SOUTHERN EUROPE: SOCIALISTS IN GOVERNMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85S00316R000300010006-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 22, 2016
• Document Release Date: August 31, 2010
• Sequence Number: 6
• Publication Date: October 1, 1984
• Content Type: REPORT

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Directorate of
Intelligence
in Government
Southern Europe: Socialists
An Intelligence Assessment
EUR 84-10196
October 1984
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Directorate of
Intelligence
Southern Euro e? Socialists
in Government
An Intelligence Assessment
European Issues Division, EURA,
Office of European Analysis. Comments and
queries are welcome and may be directed to the Chief
This paper was prepared b
support from
Secret
EUR 84-10196
October 1984
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Southern Euro e? Socialists
in Government
and perhaps politically suicidal-to revert to a more dogmatic stance
Key Judgments The advent of Socialist-led governments in France, Spain, Italy, Portugal,
Information available and Greece has put an end to decades of conservative or rightwing rule
as of 28 September 1984 while marking a transformation of southern European socialism. The
was used in this report.
parties now have become mass-based catchall groupings whose support
comes not only from workers and leftist intellectuals, but increasingly from
the middle class of white-collar private-sector employees and civil servants, 25X1
who tend to favor reformism over orthodox socialism. As a result, most of
the parties have jettisoned Marxist rhetoric and would find it difficult-
Except in Portugal, the parties won election by pledging major change, but
their domestic and foreign policies in office often differ little from those of
their predecessors:
? The failure of French President Mitterrand's initial expansionist experi-
ment set a powerful negative example for other socialist governments.
Italy, Spain, and Portugal are now pursuing austerity programs of
varying severity.
? In foreign affairs, the French, Italian, and Portuguese parties have
generally taken a strongly pro-NATO stance. They sometimes criticize
US policies in the Third World, but they actively support Western
countermeasures to the Soviet military buildup. This is especially true of
the French party, which is substantially more assertive toward Moscow
than was the Giscard administration.
? The Spanish party has halted Spain's military integration into NATO,
and its intentions regarding future military cooperation with the Alliance
remain unclear. The Socialists are working, however, to keep Spain in the
political wing of the Alliance and have supported INF deployment.
? In terms of rhetoric-and some foreign policy initiatives-the Greek
Socialists remain more troublesome than the others, but internal and
international constraints have forced them to back away from their
former extreme positions on issues such as NATO, the EC, and US bases
in Greece.
According to several opinion surveys in the five southern European
countries, most voters believe their governments have brought little basic
change and failed to solve basic economic problems. As a result, many of
those who voted for the Socialists now are disillusioned. In general,
Secret
Secret
EUR 84-10196
October 1984
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however, those who would consider abstaining or voting for another party
in the next election are swing voters rather than hardcore Socialists upset
with their governments' moderation. The swing voters are much more
likely to opt for the center-right than for the extreme left, and at least in
France they would return the conservatives to power were elections held
now. Hence, Socialist-led governments have more political incentive to
make their moderate economic programs work than to adopt more radical
approaches.
The socialist record has been mixed on issues of direct importance to the
United States. Except in Greece, the Socialist-led governments have
supported key NATO initiatives but criticized US policies in areas such as
Central America. Indirectly, the Socialists have promoted US interests by
limiting Communist influence and strengthening support for democratic
rule in southern Europe.
In the near term, the Socialists are unlikely to change their generally
pragmatic foreign policies, which are not a major cause of voter discontent
at present. Anxiety about new weapons programs or bilateral disputes with
the United States on issues such as base arrangements, however, could fuel
anti-US sentiments within the parties and among the general population.
In this case, the other Socialist-led governments would be tempted to
follow the Greek Socialists' example of playing up their differences with
Washington in order to shore up their own popularity
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Key Judgments
Socialist Ideology
Socialist Promise: The Call for Change
3
Socialist Performance: Emphasis on Continuity
4
Foreign Policy
9
Little Change
11
Prospects
11
Longer Term Perspectives
12
Implications for the United States
13
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Southern Euro e: Socialists
in Government
A series of socialist election victories in the early
1980s has transformed the political map of Western
Europe. While center-right parties rule in most of
northern Europe-where Socialists traditionally have
been strong-in much of southern Europe socialist
parties have come to power for the first time in
decades:
? In May 1981, the French Socialist Party won its
first national election since the Fifth Republic was
founded in 1958.
? The Panhellenic Socialist Movement (PASOK) re-
placed a conservative government in Athens in
October 1981 to become Greece's first socialist
administration.
? In December 1982, the Spanish Socialist Workers'
Party formed a government for the first time since
the 1930s.
? In August 1983, Italy's first postwar Socialist Party
prime minister formed a coalition government with
the Christian Democrats and three small lay parties.
