NATIONAL INTELLIGENCE DAILY

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005301309
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 30
• Document Creation Date: June 22, 2015
• Document Release Date: September 9, 2009
• Case Number: F-2007-00571
• Publication Date: July 27, 1990

(b)(1)
(b)(3)
o'' seeret-
Dir ctor of Central Intdftenoe
NATIONAL
INTELLIGENCE
DAILY
Friday, 27 July 1990
APPROVED FOR
RELEASE^DATE:
01 -Sep-2009
op~
CPAS NID 90-174JX
3o-
 Peru: President-Elect Fujimori Off to Shaky Start
Notes Eastern Europe: Nervous About Nonaggression Declaration
Sri Lanka: Army Gaining, Violence Escalating
Japan: Kaifu Riding High 15
 TmrS eL
 Baghdad has temporarily suspended its anti-Kuwait propaganda
campaign but is not relaxing its military stance or reducing its political
or financial demands; Kuwait is preparing some concessions.
Iraq's Saddam Husayn, keeping his pledge to Egypt's President
Mubarak, yesterday halted his media campaign against Kuwait in
preparation for talks set to begin tomorrow.
Iraq's rhetoric has played well at home, where anti-Kuwait
sentiments are deep seated. Saddarn has sent envoys to most Arab
states to argue his case.
Comment: Whatever the outcome of the OPEC meeting, Baghdad
almost certainly will maintain pressure on Kuwait in hopes of
financial assistance and perhaps border concessions. The Iraqis
 OPEC Struggling Toward a Target Price
OPEC members have postponed decisionmaking sessions until today so Iraq, Saudi Arabia,
Kuwait, and the UAE could meet separately to set a price target for the rest of this year.
Although Iraq is adamant about obtaining a price target of $25 per barrel, its Oil Minister
has indicated publicly it might settle for less. Kuwait is being unusually conciliatory,
announcing that it will go along with whatever the membership decides. Press reports
indicate that Saudi Arabia is putting up the stiffest resistance to Iraq's price demands and
that the two countries are debating a target between $20 and $21 per barrel.
Riyadh almost certainly wants OPEC's agreement to be credible and recognizes that a
production ceiling of 22.5 million barrels a day is too high to achieve a price of $25 per barrel
unless Iraq moves against Kuwait militarily. Such a production level probably would result
in prices of about $20 per barrel, especially in the fourth quarter when demand will be
stronger. Riyadh apparently is concerned that prices much above $20 per barrel will stop
growth in demand, reducing the prospects of future revenue increases and raising tension in
the Gulf region.
 probably believe Kuwait will try to buy time by postponing decisions
on the amount and form of financial assistance, Saddam is likely to
hold out for at least several billion dollars in the near term and to
press for the creation of an Arab reconstruction fund. He believes he
already has broad Arab support for his efforts to rein in OPEC
overproducers, and he probably is trying to gauge the likely Arab
reaction to any military action against Kuwait.
Kuwait probably will write off Iraq's $10 billion war debt as part of a
broader financial relief package. It could also easily give Baghdad as
much as several billion dollars over the next year, but it probably will
not, unless given the cover of multilateral aid by the Gulf
Cooperation Council states. Kuwait will try to tie new aid to specific
Baghdad is sure to reject.
Kuwait's basic security policy has been to balance relations with Iraq
and Iran and to rely for protection on the collective capabilities of the
superpowers, the GCC, and other Arab states. During this crisis it has
not been able to check Iraqi aggression by moving closer to Iran or
asking for Soviet intercession. Amir Jabir probably believes the lack
vulnerability.
The UAE is not likely to offer economic aid to Iraq unilaterally, but it
probably would contribute to a multilateral reconstruction fund. Abu
Dhabi probably did not expect GCC support and is not likely to seek
region.
out
 Military Situation, Late July 1990
Bushrod
Island
Johnson's rebels continue
hold on island
r
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U.N, DCww. '?~ Slresi 8riage / Island
us
6, \ Providence
Embassy e o ?' ~~ y rsrand
\ Cape?? Johnson's forces
Mesurado, battle government
Crown HM
7MrSftF6t
Execu~w
Mansion
Sierra
Leon.
