NATIONAL INTELLIGENCE DAILY FOR STAURDAY, 27 JANUARY 1990

Created: 1/27/1990

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Contents

USSR: Situation in Ihc Caucasus

: Oilwn, Exports Threatened

Germany's: The Reemergence of Berlin

Romania: Challenges to Ruling Front Mounting

Reform lenders Battle

East Germany: New Government To Be

Poland: Conirovcrsy Over Communist Assets

South Korea: Political Realignment Off to Rocky Start

Situation In flic Caucasus

Focusing on Radical Front Leaders

remains relatively calm as Moscow continues to moveleaders of the Areri People's Front. Defense Ministerin livtitiya yesterday that the military was charged withthe APF in order to preempl its bid to seizeThursday night, uniformed gunmen ransacked uHemission inase for ihe APF. and arrestedself-styled War Minister, Elibar Mamedov. Soviethim of inciting "antisocial" actions in Moscow.Gasanov. ihe APFs choice as Azerbaijan pany boss,premier of the republic yesterday by thes.v. iet

b(i)

lis arrcsl of Mamedov and ihe destruction or Azen headquarters in Moscow will further alienate many Azeris. possibly including more Azeri Central Committee and Supreme Soviet

_ talso possible lhe republic's Supreme Soviet acted on its own lo get theandidate in the key

leadership position.'

ri Front membcrsliaveease-fire on

|The

provocatiom put out of cc holdingtatue of Si Caucasus 70

Cease-FireAzerbaijan-Armenia northern border. Sporadic fighting continue;

Nagorno-Karabakh butower le>

on in Arrnen

an villages remains Tense,ussians continuing. Azeris have ower plant in the area. Nationalists ran destroyed party documents and ped establish Soviet control in the >5

years ago;

cease-fires in Nakhichevan and on the northern

Azerbanan-Armenia border may mean that moderate Front members arc still influential. But it is uncertain if they can sustain , lhe truces.ease-fire in Nagorno-Karabakh will be moreBV -j

Implicationsri Unrest for the Oil Industry

Azerbaijan yields onlyercent of total Soviet oil production, and Soviet authorities could operate lhe offshoreaccount for aboutercent of Azerbaijan'sif faced with attempts to disrupt production. The republic also manufactures aboutercent of the USSR's oilfield equipment. Most equipment needed for this winter's operations probably was shipped north before thc rivers froze,isruption of moreew months would hamper oilfield operations throughout the USSR this spring and summer. Many essential components, however, such as drill rigs and drill pipe, are produced elsewhere.

Oil ProductionImports Threatened

production in the USSR continues to decline, and Eastern t'mrome IP experience some at least temporary skortara in oil deliveries.

Soviet oil outputercent.arrels per day. lasl year. Moscow drew down domestic stocks lo offset some of lhc production drop, limiting ihe reduction in total cxpons toO b'd. hard currency customers look most of the

loscow. citing temporary Us. has cut oil deliveries to ils principal East European

deliveries io Czechoslovakia arcaownZu^KrcerTTsoiarthismay drop as muchercent for ihe year. The Sovietsthe reductions will be made.up laler so as noi to alterfor (hi

HI ear's Soviet output probably will fall belowor ihc first limerimarily because of systemic production problems. Major producing areas are mature and in decline, and the Sovieis lack the technology to exploit major new areas such as ihe North Caspian Basin and thc Barents SeaHHH|

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the, lhe Sovietsimilar decline in oil production by boosting investment sharply. Now, the leadership evidently has decided to cut investment in the energy sector to free resources for the consumer. It probably will try toontrolled decline of indigenous production while intensifying efforts to get Western help in oilfield development. Large-scale Western assistance could stabilize lotal Soviet output, but not before thc

n0

1&

abtorbH'eit Berlin and strengthen

Themergence of Berlin

Bonn is moving assertive

nd West Germany arc likely to preempt

Four-Power talks with bilateral negotiations on aviationintends to propose non-Allied flight corridors and Westairline service to Berlin

Germanys areew airportsouihofih^

[Moscow apparently hopeserbal reassertion of Four-Power rights, but inira-German developments are rapidly making the Allies' presence in Berlin irrelevant. Growing social and economic tics between East and West Berlin are reinforcing German confidence in the city's futureajor Europeaneventually tbe capitalnited German)

anuary

Crime Wave Challenging Public Force

The number of street crimes and armed robberies byassaultincreased in

by ihcta"fial Commission was killedobbery attempt at his "home on Tuesday. Lastank in Panama City was robbed by four men armed with assault rifles claiming to be Dignity Battalionimilar robbery occurred the following day. The US Southern Command says reports of heavily armed bands attacking and robbing PanaTnanian civilians have increased throughout thc country.

The Public Force still lacks the iraining, command structure, criminal investigative capability, and logistics to tackle rising crime. Complicating matters, several hundred Noriega loyalists remain at large and probably have infantry

ROMANIA: Challenge* io Ruling From Mounting

The-National Salvation Front (FSN) no longer can disguise iu lack of credibility and internal divisions; it appears headedajor confrontation with inxious. angry opposition groups this weekend, both at the roundtable talks that begin today and at the demonstrations called by the major panics for tomorrow. After several protests against thc Front's decision to run in thc May general election. President Iliescu acknowledged Thursday that the political situation is unstable, warning that anarchy would result if (he provisional government were to collapse. Several leading FSN members, including Vice President Mazilu. have resigned this week, and thc government appearse losing control over some local governments, including the wesferrtcily of Timisoara where the anti-Ccausescu uprising stancd.^Hm

onth after seizing power, the Front is struggling

to hold on in the face of increasing pressure from ami-Communist opposition groups, students, and workers. Unable to shake ofT suspicions that il is hijacking the popular revolution, the self-appointed leadership has tightened restrictionsere able to protest without incident in central Bucharest lastis seeking to exploit latent fears of possible anarchy and Hungarian irrcdentism in Transylvania]^