? In addition, the Portuguese Socialist Party, which
was in office from 1976 to 1978, formed a govern-
ment with the more conservative Social Democrats
in June 1983
The performance of these governments has reversed
the poles of European socialism. Until the late 1970s,
academic studies contrasted the pragmatism of north-
ern European socialist and social democratic parties
with the orthodoxy of the southern Socialists. At
present, however, the French, Italian, Portuguese, and
Spanish parties are stressing moderation at home and
abroad, while their British, Swedish, and West Ger-
man counterparts are proposing more radical ap-
proaches in defense, foreign affairs, and some eco-
nomic areas. This contrast is due in part to the fact
that most northern parties are out of power while
those in the south now must cope with the responsibil-
ities-and constraints-of governing. But it also
arises from basic changes in the internal balance of
power in these parties that have made leftist factions
predominant in the north and placed moderates at the
Socialist Parties: Percent of
Vote in Last National Elections
For the most part, the policies of southern European
socialist governments differ modestly from those of
their more conservative predecessors, especially in the
economic realm. Only the French Socialists imple-
mented a radical economic program-much of which
they subsequently abandoned. Only the Greeks have
taken a dogmatic approach-at least rhetorically-to
foreign affairs
This paper analyzes the promise and performance of
the governing socialist parties in southern Europe. It
examines their ideology and social base, their social,
economic, and foreign policies, and their current
standing in public opinion. Finally, the paper assesses
the implications of socialist rule for the parties' future
and for US interests)
helm in the south
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In general, the social and economic programs of the
four Latin parties have evolved similarly to those of
their northern European counterparts. In the early
postwar period, northern European socialism was
primarily a militant working-class movement stressing
nationalization and central economic planning. By the
early 1960s, however, socialist parties such as the
West German SPD began to emphasize socialization
of consumption rather than production. Income redis-
tribution and Keynsian economic management, they
concluded, could mitigate the "evils" of private own-
ership. To achieve power, they also became mass-
based catchall parties, appealing especially to the new
middle class of white-collar employees. The French
and Italian parties underwent a similar evolution in
the 1960s and 1970s, while the Portuguese and Span-
ish Socialists followed suit in the late 1970s.
The Greek party differs from the others in some
respects, in part because it is much newer. Prime
Minister Papandreou founded the Panhellenic Social-
ist Movement in 1974 as a coalition of disparate
political and social forces that had opposed the colo-
nels' dictatorship. So far, the party has relied on
Marxist rhetoric, appeals to nationalism, and its
leader's charismatic personality much more than the
other southern European socialist parties. In some
ways, however, it may have begun to enter the
Socialist mainstream. The party now grudgingly ac-
cepts Greek membership in NATO and the EC, for
example, and cooperates with the other socialist par-
ties in the European Parliament
Southern European parties continue to face some
longstanding internal tensions on both domestic and
foreign policy despite their ideological evolution-and
in some cases because of it:
? Socialist economic policies have increased the size
and power of the state. Strong currents within the
parties, however, favor various forms of economic
decentralization and self-management. In addition,
greater state control of the economy at least poten-
tially threatens the individual rights long champi-
oned by Socialists.
? In foreign policy, Socialists have long stressed
peace, international solidarity, and the dangers of
the arms race. At the same time, most of the parties
contain strong nationalistic, anti-Communist, and
anti-Soviet elements. As a result, the parties are
often sharply divided over policies toward the Soviet
Union and cooperation with domestic Communists.
National peculiarities and experiences cause major
differences among the parties, especially in foreign
policy. The French Socialists, for example, have in-
herited the Gaullist legacy of independent nuclear
forces and aspirations to a leading world role. The
Portuguese Socialists are adamantly anti-Soviet,
probably in part because of their conflicts with the
Stalinist Portuguese Communist Party in the after-
math of the 1974 revolution. The Greek party is
harshly critical of the United States and NATO
because of their putative responsibility for the 1967
military takeover and perceived sunnort of Turkey in
the Cyprus and Aegean disputes
The gradual broadening of most parties' social base
has reinforced their more pragmatic and moderate
approach. It also will make it difficult for them to
change course and adopt more radical policies. Tradi-
tionally, the French and Italian parties were alliances
of unionized workers and Marxist intellectuals op-
posed to "bourgeois capitalism." Like their northern
European counterparts, French and Italian Socialists
generally were weak among the middle and upper
classes, women, and Roman Catholics. Their class
appeal diminished in the 1950s and 1960s, however,
as prosperity weakened class divisions and center-
right parties gained among the workers. In response,
they increasingly deemphasized Marxism, stressed
common interests of manual workers and white-collar
employees, and successfully appealed to Christians
and women. The Spanish and Portuguese parties,
which had been small groupings of largely middle-
class emigres during the authoritarian regimes, simi-
larly broadened their popular appeal in the late 1970s
while retaining working-class support. The Greek
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party began as a collection of primarily young,
middle-class leftists but has increasingly attracted
farmers and industrial workers by stressing national-
ism and social change.
Recent opinion surveys confirm the Socialists' broad
electoral appeal in all five countries. Socioeconomic
differences between socialist and center-right elector-
ates are often only moderate. To be sure, manual
workers are much more likely to have voted for the
Socialists than for the center-right in the last French,
Portuguese, and Spanish national elections, according
to the polls. White-collar employees also tended to
support the Socialists in Portugal, however, and were
about evenly divided among the Socialists and the
center-right in France and Spain. The smaller Italian
party received only a minority of votes among all
occupational groups, but its strength is virtually even
among workers, white-collar employees, and high-
status professionals, according to a recent survey.
The Socialists also have broad support across other
demographic categories, according to the polls. So-
cialist strength is fairly even across age groups except
in Italy, where the Socialists do less well among those
under 30. In France, Italy, Spain, and Portugal, the
Socialists polled about equally among men and
women. In general, socialist and center-right voters in
these countries are about equally likely to be in the
lowest third of the population in terms of income. But,
while a higher proportion of center-right voters have
high incomes, Socialists are more likely to be in the
middle third.
The Socialists' major campaign theme was the need
for political, social, and economic change. The Span-
ish party's slogan, for example, was por el cambio (for
change), while the Greek party's was simply allagi
(change). After decades of conservative or rightwing
rule, the Socialists offered different faces with a
distinctive style and-they claimed-new ideas. Only
the Portuguese Socialists suffered the disadvantage of
having governed recently-from 1976 to 1978-with
only a lackluster performance on the economy
Socialist Parties: An Expanding Social Base
Since the 1960s, most of the socialist parties have
become much more representative of their countries'
populations as a whole. In particular, the growing
"new middle class" of civil servants and employees in
emerging industries has provided increasing electoral
support:
? In France, for example, opinion polls show that 45
percent of the country's middle-class employees and
civil servants voted socialist in the 1981 National
Assembly election, as compared with below 30
percent in 1978 and 1973 and 15 percent in 1968.
