NEAR EAST AND SOUTH ASIA REVIEW FOR 11 MARCH 1988

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Near East and South Asia Revietvt

II March

The number of reported cases of AIDS in ihe Middk East and Southui Ihc Uck of publk awareness about thc disease, inadccjualc bcalib systciru. and prevailing actual and jliural praciicet make the region vulnerablepread of AIDS.

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moniht after ihe last battle in Chad. Libyan forces arc less afraid of another Chadlan assault. Both Tripoli and N'Dtamcna have upheld the cease-fire declared but September whik pursuing diplomatic initiatives. Qadhafi may be considering whether he mutt make the neat movcjHHv

Tunisia: Improved Debt Prospects'

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The Tunisian economv has moved from near bankruptcyonths ago to renewed economic growtholid international credit rating. The cover nment has ended dbrupiive political maneuvering over the successioneeking continued economic growth through capon db'trtlncalii

NationalParty. Inching Toward Reform

ill haje 10

Egypt'i ruling Nutionul IX-nuKUlk: Party must developbftsder base and detach iisclf frcm inc presidency. The debate over decenlraliaation in the purl) it from over, and attempt* at -reform willver come ihc inicrcsis of (he pony's senior leadership!

)

II February anmade so hill President Amine GemaycL Tbe iiuiii" It unknown, bui ihete is no chortage of

Lebanese forces. Ptete.ing Ibe Mitiieiy Base lor an Election

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outcome of the lebancvc presidential election may depend on ihc actions and military strength of the Christian Lebanese Forces militia. Thc Lebanese Forces stresses Christian supcrioriiy againsi Shiastrength and ilrivet toisciplined lighting force..

Near East and South Asia Review]

Articles

EasC-Soulh Asia: Vulnerable lp <h' AIDS Pandemic 'JHbm

The number of reported eaica ef Acejuircd Immune Deficiency Syndrome (AIDS) la lhc Mafldk Eaa ancT Soaithow. bal the lack of publiceat tbc disease, JaadcnMie heaha utiera. aad prevail tog sexual aad cultural practicesegion nlnerableoread of AIDb In addition, extensive trace networks, significant louriilaad Large ntigTaiory labor foreca throughout tbe reason increase lhe risk of Iraai/niuion from individuals with AIDS or Infected wiih in cauiaiive retrovirus, human immunooeficiency viruspread of the disease woulderious financial burden on regional governments because of Increased health care expenditures and could lead in significant population losses In social and economk groups essential to future development--namely, mlddk-tevel economic and political manners, agrarian aad urbaa workers, and miliury personnel. Allhough most countries are beginning to establish national health plans to deal with thc AIDS pandemic. Middle Eastern and South Asian countries are likely so request increased Western medical aadsaisunce to deal wtth tbc problem over Ute oeit several >ears. Al the same lir-.e. lhe widespread pc/errM-xi lhal Westerners arc responsible for spreading AIOS mavfuef anti-Western sentiment in ibej

' Thc Iraiimammmnmtaa AIDS ia lie VrfaV lax aad Seaakav-cli aaucaoul aaa hnU oa wmmmtfm

ladMdoat oaa-MO- Nawnliilpi mm tetavi n> nt! to

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Correal Report log

The rcooned number of AIDS cases and of heat|h> individuals who test positive (or HIV infectm vary oridely ihrraagbooi ihcsrael. Qaur. aad the United Arab Emirateshe highest reasoned irieaefenee of AIDS and HIV iafcciionersona, rangingcaons These rates arc significant!)ihan csiimalcd rates of HIV infection for Uganda. Zimbabwe, and lherates are0for the United Sttleswiih

rateersons

Most Middle Eastern and South Asian countries ofncially reportew cases of AIDS or HIV infections. Thc numbers reported often fluctuate, possibly reflecting Ihe death of persons wiih AIDS or the deponing of foreigners with AIDS or infected withiagnostic and testing capabilities in tne region are limited, and we believe Ihe actual number of AIDS cases and HIV infections is much higher ihan rcpor.cd levels. The number of recognized AIDS cases and.HIV Infections probably will increase as

-ui mm StVuffaul itruniaci bcl-ocnaids and itmc lha.apoartMl)kmav iiiv WfeiUa. What po-iMt,Skk

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i bei>nn<*w> of AIOS ind carnal KIV inlmaxi.

mntcn npancd fci then'ol AIOS inn inSdnadad( kvlr-I.

Immune Deficiency Syndrome

Aecuteed Immune Deficiency Syndrome 'AIDS' Is.'I'l. ial Illness complex caused fryvirus IHIVi. The diseaseImmune system lo deteriorate, and there nuiyor sudden onset of tumors orit,

which healthy Individuals without the disease are usually resistant. Some cases of AIDS show situs ta uomage to the brain or spinal cord, which can resultIn partial paralysis, confusion, or lost ofentual progress ta dementia. Some-AIDS cases consist of chronic diarrhea wiihf weight. Death from untreated AIDS In adults usually occurs In one to two years.ay die more rapidly.

HIVetrovirus, meaning the genetic materialvirus ts Insenedersons cells otIt probably persists for life. HIVtransmitted by homosexual orbetween an Infected and anby transfer of Infected blood or tissue,of Infected blood or blood peoducn:of Infected body parts, hyneedles among Intravenous drugby direct transmission from mother to childduring pregnancy, birth, or through '

Fifty percent or more of Individuals InfectedIDS. Available drugs for treating HIV infection may prolong life, but no cure for AIDS has been reported. Minimal progress has been made towardaccine against HIV Infection.

Vulnerabilities

Wc believe several factors make ibe Middle East and South Asia vulnerablepread of lhc disease. Widespread Ignorance about AIDS and its methods of transmission will probably contribute mow to it* increased incidence, particularly among- highroups that arc generally unaware of the danger.

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le-.ovcrnment campaigns undertaken thus far lo educate the public by mesas of booklets and pamphlets are hindered b> high levch ufno popular mistrust, even disdain.sci education programs!

Inadequate hcstlh system* and poor medical facilities and practices probably will contribute io ihe spread of HIV infection in Ihc region. Generally unsanitary conditions prevail ai many hospitals and clinics. Western observers report widespread indifference by medical staff and technicians to spillage of blood and ihc use of unstcrilizcd instrument* lor inViii c . medicalMH(iiI1 ) J<

:tensive reuse of iuiion in many countries. The multiple me of unclean needles for immunization could spread lhc disease quickly among young children, although ihis risk is believed io be leas severe ihan multiple usage of needles forjdrawing blood or_ intravenous Injcciioi of d> igt

Some Middle Easierrl'countries ire vulnerabk because of iheir proalmity lo. and ealemive contact wiih. individfBjIi living in Sub-Sahiri" Africa, where AIDS cases and HIV infections are widespread. The lout hero region* of Sudan, andesser degree Mauritania, are particularlt susceptible bee-usehi bits nti turn regular coatact and share saccular cunocra and physiological traits with iheir southernCcntrar-ytfricaA Republic, and Zaire- -where ihe per capita incidence of AIDS is among the highest in ihe world. In addition, the Nik River in Egypt andrincipal transportation and commercial route, mayajor conduitpread of lhe disease from central Africa. AIDS

could be transmitted by traders and merchants using ihc Nik. jus! as infected truck driver* passed ihc disease along iheir truck routes In Kenya and

