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Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 II all PERSONAL/EYES ONLY IUI (~`t(~?HCL 1 9/11.L2 {,/ 02 8 I j TOP SECRET/CODEWORD December 14, 1982 NSC review completed - may be declassified in fUIIMEMORANDUM FOR THE HONORABLE WILLIAM J. CASEY The Director of Central Intelligence THE HONORABLE LAWRENCE S. EAGLEBURGER Under Secretary of State for Political Affairs THE HONORABLE FRED C. IKLE Under Secretary of Defense for Policy ADMIRAL DANIEL J. MURPHY, USN (RET.) Chief of Staff, Office of the Vice President LT GEN PAUL F. GORMAN, USA Assistant to the Chairman, Joint Chiefs of Staff FROM: RICHARD T. BOVERIE,6 SUBJECT: Special Study At the special meeting on December 6, 1982, DepSecState Dam asked that agencies prepare certain papers, that those papers be delivered to me, and that I put the papers together into a com- plete package and give a copy of that package to each of the participants. Attached is the assembled package. It consists of: - Four State draft papers on U.S.-Soviet relations. A paper prepared for DepSecState Dam by Ambassador Nitze. A paper prepared for DepSecState Dam by Ambassador Rowny. A CIA paper entitled "Assessment of Andropov's Power." A CIA paper entitled "The State of the Soviet Economy in the 1980s." - An OJCS draft paper (reviewed neither by the Joint Staff nor the JCS) entitled "Andropov's Military Programs." - An OJCS draft paper (reviewed neither by the Joint Staff nor the JCS) entitled "The Brezhnev Era: Military Posture of the USSR. "JCS review completed. TOP SECRET/CODEWORD DECLASSIFY ON: OADR State Dept. review completed CIA TS 820358/1 Copy -of Cys TOP SECRET Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 TOP SECRET TOP SECRET/CODEWORD 2 As of this time (4:30 p.m., December 14), we have not received the OSD papers. The next meeting is scheduled for 4:00 p.m., Wednesday, December 15, in the White House Situation Room. Once again, we would like to emphasize the extremely sensitive and close-hold nature of this project. TOP SECRET/CODEWORD TOP SECRET Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 1 II Washington, D.C. 20520 NSC review completed - unredacted segments may be declassified SECRET/SENSITIVE December 13, 1982 MEMORANDUM FOR MR. WILLIAM P. CLARK THE WHITE HOUSE Subject: U.S.-Soviet Relations Attached are the following papers on U.S.-Soviet relations: A. Executive Summary B. The View from Moscow C. The View from Washington D. Possible Initiatives. All of these papers should be considered as still in draft stage; work on them is continuing within the State Department. L. Paul Bremer, III Executive Secretary Attachments: As stated SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 . Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE U.S. - SOVIET RELATIONS Executive Summary INTRODUCTION We considered three questions: (1) What is the Andropov regime's view of the world situation and of how Soviet interests can be advanced? (2) How do we see our interests, and what would we like to see the Soviets do, not do, or stop doing insofar as their conduct affects our interests? (3) How can we affect Soviet conduct in ways that advance our interests, and counter Soviet conduct that harms our interests? (Note: It is possible that the CIA analysis of the strength of Andropov's internal political position, which we have not yet seen, will alter the following analysis.) THE VIEW FROM MOSCOW In assessing its inheritance, the Soviet leadership finds major gains and assets: ? superpower status and global reach ? a quarreling, economically shaky West _ ? domestic political, stability ? an economy strong enough to support massive military outlays while keeping popular discontent within tolerable limits . as well as problems: ? instability in Eastern Europe ? declining growth, productivity, and morale ? Western--especially American--rearmament. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE On balance, Brezhnev's successors will be sufficiently content with these conditions--and unsure of how to effect basic change--that they will not be inclined to depart from the country's general historical course. To be sure, they face choices between: at one extreme, --economic reform,. reduced military spending, and international retreat; and, at the other extreme, accelerated military growth and broad expan*sionisin whatever the cost. But dramatic movement toward either extreme is unlikely. The leaders probably think the economy (two percent growth) can sustain roughly the current pace of military effort and foreign positions, but not much more. It would take zero growth and serious hunger to force military and international contraction, given that this would mean abandonment of Brezhnev's main achievement: status, might and reach comparable to ours. This does not imply passive continuity. The Soviet leaders may see more sophisticated, innovative, agile, and diversified diplomacy as the best and cheapest way to undercut and pressure us, expand their influence, and perhaps cut the political costs of some of their more exposed positions abroad. They may be contemplating a mix of selective international "opportunity-seizing" and "loss-cutting," but in both cases with costs, risks and deviations kept to a minimum. The new leadership, like the old, sees in Washington an Administration that refuses to recognize Soviet status and prerogatives as an equal superpower, even while--in their view--magnifying Soviet military advantages. They see us as having raised the costs and risks of military and international competition, even as they may doubt the Administration's ability to maintain a national consensus in support of restoring American strength, or to forge a Western consensus around Washington's outlook and policies. They doubt our willingness to respond positively to; anything less than a broad Soviet retreat, which they will not contemplate. For some in Moscow, this assessment of Washington argues for waiting for a new American administration before attempting to improve U.S. - Soviet relations. Others may believe it demands an even greater Soviet military effort--and sacrifice. However,'while resource constraints do not dictate retreat, they will work against those who advocate a major bulge in military spending and aggressiveness. On the whole, with the possible exception of arms control, it is unlikely that the Soviets see much percentage in making major concessions in hope of satisfying this Administration. They are more likely to try even harder to put us on the defensive politically and to stimulate a public and Allied backlash against our policies, though in the process they might take some steps that would partially meet our concerns. Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE Consistent with this, the Soviet leaders may feel that Soviet interests are best served by "out-flanking" us--that is, by orienting their foreign policy away from U.S. - Soviet relations, and by trying to come to grips with some of their problems without reference to us. This would enhance their freedom to ignore our concerns, their ability to weaken our relations with others, and their ability to pursue new -initiatives. The principal. exception-.to..this pattern_i.s.-likely to be START, where they must deal with us (but will also try to' reach American public opinion around us). THE VIEW FROM WASHINGTON '- Our program to re-establish American ascendancy involves rearmament, world economic recovery, respect for international law and order, and the promotion of democratic values. Progress in achieving these goals affects and is affected by our competition with the Soviet Union. ? The more successful we are, the better able we are to induce more restrained Soviet conduct or, failing that) counter lack of Soviet restraint. ? The Soviets want to impede our program, mainly by dividing us from those whose cooperation we need for success. Over the next 6 - 24 months, our chief aims toward the competition should be: ? to prevent further Soviet encroachments; ? to bring about substantive improvement in existing problems caused by the Soviets; ? to maintain control of the agenda and the terms by which problems are dealt with; ? to keep both our general Western coalition and specific problem-related coalitions intact; and ? to engage the Soviets constructively on. issues where there would seem to be overlapping interests. Because the Andropov regime will probably follow a more active and sophisticated foreign policy, oriented away from addressing problems with us and on our terms, and because they may find it easier to mollify others than to satisfy us, we need to preserve our influence over the manner in which outstanding issues are played out. Thus, while we are in a reactive posture in the general sense that only substantive improvement in Soviet conduct will bring about more positive policies toward the USSR, we may also need to take initiatives Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE to maintain our coalitions and to establish standards for Soviet. conduct on outstanding problems that are both demanding but reasonable. We must also be true to our promise to respond positively to genuine improvement in. Soviet conduct, or we will lose our capacity to influence Moscow and to keep our partners with us. In effect, just as the Soviets may now try to out-flank us, - -we have to be ready _to.execute, our own..politica.l. flanking movements to enqure that the Soviets cannot.,escape from our agenda of concerns and our standards for responsible conduct and real progress. This means we have to consider how to use not only U.S. - Soviet relations to induce improved Soviet behavior but also our relations with other key actors, such as our European Allies, Japan, China, ASEAN, Pakistan, and others. THE INTERSECTION OF SOVIET CONDUCT AND U.S. INTERESTS In view of the foregoing assessment, we must anticipate our interests being affected by Soviet policies in the following specific areas: Sino - Soviet Relations. The Soviets may be willing to make limited substantive concessions (e.g., modest withdrawal of forces from the border) in order to' pressure us and give themselves more maneuvering room. We would hope that the Chinese would not accept tokenism. To the degree the Soviets are prepared to go beyond tokenism, we have an interest in trying to prevent a reduced Soviet threat against China from increasing the Soviet threat to NATO, Southwest Asia, or other U.S. interests. We also have an interest in maintaining influence over Chinese policies, e.g., toward Taiwan and Southeast Asia,.which could be eroded to the degree the Soviets draw Beijing into closer relations., Japan. The Soviets might feel they can use conciliatory actions--perhaps punctuated by threats--to try to reverse the growing Japanese inclination to support firmer East - West policies on a global basis. We can hardly regard a Soviet pull-back.from the disputed islands as misconduct; but we must hope that the Japanese drive a hard bargain and not regard Soviet concessions as a reason to reverse their movement toward a more solid stance on East - West relations. generally. Rapidly advancing Sino - Soviet relations could make the Japanese more susceptible to Soviet gestures. Kampuchea. A Soviet attempt to nudge the Vietnamese toward withdrawal would fit with Moscow's interests in cooperating with Beijing, gaining respectability with ASEAN, and easing an existing problem on their terms and without reference to us. At the same time, the Soviets greatly value their relationship with Hanoi and will not want to test its limits. Our interests are served by maintaining total withdrawal and non-alignment as Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE the standards. We have to guard against mere gestures designed to crack our coalition with ASEAN (and, tacitly, China). That said, we would welcome Soviet pressure on Vietnam; and we are confident that our coalition will survive as long as the Soviets and Vietnamese represent the threat that they do, notwithstanding possible moves in Kampuchea. Afghanistan. The Soviets=-possibly with a Chinese role--might show limited flexibility in order to promote their. terms for settlement and satisfy the Paks and our Allies. It is also possible that they will seriously move toward extricating themselves, an their terms. As in Kampuchea, we want total withdrawal, non-alignment, and a government of the people, and we would welcome substantial partial movement toward all of these goals. Our immediate interest is in preserving our ability to influence the terms of settlement and pace of withdrawal, and in maintaining Pak support for Afghan resistance until total withdrawal is achieved. Middle East and Persian Gulf. The Soviets will exploit lack of progress on our peace initiative, as well as our support for Israel, to recover if not expand their influence among the Arabs, if possible beyond their standard clients. Efforts to destabilize regimes are not excluded but would be quite limited. Like us, they cannot drive the Iran - Iraq war toward either a military or political conclusion. Our interests are clear: minimize Soviet influence in the Arab world and defeat any attempts to sabotage the peace process or subvert our friends. The Horn of Africa. The Soviets'are unlikely to consider engineering a draw-down of Cuban forces in this area. It is more likely that they will test us here--if they are disposed to pressure us anywhere--since their client has?a military advantage and because they may doubt our willingness and ability to save Siad if pressed. Our interest over the next year or so is in stabilizing the status quo while gradually building up Sudan and Somalia. Southern Africa. Our interest in a Namibia - Angola settlement includes but goes beyond our desire to weaken the Soviet position in this volatile and strategically important area. The Soviets are likely to be uncooperative unless convinced that they will bear the onus for failure throughout black Africa. We will not achieve our immediate goal of Soviet acquiescence if they believe we would try to portray our success as their retreat. Central America. Our interest is in defeating subversion, advancing economic and political development, and eventually restoring tranquility on our Southern porch. The Soviets are unlikely either to escalate or to try to curb the Cubans. Our aim should be to convince the Soviets that we have a far more Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 . . Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE compelling interest in defeating threats in Central America than they do in fueling them--and thus, that we will do what it takes to prevail in a show-down, e.g., over introduction of MIGs or Cuban combat units into Nicaragua. Eastern Europe and-Human Rights. We have an interest in evolution toward greater pluralism, national autonomy, and respect for human rights. Andropov may-subtly try to-exploit Romanian and Yugoslav-problems,-while deciding between crackdown'and tolerance of controlled reform, or at least gestures in that direction, elsewhere. Our immediate aims include convincing the Soviets that the risks of pressuring the Yugoslavs are prohibitive, and that we will not exploit--indeed we will respond positively to--movement toward greater openness in Eastern Europe. We want the Soviets to permit national reconciliation and a resumption of reform in Poland. But we also have an interest in ensuring that cosmetic concessions not undermine West European support for our stance or increase pressures on us to agree to a CDE. On such questions as Afghanistan and Kampuchea, while we want genuine progress and can't be seen to ignore it, we may need to counter Soviet efforts to work around us and defeat our coalition without conceding any substance. Western Europe. Blocking INF deployments may well be the Andropov regime's highest foreign policy priority. To achieve this, they will work toward offering a deal which our Allies feel would justify cancellation of our deployment program--in which case we would have to accept or else witness collapse of support for deployment anyway. (See more on arms control below). The Soviets will also try, with carrots and sticks, to abort our attempt to achieve Western agreement to constrict East - West economic relations. We have an interest not only in defeating efforts to isolate us, but also in deterring _. and/or countering Soviet threats against our Allies should it come to that. Arms Competition and Arms Control. We cannot exclude that the Soviets will decide that arms control progress will not be possible until there is a new U.S. administration. However, it would be far more consistent with their overall outlook, internal situation, and likely. international strategy for them to become even bolder in this area. They have an interest in confronting us with choices between: on the one hand, agreements in START and INF which meet their concerns; and, on the other, collapse of our domestic consensus and Alliance consensus in support of our defense program and INF deployment, respectively. Either outcome would offer some easing of their military burden. Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECP..ET/SENSITIVE Focusing U.S. - Soviet relations on arms control would be consistent with their aim of taking the rest of the agenda of international problems-out of our hands. We should be prepared for major concessions on their part. Our interest-is in drawing them toward our-goals-of reductions, equality and verifiability, -while keeping'popular support-for our- negotiating efforts and force programs intact. U.S. - Soviet Cooperation. In addition to possibilities mentioned above notably Southern Africa), we have an interest in getting the Soviets to cooperate concretely on functional problems where we have overlapping interest and where the Soviets matter. The most obvious is non-proliferation; there is no political reason why the Andropov regime would be averse to helping tighten up international safeguards and enhance IAEA effectiveness, though it is not clear that they would view such limited U.S. - Soviet cooperation as a sign of a generally more constructive attitude on our part. Ina different vein, challenging the Soviets to provide more support for economic development might produce modest but welcome results, or at least undercut their pursuit of closer "East - South" relations. Less Likely.Developments. If our overall assessment of the view from Moscow proves to be too conservative, the most likely contingencies that could affect important U.S. interests--for worse or better--include: ? Soviet directed escalation in Central America ? support for large-scale aggression against Somalia ? shipment or deployment of "offensive arms" to Cuba ? major concessions on Afghanistan, including substantial withdrawal ? major concessions in'START and/or INF. In a way, such actions would present us with more straightforward--if not easier--choices. The real dilemmas will arise when the Soviets make more limited encroachments and/or concessions. We will have a harder time gaining support for effective responses to more subtle Soviet misconduct, and conversely, preserving support for our positions when the Soviets take partial steps to satisfy others' concerns but not ours. This is exactly the sort of conduct that seems most likely. Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE POSSIBLE INITIATIVES Our basic approach should continue to reflect our view that outstanding problems are the product of Soviet behavior, which must improve if.the relationship is to improve. Thus, in the most fundamental sense, we are reactive. However, in the face of Soviet policies as projected-above, we need to consider moves-of our own to serve several. purposes: to preempt, deter, and counter new Soviet encroach- ments, which they might otherwise consider to be low-risk; _ to offset Soviet efforts, to undermine international support for our overall East-West approach; ? to avoid being outflanked and losing our coalitions on specific problems; ? to induce Soviet cooperation where it is needed and achievable. We should also be ready to deal with the less likely possibilities: either broad retreat or a burst of expan- sionism. But until we see signs that either may be in the works, we should focus on initiatives designed to advance our interests in the face of the more sophisticated Soviet strategy we foresee. Some of the possibilities follow: A. Steps to head off new Soviet encroachments: ? Enhance intelligence effort regarding possible targets. ? Warn Soviets directly when specific intelligence so warrants. ? If needed, threaten to respond in kind, e.g., stepped-up US support for national liberation struggles where the Soviets have an interest in the status quo. ? Attempt to engage the Soviets in a discussion of the limits of competition in unstable areas (e.g., Central America and Eastern Europe). ? Remove temptations (e.g., helping to ease Yugo- slav problems). B. Steps to induce improved Soviet conduct: SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE ? Discuss with Chinese how to prevent the Soviets from exploiting either party in a way that da- mages the other (e.g., shifting SS-2.0s from West to East or troops from East to West). ? Respond sympathetically to Chinese interest in US technology, consistent with our security re- quirements. ? Minimize Sino-American flare-ups over Taiwan, consistent with our recent-understanding. ? Organize a joint initiative on Afghanistan with Pakistan, China and possibly the EC, calling for phased complete withdrawal, transition leading to safeguard of Afghan non-alignment, self- determination, return of refugees. ? Develop -- and possibly discuss with Moscow -- a plan for step-by-step progress towards recon- ciliation in Poland. ? Challenge the Soviets to aid LDCs. C. Steps in the event Soviet behavior improves: ? Expand trade, within the limits, worked out in forthcoming Alliance studies. ? Make a significant effort to move toward arms control agreements. (Note: These steps would obviously have to be graduated and refined to fit the significance and character of positive Soviet actions.) D. The Use of "Process" and '"Presence" to enhance our access and influence and to communicate how we will respond to improved Soviet behavior: ? Proceed with dialogues on non-proliferation, Southern Africa; human rights. ? Consider opening consulates in Kiev and Tashkent. ? Hold Hartman-Korniyenko substantive preparations for Shultz-Gromyko meeting. ? Plan Shultz-Gromyko meeting before next fall. