EUROPEAN REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00289R000301190001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 40
• Document Creation Date: December 27, 2016
• Document Release Date: August 15, 2011
• Sequence Number: 1
• Publication Date: September 26, 1986
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
European Review
26 September 1986
Secret
EUR ER 86-022
26 September 1986
Directorate of
Intelligence
FILE CUPY
na GIVE OUT
fl tf10
~l9
462
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
European Review
Briefs United Kingdom-Oman: Major Military Exercise
United Kingdom: Thatcher's Children
West Germany: Strengthening Naval Air Forces
Netherlands: Peace Movement Searching for New Issues
Canada: Mulroney's "French Cabinet" To Woo Quebec
France: Present and Future Scandals-Raising the Ante
election expected to be held by 1988.
This summer's scandal of embezzlement and misuse of public funds
tarnished the Socialist Party's record of governing and heightened
tensions between Socialist President Mitterrand and conservative
Prime Minister Chirac. While both leaders appear committed to
continued cohabitation and are reluctant to join in mudslinging
between their parties, other Socialists and Gaullists continue to
search for misdeeds by each other in advance of the presidential
France: Naval Support for Intervention Operations
programs.
Efforts to maintain French out-of-area capabilities include
increased attention by military planners to the Navy's ability to
support intervention operations. Although small by US standards,
amphibious and naval air forces are well trained and effective in
terms of the relatively narrow scope of typical operations. Looming
budget shortfalls may result in some delays in modernizing the
forces, but the broad-based political consensus supporting an
intervention capability probably will ensure the survival of major
Secret
EUR ER 86-022
26 September 1986
25X1
25X1
25X6
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 I I I I 1 I I_ II I I I. 1 I,
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Greece-United States: Defense Industrial Cooperation Talks- 21
Round Two
The recent second round of US-Greek discussions on a Defense
Industrial Cooperation Agreement concluded successfully with a
new draft framework agreement. Because the Greek Government
expects domestic political gains from an agreement, this draft
probably will be the final version and should be ready for
ratification before next month's municipal elections.
Hungary: Worker Discontent
Workers are becoming the most outspoken critics of the Hungarian
regime, disillusioned by stagnating living standards and a perceived
decline in the quality of life. Budapest's efforts to cope with the
situation are filled with contradictions and thus far appear to have
done little to diminish the workers' indignation.
President Ceausescu once again is trying to mediate the Arab-Israeli
dispute. As the only East European leader on good terms with
virtually all major actors in the region, Ceausescu has played a
constructive role in peace efforts in the past, but his limited real
influence and fixation on the need for direct talks between Arafat
and Israel lessen the likelihood that his efforts will bear fruit.
East Germany-USSR: New Rail Ferry Link
East Germany and the Soviet Union on 2 October will inaugurate
rail ferry service between Mukran in East Germany and Kleipeda in
Lithuania-a major project that will provide both countries with
significant economic and some modest military benefits.
Profile Yugoslavia: The Hirsute, Outspoken Tupurkovski 35
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
2bAl
25X1
a
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Some articles are preliminary views oja subject or speculative, but the contents
normally will be coordinated as appropriate with other offices within CIA.
Occasionally an article will represent the views oja single analyst; these items
will be designated as uncoordinated views.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
European Review F____-] 25X1
Briefs
United Kingdom-Oman Major Military Exercise
In late November, the UK Defense Ministry plans to conduct its largest rapid
intervention exercise in the Middle East since Britain withdrew from Suez in 1956.
The exercise, known as Swift Sword, will take place in Oman in cooperation with
the Sultan of Oman's armed forces.
The maneuvers will include a major airborne assault and an amphibious landing
involving some 3,500 troops on the Musandam Peninsula.
The exercise will provide a unique operational test environment for the airborne
brigade, Britain's primary rapid deployment force. It probably is designed, in part,
to demonstrate to government policymakers that Britain's armed forces can
respond swiftly and effectively to threats against British interests outside of
NATO. It also will underscore Britain's close ties to the Sultan of Oman and
British resolve to support pro-Western Middle Eastern states in the event of
foreign military aggression.
Despite the massive media attention devoted to the highly partisan debate over
Prime Minister Thatcher's domestic policies, a recent London Times survey
indicates that the reaction of "Thatcher's children"-those who have come to
voting age since the Tories won power in 1979-primarily is one of apathy and
cynicism. From a total of 6.2 million people between 18 and 25, for example, the
survey found that nearly two-thirds did not intend to vote in the general election
due by June 1988. Of the 2.1 million who plan to vote 49 percent supported Labor,
25 percent the Tories, and 22 percent the Social Democratic/ Liberal Alliance.