Also vulnerable to HIV Infection arc urban elites, migratory workers, tou.ists. andyouth who study lifthe United States aad Europe--who may become infected through unsafe sexual practices, intravenous drug use. or through cor jted Wood.

massive labor migrati'jnTCT&ni--Nonh Africans to Europe, South and East. Asians to oil-rich Arab countries, as well as thc large migratory work force within thc ArabIhc potential risk for an increase In AIDS cases and HIV (ofeetkuUyAt thc same time, lbc incidence or unsafe betes oceiuil promiscuity among males traveling ouliidc thc Middle East and Southeaampk. involvement withconsidered high by some observers, which might putocial and economic groups abk to travel abroadigher risk of HIV Infection

Cultural and religious practices in ihe region may_ contribute to the spread of HIV Infection and make detection and tracking of thc disease more difficult. Medical authorities in many parts of thc region arc frequently-prevented from determining cause of death' because of widespread opposition to autopsies and funeral practices thai call for the almost immediatedisposal of corpses. Other cultural practices that involve the use of unstcclltzcd needles and other instruxfents include: '

Tattooing, whkb Is practiced widely throughout Ihe Middle East and South Asia by men and women.

Ritoal scarring, which Is prevalent in southern Sudan and among other tribes in Nonh Africa.

Femak circumdiion and infibulallon. slill practiced in some areas of Egypt. Sudan, and other Nonh African countries. Circtimcision increases chance* of HIV transmission during seaual intercourse.

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Although these practices would be canceled to increase the rbk of HIV transmission, there is link credible information that define* their rede in Spreading HIV infection

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ma>male biscaualit) in some MiddkSouth Asian countries than ia lhe Weststrict religious and cultural nrohibiiions againstoiermiogling of the seacs and thc inve^vementia premarital scsnal relationships.this view, seiual relations bet*ccn men arctolerated In theMuslim societies such as Saudiinr.-deip.ic religious tinctures to tbeadditionei una ihc spread of lhemen through arua'c seiual

bisastualjjy Increases the risk of HIV tit ram os Ion to women.

Nevertheless. Middk Eastern and South Allan governments are becoming more concerned about the spread of the disease and arc trying to And ways tocope wiih its potentially snjious medical,nd poliiical implications, ao increasingof government officials are attending iateraaiiOn.il and regional coafcrenccs on AIS-related

Man) countries lent delegation* latt January to aa international AIDS conference sponsored by Great Britain and thc World Health Organization. The caeculivc bureau af Arab League health minliter* met separately in London during the conference ton Aiab Mrategy to rombal AIDS.

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- Kuwait wai heatecond Middleonew wttVi after the tThe conference addressed lhemi research, identification of Iheeal meat, and aocial.:

problems associatedSJHB f "Z>

Man) governments are beginning lo incortaeatc AIDS progranu into their national healthuiua'li with technical assistance from the World Health Cugsrutatioa. The csTicacy'of iheie programs, an our view, depend! laigdy oa thcillingness to eoeifroat thc drseasc openlj. mainly "Through [Mit.ii- education prograoa, training health andersonnel, and i

T'tll't Capabilities. Despite public denials aboul the incidence of AIDS or HIV infection, many Middle Eastern and South Asian countries have initialed ambitious letting programs. Government uncertainty and even fear probably arc responsible for. anusually large orders of HIV testlood testing kito identify iisdividusb who arc infected-nth

Testing procedures and practices in thc region are improving only slowly. Medical personnel are often provided only thc most rudimyita ry informal ion on tbc disease, and most countries lack ihc capability of tracking thc spread of AIDS from person to person. In addition, few health facilities have been designated la dittnosc Ihc discs se and lest for HIV Infcoi

National health plans usually emphasize testing high risk groups for HIV infection. For many countries facing financial constraints, letting high riskprostitutes, eunuchs,nd foreigna relatively low cost alternativeomprehensive testing program.iscriminatory policy, however, mayt be sense of security among thc general public about their own risk, divert attention from thc need for public health education, and promote xenophobia. In. addition, il faib to educate young people about Ihe relationship bclween AIDS and unsafe sexual practices and drug abusc'lHggggy

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S<rtemiag Blood Sofolirt. Despite medical evidence (bat AIDS hat spread from blood transfusion! performed in thc -hen-imported blood was not tested for HIV infection blood acreeainc capabilities in Middk Lauera jad South Aliencoeritrici generally remain poor

countries arill import ancet of their blood wnrdie*.

although tome countries have begun to rcK on

dornatk sources for their medical nocd> in order io bait Lbc spread of AIDS through infected imparled blood. A( 'be tame (ime.ountries lac* th;

technical cipcrtise and equipment to tctccn domestic

Oiker Dc/raff'a*Many counliiet. auch ai Egypt, Libya. Saudi Arabia, the United Arab EmiratCL and Ii. are requiring proof of HIV ncmconU mint lionreferred to at AI OS-free cenincates in localgrantingand mrt permiit to foreigners:

health regulations require HIVll foreigners living in Egypt. Untilnforcement "at aimed almost nndenti from, bitch African

b laggfltfjgiffJlaVa-^ EgHtlTWinrai, of Dgtpfi it enforcing requirements that call forUSclearances for accest to Eg>ptiaa military tales to present evidence thai they arc free ot HIV infection.

entering Iraq arc required lo undergo leslt in Iraq for HIV infection Non-Iraqi medical

' reports are not acceptable. Three hotraialv in Buhgdadassigned ret pun sib Hit) in latefor granting health certificates in all furcigner* entering lhe counuy.

India'* Dirccioraie General of Healthesubtiihcd guidelines7 to govern HIV tewing. Al!ncluding etude mi and"hu intend to May in India for more lhan one tear arc to be toted Ivjiiv into, lion Accordinghe Indian Council of Mcdtccloreign Modem* had been lotcd by) icniing powitve for HIV

Iraq deportedambian Army personnel aflcr tests done b} Iraqi doctors found then to be HIV

ith AIDS or infected with HIV is one governmental response emerging in man)turn- eapeoall) among th- fret* An'-

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inhai caned for Saedu in the advanced Mage* ul AIDS to be placed in nulilto- hotpilak. ornecessary, vent abroad for treatment.: foi HIV-id be informed nf Iheir condition

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The Uniied Arab Emirates is establishing isolation centers in each of lhe seven emirates for individual with AIDS.

