Created: 11/29/1989

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SUBJECT; Eastern Europe On The Eve Of Tho Malta Meeting


Overview: Massive public pressure,uccessful general strike this week, led to the historic vote in parliament on Wednesday to end one-party rule. The demoralized leadership has been purged of most of its old guard members and divisions in government and Communist party ranks are deepening- The opposition has coalescedroup of dissidents and reformers called Civic Forum, which is demanding freereearket economy, and an end to the Communist Party's monopoly. The opposition will continue to press for accelerated liberalization in the weeks ahead.

Next Key.Event: Buoyed by the successful nationwide strike, opposition leaders will be watching closely how Premier Adamec honors his agreement toroad coalition governmentecember and to push for democratic reforms. The new government will be expected to move rapidly toimetable for free elections, and almost certainly will come under renewed public pressure if it does not. Reform members of the party are pushing to move up the extraordinary party congress that has been called foranuary. Party reformists almost certainly will use the congress to press for removing the remaining hardliners andeform-oriented Central Committee. I

reached on was prepared





Pvcrview: In the faco of continued large-scalend emigration to the West,rowing grass roots rebellion within its own ranks, tha new East German leadership promised unprecedented reforms to open up the political system and decentralize management of the economy. Contacts with West Germany have increased dramaticallyariety of fronts and have increased discussion of reunification. The regime remains under popular pressure to hold democratic elections in the near

future .

Next Key Event: The next few weeks likely will see additional movement toward political liberalization. Roundtable discussions between the government and the opposition, tentatively est to boglnecember, will focus mainly on electoral reform, probably will proceed in tandem with parliamentary talks on this issue, and possibly will increase pressure for free elections. An extraordinary party congress scheduledecember likely will sack party leader Krenz,eformist Central Committee, and revamp the party program. Some in the party may even pressote to reconstitute the partyocial democratic organization. During Chancellor Kohl's visit, scheduled to begin onecember, West German economic aid will be the number one topic for the East Germans. The East Germans also likely will push for restarting tha inter-German security dialogue and almost certainly will want to follow up on Kohl's proposal earlier this weekorman confederation. H 1


Overview: The Mazowiecki government, Poland's first postwar non-Communist government, is gradually dismantling the Stalinist system of controls and laying the groundwork for rapid movementarket economy. Despite continuing inflation and shortages, the population has generally romained calm, but its patience will bo triod this winter. Warsaw no doubt is pleased with recent additions to the Western aid package, but worrios about the ability of Western donors to provide the right kind of assistance when needed.

Next Kev Event: Warsaw will be holding its breath while the IMF resumes negotiations with Polish officials next weektandby agreement. Warsaw wants toetter of intent by tha and of the year to facilitate Western contributions to Warsaw's requested SI billion Stabilization Fund and to help regain access to Western bank loans. The Mazowiecki government realizesey element in its staying power is its ability to gain Western financialfrom tha United States and Wost Germany. The Communist party congress scheduled to begin onanuary likely will resultormal split between

democratic and hardline factions, which will further reduceon the reform process.


Overview: Hungary is also moving to terminate traditional Communist party rule. The Communist party has renounced its dictatorial role and the resurgent legislature has laid the groundwork for Hungary's transition to parliamentary democracy by revamping the constitution and legalizing opposition parties. Hungary's growing liberalization has ledeorientation of its foreign and defense policies. Recent evidence indicates increased consultation with Western countriesariety of security and other multilateral issues, as well as public questioning of Warsaw Pact ties. Eventual withdrawal from the Pact is an increasingly open topic of discussion, and pressure to pull out almost certainly will intensify dramatically after next year's parliamentary elections.

Next Kev Event: The National Assembly, which is to begin its noxt session in mid-December, will continue to be the most prominent forum for debating proposed reforms. Topping the agenda will be deciding the date of next year's parliamentarynoweasonablewill likely result in the massive defeat of the now ruling Socialist party and ito possible exclusion from the next government. The Assembly will also reconsider the government's economic program, but almost certainly will wait until after the elections to undertake the tough austerity measures needed to shore up Budapest's shaky financial position.


Overview: New party chief Mladenov, who replaced longtimeZhivkov in November, has promised to open up theand has taken some steps to lessen repressiondissident party members. He has notho likelythat would lessen the party'sor allow opposition parties. He actually appears toto restrict or discourage further publiclimit dissident activity. Opposition leaders,of Mladenov's willingness to implement radicalawait the results of next month's party plenumwhether to take to the streets again.

Noxfr Key Event: The party plenum onecemberational Assembly session onecember willest of Mladenov's intentions. He probably will eliminate the remaining hardliners from the Politburo and appoint moderates to the party and government leadership. The regime probably also will take measures to stabilize Bulgaria's finances and improve the availability of consumer goods, but is not likely to adopt significant economic reforms. These moves would leave the party



in control of the levers of power while givingbreathing room.


Ethnic tensions and economic problems continue to threaten stability in Yugoslavia. The ongoing trialormer ethnic Albanian political leader has provoked new clashes between ethnic Albanians and security forces as well as condemnation of Serbian-sponsored repression in Kosovo throughout the more liberal northern republics. As the economy continues to deteriorate, the federal legislature remains unable to reach agreement on President Harkovic's proposed program of free-market reforms. In Roreania, the last bastion of ultra-orthodoxy in the Warsaw Pact, the recently concluded party congress unanimously reelected President Ceausescu, who emphatically rejected the political and economic reforms sweeping Eastern Europe. The boycott of the proceedings by Western Ambassadors and others reflected Romania's increasing international isolation* Despite continued economic deterioration and Ceausescu's unpopularity, he faces no credible challenger and change is unlikely until he leaves the scene.



intelligence Update for Malta

On the Malta agenda. Soviet Foreign Minister Shevardnadze told the Italian communist Daily Pjipa on Tuesday that he "would not rule out" arms control agreements at Malta and that "this also goes for offensive, strategic arms." He went on to say thatolitical decision is made START could be achievedrelatively short tlme^_

On Germany, the tumultuous developments in Eastern Europe have forced the Soviets to reexamine their views and seem to have engendered some evolution In their position.

views among" Goroacnavs auvibuia Lemye continued opposition to any discussion of reunificationelief that it eventually must taxe place if Europe is to become stable.

On the Soviet emigration law, the Supreme Soviet, contrary to expectations, ended its session on Tuesday without passing the neasure.

is substantial agreement, however, on the need toill liberalizingonly to meet Washington's preconditions for obtaining Most Favored Nation tradeSoviet media accounts indicate no deep divisions among legislators over the bill's provisions. The bill will most likelyigh priority when the Supreme Soviet reconvenes next February or March.

no doubt is hoping that the record-high emigration flows from the USSR will persuade Washington to begin the process for granting trade benefits in the meantime.




of Central Intelligence George Kolt

Director of Soviet Analysis, DI

Suggested Talking Points for9 NSC Meeting

1. Action Requested: None required. This memorandum and particularly the attachments provide background information for0SC meeting

2. The talking pointsollective effort of

pur office working

unaer tne leaaetsnip ot

| They nave seen coorainatea wren the Chairman of National Intelligence Council, the Acting National intelligence officer for USSR and the Office of European Analysis, DI.

George Kolt:


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