NATIONAL INTELLIGENCE DAILY

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005301342
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 27
• Document Creation Date: June 23, 2015
• Document Release Date: September 9, 2009
• Case Number: F-2007-00571
• Publication Date: June 29, 1990

(b)(1)
(b)(3)
APPROVED FOR
RELEASED DATE:
01-Sep-2009
Director of Central Intelligence
4
TOThrSeege-L_
CPAS NID 90-151JX
29 June 1990
*
.
Contents
Notes USSR: Yel'tsin Challenges Center on Nuclear Program 6
: Miners To Strike in Mid-July 6
: Constitutional Committee Defends Civil Liberties 7
India: Kashmiri Militants Split 7
Liberia: Capital Remains Tense 8
China: Showing Some Flexibility on Trade 9
Indonesia-China: To Renew Diplomatic Ties 9
In Brief
10
Special Analyses USSR: Gorbachev Faces Political Heat 11
Germany: Economic Union Sets Up the Endgame 13
Japan: Growing Debate on Rice Policy 15
29 June 1990
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29 June 1990
USSR: Yel'tsin Challenges Center on Nuclear Program
The Russian Republic Congress of People's Deputies has banned the
construction of new nuclear power plants within its boundaries after
this year and until the national government demonstrates it can safely
store and dispose of nuclear waste.
Comment: The directive, signed by Chairman Boris Yel'tsin, challenges
the center's authority over facilities important to both the military
and civil nuclear programs. Although the republic does not have legal
authority to interfere with the all-union nuclear industry, in practice
it has the power to stop construction. A literal interpretation of the
ban would prevent construction at just six new sites, most of which
already face local opposition. The call for a program to manage
radioactive waste safely, however, could affect currently operating
plants. The Russian Republic produces about 60 percent of the
USSR's nuclear-generated electricity and accounts for nearly all of
the country's planned expansion of the nuclear power industry
scheduled for this decade. The directive probably will speed up the
central government's efforts to identify publicly and eventually clean
up formerly secret facilities like the plutonium production complexes
at Chelyabinsk, Tomsk, and Krasnoyarsk: that task is likely to reauire
foreign assistance.
USSR: Miners To Strike in Mid-July
Coal miners in the Ukraine, Arctic Russia, and western Siberia
yesterday announced their intent to conduct a coordinated one-da
strike on 11 July, the anniversary of the walkout last year.
Comment: The miners' frustration at the government's failure to
fulfill the strike settlement reached last August and the continuing
deterioration of living standards have led to unbridled hostility
toward the party and government leadership, particularly Premier
Ryzhkov but also President Gorbachev himself. Delegates from
mining regions assailed Gorbachev at the Ukrainian party congress
last week for plunging the country into an economic crisis. Miners'
leaders admit the walkout next month will be only a symbolic strike,
meant to vent the anger of the increasingly uncontrollable rank and
file. It is the brainchild of the two-month-old Confederation of Labor
workers' alliance and probably will be supported by some
metallurgical, chemical, auto, oil, and transportation workers as well.
Although brief, it could turn out to be the strongest display of worker
solidarity to date.
6
-Thp-Seefet?_
29 June 1990
USSR: Constitutional Committee Defends Civil Liberties
Its initial actions suggest the new Constitutional Oversight
Committee will move aggressively to expand the protection of civil
liberties as it reviews actions by the Soviet Government. Last week, it
declared unconstitutional longstanding labor legislation that denied
several categories of workers-23 million, including supervisors and
professionals?the right to court appeal if fired. The committee has
decided to review both the system requiring citizens to hold
municipal residence permits and President Gorbachev's decree
transferring the power to regulate demonstrations in central Moscow
from municipal to central authorities.
Comment: By tackling controversial issues, the committee is gaining
credibility and living up to its charter. It does not, however, have the
power to enforce its findings. This shortcoming may lead democratic
reformers to press for additional human rights legislation and
constitutional changes that would increase the committee's powers.
