BEGINNING OF EW REPORT VOLUME 13, PART ONE Volume 13, No. 2, February 17, 1995 Mexican Rounds The latest effort by Mexican President Ernesto Zedillo to create an image of a strongly led, orderly country evaporated on Tuesday. After a five-day military offensive against the Indian villages in the mountains of Chiapas state, Zedillo called a halt to the armys operations. Mexican sources attribute Zedillos shift to political advisers, who blamed the offensive against the Indian campesinos for the sweeping defeat in Sundays elections in Jalisco, Mexicos second most populous state. The candidates of the ruling Partido Revolucionario Institucional (PRI) [Institutional Revolutionary Party] for governor and mayor of Guadalajara lost. The candidates of the opposition Partido de Accin Nacional (PAN) [National Action Party] led their PRI opponents by 18 points when the votes were tallied. Though only 30 percent of the electorate chose to partici- pate, 75 percent of those who did voted for oppo- sition candidates. Jaliscos populace has little reason to love the PRI. Three years ago, government corruption led to an explosion of sewer gas that leveled a city block and killed some 225 people. The murder of the cardinal of Guadalajara two years ago remains unsolved; and the once-prosperous state economy, based on small-scale farming and businesses, has been seriously pinched by the free-trade policies of the last two PRI presidents, Carlos Salinas and Zedillo, who have opened markets to such big U.S. retailers as Walmart. The PAN governor- elect, Alberto Crdenas, who won a reputation for budget-cutting good government as mayor of Jaliscos second-largest city, Ciudad Guzman, will have a lot on his plate, as will Guadalajaras PAN mayor-elect, Cesar Coll. In a night offensive last Thursday, troop- carrying helicopters arrived at remote Indian villages close to the Lacandon forest that were the homes and headquarters of the Zapatista National Liberation Army (EZLN). Their goal was to capture Zapatista leaders, starting with the green- eyed military commander known as Subcoman- dante Marcos, named by the government as a Jesuit-trained former college professor from Tampico Rafael Sebastian Guillon Vicente, 37, who quit teaching 11 years ago and disappeared. The troops found only the oldest men, women and children. The rest had fled into the surrounding forests. IN THIS ISSUE 1Mexican Rounds: President Zedillos prob- lems of economic destabilization increased this week. It is the result of discontent with eco- nomic mismanagement, sympathy towards some of the reformist aspects of the Zapatistas, and the evaporation of the military campaign against them. International fears of debt service default and possible collapse of the U.S.-led bailout bring new pressure on the peso - and the dollar. 3Irans Future: An in-depth report on Irans theocratic leadership factions as the country moves towards the sixteenth anniversary of its Islamic and socialist revolution. 6Misconnects: While broad environmental issues remain a cause for many, concerns in 1995 are focussing on pragmatic issues. 7Yeltsin and the Security Services: While the health of President Boris Yeltsin remains problematic, his close supporters have created a stable, massive, clandestine and probably unconstitutional security apparat for the Krem- lin. The new special services are outside par- liamentary control and can terrorize the presi- dents political opponents. 8The Final Frontier: Russians and Americans may get together in space, but feuds and U.S. complaints about conditions continue at the Baikonur Cosmodrome. 9Global Briefs: Shorter reports from Algeria, Fiji, Japan, Korean Affairs, Latin American Affairs, Sierra Leone, South Africa, Uzbekistan and Vietnam. 11Jiang Zemins Army: Chinas army, believed by many to be the key to the post-Deng transi- tion, is thrust into the limelight by a mass mur- der carried out by a disgruntled officer. The army, plagued with poor morale, failed draco- nian remedies and inflexible regulations, must remain the tool and never the partner of the Communist Party. On the weekend, after reporters were barred from the region, the Red Cross received reports that Indian villages were being bombed, leaving many civilian casualties; it began to withdraw its staff. The pressure for an armed offensive against the Zapatistas came not from the Mexican public, for the demands for democratic political reform and social programs issued by the EZLN have widespread support. Many Mexicans across the political spectrum credit the Zapatistas with gal- vanizing the national debate that