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Central Intelligence Top Secret National Intelligence Daily (Cable) Top Secret CPAS NIDC 82-202C ugu copy 401 Israel-Lebanon: PLA Brigade Evacuated Overland . . . . . 1 25X1 Poland: More Demonstrations Ahead . . . . . . . 4 //One of the two Syrian-controlled Palestine Liberation Army brigades stationed in West Beirut was evacuated overland to Syria yesterday. Syrian and Israeli officials have assessed the prospect 25X1 for withdrawing their forces in Lebanon, which now total about 46,00, and 33,000, respectively. A Soviet press agency item has reemphasized Soviet unhappiness with US deployments in Lebanon.// //The Palestine Liberation Army brigade, consisting of about 1,255 fighters, was the first unit evacuated by road convoy. Italian troops escorted it to the Syrian border. Another 1,300-man Palestine Liberation Army 25X1 brigade and 3,000 Syrian regular troops are scheduled Approximately 720 PLO fighters left for Syria by ship yesterday, bringing the total of PLO personnel evacuated to some 5,000. on e nes ay quoted a ran ing military o icia as saying Syria was prepared to withdraw its remaining forces from all of Lebanon if the Israelis leave. On the same day, an assistant to Israeli Defense Minister Sharon told a member of the US defense attache's office that Israel's forces would not leave Lebanon until the Syrians had departed. He said Israel was prepared to push the Syrians out militarily Comment: The Syrian officer's statement implies a willingness by Damascus to reconsider its refusal to pull out its troops without a request from the Lebanese Presi- dent and the Arab League. The Syrian presence in Lebanon is sanctioned by an Arab League mandate, and the Syrians have rejected an equation between the Israeli presence and their own. The official, however, may be signaling that a deal could be struck at some point that would lead //Although Israel has been drawing down its forces in the Beirut area, Israeli troop dispositions in the Bekaa valley remain essentially unchanged. Israeli units withdrawn thus far have been reserve cadres and artillery.// //Regular Army units continue to man positions along the Beirut-Damascus highway and in the Bekaa Valley. Israeli troops in Lebanon now number about 33,000, down 25X1 //Syria reportedly has reinforced its units in the Bekaa Valley with at least two brigades Damascus has maintained a high force level in Lebanon since early Comment: Syrian reinforcement of the Bekaa Valley would indicate that Damascus does not intend to withdraw from Lebanon without a fight. Nevertheless, Israeli air supremacy, dominance of the ridgeline overlooking the Bekaa Valley, and ability to bring in reinforcements rapidly would give Israel a substantial advantage in any An article by the Soviet press agency, Novosti, in English on Thursday revived the USSR's categorical opposition to the deployment of US forces in Beirut. The item charged the the deployment was an "unfriendly act" that further aggravates US-Soviet relations. Al- though it suggested that the USSR could not remain in- Pravda carried a related but much more restrained 25X1 article by the same author, a prominent commentator on Comment: The press agency article contrasts with recent Soviet media silence on this issue Use of this low-level vehicle seems designed to reemphasize Moscow's unhappiness with the deployment 25X1 without committing Soviet prestige to opposing something The regime, meanwhile, is working hard to intimidate the populace. Yesterday it announced completion of a Polish-Soviet military exercise and the strengthening of security forces in the militant cities on the Baltic. Polish television announced that police had arrested 108 demonstrators in Lodz, about 110 kilometers southwest of The USI lestimate protests in the next several days will rival those staged in mid-May. They also expect the regime will be able to keep demonstra- tions under control. (C) Pravda on Thursday published an overview of the internal situation in Poland that focused on the slow economic and social recovery there and blamed the persistence of "bourgeois ideology" and "revisionists" in the private sector. The article ends on an uncertain note, however, foreseeing a continued "difficult struggle" in Poland. Comment: The publication of such an article suggests Moscow is concerned about what may occur in Poland next week and wants to prepare the Soviet public for any even- tuality. The reference to "bourgeois" and "revisionist" remnants underlines Soviet frustration at the persistence of worker opposition. In the coming week, the USSR is likely to highlight economic sanctions and other alleged Western