NATIONAL INTELLIGENCE DAILY MONDAY 21 OCTOBER 1985

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005500153
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 20
• Document Creation Date: June 24, 2015
• Document Release Date: September 9, 2010
• Case Number: F-2007-00450
• Publication Date: October 21, 1985

(b)(1)
(b)(3)
Director of
atione! Intelligence Daily
APPROVED FOR RELEASE^ DATE:
07-22-2010
21 October 1985
Copy 000
 Contents
Lebanon-USSR: Second Soviet Executed? .
USSR: Discussion of Capitalist Incentives
Canada: Defense White Paper .............. .
USSR: Foreign Trade Minister Replaced
In Brief
Special Analysis
Somalia: The Changing Political Climate
India-Pakistan-US: Forthcoming Meetings
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 ToB8ecr.t-
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 LEBANON-USSR: Second Soviet Executed?
(Information as of 0200 EDT.)
The execution of a second Soviet hostage has not been
confirmed. If the report of his death is accurate, It would appear
that the execution has been timed to coincide with President
Gemsyel'a acceptance of a Syrian-sponsored peace plan for
Lebanon, which Includes provisions for stationing Syrian
peacekeeping forces in Beirut.
The Islamic Liberation Organization, which claims to have kidnaped
the four Soviet Embassy personnel on 30 September, originally
demanded that Moscow urge Syria to end Its assault on Sunni
fundamentalists in Tripoli. Since then, the demands of the kidnapers
appear to have shifted as callers claiming to represent the group have
Insisted that President Reagan and General Secretary Gorbachev
settle the Lebanese civil war during their meeting scheduled for next
month. A caller yesterday claimed the second hostage was killed
because the Soviet Embassy In Beirut had not closed down and
because Syria's Lebanese allies are continuing to search for the
kidnaped Soviet officials.
Comment: Since the murdar of the first Soviet hostage on 2 October,
the fundamentalist militia In Tripoli has been forced to capitulate to
leftist militias backed by Damascus, and a Syrian-imposed cease-fire
Is being Implemented there. If the second murder Is confirmed, the
kidnapers apparently hope that the death of a second Soviet diplomat
will lead Moscow to intervene to halt Syrian plans to station troops in
Beirut. Sunni fundamentalists and Palestinians would be the first
targets if Syrian troops were deployed In the Lebanese capital.
Syria probably suspects the complicity of pro-Araftw2 Palestinians In
the kidnapings. The Beirut-based Sunni fundamentalists believed
responsible for the kidnapings are not strong militarily and probably
would require the help of more powerful groups to hide the hostages
in the face of the Intensive manhunt being mounted by 'e Shia Amal
and the Druze militia. The Palestinian camps may be the only Sunni-
controlled areas in Beirut where access Is denied to Syria's Lebanese
Top sem et--
 Top BOOM-
 USSR: Discussion of Capitalist Incentives
A recent article In Pravda on modernization commenting
favorably on the technological benefits of Western-style
competition suggests of the current discussion on
economic reform
The author, a member of the Soviet Academy of Sciences responsible
for developing advanced management systems, argues that the "law
of the jungle"-even though exploitative--is a powerful force for
technological advancement and improved product quality. He states
that Western enterprises, which operate under the principle of
"survival of the fittest," are forced to produce quality products
officientiv"7 n the risk of being overtaken by their competitors.
He claims the Soviet defense Industry, zonfronted by the competitive
threat of US defense programs, works on this principle. As a result,
the level of technological development and the quality of output In
defense enterprises are superior to that on the civilian side. He also
asserts that the military exerts "powerful Influence over the quality
of the products it receives and that the civilian economy could benefit
from this type of consumer-producer relationship
Comment: The article generally elaborates on the strategy for
industrial modernization outlined in General Secretary Gorbachev's
major policy address of 11 June, but Its acknowledgment that
capitalist competition spurs technology and Improves quality Is new
and unusual In the current discussion on economic reform. The author
stopped short of calling for competition in the Soviet economy, but
his frank discussion of Its benefit$ In Pravda I Indicative of the
attention the subject Is receiving.