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE We cannot and need not make any decision on a summit until we get a better fix of how Andropov views such a possibility and of whether the Soviets are prepared to make it successful, _ .. by our definition . . . SECRET/SENSITIVE ' Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE December 13, 1982 Task II: THE VIEW FROM MOSCOW I. Brezhnev's Legacy Yuriy Andropov's replacement of Leonid Brezhnev as CPSU General Secretary-followed an eighteen-year period in which, from Moscow's perspective, the Soviet Union made impressive gains in both its domestic and foreign policies. During Brezhnev's years as General Secretary, the Soviet Union emerged as a global military power, unprecedented stability was achieved within the ranks of the Communist Party, and slow but steady growth was maintained in the civilian economy. At the same time, Andropov has inherited a number of problems that will have to be addressed in the coming decade. These problems, together with the capabilities and opportunities bequeathed by Brezhnev, form the basis of the review of Soviet policy now underway in Moscow. Achievements of the Brezhnev Era The new Soviet leadership can justifiably argue that Brezhnev's term in office witnessed a shift in the 'correlation of forces" in Moscow's favor. Together with its substantial military build-up, the Soviet Union has developed a global network of friends, allies and client states that extends Soviet influence, enables Moscow directly to challenge Western interests in the developing world, and gives credibility to Moscow's claims to be a global power without whom "no international problem can be solved.' Favorable developments have also occurred in several areas of importance to Moscow: the NATO Alliance is experienc- ing severe political, military, and economic strains; Iran is no longer a U.S. strategic asset on the USSR's southern border; and a process is in motion toward improved relations with China at a time when. the threat of a Sino-American alliance is receding. Domestically, Brezhnev's most striking achievements were on the political side: under his leadership, intense factional rivalries at the top of the CPSU gave way to relatively consen- sual politics. Brezhnev's leadership style paved the way for what thus far appears to be the first smooth succession in Soviet history. In parallel with stabilization among the elite, Brezhnev presided over a largely successful effort to suppress dissent and non-conformist tendencies within Soviet society. SECRET/SENSITIVE DECL: OADR Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE - - 2 - On the economic side, Brezhnev was able during much of his tenure to sustain a long-term military build-up while keeping consumers satisfied by slow but perceptible growth in living standards. Although growth has slowed in recent years and structural problems are becoming increasingly appare.it, Soviet leaders can still tell themselves that the Soviet economy has made great strides since the Khrushchev era -- let alone in comparison with the dark days of collectivization and World War II, when the Brezhnev-Andropov generation got its political start. Unresolved and Emerging Problems Alongside these gains, the new Soviet leadership must cope with a series of unresolved problems inherited from the Brezhnev era,'as well as some emerging new ones: In foreign policy, detente with the United States -- from which the USSR derived important benefits -- has collapsed, and a more openly competitive and militarily threatenin Administra- tion has taken charge in Washington. Despite a greater West European attachment to detente, Moscow sees NATO as having embarked upon an effort to deprive the USSR of its longstanding advantage in medium-range missiles. And closer to home, there is continuing discontent and potential instability in Eastern Europe at a time when the. USSR finds it difficult to meet the growing economic burdens of empire. At home, economic growth rates continue to decline. Many factors are involved: shrinking labor resources, declining worker productivity and morale, difficulties in developing and assimilating new technologies, a decade of miserly industrial investment, systemic deficiencies in'Soviet agriculture, plus chronic problems of alcoholism and corruption. These factors combine to threaten the regime's ability to maintain growth in defense capabilities without cutting living standards and, if not attended to over the longer term, could contain the seeds of domestic unrest. On the political side, the advanced age of the leadership confronts the regime with the problem of a continuing succession process in the next several years. The Soviet leadership's immediate preoccupation will be the consolidation and allocation of political power within the key Party and state organs. Differing views on questions of resource allocation and economic revitalization are likely to surface. At one extreme,. economic stringencies may be cited as requiring major structural reforms to the economic system, reduced defense spending,, and/or_ a_pull-back in foreign policy from some of the USSR's more exposed and costly positions. At the opposite extreme, some leaders, particularly within the SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 . . Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE military establishment, will argue that the current U.S. Administration is so thoroughly anti-Soviet that growth in defense spending should increase. In the next two years, dramatic shifts in either of these directions are unlikely. Despite the acknowledged gravity of the economic situation, the regime may well believe that there is still some breathing space before corrective action becomes urgent: the economic growth rate is still 2 percent, not zero; consumer discontent, while rising, is still controllable; and there is likely to be a respite from chronic grain shortages if, consistent with the laws of probability, the USSR enjoys a decent harvest after an unprecedented four successive years of bad weather. Andropov admitted to the Central Committee that he has no 'ready recipes' for improving the economy's performance. He will probably rely in the short run on stop-gap solutions -- tighter discipline, importing selected economic reform measures from abroad, new incentives for speeding introduction of new technology in Soviet industry -- in an attempt to spur economic growth. He will also continue to import Western technology, equipment and farm products. Whatever the course followed, economic ;tringencies are not so-severe as to require any retrenchment in foreign affairs or any substantial reduction in defense spending in the next two years. Nor is it likely that Soviet leaders see the longer- term economic outlook as so bleak that it is necessary for the Soviet Union to embark on a desperate effort to capitalize on its waning military advantages, before it is too late. In sum, Brezhnev's legacy provides incentives over the long term for change in Soviet policies, and constituencies doubtless exist for such change, particularly on the domestic side. Moreover, it is conceivable that Andropov, having assumed the top leadership at 68 years of age, may feel he has to make his mark quickly and undertake some innovations in the near term -- in foreign as well as domestic affairs. However, the continuance in power of Brezhnev's closest lieutenants is more likely to militate in favor of continuity. Over the next two years, Brezhnev's heirs will not feel compelled by domestic economic constraints to undertake sudden' shifts or new departures in domestic-affairs. -By the same token, neither the immediate task of political consolidation SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE - 4 - nor the longer-range need for economic reform is likely to compel near-term changes in Soviet foreign policy. Continuity in foreign policy should not be confused with passivity. The active diplomacy practiced before Brezhnev's death -- most notably the anti-INF campaign and the opening toward China -- will almost certainly continue, and new opportunities in the Third World are likely to be seized as they arise. II. Soviet Assessment of the United States Under The Reagan Administration Andropov's ascension will not affect the basic Soviet outlook on the United States that has taken shape over the past two, or indeed six, years. Since 1977, the Soviets have faced two Presidents about whose views they knew little in advance, and whom they perceived as unpredictable, perhaps dangerously so. Moscow judged the Carter Administration as initially schizophrenic in its policies toward Moscow -- espousing disarmament on the one hand while stimulating a NATO military build-up on the other -- with anti-Sovietism taking hold in the latter half of the Carter Presidency. Since January 1981, Moscow has seen itself up against a U.S. Administration that is, for the first time since the 1950s, openly and unequivocally anti-Soviet, and unwilling as a matter of principle to accept what Moscow sees as a new historical reality: the USSR's attainment of 'superpower' status, and the right to assert itself on an equal basis throughout the world. This perception has been progressively reinforced by the Administration's defense build-up, a continued push for INF deployments, the harsh and ideological rhetoric employed by Administration officials from the President on down, our continuing emphasis on human rights, and the appointment to high posts of individuals seen by Moscow as philosophically opposed to US-Soviet cooperation and arms control agreements under any circumstances. The Soviet leadership is doubtless worried by the U.S. military build-up (perhaps more worried than is warranted by the programs per se), and nervous about U.S. political efforts to diminish Soviet influence in such regions as the Middle East and southern Africa. Moreover, the Soviets recognize that the Reagan Administration is a more serious competitor than its predecessor in regional contexts, more willing to defend its own interests, and capable of-driving up the costs of Moscow's ad- venturist behavior (as evidenced by our actions in Afghanistan). In comparison with the Carter years, the Soviets are probably SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE - 5 - somewhat more fearful of an assertive U.S. response to Soviet actions toward situations in the developing world where the position of Soviet-backed forces is fragile (e.g.,. arms transfers to the Salvadoran insurgents; MiG deliveries to Nicaragua). But whatever marginal increase in Soviet cautiousness has been induced by this Administration's policy, it has not been enough to bring about a Soviet retreat. Despite early concerns aroused by this Administration's threatening rhetoric, Moscow is by now probably considerably less apprehensive about direct U.S. action against Cuba. In Angola, despite nervousness about our diplomatic initiative, the Soviets have held firm and, in fact, presided over a sizeable increase in the Cuban military presence. In short, the Soviets do not presently feel pressured toward retrenchment in the Third World. Looking further ahead, the Soviets may have reason to doubt the staying-power of this Administration's harder-line policies. From Moscow's perspective, factors impinging on U.S. policy include: domestic economic constraints which have undercut the pro-defense consensus; the anti-nuclear sentiment reflected in the freeze movement; Alliance pressures and disagreements on trade and security issues; problems and uncertainties in relations with China; deteriorating conditions in Central America; and 1984 electibn politics, upon which all of the foregoing will converge, and which may bring to power a new Administration more amenable to improving relations with Moscow. If it views the Reagan Administration in this light, the Soviet leadership may conclude that the best course is to "wait out' the Administration until the "forces of history" have forced the U.S. back to more 'realistic' policies. In other words, while not breaking off the diplomatic and arms control dialogue with us, the Soviets would not expect any major agreements could be reached. While not feeling themselves -under any pressure to make major concessions to the U.S., the Soviets would defer decisions on a substantially increased defense effort. The foregoing appears to be the current Soviet assessment of the Reagan Administration. Some in the Soviet leadership, however, may have come to the conclusion that U.S. unwilling- ness to accommodate itself to the Soviet Union's emergence as a global superpower has deep roots, and represents a strain in U.S. foreign policy that antedates and will endure well beyond the Reagan Administration. If this should become the dominant view, Soviet policy would confront two separate, but fundamental choices: sustained arms competition vs. a negotiated modus SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE vivendi; and recurrent confrontation vs. greater restraint in the Third'World. Whatever their long-term outlook, the Soviets will seek to pressure or isolate the Q.S. by cultivating relations with China and Western Europe, and by fueling the nuclear anxieties of Western publics. Moscow will in the near term continue to express the hope that it will prove possible to do business with the Reagan Administration, and may even advance new proposals to test U.S. flexibility, particularly in the arms control area. But based on two years' experience, the Soviets are increasingly skeptical of this Administration's willingness to do business on a basis that would not require the.-USSR to `change its foreign policy' in fundamental ways. Moreover, Moscow probably believes that, even if this Administration were willing to do business, the pay-offs would be minimal in terms of expanded trade or constraints on U.S. weapons programs. In sum, Moscow doubts the credibility of our efforts to establish 'linkage' between Soviet conduct and improved US-Soviet relations and, at the same time, does not believe that we would follow through on linkage in terms of rewarding Moscow for positive changes in Soviet behavior. Thus it is unlikely that the Soviets see much cause to make significant substantive concessions toward the United States with the purpose of inducing us to do business. But the Soviets will probably undertake new initiatives in the next two years designed primarily to put the U.S. on the defensive politically, and to stimulate Allied and public pressures on the Administration to alter its policies. III. The USSR's Other Foreign Relations. Other Soviet foreign relations which have direct consequences for U.S. interests include: China: The Soviet leadership clearly is interested in creating at least the appear-ance of movement toward Sino-Soviet normalization, among other reasons to put pressure on the United States to be more accommodating in bilateral relations. The Soviets may also perceive a common interest with the Chinese in actual substantive steps toward more stable relations (ideo- logical differences are no longer as significant, permitting restoration of party-to-party ties; mutual benefits are possible from trade). Thus Moscow may take limited substantive steps in the near term, such as troop cuts bn the Sino-Soviet border, to advance the process. If the Chinese reciprocated, Moscow would go further, although in the forseeable future the Soviets' interest in avoiding friction with the Vietnamese is an . SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE - 7 - inhibiting-factor against any effort to resolve the Kampuchea problem. In any case, the Sino-Soviet relationship will continue to be burdened by deep mutual suspicions ajad conflicting political and strategic interests. Japan: The Soviets do not view Japan, even in Alliance with the U.S., as a serious near-term military threat in the Far East. Despite Soviet interest in acquiring Japanese technology, they have made no effort in the past to improve relations with Tokyo. It is conceivable that the new Soviet leadership could launch a peace offensive as it has done in Western Europe to sow divisions between the O.S. and Japan, perhaps involving troop reductions on some of the disputed islands or an offer to freeze Asian SS-20'deployments. But because of the non-negotiability of the main issue dividing Moscow and Tokyo -- the Northern Territories -- it is unlikely that there will be any serious substantive initiatives on Moscow's part. Threats to Tokyo, including continued moves toward Sino-Soviet normalization, are more likely than blandishments in the Soviet effort to discourage Japanese- American strategic cooperation. Western Europe: The Soviets perceive West European govern- ments as more concerned about defusing East-West tensions, more willing than the United States to tolerate Soviet adventurism in'the developing world, and more receptive to cooperation with Moscow without political preconditions. Thus, while seeking to avoid rekindling interest in separate European defense arrange- ments, Moscow seeks to exploit West European interests in trade with the USSR and expanded East-West human contacts, popular opposition to NATO defense improvements, and other strains in Atlantic relations as means of weakening NATO's defense posture and putting pressure on the U.S. to move back toward more 'realistic' East-West policies. At the same t,me, the Soviets also see intrinsic benefits in expanding their relationship with Western Europe, principally economic (a source of technology, as well as markets for Soviet exports, especially energy). Since the late 1970s, the Soviets have been particularly concerned about NATO efforts, instigated by the U.S., to 'upset the established balance" in Europe, particularly the long- standing Soviet superiority in longer-range INF missiles. They may have feared that the 1979 decision to deploy 572 GLCM and Pershing II missiles was but the first step toward a larger U.S. 'Eurostrategic" force, to be reinforced by modernized U.K.. and French nuclear forces. This fear has likely subsided in light of the problems INF deployments have encountered among West European publics. But if Soviet concerns about the potential military impact of INF deployments have declined, Moscow's number-one political objective in Western Europe SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE 8 - continues to be to exacerbate US-West European strains over the INF issue and, in the process, to derail the deployments themselves. In 1983, we accordingly can expect to see a continued Soviet carrot-and-stick-strategy designed to block INF deployments. This will likely entail new or repackaged proposals suggesting Soviet willingness to reduce SS-20s if NATO-deployments are suspended or cancelled, accompanied by ambiguous threats of counterdeployments and adoption of a launch-on-warning policy. If the initial phase of deployments begins on schedule in December 1983, the Soviets will, move quickly in 1984 to respond -- perhaps through cruise missile deployments or stepped-up pressure in Berlin or the Caribbean, but more likely with further efforts to appeal to growing anti-military sentiment in Western Europe -- in an effort to derail subsequent deployments, or at least to maximize the political damage to US-European ties of carrying the deployment program to completion. (Regardless of whether the Soviets succeed or fail in heading off INF deployments, they will still be able to sow considerable discord in Atlantic relations.) Eastern Europe: For strategic reasons, maintaining Soviet control and internal tranquility in Eastern Europe will be of fundamental concern to any Soviet leadership. In recent years, however, it has become increasingly costly for the Soviets to sustain the higher living standards of their Allies, and they have in fact reduced subsidies to the East European economies. For this reason, and in light of their experience in Poland, the new leadership must be especially concerned by the risk ,..:..,. 1 nr Ai annntent in the region and the NSC review completed - unredactedsegments may be influences could lead to declassified; j"" " _ "j.Wa,..Z to stability and Communist rule. Moscow's dilemma is finding the proper balance between continued repression to enforce the political status quo, and tolerance of economic reforms and political liberalization to relieve underlying social tensions. In the near term, however, the Soviet leadership is probably confident that the worst is past in Poland, and that the immediate danger of spillover of the Polish contagion to the rest of the bloc has passed. A year of calm in Poland has already dampened the Western reaction to the imposition of martial law; another year of calm will simply confirm that the threat to Communist regimes has receded, and provide the Soviets with the grist for further efforts to dismantle Western sanctions piecemeal. In-the longer. run, it is conceivable that Andropov will stimulate increased economic experimentation in Eastern Europe along Hungarian lines, perhaps in tandem with a tightening of the political screws. