NATIONAL INTELLIGENCE DAILY FOR 2 FEBRUARY 1990

Created: 2/2/1990

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^NATIONAL INTELLIGENCE DAILY

Warning Page

Soviet Response to Modiovr's Plan

Mod row hai publicly said he discussed his proposal wiih thc Soviets during his visit Ihis week. and Moscow probably bad some influence over the terms of the plan. The role of the Four Powers and the alliances, the implication that unification would be lengthy, and the continued observance of legal obligations during the process arc consistent wtttrpreviously stated Soviet views on how unification should evolve Moscow probably will welcome ModroWs notion of postponing peace treaty talks until after unification has occurred, viewing it as legitimizing the presence of US and Soviet troops in Germany during the unification process, which Moscow believes is desirable for the stability of East Germany?

The Soviets undoubtedly will largely support the proposal, although they may be somewhat uneasy about Modrow'i com men is on German neutrality. Their public reservations about unification, however, have lost force since President Gorbachev has acknowledged iu inevitability and since East Berlin has tabled an outline for the process. Moscow probably believes that ModroWs speech will help maintain short-term stability in East Germany and that it puts Bonn on notice of the necessily for an ordered procedure to take Four Power rights into account. Moscow may also view thc preconditions laid out by Modrow as useful for slowing unification. But the Soviets undoubtedlyhey have few cards to play and probably will focus on safeguarding their own interests as the process unfolds.

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Ion Stiff el

row Floats Unification Proposal

East German Premier Modrow't ant/kalian plan will only marginally improve the Communists' prospects in next month's free elections hut could sharpen H'ost German pubhcr whether neutralitybe the price for unity.

Modrow yesterdayour-step plan for German unification. He emphasized thai Four I'owcr cooperation and European iniegrulion through CSCE would be prerequisites. He also said ihe two Germany* should honor their alliance commitments but suggested unification would involve some tywof militaryibljTeveninal peace treaty. Y? -j

cooperation and the CSCfc proposals agree with Currei case public prtssure for rai beleaguerednified Germany He almo Communists' poor electors politicianefinite ui noi likelymred ^Mfe

Mod row's winbi|uous rema West German

I Modrow no doubt also hopes to encourageVcsi Gcrmar politicians who warn innified Germany's tiesATO

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Minister, Cabinet Resin"

The resignation ofBulgaria's prime Minister end Council of Ministers yesterday ond the failure of thr party eongms to make subtianiial reformsoliiical crisis that may leadoalition gorernmrnr tarl) as ek dtpMS* .

Prime Minister Gcorgi Atanasov and his cabinet resignedintense criticism at the parly

(more reassignmems and purges wilt be announced today.

The cdngrrst passed new party statutes yesterday to replace the Central Commiitee and Politburo, separate party and governmenteliminate ihe concept of democratic centralism, and limit Ihe number of terms party leaders may serve. More radical reforms, such as changing the party's name and eliminating party organixaiions in workplaces, however, were not approved.eformist faction to announcejl vvilleparate Bulgarian Socialist Partv neat week.

Comment: The dissolution of Ihc cabinet and failure of the party congress to adopt significant reforms show the inability of thc Communist leadership to respond to party and public discontent,r economic woes AV* growing unpopularity and association with ihc Zhivkor regime made his resignation unavoidable. The resignation of theinisters, however, stemmed from its failure to address Bulgaria's growing economic difnc.iii

Petar Mladenov probably will resign as party General Secretary but remain head of state. Some key hardline pany leaders are likely to fall as ihe Central Committee is replacedmaller Supreme Council. Reformist Politburo members Aleksander Ulov and Andrey Lukanov will probably become party leader and Primeespectively.

The regime hopes the changes will help it regain credibility, and ii probably will seek to entice thc opposition Union of Democratic Forcesoalition governmentew weeks, implicating the UDF in the economic crisis and undercutting its popularity before elections set for May. Thc UDF rejected such calls earlier this week and probably will pressaretaker government of civil servants, but the public senselrcpenini'. crisis nutvforcc it to join

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Election laioks Close )

inio Sunday's election, opposition Social Christian Unity Pany candidate- Rafael Angel Calderonarrow lead in the polls over the ruling National Liberation Party's Carlos Manuel Casullo. Boih arc viewed as moderates by iheir respective parties and both arc pro-US. Their lackluster campaigns have largely steered clear of important issues in favor of penonal attacks. Calderon has benefitederies of scandals (hat have tainted prominent ruling-party members. Castillo's chances apparently were bolstered by his party's superior organization andate push highlighting his proposed sociaLprograms. VwaMLl V7

Calderon and Castilloare likely to continue President

inomic p

ter Costa Rican iATT andur ageell asssume Arias's icrican peace

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ARAB STATES: Considering Summitanon

Arab League's TripartiteArabia. Morocco, andcalled for consultations on convening an extraordinary summit to consider the political and military stalemi in Lebanon

kit is unlikelyummit will be organized on short notice, particularly since Arab leaders will almost cenainly prefer to leave the Lebanon issue to the Tripartite Committeeattitude may bebe loath to jeopardizcTits newly restored lies to Syria, and few Arabsense of urgency over thc latest Christian clashes.aguc summit is held, it probably will be after the regular League foreign ministers meeting next month and couldarieiy of topics, includingmmigration to

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USSR: Aid Policies Toward Vietnam Stiffening

projects'such as power stations arc likely to dry up. Moscow reportedly will try to offset this by increasing joint ventures in Vietnam Recent press reports claim Soviet Vice Minister of Defense Kochetov told the Vietnamese lasl November that Moscow would cut aid byhird, starlingalpNNftaV j

Comment: Although Moscow Is trying to reduce the costs of its ties to Vietnam, it wants toerious deterioration while China is -improving lies to Hanoi toetnam sucks to orthodox Communism. Nevertheless, economic aid. the amount by which Soviet exports to Vietnam exceed imports, already may be falling. Soviel data for thc first half of last year show Hanoi's trade deficit with the USSR almostercent less than in thc same periodf Moscow reduces creditvas reported, ils nel economic aid to Vielnam would be lesAlhtD-bJlLofpeak amount ofillior

USSR: Consumer Goods Program in Trouble

^Moscow's urgent program

production of consumer goods this year is headed for trouble. Consumer industries across the country arc reporting severe shortages of raw materials, often blaming local protectionism for disrupting the flow of supplies. Some producers reportedly are refusing to honor commitments to enterprises in other republics on "ethnicespite orders fiom Moscow aaMaaV V" >

- Comment: Moscow is belling heavilyan produce more consumer goods to ease popular discontent and buy support for peresiroyka. To do this, it has attempted io reasscn central control over production and distribution, but ethnic conflicts, declining labor discipline, and transportation bottlenecks arc hampering the effort. Moreover, enterprise unresponsiveness is weakening traditional levers of control, such as production plans and state orders.esult. Moscow's consumer progranw* likely to fall well short of us goals.

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