Warning Page
Contents
Situation Report
Ii^epencltnce Drives Acrclftait
5
Situaiion Report
Cambodia: Peace Talks Resume Next Wet*
7
New Friction in South
Mitterrand Under Fire
Salvador: Army Launches Major Operations
Africa: Nalional Party I'repannf. for Talksadt^pjrtbsMaHIHate
10
Brief
1
Analyses
New Balance of Power in Foreign Policy
Discontent Over Economic Conditions Growing
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Situation Report
Yel'tsin showed his dominance yesterday by controlling appointments
to the security ministries and by pushing GorbachevhoroughZ
Yel'tsin onyesterday appeared to be acceding to Ycl'tsin's
predominant role. When porbachev addressed the Russian
legislature, after meetings with Yel'tsin and then with thc Russian President and eight other republic leaden. Yel'tsin clearly ran the show. He controlled the agenda and gave Gorbachev stage directions-Russian deputies alternately applauded and badgered thtrSdvict
from lhe floor. Gorbachev pledged ioecree
pi
approving all the decrees Yel'tsin issued during the crisis. In addiiion, he announced an agreement with Yel'tsin that in case either was incapacitated, he would be replaced by the other. Gorbachev expressed reservations, however, about Ycl'tsin's steps to root the Communist Party oul of Russianinsiitutions and said that there should notitch huniffl^^ar
^asssflaMflVfcTYel'ttin is the main political force shaping policy in ihc USSR. Gorbachev has acceptedoalition government lhat eventually mayinvolvc ajoint center-republic executive body and personnel changes that put reformers in charge of the center's key institutions, concessions that suggest he realizes he canole only by coo periling with Yeltsin in transferring power to the republics and by implementing major reforms. In coming days, however, there will be pressure for much greater transformations, including republic demands for greater powers under thc union treaty and for the removal of the Communist Party from stale, security, and economic structures nationwide. Gorbachev's reluctance to help hasten the party's decline shows that he docs not yet fully understand the public's demands or the inevitability of dramatic chant
said yesterday lhe entire Cabinet of Ministers would have to resign. He said he had discussed new appointments with Yel'tsin, and the two already had agreed on new leaders for the Ministry of Defense, the KGB, and Ihc MVD. Other announced changes include the dismissal of Foreign Minister Aleksandr Bessmcnnykh and USSR Supreme Soviet Chairman Anatoliy Luk'yanov and the appointment f armyVladimir Lobov a? Chief of (he General SlafT. s
continued
1
Communist Pkrty Tottering Across USSR
After sealing Communist Party Central Committee headquarters, police seiaed the headquarters ot-ihe Moscow party organization and impounded documents, which will be sciulinixcdfor evidence of partyhe coup altempl. Thc leaders of thc Kazakh. Uzbek, and Moldovan Communist panics quit Ihe union party Politburo yesterday, andurn member. Alfred Rubiks. Yuriy Prokofycv. mm* Oleg Shenin were arrested. The military, the KGB. ud other key natxwval organoationsbanded their party cells, while AVartfa severed lieshe party leadership. New Defense Minister Shaoosfcrnkov has
ft 'mmediate resignation from the pany and ha. ordered the General Suff to abolish all political organs tn lhe miliury. With Gorbachev looking on. Yel'tsinecree suspending all Communist Party activity throughoutending an invesiigation or the coup. In an effort lo shore up tbe situation, party leaders iaiued disclaimers of union party involvement in Ihc coup, and Gorbachev warned the Ruasian les.sJature aaainal lomenting anti-Communist hysteria.
The party is nowewspaper, its headquarters has been seized, it is without funds, and ihe general populace hales it. An investigatKMi is certain to reveal significant partyhe coup attempt, which will lead lo the arrests of more pany figures and accelerate its decline. Further party defections and protests are likely throughout the country. Ueiections will hu the hardest in the provinces, the last remaining bastion of party influence, incse developments will force Gorbachev lo renounce the party or risk ceding much of his remaining legitimacy to Yel'tsin and others.
