NATIONAL INTELLIGENCE DAILY

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005301321
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 22
• Document Creation Date: June 22, 2015
• Document Release Date: September 9, 2009
• Case Number: F-2007-00571
• Publication Date: June 25, 1990

APPROVED FOR RELEASE DATE:
09-01-2009
(b)(1)
(b)(3)
 Poland: Split in Solidarity Deepens
China: Unemployment Rising
EC: Inching Toward Ending Internal Border Controls
Special Analyses
Eastern Europe: Hooked on Soviet Energy
 7"Veret:
POLAND: Split In Solidarity Deepens
Accusing Lech Walesa of undermining the government and behaving
like a despot, 63 of the union leader's senior advisers and longtime allies
The resignations of Bronislaw Geremek-leader of the Solidarity
faction in parliament-Labor Minister Jacek Kuron, and such other
Solidarity luminaries as Adam Michnik, Wladyslaw Frasyniuk, and
Henryk Wujec end a decadelong alliance between workers and
intellectuals and split the movement into two camps-those who
support Walesa and those who back Prime Minister Mazowiecki. The
resignations came after Walesa refused to replace the Committee with
a new movement supporting Mazowiecki and his ambitious
economic reform program.
alesa wants to use the 200-member
Citizen's Committee and the Center Accord, a group recently formed
by his principal advisers, to promote his presidential bid. The Center
on Saturday endorsed not only Walesa's early accession to the
presidency but also his proposed radical personnel changes in the
Mazowiecki government and an accelerated date for parliamentary
elections. The group has demanded an easing of the government's
austerity program. Walesa persuaded the Committee to postpone a
decision on its dissolution for one month, leaving the door open for
compromise. Some Solidarity regional groups issued statements over
the weekend supporting Walesa, but others sought to avoid any
appearance of taking sides.
Comment: The split between Walesa and his former close associates
adds new divisiveness to an already contentious political scene, with
Walesa and his supporters moving solidly into an opposition role.
The government's ability to maintain support for its harsh economic
reform program will be seriously weakened-particularly if strikes
develop and Walesa supports the strikers instead of the government,
The situation remains fluid, however, and the split may not be
entirely irrevocable. The resignations of Wujec-a longtime secretary
of the Citizen's Committee-and the other leading intellectuals who
have criticized Walesa's ambitions will enable Walesa to consolidate
his hold over the Committee; however, the defections and Walesa's
strident antigovernment rhetoric could also increase sympathy for
Mazowiecki. Walesa may have considered this possibility when he
urged the Committee to nostnone a formal decision on dissolution
0?
 'I'o '3meee-
 Im"eff"-
 o
o'l u `e m4-
 CHINA: Unemployment Rising
Comment: Because the number of new entrants in the job market is
growing and state enterprises are already overstaffed, unemployment
is not likely to decline significantly in the near term even if the
economy continues to improve. Higher worker subsidies probably
will lead to another record budeet deficit, exceedin2 last year's of $7.8 billion.
pay government-stipulated minimum wages.
Beijing is increasing subsidies and loans to enterprises to help them
Although China's economy is recovering somewhat from its worst
slump in a decade-industrial output rose at about a 4-percent
annual rate last month-Chinese press reports indicate urban
unemplo could increase almost two-thirds to 11 million by
yearend, ment these figures exclude
4 million urban workers idled by production slowdowns who receive
only about half their basic wages. And employees of some small firms
reportedly have not been paid for months. To head off worker unrest,
25 June 1990
 -lVvSeeftt-
 'I'nfo ecret-
 The EC's Trevi Group--comprising interior and justice ministers of
the member states-has taken several steps to reduce border controls
on the movement of people within the Community. The ministers
last week signed an asylum convention to streamline the handling of
entering refugees. They also established a central drug intelligence
unit and secure communications among law enforcement ministries.
The drug unit is part of an EC plan that includes a monitoring center,
legislation on money laundering and precursor chemicals, and closer
cooperation with other industrialized states.
Comment: EC leaders probably will endorse both the drug plan and
the border control measures at the Dublin summit, which opens
today. A separate agreement signed last week-which will end border
controls among West Germany, France, Belgium, the Netherlands,
and Luxembourg, the Schengen Group-probably pushed the EC to
accelerate its own program in order to avoid a "two speed" Europe on
easing the movement of people. Nevertheless, because of continuing
disarray on such issues as visa policies and cross-border hot pursuit,
the EC is not likely to complete a pact before the Schengen program
takes effect late next year or early 1992.
