NATIONAL INTELLIGENCE DAILY (CABLE) 22 JULY 1982

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T00301R000400010042-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: December 20, 2016
• Document Release Date: August 30, 2007
• Sequence Number: 42
• Publication Date: July 22, 1982
• Content Type: REPORT

Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
Director of Top Secret
7 ~+
Central
l Intelligence
o c'
National Intelligence Daily
(Cable)
Top Secret
CPAS ID 82-170C
Copy 4 0 2
Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7 =
 Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
Iran-Iraq: Escalating Air War . . . . . . . . . . . . . . 1
Israel-Lebanon: Guerrilla Raids . . . . . . . . . . . . . 2
Egypt: Foreign Policy Concerns . . . . . . . . . . . . . 3
EC - Middle East: Turning to the US . . . . . . . . . . . 4
Eastern Europe: Declining Debt to Western Banks . . . .
Western Sahara: Increasing Military Action . . . . . . . 6
Angola: UNITA Clashes With Cubans . . . . . . . . . . . . 6
Bolivia: Inauguration Day . . . . . . . . . . . . . . . . 7
Special Analyses
Poland: Implications of JaruzeZski's Speech . . . . . . . 8
Iraq: Economic Problems Mounting . . . . . . . . . . . . 11
25X1
25X1
Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
IRAN-IRAQ: Escalating Air War
(Information as of 2300 EDT)
//Iraq bombed two Iranian cities yesterday in retaliation fo
the Iranian bombing o Ba hdad.
25X1
25X1
Iraqi aircraft yesterday bombed Ahvaz and Dezful.
Tehran claims the airstrikes inflicted heavy civilian
casualties.
The Iranian attack on Baghdad caused little if an
y
damage. Iran admits losing one of the two aircraft in
-
volved in the strike.
25X1
M
25X1
Comment: //The attack on Baghdad was the first since
October 1980, and probably responds to Iraq's recent heavy
bombings of Iranian cities. Tehran also may have intended
the strike to frighten Third World nations from attending
the nonaligned conference in Baghdad in September.//
//Iraq almost certainly will launch additional air-
strikes against Iranian cities, possibly including
Tehran. Iran has only about 100 operational fighter air-
craft remaining and cannot sustain large-scale attacks
against strategic Iraqi targets, although it can continue
to carry out limited raids.//
25X1
M
25X1
25X1
25X1
Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
(Information as of 2300 EDT)
Top Secret
The cease-fire in Beirut is holding, but the Israelis are
becoming more concerned about Palestinian guerrilla attacks. The
Lebanese are preparing to hold presidential elections.
Israeli radio announced yesterday that Palestinian
guerrillas infiltrated through Syrian lines in central
Lebanon and attacked an Israeli unit, killing five sol-
diers. Israeli military spokesmen recently have warned
that serious conse-
quences could result from continued Palestinian guerrilla
raids from Syrian-controlled areas.
Comment: The number of casualties resulting from
the attack and the Israeli publicity su gest the Israelis
may be preparing to retaliate.
the Speaker of the Chamber
of Deputies has notified the deputies the Chamber will
convene on 29 July to begin the process of electing the
new Lebanese president. The presidential "campaign" is
scheduled to begin tomorrow and run through 23 August.
The balloting by the Chamber of Deputies, whose members
elect the president, can occur on any date during the
campaign. The vote reportedly will be held on 3 August.//
The constitution provides that a two-thirds majority
of the vote is needed on the first vote, but only an
absolute majority on subsequent ballots. The Chamber of
Deputies consists of 99 seats, but seven are vacant.
The constitution is vague on whether the number of votes
required to elect a president should be based on 92 or
99 and on how many deputies must be present to establish
a quorum.
Comment: The number of deputies on hand will largely
determine whether the election proceeds smoothly or becomes
one more dispute among Lebanon's political factions.
25X1
25X1
Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
EGYPT: Foreign Policy Concerns
The conflict in Lebanon has hardened Egyptian objectives in
the Middle East peace process and caused Cairo to Zook to the US
to play a more active and innovative role.
the
Egyptians view developments in Lebanon as adversely
affecting their foreign policy. The widespread belief
in Egypt that the US shared Israeli objectives has embar-
rassed Cairo and caused many Egyptians to question the
credibility of the US as a partner in the peace process.