INDIA: Kashmiri Militants Split
The Jammu and Kashmir Liberation Front, the largest separatist
group opposing Indian rule, on Wednesday announced a cease-fire
for the Srinigar area and urged other militant groups to observe it.
At the same time, however, the Front vowed to increase attacks on
Indian targets elsewhere in the state. On the same day, a coalition of
Islamic groups rejected the Front's earlier unilateral declaration of
a provisional government for Kashmir.
Comment: Relations between the secularly oriented Front and Islamic
groups that are increasingly influential in Kashmir have been strained
in recent weeks; the Islamic groups are unlikely to observe the cease-
fire. The Front probably chose to announce it and the provisional
government to regain political momentum.
7 29 June 1990
LIBERIA: Capital Remains Tense
Monrovia remains tense as more military rampages are anticipated.
Some stores opened briefly yesterday, but most soon closed; by early
evening the city was virtually deserted. Banks say they will not reopen
until next week. Army troops reportedly returned to the port area
Wednesday night to loot, and groups of armed soldiers were seen
riding in commandeered taxis and private vehicles yesterday.
the army has regained control of Roberts
International Airfield, but the rebels may have captured and shut
down Monrovia's water purification plant.
Comment: Monrovians are likely to continue to flee as the army
increasingly loses control of its troops and living conditions further
deteriorate
Nret-
8 29 June 1990
US-China Trade, 1980-89
US exports to China
US imports from China
?Trade deficit
Billion US $
10
15 1980 81 82 83 84 85 86 87 88 89
Source: US Commerce Department.
327146 6-90
29 June 1990
CHINA: Showing Some Flexibility on Trade
Beijing is willing to engage in
trade talks on the burgeoning US trade deficit with China. Last year
that deficit expanded by nearly 70 percent to $7 billion, according to
US data. In the first third of this year, US exports to China were
14 percent less than for the same period last year while imports grew
by more than a third, suggesting the deficit this year might reach an
alltime high of more than $10 billion.
Comment: Beijing's apparent willingness to address the issue breaks
with its customary insistence on using official Chinese data?they
do not report exports to the US via Hong Kong and other entrepots
and show the US running a surplus. Beijing probably is concerned
Washington will enact unilateral restrictions if the trade deficit
continues to grow; it is likely to make a modest increase in purchases
from the US to stave off such a move. China probably also hopes to
encourage US support for an early resumption of talks on its bid to
join GATT. China will continue to target the US market for its export
sales, however, and US exporters are still likely to face a wide variety
of import restrictions, suggesting the trade imbalance will remain.
INDONESIA-CHINA: To Renew Diplomatic Ties
During his visit to Beijing next week, Indonesian Foreign Minister
Alatas plans to discuss the timing for a restoration of diplomatic
relations, possibly late this year, and to sign a payment agreement on
Jakarta's $84 million debt to China.
Alatas and Chinese Foreign Minister Qian Qichen
will also discuss the Cambodian conflict; they are expected to work
out the status of stateless ethnic Chinese living in Indonesia,
Comment: Jakarta believes normalization will bring international and
regional prestige and enhance its image of itself as a leader of the
Third World and the Nonaligned Movement. Both sides hope the
move will increase trade, although Jakarta will not forsake lucrative
trade and investment ties to Taiwan. Beijing is eager to restore
relations, in part because Singapore has indicated it will follow suit,
and to demonstrate that Western sanctions have failed to isolate
China. It has been obliging on the debt issue in the hope of
announcing the normalization before the Asian Games at Beijing in
September, but Jakarta probably will push for late this year or early
next year because of military and public resistance to restoring ties
with Beijing,
9
29 June 1990
mrse.evet
29 June 1990
In Brief
USSR
? Ukrainian Premier Vitaliy Masol reelected yesterday on third
ballot. . . nationalist Rukh deputies fiercely oppose him, backed
their reform candidate . . . indicates Communist traditionalists
still dominate split legislature.