Algeria has seni aboutiliury personnel with AIDSn old French Foreign Lcgio southern Algeria fur medical obser

laspCcaUons for US and Wcalerawidespread percepiion thai Westernersspreading AIDS may fuelsentiment In Middle Eatfcrn andeon ninesn lacCor lhc outbreak aad spread ofmike some ttnatriej relactaai toUS corrunereiaI presence or gramand port calls.

effects bare focused on intentional US delivery of infected fe!ood io Third World nations, thc danger pcoed by HIV-infected US lerviceaxn. and purported scholarly works alleging inuniional US production of the virus. Some locally inspired dii information has

Middle Fasiern and South Asian counuiesr course increased Weston medicalassistance to deal with (he pandemicnot severalgypt and Sudan havehelp of lhc US Naval Medical Research faciliitin selling up iheir national healthnd blood screeningdanihc European Community lo provideto help eatsentral AIDS Ubore loryand ihrec other regional laboratoriesacarcr domestic resources lw dealAIDS problem in poor countries alrnostprompt roooesti for ocTaetuog

Countries in ihc Middle East and Souih Asia probabl) believe ihc United Slates aad other Westernpecial ressscatsibility lo help cc-noai' the spread of AIDS, as the, atsociaic Ihe disease with perceived Westernseaaa! piomiscuity and drug abuse. Most gc*crarncnU probably expect, lhc United Stales and other Western nations io allocate financial, medical, and leehnieel resources for AIDS icsea'cfa. In particular, these countries almost certainly will continueely on the West io develop vaccines, ineapeniive and accurate test kits, and therapies that couli" lie uved in ihc less developed world. BlM. fi3

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IJbvu-Chsd: Is II OidhlfiS

Tbc Libyan relaxation may be justified because il appear! that planaajor Chadian offensive to recover thc Aoiou Strip here been impended. Both Tripoli lad pT0jamena have been contentaintain the cease-fire declaredi September while pursuing diplomatic mil buret.'Both appear interested in at lean going through the nrotions of pressing Ihcir legal claims to thc Aorou Strip in the Organisation of

C>adhefi may not be looking for an early end lo this lull In the war, but wetbe first lime since bis troops recovered Aorou villagehadian force lastis considering whether the ncxi ascve is hitrqpg )

A New Ubyan Ofleosir* Option Wc believe tbe Libyans have moved to the front in northern Chad and to support bases in southern Libya more forces than they consider necessary' for'a static defense. I

Libya Probe, Ukelr. In our view, ihc near-term object of this buildup is to mount probes in expand the buffer between Chadian forces and Ubyan outposts in the Tibesti mountains. This would be an aggressive defense" Intended to better secure Qadhafi's griphc Aozou Strip and perhaps to test ihc US and French response.b )

Qadhafi almoal certainly is resolute In his determination to hold the Aorou Strip, which contains the northern third of these snounlklns. Strong evidence of ihis intent was his Insistence on ihe recovery of Aoaou village from Habrc's forces nfier two unsuccessful and costly Ubyan attempts. Thc Ubyan hold on ihc Aoiou Strip remains in jeopardy, however, as tojtg as thousands of Chadian governmenthe southernthi ids of the Tibesil nnge aaaW B

1

if Zouar could betc Chadian position at Bardai would become untenable aad (he Chadian* would lose their ability to mournserious tilack against Aoiou airbtsc.gManaf

The Libyan style of problnidispta>ed several times in (he lasi ISlo send out one or iw* units of battalion strength lo try io setorward

camp If theewed as tenable, it tt reinforced aad usedpringboard fpr fun her

deploy me nu toward Bardai or Zouar. >BM

ore modest progiani woukl be to arteebeb for these probes, la view of thc rebsjj* repealed ineptness over lhe yearv the Libyan military commanders probably hat no iUinJou* abruu what they can accomplbh. Noncincless. the Libyans sic* rebel casualties as tnore tolerable lhan Libyan ones, and grouno gaineducky rebel probe would amount to getting something for nothing HHHd3

Wc believe that HabHTi forces in the Tibesii could easily Want probes by chher the Libyan* or lhe Chadian rebels, although they may choose toround on occasion. Chadian fighters have successfully ambushed advancing Libyans in thc last

onths. Once ambushed, the Libyan troops have shown Utile desire to stand their gnend. In our view, there are only two situations neither of which ii likelyccurwould allow ihc Libyans to gain meaningful ground la thc Tibesii'

Thc Chadians arc caught offguard by ihe thrum, and their bestwho could organiseUrge and rapid respoose^-ere abse.ii from the-V"

The rainy season (normally Jane through September] in southern and central Chad is so intense lhal supply convoys from N'Djamena cannoi reach tbc Tibesti Hsoantaini (HJI '

Libyanbeyond ihe Tibeati arc also possible bui would have less meaning lor lhe war. ha our view.ilometers separate lhe Libyan base al Ms'tan ai Sarra from ihc Chadian stronghold at Ounianga Kcbir. tbc most Immediate strategic target beyond Ihe Tibcstl. Wc believe that Chadians arepoMtioneel loibyan armored battalion apfJioaching from that asjsuiihout drawing on anyIheir anus in ihcML-

Tiimlmg/or PrweVi Libia has thc

ampaign of probo zt aa> lime, pro* "ling they arc not thrown backrictl) defensive posiurrhadian assauh. Iia no* available to gauge accuraiel) Oadhan'i liminethis option, bui several factors, in our view, indicate be will wait Bl Icasi until midipring. Qadhafi probable wants to follow through with tbc presentation to Ihc Organisation of African Unit) of Libya's claim to thc Aorou Strip to avoid being branded thefter severalhc Oiganiiaiion of Africanommit ice assigned thi> disputescntaiively scltedeled so descuss tbe issue In carl) April. Even wiih an adverse cerlcome. OedhaA probebl) cakulaics be wfl] have gained nobtkal capital by pursuing the diplomatic romrj?

Oadhafi probably has an eye on'the French presideniial election, set lo beginpril and concludeay. Wc judge that Frances inclinations have always beca perl oflans regarding Chad.robably sincere in hb belief thatargely responsible for Libyan defeats in Chad Qadbaft may want to wait long enough to assess who has the ben chance of being France's ncai president and whelher that rover nment will be more or less supportive of Habre.f

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Maghreb diplomacyffectingiming in Chad. Initiatives for iripaniic cooperation between Libya. Algeria, and Tunisia remain active after sli months of hiful oegoibtions. OadhaA'i visits toTanband Algiers in February highlight his interest in dcvcletsing meaningful ties sn these neighbors. He almost ccriaiaty rcalires thai prccipitaiclhtaiy action in Chad would derail thb cflon fl^^H

back. jjUfljfac

Delaying prubes until midspring would allow Tripoli more lime to bring Goukouai Weddeye Libyan camp.ack In Libya, iftcr several moniht of <

influence in thc Habre regimej

A few developmentuch earlier action'in Chad 5

foikr-ed quickly by Libyan (round rucJxi if Ihc Libyan commander* judge lhal ibe Chaduim nave been leriously weakened. Another rmxir-ta'ing development cuU be if lhe Orginiiation o( African Unity again postpones coniideration of who tl sovereign over ther^pexars resolute deciding in Chad'* favor!

hlenr. at -abe warfmnt have beenbysn combniWe believe Libyan ovnmjnder> would drag iheir foe on order* tu prcpurv an cJcninc. stalling Qodhari wiih caccoe^ndr..miaaJ0|^

two months

LcgpssSfc problems woold have io be moHedrujor offensive could be Uunched. The Libyan* would need too WO heavy lifi iranspurters lo ihe Irani io carry tanks ar^arrnnred tchade* quiefch inic Chad'* Interiorj

wiihouTCOnicicnisfJ"fl> lhehe Libyans would normally lake ai least two monlhi tu >rcrxrc inon of ihit rna-nii.de. I

Aa Alternative Scenario

Although ii is unlikely in ihe nexi scvrtal months.cannot rule oui thai Qadhafi will order1 tm forces to recapture Quad Doum and Faya Largest

Qadhafi may be deluded Ihait we,'Arab merccnariea he has onoved lo thc frontpearhead such anWe believe ihai nunc of theseYernertis. Palestinians, andalter ihc balance withorces Reliable sources report that the mercenaries arc disaatitAod with their pay. acox^modaiaons. aad mission, and some have* kfic doubt that many will convent lo risk death repcatedl) on behalf of Qadhafi* adventurism,

could be duped Into heading one or two mack**

Qadhafi would have io be eslremefj optir believe that Libyan irpppy would .