This overall apathy will be particularly troubling to Labor Party leaders who had
expected that the economic dislocations and high unemployment of the Thatcher
era would have radicalized Britain's youth, thereby providing the party with a new
pool of voters amenable to socialist economic policies)
1 Secret
EUR ER 86-022
26 September 1986
,,. Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Il I
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Not surprisingly, the Times survey found that Britain's youth believe
unemployment to be the number-one problem facing the country. The respondents,
however, did not place blame for joblessness on the Thatcher government; indeed,
80 percent considered unemployment to be akin to a "natural disaster" for which
no one was responsible. Moreover, more than 40 percent did not believe that any
government could do much to brighten their prospects for future employment.
Both findings suggest that unemployment may not be the determinative issue in
the next election.)
Perhaps the most striking aspect of the survey is the extent to which Thatcher's
policies and personality are altering the thinking of Britain's young. Proponents of
Thatcherism, for example, will take solace in the declining number of young
people who believe government action can ameliorate economic problems.
Thatcherites will also be cheered by the respondents' belief that the educational
system is too permissive and therefore ineffectual. Labor and the Alliance, on the
other hand, will take some encouragement-and perhaps political benefit-from
the overwhelming opinion that Thatcher is out of touch with the young and that
she is condescending. Nonetheless, consensus-driven opposition politicians
probably will be disturbed by the survey's conclusion that the young prefer strong
leadership to weak-narrowly favoring Thatcher's style over that of Labor leader
Kinnock and believing overwhelmingly that Thatcher would perform better in a
crisis. While the survey shows that no British party is yet harnessing the support of
the new generation of voters, it does indicate that Thatcher may have
fundamentally altered British perceptions of economic affairs and governmental
responsibility. In doing so, the Prime Minister almost certainly has created-if not
the groundwork for a third Tory election victory-an environment in which a
successor government would encounter widespread resistance to dismantling
"Thatcherism."
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
antiradiation missile.
The aircraft's capabilities will be improved in the late 1980s by the introduction of
the longer range Kormoran II antiship missile and the US-built Harm
one wing is fully operational and the second will begin receiving Tornados this fall.
accurately deliver a wider array of weapons.
West German Navy plans to bolster its capabilities in the Baltic include
modernization and reorganization of its tactical air units. West German naval air
units are the only NATO tactical air forces earmarked solely for maritime strike
operations in the Baltic, and modernization will enable them to counter more
effectively Warsaw Pact naval forces. The Navy's tactical fighter wings are
reequipping with Tornado attack aircraft that are more survivable and can more
naval fighter-if the Navy is willing to wait until the mid-1990s.
that the Naval Staff is also considering forming an air
superiority fighter squadron in each wing to provide the protection for its surface
ships and air units that it believes NATO air forces cannot. A wing's two attack
squadrons reportedly would be cut from 22 to 15 Tornados each, with the Navy
perhaps offering the Air Force the excess Tornados in exchange for fighter
aircraft. The attache believes the multinational Eurofighter under development for
the German, Italian, Spanish, and British air forces is the logical candidate for a
The addition of an air superiority fighter force and other naval modernization
programs will depend on the Navy's ability to wrest a larger share of defense
resources. The other services will strongly object, however, and the Navy has had
only limited success in implementing previous modernization plans. In addition to
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 I - t - 1 1 _l_ 1__ ___ _ ___ L-11 I I_ I I I
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
budget constraints, the Air Force will strongly resist attempts partially to usurp its
traditional monopoly on the air superiority role. A naval fighter force may also be
dependent on the ability of the Eurofighter program to remain on time and within
cost projections.
The antinuclear movement in the Netherlands, like those in other West European
countries, has gone into decline after failing to keep the Dutch parliament from
approving INF deployment. Peace movement leaders admit they have been unable
to come up with new issues with the same rallying potential as INF. The SDI
concept lacks the immediacy of cruise missile deployment, and most Dutchmen do
not feel compelled to take to the streets to protest US policy toward Nicaragua.
Even if the peace movement has not achieved its anticruise missile objective, the
long INF debate has made the Dutch public more aware and skeptical of defense
issues, and it has helped set the parameters for Dutch cooperation with
Washington on security policy matters. In the future, Dutch governments will be
much warier of stationing US weapons in the Netherlands; they almost certainly
will oppose deployment of US chemical weapons on Dutch soil, probably even in
wartime.