? Culture Minister Gubenko led five-minute silent protest yesterday,
interrupting artistic performances throughout USSR. . . follows
recent hunger strike at Bol'shoy. . . . "cultural intelligentsia" clear!
discontent with perceived delays in glasnost, perestroyka.
? Lithuanian legislature discussing moratorium on independence
declaration. . . Prime Minister Prunskiene urging quick approval
to permit talks with Moscow, but many legislators demanding
Soviet guarantees of legal independence.
? Moscow radio calls Hungarian legislature's decision to negotiate
withdrawal from Warsaw Pact rash, emotional . . . says will
undermine talks on Germany, new European security order . . .
USSR insisting Pact necessary while NATO exists.
? /zvestiya warns USSR may delay troop withdrawals because of
Hungary's inflexibility on payment for facilities Soviet forces
evacuating. . . USSR concerned about setting precedent . . .
controversy predates Budapest's decision to leave Pact.
Americas
East Asia
? Initial Latin reactions to President Bush's Hemispheric economic
policy address generally favorable . . . Brazil's Collor terms US
steps "wide-ranging, daring, and innovative" . . . Argentina's
Menem says measures bolster economic reform.
? Liu Zhongyi, 59, replaced beleaguered Chinese Agriculture
Minister yesterday . . . agrarian specialist, staunch advocate of
Beijing-level planning . . . should significantly help critics slow
rural reform, decentralization of agriculture.
10
-ThirSeeret-
29 June 1990
USSR Traditionalists: Short-Term Strengths, Long-Term Weaknesses
The traditionalists' success at the Russian Communist Party's congress shows their strong
hold on the party and government apparatuses and on the security forces. But they lack an
ideology, and their leaders?Ligachev, Gidaspov, and Polozkov?have been unable to rally
broad public backing. Support for their agenda of a decisive restoration of central authority
and a rollback of economic reform is widespread, however, among key groups in the political
system:
? The Apparatus. Traditionalist opposition to Gorbachev remains entrenched in the
party leadership, the apparatus of the Central Committee, and the ministries.
Traditionalists dominated elections of delegates to the Russian party congress and to
the CPSU congress in the Russian Republic, Belorussia, and the Ukraine.
? Workers, angry with inflation and unemployment, are a target of traditionalists. Last
year labor elements organized the United Russian Workers Front, which has several
hundred thousand members but little broad support.
? Military officers are increasingly politicized and polarized along generational lines.
Traditionalists in senior commands and political officers reportedly have fixed many
elections so that a million party members in the armed forces would select hardline
delegates to the party congress.
? The KGB has long been divided over Gorbachev's reforms; those responsible for
internal security are concerned about the destabilizing effects of perestroyka, and
some in the internal security directorates have publicly appealed for greater press
censorship and a tougher law-and-order policy.
? Russian chauvinist intellectuals are playing a growing role in opposing perestroyka.
They have taken over several key journals and publishing houses and have organized
mass-based orthodox political movements in the Russian heartland.
o
29 June 1990
Special Analysis
USSR: Gorbachev Faces Political Heat
With the 28th Communist Party Congress opening Monday, General
Secretary Mikhail Gorbachev appears increasingly isolated and may be
losing control of political developments. With the recent victories of
Boris Yel'tsin and other democratic reformers, state institutions are
increasingly under the control of the left, while the traditionalist tone
of last week's Russian party congress suggests the national party is in
danger of being taken over by the right. A traditionalist victory next
week could set the party on a collision course with the more democratic
state institutions.
Gorbachev apparently has been assuming that the greatest threat to
his leadership would come from democratic reformers. Watchful of
the left and distracted by the disintegrating economy and events in
the Baltic republics, he apparently has underestimated the mounting
challenge posed by party traditionalists.