Aadi

im of.the Libyan force would quickly

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Qadhafi probably could coerce his from comrnandcrsprepare and launch an offensive to recover northern Chad, but we inticiratc lhat Hibre's forces could mm it back. A* wiih the Libyan operation lo atlavl Fa-da ir.. Habre probably would receivearaarag of Libyan prenaraticats and have alew weeks loesponse. Assuming the ChadUn Government furors fight wjih ihc same caihesiasm and competent leadership that ihej displayed inand barringlucky Libyanerrarn with chemicalforward momcntuf disappear.)

A scenario in which the aTjbsans would have aof success is oneost- HabreHabre to be assassinated, disarray amongforces would beenakntyfactional leaders vlceffor lheiirc-gesi weld comma ivjers mightawj> from Ibe front Qadhafi mayhi* force lo take advantage ofrise, while conducting probesTiboti rnountaiat to incrcaic the *ecuriiygrip on ihe(3)

Tunisia: Itttprosed Prospeclspifc^

Tunisianby in Interna (tonal Monetary Fnnd tundby team in6 and cnrrgircdigorous ne*moved from near bankruptcyonths ago to renewed cceoomk growtholid International credit rating External debt peaked at ancstimaiedillion at use endnd lbc debt serviceu: probably decline aa Tunisia refinances its debt on more favorable terms and cj ports increase. The new government has ended disruptive political maneuvering over succession and now faces the cbalknge of casing unemployment andirm foundation for continued economic growth through capon diversification. We believe ihc government will continue its market-oriented economic program over the ncal several years, fostering steady economic growth and eraatiowed access lo credit and boHiehag picn;ein for poliiical lUbslit) fttj^j

M outing Debt frock ma

Tunisia's foreign financial problems steadily worsened inndOe_ Rapid economicinave Tunisia easy access lo loans and led to high spending on numerous uneconomic, public projects. Debt increased ins domcaik spending remained bigheduction ia capon revenues resulting Irom sluggish markets for phosphjte andmain commodity

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A crisis occurred ine> when foreign exchange reserves wen exhausted aad thc current account deficit rase0 million. Although Tunis sought foreign funds to meet Interest payments, foreign lenders refused to help untiltructural adjustment prog JHf

Taralng the Comer Facedire payments posilion. Tunisia signed its first International Monetary Fund standbyprovided6 Thc Wxtd Bank agreed lo double assistance0 millionn Mjj

Tunisia: External

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(Hiiniied.

unis replaced Prime Minister MiaM. whose vacillation contributed toihecrises, withore able

Creditor confidence in Tunisia rose further in7 when former Army general and Prime Mlnisjgr Ben Ali deposed ihe senile President Habib Bourguiba for health reasons. Under Bourguiba. rigid economic regulations hadajor hindrance to ecoooowc deveiccmerit Vn Al.'s early decisions as. president indicate he is more committed lo economic relorm than his predcoestor. For example, he haseform-minded economist as chairman of lhe Central Bank.I

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Tuafcdn: Debt7

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Tunisia hu met ot ex ceded all conditions of lhc IMF sin nd by loan. A* ofunisia had:

Allowed the cu/rency lorom ihc end5 to7epreciatedercent. ThU decline helped increase lhe value of exports by aboutercen' lasl year.

Begun to close money-losing state enterprises. Forunis announced Ihe-closlng of lhc slate-owned auio assembly plant lhat lost moreillionhe decision toarge, highly visible firmlear signal to the public and private sectors thai thc new government was unwilling lo continue heavy subsidies.

Crtaieda short-term credit market for borrowers and leawerj lo arrange loans without Central Bank approval of each transaction. The move will probably increase foreign and domestic investment and help develop the private"'j

esult. Tunisia has Largely restored its crcdii rating. Tunis has staled ibai rescheduling of existing debt is not in its interest and that none will bv requested. Inunisian debt sold for aboutents or. lhe dollar in secondary markets, an indication of creditor confidertC-*JM|'

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< ovt uf Reform

Thc reforms have increased unemployment slightly and led to consumer and worker dissatisfaction cs inclticicnl firms are shut down andTubsidtrs decline Ben Ali believes the costs and risks to domesticare manageable. Open dissent hat been minimal primarily because the government hat astatc'y explained beforehand ihe need for reforms and taken steps to reduce hardship. For instance Tunis has promised to pay displaced automobile workers during ibeir transition lo lhc private sector. Moreover, public tolerance was demonstrated when food jjbsidies were recently reduced without proving public demons! rat ions,imilar redaction of bread subsidies4 produced widespread

Outlook

Wc believe Ihe debt situation will improve inare optimistk ihai progress on debtreform will coniinue, and Iheyillion Tunis will seek io borrow thismuch as SI SO million will befirsi sincejgj

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Thc debt service ratio will probably fall for the next several years. Interest payments will decrease over lhc same period because many of the new loans have long grace periods. Al the same lime, exports of goods and services should rise steadily as Tunis pushes lis export promotion program m9

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Tunisia will almost certainly continue to restructure ils debt as il moves away frosn short-term debt aad project financing. We believe Tunis may sign up for lhe Eaiended Fund Facility now being discussed whh thc International Monetary Fund lhal would provide eaikr terms,onger repayment period. Furthermore, several mayor Arab donors have agreedknd for foreign raaymcriu relief rather than for_ rific i

The Eevueenylance

Tunisiaroader resource base than ntuu Middle Eastern countries. It has had to diversify earlier ond farther because, unlike other ml ^exporters, its oil will run out early In thr Iand it will become an net oil Importer. Per eapisa trots domestic product Iisith SSIO in Moroccon Algeria. The current account deficit7 was about Jit JOn

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ft number of people employed in lhe Informal

About halfi/lion Tunisians areopulation growth rettercent per year and the urbanisation raletretnt ore lhe lowest in the region. Even so. Job creationajor concern because the labor force growsercent per year. OtfiCtal tttimates of unemployment are aboulercent of the labor force. Theft estimates, however, consider neither teenage unemployment nor Iht

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cause ofjhr_

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Agrieutiure. long the main sector and vulnerable to hapka;ard rainfall, will decline In relative Importance end become more diverse. This sector accounted forerceni of lhe gross domestic productown fromercentgriculture will respond more broadly io market forces as Tunis phases out subsidies on Inputs and Increases producer prices to International levels. Cereal grains art the Staple food and account for one fifth of agricultural production. Yields hove increased In nondroughi years because Introduction of htgh^yield variety.

