NATIONAL INTELLIGENCE DAILY FOR 25 JUNE 1988

Created: 6/25/1988

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Contents

inpan: Assessing Toionto Summit

Panama: Budget Pleasures SHU Plaguing Regime

Yugoslavia; Growing Unrest

Iran: Tehran's Opkxnatic Otlens.v*

i abanon Hbbatlah Looks Southward

South Africa -Cuba-Angola: Rointorclrvfl Poslllons

Nolas

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Estonians Io P'ess Home Ruin Soma Marble Dei Attacka Continuing

Thailand; Labor Unrest Spreading In Brlri

Special Analyses

Turkey-US: Visit olEvren Nicu'houb: RaOal Nanotialing Options Narrow USSR: Rethinking Campaign Againsi AJcorW

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EUROPE- Assessing Toronto Summll

reecffona ro (ha Toronfo tummlt areamphatlilneUS

n boih Third World debt and larm subaidlat. aa well as Ihe unprecedented lack ol conflict thai marked tha

meatlngi thii feat IfRfMjt

Most European madia hava nailed the agreement on Third World dtD!shift Of US policy toward the European poaJtior'

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EC officials nave anpusudedtMtlackony. despite what some cfia/acir-trectorfrontatvorusi US approach on agricultural subsidies. Otner ECgreement loremewon. on (arm included no deadline to. etimlnatlna subsidies.ictory lor Europeana^SHkeWB accounts appea- to support assertions by the same EC officials that the concessions reflected USo avoid controversy at President Reagan's final .

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Several leaders and medlu roportera nave praised the summit process aa an effective vehicle, lor multinational economic coordination. The European madia have generally endorsed the judgment of most summll leaders that such coordination helped avoid

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media and summit leaders nave beenlina Pres-oent Reagan sjrutiatrve on East-Weal issues. OneflMaasVdaay argues that Ailed views have now correctly locused on Soviet leadereed to lower East-West tensions In order to enact MS re'orms but that the West Would proceed cnollouary on arms control.

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I-Media raporti and official reactions agree that the Improved world economy allowed summit leaders to avoid divisive

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Budget Pressures Still Plaguing Regime

revenue*robably force the reg'me in Panama, lo lake more politically dltllcult slaps to reduce spending unless 2 substantial new foreign financial support is arranged. BaaMa* 9

government's Initiatives to trim lis payroll hnvo bgon

recently tired public workers were reinstated after the National fFederallon of Publio Employee Associations threatenedtrike.

On Wednesday, heaky in Panama City that government income has droppedercent and cash on hand cannoi cover scheduled payrolteT"

rGofflrTlmeniTBTeiiuesercent less than thc precrlsis level until the political situation is resolved and economic sanctions arc lilted. Without substantial new foreign aid. financial pressures to Irlm tho public payroll further wW almosi surely Intent ry iQMl

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The regime will continue io pay the military first and move cautiously In dismissing civilian workers to avoid potentially costly strikos and public protosts. Spending lor public-sector enterprises and goverrvmeni procurement has already been cut lo the bone, and additional djyerslriits gl resources could halt many government services!

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YUGOSLAVIA-

Growing public protests are Increasing Ihe chances of clashes wllh security lorces end ota government crackdown,n the Slovens rtpublU

Labor unreal with antigovernment overtones fiaa intensified in recent days as Belgrade has begun Implementing now IMF-Imposed austerity moasures. More0 demonstrators marched on the National Assembly in Belgrade last week to protest Hie austerity measures, corruption, and officialThis week in

tarucied rail and street traffic,ity Government bunding, and called on tne lederal government 10

C Stovervts ratted this weak to protest the arrest of two Slovene (oumallsts and an army sergeant The mBlary, angered Dy critical articles In Ihe youth press, is hotcling the three on charges ol betraying military secets sseaaaaV

Several hundred Albanians Irom Macedonia head unprecedsntod protests Ihis week in Belgrade against discrimination by local officials. Ethnic Sejibs in Kosovo Province tnla weeketition against dlscriminaiirjpjty Alini-ilj.ns wim 'jQ.QOD signatures to the NationaliUlyBaTaBBSBswMll^^

aSffJJHMastaTiDisoroera are al their highest level In roccnl years,niscalculatlon by protesters or local authoritieshe country may spark violence The odds are about even that Slovene and other autnortuea vnli take aome repressive measures, such as bans on public gatheringe c* controls on Ihe Slovene youth press. The Chance ol lederal police or military units Intervening in Slovenia wilt grow hjflheof Belgrade conc.uces lhat reu.ior-.sl leaders have loel UaHaal

