NATIONAL INTELLIGENCE DAILY

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005301311
• 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 30, 1990

APPROVED FOR RELEASE DATE:
09-01-2009
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Israel: Problems Mounting as Soviet Jews Pour In 14
USSR-Japan: Peace Treaty Talks Resume Today
Liberia: Rebels Slowly Closing In on Doe
Algeria: Early National Election Announced
Togo: President Eyadema Visits US
Afghanistan-USSR: Najibullah Summoned
Burma: Military Refines Stalling Tactics
Special Analyses Iraq: Baghdad's Economic Woes
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 USSR Developments, Late July 1990
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 USSR: Baits, Armenians Defy Gorbachev
Actions by increasingly defiant republics over the weekend underscored
Moscow's impotence as it attempts to work out a new union treaty by the
end of the year.
As expected, the Presidents of Lithuania, Latvia, and Estonia issued a
joint statement on Saturday refusing to participate in the work on a
new union treaty. The Armenian parliament voted on Saturday to
suspend Gorbachev's ban on the formation of "illegal" armed groups;
a second vote on the issue is scheduled for today, according to a
A rail blockade imposed by Georgian protesters demanding the
implementation of a multiparty system is continuing into the fifth
day today; the USSR Ministry of Railways announced it is banning
the dispatch of freight traffic to the region and is financing the
evacuation of some of the 2S_000 nassenoers stranded in Samtredin
Comment: The actions by the Baltic republics and Armenia provide
further evidence of their intention to establish their terms for
relations with Moscow. The Baits appear intent on using bilateral
arrangements with other republics as a means of establishing a new
relationship with the USSR.
Moscow's unusually quick response to the rail crisis in Georgia may
be intended to underscore Gorbachev's stated intent to retain
transportation as a prerogative of the center within a new union
treaty. The Railway Ministry appears to be setting a, precedent for
how it will respond when passengers are stranded in strife-ridden
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 USSR-JAPAN: Peace Treaty Talks Resume Today
The Soviets are warning there will be no progress if the Javanese
Deputy Foreign Minister Rogachev will
continue to focus only on the Northern Territories.
raise Asian ,:onfidence-building measures and will look for agreem nt
in areas other than the territorial dispute when he meets with his
counterpart, Hisashi Owada, in Moscow beginning today. TASS
reported on Wednesday that Gorbachev had told a visiting .ap4nese
legislator there is no territorial problem and questioned whether it
would be worthwhile for him to visit Japan next year if on'.y one issue
were on the agenda. He softened his language somewhat two days
later, telling a Japanese Buddhist leader that the visit should take
place and that he is prepared to take big steps to meet Japan halfway.
Pravda recently denounced Japan's hardline stance toward Moscow
at the G-7 summit in Houston and criticized its attempts to
"internationalize" the territorial issue. TASS referred to Foreign
Minister Nakayama's comment that aid to the USSR is like throwing
money down a sewer as "unprecedented for a statesman of his rank,"
and an Izvestiya commentator demanded an apology. But the Soviets
have also floated trial balloons on the territorial issue. Pravda has
suggested joint ownership of the disputed islands under UN
trusteeship, and a leading Soviet academic has offered a three-phase
Comment: Some of the Soviets' tough talk probably is posturing, but
recent Japanese actions clearly have annoyed them and may prevent
any real progress on key issues at the talks. Before it formulates
compromises that address the territorial dispute directly, Moscow
wants assurances of both economic and security payoffs;
Shevardnadze plans to present the confidence-building-measure
proposals formally when he visits Japan in early September.
Owada almost certainly will restate Tokyo's position that Japan will
not move on any front, including economic cooperation, until the
Soviets return the four disputed islands. He is also likely to repeat
Prime Minister Kaifu's offer on Friday of technical aid and training
to support Soviet economic reform, a gesture meant to show Tokyo is
in step with the West. Owada probably will sidestep on confidence-
building measures, calling instead for Soviet arms reductions in East
Asia.