The benefits of Western-style competition for the Soviet economy
probably would be considerable, but the problems of Implementing
such a system are virtually insurmountable. The relative success of
the defense Industry Is only partly explained by pressure for superior
performance. Defense also receives priority access to scarce
resources, the close attention of senior leaders, and a well-endowed
experimental base-benefits not easily shared with the civilian sector.
The Soviets would probably find open acceptance of unemployment
Ideologically Intolerable. They would also have to develop a system to
provide consumer leverage over the quality of products produced for
the civilian economy-a function performed in the defense sector by
the nram Lary representatives at plants.
Too Secret
 Top seeps!
CANADA: Defense White Paper
Ottawa's corning White Paper on defense will neither arrest all of
the deterloraflon of Canada's capabilities In NATO nor ease the
Implementation of its new policy In the Arctic.
Defense Minister Nielsen is
dre in a e ense o c s a amen to be issued by the end of the
year ttawa Is not likely to alter Its role In NATO
but spread out plans to modernize military equipment to stay
within the 9.3 percent of the federal bu .2 percent of
GNP-allocated to defense in 1985-86.
Budget constraints earlier had led Nielsen to consider withdrawing
parts of Canada's land and air forces from West Germany. The
savings were to be used to expand antisubmarine forces, Improve
coastal defenses, and establish alrbases in the north. Several NATO
defense ministers rebuffed Nielsen's plan, however, and It apparently
Is being modified.
Comment: A real increase in defense spending above the 3-percent
NATO goal is impossible because Prime Minister Mulroney's Tory
government Is unwilling to risk the voters' wrath by cutting social
spending. Nielsen's plan to reduce Canada's forces in Europe reflects
the higher priority he attaches to Arctic defense and NATO roles
centered on North America. Despite Mulroney's campaign pledge to
enhance Canada's overall contribution to NATO, Ottawa apparently is
once again relegating defense to a secondary spot in the political and
budgetary pecking order
The unraveling of Nielsen's plan may slow Ottawa's enforcement of
recent claims to sovereignty In the Arctic. Without an Increased
physical presence there, which Is probably needed to validate
Canada's claims under International law, the Tories are open to
charges from the opposition of negligence in protecting Canadian
territory and to credible Ieaal torsion challenoes to Its assertion of
sovereignty In the Arctic.
Tow sem-0--
COPY) 6 1 21 October 1985
 Tov-e1enH
 USSR: Foreign Trade Minister Replaced
TASS announced Saturday that Deputy Minister of Foreign Affairs
Boris Aristov had replaced 77-year-old Minister of Foreign Trade
Nlkolay Patolichev, the third high-level personnel change In the
economic sphere In a week. Patolichev, who retired for health
reasons, held the post for 27 years.
Comment: Arlstov has no formal backgrrisnd in fnreign trade and is
primarily a longtime party- official, but he has-like new Gosplan
Chairman Talyzin--extensive experience In East European affairs.
This appointment thus supports recent Soviet policy statements
emphasizing Increased trade and economic Integration within CEMA
and continues General Secretary Gorbachev's pattern of bringing
outsiders Into key ministerial positions. This change comes amid
heightened rumors of corruption within the Ministry of Foreign Trade
and probably portends further personnel and policy changes In the
Ministry. Patollchev's retirement had been rumored for some time.
Gorbachev's economic agenda requires a more aggressive approach
to management than Patolichev, a holdover from the Khrushchev era,
probably was willing or able to provide.
 Rebel leader John Garang on Saturday announced a two-week cease-
fire In the south to allow civilian groups in Khartoum to study
proposals for a national dialogue. His broadcast Included contents of
a letter sent to Khartoum last month but never released publicly.
