NATIONAL INTELLIGENCE DAILY FOR 14 MAY 1988

Created: 5/14/1988

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Lebanon; Hiiballah Winning Ramadan War

greement

International: Dross Rehearsal for Toronto Summl Spein-US: Pressure on lhe Bases Issue ..

Explosion Damagesotor PropeLeniRr*Jorbechev Pushes Aarkajtturai Reforms USSR: More Hegtme Threats Against G'asnosl Editor'..

USSR: New Demonstrations In Caucasus'

Yugoslavia: Assembly Session Likely To Be Heated

Peru: Insurgent Act'vlty_jncreasing

Jordan: Foreign exchange Crunch

The Bahamas: Pindlkig Reacts to Drug Charges In

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Analyses

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Hiiballah Winning Ramadan War

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Hizballah appman on tha targe of Healingmteat In Watt Beirut and reportedly plans lo expend the lighting Into (thern Lebanon etter the holy month ol Remaam.nl*

US Embewy in Damascus OeUeveV Syla is no closer to intervening arte iaMhino ho rnawjresto "cut HJbaliati'ahe BeKee Valler. There arc unconfirmed press reports tha! Syrian forces jr^esilve t'trbaltah hghlers who crosseO Into Sy ran-occupied Beiru! aanasW

lranlan influence Is weakest when Hiiballah leaders believe ihey areHo-or-deaih confrontation, or when Hiiballah receives contradictory advlca iromthai almost certainly have applied during lhe recent lightingaaMB^

New aitacks againsthe soutn would be an imperten: test of Ktzba'iah's ability to conduct conventional military operations,here indicated wasttt CapaDlrty.,

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Oil Agreement

The USSR apparently haselor tola In North andplans to develop lolntfvwhat Is probably en olhrlchIheir disputed

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their border settlement lest week, agreed to omplore tor oil jointly*

a^repQsa-rJneutral zone In.therder area. Accordingife oil ministers ot com countries will meet shortly

to begin ImpJementmg the agreement, including tne selection of_a

foreign company to developugro*kilometor'

USSR have to compete

International oil companies to ootain the concession, but.

return for.Wablein-

long resisted Soviet efforts to SrnllYemftlprobaoly believed Wat K development, but

secure Aden's acceptance or the0 Bvold war 8ndwas to submitrg)

agreement apparently favors Moscow by giving It the right to match any competing bid. The Sovieta are already heavily involved in South Yemen's oil development and have lobbied apgresstvely during the post few months to gain access to the anticipated neutral-zone eserves .assa1

Both Vamens ere skeptlca'"of Moscow's: 'ity to tint' and develop oilfields. To sweeten ihe deal. Moscow may hayp^ttcioa both sides dditional military and economic ass'stancc

Several unresolved Issues may block Implementation oflaeludlng the drtpcemon of troops Ina endof eventual oil revenues. North Yemen resentstactics and la likely to seek participationj.echnologyit prefers 1

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Economic issues on Agenda for the OECDegotiated by heada ol delegations before thc session)

Promotion of Sustained, Job-Creating Growth

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markets lor goods and services.

Reduce agricultural and industrial suDsidles.

tower direct lax burdens.

Reduce labor market rigidities

flexible fiscal policy.

Maintain norVnnetlcnary monetary policy.

Expend structural reform vie new lax. agricultural! and commercial policies'

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Reduce federal budget deficit.aintain nonlnlfallonary monetary policy.

Hold protectionist pressures In check:

Promote further structural flexibility.'

Steps to Support OATT Urufluay Round

idterm review In December.

Condemn protectionist pressures that threaten'the round.

Highlight strong economic growth as theuccesslul round.

Oasis lor Structural Reform

Agriculture. Promote reduction ot aupport measures as trio long-term objective (

Investment. Realai protectionist pressures and sirehglhen International

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Markets, intensify international cooperaiion In merwgemeni, particularly . *

Endorse measures to facilitate the creation and diffusion of technology ana to increaseof Its economic and social imphcattona.

Human Resources Development. Identify greater labor market flexibility and

improved eoucstionBrd training programs as complements to structure: admstments.

