EUROPEAN REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00289R000301120001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 30
• Document Creation Date: December 27, 2016
• Document Release Date: July 7, 2011
• Sequence Number: 1
• Publication Date: July 4, 1986
• Content Type: REPORT

I
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Directorate of
Inteffigence
MASTER FILF COPY
Pn
N31 CfVE Id
Cr? WV' PI
o it tift
Secret
/
25X1
European Review
4 July 1986
u
?SeGret?
EUR ER 86-015
4 July 1986
Copy 452
25X1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
25X1
25X1
European Review
4 July 1986
Page
Briefs
France?West Germany: Turbulence Ahead. for
1
the Eurocopter?
25X1
25X6
Spain: Four More Years for Gonzalez
25X1
25X6
Poland: Financial Problems To Continue
25X1
Poland-Austria: Steadily Improving Relations
4
25X1
Articles
Austria: Cleaning Up in the Wake of Waldheim
Kurt Waldheim's election as Federal President has had
repercussions within Austria beyond the ill will occasioned by the
bitter and divisive campaign rhetoric. His victory has already led to
high-level resignations in the government and threatens to burden
Vienna's foreign relations.
11
Spain: Increasing Integration Into NATO
Since Madrid's accession to the North Atlantic Treaty Organization
in May 1982, the process of integration into the Alliance's military
and civilian agencies has been inconsistent and subject to the
vagaries of Spanish politics. In the wake of the recent NATO
referendum, however, Spain's ties to the Alliance are again under
active review, and Madrid finally appears prepared to define what
its past pledges to participate fully in Western Europe's defense will
mean in practice.
15
Secret
EUR ER 86-015
4 July 1986
25X6
25X1
LOA-I
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
I Li_ I I. II I I I .IIII
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Yugoslavia: The Public Mood
Recent public opinion polls suggest that the Yugoslays are unsure
about the future, preoccupied by falling living standards, and
alienated from a complex, inefficient, Communist political system.
The polls also signal implicit recognition that the unorthodox
system?designed in theory to be one of the most responsive in the
world?often has not done its job.
19
Economic News in Brief
29
Looking Ahead
31
Some articles are preliminary views of a subject or speculative, but
the contents normally will be coordinated as appropriate with other
offices within CIA. Occasionally an article will represent the views
of a single arthlyst; these items will be designated as uncoordinated
views. Comments may be directed to the authors
Secret ii
25X1
STAT
25X1 *
25X1
25X6
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
European Review
Briefs
Secret
France?West Germany Turbulence Ahead for the Eurocopter?
25X1
25X1
25X1
Despite press reports that West German Chancellor Kohl and French President
Mitterrand have reaffirmed their commitment to the joint Franco-German PAH 2
combat helicopter program, the project continues to falter over differing priorities,
which, if not resolved soon, may lead to its termination. From the project's
inception in the mid-1970s, disagreements between the two nations over design and
mission requirements, overall program management, and prime contractorship, as
well as difficulties with funding, have delayed the program and resulted in cost
overruns, development and production costs have 25X1
risen by 19 percent and 13 percent respectively, since 1983. If the program
continues, expect costs to rise an 25X1
additional 40 percent. French Defense Minister Giraud has issued an urgent
ultimatum to the Eurocopter consortium to significantly reduce the cost of the
program or risk a French pullout. 25X1
Failure of the two governments to agree on a common mission for the helicopter
and their decision to develop three models are the rime fa tors
program's delay and cost escalation
originally were seeking both an air-to-air combat model and an advanced
antiarmor version equipped with third-generation antitank guided missiles?
helicopters potentially marketable in Third World countries. Bonn, on the other
hand, was primarily interested in an all-weather antiarmor model, initially
equipped with current-generation missiles, to replace as soon as possible its
inventory of the much less capable PAH 1 helicopters. Bonn eventually hoped to
retrofit the PAH 2 with new-generation antitank guided missiles. The West
German Army, which had wanted a new helicopter by the end of this year, has
seen delivery dates slip first to 1992 and now to 1995.
? ? I I. I?
Eurocopter has been asked to present a final proposal to Defense Ministers Giraud
and Woerner by early July before they make a decision on whether to continue the
program. Both the French and West Germans are skeptical that this program, in
its present form, will succeed. In fact, several alternatives apparently are being
considered. Under one option, the Germans would produce the Leopard tank for
both countries and the French would produce the helicopter. Under another
option, only two versions of the helicopter would be developed, an antitank model
and an air-to-air model, which could make the program a less complex and
expensive endeavor for both countries. A final option would be for both countries
simply to purchase off-the-shelf models, such as the US-made AH-64 Apache or
the Italian-made A-129 Mangusta.
1
Secret
EUR ER 86-015
4 July 1986
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X1
25X1
25X1
25X1
I I I L.,11 ?
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Spain
Secret
Four More Years for Gonzalez
Prime Minister Gonzalez almost certainly will view his reelection on 22 June as a
mandate to continue moderate domestic and foreign policies. His Socialist Party
received approximately the same share of the national vote-44 percent?as it did
in its landslide victory in the last election in 1982. Gonzalez did not win as many
seats this time, but he retains an absolute parliamentary majority. The Socialist
Party's tight discipline means that Gonzalez will have little trouble serving out
another four-year term.