l
J'SGS
announcement! yesterOi> are oni> the ofSome ministries may be eliminated as Iheirto lhe republics, and (he remaining ones face further
The appointmentew prime mini tier will be critical. In rciponic questioning at the Russian Parliament yesterdayto agree (hat the post should goepresentative of(he failure of Gorfiarrev and republic leacer*Freeonsuggest* (he malter icmains con trove rslalyesterday temporarily suspended the publication ofnewspapers, includingand tired the generalTASS and lhe head of the Novosii news agency. TASS journalists nd promised to reform the agency and become a3
independent press The acting central media chief yesterday halted thepolitical parlies in the official Soviet broadcasting | MjaaV
Yel'tsin Grabs fur Yel'lun has moved quickly to farther weaken central controlof Rassiaa Russia's economy, issuing decrees that call for the transfer ofproperty and enterprises to republic Jurisdiction by yearend.
The decrees abo call for Russian jurisdiction over the all-union
supply organization, which still controls most wholesale distribution,
the creationussian gold reserve and diamond and hard
currency funds, and setsustoms service. Yel'tsin also has issued
a decree that empowers him to appoint and dismiss ministers and
administrative heads throughout the republic and that specifically tv
dismisses eight executive committee chairmen for thc regions of
Nizhni Novgorod. Ryazjji..Tambov. Tula, Ulyanovsk. Lipetsk.
Amur,aaV
grab authority he has been seeking in union treaty ncgotiaiiortsexecutive power. Yel'tsin hopes toof political and economic reforms lhal haveby locally elected councils dominated byYel'tsin probably believes that immediate
continued
changes arc needed io ensure compliance with economic directives, his newth fragile, emerging markets and stifle economiclH|V
USSR: Rising Tide of An ti-Communism Outside Russia
- account,eader Alfred Rub.ksany members supporting coup being fired.
on pan, made more specificUnius headquartershonzes seizure of other pan, propeny. demandYnana overemn statue in Vilnius
Estonia: pany banned fromenin statue toppled.
banned from law-enforcement, securily paid oanv members prohib.ted from governmentazakh pany to leave CPSlX * y
Lenin museum. leader of Kirghiz
SS&'S^JS^ d froni CPSU poU,buro in
Belorussla. Azerbaijan. Turkmenlya: no action reportedany.
Azerbaijan Powder Kcji
leastemonstrators proicsimg (he Azerbaijan leadership's procoup posilion were arrested bv republic inicrioi ministry (MVD)
d severalependence Azen lhe republic'!
lei live
r will unseat Muialibov and ihe ship. Even if members ofhemselves as reform ireed to give way to nationalists gnty. If Muialibov tries io hang enter will no longer assist him. against Armenians, may be less
* in Foreign Relations
Gorbachev said yesterday hc had fired Foreignfor his failureppose Ihc coup.he had declined Uie Emergency Comrhitiee's invitationadding lhal former KCiJJ Chief Kryuehkov had wanted' on ihc
ns Thc
rowing criiicism ofthe rsicnl io which lenkiiihc Emergency Comm.tice orsuggests ihey face anhakeup ofcould ndumber of officials, including RogachevFirsi Deputy Foreign Minister Kviumskiy. whosignificant influence Over SoviettM,
uencc over Soviet policy in nomics Ministryimilar shakru
b3
*3
ndependence Drives Accelerate
' ir'"'. lettrio, Utkmamio, mmd Georgia,by ihe collaj.tr
oy ctnirai amiaor,iy, art unity to past Jor ,mmia Armenia and Moidora wilt practtd mora llowty.
b3
The Baltic republics have moved wiih particular speed againstvestiges of central control; the Latvians andtaken control of their republics" Communist PartyEstonians arc asserting their authority over majorenterprises and nave demanded that til XGB personnelfrom the republic.iflp^|nHBHMHPSnegurally earlier Ihts week*hatconsidering discussion of Moldovan independence at thesession. Armenia is planning to go ahead withSeptember independence referendum, bul Presidentthis week that republic officials may rethink certain aspectsindependence strategy, perhaps with an eye to shortening
{,3
: dramatic ihifl in power at lhe center and "X
ascendancy of Yel'tsin. who has proved sympathetic tomovemenis. offer ihe breakaway republicsto leave the union more quickly on more favorablewould have been possible. Russia win be the criticalby acting as an intermediary in independence negotiations with center or by pushingnion treaty that greatly eases thesecession. With changeovers at the Interior and Defensethe KGB. tbel be much less able to suppress republic movemenis. and harassment of thc Baltic republicsnd
If granted Independence, (he Baltic republics could function ai independent slatesew months, although finalizing arrangements on such issue* as Soviet troop stationing will take longer Georgia probably will also claim independence as soon as the center allows it. Territorial disputes and deteriorating economies, however, may lead Armenia and Moldova to hesitate, hoping that
Yel tun will use his increased power tonion ,
thai crcatei ihr much looin confederaiion Ihey mightS
0
Croatia it threatening to broaden It, conflict with Serbia leader Miloserlc I, lightening hi, political grip at home.