 Fighting continued yesterday but quieted by midafternoon, probably
indicating the rebels' capability for a sustained assault on downtown
Eight to 10 explosions occurred near the Executive Mansion late
Wednesday night, possibly caused by rebels firing from the vicinity of
Spriggs-Payne Airport There were
reports of fighting around Crown Hill early yesterday, and heavy
gunfire was heard at Spriggs-Payne Airport and in Congotown. The
army temporarily abandoned the southern end of the Mesurado
bridge in the morning, possibly allowing Prince Johnson's rebel forces
to cross into the capital, but subsequently retook it. By midafternoon,
Monrovia was quie and the army was movin confidently
throughout the city,
Army troops have abandoned Camp Schieffelin but have set up an
alternate checkpoint along the highway into Monrovia. Soldiers still
Comment: The "battle for Monrovia" could drag on for several weeks
or more. Johnson's rebel group, unable to launch a r,astained attack or
gain ground outside Bushrod Island, is likely to continue its hit-and-
run tactics to weaken the army. The bulk of Charles Taylor's forces
still are trying to fight past army units on the outskirts of the capital.
last a month.
Army indiscipline and anti-US sentiment almost certainly will grow
as the fighting wears on. US and other foreign installations are likely
to become more vulnerable to break-ins
As the military becomes desperate, it is increasingly likely
 Soviet Media Stake Out More Independent Editorial Line
Several signs suggest that Soviet editors and others responsible for the media are increasingly
testing the limits of glasnost:
- Ogonyok, the flagship of glasnost, has announced it is freeing itself from party
control.
- The editor of Pravda says he wants the paper to become self-sufficient, perhaps
implying a desire to improve its popularity by distancing it from the party. Although
Pravda takes a middle-of-the-road line, it recently printed a startling article admitting
that anti-Semitism is growing in the USSR.
- The Moscow city council has decided to establish two daily publications that will not
be subordinate to the council; it will also establish a radio station.
- In the most outspoken media attack on the military leadership to date,
Komsomolskaya Pravda recently published a letter from 47 leading liberals suggesting
that a coup of some sort might take place as a result of an alliance between the
military and other traditionalist forces.
- A Soviet publisher is joining with Business Week to issue the USSR's first major
Western Russian-language magazine.
oa-
 Grassroots pressure from Soviet editors and new moves by the leadership
have expanded glasnost and will intensify demands for relaxing
remaining media controls
Gorbachev last week followed up his recent decree giving parties and
organizations outside the CPSU access to TV and radio by rejecting
calls to clamp down on "communication and dialogue." Glavlit, the
government censorship administration, announced it will no longer
review publications beforehand but will simply be available to
consult with editors on questions of state secrets; editors will he
responsible for not printing classified information.
Several Soviet publications have recently exhibited considerable
frankness and willingness to operate more independently of the
CPSU even though official meddling still occasionally occurs. Those
restraints were exercised when a KGB officer confiscated the first
edition of a newspaper written by delegates to the recent party
congress.
Comment: Writers and editors seem to be moving quickly to establish
independent publications in accordance with the procedures laid out
in the law on the press. At the same time, local party officials
undoubtedly will occasionally try to censor the media as problems in
implementing the new press law are ironed out.
The editors may be responding to the devolution of authority to
republic governments and legislatures; Boris Yel'tsin, in particular,
has lambasted the dependence of Russian Republic media on central
TV and radio officials. Editorial boldness will encourage local
government councils to fight party organizations harder for control
newspapers.
 off._
 T-S
PERU: President-Elect Fujimori Off to Shaky Start
President-elect Fujimori, who takes office tomorrow, apparently is
prepared to abandon campaign promises of painless solutions to Peru's
economic problems but not to deal with the anticipated popular reaction
against the shift.
Fujimori's senior economic adviser says the President will implement
rate of more than 60 percent for this month.
the new government may move slowly to enact
changes and planners lack details on financial resources
and that recent resignations from Fujimori's economic team have
intensified internal coordination problems. Moreover, although
contemplated price rises for goods and services the public sector
provides might initially push inflation above 200 percent a month,
Fujimori reportedly has yet to finish an emergency social welfare plan
to offset any popular backlash. Outgoing President Garcia has
publicly urged labor unions to oppose the adiustment measures.
Comment: Fujimori won the runoff election last month by a margin of
nearly 23 percent, but this move toward an orthodox stabilization
program threatens to undermine his popular support. He probably
would have had to contend with demands from restive labor unions
and disgruntled consumers seeking protection of their purchasing
power even if Garcia had not called them to actionj
support fades, the sizable opposition will find more political gain
in opposing the Fuiimori government than in cooperating with it.
 The Soviets see the declaration as helping to inaugurate a new era in European security, and
as evidence NATO is taking a less threatening posture. They are well aware that a drafting
exercise will neither prolong the real life of the Warsaw Pact nor give it legitimacy in the eyes
of the West. Moscow hopes the existing alliances will play major roles in the transition to a
Pan-European security system but is not counting on the Pact remaining intact in the
interim.