Spanish conservatives are frustrated because they had hoped that Spain's 22
percent unemployment and recent surge in drug trafficking and street crime would
bring them gains at the polls. Instead, they actually lost a seat, and their distant
second-place finish could trigger a challenge to the leadership position of Manuel
Fraga. Former Prime Minister Suarez's center-left Social Democratic Center
Party nearly tripled its share of the vote and emerged as the third-largest party
behind the Socialists and Fraga's Popular Coalition?a finish that makes Suarez
the undisputed leader of the political center. The Communists staged a more
2
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X6
25X1
25X1
2
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
limited comeback. Both they and Suarez featured anti-US themes in their
campaigns, and their gains are likely to reinforce Gonzalez's desire to negotiate a
cutback in US forces in the bilateral security talks that begin in Madrid on 10
July.
Poland
Financial Problems To Continue
The Polish financial situation will improve little despite new credits from several
Western governments, a new rescheduling agreement with Western banks, and
Poland's formal acceptance into the IMF in mid-June. Western banks have agreed
3
Secret
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X1
5X6
25X1
IIH I II I I II I I
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
to provide about $2 billion in debt relief this year and next. Commercial bankers
hope that settling on more generous terms than they originally offered will give
them an advantage over Western government creditors in any future negotiations
on debt relief . Even so, the bankers believe
that Poland will reopen discussions with commercial creditors on new loans next
year. Warsaw is also counting on obtaining credits soon from the IMF and has
applied for membership in the World Bank.
Two recent loans from the United Kingdom and Belgium, together with credits
previously pledged by Austria, France, and West Germany, bring new
government-backed loans offered in the past year to about $120 million. These
credits depend on Poland's repayment of arrears due under existing rescheduling
agreements and timely debt payments in the future.
however, West German officials have withdrawn
approval for export credit guarantees because Poland failed to make payments due
under past agreements.
Warsaw will cite these developments as improvements in its financial relations
with the West, but its financial situation is not bright. The new credits cover little
of the $1 billion financing gap Poland still faces this year, and Warsaw probably
will be unable to meet all the conditions necessary to receive them. New loans from
the IMF will be limited until the Poles negotiate an economic adjustment program.
Negotiations will probably be lengthy because the IMF is likely to demand
tougher austerity policies than Warsaw will accept. In the meantime, bankers and
Western governments probably will base their decisions about major new credits
for Poland on Warsaw's progress in negotiations with the IMF.
Poland-Austria Steadily Improving Relations
Secret
Poland's efforts to improve relations with the West have probably been most
successful with Austria as demonstrated by increasing economic ties and recent
contacts with the Polish Government?sponsored trade unions. Traditionally
neutral, Austria was the first Western nation to reestablish contacts with Poland
after the imposition of martial law, when Foreign Minister Gratz visited Warsaw
in late 1984. It also was the first Western country to resume lending to Poland,
granting $40 million in trade credits in 1985. This year Austrian and Polish firms
have concluded automotive and construction agreements, including a $200 million
contract to build hotels in Poland. Government officials on both sides probably also
back meetings such as those earlier this year between the President of the Austrian
Trade Union Federation and Warsaw's government-sponsored unions; the
Austrian official recently told a US official that he considered Solidarity
"finished" as a trade union.
Austria's pragmatic Polish policy is influenced by several factors. Vienna is keenly
interested in easing East-West tensions in light of Poland's geographic location
and membership in the Warsaw Pact. Austria believes Poland should be allowed to
resolve its own problems and sees economic and political sanctions as interference
4
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
in its internal affairs. Warsaw probably sees good political and economic relations
with Austria as a useful first step in regaining Western markets, acquiring trade
credits, and demonstrating that the country's normalization program is on track.
25X1
5
Secret
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
-:1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
R
Next 3 Page(s) In Document Denied
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X1
25X1
Ii U. .1 ?., 1 I....11 . 1 1 1 1 I I
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Austria: Cleaning Up
in the Wake of Waldheim
The election of Kurt Waldheim as Federal President
has had repercussions within Austria beyond the ill
will occasioned by the bitter and divisive campaign
rhetoric. His victory has already brought about the
resignation of the country's Chancellor, Foreign
Minister, and Agricultural Minister. It also threatens
to burden Austria's foreign relations and may even
affect the country's role as an international mediator.
The Election
Waldheim's election on 8 June as the first non-
Socialist President of the Second Republic was
convincing by Austrian standards. He was able to
build on his strong showing in the initial balloting of
4 May (49.6 percent) by capturing 53.9 percent of the
vote, while his opponent, the Socialist Kurt Steyrer,
garnered only 46.1 percent, just 2.4 percentage points
more than he won in May. Waldheim's tally was the
best ever by a nonincumbent and the third best since
World War II.
Domestic Repercussions
Most observers have viewed Waldheim's election as
the product of two emotions. On the one hand,
Austrians of all political camps reacted strongly to the
steady stream of accusations that, during his World
War II service in the Balkans, Waldheim participated
in Nazi atrocities. Few Austrians, however, saw the
campaign against the former UN Secretary General
as an attempt to shed light on the man's past. Instead,
US Embassy reporting and press commentaries
suggest that most of the public interpreted the entire
affair as an attempt by foreigners to dictate the
country's choice as president. This patriotic backlash,
in our view, contributed importantly to Waldheim's
triumph.