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE - 9 - The new leadership will also be alert to opportunities to strengthen Moscow's position in Eastern Europe, both inside and outside the Warsaw Pact. For example, Andropov may, try to exploit Romania's economic difficulties to bring Ceaucescu (or his successor) back in step with Soviet foreign policy. Steps' to exploit Yugoslavia's economic troubles or to foment separatist movements are also possible. In addition, the Soviets.may perceive a target of opportunity in Albania, should Hoxha die or be overthrown. Third World: The Soviets have historically considered the Third World as a major arena for advancing the USSR's interests; particularly since World War II, Moscow has also viewed competition with the U.S. (as well as other Western countries and China) for influence in the developing world both as a primary means of establishing their credentials as a global power, and as a means of undermining Western strategic and economic interests. Despite periodic setbacks, and despite the increasing burden of supporting client states economically, the Soviets have persisted in an assertive Third World policy. The new leadership will likely continue to view the Third World as one of the most important arenas for East-West engagement. The Soviets have generally taken a low-risk, opportunistic approach to the Third World competition, relying on proxies or security assistance in order to minimize the risk of direct confrontation with the U.S. Afghanistan is unprecedented in that the Soviets' own troops were directly involved, and may signify an increased readiness for direct engagement elsewhere. With respect to specific regional issues: -- Afghanistan: The, Soviets must appreciate that there can be no near-term military solution at current levels of involvement. Soviet strategy is probably based on the judgment that the resistance can be worn down over a period of many years, as done earlier in the Boishevization of Soviet Central Asia. The domestic burden of the Afghan adventure is not significant enough to impel the SovieEs toward an early with- drawal. Thus the Soviets will continue to focus on influencing the Pakistanis (through both threats and blandishments) in order to curtail armed assistance to the rebels. One means of doing this will be to create the appearance of a willingness to negotiate on a political solution, without offering any concessions which would undercut Soviet insistence on maintenance of a pro-Soviet Afghan regime. -- Middle East/Persian Gulf:--In the Middle East, the Soviets suffered a setback with the us-engineered PLO withdrawal from Lebanon, continue to be excluded from the SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE - 10 - Arab-Israeli peace process, but nonetheless continue to maintain important clients in the region. Thus the Soviets can be expected to continue to seek a role in the peace process and to improve ties with moderate Arab states, while attempting to undermine US-sponsored initiatives and exploit future breakdowns in the process. In the Gulf, Soviet strategic interests received a major boost with the fall of the Shah and expulsion of the U.S from Iran. Since then, the Soviets have been playing a waiting game, looking for new opportunities to expand their influence. -- Africa: In southern Africa, the Soviets probably will continue quiet efforts to scuttle the Namibia/Angola nego- tiations, while endeavoring to position us as the scapegoat for the failure they hope will eventuate. They also may seek to reinforce their regional position by providing additional military aid, directly or via surrogates; to governments threatened by South African destabilization. In the Horn of Africa, the Soviets' intimate relations with Ethiopia's Marxist regime, and the latter's military preponderance in the area, offer the Soviets a possible proxy should they decide to seek an 'easy' geopolitical advantage. The Sudanese and Somali leaderships' are both closely identified with us and quite insecure at home. Should the Soviets decide on such an initiative, they could be. emboldened by the-belief that no political base exists in the U.S. for direct American military support of these regimes. -- Central America/Caribbean: The Soviets have made it a priority objective to build up Cuba's military capabilities in the fade of what they perceive as an increased U.S. threat to Havana, as a means of sustaining their destabilizing actions in the region indirectly, and as a way of diverting American attention and efforts from the global competition. Moscow may have become more cautious about exploiting fluid situations in this hemisphere in response to this Administra- tion's strong representations about the region. But the Soviets realize that U.S. sensitivity about the area provides a low-cost opportunity to challenge us in our own back yard. As a result, they have not hesitated to seize opportunities when they arise and to defy U.S. warnings against involvement in the region, relying on Cuba as an intermediary in order to avoid provoking a direct confrontation with the U.S. It is possible that this Administration's stance made the difference in the Soviet decision not to supply MiGs to Nicaragua, but the Soviets have not in-any.way cut back on their military support for the Sandinistas. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 ; Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE - 11 - -- Southeast Asia: The Soviets consider themselves the chief outside beneficiary of Hanoi's 1975 victory and its extension of domination to Laos and Kampuchea. While obtaining greater military access to the region, they have been unable to build politically on this advantage due to Hanoi's isolation in the region, and have had to shoulder the growing burden of subsizidizing the-Vietnamese economy. Prospects for improve- ment in Sino-Soviet relations and the advent of a Sihanouk-led coalition, which creates another option for Hanoi, may tempt Moscow to nudge the Vietnamese toward accommodation with their neighbors; its own fears of Sino-Soviet normalization could prompt Hanoi to move in this direction. But a close, aggressive Soviet-Vietnamese relationship -- which Moscow will be reluctant to jeopardize in the near term -- will effectively preclude extension of Soviet influence outside Indochina; a satisfactory settlement and general accommodation in Southeast Asia, however, could lead to a marginal increase in Soviet activity in ASEAN. IV. Moscow's U.S. Policy Agenda Over The Next Two Years If, as we expect, neither leadership politics nor broader domestic concerns veer out of control, the Soviet Union will continue to conduct an active foreign policy over the next two years, invigorated at least to the extent that Andropov is personally more engaged and skillful than his predecessor. We do not anticipate either a dramatic retrenchement or a new burst of expansionism. This judgment could, of course, be altered by the unpredictable consequences of such events as the outbreak of a divisive leadership struggle within the Politburo, a new breakdown of order in Poland, or a major US-Cuban confrontation. In such unforeseen circumstances, the Soviets could offer major -substantive concessions, for example moves to accommodate U.S. positions in START and INF, or a compromise in their stance on ? requirements for a negotiated settlement in Afghanistan. On the other hand, the Soviets could follow a more aggressive course, including an escalation in destabilizing activities in Central America, shipment or deployment of 'offensive weapons' to Cuba, or support for large-scale aggression against Somalia. Short of such unanticipated developments, over the next two years the Andropov leadership is likely to see opportunities for initiatives in several areas -- some substantive, some atmospheric, some propagandistic -- designed to put the U.S. on the defensive and undermine our-Alliance relationships: efforts to block INF deployments; steps toward Sino-Soviet normaliza- tion; efforts to influence Pakistani policy in Afghanistan;*and. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 . . Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE - 12 - the like. 'The Soviets may also launch an INF-style propaganda campaign concerning the START negotiations, in order to appeal to pro-SALT II forces in Europe and the U.S., and to make the case that U.S. intransigence in START is blocking an INF agreement. It is also possible that the Soviets may make some low-cost gestures on the human rights front in order to induce greater U.S. flexibility on issues of central importance to them. In US-Soviet relations, we expect a continuing deemphasis on conducting substantive business with the United States so long as we refuse to move off our current agenda. Emphasis will instead be placed on isolating and/or pressuring the U.S. and gaining influence among our traditional friends and in selected developing countries, as well as with China. The Soviets will continue to express interest in a 'carefully prepared' US-Soviet summit meeting, in order to demonstrate Moscow's constructive attitude, to pressure the Reagan Administration to accommodate Soviet position::, and to place the onus on the U.S. for preventing a summit (or for precluding the possibility of a positive outcome should a summit take place). In general, Moscow will continue the arms control and diplomatic dialogue with us -- maximizing the propaganda value of this dialogue, while probing for signs of U.S. flexibility -- but insist that since t?Te U.S. bears virtually all responsibility for the downturn in relations, it must make the first move toward improvement. Drafted:EUR/SOV:AVershbow Cleared:EUR/SOV:RECombs, Jr. 12/13/82 x28040 (0656/3m) PM:JAzrael S/P:SSestanovich INR/SEE:RBaraz P:DJohnson SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVZ Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Task III -"The View from Washington" A. U.S. Interests and Soviet Behavior Our objective in world affairs is an international environment in which our interests are secure. In its current form and with its current expansionist tendencies, the Soviet Un.on is the greatest obstacle and threat to such an environment. Over the past decade at least,-the USSR has acted on the sense that the basic forces of history were moving in its favor, and against U.S. and Western interests and values. We and the Soviets are and will remain competitors. The question for us is not whether to compete, but how to compete. Clearly, our task is to manage relations with the Soviet Union in ways that [1] advance U.S. and Western interests and values, and [2] avoid damage to those interests and values. In the broadest sense, our priority objective vis-a-vis the Soviet Union over the next 6-24 months is to maintain the sense of American recovery and ascendancy we have already established under this Administration. We need to show that it is the U.S., rather than the Soviet Union, which has the superior capacity to understand the issues on the international agenda and shape developments to its advantage. Domestic economic recovery and increased military strength are necessary ingredients. Substantial restoration of American economic health and substantial American and Western rearmament will be needed if we are to demonstrate that the tide of history is running our way. At the same time, capable conduct of American foreign policy is needed to protect and support its own basis in economic recovery and in rearmament. Both are threatened if we mismanage U.S. international interests. Our foreign policy priorities are thus designed both to provide a firm framework for our domestic and rearmament programs, and to shape the international environment -- in general and in competition with the Soviet Union --'in ways favorable to our interests. Specifically: -- We seek increased and modernized military strength for ourselves, our Allies and our friends. -- We seek to consolidate and strengthen our alliances and friendships with key countries. -- We seek to resolve regional crises and tensions in cooperation with area parties, thus depriving the Soviets of entries and opportunities and building conditions for future stability. - ? - - SECRET/SENSITIVE DECL: OADR Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -- We seek to promote respect for the rule of law and for internationally accepted norms of behavior, as the proper basis for relations between states and for world order. -- Finally, we seek to advance world economic recovery and stable arrangements and rules for international economic life. Thus, we have a broad program which extends far beyond our competition with the Soviets but promises major U.S. advances in that-competition to the extent that it is successful: It will demonstrate our mastery of events and trends; -- It will demonstrate how irrelevant the Soviet Union -- dictatorial, overmilitarized, expansionist -- is to the solution of the real problems facing mankind; and -- It will set the terms and a framework for constructive Soviet participation in world affairs if the USSR moves in that direction. There are both dangers and opportunities in a.program intended both to limit Soviet mischief-making and induce constructive Soviet participation in international transactions. Two examples illustrate this. Non-proliferation is an area where Soviet assets are so lar?e that little progress can be made without Soviet participation but where the Soviets share many motives for constructive behavior with us. It is thus an issue where cooperation is both essential and possible. World economic relations are a contrary example. The Soviet economy is large enough and related enough to the world economy to count, but not dependent enough on outside inputs to make constructive participation. come naturally. Hence, Soviet conduct in the world economy is mainly opportunistic, involving use of economic assistance to gain political advantage, without contributing in substantial ways to solutions of the financial, energy, food and other resource issues which define the global economic problem. Here a dual approach is called for: to pillory the USSR for its irresponsible passivity in the face of- global economic issues and its exploitative approach to economic tensions in individual countries, and to set the terms and define standards of performance for a genuinely constructive Soviet role. We have also developed a specific program to guide us directly- vis-a-vis the Soviet Union. It focuses on three tasks: -- To contain and overtime to reverse Soviet expansionism by competing effectively on a sustained basis with the USSR in all international arenas: SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -3- --To promote, within the narrow limits available to us, the process of change in the Soviet Union in the direction of a pluralistic political and economic system; and -- To engage the Soviet Union in negotiations to att.:mpt to reach agreements which protect and enhance U.S. interests and which are consistent with the principle of strict reciprocity and mutual interests. We can expect the Soviet Union to resist implementation of both the broad U.S. foreign policy program and our specific program vis-a-vis the USSR with all the considerable political and diplomatic assets at its disposal. It is too early to say exactly what steps the Andropov leadership will take.-to do so. There are limits -- in resources, in outlook, in the shape of issues -- to what it can do. No doubt it will be prudent. Nevertheless,*it would also be prudent for us to examine the shape of an activist Andropov foreign policy going somewhat beyond the cautious limits that are most likely in order to envisage the challenges it could pose to our own foreign policies, and the adjustments that we may wish to tz?ce to meet them. So far under this Administration, we have demonstrated that the historic.tide is not running against the U.S. and the West. We. have not yet succeeded in showing that it is shifting in our favor. To do so, we will need over the next 6-24 months to manage both bilateral relations and, more importantly, the key elements of the international environment skillfully and forcefully. In order to block progress on our program, the most plausible objective for an activist Soviet foreign policy over this period is to isolate the U.S., either by making moves in which the U.S. is not involved, and/or by demanding "ready and positive" responses to moves which do not go to the heart of U.S. and Western concerns but can nevertheless be advertized as "contributions to lessening tensions." The point will be to show our Allies, friends and public opinion that we cannot control events, and that we let issues slip away from us because we are not alert or firm enough, in order to demonstrate that the Soviets rather than the Administration hold the initiative. Regional Issues In our direct dealings with the Soviets, we have made clear our general concern with the adventurist pattern of Soviet conduct on regional issues, and-our specific concerns with regard to Poland, Afghanistan, southern Africa, Central America/the SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -4- Caribbean and Kampuchea. They have accepted discussion with us on the basis of this agenda, and in two cases -- Afghanistan and southern Africa -- we have conducted more detailed discussions at the sub-ministerial level. Nevertheless, resolution of these issues on a basis which advances our interests will not depend primarily on U.S.-Soviet bilateral discussion. Rather, it will depend on how the specific regional situations evolve, under U.S. and Soviet influence, but not U.S. or Soviet dictation. Reviewing these issues, it is natural to begin with an area where new Soviet activism met with a local response even before Brezhnev's death: the Sino-Soviet negotiating process. A Soviet policy approach designed to isolate the U.S. could well begin in Asia. 1. Improvement in Sino-Soviet Relations The U.S. interest in Sino-Soviet relations is to retain maximum flexibility for ourselves in relations with both; to limit the degree of rapprochement before it damages regional stability or U.S. alliances and friendships in the area; and to ensure that partial solutions to area problems which may emerge from Sino-Soviet discussions do not stop short of addressing the real causes of instability we have defined. Both for historical and geographical reasons, and because both sides have substantial interests in Europe, Asia, and elsewhere which could be jeopardized if they sought-a return to their relationship of the 1950's, we believe it is unlikely that Beijing and Moscow will move quickly to any strategic realignment that would face the United States with the two-front challenges of the Cold War era. Nonetheless, however sparse the substantive achievements might.be, Moscow and Beijing have already derived some diplomatic advantages from their negotiating process, and it would be imprudent to exclude results altogether. A modest relaxation in Sino-Soviet tensions need not damage U.S. interests, provided we do not over-react in our own dealings with Beijing. However, the further the process goes, the greater the potential damage, particularly if accompanied by further strain in U.S.-China relations. --Force Postures. Some of the global strategic benefits resulting from the Sino-Soviet confrontation could be lost if there were substantial reductions in troop levels on the borders of China. Even if Soviet troops were not redeployed westward, Western military planners would have to calculate a larger possibility that, in a war contingency, Moscow could free Soviet Far East forces for use-in Europe. Moscow, in turn, would have fewer grounds to fear U.S.-China collaboration in a global confrontation. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -5- -- Political Impact. Regionally, if China's flexibility to redeploy its own troops were increased, the concerns of our Allies and friends [perhaps most notably Taiwan] could be increased. The latter factor could make it harder to implement the August 17 U.S.-China Joint Communique, which is critical to preventing deterioriation of U.S.-China relations. Moreover, improvements in Sino-Soviet relations could well increase pressures on Deng's reformist group from hardliners, who question the importance of U.S.-China relations to China's security and want an assertive policy vis-a-vis the U.S. and Taiwan, which could further reduce the counterweight to the USSR China now constitutes. A significant improvement in Sino-Soviet relations could also reduce the long-term influence on China which we seek through the large and still-growing student exchange program giving us access to future Chinese elites. 2. Japan The U. S. interest is to keep our principal Pacific ally confident of U.S. capacity to maintain our common security interests; increasingly willing to contribute to their maintenance; willing to work with us to resolve both bilateral issues and multilateral problems, in both the political and economic areas; and supportive of Western positions in a variety'of international fora. In terms of resources devoted to regional security, we have an interest in seeing the Soviets reduce their threat to Japanese security, but should recognize. that Japanese concern about soviet military forces as the only plausible hypothetical threat to Japan serves to cement US-Japanese ties. Japanese attachment to the U.S.' security tie is unlikely to be called in question by any foreseeable development, and the direct Soviet blandishments to Japan which are most likely would arouse skepticism rather than responsiveness. However, there is some Japanese nervousness about the implications of the Sino-Soviet negotiating process. Our ability to collaborate with Japan in Asia as well as we do has been conditioned in large part by common approaches to China over the past decade. Substantial movement toward Sino-Soviet reconciliation could possibly lead to a renewal of differences over China policy and to charges in some Japanese political circles, right and left, that U.S. mismanagement of China policy had been among the factors responsible for such rapprochement. there would be no inclination to weaken the U.S.-Japan security treaty as a result, and this in turn should act as a brake on Japan's moving off on its own, but Japan might in these circumstances be less inclined to follow the U.S. lead with regard to Asian policies, particularly where China is a factor. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -6- Direct Soviet blandishment could take the form of troop reductions in the Northern Territories; offers to discuss SS-20 deployments in Asia with the Japanese; or hint at a return to the defunct 1955 offer to return the two smaller-of the four islands that constitute the Northern Territories. Mere Soviet overtures on the Northern Territories would have limited resonance, and would on balance be viewed with suspicion by the Japanese. An offer to discuss SS-20 deployments with Japan would suggest to the Japanese that Japan is a target to an extent the Soviets have thus far avoided. Thus, in terms of bilateral blandishments only actual return of the two islands would cause serious Japanese questioning of the tough anti-Soviet stance that comes naturally to them. Soviet positions on the Northern Territories have been very hard .for almost two decades, so that it is highly speculative to envisage Soviet offers, much less a Japanese response. Nevertheless, a combination of expressed Soviet willingness to deal on the Northern Territories and rapidly advancing Sino-Soviet reconciliation which the U.S. appeared helpless to affect could produce the kind of Japanese anxiety which would be detrimental to U.S. interests. 