NATIONAL INTELLIGENCE DAILY THURSDAY 24 MARCH 1983

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01094R000200010035-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 22, 2016
• Document Release Date: July 12, 2010
• Sequence Number: 35
• Publication Date: March 24, 1983
• Content Type: REPORT

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Director of
Central
Intelligence
1-_
NNationalInte
Thursday
24 March 1983
. o1.roet.er
24 March 1983 25X1
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Contents
EC: Prospects for Monetary System ...................................... 3
Honduras-Ell Salvador: Military Training Proposal ................ 5
Venezuela: Fears for Political Stability .................................... 6
USSR-China: Limited Exchanges ............................................ 10
France: Mitterrand's Speech .................................................. 11
USSR-Hungary: Ustinov's Visit ................................................ 12
Poland: Ministerial Changes .................................................... 12
Libya-Upper Volta: Military Assistance .................................. 13
USSR-Australia: Better Relations Welcomed ........................ 14
China-UK: Destroyer Contract Canceled ................................ 14
Cuba: Crop Losses .................................................................. 15
Mauritius: Cabinet Resignations ............................................ 15
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EC: Prospects for Monetary System
The ability of EC countries to compromise on the issue of how to
realign their currencies stren thens the long-term viability of the
European Monetary System.
The compromise requires West Germany to revalue its currency
in the system, which will make its exports more costly. In return
France has agreed to a small devaluation of the franc and to
undertake a politically unpopular austerity program to help
strengthen the franc. West German Finance Minister Stoltenberg has
accepted President Mitterrand's assurances that the economic
measures will be speedily carried out and that French ministers will
coordinate with their West German counterparts on economic policy.
Comment: The negotiations in Brussels were the most divisive
since the inception of the European Monetary System four years ago.
Bonn on balance is pleased with the outcome because it requires
France, the weaker currency country, to make the difficult economic
adjustments necessary to strengthen its currency system. For the
second time in less than a year, France has changed its economic
policy rather than float the franc and adopt more protectionist
measures.
Even French Finance Minister Delors, who threatened to withdraw
France from the System, has to welcome the results, which have
spared France the embarrassment of a large devaluation. Delors has
advocated new measures to reduce inflation and cut the budget and
trade deficits, and he has argued effectively against those in
government who urged Mitterrand to ignore external constraints,
such as the EMS.
If West German and French consultations are successful, they
could be a major step forward in the development of the EMS.
Although the System was primarily designed to promote the
coordination of economic policies among EC members, little progress
has been achieved. Even if France's program and consultations with
West Germany do prove effective, however, the difference between
the rates of inflation in the two countries probably will not be
narrowed enough to prevent another realignment by next year.
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Boundary repro entation is
not necessarily authoritative.
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SAN SALVADOR
El SaIV
North
Pacific
Ocean
Nicaragua
5
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HONDURAS-EL SALVADOR: Military Training Proposal
Honduras may agree to allow US-sponsored training of
Salvadoran troops on its soil despite tensions with El Salvador and the
risk of domestic political repercussions.
Both countries, meanwhile, are trying to resolve their
longstanding border dispute. Despite Honduran suspicions that the
Salvadorans are stalling, a mixed commission has made some
progress. The Honduran Foreign Minister has asked the US to supply
survey equipment.
IAn agreement to proceed would be
Tegucigalpa's strongest support so far for the Salvadoran
Government. Nonetheless, the Honduran Government would be
concerned about possible retaliation by Honduran leftist terrorists
cooperating with Salvadoran leftist insurgents
A rapid resolution of the border issue appears unlikely.
Tegucigalpa may ask for Salvadoran territorial concessions in return
for cooperation on the training proposal.
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VENEZUELA: Fears for Political Stability
The inability of President Herrera's administration to deal with
increasing financial difficulties is creating discontent that has spread
to the armed forces.
growing dissatisfaction among junior
officers. According to the US Embassy, anti overnment handbills are
being circulated in some military units.
The Embassy, however, has no reliable evidence to substantiate
current rumors of coup plotting in the armed forces. In addition, no
officer or group of officers has emerged to take the lead in focusing
the discontent in the military.
