Created: 4/1/1990

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Director of Intelligence


The Future of Eastern Europe

National Intelligence Estimate

f theith theS Intelligence Community.

Director of



The Future of Eastern Europe

Infomation available as ofasused

snce Estimate.

The fomOMiing intomgencti organifdl'ons pamcipated

in the preparation of this Estimate'

The Central IntesVgcnce Agency'

The Defense Intelligence Agency

The National Security Agency

The federal Bureau of Invcstirjtllian

The Bureau ol Intelligence md Research.

Department of State

Ihe Ofhca of Intelligence Suppo-t.

Department ol the Treasury

also participating:

Thc of the Deputy Chief of Start tor Intfflk^jenco. Deoarrmoot c4 lhe Army Tho Office of thc Di/ecior o* Naval loteftgence. Department ol the Navy The Assistant Chief ol Staff. Intelligence. Dcpdnrnoiit of the Air force Trie Director of Intelligence. rHeadQuarters. Marine Corps

This Estimate wasoe put*cMon by the National Foreign IntoHtgonce Board


The Future of Eastern Europe

Tho revolutions in Eastern Europe provide lhe basis for developing democracy and market economies. But this will notinear process,umber of countries will coniinue to face polilicalethnic turmoil, and economic backwardness.

Even with Western help. East European(bat of Eastlikely lo make only modest progress during (lie next five years.

The possibility remains ofa relapse to authoritarianism,in fhe Balkans, where thc lifting of Communist hegemony threatens to retive old ethnic animosities, civil strife, and interstate tensions. The environmental nightmare will also persist.

West Europeans are better positioned to lead in shaping the East European future, but Ihe United Slates has important advantages, among them thc desire of East Europeansounterweight to Soviet and German influence.


Key Judgments

Communist party rule in Eastern Europe is finished, and it will not beThis and thc lifting of Soviet hegemony create new opportunities for establishing representative democracies and self-sustaining marketThc way will also open for new modes of regional political and economic cooperation. Thc greatest impetus is the resolve of East Europeans and their leaders to achieve reforms by emulating Western economic and political models.

Thc evolution of the region will make thc designation "Eastern Europe" increasingly imprecise, as East-Central EuropeanCzechoslovakia. Hungary, and Eastahead in closer association with the West, and thcRomania,ore separate role. Yugoslavia, if it holds together, will continue close tics to the West.'

In some East European countries, however, we will see political instability and perhapsevival of authoritarianism, amidst lingering economic backwardness and recmerging ethnic animosities. Despite Western aid and investment, lhc East Europeanlhat of Eastlikely to make only uneven progress durine thc five-year timcspan of this Estimate.

Ultimately, prospects for healthy democracy will be closely tied to thc way in which East Europeans resolve their systemic economic crisis:

Western aid will be essential, especially in thc early stages, lo make up the "capital deficit" required to cushion any transition to market economics.

Such aid will have to be linked to private investment, access lo Western markets, and long-term programs designed lo develop the skills and institutions necessaryodern economy, as well as to fullof indigenous resources for investment.

The outlook is more promising for thc countries in East-Centralparticularly East Germany, which will rapidly merge into West Germany's economy. Elsewhere, several countries have good potential as sites for

' The Assistant Secretary of Stale for Intelligence am! Research. Department af Stale, believe/ that broad regional subgroupings adapted for analyticalas Fast-Central Europe and thettmet obscure the differences between countries.

Wcsiern-owned manufacturing plants wiih preferential entree to the European Community. Thc agricultural sector has the capability for quick turnaround.

But the strains of even successful economic reform that is accompanied by inflation and unemployment wilt test the patience of people fed up with economic hardship and traditionally cynical about political promises. Lingering economic crises and resurgent ethnic divisions may fuel chronic political instability and interstate tensions, notably in the Balkans:

The major near-term danger to democratization in East-Central Europe is that the whole process will run out of steam as popular euphoria wanes and little substantial economic improvement has occurred. Tbe result wouldaralyzing political impasse or prolonged "muddlings in the Third World.

Thc worst caselikely in Romania andnoteturn to Communist regimesurn to authoritarianism, growing repression of ethnic minorities, civil strife, and even the onset of greater interstate frictions,

Meanwhile, despite the Albanian regime's readiness to use brutalmeasures to suppress dissent, it is likely that revolution and reform will come to Albania within five years.

Thc Soviet Union's size, geographical proximity, security concerns, raw materials, and market will continue to makeajor factor in Eastern Europe. But even an aggressive. post-Gorbachev Kremlin leadership wouldcouldalter the course of events there. Moscow will seek to replace its lost domination of Eastern Europe with the advantagesroader engagement with Europehole.

A united Germany, however, will move even more assertively into Eastern Europe as an economic and political influence in the vanguard of thc European Community. This willource of worry for most East Europeans, particularly the Poles. This concern, however, will bebecause Germany wilt be democratic and integrated into the European Community. German influence will be somewhat diluted as other Western countries also build economic and polilical ties to thc region. Even so. Germany's weight and occasional insensitivity will raise hackles.

East European events wilt continue to take placeackdrop of declining relevance for thc Warsaw Pact and NATO. The Warsaw Pactilitary alliance is essentially dead, and Soviet efforts to convert it into a


political alliance will ultimately fail. Most East European states will aspire to build links to Western Europe and will hope that the CSCE process canasis for such broader security arrangements.

East Europeans will continue to seek substantial US participation in their developmentounterweight to thc Soviets and Germans. In lhe region where both world wars and thc Cold Waremocratic, prosperous, and independent Eastern Europe would be an element of stability rather than an object of great power rivalry in the borderlands between East and West.


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