NATIONAL INTELLIGENCE DAILY FOR 7 SEPTEMBER 1989

Created: 9/7/1989

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J mATIONAL INTELLIGENCE DAILY

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INTERNATIONAL: US Antidrug Strategy Well Received

initial reaction from Latin America and Western Europe to the new US anlinarcotics strategy generally has been to laud Washington's determination to tackle demand for drags and to welcome prospects for increased assistance lo several

In Mexico, media have commended the US commitment toconsumption and haveositive change in thcof thc need toultilateral approachdrugahamian editorial took thc sameUSnasajignificant shift in strat

US drug strategy on Monday."praised US intentions to proceed forcefully against domestic demand and repeated their support for an Andean-US anlinarcotics summit. Peru's antidrug police.chief . ublicly hailed thc decision to allot additional funds.

Colombian Government spokesmen welcomed US technical cooperation but emphasized that Bogtoa has ruled out asking for foreignabinet minister has called on the US to "punisheiterating that Colombia views the problem to be elated mainly to consumption.aBBaa^

West European reaction ranges from general approval to criticism of some aspects of the program. Spanish drug czar Miguel Solans and some press reports faulted the programack of emphasis on curbing drugonservative French paper, however, say? thc strategy answers Latin American charges that the US is not doing enough to stopest German daily comments that the US needs to commit more funds to the project but doubts that US politicians are willing to raiseoviet Foreign Ministry spokesman said on Wednesday that sending US troops to Colombia to combat drug trafficking would be "impermissible interference" in Bogota's affairs.

1 As more reactions from Latin leaders appear, they

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probably will not diverge significantly from the generally supportive position already conveyed in the media. Some governments may voice concern over being left out of pans of Washington's new efforts. Ecuador's President Borja probably will make dear that Quito's past cooperation with the US on counternareoiics entitles him to an invitationummit. West European leaders probably view ihc US strategy as realisticime of tight budgets. They may seek to take advantage of thc momentum by encouraging broader West European countemarcotics cooperation with Latin America. Moscow may fear US troops in Colombia couldrecedent for Peru, where Moscow has an important military relationship.

Drug Violence Likely

Attacks against dependents of Colombian military and policeis the first stage of an intensifying campaign ofviolence by the drug traffickers, which will be spurred on bydecision fo extradittjaigjupney. manager

Unidentified gunmen have murdered thc wives of aArmy officerolice major inhad been

involved inviiics^BBW W

Trafficker reprisals arc also continuing in Medcllin; in ihe latest violence, two banks were bombed Tuesday,estaurant ownedupporter of slain presidential candidate Luis Carlos Galan was torched. Two US correspondents were among four injuredombing the same day of another restaurant frequented by foreign journalists. |PD7

To protect against funhcr attacks, thc government has announced additional measures to protect key members of the judiciary; security has also been increased at government and commercial buildings and at Bogota airport, and public gatherings have been banned in Bogota. Thc government last nightecree enabling it to remove mayors and to place cities under temporary military control. Bogota also has0 reward to any citizennformation leadinghc arrest of major drugs^M 2

militaryon heightened alert in anticipation of additional

for thc government's decision to extradiie Martinet

>The apparent targeting of military and police dependents demonstrates the growing anger of the traffickers over the disruption of some drug operations. They evidently hope to play on widespread fears within thc armed and security personnel of terrorist reprisals to undercut support for the government's crackdown. The extradition will boost the morale of Colombian military and security forces, but it will almost certainlyapidly escalating campaign of trafficker intimidation and violence; thc drug lords had previously threatened to killudges for every trafficker extradited. Traffickers may also target US interests in Colombii

South Africa's ruling National Party, faced with Its failure toajority In yesterday's election and with renewed black opposition activity. Is likely to more cautiously on plans tctr^ututed reforms centered on consultations with blackW

Although the Nationalists lost support on both ends of thc political spectrum, thc Conservative Party easily retained its position as thc official opposition, making enough gains in Transvaal and Orange Free State Provinces nearly to.doublc its representation. The Conservative Pany also demonstrated increased suppon outside its traditional strongholds, winning two scats in Cape Province and making enough inroads in NataUothrow several races to the pro reform Democratic ^arty.^gjjppjr"-

Thelast February by thc merger of thc former official opposition Progressive Federal Pany and other pro reformwell nationwide, regaining the suppon of many reform-minded whites who opted for the National Panyhe DP did particularly well in affluent English-speaking areas, but it also picked up some suppon among moderate Afrikaners.-MMfa-