The administration's prestige also is at a new low in civilian
circles. Last week approximately 200 business figures issued a
manifesto calling for a new government team supported by key
sectors of society to deal with economic problems. The government's
delay in implementing the complex exchange controls announced last
month and the private sector's expectation that a more drastic
devaluation may be forced on the administration have slowed
business activity and spurred some panic buying by consumers.
Comment: There is growing national concern that the
government has little time to put its house in order. Herrera is
increasingly isolated from the political establishment.
The President's own party believes he has doomed its chances in'
presidential elections this year. In an open break with Herrera, party
leaders have called for the resignation of his chief economic adviser,
Central Bank President Diaz Bruzual.
Despite reductions in the defense budget and a scaling back of
some traditional military benefits, the country's financial straits have
not yet seriously hurt armed forces personnel. Nonetheless, a more
drastic downturn in the economy-accompanied by food shortages
and urban unrest-could cause some officers to begin to reassess
their current commitment to civilian rule.
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USSR-CHINA: Limited Exchanges
Western and Japanese media have reported that, during the last
round of Sino-Soviet talks in Moscow, the Soviets agreed to send an
unspecified number of industrial experts to China to assist economic
modernization. The Chinese will send agricultural experts to the
USSR. In addition, both sides will resume a limited exchange of
students.
Comment: If the press reports are true, the exchanges will be the
first since the USSR withdrew its remaining advisers from China in
1962. Beijing originally insisted formal agreements in nonpolitical
areas had to be preceded by a favorable Soviet response to Chinese
demands for progress in resolving outstanding security issues.
Beijing's approval of the exchanges-presumably without formal
agreements-almost certainly will encourage Moscow to believe
further progress toward normalization is possible.
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FRANCE: Mitterrand's Speech
President Mitterrand, in a televised address yesterday, avoided
giving any details of expected tougher economic policies. Instead, he
defended the previous government's record on social issues, pledged
that existing policies would be continued, and denied that a new
austerity program is being considered. At the same time, however,
Mitterrand promised an all-out effort to deal with inflation.
Comment: Mitterrand's remarks recall his performance last June,
when he took a similar position only days before the franc's second
devaluation. His air of detachment is designed to shift the political
burden of unpopular austerity measures to Prime Minister Mauroy,
economic czar Delors, and other members of the cabinet. Specific
economic measures to reduce budget and trade deficits probably will
be announced tomorrow after the cabinet meets.
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Defense Minister Ustinov, during a one-day visit on Tuesday to
Budapest, held talks with Hungarian leader Kadar, the Defense
Minister, and the party secretary responsible for military affairs.
Warsaw Pact Commander Kulikov also attended. Soviet and
Hungarian media report the talks took place in a cordial atmosphere
and dealt with general bilateral relations, cooperation between the
two armed forces, and international issues. The Soviet account says
the two sides "exchanged opinions."
Comment: The characterization of the atmosphere as cordial and
the Soviet reference to an exchange of opinions indicate there were
some differences of view. Sources of the US military attache in
Budapest say Kulikov last month tried to persuade the Hungarians to
allocate more funds for defense. Although this objective may have
been the main purpose of Ustinov's visit, the language of the media
accounts suggests he failed.
POLAND: Ministerial Changes
Premier Jaruzelski yesterday replaced four ministers and
appointed Lieutenant General Hupalowski to replace the civilian who
has headed the organization charged with overseeing the financial
and administrative practices of government agencies and evaluating
their performance. Hupalowski relinquishes his job as the minister
responsible for supervising local government officials to Lieutenant
General Oliwa, the chief of the Warsaw Military District since 1968.F-
Comment: Both officers have long been proteges of Jaruzelski,
and the changes may give him added control over the day-to-day
activities of the obstreperous, often incompetent, bureaucracies. The
changes again demonstrate Jaruzelski turns to military colleagues to
fill important posts when he wants action.
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Western
Sahara
Boundary representation is
not necessarily authoritative.
