NATIONAL INTELLIGENCE DAILY

Created: 4/30/1980

OCR scan of the original document, errors are possible

National Intelligence Daily

Wednesday0

SITUATION REPORT!1

IRAN

Iraq probablyrecpsneible for yee^erday'e attempted as-eaaeination of Foreign Minister Ghotbsadeh in Kuwait.

Kuwaiti authoritieo suspect tho attackere wore Iraqis or Iraqi sympathizers. |

The attack may lead to further decline in Iranian-Iraqi relatione. More herder incidents are likely, and tho Iranians probably will aearch for somo way toin kind for tha attempt on Ghotbzadoh.

Chamran's Comments

Defense Ministeriaarticularly influentialyeaterday he favora releasing tho hoatagoa and argued that ovory country usos its ombassies to collect intelligence. Chamran in acutely ccnecioue of Iran's military weakness in tho aftermath of tho US rescue miaaion, and ho probably ia concerned that the US will mount military operationa against Iran. (U)

The Iranian Armyarning to all ita unita yeaterday that the US may soon launch another "plan- for military intervention. The broadcast stated that US Marlnoa have arrived in Bahrain. (U)

Bani-Sadr haa publicly aaked the European Parliament, tha Nonaligned Movement, tho Islamic statea, and tho UN to aend delegations to Tehranayeview of the US aggression. Tho Nonaligned statea were also asked to convene in "emergency session" at thelevel on this iaaue. (U)

Tudeh Statement

Tho pro-Soviet Tudeh Party hastatement condemning tho rescue mission and characterizing it as "one link"S conspiracy to overthrow the Khomeini regime. Tho Soviet-controlled National Voice of Iran radio based in Baku hasimilar line on theand warned that the US isfifth column" of Iranians to support its "plots." i

The Tudeh and other leftists probably are especially pleased that tho rescue mission has at least temporarily halted the attacks on leftists at Iranian universities. Classes reportedly have resumed on some campuses. I I

Kurdish Tensions

Both President Bani-Sadr and the principal Kurdish dissidentsease-fire in the Kurdish areasat midnight local time lastTensions remain very high, however, and significant fighting could resume if Bani-Sadr does notoodwill delegation from Tehran to Mihabad today as the Kurds claim he will. Both sidos have indicated that the prospect of somein the autonomy negotiations may^iavo permitted the agreementease-fire.

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BRIEFS AND COMMENTS

USSR-USi Warning on Iran

a naming issued by President

Breahnev ingainst US military action in Iran md alao.ts efforts to ieolate the US from Us alliea byon the abortive resgue ;HssionIran and on

'warned^lhat further

Us military actions Ih If AHto 'most dangerous

Brezhnev's statement of

n which tha Soviet leader warned that military "interference" in Iran would be regardod by tho Soviet Union aa affecting ita "securityoscow last cited this atatomont publiclyarch.

Soviet propaganda recently has become oven harsher, attempting toserious and dangeroua crisis in Washington's whole foreign policy course." Moat of the commentary haa attempted to preaent Secretary Vanceictim of the US political ayatem and of intrlguea against him, but one Soviet domestic broadcast warned that his departure "alerts" the world to "tho dongorous, adventurist course on which the US has embarked." (U)

The theme of US irresponsibility also was prominent in Foreign Miniaterpress conference in Paris onpril and in the speech of candidate Politburo member Ponomarev to tha gathering of European Communists in Paria on Monday. In addition, Gromyko warned thaagainat US "preaaura." (U)

SPECIAL ANALYSIS

IRANi Economic Conditions and Prospects

The Iranian economy has been running at half epeed since the revolution, and there are no eigneubstantial improvement is imminent. Despite publicity given by the Iranian Government to some recent trade deals with the USSR and East European countries, the Bloo does not represent an attractive alternative to Western goods or markets.

modern sectors have been most disrupted, with oil production down toillion barrels per day in first0 or aboutercent of its prerevo-lutionary level. Industrial production has been stagnant for months at less than half normal production/ and large-scale construction activity has virtually ceased. Grain production reportedly was above average9 due to good weather, and first reports from Iran Indicate that another good crop ia expected this year.

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deterioration of the economy has not yet caused extensive unrest due to Iran's ability to obtain basic foods and other necessities in sufficient amounts. The standard of living has been lowered to an austere level, however, with quality foods and manufactured goodsto find.

Oil production has been troubled by marketingorganizational and labor problems, andfrequent sabotage of oil facilities. The Iranians also are having some problems in obtaining some spare parts, chemicals, and other materials for the oil industry that formerly were purchased from us suppliers.

Iranian difficulties in finding alternativeare attributable to the lack of organization

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rather than the absence or sellers. The greatestis acquiring refining catalysts and other process chemicals.

Tehran last week began denying crude oil to Japanese companies due to disputes over oil prices. British Petroleum and Shell had previously suspended their own purchases. In all,arrels per day ofcrude exports are affected. I I

Industry

Iran's major industries continue to be plagued by strikes, low labor productivity, worker interference in management,ack of competent technical andpersonnel. Shortages of raw materials and capital goods frommostly to Iranian mismanager.ent--are major problems.

The takeover last summer of private Iranianof major industries served to prevent the layoLf of oxcobs workers and assured the companies' survival through government subsidies. Joint venture operations with foreignprovide some technical and managerial services plus better access to spare parts and rawgenerally fared better than the wholly Iranian operations.

Central Bank officials have statedran's industrial plants are facing severe The General Motors plant, which hasat less than SO percent of normal, isrun out of assembly kits within two month3iSunbeam were operating at belowercent andrespectively.

The blocking of Iranian assets hasumber of loans to be declared in default. Although thoof the Central Bank in late March stated Iran's intentions to sorvice its foreign debts, Irar. haswithheld payment to US banks.

Japanese and British banks recently have expressed concern about overdue payments on Iranian loans, and Japanese pressure to secure payment commitments did notositive response from the Contral Hank. While non-US creditors are pointing out in strong language the implications of default, in moat cases they have not acted to close out loans.

Sanctiona-Related Prospects

In tho ovont of an imposition of economic sanctions by Wootern Europe and Japan, Iran would not bo willing or ablo to redirect much of its trade to Soviet Bloc countries, which now account fororcent ofimports. Iran's priority needs are for food and other agricultural products which the Bloc countrios would be hard pressed to provide. i i

Iran would first attempt to fill its industrial materials requirements through transshipments from third

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parties, although Communist countries could supply some goods. Maintenance of Iran's plant andentirely of Western origin--requirea Weatarn-made

The Bloc would notajor market for Iran's exportable oil, in large part because of Soviet and East European hard currency constraints. Iran couldubstantially incroaaed market for more of ita oil in the USSR and Eaetern Europe only if tho Soviets agreed to export more of thoir own oil to the west and consume Iranian crude in ita place. I

In the eventlockade of Iranian ports, Tehran would have no choice but to turn to tho USSR to help meet its needB. Soviet overland rail and highway routes, which would have to handle all Iranian importa, would be put under aevere strain just to transport the annual Iranian food requirementaillion tons. and civil unrest in Iran have held the flow of goods far below even this lavel for months. Moving increasing quantitiea of goods serosa the border wouldarga diversion of freight cars and other scarce equipment in the USSR.

Tap Sacrat

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