3. Kampuchea As one of the Chinese obstacles to normalization of relations with the USSR, Kampuchea is on the agenda of Sino-Soviet talks, and the Chinese have now presented a proposal for phased total withdrawal of Vietnamese troops in that context. Our interest in both regional and U.S.-Soviet terms is in total withdrawal of Vietnamese troops, leaving an independent, non-aligned Kampuchea. But a partial withdrawal which left Kampuchea under Vietnamese control and deprived our ASEAN friends of the will and/or means of promoting their consensus conditions for regional stability, would not be in either the U.S. or Chinese interest. In Kampuchea, the Soviets and Chinese could theoretically convince the Vietnamese to withdraw all forces in return for Chinese security assurances, termination of support for the Khmer resistance, and increased Soviet and possible Chinese aid, with a payoff in Sino-Soviet relations and in a reduction of ASEAN pressure. It might improve Moscow's image and marginally improve Soviet access to ASEAN, but might perpetuate general ASEAN wariness of China, and might well also lead to increased access for our friends and us in Indochina. A Soviet-Chinese induced partial Vietnamese withdrawal, by contrast, might only .heighten ASEAN suspicions of both-the Soviets and Chinese. ASEAN could react in two ways. First, it might feel obliged SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE simply to acquiesce. Or, it would act to maintain its control of the Kampuchea situation and pressure for total Vietnamese withdrawal. The legacy of strong U.S. support for ASEAN and the attractions to Hanoi of normalization of U.S.-SRV relations and access to Western resources, and inevitable fear in ASEAN of a Sino-Soviet-Vietnamese condominimum in Southeast ALia, give our friends and us important leverage unavailable to Moscow or Peking. 4. Afghanistan As in Kampuchea, our interest in both regional and U.S.-Soviet terms is in total withdrawal of Soviet troops and restoration of non-aligned, independent status under a government-of the Afghans' choice. But, as in Kampuchea, a partial Soviet withdrawal that deprived Pakistan of the will and/or capacity to resist a Soviet troop presence in Afghanistan, led to a partial Soviet withdrawal that left the Soviets in control of Afghanistan, and was achieved without U.S. input, would not be in our interest. Again, the Chinese also would be unlikely to cooperate in a solution of this sort. But, althouth no concrete proposal has yet surfaced, Afghanistan figures, like Kampuchea, as one of the "obstacles" to normalization on the Sino-Soviet agenda. Faced with a Soviet offer to reduce troop levels and perhaps reconfigure the puppet Afghan government in return for reductions in Pakistani support for the resistance, our proximate goals should be to ensure that the Pakistanis, rather than the Soviets, control the pace of Soviet reductions, and that Pakistani support for the resistance does not cease until total Soviet withdrawal is achieved. 5. Persian Gulf and the. Middle East These two regions are of course fundamental to our interests, and the Soviets possess considerable assets in the area. These are of two kinds, though the Soviets do not distinguish between them in pursuing their own purposes. They have a wide variety of covert means to influence critical situations: in Saudi Arabia, among PLO and other Arab radicals, in Iran. They are used to obstruct U.S. peace and mediation efforts, and to position the Soviets to exploit new opportunities. In terms of political and diplomatic leverage, on the other hand, Soviet assets have been seriously reduced in recent years. In the Iran/Iraq war, they must lack confidence in their capacity to derive advantage from any possible outcome, and the Gulf states will be difficult for- them to penetrate in the next 6-24 months even if the Saudis were willing. Here our objective SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE_ -8- is to prevent the Soviets from exacerbating the current Iran/ Iraq conflict, and to deny them the chance to set the terms for its solution, through our relations with third parties. On Arab-Israeli issues, only if Syria became a pure Soviet client through some unlikely combination of reduced Saudi support and Syrian failure of nerve would the Soviets be in a position to block US-mediated forward movement. Should the current US peace initiative not succeed in producing negotiations, the Saudi reaction could include the establishment of active diplomatic relations with the Soviets; but for internal reasons and because of the strength of our position, it would not have substantial or far-reaching effects on our interests. Hence, while the Soviets can continue to play a modest blocking role in the area, their chances of reentering the mainstream of area developments in the next two years are small. 6. Ethiopia Across from the Peninsula on the other side of the vital Red Sea oil route, the situation is threatening for U.S. interests. The regimes closest to us -- Sudan and Somalia -- are so weakened by economic crisis as to be living on borrowed time. Libyan intrigue and the overwhelmingly dominant Ethiopian military establishment could be used by the Soviets to topple Siad Barre .and/or Nimeiri, thus dealing us a geopolitical reverse at little cost or risk to themselves. Our primary interest vis-a-vis the Soviets is that they refrain from doing so. Drawdown or departure of Cuban forces in Ethiopia is a secondary priority. 7. Southern Africa Here our primary interest is that the Soviets refrain from obstructing and preventing conclusion of the Namibia/Angola settlement process underway. The U.S. is held responsible for the success of a diplomatic initiative that has been difficult from the beginning and is encountering heavy weather now. The Soviets realize it is not yet exhausted and fear it may succeed, thus undercutting their influence in the region. At the same. time, they wish to avoid seeing the onus for failure placed on themselves or the Cubans, so their opposition must be low-key, and thus possibly ineffectual Ultimately, a deal must be cut if there is to be a regional settlement, and some degree of Soviet association will be required if their Cuban surrogates are to cooperate, as they must for settlement to be achieved. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 .SECRET/SENSITIVE -9- In the near term, if the Angolans and other Africans insist on Cuban troop reductions in Angola, it is not to be excluded that the Soviets and Cubans will accede in order to avoid the blame for keeping Namibia enslaved. If they do, a plausible offer would be a Cuban-free zone in southern Angola and'perhaps some reductions in return for a comparable commitment from the SADF in Namibia, and perhaps a Cuban commitment to withdraw entirely "near" in time to total SADF withdrawal from Namibia. This would be damaging to our interests if it were inadequate to secure SARG cooperation on the total settlement, or if Cubans were redeployed to Mozambique. 8. Central America/the Caribbean Our general interest is that the development process in the area go forward without outside subversion or threats to our security interests. Whatever the complexities of the Soviet-Cuban relationship, the Soviets are currently -engaged in fostering outside subversion, in building up Cuban power-projection capabilities through direct military supply, and in building up Nicaraguan military strength indirectly through Cuba'. While the region is peripheral to core Soviet interests, they have a strategic interest in causing trouble for us in a vital area close to the U.S. It would be in our interest for the Soviets to stop any or all of these activities. The most urgent contingency in terms of escalatory capability [and thus of U.S.-Soviet relations overall] is introduction of jet combat aircraft and Cuban combat forces into Nicaragua. In our bilateral dialogue with the Soviets, we have said this would be unacceptable, and they have the means, within the "normalcy" of their Cuban relationship, to-prevent it. Aside from this contingency, the Soviets can increase or relieve pressure on us in the region by.altering the pace of military supply to Cuba. Over the longer term, this is already a problem for us, since a conflict contingency would require us to use NATO-designated forces in order to counter Cuban forces now existing; increasing them will make the problem worse. 9. Other Extra-European Areas. Elsewhere in the world, military conflicts, economic recession or simply societal development can produce fresh opportunities for the Soviets to expand their influence to our detriment at little cost to themselves. The Falklands crisis was such a case. Economic/financial distress in the Third World -- Mexico comes to mind -- provides the raw material for a potential loss of U.S. prestige and influence that the Soviets could seek to SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -10- exploit. U.S. losses need not lead to Soviet gains, but to the extent they are exploited by the Soviets they will serve to "prove" the failure of U.S. leadership. The Soviet Empire Within the Soviet Union and in Eastern Europe, the U.S. interest is in evolution toward greater diversity, individual freedom and national autonomy, and respect for human rights and internationally accepted norms of behavior, both between states and "toward one's own citizens. In practical terms these goals are not always perfectly compatible; Romania is a case of a country whose human rights performance makes U.S. support for national autonomy [in the specific form of access to the U.S. market as an alternative to the Soviet market through MFN treatment] difficult. An active Soviet diplomacy under Andropov is capable of increasing this difficulty through moves that are both welcome and troublesome to us. Adjustments are unlikely to be fundamental, or made as "concessions" to us; but it will be hard or impossible to dismiss them either in terms of our own principles or in relations with our European Allies. Three types of possible adjustments come to mind: -- A) Human rights. Since state control over Soviet citizens is basic to the Soviet regime, basic changes are not in the cards, but the regime could easily make small moves in the human rights area designed to require a "positive response" in view of the importance we attach to this topic. The Soviets could release or improve treatment of more or less well-known dissidents, possibly allowing some to emigrate, under cover of a broader amnesty, in return for spy trades, or simply as gestures timed for internationl impact, e.g., in CSCE. Or they could make sudden moves to meet Western "balance" requirements in CSCE. Or they could make new gestures like the invitation just accepted by the ILO to observe labor conditions in the USSR. -- B) "Normalization" in Poland. Without judging the degree of Polish initiative/Soviet tolerance of every step, the process is sure to cut both ways in terms of U.S. interests. It will alleviate suffering, and show that Western pressure in some sense "works." But it will also reflect greater regime self-confidence; it will keep most fundamental aspects of repression intact; and it will increase tensions among the Western Allies. -- C) Economic Reform. Within the next 6-24 months, the Soviets could broaden the limits of their tolerance for economic reform in selected-East-European countries [though they are on balance unlikely to do so in a major way]. The motives would be SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -11- to relieve themselves of some of the economic burdens they carry; to consolidate party hegemony before developments reach the "Polish" flashpoint;.and to observe [outside the Soviet Union] experiments with efforts to contain the political consequences of economic reform through greater discipline in non-economic areas, in case they also choose this path to dealing with economic dilemmas. Here too, we may have to decide' how far we welcome or even support reforms undertaken to achieve such goals. Military Security/Arms Control The U.S. interest is to modernize our military forces and correct shifts against us in the military balance, at the lowest possible level of forces achievable through agreements that protect and enhance U.S. interests. The Soviet objective is to undercut public and political support for this effort here and among our Allies, and to defeat it. Over the next 6-24 months, the Soviet leadership under Andropov is-likely to make vigorous moves to achieve that objective. Andropov will need to keep military support for his leadership, and major reductions in forces are unlikely. However, some adjustments ara possible. The Soviets may consider some redeployment or even disbandment of conventional forces, and have offered to reduce intercontinental strategic forces in START. At the same time, the war'fears infecting West European, Japanese and U.S. politics are genuine, so there will be a high premium on parleying modest willingness to adjust force levels downward into showcase negotiating moves designed to undercut Western rearmament. Current Soviet attacks on and veiled threats with regard to MX and INF deployment may thus be increasingly counterpointed by well-publicized negotiating "concessions" intended to paint the Administration as insincere and unwilling to negotiate, the better to isolate it. Once again, we may have to deal with offers we know are superficial or malign. Western Europe At the present time, we are pursuing a large number of specific objectives of very high national importance to us in Western Europe: implementation of the NATO two-track decision on INF modernization; increased West European defense spending; West European cooperation in shaping and implementing a coherent new policy for East-West economic relations; European willingness to work with us on both bilateral and multilateral trade and financial issues. Many and ultimately all of these objectives are important to the success of our broad program for managing relations with the USSR. In defensive terms, we wish to prevent the Soviets from threatening either our West European Allies or our capacity to accomplish our larger goals; more broadly, SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -12- however, we wish to move with our European Allies to shape a sounder and more stable environment for East-West relations. The Soviets know this, and can be expected to try to make our efforts fail. They have always done so, and they will almost certainly try harder under Andropov. Their East European glacis, where Andropov has his most extensive direct foreign policy expertise, is under strain, and at a time when Western Europe must be returning to the center of Soviet preoccupations. It is conceivable that the Soviets see in East-West tendencies a historic opportunity to achieve a permanent weakening of the Western alliance system. The Western rearmament effort will be at a critical stage in 1983, when the INF deployment decision will be implemented; the Soviets must try to prevent implementation in any event, and will try to do so in a way that maximizes 'strains in the Alliance. Hence, it- is no surprise that a European angle figures prominently in much of the action program for Soviet diplomacy sketched out above. -- Even a program which begins in Asia can be used to show Europe that the USSR is the superpower most actively seeking political solutions to problems: -- "Reducing tensions" on the USSR's Asian borders while threatening a retaliatory buildup in the West could be a worrying contrast for Europeans; -- Forcing a stiff U.S. response to Cuban moves in the Caribbean would play to Soviet advantage on a sharp contrast in U.S. and European priorities; and -- The Soviets have a small but impressive arsenal. of moves -- human rights gestures and arms control "concessions" -- to fuel the lingering West European detente mystique. Thus, in this critical area as well the USSR could present a mixture of threats and blandishments which will be'hard to handle. B. U.S. Priorities and U.S. Leverage The U.S. has a strategic approach reflecting its real interests in world affairs at this time, and a comprehensive program for pursuing it. There is no need to adjust fundamentals. Precisely because the program is so comprehensive, however, we may need to concentrate our efforts and prioritize among the elements of the program if we are faced with new Soviet activism along the lines suggested above. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -13- Soviet moves of this sort would in fact constitute a response to our overall policy approach, and a validation of it. Soviet military adventurism and Soviet disregard for human rights and other international commitments have after all been at the top of our agenda for U.S.-Soviet and East-West relatio,._s. Moves in. Afghanistan, in Kampuchea, in Poland, in human rights would be movement in our direction. The problem would be that if the Soviets remain in control of the process of movement, such moves will stop well short of addressing our basic concerns. Our task would be to keep the Soviets moving over the border between shadow and substance, by our own efforts and together with our Allies and friends. To do so, we would need to concentrate on a limited number of priority objectives in our program. It is premature at this point to identify such priorities. It is not even clear that the Soviets under Andropov will wish or have the capacity to proceed as projected above. But it is not premature to begin thinking about the criteria we would have to use to choose wisely the objectives on which we might concentrate. Briefly, there are four possible criteria, and they are not mutually exclusive: -- Strategic. Attention to this criterion would define areas of critical importance to our security interests where these interests are under significant threat. Examples would be the- Persian Gulf and the Red Sea/Indian Ocean supply lanes; Central America; our military modernization program [and hence European defense spending as well as our own, and management of arms control negotiations with the Soviets].. -- Western Values. This criterion defines areas where our own self-respect and our broader leadership credibility require sustained political and diplomatic efforts whatever the near-term strategic advantage. Examples would be human rights; respect for the rule of law and international commitments; our program for promoting democratic development; and reciprocity in bilateral relations. -- Unity in Strength. In the U.S.-Soviet competition, we will be obliged to act unilaterally on some occasions, but in most cases our ability to determine outcomes depends on common or harmonized action with other countries. This fact defines a criterion which focusses on issues where cohesion with Allies and friends is needed either to effect a particular outcome or to maintain a reserve of cooperative inclinations for future contingencies. Examples-would-be-Afghanistan, Kampuchea and INF deployments in Europe. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE- -14- -- Initiative. Maintaining the initiative in our own hands has independent political value as an element for effectiveness everywhere. In determining priorities we would therefore need to consider issues which permit us to display mastery of events, even if they are not in areas of preeminent strategic interest to us. Southern Africa is the most salient current example. Since we cannot yet choose priorities, it is doubly premature to identify the specific leverage at our disposal in priority situations. But, again, it is not too early to begin thinking about the kinds of leverage we would wish to bring to bear. The key distinction here is between direct leverage on the Soviets and our capacity to shape the Soviet leadership's environment to our advantage. The overall quality and tone of the bilateral relationship affects Soviet decisions of interest to us, and we have substantial control over it in our ability to set the style of public statements and determine the protocolary aspects of doing business. Moreover, we are in negotiation with the Soviets on a variety of arms control issues, and it may be in our interest over the next 6-24 months to engage new negotiations with the USSR on various topics, ranging from arms control [nuclear CBMs and TTBT/PNET verification] through economic issues [a maritime .agreement and a new long-term grains agreement] to other bilateral topics [a new cultural agreement ensuring reciprocal cultural access to the USSR for us, new consulates in the two countries]. Nevertheless, our capacity to shape the Soviet environment indirectly will continue to provide our best leverage in this period, given the high degree of mutual mistrust and suspicion in and the current low level of direct transactions. We regularly discuss "indirect leverage" directly with the Soviets under the rubric of regional issues. In these discussions, we have the option of threatening to turn up the heat on them, or promising to turn it down, depending on Soviet conduct on a given topic, so long as we exercise it realistically and in coordination with other players on these issues. In the main, however, we will exercise indirect leverage most productively by effecting changes in actual'power configurations of interest to the Soviets. Our public posture on Soviet-related issues and our rearmament program are of course key assets here. But they are matched in importance by two others: SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -15- 1. On Asian issues [Sino-Soviet relations, Kampuchea, Afghanistan, Japan], we can promote our interests and keep up pressure for genuine solutions only by strong but prudent efforts to keep our relations with China, Japan, Pakistan, Thailand and the other ASEAN states in good repair. With China, this means managing U.S.