Observers also agree that Waldheim's victory
represents a protest against the Socialist Party.
According to this reasoning, many Austrians believe
the Socialists have become too comfortable and too
corrupt after 16 years in power. Nor had the Socialist-
led government of Chancellor Fred Sinowatz inspired
much confidence as it stumbled from one scandal and
gaffe to another.
11
Secret
There were indeed signs of voter dissatisfaction with
the Socialists. In both rounds of balloting, Waldheim
made serious inroads into Socialist voting groups;
according to US Embassy reporting, he captured
approximately 7 percent of their votes on 4 May and
approximately 11 percent on 8 June. The press also
noted that in May Waldheim did surprisingly well in
Vienna?historically a Socialist bastion?and that in
June he took over 55 percent of the vote in Lower
Austria, a province with industrial areas that are
postmortems point to a strong showing by Waldheim
among younger voters, whose idealism normally
propels them to the left.
Secret
EUR ER 86-015
4 July 1986
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X1
25X6
I 11 1 1 1 .11 1 1 .1. 1 1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
New Members of the Austrian Government
OF? Press 0
Kurt Waldheim, President
67 years old . . . career diplomat and former UN
Secretary General . . . independent, supported by
conservative Austrian People's Party (OVP) . . . first
OVP-nominated president in postwar era . . . has
stated he will exercise full powers of largely
ceremonial post . . . cautious, takes pride in
compromise and consensus
Prafil 0
Franz Vranitzky, Chancellor
48 years old . . . excellent manager. . . Socialist
Party moderate. . . enjoys wide public support . . .
seeking to present image ctf dynamic leadership . . .
good connections with opposition OVP . . . could be
laying groundwork for grand coalition in 1987 . . .
holds conservative economic views . . . desires closer
cooperation with EC . . . favorably disposed toward
United States. . . sensitive to US concerns on
technology transfer.
Peter Jankowitsch, Minister for Foreign Affairs
52 years old . . . confirmed socialist but foreign policy
moderate . . . expert on Third World issues . . .
party's chief delegate to Socialist International . . .
friendly toward United States. . . skeptical of SDI
and of US policies toward Nicaragua . . . advocates
tougher sanctions against South Africa . . . favors
closer cooperation with EC . . . urbane, articulate,
hard working.
Camera Press C
Ferdinand Lacina, Minister for Finance
43 years old. . . moderate socialist but well regarded
by party left wing . . . dedicated technocrat . . . more
interested in Austria's economic health than in
scoring political points . . . appointment reflects
Socialist Party's continued confidence in his abilities
. . . well disposed toward United States . . .
sympathetic to US technology-transfer concerns . . .
soft-spoken negotiator. . . precise, principled.
Secret
12
25X6
25X1
25X6
25X1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
I J1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Austrian Photographer
Erich Schmidt, Minister for Agriculture
42 years old . . . lawyer, economist . . . convinced
socialist . . . hard-driving politician . . . former state
secretary in Ministry for Trade, Commerce, and
Industry . . . has traveled extensively to promote
Austrian exports. . .favorably disposed toward
United States but protective of national interests.
Wide World 0
Rudolf Streicher, Minister for Nationalized
Industries
47 years old . . . widely regarded as one of Austria's
top business managers. . . former director of Steyr-
Daimler-Puch industrial conglomerate. . . revitalized
debt-ridden Austria Metall Company. . . considered
uncompromising by trade unions . . . will attempt to
streamline inefficient state-owned industries.
13
Secret
Clearly hoping to reverse this voter disaffection, the
Socialists have shuffled their Cabinet. Chancellor
Sinowatz resigned the day after the presidential
election and was followed shortly thereafter by
Foreign Minister Gratz and Agricultural Minister
Haiden. In, a hastily called meeting of the Presidium
and Executive Committee, the party agreed that
Finance Minister Franz Vranitzky should replace
Sinowatz. Haiden undoubtedly fell victim to farmer
dissatisfaction over the government's management of
the Chernobyl fallout and the wine scandal. When
Ferdinand Lacina moved from the Ministry for
Transport and Nationalized Industries to replace
Vranitzky, Rudolf Streicher became the new Minister
responsible for the nationalized industries, probably
because of his reputation as a capable administrator
at Austrian Metall and Steyr-Daimler-Puch. For his
part, Gratz, a former mayor of Vienna, has agreed to
focus his energies on his job as party leader in the
capital, presumably in hopes of reversing the trend in
that important center of Socialist support.
The selection of Vranitzky, in our view, was a shrewd
one. A party moderate with a reputation as a
technocrat, Vranitzky was appointed Finance
Minister in 1984 in a Cabinet shakeup intended to
replace party idealogues and allies of former
Chancellor Kreisky with competent men at the center.
The changes were also supposed to revitalize the
image of the Sinowatz government. That it failed is
hardly the fault of Vranitzky, as he is one of the few
Cabinet members untouched by scandal or mishap.
US diplomats also note that he is popularly viewed as
someone partly responsible for the economy's recent
modest upturn.
