PAKISTAN: THE NEXT YEARS

Created: 11/8/1982

OCR scan of the original document, errors are possible

Pakistan: The Next Years

, PAKISTAN: THE NEXT YEARS

THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL INTELLIGENCE.

THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS, EXCEPT AS NOTED IN THE TEXT.

The following inteBigence organizations participated in tho preparation of Ihe Estimate:

The Control intetganie Agency, theIntelligence Agency. the Notionol Sacurrly Agency. Ond the irrteKgence argonizotiorB of tha Dapartman'i ot Stole ond ihe Treowjry.

Aho Partkipating:

Tha Aantont Chiel oA Stall lor Inteligence. Deporimenf ol tha Army Tha Director ol Novol Intelligence, Department of the Navy The Auiitonl Chief ol Staff, Intelligence, Deportment of the Ar force The Director of Inleeigence,arine Corps

CONTENTS

SCOPE

KEY

onstraint on ZU

Thr- Currrnt DooMfltc Scene -Zta in Chargr. But lor llow

Zlt's

lans for Change

Ethnicawl ihe Threat ol Terrorism

TheCSxacei Ahead. With No Easy Solid kito

Present Slate ol tin- Economy

Economic Outlook

Impact of tbe DOT

The Itok- o( Fnielun Aid

Relationship of Ihc Economy to Political Stability

Pakistan's Foreagn Ptrafcv

ith

ReUilinns With tba Snvtel Union

The TaJks OB

Relations With

PakisUn's Nuclear Program...

Outlook

lor Continued Rule by Zia

SCOPE NOTE

This Special National Intelligence Estimate was prepared to set the stage for President Zia's forthcoming visit to Washington. It assesses the domestic and foreign policyfor Zia's government over the next one lo two years.

KEY JUDGMENTS

Pakistan's President Zia-ul-Haq faces growing domestic problems but no immediate threat to his rule. His largely benign authoritarianhas given Pakistan general political stability and substantial economic growth. Zia lacks an organized constituency outside the Army. Itowever. and he could find his hold on power challengedtrong opposition emrrge.

Zia's visit to Washington will be paralleled by the arrival in Pakistan of tbe most visible symbol of ihe new USfirst si* of6 fighter aircraft. Islamabad is aware thai only the United Slates can offset Soviel pressures and provide Pakistan with Ihc sophisticated weapons il believes il needs The US-l'akistan deal on economic aid and weapons sales undoubtedly lias strengthenedinternational position and restoredof its self-confidence The relationship faces several difficult hurdles, however:

Islamabad sees nuclear weapons as critical to its long-term survival and continues louclear explosives eapubill-ly. Zia is unlikely toevice, however, while2 billion US program remains on track He also has been told that any reprocessing undertaken in Pakistan lo acquire plutonium would very likely result in the termination of US assistance

The Pakistanis continue to doubt tlie reliability of USand US steadfastness in limes of crisis. These doubts-based on earliercurrent Pakistanial>out the funding of the US arms iwekage and the precise equipment to be supplied

Pakistan's leaders believe that the Soviet invasion of Afghanistan fundamentally altered thr balance of power in South Asia, and tin- Zia government has strongly opposed the Soviet occupation of Afghanistan.

But Pakistan also views the indefinite presenceillion Afghan refugees on its own territory as unacceptable. Pakistan therefore has pursued the UN-sponsored indirect talksettlement onIslamabad might accept some conditions, such asew Kabul government closely tied to the Sovietihe United States would notlong as most Soviel troops left and ihe refugees returned home. Major concessions, such as recognition of the Babrak government and acceptanceontinued Soviel troopare unlikely in at least the next year, even if the US relationship should falter, because of concern over the reaction of conservative religious parties and well-armed Afghan insurgents at home and vital friends abroad, such as Saudi Arabia and China.

The primary factor in Pakistan's foreign policy is suspicion of India. Pakistan is aware lhat il cannot count on US support against India, and therefore continues touclear capability as its ultimate deterrent. Indo-Pakistani relations are unlikely to improve substantially, despite the ongoing talkso-war pact.

Zia and his opponents will plan their current actions with an eye to the Washington visit. Zia mayate for nonparty elections, while the political partieseries of protests. Terrorist groups may attempt spectacular actions, such as the hijackingakistani airliner.

Zia's hold on power remains firm for now. but his failure to fashion acceptable political institutions and win broad popular backing leave him vulnerable should he blunder, the economy stagnate,opular leader emerge to unite the opposition. Although the opposition parlies so far remain ineffective, there are signs of increased impatience with martial law and stronger callseturn to civilian government through elections. When change comes, it is likely to be abrupt and violent

The most likely event leading to Zia's downfall would lie mass public unrest in Pakistan's major cities, probably stimulated byproblems. The Army would move quickly lo remove Zia if strongshould develop. His likely successor would be another general, ruling with civilian support based on the promise of futureew regime might change domestic economic policies, but would be less likely to alter basic foreign policies, including relations with the United States.