Moscow has welcomed the NATO commitment to a joint declaration and has referred to it
as a declaration between the blocs, but Shevardnadze has indicated that it does not have to
be signed on a bloc-to-bloc basis. He also expressed willingness to open the joint declaration
to signature by CSCE members and is likely to be open to national negotiations on the
document. Moscow would prefer a cooperative consensus in developing the declaration but
would still consider even limited consultations a useful means of continuing dialogue among
Pact members.
 Several East European states have recently expressed concern
that Moscow could use NATO's proposed joint declaration on
nonaggression to help legitimize and prolong the existence of the
Warsaw Pact, the Soviets have argued
that developing the declaration's language would require cooperation
among Pact states. Moscow wants a document
that requires common drafting within the Pact, but Warsaw prefers to
work from a NATO or US draft. Hungary has suggested calling the
document a "Declaration of Security Cooperation," which would be
drafted and signed at the Conference on Security and Cooperation in
Europe (CSCE).
Comment: The East European countries-except Bulgaria-are
pressing for a new Pact structure that permits consultation on
political issues but does not require a common position. Most prefer
that the declaration be negotiated and signed by individual Pact
members. In the near term, Hungary, Czechoslovakia, and Poland
probably will continue promoting CSCE, rather than the alliance,
for discussing such security issues as the nonaggression declaration.
 To
Trouble Down on the Farm
Agricultural workers represent approximately 30 percent of the Polish labor force, and the
country's 2.7 million private farms include 75 percent of the cultivated land:
- Private farms average only 12.5 acres.
- Many small farmers are accustomed to working in nearby industries, but they are
heading layoff lists as factories retrench.
Polish farmers, many of whom bypass local procurement monopolies by selling directly to
consumers in town markets, must cope with a decrepit agricultural infrastructure. The
government's economic reforms and austerity program have added new difficulties:
- Warsaw has removed almost all price restrictions, raising the costs of fuel,
equipment, seeds, and credit.
- Wheat is being bought for $63-77 per ton, about $100 below world prices.
- Farmers in the Krakow area receive only 4 cents per liter for milk, which costs.them
several times that amount to produce.
 The Mazowiecki government on Wednesday agreed to use subsidized
credits to lower the cost of farm inputs and to boost procurement
prices for grain products. It also promised to provide about
$84 million to restructure the dairy industry and discourage farmers
from culling their herds. The cabinet approved most of these moves
earlier this month. Warsaw also pledged to promote agricultural
exports while maintaining "rational" protection of the domestic
Comment: The agreement at best probably will temporarily forestall
further outbursts of rural discontent; the absence of agricultural price
guarantees virtually guarantees trouble. Farmers, many of whom
work tiny, inefficient plots, are among the harshest critics of the
economic reform program ar.d are particularly angered by what they
see as foot-dragging in breaking up the local monopolies that often
control the sale of farm inputs and the purchase of farm products.
The austerity program also has lowered demand while food grants
from foreign donors have further depressed farm prices. Peasant-
affiliated parties provide about 40 percent of the government's
legislative majority, and the largest, the Polish Peasants' Party,
recently threatened to pull out of the coalition. Such a mov.3 is
unlikely in the near term, but the government's ability to hold restive
rural delegates will be severely tested in coming months as farmers
find that customary grain purchasers already hold large stocks of
 The government and the FMLN insurgents yesterday agreed to a
UN-proposed document on human rights but postponed discussion
of the most difficult topic, military reform. The human rights
document, introduced to break an impasse, specifies guarantees on
such issues as rights for individuals arrested or detained. The
agreement, to take effect with a cease-fire, also calls for a UN mission
to verify rebel and government compliance. The FMLN earlier
rejected a government proposal on military reform, saying it failed to
address such key rebel demands as a purge of military officers
accused of human rights abuses. According to press reports, leaders of
both sides believe some progress has been made.
Comment: Both sides showed flexibility, agreeing to extend talks a
day and to switch topics so as to reach some agreement, but the
mid-September target date for a cease-fire remains overly optimistic.
Armed forces reform probably will be addressed in the next round,
the fourth, set for San Jose sometime next month. The UN
representative appears to have played a pivotal role in keeping the
parties talking and may try next time to present a UN-drafted
 Military Situation, Late July 1990
0 6o Ndomalan
0 5 ~' S0 Mile.
