NATIONAL INTELLIGENCE DAILY TUESDAY 14 NOVEMBER 1989

Created: 11/14/1989

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Contents

c^ast Germany: Pressure for Elections

USSR: Debate on Property Rights Likely To Be

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El Salvador: Fighting

PLO-lsrael: Arafat Seeking Greater Control of

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France: Proposing EC Talks on Easternb

USSR: Serious Charges To Be Decided by

Bulgaria: Party Reinstates

Sri Lanka: Sinhalese Rebel Leader

Panama: People's Assembly Gets Broad

In

ew President

USSR: Tough Economic Measures Needed

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EAST GERMANY: Pressure for Election* Uuiiding

Q*er Elections

ihc regime and ihc leading opposition group New Forum are opposmg growing public pressure for early free elections. Last night uprotcsien marched in suppon of lhal demand in Leipzig. New Premier Mod row. confirmed yesterday, warned West German Chancellor Kohl last weekend againsi pushing for early elecltons. New Forum eofoundcrs Jens Reich and Baerbel Bohlcy also came out sirongly against early elections, saying the opposition needs atear to organize. Reich, who said his groupostly new members and is growing, argued against any hasty move to leave the "Eastern Bloc" and denounced talk of German reunification as harmful lo Soviet President Gorbachev]

Communists and New Forum are struggling to slayommand of events; thc Leipzig demon si rat ion's focus on free elections suggests they will not be able to do so. Pany leaders hope, probably vainly, that by delaying electionshey may improve their dismal chances. New Forummall, weak organizauonal base and uncertain access lo Ihe mass media, as compared with the large but eroding Communist pany. The regime probably will feel obliged to move up the date for elections, and New Forum will havejo scramble io put together an electoral slate and

Km ^ration Slackening Temporarily

exoduspe red ofT since East Berlin opened its borders. Wesi German auihoriues lold rrponcn early yesterday ihat0 of theillion East Germans who crossed into West Berlin and West Germany since Thursday night have asked to settle

"he regime's gamble on liberalized travel appears to have worked, rvlost East Germans appear content for now io sample Western consumerism and return home Thc experience may make Easi Germans less lolcrant of shortages and increase public pressure market-oriented reforms and economic suppon from Bonn.

People's Chamber. East Germany's legislature, yesterday elected

Maleuda. the cautious head of thc Democratic Peasants'

as its new presiding officer. He defeated Manfred Geriach. the

relatively outspoken leader of another satellite pany. the Liberal Democrats The legislature reconvenes Friday for another two-day session P

[Maleuda has not been among lhe minority panyave called for reforms, and the Krcn* regime probably engineered hii election to slow the pace or change. Ncvcnhcless. the voting was televisedeginning for open debate thai will Id lo thc pressure on deputies to repicscnl their constituents.

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USSR: Proposed Forms of Property Ownership

Ownership tore Ownership All-union

Joint all-union and republic

Republic

Municipal

land and naiural resources and most capital equipment.

Defense industries, heavy industry, extractive industries, national communications and transportation systems.

Land, natural resources, and waterways. Republics "possess, utilize and dispose" of these properties. Moscow determines the basis for their use.

Food and consumer goods industries, property related to republic services and infrastructure, including health, education, transport, and housing.

Property related to local services and infrastructure, including health, education, urban transit, and housing.

Ownership

Collective farms

Joint stock companies

Leaseholdings

Cooperatives

ooperative form of ownership, now differ little from stale farms but are not subject to state orders.

Employees own shares, noncmployees may be able to own shares. Shares cannot yet be sold or traded.

Enterprises or parts of an enterprise can be leasedroup of individuals forears. Leased farmland can be inherited.

Members can buy and sell capital equipment. There are restrictions on hiring and other activities

Ownership

Private property

Personal property

Equipment individuals need to set up own small businesses, such as consumer services or handicrafts. Private fanners can buy and sell machinery and draft animals.

Personal possessions, including consumer durables, houses, personal effects not used to create income except for musical instruments. .