 - Two bombs exploded Friday night at South African ruling
National Party's Johannesburg headquarters and local Transvaal
office ... extensive damage, no i 'uries ... ri htwin extremists
probably responsible.
that President Doe resign.
reported over weekend ... government still rejects rebels' demand
sense of showdown with Gorbachev at party congress.
reform group, republic chief Yel'tsin... suggests bid to lessen
-New Russian Communist Party chief Polozkov yesterday refuted
traditionalist sobriquet ... extended olive branch to democratic
contemporaries, like Ligachev, to follow suit.
says leadership should be younger ... puts pressure on
- Izvetliya today reports Soviet Politburo member Zaykov, 67, will
not seek reelection at CPSU congress opening next Monday ...
relations between center, republics.
-Moldavia's legislature issued declaration Saturday proclaiming
its laws supersede Soviet laws... ninth republic to jump on
sovereignty bandwagon ... increases pressure for treaty redefining
Africa - Peace talks between Liberian Government and rebel delegations to
resume today in Sierra Leone ... some skirmishing near Monrovia
- Poland has welcomed declarations of East and West German
parliaments affirming Oder-Neisse border- Warsaw dropping
demand treaty be signed before unification but still insists treaty
language be nailed down first.
 W.
 Special Analysis
between rank-and-file members,
moved quickly to repair interparty strains in the legislature and
PANAMA; Six Months After Norlega
President Endara's team continues to enjoy widespread public support
six months after Manuel Noriega's ouster, although some of the
euphoria is beginning to wear off as unemployment persists. The three
coalition leaders have worked together smoothly, although differences
over the Public Force may cause serious rifts in coming months. Despite
growing business confidence and progre i e public's
main concern will remain the economy.
The government has benefited from disarray in the opposition. The
Democratic Revolutionary Party (PRD) is still clinging to the
populist ideology of former strongman Omar Torrijos but has failed
to exploit antigovernment sentiment among fired government
workers, the homeless, or the unemployed. The reported plans of
radical leftist groups to use violence, including erriIla warfare.
against the government apparently have fizzled.
The three coalition leaders, Endara and Vice Presidents Ford and
Arias Calderon, have kept party rivalries under control. Controversial
government appointments and Endara's revival of the populist,
antimilitary Arnulfista Party have fueled competition with Arias
Calderon's Christian Democrats (PDC), but the three leaders have
Economy on the Mend
The private sector has taken the lead in rebuilding the economy.
Firms have made repairs, increased production, and restocked
inventory. Panamanian entrepreneurs reportedly are repatriating
capital and using credits from wholesalers to revitalize their
continued
'I'' 9mret-
25 June 1990
 Panama: Refugee Frustrations Mounting
Demonstrations that drew several thousand protesters to the Presidential Palace Wednesday
indicate growing frustration over unresolved economic and social issues. Refugees from
Chorillo, the area of Panama City razed during fighting on 20 December, protested against
living conditions in US-sponsored relocation facilities managed by the Panamanian
Government. The refugees also demanded that President Endara request US compensation
for property losses and deaths. Many refugee families believe US relocation assistance of
$6,500 per family for a new home and $800 for personal property losses is inadequate.
Press reports indicate students and labor organizations that joined the refugees plan to
protest government layoffs intended to purge ministries of Noriega supporters and to trim
expenditures. Rising dissatisfaction with living conditions in refugee facilities and
unemployment troubles are likely to continue to spur periodic rallies in urban areas.
25 June 1990
 businesses. Some 80 percent of businesses looted during the invasion
have reopened, and 70 percent of workers who subsequently lost their
jobs have found employment. Government revenue from sales taxes
is up 17 percent this year, and manufacturers are increasing
production as domestic demand rebounds. The banking system has
increased its liquid assets by 30 percent since J and 1 s to lift
remaining withdrawal restrictions next month-
The government's austere budget is constraining reconstruction
programs. Nearly 80 percent of public revenue is slated for salaries,
pensions, and domestic and multilateral debt service, leaving little for
infrastructure repairs and social programs. Panamanians still see the
25-percent unemployment rate as the country's top problem. Protests
by dismissed government workers and refugees from destroyed areas
of Panama City have been commonplace. Officials are working with
the IMF and the World Bank to develop a medium-term economic
reform program, but slow progress soliciting contributions from
countries other than the US to clear some $540 million in arrears to
international financial institutions probably will delay disbursal of
standby or structural adjustment credits.