Belgrade peotetVy will also try to need oh greater unrest that threatens Yugoslav siabaty by backing down on its more Stringent austerity mniaTM In Ihe race erf growing strikes and protests. The mattery may defuse Slovenehough still showing tougnness--by giving the Journalists kohl sentences. Any ethnic vio-snce in Kosovo end Macedonia prooaPry can be contained quickly by security forces -

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Tehran's Diplomatic Otlvn.lv*

Tehran baaumber ol alepa le improve lit standingWeil and hat even made soma positive sialemenu about US I ojslna to gain political flexibility to olftet IOmilitary

[Iran has restored r. plorr.itlr. rotations with Franca and

Iranian loaders and mod Id continue lo assert that US Statements about Iraq's rote In slatting .trig irnn-irao war Indicate the US wa/Ms oese lens ions with

improved -tt, itjjm^nore

rah is attempting to roduce foreign pressuresane when Ha military and economic options are declining Its Immediate goal la io gain Western support at the UN tor lis proposals lor Implementinginimum, Iran hope* improved bilateral relations wtm Western oountnea will make trjorri.more reluctanl to support on arma embargo against Iran,

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probaory also hopes to widen differences between the US and Iraq on the UN resoaitlon Iran, like the US. supports the Secrotary General's call for proxirnily talks between Iran and Iraq on the

wouldease-fire, despite radical opposition. It the Security Council accepts Man's conditions. "ie radicals, however, would try to derail further negotlatons after en mitla) cease-fire by demandinc harapjunishment tor the Iraqi regime in any peace settlement *

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Hiiballah Looks Southward

Hiiballah It taxing ttaptana political If -C

Inllucnce In aouthttnith Srrlan batI n- aBtjan, -

iu ciasrwi with Amal endie south this spring. Hcj^aaah has relocated man/ ol in vulnerable laciiities and ia to air*

Ince Ihe Syrlana moved Into southern Beirut Damascus haa tried to coordinate more oosnly withadicals. Syria'a desire to have Barri accept Horbaliah military activities In Ihe south dartilea Syria's lnieobon to nave Hgbaaan resume attacks against pro-Israeli rorces in Lebanon, i

orobaoiy be'ievea It canon*oirticaJ vuirvjratakTy ana Arnefs recent miirtary setbacks by reviving militia activities tn south Lebanon. Oaudrominent southern Amal mflltia leader, has been reluctant lo accept Barn's directives, however..and his loyalists could alow Hizballah's return to the south.

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USSR b. Ionian. To Praia Mom. Rule

Estonian Ceteoat-xi to me pa/ly conference In Moscow next week plans lo presentroposalss.-id the autonomy of Estonia and olher Soviet republics The groups platform haa been published b> the Estonian press and endorsed by the new Esloman party boss. Vayno Vyah/as. It callseturn to Lenin's principle oflederallsnV and outlines various measures lor extensive economic and cultural autonomy lor the republic. Mombera cs the Uivian and Lithuanian delegations reportedly may follow Estonia's lead and press similar Oormi aaaexss"*

Ga-eraj^rntsiy Gorbachev handplcftod Vynlyas 'or

prepared to allow the Estor-ans to ai. tr-.etr proposals at the party conference Who*Nia not lo Gorbachevsadvantage lor the Estonians to push the most controversial parts otrogram, the regime Is commit tad to the principle of more rights for the regional republics. Gorbacheviak In permitting open discussion ol tneplatform but may hope that thelaaa yet limited to broadserverameworli lor working out overore modest change In tho siatus ol tho non-Hussion ropublics.1

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THAILAND: Leber Unrest

aeway union strike true broke oulBsncko* this week is Spreading as other labor groups protest QQyranmeni plans to se* o'faTo rjn'ctasssBaaSeHaVBaWsl^|pa^^workera began to striken wec-iesday. and port and electuthority wprkora are Oectding whether toove

Preml ,

Increasing pressure toirect rola to rcsoivekout* quickly or runs - vioie^reastteeMMMflaeffOT

Prime Minister certainly wanla ret service to resumeuly when celebrations begin marking King Phumlphon's roign as the

longest in Thai <

Rabin's Visit

On the eve ol Ne US visit. teraea Defense Minister Rabin has announced the releasemal number nf Palestinians detained tor protesttrying to head oft crmcttm ol his tough security measures. He also has met wtth prominent Palestinians and reopened some high schools in tne West Bank, in addition to fliscussoris on Israeli measure! lo que" the Palestinian unrest. Rabin expects his visit lo locus on defensethe prospects lor Israeli participation In SDI projects and technology transfer. He Is likely to explore US thinking on the proliferation ol missiles, nucksar weapons technology, and clvjmlcal munitions In the Arab world.