The peace movement's recent decision to concentrate more on Eastern Europe and
Soviet policy in Afghanistan, moreover, is not likely to reduce criticism of the
United States. Rather, an apparently more balanced perspective will strengthen
what the US Embassy in The Hague says are growing perceptions that there is
little difference in US and Soviet international conduct. A broader East-West
focus may yet help the peace groups' anti-INF goal by drawing public attention to
arms control and increasing pressure on The Hague to urge Washington to make
concessions in Geneva. Dutch deployment of cruise missiles is not scheduled before
1988, and peace groups are hoping for an agreement on INF that would reduce the
number of cruise missiles allotted to the Netherlands or make their deployment
unnecessary altogether.
Canada Mulroney's "French Cabinet" To Woo Quebec
Prime Minister Mulroney is trying to shore up Tory support among Francophone
voters, but his effort will be constrained by suspicions in the western provinces and
budget limitations. To reverse an alarming drop in public support for the Tories in
Quebec, Mulroney has decided to establish a committee composed of the 11
French-speaking Cabinet ministers, each of whom will speak in Quebec for the
non-Francophone federal ministers. Mulroney hopes this arrangement, combined
with a recent Cabinet shuffle that gave four of the five major economic portfolios
to Quebeckers, will help him retain the votes he needs in the next federal election,
expected in 1988. Energy Minister Marcel Masse, whom Mulroney recently
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
appointed as the province's political overseer, said the new committee is tasked to
overcome Ottawa's inability to communicate to Quebeckers the good news arising
from Tory policies and to change Quebec's perception of the federal government.
I--,i Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 I I III I it I I 1 I III
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5 --
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Iq
Next 3 Page(s) In Document Denied
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
France: Present and Future
Scandals-Raising the Ante
This summer's scandal of embezzlement and misuse
of public funds has not only tarnished the Socialist
Party's record of governing but also has increased
tensions in cohabitation between Socialist President
Francois Mitterrand and conservative Prime Minister
Jacques Chirac. Both Chirac and Mitterrand,
however, appear committed to the successful
continuation of cohabitation and are reluctant to join
in a major mudslinging campaign between their
parties. They are likely to avoid total escalation in the
war of Gaullist disclosures and Socialist
counterattacks)
however, both the Socialists and
the Gaullists continue to gather evidence of
wrongdoing by the other side in preparation for the
presidential election, currently scheduled to be held
by 1988.
A License to Steal?
France's most recent scandal involves embezzlement
and misuse of public funds by former Socialist
Cooperation Minister Christian Nucci and his
administrative assistant Yves Chalier. The Crossroads
of Development Association was created by Nucci in
1983 to sensitize public opinion to development
problems in the Third World, particularly those in
Africa. Overtly, the association's main project was to
finance the 1984 Franco-African Summit in Burundi.
Nucci, who reportedly dislikes administrative
detail, named his staffer Chalier as the association's
treasurer and gave him unlimited authority over its
funds.
The deliberately fuzzy bookkeeping records
enabled Chalier to embezzle government
funds. Chalier
probably believed he was
immune from prosecution. He willingly met both
current Cooperation Minister Michel Aurillac and
Mitterrand in April to explain the Crossroads of
Development's activities, but skipped the country
later that month when it became clear he would be
charged with criminal malfeasance. French
authorities have since issued an international arrest
warrant for Chalier, whom they believe may be in
Brazil, for embezzlement and misuse of some 81
million francs.
In the most blatant misuse of public funds, Chalier
obtained a chateau through a series of purchases by
companies of which he was co-owner. One of those
companies even received a preferential, government-
approved low-interest loan to buy the chateau by
producing an authorization purportedly signed by
Nucci. (Nucci's signature may have been forged.)
Further investigation into the affair has turned up the
questionable spending of some 20 million francs from
a joint private bank account under both Nucci's and
Chalier's names and of some 51 million on the
Franco-African Summit in Bujumbura in 1984.
25X1
25X1
25X1
25X1
Spreading the Blame
Chalier has claimed in a letter to Aurillac that
Socialist Government officials ordered him to create a
false bookkeeping system to hide government
expenses. Nucci is certainly vulnerable to charges of
mismanagement of his ministry and its personnel, as
he has claimed ignorance of almost all Crossroads' 25X1
transactions. His name on a personal joint bank
account with Chalier's and the questionable spending
of 20 million francs through that account have raised
suspicions. His signature on documents approving
loans and financial transactions is being investigated,
although it is likely that his signature was forged. His
election campaign posters appear to have been paid
for out of Crossroads of Development funds. The
prosecutor in the case may file criminal charges
against Nucci-a move potentially very damaging to
the Socialists' interests.
