NATIONAL INTELLIGENCE DAILY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83T00296R000200010080-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 22, 2016
• Document Release Date: January 20, 2011
• Sequence Number: 80
• Publication Date: March 27, 1981
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6 25X1
/~,~g~llGg\
Director of
Central
Intelligence
National Intelligence Daily
Friday
27 March 1981
Top Secret
copy 2 2 7
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
Poland: Increased Threat of Confrontation . . . . . . . . 1
Pakistan: New Constitutional Framework . . . . . . . . . 8
EC: Summit Results . . . . . . . . . . . . . . . . . . . 9
Lebanon: Army Units To Move South . . . . . . . . . . . . 10
Romania : New Sign of Unrest . . . . . . . . . . . . . . . 10
South Korea: National Assembly Elections . . . . . . . . 11
Special Analysis
Argentina: Viola Takes Charge . . . . . . . . . . . . . . 12
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
Solidarity went ahead with its plans for short "warning"
strikes today after the government postponed yesterday's expected
meeting between union and government negotiators.
The strikes--which began early this morning and
were to last two to four hours--were held in all econ-
omic sectors except those providing vital services and
rail transportation. Solidarity's decision to keep the
transportation system functioning is a recognition of
Soviet sensitivities and an effort to show that it is
using the strike weapon "responsibly." The union also
has taken elaborate precautions to ensure that the
strikes are calm and disciplined.
The government is attempting to put Solidarity on
the political defensive by calling the strikes "suicidal"
in light of Poland's economic problems. This argument
has had little impact on the attitudes of the populace
who see the strike as a protest against police brutality.
For the same reason, Kania's call for party members not
to join the strike probably went unheeded.
The government's postponement of talks with the
union--which were slated to resume today--and its other
recent behavior reinforce signs of deep divisions within
the party leadership. Western reporters in Warsaw have
heard rumors of a confrontation in the Politburo last
weekend over the possible declaration of martial law.
One or both factions in the leadership may have decided
to take the case to the Central Committee session this
Sunday.
The session now appears to be shaping up as a
major confrontation between hardliners who support the
imposition of martial law and moderates who are demanding
punishment of those responsible for the Bydgoszcz inci-
dent and for a purge of conservatives opposed to reforms. 25X1
The moderates hope to unseat,
among others, Stefan Olszowski and two other full 25X1
25X1 Top Secret
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
As in previous periods of increased tension, the
government has moved to limit Western press coverage of
events in Poland. Government actions this time appear
more extensive and include barring entry to any addi-
tional Western journalists and refusing Western tele-
vision correspondents access to Polish facilities for
transmitting their reports.
Prime Minister Jaruzelski yesterday discussed the
tense situation with Polish Primate Wyszynski and pre-
sumably asked for the Church's intervention to help
mediate with Solidarity. The two men agreed that
conflicts can be resolved by peaceful means and called
for a "full and objective" appraisal of the incident
in Bydgoszcz. The latter statement may be a sign that
the regime is willing to admit wrongdoing by the police.
Jaruzelski's meeting with Wyszynski--his first ever--will
help reinforce the favorable image he has within Soli-
darity and many other segments of the society.
Moscow Blasts Solidarity
The Soviets yesterday continued to lay the propa-
ganda groundwork for a regime crackdown on Solidarity
by issuing their most sweeping public condemnation of
the union to date.
The TASS report, which described the situation in
Poland as "extremely tense," made a number of charges
against Solidarity, each of which on its own would be
grounds for repressive measures in Moscow's eyes. It
stated that Solidarity is preparing for a general strike
and is flooding the country with leaflets containing
"direct threats against Communists." According to
Polish Deputy Premier Rakowski, Solidarity also is de-
livering ultimatums to the government, attacking the
militia and security services, declaring a "war on
peoples' power," and weakening Poland's international
standing.
TASS fully backed the Polish party's tough stance
on the Bydgoszcz incident. It did not shut the door
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
on continued talks between the regime and Solidarity
but made it clear that they can only be conducted on
the regime's terms.