Comment: Robin mado tho conciliatory -cstures lo counteract the unflattering portrayal ol him In foreign media for Ns "Irontlsl" poBcy. Rabin probably timed the announcement of the releases to forestall US criticism of continuing Palestinian casualties and violence In the West Bank and Qaia Strip. By keeping contentious discussion el Israeli security measuresinimum. Rabin probably hopes lo extend consultations on Israeli acquisitions of military hardware and on Aral- weapons programs. He 'i likely to locus on lhe prospects for further Syrian missiletrie Chineseme statos of Saudiites

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In Brio!

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i Nagorno-Karabakh soviet decided this week region would leave Azerbaijan Republic even IIisapproves, coned move unconstitutional

Communist Insurgents attacking Army unit In northern Luion this week used mortars tor first timeuerrillas probably have capturedmm mortars in recent years capability limited by shortage of ammunition.

Tserenpllyn Oombosuren new Mongolian Foreignducated in Moscow but apparently interested In contacts with West

Government changes ponotng. cabinet resignedately to reflect shifts In party enr-cutlve of Motherland Party favoring conservative, religiousajor policy changes unllxeiy CaMM

Government battling Labor opposition over UK warships* weekendabor, to embarrass government, claims ships nuclearockworkera' otlempt to block horj>gr_*ttn dsaced tanker lolled, fur the' confrontations likely aaeeB9*'

USSR. Bulgaria esiaonsivng limited currency convertibility lorfirms with directecond such i

part ol reforms many CEMA members*

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Special Analysis

o( President Evron

Turkish President Fvren's firstto Washington nestmarks tne returnegree ot stability to Turkish-US relations. Evren it lest Involved than Prime Minister Oaai In the day-to-day running ot the government butource tor moderation In Ankara and hateading role In restoring Turkey to civilian rule tlnce "

Ankara Facing Bumpy Rood

the mart* remarks wereerrorism, potn performance. terrorisrn_rema" rarer..

Ev/en's visit occurs amid speculation that Turkeyew era ot ngnt-iett turmoil that might threaten Ita recent democrat* gams. Such speculation appears premature. Dut had the assassination attempt agamst Ozat last week succeeded. It would have setrotongod scramble for control Of his Motherland Party, possibly resulting In the same kind of factionallied parliamentary politics that plaguednewm himself broughtound of heated discussion about lhe eaten! ol the military's confidence in the Oial government in April when he Justified its Intervention0 and sax)

ie srtuation demanded.party onlicrsm otabouttaction with^

domestic htwing terrorism is even

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There are other source* ol Instability in Turk.sh scciely; economic problems are cur-onth/ the mostInllauon Is running alul Ozal hss not Imposoduaterrly to stabilize the overheated economy Mo apparently (ears that higher unemployment and cutbacks in public services would bring even more public outcry. Foreignve Already become more cautious in making new loans to1

US Connection

The Turks wM view the fivten visit aa confirmation ofto Washington and as further evidence thatto democracy rnakes them more acceplaoie to thevisn comes moreear alter It was postponed because ofunhaopineu with the level of US aid and wtnresolutions ongenocide" andimproved after Ankara ratlliod the renewal ol theand Economic Cooperation Agreement In February.is almoin oerliinlohfgMlgnt Ankara's desire tor more US assistance

Evren. in lacl. is likely to use the level ol aidarOstlck by which to measure US-Turkrah relatlona. notingolitically ana economically viable Turkey Is In Washington's Interests. Ho Is also likely to ask the US lo help lobby Inr Turkey's eniryinto Ihe EC as an insion ol Ankara's NATO membership. aMS*.

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Analysis

pllons Narrow

rebel leaden are publicly declining furtherwhile ihey soelr renewed US etalatance their

mutter, weakness ana continued Inl.ghung ere likely te drive etD'recftwole members bat* ro lhe negotiating table.