The middle-class share of the socialist vote in-
creased only slightly, however, because the party
also greatly bettered its performance among work-
ers-largely at the Communists' expense.
? In Spanish national elections between 1977 and
1982, the Socialists markedly increased their fol-
lowing in traditionally conservative rural provinces
and among centrist white-collar employees.
? The Italian Socialists receive well over half of their
support from the middle class, according to recent
opinion polls. A study published in 1982 showed
that the Socialists had significantly increased their
strength among white-collar employees since the
mid-1970s while losing working-class support.
? Since the 1974 revolution, the Portuguese Social-
ists have striven to be a mass-based party. Accord-
ing to various studies, the party's core supporters
tend to be in the urban middle class, but the
Socialists are also strong among peasants and
industrial workers.
? PASOK demonstrated a strong appeal across class-
es and regions in the 1981 national election. Ac-
cording to opinion surveys, 48 percent of voters in
both urban and rural districts voted for PASOK,
and it polled virtually as well among upper-middle-
class voters as among unskilled workers.
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To many voters, "change" meant improvement of the
economy. The worldwide recession was the conserva-
tives' major handicap, according to various polls and
press reports. The Socialists highlighted their promise
to strengthen the economy, particularly to fight un-
employment. The French party, for example, prom-
ised to stimulate employment through government
fiscal and investment policies, and to create 150,000
jobs directly in the public sector. The Greek party
pledged to revitalize the economy by socializing key
industries and redistributing wealth to lower paid
workers. Remedies for the economy in the other
countries, however, were not particularly socialistic.
The Spanish party's plan for creating 800,000 jobs
over four years relied primarily on subsidies and tax
breaks to encourage private investment. The Italian
Socialists advocated holding public spending constant
in real terms and promoting technological innovation
in the private sector. The Portuguese stressed that
austerity and economic sacrifice would be necessary.
In addition, the Socialists promised an assortment of
social and political reforms. The French and Greeks,
for instance, pledged to loosen central government
control over localities and regions. The Italian Social-
ists proposed several institutional innovations to
strengthen the presidency and increase Cabinet stabil-
ity. All five parties endorsed various reforms regard-
ing labor relations, the penal system, women's rights,
and education. The proposed reforms reflected tradi-
tional leftist concerns for equality and social justice,
but few were distinctively socialistic. Indeed, some
proposals, such as political decentralization in Greece
and France, inherently conflicted with traditional
socialist objectives of reducing regional disparities and
increasing central government control of the economy.
On foreign policy, the parties' positions reflected
national as much as ideological concerns. In general,
parties in France, Italy, Spain, and Portugal strongly
criticized Soviet military and external policy, but also
urged greater West European independence from the
United States. The Spanish party condemned
Madrid's entry into NATO and demanded a national
referendum on the question. The Greek party was
stridently critical of the United States in the pre-
election period, particularly of Washington's military
aid to Turkey, and called for the closing of US bases
on Greek soil. By the time the election was held, how-
ever, Greek Socialists had already moderated their
demand for complete withdrawal from NATO and
the EC.
The parties' emphasis on ideology varied widely.
The French Socialists-along with their Communist
allies-pledged to "break with capitalism" and spoke
of a "new vision" for the French political and eco-
nomic system. The Greek Socialists used a blend of
Marxist and nationalistic rhetoric. In Spain, by con-
trast, the Socialists had explicitly renounced Marxism
in 1979; in the 1982 campaign, they called for realism
and moderation. The dominant factions in the Italian
and Portuguese parties likewise distanced themselves
from Marxism and urged pragmatic policies, particu-
larly for the economy.
Socialist Performance: Emphasis on Continuity
the United States.
In office, the Socialists have instituted little funda-
mental change. In our opinion, the recession that
helped bring them to power ironically also prevented
the attainment of their more radical objectives. In
particular, the need to limit ballooning budget deficits
has ruled out major new spending programs, and the
recent modest economic upturn has only slightly
lessened this constraint. In foreign policy, France,
Portugal, and Italy have generally pursued a strongly
pro-NATO course. The Spanish Government has
dropped its opposition to membership in the Alliance,
although it has frozen Spain's military integration in
NATO at least temporarily. Even the Greek party's
stridently anti-US rhetoric and troublesome antics
mask a moderation of its positions toward NATO and
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Table 1
Southern Europe: The Socialist Record
Nationalize private banks and nine indus- Achieved in early 1982.
trial groups
Reduction of working time, increase in
minimum wage
Introduced fifth week of paid vacation and
39-hour workweek in January 1982; in-
creased minimum wage repeatedly, al-
though by less than the inflation rate.
Passed in December 1981; now proposing
cuts in income and business taxes.
Various government measures to "re-
launch the economy"
Abolition of death penalty
Right to vote in municipal elections for
immigrant workers with five years
residence
Moratorium on new nuclear power plants
and referendum on the subject
Decentralization of the state
Creation of a Basque province
Progressive and simultaneous disarma-
ment to abolish military blocs
Withdrawal of Soviet SS-20s and cancel-
lation of US Pershing II deployment
Deficit reductions through spending limits
and crackdown on tax evasion
Creation of public-sector jobs
No specific commitment regarding wages
Direct election of the president; 5-percent
barrier for parties' representation in Par-
liament; various measures to strengthen
the prime minister's position
Limitations on public service strikes, espe-
cially in transportation
Supported NATO's dual-track INF
decision
Strongly expansionary fiscal policies in
1981 and early 1982; austerity measures
since June 1982 including limits on social
spending, price increases for public serv-
ices, deflationary monetary policies.
Passed in October 1981.
Abandoned.