Croatian President Tudjman on Thursday issued an ultimatum to the collective Presidency threatening to lake "all necessary steps" io defend his republic unless military operations againstnd byugust Fighting between Croat and Serb forces continued yeslerday in Slavonic and south of Zagreb llflkfa*.
Milosevic Tighten. Hold
does not command Ihe miliury strength to cnlorce any ultimatum against the Serbs or Ihc Army, but his deiperat:on may lead him to approve attacks that would broaden the conflict. Army and Serb forces almost certainly would retaliate foicefullyand may moveto consolidate Iheir gains in Croatia before Tudjman's deadline.
success probably has emboldened Milosevicconcessions he was compelled lo grant io thc Serb medialast March in Belgrade.
Kxport Guarantees lo Slovenia
Vienna next month will extend export guarantees to Slovenia, as Germany did two weeks
MgWlsasl Vienna and Bonn also may lenew efforts lo developconsensus for recognumg Slovenia and possiblyrepublics now move quickly
independence and win international recognition.
IS
LEBANON: Ne- Friction in South
The Israeli-backed Army of South Lebanon yesterday demandedevacuate three Shia villages in anas controlled by
le'ur.csc Army north of the Israeli securityaaBaBBBaWThe ASL and Lebanese Army troops deployed nearby exchanged fire; both forces also clashed with Islamic reals guerrillas in separate incidents ihis week
I though uie Lebanese Government does not want "to nsk Israeli involvement, it cannot ignore tbcrovocation for fear Ihat hs own efforts to regain credibility will suffer. Inaction against the ASL would increase Muslim complaints, especially since the Army began door-ic-door searches for weapons last Thursday in areas Including the Palestinian camps. Beirui almost certainly will try to use diplomatic contacts to calm the situation but will not heiitatc lo respond militarily to further ASL affronts The Lebanese Government hopes to begin shutting down Hiiballah facilities this
robably willormal go-ahead from Syria. Hj^i *y
FRANCE; Miftcrraad Under Fire
President Mitterrand is being heavily criticized for his hesitant reaction to thc Soviet coup, and his ruling Socialists could suffer in regional elections next yearesult. Hc appeared willing to accept lhe coup Monday but then toughened hii nance Wednesday when the coup unraveled. The right Ls also arguing thai uncertainties in thc USSR require that cuts in the defense budget be restored Although Defense Minister Joxe hadimilar position before the coup Icflwingan: mere social spend.ng instead
bubbbbbbbbb* Mitterrand now appears vulnerable on foreign policy, anwhich hc has excelled.lurry of diplomatic activity meantthc initiative, Im sagging popularity could further dimelectoral prospects in the coming regional elections andelection
1 heepeated criticism of Mitierrand's performance and internal Socialist divisions over budget priorities will dash the party's, hopesacade of unity ihc electionsilBPaBBl
fas
EL SALVADOR: Army launches Major Operations
Government force* have begun large-scale sweep operation! throughout Ihe FMLN insurgents' base areas in northern El Salvador in the past week. The Army has two of its five elite counter insurgency battalions in the rebel stronghold of non ben. Morazan Department, where it has never before mounted such large operations, and has deployed the other three to other FMLN bastions. In response. Ihe guerrillas fired an unidentified surface-to-air missileround attack aircraft on Tuesday. The FMLN also claims Army units -have clashed with civiliansesettlement camp in Moraran. San Salvador police uncovered two weapons cache- this week that includeds andounds of
sustained Army offensive would severely disrupt the ability to use ibeir bases as logistic corridors and staging areas. The government operations and arms seizures could also jeopardize FMLN plans for attacks in other parts of the country, articularly San Salvador. The rebels' first useAM in nearlyonths suggests the military is exerting pressure in areas Iheonsiders critical. Insurgent claims of military attacks on civilians and other human rtghu abuses are likely to increase as the armed
ar isolated, guerrilla-dominated resettlement camps.