BULGARIA: Reform Leaden Battle Hardliners

Bulgaria's reform-minded leadership is pushing ahead withgrowing opposition within the Communist Party. Afterof an unscheduled Central Committee plenumcalled to discuss the crisis in the party. Sofiathai Communist Party organizations in the Armydisbanded.ational Assembly session broke downthe chairman of the Assembly explained that abetween opposition forces and the Communistneeded before the Assembly could adopt new measures.no other details on the Central Icidea coalition government with

breakdown ofthe Assembly session showsof reform are becoming more vocal and probablythe leadership at next week's extraordinaryoalition government, reformist panyare trying to line up suppon among the opposilion sodefeat any attempt by hardliners lo regain power. Alead lo inclusion of Ihe opposition in the governmcni as*-r*

rat

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Romania: Economic Worries Growing

The strategy of lhe National Salvation Front (FSN) to raise living standards ishort-term bid to bolster its popularity, the program will be increasingly difficult to maintain without Western assistance. The decision to divert energy and agricullural supplies from ihe export and industrial sectors has doubled consumer energy use and improved food supplies, according to Prime Minister Roman But the diversion of energy hasumber of industries to cut work hours sharply. Although Soviet energy imports are for now staving off further cujitojodustry..Moscow is concerned about Romania's ability to pay|

FSN policies aln crimping export Imports and evci far is using short Si billion toensi few momhs, Roi their growing sh

areipple effect on industrial production.olicies will make il harder to pay for the sharp increase in ode Romania's good international credit position. Bucharest so and is tapping ils foreign exchange reserves of more than food supplies. If thc political situation fails to stabilizecnous problems in persuading Western creditors to increase sure and in getting the Soviets to provide energy on crcdil. This could setownward economic spiralisruption of imports forces the closure of some enterprises lhat are not competitive or energy efficient.

EAST GERMANY: New Governmcni To Be Formed

A spokesman for Easi German opposilion gioups yesterday announced ihcir readinessonpartisan caretaker governmcni until ihe electionsay; negotiations with thc governmcni arc to begin tomorrow. Opposition demandsinimum of five Cabinetihe Foreignf.reaicr round table participation in selecting, ministers and leiiislaiion -

econstiluied itovernmeni wiih greater non-Communist participation probably will emerge by caily neat month. In the interim, thc dominant Communist faction will continue to balk at genuine power sharing, especially opposing loss of the crucial defense and economics posts Communist ministers probably will agree io

liescmtciicsi-.iup It.s

post. Thc East German Social Democrats, who believe they are fromrunners for ihc May elections, appear wary of assuming too much responsibility for ihe country beforehand. Any caretaker government almoste too weak and divided to implement tin* far-re itching reforms needed to reslorc slabn

ity.

POLAND: Controversy O'er Communist Asseis

Premier Maaowiccki's personal intervention hasquabble over the disposition of Communist party assets that might have threatened his Solidarity-led coalition Maiowiecki and other officials on Thursday persuaded Solidariiy legislators to withdraw,9 voie in the Seim. lhe bill directing the seizure of state properly held by ihc Communist party. The governmcni has.ommission lo study how io reclaim such

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^BBBMatwMirowiecki continues to expend political capital tohat legal means, rather lhan public pressure alone, guide political change. Shelving the billisk that the legislation would also threaten holdings of the Peasant and DemocraticCommunist allies now aligned wiih Solidarity. Public pressure will ensure thai Warsaw pursues Ihc Communists' wealth; anti-Communists arc lakingovcr party offices so frequently thai some local parties are vacating buildings before proicsicrs arrive.arty study found that ihc Communists' IcgnVClaimuildings and equipment worih an estimated SIO0 mj/fton is questionable, sueecsiiru! 'hai thr gpvcrnmeni commiujBn willimilar conclusion. -

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SOUTH KOREA: Polilical Realignment Off to Rocky Start

President Roh publicly warned yesterday that continued infighting might turn public opinion against the announced political merger or South Koreas three major polilical parties. Besides internal party bickering over the wisdom of that deal, the three camps are making contradictory statements about who will head the new organization id Whether il will move toabinet form nf pnvr>mmi-ni

luabbling over internal matters is likely lo heighten public skepticismime when even the mosi conservative newspapers are warning ihe new Democratic Liberal Party againsi exploiting its dominance. Roh's public warning underscores the work facine thc new party in proving it will promote compromise and stabilize politics aspecial legislative session next month will allow ihe public lo assess how well the new order works, as lawmakers struggle to revise South Korea's controversial internal p rujes for local cleciionv J| |

In Brief

Independent farmers in USSR's Russian Republic have formed group like ones in Baltic stales. Belorussia io provide legal, material, financial suppon .. reformers in leadership supportivearm bureaucracy sees threat to collectives Vj>

Latvian officials, ignoring warnings by Soviet authorities, this week closed key paper plant as environmentalove has already prevented republic's newspapers from publishing

Belgian press reports unprecedented personnel shake uj.ight key officials to be replaced

insurgent leader Savimbi to arrive in Portugalst visit as UNITA'slaims heavy fighting under way in southeast, but willingnesstoiravel suggests UNITA believes situation under control pjpj^

Kenyan President Moi arrives Monday, seeking assurances of US poliiical backing, also wants more economic, military aid. less human rightsay cite military access agreement, renewable this

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