NATIONAL INTELLIGENCE DAILY MONDAY 2 DECEMBER 1985

Created: 12/2/1985

OCR scan of the original document, errors are possible

Director of

National Intelligence Daily

Monday

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Ipsrcval for falR"5"

C:.tojiia

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Warning Page

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Syrian Ter rensm

Ireo claims to haveyrian-spontoredlor several bombings in Baghdad, but Ihe Iraqisoil on any retaliation, apparently loopen

the arrest of tou

sn led thai

possibilityapprochement with Damasi ii>

i-' television

s last

been respon Baghdad? Syrian intelligenceonth

JRecent elloru By Iraq and Syria to reconcilehave made no progress so lar. Nonetheless.calculates that fnciions between Syria and Iran overand oihe' issues etfr- an opportunity to aaam

away trom its supportranianor*J| A

The iraqfat probably will revert to sponsoring lerronst attacksil Damascus proves obdurate on ils baching lor Iran andtalks fail. The presence In Baghdad ol PLOof mounting anti-Syrian operations may setve both asIhrcat lo Qamn^u'i and as an aid to Iraq In controlling

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BHA.7IL: Going ll AlOno

Brasilia currcnify feelsressure to conclude new ivf and deci

ation.

Kiar.ce Mm.iter funaro announced last week ihatt cease efforts to rcacn an IMF accord andestructure its Bank debt r- i,flimsi,.jH

politically feasible and thai II will reduce the public-sector deficit substantially, alihoi '

jTne Government evidently believes Wet mosteschedule ahort-term credits and principalyear ll interest payments are met With important national schcCu|ea 'o' late nexl year. Brasilia is tixely toadjustment ce-cettions

rol

1 December ISA 4

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Special Analysis

P(N GUI I':

of Expanding"

The USSR probablr expects new opportunitiesore active role In Ihe Persian dull altar lit receni success In establishing diplomatic relations with Oman end the United Arab Emirates. Tensions between Persian Quit Arabs and the US will encourage Moscow to keep Ir/lng to court Saudi Arable, Qatar, and Bahrain. The Persian Quit aisles remain suspicious Ol Moscow's intentions In the region, bul their more immediate concern is the Iran-Iraq wer. Kuwait, the UAt. andeaser degree. Oman will look Increasingly to Moscow tor additional insurancehreat from Iran orjrsq and to polish their nonaligned credentials.?"

Tne USSR pfObl establish reiauoiwiih Iran hai recognizes the'd

lo Bahrmnf may be morehe USSR Is now satisfied with the slate of relations with Saudi Arabia ant) implied that formal ties may eventually be possible!

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probably hopes to exploit the doubts ot the Gulf stalescommitments to their security. Soviet media have toutedOman and the UAElon ot growing esteem for thcdisenchantment with tho US Pelyakov recently visited Iraqpossibly to set tho stage tor reported visits by SovietSpKolov to Kuwait and President Saddam Hussayn

Moscow

couMJ

latlonship should Riyadh wish one.

continues

The USSR also may iry lo expand its limited economic ties In the Gulf. Moscow may try toew agreement on economic cooperation with Kuwait signed last month to urge Oman and the UAE to open their markets to Soviet goods, tn addition, the Soviets eventually may want more Oil Irom the Gulf elthor to mr.ni: lor hard currency orjq supply their own clients as domestic Pit production

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Special Analysis

Party Congress

das Sentoe. who willarty congressthe third since Angolanpolitically stronger then et any time since esaumlng power9 but more dependent than swer en the Sovlela end Cubans. He will seek endn strong backing trom the ruling MPLA to continue Ihe

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I'Zltora

vigorous military offensive nest yeai

"gating of

The MPLA' leadership probably WW Interpret lhe success ol the Arm/rrecent olfensivo againsts holding the promise ol more success to come. UNITA presumably wouk) like to carry nut ra-cs near ihe capital this week, but It failed to disnjf the NonaUpned Movement in Luanda In September)

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Themes '

Although the MPLA Mililitary solution to llio HSuroencv It is unlikely io close the door on talks aimedegional settlement-such as the recent discussion in Lusaka. Zambia, with us representatives. Angola's Increased dependence on Sovietassistance will not make it easy for doe Santos to pursue serious negotlalions at odds with Soviet Interests "

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Dos Santos, by mpyfrq closer'id Moscow, has undercut the hardli

He Is also likely to Introduce reforms to broadon the party's limited appoal and to Improve tha economy, which, with Ihe Oil (ndusf

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Special Analysis

Financial Difficulties

The PLO la experiencing incMiM financial strains thai ant forcing It to draw on raservms and curtail socialt has traaillonally provided to Palestinians. Thm PLO's money troubles are not diminishing Its terrorist capabilities, however, because PLO chief Artist Is taking speclalrrieasures to ensure the PLCs military remains well

Tho Palestine Nalional Fund, the financial arm ol the PLO. has pubkcfyurrent operating deficit0 million, based on planned expenditures ot0 million. The PLO's military. Industrial, and social welfare wings have suffered heavyosses In the past few years, firstesult of Israel's Invasion ot Lebanonusnd more recently because of attacks by Syrian-sponsored* Shias on Palestinian refugee camp* in Beirut. The dispersal of PLOrom Lebanon to vsrioua Arab states three years ago has also raised military costs substantiallyYS Mfc

Arab contributions, have fallen with declining oil Incomes and thefinance the Iran-Iraq war. Represent at rms of seven Arsb statesBaghdad6 end pledged to give the0 million athe National Fund reports that only Saudi Arabia Is still6 mulion Donations olher than formalalso appear to have diminished, with mostArab supportto arming and training PLO

Terrorism Unaffected

continued

The increase In PLO-rolated violence over tho past tew yearshat PLO leaders ere making sure military preparedness remains high. Last yeer Arafat bypassed regular PLO channels to deposit Saudi ad directly into militaryaction for which he was publicly chided by tho National Fund.'"

Icrel

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Political Repercussions

utUes are forcing Itut Dock oarcie as iiccii welfareor lhais8 flblefllp Pa,eslln,BniLebanon, and the Israel,-occupied territories wno have been unemployment and reduced UN refugee3

Irom the money shortage Mis at.,fat, tostrings has longajor asset to nis

begun to Ihem more carerul!)

conserve n

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I leadership probably wilt not be threatened soon oyol cash, evenlnancla) lurnaiound ialhcial assets and Arafat's probable private holdings

much larger than those of any rebel

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