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Debate on Property Rights Likely To Be Heated

legislation relaxing restraints on private ownership of some types of property is biing debated at Ihe joint government-academic conference on economic reform that opened yesterday; tha Supreme Soviet leadership probablyompromise wilt emerge from the debate at eonference-^mjm^

The Supreme Soviet lasl month beganegislative package on properly rights, land use, teasing, enterprise rights,ew tax system that will be central to getting economic reform back on track. The centerpiece ofthe governmentraft law on property, grams individuals the right to own equipment for small shops and farms but prohibits them from hiring others and upholds theyear-old role as sole landowner. Thc Interregional Group of Deputiesore radical proposal that would permit private farmers to buy and sell state land and private businesses to form and disband and to hire and fire larxu

The property law will also determine the degree of autonomy republics can exercise over resources. The government-proposed property law loosens Moscow's control over land, natural resources, and waterways by giving the republics and central government joint ownership. Although ihe draft law falls short of meeting Baltic demands that republics exercise exclusive control over all land and resources, it gives them sole ownership of enterprises and equipment involved in producing food and consumer goods. It also would increase the share pf total industrial production under republic jurisdiction from the current levelercent to aboulerceni.

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BBBaaflaSBH he debate in the Supreme Soviet on propertybeen long and contentious. The leadership would gladly acceptat the conferenceet the legislation moving.how far property rights must be expanded to support reformrevitalize the economy will be central to shaping anplan.ompromise, however, will be hard givenin views. Effective implementation of evenlimited legislation could lay the groundwork forin determining

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SALVADOR]

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il.b

Continues

Sporadic fighting continues throughout the country; although the Crituani government seems to have improved security in San Salvador and has thus far countered the guerrilla offensive.^ ft3

lighting continued

yesterday, primarily in ihc capital's northern and "cistern suburbs whereoccupied some buildmgsand houses. Thc insurgents yesterday attacked thc headquarters of the transitthr USshelled llopaheo airfield late Sunday night.

an

Imost ofthe metropolitan area-is under government conTroT; ihcre apparently has been no attack on miliiary targets in the capital since Sunday night. The Army remains on alert and hasweep operation at the National University, ippareni staging ground for the lair- >

the offensive soon, they are likely touccess, cil government's heavy casualties and repressive reaction*'

righting may continue throughout the weefgovernmentappear lo have succeeded thus far in thwarting an all-out guerrilla offensive. The insurgents may have miscalculated that iheir offensive wouldeneral insurrection, though they probably can remain holed up in the poorer nc^horhoods of San Salvador where they have supporters. If FMLN leaders call off

l'-Mvr tnnn r--

Ihe

is likely lo be criticized for his decision to declareof siege and for Die attack againsi thc National University,actions will no doubl impedeLN's ability to

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ret

Arafat Seeking Greater Control of Intifadah

PLO Chairman Arafal is trying to increase his personal control ortr tht Palestinian uprising to prerent more violence and anarchy In the occupied territories.

Arafat is determined to maintain discipline In Palestinian

ranks while negotiations with Israel are under consideration. He fears thc chaos in Nabulus could spread throughout the West Bank and thc Gazadamaging histhere is no progress on

appeals for restraint in

talks with thc Israelis, Arafal has madeattacks on collaborators in Nabulus.I

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FRANCE; Proposing EC Talks on Eastern Eurorx

French President Mitterrand yesterday invited lop EC leaders to an unscheduled EC Sumnin this Saturday in Paris to discuss Easternove almost certainly designed to keep West Germany from pursuing its own agenda for dealing wiih developments Ihcre. He warned publicly over the weekend that accelerated change in Eastern Europe threatens thc established order, reiterating his view that the EC should serve as the vehicle for managing theesponse to East Bloc events!"-

t'SSR: Seriouso IK* Decided by Juries

The Supreme Soviet ycslcrduy mandated lhal. beginningecember, juries will be used for cases involving offense punishableears or more in prison or dcaih HHBl'oudge tilling wuh iwo 'lav assessors has decided criminal cases. Thc new law alsoefense lawyer participate from the beginning of an) criminal investigation, instead of only after thc prosecutor has prepared histep meant lo reduce the

BULGARIA: Party Retaliates Dissidents

The Politburo yesterday reinstated party members who had been dismissed over thc past several years for participating in illegal dissident activities and recommended their former jobs be returned. Thc Bulgarian Supreme Court also ruled yestcrdsyower coun had improperly rejected lhc application for legal status or lhc dissident organization f'xtrglumosi and returned (he applicationeconsideration and new ruling within two wccksJ

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SRI LANKA: Sinhalese Rebel Leader Killed

Sri Lankan security forces on Sunday caplurcd Rohana Wijcwccra. thc charismatic figure who has led the Sinhalese nationalist ianatha Vimukthi Peramuna since its formation in!