has pressed the PRI and its entrenched old-style authoritarian politicians to accept gradual reform under the technocratic President Salinas. Rather, the pres- sure for sending in the army to crush the Zapatis- tas came from the New York-based Chase Man- hattan Bank and other creditors. A memorandum dated January 13, 1995, entitled Political Update on Mexico circulated by the Emerging Markets Group at Chase is cred- ited with sparking the sudden change in President Zedillos policies. In part, the document said, The government [of Mexico] will need to elimi- nate the Zapatistas to demonstrate their effective control of the national territory and security pol- icy. The memorandum made reference to the pending local elections and said, The Zedillo administration will need to consider carefully whether or not to allow opposition victories if fairly won at the ballot box. Elections are pending in the states of Yucatn, Guanajuato, Baja California and Michoacn - all opposition strongholds. In Washington, the Institute for Policy Studies, that publicized the Chase memo, says its author is Riordan Roett, a distinguished Latin American scholar and liberal who in 1974 headed the Emer- gency Committee to Aid Latin American Scholars (ECALAS), an organization that helped sponsor Chilean political refugees into U.S. academic posts. Roett is director of Latin American Studies at the Johns Hopkins School of Advanced Interna- tional Studies in Washington; he is on leave-of- absence while serving as Chase adviser. Shortly before the memo was circulated, Roett spoke at a Washington panel on the Mexican economic crisis and its ramifications. There, Roett recounted that the top Clinton State Depart- ment officials he spoke with were somewhat puzzled that Chiapas was of such concern to investors [since they felt] Chiapas is a tiny part of Mexico and Comandante Marcos does not appear to have nuclear power to use against Mexico City. But in this context, Chiapas becomes one of those drops, drops, drops of water that anticipates a great deal of anxiety on the part of the investor community. Roett insisted that despite the bailout efforts, foreign investors would not return to Mexico until their confidence was reestablished, meaning when the Zapatistas were eradicated, saying It is abso- lutely essential to resolve the Chiapas issue from the investor point of view as quickly as possible. Roett acknowledged, There are always political costs in bold action. If it cannot be resolved diplomatically; it must be resolved. Even if this were a good year, said Roett, from the investor point of view, Chiapas is one of the questions that I am constantly - constantly - hit with by investors in my Chase Manhattan Bank hat. They want to know why it isnt resolved, when will it be resolved, why cant it be resolved and what it represents. He warned that Mexican international currency reserves had fallen to $5.5 billion from $28 billion at the end of 1993. Even with the $18 billion credit line initially put together by the Clinton administration with other nations, said Roett, Mexico had access to less than $24 billion. In other words, he feared that Mexico would default on service of its debt, of which Chase and other U.S. banks hold a great deal. Thus, unless real support took place quickly, the collapse of the peso would pull down every other emerging market in the Third World and leave creditors looking at default. Interestingly, the huge investment funds and banks do not blame the collapse of the peso on the deliberate prolonged overvaluation of the peso in the face of serious inflation of the money supply by the PRI government in order to finance Zedillos presidential election. Experts believe the peso should have been devalued heavily a year ago. Devaluation was postponed, claim many ana- lysts, for two reasons - to pacify the Mexican voters, U.S. investors and the U.S. Congress when the NAFTA vote was pending. The real culprits, the Mexican government would like the United States to believe, are the Mayan-speaking Indians of remote Chiapas state. On December 19, 1994, the Zapatistas staged their first demonstration since starting their rebellion in January. They took over three small towns to dramatize their demands that President Zedillo resume the dia- logue. The Zapatistas had held to their cease-fire through the election and Zedillos December 1 inauguration. Zedillos failure to appoint a peace commissioner sparked the December 19th brief takeovers. It had nothing to do with the Finance Ministrys announcement of a 20 percent devalua- tion the next morning. Foreign investors