Ethnic tensions, especially iu Baluchistan, will continue to be an irritant, but do not threaten Pakistan's national integrity. Random terrorist actions are unlikely lo bring about the downfall of ihe

government. Terrorism weakens the Zia government to the extent that it undermines public confidence in thebility to maintain public order.

Relatively flood economic performance has been an important element in the stability of Zia's regime lo date. The potential for continued strong growth exists, bul it is threatened by serious structural problems, especially government overregulation. Zia will have toarrow line to carry through on necessary reforms without triggering public discontent over rising prices. Failure to make these reforms will eventually heighten economic problems; making them too abruptly could have adverse, perhaps fatal, political consequences.

WnK)

DISCUSSION

Past as Constraint on Zia

Pakistan has vwiglii in vain (hii-mhoui iu hlslory for i- litii j. stability Pericnis of inWfectise civilian Boveminenl have alternated wilh martial law.nevernscnvu$ oi general acceptanceolitical order. Divisions be!wren ethnic croups Led lo thr secession, with Indian atd. of Bangladesh inonlv iisccesslul dtsmrml>rr memational slate in the postwar era.

The debacle nl the Bangladesh war brought to power Zulfikar Ah Bhutto and his Pakistan Peoples Party (PPP) Determined to stifle all oppoattiori. Bhutto turned Incrciinrtgly to dictatorial methods that henihlnied rather than healed Pakistan's political po-Lariulion. Large-scale nationalizationack of rational planning ledirtual halt in private investment and In economic chaos Charges thai7 elections were rigged brought about three months ol public violence. That Marked an Amiv takeover led by General Zia-ul-llaq. who* Limed "carptaker" resume, and promised elections withinays

tc vela lions ol extensive wrongdoing by Ihc PPP administration, coupledrllel that it would winast election, led Zia to postpone tbe prtanised polls and lo embarkprocess of accountability" designed to cleanse the body politic. Electionslot9 were again postponed when il became apparent (he PPP would be ihe probable winner The relatite stabihty of martial law. coupled with careful economic planning and some cautious reforms, led to renewed economic growth.

4 Pakistan's relalions with ihe Uniled Slain haveeries of ups and downs Pakistanilitary assistance agreement with the Lnited Mates4ecurity agreementhe leUtton-shlp was never smooth, however, and was plagued iiom an earls poinl by dispute* over tbe lypv and quantity of US equipment to be uppbed. Pakistan lost faith in US relublllty when the United Stales cut off aims supplies to South Asia during3 Indo-

Pablstanieeling lioiahtetied by the US failure in Pakistani em to keep Pakistan (ton) lielng dlunrm-beted by India1 US opposition lo Pakistan's Ducirar rsnvjam brought reUtxm even lowerS-Pakbtan relations warmed after the Soviet invasion of Afghanistan in9 Afterarter administration economic and mlli-taiv piickage as iasiilfltlcnl. Pakislan agreedeagan administrationwilh lite caveat that Ihb did not aflcct Pakistan's newf nod status

The Currant Domesticin Charge. But for How long?

Zia is generally respected, or at least tolrraled. in Pakistan, bul be arouses no strung mlhu-siasni The political parties arc tn disarray and unable to muster any sisjndicanl iipporition There Is diffuse dimallsfaction. however, with martial law. which has continued uninterrupted for over live years. Zia thus finds bitnsrll wilh no dtieri challengers, lwl without any broad-bawd popular support lo prntect himself if unreal develops

Zio's Supporters

does have the support of Pakistan's strongest institution, Ihe Army. Zia has adroitly manipulated senior nflloer appointments tooyal senior olfkrr corps The Army's influence now ritends Into almost all areas of tbe society', as set-sin* and retired Army of fleers base been appended lo Id! ptMlions in the bureaucracy and stale-run industries. Thaisome resentment, particularly among linenhriut Ihe Army's continued martial law respoiisi-blllllcs. and the attendant corniplinn. Bul live military irabrrs that its interests an- hound up wilh Zia's. and crsanceaudden coup will depose Zia are minimal

7 Zia also appears to have Ihe general support of thi- urban lower middle classes, the "Islamic middlehopkeepers, eh-rlrs, baraar mctrhanU. and

SEOfrfl

SEarfEl

Indus! rialbts, among ollicrs The support of ihese groups Is crucial to the maintenance of peace in the large cities. Any reversal of their support would spell trouble for Zia Pakistan* traditional elitelandlords, Urge industrialists,seen their influencebuthvir largelt neutralome important groups such at lawyers, ara adamantly opposed.