Tou~eret_
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Military Situation, Late Jul), 1990
MONROVIA
Free port
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Johnson's rebels conflnp?
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citizens are increasingly vulnerable to stray gunfire.
army soldiers have stayed clear of the Embassy compound, US
Comment: Johnson's troops probably will continue to expand t:'.ir
hold in downtown Monrovia before moving toward Doe's stronghold,
but limited supplies of ammunition probably will slow the advance.
Taylor may be waiting for Johnson and Doe to wear each other down
in the city center before advancing his forces. Despite the military
stalemate, Taylor's radio announcement proved a politically savvy
move to assure the public of his control. Although the rebels and
government and the appointments to his own Cabinet.
which Taylor on Saturday announced the dissolution of Doe's
capital remain relatively quiet, although heavy shooting was heard
yesterday in Congo Town. A government artillery barrage launched
from the area apparently was aimed at the Elwa radio station, from
hares Taylors forces southeast-of the
300 may be army deserters. They are distributing food to refugees
LIBERIA: Rebels Slowly Closing In on Doe
Prince Johnson's rebel group continued to gain ground in downtown
Monrovia and in the vicinity of the US Embassy. His forces on
Bushrod Island are estimated at about 1,000 men, of which more than
population voted.
Comment: Bendjedid's decision to call an early, election will help calm
the growing impatience of Islamic fundamentalists. The move also
buys time for secular opposition parties to resolve longstanding
differences and to attempt to build coalitions to thwart an Islamic
victory at the national level. Participation by the Berber Socialist
Forces Front should encourage the higher voter turnout necessary for
secular opposition forces to make a stronger showing. The FIS scored
FIS, according to press reports.
ALGERIA: Early National Election Announced
President Bendjedid yielded to opposition Islamic Salvation Front
(FIS) demands and announced yesterday that an early parliamentary
election will be held during the first three months of next year. The
leader of the Berber Socialist Forces Front, which boycotted local
elections last month, announced that his party is likely to participate
30 July 1990
 Too
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TOGO: President Eyadema Visits US
During his visit to Washington this week, President Eyadema
probably will focus on the unrest sweeping West Africa, especially
the Liberian insurgency, and on his plans for gradual political
liberalization in Togo. Eyadema, in power since 1967, faces little
organized domestic opposition and has been able to concentrate on
regional mediation efforts, human rights reform, anticorruption
measures, narcotics interdiction, and IMF-backed economic
restructuring. Togo's economy is based on commodities vulnerable to
Comment: Eyadema almost certainly will continue to need
considerable foreign aid in the near term. He probably believes
greater political liberalization will contribute to good relations with
the US, and he will emphasize moves his regime has taken in this
direction, such as allowing independent candidates to compete in
legislative elections. Eyadema probably hopes his visit will lead to
increased aid, possibly including US support for his regional
mediation and narcotics interdiction initiatives, new loans from
multilateral organizations, and debt rescheduling.
AFGHANISTAN-USSR: Najibullah Summoned
President Najibullah went to the USSR yesterday for a short visit and
medical consultations, according to press reports. During a press
conference last week, he offered to relinquish control of some
elements of the military and mass media in an effort to spur the
negotiating process forward. First Deputy President Keshtmand his
been in Moscow since earl this month~
Comment: Najibullah, who has no known medical problems,
apparently had not left Afghanistan since the Soviet withdrawal
was completed in February 1989. His trip probably is related to the
Baker-Shevardnadze talks in Irkutsk on Wednesday; Moscow
probably is seeking to clarify Najibullah's latest offer and to
coordinate its strategy with him. The USSR is not likely to replace
Najibullah at this time-his international stature is on the rise and
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 'I'oll'SretwL~
South Pacific Reaction to US CW Destruction Plan
A majority of the South Pacific nations probably will reluctantly support the destruction of
chemical weapons stocks now on Johnston Atoll but will object to transporting stocks from
West Germany. Washington has allayed some concerns by agreeing to let Forum observers
visit the facility and by assuring that no further chemical weapons will be destroyed there,
with the possible exception of some found in the Pacific region since World War II.
