NATIONAL INTELLIGENCE DAILY WEDNESDAY 5 OCTOBER 1983

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01094R000500020075-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 27, 2016
• Document Release Date: July 27, 2010
• Sequence Number: 75
• Publication Date: October 5, 1983
• Content Type: REPORT

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National Intelligence Daily
Wednesday
5 October 1983
Top Secret
CPAS NO R2- IY
5 October 1983
Copy 2 8 5
094R000500020075-8
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Top Secret
Contents
Italy: Budget Battle Looming .................................................. 3
East Germany: Meeting of Church Leaders ............................ 6
Lebanon: Tougher Negotiating Positions ................................ 7
Chile: New Protests Planned .................................................. 8
USSR-US: Criticism of INF Proposals .................................... 9
Libya-Ghana: Strains in Relations .......................................... 10
Italy-Albania: Foreign Ministers Meet .................................... 11
Special Analysis
USSR-China: Status of Relations ............................................ 12
Top Secret
5 October 1983 ,
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ITALY: Budget Battle Looming
The new austerity budget calling for increased taxes and
substantial cuts in social spending emphasizes proposals that already
are causing friction in the five-party coalition government.
Prime Minister Craxi unveiled a draft budget for 1984 last week. It
is designed to reduce the deficit from a projected $88 billion to
$58 billion, about 15 percent of gross domestic product. The package
calls for $5.1 billion in social spending cuts, including reductions in
family allowances and in pension and health benefits.
The draft budget also cut capital spending by $5.3 billion and
anticipated $3.8 billion in savings from reduced interest payments on
public debt. At the same time, the budget aims to increase tax
revenues by $8.1 billion, in part from increased corporate taxes and
higher taxes on interest income.
The Christian Democrats lost heavily in the national election in
June, and some of the party's leaders are especially sensitive to
proposed cuts in social services, which will hurt a number of
important party constituencies. Trade union leaders, including some
from Craxi's Socialist Party, also have criticized the proposals. The
fiscally conservative Republicans strongly support the budget, but
they are concerned that eventual compromises will lead to greater tax
increases rather than spending cuts.
Press reports state that the measures were presented to
parliament as a decree law effective 1 October. The law will lapse,
however, unless approved by parliament within 60 days
Comment: The budget cuts are the most severe in decades, and
voter constituencies important to the coalition parties will be hit hard.
The debate on the budget probably will be protracted, despite
government efforts to push through a bill making parliamentary action
on the annual budget mandatory by 31 December. The final package,
however, is likely to be more expansionary and inflationary than the
government wants.
Tan Secret
3 October 19-93
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EAST GERMANY: Meeting of Church Leaders
Lutheran leaders recently reaffirmed positions that conflict with
the regime's policy on several sensitive issues, but their careful
balancing may satisfy neither the government nor the church's youth
and peace activists.
The synod endorsed several steps toward disarmament and
appealed to the regime to work within the Warsaw Pact against the
stationing of short-range nuclear weapons on East German territory.
It also called on the government to live up to the terms of the Helsinki
Agreement of 1975-which include freedom of emigration-and to
facilitate travel between East Germany and West Germany.
The church leaders deferred a decision, however, on whether
pacifism is a basic tenet of faith. Such a stand could lead to direct
conflict with the highly militarized East German state. which faces
shortages of conscripts for the next several years.
The synod also made no direct statement on official delays in
processing applications for emigration, in part because many bishops
believe Christians should stay and work within the system. Although a
leading bishop deplored the regime's mistrust of young people, the
meeting sought to discourage spontaneous public demonstrations
and other activities that might lead to repression.
Comment: The synod's caution reflects its concern that, with the
end of the Martin Luther 500th birthday celebrations and with the
peace campaign against INF, the regime will soon move against the
church's activities on peace, environmental, and emigration issues.
The church's failure to take stronger positions probably is already
alienating young people and peace activists, which could tend to
divide the church. Any crackdown might differentiate between
church-related and more autonomous activities, putting even greater
strain on the church.