Garang gave Khartoum the following preconditions for dialogue:
public commitment to a national congress to review government
structure and to choose a new Interim government of national unity,
ending the state of emergency, repealing former President Nimeirl's
Islamic laws, and canceling the integration treaty with Egypt and the
defense protocol with Libya. Sudan's pr&ss yesterday carrle#- oosltive
statements by government leaders but no official response.
Comment: Garang's statement Is the most serious public proposal
for dialogue he has ever made to Khartoum. The Insurgents'
Intentions, however, remain unclear. Rebel leaders may believe they
must move now or lose political clout altogether as the government
prepares for a national conference, and they may reason that current
weak leaders will make more concessions than any future
government. On the other hand, they may simply be buying time as
rebel forces In the south rearouD and rearm for further attacks
against the government
 -TOO SV%jlUr77777
 In Brief
Europe
-w Soviet party leader addressed Socialist International Conference
on Disarmament Thursday ... statod usual themes on
disarmament. SDI ... Soviets still trying to Influence European
Socialists against US military programs.
day after Pyongyang's release of South Korean fishing boat
- South Korea yesterday sank North Korean spy boat off coast ...
first detected sea Infiltration attempt since 1983 ... comes one
captured in North Korean territorial waters on 6 October.
Western capital goods, agricultural products, energy.
-- Bulgaria reportedly negotiating $125 million club loan with West
German bank ... third loan since June, raises borrowing to
$450 million this year ... needed to finance expanded Imoorts of
 11 21 October 1035
 Special Analysis
SOMALIA: The Changing Political Climate
President Sled, who celebrates his 11th year in power today, Is
taking heavy criticism from senior Somali officials for failing to
acquire large amounts of Western assist no@ to r*varso the
d economic decline.
led is disillusioned with ? an o er
Western nations because they have not met his high expectations
for aid, although Mogadishu has adopted several reforms urged
by the US and has provided the US with military access. In an
effort to quiet his critics and to develop alternative sources, of
aid, Sled Is trying to distance Somalia from Its close
Identification with the West, the US In particular.
Slad's critics claim he has little to show for his close ties to the US,
They say the military has grown
r ana a economy as not nefited appreciably from the
partial dismantling of the regime's socialist economic structure. Many
Somalia are questioning the President's ability to deal effectively with
the country's problems.
The milita Is unhappy with the West's failure to provide hea
weapons. 7most
senior officers have little use for US military programs that emphasize
training--Including the training of Somalia to perform maintenance-
and refurbishing of Somalia's Inventory of aging Soviet weapons.
They claim that the refusal of the US to provide modern arms Is to
blame for the Somali Army's Inability to defeat dissidents operating
out of Ethiopia and to dislodge Ethiopian troops from disputed border
positions.
The ruling Socialist party Is the center of opposition to Western-
sponsored economic reforms. some
Soviet-trained party officials suspect that the US deliberately keeps
economic assistance low in an effort to force Sled from office, a view
reportedly shared by others In the government and the military.
Many sen!or officials resent the more open economic climate
encouraged by Western aid donor3 and by the IMF because they
benefited from the corruption that the previous system encouraged.
They are urging Siad to reimpose many of the regime's socialist
policies, even thouah the economy was near collapse before it was
TopSecreot
 Edging Away From the West
Siad already has taken a number of measures to blunt the criticism.
With backing from his senior commanders. he Is trying to Improve
relations with Libya and the USSR In an effort to limit outside support
Tripoli, !n return for Somalia's agreement to renew relations earlier
this year, agreed to end Its aid to the insurgents and to provide
economic aid to SomallaF---
IVIO'cowalsohas een receptive to Somali overtures. and
the Soviets may be tempted to offer limited
technical, m ary, and economic assistance In an effort to weaken US
influence in Mogadishu,
Siad also has moved to reinvigorate the Socialist Party, which chafes
at Its waning Influence In the face of Western Innovations. Party cells,
long dormant, have been reactivated, especially in the military and the
bureaucracy. Siad, disappointed by the paucity of Western
Investment in Somalia, apparently has decided to back out of the
unpopular IMF-backed reform program unless substantial revisions
,are made.