Quality Support protection Ot the cuaniy ofwafer, and. " - -

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Rehearsal for Tvrcnto Summit

Dlttarmneat over economic poller coordination, agriculture, ana Structural eOluttment will proOeOI, limit progress at the annual two-oar OECD ministerial that opens In Paris or IB rV./aaaaggh,

meeting wdi'bring together, irade. finance; and other7 ministers ol lha Qtoup of Seven andther industrialized't' itir International economymost will oomt with pride to Iheir strong economic performance-orcont aggregate growth lor the OECD7 versus5 oorc-nl thai was expecieoto the

S'ul

Improve Interna tl the

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c high unem Conlentloi

jrohabl

ene

credit for th to eAyr

against cornpracency, of current account imbalances, -assures, end LDC debt, on of agricullural subsidies aassssagjaaafaafj^

nove lOO QUiCKly to reduce

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reluctant to support much more They are likely to try to claim taken on agricultural Subsidies and

alredOy

epHcism tiat tne US can reform us own agricultural

result* are unlikely lo emerge from the OECD ministerial Most countnes probably wMMryfo dehoct calls for action on the more contentious issues and defer major dec-s'cns until the Toronto economic summit In _'une. The disagreement ever agriculture ts nfceh-toprogressramework agreement for thecterm review In December. In part because tne West European country insist on simultaneous agreement onaji issues, considered during the current GATT round!

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Pressure on ins Bases issue

_eferendum appears relatively)

present, and any motionublic vote would require approvalmajority In Pamarrtem Gonzalez almostould notomplicating SpanistvUS relations by supporting such anow tRefa base agreement Is almost in sight. He can easily argue that fto has lived up to his promise to reduce US forces by citing the- -r endlng removal ot the highly visibleTactical Fighter Wing.

onzalez Istrong position domestically.pollsevival pf sgppon tor the Socialistserections last yeai_AlUiough some Socialists approve of thepositions ofa the Communists, ihey areto get involved with eitjerS-arez's fuzzy ideology or the' totJ

The government may, nonetheless, see tactical advantage In using the spectereferendum to press Washington on the remaining laaues in the negotiations. In particular, the Spanish might arguo thata^eeme.il must be altered toreflact public oppoeiiion tontroductionc*oarCeMo keep pressuree'ecnoum from. wi

Explosion DamagesYolor Propellent LI

yecflLmbuiidmps and

perationalCBM no has probably been the

An explosion onay in Pavlcgrad d

motor propellant line.

both tne rall-moDlle and sllo-based versions of tiiece

JHthe Soviets have no additional tooling and equipment Injr.i'icuntly effectroduction.

Soviet propellent plants have redundant capability built Inlor such accidents. The10cetfier have had similartne accident on

mrsslle delivery rates will probably, not be teit for several months time required to produce missiles

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USSR: Gorbachev Pushes Agricultural Reforms

roup of agricultural specialists on Friday, General Secretary Gorbachev lashed out al looal officials lor tailing to Implement Key parts of-hls reform program for thc country's lorms. As he has on numerous past occasions. Gorbachev made an emotions: pilch for more vigorous Introduction of the family contract and of leasing arrangements thnLr-cck to raise production through Improved individual

Gorbachev has demonstrated Increasing frustration In recent months at the slow Implementation of reform measures In agriculture and at the lack of progress Inajor improvement In the supply offactor lhal Is contributing to widespread public skepticism about the luture success of porosvoyk'a. The food supply, which Improved substantiallyurn for the worse last year. The Central Committee. Gorbachev saidpeech last month, is flooded with letters complaining about shortages of livestock producls in mgny areas of lhe country,isplay of unity. Gorbachev was accompanied at the ^nu^Hncbyscnlor party secretaries Ligachevonov.

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the best own dissident In thenow under Investigation torol.eeharge thatenalty of one to live years In prison.o!ccess*saBBSW nave confiscated arch yesord processor Ihot Grlgor'yants uses to publlshTfie unofficial Journal . : Giasijest Earlier (his week, he wos sentenced to scvon days in jail on

Of

rlous chargeaid on his otlice brokefgV on-would-be opposition parly

or

ia harsh reaction mlghl reflect General Secretaryv.ty to the emergence of an oppositionecision to quiet Tus conservativehave been callingrackdown on people like Grigor'yents who are perceived tobusing glasnost. By associating himself with the new parly.

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under attack tor his activism in late Marchmay have made It easy lor the police to justly arrestingong stmt in jell would probably attract considerable adverse publicity for tne regime on the eve o( the Moscow summit, and it may vol free him when the seven-day sentence la up. Raising the threaterious criminal charge may beuats andrrrs reporting theparty SaBBBBaaaK'AR'V'BeT

USSR: New Demonatratlona In the Caucasus

rof large demonatraUcntancLatriMei in Stepa.-akort. the of the predominantly Armenianin Azerbaijan They repontecVy were touched off when enwas appointed prosecutor tneie and. in anaeveiopment, Averts beat an Armenian youth to death. nrnaVajaafaBBsSaaaasocal Aiarl party(

acknowledgeoTthe situation Is very tense end blamed Armenians for trying to force Arsrli out of the oblost. while denying Aian responsibility;Q Armenians reportedly rafted Thursdayheir capital Yerevan to support the reunification of

