THE OUTLOOK FOR EAST GERMANY

Created: 1/13/1966

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NATIONAl IN1ELLIGENCE KSIIMATE

NUMIilR

ihe Ouiloou lorens

DIRECTORNTRAL INTEUIGU* I

UNHID SIAllS INIEUlOtNa rX'Akl-

l ill.l

IJ IANUAKV IVA6

7'it following infalliganca organiiofiom poiUcipated in Ihe preparation of

CanftoJ inotligorcaandinfalUgeneo orooniotlont ol Iho Dmitt ol Siolt. DaUcua. and iho NSA.

Concurring!

Mr. Richard Htlmt. Oopuly Director al Control Inlolligonc*

Mr.vgt-ai. Tne D'ocior of Intollganco ond RoMorch, Ooportmoni of Stole

i-'tt. iii'mai

* ,

fig

WARNING .

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J

THE OUTLOOK FOR EAST GERMANY

THE PROBLEM

- IcMUf-lvmi unllnnk loriiuuiy and lo famine nmiurnternal ami external policiesru-nil

CONCLUSIONS

A.'i'tmiii ivtilmr is imm' siahli-llw h'aili'islilpnJUIent, tlutu ul any nilicr lime In Its liUUw), 1'npnlar stippurt

Nmicl support. i'iiin allalis. Within <H. (lu* i'lasliiilrpciidt'iicc from Tin; departure ul nil Is tinlikcUi-

U still minimal.rMtyail .uivpitiiirr nl the rrniineonnc general. ImpruwmeiU in ihr enniuim will Ih- tl'iw ami uneven, 1ml major reversals am unlikvK

(in ol awplanci;Inline and 'ill make il iinreasimihTUiaiiv, tu denyl life.

he ri'itiiiH- will rciiuiii ImmvIIi tlr|h'iit!riil ii and tlu* Soviet uilou will remain ilivMvr inu liamewtirk u| vhmv iimpemliiiti withSli leadership nuiy make limitiil inuves toward greater Moscowess rrprevdvi- inii-nmlndent timid leml In ciiscs tvilh danger the Hirvival ul Cumiuuimt

C. Tlie retTAite's dlinv.broad will pmhuhlvult for the West, Olid pariinilarl existence id the

DISCUSSION

I. Ill August hJOI. hrlnrr Ihes ri.vlul arms* llilllii. ihv Kast CriivuninioiiloY.'iiiiiiuuis iiiiinlirr (il ptiipTi' Ik'nighe Wi-sl was symptoMulu-ohhral ifMfcf.ullll1adMrtl tl.jl kW.Vh.sv IWlii, .annuim.MralIn tas.ir otmam Ills mmwhilriiu* hail also lavn nHarrWd

m .iinliiliiiiis millvi-rlnk'- VWsl Ii.nnaii*.

ami hi Ids uillUmiH-ss lo inn llu- risks .itrttisi/alniii of aexi-

V snimiKi'JKI<itji

(turnoi.ii th. ranpk -l*

aiith<.litv,i'ivlamr in- situation tlniKiiidrd drastic im-iisiu 1%

- Ha- Wallinn- pnmpusili- (or dn.lmg tilthiimiiwill,noit. hi iwivi- giado-

.ilhs dimUm. |heni Yearas ipm-iiv ImhhsI. and in l'AI thes 4ilii|riiil in an rllurt t" rcviiulue ami laliiinah/i'ntiuinv. Muiiilliuii.'iisly. the ITbrlehlWI1lakeills iiiiiIidIIkI inriiMircssr iiilrmal tension, ('riicinl to theseial Kliru-li.halleiige lol-rlm laid Ik-.ii il.tiMs.Hvl |U- I'ulaui missile .Ttsu

I. THE INTERNAL SITUATION

1 In tin- past ioniine li.is Urn an .iliviuus iinn-asi-i* stabilityh< Minim- amifi itsi* tlu- tiisi turn* sine*-llir ss.ii* ilH- lalucad Im-.h; drawn oil 'n (btililsngi.-s. ami thaplanum can lUMinte thai ituiiimimmc ininm luis Inili-iil since I'Kil The mipiilatioii. llixmgh Imsi. ally .iiiti-OiininiiiiisC. lias hailiinu- In termstin-nd In lis li'luiiuiis tilth thespenally slim iIm- usitihum of KIiiusIkIii-v, |In- L'llairlit lewh-ishlp hasastpusslinii in Ia-iilral Kiuojm- Id mluiKr iIk* t'SSH>i iniuK-'s kmtr-ti-nii survival

.: ratiM taHasaihmim pal mmiwwm mm (MM

1mllu.rlunwiOi <i(iiUlU.n. Tlia

iv-vuM..ill.nl.