Egyptian officials fear that in the long run radical
trends in the area will increase, thereby jeopardizing
regional stability, Egypt's interests in the Arab world,
and the survivability of the Mubarak regime.
Regardless of the fate of the PLO, Egypt will place
even greater emphasis on the Palestinian question as the
key issue underlying a comprehensive peace in the Middle
East. Cairo now cannot
secure enough domestic support for a settlement that prom-
ises anything less than the prospect of full Palestinian
self-determination. the Egyptians will look to
the US to increase its efforts to achieve this goal.
Comment: //The Egyptian commitment to the peace
process has not dissipated because of the conflict in
Lebanon. Egyptian policymakers still believe they have
a central role to play in that process.//
//Cairo's hope for renewed efforts toward a compre-
hensive settlement is in part a response to domestic
criticism over its close ties with the US and Israel. It
also underscores Egypt's strong desire to regain its
position in the Arab world.//
25X1
25X1
25X11
25X1
Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
EC - MIDDLE EAST: Turning to the US
//EC members are increasingly inclined to urge the US to take
the lead in dealing with the conflict in Lebanon.//
//EC Foreign Ministers on Tuesday agreed the EC
should not take any independent action on Lebanon, but
should encourage the US to accelerate its efforts to
achieve a disengagement in West Beirut. Some ministers
reportedly implied the EC itself cannot directly affect
the situation in Lebanon because of its lack of influence
over Israel. Regarding the war between Iran and Iraq,
the ministers merely noted that the conflict might add
to instability in the Middle East.//
//The ministers also expressed concern that what
they see as growing anti-Americanism in the moderate Arab
nations may take a generally anti-Western turn. To try
to prevent this, they called on EC Political Directors
to consider ways of improving the dialogue between Western
Europe and the Arab moderates.//
Comment: //In addition to a feeling of helplessness,
the EC's current emphasis on coordination with the US in
dealing with the crisis in Lebanon probably reflects a
hope that US policy on the region may be evolving more
in line with West European preferences. West European
leaders also may be reluctant to complicate relations
with the US by independent action on Lebanon, because
they fear the hostilities between Iran and Iraq might
require a joint Western response. Nevertheless, their
concern with the spread of anti-Americanism suggests they
will continually reassess how closely they want to be
identified with the US in the Middle East.//
//The West Europeans are likely to try to persuade
the US to seek a general solution to Arab-Israeli differ-
ences, and will push in particular for action on the
Palestinian question. They fear the PLO will become more
of a force for instability unless it is allowed to par-
ticipate in a Palestinian self-determination process or
receives some other form of political compensation to
offset its military defeat.//
Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
EASTERN EUROPE: Declining Debt to Western Banks
Newly released data from the Bank for International
Settlements show Eastern Europe's liabilities to Western
banks fell by $4.2 billion in the first quarter of 1982.
To repay the banks, the East Europeans, including the
Yugoslavs, drew down their foreign exchange reserves by
$2 billion, sold gold, and slashed imports from the West
by nearly 20 percent, as compared with the first quarter
of 1981. East Germany lost $1.2 billion in credits and
$600 million in reserves, and Hungary's liabilities fell
by $900 million and its assets by $400 million.
Comment: The decision of Western bankers to reduce
their exposure probably forced East European countries to
pay off at least 50 percent of liabilities maturing between
January and March. These cutbacks in credit have already
brought Hungary to the brink of insolvency. Although
East Germany still has substantial hard currency assets,
continuing problems in refinancing maturing credits could
jeopardize East Berlin's financial position in the next
Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
WESTERN SAHARA: Increasing Military Action
//Clashes are increasing in Western Sahara between
Moroccan forces and Polisario Front guerrillas. A
Polisario communique on Monday claimed several recent
operations against Moroccan positions, and a Moroccan
military official reported airstrikes against the insur-
gents last week. Earlier this month, the guerrillas
attacked Moroccan Army units protecting crews at work
near Semara on a new section of the defense barrier.//
Comment: //The Polisario has undertaken at least
three operations against the Moroccans this month in
part to block extension of the fortified barrier that
has enabled Rabat to control the core section of the
territory. Some of the insurgents' more heavily armed
units have moved closer to the new construction area.
