National Intelligence Daily
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SITUATION REPORT
IRAN
After several violent vvidente, Iran appeare on the vergeomplete diplomtio break uith Iraq, 1
Tehran announced yesterday that it was recalling all its diplomats from Baghdad, j
The latest decline in relations follows theassassination of Iraqi Deputy Prime Minister Tariq Azizprilecond terrorist incident in Baghdad on Saturday at the funeral for those Killed during the attack on Aziz. Baghdad hos moved rapidly to retaliate.
Since the incidents, Iranian oil installations athah andAbadan near the border with Iraq have been attacked, r
The Iranians also have blamed Iraq for the weekend attack on Iranian communications facilities nearhlrln/""
Intense Iraqi media attacks on Iran have stressed the thome of Porsian hatred of Arabs, especially Iraqis. The Baathist leadership probably hopes that Arabwill have greater appeal to Iraq's majority Shia Muslim population than the Iranian clorgy's call to topple the Baghdad government in the name of Islam. In order to reduce tho possibilities for domestic unrest, Baghdad this weekend began expelling Shiae of Iranian origin.
The oil disruptions are not likely to have aeffect on tho overall domestic supply of refined oil products, although production has declined. at Abadan reportedly has fallenarrels per day from its normal production levelarrels per day, and production at the Kcrmanshah refinory apparently has fallen0 barrels per day0 barrelsesult of reduced inflow fromhah.
Hostages
President Bani-Sadr's political position has been further weakened by Ayatollah Khomeini's refusalto authorize the hostages1 transfer to government control.
believe Bani-sadr will continue to loox tor ways to rnsolvo the crisis, there is little prospect he can do much until tho National Assembly is convened. | |
Bani-Sadr's preoccupation with the hostage issue in the last two weeks has almost certainly damaged his supporters' hopes of doing well in the second round of elections for the National Assembly later this month. Tho final results of the first round indicate thatfeats in the Assembly have been filled and runoffs will be necessary in the remainder. In many
of tho campaigns still to be decided, the hardline Islamic Republic Party will be the favorite; it won about half of the seats decided in the first round.
Roactlon to US Sanctions
Tehran radio has announced that the Revolutionary Council convened in "extraordinary" session early today to decide on steps to counter the new US actions. Tehran radio reported on the new US moves against- Iran without comment, but noted US press reports that the US is not considering any military action. (U)
TASS has called the US moves punitive measures to punish Iran for holding the hostages. <U)
Japan has formally expressed its sympathy for the US moves. apanese television network today, however,oreign Ministry source as saying that Japan's dependence on Iran for oil is such that it will first want co review Western reactions before deciding whether to side with the US on the sanctions issue. (U}
RAB STATES: Financial Agreement
Egypt apparently has accepted an International Monetary Fund schedule for resuming interest payments on some S2 billion of frozen Saudi, Kuwaiti, and Iraqi deposits in Egypt's Central Bank. We believe that this move reflects Cairo's understanding that the funds, with zhe possible exceptionillion held by Iraq, would remain in Egypt. Egypt froze the deposits last year to prevent possible withdrawal in retaliation for President Sadat's peace treaty with Israel.
Original document.
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