-China relations well, buil:ling the bilateral aspects of our relationship where we can and renewing our dialogue with the Chinese on strategic topics of common interest, while managing our unofficial relations with Taiwan with care. With Japan, we should give more weight in our dialogue to political/security issues that unite us, alongside trade and defense burden-sharing issues that divide us. With Pakistan, we should develop our bilateral relationship where we can; maintain our support for the Afghan national resistence and firm Pakistani insistence on total Soviet withdrawal; consult intensively on ways of advancing political solutions in Afghanistan;'and not hesitate to advance them, or encourage others to do so, if common approaches are agreed. With ASEAN, we should maintain our firm support for ASEAN strategy, and continue to stress our bilateral security relationships, particularly with Thailand. In that context, our continued support for ASEAN's efforts to strengthen the Kampuchean coalition and its non-Communist elements is important. With all, we should make the point that forces reduced should be disbanded, and not redeployed against other friends of ours. 2. In southern Africa,-we should maintain the considerable leverage we have by continuing to work with all interested parties for concurrent solutions in Namibi and Angola. We should consider increasing it by developing specific contingency security assurances, acceptable to the SARG, for the MPLA government, thereby preparing more specifically to tag the Cubans and Soviets with responsibility for failure if we do not succeed. Finally, we should continue working with the SARG and with Mozambique to reduce the likelihood that Cubans will be transferred to Mozambique rather than home. 3. In Europe, our multiple efforts to engineer a new post-detente consensus depend critically for success on developments in arms control negotiations, given the importance both the Soviets and the West Europeans attach to this area, and the decisive character the INF dual decision has assumed for NATO. The leverage we develop in other areas will not compensate for the loss we will sustain if we are unprepared to manage a Soviet carrots-and-sticks offensive in Europe which mixes new "proposals" or "concessions" in'INF and START with heightened threats to Allies. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -16- The dilemma new Soviet activism could pose for us recurs so often, in case after case, that it can be considered generic to the current situation. The Soviets have a running shot a preventing success of our overall program by threatening the integrity and effectiveness of U.S. policy from two sides: we will sacrifice essential support for our tough approach, our basic "leverage-," if we refuse any positive response to Soviet moves, or if our response is too positive. We have it in our power, working with Allies and friends, to pursue our own objectives by making measured responses that take credit for Soviet moves where credit is due us, give credit where it is due the Soviets, and insist on further progress toward real and potentially stable solutions of the issues we have identified. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE Task IV. US Policy: Possible Actions/Initiatives put on the defensive or caught off guard. NSSD 11-82 and NSDD establish the framework for U.S. policy towards the Soviet Union over the next 5-10 years. The question this section addresses is what we can do concretely over the next 6-24 months to implement the longer-term policies established in the NSSD and NSDD. The preceeding three sections of this paper set out our best estimate of the context for the next two years. There are important uncertainties both about Soviet conduct and other key variables (global economy, crisis spots, US domestic consensus, etc.). However, in order to determine US policy now, we need to proceed on certain explicit assumptions -- being prepared to. adjust as required by subsequent developments. We believe the most prudent assumption is that the Soviet Union will pursue a somewhat more active diplomacy, and continue its opportunistic course in regions of instability (as opposed to an immobilized, inward-looking Soviet leadership). The probability of really radical changes in the substance of Soviet policies across the board is not high. But they are likely to be more active on the margins across a fairly broad front. By proceeding on this assumption, we can prevent being But we face this dilemma. Our approach has been -- and should remain -- that outstanding problems relate to Soviet behavior and they need to change. This could put us in a largely reactive mode. At the same time, in the face of a more activist Soviet approach, American policies over the next 6-24 months must be geared to meet these four concerns: 1. To preempt, counter new Soviet threats against Allies.; and friends (in Europe re INF) or new encroachments (Somalia, Central America). 2. To offset Soviet efforts to undermine support for our overall stance on East-West relation -- peace offensives vis-a-vis China, Japan, Europe. SECRET/ SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE 3. To avoid losing the initiative or becoming irrelevant on specific outstanding problems because the Soviets make deals without reference to us, i.e. Afghanistan, Kampuchea-, perhaps Poland (this is not to say, that any change of Soviet behavior in which we are not involved must be bad. It is to say that certain situations which the Soviet Union and its allies created (Afghanistan, Kampuchea, etc.) are unlikely to be settled on optimal terms without the participation and weight of the United States). 4. To induce Soviet acquiescence or active cooperation in areas where this is needed, i.e. southern Africa, non-proliferation, other arms control. . The strategy of American activism, momentum, and strength which this requires does not define the content of our policy in each area. For example, we do not need to rush into a summit just to demonstrate activism. Nor should we change policies for the sake of doing something. Clearly our approach will depend in part on the situation in each area, i.e. whether in INF the Soviets make an effective presentational or substantive move determines in part whether we need to take steps in Geneva to assure that our deployments move ahead. But* it does mean moving now to get the initiative in our hands in areas where there is already evidence of Soviet movement -- China, Kampuchea, Afghanistan. In general it means being acutely conscious that the Soviets have opportunities and the power to move in directions both unfavorable and favorable to the United States. The most important determinants of the success of our policy towards the Soviet Union over the next two years will be external to the direct bilateral relationship. The major determinants will be our ability: to sustain major defense increases and restore economic growth; to keep the cohesion of our alliances; and to help shape regional situations like the Middle East where the US-Soviet relationship is of tertiary importance. But there will be an important role for action and initiative in the US-Soviet relationship as well. We will need disincentives and incentives, a willingness to penalize misconduct and to stimulate positive steps. This will require discipline and sophistication -- the ability to take limited steps while keeping from another large swing. in atmospherics. What can U.S. policy realistically be designed to achieve vis-a-vis the Soviet Union in this limited period of time. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 First, we need to avoid another major Soviet victory at our expense and/or major new instance of Soviet misconduct (of which there was one nearly every year from 1975 to 1980), whether negative like preventing INF deployment or expansive like a Soviet-backed insurgent takeover of El Salvador. o Second, we need to stimulate reassessment in Moscow about the costs of using their normal policy tools vs. the benefits of a more responsible approach to international problems, i.e. that national liberation struggles are now a two-way street -- witness Afghanistan, Kampuchea, Angola, Nicaragua -- and that Soviet influence/prestige could be enhanced through participation in negotiated/peaceful solutions in places like southern Africa. The bottom line is that in two years the Soviet Union is likely to present much the same challenge it does today no matter what policy the U.S. pursues. We will not get a broad Soviet retreat or an abandonment of their long-term view of history. But we can try to compel a pause, while we rearm, to sustain serious pressure at points where ultimately reversals are possible, and to test Moscow to determine whether and where it is prepared to engage in more constructive pursuits. Thus we need U.S. moves which are both politically effective and serious enough to engage the Soviet Uni6h. How should we accomplish these objectives. The following sets out under four categories a fairly rich menu of actions and initiatives. Taken together, they constitute a broad program for US actions over the next 6-24 months to deal with greater Soviet activism -- whether of the new pressure, peace offensive, or positive substantive movement variety. A. What steps should we take to head off new instances of Soviet misconduct? Warnings? Preemptive action? We need to be prepared for a somewhat more formidable Soviet challenge, particularly in the areas of covert action- and military adventures, given Andropov's background and growing Soviet military projection capabilities. These could range from support for terrorism (PLO), to increased support for guerillas (El Salvador), to political/military moves (raising the fear-level in Europe, Cuban troops into Nicaragua penetration into Pakestan), to full scale invasions (a move, into Somalia, Iran). What should the U.S. do to head off these possbilities. Clearly each potential situation deserves detailed individual consideration which this paper cannot provide. But we can take steps in five areas: SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET /SENSITIVE -4- Prediction. Prediction. As the to-date success of our effort to persuade the Soviets to keep MIGs out of Nicaragua demonstrates, we need the best possible intelligence collection and assessment efforts in areas where--the Soviets might move. Unless we know in advance, we will be unable to warn against them or take a counter-move. We would face a fait d'accompli, or a much more difficult and dangerous effort to reverse the Soviet/proxy action. Specifically, we recommend that intelligence community tasking set a high priority on monitoring potential areas for Soviet moves over the next 6-24 months. 2. Warnings. With advance knowledge, we can and should issue warnings to the Soviets. We should do so in future areas where intelligence raises serious concerns. 3. Reciprocity. The reason words had an effect in the Nicaragua case is that the Soviets judged that t;.-iis Administration had the will and capability to back them up and/or to reciprocate in other areas. This is one of several important reasons for us to sustain our own programs to help national liberation struggles in certain countries, and keep in good repair the relations with other pountries we need Co do that. We also should be prepared to increase these programs inter alia if the Soviets increase their threat in situations of importance to us and to indicate to Soviets that we will. 4. Preemption/Reaction. We need to continue developing our military capabilities for preemption/reaction, notably the RDJTF. And we should encourage Allied capabilities, i.e. in French in Djibouti. 5. Dialogue. One idea which needs further development is the possibility of a dialogue with the Soviet Union about the use of force versus peaceful settlement in areas of instability. We are now in a stronger position to discuss this than in the 1970s because we are hurting the Soviets and their clients in various areas, even as they continue to hurt us. Clearly we do not want another set of principles which the Soviets proceed to ignore. Nor at the other extreme can we engage in specific.trade-offs or discussions of spheres of influence, i.e. abandoning Afghanistan if they get out of Nicaragua. One positive thing we have established these past two years is that what happens SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 -5-. in Poland -- a Warsaw Pact country -- is a matter of serious international concern. We should continue to extend our droit de regard to the old "Soviet sphere" and that is another reason to resist its extension -- to Afghanistan. But there might be some area for useful thought and potential exchanges in between. The discussion could be over "means" -- acknowledging that we each believe in political/societal change but in different direct-ions, that we are and will remain essentially competitors, and that the central question is whether support for armed liberation struggles, etc. isn't becoming too dangerous for both sides in the nuclear era, i.e. to use a head-clearing example, if an insurrection starts in Mexico and the Soviets arm it, would the United States respond by arming underground worker movements in Poland. We could for example make clear that there is a general relationship between the growth, necessity for and level of our programs in these areas and Soviet use of covert action and military force. This is a subject Andropov and Ustinov are particularly well equipped to address either through others or in any direct meetings with us. This perhaps could be done in dialogue between non-governmental people. It probably should not lead to any specific agreements but might result in some reciprocal and understood demonstrations of will on both sides. 6. Removing the Temptation. In a broader sense, one of the key element is to prevent the source of temptation from becoming so attractive that the Soviets intervene. The Middle East and Southwest Asia is the best example. Yugoslavia is another good one. US policy must place high priority-on helping to ease Yugoslav economic problems to prevent Soviet meddling or worse., This applies in a number of other areas. Security assistance is particularly critical to friends who are potential targets of Soviet-sponsored pressure. We should work with the environment to make it less receptive-to Soviet use. 7. Individual Game-Plans. Finally, as we develop individual policies for areas which Task II has identified as most likely for Soviet action, i.e. raising the fear level in Europe, Cuban troops into Nicaragua, further Soviet moves in the Horn of Africa and the Gulf we need to keep this potential for greater. Soviet activism in mind. These papers should develop strategies which incorporate all of the elements listed above (warnings, reciprocity, preemption, etc.), plus SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 crnorm /cr,,TCTmT~n~ Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 the traditional diplomatic use of Allies, the U.N., etc. As we deal with individual problem areas around the world, we must not assume that the new Soviet leadership is so preoccupied at home that it cannot cause us new troubles. B. What steps should we take to induce both general and specific improvement in Soviet conduct? What leverage can we apply? What initiatives-can we take? 1. Under the category of sustaining leverage and/or turning up the heat, there are these key areas for action: o East-West economic policy. As the NSSD points out, one key to our success in dealing with the Soviets and-bringing about long-term change in the Soviet system is a united, firm Western approach to economic relations with the Soviets. We need to finish the first phase of the Western effort to define such a policy by the Williamsburg summit, i.e. six months from now. It will take additional time to have specific agreement and teeth for each component: credits, COCOM, energy, etc. What this means for our overall approach to US-Soviet relations in the 6-24 month period of this paper is that we can move in the right direction, but slowly and with some predictable bumps. We need to take this into account as we examine other areas of the US-Soviet relationship, i.e., our economic leverage will be growing but still limited and fragile. We need to avoid moves which could ease pressure on the Allies for a tougher economic policy, i.e., overly positive atmospherics. Equally important we need to sustain Allied consensus, not pushing them on specific near-term problems so hard that we kill the overall exercise. o US-China relations. We need to provide sufficient content to the US-China relationship to sustain this key factor in our relations vis-a-vis the Soviets. To accomplish this, we will need to proceed calmly to develop US-China relations on their own merits, in a manner that will avoid giving either the Chinese or the Soviets the impression that they can manipulate us. The series of high level US-China exchanges already planned for 1983 will be key to advancing the relationship. The aim of the Secretary's February trip to China -- the first in the series -- SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/ SENSITIVE will be to restore an atmosphere of trust and confidence. We have already made clear to the Chinese, and have received positive responses from them, that we expect the visit to include detailed exchanges of view in areas of common interest, regionally and globally. In the Soviet context, we need to focus more closely on ensuring that any agreement the Chinese reach with the Soviets accords with our own interests. As the US-Chinese dialogue resumes, we should seek to engage the Chinese in discussions on how to prevent the Soviets from taking advantge of any reduction in Sino-Soviet tensions in a way that would be damaging to either of our interests. For example, any Sino-Soviet agreement to reduce troop levels along the border which allowed the Soviets to redeploy southwest (e.g., Afghanistan) would be damaging to both US and Chinese interests. It is also in both of our interests to avoid increasing the burden on NATO forces. Therefore, in our dialogue with the Chinese, we should encourage them to seek genuine demobilization, rather than redeployment. We should also maintain close dialogue on Afghanistan; and, on Kampuchea, we need to keep the US-China-ASEAN consul-tative process intact. Improvement in US-China relations will require not only restoring high-level rapport but also managing problem areas, and reduces Beijing's incentives for expanding relations with Moscow. We need to define our long term national security interest with China carefully, weighing export control needs against our interest in.strengthening China against Moscow. We must bear in mind also China's strong sensitivity to discriminatory treatment and need for help in its modernization. US-China defense relations offer a means to reinforce the bilateral relationship and nurture its potential vis-a-vis the USSR. Proceeding too aggressively could backfire however, furthering both Beijing's and Moscow's suspicions that we see China solely as an anti-Soviet weapon.- The ball is in Beijing's court on arms sales; we can leave it there' while nonetheless pursuing a visit by Secretary Weinberger, which the Chinese have indicated they would welcome. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 - - Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 We must handle unofficial relations with Taiwan carefully, enhancing their substance while avoiding missteps that inflame relations with Beijing and give friends and allies the impression that we are mismanaging this key area. o The Middle East. Here it is important that we conduct ourselves in ways which deny the Soviets opportunities for advances. We should show sufficient forward movement -- evacuation of foreign forces from Lebanon and a beginning to broadened autonomy talks -- for us to maintain the support of moderate Arabs and deter the extremists from becoming instruments of the Soviets. We should, of course, continue to deny the Soviets a role in either the resolution of the Lebanon problem or the peace process. While planning for success regarding Lebanon and Middle East peace, we should also forsee the problems which might be caused by failure. In doing so, we should recognize that if we play our hand correctly, even in failure we should be able to prevent significant Soviet gains in the Middle East. o Other areas for sustaining leverage and/or turning up the heat include those touched upon briefly in "A" above: programs directed at Afghanistan, Kampuchea, Nicaragua, southern Africa, the Horn of Africa, etc. - 2. These same areas provide possibilities for constructive initiatives or measures in concert with key regional countries. We set forth proposals so that we cannot be undercut by Soviet initiative's, but also that can serve as the basis for genuinely useful negotiations if the Soviets are interested. o Afghanistan. A joint initiative on Afghanistan with Pakistan, China and possibly the EC in the next few months could have multiple benefits: it would be an early way to test the possibilities for positive movement with the Andropov regime, and make somewhat more difficult a further toughening of the Soviet position, i.e. raising troop levels, attacks on Pakistan; it would keep the U.S. in-the mainstream of this key issue, where there is some danger of separate Pakistani and/or Chinese deals with the Soviets on less than optimal terms; if done carefully and in full consultation with the Paxistanis and Chinese, it would provide some additional content for our relations with these countries at a time when this is needed; SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 here and abroad it would show the U.S. as active diplomatically with a positive program vis-a-vis the Soviet Union. Launching a joint initiative will require considerable effort and may not succeed. But we should attempt to do so as soon as possible -- ideally prior to the Secretary's trip to Beijing. We envisage a package of four substantive elements: phased, complete withdrawals of Soviet forces; -transitional leading to permanent safeguards of Afghanistan as a non-aligned state which is not threatening to its neighbors; self-determination through electoral or traditional means; arrangements for return of refugees. o Southern Africa. As our southern Africa effort moves toward critical choices in the next 3-6 months, it is predictable that Moscow will pursue a two-track approach of (a) publicly berating us for the Angola-Namibia linkage and stirring up African dismay and allied nervousness over the possibility of a breakdown, while (b) making careful behind-the-scenes calculation of how we are doing and what degree of compromise will be needed. Moscow will formally reject linkage while indirectly participating, via its influence with Luanda and Havana, in a de facto negotiation. In these circumstances, it is essential that the US game plan include potential moves to maximize pressures/incentives on the MPLA to deal and to strip-away arguments that could shift the onus for failure to us. One element of our approach should be continued exchanges at sub-Ministerial level which give us useful opportunities to probe Soviet intentions and test Soviet flexibility. Another is continued development, with our CG allies, of proposals which give the MPLA (and indirectly Moscow) something concrete it must react to. Maintenance of CG cohesion is central, and the French involvement in developing proposals, scenarios and security assurances should enable us to keep the initiative and disarm Soviet divisive maneuvers. Assurances for the MPLA--put forward to obtain an adequate bid on Cuban withdrawal and to demonstrate our resonableness and good faith--range from SAG commitments to us, to international undertakings in the UNSC context including, perhaps, outside observers, to bilateral help in the security. field from the French or Portuguese.