'ijcwccra in an area ofactivity His deputy. Upatissa Gamanayakc.

[Even though Wijcwccra's deputy probably will assume leadership of the JVP, the government's success in capturing and killing rebel leaders is hurting the group. Government counlerinsurgcncy operations continue to result in high numbers of civilianmoreeek, including many at the hands of progovcrnmcnt vigilante groups. In response, ihcs hitting economic targets such as lea and rubber plantations,he aim of driving up inflation and unemployment and provoking widespread unrest in the Sinhalese-dominated southJ

PANAMA: People's Assembly Gels Broad Powers

Defense Chief Noriega is taking further steps la consolidate controlcivilian government and may declare himsclfhcad ofyear's end. Thc regime lasl week granted broadand legislative powers lo theandpicked local officials established

Lhas been nominated lo head lhe group^ncl

- the regime has announced it will revise thcenior member ofthe assembly speculated lasl week that Noriega may be declared head ofgovcrnmcm before thc end of this year, according

iNoricga probably believes his recent step* will notignificantly harsher regional reaction lhan thc establishment of thc assembly dfd lasl monih. but thc measures may anger Latin rcpresentaiivcs at the OAS General Assembly sessions in Washinglon this week. Although Noriega probably will continue to rule by decree, like former military strongman Omar Torrijos. hc will use the Parliament lo change lhe constitution and give his dcjarip control of the governmcni some appearance of legitimacy.gflBB

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In Brief

smalliih Iran

)Iraq reopening Al Basrah port tomorrow, first via Shatt al Basrahanal only handles tile Baghdad'still increase* leverage

E*yp< has agreed to major economic reforms after intenseWorld Bankne step closer to IMFdebt. details

of reforms not final. "

Chinese Premier Li Peng begins visit to Pakistan todA] trip abroad since Tiananmen Square crackdown .1

Pakistani Prime Minister Bhutto's Cabinet resigned yesterday but continues lo supportit her streamline Cabinet, fulfilling promise madeafier victory in defeating no-confidence vote last monihr""

Voting in Namibia ended on scheduleN reports few incidenis.perccnlpecial Representative Ahtisaari likely to announce results, issue final certification today or tomorrow -o

Special Analysis

a New President

ackdrop of accelerating inflation andargely discredited government, Brazilians go to the polls tomorrow in the first free, direct presidential electiono clear favorite has emerged; in Ihe likely event no candidateunof_ election between the top two finishers will be held next month.]^

The campaign has been characterized by an overwhelming rejection ofthe Sarney government as inepi and corrupt,id from each candidate to present himselfresh alternative. Voters are concerned about inflation and the declining standard of living, but no candidate hasrogram that has captured the public imagination. Inflation is rising nearlyonth, fed by huge wage increases and mushrooming payments on the internal debt. Most candidates have stressed, but in vague terms, the need for tough economic reforms and renegotiation of0 billion foreign debt once domestic economic problems have been addressed.

A Close Race

The large numbernvolatility of the polls, and an undecided vote that may be as high as half the electorate make the outcome particularly difficult to call. Moreover, polls showhird or more of the electorate docs not fully understand that, if no candidateunoff between the first two finishers will be held in thc middle of next month. The top threeall have less thanercent in rcccnicenter-right frontrunncr Fernando Coltor de Mcllo, populist firebrand Leone! Brizola. and leftist Luis Inacio Lula da Stlva. In recent weeks Collor has slipped markedly, in part because olher -andidates have attacked his credibility; Lula has picked up some suppon and may be edging into second place. Some political pundits consider centrist Senator Marioarkhorsc candidate]

