NATIONAL INTELLIGENCE DAILY FOR 5 FEBRUARY 1988

Created: 2/5/1988

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Contents

Ntcersgujt-Ctiba; Reaction to tis Aid Vote

laraal-Lebanon: Fatah Infiltrators Ambush

USSR; Reaction to Initiates oa Arab-Israeli 3

Italy: Got la Government In 4

m*

Camc-odln-Vlatfiiim: Politicking Picks Up. Rghtlnpj 6

Notci

7

. 8

Arab Stales: Reaction to US Velo of UN 9

Special Analyana

USSR: Soviet* To Remain Largest Grain13

14

NICARAGUA-CUBA: Reaction to US Aid Vote

Thm Sandinistas are welcoming lha US Congrmsslonsl vote against farther lethal aid fo tha Nicaraguan Insurgentsauljaua mllhough uncompromising manners course ofrnniusporttwmmjfe

President Ortage yesterday acclaimed the defeat ofill ond called on Honduras to close rebel bases. Sencinista offenewed calls for bilateral negotiations with Woshlnntpn and callad on thc Nicaraguan rebels to lay down their? j

The Sandinistas sra probably tempering their response In order to deny the US any pretext to renew lethal eld to the Insurgents Managua,lkety to Intensify calls for Immediate on-site mspnctlons In Honduras In anllclpotlon of the Central American Foreign Ministers' meeting later this month In Guatemala to consider verification3

b(3)

ISRAEL-LEBANON: Fatah Inflliralora Ambush draalla

A prodawn attach yaatorday bp Palestinian commando* wai fuiiad by tarsal! troops lotIda northern Isroal, but tha doaths ot two Inraalt aolOlara In tho raid wilt Inspiremong Paloatlntani In lha Waal Bunk

Three Palestinianas belonging to Fatah byIrom Lebanon Into northern Israel andmambora of an Israeli potro! before additional Israeli forcesandjrvounded and capturefe 6cK;oncL The tfllrdbajk^nto _^

The attack occurredettlementile from Israel's northern border, and marked the second time In recent weeks that Palestinian gunmen have conducted en operation In this area. The earlier cross-border raid, onanuary, resulted In the deaths of an Ismail soldier and all threo members ol tho commando squadaaMPpY

! raid will raise Palestinian morale end encourage further unrest In the occupied territories. The recent Israeli losses, coupled with the six unavenged Israeli deaths In the hang-glider attack In November. wUt fen growing Israeli domestic criticismilitary's performance along the border with Lebenon end In tho occupiedf* V> O

The redeployment of elite Israeli Infantry units from the border to the occupied territories has obliged Israel's client Army ol South Lebanon to bear the prurjW' the petroling In the security zone while repelling increased Hizballah attacks. The Israeli military has tried to Improve ASL effectiveness by providing heavier, more rapid fire support from both artillery snd attack helicopters, but infiltrations are tlkety to Intensify In support of continuing disturbances In the occupied

Main Points ol President Mubarak.'* Peace Initiative

parties concerned woujdlhall all forms of violenceIn the Israeli-occupied territories tor six months.

All settlement activities In the terrltortes would cease during this period.

The political rights and other fundamental rights of the Palestinian people living under the occupation would be respected.

. '*

protection ot the Palestinian people would be guaranteed through appropriate International measure!.

*

parties would move toward convening an International conference for peace In tho Middle East with the aim of

a comprehensive settlement that recognizes lhe

right of all countries of the region to live In peaceenablae Ihe Palestinian people to exercise their dght

to Initietivaa an Arab-Israeli liaua

Moscow, apparently worried lhal US and tTgyptlan Inltiellvet on (Aa Arab-lataall dlapute will overtake in own recant call let en

with near universal acclaim In tha Arab world, and Moscow probably bawraa the USSR Is now perceived na trie euperpower most actlvoly Involvad Inolution to the conflict. The sudden Interest In US-Soviet talks probably arises out of concern that the US Initiative may preempt discussion of Soviet proposals and lead arjaln lo aeparate negotiations without Soviet participations possibility raised In Soviet media treatment of tha USj^agfc

The Soviets undoubtedly welcomed tne call tor anby Mubarak bul were prooably distressed thathis plan shortlyisit to thecoordination.and affirming the importance ot a

f

ii Government In Trouble

Tne turvlval al Prima Mlnleter Qorla'e live-party coalition It Increasingly doubttul at oppositionby defectors from tho governingto dealgriea ol deteeu In uecret voting on the budget3

Gorlo said this week he would press ahead with efforts to get8 budget through Parliament but that once the bill la passed he would "provoke andlarification" to find out If his government still enjoyed majorityeanwhile, members of the governing coalition are beginning to snipe at each other In public. Socialist leader Craxl was quick to blame the turbulence on defectorswn Christian Daeoocretjc Party. The tiny Liberal Party, whichlnlcrisls In November by temporarily pulling out of trie jover nmenl. called for en Immediate summit of the coalition partners.