It remains to be seen whether these changes will be
able to reverse the party's electoral slide. Opinion
polls have shown a steady decline in the popularity of
both the Socialists and the coalition government, a
trend evident in regional elections over the last few
years as well. Most polls this year have shown the
Socialists backed by approximately 44 percent of the
respondents, generally a point or two behind the
opposition People's Party. This is well below the
Socialist tally of nearly 48 percent in the 1983 federal
election.
Secret
25X1
25X1
, Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
. I , 1, I,. 11 1 .1.. 1-11 , 1 .1 , ?I, , 1 1 1..1 ..
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Leaders of the conservative People's Party have
already celebrated the Waldheim victory as signifying
a sea change in Austrian voting behavior and as the
harbinger of a conservative trend in Austrian politics
that will sweep them back into power next spring, a
position they have not occupied since Bruno Kreisky
led the Socialists to a parliamentary majority in 1970.
We expect the People's Party to spend much of the
next nine months attempting to consolidate its hold on
the voters who supported Waldheim. It remains
unclear at this point if party leaders will rely on the
xenophobic themes they exploited so well during the
recent campaign or if they will turn instead to such
domestic issues as the budget deficit and the plight of
the nationalized industries.
Consequences for Austria's Foreign Relations
The People's Party undoubtedly will have numerous
opportunities to appeal to the Austrians' sense of
wounded pride over the next few months. Initial
foreign reactions to Waldheim's victory suggest that
the debate over his wartime past will continue.
Negative commentary on the character of Austria's
new President?and the judgment of Austrian
voters?emanated shortly after the election, for
example, from Jewish leaders in the United States,
the influential Le Monde in France, and Labor Party
leaders in Britain. The most critical reaction, not
surprisingly, appeared in Israel; that country's leaders
expressed regret over the outcome and recalled the
Israeli Ambassador in Vienna for consultation.
These reactions are unlikely to be the last, and
Austria's foreign relations are bound to be affected.
The World Jewish Congress and the Israeli Justice
Minister have announced their intentions to continue
their investigations into Waldheim's past. According
to press reports, the latter even referred to the
theoretical possibility of an extradition request, and
the World Jewish Congress promised "to make life
uncomfortable for Austrians." Pressure is also likely
to mount on Yugoslavia to open its archives to permit
inspections of files pertaining to Waldheim's case, a
move Belgrade has resisted thus far to avoid
burdening its own relations with Vienna.
The Austrian response could take a variety of forms,
some of them with distinctly negative implications for
relations with the United States and Israel. Official
steps in this direction are unlikely, however, at least
Secret
for the present. The most overtly negative
possibility?but one we view as the least likely?
would be for the government to close the refugee
camp at Traiskirchen near Vienna that serves as a
processing center for Jewish emigres from the Soviet
Union. Negative repercussions are more likely to
develop on the popular level with the emergence of an
anti-Israeli and anti-American undertone in Austrian
political discourse. There were already signs of this
during the election campaign. Both of the major
parties, for example, responded to the accusations
against Waldheim by objecting to "foreign
interference," with Conservative spokesmen
expressing themselves in a more vituperative vein.
And one poll showed that a full 25 percent of the
Austrian public expressed some anti-American
sentiment as a result of the charges. Some Austrian
journalists even attributed calls for an investigation of
Waldheim's war record to a US political leadership
desirous of courting Jewish votes in upcoming
Congressional elections; nearly all commentaries
pointed to supposed US ignorance of Austrian history.
The next few months will show just how strongly this
will influence official Austrian policy.
Immediate Prospects
For now, however, we expect a more positive response
from the current government, as it works to restore
Austria's tarnished image and attempts to prevent a
diminished role for the country in international
affairs. Austrians of all parties approve of the
country's policy of active neutrality, a policy that has
permitted the country to play an active role as
intermediary in East-West and Middle Eastern
affairs. Socialist Party leaders expressed concern over
the potential threat a Waldheim presidency would
pose to that role, and they can be expected to work to
preserve it. In particular, they will press to preserve
Vienna's place as a neutral meeting ground for
international conferences and summits. In fact, we
believe one of Chancellor Vranitzky's first steps will
be to request visits to Moscow and Washington, not
only to enhance his own image as Chancellor but also
to argue his government's case for protecting
Austria's special place in the global community.
14
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X1
1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Spain: Increasin Integration
Into NATO
Since Spain's accession to the North Atlantic Treaty
Organization four years ago, the process of
integration into the Alliance's military and civilian
agencies has been inconsistent and subject to the
vagaries of Spanish politics. The former right-of-
center Union of the Democratic Center (UCD)
government took concrete steps immediately upon
accession, but with the subsequent rise to power of
Prime Minister Gonzalez's center-left Socialist Party,
Spanish participation in NATO was "frozen" at a
level significantly below full integration into the
Alliance's military wing. In the wake of the recent
NATO referendum, however, Madrid's ties to the
Alliance are once again under active review, and
officials now state that "almost anything is possible."
Indeed, after the lengthy delay, Madrid finally
appears prepared to define what its past pledges to
participate fully in Western Europe's defense will
mean in practice.