[The National Party's slimlowest since it first upset the old United Party inlikely to fuel an ongoing debate in the pany over the pace of reform, complicating postelectionor reform and for talks with black leaders. Acting President F. W. deelection to the presidency remains virtually assured when the electoral college meets nextensure any moves arc fully backed by the National Pany caucus or risk an exodus to the opposition. Anxious to avoid thc appearance of negotiating under pressure, de Klerk is likely to wail until security measures have curtailed black unrest before proceeding with his agenda. (afaSbV-V' '>

Nevertheless, over the longer run, de Klerk must move forward with thc National Party's plans for some form of dialogue with black leaders and for limited apartheid reforms or risk losing additional suppon to thc pro reform Democratic Party. National Pany leaders probably also realizeailure to live up to the expectations for major new initiative* would lead toSouth Africa's international isolation. aaa^Bag)'! asaa^aafatjpjatal V

(he US Evacuation

The evacuation of US personnel from Beirut probably will have little Immediate effect on the situation In Lebanon; increased Syrian air activity over Lebanon risks an air clash trlth Israel. SpBaaaV

General Awn condemned the evacuation, although most Lebanese officials have not reacted publicly. Awn said thc "American Cain could not look Abel in thend the leader of thc Christian hardline Phalange Party. George Saadch. said heiihcd b> the move. Druic leader Junblati toldWaawaaaaa*yesterday thaLHij^cyacuaiion would harden the views of Clnistian

Tel Aviv and Damascus have not commented publicly on the evacuation. The Israelis continue to .activits

criticism of the US move probably will not translate into increased political support for Awn. And Syrian leaders almost certainly are pleased by the US evacuation; they will view itign that Washington does noi back Awn. President Assad will not shift tactics against the Christian enclave, however, solely because of Washington's move. He probably views Washington's role inettlement of the Lebanese crisis as less important now lecause of its reduced access to Christian leaders. flsVaaaV vp 3

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Minister Kuud Lubbers'* Christian Demoeraiic Appeal will be given the first chance toew governmentesult of the election jestcrday. It remains the largest single party witheats, but its previous coalition partner, thc right wing Liberals, dropped fromocats. Thc antinuclcar Labor Party lost thrc= of itscats. Democratsicked up two scatsotalnd thc "'Green Left" alliance of small leftist panics gainedafaP

V, bbers and Foreign Minister van den Orock almoii

certainly will head thc neat government, but coalition negotiations svill be difficult and might take months. Lubbers probably would like to lead his third center-right government in coalition with the Liberals, and the two parties may be able tolim majority with theiruteals. The Liberals' losses and internal disarray, however, may force Lubbers to turn to thc Laborenter-left government under Lubbers, including his Christian Democrats,"Labor, androbably would undercut Dutch support for NATO nuclear modernization programs, threaten the Duich commitment io nuclear tasksassigncdbv^^jATO^and freeze or reduce defense spendingafJggjgHMka^ajfllHPlaaaW V, -

POLAND: New Government To He Anno

Premier Mazowiccki will present his cabinet nominations today, and the Polish parliament is expected to complete its debate and confirm the Solidarity-led government next Tuesday. Thc Communists will retain thc defense. Interior, and, most likely, foreign affairs portfolios but otherwise will yield their levers ofcontrol to Solidarity, which willlurality of the more thanabinet posts. Solidarity leaders have insisted the hotly contested Radio and Television Committee must be under their control. Solidarity's coalition partners, thc United Peasants and Democratic Parties, have been given significant responsibilities; some Solidarity legislators have grumbledere not adequately consulted in the selection of thc cabint

andmark event, the installation of the first mnist governmcni in Eastern Europe in more lhanears marks only one small stepong, probably stormy transitionore democratic Poland. The role of the premiership in relation io that of President Jarurelski willo be toned oat. and new Solidariiy ministers willo overcome the inertia of entrenched, hostile bureaucracies. Marowiccki has yet to fashion an economic reform program acceptable to competing domestic groups and to the international community. The Communist party has grudgingly accepted its loss of ihe govf mnyntanrt it not likely lo case Mazowiccki'sJ^rM