Secret
EUR ER 86-022
26 September 1986
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 CIA-RDP87T00289R000301190001-5
Nucci, who serves in the National Assembly, has
asked parliament to lift his immunity so that he can
facilitate a full investigation of the affair. He
obviously hopes to stem the rising tide of evidence
against him; but according to Embassy officials,
Mitterrand's African affairs adviser, Guy Penne has
advised the Socialist Party to let Nucci fend for
an attack on Budget Minister Alain Juppe's election
finances in early August in the satirical weekly Le
Canard Enchaine was the Socialists' warning shot: if
leaks on the Crossroads of Development case
continued to surface, more attacks on Rally for the
Republic (RPR) officials would appear.
himself.
Embassy officials also report that Penne is in some
legal jeopardy. His name is rumored to be on several
checks diverting money from the Crossroads of
Development into Socialist Party coffers, and he may
also have known about Chalier's purchase of the
chateau. Most observers agree that Penne has been
unconvincing in his public remarks. Penne, who plans
to run for the Senate in late September, may give up
his post at the Elysee-which he could keep while
serving at the same time in the Senate-if disclosures
continue to implicate him in the scandal. Rumors of
his replacement at the Elysee have again surfaced.
Perhaps the information most damaging to the
Socialists is the allegation that the government knew
about the Crossroads' questionable finances in 1985,
yet did nothing about it. Customs officials discovered
a bogus receipt for work at the 1984 Franco-African
Summit (the money supposedly used for bribes) and
reported it to the State Secretary for the Budget, who
probably informed both Mitterrand and Prime
Minister Fabius. The seriousness of criminal activity,
the apparent complicity of the Socialists, and their
inaction have raised doubts about the Socialists'
proclaimed commitment to morality in government
and their competence.
Gathering Dirty Laundry
Most Socialists believe, with good reason, that the
conservatives are carefully orchestrating the
disclosure campaign to bolster their sagging public
opinion ratings and tarnish the Socialist Party. In
response, the Socialists have begun their own
however, seems unconcerned about allegations against
himself and other RPR members and appears
unwilling to give up the battle.
Increased mudslinging reflects in part the tension
developing between Mitterrand and Chirac in their
cohabitation (powersharing). Embassy officials note
that leaks regarding the Crossroads of Development
scandal began to appear regularly after Mitterrand
announced on 14 July that he would not sign the
government's ordinance on privatization.
Some senior RPR party officials,
including Pasqua, believe that divisions in the
governing coalition will only widen with time and that
the mid- and long-term economic trends are not good.
Both Mitterrand and Chirac probably want to keep
the mudslinging from getting out of hand, judging
that they both have a lot to lose from an all-out
conflict that reveals skeletons in both their parties'
closets. Thus, they are likely to convince their
supporters to back off.
co a itation is popular wit t e
French public, and it would be damaging to either
man if he were seen as causing its failure.
campaign.
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Ending on a Positive Note?
Some commentators in the press hope that this messy
affair will lead to greater demand for legislation
regulating political party and election campaign
financing. Politicians admit that all the parties
indulge in some financial fraud, receive money from
other countries, use government funds, and ask
friends and/or businesses to pay for their campaign
posters. At least a dozen bills aimed at controlling
party finances have been introduced into and
forgotten by parliament since 1971. A prominent
conservative deputy has recently introduced another
bill in the National Assembly for electoral campaign
financing. Revelations from the Crossroads scandal,
as well as increased campaign costs-which will be
exacerbated by the introduction of political publicity
on television-will probably give greater impetus to
calls for new legislation. Despite increased public
interest in reform, however, it will be a tall order to
get the political parties to agree on the mechanics of a
law.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 I I II I I I Id 1 I I I I l i
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
France: Naval Support
for Intervention Operations
Efforts to maintain French out-of-area capabilities
include increased attention by military planners to the
Navy's ability to support intervention operations.
Although small by US standards, amphibious and
naval air forces are well trained and effective in terms
of the relatively narrow scope of typical French
intervention operations. Planned force
modernization-including new amphibious assault
ships-will maintain current capabilities despite
reduced force levels. Looming budget shortfalls may
result in some delays, but the broad-based political
consensus supporting an intervention capability
probably will ensure the survival of major programs.