The Insurgents this weekandinlsta invitation to resume talks this month as a

Some rebel leaders, however, appear willing to resume negotiations. Directorate members Pedro Joaquin Chamorro. Alfredo Ceaar. and Aristidei Sanchez nave separately raised the possibility of reinitiating

Problom* Mount

Budget cots and charges Ol mismanagement are creating serious Internal problems for rebel political leaders All aaeajMaaBMejajBaaae.

employees engaged In poliiical support aclhrtlles in Miami, Washington, Latin America, and Europe will be dismissed at the and lhe month. aneae'SBe)*VBloBeaVaBjMjj

amibutethe layoflack of funds.

continuedwv* tsaa

easBseflLeV charges mat the organisation haa become loo largo and" complacent and ts callingajor reorgan<iatkin. He predicts that most If not all ot tne current political .leaders wit oe replaced at Ihesr.rm.oty- wn.cn rmghi be held earlyontn. 1 *

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Alcohol Control Complicate! Economic Policy

In his speech le the Central Committee plenum Ih February. Qoneral' Secretary Gorbachev said that reduced state alcohol sales which are highly taxed, had oost tne treasuryillionhe first twoall years ol the antlalconoi campaign. In October, he citedajor cause of the laMure to achieve overall gams In consumer sates commensurate with people's Increased locomo.

The fiscal impact of the alcohol program could build support among economic policy makersodification of alcohol pofcy. Fear of lost revenue reported^ deterred Gorbachev's predecessors from pressing aggressive alcohol control. Those concerns were put aside'ut Gort>ecrk9V'B-rcfnarlts Indicate he realizes that alcohol rx*ey plays an important role both in the level of state revenues end In creating consume* setiaracDon.

Special Analysis

Campaign Against Alcohol

Tha Gorbachev loaderihip's entlalcohot campaign enters lis fourth year amid Increased public criticismumber ol undeslred economic side effects,arge loss or revenue from alcohol teies. Peports Indicate the leadership has decider)elax (fie mare onerous features ol the campaign while continuing to arise* (he woraf alcohol abipses. General Secretory Gorbachev has much to gain politically Iromohangetthai would be perceived as Improving consumer welfare. The political problems facing Ihe regime's chief promoter ol loughrestrictions on alcohol, "Second Secretary" Ugachev, have probably made It eeslar to sollen the campaign's more extreme

Prortwient reform economists have recently dfWan apparent Dan on craSorsrn ol the eniinicohoi oampaign eABaaaaaaVeannaaaaaBaaas*

campaign had (orood substance abuse tonawughereading to large-sale producllon ol Illegal Ocjuor ncreasing use ol substitutes, many of which are poisonous.

.the policy had "greatly exacer baled problems In Ihe tnah^udflet" without significantly reducing alcohol consumptl

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have urged the campaign be retocusod to moderate alcohol abusemore establishments that sorve wine and

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Pubfcc resentment ol tha campaign haswing lor soma time WMks tho doubling ol .alcohol prices, limited supplies, and measures to make alcohol difficult to Buy have cut legsl soles by more than half, these measures haveenragod many consumers and contributedidespread perception that ihe lot of Ihe-averege cllOen is getting worse undei Gorbachev. Meanwhile, home brewers have increased roducttona levelnr: state woduct.cn, i

The leadership, disturbed by the massive lawOrnaking by ordinary citizens, Is also embarrassed by disruptions in -theavailobilityconsumer goods due to Ihe campaign.Sales'ofmain raw material of homeIncreased eharpty since the campaign started5 Sugar rationing has now begun In many.areas of thobecause ol supply shortages, consumer hoarding,ohcy decisionimit Xegai alcohol prrjductlon Toothpaste, cosmetics, and even Insect reeeaem have scarce because they are being used as HQuor substitutes.

Leadership's Neil Stepa

The apparent political decllno of Llgachov has weakened the leadership's most strident advocate of tho sntlaKohoi program. Ugachev hasaximehst approach, seeming to want lhe USSR toountry of abstinence rather than moderation in drinking ^HseeV*^

Gorbachev probably does not Intend to abandon the campaign. He -has associated himself pernonally with it. collingtruggle to aavo the Slavic people end an essential companion to rotorm. To revursn course would give the appearance ol apoflcy defeat. He also credits the campaign with improvements in public orier, art jncrease in Hie expectancy,eduction in accidern ralaa.1

regime, however appear* to be prepanng to mod-fy Ihe campaign slightly to make It loss oflenstvo Jo social drinkers an recapture sales lost to llleonl producer

continued atrictenforcemei drunkannass. Drinkingncreasedrape leadership is trying tooevisi Gorbachev, preserve the b* dr

no ugh to gam credit wtth* consumers.

il ration Is likely Io be balanced by lenl against Illegal distillers and publicthe leadership perceives haa acted toarticular target. Theoia that wuoss ol face lor idts ol Ughter aloohot control, and be

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