The election court's ruling invalidating thc candidacy of TV personality Silvio Santos last week will probably boost Collor's chances. Accusations are widespread thai the Sarney administration engineered the Santos candidacy to defeat Collor. who has based his campaign on an antiadministration theme, and Collor is likely to benefit from bitter verbal exchanges with Sarney over the past week.

continued

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Brazil: Profile of ihc Electorate

Brazil's electorate has become much larger, younger, and less educated since the most recent free, direct presidential election almostears ago. Approximatelyillion Brazilians are expected to cast ballots tomorrow; onlyillion did sohe typical voter today is young, poorly educated, urban, and politically inactive. Someercent of the voters have never votedresidential election. Under the newyear-olds arc eligible lo vole for the first lime, as arc illiterates, who constitute someercent of Ihe population. Voting is mandatory for people agesailure to vole is punishableineo

ercent of the monthly minimum wage. Aboutercent of the population have lessrimary school education, and onlyercent have any college education.

Outlook

With no candidate expected tounoff isUnofficial voting returns shouldcomcinquickly, butmay not be available for a3

The top two finishers probably will be Collor and either Brizola or Lula. Either combination would make the secondolitically more delineated contest, pitting center-right Collor againsi leftist state-interventionist Lula or social welfare advocate Brizola. The ability of the candidates to build coalitions with other parlies and cut deals with the elites will be important factors in whether ihey succeed. Lula's presence in thc runoff would almost certainly have negative implications for the economy, resulting in increased capital flight; it would also cause concerninthe military aboul thc prospects for instability and violence .HttpjB fa 3

Thereisk of violence runoff;

thestrongno docs not make thc run

neither Lula nor Brizola makes the

Bnzola's supporterso prepared to cry foul if Brizola foster street violence in protest.

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Special Anal) sis

TouRh Economic Measures Needed

The USSR's economic stabilization effort is likely to prove inadequate, and the regime already may be drafting bolder measures to resohe the enormous and politically dangerous Imbalance between consumer demand and supply. Gaining support for such policies from Ike Supreme Sonet will be difficult, however, and their implementation could increase unrest. Without such measures, workers'incentives will continue to decline, further reducing discipline and product! tit)

The government's current effort to restore equilibrium to thc marketplace relics principally on projected record increases in the production of consumer goods andesser extent on budget reductions and the sale of bonds to lhe public, price increases and other measures requiring sacrifices on ihe pan of the people are notably absent. Even the planned increases in ihe supply of goods, however, would not satisfy excess demand during the nextcrucial time and turningccording to Premier Ryrhkov. Total retail sales arc planned lo increase byillion rubles next year, bul incomes are planned to increase by about the same amount. In addition, some Soviet economists put the accumulated excess purchasing power at moreillion rubles, including at leastillion rubles in cashubstantial share of personal savings deposits J| | o5

Moreover. Moscow probably will noi come dose to achieving the planned increases in supply. Thc production goals are highly unrealistic given thc Soviets' production capacily and thc long leadlimc needed to bring new capacity on line. Planned imports for next ycararenot sufficient to make an appreciable difference in ma- WJ. I

Measures intendedlow the growth of demand and to soak up excess purchasing power are also likelyal' short. The plan to halve ihe budgci deficit0 billion rubles by the end of next year, for example, hinges on overly optimistic projections for revenue

Calls for BolderounccA program docs not go fai enough.

Gorbachev saidpeech in early September ihai lhc governmeni is

conlinued

1,3

drawing up emergency measures lo address lhe consumer disequilibrium and lhal lhe package cqijI<linclude "unpopular, harsh, and painful" policic ft ft fcj

The government probably isariety of measures lhal effectively reduce state subsidies and increase prices. The recent devaluation of thc ruble for tourists and Soviet travelers could be thc first ster^^

impact of higher prices on pensioners and olher low-income consumers would be minimized through an expanded rationing program. Moscow probably is alsourrency conversion that reducesthe value of large holdings of cash and savings ,

Moscow continues to delay such pol imbalances will increase. Longer qucut goods in stale stores, and additional ra wage incentives, contributing to reduci production

ics, consumereduced availability of oning will further undercut labor discipline and

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