NATIONAL INTELLIGENCE DAILY FOR FRIDAY, 4 AUGUST 1989

Created: 8/4/1989

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Iran: Increasing Involvement in Lebanon

El SaKadur: MiluarjUSSR: Supreme Soviet Backs Cooperatives

Afghanistan: Reverberations From Insurgent Clashes Thailand: Strains Ahead for Chaichai Governmcni

Somalia: Siad Trying To Regain Conirol

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Hati/cr Concedes I'lCMdency io Viz Zamora

Ties Declining, Noiighi

Brief

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Domestic Support tor Ubayd Kidnapping High

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SKwallo* Report

In announcing suspension of ihc ihreai lo kill (IS hostageoppio. ihc Rcvolulionary Juilicc Organizationemands io include ihe release of an unspecified number of imprisoned Lebanese and Palestinian activists, as well as Shayfch Abdul Knnm Ubayd. According to the pressist of lhc prisoner, is io be passed lo lhc Red Cross

a: These develop menu almost certainly will si Israeli kadcrs" belief that negotiations arc possible

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a news briefing held in Moscowoviet Foreign Ministry spokesman slated lhat thc USSR is strongly opposed lo escalating violence over the hostage crisis, cautioning that the threat or use or force would not defuse Ihc situation. He said Moscow intended to discuss lhe hostage crisis with Syrian and Palewmian leaders and lhal it wouldessage to Israel on lhc matter. Soviet press coverage of* US naval movements in lhe Mediterraneanhrcr. fsauslA^Btf

Moscow is attempting lo dissuade the US and Israel from miliiary strikes thai could lead lo calls from its allies for more direct Soviet involvemeni and undermine iu efforts to convene an international conference on the Arab-Israeli peace process. The Soviets more active diplomacy ii also designed to establish thcredentiali as an opponent of terrorismeacemaker in ihe region.

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Trkrmm itnShim /mrxe, tm Lehmmmm mmd imcrrmtimg in comnlinmlim*im im fmrr to helmmiiim mmilr mgmimii (mriiiUm Prime Mlmluti Michel

S>na is forencouraging Iran toarger role in Lebanon in part because Damascus has limited influence with Hiiballah. It needs Tehran's help to keep peace bctw-een thc rival Shia groups and loHi/hallah intolarger Lebanese Muslim alliance against Awn.

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insurgents conductrd attacks throughout Ll ftatttsdar

the Army has begun operatlonsln two major guerrilla bait areat.

The rebel attacks appear to have been well coordinatedargeted isolated National Guard and civil dcfcnie pom rather than well-defended military installations foi the mosl part. Thc guerrillas also conducted several sabotage operations againsi electric, lines and the transportation system. Thc civil defense and security forces reportedly suffered ai least four dead andounded while ihc rebels sustained three casualties.l

military* hasajor operationebel base area

southern coast HLHLI^HHBIsBiV^BsBHaV "vc Army, battalionsational Guard iroops have deployed to Usulutan Department to increase securityajor coffee-producing area. Thc Army also iseries of smaller commando operations in northern Mora/an Department thai have killed atJBHV

i he insurgents probably timed theii attacki to take

advantage of military unpreparednessccklong national holiday. Despiteear of military setbacks, thc insurgents are still strong enough lo engage some lightly guarded targets. The rebels probably could notortified military installation such as Ilopango Airbasc. but they may be able to damage aircraft and facilities bytandofl

By attacking rebel base areas, the miliury is trying lo establish apresence in areas the rebels have long held. Thebe able lo avoid taking many casualties during thesedispersing ihcir forces elsewhere in El Salvador. But.forces can deny the rebels sanctuary, they may aifrustrateability

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MMupcrathc*

The Supreme Sotier't approval ihit weekevised decree thailanned inert-ait in raxei on cooperaiivti underscores lhe reform-mindtd mood of the new legislature and should encourage ihe rapid^vetopmeni afihtse independent businesses lo continue.