0
Government forces recapture
towns; besieged Army
camps relieved
 SRI LANKA: Army Gaining, Violence Escalating
supporters and searched door-to-door for Tigers in the east;
Government forces this week recaptured two northern towns,
relieved besieged Army camps, and repaired a causeway linking the
mainland and the Jaffna Peninsula. The Army has about 8,000 men
in the north, as well as aircraft. It has executed Tamil Tiger
The Tigers have massacred more than
vigilance committee in the south.
more than six months, killing 15 members of a police-sponsored
Muslims have killed some 60 Tamils. Suspected members of the
Marxist Sinhalese militant JVP struck Wednesday for the first time in
100 Sinhalese and Muslim civilians in the past two weeks, and
probably is still too weak for a comeback.
to local volunteers. The JVP may stage more assassinations but
Comment: The undermanned Army has not regained full control of
the east and probably will not try to retake the Jaffna Peninsula soon.
It may send paratroopers to reinforce its camps. The Tigers may
increase attacks in the east to force the Army to redeploy there. The
Army has been professional overall, but local commanders may have
carried out summary executions in the east. Ethnic violence probably
will mount, particularly as the Army transfers security responsibility
unilateral effort to stop debt payments.
Authorities plan to spend more than $1.3 billion on airports,
communications facilities, bridges, and other damaged infrastructure.
Farming areas and market roads in north and central Luzon were hit
hard; rice prices in Manila are inching up, and some vegetable and
fruit prices have doubled. The House of Representatives recently
passed a resolution in favor of suspending interest and principal
payments on the country's $26 billion foreign debt for 30 months so
as to save nearly $3 billion for rehabilitation. Aquino has reiected any
commercial banks for easier repayment terms.
will decrease as scarce resources are diverted to hard-hit areas.
Manila's plan to use a government savings program to finance much
of the reconstruction almost certainly will increase the budget deficit
and inflation, currently 12 percent a year. Manila probably will ask
for emergency assistance from foreign donors and may negotiate with
Comment: Before the earthquake, the domestic economy was
projected to grow about 4 percent this year as compared with
6 percent last year; some Philippine economists now predict
3-percent growth. Agriculture, hurt by a drought earlier this year, is
likely to stagnate. Government spending in many parts of the country
0'1' p rret
 P
 US Middle East policies increasing.
-- Support for boycott of US goods growing among Jordanian
professionals, businessmen, leftist legislators ... boycott unlikely
to materalize, government probably, will oDDOSe ... resentment of
increase economic cooperation.
- North, South Korean agreement yesterday to hold prime-
ministerial talks may fall through if unification rally on 15 August
canceled ... propaganda battle intensifying, bickering over rally
arrangements likely to continue.
- Four members of Italian cabinet, including Defense Minister
Martinazzoli, resigned yesterday ... seeking greater say in policy
... government will fall if Prime Minister Andreotti cannot strike
deal before toni ht's vote of confidence.
most likely scene if Moscow acts to implement decree.
enforce presidential decree banning armed groups ... senior
officers' solidarity meant to intimidate nationalists ... Caucasus
- Soviet military, Interior Ministry officials yesterday said they will
Middle East - USSR has opened commercial mission in Tel Aviv, Israel to
follow suit in Moscow ... Israeli Finance Minister reportedly
invited to Moscow to discuss joint ventures ... Soviets hope to
77OFftrret-
 oT net-
 Special Analysis
Prime Minister Kaifu is in afar stronger position than when he took
off ce last summer. His strength is based on personal popularity that
could erode quickly if the Liberal Democratic Party mishandles any of
Kaifu, whom party leaders initially viewed as only a stopgap Prime
Minister, has won widespread public support; a recent poll showing
63 percent of the voting public backs him makes Kaifu the most
popular LDP Prime Minister ever. He has won high marks for
resolving trade disputes with Washington and representing Japanese
interests at the G-7 summit in Houston. Kaifu's youth and oratorical
skills add to his image.
leaders. LDP strongman Shin Kanemaru, for example, told reporters
last week he favors retaining Kaifu as Prime Minister.
Because Kaifu depends so heavily on public approval, the LDP's
management of several controversial issues will be critical to his
staying power. This fall, a special Diet session will consider revising
the 3-percent consumption tax that helped bring Takeshita down.
The party is also moving toward liberalizing Japan's rice market.
Polls show urban voters favor such a move but farmers are far from
convinced.
Political scandal also could undercut Kaifu's popularity. Earlier this
summer, the Prime Minister's aide was implicated in questionable
financial dealings. Kaifu emerged unscathed but remains vulnerable
to taint from Japanese "money politics."