saw that the Mexican government had deceived them [the Finance Ministry denied plans to devalue right to the end], that there was no transparency in the governments actions, and that surely the overval- ued peso would fall at least another 20 percent. As a result, they bailed out. Wednesdays debt default of Grupo Sidek, a large Mexican construc- tion conglomerate, precipitated another pounding of the peso, bonds and the Mexican stock exchange that dropped more than 6 percent that day. Zedillos policy wobbles may give the old-time PRI warlords an opening to impose reactionary policies on the elections, the Zapatistas and their sympathizers, and detonate just the sort of explo- sion they hope to avert. Irans Future The year has not opened propitiously on the eve of the 16th anniversary of the Islamic revolution- ary regime in Iran. Unprecedented torrential rains fell on Fars Province this month, sending floods rampaging down the Zagros Mountain ravines and flooding salt flat remnants of ancient lakes that dried up at the end of the last ice age. Villages were inundated; almost all the bridges in the province were washed away or seriously damaged. In the adjacent coastal province, Bsher, riverbeds normally dry overflowed and the port city of the same name suffered extensive flooding. The more northerly portions of the Zagros, northeast of Shiraz, the provincial capital of Fars, suffered a two-day blizzard. Iranians are having to take care of themselves after these catastrophes for the central government is hard pressed for resources. Individual Iranians [whether hanging out at shopping malls, standing on line for food, traveling in buses, or the pro- verbial taxi driver] freely express their cynicism over official corruption, mismanagement and the bullying excesses of the fanatical religious vigi- lantes, the hezbollahi [members of Gods party]. Individual Iranians are not punished usually for speaking their minds and expressing opinions because the mullahs [clerics] know it can not be stopped - but action can. If any try to organize opposition, the full force of the state security apparatus is directed against them. Indeed, there are questions as to whether the government of President Ali Akbar Hashemi- Rafsanjani remains standing simply because it is under attack by fragmented enemies. Just before his death last month, one of the regimes most revered secular democratic critics, Mehdi Bazar- gan, who served as Ayatollah Khomeinis first post-revolution prime minister, estimated that the committed supporters of the regime may number only five percent of the population, with most of them being Khomeinis hezbollahi rather than Hashemi-Rafsanjanis allies. Irans president has been testing the waters for a constitutional amendment to allow him to run for a third term. Rafsanjani won reelection in June 1993 with 63 percent of the vote against a divided field of weak candidates. When Deputy President for Legal and Parliamentary Affairs Hojat ol-Islam Ataollah Mohajerani tested the waters with Maj- les-e Shura-ye Islami [Islamic Consultative Coun- cil] deputies, the reaction was so strong he and Hashemi-Rafsanjani backed down for the time being. New maneuvers on the idea of a constitu- tional amendment were revived in January; but now the dominant clerical factions are rent by a new dispute in and out of the government. The dispute among the clergy was not caused by Grand Ayatollah Mohammad Ali Araki, whose only fault was to die in December at the age of 106 and leave open the question of which cleric should ascend to the exalted position of Marja-e Taqlid [preeminent source of emulation]. Hashemi-Rafsanjani and his allies decided the title should go to one of his political allies irres- pective of standing in the religious hierarchy. A list naming four ayatollahs as suitable candidates for Marja-e Taqlid was published in the English- language Iran News, a paper controlled by the president, and in the quasi-governmental Resalat. The list of suitable candidates was signed by the powerful Tehran Jame Rohaniyat-e Mobarez [Society of Combatant Clergy]. The organization is led by Ayatollah Mahdavi-Kani, a member of the Assembly of Experts, who has been at various times prime minister, head of the revolutionary committees, interior minister and the official in charge of all the mosques. The list omitted the name of Irans head of state Ayatollah Ali Hoseini-Khamenei. It appears that Hashemi- Rafsanjani has allied himself with Mahdavi-Kani to block a move by Khamenei and his faction to combine the supreme religious and supreme polit- ical offices in one