SOUTH AFRICA: National Party Preparing for Talks
President de Klerk has called an extraordinary congress of hla ruling National Panyeptember to reveal detailed proposalsew South African constitution to be negotiated with black leaders. Hcuse thc congress to press party leaders to endorse the proposals, which must be approved by the four provincial branches. Theo haseading advocate of negotiations to thc new position or secretary general and has charged him with preparing for talks with Wackleadcrs and with building party membership among nonwhucs.
PDeecision topecial congress, the fifthparty look powerndicates growing confidence thatprocess isatershed; until now.onstitutional proposals. The congress is set forbefore Pretona, the ANC. and Inkatha meet lo sign aplan io end township violence and appears timed foron the negotiations. Governmcni and ANC officialsoptimistic that thc peace accord andN role in repatriating thousands of exiles havem.conference on constltulional principles andANCs demand for an interim ""
f
CHINA: US ebrporrs Ltitag Share-
Although China's imports grew atpercem nnnualrough June, US suppliers are losing ground because of Beijing's import barriers and growing foreign compeiilion. In Ihe first six months of this year. Chinese imports from the US wereercent
re,J. "me per">d year' ,nd Chinese statisticsUS share of China's market actually declined despitedemand for imgons. Japanese andoercent.Taiwan and South Kprca mode eveninroads, albeit from smaller 1 "
ne key USlimber, andareup because of China's rapid industrial growth. Because
ewimpon
restrictions have disproportionately hampered oiher importantSale, to Chin, of USg equipmentfor example, were nearlyercent less than in the sameyear. The price advantage thai has helped US primarygrow so far ihi. year, moreover; could be eroded if lhecontinues to strengthen. China's preference forand semifinished goods used in exports will continuesuppher, from Taiwan. Hong Kong, and South Korea.haveive-year slide in market share, in pJnstrength of Tokyo's hela to Bcmrin overcoming economic
South Korea accepted North Korea's proposal to delay prime ministers meeting until late October'yongyang may need I naidciBwiIlingness lo accept North's nonaggressionf
Taiwan suspended commercial flights to Vietnam yesterday,after making first ones inhinaHanoi to limitilateral trade. Taiwan's /investment probably will still grow.
opposition rejoined stalled nalional conferenceniistingatra delegates brought in by regime bef compromise not reachedJ_gpposition will again walk oui. probably call for generalf*|
Togo's polilical reform conference yesterday stripped President Eyadcma of mostadical opposition still hoping lo remove hir
hree main opposition parties on Thursdayaccelerated reformuch cooperation has beenof Soviet coup adding impejut^ continuedelection prospects ncs'. yeai y
Special Analysis
New Balance or Powerrclgn Policy
Although Sovietfortiga policy will no lowgcr be constrained by Ibe need lo appease hardliners, ibe cealtr must mow accept increased input from ihe republics, primarily Russia. Tha emerging leadership will foots ia eomimg months oa domestic political issues, bat economic imperatives and pressure from tha republics will, such issues as arms control*
The search Tor economic assistance will dominate the agendas ofthe center and the republics and will encourage greater cooperation with the West-and other potential donors. The emerging leadership will expect the triumph of reform to make the West more forthcoming on economic aid and on thc integration ofthe USSR into international economic institutions. Despite the new regime's recognition (hat an apparently coherent economic policy will encourage greater Western aid and investment, competing republic demands for control over aid distribution may complicate this effort
Secant) Policy
The greatest effect of the failed coup is likely to he on security policy. Thc preponderant traditionalist influence in arms control decisionmaking that had constrained Gorbachev's ambitious agenda will be sharply reduced. Pressure from (he republics will reinforceconomic imperative to accelerate cuts in military spending and almost certainly will lead to further force reductions and new measures to reassure the West aboul Soviet military intentions and encourage it to provide more
The diminished influence of traditionalists concerned aboulprestige and security will also facilitate resolution ofwith Germany and the East Earopeaa countries.probably win more readily back away from demandssecurity provisions in new bilateral treaties withWarsaw Pact allies. They are likely to be more amenableon issues such as the schedule of their withdrawaland German compensation issues: they will continuebard, however, to ease the serious econom ic and 'fiin associated *nhjlhceturning Sovjel
most Ol *hich areussia. Belorussia. and Ukraine.fj /
RcgloaaJ
The demise of the traditionalists and pressure from the republicaregional policies that promote cooperaiion with thethai further reduce the burden of commiimer.is to ThirdThc Soviets will continue to seek an active rok in thepeace process and to back efforts to control thc flow of armsregion. The post coup leadership probably will moveties to Israel, but it will offer reassurances of support for .positions in the peace conference.'