Amphibious Operations
Analysis of joint exercises since the formation of the
Army's Force d'Action Rapide (FAR) in 1984
indicates strong emphasis on the development of
command and control for naval support of
intervention o erations. ReviewinLy a June 1986
exercise, the
Exercises
have drawn considerable attention from senior
officers-in contrast to the early 1980s when US
observers described amphibious operations as the
neglected stepchild of the intervention forces.
French amphibious forces do not have a major
forcible entry capability, and this is reflected in
exercises. Joint maneuvers typically involve raiding
operations or reinforcement of a friendly government
by combined airborne and amphibious landings in a
relatively benign environment. Air Force units and a
carrier battle group provide air support, while
amphibious forces land light armored and airmobile
units as well as logistic support in conjunction with
the arrival of airborne units.
The units involved typically are at most the equivalent
of two battalion-size regiments.
The Navy and Intervention Operations
The French Navy's primary missions are maintaining
a strategic deterrent force and protecting Paris's
overseas interests and territories. The latter power
projection function is handled by a mix of forces in
terms of the capabilities of individual units. A
relatively large number of small, lightly armed
ships-such-as the Type A69 light frigates provide
an inexpensive presence and limited naval
intervention capability in areas such as the Indian
Ocean. The Navy's amphibious forces and aircraft
carriers serve as a central reserve to back up the 25X1
smaller ships and handle restricted combat
operations.
Amphibious ships provide Army intervention units
with strategic mobility and logistic support. The
French Air Force has no strategic transport aircraft
and its tactical airlift resources are limited. Naval
amphibious ships are the sole means by which light
armored or mechanized forces may be transported
overseas and landed in a concentrated, combat-ready
state for intervention operations.
naval amphibious capabilities have
become increasingly identified with the development
of the Army's overseas intervention forces.
The carrier battle group-a carrier with supporting
escort and logistic ships-is the Navy's primary force
for conventional power projection outside Europe. It
may launch independent strikes or support friendly
forces ashore. Carrier-based air support is
particularly important since French warships lack
significant firepower for shore bombardment. French
surface combatants carry at most a pair of 100-mm
guns.
Secret
EUR ER 86-022
26 September 1986
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 I I
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Naval Amphibious Forces
Amphibious planning and doctrine are the
responsibility of a small Navy amphibious center at
L'Orient,
Imay be playing a
larger role in planning. Amphibious ships are assigned
to the Atlantic and Mediterranean squadrons and to
overseas logistic support duties. The Navy's major
amphibious ships are two 8,500-ton Ouragan-class
Dock Landing Ships (LSD) assigned to the Atlantic
squadron. These ships can carry two loaded 670-ton
Tank Landing Craft (LCT) and 350 troops. They have
limited helicopter support facilities.
Current plans envisage retirement of the Ouragan
class in the early 1990s.
The remainder of the amphibious force is composed of
six Tank Landing Ships (LST), a small headquarters
ship, and 11 LCTs. The two obsolescent Trieux-class
LSTs-one of which is based in the South Pacific-
are nearing retirement. Four small Champlain-class
LSTs-built to carry a landing company of 140 men
and 12 vehicles-are based at French overseas
territories. A 20-year-old converted repair ship, the
2,400-ton Rance, is available as a headquarters and
medical support ship for intervention operations. The
, but any of its three large air-capable ships can
serve in this role. The Navy's assault helicopter force
is small-two squadrons with 12 aging Super Frelon
medium helicopters-but Army helicopter units have
operated from French carriers. The Atlantic
Squadron's helicopter carrier Jeanne d'Arc is used as
a training ship but can be rapidly converted for
antisubmarine warfare or amphibious operations. As
an assault ship, the Jeanne d'Arc can carry a 700-man
infantry regiment and up to eight medium helicopters.
The ship has participated in recent amphibious
exercises, but training commitments-including
periodic out-of-area cruises-restrict its availability.
The Navy's two 33,000-ton Clemenceau-class aircraft
carriers may also be used in the assault role, but at
the expense of fixed-wing air operations. In a 1985
intervention exercise, the carrier Foch embarked a
helicopter regiment (40 light and 23 medium
helicopters) from the FAR's 4th Airmobile Division.
The Foch was the centerpiece of an amphibious group
25X1
2bAl
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
that included an LSD and two LSTs. Aircraft from
the carrier Clemenceau provided air support for the
landing. Budget restrictions and maintenance
requirements, however, seldom allow both carriers to
be operational at the same time.