Executive powers transferred from pre-
fects to local elected assemblies; powers of
prefects primarily limited to coordination
between Paris and localities.
Abandoned.
Slow rate of growth in defense spending;
increased military cooperation with
NATO; proposals to revitalize Western
European Union.
Strong support for Western INF deploy-
ment; refusal to include French forces in
INF negotiations.
Abandoned 1983 deficit target; 1984 defi-
cit will almost certainly expand in absolute
terms and as percentage of GDP.
Few public service jobs created.
Reductions in automatic wage indexation
system.
Craxi has formed an "inner Cabinet" to
increase the government's decisionmaking
flexibility; reforms of parliamentary pro-
cedures to reduce small parties' ability to
block legislation.
No action yet.
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Table 1
Southern Europe: The Socialist Record (continued)
Economy Create 800,000 jobs over four years No net job creation so far; pushing unions
to accept real wage cuts.
Social and political reforms More public control over religious schools Created councils representing parents and
local governments to oversee private
schools.
Liberalization of abortion Accomplished.
Continue process of regional devolution Limited transfer of administrative powers
to the region, but general slowdown of
devolution.
Defense and foreign affairs Referendum on NATO membership May hold referendum in 1985; govern-
ment working to keep Spain in the politi-
cal wing of the Alliance.
Spanish accession to the EC Negotiations aiming at Spanish accession
on 1 January 1986.
Open banking and insurance to private Law passed July 1983.
participation
Repeal government ceiling on wage Passed in June 1983.
increases
Limit government spending; no major new Limits on state expenditures and other
social programs austerity measures demanded by Interna-
tional Monetary Fund.
Various measures to improve urban living Has proposed anticrime and antiterrorist
conditions (health, housing, crime, con- legislation.
sumer protection)
Defense and foreign policy Speedy negotiation of US base renewal US lease of Lajes Air Base in the Azores
renewed in December 1983.
Promote EC accession Progress on negotiations for EC entry,
scheduled for 1 January 1986.
Economy Expansionist fiscal policies Increased public spending, especially on
social programs and public-sector wages.
Tax and wage adjustments to redistribute Sharp increases in minimum wage; full
income inflation indexing for lower paid public
servants; higher business and indirect
taxes.
"Socialize" key sectors of the economy Introduction of management councils in
public-sector industry representing work-
ers, local governments, and the state; some
nationalizations.
Social and political reforms Full church-state separation Introduced civil marriage against the op-
position of much of the orthodox clergy.
Ease restrictions on political refugees liv- Accomplished December 1982.
ing in Communist countries
Enacted measures that make it more diffi-
cult for private schools to function
effectively.
Created provincial councils with planning
and budgetary powers; weakened position
of central government representatives to
the regions.
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Table 1 (continued)
Remove US bases and nuclear weapons
from Greece
Referendum on EC membership
Proposal for Balkan nuclear-free zone;
strong criticism of NATO policies, includ-
ing INF; no move to withdraw from the
Alliance.
Signed five-year renewal of base agree-
ment with Washington in 1983.
No referendum or moves to withdraw
from EC; extraction of special concessions
from Brussels regarding import restric-
tions and development aid.
Domestic Policies
The French Socialists came to office on a wave of
euphoric optimism, and-to judge by their actions
and public statements-believed they had a historic
opportunity to transform French society. Indeed,
President Mitterrand's first year in office saw a bold
attempt to realize socialist objectives. Within less
than 12 months, the government had implemented
much of its economic program, including:
? Nationalization of nine major industrial groups and
of the remaining private French-owned banks.
? Creation of 125,000 public-sector jobs.
? Introduction of a 39-hour workweek with no pay
reduction, addition of a fifth week of paid vacation,
and an increase in the minimum wage.
? Increases in unemployment benefits, family allow-
ances, and various other social programs.
? Imposition of a progressive tax on wealth.
Mitterrand's initial economic program was an unmiti-
gated failure. His strongly expansionary fiscal policies
in 1981 and early 1982 increased the already large
budget deficit and-since the increased purchasing
power injected into the economy was spent primarily
on imports-also increased trade deficits, foreign
borrowing, and pressure on the franc. In addition,
socialist policies pushed up consumer prices at a time
when inflation in France's major trading partners was
rapidly decreasing. In response, Mitterrand shifted to
a policy of "rigor." An initial austerity package in
June 1982, followed by more stringent measures in
1983, imposed new taxes and constraints on public
spending. This change of course marked a strong
rebuff to the Communists and leftwing Socialists, who
called for greater state intervention to limit imports,
inflation, and unemployment. Mitterrand now is pur-
suing an ambitious program to modernize France's
aging industrial infrastructure by cutting subsidies
and forcing layoffs in inefficient sectors such as
shipbuilding and steel-a major reason the Commu-
nists cited for leaving the coalition in July.
Mitterrand's failure set a strong negative example for
other socialist parties. The Spanish Socialists, for
instance, took office in December 1982 determined
not to repeat the French mistakes, according to press
accounts.. The Gonzalez government has used nation-
alization only in two exceptional cases, offered subsi-
dies and credits to private investors, and held down
overall public spending. The Socialists are also pursu-
ing an industrial "reconversion" program that will
eliminate jobs in overmanned sectors such as ship-
building and steel while promoting investments in new
technologies. To create new jobs, the government is
also pressing the unions for wage restraint and re-
ducing employers' social security contributions. Un-
employment has increased since the Socialists took
office, but inflation has declined and real GDP has
grown at a modest rate.
