NATIONAL INTELLIGENCE DAILY WEDNESDAY 2 APRIL 1980

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005104569
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 18
• Document Creation Date: June 23, 2015
• Document Release Date: February 1, 2010
• Case Number: F-2007-00460
• Publication Date: April 2, 1980

Director of
Central
Intelligence
APPROVED FOR RELEASE^
DATE: 01-20-2010
National Intelligence Daily
Wednesday
2 April 1980
(b)(1)
(b)(3)
Top Secret
 Situation Report
Iran . . . . . . . . . . . . . . . . . . . .
Briefs and Comments
Spain: Delayed EC Accession . . .
Egypt-China: New Aircraft DeaZ. .
Japan: Economic Outlook . . . . . .
Special Analysis
The Palestinians: Prospects for Increased Militancy . . 8
2 April 1980
 President Bani-Sadr's comments last night indicating that the
US has not met Iran's conditions for transferring the hostages to
government control probably reflects his weak political position.
directly orders the militants to comply.
Bani-Sadr almost certainly has faced serious oppo-
sition to his proposal and he may well continue to ask
for more concessions to avoid appearing too conciliatory
toward the US. Even if he has good intentions, Bani-Sadr
lacks the political influence to carry out his pledge to
transfer control of the hostages unless Ayatollah Khomeini
lah apparently believes that the Shah, abetted by US
plotting, continues to threaten his Islamic Republic.
In a hardline statement yesterday Khomeini pointedly
ignored the transfer issue, indicating he is unlikely to
reverse his public support of the militants. The Ayatol-
Council and Khomeini.
The President's assertion that the Revolutionary
Council favors transferring the hostages is also open
to question. He and Foreign Minister Ghotbzadeh have in
the past consistently overstated their support from the
tants is possible without Khomeini's approval.
ful political allies including the left and the cleric-
dominated Islamic Republic Party. A spokesman for the
militants indicated yesterday that they will only obey
instructions from Khomeini. A Foreign Ministry spokes-
man admitted, moreover, that no action against the mili-
The militants continue to receive support from power-
Both Khomeini and Bani-Sadr took a tough line on
Kurdish opposition to the government in their statements
yesterday. Khomeini suggested no one's interests would
2 April 1980
 be served unless the Islamic Republic survived, and called
upon Kurdish "brothers and sisters" to desist from their
separatist ways and recognize the authority of the central
government.
rity is endangered.
Citing national security as a primary concern, Bani-
Sadr called on the Kurdish Democratic Party to lay down
its arms. He confirmed recent reports of Army activity
against armed Kurdish groups, and threatened that mili-
tary operations would continue as long as internal secu-
that is likely to heighten tension with the Kurds.
Khomeini's position--that the Kurds are misguided
and subject to manipulation by external powers--is not
new, but Bani-Sadr's rejection of further compromise sig-
nals a significant hardening of the government's attitude
Preliminary data from the National Iranian Oil Com-
pany indicates that during the 30-day period ending
20 March Iranian oil production averaged 2.3 million
barrels per day. Production apparently has rebounded
from a mid-month drop caused by a series of sabotage in-
cidents. Exports averaged 1.4 million barrels per day,
down 300,000 barrels per day from the previous month.
The Iraqis already provide aid to a wide variety of
Relations With Iraq
Iraqi Deputy Prime Minister Tariq Aziz was slightly
wounded yesterday by an "Iranian" terrorist, according
to the official Iraqi news service. The announcement
did not claim that the terrorist, who was killed by Iraqi
security forces, was acting on the orders of the Iranian
Government. Nevertheless, the incident will strengthen
Baghdad's determination to undermine the regime in Tehran.
Khomeini's domestic opponents.
2 April 1980
 SPAIN: Delayed EC Accession
and defense policies.
Delays of a year or more in Spain's timetable for attaining
EC membership pose a potentially serious problem for Spanish foreign
Spanish Minister
for EC Relations Calvo Sotelo recently told Belgian
Foreign Minister Simonet that full accession by Spain
to the EC is not likely before late 1983 or even 1984.
Calvo Sotelo maintained that realistic negotiations on
the most troublesome issues--particularly agriculture--
could not eve beain the French presidential elec-
tion in 1981.
lobby.