interference in Polish affairs and to signal support for the martial law regime's efforts to maintain Iraqi airstrikes on Khark Island over the past two weeks have damaged oil export facilities and discouraged some tankers'from loading. //Air attacks on 18, 20, and 25 August destroyed four medium storage tanks. They also damaged a pipeline lead- ing to the jetty where tankers load oil and one of six pipelines that carry crude to Khark Island from the main- //Although no tankers had been observed loading at the jetty, at least five tankers have loaded at other facilities at Khark since 17 August. Tankers are still Comment: //Iraq probably will have to inflict major damage to the loading facilities or to a foreign tanker before a substantial reduction in Iranian oil exports is likely.// //In spite of the risks, there are still great incen- tives for purchasers. Even with higher transport and insurance rates, Iranian crude still has a $2.40 per barrel cost advantage over Arabian crudes. Moreover, tanker owners stand to make better than 100-percent profit for such dangerous hauls in spite of a depressed the Iranian economy. Oil payments usually lag two to three months. This flow of income and Iran's foreign exchange reserves should allow Tehran to continue the Approved For Release 2008/08/06 : CIA-RDP84T00301 R000400010202-9 Top Secret 25X1 COSTA RICA - NICARAGUA: Asylum Offered to Key Exile President Monge's offer of asylum to exiled Nicaraguan revo- lutionary hero Eden Pastora underscores his determination to continue the hard line against the Sandinistas, despite some opposition in 25X1 his ruling party. //Monge made the offer when he met Pastora during presidential inauguration ceremonies earlier this month 25X1 in the Dominican Republic. It is contingent on Pastora's pledge to refrain from the kind of military activity that Comment: Monge's offer, which Pastora almost cer- tainly will accept, appears to be a victory for Volio. He is largely responsible for the increasingly hard line against the Sandinistas, and he has been locked in a power The President realizes Pastora will be difficult to control. His offer, however, probably reflects his anger at Sandinista complicity in a recent terrorist incident //The move will aggravate tensions with Nicaragua, but Monge may reason that growing international disillusion with the Sandinistas will reduce chances of retaliation. Nevertheless, the Sandinistas regard Pastora's popularity SPAIN: Early Election Prime Minister Calvo SoteZo announced yesterday that national elections will be held on 28 October. After CaZvo SoteZo met with the cabinet on Thursday, King Juan Carlos signed a decree dissolving parliament. 25X1 Comment: The early election favors the opposition Socialists, who have considerable momentum as the front- running party. Calvo Sotelo and other leaders of the Center Democratic Party probably believed, however, that they had to start the campaign now in order to prevent further defections to former Prime Minister Suarez's Social Democratic Center and other new splinter parties. An early election also denies the new parties time to build up campaign organizations and establish their identity with the voters. 25X1 CHILE: Cabinet Changes President Pinochet on Thursday asked for the resigna- tion of his cabinet and probably will name new ministers 25X1 next week. As in the shakeup in April, the government announced that new economic measures designed to combat the deepening recession will accompany the changes. Comment: Pinochet has effectively used such shakeups in the past to regain the political initiative and re- store confidence in his administration. The last two reorganizations, however, brought rapid and unexpected economic policy changes and led to increased certainty. Pinochet's hold on power depends publi large c un- ly on the order and economic progress he has enforced. public confidence is shaken, his regime could face If its 25X1 Public support for President Rene is eroding fol- lowing the Army muting last week, according to the US Embassy. The public generally sympathizes with the mutineers, who may have included up to 200 of the 700- man Army. The Seychelois especially resent the key role Comment: Rene is likely for now to continue relying on Tanzanian troops. Further weakening of his position or another challenge to his rule probably would cause him to ask France or the USSR to assist his security services. The French, however, are reluctant to become involved for financial and political reasons, and Moscow would be unlikely to provide a military garrison. The USSR would be more likely to try to arrange Cuban and East German help and, in return, might seek regular