1 oi

Tcmbcr isibv

CZECHOSLOVAKIA-USSR: Soviet8 Invasion

A Soviet official's denunciation of the invasion of Chechoslovakia will inicnsifv the struggle between Prague's pragmatists and hardliners. In an interview this week, forme. Politburoazurov. who orchestrated thc Soviet move*enounced ihc intervention and his role In It. Hc implied ihai Czechoslovak President Husak was co-opted by Moscow to act as lis agent in dismantling Ihc Prague Spring reforms. Mazurov endedall for the Czechoslovak old guard to resignentral Committee plenum

this

MMBJBteajPragmamu in the Czechoslovak part> will be emboldened by these comments io press for more meaningful reforms and for the replacement ofleaders implicated by iheir role in the invasion. The implication that Husakurncoat will seriously taint him in ihe partv and may presage his ouster at the plenum early next month. Althoughin the Congress of People's Deputies-was almost certainly expressing his personal view, this is thc most critical Soviet statement yetl evidently reflects the opinionsaction in the Soviei leadership. It alto is the firstoviet official has called publicly for the removal of East European leaders. If Prague raises the matter with Moscow, ihc Soviets will probably disclaimcitriaic support for the current

Electiono Briny Little Policy Change

Thc victorious People's United Party almost certainly will maintain Belize's traditionally close relations with Washington. The PUP wonfa possibleational Assembly scats on Monday, and its leader. George Price, probably will succeed Manuel Esquivcl as head tine the position he held4

spite the apparent hopes of the traffickers, the new government is likely to continue serious anlinarcotics efforts, especially againsi Belize's growing cocaine trafficking and crack abuse. Thc two sides are similar ideologically, but Esquivel's party was hurt by thc PUP's charge that the common people had not benefited from recent economic growth. Although the new government is likely to deviate somewhat from Esquivel's conservative fiscal policies, perhaps by augmenting governmeniQBtams-PO major policy changes arc likely*

BOLIVIA-ARGENTINA: Swapping Debt

Bolivia, hoping to get Argentina to resume regular payments for natural gas. haswap to eliminate bilateral debts.reliminary agreement reached last week. La Paz will forgive0 million in Argentine debt for gas. and Buenos Aires will write off0 million in Bolivian debts, most of which would not have come due for moreecade. Although thc agreement is not to be finalized until November. Buenos Aires has promised to begin making payments in the meantime for gas delivered since the Menem government took office in July.however, that thc Boliviansillion of the Atgcntine arrears to US gas producers and thai La Paz lacks thc cash to make payment on aBBBaatv

Argentine arrears have caused Bolivia severe foreign exchange difficulties in receni months; La Paz relied on gas payments forercent of its foreign exchange earnings and forounh of government activities. The Bolivians apparently will get some urgently needed payments for gas in lhe next few months, but Argentina's economic crisis makes its ability to continue making payments questionable. La Paz probably will continue to run short on foreign exchange and have difficulty meeting its.full lions to lhc US firms involved in supplying thc gas/

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In Brief

East

USSR

USSR has denied visasraeli Agriculture Minister Katz-Ox. invited to festival byarlier vetoed similar Georgian invitation io Arielhows Soviets'caution in bilateral relations, sensitivity to nationalist tensions.

Americas

South Korean police hauled workers, st'idcms. Buddhist monks_ in separate protestsadicals may try to use diver, grievances of groups to stoke fall jroiest campaign.

V*3

Moscow'* Military-Security Options

If Moscow chose to oust Baltic pany loaders, it probably would rely on airborne and<MVD) troopsto cordon ofT government ajd party buildings and secureother key '

Moscow MouldBaaakakaaMI MUruopt alreadv stationed in the Baltic aicaspecialand quipped tocontrol noiing-^STTlessay from the Baltics by road or rail. These would probably be used to round up separatist leaders and handle violent demonstrations.

Moscow probably bellevca that airborne and MVDhave infantry fighting vehicles or armored personneldeal with allull-scale rebellion In that unlikelyozen or so ground 'orces battalions from the Baltic MD could also be deployed without mobilizingeservist callup in the Baltics would risk further antagonizing the local population, allhough it could also serve to intimidate nationalist leaders subject to callup.

Meanwhile, the Soviet Defense Ministry is showing concern about rsing hostility toward the armed forces in the Baltics. Krasnaya rvezrfa says the Ministry's chief political officer is meeting with personnel from the Baltic MD to discuss the local situation and the Central Committee's statement.