In addition to protecting the extension, renewed Moroccan
air activity is intended to preempt an attack by the
Polisario on a target likely to gain it wide publicity--
such as the recently reopened phosphate mines at Bu Craa--
just before the Western Sahara issue comes up again at
the OAU summit in Tripoli early next month.//
//Insurgents of Jonas Savimbi's National Union for
the Total Independence of Angola ambushed an approximately
1,000-man Angolan and Cuban force in southern Angola last
month Several Cubans
were killed. this was the first major
engagement between Cuban combat troops and UNITA since
1980.//
UNITA also may be
concentrating on capturing whites to dissuade foreign
governments from assisting the Angolan regime. This
recent increase in insurgent activity may be an attempt
by Savimbi to draw additional attention to his assertions
that UNITA will have to be involved in any settlement
on Namibia.
25X1
25X1
I
25X1
^
25X1
25X1
Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
BOLIVIA: Inauguration Day
The presidential swearing-in ceremony yesterday
for General Vildoso was delayed until late evening
because of power struggles between military factions
over key positions--including the top Army post. The
junta of service commanders that appointed Vildoso also
was trying to ensure a dominant role for itself in the
new government before permitting Vildoso to take office.
Comment: The military infighting indicates the
weakness of Vildoso's support among his colleagues.
The deals necessary to allow him to assume the presidency
probably will limit the effectiveness of his government
further. As the alignment of the new cabinet members
becomes apparent, it will indicate how successful Vildoso
has been in putting his stamp on the new government.
Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
POLAND: Implications of Jaruzelski's Speech
Premier JaruzeZski's speech yesterday to the parliament will
gain little popularity for the regime or its policies and does not
foreshadow a break in the domestic stalemate. The West Europeans
are not ZikeZy to use the decisions of the Polish Government as a
Lever to press Washington for immediate relaxation of post-martiaZ-
Jaruzelski clearly wants to remove the superficial
irritants of martial law. He plans to proceed at his own
pace, however, and base his actions on the level of
opposition activities.
The Premier will not hesitate to return to more
harsh tactics if resistance increases. He also has held
out the possibility of ending martial law and of a papal
visit only if there are sure signs of domestic peace.
The speech reflects the regime's increased confidence
about its ability to maintain control. This may be due
partly to the belief that Solidarity is plagued by weak-
ness and indecision. Nevertheless, Jaruzelski still
harbors strong reservations about the union's intentions
and potential strength.
Jaruzelski explicitly stated that his long-term
goal is to create an effective, competent, and highly
disciplined state apparatus, and that the military must
play a key role. He will continue to place military men
in important positions, even in the party, and bureaucratic
procedures used by the military will be imposed on civilian
government offices. These practices will contribute to
the feuding and bickering within the regime.
Solidarity and the Church
Solidarity's rank and file, comprising most workers,
will find little new or encouraging in the speech.
Jaruzelski reaffirmed that economic conditions will
25X1
Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
remain bleak and that the government even intends to
crack down on increased absenteeism, particularly on the
part of younger workers.
The unconditional release of 913 internees and
conditional release of 314 more may ease somewhat the
reported pressure for Solidarity activists to stage
demonstrations today--Poland's national day. The under-
ground leadership, however, will continue to agitate for
the release of the remaining 600 to 800 internees and
will not accept the Premier's refusal to engage in a
serious dialogue.
Solidarity's leadership currently is trying to re-
assess its strategy of how to bring effective pressure
on the regime. Jaruzelski's speech and the unwillingness
of the regime to map out a future role for trade unions
probably will strengthen the conviction of many union
leaders that a dramatic gesture--possibly in the form of
a general strike--eventually will be necessary to force
concessions.
With the postponement of the papal visit, the
Church has again been forced to bow to the government's
will. Church leaders will welcome the release of internees
but will remain privately skeptical that the regime is
seriously interested in a dialogue with it and Solidarity
on the country's future. Nonetheless, they will continue
to work cautiously for the release of the other internees,,
urging restraint to the underground and the populace.
