NESA WARNING AND FORECAST REPORT, JULY 1987

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91B00776R000300070020-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: December 23, 2016
• Document Release Date: June 6, 2013
• Sequence Number: 20
• Publication Date: July 29, 1987
• Content Type: MEMO

Declassified in Part - Sanitized Copy Approved for Release 2013/06/06: CIA-RDP91 B00776R000300070020-0
The Director of Central Intelligence
Washington, D.C. 20505
National Intelligence Council
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
VIA: National Intelligence Officer for Warning
NIC-03083-87
29 July 1987
Assistant National Intelligence Officer for NESA
SUBJECT: NESA Warning and Forecast Report, July 1987
1. The NESA Warning Meeting for July covered two topics.
2. Iran: Internal Politics and Gulf Policy. CIA led the discussion,
noting the lack of significant differences among the senior Iranian
leadership over Gulf policy despite considerable political infighting and
factionalism over other issues.
As far as the ground war is concerned, there is no indication that any
differences over war policy have affected Iran's strategy. Although, there
has been no strategic change, one can argue that Iran is laying the
groundwork--by increasing activity in the Gulf and seeking alliances with
Iraqi Kurdish groups--for a shift from a war of grand offensives with heavy
casualties to a "war of the periphery."
CIA sees no particular significance in Iran's belligerent behavior and
diplomatic rows with France and Britain. It is typical for Iran to act
reasonably as long as events favor it, but to become intransigent when
challenged. Such behavior reflects overconfidence based on Iran's
experience in dealing with the West over the last few years.
Iran is unquestionably becoming increasingly isolated, but it still
thinks it can exploit the recent UN resolution calling for a ceasefire in
the war. Iran believes that enough key players have reservations about
endorsing sanctions, fearing such a move would damage their relations with
Iran, that the second resolution on sanctions will fail. Iran believes the
first resolution will have very little impact if it is not followed up by
sanctions.
NIO/NESA asked whether current Iranian pugnaciousness might reflect
Majlis Speaker Rafsanjani's determination that his credentials were damaged
by the US arms sales to Iran and that he must toe a harder line in order to
reestablish his leadership. Both INR and CIA doubt that this is the case.
Declassified in Part - Sanitized Copy Approved for Release 2013/06/06: CIA-RDP91 B00776R000300070020-0
 Declassified in Part - Sanitized Copy Approved for Release 2013/06/06: CIA-RDP91 B00776R000300070020-0
? SECRET , 25X1
The change in Rafsanjani's behavior came only after US reflagging intentions
became clear; he no doubt recognizes there is no room for any hint of
flexibility on the reflagging issue. Moreover, a variety of reporting
indicates that that Rafsanjani has shown a conciliatory attitude on other
issues.
Khamenei has generally been among those who want to wind down the war,
worrying that big offensives are potentially destabilizing for the regime.
NSA pointed out that in the short term--at least until Iraq resumes
attacking ships, as the Community believes it will--the rhetoric works in
Iran's favor.
The Iranians still believe US and Kuwaiti
resolve can be broken. based on evidence of Iranian terrorist tasking,
Tehran may attempt some dramatic act in hopes of galvanizing opinion against
the reflagging program. There is no indication that Iran is looking for
more hostages, however.
The state of Khomeini's health continues to be a key unknown
complicating the Community's efforts to forecast internal developments.
2. India: Gandhi's Woes. State/INR led the discussion, noting that
reporting from massy New Delhi is begining to sound worried about Gandhi's
political future. The Community generally agrees that Rajiv is in a tight
spot and would not win if an election were held today. However,'there seems
to be a consensus--if.not optimism--that Rajiv still has time to turn his
political fortunes around before the scheduled 1989 election.
On the surface, it looks like Rajiv should be in good shape:
--his Congress (I) controls 75 percent of the seats in parliament and
over half of the state legislatures;
--recently passed legislation makes the changing of party affiliation by
parliamentary delegates virtually impossible;
--the opposition is fragmented.
Rajiv is clearly in trouble, however, and the respite granted by the
Congress (I) victory in the recent presidential election is apt to
shortlived.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2013/06/06: CIA-RDP91 B00776R000300070020-0
 Declassified in Part - Sanitized Copy Approved for Release 2013/06/06: CIA-RDP91 B00776R000300070020-0
SECRET 25X1
--He is no longer seen as "Mr. Clean"; if he is not associated with
corruption, he is at least implicated in a cover-up. This particular
problem goes back to a legal change banning corporate donations to
political parties. Much of the questionable transfers of funds
involving Swedish and West German defense contractors probably are
traceable to Congress (I) coffers. More damaging disclosures are likely.
