NATIONAL INTELLIGENCE DAILY

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005301350
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 26
• Document Creation Date: June 23, 2015
• Document Release Date: September 9, 2009
• Case Number: F-2007-00571
• Publication Date: July 10, 1990

APPROVED FOR
RELEASE DATE:
01 -Sep-2009
NATIONAL
INTELLIGENCE
DAILY
Tweday, 10 July 1999
op e~
CPAS NID 90-159JX
a//
(b)(1)
(b)(3)
 Nicaragua: Chamorro Calls Out Army
France: Faux Pas on Troop Withdrawal From Germany
3
East Germany: Looking for New Soviet Troop Agreement
4
Albania: Still Rocking
USSR: Relaxing Enforcement of Air Sovereignty
Vietnam: New Trade, Aid Accords Undermining Embargo
In Brief
 The 28th CPSU Congress yesterday endorsed a restructuring of the
leading party bodies that includes the creation of a powerful new deputy
general secretary position.
The Politburo will be enlarged to include the first secretaries of the
15 republics and other key regional party officials in addition to the
general secretary and the deputy. The congress will select the general
secretary-almost certainly Gorbachev-and the deputy, possibly
today. The deputy will preside over meetings of the Secretariat and
run the day-to-day activities of the party. The revamped Secretariat
will contain intellectuals and representatives of industrial and
agricultural workers, as well as the CPSU secretaries.
Comment: The dilution of power likely to occur with the expansion of
the Politburo probably will work to Gorbachev's advantage, but the
new deputy position and the apparent revival of the Secretariat could
be used to challenge his control of the party. Gorbachev will want an
ally in the slot to safeguard his authority; traditionalists are likely to
back one of their own, ossibl forcing Gorbachev to accept a
compromise candidate.
Because the deputy-unlike other Politburo members-will be
elected by the congress, Gorbachev cannot replace him at a Central
Committee plenum. This job security and control of the Secretariat
will give the deputy a strong independent power base. I
1 10 July
1990
 TO-
Army to help police restore order in strike-torn Managua.
Chamorro instructed the Army and police to clear barricades from
the roads and to retake installations held by demonstrators. As of
0200 EDT today, there was no indication the Army intends to
comply. Strike leaders vowed to continue their efforts to paralyze the
country.
The President's action followed a shat escalation of strike-related
violence in the capital. the
Sandinista police made only halfhearted efforts to dismantle
barricades and separate progovernment and pro-Sandinista
demonstrators, who engaged in rock-throwing melees in which dozens
were injured.
Gunfire was heard in several neighborhoods, and the press reports
that at least three people may have been killed. Last night Sandinista
supporters occupied Radio Nicaragua and both television stations,
but police forced them out after several hours.
Press reports indicate striking workers have shut down Sandino
International Airport, and electricity and other services have been cut
in some areas.
The strike has already proven costly. The government claims losses
are running $2 million a day, and private-sector leaders say only half
the cotton crop has been planted because of peasant land invasions.
Even so, business groups and political parties aligned with the ruling
Comment: Chamorro's resort to the military represents a victory for
the Sandinistas. They may either continue the strike to undermine
Chamorro further or-having made the point that the government is
helpless without Sandinista cooperation--call it off. If the Army
refuses to restore order, Chamorro will have little choice but to offer
 President Mitterrand's hint in an interview last week that France might
withdraw its troops from Germany may undercut NATO efforts to
maintain a long-term military presence after German unification.
Mitterrand said "logic dictates" the French Army should come home
as soon as the Four Powers cease to play a role in Germany. Defense
Minister Chevenement has tried to limit the damage by saying French
troops would not leave before the Soviets withdraw from eastern
Germany and France consults with its NATO Allies.
showing pique at his secondary role in NATO's strategy review last
Mitterrand's statement may encourage German voters to overlook
the primary basis for French troops in West Germany, which is
bilateral agreements rather than Four Power rights. His comment,
and Chevenement's statement, could also encourage the German
public to seek simultaneous withdrawals of Soviet and Allied forces, a
course the Kohl government rejects. Other Allies, especially the UK,
are likely to express concern over the statements. Mitterrand's remark
could also add to pressure to trim France's defense budget in the long
term. The Rocard government is already debating defense spending,
which is scheduled to grow by about 1 percent in real terms next year.