^Ojerrjrne

Opposition to tho budget bill from the Communists and the Radical Party, as well as from disgruntled government members, has forced Gorloeries of open confidence votes over the pest two weeks In order to push key spending and tax measures through Parliament The enure budget wilt be putecret vote today. If the budget bill passes In the lower Chamber of Deputies, It wilt need to goho Senate tor detinto because of the number ol*

, Both Craxl and Christian Democratic Party leader OtMlta eeem to prefer torisis now because neither yet feels strong enough politically to bid (or the prime-ministership. The chanceiscalculation Is growing, however, as the difficulties in passing the budget blllpolnl up discontent In the governing coalition and an

OoMlta appears to be under alege In Ms own party. Some Christian Democrats would like to see him step down es party tesder end probably view an early government crisis as an opportunity to move DeMliu Into tho prime-ministership wtillo opVlng up tho top parly post before the Chrlatlan Democratic congress In April. Craxl Is raising the possibilityew election If the_ government laHa, but he probably would bo content to allow the Christian Democrats toe_wjjpvarnrnont and bear tho brunt of criticism over economic policy.

ARABeaction to US Veto of UN Resolution

Editorials -throughout the Arab world predictably have expressed outrage over the US veto on Monday of the UN Security Counca resolution on the violence In the occupied territories. The media In moderate Arab states have called the veto unjustlllable. claiming It encourages Israeli repression end eontrodlcts US human rights policies. Somehange In trie Arjy> moCoretes' position Interest '

j us condemnation of Israel In the UN Security Council vote on o" January probably heightened expectations In many Arab states that the US would support the latest resolution. Arab govornments ere allowing their controlled press to express hostility toward the veto to lessen the prospects of demonstrations orojaa^^

It) Briiif

MiddleIraqi oppositionist radio slatJon Voice of Iraq resumed

broadcasting from Damascus oaollows resumption ol Iraqi media attacks againstetlects eroding prospects for Syrian-Iraqi reconclllatl

China, Uruguay signed communique establishing diplomatic relationsncreases Taiwan's diplomatic Isolation leaving Paraguay only South American nation recognizingaipei Hkelyto cut aid Out not

Special Analysis

To Remainrain Imporlera

Deaplte above-average grmln harveatu In tsacillion tona eecftUSSR will probably buyillion tona of grmln,illion tons ot wttest. during (fiearketing rear, Moscow haa alrmady1 million tona ol grain; It will probably want anillion lone of wheat and at muchillion tona otcoarte grain during thm ameond halt of tha marketing yoar. Since Imet Jane, the USSR haaillion torn -of US wheel ur.dv, thu Cporl Enhancement Pribrama^aa**^

Sovtol wheat purchaees wfll continue to be mostly mining quoRty lo offset tho damage to Its domcsllc crop by unusually we! weather. Moscow couldaximumillion tons tifmllllng-quo/tty wheat; any more would have lo como from iho

Prices will determine how much Is actually purchased and from whom. If prices are not favorable. Moscow may postpone purchases and draw on stocks until the new grain crop Is available this summer. Tho US offer last Friday ofillion tons of US wheat will probably requiresubsidyer ton to attract Soviet business. The EC has subsidized grain sold to Ihe USSR at0 per ton, but an EC official recently claimed that budget constraints wiU limit funher subsidies. MHBfe.O

The current US-Sovtet Long-Term Grain Agreement expiresSeptember, and Soviet officials haveillingnessa third ag'eement. Negotiating, however, will probablymore dlfftoort than previously. The USSR's optimism aboutharvests and Increased competitiveness amongIn receni years have caused Moscow to question theeuch agreements. And Moscow perceives that II hasol the US. desireew agreement, especially inyear.aj^faw V

Because MFN ate'.us Is rtolTn prospect, tho Soviets mayew LTA, but one wtth more favorable terms for ihem. Moscow probably will push for minimum purchase tower thanillion tons In the currentore llexlble mix than Ihoinion tons of wheatillion tons ot corn, and en explicit US commitment to prices competitive with those of other exporters. Moscow might also try to link future purchases of US Qrsii to Improved access to US markets In general.^

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