French farm interests are threatened by the prospect
of Spanish competition and by the difficulties Spanish
accession would pose to the crisis-ridden EC agricultural
pricing system. While French leaders remain committed
to melding Spain eventually into the EC, presidential
candidates will try not to alienate the agricultural
economic costs.
In Spain the delay could cause a loss of momentum
for Community membership. All major parties support
joining the EC for economic reasons and because it would
signal final acceptance of Spanish democracy by Western
Europe. Spanish businessmen and farmers, however, are
just beginning to araonle with the attendant social and
Alliance could face serious trouble.
The delay is likely to impede progress on Spain's
recognition of Israel and on the difficult Gibraltar
issue, which will continue to sour relations with the
UK. More important, since Madrid seems to be linking a
final decision on NATO membership to entry into the EC,
the NATO issue might not be decided until after the next
Spanish parliamentary election, which must be held before
March 1983. If the Socialists were to win the election
or strengthen their position, Spanish plans to join the
2 April 1980
 A reported new accord between Egypt and China for F-7 air-
craft--Chinese versions of the Soviet-designed MIG-21 that is
the mainstay of the Egyptian Air Force--could be stalled bu pay-
ment delays on an earlier aircraft agreement.
the Egyptians have not paid anything on the con-
tract for 50 F-6 fighters--Chinese versions of the
MIG-19--since making a down payment at least a year ago.
this could hurt other Chinese arms
sales to Egypt, particularly the F-7 agreement.
The F-7 is a day fighter that is less advanced than
many of the Soviet-built MIG-21s already in the Egyptian
inventory. Nonetheless, it could allow Egyptian pilots
to expand training again after several ears of in-
creasingly restricted air time.
IThe Chinese probably
cannot deliver more than a few new aircraft very quickly.
The payment problem could be the first major set-
back in Egypt's growing military relationship with China,
which is now Egypt's second most important arms supplier.
In addition to selling or giving the Egyptians new equip-
ment, the Chinese have provided them with spare parts for
key weapons, such as tanks and transport aircraft, in
their largely Soviet inventory.
2 April 1980
 TopSeeret
5
2 April 1980
 Japan: Selected Economic Indicators
Real GNP Growth
Percent
6.0 5.9
Percent Billion US .$
5.9 2.2 2.2 16.5
 Prime Minister Ohira's political position has not
deterred his efforts to push forward with his conserva-
tive economic policies--wage restraint, tight monetary
and fiscal policies--aimed at reducing Japan's large
budget deficits and restraining inflation. Given the
government's focus on anti-inflation policies, exports
should, generate around half of Japan's GNP growth this
year.
billion.
If Japan reaches its growth and inflation targets
this year, it could move toward posting perhaps the best
all-round economic performance of any major country in
1981. With inflation easing, Tokyo will be able to re-
lax monetary policy, spurring increased investment.
Coupled with continued export growth, these factors
could push Japan's GNP growth over 4 percent next year
and hold the current account deficit to less than $5
2 April 1980
 7 Too sag--~
2 April 1980
 THE PALESTINIANS: Prospects for Increased Militancy
Few Palestinians or other Arabs believe the Egyptian-Israeli
autonomy talks will satisfy even minimum Palestinian political de-
mands. The failure of the talks to make arrangements acceptable to
the Palestinians would, under any circumstances, intensify Arab
criticism of US policies. Several recent trends in the Middle East
threaten to step up Arab demands for new US initiatives to deal
with the Palestinian issue.
Palestine Liberation organization leaders recently
have interpreted efforts by the US to improve its military
posture in the Persian Gulf and Indian Ocean and to mobi-
lize Arab opinion against the USSR following its invasion
of Afghanistan as a possible threat to Palestinian polit-
ical interests. According to this view, the US is ex-
ploiting an alleged danger of Soviet expansion to divert
attention from the Palestinian issue and to postpone ad-
dressing it indefinitely.
The PLO leaders fear that the US is moving to con-
solidate a separate Egyptian-Israeli peace that would
leave Israel in control of the West Bank and Gaza and the
Palestinian issue unresolved. This fear is likely to grow
if the US expands its military presence in the Near East
while progress on the Palestinian issue is stalemated.
If the autonomy talks are unsatisfactory, the PLO
and Palestinians in general probably will become increas-
ingly radical in their opposition to US policies and
question the moderate policies of PLO Chairman Yasir Ara-
fat. Arafat's diplomatic initiative to gain West Euro-
pean and Japanese support is already under increasing
attack b hardline Arab states and PLO rejectionists.