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The Portuguese Socialists imposed a severe austerity
program shortly after taking office, as they had
promised during the campaign. The government-a
coalition with the Social Democrats-devalued the
currency, raised petroleum prices, and virtually elimi-
nated subsidies for basic foodstuffs, causing their
prices to increase sharply. The coalition later suspend-
ed public-sector investments and abandoned some
projects altogether. In October 1983, the government
announced further budget cuts as well as tax and
price increases. To modernize the economy, Prime
Minister Mario Soares has opened banking and insur-
ance to private ownership, returned part of the farm-
land seized during the revolution to the original
owners, and announced a plan to restructure various
public-sector enterprises. So far, Soares has been able
to reduce the government and current account defi-
cits, but inflation has accelerated because of price
increases for government-subsidized goods. GDP fell
last year and is expected to decline further in 1984,
however, because of the government's austerity pro-
gram, and unemployment has increased since the
Socialists took office. Soares now is promising to shift
to more expansionary policies in 1985 to promote
economic recovery.
The Socialist-led Italian Government has also intro-
duced several austerity measures, but the budget
deficit is still increasing. Economic policy requires
agreement among the five coalition parties, and Prime
Minister Bettino Craxi's Socialists have reluctantly
accepted the need for austerity. The government has
reduced a variety of social benefits, implemented a
partial freeze on wage indexation, and scaled back
plans to create public-sector jobs. The government
now is proposing gradual increases in the retirement
age and a crackdown on tax evasion by small busi-
nesses and professionals. Compromises among the
coalition partners and with the Communists, however,
have watered down many of the budget-cutting meas-
ures. Inflation has declined and moderate export-led
economic growth has resumed since Craxi took office,
although unemployment has risen slightly. According
to the US Embassy in Rome, this modest economic
upturn has caused Craxi and most of the coalition
partners to feel less pressure to reduce the still-
growing budget deficit.
The Greek Socialists have been more reluctant to
embrace austerity, but they have been forced to water
down their original objectives. After taking office in
October 1981, they interpreted their promise to
"socialize" the commanding sectors of the economy to
mean the establishment of supervisory councils in
public-sector industries representing employees, local
governments, and the state. The party has generally
limited nationalizations to financially troubled com-
panies, although it also has taken over several firms it
accused of illegal foreign exchange transactions. At
the same time, the government has tried to redistrib-
ute wealth by raising business taxes, easing credit for
small businesses and farms, and rapidly increasing
public spending, especially on wages and social serv-
ices. As a result, private investment has fallen while
government deficits and inflation have remained high.
Fearing adverse political repercussions, the govern-
ment has not followed the other socialist governments
in imposing across-the-board austerity. Instead, it has
turned to greater state interventionism-including
price, profit, and import restrictions-to control infla-
tion and the growing current account deficit.
All five governments have also instituted various
social and political reforms, particularly ones with
little budgetary cost. The governments probably hope
the changes will refurbish their socialist image and
offset criticism of their economic policies and
performance:
? Mitterrand, for example, has abolished capital
punishment and secured passage of laws protecting
foreign workers' rights. This summer, however, he
was forced to withdraw legislation increasing state
authority over religious schools. To promote decen-
tralization of the state, the government has trans-
ferred numerous administrative powers from Paris
to elected regional assemblies.
? The Spanish Socialists have loosened restrictions on
abortion, eliminated penalties for some forms of
drug possession, and reduced the amount of time a
person can be held in jail pending trial. A rising
crime rate, however, is putting pressure on the
government to undo some of its penal reforms.
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? The Portuguese Socialists' major social innovation
has been to legalize abortion. The government now
is pushing antiterrorist legislation that would permit
telephone tapping, other surveillance methods, and
search and arrest without warrant when urgent
action is required. Many socialist backbenchers fear
infringements of civil liberties, however, and Parlia-
ment probably will weaken many of the law's
provisions.
? Craxi has introduced several institutional innova-
tions in an attempt to make the Italian political
system more effective. For instance, he has estab-
lished a "Cabinet Council" of major ministers to
make key decisions and has streamlined parliamen-
tary procedures to prevent obstruction by small
minorities. The Socialists' minority position in the
Cabinet, however, has limited their ability to imple-
ment major social reforms.
? The Greek party has lowered the voting age, intro-
duced civil marriage, eased restrictions on divorce,
reformed the bureaucracy, and modernized the uni-
versities. It also has transferred some planning and
budgetary powers to elected regional councils. In
December 1982, Papandreou eased restrictions on
the return to Greece of exiles living in Communist
countries since the Greek civil war
Foreign Policy
We believe that foreign policy in the five southern
European socialist countries reflects both ideological
tensions and international constraints. All five parties
stress their traditional commitment to disarmament
and peace, but most also see the need for Western
countermeasures to the Soviet military buildup. Fur-
ther, except in Greece, strong anti-Communist strains
coexist with pacifist tendencies in Western socialism,
according to many academic studies: Socialists see
Soviet-style Communism as a perversion of Marxism,
and many stress traditional Russian expansionism.
Moreover, Socialists have experienced Soviet machi-
nations against them in their often bitter rivalries with
national Communist parties. Hence, socialist govern-
ments are torn even more than others between a desire
for detente and distrust of Soviet foreign policy. In
many cases, they have sought other areas in which to
demonstrate traditional socialist internationalism.
One result, we believe, is a tendency to play down
East-West rivalry in the Third World-especially
when few West European interests are involved. The
socialist governments have condemned the Soviet
presence in Afghanistan, but they criticize perceived
US overreactions to the Soviet role in areas distant
from Western Europe such as Central America and
southern Africa. French Foreign Minister Cheysson,
for instance, has repeatedly attacked US aid to
Nicaraguan contras and rejected the linkage of
Cuban withdrawal from Angola to Namibian inde-
pendence. Paris has cooperated with the United
States, however, in areas where it has greater histori-
cal and economic ties, including Lebanon and, until
recently, Chad.
In East-West relations, France, Italy, and Portugal
have generally taken a strongly pro-Alliance stance.