West European Reactions
//The allies will welcome in principle any relaxation
in the Polish internal situation. They are not likely,
however, to view Jaruzelski's announcement as much more
than a minor effort to enhance the regime's internal
legitimacy and international image. The West Europeans
are likely to continue to insist on their original de-
mands that Jaruzelski release all internees, abolish
martial law, and restore a dialogue with Solidarity and
the Church.//
Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
//The West Europeans probably believe renewed debate
at this time over Western post-martial-law sanctions
would aggravate differences with the US over the gas
pipeline and other issues. An additional relaxation of
martial law, however, could lead to West European pres-
sure on the US to remove or relax sanctions.//
//Warsaw's latest decisions probably are enough to
convince most allies to support the desire of West Euro-
pean neutrals to end the deadlock at the CSCE meeting in
Madrid and resume discussion on the substantive issues
blocking agreement on a post-Madrid security conference.//
//NATO participants refused to continue CSCE nego-
tiations after the imposition of martial law in Poland.
Now, however, the allies almost certainly will support
the Swiss view that, with the beginning of START and INF
talks, CSCE should not become the "orphan" of the Euro-
pean security process.//
Poland's domestic political situation is unchanged.
The perseverance of the underground Solidarity leader-
ship, combined with the unhappiness and alienation in
factories, will ensure that opposition sentiment and
activity continue.
The government will keep up its efforts to quell
opposition. Prospects remain reasonably high that
opposition activities in coming months will lead to
clashes with the security forces, thereby perpetuating
Approved For Release 2007/09/13: CIA-RDP84T00301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
IRAQ: Economic Problems Mounting
The Iranian invasion has intensified Iraq's already serious
financial problems. Additional aid from Arab neighbors in the
Persian Gulf region will not offset the war-related loss of oil
revenue. Iraq already has been forced to draw down its foreign ex-
change reserves substantiaZZz, to avoid import cutbacks, especially
for military equipment.
The conservative Arab states of the Persian Gulf
are unlikely to provide Baghdad with enough additional
aid to enable President Saddam Hussein to avoid new aus-
terity measures.
Baghdad has been spending an estimated $1 billion
per month on the war. Military contracts concluded this
year alone total some $3 billion, divided about equally
between Western suppliers and the Soviets
Financial Squeeze
Iraq's revenues in 1982, however, will be only
about $10 billion. This will be about half the prewar
level and is based on an assumed oil export average of
about 800,000 barrels per day.
It will be difficult to maintain this level if Iran
retaliates for Iraqi strikes on Iranian oil facilities
by trying to sabotage the pipeline that carries Iraqi
oil across Turkey. Iraq's other oil export facilities,
the terminals in the Persian Gulf and the pipeline
across Syria, have been closed because of the war.
As a result, Iraq faces the prospect of an $11 bil-
lion foreign exchange gap this year. Its import bill
alone probably will be twice as large as oil revenues
because of spending for many civilian projects begun
earlier and for military requirements.
Baghdad already has drawn down its foreign exchange
reserves by an estimated $5 billion this year to pay
for its foreign obligations. Its remaining reserves are
Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
 Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
estimated at $15 billion--less than half the prewar
Iraq's credit standing has been slipping in inter-
national banking circles because of the war, dwindling
foreign exchange reserves and delays in making payments
on existing loans.
Domestic economic activity already is slowing as
civilian development projects are postponed or canceled.
Much of Saddam's popular support has hinged on his ability
to insulate the consumer from the war. The regime,
therefore, will give priority to ensuring an adequate
supply of basic necessities.
The invasion is likely to prompt the Persian Gulf
states to renew their aid commitments to Iraq. These
countries do not see an acceptable alternative to Saddam
and fear the regional consequences of an Iranian victory.
They have provided $20 billion since the war began and
have promised an additional $4 billion to cover most of
the loss caused by closure of the Syrian pipeline.
The Persian Gulf states, however, have their own
financial difficulties this year because of the soft world
oil market. They probably will be hesitant to dip deeply
into their reserves to help Iraq.
What aid they do give will be designed to keep Iraq
afloat, not to allow significant economic development.
Moreover, the rich states anticipate the need to pay
reparations to Iran, either on behalf of Iraq or as part
of their own effort to appease Tehran.
Cash alone will not guarantee the flow of imports.
An Iranian attack across the Shatt al Arab probably would
sever Iraq's primary Persian Gulf trade route through
Kuwait.
This route now handles about one-fourth of Iraqi
imports and nearly all Soviet military equipment bound
for Baghdad. Alternative routes through Jordan, Turkey,
and Saudi Arabia would be unable to cope with the added
load.
'25X1
25X1
Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
 Top Secret
Top Secret
Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7
Approved For Release 2007/09/13: CIA-RDP84TOO301 R000400010042-7