Several Soviets claim Gorbachev failed to control the delegate
selection process for the Russian and Soviet party congresses,
although delegate support was key to reforming the party. According
to Yel'tsin, Gorbachev's indifference allowed the scathing criticism of
his leadership and the election of traditionalist Ivan Polozkov as head
of the Russian party. Although Gorbachev may have counted on
reformers at the Russian party congress to defend him, only a few
independents such as Moscow party chief Prokofyev spoke in his
support. Apparently alarmed by the traditionalists' strong showing,
Gorbachev early this week considered postponing the Soviet congress
until this fall
Traditionalism is making itself heard in the other Slavic Communist
parties as well. Last week Ukrainian Communists elected longtime
reform opponent Stanislav Gurenko as their first secretary, while
regional leaders assailed Gorbachev for leading the party and the
economy into crisis. According to I zvestiya, the Byelorussian party
chief last week publicly criticized Gorbachev's leadership of the
party and state.
Possible Showdown
The congress opening Monday is shaping up as a showdown between
Gorbachev and traditionalists who want to preserve the party's
monopoly over the political system and to put the brakes on his
reforms. Gorbachev's position as party chief is also vulnerable, and
11
continued'
-TUrSeefet--
29 June 1990
A Two-Headed Party?
The proposed revision of the Soviet Communist Party bylaws,
published yesterday, would divide the top party leadership between a
Chairman and a First Secretary. The Chairman, elected by the party
congress, would head a new Presidium, which would replace the
Politburo as the party's leading policymaker. The Central Committee
would elect a First Secretary to oversee the Secretariat and the work
of the powerful party apparatus.
The proposal poses a danger for Gorbachev, who clearly would like
to retain control of the party. He presumably would want the post
of Chairman since it would allow him to give up day-to-day
management of the party and to refute criticisms that no one person
can run both the party and the state. The election of a like-minded
thinker to the post of First Secretary would be critical, however, since
the First Secretary would have the power to obstruct Gorbachev's
policies and build an independent power base. The proposal to split
the top party leadership was not mentioned in precongress debates
and may be a product of recent compromise with traditionalists.
"Ttra-Seet.eL__
29 June 1990
the congress could become a referendum on his leadership. Critics on
his left and right, including Politburo member Ligachev, have called
for him to step aside and appear poised to challenge him. If
Gorbachev fears the traditionalists will prevail, he might try a bold
step to regain the initiative. He might risk offering to resign at the
outset of the congress, for instance, hoping the delegates would find
they have no real alternative.
Losing His Edge
With the loss of leadership allies in the Russian party and state,
Gorbachev appears to be losing some of his political magic. He
seriously miscalculated his tactics against Yel'tsin's bid to become the
Russian Republic's Chairman, and he contributed to panic in the
streets of Moscow by allowing the premature announcement of price
hikes. Gorbachev also appears to have seriously misjudged the mood
of delegates to the party congress and revealed political weakness by
contemplating a postponement of the conclave
Gorbachev apparently has few options for responding to his
problems. He must retain the allegiance of the party apparatus, which
still controls many institutions through its ubiquitous presence
nationwide, and must also come to terms with mounting public
pressures for faster change. The renascent traditionalist cast of the
party, however, appears seriously out of step with Soviet public and
state institutions, further eroding the party's credibility and appeal.
At the congress Gorbachev probably will try to reestablish a centrist
majority in the party through compromise or grandstanding, but this
would be a temporary fix at best. The growing alienation between
party and state is likely to continue, possibly leading to a bitter
confrontation for primacy.
12
29 June 1990
The German Economy in the Year 2000
Germany will be a more potent economic force after unification but hardly on the scale of
the US or Japan. A unified Germany would account for only 8.2 percent of total OECD GNP
this year, about one-fifth of US output. A more dynamic German economy would, however,
lead Western Europe.
Germany's relative weight will not increase by the year 2000, even after a decade of rapid
growth. CIA econometric projections indicate the unified country will grow considerably
faster in the 1990s than West Germany alone would have, 3.2-percent versus 2.2-percent
average annual growth. But this growth rate is barely above the projected OECD or US
growth rates of about 3 percent, and the relative position of the German economy will be
much the same in the year 2000. Even under the more optimistic forecasts of German
officials-4-percent growth in the 1990s?German GNP at most would account for
8.8 percent of OECD GNP.