10 July 1990
 EAST GERMANY: Looking for New Soviet Troop Agreement
for a new agreement on Soviet forces in East Germany amid reports of
growing local opposition to them.
Eppelmann last Thursday said for the first time that a new stationing
agreement should include a timetable for the withdrawal of Soviet
troops and give German authorities significantly greater control over
their activities. He noted that the Soviet troop presence was causing
tension in East Germany. Eppelmann urged the East German public
to be patient, however, and warned that Soviet withdrawal would
take several years for technical reasons.
Reports of incidents involving Soviet forces and civil-military
tensions are becoming more frequent. East German police recentl
killed a Soviet soldier after he took a family hostage.
German press has reported demonstrations and petition drives
against the presence and activities of Soviet forces throughout the
country.
The Soviets have taken steps in recent years to reduce the visibility
and annoyance level of their presence. They are garrisoned and train
in areas closed to civilians, at some distance from major population
centers. Moreover, Soviet forces no longer conduct low-level or
weekend training flights and make efforts to avoid damaging or
monopolizing East Germany's transportation network.
Comment: The risk of more serious confrontations between Soviets
and Germans will increase if Moscow delays agreement on troop
withdrawal or refuses to give up its occupation rights when German
political unification is substantially complete. Incidents between
Germans and Soviet forces will continue in any case, but the
governments want to avoid confrontations and will try to keep
problems manageable.
The recent Soviet proposal for a 21-month transition period after
unification before the stationing agreement is reexamined indicates
Moscow may not be prepared to set a withdrawal timetable until the
issue of German membership in NATO is resolved.
 President Yoweri Museveni, the 45-year-old guerrilla leader turned
politician, will fill the position until the Organization of African
Unity summit next year. In his inaugural speech, Museveni called for
African-based economic solutions and negotiated settlements for
domestic and regional problems. He stressed the need to move
toward democracy without foreign pressure and urged the West to
grant African nations a 15-year grace period to revive their ailing
Comment: Museveni lacks a thorough grounding in regional affairs,
but he is a Pan-Africanist and is likely to breathe new life into the
OAU. He is a dynamic leader with an extraordinary sense of purpose.
He has already sought US cooperation in involving the OAU in
Angolan national reconciliation. Citing Africa's propensity for tribal
that avoids aggravating ethnic divisions.
 Albanian Unrest Disturbs Neighbors
Greece appears to be preparing for a possible flood of refugees and is signaling Tirane its
interest in ensuring the safety of the ethnic Greek minority in Albania; Belgrade worries the
turmoil may aggravate the instability in Yugoslavia.
Greece is deploying commando and naval forces to the Albanian border, according to press
reports. An elite Greek unit from Naous near the Yugoslav border, probably the 350- to
500-man "B" Raiding Forces Battalion, reportedly has been transferred to Ioannina near
southern Albania. A naval task force that includes at least one frigate reportedly is off
Albania's southwestern coast north of the Greek island of Corfu.
Belgrade has limited its involvement to letting its Ambassador mediate. No unusual
movement by Yugoslav military units has been noted near the Albanian border.
Athens probably wants both to secure its border to avert a possible influx of refugees and to
demonstrate its resolve to protect the large ethnic Greek minority in Albania. The nationalist
conservative government almost certainly would prefer to work with EC members to resolve
the conflict through diplomatic channels, but any violence against Greeks in Albania would
put more pressure on the government to send additional forces to the border and, in the last
resort, even to consider limited military options to protect the Greek minority.
Belgrade undoubtedly fears that continued unrest will add to tensions in Serbia's
predominantly Albanian province of Kosovo and bring in large numbers of refugees.