Z'n't Opponents

ia'i most important opponent remains the PPP svrricli has joined other opposition parties tn thrfor the Restoration ofMRD) The MRD calls lor an immrdialr rial to martial law followed by open election* Must observers agree that the PPP would win atluralityree election, due to it* rontlnurd popularity among the urban poor and rural pcuutnlv Tlie- patty'shas suffered heeaune nf ils inability to function openly, bul it Is essentially InlaclJ

tiadillonally have (alien inwhen urban violence becomes so widespreadthe Anny can control tt. Unwilling lo shootown countrymen far vory long, the. Army IIhe leader

Zia's Plans for Change

mission lias aradually changed froma "caretaker" lo thatuilder ofindeedeformer of Pakistani society. Heit dear that there Is to be no going backpreview parliament art democrac* Thisboth lo lib knowledge that the PPP wouldinetup and tohaiis unsuited lo Pakistan Zia's attemptsPakistan hate taken three main forms-

The downgrading of (tiUfnur imtUutltms. Tbe power and Independence of the judiciary, the civil service, and the preas have been severely reduced Numerous provisions ol ihe constitution have been suspended

ttiiMinfton of newia has can tlouslv hrouxht into existence loeal government councils. "Islamic" courts,ominatedAdvisory Council in placergblalure.

of Pakistan's lilamle <herac-trr Thh has both restrictive aspects- -theoi ,ik< linl and restrictioni im m

mm tbr atlcnipt lo rmilr Islamic

judicial and financial imlilutiom and, ultimately, to set up "Islamic democracy."

Zia made his intentions specific In an address to the public on Pakistan's Independence Day in2 Helan for sweeping social reform and promisrd that hr would reveal thr outline of an Islamic polllkal system within one year

Islamic Democracy

ia has never clearly defined his concept of "Islamicn its most radical lurtn it seems toyttrm In which there are no political parties, for there ran br no divisionsue Muslims t. ho accept Cod'luler will be enenrn. seeniinglv by consensus The chirf. and ppthapii only, yualilica-tion lor his rulr is lhat helouy Muslim. He will be advisedouncil of pious Muslims

serins to be aware lhal such ab not practical In present-day Pakistan andsuggested various less radical it hemes atamong their featuresailequirement that candidate* beMuslims Tlirrr areasic flaws wllhhowever, and with Zia's rntiirHrsl. the mere imposlltoti ol unwill do nnlhing to fuse the divitlse nalurepolitics orlSecond, Pakistan's Muslims havrn (that an Islamic lyslnnZiadifficulty lo coming upchemeaiority of tbe populace

Ethnic Tensions ond tbe Throat of Terrorism

unjabi, the dominant ethnicn. comprising approximatelyrrcml of the

SECRET

population Thr smallerercent. Pallians.ercent, and Raluch. 3arr all disaffected Io some extent byhai ihey see at Punjabi rulr through thr Array and mil service The Soviet Union has made contact with the dioMlenl

in Baluchistanmall groupBaluch tribesmen has shellercd in Afghanistan sincehe hlslnrie Palhan call for an independent or autonomous homeland, egged on by Kabul, leal its appeal when the Soviets moved Into Afghanistan New trouble* have arisen, however, because ol tbe presence ofillion Afghan refugees in Pakistan There has been remarkably little friction between tbr refugees and thr natives, but it has met rased recently Afghan agents prohabrv plav some pert in fomenting such discontrnt

hr terrorut group Al-Zulfiknrew plienomrnon in Pakistani politics. |

AT

Zulfitarowni in jlUikim: tlie'/Jj gm*rnm*nt Ilsrson, and terrorist bombings cause mainly syrnbonc damage, bu* thr inability of ihr police to bring themall lus proved increasingly embarrassing In thr rnglmr

TheChoices Aheod, With No Easy Solutions

Present State of the Economy

akistan's economy has turned around, with annual GDP growth averagingrrecnt fur ihr past lis*Agriculture, which remains ihcof ibe economy, has benefited from favoraber wealbei conditions and has rrspotujrd to hrltvin procurement prices. Pakistan1 reached self sufficiency In wheat for the first lime in its history.

ndustry still suffers from liabilities inherited from tbe HhuIIooverregulalain anil an incoherent lalxirsldl lias achieved an aveiagr annual growthercenthas been particularly strong in ihe private smell scalr Industrial sector Industry represent* only aboutercent of GDP but Is of special importance In providing urban jobs and in expanding nonliaditional eiporU

xport performance had been12 growth leveled offesult of the global recession and an increasingly overvalued rupee. Rice, cotton, and cotton textiles remain the mainstays of Pakistani expoits. hut nnntta-dilional manufactured goods are growing inExpatriate worker rcmitlancM have become another major faclor in the balance of payments. At overillion last year, remiltance* alone cnveied wellhird of commodity imports.