Mitterrand, for example, has been tougher than his
predecessor in limiting high-technology exports to the
Eastern Bloc, while Craxi and Soares also accept
COCOM restrictions. All three leaders have support-
ed key Western initiatives on security:
? Mitterrand departed from his conservative prede-
cessor's policy by strongly backing Western INF
deployment and publicly denouncing Soviet human
rights abuses. He has worked to reinvigorate the
Western European Union (WEU) as a means of
strengthening West Europe's defense cooperation,
enhancing its influence with Washington, and coun-
tering any West German drift toward neutralism.
? Craxi upheld Italy's commitment to deploy INF
beginning in November 1983, and he has strongly
endorsed French efforts to revive the WEU.
? Soares has consistently affirmed strong support for
the Alliance-a stance arousing little controversy in
Portugal. Last year, he renewed the treaty allowing
US military bases on the Azores
The Spanish Socialists' position on NATO is more
ambiguous. The Socialists strongly opposed Spanish
entry into NATO in 1982, and upon taking office they
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froze Spain's military integration into the Alliance.
Prime Minister Gonzalez, however, has decided not to
seek withdrawal from NATO's political wing, proba-
bly in part because he believes this would harm
Spain's relations with the rest of Western Europe and
with the United States. Gonzalez has postponed the
promised referendum on NATO membership at least
until 1985 and, according to press and US Embassy
reporting, is working hard to assure an outcome
allowing continued political membership in the Alli-
ance. Gonzalez has stressed, however, that Spanish
integration into NATO's military structure remains
frozen. The US Embassy in Madrid is uncertain
whether the government will maintain the option of
gradual de facto military integration in the future.
The Spanish Socialists have also been ambiguous on
other NATO issues. Gonzalez has repeatedly rejected
neutralism and endorsed a Spanish contribution to
Western defense. He has stated publicly that he
understands the need for NATO's Pershing II and
cruise missile deployment, although he has not sup-
ported INF as vocally as have Mitterrand and Craxi.
At the same time, Gonzalez has stressed Spain's
continued rejection of nuclear weapons on its soil.
According to the US Embassy, some elements of the
Spanish leadership favor movement toward closing
US bases in Spain in order to "balance" a positive
decision on NATO membership. Spain has dissented
from some NATO declarations, including a statement
last May blaming the Soviet Union for the deteriora-
tion of East-West relations. Further, the Gonzalez
government is resisting US urgings to join COCOM
and to restrict its exports to Cuba.
The Greek Socialists have opposed a series of Western
political and defense initiatives. In early 1982, Papan-
dreou refused to participate in Western economic
sanctions against the Polish Government for its impo-
sition of martial law, and he has consistently opposed
NATO's INF deployment. In September 1983,
Greece blocked an EC condemnation of the Soviet
Union for its destruction of the Korean airliner.
Papandreou has repeatedly called for a Balkan
nuclear-free zone, which-since there are no nuclear
warheads in Romania, Yugoslavia, or, according to
most Western experts, Bulgaria-would entail
NATO's unilateral removal of atomic weapons from
Greece and Turkey. Moreover, the Prime Minister
often is given to provocative rhetorical flourishes
designed to appease his more leftwing supporters. At a
party congress in May 1984, for example, Papandreou
denied that the Soviet Union is an imperialist power
while calling the United States the "metropolis of
imperialism."
The Greek party's bark, however, exceeds its bite. The
Socialists have shelved earlier promises to withdraw
from the Alliance, although Greece refuses to partici-
pate in NATO exercises in the Aegean pending
agreement on new command and control arrange-
ments involving Greece and Turkey, and has recently
canceled a joint exercise with the US Army. Similar-
ly, Papandreou has dropped his call for withdrawal
from the EC, accepting instead a package of conces-
sions from Brussels including greater development
assistance and a more gradual phaseout of various
barriers to imports. Greece remains in COCOM,
although its role there is very minor. In 1983, Papan-
dreou signed a base agreement with Washington
which-contrary to his public assertions-does not
foresee the automatic closing of US facilities after the
treaty's expiration in 1988. Indeed, the Papandreou
government's terms differed little from those offered
by its predecessor. Fear of increasing Turkish influ-
ence in NATO and the need for Western economic
and military aid are major reasons for this modera-
tion, in our judgment. In addition, Papandreou is
probably trying to appease the largely pro-Western
military establishment and appeal to centrist voters as
well as moderates in his party.
Pluralities of people in all the countries except France
appear to believe that socialist governments do not
differ greatly from their center-right predecessors in
either foreign or economic policy. Disillusionment
with socialist performance is widespread, particularly
among swing voters who supported the socialist par-
ties in their countries' last national elections.
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Little Change
According to a variety of public opinion surveys in
Italy, Portugal, and Spain, pluralities see only slight
differences between socialist and nonsocialist domes-
tic policies. In Portugal-whose socialist party is
generally more conservative than its counterparts in
the other countries-a large minority sees none at all.
A majority in one French poll last January says the
government's domestic policies differ greatly from its
predecessors'-but the polling took place before the
latest round of budget cuts and layoffs in state-owned
industries. Nationwide polling is scarce in Greece, but
pluralities of greater Athens residents surveyed in
July 1983 said the Papandreou government had kept
its promises in social but not in economic policy
Even fewer respondents see change in socialist foreign
policies. In recent Italian, Portuguese, and Spanish
polls, pluralities say socialist foreign policies are only
slightly different from those of preceding nonsocialist
governments, and only small minorities see more
substantial differences. In the poll of greater Athens
residents, a plurality-and an overwhelming majority
of nonsocialists-said the government has not kept its
promises in foreign policy. In a recent French poll,
however, almost half of the respondents see quite a bit
of change in socialist foreign policy. In our view, this
probably reflects the Mitterrand government's hard
line in East-West relations more than its differences
with Washington on some Third World questions,
since the Giscard administration also emphasized
France's "special relationship" with less developed
countries but was markedly less assertive toward the
Soviets
Disillusionment With Socialism
The policies of socialist governments have alienated
many socialist supporters, according to the polls. In
recent French, Portuguese, and Spanish polls, a larger
share of those who voted socialist in the last national
election than of those who voted Communist and
center-right say they may abstain or switch parties in
the next election. These results do not necessarily
indicate future election outcomes, but they do suggest
that socialist parties in these countries risk alienating
more of their supporters than they attract from other
parties. In Italy, by contrast, Prime Minister Craxi's
Socialists may have picked up some support, accord-
ing to a recent survey.