Quoting the Polish news agency, TASS stated that
"measures are being taken to restore order" in light
of Solidarity's "provocative" actions. This represents
both a Soviet approval of such a course and, at the
same time, a form of pressure on the Polish Government 25X1
Economic Problems
A Polish financial official said yesterday that
Poland will default on its debts to Western creditors
on Tuesday unless it immediately receives substantial
financial assistance. He made the statement to the
five-nation task force--consisting of representatives
of the governments of the US, the UK, France, West
Germany, and Austria--meeting in Paris to discuss re-
scheduling. The Poles will pass the same message to
private banks in New York today and in London on Monday.
The Poles are asking for $1.3 billion through some
combination of loans and deferrals of payments due in
the March-June period. Polish data indicate that Po-
land's debt service obligations will come to about $2.2
billion in that period. Task force members made no
official response to Warsaw's plea but implied that
Poland stood little chance of obtaining the quick fix
it is seeking.
The Polish official in Paris said Poland was on
the verge of default because Western banks had with-
drawn deposits from Polish banks and had failed to
provide promised export credits, exports had fallen
below expectations, and bridge financing had been
only partially implemented. Warsaw's impending bank-
ruptcy also points to the limits of Soviet assistance. 25X1
The heightened political tension in recent weeks
has increased food hoarding and created the worst food
supply situation in years. The additional--but unsatis-
fied--demand for food from an already strained market
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
Norway
Sweden
0A1 14
Gdynia
Gdansk
If(
f
ti
West
Germany
Italy
Adriatic
Sea
Poland
VIENNA*
*BUDAPEST
Hungary
Yugoslavia
Boundary representation is
not necessarily authoritative.
U. S. S. R.
Romania
*BUCHAREST
Black
Sea
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
network has increased consumer impatience and resulted
in some violent confrontations with store workers.
While rationing has been formally imposed only in Gdansk,
local informal rationing of most staples and household
goods is widespread and will probably continue for the
foreseeable future.
4 25X1
27 March 1981
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
25X1
Next 3 Page(s) In Document Denied
Iq
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
President Zia is moving boldly to gain the political initiative
and strengthen his leverage over the opposition.
Exploiting the opposition's disarray in the after-
math of the recent hijacking, Zia on Wednesday promul-
gated an order that sets aside the guarantees of parlia-
mentary government and judicial independence in the
Constitution of 1973 and provides a legal framework for
prolonged military rule. The order gives Zia the author-
ity to break up the party system and make the country a
benevolent, if authoritarian, Islamic state.
The new legislation effectively dissolves the Paki-
stan People's Party, the country's largest political
group, and all but one of the other parties in the oppo-
sition alliance, and allows the government to control
the formation of new parties. It empowers the President
to appoint a quasi-legislative Federal Advisory Council
and promises a resumption of political activity only at
some point in the future.
Zia could be overreaching himself by banking on the
emotional and probably transitory support resulting from
the hijacking. Neither the party leaders nor important
social groups--some of which have backed Zia in the past--
are prepared to abandon permanently parliamentary govern-
ment and judicial independence.
The spreading belief that Zia has brought the country
to a turning point could rapidly dissipate his recent
gains, revive the opposition's momentum, and unsettle
key supporters in the Army and the bureaucracy who worry
that Zia is going too far in making Pakistan an Islamic 25X1
state.
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
The EC summit this week in the Netherlands was characterized
by general harmony on foreign policy issues but sharp disagreement
on some pressing Community internal problems. 25X1
The summit participants followed the line reportedly
taken recently by Chancellor Schmidt and President Giscard
by agreeing that US foreign policy is still evolving and
that a wait and see approach is necessary. In part for
this reason, they reaffirmed the need to go slow on their
Middle East initiative. 25X1
The EC leaders, however, also saw an opportunity for
increased West European influence on US policy. Schmidt
and Prime Minister Thatcher suggested that the EC should
work toward settlement of the Namibian problem.
Although security issues are technically outside the
scope of EC political cooperation, Schmidt stressed the
need for US-Soviet talks on limiting theater nuclear
forces. EC leaders probably have discussed NATO issues
at previous summits, but this is the first time that they
have publicly admitted doing so. 25X1
The EC leaders also finally endorsed Giscard's recent
proposal for an international conference on Afghanistan.