.alUanp.-. In |IH.i.BM IM

ns slots hrcaajJill1i.Altilaiulri. stilll-.

imiiii'iiiiiiiu hi luu .III tn umki-

I (hi- rutty millu- Sutiulisi Uniiv Pattyhasnrpiisiimlynlltiial inslrnninil.ilp il has priiMii CavfkaUa nfjK-atrd politiisi! and rismnniii vtisi-*. llu- parti ia*sirinlHf* amiIU

percent tit ilk- population and tin- hlglhM number since I'W It continues to4 mmn .lite pertv. Tlk- tact that mrmlxidiip lui0 since the- IViD tagfvMi that nunvC.-imuuimed tu making their career* in tbe German Democratic He-public and Miccem membership will help.

V Perhaps tin- most lmpiui.ml ilialli'iiuv In tin- party and In iiiliniul stubllllv "ill Ih- ihroi tlu- mi11aafcl tn c'lhriehr. fatars bv has JnatrdGerman pniilkv IU- lus Uvn sldlful and mnum-iuL not unh ui copinu with internal ptn'Muue*tMfJ to the inudulitioiu in Susiet policy. ButmAnd hh era is drawingliw.hi*in the Gorman CummnnUt movement Imw disappeared or arr politically Inactive. IK- mluht Ih- removed with Soviet cummanec. or he cuulddntwtKr rule, but It svrms llkelv tlut lie will die in office In am- rxmt. wtthln thrmd wanuture of EaM Cvrrtum oil) almost certainly pau to ihe IuikUifferent leadership.

fl. Al present it anpftn dint the iItwhjmirich llniieek.r.is power position includes membership im the'Politburo, tliv party Secretariat, and tbi- National Deli-nsc Ginned, lie Im active In ulmust every phase nl parte aflain. Tin- Premier. Willi Stoph..lie parly lui not luJ to contenda mkcvscImi Imiu' before and tlirrc is nn establlslird process for the transto nt poww. Okl ammnmte* andound to revive, .md any avw leadership willhricbc's prestige authority, and experience.

For theselu- immediate succession phase will proliubly take the formcollectivelie Snvfi't rolepecial, stabilizinij Inctoi. and It can be osiuined dial tlu- Soviet, have mode tbeir im rkrWl clear. II the nerd should arise tlk- Soviets would almost certainly exert the strongest possible political influence on the East German party. But Ihe Soviets could misjudge the situation and their intervention might only aggravate it. Despite these possibilities. It I* likely thai the siucvssioii will be accomplishedajor crisis, and almost certainlyreakdown In Communist authority.

Thr characterew leadership,n open ijuestinn Tlsr next generation o; leaders, as represented iu themember Politburo, is of different background and environment trom I'lhrieht. Most ot the fullare in their early fOtU'i.froup they reflect the diversity common lo present-day CommunUl elites, Some inr technicians, sonic Ulcologues, some party bureaucrais. Eight ot diem (uined thr old German Communist Party in tbend early IB3QV The others came into dur partv after the war. or during tbrtr sojourn in die L'SSH. Most ot litem achlrwd vlature ui die party alter the death of Stalin.

Thus, the new leadership is not likely tnarbon copy of the I'lhrieht regime, either in style or in approach llie problem* fl will face will be more complex in many lespetls. One iivml alreadyhe ilKteased

Importance nl technocrats. An economic policy muvcs over the untestedxperimentation and reform, these specialists may carry more weight In party counsels. As demonstrated hy Ihe recent policy disputes whichled In the Milekle of Erich Apel. the East German planning chief, there Isigh potential far flushes lietweeu ihe economists andew leadership,uch clashes might grow iikk.iMiigly difficult to resolve.

Tin-mill llic Cnio/c. The generalt Gcnnunyong been more ivxtrktive thao in nllier Coinmimist countriesEurope.egime has always had torehtllv Isetwecn lightening andUsince IWO tin* disparity from East Europe has become more pronotmtvd. Dui In the lust two yean the East German regime hit*umber nl limited measures toore relaxeds ir.its in the West, the llerlln pass agreements, und an Increase in ntlier travel and conflicts with the non-Cnmmiinlst world.