~o '~e+eret_
10 July 1990
 there are being turned back.
military police have blocked all roads to Tirane, and trains bound
Tirane yesterday announced more government changes as reports
of widespread unrest trickled out. The shakeup was restricted to
ministers dealing with the economy and appeared intended to ease
discontent over food and other shortages. Press reports say
demonstrations are under way in Kavaje and workers in Elbasan are
on strike at Albania's largest metal-processing combine. Security and
The government is beginning to make good on promises to let
seekers by sea,
allowed to depart by tomorrow or Thursday, although no specific
arrangements have been made to evacuate them. The Italian
Government is considering evacuating as many as 3,000 asylum
the estimated 3,000 refugees in the West German Embassy will be
out visa applications.
(Refugees in the French, West
German, Italian, Hungarian, and other embassies have begun filling
The large number of asylum seekers and the illiteracy of many are
slowing the application process. Meanwhile, Albania has tightened
the issuance of visas for foreign correspondents. A Greek reporter
confirmed that Albanian officials are detaining at the airport foreign
 o
 nw-MISM
IMAXIM
TMrSeffgt-
Top ~rre~
 -ToirseeftL
Changing Tone of Soviet Air Defense Officials on Civil Air Violators
"Every member of the Air Defense Forces going on duty receives orders to stop any violation
of the country's airspace by a foreign aircraft. [Any intruding aircraft is to be] located,
identified, and shot down. I personally guarantee that. I do not recommend anyone to try it
again."
- Army General Ivan Tret'yak
Commander in Chief of the Air Defense Forces,
in Nedelya, November 1987
"Air defense cannot do everything. Nor does it have the right to do everything.... Orders
forbid us shooting down sporting and civil aircraft.... It is infeasible and ruinous for our
country to set itself the task of combating every hang glider and sporting aircraft. Especially
since we are now cutting back our defense spending and reducing the numerical strength of
our troops."
- Col. Gen. Igor Maltsev
Chief of the Air Defense Forces Main Staff,
in Krasnaya zvezda, June 1990
'T'oD-S~
 limitations and was not worth the cost in today's political and
economic climate. He was responding to public criticism of the
Forces' repeated failures to prevent intrusions by light aircraft in
Published remarks by a senior official of the Soviet Air Defense
Forces strongly suggest that the leadership has deemphasized the
Forces' peacetime mission of defending against aircraft border
incursions. The chief of the Air Defense Forces Main Staff was
quoted in last month's Red Star as saying that prevention of border
violations by nonmilitary aircraft-one of the Forces' traditional
missions-was not feasible because of equipment and manpower
Comment: The officials' comments imply that Soviet air defenses are
to concentrate their increasingly limited resources on preparedness
for their wartime missions of warning and defense against air attack.
The change diminishes the possibility of their downing a civilian
terms like those required by the IMF.
economist Nikolay Shmelov, writing in Moscow News, joined in
rejecting political strings but said he is willing to accept economic
The Soviets have begun to discuss openly the issue of Western
economic assistance, focusing on political conditions that may be
attached. In a speech to the party congress, Foreign Minister
Shevardnadze denied that the USSR is changing to a market
economy to get aid or that there is a connection between credit
agreements and other matters such as the German question or arms
reductions. Several Soviet press items have also picked up the theme
that aid must not come with political conditions. Prominent reform
leadership.
might also be willing to accept political terms but only if they were
not publicized to preclude their use by hardliners to undermine the
Comment: Reformers in the leadership probably would welcome
economic demands as a means of speeding the reform agenda. Some
I Q July 1990
 'T-of'Sref"-
 off' per. ee~et_
 President Li Teng-hui will find it difficult to implement long-
promised reforms of Taiwan's political system despite the
endorsement of direct presidential elections and restructuring of
the island's three legislative bodies by a just-concluded conference.
Li failed to gain support for a timetable for the reforms, and senior
ruling-party officials indicate some changes may be delayed un to
six years.