On Poland, they did not specifically decide how to handle
additional EC or bilateral aid. 25X1
Disagreement over internal issues reflected the
severe economic constraints the EC members now face. The
Common Fisheries Policy was a subject of heated debate.
Schmidt criticized Thatcher for refusing to accept a
fisheries agreement which would allow West German fish-
ermen access to Canadian waters.
Schmidt warned that Bonn would no longer make finan-
cial sacrifices for other EC members. EC ministers will
meet today to try to resolve the controversy.
The West German leader also chastised his colleagues
for continuing to subsidize their steel industries and
threatened to impose import restrictions if EC members
fail to limit subsidies. On farm prices, the EC leaders
agreed to try again to achieve a compromise before their
deadline of 1 April. This will be a difficult task
because the UK and West Germany want to keep price hikes
low, and Giscard--with the French election in mind--wants 25X1
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
BovnCery representation
not necessar!ly authoritative
Syrian Dominated
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
LEBANON: Army Units To Move South
test the redeployment in the UN zone of Lebanese Army
The Lebanese Government's decision on Wednesday to
send additional Lebanese Army troops to join the UN force
in southern Lebanon may lead to renewed clashes there.
President Sarkis told US officials in Beirut that the
redeployment, which could get under way next week, would
take place in stages to avoid antagonizing the Israelis.
The troops, moreover, are to emphasize civic action and
medical duties. Israeli-backed Christian militia leader
Haddad, nevertheless, is likely to react with force if
the new troops are stationed near the border enclave he
dominates. Three UN soldiers were killed earlier this
month when Haddad's forces shelled a UN position to pro-
elements already in the south.
ROMANIA: New Sign of Unrest
The US Embassy has obtained a copy of a handbill
calling for the formation of free trade unions and for
a general strike on 1 May and demanding the right to
strike, a five-day workweek, wage increases, and a freeze
on food prices. When similar handbills were discovered
in various parts of the country two months ago, Romanian
authorities were concerned about the apparent attempt
to link discontent over food shortages and poor working
conditions with developments in Poland. Their extensive
efforts to find those responsible apparently had little
success. The security apparatus quashed a nationwide
rail strike planned for 1 March, however, and it probably
would have little trouble preventing a general strike. 25X1
President Ceausescu continues to resist making any
major policy adjustments to deal with the causes of mount-
ing worker discontent. Yesterday, in what appeared to be
an attempt to improve implementation of existing policies,
he replaced several high-level officials responsible for 25X1
economic management. These changes, however, are unlikely
to improve economic performance significantly.
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
SOUTH KOREA: National Assembly Elections
The government party's sweep of 151 of the 276 seats
at stake in the National Assembly elections on Wednesday
marks the final stage in the transition to a government
dominated by President Chun. The Democratic Justice
Party performed better than even its organizers had
predicted, winning 34 percent of the popular vote--up
slightly from its predecessor's 31.7 percent in the
election of December 1978. Only two other parties won
more than two seats. Although the Democratic Justice
Party's win was guaranteed by new election and party
laws, vote buying, and pressure on opposition candidates
to withdraw, the government will cite the unexpected
margin of its victory as an expression of the people's
desire for stability and continued strong leadership
under Chun. In the past, the Assembly has not played a
major part in policymaking, and the new legislature--
scheduled to convene around 10 April--is likely to 'W-WA
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
ARGENTINA: Viola Takes Charge
When retired Army General Roberto Viola replaces President
Jorge VideZa on Sunday, he will face massive economic problems,
conflicting pressures over civilian participation in the political
process, and demands for an honorable settlement of the Beagle
Channel dispute with Chile. Viola's prescriptions for solving
these and other problems are likely to encounter vigorous opposi-
tion as Argentina enters its sixth year of military rule.