French naval amphibious forces are well trained and
adequate for limited multiregiment operations, but
the small number of amphibious ships means rapid
deployment capabilities will often be marginal. For
example, in August 1986 the LSD Orage began a six-
month out-of-area cruise providing logistic support to
French overseas bases
Landing Forces
The French Navy maintains a small naval infantry
component, including a 500-man naval commando
unit-Groupment de Fusiliers Marins Commandos-
based at L'Orient. The group includes a headquarters
and five company-size units-three 84-man assault
commandos, a support commando unit, and a combat
swimmer unit. According to US observers, the naval
commandos are highly trained and well equipped for
unconventional warfare and raiding operations. In a
major amphibious landing, naval commandos would
make the initial assault to secure the beach for
following Army units.
hope for greater naval commando
participation in joint intervention exercises with the
Army.
Army formations with units trained for amphibious
operations include the 8,000-man 9th Overseas
Infantry Division based in northwestern France. The
division has three battalion-size infantry regiments,
an artillery regiment, and an armored reconnaissance
regiment with 36 ERC-90 armored cars. The 6th
Light Armored Division, based in southern France,
also includes amphibious operations among its tasks.
The division has two light mechanized infantry
regiments with VAB wheeled armored personnel
carriers and two armored reconnaissance regiments.
Each light armored regiment has 36 AMX-IORC
armored cars with 105-mm guns and 12 VAB ATGM
carriers with HOT antitank missiles. Helicopters for
any major operation would probably be drawn from
the FAR's 4th Airmobile Division, which includes one
infantry and three combat helicopter regiments. Each
helicopter regiment has two observation, three
antitank, and two transport squadrons-a total of 25X1
about 70 helicopters.0 25X1
Sea-Based Air Support
Carrier operations in support of French forces in
Beirut during 1983-84 undoubtedly reinforced Paris's
belief in the importance of sea-based tactical air
support for intervention forces. Senior FAR
commanders have stressed publicly the value of the
Navy's carriers and support plans for carrier force
modernization. The Navy strives to maintain one of
its two Clemenceau-class carriers operational at all
times.' The 40-plane air wing on the operational
carrier typically includes 12 to 20 Super Etendard
fighter-bombers, six to eight F-8E (FN) fighters, and
three Etendard IV-P fighter reconnaissance aircraft.
The remainder of the air group consists of ASW
aircraft and helicopters.
French carrier forces consistently display a high
degree of proficiency in exercises with US forces, but
their ability to sustain high-intensity combat
operations, particularly outside the Mediterranean, is
restricted. Major limitations include the small
number of carriers, support ships, and reserve
aircraft; the small number of aircraft the ships can 2.5X1
accommodate; inadequate air defense resources; and 25X1
weak logistic support. F__~ 25X1
Naval air support for intervention operations probably
will involve interdiction and close air support missions
by Super Etendards. The small number of aircraft
and modest electronic warfare capabilities, however,
will restrict the scale of operations.
' Although both carriers may on occasion be operational at the
same time, they routinely alternate in service.
25X1
ocvi
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
in delivering live ordnance. The carrier's aging F-8E second ship was expected in 1986 but apparently has
fighters probably would be unable to provide air been delayed. Despite budget constraints and a
defense for forces ashore against significant numbers continuing defense review, the LPD program probably
of modern high-performance aircraft. A major gap is will survive.
the lack of an airborne early warning (AEW) aircraft
such as the US E-2C Hawkeye. 0 government's strong commitment to an intervention
capability is likely to preserve the program. Delays
Modernization are possible, however, and the Ouragan-class LSDs
Construction is under way on the first of a new class may have to be retained longer than planned
of Amphibious Transport Docks (LPD). The 1984-88
Military Program Law envisaged three Foudre-class
LPDs in service by the mid-1990s. The order for the
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
The first 11,000-ton Foudre is scheduled to enter
service in 1990. The ship is designed to accommodate
a mechanized or light armored regiment and will have
expanded command and vehicle handling facilities. It
can carry two loaded LCTs, and its helicopter support
facilities include a hangar for four medium transport
helicopters. The Foudre will have a higher sustained
speed than the Ouragan. The Navy is also building
two smaller LPDs as logistic support ships for French
facilities in the Pacific to relieve the Navy of having
to assign an assault ship periodically to this task.
Construction has also begun on the first of two
36,000-ton Richelieu-class nuclear-powered aircraft
carriers to replace the Clemenceau class in the mid-
to-late 1990s. The ship will accommodate the same
size air group while allowing for the greater size of the
next generation of naval aircraft. Related aircraft
programs include a new fighter based on the Air
Force's Rafale B aircraft (despite the Navy's
preference for the US F/A- 18) and possible
acquisition of a carrier-based AEW aircraft.