Nauru, supported by Kiribati and the Marshall Islands, probably will submit a paper
opposing the US plan for weapons destruction. The three nations fear that the byproduct of
incineration might be carried downwind and that the transportation of chemical weapons
materials through the region is risky.
Australia is the plan's principal supporter in the region. Canberra accepts that incineration
is the only practical solution and will not oppose the shipment of CW stocks from West
Germany. It wants assurances, however, that there will be no further use of the facility after
the on-site and West German stocks are destroyed.
New Zealand is likely to follow Australia's lead. But, as self-appointed spokesman for the
South Pacific nations, Wellington probably will express concern about the transport of stocks
from West Germany and will ask to be informed of the general route.
 BURMA; Military Refines Stalling Tactics
Burma's military rulers on Friday announced a national convention
to set guidelines for the National Assembly in drafting a new
constitution. The regime also means to review the draft constitution
and to submit it to a national referendum after approving it. Regime
officials have publicly warned the National League for Democracy,
which last May won 80 percent of the Assembly seats, not to try to
form an interim government. The NLD's Assembly delegates met this
weekend to discuss the transition from military rule. They called for
parliament to be convened in September, for talks with the military
and for the release of NLD leader Aung San Suu Kyi.
Comment: The regime is trying to sidestep the NLD's electoral
mandate, and its ploy probably will delay political transition for
a year or more. Officials have not explained how the national
convention will be chosen, when it will meet, or when the Assembly
may convene. They evidently mean to keep Aung San Suu Kyi under
house arrest. The NLD will come under strong pressure to abandon
the conciliatory approach followed since the election. The military
deal firmly vith any unrest.
 IN=
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 Europe
-Yevgcniy Shaposhnikov named Soviet Air Force Chief, Deputy
Defense Minister .... young, "rising star" ... fourth high-level
military appointment this sum r retirement of World War I I
veterans likely in other services.
-- Gorbachev has put new Soviet Politburo member Yanayev in
charge of Japanese affairs, Japanese media report ... apparently
has broad Asian portfolio ... Presidential Council trio Yakovlev
Shevardnadze, Primakov likely to overshadow him.
-Yugoslav Premier Markovic forming first countrywide
non-Communist opposition party to contest elections expected by
yearend ... trying to build support for Yugoslav unity ... faces
uphill battle against regionally based nationalist parties.
- Hungarian officials nullified referendum for direct election of
president because of low voter turnout ... preserves deal cut by
government coalition partners ... Acting President Goncz likely to
be confirmed by National Assembly.
 Iraq: Economic Ties That Bind
Baghdad's dependence on other countries for imports, credits, economic facilities, and
water fuels Saddam Husayn's sense of vulnerability and his determination to achieve
self-sufficiency and to exert greater control in the region. OECD countries supply about
70 percent of Baghdad's civilian imports-mostly manufactures, including high-technology
items that are generally unavailable from non-Western countries, as well as food. They also
supply at least three-fourths of new credit available to Iraq:
-Japan agreed late last year to reopen a $2.8 billion credit line and to provide
$245 million in new credits in return for payment of arrears, although the two sides
have not agreed on a timetable for disbursement.
-Turkey offered $800 million in new export credits earlier this year.
- The US made available $700 million in agricultural and export credit guarantees in
fiscal year 1990.
-The UK guaranteed nearly $400 million in trade credits in FY 1990.
Baghdad also depends heavily on neighboring countries for economic facilities and water:
- Iraqi oil pipelines through Turkey and Saudi Arabia currently carry nearly 90 percent
of Baghdad's oil exports and account for about 70 percent of its current export
capacity.
Iraq continues to rely on ports in Jordan, Kuwait, and Saudi Arabia while expanding
its ports at Umm Qasr and Khawr az Zubayr.
- Iraq relies on water from the Tigris and Euphrates Rivers, which lie upstream in
Turkey and Syria.