At the same lime, the regime remains extremely sensitive to outside in-Huence fromEast and West. It fights an ideolngicul war on two fronts.as lo contend with procure* fur liberalization generated by the example of other East Eurnpean states and with the Impact of the vital complex at Western inHnences to which Its people are exposed. They have easy access tn Western radio and television, and are aware of the developments in the West and the world ut lartic. Conaeipiently the regime mintast amount of money, time, and eHort In combating the effects both of Western iuHuonce and of "revisionism' from within thu Cuinmiinbt world.

Popular support is still 1nin1tn.1l. The population has become moreand submissiveiowever. and this trend seems likely toThe regime will permit only that degree of relaxation which, in its view. Is necessary to win greater cooperation from tlie people, especially In the effort to achieve tertuin economic goals. Such relaxation, if accompanied by the kind of limited ecunomlc gnlns that appear likely, would serve to reduce some important cuuses of present popular discontent. Over the long term, however, there Is tlie possibility that concessions hy the regime will generate popular pressuresiberalization well beyond what tho regime considers safe.

nteUeclitiiU. The regime's policy toward Intellectuals litis fluctuated between periods nf some relaxation of controls nnd harsh crackdowns. Even durine the mure relaxed period, however, tlie Ulbricht leadership has lugged well behind most of East Europe and the L'SSH In permitting greater freedom of expression. Partly because of the relutlvely high level of control, it Is difficult to judge the extent of intellectual dlasldence and its political content. We, dunk tliat as in other Communist countries of Europe there Is considerable questioning of the regime's policies among East German intellectuals, uud this willontinuing problem. Yet whatever intellectual dlssldence may exist is notor cohesive. The regime will probably be able to keep the problem under control and intellectual dlssldence in Itself will probably nut produce any important political change.

CoNKWiiiftiim. The problems tit tlie East German leader*considerably eased tf tlxn iotild invoke lltr spirit tif uulioiuilUm. a* luuin Poland. Human u. Jmi even.tkii. But nuramaltsm inis Inherently hound lip hi tlie imsMfcNilrifctUtal- As long aE.ist German pnlUv is dlrvvtiil Inward perpetuating the division olfeeling iniist'eiiilnaKiw nf separalcness from the iiuiuwitv

he .ttortevelopistinctGerman national terhng lias met with simve svtcccss. The lung separation Im* led tu siiniu acceptance in East Germany oi the iwu-siute concept. Despite the general dislike nf tho regime, the punuUtton duplies some seme ot pride tlut whaleser has la-en achieved Ui social and economk pnspew lu* Uvn accomplished despite formidable obstacles Conversely. West Germunysmiracle" provokes some resentment ot Bonn Finally, whatever lingcilng hope there may liavs been for earlytnM drttroyed by tlie Berlin Wall.

he regime's dilemma over nationalism.ound to petstit It will gradually be hclglitened by the tact that the current of nationalism is running strong'throughout Eastern Europe and in West Germany. Invoking all-German sentiment will tend to keep alh* lies wild tlie Federal Hepublk. which the regime is anxious to destroy. Tlierr is also tho danger that an effort tn exploit nationalist feelings could easily1 anil-Soviet turn. The regime cannot afford lo ignore national feeling and will continue to try to use it. It will also remain extremely sensitive lo the dangers imotved and will proceed ool>greatuccessor regmie In L'lbfkht ii likely to be less sun-of itself In dealing with this dilemma.

IT. Ththe East German military establishment has no independent soke in die lormulation of polite nor does It ever! much mliitence on policy. We foresee no change hi thb situation.oubtful (hot the military trill play an active role In the succession period; If It did. it wouldonservative force, backing tlie Soviet-sponsored lineontinuation of the Ulbrkht tradition 3

II. THE ECONOMY

economic situation bus Improved markedlyt thatefforts ta force thef economic growth had led to scnoiupressure! hsu Imilt up, large resources were tied up Inprojects, and "production lor production's sake" had filled thewith unsalable goods. The regime luu brought thesefktlonary pressures were eased by holding thewage* rablng consumer goods prices, and informallv rationing butter Most of the mujnr Investment projects started In the Intohave been

hii; 'Lj*I

0 -

finished Tlse new economic system ol planning ami management, adopted lit 1US1 tended lu discourage production a* an end in itself, and emphasize salabllits and proatabilin tlu- criteria (or econumic decisions.