Comment: The President will try to translate the conference's vague
recommendations into law during the fall legislative session. He lacks
control, however, over young party reformers who are increasingly
willing to vote against government policies that lack constituent
support. Conservative mainlanders led by Premier Hao Po-ts'uin,
seeking to maintain their political dominance, almost certainly will
try to force Li to modify further reform legislation to accommodate
their interests. The radical opposition may try to turn voter
disillusionment with the conference into street protests, raising the
prospects of renewed violence and a crackdown on political dissent
by orthodox party elders
 O
 Top
Hanoi continues chipping away at the international economic
embargo imposed after it invaded Cambodia in 1979. It is, for
example, selling Malaysia 10,000 tons of rice this year, Kuala
Lumpur's first such purchase since 1975, according to a press report.
Last month it signed a trade agreement with Australia establishing a
framework to expand economic links, including regular government
contacts on trade and investment issues. In May Vietnam and Italy
signed investment and technical cooperation agreements and a
$100 million aid agreement.
Comment: Vietnam is anxious to attract more Western aid and
investment. Despite reform efforts, its moribund economy remains
troubled by shortages of critical resources, a primitive infrastructure,
and a rigid bureaucracy. Substantial Western aid and investment
are unlikely before a settlement in Cambodia, but some Western
businessmen and governments believe keeping Vietnam isolated does
little to promote a settlement. They also do not want to fall too far
behind potential competitors in establishing a presence in the
Vietnamese market in anticipation of a settlement.
 Israeli Settlements in the Golan Heights. July 1990
An Nabaliya
at Tab' Mart
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Rosh
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GOLAN HEIGHTS
(Israeli occupied)
160 Soviet Jewish
irnmigrants recently settled
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Turkey
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11 -
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 Middle East - Israeli press reports 160 Soviet Jewish immigrants recently settled
in Golan Heights ... Israel sees settlement in area annexed in 1981
as less controversial than in West Bank. Gaza .. . still unacceptable
to Syria, other Arabs
- EC officials hope to meet with Israeli Foreign Minister Levi on
23 July, PLO representative to Arab League Balawi on 24 July in
Rome . . . trying to rebuild EC-Israeli ties, encourage PLO steps
to reopen dialogue with US.
- Iraqi, Syrian, Turkish ministers late last month failed to agree
on Euphrates River water sharing ... Ankara unwilling to meet
increased water demands of those downstream ... Turks, Iraqis
increasingly at loggerheads over issue,
convicted of instigating riots in February ... nationalism,
interethnic tensions driving continued flight of skilled. educated
- Soviet Premier Ryzhkov announced 7-million-ton cut in oil
exports to ease fsel shortages slowing harvest of bumper crop ...
reductions to Eastern Europe included .. cut. 4 percent. will
further weaken trade position.
- Soviet statistics show industrial production through June
0.7 percent lower than last year ... production off sharply in
Azerbaijan, Georgia, Armenia, Lithuania, Tajikist
still outpacing consumer goods, creating shortages.
- Court in Soviet Tajikistan Saturday sentenced to prison 21 persons
suggests talks to shape negotiations will be thorny.
to gain independence Lithuanians must follow secession law .. .
- Gorbachev yesterday named delegation to negotiate with
Lithuania ... Premier Ryzhkov, chosen head, said Saturday that
non-Tajiks ... exodus threatens local economy.
group's morale, pose headaches for President-elect Fujimori.
from maximurn security prison in Peru yesterday ... will raise
- Senior Tupac Amaru leader, at least 40 other insurgents escaped
 oT-
 - Chinese say coal production up 6.1 percent over first-half 1989,
oil and gas output nearly static . . . cuts in energy investment
foreshadow continued shortages ... Beijing counting on foreign
loans to foster long-term growth.
-- China's legislature will not pass copyright law this session despite
promises ... domestic TV/radio industry lobbying successful .. .