Share of OECD
Percent
1989
2000
Without Unity
With Unity
US
39.9
39.8
39.5
Japan
14.7
15.9
15.5
Germany
7.2 a
6.6 a
8.2
France
6.3
5.8
5.7
Italy
6.2
6.0
5.9
UK
6.1
6.0
5.9
Canada
3.9
'4 7 0
3.8
a West Germany.
29 June June 1990
Special Analysis
GERMANY: Economic Union Sets Up the Endgame
West German absorption of the East German economy, which begins
Sunday, will make unification irreversible regardless of the next
German election or the two-plus-four talks. Bonn should be able to
manage the short-term economic and social dislocations in eastern
Germany that German economic and monetary union (GEMU) will
bring, but Chancellor Kohl will pump public funds into East Germany,
risking inflation and higher interest rates, if the strains seem to threaten
his reelection chances in December. On balance, GEMU will benefit the
German, European, and global economies by paving the way
dynamic German growth and providing new export markets.
East Berlin has agreed to abandon its command economy in favor of
a free market system and to cede sovereignty over economic policy
to West Germany. The worthless ostmark will be replaced by the
powerful deutsche mark. East German authorities will free prices,
foster competition, and remove restrictions on foreign investment.
The process will be eased by East Berlin's adoption of West German
commercial, tax, and social structures.
Impact in Germany?Prognosis Favorable
East Berlin's commitment to a free market system and Bonn's
willingness to provide substantial financial support augur well for the
East German transition to a market economy. The booming West
German economy should also function as a safety valve. Private
forecasts and CIA estimates expect growth to remain about 4 percent
this year and next, creating thousands of new jobs for East Germans.
Nonetheless, GEMU will bring major changes in the near term: a
fourth of all East German firms might fail this year, and
unemployment may top 20 percent in the next six months. Bonn and
East Berlin are banking on a surge of public and private investment
in East Germany to cushion the impact.
In the next few years, foreign investment and adoption of Western
production modes should spark an economic renaissance in eastern
Germany. It probably will receive the $600 billion it will need to
achieve the West German standard of living by the end of this
century; its growth should average 9 percent per year.
Risks for Kohl
The private investment needed to create jobs and to persuade
East Germans that they face only temporary economic pain will be
continued
-TiM"Seer-et?.
13 29 June 1990
Economic Union and the Two-Plus-Four Talks
Economic and monetary union beginning Sunday will increase East Germany's reliance on
Bonn and further reduce East Berlin's clout in the two-plus-four negotiations. Bonn's
leverage has grown as GEMU has neared; parties in the East German governing coalition
have dropped their opposition to Chancellor Kohl's timetable for all-German elections this
year and are following his lead in trying to conclude the two-plus-four talks before the votes.
Continuing protests against Soviet troop contingents and a hostage incident this week
involving a Soviet soldier and an East German family also make East Berlin anxious for
quick agreement on a new legal basis for the presence of Soviet forces.
East Berlin may cast itself as an honest broker and propose extending the one-day political
directors' meeting set for Wednesday in East Berlin and a second meeting before the Paris
two-plus-four session next month as a gesture of support for Soviet Foreign Minister
Shevardnadze's call to intensify work on an agreement. The East Germans probably will also
lobby vigorously for institutionalizing the CSCE process as part of a new European security
architecture, as Prime Minister de Maiziere did on the fringes of this week's EC summit in
Dublin and with Prime Minister Thatcher in London. A less likely possibility is that the East
Germans will revive their proposal for a security zone in Central Europe as a compromise
between a unified Germany in NATO and Moscow's call for NATO's transformation and a
transition period for both Germanys.