Progress Under the UCD Government
US Embassy reporting indicates that, from the time
of its admittance to NATO in May 1982 until the
inauguration of Gonzalez's Socialist government in
December 1982, Spain sought to integrate rapidly
into NATO civilian and military structures. By
November 1982, despite differences between Spanish
and NATO officials over Madrid's share of the
NATO budget, Spain was participating actively in a
multitude of NATO civil bodies and had established
representation in several military committees, such as
the Defense Review Committee and the Nuclear
Planning Group.
Despite the best efforts of the UCD government,
however, Spanish participation in other salient areas
of the Alliance was only partial or lacking when
Gonzalez's Socialist Party (PSOE) swept into power.
Most notably, Madrid had no representation in key
military groups, such as the SHAPE staff and the
Integrated Military Structure, and it had not agreed,
on contributions to the military budget. Moreover,
Spain had neither committed military forces to
NATO nor allocated funds for its delegations.
15
Spain's absence from key military committees, its
lack of committed forces, and its neglect of budget
contributions indicated in late 1982 that full
integration would be a slow and arduous process.
Moreover, with the inauguration of a new Socialist
government, which had been elected on an anti-
NATO plank and was committed to a national
referendum on NATO membership, Spain's
continued integration seemed in jeopardy.
Integration Under the Socialists
While Gonzalez and the Socialists initially kept to the
letter of their anti-NATO campaign promises, the
new PSOE administration quickly realized the
potential for damage to its diplomatic and economic
relations should Spain withdraw from NATO.
Specifically, Madrid feared that its European allies
would look unfavorably on the Spanish application to
join the European Community (EC), then under
consideration. EC rejection of Spain's petition would
cost Madrid both politically and economically and
would ensure Spanish isolation from the rest of
Europe for years to come. As a result, the Socialist
government sought to finesse the issue of the promised
referendum on NATO membership, while
maintaining Spanish participation in numerous
NATO forums. Reporting from our NATO
Ambassador indicates, however, that Madrid focused
primarily on, and was manifestly vocal in, NATO's
political and economic groups, rather than its military
bodies. As a result, by the time of the referendum?
over three years after the Socialists came to power?
Spanish integration into NATO had increased only
slightly beyond its pre-Gonzalez level, especially with
respect to military activity.
Post-referendum Movement
Following the successful 12 March referendum on
NATO membership, Spanish officials proposed steps
to end Spain's ambivalent status in NATO, while
Secret
EUR ER 86-015
4 July 1986
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
I III L I 1...11 I I I I LI
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Spanish Participation in NATO From
Accession to the Present
Activity
1982
1986
Pre-referendum Post-referendum a
Committed military forces
North Atlantic Council
Senior Political Committee
Political advisers
Economic advisers
Regional experts
Ad Hoc Group on Mediterranean
Science Committee
Civil emergency planning
International/military staffs
y
Defense Planning Committee
Military Committee
y c
Military Headquarters
Defense Review Committee
y
Liaison to commands
Armaments groups Y a
Ad Hoc Group on Military Assistance to Portugal
and Turkey
Executive Working Group
Nuclear Planning Group
y
Infrastructure Committee
Infrastructure program
Y
NATO Air Defense Committee
NATO Air Defense Ground
Environment (NADGE)
NATO Electronic Warfare Advisory Committee
Conference of National Armaments Directors
Military budget
y h
Y?i
Civil budget Y h
SHAPE Technical Center
SACLANT ASW Center
ACE high communications system
NATO Maintenance and Supply Organization
NATO HAWK Production and Logistics
Organization
NATO Patriot Steering Committee
Military Agency for Standardization
Y f
Various committees and working groups on
electronics, communications, oceanography,
meterology, and information
a All activities listed in the post-referendum column are projections
based on statements made by Spanish Government officials.
h Only one officer was appointed (to the Information Directorate).
a No officers had been appointed to the Integrated Military Staff.
d In these two cases, Spanish officials indicated that Spain would
initiate an undefined "higher level" of participation.
a Spanish attendance was sporadic at best.
f Spain participated only in "observer" status.
Secret
Spanish officials have stated that infrastructure contributions will
be commensurate with Spanish involvement in NATO military
missions and roles.
Ii Spain attended committee meetings but made no contribution to
the budget.
i Spanish officials have agreed to fund the "relevant" parts of the
military budget, in keeping with Spain's nonintegrated status.
16
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X1
I I
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
remaining outside the integrated military command
structure. Some key steps that would substantially
increase Spanish military involvement in the Alliance,
while retaining Spanish forces under national control,
include:
? Appointment of liaison officials to three major
commands and the assignment of personnel to
NATO's Secretariat and its International and
Military Staffs.
? Fuller participation in a host of committees dealing
with force planning, logistics, armaments, and
infrastructure.
? A firm commitment to funding Madrid's share of
the civil budget and all applicable areas of the
military budget.
The Spanish Ambassador to NATO has indicated to
his US counterpart that Madrid will abide by the
conditions of the referendum and will not place
military forces and assets under existing NATO
commands. Nonetheless, he said Spain is prepared to
coordinate its national military plans with NATO's
Military Committee, and Spanish officials continue to
proclaim both their wish to participate in Alliance
defense planning and their willingness to modify their
national defense plans to complement NATO
missions. In addition, Spain hopes to reach bilateral
"coordination areements" with other NATO nations
regarding the roles and missions of Spanish armed
forces within NATO.