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Too Secret
LEBANON: Tougher Negotiating Positions
Lebanese factional leaders are hardening their positions toward
national reconciliation talks. Former President Franjiyah, a member of
the opposition National Salvation Front and one of 11 politicians
invited to attend the talks, said yesterday that he would not
participate unless President Gema el first abrogated the Lebanese-
Israeli withdrawal a reement.
They also will try to obtain withdrawal of the Multinational Force
Comment: Franjiyah, who has long been allied with Syria,
probably is acting on behalf of Damascus to keep the withdrawal
agreement at the forefront of any talks. The Syrians will continue to
push this issue and to demand political concessions that would
weaken the influence of the Phalange Party in the central government.
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7 5 October 1983
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Protest marches to be staged on 11 October by the Democratic
Alliance and a leftist-sponsored sixth day of national protest planned
for 13 October are designed to put pressure on the government to
make more political concessions. The Alliance is taking precautions
to ensure that its marches in Santiago and other cities remain
peaceful. Two newly formed leftist coalitions are planning the day of
national protest. The Democratic Alliance has refused to participate in
Comment: The Democratic Alliance is trying to maintain the
leadership of the opposition movement and the momentum of the
talks that resumed with the government last week. Leaders of the
Alliance hope that by carefully controlling their rally and refusing to
participate in leftist activities, they can avoid responsibility for
whatever violence may occur. The arrest yesterday of Rodolfo Seguel
and other labor leaders during a march demanding reinstatement of
fired copperworkers indicates the government is trying to discourage
the protests planned for next week.
Top Secret
8 5 October 1983
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Top Secret
USSR-US: Criticism of INF Proposals
"contrary to the will of the majority."
An edito'rial in Pravda yesterday repeats General Secretary
Andropov's characterization, made on 28 September, of the most
recent US proposals on INF as "another deception." It notes that the
US position on the basic issues of nondeployment of US missiles and
inclusion of British and French systems has not changed. The editorial
then makes a detailed rebuttal of the proposals and concludes by
criticizing those West European leaders who support the US position
Soviet propaganda initiative aimed at this audience.
Comment: This is the first Soviet commentary to discount the US
offer point by point. Although Soviet negotiators in Geneva are still
interested in receiving elaboration of the proposals, the editorial is
further evidence that Moscow is focusing its efforts on appeals to
public opposition to INF in Western Europe. The meeting next week of
Warsaw Pact foreign ministers in Sofia could be used to launch a new
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9 5 October 1983
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Top Secret
Libya has cut off oil supplies and credits to Ghana
(Ghana also
has been una ee twin oil from Nigeria, because of its inability to
repay large debts from previous purchases. According to the US
Embassy, Accra will have to spend scarce foreign exchange to buy oil
on the spot market.
Comment: The oil cutoff, coupled with Rawlings's tentative
attempts to improve relations with the West, indicates serious strains
in Libyan-Ghanaian relations. The lack of Libyan oil on easy credit
terms will jeopardize Ghana's fledgling economic reform program and
hinder compliance with the recent IMF agreement. As the economic
situation deteriorates, Rawlings could be forced to come to terms
with Libyan leader Qadhafi.
Top Secret
10 5 October 1983
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ITALY-ALBANIA: Foreign Ministers Meet
Italian officials are satisfied with the meeting last week between
Foreign Minister Andreotti and Albanian Foreign Minister Malile, who
now is trying to cultivate better economic relations with the West. The
two met at the UN General Assembly, at Albanian request, to discuss
expanding bilateral trade. Malile expressed satisfaction with relations
with Greece and Turkey as well as with Italy, but reiterated his
country's fears that Yugoslavia intends to absorb Albania. He stated
that Albania hopes to attract more Western tourists, and he showed
interest in Andreotti's suggestion that he visit Italy soon.
Comment: This meeting is the first with a Western foreign
minister in several years. It is the latest step in Albania's campaign to
gain access to Western goods and markets while avoiding political
ties. Malile rejected Andreotti's suggestion that Albania accept trade
credits, and Tirana probably will continue to insist on a strict barter or
cash-and-carry relationship with Western partners. The Albanians
remain determined to protect their neutrality.