2 April 1980
 One of Syrian President Assad's principal reasons
for withdrawing most of his peacekeeping forces from
Beirut and southern Lebanon was to remind Arafat of the
PLO's dependence on Syria. Libyan leader Qadhafi has at-
tempted to punish Arafat by expelling the Fatah represent-
ative from Tripoli and by trying to mold the rejection
groups into a more effective alternative.to Arafat.
Arafat's recent decision to press for immediate UN
Security Council consideration of a tough resolution af-
firming Palestinian political rights is largely designed
to placate his critics. The PLO chief's continued suc-
cess in gaining European support has helped keep his more
radical critics off balance, but it also heightens the
Arab and Palestinian view of the US as the main obstacle.
The PLO probably hopes that by this summer the US will
either have to undertake new initiatives or face increas-
ing isolation from the Arabs and West Europeans.
The growing militancy among West Bank inhabitants
also is likely to increase Arab concern over the Pales-
tinian problem. The area's leaders, who have become more
unified, are devoting more attention to creating a re-
gional organization with which to confront the Israeli
occupation.
The two most active groups on the West Bank are
leftists and Islamic fundamentalists, whose policies
have a strong anti-US and anti-Israeli content. A sub-
stantial growth in West Bank extremism would play into
the hands of PLO rejectionists and probably would force
Arafat to push a more radical line in order to protect
his influence.
Arab Perceptions
Arab leaders in Saudi Arabia and other Persian Gulf
states are arguing more forcefully that resolution of
the problem is crucial to the US position in the Middle
East. Meanwhile, they are increasingly inclined to 'ud e
the US on its Palestinian policy alone. = 7
The moderate Gulf states' impatience with US policy
is reinforced by the link that they see between threats
to their internal security and the unresolved Palestinian
--continued
TOP Co of
9
2 April 1980
 Estimated Distribution of
Palestinian Population
Total Population
4,000,000
Total Population in Israel and Total Population in
Occupied Territories Arab Countries
1,700,000 2,300,000
I Syria 6%
Saudi Arabia 3%
Iraq 1.75%
Egypt 1.25%
United Arab Emirates 1.0%
Other Arab Countries .575%
 issue. They anticipate increasingly serious difficulties
with dissidents in light of the Mecca incident last fall
and the attempt by religious figures in Iran to export
revolution. Palestinian fedayeen ties with the revolu-
tionary government in Iran and with Shia leaders in the
Gulf states have raised new concerns among the Arab re-
gimes about the Palestinians as a potential security
threat.
Fatah are failing.
Palestinian moderates support the existing regimes.
The rejectionist PLO groups, however, are more closely
tied to Gulf dissidents; some apparently are attempting
to expand their own subversive capabilities. They may
begin to co-opt more local Palestinians if the latter
become convinced that the more moderate policies of
the problem.
Outlook
All these factors are gaining momentum and could
badly damage the ability of the US to determine the
agenda and timetable for dealing with the Palestinian
issue. The interaction of these forces over the next
few months is likely to cause the Palestinians, the PLO,
and many Arab states to judge the US even more harshly
if it fails to satisfy their demands. Without progress,
radical influence in the PLO and among Palestinians is
likely to grow--a development that probably would lead
to even more strident demands for a swift resolution of
The prospects for major violence between the Pales-
tinians and Israelis have increased. Following clashes
between Israeli security forces and inhabitants of the
West Bank and increasing political activity there, Israel
has adopted harsh tactics to keep the situation under
Prolonged violence in the West Bank would almost
certainly cause Arab governments to demand a US initia-
tive to end the Israeli occupation and to solve the Pales-
tinian issue. Those governments, already troubled by do-
mestic unrest and concerned that it might spread to the
local Palestinian population, probably would demonstrate
2 April 1980
 increased sensitivity to the charge of being soft on the
Palestinian issue. For its part, Israel would be even
more resistant to US pressure.
In the event of serious Palestinian-Israeli clashes
in the West Bank, many Palestinians in the diaspora are
likely to stage sympathy demonstrations in their host
countries. Leftist and Islamic fundamentalist dissidents
probably would join the demonstrations and try to use
them to foster more antiregime activity. This would in
turn reinforce the pressures on the local government to
adhere to a hardline position and to demand a US initia-
tive.
2 April 1980