Special Analysis

Option of Force In the Bullies

central party leadership is likely to persist in granting the Baltic republics greater autonomy while warning strongly against secession. President Gorbachev is gamblinglexible and constructive approach to demands for autonomy eventually tvllt erode secessionist sentiment, enabling him lohow of force that would cripple Ms reform program and cost him international good wilt. Moscow ultimately would use force to prevent the secessionaltic republic butariety of options shortajor military crackdown to deter Baltic nationalists from moves toward secession. Widespread intercommunal violence, not Baltic political posturing, is thc most likely triggerse of force.^

Moscow is unlikely to abandon its suppori for far-reaching political and economic reforms in the Baltics that remain within the bounds of percstroyka and disavow secession. Gorbachev has endorsedf more independent republic party organiza'ions and

Even thc st rongly"*caut ion aryCent rat Committee statement"ugust affirmed plans thc Supreme Soviet approved in July to allow the Baits to implementif-financing in Januaryyear earlier than anywherelo craft more radical plans for republic economic independence. The Central Committee statement criticizing the Baltic independence movement was nonetheless less conciliatory than many of Gorbachev's past comments and indicates thereolitburo ccmsensus that Baltic demands for independence are

Good Options

The Baltic nationalists responded initially to the Centralby postponing action on several controversialover thc long term, will not yield on their plan to usewithin the USSRrelude to an eventual push |

'Pi

The Moscow leadership almost certainly views thc use of forceas; resort. Gorbachev jast Dj^ccnibcnaasssaaataaajjgaa^

^ktWaWktgmWg^^

his desire to do everything possible to avoid using thc military. Some leadership elements, such as party Secretaries Chebrikov and Ligaehcv, probably would turn rnore quickly than would Gorbachev

com in tic

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*

Gains Made for Baltic Autonomy9

II nalional anthems, nags reasserted in all three republics.

Popular-front candidates dominate March elections to the Congress of People's Deputies.

National language laws passed in all three republics.

Citizenship laws proposed in Estonia. Lithuania.

USSR Supreme Soviet approves Baltic economic autonomy bill.

Lithuanian party youth organization (Komsomol) severs ties to Moscow.

Lithuanian party announces fair conference to consider cutting ties to CPSU.

Congress of People's Deputies reportedly finds annexation of Baltic republics illegal.

Potential Flashpoints

Outside agitation by reactionary Russian nationalist groups. Extremists gain control of Popular Fronts. Baltic parties split along ethnic lines.

Moscow leadership in open conflict over nationality policy. Pronations! 1st Baltic party leaders fired.

Nationalist, "parallel" government formed, declares secession. Widespread interconununal violence erupts; MVD cannot control. Soviet troops deployed; martial law declared.

from political means to thc use of force, but hi thc end thc entire leadership would agree or thc nccejsiivof military' aciion if all other moans failed io prevent secession. VBaWV ->

4

The leadership would first exhaust less drastic means. For example. Gorbachev could deprive activists of important advocates in Moscow by removing nationalist-minded officials, such as Lithuanian pany chief Brazauskas or Estonian premier Toomc. Or. central ministries could be directed to cxen economic pressure by delaying ihc delivery of fuel or blocking foreign financial ventures. Alternatively. Moscow migm emphasize ils disapproval by increasing thc presence and visibility of security (MVD and KGB) personnel or military' units in the Baltics, hoping to cow dissenters andajor bloodletting. In April the appearanceew armored personnel carriers in Rigaoutine military cammajad staff exyrcise reportedly discomfited Latvian

Moscow recognizes thai these options carry thc risk of provoking demonstrations and escalatingituation ultimately trapping thc central leadership into sending troops. The risk is less, however, than that associatedeneral crackdown in thc Baltic republics, which would be held in reserveaslrackdown could force Gorbachev to retreat on thc decentralizing aspects of his domestic reform program and sharpen nationality problems elsewhere in the country, lt would also cost him much of the

ationa^good will derived from his diplomatic initiatives.

Outlook

The political atmosphere between thc Baltic capitals and Moscow will remain tense over thc next few months as local panics try to maintain their credibility in the face of continued work by the popular fronts to press their action programs for independence. Critical points could occur this fall with republic-level elections in Estonia and Latvia or next spring when the fronts in boih these republics plan to hold popular congresses that will consider declaring independence. Sajtidte candidates in Lithuania are likely to win control of the republic legislatureV ^

As long as Moscow continues its present course, republic party organizationshance of persuading nationalists not to provoke Moscow with calls for secession. The greatest threat io Moscow's policy of accommodation comes from the Russian minorities, who are much more likely than the Baits to attempt toiolent confrontation. If widespread intercom munat violence then resulted. Moscow would declare martial law and use iroops to restore order.

Top.

ircmtxi It

Iran's Economy: Bad and Getting Worse

Industry i* operating atcrcenl of its capacity, unemployment stands atercent, and inflation is running at someercent annually. Urban homing shortages arc becoming severe. Foreign exchange reserves have fallen below what are needed to cover two months' worth of imports. The population is increasingillion every seven months, further stressing already overburdened government services.,

Iran probnbl) seeds atillion to engage in large-scale civilian reconstruction, but its recently released five-year plan has allowed for only S2 billion in foreign reconstruction crediii annually. Almost half of this amount is earmarked for projects in the energy sector.

