Created: 10/31/1980

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POLAND: Crisis at Another Peak

The meeting scheduled today between Premier Pinkovaki and leaders of the free trade union Solidaritu--perhapa the first ofa critical juncture in the development of Poland's internal crisis.

The leaders of both the regime and the union are publicly committed to opposing positions on matters of principle, particularly union acknowledgment of therole of the party and regime acknowledgment of the union's right to strike. ompromise that would save face for both sides will be extremely difficult. If they fail, strikes are likel^^andthe regime may use the police against strikers. J

Use of the police would entail serious risks. The strikers and public might resist them, and clashes could leadationwide breakdown of public order. At that point the regime would be forced to call on the military, which has been loath to act against the public it is pledged to defend. Part or all of the military might refuse orders in such an instance.

We do not know exactly why Pinkowski and party leader Kania rushed to Moscow or what guidance they received. There is no doubt that the two reviewed strategy with Brezhnev or that Moscow used the visit to underscore to the 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. 1jjjjjjj]jJJ|jjjjjjjjjjjjj!

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 thoir organization over which they could lose control.

Soviet intervention is not inevitable, but the chances for it are high enouah^that we should be prepared for the

The Soviet Perspective

Soviet press treatment of the Kania-Pinkowski visit carefully avoided committing Moscow to the present Polish leadership. Moscow could eventually decide to back yet another new regime in Warsaw. The current leadership seems to be doing everything in its power, however, to accommodate Moscow's desires, and the fundamental problems--union militancy and the questionable reliability of thelleviated by another shuffle of top personnel.

A Soviet decision to change the Polish leadership, therefore, probably would be partroader decision toilitary 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 increased political pressures would cow the Polish public. Only the unlikely eventomplete capitulation of the union movement would seem sufficient to stay the Soviet hand.

Soviet Options

We believe the Soviets would still prefer to allow the Polish Government to solve its problem without military force of any kind and to sec Polish forces used if force is necessary. Nonetheless, we have no doubt that Moscow has plans on hand for any of several ways to use its mili-tary forces 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 in Poland. mallof this sort could be accomplished quickly and with

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

If the Soviets felt that the Polish Government or tho 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. We 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 support. |

Rapidly deteriorating conditions in Poland could, however, cause the Soviets to commit up toeadyearly while continuing to prepare the remaining forces. The Soviets haveeady divisions in Central Europe that areay's march of western Poland.ecision to sendartial force were made, our warning would be reduced to lesseek.

Polish Economic Condition!

Should they manage to restore political stability, the Poles will still face economic problems of staggering proportions that could well rekindle political tensions

Poland's economic outlook has become steadily gloomier in the four months since unrest broke out in July. The recent meetings of the party Central Committee and parliament conveyed an unmistakable sense of drift and helplessness on the regime's part in handling the economy, largely refloct^ighow little room for maneuvering the leadership has.


it it-


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 betterwith supply. The strikes and the conce*-sions that ended them 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 consumer has been reversed.

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 of around-the-clock work in the min. l

Consumer well-being also is jeopardized by poorresults Meat production will behard hitpercent drop in the harvest ofimportant fodder crop.

Poland's basic economic problem remains how to reduce an unacccptably large balance-of-payraents deficit while providing enough consumer goods to prevent unrest. With the shift in priorities toward consumption! Poland'sfinancing needs have increased. The support needed from abroad, however, is not yet in sight. Warsaw will have to 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 theirHHLbbV

Poland has beenoncerted drive torelief, appealing to numerous Westernfor several billion dollars in aid throughand new credits. Western governmentsto grant all of Poland's requests, but willdecisions only after close consultations withand other creditors.




Large-scale aid will be necessary to avoid ansqueeze that could have calamitous political Lacking the requisite financing, Poland might be forced to pare its current account deficitevelopment that would severely cut production and Without Western aid Poland will be hard pressed to put its economyiable footing. Massive infusions of aid, on the other hand, might lead the Polish leadership to delay or avoid the drastic economic changes that it ultimately must make, j

Because the economic outlook is so dismal, theeconomic groundsmore serious unrest than we have seen so far is building. Unless tho Polish people are willing to accept little or no growth inenewal of strikes and perhaps civil disturbances seemimmediately but in sixhe workers conclude that their strugglo formatej^^qains through political change has failed.

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