Nogorno-Kartbakheaoya witharp to protest the(3)

o's nationalist leader arrested ina-fla*-

emon si rations and strikes bono earlier official claims

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thoi trrn situation has returned to normal. This outbreak probably surprised the regime, which had beenwltnorawing troops from the area since early last montn. Moscow, looking toward the-Pfl'ty conference next month, will certainly take any step* necessary to avoid an escalation such as occurred In late February wheniii.on peopleerevan to support Armenian claims to NaoPrno-KaraDaKr.skavat-coritrol force* rem Sin to be aalSOfW *

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YUGOSLAVIA: Assembly Session Likely To Be Heeled

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M.kulic Is Che'ienge Cu

ayote ot confidenceork, which beg-ris oveiia end Croatia nave called grounds ot mismanaging Ihe pport tne Prime Minister end atisn attacks on his polices in twoin addition to Jutlne government changes areer.rj the

jeory io .urther USnfidence vote, but tne unprecedented

orma midterm rev.mv and

biovcne and Crcafan prendre will probably force MiKuac to push harder for economic reforms. Assemoiy assertlveness wouldinkingsign ot political liberalization In Yugoslavs. Interim Foreign Minister Loncar and Defense Minister Kedljevlc are generally Western onented and will probably-be less accommodating tolldle Eastern states than their predecessors.

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ma. probably opashisthe'ar explosive

Tupac urch to beeast 10

PERU: Insurgent Activity Increasing; N

Leftist insurgents have Increases lerrorist actions In L

o.cmment before Ih.

iida,

a pence bus,

In an effort" to er weekend. In'app Pro-Cuban Tupa bomb in front of rJnv.ee al tholtrlir Amaruisited by the Po followed up rece with the bomb wounding 3

ecurity -

I The papal visit, which coincides with the eighth anniversary of Sendero Lumlnoso's first armed action,onvenient focus for Tupac Amaru to try relnvlgoratlng Its flaggmo insurgency. Recent.terror 1st actions by SenOero underscore surge In Its political and mililary activity during the past six weeks. The latest violence will prompt the government to increase oir

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measures lor the Pope's entourage

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JORDAN: Foreign Exchange Crunch

managed to everor^gnaxenangaarly May ihotrief butaharp eroD In ine exciatce rata and thetignjorcapitalworth ahoutStuOaaM

e action came arte Am-na" announced It could net pay ahori-lerm obligations owed foreign sellers because ol declining foreign exchange reserves, whien had fallenecord low olillion by last February; To headurrency devaluation and further capital flight. Jordan use Jnroutmi-lion In emergency funds Arab uU'..aa-eaBBBB.WnflMpaW Meanwhile.

ble hosmade en enrly paymentBeg'iead Pact commitment

usua-ty paid after Jury.

likelihoodontinued shoe in Jordan's already preca-iousTy low foreign exchange rese-ves and the prospect ot diminished aid.from other Arab countries almost certainly guarant that Amman will coma under even greater pressure to devalueurrency and Increase foreign borrowing. Foreign exchange reserves may now be as lowillion, the equivalent of lessiban one month's Imports. The early Saudi payment probably wasJTtade ^Ljco^jjj^orcsn's critical fo-egn exchartgc situatli leWMbV

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BAHAMAS: Pindlmg Heads to Drug Charges

Prime Minister Pindiing's spirited delense following press reportswill be mdrctedS grand Jury onrges is likelyhis political position

rconc suil In violence ag<

Ihe US might try nsl US citnens In

couio

Prlme*Minisierationally"address to "discredit allegations that he hos accepted bribes from diug iraiiickcrs anC to quole senior US officials who have in the pas: praised Nassau's cooperation in nercoilcs Interdiction operations.

to apprehend Plnciiri The Bahamas.

Plndllng Is aiiempting botti io reassureoncerned about the allegations and io arouse Ihc same kind of nationalistic ssnlimem that aided his reelection last year. He Is likely to lake tne line Ihai his domestic detractors are politically moilvaled.uling party focos two early byelections'

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Khomeini votea yesterflay in Iranian parliamentary runoff, fifil public appearance In liveeeded son'splacing parol in Don .pro:arioua neaitn may at lean partially explain silence on events in Gjir^ejaasW

governmentt|kely to replace Qalglan EC Commissioner Do Clerq inumored successor is Flemish Socialist Party Chairman Vannlikely to gel De Clare's fC-cxicrnHl relations, iraae portfolio Because of inexpor.tiiiccvajBsHsBW^

Soviet Union, Zimbabwe signed aorenment thin week establishing friendship

culturalonilnuas warming trend In relations.

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