air and naval access to facilities in Seychelles Top Secret The financial crisis in Mexico is highlighting again the grow- ing debt burden of the developing countries. Mexico, Argentina, and Brazil are the three largest debtors among developing countries, and the first two are likely to obtain some form of debt relief from commercial banks before the end of the year. The international financial community is increasingly concerned about the implications The total of the developing nations' medium- and long-term external debt is likely to approach $550 bil- lion by the end of 1982, up from $150 billion only seven years ago. Until this year only the smaller developing countries--with an aggregate debt of only $10 billion, or some 2 percent of total developing country debt--have been in arrears on their debt payments. Now Mexico and Argentina are in arrears, and the countries in evident financial trouble have nearly 25 percent of the aggregate The international financial community is most con- cerned about the situation in Mexico. Overambitious development goals; heavy borrowing that has pushed for- eign debt, including short-term, to upwards of $80 bil- lion; and loss of confidence among Mexicans in the govern- ment's ability to manage the economy underlie the crisis. Mexico has virtually exhausted its foreign reserves, but it still has to repay more than $30 billion in short- and long-term loans coming due over the next 12 months. Mexico City, in what promises to be the largest debt re- scheduling in history, probably will try to refinance more than $20 billion in short-term bank debt and to get Other countries, especially in South America, also are having difficulty managing their international fi- nances. Argentina--the third-largest debtor among de- veloping countries--faces serious repayment problems following the economic disruptions caused by the costly The resignations last week by the Economy Minister and the president of the Central Bank in a dispute over economic policy will reinforce the conviction growing in the banking community that the Argentine economy is pre- carious. Unless Buenos Aires moves quickly to put its house in order, it probably will also be forced to seek a rescheduling of the $15 billion coming due in the sec- Chile and Peru also could encounter difficulty be- cause of reduced export earnings, rising debt servicing burdens, and declining confidence among lenders. Venezuela could face repayment problems if it is unable to refinance Debt restructuring is becoming more attractive to other countries in less immediate jeopardy. This option is now openly discussed in Brazil, even though the country is meeting its foreign financing requirements in good order. Growing numbers of Brazilians are discussing the Some Brazilian economists are calling for the major Latin debtors to seek a collective renegotiation. Despite the debate, there apparently is no support for voluntary debt renegotiations in Brazilian Government circles or The current debt crises in Mexico and Argentina are bound to stimulate a great deal of concern about the stability of the international financial system. So far, both countries have acted responsibly in dealing with Debt renegotiations by Mexico and Argentina will not of themselves impair the profitability or solvency of the creditor banks as long as full interest payments are made. Nonetheless, they are likely to make bankers and substantial credit to the developing countries. The debt problems of the developing countries will cause lenders to pay closer attention to the particular economic and political problems of individual nations. The maturity structure of the external debt of a number of major borrowers, including Argentina and Venezuela, has become heavily weighted toward short-term obligations. The need for constant refinancing, combined with the susceptibility to reductions by the banks in new lending, Although developing-country financial problems are not limited to Latin America, the debt management dif- ficulties being encountered there have the most serious implications for the US. The Federal Reserve reports that US banks--excluding foreign subsidiaries--had ex- tended some $70 billion in credits to Latin American borrowers at the end of the first quarter of 1982. US banks account for some 40 percent of industrial countries' US financial institutions could be whipsawed by financial rumors, unanticipated shocks, and the failure to arrange orderly debt reschedulings. Any visible effort by the US Government or by US banks to help resolve Latin American economic problems by encouraging austerity meas- Approved For Release 2008/08/06 : CIA-RDP84TOO301 R000400010202-9 Top Secret