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 F_
Special Analysis
Iraq lost more than $1 billion in oil revenues during the first half of
the year because of the decline in oil prices. Oil receipts will be about
$16 billion this year if the world average price remains near $18 per
money from Ku wait as well as OPEC concessions in the future.
problems, and Saddam probably will use intimidation to secure more
IRAQ: Baghdad's Economic Woes
President Saddam Husayn's efforts to extort financial aid from Kuwait
and to force OPEC discipline reflect his unwillingness to abandon his
guns-and-butter strategy employed since the end of the Iran-Iraq war.
The new OPEC accord alone will do little to relieve Baghdad's cash-flow
The revenue shortfall and a heavy repayment schedule this summer
on its $45 billion non-Arab foreign debt have exacerbated Baghdad's
serious financial problems. Iraq faces an estimated deficit in its
foreign payments position of $4-5 billion this year. Its foreign
exchange reserves of $3 billion are enough to cover only about
three months of civilian imports.
Financial Straits Impede Plans
Saddam's ambitious postwar economic recovery plan is being slowed.
Large new industrial projects intended to boost export revenues,
support military industrialization, and provide jobs for demobilized
soldiers have been delayed. Concerned about delays in expansion of
the oil sector, Iraq even invited Western firms this spring to finance
development of its oilfields in return for payment in oil but has had
no offers. Growth in industry and agriculture remains flat because of
press reports.
Lack of improvement in living standards, which deteriorated
significantly during the Iran-Iraq war, has contributed to popular
discontent and rumors of coup plots,
Annual inflation is about 40 percent, an the ban Of near y
80 "nonessential" imports last month has further reduced limited
supplies of consumer goods. Iraqis are particularly disgruntled about
bearing economic hardship while the government spends on frivolous
items,
Baghdad.
 Saddam is determined not to let financial constraints stand in the
way of military buildup and economic development; he fired the
Finance Minister last fall partly because the official told Saddam that
Baghdad could no longer afford a guns-and-butter strategy, according
to press reports:
-The President probably refuses to consider decreasing
expenditures to modernize the armed forces and to develop
military industries.
- Saddam also is loath to reduce spending on key foreign-
exchange earning projects, particularly in the oil sector.
He probably is concerned that additional cutbacks in
consumer imports would fuel popular discontent.
- Baghdad cannot boost oil exports because it is producing near
its maximum sustainable capacity.
Saddam probably took drastic steps now to boost oil prices and
to extort money from Kuwait because he believes that the economic
situation is grave and that his only other option is to abandon his
ambitious military buildup and stall economic recovery
Intimidation Likely In the Future
The magnitude of Iraq's economic problems and the success it has
already gained from bullying tactics probably will lead Saddam to use
these methods in the future to obtain financial aid from his neighbors
and concessions on OPEC production and pricing policies. Even if
Iraq receives $4-S billion in aid from Kuwait and other Gulf states in
the near term-enough to cover its financing gap this year-it almost
certainly will press later for billions of dollars in additional bilateral
or multilateral assistance needed to invest in reconstruction and
development, boost imports to levels of the early 1980s, and service
its massive foreign debt. In addition, Baghdad probably will lead
OPEC's price hawks in opposing any increase in the cartel's
 F-
Gorbachev and Yel'tsin Try To Set Aside Animosity
Gorbachev and Yel'tsin claim they want businesslike dealings; while each hopes to maneuver
the other to his advantage, the momentum seems to be shifting toward Yel'tsin.
Yel'tsin regards the Soviet President as past his political prime and is embittered by
Gorbachev's past efforts to block his career. But he has ublicl promised to let bygones be
bveones and to pursue more cooperative relations.
Both leaders have signaled at least son;, recognition of their mutual tactical dependency:
-- While the Russian Republic has decided in principle on an independent bank,
Yel'tsin has acknowledged the importance of central control over monetary policy
and the issuance of currency.
Gorbachev issued a decree yesteiday for the Soviet Central Bank and republic banks
to work out common policies, while asking that republic governments not take
actions that would disrupt the financial system.
Gorbachev recently called for a broad coalition to tackle pressing problems, although
he did not appeal directly to Yel'tsin.