- We can best maintain the.high ground by means of SAG cooperation SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET /SENSITIVE in a "peace offensive" that reduces conflict in southern Angola and--at an appropriate moment--considering recognition of the MPLA which would strip away the argument that our.purpose was its overthrow. S We should recognize that it is highly unlikely that Moscow will come down off its "principled" position on linkage until the pieces of a package are in place--both to protect itself from the charge of selling out its clients and to maximize pressures on us. A consistent record of reasonableness-- shared with both the MPLA and Moscow--and a firm reiteration that we cannot be shifted on the Cubans--will give us the best chance to track Soviet moves and shape the final outlines of a settlement on our terms. It will also give us the basis for a solid public presentation of who caused failure if the process (or the MPLA) falls short. Proceeding thus will enable us to point out that despit .its principled position the Soviets were (already are) prepared to consider parallel withdrawal in Phase III. We will need to push the South Africans to gain more high ground if this becomes necessary. o The Horn. Via our. military assistance to Somalia and periodic exercises, we must create the impression in Addis Ababa and Moscow that further aggression against Somalia runs real dangers, including greater U.S. involvement. Economic pressure, both direct and indirect, must be maintained on Ethiopia to'curb its adventurism. We should consider how we might facilitate a negotiated decrease in border tension. o Poland. We should do a separate paper on the Polish-Soviet connection. Can we encourage further progress towards reconciliation in Poland by taking the same step-by-step/dosage approach to removing the Poland-related sanctions in effect against the Soviet Union? Do we want to approach the Soviets to discuss the course we would like to see in Poland over the next 6-24 months and how it would affect our relations (this issue was not addressed in the President's Dec. 10th remarks). Clearly all of this requires close consultations with the Allies. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE o Cuban Proxy Problem. This is another possible area for initiative which requires careful and more detailed consideration than this paper can give. For example, we could consider making an offer to normalize relations with Havana if they withdrew their forces from Angola and Ethiopia, and ended their destabilizing activities in the Western Hemisphere. If the. Cubans and Soviets refused to accept the proposal, it would paint them as the intransigent party; if they accepted, it would constitute a major geopolitical triumph for U.S. policy. To give this project some teeth, we could try simultaneously to sustain pressure on Cuban forces/presence in these areas and in Cuba itself (at the same time, we must recognize the complexity/difficulty of carrying this out). In considering the foregoing we should keep in mind these factors. There are areas where we could consider discussing with the USSR the desirability of reduction of withdrawal of Cuban forces (e.g., Africa, the Middle East). In Central America, while we would not wish to begin a dialogue with the Soviets, we need to warn them of the risks that arms supplies to the area can cause. Most important we need to make them continually aware of the unacceptability of the introduction of Cuban combat forces in this region. We need to bear in mind that (a) the direct role of the USSR in the Western Hemisphere is relatively small; (b) its control over Cuban actions in this region is rather in the nature of a veto on certain possible Cuban initiatives than it is any blanket directive authority; (c) the Cuban proxy has strong interests of its own, particularly in Latin America, most of which are starkly antithetical to US interests; (d) the capacity of the United States to change the aggressive course of the Cuban-proxy are limited in nature; (e) in the Western Hemisphere the actions of third countries and their reaction to U.S. or Cuban activities will be at least as significant as the Soviet reaction. This means that we may wish to persuade the Soviets to take specific steps of self-restraint or restraint of the Cubans but that no general dialogue on this region is desirable. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 VY~/iW ~ Vr C. What should we be prepared to do in the bilateral relationship if Soviet behavior improves? Defining an improvement in Soviet behavior is more difficult than demonstrating the reverse. In the midst of what will continue to be a basically adversarial relationship, with far more points of friction than agreement, what constitutes a significant enough improvement to warrant a U.S. move? In terms of human rights, does release of some prominent dissidents in the midst of general repression call for something from the U.S.? Does the absence of a new aggression each year, an improvement over the past decade, mean we should reward this behavior or should we continue to require progress on existing aggressions? And how much progress on these continuing problems warrants what level of-response in either the direction of the overall relationship or specific areas of it?. There are no easy, abstract answers. To some extent we will need to deal with issues in their own regional and functional context, keeping in mind our overall policy; of linkage and the realistic tone we want to sustain in the relationship. But perhaps we can view the next 6-24 months in terms of three general situations: no movement on the Soviets' side except presentational insincerity; some minor moves; or a fairly significant move(s) either in terms of political impact or actual major substantive changes. The fo-lowing assumes the Soviets take no major new negative action which overshadows their neutral or positive moves. We see three basic alternatives for U.S. policy towards the bilateral relationship (as opposed to Sections A and B above which ranged more broadly -- most of the actions/initiatives set forth in those sections should be done on their own merits regardless of improvement or lack thereof in Soviet conduct). 1. Maintain the Status Quo, including its Presentational Aspects: Reiterate the basic policy we have articulated since the outset of this Administration; reaffirm that we are prepared to work for better relations on the basis of mutual restraint and reciprocity, but undertake no bilateral initiatives, gestures or signals of increased U.S. flexibility on the substance of the major issues; continue to emphasize the need for changes in Soviet conduct as the precondition for improved US-Soviet relations, while pursuing an active dialogue with Moscow on the full range of issues in order to demonstrate U.S. willingness to find constructie solutions. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 2. Status Quo Plus Small Steps: While reiterating our basic policy, make minor changes to our existing positions in order to reinforce minor Soviet moves and the "two tracks" we wish to pursue vis-a-vis the Soviets: building our strength, and engaging in serious efforts to improve relations on that basis. The purpose would be to reinforce any small evidene of movement and to test the intentions and flexibility of the new leadership -- without offering significant moves on the main arms control and other bilateral. US steps could include negotiation of a new long-term agreement on grains, reestablishment of government- to-government contacts on trade through the Joint Economic Commission, or minor.steps forward in arms control, such as greater flexibility in Madrid on CSCE/CDE issues. 3. -Bilateral Activism: Within the framework of our existing approach, announce U.S. initiatives in arms control or other bilateral areas, and perhaps even agree to an early summit as well; the purpose would be to demonstrate forcefully to the U.S. public and our Allies that we are prepared for a substantial improvement in US-Soviet relations, and to encourage further positive Soviet actions. This paper cannot and should not get into the details of possible initiatives. We just note the centrality of arms control -- particularly START and INF. In addition, if there are really substantive as opposed to political major moves in Soviet positions, we could consider other areas for U.S. moves. For example there is some room for expanded trade once we have clearly demarcated the boundaries, i.e. when we"have Allied agreement on COCOM, credits, energy, etc. This would be related to confidental talks and significant steps on human rights. In keeping with our overall approach, moves under all three options would be so designed as to yield nothing of substance unless the Soviets reciprocated. In weighing the choice among these alternatives, we must' keep in mind what the Soviet Union's main objectives are likely to be in East-West relations over the coming months: particularly, undermining the U.S. consensus in support of increased defense spending; and undercutting the cohesion of the Alliance -- derailing INF deployments in particular. To counter Soviet efforts toward these ends, we need a policy which holds firm to the principled positions we have taken on the major issues, but which at the same time convincingly portrays us as sincerely prepared to work for improved SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 . Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE relations. Such a policy would, at a minimum, help to defuse the Soviet "peace offensive". If amore stable and constructive relationship were to result, all the better. The first approach would be the course to follow if:the Andropov leadership were simply to maintain the foreign policy line established under Brezhnev, and avoid any substantive or presentational departures. Absent major Soviet initiatives or a stepped-up rhetorical campaign, we could successfully fend off pressures to alter our policy, and keep the pressure on Moscow to make the first move. The third approach would be the appropriate course of action if the Andropov regime were to take the offensive either on the substance of the issues, or successfully on the atmospherics. Even if there were little Soviet flexibility behind the intensified rhetoric, it would be a mistake to yield the initiative we have seized in US-Soviet "relations by simply standing pat, and we would have to develop our own program aggressively to keep the high ground. At the same time, a more .activist policy would not imply a shift in our basic policy toward the USSR; we would still demand changes in Soviet behavior as the prerequisite to changes in our own positions. The second approach is the course that many commentators are pressing for, but would have some important drawbacks. it might be seen as unjustifiably forthcoming in the face of only minor moves by a still largely unimaginative Soviet leadership. A strategy of small steps could risk overly stimulating public and Allied expectations of a "new dawn" in US-Soviet relations, yet the gestures themselves would not go far enough either to pressure the Soviets necessarily to move On to major moves or to position us as the clearly more forthcoming party in the relationship. They could also undermine domestic support for our defense buildup. The Allied dimension is particularly important as we consider our choices. A major Soviet objective is and. will remain to influence West European public opinion in the direction of opposition to U.S. policies. Sustaining Allied unity on East-West trade and defense policies will be even more difficult during the Soviet transition, when many of our Allies will be especially eager to let bygones be bygones and seek a new rapport with the Andropov regime. Thus it is vital that we coordinate closely with the Allies, including the Japanese, as we weigh the choice between a cautious and a more activist approach. Above all we should try to restrain the Allies from striking out on their.own in new directions. We also need to take into account how our policy toward Moscow will affect our relations with the Chinese. While the SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE basic'direction of our Soviet policy will be determined by factors intrinsic to the US-Soviet relationship, we may want to consider the Chinese angle in deciding, for example, how we handle the different regional issues. D. How can we use "process and presence" to communicate how we will respond to improved Soviet behavior, alter Soviet incentives and disincentives, and enhance our influence on and in the Soviet Union. Assuming no new Soviet act of aggression, we need to consider how to strengthen our communication with and presence in the Soviet Union. There are three categories of "process and presence." 1. Dialogue on specific issues. We need to go ahead with' our talks on non-proliferation, southern Africa, human rights and to get on with some-new areas, i.e. TTBT, nuclear CBMs and perhaps CW. 2. Enhanced presence and the means to get to the Soviet population are key to enhanced influence. We need to look seriously at consulates in Kiev and Tashkent to give some meaning to our more active nationalities policy -- the Ukraine and Central Asia are at the heart of the Soviet empire question. We also should review how to gain both greater presence and greater reciprocity through exchanges and particularly exhibits, next to the radios the most powerful tool we have had to influence Soviet citizens and now absent from our arsenal because we unilaterally decided not to proceed with a new cultural agreement. The strengthening of the radios themselves must proceed in accordance with approved Presidential guidance. And finally, our overall ideological/political action offensive must move ahead. 3. Higher-level meetings are important to getting across our message and determining how far the Soviets are prepared to go. We envision a three stage process over the first six months of 1983. a. Meetings between Hartman and Korniyenko/Gromyko in Moscow, and with Dobrynin here in Washington. One- objective would be to determine whether and when another meeting between Secretary Shultz and Foreign Minister Gromyko makes sense. SECRET/SENSITIVE Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET/SENSITIVE -16- b. Another Shultz-Gromyko meeting could make sense before the regular one at the fall UNGA. It in turn could determine whether or not there is reason for a summit. We could try to avoid these pitfalls by lowering our own and the public's expectations with regard to a summit but that would be no easy task. We should try to move our public line away from emphasis on the need for "positive results" to the theme that a summit should be "carefully prepared". Such an approach would attempt to demystify the whole summit question, and seek to minimize the danger that the lack of concrete results would be interpreted as a "crisis" in the US-Soviet relationship. Another possible way to make them lower key and more routine would be to establish the principle of annual summits -- this clearly requires consideration. But altering public expectations will be very difficult no matter what we do. Another question we would need to answer is whether we could control the pressure for substantive results once summit preparations were in train. (One means of lowering expectations would be to arrange a summit on the margins of some other event, e.g., an Andropov visit to the UNGA. Such a summit could be more of a "get-acquainted" session, but it is difficult to. predict whether the opportunity for such a chance encounter will occur in the coming year). The timing of a summit would be as critical a question as whether to have a summit. Seeking a summit within the next six months could be interpreted in Moscow as an attempt to meddle in succession politics, and at home as a deviation from the basic policy course we have established these past two years. On the other hand, if a large number of our Allies seek early meetings with Andropov, this could argue for an early US-Soviet summit, perhaps in late spring, after the Williamsburg Summit (a spring meeting could give INF a needed boost at a time when public opposition to deployments will be reaching a crescendo). Moreover, if the President visits Beijing, it might be prudent to consider a meeting with Andropov in roughly the same time frame, in view of our own difficulties with Beijing and the nascent Sino-Soviet rapprochment. No decisions on a summit are needed at the present time. Until we have a better fix on Andropov's policies, and until we can better judge whether a summit would be beneficial, we should avoid discussing it with anyone. SECRET/SENSITIVE - Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 TIVE 8238220 SECRET UNITED STATES ARMS CONTROL AND DISARMAMENT AGENCY Washington, D.C. 20451 NSC review completed - unredacted segments may be declassified MEMORANDUM FOR KENNETH W. DAM DEPUTY SECRETARY OF STATE December 10, 1982 Per your request, this memorandum provides a brief review of the current status of INF negotiations and provides my views on future strategy. 1) After a year of INF negotiations, the Soviets have adapted their position to make it highly plausible to European public opinion and to German public opinion in particular. The main elements of that position are a) The USSR will reduce the level of its "medium- range" nuclear missiles in Europe (or within range of important targets in Europe) from the-current level of approximately 500 (with over 1000 warheads) to a ceiling of about 150 (with no more than 450 warheads) provided that the US foregoes its _ planned deployments of Pershing II and GLCMs in Europe and agrees not to increase the number of its "medium-range" nuclear- capable aircraft in Europe. b) This will result in the USSR having fewer "medium- range" missiles and fewer warheads on such missiles than the US claimed the USSR had in Europe in the early 1970s before any SS-20s,'the threat the US deployments were designed to `counter, had been deployed. c) Furthermore, the USSR, as evidence that all it seeks is equality and not any advantage, is prepared to assert SECRET DECL: OADR Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET 2 that it seeks no more "medium-range" nuclear missiles than NATO, it seeks no more "medium-range" aircraft than NATO, it seeks no more shorter-range nuclear missiles than NATO, and it is pre- pared to discuss equal limitation on shorter-range nuclear air- craft. 2) Public opinion in Europe, and most significantly, in Germany and the UK, no longer supports the zero/zero solution; what they want is a negotiated. settlement that makes U-S deploy- ments unnecessary.. From -my discussions in Bonn and London last month, I received the impression that both the CDU and the British government, if not yet Mrs. Thatcher, publicly stand firmly behind the US position but desperately hope we can find some other solution. Both face elections and don't want deploy- ment of US nuclear weapons on their territory to be a central electoral issue. 