"

tn recent year, and Tunisia will have to Increase Its groin Imports substantially. Fish production has Increased for ihe last several rears as - Investment In equipment and training hot paid off.

Hfc b'(3)

Manufacturing made up aboutercent nf the gross domesik product and grewercent In6unisia has stressed lis comparative advantage In tight industries such ot ttMilet. leather.

uetod. and paper, and those products greu- most rapidlyo encourage investment ihe government hai made profitability the main investment criterion, providedto investors, and assured repatriation of nonrttldenis' profits to lure foreign investment We believe these probusiness policies svill eonlinue to boost gross domestic product growth andr the ncXI

UK )

Earnings'from tourism, the senite sectorcomponent, have fluctuated widelylo poliUcal ond economic6 tourism earnings fell aboutlargely because of the overvalued dinar,alrstrikr on Palestine Liberationia Turn's, lhe severance of relations with and tighter exchange contrail ImposedLibyans end Algerians had frequentlyTunisia on short shopping trips. Thethe currency In late6 sparked aEuropean tourists, but not enough io preventIn revenue. Tourismrowing aboutercent, asmore vigorously and Europeansreipond lo theackage ofpresumably will Increase Investmentrtitauranis. ond othernear the sites of Homani*gj

Remittances from Tunisians overseas were estimated by the IniernatitOvl Monetary Fund6ihe amount of inttreit paid on medium- and long-term dtbt. Mat Tunisian expatriates are in Europe and not In the Persian Gulf and are. therefore, more likely lo rtmatn abroad. Wt believe the expatriates hold large amounts of unremitted money andource of even further funds. Furthermore, several measures taken by Tunis to revile Investment cadet and banking regulations probably 'ill further tap those fundi jVqR

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Lebanon: The Attempted Assassination of Amine Gemayel

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Onebruary IMS an attempt was mad: to kill Preboeai Amine Gemayel ofomb whs. discovered on Presidentlineasbout io depart Beirul International Airport for Cyprus to pick up Gemayel foi an official trip to Sudan and North YemenJJU

Evidence pointing to the assassin at Unwed, bul. ai is usual la Lebanon, there it no short if of poattfclc

IWtenant

There ts still eon (won ceauxrniag whenere lhc bomb

No She*tag* afWe have no reliable evidencearticular (roup e* individual in the attempt, The.ihrrteal est interest In killing Gemayel arc tiieices. the Syrians, andourthTut Gensaveljhiriueir may have arrariin: tie entirepH(rj^

The Lebanese Forces, under the command of Sanur Ja Ja.ardline Christian orisolution that wants to preserve Chrtuan political preeminence. The ebanese Forces has only limited access lonternalionil Airport, but wis im plica tod in ihe ssassination of Lebanese Prime Ministerara mi lasl miiicki Although Gemayel itlormer member of thees. he is viewed by AS kaderihip as loo witling lo compromise with Syria on sofutioni to Lebanon's lurrnoif. whkifcould be ctrimeniat loChristiin interests.The death of ut ihorl any deal ihai lhc President may be acgcaiatirat with lhe Syrians to broil Chrtniae rcptcseaiiiioa aad pankipaiion ia Lebanon's gOvernriKntll lUMi^mjgajJjggfr5"^

Jaw

is the meal organized of thc min, inicrestod rrmiesebanor and hat one or more potential candidatesGemayei's early departure from thehave provided Damascus with an excuseagainst Ihe Lebanese Forcesliminatea source of interference In lhe LebaneseUnlike the Lebanese Forces, how esc

Gemayel may yietb* to many of Syria"s

Hiiballah ii another organization lhal would -Gcmayel's death. It has access to Beirul International Airport, which is close to Hizballah's stronghold in Beirut's southern suburbs. In line with in desire to create an Islamic fundamentalist state in Lebanon, thc death of Gemayel and the subsequent instability could, workizballah's advantage. Public acknowledgement of .Hizballah's involvmcnisuccessfulial ion would increase its prestigeormidable terrorist miliiary organization. These reasons" could applyther factions In Lebanon which would not hesitateill Gemayel. given thc opportunity^BaBfc-5

iusc Gemayel cannot constituiionally runecond term and is notandidate of his own. an increase in popularity would serve him in two ways:

It would provide him with greater standing at he prepares to leave office and seeks loeadership position within lhe Christian oummuniiy. The weakness of this argument is that thc election is six monihs away, and any popularity won wnutd be lost by election lime.

econd, and more important, reason is thatattempt might lake some pressureas' he negotiates wiih thcSyrians for aLebanon's

A Post assassination Scenario If Gemayel had died, power would have passed provision* Its to the Lebaneseie two applicable const it utkwut provisions arc Articlesrticletales thai executive authority would pass to the Council of Ministers, which includes thc full Cabinet, led by acting Prime Minister Salim aI*Huss. (The Council of Ministers and Ihe Cabinet consist of the same membership, execpejhat the Cabinet is chaired by the President. IflflTtO

The Cabinet has not irlSi in over iwo yearsesultyrian-inspired Muslim boycott, prompted by lhe collapse of.the Tripartite Accord inS. In addition lo (he dcalb or resignation of three ministers, it has been servingaretaker capacily since thc resignation and later assassination of Prime .Minister

With Gemayel dead, the Syrians and Muslims would have no reason to block Cabinethe Council ol Ministers could temporarily exercise

executive authority as provided underhe Christian Ministers might boycott the Council and Cabinet meetings followingeath and possibly cause thc Couiu^lmeeting to fail for lackuorum J

T4 of the Conitituilon pertains to the fillingvacancies, tt provider that theshall meet "immediately and withtoew

It 'a unlikely, however, that the situation ia Lebanon foOowi-tasaaiiinaiijn would allow (or an immediate election The Lebanese forces, forexample, has tbc power to mtirakdau enough Assembly members iouorum af the Assembly frocn meeting. The Syrians cooac press Acting Speaker Musayni sad also delay thc ckction until the Syrians were convinced that the Council of Ministers would not aa contrary to Syrian interests. In any of theseonsti tut tonal vacuum would develop, and the remaining functions of thc Lebanese Governmeni and prospocu of holding an election would vanithflflBj

wJliaiui

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4|

Lebanese Forces: Preparing Ihe Military Base for

Election Shond

Ih* ouicome of lhe Lebanese presidential ckcuuo may depend oci the actions aad military iirrwgth ol" the Christian Lebanese rofces militia. The Lebanese Forces is one of lhc largest and nest ecruipped mititiat thai have developed in Lebanon's anarchic vm'.c. Iton (rolled by veteran leader Simir Ja la, "ho look ever (he ecgaai ration in Januaryhe -trained Jamoupjus, reihless. highly charismatic, and an, excellent milnsrj tactician. Ja Ja hasjltintness to vse vtutertcfaagainst both Christian and Muslim ormortcntt and is buildint ap Ihc armed strength of Ihe Lebanese Forces to achieve ha cram gosb and the aoal^jfihc eatremisiin, of lhc Christian communit)

Thc Lebanese Forcestrength ofihe potaibilit) tat0eneralt has several special units for carrying out clandestine operations. It stresses Christian superiorityrosving Shia Maslim strength and larrves toisciplined Fghung forte that will not only successfully defend the Christian enclave north of Beirut but also rid Ictanon of all foreignncluding Palestinians. Syrians, and eventually

Becflaa Option.