The politically moderate Viola will share power
with a three-man junta comprising the heads of the mili-
tary services. Although important government decisions
will be made only after consultations with and approval
by the junta, Viola is a strong leader who will seek to
impose his own personal views on policymaking. He will
have to contend with some influential members of the
military hierarchy who are opposed to his alleged popu-
list leanings and softness in dealing with Chile, as
well as his tacit support of outgoing Economics Minister
Martinez de Hoz, whose policies have left a legacy of 1)r-v11
Economic Situation
The ailing economy, which has registered little
growth in the last five years, will be the new govern-
ment's most urgent concern. Although Martinez de Hoz
has restored Argentina's international financial stand-
ing and maintained full employment, he has not been able
to make Argentine businesses competitive overseas or to
lower the inflation rate to an acceptable level.
A wave of bankruptcies and financial jitters, more-
over, have undermined business confidence and have led
to a drain on foreign reserves. To reduce inflation,
the peso was allowed to become progressively more over-
valued during the past year in the expectation that
--continued
Top Secret
27 March 1981
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
cheaper imports would force Argentine producers to cut
costs and lower prices. Many businesses were unable
to compete, however, and they failed, as did several
financial institutions that had lent too much to found- 25X1
ering firms.
The overvalued peso made Argentine exports over-
priced for foreign buyers; exports, in turn, dropped
while imports jumped. The sizable current account
deficit reduced foreign exchange reserves in 1980 from
$11 billion to $7 billion.
After Martinez de Hoz finally permitted a 10-
percent devaluation in early February of this year,
Argentines concluded that a more realistic devaluation
would follow, and they rushed to convert pesos to dol-
lars. The massive outflow since devaluation has further
reduced reserves to a little over $4 billion.
Viola's economic team now must restore confidence
and stimulate growth. It probably will not be much more
successful than Martinez de Hoz, however, in restraining
government spending--the chief cause of inflation.
Additional devaluation to stimulate export produc-
tion and to restrain imports is likely, but it also
would be inflationary. A new round of inflation could
prompt active opposition from organized labor.
Political Liberalization
The new President's toughest political test will be
in developing a framework for bringing civilians--
especially the Peronists--back into the political proc-
ess. The military's timetable for reversion to civilian
rule remains unclear, but it appears unwilling to accept
an elected civilian government before 1987.
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
The military is particularly wary of the Peronists,
who they believe brought the country to the brink of
ruin before being ousted in March 1976. Viola's culti-
vation of old-style party and trade union leaders also
has raised suspicions in some military quarters that he
will provide them a political opening.
Political party activities are still suspended, but
recent open criticism of government policies by the
parties has become harder for the authorities to ignore.
Meanwhile, Viola is placing more civilians in his
cabinet and at all levels of government, and his inclu-
sion of some Peronists and Radical Party members in
lower-level government jobs will add to the unease of
some of his military colleagues.
The Beagle Channel Issue
about the Beagle Channel mediation. Pope John
Paul II's proposal for solving the dispute created a
major split in Argentina's ruling group because its fail-
ure to establish clearly Argentine maritime claims could 25X1
The Argentines seem
determined to draw out the talks, hoping to wear down
both the Vatican and Chile, which accepts the Pope's
proposal.
Viol
will have to fend off its most influential
critics, who probably would push for a military solution
if the mediation fails.
Viola's recent unofficial meetings with top US
officials have given him an important boost. The view
in Buenos Aires that he has substantially improved
relations and opened the door to renewed US military
sales to Argentina will afford him considerable short- 25X1
term political capital.
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
The long-term success of Viola's administration,
however, will depend largely upon his ability and that
of his advisers to bring Argentina out of its economic
doldrums. Although they probably will continue to adhere
to free market principles, some major changes in policy
will be required.
The new leadership has not yet agreed on specifics,
but the more extreme measures that may be necessary
will be hard to sell. Argentines are not accustomed
to austere living.
The onus of failure will fall more directly upon
Viola than it did upon Videla because he will assume
more responsibility for economic decisionmaking. A
major improvement in the economy appears essential
before any real progress can be made in Viola's
cherished program of political liberalization. Until
that time, Viola will have to summon all of his political
skills to mollify his military opponents, who mistrust
and could try to overthrow him, and civilian political
leaders, who believe that military rule has nearly ex-
hausted itself.
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
 Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6
Top Secret
Top Secret
Sanitized Copy Approved for Release 2011/01/20: CIA-RDP83T00296R000200010080-6