Kohl probably can avoid an embarrassing fight with East Berlin on these issues. As long as
the Germans believe that Soviet cooperation hinges on the economic sweeteners Bonn is
prepared to offer, East Berlin has little option but to follow his lead.
"Tup-Sestet,_
29 June 1990
impeded if wage hikes in East Germany exceed productivity gains, if
property ownership remains unresolved, or if uncertainties develop
about the timing of political union. Any of these developments could
leave Bonn with two unpalatable options:
? Appropriating West German public funds to subsidize the
East's economy, fueling anxiety in the West that Kohl will
break his pledge not to raise taxes and among Bonn's G-7
partners that interest rates will jump.
? Riding out the economic and social dislocations, the resultant
policy feud with East Berlin, a new surge of emigration, and
possibly increased sympathy for the Social Democrats and
extremists of all political stripes.
Impact on Europe and the US
the EC will grow an extra quarter
of a percentage point over the next year as increasing East and West
German demand for foreign goods sparks an export boom; these
gains will diminish over time. German trade with Eastern Europe and
the USSR probably will decline over the next year as the East buys
more from the West and as German investment centers on eastern
Germany. By the mid-1990s, however, economic expansion in
eastern Germany should benefit Eastern Europe, especially as new
firms build on the region's links to the East.
Exports to Germany from the US may rise by $15 billion next year,
more than offsetting the expected mild increase in US interest rates
that would accompany higher German interest rates. The result will
increase US economic growth in 1991 about three-tenths of a
percentage point. If the economic and social dislocations from
GEMU are greater than expected, however, Bonn would not hesitate
to ignore any US preferences and reduce aid to the rest of Eastern
Europe or Central America.
'T'MrSeere.t?_
14 29 June 1990
Japan's Subsidies for Rice Farmers
The expected LDP move to cut government-set rice prices continues
a four-year-long effort to rationalize rice farming, a key sector of
Japanese agriculture, in order to reduce budget outlays and increase
efficiency. Japan's price support system, instituted after World War II
to alleviate food shortages, has become increasingly costly: Tokyo
spent more than $20 billion on assistance to rice producers last year.
Moreover, price subsidies have helped keep the farm sector
notoriously inefficient. The average Japanese grain farmer produces
only 4 percent as much as his US counterpart.
Gradual annual reductions of 3 to 5 percent begun in 1986 were
halted after the price cut in 1988 because the LDP, facing elections in
July 1989 and last February, needed to woo rural voters disaffected
by earlier liberalization measures. The anticipated resumption of
price cuts this year in part reflects the fact that the party does not
have to call new elections until July 1992. It apparently believes it can
repair any damage to its rural support base before then.
'Fott,Sgmf,_
29 June 1990
Special Analysis
JAPAN: Growing Debate on Rice Policy
The ruling party's imminent decision to cut price supports for rice
farmers probably will fuel a national debate on the once sacrosanct
ban on imported rice; although public sentiment favors liberalizing the
market, the electoral clout of rural voters means Tokyo will move slowly.
The Liberal Democratic Party reportedly will announce a cut in price
supports for rice growers next week. A week ago Komeito, the second-
largest opposition party, reversed itself and called for a review of the
total ban on rice imports. Former Prime Minister Takeshita, who is
an LDP kingpin and a key supporter of Prime Minister Kaifu, has
praised Komeito's position, but agricultural groups have responded
with a wave of protests.
Public and ruling-party attitudes toward government support for
rice farmers have been shifting. Opinion polls indicate 71 percent
of Japanese consumers favor a partial or total opening of the rice
market; only 29 percent did in 1987. Press reports suggest most
politicians and officials recognize that dismantling costly subsidies
and import barriers will lower prices for hard-pressed Japanese
consumers?a constituency the LDP hopes to cultivate?and remove
a major irritant in trade relations. Moreover, Tokyo is strongly
committed to completing the GATT negotiations by December,
and failing to address the rice issue would expose it to criticism
for impeding a successful outcome.
-Srefet___
15 29 June 1990