Outlook
Planned modernization of amphibious forces will
maintain rather than expand current capabilities. The
Foudre-class LPDs will be more capable than the
ships they are replacing, but the strength of the
amphibious force will fall from the current level of
nine ships to seven in 1990 and as few as five in 1995.
The Trieux-class LSTs are being retired without
replacement, leaving the Ouragan class and the
Foudre as the only naval amphibious ships available
to the FAR in 1990. Completion of the Foudre class
probably will enable the Navy to keep two LPDs
available most of the time. The Navy may also opt to
expand its ability to use merchant ships.
Carrier force modernization will also maintain rather
than expand the Navy's capabilities for intervention
operations. A modern two-ship carrier force-
assuring that at least one is available on short
notice-gives France a significant out-of-area power
projection capability. The modest size of the
amphibious force, however, will preclude major
operations on the scale of British action in the
Falklands, and French planners apparently are not
seeking to prepare for undertakings on such a scale.
that the scale
and duration of possible intervention operations is and
will remain limited, in keeping with the restricted
scope of French objectives-maintaining a capability
to support friendly governments or groups against
modest opposition
25X1
25X1
2bAl
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 _-_ L ___- L l-ll 1 I _ I i t 1 . 1 _ __ ____ -__ _.1 . I . L Ii Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Greece-United States: Defense
Industrial Cooperation Talks-
Round Two
The recent second round of US-Greek discussions on
a Defense Industrial Cooperation Agreement
concluded successfully with a new draft framework
agreement. This draft will probably be the final
version and should be ready for ratification before
next month's municipal elections. The revised draft,
like its predecessor, contains an annex with several
programs sought by Greece that, for various technical
and political reasons, will not be fully implemented.
Because the Greek Government expects domestic
political gains from an agreement, however, the final
number of programs and extent of technology transfer
agreed to probably will not prevent ratification.
The Framework Agreement
The first draft last January of a new framework
agreement for Defense Industrial Cooperation
(DICA) contained several demands that made the
creation of "captive markets" in the United States, as
well as a requirement to procure specific products and
services from Greek industry an indispensable
precondition for agreement. Athens also demanded a
US commitment that "specific annual economic
returns" be guaranteed for the duration of the
agreement. Included in that draft was an annex of 10
potential cooperative projects for which Greece sought
US know-how, plant, or equipment.
The new.draft DICA is significantly scaled down
from the original, and all the Greek demands in the
first draft have been eliminated.
elimination of the original demands reflected a
recognition by Athens not only of the importance of
obtaining an agreement but also of the need to put to
rest as many bilateral US-Greek issues as possible.
This is particularly important in view of the
government's desire to show the Greek electorate
some progress on an agreement prior to next month's
municipal elections.
Desired Programs Versus Capabilities
Of the cooperative programs presented in the annex to
the first draft, only two-the acquisition of facilities
to provide depot-level maintenance on the Harpoon
antiship missile and the acquisition of technical know-
how to modernize 4.2-inch mortar ammunition-have
been dropped completely. Greece still wants to be
involved in cooperative efforts in the remaining
programs. In particular, Athens remains extremely
interested in building modern frigates for the Hellenic
Navy in Greek shipyards, coproducing a remotely
piloted vehicle for both internal use and export, and
receiving assistance in the improvement of Greece's
electronics industry with an aim to coproduce
integrated self-protection systems for aircraft and
laser guidance systems for both US and Hellenic Air
Force weapons.
25X1
25X1
Other programs of vital interest in the annex include:
? Acquisition and modernization of additional A-7
aircraft to replace those lost from the inventory.
? Repair of US 6th Fleet ships.
? Intermediate-level maintenance of Harpoon
antiship and Sparrow air-to-air missiles.
? Production of the Beechcraft T-34 primary trainer.
These projects would apparently be undertaken by the
Hellenic Aerospace Industries (HAI), the Hellenic
Shipyards, the Greek Powder and Cartridge
Company (PYRKAL), and the Hellenic Arms
Industry (EBO). During the recent discussions, it was
agreed to send a US survey team to Greece to
investigate the ability of the various Greek industries 25X1
to gainfully participate in these programs. An
additional charter of the survey team is to find new
areas of cooperation not envisioned by Greece.
