POLITICAL CONSEQUENCES OF ECONOMIC DISTRESS IN EASTERN EUROPE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R001202840028-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 20, 2016
• Document Release Date: June 19, 2006
• Sequence Number: 28
• Publication Date: November 3, 1982
• Content Type: MEMO

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THE DIRECTOR OF CENTRAL INTELLIGENCE
National Intelligence Council
NIC 8899-82
3 November 1982
MEMORANDUM FOR: National Foreign Intelligence Board Principals
SUBJECT . Political Consequences of Economic Distress
in Eastern Europe
1. The economic difficulties facing most Eastern European countries, of
which Poland is the most dramatic example, make it imperative that we fully
assess the political implications which may follow. Accordingly, the Director
of Central Intelligence has directed the production of a National Intelligence
Estimate, tentatively titled "Economic Distress in Eastern Europe and its
Political Consequences." Our intended completion date is First Quarter 1983.
2. In accordance with our standard procedures, please designs
agency's representatives as soon as possible. The NIE chairman is 25X1
Natinnal Officer for USSR-EE, and the principal
drafter will b EUR-EE. A draft Terms of Reference is
attached. We plan to discuss it at a meeting in Room 7D64, CIA Headquarters,
at 1400 hours, Wednesday, 10 November. Please have your representatives call
their names and pass appropriate clearances to by COB 25X1
9 November 1982.
Attachment:
Terms of Reference
This memorandum is
classified SECRET.
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Terms of Reference
Economic Distress in Eastern Europe
and the Political Consequences
The Nature of the Problem
The economies of the Soviet Bloc states of Eastern Europe
have entered a period of severe stress. Growth has virtually
ceased in most of these countries and GNP has declined in
Poland: living standards have been adversely affected, hard-
currency debts have reached alarming highs, Soviet and Western
sources of aid have been drying up, and volutions to these and
other difficulties are nowhere in sight.
This NIE will examine the character of the economic problem,
the near-term prospects and the implications for both East-West
and intra-Bloc relations. It will also assess the political and
social consequences of economic travail in societies which, even
in the best of times, are essentially unstable, and does so for
the area as a whole and for each individual state--Poland, East
Germany, Czechoslovakia, Hungary, Romania and Bulgaria.
(Yugoslavia will be treated in a forthcoming estimate.)
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I. INTRODUCTION
A. What are the principal sources of popular disaffection
in Eastern Europe? Can they be said to be mainly
economic (discontent with living standards, shortages,
wages, prices, etc.) or political (lack of freedom,
inability to participate in political life, regime
oppression, lack of free trade unions, etc.)
B. What are the fundamental economic problems and trends?
C. What is the current state of stability at the top (i.e.,
within the regimes)? Are factionalism, demoralization,
uncertainty heating up as the Soviet succession struggle
begins and as economic conditions become worse?
D. Is the general political and social scene in Eastern
Europe changing--deteriorating?--as a consequence of
economic travail?
II. THE CHARACTER OF THE ECONOMIC DECLINE
A. Trends: What are the principal economic trends in GNP,
productivity, foreign trade, indebtedness, and living
standards? What is the nature of the current economic
squeeze? The impact of Western recession, credit
restrictions? Impact of Poland, lack of Soviet help--
cuts in energy exports?
B. Policies: Can we accurately describe official reactions
-to these trends? Are the regimes mainly trying to
muddle through or do they have (or seriously
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contemplate) coherent (if not necessarily effective)
policies addressing their problems?
C. The Soviet Role: What, essentially, has been the Soviet
role in East European economic developments?
Specifically: (1) to what degree has the USSR
contributed to or alleviated East European economic
problems? (2) what are the size and significance of
Soviet aid programs and subsidies? (3) What are current
Soviet attitudes and policies concerning current East
European economic problems and policies (including those
associated with reform), and what is their impact? And
(4) are Moscow's policies likely to change in the near
term (perhaps as a result of changes in the Soviet
leadership)?