Not surprisingly, economic policy appears to be the
biggest cause of disaffection. In France, Italy, Spain,
and Portugal, pluralities of those who voted Socialist
say economic policy is the aspect of government
performance of which they most disapprove. In
Greece, a survey of Athens' residents published last
February showed that 94 percent thought the govern-
ment should give priority to domestic issues, particu-
larly unemployment and inflation. In a July 1983
Athens poll, almost 80 percent expressed little or no
satisfaction with the government's handling of the
economy.
Various polls make clear that respondents disillu- .
sioned with socialism tend to be uncommitted centrist 25X1
voters rather than dogmatic Socialists upset with their
governments' moderation. They tend to criticize gov-
ernment for failing to change national policies, rather
than for changing them in wrong directions. In
France, Italy, Spain, and Portugal, disillusioned re-
spondents are much more likely than others to say
governments differ little or not at all from their
predecessors in domestic policy
According to the US Embassy in Athens, the Greek
Socialists have suffered major erosion in middle-class
urban areas but generally have maintained their
strength in large working-class districts and in most
rural areas. The results suggest that, as in the other
countries, those who change their vote from the
Socialist party tend to be relatively uncommitted
centrist voters upset with government economic policy
and likely to switch to center or center-right parties.
Hardcore Socialists, by contrast, are probably re-
maining loyal to the Papandreou government because
of its uncompromising rhetoric and its frequently
dogmatic approach to foreign and domestic policy.
Prospects
Near-Term Policies
For the next year or two, the Socialist-led govern-
ments face the challenge of appearing simultaneously
innovative, competent, and principled. Most owe their
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election to their call for change, and their generally
cautious domestic and foreign policies have alienated
many erstwhile backers. At the same time, radical
approaches-particularly in economic policy-would
almost certainly alienate much of the middle class,
whose electoral support is crucial. We believe this
dilemma reflects the broad but fragile basis of support
for the Socialists in the last elections. According to
our analysis of opinion surveys, middle-class swing
voters opted for the Socialists in hopes of improving
the economy and from an often ill-defined desire for
change, not in order to support orthodox socialism.
The Socialists have few options for resolving their
dilemma. Both economic constraints and public opin-
ion tend to rule out traditional Socialist approaches
such as massive nationalizations. Socialist-led govern-
ments will be tempted to switch to expansionary
economic policies as elections draw near, but even this
could backfire by rekindling inflation and creating the
impression of economic bungling.
On balance, we believe most of the five governments
are unlikely to change their basic policies over the
next year or two. The Portuguese have promised to
ease up on austerity next year, and the French,
Spanish, and Italian Governments may also somewhat
loosen fiscal and monetary policies before the next
elections. At the same time, however, the four govern-
ments have staked their reputations on structural
reforms designed to stimulate private investment and
hold down public spending. Moreover, these govern-
ments' economic policies are beginning to show re-
sults: current account deficits and inflation are declin-
ing, and, except in Portugal, economic growth has
picked up. The governments still have some time for
their policies to succeed because parliamentary elec-
tions are not required until 1986 in France and Spain,
1987 in Portugal, and 1988 in Italy. Despite a
deteriorating economy, the Greek Socialists are un-
likely to embrace austerity programs similar to those
of the Latin socialists, in part because a national
election is due by 1985 and may take place this year.
despite the political and economic risks. We consider
it more likely, however, that most of the governments
will modify their economic programs only slightly
while stressing cheaper and more popular innovations
in social policy: greater social equality; women's
rights; and reforms in education, the penal system,
and the civil service. In addition, the French and
Greek Governments will probably continue to stress
their commitment to reducing the national state's
power over regional and local administrations.
Longer Term Perspectives
Even beyond the next elections, the diversity of the
socialist electorate will tend to rule out radical class-
based economic policies. The Socialists' support
comes increasingly from the middle class, which often
favors some social reforms but opposes radical income
redistribution. In many cases, middle-class support
allows socialist governments to reject the demands of
working-class constituents. The Socialist-led govern-
ments in France, Italy, Spain, and Portugal, for
example, have rejected labor union criticism of their
austerity measures and industrial restructuring. The
Greek Government has severely limited the right to
strike in public enterprises despite union opposition.
If policies do generally remain moderate, as we
expect, the parties could undermine their core sources
of support. The Socialists' pragmatic economic man-
agement, if successful, would almost certainly en-
hance their appeal to swing voters, but at the cost of
blurring their distinctive image among their hardcore
supporters. The Socialists' following would temporar-
ily be larger, but also more prone to defect to more
conservative parties as soon as economic conditions
worsen. Communist and other leftwing parties, in the
meantime, would probably attract many socialist vot-
ers upset at their parties' abandonment of traditional
objectives
To counter this electoral erosion, the Socialist-led
governments will be tempted to abandon austerity
efforts and adopt new spending programs. The social-
ist Prime Ministers have embraced austerity reluc-
tantly, and they or their successors will face pressure
To enhance their electoral prospects, the Socialist-led
governments still must try to highlight their commit-
ment to change. Leftists in the parties might succeed
in forcing strongly expansionary economic policies
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for expansionary policies and greater social spending
designed to appeal to the middle class. In particular, if
modest economic growth continues in the late
1980s-which we consider probable-socialist gov-
ernments may allow government spending to rise
again as a proportion of GNP. At the same time, high
unemployment-which probably will continue despite
economic growth-may induce new social programs
and attempts to stimulate the economy
Implications for the United States
The socialist record is mixed on issues of direct
interest to the United States. In general, the Socialists
in office have been much more sensitive to US
interests on subjects such as INF and US bases than
their preelection rhetoric would have suggested. At
the same time, they are often more critical of US
policies than were their center-right predecessors,
especially on Third World issues. The record varies
widely, however, among the countries and according
to the specific issue (see table 2). In general, the
Portuguese and Italians have been the most responsive
to US interests while the Greeks have been the least
accommodating.