Specifically, Spain's Ambassador claimed that the
Spanish Air Force could be most easily oriented
toward NATO missions and proposed that its role be
negotiated directly with the major NATO commands.
He made a similar offer for Spanish naval roles but
stressed that Spain did not wish to reopen the sensitive
issue of command areas. Consequently, he suggested
that the Spanish Navy might assume roles in keeping
with its mission to defend the Canaries-Gibraltar-
Balaeric Islands axis. Commitment of Spanish ground
forces is more sensitive. Although the military is
prepared to contribute to NATO rapid reinforcement
missions, Madrid wants its ground forces to retain a
role geared ? rimaril toward defense of Spanish
territory.
17
Outlook
In military terms, Spanish participation in NATO?
even short of full integration?will strengthen Allied
capabilities in several ways. According to US
Embassy reporting, the Spanish Navy is nearly up to
NATO standards, and the continuance of its
modernization program will increase its effectiveness
in antisubmarine warfare and the defense of vital
Atlantic sea lanes. The Spanish Air Force is also near
NATO standards, and its acquisition of US F/A-18
jet fighter aircraft will substantially augment Allied
air defense capabilities. Although the Spanish Army
is less well prepared, existing reorganization and
modernization programs should improve its ability to
defend the Spanish homeland, though modernization
recently has been delayed by budget cuts and
bureaucratic mismanagement. Overall, any Spanish
contribution to NATO's military capacity is
beneficial insofar as it buttresses the ability of
Alliance forces to conduct existing missions or permits
their redeployment to more critical areas.
Politically, the issue of Spanish participation is more
problematic. US Embassy reporting indicates that
Spanish moves to forge closer ties to NATO generally
have been welcomed publicly by the Allies. Some
NATO countries, however, are privately concerned
about the practical implications of Spain's "a la
carte" approach to membership. Several?including
the Danes, Dutch, and Canadians?have raised
questions on financial issues, while others worry about
the mechanics of Spanish participation in the defense
planning process. Although Spain's efforts to date
have been welcomed, Turkey's representative warned
recently that most governments will not agree to give
Spain a "blank check."
While Spanish officials have ruled out full integration
under the current PSOE government, they concede
that a future administration would not be bound by
this decision. In any case, according to the US
Embassy, existing Spanish plans constitute de facto
integration. The extent to which Spanish forces will,
under the terms of Spain's current participation,
assume roles complementary to or coordinated with
Secret
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
. 1 11 . .1 ,, ,?, , 1 . ? 1,. 1 1 1, 1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
those of other Alliance forces should become clearer
when discussions begin on the "coordination
agreements" linking Spanish forces and NATO
military roles. The general outlines of those
agreements, as yet unknown, will become apparent as
negotiations on the renewal of the US-Spanish
defense agreement?slated to begin in July?proceed.
The Spanish will, as part of their effort to reduce the
US military presence in Spain, be forced to define in
concrete terms those roles they wish to assume in the
defense of Europe
Secret 18
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
II
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Yugoslavia:
The Public Mood
The jaunty, self-confident Yugoslays of Tito's day are
now unsure about the future, preoccupied by falling
living standards, and alienated from a complex,
inefficient political system. Opinions vary from region
to region, group to group, and no clear consensus
emerges on policy prescriptions. These are some of the
findings of a spate of public opinion polls that
appeared recently in the Belgrade press. On the one
hand, the polls suggest that government and party
leaders installed recently are unlikely to face massive,
organized discontent. On the other, they indicate that
Yugoslays are unlikely to rally around official efforts
to promote recovery.
The Opinion Polls
While it is unusual for Belgrade to publish several
public opinion polls in short order, public opinion
research in Yugoslavia has long roots. It is grounded
in the liberalization era of the mid- and late-1960s
and has become more intensive since Tito's death in
1980. The publication of poll data reflects in part
increased openness by both the press and the regime.
The polls also signal implicit recognition that the
unorthodox Communist political system?designed in
theory to be one of the most responsive in the world?
often has not done its job.
The latest polls were released by the leading Belgrade
weekly NIN in three issues between 20 April and
25 May. They consisted of:
? A survey of national attitudes toward the
government cabinet and its premier, Milka Planinc,
that finished their four-year term on 15 May.
? Studies of youth attitudes both across Yugoslavia
and in the large southern Republic of Serbia.
? A broader survey of national opinion on economic
and political problems, relations among the many
ethnic groups, and other issues.
The first poll, conducted by NIN in mid-April,
involved 100 telephone calls placed proportionately
around the country. The second poll, taken in early
1986, was carried out by Zagreb sociologists from a
19
sample of 6,600 interviewees nationwide,
accompanied by another sampling by Serbian
sociologists of 2,500 youths in that region. The third
poll, of 4,500 Yugoslays across the country, was
conducted by a Belgrade polling institute in late 1985
at the behest of a research center within the
Communist Party Presidium.
