THE FEDERAL REPUBLIC OF GERMANY SEEMS TO HAVE BEEN SELECTED AS A TARGET OF RESUMED PALESTINIAN TERRORIST ACTIVITY FOR THESE REASONS: (1) CLOSE GERMAN AND ISRAELI DIPLOMATIC AND ECONOMIC TIES, (2) STRONG LINKS BETWEEN GERMAN AND PALESTINIAN TERRORIST GROUPS, AND (3) THE LARGE MIDDLE EASTERN AND PALESTINIAN POPULATION WORKING OR STUDYING IN GERMANY. IN ADDITION TO THIS, COUNTRIES THAT BORDER GERMANY HAVE INADEQUATE SECURITY WITH FACILITATES ENTRY INTO GERMANY. BOMBINGS, ARRESTS OF PALESTINIAN-TRAINED PERSONS, AND THE CONFISCATION OF EXPLOSIVES IN GERMANY DURING APRIL 1979 ARE INDICATORS OF TERRORIST PLANS TO RESUME ACTIVITIES. THE EXTENT OF TIES BETWEEN GERMAN AND PALESTINIAN TERRORIST GROUPS IS EXPLAINED, PALESTINIAN TRAINING NOTED, AND JOINT OPERATIONS RECORDED. OVERALL, PALESTINIAN TERRORIST OPERATIONS SINCE 1970 HAVE FOCUSED ON THE MIDDLE EAST AND EUROPE. INCIDENTS ARE LISTED BY COUNTRY AND PERCENTAGE OF THE EUROPEAN TOTAL, WITH GERMANY BEING THE VICTIM OF 22 PERCENT OF THE INCIDENTS. IN EVALUATING ACTIONS BY TACTIC, 34 PERCENT WERE BOMBINGS AND 27 PERCENT INVOLVED FACILITY ATTACKS. THE REPORT CONCLUDES THAT IF PALESTINIAN OPERATIONS IN EUROPE FOLLOW THE PATTERN ESTABLISHED OVER THE PAST 19 YEARS, THE PROBABLE TARGETS WILL BE BUSINESS INSTALLATIONS, AND BOMBINGS WILL BE THE TACTIC USED. AIRLINE OFFICES HAVE ALSO BEEN TARGETS. TABLES ACCOMPANY THE TEXT. (RFC)