person. In effect, Irans president and the Tehran Combatant Clergy are arguing for a separation of the religious and political institutions. The oppo- sition is centered in the Jamae-ye Modarresin Hozeh Elmiyeh Qom [Society of Qom Seminary Teachers] led by the chairman of the Assembly of Experts, Ali Meshkini, Judiciary chief Moham- mad Yazdi and Ahmad Jannati, an influential member of the 12-member Council of Guardians. They want their ally Khamenei to embody both the governmental leadership and the marjaiyat [condition, state or status of being accepted as a source of emulation] lest the leadership be weak- ened. The Majles issued a statement saying only Khamenei was worthy of the marjaiyat. A third group of clerics within the regime is said to have proposed the rehabilitation of Grand Ayatollah Hossein Ali Montazeri, deposed as Khomeinis heir because of his criticisms of the regime. There is a fourth faction - the Shiite clerical establishment at Najaf in southern Iraq, whose candidate is Ayatollah Sistani, successor to Ayatollah Abolqasem Khoi, who died under house arrest by the Iraqi regime. The only point on which the Qom clergy is united is that the marjaiyat should not go to Najaf. The stakes are very high for the clerical fac- tions. Those who oppose the regime and lose face prison, torture and execution. In a letter to the U.N. secretary-general, one non-clerical opponent noted that Yazdi, Meshkini, Jannati and former Minister of Intelligence and Information Hojjat ol-Islam Mohammad Mohammadi-Reyshahri wage a war of oppression against dissident clerics via the Special Court. It is claimed that more than 1,000 dissident clerics had been stripped of their posts, 1,000 more were imprisoned, flogged or banished, and 600 had been condemned to death [the number executed is uncertain]. One sign of the governments unpopularity has been its ruthless suppression of any form of dis- sent. Last August, the Majles-e Shura-ye Islami rejected the petition of the city of Qazvin and its environs, an agricultural center of 750,000, 80 miles northwest of Tehran, to be separated from Zanjan Province and allowed to form its own provincial government just as Tehran has its own provincial-type government. The issue was local self-government and control of taxes levied. When thousands marched in protest of the Majles ruling, the government reacted violently. Oppo- nents of the regime claim between three and four thousand were killed. The government said only a handful died. All local government officials and even the Friday iman [preacher] in the mosque [the Friday imams are appointed by and answer- able to the government] supported the people. For this rebellion, save only the Friday iman, all lost their jobs and many their lives. In his last interview, Bazargan said that the smallest movement, the smallest gathering of people, even a strike by workers or students is forcefully suppressed out of fear that it might spread. Bazargan died on January 20 in Zurich, Switzerland, of heart failure. Reportedly, the government delayed granting his familys request that he be allowed to seek medical help abroad. Tehrans official media said he was flown by helicopter to the hospital directly from the plane and was shortly pronounced dead. Some five years ago, Hashemi-Rafsanjani explained his reason for draconian measures quite forthrightly in a conversation with Bazargan and other opposition leaders. Said Irans cleric- president, When the Shah gave us freedom, we drove him out of the country. We will not repeat this mistake. Iran lists more than 70 legal parties, but they are powerless shells. Three groups count: the Tehran Militant Clergy, the Qom Seminary Teachers and the Fedaiyin Islam [Fighters for Islam] Organization, headed by Sadeq Khalkhali. All have large followings of Majles deputies. The regime has been brutal to Bazargan and his Iranian Liberation Movement. Bazargan, whose family hails from the eponymously named town on the frontier between Iranian Azerbaijan and Turkey, had the confidence and support of Irans middle classes and bazaaris [small businessmen]. He was known as a consistent democratic oppo- nent of the Shah and as a pious, devout Muslim. His presence as head of government gave the mul- lahs cover and a breathing space as they maneu- vered to take full power. He and his party have the potential to be a real threat to the regime. In subsequent Islamic Consultative Assembly elections, Hashemi-Rafsanjani used the certifica- tion board of Shiite clerics that he appointed to disqualify as unfit to run for public office his secular democratic critics