Indirectly, the Socialists have promoted US interests
by limiting Communist influence and strengthening
support for democracy in southern Europe. By appeal-
ing to leftist and working-class voters, the Socialists
compete directly with the Communists. With the
possible exception of Italy, socialist gains have come
in part at Communist expense. At the same time, the
socialists' generally moderate policies have eased the
anxiety of some business and military elements that
might otherwise have supported antidemocratic forces
in Spain, Portugal, and Greece
The low salience of foreign policy means that the
Socialist-led governments will have little near-term
incentive to abandon their basically pragmatic ap-
proach to world affairs. Most of the socialist govern-
ments will probably continue to criticize US policies
in the Third World-in part to placate their hardcore
voters, who in all five countries are more likely than
center-rightists to say their countries are generally too
close to the United States. Policies toward the United
States are not, however, a major cause of disillusion-
ment among those who voted socialist in the last
national election, according to a variety of polls in the
Latin countries. Partly as a result, the Latin Socialist-
led governments can afford to support US policies on
arms control and East-West relations, sometimes
more vocally than their more conservative predeces-
sors. Only the Greek Socialists are likely to remain at
odds with Washington on a broad range of Alliance
This moderation could decrease over the longer 25X1
term-but probably more because of national than
ideological concerns. Major debates about chemical
weapons, space-based nuclear forces, or new NATO
nuclear arms modernization efforts, for example,
could rekindle anxiety about the arms race among
Socialist supporters and in the general public. In
addition, bilateral economic or political disputes with
Washington could fuel anti-US sentiment. The US
military presence in Spain, Portugal, Italy, and
Greece, for example, contains the potential for various
disputes concerning compensatory payments and base
arrangements. Trade issues, especially in textiles,
steel, and agriculture, are a continuing source of
tension between the United States and all five south-
ern European countries.
If disputes with Washington increase, southern Euro-
pean governments would be tempted to demonstrate
their independence from Washington by denouncing
US policies or urging major arms control concessions.
Except in Greece, however, the Socialist-led govern-
ments may be no more prone to criticize Washington
on key East-West issues than their conservative and
Christian Democratic counterparts in northern
Europe: the Socialists are less vulnerable to the
charge of being US puppets, and they need to appeal
to generally pro-US centrist voters. The Greek Social-
ists, by contrast, would probably react by hardening
their stance toward Washington in order to satisfy
widespread nationalistic and anti-US sentiments.
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Table 2
Socialist-Led Governments and US Interests
NATO Maintained independ- Strong supporter of
ence from NATO inte- most NATO initiatives
grated command; im-
proving capabilities to
cooperate with NATO
in early phases of a
conflict
Froze Spanish military Supports Alliance but Unresolved problems
integration in NATO; low defense spending concerning full partici-
favors continued mem- limits participation pation in NATO mili-
bership in political tary structure; refuses
wing of Alliance to participate in
NATO exercises in the
Aegean because of
perceived Alliance tilt
toward Turkey.
INF Strongly supported Began cruise missile Expressed "under- Supported INF Vocally opposed INF
INF deployment; insist deployment standing" for need to deployment deployment.
on keeping own nu- deploy INF
clear forces out of INF
negotiations
US bases No US bases in France No major problems May propose more Renewed US bases in Five-year renewal of
concerning NATO and limited US use of Azores; permitted sta- US bases in 1983.
US facilities bases even before cur- tioning of satellite-
rent treaty expires in tracking site in south-
1988 ern Portugal
Soviet Union Strongly critical of hu- Generally critical of
man rights practices Soviet human rights
and policies in Af- and foreign policies;
ghanistan and Poland; skeptical of economic
support East-West sanctions
trade
Central Sold arms to Nicara- Little criticism of US
America gua in 1981; has criti- policies
cized US policies in
Nicaragua and El Sal-
vador; now increasing-
ly disillusioned with
Sandinistas
Middle East Participated in Leba-
nese MNF and in Red
Sea/Gulf of Suez
minesweeping
Criticize Soviet for-
eign policy but reject-
ed NATO statement
blaming Soviets exclu-
sively for the arms
race
Support Contadora
initiative
May establish diplo-
matic relations with Is-
rael; trying to improve
economic ties with
Arab states
Strongly critical of So- Little criticism of So-
viet foreign and mili- viet foreign policy; did
tary policies not participate in
Western sanctions
against Soviet Union
for its role in Poland
and blocked EC con-
demnation of USSR
for KAL incident.
Generally support US Critical of US policies.
policies; critical of
Sandinistas
Participated in Leba-
nese MNF and in Red
Sea/Gulf of Suez
minesweeping
a Italy's Foreign Minister is a Christian Democrat, and Prime
Minister Craxi's Socialists are a minority in the Cabinet.
Close ties with Israel; Recognized PLO as
trying to improve rela- sole representatives of
tions with Arab states; Palestinians in 1981;
may allow PLO to has sought to improve
open office in Lisbon relations with Arab
states.
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