Yel'tsin believes that time and public opinion are on his side as regional forces become
stronger and that Gorbachev eventually will prefer to eal with republic leaders like himself
rather than with radical separatists. And Yel'tsin concedes that Gorbachev is a broader
thinker and more flexible than other national politicians and preferable to any that might be
installed by a traditionalist backlash.
Gorbachev knows there can be no new union treaty without an accommodation with the
Russian Republic's leacership. Gorbachev will try to limit any concessions so as to protect
his vision of a future union and to avoid enhancing the stature of a potential rival. He still
controls many all-union assets and revenue that the republics claim a right to share, and he
probably thinks he can pose as the honest broker in union talks on subjects that could pit the
republics against one another on many issues that threaten fractious rivalry and disorder.
30 July 1990
 Special Analysis
quicken the pace of reform and threatens its ability to manage the
economy and control the evolution of the center's relations with the
Moscow's delay in adopting a comprehensive economic program has
allowed Boris Yel'tsin to seize the initiative in promoting bold measures
to reform the economy and redefine economic relations between the
republics. Yel'tsin's assertive stance puts more pressure on Moscow to
republics.
rights.
Yel'tsin's election in May as chairman of the Russian Supreme Soviet
put an ambitious politician with a radical reform image. at the head of
the republic that dominates the Soviet economy. His hand was
strengthened by the election of other reformers to critical Russian
posts, including the chairman of the republic's Council of Ministers,
of sovereignty the Russian legislature adopted last month, he has
vowed to introduce market reforms, take control of the republic's
Yel'tsin is arguing that the republic cannot wait for Moscow's lead to
deal with the deteriorating economy. Acting on the broad declaration
Moving Toward a Market Economy
Yel'tsin's economic approach calls for a rapid transition to a market
economy, starting with the transfer of most state-owned industrial
and agricultural enterprises to joint-stock or private ownership. In a
year or two, proponents of this approach claim, all the elements of a
market economy are to be in place. The details are only beginning to
and the Maritime Kray
last week approved requests from a number of regions to have their
territories designated free trade zones, including the cities of
Leningrad and Vyborg; the Sakhalin. Kaliningrad, and Chita Oblasts:
Yel'tsin is likely to be most effective in promoting the privatization of
the consumer sector, where local authorities already have been given
a fairly free hand in determining policy. His agenda will also further
efforts by the new mayors of Moscow and Leningrad and like-minded
radical reformers to create market economies. The Russian legislature
 o-T oMUCreE-
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 The major flaw in Yel'tsin's approach to economic reform may be his
ambiguity on the need for higher prices. Ultimately the state must
surrender control of prices for Yel'tsin's privatization program to
succeed. Meanwhile, he has gained popularity by promising all of the
Redefining Central-Republic Relations
Yel'tsin's assertion that the republic has a right to determine its own
economic policy and to establish market relations with other
republics has also been popular. He says the Russian Republic has
reached general agreements with the Ukraine, Belorussia, and other
republics that could form the basis of the new union treaty that is to
In Yel'tsin's view, the responsibilities of national
authorities should be limited primarily to national security; the
USSR's economic infrastructure, such as the railroads and pipelines;
certain major programs like space exploration; and an as-yet-
undefined role in regulating monetary policy.
Challenge to Moscow
Russia's assertion of sovereignty over its natural resources and its
threat to withhold payments to the central budget could greatly
complicate Moscow's ability to fund vital national programs and
redistribute resources to less developed regions. Premier Ryzhkov
warned recently that the republics' declarations of sovereignty and
refusal to carry out the demands of the union government were
creating economic chaos b causin breakdowns in supplies and
disruptions in production.
Yel'tsin's economic program has stolen the headlines and the
economic initiative from Gorbachev. Last week's announcement
of a series of presidential decrees on economic reform and the
Presidential Council's discussion of a new union treaty suggest
Gorbachev is trying to regain the limelight. The threat to the union
posed by Yel'tsin may prompt him to press forward with reform at a
faster pace and may give him the ammunition needed to persuade the
foot-draggers.