Thc revised decree was issued aflcr moreeek of heated debate between deputies who view the independent businesses as essential for rein vigor at ine the economy and those who believe they arc out touick buck at the expeme of ordinary- citizens. The original tax decree, issued in February, allowed republic authorities, asuly, to determine the tax rates for cooperatives in their regions. Some republics, the Baltic ones for example, adopted moderate rates, but others, like the Russian Republic, whose cooperatives account for roughly half thc goods and services cooperatives produce nationally, set prohibitiveaaMMft

ihc revised decree limits the tax rates for virtually all types of coopcra lives toercent and. if businesses charge state prices, toercent. It exempts from taxable income spending on fixed capital, on training personnel, on protecting thc environment,wages. Like Ihe original decree, however, it does not limit the tax rates that republics set for businesses that act at middlemen between enterprises and the public or between one enterprise and another.*

*Br*4aBVV*Tric new decree^ for reform minded acetic, who were concerned prohibitive rates would stifle cooperatives. Althoughpcrcem ceiling is not as low as many cooperative businessmen would like, it docs not appear excessive If spending on wages is in fact exempt, the new decree is likely to substantially reduce thc taxable income of virtually all cooperatives because mostarge shsrc of ihc, mcomc on wages.

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lhc absence of tax ceilings for middlemen, the Russian Republic and other regions where hostility to cooperatives is strong will impose stiff tax rates that will probably force many cooperatives there out of business or underground, depriving thc legal economy of this valuable activity. Many ofthese middlemen may seek to register their businesses inikeluc republics, thatradition of private business,!

4 Avium

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AFGHANISTAN: Reverberation* FrumufRenlClt.hc-,

Afghan interim government risks open breaks in its leadership if it does not deal toon with the attack last month on insirrgents in northeastern Afghanistanival resistance faction.*.

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Thc killing of more thanember* of ihc Jamsistu nee group by member* of ihc Hizbi Islami faction threaten* the Afghan resistance. Jnniint leader Burhnnuddin Rabbani says publicly that the killings were an attempt by Hlzbi Islami leader Gulbuddin Hik to

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The interim government risks an open break with rith moreighters, the largest insurgentil doc* noi disciplineailure to investigate the incident and punish the killers will reinforce the Afghan perception Ihat interim government leaders cannoi make hard decisions.usier from the interim government might increase its popularity but would probably not stop further clastic* the ill

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Thc murdered fighters were loyal to Jamiat's northern commander, Ahmad Shah Masood. and included seven of his leading commanders. Masood nonetheless will try lo avoid revenge attacks on Gulbuddinc intends to press ahead with plans to begin an offensive early neat month against regime positions in northeastern Afghanistan and along theSalang highway. If Matood believes the interim government is treating his grievances lightly. however, hc probably will reevaluate his strategy and undertake itions against Hubt Islami positions in the north!

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ew Thinking on Indochina

Willi help from hit advisers, Prime Minister Chatehai has translated his preoccupation with establishing an economic foothold in Indochinaolitically appealing policy line. Thc advisers contend that Vietnam's steady economic decline means that it no longererious military threat to Thailand and that, with Vietnam's withdrawal from Cambodia nearly complete. Bangkok's most important opportunities and challenges are shifting to thc economic arena.

and hia

that business diplomacy is Ihe key to diversifying Thailand's political alliances and trade relationships with the goals of:

Safeguarding That political Interests in (ndochtna. Chatehai and his advisers sec rebuilding Indochina through trade and investment as the best means of gaining influence there.

Easing Thai resource constraints. Bangkok is concerned that Thailand's export boom is depleting local stocks of many raw

. materials like timber and seafood that Indochina still has in abundance.

strong growth of exports end incomes. Chatehai argues lhat trade wiih Indochina can help offset protectionist pressures from Thailand's traditional markets in North America and the EC and reduce Thailand's dependence on

ihcrn.

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Strain* Ahead for Chatchai Cuirrnrm-nt

Minister Chatchai finishes hit first year in officetrong political position, but his governing coalition will be tested in the year ahead, especially on ho* it manages economic and trade iisuri.WfMMMm

play* lo ihc public* desireoreikilllully.

ha* held "mobile cabincl meetings" around ihe couniry*andonuiiuiional amendment ihai will give more power io lhe circled lowerof Ihc legislature. Chatchai has also used his coalition's large majority in push for legislation that may help distribute thc benefits of Thailand'sercent lastevenly.

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Siad liylnitTo Regain Control

President Siad may eliminate the final vestiges of constitutional rule in an effort to increase his authority In Mogadishu: government control elsewhere in the country continues ta slip.*

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latest movesetermination io stifle disseni. Allhough the legislature lacks real authority, dissolving it would eliminate thc last forum for criticizing the regime. Revival of the autocratic revolutionary council, through which Siad governed after the coup that brought him to powerould warn his critics lhat aniiregime activity will again be brutally punished. Having concluded that Western donors are already backing away from his regime in response to human rights concerns. Siadalculates lie has little more to lose on that score.'