The Lebanese Forces' key goal Is to prcvcnl an ciircmcly pro-Syrian candidalc from assuming the presidency. Il still probably doonsiders necesiary to avoid losing to lhc Syrians. Optiom open lo the Lebanese Forces include:Embarkingajor public relations campaign lo increase both International and domestic support Tor (he Lebanese Forces' orspenitionyrian puppet gCAcrnrncnt.

rces candidate possibly including Commander Ja Ja.

Continuing coverl contacts wiih thc Syrians In ordereach agreementompromise caadidatc.

ore pro Syrianhc whe of increased pressure from both Christians and Syrians

Influencing tbe balloting uf members of .he parliament >cr%jag asprcsidcniialhrough threats or more liolcnt means

Resorting tomilitai) prcvsutepc icrroriii operations toderail tse election process ajg^PPJ ^

The Lebanese Forces holds aa advantage in the CSrvtoral process.f thcging members of Ihc parliament are Christians. Thirty of these arc Maronites living in Eastajor Lebanese Forces' stronghold. Thc Lebanese Forces raced only prevent Jo of these deputies from attending ihe electoral session to cause thc first ballot to fail (or lackuorum. twmprornjsigg the'legitimacy of the entire election jiroiem

Whatever option ihc Lchaacsc forces kCSccts. lhe ttrcngth of the military arm of the Lebanese Forces willey factor Ja Ja and hb key advisers probably have deferred choosing an option until (hb summer's parliamentary balloting draws nearer. The Ixbsacsc Forces' assessment of iu military strength, especiallyisritical factor in Its decisionmaking

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The Miliury Arm

Ogaa'^rJawofiK* Ltbsmtu Farces. Thera lions! Brueture of the Lebanese Forces ctascl) resembles lhategular army and reruesentif ihe militia's key sirengths.eadedommand Council. The commander of lhc Council implements political and militaryUbanese Chrruiaa

Ihc unilateral action of Commander Ja Ja.,

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lie instruct iont wj hea vi ly fromraining methods. Overall tninint callsweek program broken down inio three phasesimed at instilling discipline Into lhe Lebanese Forceswellnowledge of advanced miliury skills. Those who complete (he

Special aad Eliten. Several special or elitein the Lebanese Forces for usethe Christian enclave ot to supportoperations. For caampte. several yeanLebanese Forcesaratrooper unitIOIsi Parachute Corspany. It is describedmostly of bank-seasonedLebanese Forces Amu lis purpose is toenemy linesomrnando unit. Itslong-ra age rcconnarsunc* patrolling,garrisons, destroying mat bridges andassets, and otherwise

enemy operations. We believe this unit has been involved in hit-and-run attacks on Syrian lorces. which subsequently wereed by ihe Lebanese Forces' Voice of Lebanon radio Although trained lo parachute into enemy rear areas, all Infiltration

I

Junh-ahjl h

Beirut lo intercept shipments of irmt aad ammunition.o undertakes seaborne operations behind cocmyuniyjh_rt hope port for ihe Lebanese Forces nov

uniu calledem (Arabic for shock irc-ipi SpeCial Force,JJjggfyaigatgnaV

tamontiitir

unconvcnilonal warfare unit under the direct control' of Ja Ja. Thc Lebanese Forces also hopesOO-man special forces or ranger touallMWUu terseobile reserve or special action unilj

waier demolitions:

A Lebanese Marine Force, logcihct *ith the Lebanese Fceccsnavy. operatesmall self-contained maritime fighting force trained primarilytorinfantry raids from the sea. Il includesa small unit of commando divers who specialize ia clandestine raids, beach reconnaissance, and unekrv^tei demolitions similarS-Navy SF.AI.aaa*

The Lebanese Forcesmall navy thai conducts coastal patrols and sets up uecustomil blockades on the Muslim-cootHilled ooasl *ouih of

ith tht Armed Forces. For Iheyears lhc Lebanese Forces have frequently with predominantly Christianforces units. According to US Embassy' altlwujh minor clashes have occurredthc Lebanese Forces and the Lebanese . forces, both have traditionally cooperatedcaJi other. Improvinr. this cooperaiion infiltrating (he-armed forces' carreer corps withForces Sym pat hirers are key goals of Ja-

'.-i

The Lebanese armed forces* major rote in East Beirut has been to occupy the frontline facing Muslim West Beirut. Thc Lebanese Forces backs up (hermed forces patrolling the line dividing (he capital

< a

Arms reach the Lebanese Forces through Tu pons in the Christian enclave. Juniyah is the most common

of eniry for armsAl

Ugayfaah/Nahr Ibrah^

Safra/Tabarb it antuherpon "here iltcs^auwafarc allcted to have delivered miliury supplieshe Lebanese Forces. Acjuamarinamall,pern thai wai usefrto offload arm* shipments eartKr in ihe civil -ar. butilk used today. Arms shipments have alu> been orTloadcd at Beirut's Fifth Basin and Ad Dubavyoh.

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Outlook

As one of ihc largest and best organ! ted of Lebanon militias, ihe Lebanese Forces will continue to uccessfully defend thc Christian enclave agalnit Muslien militias. AlthSrgK not stronc enoughefend against to all-out invasion by Syria^ii couldiiti toll of an- invading foicc

As lheinn: balloting approaches, we capectthe Lebanese Forces to step up its military buildup. It will abo tec* to developviihti-Synan forces aad continue harassingnits with unall-tcak atucks Should Ja Jjry to become president, the Lebanese Feeoea may be confronted with thc grcaicsi miliury challenge In ils

)

t

e.

Lebanon's Populalionumbers Gimej

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ithighly chiiied political iiiue in Lebanon Under) National Charier, politicalis distributed oa tbe basis of religion sect. Lebanon's only official census, conductedstablished the Maronite Christians as ihc country's largest sect, which gives them sole claim to the presidency under thc National Charter. Population estimates that challenge the noinnaroniic majority throw into ceafutJon ihe entire structure of Lebanese poiitks CVrsiians and Muslims alike use estimates of the sire of their *reis. or confessional groepsjlo justify their claims to political powcrAgjp

Kit, ma tinsopulation .