Economic Outlook

IS Pakistan should be able to sustain recent (rends for at lcas( the next year- Assuming reasonableconditions for agriculture, overall economic growth will probably exceederccnt trcndline for the fiscal year endingot the longer term, however, prospects are clouded by thr seriousflaws which remain imbedded in the economy. Some of these problems, such as rapid population gross! h. are cultural as much as economic in nature and al brat can be resolved only over decades. But others, such as low productivity, excessive industrial regulations, inadequate resource mobilization, and consumption/savings patterns, arr more directlyto government policy

lie most visible symptom of ihese problems has been chronic pressure on Pakistan's balance olCuirent account deficits In the ranee of tl billion per year8 were manageableime, hut the Zia regime has been reluctant to take corrective actions,urrency devaluation. In Pakistan's fiscalhe deficit jumped4 billion. There Is no prospect Inr significantthis year.

Impact of the IMF Program

he Government of Pakistan (GOP) began to respond to these balanec-of-paymcnts pressures0 byhree-year structuralprogiam agreement with tbe InternationalFund (IMF) In return, il5 billion in support from llie IMF, and an IS mouth official debt rescheduling bom major bilateral creditors including the United States.

akistan's performance under the program has been mixed. Progress has been made In budget and monetary restraint and in adjusting administered

Fcoilomk' indicators

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e'aototea reptiataat af MP aerator*.debt. aad dee* -rfc op is oaa yeai'i Matntcot eefWtei theeeeM larnaar drba iipaietaati tor (eKJ by at baataten*

' Fipresvdatio lo current account reoeliMs, badndineand

ssets' Eurtnal debt service peimenb'ri'kp tiiiiii.pneantl'1 KdiHtn aid disbursement i

toward more realistic levels {although producei prices (or natural gas and oil remain toohe COP has done Utile, however, in the key areas of lai reform and import liberalization The abrupt leveling-off in export earnings in1 finallyupee devaluation, but the new rate was considered still too high by (he IMF. (Under continued IMF pressure, the exchangeas been fmihei adjusted in several steps. The aggregate devaluation against the dollar is currently overeroent) Delations with the Fund have born strained al limes due Ioover such issues,ontinuation of the program as it goes into the third year dors rag now appear to be in serious ieopardy

The Role of Foreign Aid

oreign economic aid to Pakistan lias increased substantially since the Soviet Invasion of Alghanlslan. The commitment level2ft billion, excluding laige bul erratic Arab itipuls Tim aid has enabled Zia'i regime lo sustain rrsia-rtablr growth rates and to maintain tbe momentum of Hi drvdop-mentpite of domestic budget restraintsd to drsrlofsment projects may help cvmlually to generate the resources needed lo service Pakistan's long-term debt, which is growing rapidly due to excrssivr public-sei lor borrowing In the past and to present military purchaws. Il dors nol ease tbepayments siiureze nor ihc political complications lhal ailsc from tlie cui rent economic situation For this reason the GOP has laseii rmphasl/mg ihe need for greater pionorlioas ol aid in the form of untied baUncr-of-paymrnl*rlnlrd Issue is net resource Hows. Glowing drbt service payments now absorb aboutercent of gross loteign aid receipts.esult, the GOP has hern prexsing for additional debt rrscheduhngeans of incrnasing net foreign aid.

he UStlhon rcraiomlc assist-arte*/military sales package fig Pakistanesult of the security threat created by the situation in Afgrunwtan. Thrillion in Foreign Military Sales (FMS) credits willignificant addition tolong-term drbt burden. Therefore, the economic portion ot the package wasrnvidrimmediate balance-of-payiiirnls support and anstimulus In Pakistan'* lunger term productive capacity. US assistance Is an Important but notelement in uvrtall Inrclgn aid to Pakistan It presentlyittle overercent of Ihe total and will probably rise to aroundercent by tbe

RET

ol the Economy to Political Stability

Growth ol teal per capita Income has benefited most elements of Pakistan's complex socioeconomic stiuctiire in varying degrees- The lack ol economic "git bsues" hasajor factor in the inability of the political opposition to generate popular dbsatisfac-tton with military rule

However. Rtvefi the serious structural proKrrm that remain, the economy's ptcepects for sustained vigorous growth are drnendrnt on the gmrrraxsent's success in carryins through an agenda of reforms such as prescribed by IMF and Ihe World Bank. The greatest obstacle to iheseOP reluctance to risk serious discontent anions: the urban masses

2fi. To date, Ihe public has accepted gradual redur-tloas in food subsidies and increases in energy prices with little evident complaint On balance, mostof society probably have experienced realgrowth. Employment abroad has been ansafety valve by easing domestic unemployment and supplement) na Income levels But substantialprice adjustments arr necessary Rapid further price increases, by eroding real income levels for urban dwellers, could provide potent ammunition for the political oppusiticei Yet failure to make these changes will assure an eventual belance-of-payments crisis that would force even more drastic adjustments.

n balance, ihe /la iiovrrnincnl has fairforace ol economic adiustment consistent with political liability fur the near term Pakistan's long-lerm stability, however, will continue to be threatened by fundamental socialdangerously high population growthn inadequate anal misdirected educationaland deep-seated regional and class rivalries.