The Endara government continues to ride the wave of public good
will and optimism generated by Noriega's ouster. Despite periodic
jockeying for position by the coalition partners, government leaders
are likely to remain in agreement on most basic political and
economic issues. Nevertheless, the highly charged issue of the Public
Force's future and the continued public humiliation of its officers
could open serious rifts in the governing coalition and even bring
about the collapse of the Force if a consensus is not reached soon on
the disposition of former military officers now in the Force.
Optimism in the private sector probably will continue to stimulate
investment and sustain a slow recovery for the rest of the year. US
assistance will help businesses overcome bank liquidity shortages and
promote rebuilding of the battered infrastructure. The IMF and the
World Bank probably will encourage Panama City to adopt difficult
structural reforms, including further cuts in the government payroll,
privatization measures, price liberalization and tariff reforms, and
changes in protective labor laws. Such austerity measures, if adopted,
probably would intensify public worry over the economy, expose the
government to charges of insensitivity to the poor, and increase the
size and frequency of antigovernment demonstrations.
i'r
 01
 Eastern Europe: Sources of Enemy
 Special Analysis
EASTERN Hooked on Soviet Energy
EUROPE;
East European countries have taken a number of steps to wean
themselves from Soviet-supplied energy, but cost and environmental
considerations probably preclude a major break for at least several
years. The East Europeans are vulnerable to a cutback in Soviet
deliveries; a sustained one could severely depress their economies and
scuttle modernization.
Slowdowns in the delivery of Soviet oil and gas in the first quarter of
the year have fanned the strong anxieties East Europeans have about
depending on Soviet energy. The USSR, the region's leading foreign
source of fuels, supplies all East European countries except Albania.
providing between 17 and 64 percent of national energy needs.fi
Despite their des-re to diversify, the East Europeans have few ready
alternatives to Sov'?.t oil and gas. Buying from OPEC suppliers means
using hard currency needed for critical consumer and industrial
imports. Abundant domestic reserves of coal offer a cheaper
alternative, but the years of uncontrolled industrial use of coal have
fouled the environment and raised strong local opposition to policies
that would make the problem worse. Most of the region's nuclear
power stations are Soviet designs and have significant safety
problems. As plants are shut down, nuclear energy production
probably will shrink in the near term:
- Bulgarians are questioning the safety and cost of the nuclear
power plant under construction at Helene, according to press
reports.
continued
25 June 1990
 Too
Operating and Planned East European Nuclear Plants
Bulgaria
Czechoslovakia
East Germany
Hungary
Poland
Romania
Yugoslavia
Units in Units Under Reactor
Operation Construction Designer
USSR
USSR
USSR
USSR
USSR
Canada
US
? The East European nuclear power program is dominated by Soviet-designed plants and
CEMA-produced components.
 O t-
- Yugoslavia is considering shutting down its only operating
nuclear plant, of US design, because of concerns about
disposal of radioactive waste.
East European countries are inefficient consumers of energy, using an
average 24 percent more oil, gas, and coal per dollar of GNP than the
US. The region probably could save the equivalent of as much as
1.9 million barrels of oil a day by raising energy efficiency to US
levels. Western experts estimate, however, that it would take some
$250 billion over the next 15 years to reach this efficiency, and
funding of such, magnitude would have to come primarily from
foreign sources.
Eastern Europe will remain heavily dependent on the USSR for
energy, and a sustained cutoff would cripple the region. Households
and sectors that depend on natural gas, such as fertilizers and
chemicals, would be hardest hit because there are almost no
alternatives to Soviet gas supplies. Alternative supplies of oil
probably could be found, although at great cost in hard currency
and in quantities that would require strict rationing.
In the longer term, significantly reducing dependence on Moscow will
require massive investment in new, safe nuclear plants and energy-
efficient capital equipment. Emerging nuclear technologies in the
West may lower the price and increase safety enough to attract East
European interest. It is likely that the USSR will remain the primary
supplier of gas because of its extensive pipeline network and the cost
of developing alternatives
O
25 June 1990