led by Bazargan and in addition some of his critics among the clergy who charged Hashemi-Rafsanjani was failing to imple- ment the policies of Khomeini. Prominent among this group were two leading red mullahs, both with the clerical titles of hojat ol-Islam, Moham- mad Musavi-Khoeinha, who orchestrated the occupation of the U.S. Embassy and subsequently was prosecutor general; and Ali Akbar Mohtashe- mi-Pur, who created Hezbollah while he was Tehrans ambassador to Damascus and from 1985 to 1989 was interior minister. In mid-January, in what proved to be his last interview with a German publication, Bazargan recalled methods by which the Iranian government destroys potentially challenging opposition parties. A party is forbidden to publish and hold public assemblies; any who make copies of party announcements are arrested. The registration commission informed Bazargan that his applica- tion was rejected and his Iranian Liberation Movement was illegal - by law only a court can do that. He put no hope in Irans courts terming the level of official corruption breathtaking - especially in Yazdis judiciary. The secret police harass ordinary party mem- bers directly and using violent gangs of fanatics, the hezbollahis, as the devotees of the late Ayat- ollah Khomeinis teachings are termed. The intent of the regime is to isolate the party leaders from their supporters. Recently, the secret police recorded telephone calls of a school teacher and one of his female students, spliced the words to concoct a scandalous conversation, made the tape public and arrested the teacher, ruining his career. In prison, his tormenters boasted they were cut- ting off the branches of the tree so the roots would dry up. In Bazargans opinion, perhaps only 5 percent of the populace actively support the Iranian gov- ernment. Even among the ministers, functionar- ies, directors and clergy there are people who are against it and do not support the system. In the past, a few independent or opposition publications have been licensed. However, control over the media is exerted and maintained through the Ministry of Cultures monopoly on paper and newsprint. Publishing stories that displease the government brings a cut in the allocation - or sometimes outright banning. At the end of last week, Hashemi-Rafsanjanis government decided to strike indirectly at Khamenei by a ban on the newspaper Jahan Islam [Words of Islam], founded in 1991 and owned by a cleric, Hojat-ol-Islam Hadi Khame- nei, a brother of Leader of the Islamic Revolution Ayatollah Khamenei. The publication had run a series of interviews with former Interior Minister Mohtashemi, who often criticizes Hashemi- Rafsanjanis regime as abandoning the Khomeinist principles of export of the Islamic revolution and militant opposition to the West. In his private capacity, Mohtashemi has made many visits back to Damascus and the Bekka Valley of Lebanon to consult with Hezbollah [Party of God] leaders. Irans clergy have divergent views of how strictly the population must be disciplined in order to make them conform to the precepts of Shiia Islam, under what conditions to have rela- tions with Western countries and how best to reconstruct the national economy. After 15 years of Islamic revolutionary rule, democracy is a shell and the per capita income of Iranians has been slashed in real terms despite oil exports. The wreck of the economy began with the upheaval accompanying the revolution, nationalization of major sectors of the economy and the eight-year war with Iraq. In the eyes of the revolutionaries, virtually any entrepreneur was subject to charges of collaboration with the for- mer regime. Even while the war with Iraq conti- nued, Tehrans bazaar merchants who put millions into financing the Islamic revolution against the monarchy were singled out as capitalist exploiters by the red mullahs. Hashemi-Rafsanjani has promised privatization and new laws to encourage foreign investment ever since becoming president six years ago. Movement in that direction has been slow. The main successes have been in persuading members of the Iranian diaspora to invest in the homeland. Throughout the war with Iraq, virtually noth- ing was spent on fundamental infrastructure ele- ments like roads, ports, communications and elec- trical power. Many of Irans rural villages are not on the electrical grid - one reason the government has been promoting wind power and other alter- native sources of electricity for small villages. During the past 15 years, the population increased from 33.5 million to 66 million. Half the popula- tion is under the