Beijing's ability to address US concerns before April bilateral trade
talks in doubt.
reports Singaporeans invested in Phnom Penh hotel ... weak
- Singapore warned citizens last week to withdraw investments in
Cambodia until political settlement reached ... embarrassed by
 MM
o
I-Orsteret-
Aspects of Polish Economic Reform-Phase II
To ease the effects of recession without re-igniting inflation, Warsaw is taking.several
measures that may assuage interest groups in industry, agriculture, and small business. It is:
- Cutting subsidies further and shifting the budget from surplus to~deficit so it can
channel more funds to strapped local governments, housing construction, and
selective price supports for agriculture, including the dairy industry.
- Raising incentives by allowing bigger tax-free wage increases in industries where
productivity is rising or where base rates are now judged to have been set too low.
- Reducing and stabilizing central bank interest at an annualized rate just above the
inflation rate.
- Spurring competition by breaking up more monopolies, lowering or removing import
tariffs, and giving more tax breaks to small businessmen to advance small-scale
privatization.
- Liberalizing foreign trade and investment rules; most export quotas will be
eliminated, and restrictions on profit repatriation will be eased more quickly.
 Special Analysis
Tom
The Mazowiecki government is preparing to fine-tune ambitious
economic reforms in an effort to limit a recession that has been deeper
than it expected. A surge in unemployment and prices over the next few
months, however, is likely to overshadow any improvements.
Warsaw is loosening up slightly to breathe a little life into the
economy after six months of Finance Minister Balcerowicz's "shock
therapy." Arguing that the stabilization program is bringing down
inflation-the May rate fell to 4 percent-the government has
decided on selective measures to stimulate the economy. Warsaw
insists that this is only a planned "second phase" of the economic
reform program and that it signals no general retreat from belt-
tightening fiscal and monetary policies.
When Warsaw launched its tough reform program in January, it built
its 1990 budget around a jobless forecast of 400,000, but by mid-June
unemployment had already topped 500,000. It will jump again this
month and through the rest of the year as thousands of 90-day
termination notices expire and as new graduates sign up for benefits.
It now seems likely that more than a million people will be out of
work by December.
The picture is not much brighter elsewhere in the economy. Although
the rate of decline in production is slowing, output is still off
28 percent, as compared with last year's level. Declines have been
twice as steep in light industry, food processing, and chemicals.
Trade surpluses and hard currency reserves are rising but largely as
a result of falling imports of raw materials from the East and capital
goods from the West, a situation that will further depress output and
employment. Monthly drops in real income are slowing to the single-
digit range, but the decline since December has been 42 percent.
The government is acting on two fronts to prevent the recession from
deepening. It is moving to approve easier credit terms, higher wages,
10 July 1990
 requisite privatization laws this month
30 state firms by year's end if, as expected, the legislature passes the
and more money for local government welfare programs; it will also
push harder to restructure the economy to respond better to market
signals. For example, Warsaw pledges stricter enforcement of
antitrust laws to break up monopolies and plans to auction off 20 to
Walesa's pressure for faster political change as a tradeoff for the
economic hardships, the government no doubt reads the political
danger signs in recent strikes and in protests from worker, farmer
The Mazowiecki government is walking a tightrope. It must
prevent a resurgence of inflation and retain the support of Western
governments, banks, and international financial organizations. But
it almost certainly feels driven to ease up where possible to keep
domestic political support for reform. Against the backdrop of Lech
and the need to attract foreign investment.
Warsaw hopes that economic recession and the risk of political
turmoil will reinforce its appeals for debt reduction. It argues that
permanent relief from 80 percent of its $25 billion official debt to the
sagging farm production.
run out of materials, money, and markets. Unemployment probably
will approach 1.5 million, about 17 percent of the urban industrial
work force. In addition, the anticipated initial selloff of state firms
later this year probably will fall short of expectations because of a
scarcity of domestic private capital. These strains are likely to
coincide with a surge in inflation triggered by this month's energy
price hikes, planned rent increases, and food prices driven higher by
Attempts to prime the economy and give people hope probably will
have to compete with a rash of bad news in the fall. Bankruptcies are
likely to proliferate in late summer because many state industries will