Pakistan's Foreign Policy

slamabad's foreign policy aims at rnaintaining Pakistan's national ercurlty in Ihr face of the Soviet invasion of Afghanistan, the growing military power ol India, and the alteimath ol ibe revolution in Iran. Pakistan is concernedeakened Iran will come under Soviet influence, bul itsear is of future Soviet and Indian collaborallon to dismemberor turn itent* buffet slate under Indian hegemony. Islamabad dor* nut see this as anthreat, but it feels vulnerable to direct Indian or Soviet mililary pressure and to outside meddling in its potmtially unstable domes* ir politics Pakistan bconcerned about possible Indian irsisntnes to its developmenturlrar neapon* capalnbly

akistan views China a* It* most reliaUe ally and DM depended on (truing loi must of its arms, blauiahad knows that Ui any major showdown wiih India. China probably would be able lo oiler only limited help since Belling would be constrained by Soviet supimrl for India and by enormous logistical difficulties in bringing Ils military power lo bear. Pakistan has strengthened its lies with the Muslim world, purticubilv Saudi Arabia, and enntutues to emphasize its DOOalagnrdmoscs which serve Pakistan's security by rrduring its eipmurr and giving it access to tlie financial resources needed lo purchase modern weapons

Pakistan: Narcotics ond ihe Golden Crgieent

Sinceith Iran andhai suppllnl more lhan lull the utaum for the Western heroin market More ireentlv. dixit bboratorin in Fakutaa have begun ptcdocrng Ugnlliraat amounts of htahly parr otaam d*1 market limit Iand ba enlnnenirnl lutborltm ere hemming cumeiiied about eipending heroin abiue In Pakistan and seniorncluding IVcudetii Zia. are begliuiing lo regard It uuiro seriously. Inleiualiunal asriitaner to help Pakistan cope withimited. Local aathorltkei are irhKtaM to enforce tbe ban un poppMa without vuMailUl mcecne uihst'.lutioe pronantio move agaioat famaa lalmtonri thai nut br oprrallag lacallv sensilivr tribal areas

Once ciirinii opium stocks areies will rise, sellingew round ol prm tuition. We doubt that thr covrrnnienl has ihe resources to keep production at Hi present leseb a* sncrettf ili> interrupt the firm al opium laicirvitinaastern Afghanlitan and Pakistan's own tubal aieat Imiimenshrdrefugeesinvnaenl leaden nredinaor weaponi mat lu lime bmene liivobed in tlie lucrative trade For ihrte reasons, we eipect Pakistan lo remain an important staine ef supply for llw Weitern heroin market, and an issur In US-Pakistan relations

SF^RtT

id onias strengthened Pakistan's international pnsllion and restored some of ils sell-confidence Nevertheless, the Pakistani* continue to question the durabillly of US commilments and US steadfastness In limes of crisis. The Pakistanisaul ihe long-term impact of several irritants,the narcotics issue (see inseti Most importantly Islamabad believes il cannot count on US support iu the eventnnllirl with India, an adversary whose conventional military power Pakistan cannot hope to match. Pakistan thus seeks an ullimale guaranlee of ils securityuclear deterrent against India.

Relations With India

Relations between Islamabad and New Delhi remain marred by deep mulual suspicions. Thecontinue to believe lhal India intends to secure its regional dominance by breaking Pakistan's ability to conduct an independent foreign policy.oncerned that India's conventional military power has grown beyond its need for self-defense. Pakistan's leaders believe their country will be vulnerable to Indian military and polilical pressure as long as iheyredible nuclear deterrent.

One ol Pakistan's responses to these perceived threats has been to engage New Delhi in lalkso-war pad. These talks, begun al Pakistan's behest, are scheduled lo resume early next year, but their scope has been broadened by India's counlerollerreaty of friendship and the establishmentointAccording lo Pakistani Foreign Ministry olhe Indian draft Treaty of Friendship contains clauses lhal aim at circumscribing Pakistan's foreign policy and compelling it lo accept India's piednmlnanee Tbe Indian draft would require lhal Pakistan and India settle all unresolvedand that each would renounce Ihc right to permit outside powers access In bases un il$ soil. India attaches importance lo its draftoint commission, which il believes would provide tbe framework for expansion ol Irade and cultuial relations, improved communications, and greater movement of people between Ihe two countries.

