Created: 10/31/1980

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POLAND: Crisis at Another Peak

The meeting scheduled today between Premier Pinkcwoki and leaders of the free trade union Solidarity--perhaps the first ofa critical juncture in she development of Poland's

ir.zemal crisis.'

The leaders of both the regime and the union are publicly committed to opposing positions on matters ofarticularly union acknowledgment ofhe party and regime acknowledgment ofnion's right'to strike. ompromise that would save face for both sides will be extremely difficult; If they-fail,,strikes are likely, and the regime may use the police against strikers.

Use of the police would entail serious risks. The strikers and public might resist them, and clasheseadationwide breakdown of publictoint the regime would be forced to.call onhich has been loath, to act against the public'.it:-is pledged to defend. Part or all of the militaryefuse orders tn such an instance.efelsmV:<* if- '<

We do not know exactly why Pinkowski-eader Kaniao* Moscow or what guidance -they receivedhere is no doubt that the two reviewed strategyor that Moscow used tho visit to- underscorehe'Polish-public that it considers the situation^serious, and we believe'it likely that Moscow has urged the" Polish Government to stand firm against worker demands, fllfe

. ** m *" V v*

Both Kania and Solidarity leader Walesa"are aware of the dire consequences that could resultailure. today to begin defusing the current crisis. Neither wishes to set inourse of events that bothcould lead to Soviet intervention. While some leaders of Solidarity may not wish to back down, they are limited in their flexibility by more militant elements in their organization over which they could lose control. .*


Soviet intervention is not inevitable, but the chances for it are high enough that we should be prepared for the eventuality. (amfe

The Soviet Perspective

Soviet press treatment of the Kania-Pinkowskiavoided committing Moscow to the present Moscow could eventually decide to backnew regime in Warsaw. The currentto be doing everything in its power, however,Moscow's'desires, and the fundamentalmilitancy and the questionable reliability ofmilitaryould not be alleviated by anothertop personnel. VCi /vs"r *f.

A Soviet decision to cliange the Polish leaderships therefore, probably would be partroaderoilitary solution to the crisis."The Soviets would prefer that Polish security and military forces be used, but we would also expect tooviet invasion .force readied. While this was occurring, Moscow would hope that military demonstrations and sharply'increasedpolitical pressures would cow the Polish public. Only he unlikely eventomplete capitulation of the union movement would seem sufficient to stay theand.

Soviet-*jVv: ;s

We believe the Soviets would still prefer to allowhe Polish Government .to solve its problem without military force of any.kind and,to see Polish forces used if force is necessary. Nonetheless, we have no doubt that .Moscow has plans on hand for any of several ways'toluse itsforces to influence events in Poland.

one option would be toew divisions, ostensibly at the request of the Polish leadership, to back Polish police or military forces in controlling the situation. This force could be drawn from high-strength divisions in Eastern Europe and used to supplement the

two Soviet divisions already inmall,of this sort could be accomplished quickly and with


little or no warning. It could also be done under the guise of an exercise, which would provide some advance notice.

If the Soviets felt that the Polish Government or the polish military were not willing or able to take effective action, they would probably decide toorce large enough to overwhelm any Polish militaryand to discourage or subdue civil resistance quickly. He believe that the assembly oforce-perhaps on the order ofivisionseek. The necessary mobilization and logistics support activity should become apparent to us withinours after they begin. The Soviets would be able to commit most of the force at that point, but the-resultingwould not be well prepared or fully coordinated. We believe it is more likely that at least an additional week would be used to exercise the troops, rehearse the operations plans, and build up logistics i pej. JRapidly deteriorating conditions in Poland could, however,'cause the Soviets to commit up toeadyearly while continuing to prepare the remaininghe Soviets have 2ft ready divisions in Central Europe that areay's march of western Poland.ecision to sendartial force were made, our warning would be reduced to leaseek. -

Polish Economic. "'

Should they manage to restore politicalhe Poles will' still face economic problems of staggering proportions that could well rekindle political tensions in the new year. -fllmmi

Poland's economic outlook has becomein thfc/.four months since unrest broke but The recent meetings of the party'Centralparliament conveyed an unmistakable-sense ofhelplessness on the regime's part in handling the argely reflecting how little room forhas.

Before July, Warsaw was striving to improve Poland's external financial position by squeezing capital investment and by readying measures to bring consumer demand into better balance with supply. The strikes and thethat ended then have effectively killed the consumer austerity element of the regime's pre-july economic The policy of favoring the balance of payments at the expense of the consun-.er has been reversed. twWMT

Despite the regime's reordered priorities, the output required to bringerceptible improvement in Poland's standard of living is not likely to be forthcoming. Industrial production continues to lag, ercent lower in September than the level in the same month last year. The fall in the production of coal andexportparticularly disturbing. evival-in industrial output will be hindered by the reduced workweek soon to be introduced and by.the abandonment ofaround-the-clock work in tne mines. "'AamY :

Consumer well-being also is jeopardized'by poorresults Meat production will belarly hard hitpercent drop itf the harvest of potatoesan important tadder crop. *

Poland's basic economic problem remains how to. reduce an unacceptably large balance-of-payments deficitroviding enough consumer goods to preventithhe shift in priorities toward consumption, Poland'sternal financing needs haveThe support needed" from abroad, however, is not yet "inarsawave tb find several billion dollars:of_new-credits. Western bankers are willing'to do'little-'more than roll over existing debt, and other'East European countries have been miserly in thoir support*.

Poland has beenoncerted'drive to gain financial relief, appealing' to numerous Westernfor several billion'dollars in aid throughescheduling and new credits. Western governments seem unwilling to grant all of Poland's requests, but will make their decisions only after close consultations with the US and other creditors. WMhrnY -l?

Large-scale aid will be necessary to avoid ansqueeze that could have calamitous political Lacking the requisite financing, Polandforced to pare its current account deficit sharply,that would severely cut production and Without Western aid Poland will be-hardput its economyiable footing. Massiveaid, on the other hand, might lead the Polish leadershipdelay or avoid the drastic economic changes that muse make.

Because the economic outlook is so dismal,

economic groundsmore seriousunrest than we have seen so far is building. Unless the Polish people are willing to accept little' or no growth inenewal of strikes, and perhaps civil-;disturbances seemimmediately"but inhe workers conclude' that their struggle formateria^gaujs through political change has failed.

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