IB. SWr-reiw Ontlooi The outlook for the iunatny in the short term is tor continued improvement 'miioderate pace.ew yean the rate of economic growth will lie at admit presentercent. Iwt below the higher rate* of the late IWSfK There will lie Mime moderni/ntlon of Industrialarticularly important problem. Agricultuml mitput will prols-able increaselow rate, though large imports ot' grain,nd dairy product* will uill be nceev.arv. The economic reform progrum will probahlv continue to evolve somewhat unevenly, but hi the main It will probably he beneficial In the economy,

nhm Comlltloni. The populace naturally hopesetter standard of living, and the regime continues to promise It. The present ouduok Iiradual improvement, chiefly in the availability of more consumer good* and some Increase In .piality. Huwes.-r. these Imprm-emenli will fall far short nl satisfying popular demands. He East European standards tlie average East German will be well off. hut most nl the people will remain highlv conscious of beina much less well off than the West Germans. As (ar as these comparl-sons can be made, the gup Isetwven Using conditions in East and Waff Germane lias esen widened in tlieresent trends continue, it will pratwblv increase in tht.

he Long Teiwt. Tlie longer-run outlook for the East Carman ecnnomv ts more uncertain. While the continuation ol present policies will assure modrtr gains, these advances may bfl .it the cost ol staring up serious troubles by the end of the lSrMs Tliereumber of basic disadvantages toosercomr. Demographic problems remain severe; total emplriyraem declined slightly during the past Ave venrs and will probably decline somewhat more during the nest Ave. East Cermau Industrial technology is in large part obsolescent hy Western standards, and resources must In- shifted from new Investment to replacement and modernisation ol the existing industrial plant. Productivity Is still Increai-log. but notate sufficient tn stimulate economic growth beyond the present modest level. Thus East Cermuny mustajor effort to modernize Ih Industrial plant and raise efflclencv.

ut the East Cerman* are caughticious circle. Tlw prospects lor modernizing their technology dependreat extent on acquiring new plant and equipment from tbe WW To do this, unless they obtain Western credits or investment, they mint Increase the salabillty of their goods in Western markets But outdated technology mokes many of their goods unacceptable in tbe West and therebv limits the chances (or expanding trade. In sum. the long-term economic outlook wilt depend on wbedier the East Germans succeed in the effortompete for foreign markets. Our estimate Is thai rheir chances OR not very good.

oping with these lunger term problems Involves polities as well as economics. In aider to push exports nnd raise efficiency. It would probably be necessary toemporary decline In grosvth andmostprospect for any pnlltlcnl leadership. If these decisions are deferred, .is seems likely, then it may be that tlie new difficulties will confront Ulbrichts successor* An additional uncertainty Is tlie level of Soviet support. Recent indications an- that the Snvicts have not met the East German desires in their new five-year trade agreement; since East Germany Is vitally dependent on Soviet supplies of raw materials, new adjustments in East German economic planning will be called fur. Finally, there is the question of trade with Bonn. The East Cermans would like to shift the pattern to Include more imports of complete plants and major Items of equipment, preferably an credit. But this Isolitical decision, which might call for East Cerman concessions In other areas. And this problem, too, might be facedew leadership, rather than by Ulbricht.

n balance we think these problems, though important- will not menace the survival of the East German regime. But they may begin to undermine its confidence and stability by.

III. FOREIGN POLICY

The USSR. East Cermany's foreign polity is determined almostby Its dependence on the USSfi. The Ulbricht regime or nny likely successor probably could not maintain itself without some significant degree o: Soviet support The possibility for Independent East German action onIssues is. therefore, largely theoretical. While the SED lies achieved considerable autonomy in internal policies, the Soviet voice is still decisive in foreign affairs.

We believe the prospects are for continuing closeovlet-CDR relations, though East Cermany's position is likely to become less obsequious nnd subservient. Tlie periodnd especially since the fall of1ms already been marked by an East German assertiveness in relations with Moscow. East Cerman remonstrances, for example, probably contributed to Soviet refusal to sign new trade or cultural agreements with Bonn that would again recognize West Berlin's ties to the Federal Republic. Moreover, the Soviets also apparently Intervened on Ulbricht's behalf In Prague over the same issue.

Maintenanceommunist regime in the GDR will almost certainly continue torucial element In Soviet policy. Differences and frictions svill arise from time to time, but mutual interest in the status quo will probably keep any divergencies within hounds. If palycentrtc tendencies in international communism grow, us it seemv likely, East Germany will probably assume greater importance to the USSR. The large Soviet military establishmenthi the CDH svill continue to be Moscow's decisive means of Influence;

for it* part the East German regime will cuntinuc lo lecl the need lor these force*.