Islamabad, we believe, would like to drasv mil ils diplomatic dialogue with India al leasl in part to distract New Delhi from Pakistan's nuclear weapons program Pakistan rcoarju/rs lhal It cannot give up ils claim to Indian-held Kashmir for domestic political reasons, but would agree to pul ihe matter aside and concentrate on other problems ll. as ei peered, the talks remain on track, the Pakistanis do not expect more than modest. Incresrienta] progress

he itopovM by. In New Delhiwember Mfecti tho nnprm-rmenl in the tone ol the lelations following tlie two mnrtlngj between the Foreign Secretaries Ibis year and holds hope lor further progress luwatd uurmali/almn Pakistan is moderately encouraged by New Delhi's recent effort to assert its unnallgnod status, petluips from aof Indian-Soviet ties in the altermalh ol the Soviet invasion uf Afghanistan New Delhi's decision to diversify its arms suppliers, toialogue with China on their dlspulrd Imrder. and to seek improved relations with the United Stale* are seen by Pakistan as welcome step* that reduce Soviet influence in South Asia Islamabad realize* the Soviets have important ecoieunic and military leverage on India and that Ness Delhi will trek Moscow's support in any maior confrontation in tbe region, but It brbrve* it has ao better option now than cautiously to pursue better relations with India

Relations With the Soviel Union

ihe Soviet invasion of Afghanistan,between Islamabad and (lie Soviet Unionstrained Pakistani leaders ludievr lhalol Soviet power along Pakistan's bordeifundamentally altered the balancein South Asia, makingrnnllineview the Soviets as actively hinderingbetween India and Pakistan Zia andgenerals bat the Soviet, will not leaseand believe Moscow intends tu eventuallyIndian Ocean by creating further client states.Asia Although they seeoviet invasion of Pakistan, theynerds lime lo strengthen itselt Tbey'Afghan insiirgrnts in order to make it more

tor the Soviets to ronsnhilale their hold on Afsthanistan Inurriisbn their Islamic credentials

would, hut*ever, like lo reducethai has iharactnt/ed its relations with Moscow

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the Soviet invasion of Afghanistan Given the power and peoiimily of the Soviet Union, Islamabad realtrea that it can neither knurr the Soviets nor unnecrnarily provoke them Pakntan accepts that Moscow will always choose Indiaartner over Pakistan In South Asia. Islamabad may calculate that the Soviets will moderate their pressure toto Soviet aims in Afghanistan for fear ol driving Islamabad mote (irmly into the US embrace.

akistan keeps Its channels open toi' "infS<T'nnind etuiareas ot common agreement. These efforts are aimed at reassuring hfancow that Pakistan has not ctaed off all its options in dealing with them Islamabad will attempt toreak with Moscow because it wiirrie* that the West will in limo forget aboul Afghantstati oi may reach an agreement onover Pakistan's head as partargei Intcrna-linnal seltlement Of more immediate corveorn In Zia's inner councils, we ludge, is the possibilityutoff nf US aid over Pakistan's continuing nuclear program.

M Moacow hasinki-matsc approach to Pakistan, but also has tried to exploit Islamabad's fear of internalontacts with political and ethnic opposition groups in Pakistan]

r

he Soviets also separatists and

may be funneling funds to the left wing of the Pakistan People's Party inside Pakistan These groups are loo weak at present lo threaten Zia's tenure, bul their potential lor dramatic acts of terrorism and for subversion particularly that engendered by growing tensions between Pakistanis and Ihe large population of Afghanworiles Islamabad

Tolks on Afgh<inHton

he Afghanistan problem will remain tbeissue in Pakistan-Soviet relations Although ibe Soviets are no closer Io solving their problems in Afghanistan. Ihe refugee problem In Pakistan hasajor concern lo tbe government inLocal resentments and concern In the Army thai the Afghan refugees willcrmanenlfor Pakistan much like the Palestinians in the

l

see

Middle Fast haveote ol urgency toearcholilical settlement on Afghanistan.

ia and his advisers will haveil.nr. these pri-ssnrrx with the strong support their Afghanistan policy draws from censervalive reftsOou* parties and well armed Afghan irmirgeots at borne and vital friendi abroad, such as Saudi Arabia. China, and the United Slate* While ihey doubt that ihr Soviets arc readyolitical settlement acceptable lo Pakistan. Pakistan's leaders behrvr Ihey have no choice bul to probe for any flexibtlily in the Soviet positionprunaii aim inhe treat Son of coridrtions there that would permit the relugees lo return, bul the Pakistanis know that Ihe refugees will not return as long as large numbers of Sovitrt troops occupy the country.

Some senior Pakistani officials brheve nvajor progrcss on Afglianistan is poasaolc in the coming monthc They am lhal Afghanistan, largely because ol Soviet iKiunpting, had shown considerableat the UN-sponsoted liidin-ct lalks in Ccnrva last June They regard as major cimcesslom Kabul'stu permit Soviet withdrawals and ihe vtawa of Afghan refugee leaders lo he included In aThev alio arc encouraged by public Soviet support forlie UN-iponsoied lalks and ihe dislinet impression gained In Moscow by both UN Secrelury Cenoral de Cuellar andis personal reprrsenlutive on A'lthanistan. that the Soviets are lookingolution to their Afghanistan adventure They belseve Ihat ecotiomic probJeiru at home and continuingin Poland have put thr Soviet leadership under growing pressure toolilical solullon In Ihc mess In Afghanistan.