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BOLIVIA: lian/.er Concedesrnoru

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Ccnici-rightist Hugo Ban/el's unexpected concession ol ihc presidency Wednesday io Jaime Pa/ Zamora of the ccnicr-lclt Movement of ihc Revolutionary Left willnioulh vole in ihc cMiujivtsiunnl runofftoday. In exchange. Han/cr's parly will get thealf the cul>li>ctForeign All am nndIcadcislnp of the lower house of Congress in u

government,News I'a* Zumora presidency rcportcd"iy hav ledunon bankf^Jcpositi and hoarding uf food. mmW***

%ffMM0tM%9l'a/nd Bun/cr's panics arc not ideologically eonipaiiblc. and tlieircoaliliun is inlicrenily unstable. Why Uanier. who appeared lo liuvc Ihc presidency in his grasp, conceded is noi clear. He was disgusted with three months of interpany squabbling and apparently feared Par Zamora might join with ihc ruling-party candidate, whom liiinzcr despises. The run on the banks shows1 ofumora. who served as vice presideni in thc mid-1when hyperinflation almost destroyed the economy. Par Zamora will need to move quickly.to assure Boli* ians hc is com mined to maintaining current economic policies and to stop thc run from depleting bank deposits.

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ROMANIA-US: Tics Declining, Notight

Although Bucharest believes mounting hostility to it throughoutGovernmcni will cause US-Romanian ties "to dctcrioiateRomanians refuse to reconcile themselves to the situation orresponsibility for it.

apparently is concerned it has little chance to restore the favorable relationship it once enjoved with Washington but Presidentesistance lo improving thc political and human nglus situation is nonetheless adamant. Romania's paradoxically genuine desire to increase trade and acquire advanced technology win spur us public relations efforts to include, for example.ge ads in US ncyvajsapcra and lobbying for closer

In Brief

Kumars in Moscow say Gorbachev tu resign a* Smid parlyIn Ministerm corroborationrelleciion of increasing leadership tension*.on Supreme Soviet

met with head of official PutUh unionot let leader endorsed expanding lies lo all Polishraderobably preparing to meet Solidarity leader Walesa soon.

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warning strike atuibass coalearby dam's construction not haltedin local strikehow* Moscow thatto strike remains)

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Goad weather, increased acreage hove given China record summerertilizer and other shortages mean more important fall harvest probably will be short ofrain imports may approach last yearsillion metric tons. <Mmw%W

China

lain accepting passenger aircraft from Boeing,el delivered Tuesday.ore on ordersatisfied by US decision exempting aircraft *lanctions.^

' Radical Sinhalese insurgents calling general strike today in Sriailure of talks on Indian troop withdrawal will fuel their campaign againstresident Prcmadasa under fire from opposition, onn party

Special Analysis

SupportUbayd Kldanpplnit Utah

The Israeli Government has received strong domestic support for Its handling afihe Ubayd operation. Opinion It running strong against

Western critics teho blame Israel, noi Hizballah, for lhe executionhuiiage. Israelis are concerned about maintaining iheiragainsi Irrrorism and Kant lo avoid appearing ta haveto(3)

Seizing Shuykh Abdul Karim Ubayd bud overwhelming bipartisan backing: the Inner Cabinet votedo one ta approve the operation, according to press reports. In contrast to most controversial Israeli operations,ingle major figure frombor Pari) or the .

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Likud bloc has criticized the action openly..

Until the announcement of ihc death of Lieutenant Colonel HiBgins. the Itiueh public mood wat strongly upbeat with high hopes for swapping Ubayd for the three Israeli soldiers Hizballah holds. The initial editorial response to thc kidnapping of Ubayd was unanimously favorable. Lasl weekend. Israelis widely and proudly compared lhe seizure lo the rescue raid on Entebbe inor hiu daring and'

Israeli public conmicnlnry has widely blnmcd US and Western criticism of Israel's action for emboldening Hizballah. Tel Aviv appean shocked and angry' thai some in lhe West hold Israel, not Hizballah, primarily responsible for any nonage death. Israeli newspapers say the Ubayd abduction is no diffcreBMhan lhc US seizure of Shia terronsl Fawar Yunis

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those in the West who

some second-guessing over the damage Ihc affair could do to US-Israeli relations, support for theandling of il remains high. The Knesset on Wednesday lejccicd no-conlldcncc moiions from three Communitl and Arub fringe parties over lhe gov enmient's actions.l-of-center oppotition parties that arc

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