Tot

tSBBMf I

Special Analysis

Initial Prospect-.

TAe Iranian President helped win Assembly approval of his Cabinet by supporting many of the radical policies of his rivals. The real measure of his power will be whether he can win approval of more pragmatic policies

without splintering his-j

Rafsanjani's first test is likely to come on thc issue of seeking foreign financing. Me probably will win approval to obtainimited amount of Western financing for specific projects, Rafsanjani probably will seek to broaden Iran's .commercial tics to the West while limiting its political

The Economy

Rafsanjani must dealleak economic situation, but he has presented no specific reform program. Iran's current economic policies reflect the influence of officials who arc more concerned about maintaining Iran's economic independence than they are about pursuing recovery- This bias is particularly evident in thc meager foreign reserves allocated foraaaV ^

Rafsanjani mult know the economic goals he has set cannot be met without the West's help. He has warned against basing economic policy solely onirect slup at his extremist rivals. p

Seme areas of foreign trade and some industries probably will be shifted from the public to the private sector. Rafsanjani p'robably will agree to increase taxes on thc svcalthybut will delay action on such divisive programs as land reform.

Terrorism

Rafsanjani's government almost certainly will continue to sponsor terrorism to support specific foreign policy goals and to eliminate Tehran's opponents overseas. Rafsanjani and Supreme Leader Khamenei have explicitly kept in force Khomeini's dealb edict against author Salman Rushdie. They probably have also approved broad policies against iintircgimc elements; since May these policies have led to the assassination of five exiles in three countries and to terrorist bombings in Mtcca during the hajj. Thc prospect is increasing that cxtremKis will conduct rogue terrorist operations to embarrass Rafsam'sni.^aaMP Vj-i

continued

Rafsanjani's new lovcmmcm will connnuc io expand Iran's relations with radical Palestinian groups and its influence in Lebanon. Iranian officials arc foslcing greater cooperation among the Palestinians and between thc Palestinians and Hiiballah. The groundwork was laidani an-spun sored meetings that included all of these groups in Tehran in July and Damascus in August. Tehran is expanding aid to Amal. thc more moderate Shia group, and promoting Arnal-Hiiballah reconciliation. tatJBh? 7

Iran wants thc Palestinians and Hizballah to participate in attacks on East Beirut and to conduct operations against Israeli targets in southern Lebanon. Iran recently has intensified its am>4srael policy. Rafsanjani probably seesolicyy to curry favor with his domestic opponents at little cosi to Irai dhXWmat J?

The USSR and Ihe US

The new government will continue to expand relations with the USSR, beginning with implementation of recent economic agreements. An arms deal probably will be concluded by the end of thc >ear. Tehran and Moscow are likely to cooperate more on regional issues. Rafsanjani. through his mouthpiece the Tehran Times, has endorsed Communist participation in an Afghan coalition government, and Iran probably will seek to co-ordinate more closely with Moscow on Lebanon. Pressure from Iranian radicals is likely o force Rafsanjani to continue to be hostile toward ihc US. *MaV -

Persian Gulf

Rafsanjani probably will continue Iran's selective approach toGulf states: cultivating good relations wi th Oman, theKuwait while remaining bitterly hostile toward Saudiprobably will not attempt to foment revolution in Use Gulfthe near term. It will, hcwcvei. continue to provide financialpropaganda suppon to dissident Shias and military* training

continued

Rafsanjani's relatively flexible policies will change if his domestic position erodes. He might thcn_ attempt to recover by supportingV' j

MBsBlMHMn>aV Thc radicals' lass of critical cabinet and judiciary posts has deprived them of most of the institutional leverage thev needed to block Rafsanjani's economic and diplomatic policies, thev arc still influential in the Consultative Assembly, but Rafsanjani's ability to control the deputies is shown by their endorsement of his entire cabinet slate. His need to appear responsive to their demands for adherence to Khomeini's legacy, however, will make him cautious in improving tics to the West.3

cabinet.I

In preparation fora more pragmatic foreignranian leaders and media arc softening their line toward the West, including the US: for example. President Bush is being favorably distinguished from his predecessors. Tehran also declared publicly on Tuesday its interest in improving ties to Saudi Arabia. In line with these policies, the Rafsanjani government's support for terrorism (aside from the targeting of overseas Iraniansiming to overthrow the regime) is likely towith former Interior

aiton of Lebanon's Hizballah, out of the

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