Zia and his senior advisers probably view signs ol Soviet flexibility more cautiously. They- seem lo fear that signs of Soviel flexibility may be ploys to persuade Pakistan to engage in direct lalks with Ihe Itubrak regime In Kabul and to slacken in Hs eflocts lotrong resolution on Afglmnblan in the UN (ieneral Aaembli this fal f

| Islamabad

EI

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lhal recognition of ihc govrrnmrril in Kabul is one of ib (rump cards ll is doubtful lhat Zia would play ilullout of Soviet Iroops is Largely completed, most of ihe irfueres has* returned to Afghanistan, and Kabul has accepted Pakistan'sof the long-disputed border between the two countries

Rotations With China

The close relations between Islamabad andare rootedommon perception of Soviet strategy and Indian policy in South Asia Pakistan sees Chinaelerrent tn Indian -and more recently. Soviet- aggression ami believe* China would be the must likely Hale to ud If India moved to break up Pakistan Islamabad regaids China as its most reliable ally, having given Pakistan strong diplomatic support in the last two wars wllh India Islamabad appreciates tbe facl that Beijing supports Pakistan in order to frustrate Soviel designs to encircle China and to gain for China an oullel lo ihe Middle Faut

lthough China cannot provide Pakistan with the most up-to-date weapons systems. Chincse-sup-rjhed tanks andwtitutr the bulk ofarmaments Pakistan basource of modern Western arms and technology for China and there are indications ihc Iwo countries have joint defense production programs bawd on Western tret' oologies. (

Western arms lechnolosi'e* acquired bv Pakistan.is aware of US concern about unauthorized transfers of US weapons technology to China, but considers its security relations with China morethan those with Ihe United States,

Pakistan's Nuclear Program

akistani decision make is,inimum,want the option louclear device and/or touclear weapons stockpile on dioft order. The Pakistani leadership persists in this view despile US oppusitirni lo Pakistan's nucleardevelopmenl effort and Ihe Ihreat such activities pose lo continued US mllitaiy assistance. Pakistan is continuing its efforts to produce the fissile material and to acquire or manufacture the high explosives and other rompnnenls neededuclear device.

akistan's cloae military relations wilh China suggest that Islamabad may at some point give Ucajing access to new US weaiams it receives, despite havingeneral Security of Miliury Information Agreement. For ihrem. however, we believe. Pakistan probably will safeguard ihe new US arms it receives to protect the arm* nipplv relationship But major strains in relation* with the Unitedreinforcing Islamabad's doubt* about US rehabilitycould cause the Pakistanis lo thi in US aims to China China has obtained Frrnchpossibly US air-to-airPakistan and has negotiated agreements on joint weapons development based on

Outlook

or Continued Rule by Zia

arring an assassin's bullet. President Ziawill malnlain hu hold on power over thr-s We believe, however, thai increasingly open public dissatisfaction with martial law and an uncertain economic climatethe next one lo threeZia with Ihe choice of lacing serious unrest or optingivilian regime under Army tutelage Althoughegime wouldopular coruensui. it might attract enough of tbe moderate opposition ia more lime

he opposition remains ineffective and lacks public respect. Its divisions have only been papered over by the Movement for the Restoration ofand it has vet to findaior issueeader to galvanize llie broad dissatisfaction wtth Zia into active opposition. Xlost educated Pakistanis are still teluctant to confront ihe Army in the streets for fear that the Soviets or Indians will exploit internal unrest ot that separatist leaders will use an oiiposltion movement to make major oalnv

evetlrseiess.rie have been signsimpatience within kry pio-ZJaover thr cootirsuation of martial las* andin Ihe countryeturn lo civilian

major opposition leaden are convinced Ihr time, is ripe lo move against Zia Some senior tevurily ulfKlab believe Ihr lisle of public opinion is runningia and are increasingly skeptical about the irgime's ability lo contain possible internal diaadenv Should ihc erigsomy fallrt and affect the inlrrnti of the urban middle classes aial then clerical allies, oppoai-llon lo Zia could coalesce rapidly

St lt Is highly unlikely lhat Zia's leadership would survive prolonged disturbances partkiilarl) if the Annv is called out to put down vtolrul disorders in I'uruahs cities Unwilling to fire on its own iieuple, or to alio- radical leaders to seize controlosemenl. the Army probably would quickly remove Zia from office and install another generalot possible to predlcl when Mich an oulbieak might occur, butroad decline in the economy should occur there probably would be serious unrest Politically difficult structural adjustments In the rronurny. particularb those required by Ihr IMF. could set off urban unrest over Increases in food prices We do not know when lohtleal change will come, bul when change dor* curneikely to be both violent and abrupt.esult, we would piobablv have little warning of an impending uplieaval

continued presence of Al-Zulflkar andterrorist groups make* auasunarion for Zialeaders anprrsciil threat An attemptlife reportedly was made last ipilng whenwas fired at hn aircraft. Pakistanialert lo the threat, bul Al-Zulfikai i. difficult

violence, such as the huackinglHl, has so far IHpixl ralheiZia He chums lhaloolbh to talknder assault internallyof terrorism are widely condemned iusociety.ontinued upsurge ofcould lontilbutcillingness toOne of the chief claims of the martial lastbeen thai il has protected llie and property,to lie- Bhuttorartinurd inahditv to

root out terrorism may (cademandew government thai can do so.