Algeria
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iviediterranean See
TRIPOLI
Turkey
IE9yp
Red
Sea
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LIBYA-UPPER VOLTA: Military Assistance
Libya airlifted two shipments of Soviet-made small arms to Upper
Volta earlier this month that may have been distributed to units loyal
to leftist Prime Minister Sankara.
to provide small arms trainino
ibyan military advisers have arrive
France and neighboring moderate states have expressed concern to
US officials that Upper Volta could become more unstable and left-
leaning
Comment: The five-month-old military regime is badly split
between moderates loyal to President Ouedraogo and radicals allied
with Sankara. The volatile Prime Minister commands a following
among junior officers and enlisted men, and, unless Ouedraogo
moves soon to bring him under control, he could eventually be in a
position to threaten the government. A radical regime in Upper Volta
would offer Libyan leader Qadhafi increased opportunities for
meddling in Niger, Ivory Coast, and Togo, which already feel
threatened by Libyan-supported Ghana.
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A Soviet Foreign Ministry official says the USSR is ready to
discuss better relations with Australian Prime Minister Hawke. Hawke,
who visited the USSR four times as a trade union leader, has
announced plans to restore scientific and cultural exchanges and
resume high-level official visits and other ties that Australia has
banned since the invasion of Afghanistan. Pravda has published these
remarks as well as Hawke's statement that the government needs to
oversee US satellite tracking operations based in Australia more
closely.
Comment: Although trade with the USSR has continued, Moscow
will welcome the lifting of the sanctions. Despite Hawke's decision to
normalize relations, however, Australia will remain deeply suspicious
CHINA-UK: Destroyer Contract Canceled
The US defense attache in Beijing confirms the Chinese have
canceled a contract signed late last year for British help in
modernizing destroyers. The contract-worth at least $150 million-
contained a 60-day ratification clause, which Beijing allowed to lapse.
US officials in Hong Kong reported earlier that the British were to
install the Sea Dart air defense missile system, sensors, radars, and
electronic warfare equipment on two new Luda-class destroyers.
Comment: Beijing may have concluded that the acquisition of
only a few missiles, without the attendant production technology,
would be too high a price to pay in modernizing the Navy's air defense
capabilities. The Chinese are developing their own shipborne air
defense missile, and progress in that program also may have helped
convince them British assistance was not required.
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CUBA: Crop Losses
A Western embassy in Havana reports about 1 million tons of
sugar were lost and nearly 40 percent of the tobacco crop was either
destroyed or damaged as a result of heavy rains during January and
February. Moreover, 25 percent of vegetable crops for domestic
consumption were ruined, and the remaining 75 percent was
damaged. Tornadoes that struck growing regions last week are
believed to have caused additional destruction.
Comment: The crop losses could cause hard currency earnings
from sugar and tobacco sales to drop by almost $200 million,
20 percent of anticipated earnings for 1983. This would prevent Cuba
from meeting trade targets established by Western creditors in the
recent debt rescheduling agreement. The losses also portend
increased austerity for consumers and may cause Havana to appeal
to the UN for assistance in financing food imports.
MAURITIUS: Cabinet Resignations
The resignations on Tuesday of over half of the cabinet ministers
are the result of continuing differences between former Finance
Minister Berenger and Prime Minister Jugnauth, both of the leftist
Militant Movement, and between Berenger and the Movement's
smaller coalition partner, the Socialist Party. Berenger says that his
group does not intend to resign from the Legislative Assembly and
that it will maintain a watchdog role over the government's actions.
The US Embassy believes Jugnauth probably will be able to form a
new cabinet and command a parliamentary majority, thereby avoiding
Comment: Berenger's move is likely to have a negative effect on
internal stability and Jugnauth's long-term prospects. It splits the
government as well as the Militant Movement, whose Politburo and
Central Committee are controlled by Berenger's supporters. The
pragmatic Berenger has been the driving force behind the unpopular
austerity measures required to obtain assistance from the IMF and
the World Bank. His resignation could jeopardize negotiations for
additional funding and prompt Jugnauth to intensify his efforts to
obtain aid from the USSR and Libya
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