The Soviets probably will be cooler toward countries lhalfor the coup and clients who remained silent. Relationsprobably win deteriorate as Gorbachev and other Sovietthat Beijing privately welcomed the coup, and thc removalhardliners will weaken ties to Caba, Iraq, and Afghanistan;probably will be more willing lo compromise on the timingPresident Naiibutlah's departure and to cut assistance to Kabul /Havana.'
Thc strengthening of reformers willll towardregional political and economic influence, at the cipenseclients. As lhe USSR seeks more aid from SouthJapan. Its support for North Korea almost certainly willrapidly, and it may be more prepared lo make concessionsNorthern Territories, but Russia will demand thai any/
A Caveat
The post coup leadership wilt accelerate positive trendspolicy, but widespread personnel changes inMinistry and elsewhere may paralyze policy formulationlime. The loss of expertise, the emergence of conflicting voices,preoccupation with domestic maljers.miiy.mnkc it difficult Lreach any hut the most urgent isioni -
Special Analysis
Over Economic Conditions Growing
Popular discontent over President Rafsanjani's economic reform program is mounting and has produced demonstrations and riots in the past month. Rafsanjani, howavtr, probably believes continued reform Is hay to retiring tba economy and, ultimately, to retaining his political
L V
Last year Rafsanjani announced sweeping economic reforms anduntber of initiatives in ihc live-year economic development plan. His proposals include unifying multiple exchange rates and devaluing the rial;umber of state companies, most of which arc losing money; opening up the economy to foreign investment and other foreign financing; and removing subsidies on most basic commodities and reducing transfers lo municipalities in order to help reduce the mounting government budget deficit. Iran's rapidly growing population, however, will put increased demands on lhe government to provide basic-services, complicating efforts to restrain the
to Reform
Dissatisfaction with the reform effort almost certainly isarson, bombings, and protests in Tehran. Esfahan. Tabriz,Many Iranians say recent price hikes on basicwith the rising cost of housing and other basicit hard to make ends/
Rafsanjani's radical poliiical opponents are trying to exploit growing
" jisinabjliiyjo improve living conditions, ^
hardliners are not (Up
0 derail the reform program, however, because many of the policies they advocate, including strict adherence to Islamicloreign economic participation, arc widely unpopular.
continued
Road Ahead
Feai of further unnui and criticism by polilical opponents probably will constrain lhe economic reform effort in the next several months as Rafsanjani tries lo adjusi the pace and scope of implementation. Iran's complex economic problems cannot be cured quickly or painlessly; Rafsanjani must balance the costs and benefits of economic restructuring, particularly tbe impact on the public and foreign Investors. Rapid reform could ignite major disturbances and political maneuvering against him, bul proceeding too slowly couldu rt her deterioration in living conditions.i"
J?2
Rafsanjani's economic development plan indicates he probably believes pushing ahead with economic reformey to the revival of the economy and, ultimately, to his political standing. He ia likely to expand his media campaign to counter radical criticism of his economic policies and to prepare tbc public for further reform by cautioning lhat the road to recovery is long- Rafsanjani will try to curb inflation by cracking down on "economicspecially merchants who raise pricese probably will interrsify efforts in irru'f aid, particularly World Bank and IMF loans.
Original document.
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