Ethnic unrest in an area such ast seriously threatened ihe dismemberment ofalso could lead to Zia's downfall This possibility seems unlikely, however. The Balueh simply dohave the numbers to defeat the Pakistani armed forces. Tlte Soviet Union has been In contact with dissident Balueh groups, and with other opposition groups throughout Pakistan. Its financial assistance In these groups appears aimed more at pressuringand perhapshange ol regime, than at promoting the breakup of the country.

Al) of ihe players in Pakistan's polilical scene are casting their current actions with an eye on Zia's December visit tu Ibe Uniled Slates. Zia himself mav announce some newa date forbe comes. The legitimatehoped loeries ofthat would force Zia to arresl thousands, thus damaging his image on the eve of his departure ThU plan seems lo have beenerious blow by Ihe recent terrorist events, however. The opposition fears that demonstrations now will cause it lo be associated In the public view with the terrorists. Al Zulfikar itself would no doubl like to increase ihe incidence of terrorism, or perhaps pullajor event, lo coincide with Zia's trip Dutch authorities recentlyroup ol Pakistanis planning loakistani airliner.

If Zia should fall through public unrest, the most likely outcome wouldrokered solution involving iho Army and the opposition groups.general would probably take over, al least on an interim basis, with the promise of elections in ihe future. Most of those generals close to the top at present seem to be less intent than General Ziatrict Islamic program and some are less enthusiastic about strong opposition lo the Soviet Union In Afghanistan

A successor regime will have Utile room to maneuver on foreign policy, however. All political factions except the small radical wing ol Ihe PPP agree ihat Pakislan must have some type of US connection. This, plus the necessity of support from China and

Saudi Arabia, and the difficult domestic consequences, will militateramatic shift iu Pakistan's Afghan policy, such as recognition of ihe Babrak regime and awuicscenceontinued Soviet troop

ramatic change would he more likely in domestic policy. An Interim military regime ruling with the support of the PPP could well turnype of leftist populism involving new itationaltutions of industryurning away from Ihe structural reformshi High not yetthe Zia regime The rrtull would likely be economic stagnation and Ihr eventualof Pakistan inlrmationallv by diminishing its polilical andstrength No Pakistaniikely lo drop its plan for the deveiop-menluclear explosivea weakened Pakistan would probablyreater need to go ahead

rtwit government has shown no signs that it has abandoned its uHimale goaludcarcapability The lime frame for un explosion lias probably been IruKtlirnnl by thr US military sales/ economic aid package if tlx- parkaue remains on truck, Zia is unlikely loevice wllhbi the next two to three yean, even ll fissile malerial should become available, since planned deliveries of US arms, particularly the l'-lfl, will not be completed during thai periodubstantial reduction of thebetween India and Pakistan would lessenfelt needuclear capability, however, and this is not likely to occur

facing Pakistan,ne of longer term Instability No lewder is likely to be able to heal the divisive and Iraglle nature of Pakistani politics. At Ihe same time. Pakistan will continue to lose Its facade i'l Wrslrrn values. The W'esternized elite which hasowerful role since Pakistan came into existence will bccunie leas and leas powerful. Pakistan's future rulrri willifferent world view and share lexer assumptloni with us They will place more emphasis, and have more extreme views, on issues such as the Arah-lsiarll dispute. US-Pakistan relaliom wil) probably be more contentious, even if basic agreen issues such at Afghanistan continues

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DISSEMINATION NO"ICE

I. Thiiwo* diisetrvi noted by the Director otoIntelligence, this copy is for the information and use of the recipient and of persons under hii or her jurisdictioneed-to-know bawl. Additional eitentlol dissemination may be authorized by the following official* within the* respective deportments,

o. Director. Bureau of kiteJIioenca and Rciearch. for the Departrnerit o< State

b. Director, Defenie InteJioence Agency, for the Office o* thr Secretary of Defense

ond the oraaniiotion of the Joint Chief* of Stall c_ Aulitan* Chief ef Staff far Intgfcowe. for the Depattmeot ol therector ef No-eoffor theof rhe Nosty

Quel of Staff. tnteBgence, for the Deyyortment of (he Air Force

of Inteftgence. far HeoefcjcorSers. Marine Corps

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ment ol Energy

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