Top Secret
11 5 October 1983
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Special Analysis
Moscow and Beijing are still talking past each other on the major
issues dividing them, but they are continuing to make progress toward
better relations. The Chinese apparently believe that their bargaining
position has been strengthened as a result of their improved ties with
the US and the deterioration in Soviet-US relations. Moscow appears
intent, however, on continuing to deflect Beijing's demands for
movement on major security issues. Normalization talks, which are
slated to resume later this week, are likely to continue the trend of
gradually improving relations while failing to produce much progress
on key issues.
Press and diplomatic sources report that during Soviet Deputy
Foreign Minister Kapitsa's visit to Beijing in mid-September the two
sides agreed to open a second channel of communications at the
deputy foreign minister level. Chinese Vice Foreign Minister Qian
Qichen will visit Moscow next year.
The Soviets evidently made the suggestion in the hope of
channeling talks about the Kampuchean, Afghan, and Mongolian
issues into the new forum. They also may have hoped to persuade the
Chinese to cooperate on those foreign policy issues where. the two
sides have similar positions.
Although the Chinese agreed to the new talks, they apparently did
not drop their right to raise international issues at the normalization
meetings. They evidently wanted in part to demonstrate progress in
Sino-Soviet relations on the eve of Secretary of Defense Weinberger's
visit. Beijing actually may view the new forum as another channel for
putting pressure on Moscow for movement on Vietnam, Afghanistan,
and the Soviet military buildup on the border.
Reporting from Soviet and Chinese sources indicates China also
accepted a Soviet offer to assist in rehabilitating two to four Soviet-
built industrial plants, Soviet suggestions for substantially increased
bilateral trade and student exchanges next year, and more cultural
and scientific contacts. The Chinese, however, reportedly rejected a
Soviet proposal for regular meetings at the foreign minister level and
for a resumption of the border talks. The USSR is likely to continue
pushing the latter proposal.
Top Secret
.12 5 October 1983
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Each Side's Objectives
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The Chinese have rejected generalized agreements on
"principles" and submitted specific suggestions for reducing what
they see as the Soviet threat to China. China calls for Vietnam to
withdraw its troops from Kampuchea, for the USSR to withdraw its
forces from Mongolia and Afghanistan, and for the reduction of the
number of Soviet troops and missiles along the Chinese border-
preferably to the level existing in 1964.
Positive Moves
Moscow and Beijing also have generally been muting their
criticism of one another. For example, the two sides handled
Mongolia's expulsion of most of its Chinese minority and China's
artillery attacks on Vietnam's territory in a restrained fashion. In
addition, the Chinese refused to endanger their incipient opening to
Moscow and abstained from the UN resolution on the shootdown of
In August leaders of both countries made statements that went
part way toward meeting the other's security concerns. On 27 August,
for example, General Secretary Andropov promised to destroy all
missiles that might be removed from the European USSR as a result
of an INF agreement in Europe rather than deploy them in the Far
East. On 29 August General Secretary Hu Yaobang tried to meet
Soviet concerns that normalization of relations would not damage the
USSR's third-party interests by noting that China never had harmed
or would harm Vietnam, Kampuchea, Mongolia, or Afghanistan.
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Prospects for the Next Round
Despite the increase in bilateral contacts, there is little chance of
a major breakthrough during this round of normalization discussions.
Soviet Deputy Foreign Minister Ilichev probably will find the Chinese
considerabl"7 gher after Secretary of Defense Weinberger's visit.
Beijing is likely to hammer home its objections to all SS-20
deployments in Asia. Moscow probably will not try to enaaae in a
bidding war with the US for Beijing's favors.
Although the two sides have moved a long way since the
discussions began a year ago, the legacy of mutual mistrust and
suspicion will not be dispelled soon. The continuing gradual buildup
of Soviet forces opposite China testifies to Moscow's pessimism
about the prospects for a real rapprochement. Nonetheless, the two
sides probably will continue to try to take small steps toward
improved ties while remaining steadfast on the major security issues
dividing them.
Ton Secret
14 5 October 1983
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