Population estimates for Lebanon "tryand aP are subjectigh degree of interpretation Lebanese demographic data arc fragmentary, and iheie arc no recent official statistics. Lebanon conducted iu last official census2 and its meat recent fedlowup surveyopulation estimates for recent years recruire that demographers make several assumptions regarding eachroup's rales of natural increase (births minus deaths) and migration and war-ielated caiualuevJfaft

Populalion figures aresensitive andiptosive in Lebanon, which further explains the wide range of estimates- Thc Christians, in their quest to legitimist political power, sill) rccogniu2 census thatpercent Christian majority by including Lebanese living overseas, who arc all assumed lo be Christian Over 'the last half century. Lebanon's Muslims clearly lamubstantial majority In Lebanon, with the Shias emerging as the largest sect. In Ihe absenceew censui or an agreement on who to includeensus. Lebanon's poliiical reform prnceai became deadlocked, and tbc country bad no ccmiitulional wenisiou for peaccfatly redistributing pottlkal power

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' it

)

M-Shl'oa rx theil newsparer itul broke thc LS arms solesran itoeibc paper published its own demographic'i^Ih* basis of uninecineddaia5 Ihai> lo'il nopuliiion oiinuiie.il

Itlvel* imall total Shii

Conclusions

Thc Climates display the deep diviiions lhal prohibit genuine political reform in Lebanon todayvAsidc rom lhc obviously distorted Phalange estimate.bui equally valid conclusions can be drawn from each study. The cost significant demographic trend revealed in lhe studies, howcver.'rs ibe expanding Muslim majority anrLthe gradual erosion ofu'ljii

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airly large -'HQ

IthOMtHi'.K

Phalange} estimate of Lebanon's"mirrors2 official census.estimate, which obviouslylight Christian majoritysurprisingly, the party's estimate of Ihe size ofcommunity is the largest of all LheNo bcompMitior. <j! the Ctu'i.iin

communiTST which includes Maronites. Greek Catholics and Orthodox, and Armenians. According to thc Phalange, the Shias comprise onlyercent of total.

f

The Sri Lankan Mitiiari Low Profile'

Sri Lankan military hai been forced to adapt to new security duties since the intervention of Indian troops on the island. Under the terms of the Indo-Sri Lankan peace accord, thc Sri Lankan Army was (equired to turn counter ins urgency duties over to ihe Indians and return to barracks. Military reaction lo the Indian Intervention has been positive, although it has wavered at timet

m

.The Sri Lankan military is focusing on tbe Sinhalesehreat ia lhe teeth, although ii is providing limited assistance to Indian forces on occasion Wc believe thc Sn Lankan military will abide by lhe terms of tbe peace accord*

The military may grow more resentful if thc Indians prolong their itay and would probably direct its anger at Colombo. Although unlikely, an Indian decision to withdraw forces from the island would create new problems for thc Sri Lankan 'military because It would be forced to stretch Its limited resources lo tackle boih the Tamil and Janalha Vimuklhl Pcramuna miliianti hawa***

New Countrrtniurgrat

Since thc inceplion of thc Tamil insurgencyhe Sri Lankan armedeexpanding from03 to0 by the time thc Indo-Sri Lankan peace accord was signed last year. UaUke its Indian counterpart, the Sri Lankan military had little fighting tradition, and its main component,or internal security, was the police force. To tackle the insurgency. Colombo esfunded ihe police and created several special paramilitary anils. The ;wo meat active .paramilitary units created were the Special Task Force and the Home Guard civil defense groups. Thc Special Task Force is an elile foice ofen trained in paramilitary skills lhal was first used in thc Eastern Province to monitor Tamil-dominated areas. Armednd armored

vehicles.

Home Guard, a

civilian militia ofCOO. provided protection for Sinhalese and Muslim" vrlhigers in mang areas of he North-Central and Eastern Provinccs.^anaVlj'

The offensive by Sri Lankan forces on ibe Tamil-controlled Jaffna peninsula last tprtng demonstratedihat (he military had overcome some of its traditional.maintenance and Iralning and lackof equipmenttheivil war and was better able, to confront ihc

insurgents.

were more effective becausej were coordinatedew Join!directed by thc centralihc miliury had lacked strongand control. It also had acquiredlighi armored vehicles, patrol boats,especially j

counter insurgency. These purchases improvedlhe mobility of the armed iVu ^

small Sri Lankan Alt Force abo provided for ground operations against insurgent

Indian Pleurae* Alien Role Thc rot* of ihc Sri Lankan security fee era was restricted by ihe Indo-Sri Lankan peace accord signed last July sad th* subsequent arrival of large numbers of Indian troops on ibe ills id Tbc terms of the accord confinedm) to barracks and allowed only the police lo participate in joint pairols with the indians. The Army redeployed to camps in thc can ardouth, where Sinhalese Marxists wereproblem for the government. The special paramlllury forces also were redeployed or disbanded Thc Special Task Fore* moved south, although elements remained in the cast to aasbl ihc Indians against the TamilThceputation for abuses of Tamil civilians- was disarmed by the Indian forces in accordance wiih ihe pcac*

11

5%,

The Sri Lankan miliiary has crilieiied lhc Indians foi no< taking strongeragainst (he insurgents. In October ihe Sri Lankan Army attempted to move oui of their barracks lo restore order in Trincomatcc when ihey believed Indian forces were not prolcdinc the local Sinhalese population from Tamil guerrillas. Thc Indiansopped (hem from taking actionbecauseove would have violated the terms of

Sri Lankan supplrt for thc Indian presence fluctuates.

fjjajjg, nkans espeet the Ind.ant to keepgh levei of activity against ibe Tamils. Otherwise. fgggggflgaV New Delhi does aceeason to remain on thc

)

Deployment of

Although the Indians control counterinsurgency ctTorts In the north and east, the Sri Lankan security forces areole again, especially in lhc Eastern Province..India mustubstantialforce In thc north while crmcentrating in (be easi where the Jajniis hivcregroupcd since the October offensl'

While thc Sri Lankans are rejoining Indian effortsthc.Tamils in the east, they arcore sensitive security threat in ihe south, whereinhalese radical Mariist group. Jarutha Vimuklhi eramuna ts assassinating government officials to underscore Its opposition to the peace accord

The Sri Lankan security forces are having some success in combating (heVimukthi Peramuna and recently rounded up several suspected

r: Their

success Isgroups secretive and cellular nature and the fear by local authorities of reprisals. The assassination of lhc government's police aoperintertdeni in charge of the Counlersubverslon Division two months ago was an[Indication of the effectiveness of thc groups

will conccniratc on ibe growing ihruai (mm lhc Janaiha Vimukihi Peramuna in Ibe Muih and probablyelerminalion lo putthe problem by eapanding special paramilitary units such as lhe Specisl Task Force- Morale within the Sri Lankan miliiary will remainn ihe ncai term as long as lhe Indians appear lo be rnskini headway acainsi Ihc Tamil mllitanls and lhe Sri Lankans are effective against lhe Janatha Vimukihi Peramuna.