III. SHORT-TERM ECONOMIC PROSPECTS IN EASTERN EUROPE
(Building on the preceding sections, this summary look at
likely trends over the next two to three years in East
European economies and will estimate probable performance and
emphasize problems of particular interest to East European
consumers.)
A. To what degree is East European economic performance
likely to improve or to deteriorate over the next two to
three years? (Differentiate, where necessary, between
-the various economies.)
B. Are deep economic crises, as in Poland, likely anywhere
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else?
C. To what degree is the consumer likely to be (favorably
or adversely) affected? What of possible cuts in
investment? Military spending? And their implications?
D. How will the East European regimes attempt to deal with
their economic problems? Will they attempt to turn to
the West? It so, what will they hope to get and what
kinds of levels of increased trade and aid from the West
would make a difference? What might the East Europeans
be willing to do to facilitate closer economic ties to
the West? If the East Europeans turn to the USSR, what
will Moscow be able or willing to provide, and how much
help will it be? What are the economic and political
consequences of closer EE-Soviet economic relations?
IV. POPULAR ATTITUDES AND REACTIONS
(This will discuss the views of the various East European
peoples concerning their own governments, the communist
systems, and the USSR, thus to set the stage for an
examination of the possible impact of economic troubles [as
projected in the preceding sectionj, on political stability.)
A. How can we best describe the current popular mood; in
Eastern Europe--passive, morose, restless, unsettled,
-explosive? Are the attitudes of the peoples concerned
shifting as a result of economic decline? Specifically,
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is the implicit social contract--roughly, more
cooperation for more bread--threatened by the current
malaise?
B. Is the public's stake in stability (its concern for
continued domestic peace) decreasing as a result of the
bleak economic outlook or has the Polish experience
affected public attitudes?
C. What are the regime's and the USSR's probable reactions
to growing (and potentially dangerous) popular
dissatisfaction?
V. THE "CRISIS" TO COME
(This will draw from all of the above and estimate the
likelihood of political and social crises).
A. Will political and economic problems in Eastern Europe
conjoin to create--within the leaderships, between the
leaderships and the people--crises within these states
and/or between the regimes and the USSR?
B. If so, how, where, and when.
C. In dealing with public unrest, how will the regimes
react--with brutal repression, a willingness to
compromise, capitulation, or what? What are the forms
and effects on policies that would follow from struggles
within the leaderships? How will the Soviets respond
-(up to and including the option of military
intervention)?
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VI. COUNTRY SURVEYS
(In the process of reviewing the relevant circumstances in
each of the six East European states of the Soviet Bloc, this
section will pay particular attention to the nature of
party/government efforts to deal with economic problems, and
popular reactions thereto. Differences between the various
countries [e.g., in public attitudes--resentful and surly in
Romania, resigned(?) in Czechoslovakia will be emphasized,
and parallels with Poland (80-81) will be drawn, if
appropriate. Estimates about short-term stability will
conclude each survey.
A. Poland: describe current status and prospects (as grim
as they seem to be?).
B. East Germany: discuss unique status (in re Germany);
role as USSR's leading trading partner; past successes;
present problems (especially fiscal) and prospects. Is
the GDR success story coming to an end? The role of the
Church, the peace movement, and the impact of the FRG.
C. Czechoslovakia: do we color it all gray? or do current
signs of the leaderships' realization that at least some
economic changes are necessary indicate a little more
color in the future?
D. Hungary: assess.the economic reform and Kadarism to
-date; will they serve as a model for the other East
European countries? How do the Soviets view this
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prospect--e.g., are the Soviets willing to let Hungary
serve as a model? Discuss current stringencies and
prospects.
E. Romania: tension,'austerity, autonomy; will the people
remain (mostly) passive? Can Ceausescu last? If he
doesn't, what's likely to come in his wake?
F. Bulgaria: Is "everything (still) coming up roses"? Is
there a possibility of a disruptive post-Zhivkov
succession struggle, aggravated by economic issues and
problems? If so, what next?
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