NATIONAL INTELLIGENCE DAILY SATURDAY 2 JANUARY 1988

Created: 1/2/1988

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t, creditor banksvinoe their Mexican Governmeni debtaoount tor eaallon ofexican bonda. To make tho deal mora attacttvo to banks, th* u$ Treasury haa agreed to ousmnlee the Mwdcan bond* by Issuing bond* of Us own to Mexico for about

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Reactions lo US-Mexican Debl Plan

South American debtors ara reacting with wary optimism lo Ihoelief schema umellad o, tho US end Mexico early this wee* ifjjrjpr*

South Americano are pleased thai Western creditors are am bracing, in the Mexicanonviction held by many regional debtor countries ihat their commercial debt should be devalued through secondary market discounts. While key LatinBrazil andcalled theositive development that Ihey hope wftievenluaRy benefit other debtors, they are expressing concern that the arrangement was tailored to Mexico's situation arKJmay not easily be applied to their own critical debt

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problems"

Most foreign bank creditors have welcomed the scheme, according to pressumber of small- to medium-sized International banks Intend to take advantage of the opportunity to shed their Mexican debt for perhaps aa little as SO con is on the dollar, ail hough larger banks have yet to Indicate iheir plans lor participation.MsesT*

US-Mexican debt plan Is less suited to Brazil or Argentina. Both are short ol foreign exchange and would be unable or unwitting to foottha billomparable US Treasury bond guarantee.iflpM bS

Brazil would noi qualify lor Ihe guarantee so long aa Its Interest payments remained In arrears and it relused to subscribe to an IMF program. Brasilia's relations with bank creditors may become more contentious because It will probably insist onas generous as those accorded Mexico but without the costs of an IMF program or large foreign exchange expundlturea^ajswjaa h3

Buenos Aires probably will expect the US and creditor banksii special treatment because Argentine jlkeJ^dcrt^uui ito honor ils debl

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MAJTfc Cop.noeegn AM Cut.

H trying to MM the knpact of recent aid cuts but probably wM fsK^ flnencw crtsts

rnonth. To cope wtth the suspensioniBton in US and rnu*Mat*rsx beiance-otu support.rtnc* hM raised OMcene taxes, delayed paying crvfl servants,ut Inlhasaiartosof mBhary,

BSBBBBBBsViB%ffsSKtcoiui ofre sufficient to last

j*ilt cover no moreormiU ali-weet auprVy

ruling council almost certalnry wants to

auatertty measure* before th* scheduled Inauguration ofpnsssdsrrtebruary.i*ry salary cutsa portion ofctober. To retain thejyafty.protebfy wll shrft the burden of meet budget cuts tosector.ow, however,ew round ofb*gin* toesd

to

The visit of Bavarian Mrritfter-Prveklsnf Franzfter the* was* Is Hosfybout Soviet domestic and foreign poBcies. Following th* trip.ew chapter InGerman rotations and said th* INF aocord-which he hM criticized on miVtaryimprov* th* cflmat* tor other arms nageOaflons. Straus* urged General Secretary Qort>*cbev to accept cuts in tactic* i

rv to acoeptacncei"X

.conventionalwo men also agreedlobal

I be verifiable. The Bavarian atais's leader called as well tor expanded East-West trad* and discussed possible Soviet-Wast Gernisnoooooraruon Inxperimental nucloar react or r

2 Januwy 1GSR

FriA>(CI LUXEMBOURG Acquittals inft CM*

A Luxembourg court hu acquittedranchn chargesvVMUng in* grand duchy'a laws on lachnology. athrmsd th* Luxembourg Government's acQjOnsIMS to setza th* US-rnad* ion *tch*rmad In mfcroeieCTrontca rout* to MOSCOW

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caae demonstrates th* dlrttcufllea in enforcing export controls. pertKutarty drfterlng national laws that are not designed to control mulunaOon shippingh*hai the primary defend ant. aWvough sofOng BsgaMy lo th* USSR, had not Intended lo ship the controlled Item through Luxernbourg and therefor* had notvtaUnad Mah* Uoarnbourg Government can appeal th*ts*on out probablynot becauseIs mor* concerned about Peris than about *nlorclng COCOM ruts*

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'. fodlo claims town of Qayasn nasv Ethsopsan border wxtodlyin bco* Amryi

| Prt*MtM Mt pstfSamentary ssscboni for 2Bopposition parties say they wfflErsttadeostrwbiwwarfkxi defectorsculd srdrt kcaJ sisctons from

2 January

Mohsrnmed Abdul Munsrfl appolrit ed Barajlaoesh Rruanceonett, officiwiad held cormioioo and av^cuttUTOeshad wants to maintain competent economic kssdsrshlp during currant

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