
ued harassment of West Beirut and their control of check-
points in the city. Beirut radio said Israeli forces
had cut off all water, electricity and telephone service
into West Beirut and had turned back Red Cross relief
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 Comment: Wazzan has been the chief contact between
the Lebanese Government and the PLO, and his refusal to
participate in further talks could seriously delay the
Two West Bank Arabs were killed and several wounded
Saturday during demonstrations protesting the Israeli in-
vasion of Lebanon. The body of an Israeli settler--whom
security officials believed was killed by Palestinians--
Comment: The West Bank has been generally quiet
since the Israeli invasion began, but the recent activity
may point to an increase in political activity and the
Israeli Economy Minister Meridor yesterday announced
that Israel now believes 331 Lebanese and Palestinian
civilians were killed and 1,083 wounded in the recent
fighting. The figures do not include casualties in the
Comment: The Israeli figures do not include PLO
military casualties, which Israeli spokemen have pre-
viously put at about 1,000 killed in areas outside of
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0
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 Prime Minister Papandreou's replacement of virtually all of
his economic ministers in a cabinet shakeup over the weekend is
designed to underscore the priority he places on solving economic
Greece maintains a good credit rating, but it is
plagued by a 25-percent rate of inflation, sagging in-
vestments, and a poor balance-of-payments outlook. In
making the cabinet changes, Papandreou stated that eco-
nomic problems require "more intensive handling." Except
for the replacement of Deputy Defense Minister Petsos,
there were no comes in the foreign affairs and defense
ministries.
Former Governor of the Industrial Development Bank
Koulourianos will become the new Finance Minister.
Former Governor of the Bank of Greece Arsenis will
head up the new Ministry of National Economy, which re-
places the Ministry of Coordination and assumes many
functions of the old Ministry of Industry and Energy.
Arsenis gained much of his practical experience
working with the UN on development and monetary policy,
while Koulourianos spent a major portion of his career
with the World Bank. Both received some higher education
Comment: The changes are likely to be well received
by the business community and may help rekindle investor
confidence. Most industrialists had remained skeptical
of the new socialist government--a problem compounded by
the inexperience of many of the previous economic ministers
and the apparent lack of intergovernmental coordination
The changes also underline Papandreou's gradual shift
toward pragmatic foreign and economic policies. Most
Greeks thus far approve of the Prime Minister's handling
of foreign affairs, but growing public unease over the
government's stopgap economic policies had begun to sur-
face. Papandreou probably felt compelled to put together
 0
QOV
 Terrorists on Sunday dynamited two major electrical
plants in Tegucigalpa, blacking out the entire Honduran
capital. Some power was restored yesterday, but at least
80 percent of the city's 500,000 inhabitants are expected
to be without power for three to seven days. No Honduran
group has claimed credit for the act
Comment: Salvadoran insurgent leaders have publicly
threatened to strike against the Honduran Government in
retribution for its recent military cooperation with
San Salvador in blocking guerrilla movements along the
common border. If Salvadoran leftists are behind this
latest escalation of violence in the neighboring country,
they are unlikely to sway the public commitment of Honduran
authorities to crack down on the local operations of for-
eign terrorist groups. Moreover, such actions by the
guerrillas could undermine their appeal to moderate
 President Zia, who yesterday marked the fifth anniversary of
his takeover, faces growing problems but no immediate threat to his
rule. His largely benign authoritarian regime has given Pakistan
general political stability and substantial economic growth. Zia
lacks an organized constituency outside the Army, however, and he
could find his hold on power challenged if the economy stagnates or
a popular leader emerges to unite the opposition.
Zia has deftly employed censorship, house arrests
and preventive detention to keep the opposition off
balance. He has been aided by the absence of any real
alternative to his rule among opposition leaders. He
also has benefited from public fears--particularly pre-
dominant in Punjab Province--that the Indians or the
Soviets would exploit internal unrest or that an opposi-
tion movement would set loose dangerous separatist pres-
The Army is well disciplined and will follow Zia and
the senior generals as long as it is not called upon to
quell mass civil disturbances in its home province of
Punjab. The generals will accept a gradual return to
civilian rule, but probably will insist on guarantees
to protect their privileges and a veto over the major
Zia has benefited from the economy's strong perform-
ance, which is the result of good harvests, stable
economic policies, the increased security of private
ownership and a steady flow of worker remittances from
abroad. His cautious economic policies, however, may not
 Large private investors worry about the long-term
stability of the regime and have failed to respond to
government incentives. Pakistan's external financial
position remains dangerously dependent on world crop
An economic downturn could stimulate serious public
dissatisfaction with Zia. Price increases are a growing
concern to most Pakistanis, and Zia's policy of reducing
The President's policy of Islamization probably has
reached a point of diminishing returns. Many educated
Pakistanis resent pressure for religious conformity and
feel threatened by the rise of Islamic fundamentalists
Some Army officers are concerned that a constant
emphasis on Islam will intensify tensions between Sunnis
and Shias and among other groups as the regime seeks to
bring laws into conformity with Islam. If Zia presses
on with Islamization, he could arouse destructive sec-
tarian tensions. On the other hand, if he holds back
he risks losing the support of influential clerics, who
have benefited from Zia's Islamization program and keep
The opposition has failed to convince Pakistanis
that it would rule Pakistan better than Zia. The Movement
for the Restoration of Democracy--a coalition of opposi-
Moderates in the Movement believe some form of
accommodation with the Army is possible. Radicals reject
any deal with the Army and believe the next political
convulsion will take the country substantially to the
 The Pakistan People's Party--the largest party in
the Movement--is still the most important political force
in Pakistan after the Army. It would win any national
election held on the traditional plurality basis.
The loyalty of the party's rank and file to former
Prime Minister Bhutto's wife and daughter appears unshaken.
The party is neither well led nor well organized, however,
and needs an election or an explosive issue if it is to
Opposition to Zia is most intense in Sind and
Baluchistan, where the Army and civil bureaucracy are
viewed as instruments of Punjabi interests. In North-
West Frontier Province, opposition leaders recently have
begun to exploit growing tensions between Afghan refugees
and local populations. Although these activities could
lead to an increase in ethnic and sectarian violence,
they probably would be manageable for Zia unless serious
Zia will have to respond to the growing impatience
with martial law or face serious opposition. He probably
will continue to use the appointed Federal Advisory
Council as a soundingboard for his vague plan for
"Islamic democracy" and as a vehicle for a progovernment
coalition of interest groups. He has hinted that national
or provincial elections will be held on a nonparty basis
The Pakistani leader will move cautiously. He is
aware that any plan to provide Pakistan with altered
permanent institutions also could unite the opposition.
Opposition politicians and anti-Zia interest groups
will attempt to gain momentum for their causes this fall
and winter and may succeed if clerical and merchant groups
become seriously disillusioned with Zia's economic policies.
If Zia loses out to a revived opposition, his most likely
successor would be another general who would ensure the
 Approved For Release 2007/09/13 : CIA-RDP84TOO301 R000400010082-3
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