The methodology used in the polls is weak by Western
standards. For instance, the NIN telephone poll
involved an unacceptably small sample and was
weighted toward more advantaged Yugoslays because
it necessarily missed the many households without
phone service. The third poll, commissioned by the
party, canvassed only people employed in the "social
sector"?a sample that excludes millions of
unemployed, students, farmers, private businessmen,
and retirees. NIN, moreover, does not always give the
precise wording of questions and answers. No account
is made for citizens refusing to respond frankly or at
all, especially in regions where suppression of
antiregime views still runs strong. And some
particularly intriguing and provocative questions were
not asked or at least reported.
25X1
25X1
25X1
25X1
Nonetheless, the poll findings are broadly in line with 25X1
impressions gained from many other sources,
including public statements by Yugoslav leaders.
They are unflattering enough to the regime to suggest
a minimum or absence of official tampering. And the
results often track with each other and with previous
findings, thus giving at least a crude baseline for
analysis. 25X1
A Dampened Mood
The latest polls tend to confirm signs that the
collective malaise that set in following the economic
crisis of the early 1980s is continuing and even
deepening. The crisis came about after Belgrade
realized the country was on the verge of insolvency
Secret
EUR ER 86-015
4 July 1986
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X1
I.1 1 II I 1 .1 L.11 I I I. .1 I LI
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
caused by a hard currency debt of nearly $20 billion.
With support from the IMF, it imposed an austerity
program to cut consumption and redirect investment
and took other measures to spur export-led growth.
The measures have been only partially implemented.
Faith in the future, once high, is now down. In the
NIN telephone survey, the share of people believing
the economic problems would be overcome within a
few years dropped from 53 percent in 1983 to
26 percent currently, and the number of those who
say they are uncertain when it will be overcome went
up from 40 to 72 percent. In the broader third survey,
60 percent of respondents reported that their
"prevailing feelings" were negative or mixed-31
percent of them conveyed "concern and fears," 10
percent "indifference and passivity," and 19 percent
"both hope and fear." Only 14 percent believed that
"everything will be overcome soon," and, at a time
when Belgrade is trying to enlist public support, only
19 percent said they were ready to act to overcome
problems.
The third poll gave other evidence of pessimism and
preoccupation with daily concerns. It listed 82 percent
of respondents saying that falling living standards
were the most important problem affecting their
families. By contrast, in 1965, a time of somewhat
poorer living conditions but of economic growth, less
than 15 percent of those surveyed listed low living
standards as a main complaint, and far more
respondents showed interest in world events than in
domestic economic problems. Other polls, of residents
of the capital city of Belgrade, have also recorded
increasingly downbeat assessments of personal living
standards since the boom years of the 1970s.
Apathy or complacency?rather than anger?appears
to prevail among many young people. In a survey of
young Serbians, two of three claimed to be satisfied
with their lives, including a startling 53 percent of
those who are unemployed. The NIN telephone poll
also suggested Yugoslays are taking joblessness in
stride, although the country's unemployed now
number more than 1 million, about 14 percent of the
labor force. A far greater concern in the NIN poll was
inflation, which is currently running at an annual rate
of over 100 percent.
Secret
Disillusionment with the political system ironically
seems stronger in the richer northern regions than in
the more backward south. Youth from the relatively
prosperous Republic of Slovenia, for example,
recorded highest disenchantment with the party, the
official self-management labor system, and the level
of ethnic equality. Yet a majority of youth from less-
developed Bosnia, Kosovo, Macedonia, and
Montenegro said they wanted to join the party. While
such a high response is suspect, it underscores that a
? party card tends to open more doors in poorer regions
where opportunity otherwise is more limited.
Who Is To Blame?
Opinion seemed mixed on who was at fault for the
crisis, demonstrating in part that the diffused system
offers malcontents few easy targets. Confusion seems
to exist first of all as to whether the authorities or the
people are mostly to blame. In the party-
commissioned survey, some 59 percent blamed the
crisis on "politicians and businessmen," while only
29 percent said "we are all responsible." Yet in
response to another question in the same survey, only
one-quarter of the respondents blamed problems on
leadership ineffectiveness while nearly half pointed to
chronically poor Yugoslav work habits?"negligence,
irresponsibility, lack of discipline."
Of those blaming the leadership, differences emerge
as to exactly what bodies are at fault. The results bear
out other evidence that Yugoslays tend to view
officialdom as a kind of undifferentiated mass, despite
different roles and rivalries among top bodies. The
Communist Party clearly showed lost prestige, a fact
also reflected in its growing problem of attracting new
members. Yet respect for other political institutions is
hardly greater. In the above survey, the "state" and
"leadership" received about as much criticism as the
party. Likewise, in the NIN survey, more than half of
those polled blamed the Assembly, party, government
cabinet, and regions as a group?and not any one
body alone?for failing to implement the economic
stabilization program.
20
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
lit I
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Shifting attitudes toward
personal living standards were
reflected in surveys of Belgrade
residents re orted last year by
NIN.
Finding a Way Out
Yugoslays seem to have few clear ideas on ways to
emerge from the crisis, although tolerance for
authoritarian, as opposed to Western-style, solutions
appears high. Despite official support for introducing
more market measures into the economy, a free
market came in only 14th in the order of possible
solutions, garnering support from less than 2 percent
of respondents. Meanwhile, 42 percent saw the need
for a "firm hand," an open-ended expression that
NIN interpreted as meaning "increased state control
and intervention."