Slad probably will grow more vocal in his criticism of the West, and he
will try to make the US a scapegoat for Somalia's Ills. Such limited
anti-Western moves probably will help appease frustrated Somalis.
Slad is unlikely to break with the US, however, because he does not
want to risk jeopardizing aid from the West and from conservat''e
Arabs. Libya probably will not provide Mogadishu with all the aid it
seeks, because Muammar Qadhafi at present assigns a lower priority
to Somalia than other areas. Moscow also is unlikely to respond
strongly to Siad's overture because It distrusts him and places a
hioher oriorty on its relationship with Addis Ababa.
-T" sect 011
 Special Analysis
INDIA-PAKISTAN- Forthcoming Meetings
US:
Indian Prime Minister Gandhi and Pakistani President Zia are
likely to use their first substantive meeting In New York on
Wednesday to size each other up and perhaps to raise Issues
each hopes to bring up with President Reagan later In the day.
The two leaders may only repeat their standard positions on the
topic of nucloar weapons-the pr;acipal Issue between them-4n
their bilatere talks. Each will try to demonstrate mutual good
will by focusing Instead on acknowledged areas of potential
cooperation, Including the South Aston Association for Regional
Cooperation, narcotics, and restoration of communal harmony In
Gandhi Is unlikely to push Zia hard about the Pakistani nuclear
program, although he probably will at least mention his continuing
concern. He could also reiterate Indian worries about Islamabad's
alleged backing for Sikh extremists.
For his part, Zia Is also likely to propose Ideas on ways to Improve the
bilateral relationship. He may suggest regular high-level diplomatic
talks In addition to the formal Joint Commission sessions that focus
on trade, communications, and cultural exchanges. Zia may also
solicit Gandhi's views on whether-as the Pakistanis believe-the
Soviets are becomina serious about a negotiated settlement In
Afghanistan.
India's Propaganda Campaign
Even if the two leaders skirt the Issue In NOW York, Gandhi's
propaganda campaign against Pakistan's nuclear weapons program
will be uppermost In their minds. Gandhi has steadily Increased his
criticism of the Pakistani program and the US role in it. He probably
hopes to. Increase US Congressional pressure or. Zia to eschew
weapons-related activities in his nuclear program and is likely to step
up his campaign in anticipation of Congressional hearings on the
Pakistani aid package.
14 21 October 1985
 Gandhi probably calculates that Zia may be sufficiently worried about
Congressional reaction to engage in serious bilateral talks on the
Issue of nuclear weapons In South Asia-including perhaps the no-
first-use pact unofficially floated In the Indian press. Gandhi believes
progress toward such a pact could allay growing pressure at home to
counter nuclear developments in Pakistan by initiating an Indian
Talking to President Reagan
Gandhi's agenda will
stress the need for movement on arms trol at the US-Soviet
meeting In November. Gandhi might be willing to
use possible talks with General Secretary Gorbachev on the way back
from the UN to promote progress on both arms control and
Afghanistan. Gandhi may convey his Impptlence with the pace of
technology transfer, but he might also urge expanded Indo-US
cooperation--perhaps In joint agricultural aid to Africa. He may also
raise the Sikh Issue with President Reagan
Zia will want to dispose of India's charges on the nuclear Issue by
offering assurances of Pakistan's peaceful intentions. He will
emphasize Islamabad's key role in Washington's Afghan policy as a
prelude to a discussion of Pakistan's security and economic
Although both Zia and Gandhi profess concern about the
nuclearization of South Asia, neither favors signing the nuclear Non-
Proliferation Treaty. Although Pakistan has said it would sign the
Treaty If India did, Islamabad knows that New De ?i wants to maintain
a nuclear option to counter the Chinese nuclear capability. Both
nations argue that the Treaty discriminates against nonnuclear-
weapons states by denying them technology and allowing nuclear-
weapons states to continue an arms buildup.