Relations with Bonn ami Bftlln. Inoward Bonn and Berlin the Soviets ulsn seem to have relinquished some limited authority to the CDR. The Ulbricht regime apparently had considerable freedom in negotiating the Berlin pass agreements. The harassment* last April, when the West German Bundestag met In Berlin, were evidently prompted by an East German initiative. In the absence of major Soviet moves on the Berlin question, however, the East Germans ore likely to lx> nitrified to marginal challenges to the Western position hi Berlin. The GDB's moves will nevertheless lend to keep tensions in Berlin relatively high. On balance, however, the issues are too sensitive nnd Soviet interests too Immediate for tho East Germans ID Ik1 permitted anpolicy In this area.

Soviet and East German interests dictate an attitude of basic hostility toward the Federal Republic. Nevertheless, the regime's greater self-eon6dence and hopes of Influencing Bonn's policy linve led to an Increase In contacts. The volume of interzonal trade has increased, there an* more travelers in bothnd cultural exchange* have risen. There have been "technical" agreements clearing away some old Issues and an Interest on both sides in negotiating over newEast Berlin passes, prisoner exchange. We expect this trend toward more contacts to develop, hut East Germany's relativerowing somewhat stronger. Bonn's political leverage ul interzonal trade is declining and the continuation ol contacts and negotiations gives mcreasing plausibility to East Germany's claim toovereign power.

Eastern Europe. In terms of atmosphere, mood of the people, and ideological tone, East Germany compares unfavorably with most of Eastern Europe. Moreover, in other East European capitals Ulbricht has personified the worst aspects of Stalinism and the regime suffers becauseeneral antipathy to Germans. Events in Eastern Europe, particularly nationalist trends and desire for greater freedom of actionis Moscow and the West, have further tended to isolate East Cermany from Its Communist neighbors.

Future relations between the GDR and Eastern Europe are likely to be inconsistent and contradictory. Both the East Germans and the Sovietsreat interest In retaining unqualified support for their Cerman polity: to this end, the Ulbricht regime and its successor will make some effort to adapt policies to coincide with the more liberal national currents In the Bloc. On the other hand, tlve East Germans will resist any development ot normulor understandings between Eastern Europeans and Bonn. The rise of the Federal Republic's activity in Eastern Europe already confronts the East German regimeerious competition for markets and influence. East German influence in Hungary, Rumania, and Bulgaria is lileuly to sufferesult of Bonn's growing etunoinlc involvement. But Eastern Europe Lv likely to remain committed to East Germany if only because Cmlwislnvtikin und Poland will feel the needeparate Cerman stateuffer against Bonn

und will regard tlu- presence of Soviet turces inermany a* essential, pending any European security agreement,

he .Voii-Cummnnfif World Eastrime objective ui thi* area is international recognition. At considerable economic costillion in aid) tbe regime has made perceptible, llinngh limited, gains. In IUW. East Germany had trade and/nr consular representation oi various kinds inon-CommunisthrasndV In the seake of hostile Arab reaction to the publication oi West Germany's arms deal with Israel, the East Germansetermined effort tn gain recognition in ihe Arab world.esult, the UAH and Svria now have the same level of consular relations with the Federal Republic andH. Yemen has broken relations with Bonn andonsulate general in East Berlin. We doubt that East Germany will gain recognition th jure from any important non-Communist countries In the next few years. But wc- do expect that in more countries the Federal Republic and the CDR will hu placed on roughly similar levels of representation, as iti the cane of the UAH. IfIhe effect will be to erode Bonn's declared policy of breaking relation* with those non-Communist countries which recognUu' the GDI! (the Halkteln doctrinej.

Eatt Germany's long-term chance* of improving its international status are basically conditioned by Bonn's ability to use the Hallsteln doctrineeterrent. Thus far onlv four lountrics (Yugoslavia, the CAR. Yemen, and Syria) have opted for higher-level ties with East Berlin in the facereak with Bonn. The trend toward greater contacts, trade, and formal agreementsEast and West Germany may eventually erode the latter'* claim to sole representation in the eyes- nf third parlies. Tillsilemma for Bonn, not tor East Berlin, which gains from even the slightest increment in recognition. Compared with ten years ago, the chance* ul International acceptance of East Germany have grown considerably.

Jnftvmif tonaln important point of debate in Westis whether new trends in Eastern Europe and in International communism can be exploited to isolate East Germany, or whether more direct contact* and dealings would contribute to the emergenceore liberal and national trend In East Germany once Ulhricht departs. Our principal estimate Is that over the next several yean East Cc-rmany will continue to gain in stability andlability. If this Is correct. It will become Increasingly difficult for the West, and particularly for West Ccrmany, to deny the existence of the East Cerman regimeact of Hie.

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