Data suggest public support for strong, dynamic
leaders at a time when the country is being run by a
faceless collective leadership. Outgoing Premier
Milka Planinc, a tough, candid woman, won high
marks in the NIN phone survey this year, as she did in
similar NIN polls in 1983 and 1984, despite lower
marks for her cabinet. Charismatic, though
ideologically diverse, foreign leaders rank highest
with Yugoslav youth; this year's top choices included
in no specified order President Reagan, Gorbachev,
Qadhafi, and Arafat.
Yet Yugoslays, on the whole, appear increasingly
attracted by democratic practices and wary of the
authoritarianism of Soviet Bloc countries. A large
21
majority believe the public still has too little influence
in electing officials. Some 79 percent believe that the
holding of competitive elections with multiple
.candidates should be mandatory. The practice has
been introduced recently but applied only
sporadically. And few people see a greater role for the
Communist Party, one of the less democratic
institutions, as key to overcoming the crisis.
The Serbia Problem
The polls bear out other evidence that frustrations are
building among the Serbs, a once-dominant ethnic
group that believes its interests have been neglected.
Long leaning toward centralist solutions, Serbians
registered strong discontent with the slow process of
national consensus seeking, with two of three Serbians
voicing dissatisfaction. Serbians also recorded
unusually high concern about the lack of national
cohesion, with only 4 percent saying that unity is
unthreatened.
Concerns were also strong on ethnic relations in
Kosovo, an autonomous province of Serbia where
Serbs are now a small minority beleaguered by the
Albanian majority. In a 1983 survey of residents of
Secret
EUR ER 86-015
4 July 1986
-11- Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
1. I, I 11 I ,IIII I I
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Young Yugoslays generally are
too alienated to help improve
the system but too complacent
to revolt, this NIN cover story
on youth was reported in May.
The graffiti on the wall reads:
"This country needs youth!"
Belgrade, the Serbian as well as national capital,
65 percent had positive views on interethnic relations,
while the figure was exactly the opposite only a year
later. While such a quick turnabout is suspect, a
separate survey of Serbian youth attitudes showed
nearly three-quarters believing that the Kosovo
situation would either never be "normalized"?that
Secret
is, resolved to Serbia's advantage?or that they could
not say when it would be. Interviewers also noted
increasing identification by Serbian youth with pre-
Communist Serbian national heroes.
22
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X1
25X1
I A
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Conclusions
The polls bear mixed tidings for the new government
and party leaders who have come into office in recent
weeks. On the one hand, they suggest that the
Yugoslav public is too self-absorbed, demoralized,
accepting, or divided to stage the kind of nationwide
protests that have rocked some other Communist
states, such as Poland. Nationalist outbursts in
individual regions?Serbia now being a prime
candidate?cannot be ruled out.
On the other hand, these same traits suggest the
public is unlikely to develop the sense of duty and
national purpose that could lead to a sustained
economic and political recovery. An energetic,
decisive leader such as the new Premier Branko
Mikulic could make incremental improvements both
in the economy and public mood. But the
fractiousness, divisions, and differing interests that
have long marked Yugoslav politics will undoubtedly
continue no matter who is in charge.
23
Secret
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
L I 1_1 .1 I...11 I . I. .1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
25X6
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
R
Next 3 Page(s) In Document Denied
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
_11
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Economic News in Brief
Western Europe
According to reliable defense attache source, strictly
West European consortium will produce Eurofighter's
all-new engine. . . details expected to be worked out in
next two months . . . reduces likelihood of US
participation in engine development.
West German Finance Minister ordering ministries to
cut 1986 spending by $450 million . . . offsets
compensation paid farmers resulting from Chernobyl
and EC farm policy changes . . . further evidence
Bonn resisting moves to stimulate economy.
West German Putzmeister firm to deliver at least five
special cement mixer trucks to USSR . . . probably for
use in sealing area around Chernobyl reactor core . . .
truck cabs heavily shielded with lead.
Norwegian parliament approved $420 million austerity
package . . . minority Labor government reversed
position, accepted opposition proposals to avoid
showdown . . . package insufficient to resolve fiscal
crisis caused by falling oil revenues.
Eastern Europe
CEMA has discussed new aid products with
Nicaragua, including gold mining, hydroelectric,
textile projects . . . will add to $1.9 billion in Soviet
Bloc economic aid since 1979 . . . proposals could be
signed in October.
Czechoslovakia to receive syndicated loan of $100
million from Western banks this month . . . because of
favorable terms, Prague likely to borrow another $100
million this fall . . . will use loans to finance imports,
cover debt service payments.
29
Secret
EUR ER 86-015
4 July 1986
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
. i II I .1 ? ..? 1. 1, ?.11. 1.. , 1. .1
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
A .
.1 I
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Looking Ahead
July
Western Europe
West German Foreign Minister Genscher has accepted invitation to visit USSR in
late July. ... plans to meet Gorbachev, Foreign Minister Shevadnadze ... arms
control almost certain to be main discussion topic.
31
Secret
EUR ER 86-015
4 July 1986
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
1. II I .1,, . ,?,.J. i1I I J
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2
Secret
Secret
Declassified in Part - Sanitized Copy Approved for Release 2013/01/03: CIA-RDP87T00289R000301120001-2