age of 20. The development plans of Hashemi-Rafsanjani largely have not been implemented because of corruption, wastage and diversion of funds to a huge military buildup that, according to the United States and Israel, includes a clandestine nuclear weapons acquisition program apparently sparked in 1992 when U.N. inspectors found Iraqs secret nuclear weapons factories and discovered Baghdad was about two years away from building and testing its first nuclear weapon when Saddam Hussein made his catastrophic decision to invade and annex Kuwait. For several weeks, Israel has been leading a campaign to raise U.S. awareness of the strategic danger posed to the Mideast - Arab monarchies and other secular states as well as Israel - by a future Iran with its fanatical mullahs able to blackmail governments with a modest arsenal of nuclear weapons jury-rigged to Chinese medium- range [M-9 and M-11] and North Koreas intermediate-range Nodong I missiles. Washing- ton also has said Iran is seeking a chemical weap- ons arsenal utilizing insecticide and chemical plants purchased from India and Germany - a move sparked by Iraqs extensive use of poison gas on the Kurdish villages in the mid-1980s. These reports coincided with the arrival early last month of Russian Minister of Atomic Energy Viktor Mikhailov to sign an accord to repair and complete the two 1,200-megawatt reactors at the Bsher nuclear-power plant nearly completed by Germany when the revolution took place, but bombed and seriously damaged by Iraq. This week U.S. Defense Secretary William Perry, an expert on defense technology, dismissed Irans current program saying Tehran would need a decade or more to build nuclear weapons. Furthermore, Iran has not built even one reactor or missile on its own. As one Israeli expert on Iran noted, Tehran has been running a missile development program for a decade, so far without success. One Tel Aviv commentator recently noted, Iran is a weak country, economically back- ward (GNP per capita is $1,400 compared with $14,000 for Israel), torn apart from within, no vision, no government, no military capability. . . . If Irans leaders have decided to go for the nuclear option, they are doing so out of weakness and desperation. The further the nuclear weap- ons program progresses [and it will cost $30 bil- lion or more], said the writer, the further Iran will move from strengthening its conventional army, raising the living standards, education and supporting the networks of international terrorists. Yet, it is possible that Iran is thinking in terms of gestures and prestige. Obtaining by bribery two or three former Soviet nuclear warheads from Central Asia and affixing them to the Nodong I that has a range of some 600 miles and can just barely reach Israel may be the sort of use Tehran has in mind, or perhaps using it to blackmail the Gulf states and Iraq. The position of Hashemi-Rafsanjani and his relatively small support faction is far from secure. He needs Western technology and trade to rebuild Irans infrastructure. Yet his government alarms potential Western trading partners by strident anti-Western rhetoric backed up by extensive terrorist operations against exiled opponents and open-handed support and arms for Islamic politi- cal revolutionaries throughout the Islamic world. Iranian leaders seem not to understand why West- ern governments feel outraged by the slaughter of Iranian political refugees in their capitals, bomb- ings of civilian buildings, embassies and airliners, and the training and arming of revolutionary terrorists. Since last year, there have been reports of Tehrans emissaries seeking meetings in West- ern capitals with Israeli considered close to their government asking in effect why they were upset by what Iranian officials say in public. Hashemi- Rafsanjanis need for Western loans has not low- ered the confrontational tone coming. Inflation and unemployment cause many hard- ships for those least able to bear them - the poor, the unemployed and the crippled veterans of the war with Iraq. Three million Iranians receive assistance from the foundations formed to manage the property of the late Shah and his supporters. Though charges of embezzlement and corruption attach to such entities as the Foundation for the Oppressed, headed by former Iranian Revolution- ary Guards Corps commander Mohsen Rafiqdust, 55, the pull of Islamic political populism has its attractions. Hashemi-Rafsanjanis term ends in two years, barring a constitutional amendment. The nature of the successor government is in the balance. END OF EW REPORT VOLUME 13, PART ONE.