3) The time between now and March is the optimum time to finalize an agreement. After that, the first physical elements of deployment are scheduled to become evident. After that, the positions of both sides are likely to harden, not soften; too much will be at stake to demonstrate what could seem to be weak- ness under political and public opinion pressure. If no agree- ment is reached by March, and we stick to the zero/zero option, it is unlikely that in Germany the CDU will continue to back deployment as scheduled. It is certain, however, that the SPD and the Greens will.more and more violently oppose; that if deployments proceed, physical violence will be used; and that that violence will have to be suppressed. Even then it would be far from certain that deployment could proceed. The polit- ical cost of attempting to proceed, particularly in Germany, is likely to be enormous. Accordingly, we should identify now the best alternative to sticking with zero/zero. B. A Suggested Course of Action 1) Procedures The governments of the countries in which deployments are to take place fully understand the necessity of maintaining a firm public position if anything is to be gotten from the Soviets. They also understand the danger of leaks. The key countries with whom prior coordination is necessary are the UK (where.the first deployments are scheduled.to occur) and Germany. I would suggest that Pym be talked to first, merely to alert him that Secretary Shultz (or someone on his behalf) intends to talk to Kohl. about a position other than zero/zero. Only later after negotiations with the Soviets are underway should the other deploying countries be informed. SECRET Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 2) The substantive position to be taken: I have found it useful to divide the options into Plan A and Plan B. a) Plan A The objective would be to give Kohl and Mrs. Thatcher the best possible ammunition in support of undelayed deployments within the proviso -that-any agreement with the USSR must meet the test of "equal rights and limits" as to the USSR versus the US (not Warsaw Pact versus NATO). I would suggest that either Secretary Shultz in negotiation with Gromyko, or I in negotiation with Kvitsinskiy, be authorized to explore the full spectrum of arrangements that meet those two parameters. This would include 50 missiles on their side in Europe versus 50 for us, or 75 each or 150 each. It would also include concepts such as an equal number of warheads on each side, freedom to mix ballistic and cruise missiles, and even the differential choice concept included in the Nitze/Kvitsinskiy exploratory package of last summer. If the Soviets reject all such approaches we could make a case that we had negotiated seriously on the basis of a number of possible solutions other than zero/zero. b) Plan B The reason for considering another Plan,.a Plan B, is that there are two difficulties with Plan A.- First, there is little possibility the Soviets will agree to any of the alternatives meeting the criterion of equal US/USSR levels rather than equal NATO/USSR levels. They do not intend to sanction US deployments of medium-range missiles in Europe. They do not believe they need to; they think there is a good chance US deployments will be impossible in:the absence of an agreement. Second, there is little possibility that European public opinion will agree that we have negotiated seriously and explored all useful possibilities unless we have explored possibilities other than zero/zero that would make US deployments on their territory unnecessary. Any agreement other than zero/zero could be monitored only with low confidence. Furthermore, it would set an unde- sirable precedent to record in a bilateral treaty limitations which are not seen to be equal between the US and the USSR. Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SECRET 4 I would therefore suggest that if Plan A fails, there be an exchange of letters between President Reagan and Andropov rather than an INF treaty. The exchange of letters would be in the context of an expanded charter for START to consider INF systems as well as START systems. The US goal would remain zero/zero but in the interim the President's letter would state our intention to forego INF deployments pending a START agreement; Andropov's letter would agree to reduce over five years the number of Soviet medium-range missiles within range of important targets in Europe to less than 150 and to agree that 80% of the missiles removed would be destroyed. Additional provisions such as ceil- ings on nuclear-capable aircraft in Europe and on Soviet INF missiles outside.of range of Europe would be included in the letters or annexes thereto. C. Recommendation I recommend I be authorized to explore with Kvitsinskiy at the outset of Round IV a package of proposals such as contained in Plan A and that Plan B be considered in the event that exploration pursuant to Plan A proves fruitless. Paul H. Nitze Ambassador SECRET Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3_VE 8238221 UNITED STATES DELEGATION TO THE STRATEGIC ARMS REDUCTIONS TALKS WITH THE SOVIET UNION Geneva, Switzerland --December 13,-"1982 NSC review completed - unredacted segments may be declassified MEMORANDUM TO: Acting Secretary of State FROM: E. Rowny, Chairman, US START Delegation c) SUBJECT: Short-Run Tactics and Long-Range Strategy on START 1. ' What is the situation' in Geneva? We finished the second round of START on December 2 an resume the third round on February 2. During the second round the United States laid out most of the remaining details of President Reagan's Eureka proposal. The Soviets proposed little new and essentially stalled. 2. ' What is the 'situat'ion 'in Mo's"cow? Andropov has moved in rapidly, is in complete charge, and is putting younger proteges into key positions. He apparently struck a deal with the military and will not reduce the momentum of buildup in strategic arms. Andropov has shown he is well aware of the Soviets' serious economic and foreign policy situations and will tackle them energetically. In arms control he will be more sophisticated and clever than Brezhnev. He will seek to appear flexible and reasonable while in actuality'he will-be tougher than Brezhnev. Andropov will exploit public opinion sentiment in the West, giving priority to Europe. 3. What is the situation in Washington? President Reagan achieved a victory in the Nov-ember elections by keeping intact the Senate majority but suffered a defeat by losing 26 Repub- lican seats in the House. Since the economy has yet to show a conclusive turn-around, defense cuts are the prime objective of an increasing number of legislators. The deletion of funds for MX on December 7 by a substantial majority (and the less publicized deletion of funds for the Pershing II) are severe blows to our defense programs and will have grave implications for START and INF. Meanwhile, the freeze movement and highly publicized Catholic Bishops' activities, although cooled off somewhat, are still very much alive and need to be actively countered by prominent Administration officials. Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 II Approved For Release 2009/04/14 :TCIT TA-RDP84B00049R000400710011-3 2 4. What is the situation 'in Western Europe? We are, unfortunately, faced with a tired and weary Europe, reluctant to face up to the threat and the needs of their own security. Europeans are increasingly skeptical about the direction of US foreign policy and about US sincerity in arms control. They show increasing resentment over US role in Europe but at the same time are unwilling to take care of their own needs. The Soviets have skillfully exploited this-European malaise and Andropov can be expected to work harder to.split us_from Europe. 5. What will be the Soviets'' strategy and tactics for 'START? The Soviet strategy an ong-term goals will not undergo any major change. Andropov, while seeking to improve f e internal economic and social situation and the external inter- national situation, will continue to rely heavily upon military power to back up Soviet foreign policy objectives. Tactically, he will make arms control proposals and foreign policy moves which will make him appear moderate, flexible, and reasonable. In Geneva the Soviets have linked any reductions in START to no deployments of GLCMs and P-II's in Europe. While Moscow will probably not make such linkage public, it will undoubtedly publicly accuse the United States of lack of flexibility in INF, and of stalling in START. Dobrynin will attempt to estab- lish the back-channel as a way of exploiting US internal differ- ences and influencing US arms control policies. 6. ' What should' be our long-term 'strategy and short-term tactics? Our long-term strategy should be to continue the two-' trams approach of modernization of US programs and arms control. Without a strong defense posture US foreign policy goals will not be achieved. At the same time, only an improved military posture will provide the Soviets incentives for entering into arms control agreements.. Most importantly, we need a strong and steady public relations campaign. The President, although the most important player, cannot carry this program alone. Other officials should carry the main burden of the stepped-up -- public relations program. I would suggest that the President shift his rhetorical style and let others point out that the Soviets lie and cheat. Andropov wants, more than anything, respect; he will react sharply to being humiliated. As for START, we should do the work now in Washington which will.allow us to lay out the full scope of our proposed agreement in Geneva early in round three. This will do much to blunt Soviet criticism that we expect them to "disarm uni- laterally" without the US accepting constraints on cruise mis- sile and other modernization programs. Beyond this we need to "show progress" on arms control.by pursuing a separate and early agreement on confidence-building measures. 7. What should be our 'course of action in 1983? 1983 will be a critical year for arms control. Since Andropov will engage Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 in a more dynamic Soviet diplomacy, we should be in a position to initiate action in US-Soviet relations, not just react. Other- wise, the Soviets will be perceived as setting the East-West agenda, not us, and scoring diplomatic gains at our expense. The last full year before the election year of 1984 affords us opportunities to get beyond the stage of tactical skirmishing in START before domestic pressures and Soviet hedging of bets begins to set in. The.next year may also. be the las-t chance to achieve a truly effective deep-cuts agreement since the USSR is on the threshold of production and deployment decisions. Allowing START negotiations to stall could mean lost opportun- ities. From many vantage points, therefore, 1983 could be an excellent time to draw the Soviets into a real bargaining situ- ation. As for timing, it is too early to make any shifts or take any major initiatives. We should stick to our basic posi- tion and extol its virtues. We should see how MX/CSB Peace- keeper fares in Congress, and see how our defense authorizations stand up. We should also wait to see what the Soviet leadership does during the next several months. In April, at the end of round three of START,.we will be in a position to evaluate whether it would be in our national interest to move to get an agreement by the end of 1983. This decision should not be tied to domestic politics. Nevertheless, it should be obvious that if we take no initiative by the summer of 1983 nothing will happen until after the elections in 1984. On the other hand, if we decide next spring,.after careful evaluation, to move to get an agreement by the-end of 1983, it will take us at least six months in Geneva.to work out the details. Such an agreement would probably have to settle for: - Reductions in warheads and deployed missiles to figures higher than our proposed levels of*5000/2500/850. Reductions in throw-weight less than could be achieved~ through reductions to the Eureka levels. Limits on the number of ALCM-carrying bombers. We should explicitly link any. willingness to constrain cruise missiles to Soviet willingness to agree to substantially lower levels of ballistic missile throw- weight. Thus, while some current US goals, such as equal throw- weight, reductions to. low levels of missiles and warheads, and limits on the number of non-deployed missiles, might not appear achievable the near-teerm, we would want to retain them as long term objectives and continue negotiations toward these ends. We would need to retain sufficient leverage with which to achieve our long-term goals. Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 However, these are not decisions we need to make now. By round three we need only be prepared to table our Basic Elements and certain definitions. 8. Relationship of INF and START. As the time for INF deployments draws nearer, Soviet agitation will act on Allied nervousness to make our political position in these negotiations less secure. The Soviets can-be expected to make their major propaganda effozts in Europe.- They will contrast their supposed flexibility with our unwillingness to consider any possibility other than zero-zero. They may also indicate a willingness to move ahead in START if we show "reasonable" in INF. In my view this is the time to be firm and patient. The United States should adhere to zero-zero and not reevaluate it until after the German elections in March. 9. What surprises might' we e'xpe'ct and how should we react? As indicate above, Andropov will be energetic and clever; he can be expected to deal us some surprises. We should anticipate these and make preparations now to head them off or turn them to our advantage. These surprises can be grouped under three clusters: (a) The Soviets may try to appear more.reasonable and forthcoming; (b) The Soviets may opt to play hard-ball; and (c) The Soviets may seek interaction between INF and START. a. The' Soviet's' may' try * 'to' appear more reasonable and forthcoming. Soviet leaders and negotiators in Geneva may make new proposals, such as offering to include missile 'throw-weight if we include bomber "throw-weight," may make new proposals on warhead and cruise missile limitations, or may try to show that the 1800 proposal is a good "way station" on the way to further cuts. Counter: We should be prepared to-table our Basic Elements, to demonstrate that bomber throw-weight is not the same as missile throw-weight, and that the 1800 proposal (in the.absence of limitations on missile warheads) could lead to little or no reduction in Soviet strategic capability. b. The Soviet's' may 'opt* to' la hard-ball. This could cover a number o actions. They might charge that since we are deploying MX/CSB,-the'Soviets need not be limited by SALT. This could be followed by decisions to build new systems and to cease to dismantle older systems, for example, Yankee submarines, as newer systems are deployed. The Soviets could stop their current "moratorium" and begin deploying additional SS-20s or SLCMs against Europe. They could also announce adecision to deploy Soviet GLCMs against Europe and offer:to trade-.them for US GLCMs..: They could carry--out Brezhnev's threat to place the US':in an "analogous" position should INF deployment proceed by deploying SS-20s ox cruise missiles in Cuba or by stationin SLCM-carrying submarines off the US coasts. Counter: We should Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 J L., l\L 1 make the necessary preparations now so that we can play hard- ball in return. c. The Soviets may' 'seek interaction between INF and START. They could p ay this card in a number of ways. For ex- ample, they could offer us concessions in START if we offer them concessions in INF, walk out of INF because we are not being "flexible and reasonable," and offer to-fold INF into START. Counter: We should insist that intermediate and strategic sys- tems are separate, that no concessions can be made for so-called "FBS," and that no compensation can be made for UK and French systems. We should fold INF into START only when it is in our interest to do so. Whatever happens, the Soviets can be expected to inten- sify their propaganda efforts that the US is stalling while they are moving ahead. This could take the form of renewed calls for a freeze, saying we are fueling the arms race, exploiting the Bishops' movement, etc. We-must start now to devote the time and effort to our public affairs planning and implementa- tion. The effort at the negotiating table could be won or lost depending on whether-we succumb to public pressures or turn public opinion around. 10. Back-channel. The use of the back-channel by Dobrynin or others in Was ington should be discouraged. It can only lead to a repetition of past exploitation of US internal differences and cause confusion and erosion in our negotiations in Geneva. 11. Conclusion. The above is a realistic approach to continuing the bolJ-initiative in START announced-at Eureka. Now is not the time to compromise on START. Now is the time to get 1 TCSB and defense expenditures approved. Tt is also the time to step up the public affairs effort and.prepare to react to surprises. Now is the.time to invigorate the Washington bureaucracy. SFrRFT Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 NSC review completed - and takes no action on document Next 8 Page(s) In Document Denied NSC review completed - unredacted segments may be declassified AIPS6.4v Q Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 vV 1\i 1 lJ ril1111tlL Central Intelligence Agency NSC review completed - unredacted segments may be declassified vdashingon.D.C.20505 DIRECTORATE OF INTELLIGENCE The State of the Soviet Economy in the 1980s The Basic Situation Soviet economic growth will continue to decline in the 1980s as average annual rates of increase in labor and capital decline and productivity gains fall short of plans. We expect average annual GNP growth to fall below 2 percent per year in the 1980s. ? The labor force will grow more slowly in the eighties than it did in the seventies--at an average annual rate of 0.7 percent compared with.1.5 percent. ? Growth in the productivity of Soviet plant and equipment, which has fallen substantially since 1975, will continue to drop as the cost of exploiting natural resources rises and Moscow is forced to spend more on infrastructure. ? Continued stagnation in key industrial materials-- particularly metals--will inhibit growth in new machinery, the key source for introducing new technology. ? Energy production will grow more slowly and become more expensive, whether or not oil production falls. ? With continued growth in domestic energy requirements, Moscow will face a conflict between maintaining oil exports and meeting domestic needs. ? Agriculture will remain the most unstable sector of the Soviet economy, with performance in any year highly dependent on weather conditions. Slower growth of production will mean slower expansion in the availability of goods and services to be divided among competing claimants--resources for future growth (investment), the consumer, and defense. This memorandum was prepared by the Soviet Economy Division, Office of Soviet Analysis. Comments and queries are welcome and may be addressed to Deputy Chief, Soviet Economy Division, 25X1 25X1 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 CONFIDENTIAL ? Continued rapid growth in defense spending can be maintained only at the expense of investment growth. ? Slower expansion of investment will be compounded by the increasing demand for investment goods in the energy, transportation, metallurgy, and machinery sectors. ? An increased share of investment in heavy industries, together with continued large allocations to agriculture, will depress the expansion of housing, and other consumer goods and services. Making up production shortfalls through imports will become more expensive as the need for imports increases and Moscow's ability to pay (hard currency earnings) declines. ? The Soviet need for imports of Western grain and other agricultural commodities will remain high in the 1980s, as will requirements for Western machinery and techology. ? We expect real export earnings to decline between now and 1990 as sales of natural gas fail to offset the drop in oil earnings, and opportunities to expand exports of other commodities remain limited by their low marketability and tightness in domestic supplies. ? The availability of Western credits will be crucial for Moscow to maintain or increase its imports from the West; a tighter credit market would complicate Soviet economic problems and make resource allocation decisions more painful. Options for the New Leaders Changes in Decision-Making Process The poor performance of the economy during the latter years of the Brezhnev regime has driven home to the new leadership the notion that there are relatively few opportunities for quick fixes and that the economic problems of the current decade may spill over into the 1990s. Because the new leaders can expect to reap the benefits of policies with longer pay-off periods, their policy decisions may be more forward looking. The new leaders will be especially sensitive to the fact that severe disruption of the economic system by the implementation of hasty, ill- conceived policies might be a quick route to both economic and political disaster. The new leadership probably will continue to favor bureaucratic centralism rather than moving voluntarily toward fundamental systemic change. These leaders--because of the stringent economic situation and their own personalities--will rely more on tightened discipline and control to effect economic -2- CONFIDENTIAL Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 VV1.1'l illil.l ltlL policies of long standing than on coaxing desired behavior through increased incentives. Andropov's long tenure in the KGB has given him experience in using administrative measures to modify behavior. Moreover, the Soviet people, faced with unsettling economic and social problems, seem ready to accept a leader who would demand greater discipline. This trend, however, would not rule out a mix of liberal and authoritarian measures. Greater dependence on the private sector, for example, is a distinct possibility that could be classified as liberal, while harsher penalties for labor absenteeism and mismanagement, though authoritarian in nature, need not mark a return to neo-Stalinism. Changes in Policy The new leaders will surely bring changes in economic policy. Because they have laid particular stress on continuity, and because it may take some time to develop a strong consensus, new policy lines may not appear until the 1986-90 five year plan has been drafted--i.e., 1984/85. Some indications of change are likely to be discernable next year, however, as discussion and debate about policies for the late eighties ensues and annual plans for 1984 and 1985 are formulated. Major Claimants. The hardest policy decision for the Andropov leadership will be resource allocation among the-major claimants. Maintaining historical growth in defense spending would squeeze investment and consumption further. Keeping investment growth at current rates as well, might result in an absolute decline in consumption. The Military. Strong