New Delhi presented lhe move as necessary to pursue Tamil guerrillas. Allhough unlikely, anecision soon io withdraw all forces from the island would force lhe Sri Lankan militaiy io reiurnounlerinsurgencygainsl lhe Tamils in lhcnorth and casi and against the Janaiha Vimukihi Peramuna In thc south. SucKa

Should tbe

Indians prolong ibeir slay on lhc island beyond the national election scheduled for M

aw

)

India's TradeaEastern Europe JafgWA W

_ Trade relation* between India and fjiiern lutvpe. all hough relatively Unruled, are driven un boihy prospectsreater exchange food- and services without using precious bard curicnet The volume and aire of lhe agreements between India and Ibe East European nations bare increased significantly in reccni years, bui ihey mutt revolve several problem) before trade Itveli arjwivach those between India and Western Europe.unhappy wiib lhe Quality of the gooda eiehanjed^aod Ibey often have ifneeed the coniraciual agreement* bet*een themedirect their fuudither marketsorciin carrency sale can be made lenaun* $3

BecJuveeed

Although India and Eastern Eur ore have kmg been trading partners, the rciitionsbip nai ctpunded considerably over the last few -ii. antsstjsajntnjag, ajajjkjjsjBannnisnVw khe value of trade wiih the hatl European nations more than6 SO0 million. In cunirait. trade with Weimpi Europe6 amounted* >

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7 India signed trade agreement!,wiih nearly all the East European nationieconomic cooperation. Th*plans forentures andin Third World countries as welltrade. New Delhi hast ternlo make deals that allow India toimports without having to spendcurrency. Most lrareactions between ihc twosettled io noncoftveriibie Indian rupee pat mean umilar lo the one Indie hat wiihUniono use barter arrangement!

In the past. India's most active East European trading partners have been Romania and Poland. More recently. India has slgnihcanily increased ili trade with Hungary and Czechoslovakia. India'* exports to Eastern Europe have consisted of raw material* latch

D> nonferrous metals, textiles. Jute, cotton.tea. and spices. In turn. India has imported finished products such as machines and machine parts. ngineering goods, military equipment, chemicals, pharmaceuticals, and newsprint. East Europeanenerallyroblem markeling these r_

XicS* inof their poo* oitnltu.

India probably sees trade wiih Eastern Europe as .olitical purpose because It helps reinforce ndia'a claims of

Delhi's nolky indicates it wants to maintain its involvement with Eastern Europe as aagainst eicesstve reliance on thc

Hungary

India's trade wiih Hungary, although relatively small, has increased almostcrccni

trade talis between thc |em have focused* on increaiing technical and commercial cooperation, including an agreement fur Hungar) to Import, (or the lirsi lime, an Indian-aticmbtcd Japanese automobile called ihc Maruti. flic hundred Mifuii-lOOt were shippedore arc to be 'hipped Ihit year. Hungary will manufacture dashboards lor ihc Maruti in exchange for the tonbed autumot-lc Another agreement allowed Hungary to import iron ore pclku aad etcciroruc goodt from India India aad Hungary also agreed ihai bolaUwovW avoid double laiation loetter fV?-of.technology between the

r"

Card akla

Crcchoslcnikiaajor Bait European trading paiinci with India more lhan iwe decades ago through tit participation In building India's industrial facilities. Czechoslovak irade organisation) arconstructing pope' mills, temle and leal her-processingncinerating plants.

power stations, forges, bun mi chine iouJ! boilerftmmtfak-

b

-aja)trusi> India and Czeclvcrslevakia eipeci io more ihan double ihe'. bilateral wade volume this ;ear. reaching slightly more0 million. To achieve that goal, ibe two ate discussing several joint ventures in Third World countries as well is continuing traditional commercial exchanges,

Poland

Barter dcjlige role in Indo-Polishgaj^^HaafaaY'n ai India and Poland worked out an arrangement fo' India toons of coking coal from Poland in exchange for an equal quantity of iron ore at in estimated vakhs> of IBS million. Despite recent cooperaiion. thererge trade imbalance between India and Poland, with India running the deficit. Theyrotocol to iocrrssc Iradc by aboutercent, from0 million'> millionndia and Poland are trying to'expand niutua cooperation in key areas, including shipbuilding, machine tools, electronics, coal mining, and chemic technology. ^agT^

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Romania

Trade relations between India and Romania arc strained, despite good political relations and cHocti in increase economic cooperation ejjgsssassS|f^

reputation for late deliveries, in inability to finish contract -orkSJin lime, and inferior quality goods. Despite the strain in economic relations, the two countries are discussing possible waysmprove Iradc. Tbcy have agreedxchange technical personnel and collaborate in research and de-elopment. They are exploring the possibility of joint ventures and cooperation in electrical and ^metallurgical equipment manufacturing. They signed an agreement in7 to Increase their bilateral tradeercentfiasuj^

Yegoslaria

Tradendia and Yugoslavia is small, al pist over tlOO million, but the two hope to increase bilateral trade to about SIS0 million this year. They have agreed to explore opportunities for economic cooperation through joint ventures, trantfer of

technology, and business ventures in Thirdountries. Tbcy recently agreed lhal India "ould oport tractors, automobile tiro, diescl engines, and auto pansugoslavia. They also arranged forYugoslav bank to proviJktarcdil to finance Indian imports of industrial equipment and ships from Yugoslavia. Tbc credit agreerneni permils'thc use of repayment proceeds to finance ex oris of goods and" services from India to >*

.kjV*

CutV

Bwaicral trade between India and East German) has ttagnated al aroundillion over the past Iwo' years. Indian-East German Iradc has suffered In part because India has only providedoercent of

.

Trade between India and Btiigirta has fallen

significantly in tbe past fe- years, despiic lhe signing .

of highly opjimislic trade

agaan%faavaaaW*ndia and Bulgariaradc protocol' intended to increase their bilateral nde by SO pereenl. 'h

ecreasedMillion.ountries recentlyrotocol8 thai callsrowth in tntst ofcrcent;'bul^ka^gjjps' 'ej^

)

manufactures many products wanted byurged -

Bulgaria to import more Indian goods such as 'perfume compounds, and essential oib.irnngcd countertrade agrecmenis for Bulgiriaearthmcn-ing equipment against delivery"metal working and

Implications

Wc believe India win look lo increased trade withuropeay lo reduce ihc pressure on it* foreign payments. New Delhi hopes Ihai Eastern Europe canarger share of Its basic Import needs In exchange for rupees or through barter. In add it ion. in some areas such as coal mining, several East European countries can make an important contribution to India's economic development At the same lime. New Delhi hopes to expand exports from new growth industries whose products, for ihc most pari, have notuality level high enough for Western markets. Items in this category include computer hardware and software and automobile*.

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We believe Newonvinced thai these more advanced countries are the best source of quality good* and ihe advanced technology for in mode rnirai ton program. Past actions Ind-caic New Delhi will ignore selected eeutireeaual arrangement* with Eastern Europeale io Ihc West for hard currency can be made Tbe Soviet UaadeuJvowcucr. nay face greater competition if Indian trade wiih Easternncreased significantly The Soviet* are India's largest rupee trading partner and, caccpt for petroleum, the goods exported to India arc similar to those sold by Fastern lj rgj

trade wiih Eastern Europe probably will not displaceignificant degree economic relations with ihc failed Slates, Western Europe, and Japan.

Secret

53

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