--Rajiv's second major source of troubles is the erosion of support
among Congress (I) politicians. His advisers are seen to be "yuppies"
who have no resonance among the Indian masses. Gandhi's coattails have
worn thin, as the recent electoral debacle in the Hindi-belt, Congress
(I) heartland state of Haryana demonstrated. A group of legislators in
Uttar Pradesh (UP) state, the most important of the Hindi-speaking
states, reportedly is prepared to bolt Congress (I) and is attempting to
mobilize dissidents there. The party also appears to have lost the
support of two key minorities, the Muslims and the harijan
(untouchables).
--Gandhi is running scared, as his purge of party notables and the
expulsion of former Finance Minister V.P. Singh--who charged the
government with trying to cover up the kickback scandals--suggests. His
espousal of a more leftist, populist position at home is an attempt to
balance his elitist image, as is a renewed emphasis on ties to
Moscow--including his recent visit with Gorbachev. Gandhi is also
showing signs of instability in his personal behavior.
INR believes a credible effort by Congress (I) dissidents to rally
around V.P. Singh, who retains his seat in parliament, already is under
way. CIA and NSA, however, find it difficult to imagine that corrupt older
Congress (I) politicos would back someone who was genuinely a reformer, even
for expediency's sake. Cooperation and a common platform among them in
support of V.P. Singh would be elusive, as the dissidents have competing
personal agendas.
Gandhi can be expected to take a number of steps in an effort to give
his government a new look and optimism. He will shuffle his Cabinet to
include more Congress (I) stalwarts, who are not as pro-Western as he is.
Gandhi may also talk about party elections, which have not been held for 17
years. [NOTE: Gandhi did, in fact, make minor changes to his Cabinet the
weekend of 25-26 July. For the most part, these were stop-gap measures
designed to reassign vacant portfolios. Gandhi indicated a major
reshuffling might take place after the monsoon parliamentary session ends
next month.1
INR spelled out some of the implications of Gandhi's political troubles
for Indian policy:
--some of his new advisers are apt to be the leftist, manipulative
confidants of his mother, and Gandhi may come to believe he needs the
support of the Communist Party just as his mother did during the 1969
Congress (I) revolt. [CIA believes, as Embassy reporting indicates,
that the influence of the Indian Communist Party in domestic politics
has declined in recent years.]
25X1
Declassified in Part - Sanitized Copy Approved for Release 2013/06/06: CIA-RDP91 B00776R000300070020-0
 Declassified in Part - Sanitized Copy Approved for Release 2013/06/06: CIA-RDP91 B00776R000300070020-0
? SECRET W 25X1
--The economic liberalization program is likely to slow, although it
would be difficult to undo some measures;
--More populist programs can be expected even though it is clear Gandhi
is elitist;
--On China and Pakistan, Gandhi is likely to follow a cautious
policy--no confrontation, but no concessions, either;
--Sri Lanka may be one area where activism and a tougher line might be
more popular;
--Indian foreign policy elsewhere will be characterized by a lack of
innovation;
--Gandhi's rhetoric will take a more leftist slant, although he will
probably remain committed to Western high technology;
--Gandhi may figure that an acceleration of the nuclear program would be
popular.
DIA agrees that Gandhi tends to have a short-term view of things and may
not see the pitfalls in trying to achieve a cheap victory using the tougher
line on Sri Lanka. The more he supports the extremist Tamil Tigers, the
more is works against his efforts to soften communalism in India. Sri
Lanka, moreover, could become a military entanglement for India. (NOTE:
India and Sri Lanka signed a peace accord on 29 July that includes a
provision for an Indian peacekeeping contingent.) INR tends to believe that
neither Rajiv nor the Indian public would see it that way; after all, India
split Pakistan without many repercussions at home.
Gandhi's choice of advisers will be a key
topple Gandhi during the inevitable next crisis; an important restraining
indicator of whether he can turn things around. Efforts by Congress (I)
dissidents to split the party bear monitoring. The dissidents may try to
build a base around V.P. Singh--the new "Mr. Clean"--that could be a base to
The Community believes Gandhi will continue to support relations with
the United States and the West as sources of high technology. The heightened
leftist rhetoric from Gandhi., however, and the likely absence of influence
from pro-Western advisers, will make interpretation of his intentions more
difficult.
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/06/06: CIA-RDP91 B00776R000300070020-0