incentives exist for at least some slowdown in military hardware procurement. In addition to needing more resources to break economic bottlenecks, a slowdown (or even zero growth) in military procurement for a few years would have no appreciable negative impact on forces already in the field, and modernization of these forces could still proceed. We believe the groundwork for such a course may have already been laid in Brezhnev's speech to top military officers on 27 October 1982. In any event, this course will be required if the Andropov Politburo wants to improve economic performance substantially. Investment. A strong condidate to receive more investment funds is the machine-building sector--because of the need to modernize Soviet industry and because of constraints on importing foreign machinery and technology. Modernizing machine-building would also help justify a temporary slowdown in defense hardware as such action could ultimately enhance military hardware production. The new leadership, with its longer time horizon, might launch such an effort. -3- CONFI DENTIAL Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 l.V PIr 1 LL.1\ 11LAL Consumption. A new leadership prone to authoritarian solutions is likely to be more pragmatic in its consumer policy, and may place more stress on tying wages and "perks" more closely to production results. Retail prices may also be raised on all but essential goods and services, and an expansion of the private sector in consumer services may be in the offing. Reform. The new leadership's predilection for administrative measures and bureaucratic centralism would severely limit the extent of future economic reform. The difficult economic situation argues against reform measures--like those lauched in Eastern Europe--that had never been tested in the USSR. Some movement toward a regionally organized economy might be thought more suitable to today's problems--for example, exploitation of energy and raw materials in Siberia. Agriculture. The new leaders will continue to support the farm sector, but might decide to favor the industries that support agriculture and those that process its output. The Food Program already does this to some extent, but an actual cut of investment inside the farm gate would be a stronger signal of the new leaders' dissatisfaction with the returns from agricultural investment. Labor. In addition to instilling tighter discipline, the new leaders are apt to focus on automating manual labor (consistent with more investment in machinery), and developing social and cultural infrastructure in labor-deficit regions. The latter would provide some inducment for emigrants from labor surplus areas and reinforce a regionally differentiated pro-natal policy favoring the labor deficit areas. East -West Trade. With economic problems pressing from every quarter, the new leadership might welcome--though perhaps not publicly--the opportunity to expand economic ties with the West in general and with the US in particular; the more so if decisions are taken to slow growth in military hardware, step-up investment in machinery, and reduce investment on the farms. Under these circumstances, Moscow might find it advantagous to press for (1) economic ties that provide them with technology and goods for both civilian and military purposes and (2) arms control arrangements that limit Western advances in military technology which they would find difficult and costly to counter. Impact of Changes. These changes in approach and policies will not be a panacea for the Soviet economy's ills. Nevertheless, the changed policies could bring marginal improvements in key areas and allow the new leadership to continue to muddle through even in the face of economic conditions probably worse than they had expected. Of primary importance to the new leaders, these policies would not require the surrender of power and would continue to allow them the freedom to impose their will on the smallest economic or administrative unit. In this way, they could feel assured of 4- CONFIDENTIAL Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 their ability to handle such problems as public unrest, external economic or military threats, or internal disasters that would require an emergency redistribution of resources. Opportunities for the US Opportunities for the US to influence the policy changes discussed above lie mainly in whether and to what extent we are willing to expand commercial ties with Moscow and in the signals we send the new Soviet leaders with respect to arms control negotiations. Of most immediate use to Moscow would be an arms control agreement that would provide a more predictable future strategic environment and thereby permit the Soviets to avoid certain costly new systems--and perhaps thereby enable them to increase somewhat future investment for bottleneck sectors of the economy--particularly transportation, ferrous metals, and machine building. Soviet officials have clearly indicated that staying with the United States in an arms race would have dire consequences for their economy. They probably are also uncertain of their ability to keep up technologically. Moscow's recent attitude toward purchases of US grain not- withstanding, the United States could again become an important source of Soviet purchases of agricultural products and machinery and equipment for both agriculture and industry. The need is there, if the "price" (including sanctity of contract) is right. Soviet agriculture could benefit substantially from US technology in livestock feed production, fertilizer application, and animal breeding, and the US is still Moscow's best long-term bet for grain imports on a large scale. The USSR faces increasing dependence on the West in developing and processing its oil and gas resources in the 1980s. From a technical viewpoint, the US is the preferred supplier-of most types of oil and gas equipment because it is by far the largest producer, with the most experience, the best support network, and often the best technology. In some products--for example, large capacity down-hole pumps--the US has a world monopoly (albeit one that could be broken in a few years by entry of other Western producers), and the most critical needs of Soviet oil industry are for just such equipment. Because the prospects for Soviet hard currency earnings in the 1980s are far from bright, Western credits will have to cover an increasing proportion of Soviet imports from the West. An increase in the availability of US government backed credit could look very attractive to the new leaders in Moscow. However, since the mid-1970s, the Soviet experience in com- mercial relations with the US has been disappointing to Moscow, and it would probably take a strong initiative on our part just to get their attention. Although a US offer to renew close economic ties with the USSR might be welcome, it would probably be greeted skeptically by the Soviet leadership as primarily a tactical maneuver-- -5- CONFIDENTIAL Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 a further retreat by Washington (following the grain and pipeline decisions) brought about by US-West European economic competition and pressures from US business circles. Needing to consolidate his power, Andropov could not--even if he wished--respond unilat- erally to such an initiative, but would have to move within a leadership consensus strongly influenced by the views of Gromyko and Ustinov, who would urge caution. Thus the Soviets might: ? Accept part of the offer as a means of coping with particularly acute bottlenecks, especially in technology and food supplies. ? Seek to avoid the establishment of long-term economic dependencies on the US. ? Exploit any new atmosphere of mutual accommodation as a means of reinforcing support in the United States and Western Europe for cutbacks in defense spending and arms control measures favorable to Soviet interests. We would expect the Soviets to give any US initiative low-key treatment, publicly casting doubt on US motives, but at the same time seeking to engage the Administration in a dialogue about it. A US offer to return to a "business-as-usual" basis would probably not result in any surge in orders for US companies beyond the sectors in which the US is already an important supplier. Moscow is at least as likely to use the opportunity created by a US offer to put commercial pressure on the West Europeans and Japanese, and exacerbate existing tensions in the Alliance. At a minimum, Moscow would press for US government guarantees regarding fulfillment of contracts while at a maximum it might seek repeal of the Jackson-Vanik and Stevenson amend- ments. In either case, it would refuse to make any significant political concessions in return--which Andropov probably could not deliver even if he desired. If this process permitted- the Soviets to acquire more technology on acceptable terms from the United States, they would do so--but not at the expense of established ties with Western Europe and Japan, or of their own long-term economic inde- pendence. The Soviets have traditionally taken advantage of opportunities to exploit relations with the West to acquire tech- nology and goods for both military and civilian purposes and we expect they will continue to do so. -6- CONFIDENTIAL Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SEURLI ED"ITUI1 On the basis of observed military activity in the USSR, Soviet resource allocations for defense will continue to grow at 4 to 5 percent per year through 1985, just as they did through the 1970s. Soviet marshals and other supporters of defense programs among the Soviet leadership probably consider the state's investments in its military establishment during the Brezhnev era amply justified by the security the USSR has enjoyed over the past two decades and by the political power exerted by Soviet arms worldwide. The behavior detailed in the enclosed paper (The Brezhnev Era: Military Posture of the USSR) indicates that their strategic priorities are these: (1) Acquiring the means to attack and defeat American military forces at all levels of conflict. (2) Maintaining the integrity of the Warsaw Pact. (3) Securing the borders of the USSR in Asia. (4) Extending the influence of the USSR in the Third World. In recent years these priorities have apparently underwritten unprecedented military research and development programs. Current R&D includes work on some 200 major weapon systems which will reach deployed forces sometime over the next 10 years. For example, we know that floor space at 168 key military R&D facilities, which work on all types of weapons, more than doubled between 1963 and 1981; and from construction underway, we expect that steady expansion to continue at least through 1985. Recent expansion has been greatest in facilities for missiles,. space systems, and lasers. During the 1980s, some 165 to 180 new or substantially modified major weapon systems should be introduced into the Soviet Forces--about 25 to 40 more than in the '60s or the '70s. Compared with the 1960s and 1970s current Soviet R&D exhibits much less emphasis on evolutionary modifications to existing systems and concentration on new designs of higher technological risk and inherent costs. Since R&D and procurement together absorb about half of Soviet defense outlays, these ongoing programs point to ever higher resource allocations for defense. The Soviets are already working on counters or counterparts to almost every impending US weapon system. PEACEKEEPER could evoke deployment of a mobile, land-based ICBM, and a new thrust in ABM defenses. Military missions of the US space shuttle could be matched by a Soviet space plane and a space-based antisatellite laser. US SLBMs like C-4 and D-5 will be answered by SS-NX-20 deployments. Deployment of Pershing II could trigger a surge of SS-20 deployments (they are stockpiling precast concrete base-parts during the present "moratorium"), and GLCM could be answered by land-attack SLCM deployments to "put the US in an analogous cy ? of ' 2 copies CPDCT Classified By: Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 sified 4N; 4/9 D Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 JtLtt I position." US ALCM, GLCM, and SLCM systems will almost surely cause new air defenses to be deployed, including more capable radars and laser weapons. These and improved antiship and ASW systems could be fielded, and from all present indications,will be. Were Andropov and his colleagues so to choose, they will have the military means to adopt more aggressive and confrontational policies, including new arms for offensive and defensive intercontinental warfare, which would be inherently more threatening to the US. Moreover, they could pursue military programs which could threaten Europe directly, as with increased deployments of "Eurostrategic" weapons, or indirectly, via Southwest Asia. They will be able to intimidate Japan in the same ways. Clearly, there are inhibiting factors. One is Afghanistan, where Muslim insurgents have successfully challenged the might of the Red Army, raising problems for the Soviets among their own Muslim minorities and calling into doubt the wisdom of projecting Soviet land forces further into Southwest Asia, e.g., into Pakistan or Iran. Another is the PRC and its implacable opposition to Soviet "hegemonism." And undoubtedly a third is concern that a militant, militarist USSR might catalyze a return to US defense budgets of 9 percent GNP, a revitalized NATO, and even an anti-Soviet military coalition including the PRC, Japan, and the US. A fourth is the poor performance of the Soviet economy, which could support continued growth of the military sector only by increasingly painful deprivation of Soviet and East European consumers. The Soviet economy's overall productivity continues to decline, with the 1982 industrial performance the fifth straight year of decreased growth. Soviet GNP will rise in 1982 about 1.5 percent, the fourth con- secutive year in which growth has been below 2 percent. The outlook for 1983 is for more of same: slow growth, endemic industrial shortfalls., and no improvement in consumer living standards. This year,-after three years of harvest shortfalls, the government launched a well-ballyhooed food program designed to improve the production, processing, and marketing of food products. But it seems evident that there will have to be other policy shifts to arrest and reverse the pervasive malaise. Options include modest cutbacks in defense spending, a reallocation of investment to industrial bottlenecks like transportation and ferrous metallurgy, broader use of personal incentives to energize labor, and a systematic attempt to solve the geographic maldistribution of the labor force. CIA recently published an assessment entitled "Can the Soviets 'Stand Down' Militarily?" (Directorate of Intelligence, June 1982), which concluded that cuts as high as 20 percent by 1990, phased in gradually after 1985, were possible, but unlikely. The CIA paper, written before Andropov., characterized prospects for a resource shift as follows: ornnrT, IMM1111" Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 "To be sure, on a "micro" level the Soviet military-industrial complex has on occasion been directed to help reduce Soviet dependence on Western imports by shifting resources to the civilian economy. we have informa- tion that suggests the defense industries are now charged with helping to modernize the civil gas turbine industry so that the Soviets will be able to produce their own efficient turbines for gas pipelines. "The Soviet economic predicament is in many ways a product of Moscow's own choosing. By placing a priority on military research and production, the leadership has slighted the civilian sector, thus helping to create pronounced imbalances in the economy. "Although the Soviet economy is in deep trouble, the country's present leaders do not believe the time has come for drastic action. They are convinced--and we concur--that some growth remains to be squeezed from the present resource-allocation scheme. In a sense, Soviet leaders have reached the point of banging and shaking the ketchup bottle to get out a few more drops--the effort is tremendous and the return is small, but at least there is a return. The Soviet economic bottle is not yet empty-- so to speak--and until it is, the leaders are likely to remain unwilling to launch a program designed to improve economic performance by shifting resources. "Any near-term decision by the Soviet leadership to shift resources from the military to civilian investment is unlikely for other reasons as well: ? The Soviets recognize that military power is their principal currency as an international actor and that continued high levels of defense investment are necessary to sustain the present dimensions of Moscow's global role. ? The Soviets' assessment of their security requirements for the 1980s would probably hold little prospect for reduction in defense spending. The recurrence of instability in Eastern Europe, the prospect of an increased arms competition with the United States, and continuing hostility with China will maintain the pressure for continued high levels of military outlays. ? Given the current support within the Soviet elite for main- taining a strong military position, advocacy of deep cuts in military spending would necessarily involve formidable political risks for any faction within the Politburo inclined to move in this direction. This would be particularly true during a succession period, when those maneuvering for power would be reluctant to advocate major changes in defense policy. "No faction would propose a resource shift, and the Politburo as a whole would be unlikely to authorize a shift, unless in the judgment of Uf'.RPT unr Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 SLUKEi ~` FO~ the Soviet leadership, a resource shift were economically necessary. Moreover, Soviet leaders would resist the idea of a resource shift unless and until they had reason to believe that the West would not seize the opportunity to forge ahead militarily while the Soviet Union stands down. "Nonetheless, the Soviets could at some time feel impelled to reduce defense expenditures if: ? Economic conditions in the USSR turn out to be poorer than we currently project (for example, a series of disastrous harvests causing an actual reduction in economic output). ? Extraordinary political shifts occur, such as a Sino-Soviet rapprochement, a general lessening of tensions with the West, or a move by Western European countries away from US influence. ? Soviet political leaders who are sympathetic to consumer needs come to power." The CIA assessment noted that for the USSR East-West trade and technology transfer has been a key factor in staving off economic disaster and sustaining military growth. In the 1970s imported chemical equipment accounted for one-third of all machinery purchased in the West; the Soviet chemical warfare capability is the largest in history. The Soviet motor vehicle industry has been especially dependent on Western technology; the Kama River truck plant, largely purchased in the US, produces nearly one-half of all Soviet heavy trucks, which are supplied directly to the Soviet military. Western computers have been imported in large numbers; to date the USSR has not been able to match. the militarily relevant computer hardware, software, or expertise available in the US, Japan, or West Europe. Soviet imports of tungsten have been crucial, for its submarine construction and tank munitions. The CIA assessment concludes as follows: "Since the credit, goods, and technology provided by the West have helped Moscow to maintain its current allocation scheme, it follows that if the West were able to deny or limit Moscow's access to these forms of assistance, pressure would be increased on the Soviet leadership to shift resources from arms production to the civilian economy. "The action that would impinge most quickly on the resources available for military production would be a denial of machinery and materials used either to produce machinery or to supplement domestic machinery production. For example: ? An embargo on specialized oil and gas production equipment would force Moscow to allocate military-oriented metallurgi- cal and machine-building facilities to produce such equipment; reduced Soviet petroleum output in the interim would aggravate civilian industrial problems and might, therefore, cause addi- tional civilian encroachment on defense production. Q Cf%D CT mcnom Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3 ~ lU K L I , rtutul ? An embargo on large-diameter gas pipe and other high-quality steel products could possibly cut into production of such military items as submarine hulls. ? An embargo on equipment for plants manufacturing cards, trucks, and mining and construction vehicles (as well as an embargo on such vehicles themselves) could increase the pressure in the Soviet Union to produce these items in military plants. "Western denial of grain and other agricultural products would also hamper the Soviet military effort. For example, to increase domestic farm output, Moscow might have to allocate more factory space to producing farm machinery instead of tanks and armored personnel carriers. A Western embargo on selling farm machinery or on building the facilities that manu- facture such machinery would also put pressure on existing priorities. Reduced per capita food consumption would work against Soviet efforts to raise worker productivity, increasing the problems facing industry. "By curtailing the Soviets' import capacity--primarily by restricting credits but also by hampering their oil and gas production and thus their hard currency exports--the West would further raise the cost to the USSR of maintaining its present policies on resource allocations. "It is, of course, impossible to say for certain that the Soviet leaders would respond to Western pressure by shifting resources. However, it is important to note that in some instances they have deemed a shift to be in their best interests and have directed the military-industrial complex to support the civilian economy." NFP.P1: i 18FOR1 0 Approved For Release 2009/04/14: CIA-RDP84B00049R000400710011-3