 Soviet Jewish Immigrants to Israel
u J F
1989
'Jewish Agency reported 9,032 Soviet immigrants, while the United Israel Appeal
reported 11,015 Soviet immigrants.
D J F M A M Ja
1990
 No=
'
ISRAEL: Problems Mounting as Soviet Jews Pour In
More than 100,000 Soviet Jews are likely to reach Israel by yearend,
Israeli tensions.
Immigration has leveled off at about 10,000 monthly for the past
three months, probably because the transit routes through Eastern
Europe are jammed. The influx almost certainly will hit Israel's
economy hard later this year, when large numbers of immigrants
complete mandatory language and vocational training and enter the
job market. Unemployment, already more than 9 percent, is certain
to rise. some 50,000 immigrants will
year the economy generated only 8,000 new jobs.
Housing costs are skyrocketing as the newcomers, who receive a hefty
housing grant from the government come with n iv elis for a
rapidly dwindling housing supply. special
immigrant absorption centers are nearly full. The Israeli press is
reporting growing public unrest over housing costs; some Israelis are
setting up tent camps in public parks, one within sight of the Knesset.
To help fund a $1.5 billion budgetary supplement for Soviet
immigration, the government is proposing cuts of $250 million in
funds for defense, religious institutions, and consumer subsidies.
The proposed cuts are under attack from all quarters. Without the
supplement, Israel would be unable to absorb even 50,000 immigrants.
and the Knesset probably will approve the funding request.
The Knesset is likely to reject most of the proposed budget cuts,
however, rather than antagonize such powerful constituencies as the
defense establishment and religious Jews. The government probably
will borrow more to finance the increased budget deficit, fueling an
annual inflation rate that is already near 17 percent. The current
trend in Soviet immigration makes another supplemental request
likely this year. Tel Aviv will increase pressure on Washington to
transfer the $400 million in US aid earmarked for Soviet immigrants
to Israel, and it may even request more support.
Analysis
 F-
Meanwhile, Construction and Housing Minister Arid Sharon is
trying to bulldoze his way through bureaucratic red tape holding
up construction. Yesterday, Sharon presented to the Cabinet a
313.5 billion five-year plan designed to cope with the influx of
Soviet-Jews. His plan, debated for five hours, envisages importing
90,000 prefabricated and temporary housing units and building an
additional 45,000 units this year and 60,000 in each of the next four
years. Israel's Finance Minister, however, said the government could not
afford Sharon's proposal and plans to present an alternative at a special
Cabinet session on Thursday. This month, the High Court of Justice
overturned Sharon's eme
rgency orders to buy 3 (M nrefabricated and
temporary housing units.
The numbers of Soviet Jews moving to the occupied territories,
particularly to areas free of intifadah-related violence, probably will
increase in the coming months. According to Israeli media,
160 Soviet Jews haw the Golan Heights in the past two
months. the availability of relatively cheap
apartments there and elsewhere in the territories probably will attract
West Bank and incorporated into the city after the 1967 war.
the territories. A little more than 1 percent of Soviet Jews probably
are going to the territories. Another 6 to 7 percent are moving into the
eastern section of Jerusalem that Israel unilaterally detached from the
Sharon is serving as Tel Aviv's point man in trying to convince
Moscow and Washington that Israel is not settling immigrants in
the occupied territories, but Tel Aviv has not cut back the special
economic incentives for all Israelis, including immigrants, to settle in
Arab rhetoric on the immigration issue remains harsh. Arab leaders,
particularly King Hussein, are charging that immigration will
displace large numbers of Palestinians from the territories to Jordan.
Arab ire has persuad?d Moscow to retain its ban on direct flights to
Israel, which probably prevents immigration from exceeding current
levels. Palestinian and Islamic extremists are increasing calls for
attacks on Soviet Jewish immigrants, those en route to Israel and
those in the occupied territories. Because the issue is so emotional for
Israelis, Tel Aviv almost certainly would respond with strikes against
30 Jul), 1990