25X1
25X1
All of these programs would require transferring
varying degrees of US technology and, in some cases,
US provision of both plant and equipment. Athens
would particularly like advanced technology in the
areas of fiber optics, reinforced plastics, precision
metal casting, and hot forging. In some cases, these
applications involve sensitive technologies which, 25X1
under current policy, cannot be transferred. The other
cases will be contingent upon the survey team's
Secret
EUR ER 86-022
26 September 1986
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Few specifics are known about the capabilities of
Greece's largely state-owned defense industries.
Attache reporting suggests that some industries have
achieved a fair degree of technical expertise and
demonstrate good quality control. The Hellenic
Aerospace Industry (HAI) facilities, for example,
reportedly rank as the major aircraft engine
maintenance depot in the eastern Mediterranean.
This position probably will be strengthened by the
multimillion dollar joint venture recently agreed to
with General Electric as a result of the selection of
the GE F110-100 engine for Greece's new F-16s.
The Greek shipbuilding industry, currently
economically depressed and suffering from a lack of
marine and design engineers, maintains some of the
largest drydock capabilities in the world. Recently,
$55 million in credits have been ensured by the
government for the construction of yet another
floating drydock and several vessels of various sizes.
Athens is also hoping to close a deal for four new
frigates, three of which are to be built in Greek
shipyards. Press reports indicate that Hellenic
shipyards already have received a $600 million
contract for their construction, but Athens has yet to
decide which of four competing foreign shipbuilders
will actually supply the frigates.
calibers for NATO and for export.
As in other areas, Greece would like to expand and
become self-sufficient in the fields of ammunition,
small arms, and armor production. According to
industrial press reports, one of the two major Greek
companies in this field is in the process of
constructing the largest ammunition facility in
Western Europe as well as its own firing range to test
its products. This same company recently developed a
twin, 30-mm antiaircraft system using a cold forging
process for the barrel, an 81-mm, and, reportedly,
120-mm mortar, and a Greek-designed, shoulder-
fired, antitank missile. Both companies are producing
standard and special ammunition in a broad range of
Athens has also demonstrated a strong desire to
produce an indigenous tank or armored personnel
carrier. Efforts to do so, however, have been
extremely expensive and not very successful. Athens
has recently sought information and
suggested coproduction of an APC in Greece. Recent
attache reporting, however, indicates a decision may
have been reached to assemble an APC in Greece
from a Dutch vehicle body and a US-manufactured
drive train. On the more positive side, Greek
industrial capability to upgrade US M-48 tanks to
A5 standards and to maintain them has consistently
received high praise from US defense attaches over
the years.
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
determination of Greek industrial capability to absorb
those technologies.
Outstanding Issues
Two issues remain to be resolved before the DICA
can be ratified. First, the survey team must complete
its assessment of Greek industrial capabilities. This
report, together with the results of a technology
security study, will ultimately decide which programs
and levels of technology and assistance will be
provided. Regardless of the conclusions, Athens will
probably insist that the DICA include an annex
outlining specific programs and technologies by name
Implications for the United States
Despite implementing the US-Greek General
Security of Military Information Agreement
(GSOMIA) in January, Washington remains
concerned over Greece's ability to protect sensitive
technologies. This ability, which is the subject of a
study soon to be released, will become increasingly
important as coproduction arrangements get under
in order to shore up their defense industries.
The second issue concerns the duration of the DICA.
Athens wants an agreement lasting five years from
date of ratification in order to show "positive" results
to its parliament. The desired five-year period would
overlap with the current Defense and Economic
Agreement (DECA) to which the DICA is tied, but
Athens wants the new DICA to be folded into and
made concurrent with a new DECA in 1988.
Regardless of how this is resolved, both sides have
already decided that the agreement will contain a
five-month notification (termination) clause which, in
reality, makes duration of the DICA a nonissue.
Although there has been some loss of classified
information and some high-tech diversions to the
Soviet Bloc through Greece, US Embassy reports
indicate that these diversions have occurred only on a
small scale and do not point to Greece as a major
problem. Greece could become an even riper target as
it develops an indigenous high-technology industrial
capability. Athens, however, appears to be taking the
threat more seriously, and government officials have
assured the United States that they are willing to take
the steps necessary to protect classified information
Implications for Greece
The DICA is extremely important to Athens because
of Greece's weak economy and the need to bolster its
defense industries; both are sources of strain on
ambitious military-industrial modernization
programs. Exacerbating the problem is the
government's desire to develop an industrial capacity
to produce products for which there may be no export
market and which they do not themselves have the
capacity to absorb. Despite the gains already made in
some industries and several unfulfilled contracts,
Greece has had little success in marketing
indigenously produced defense products.
Furthermore, many industries, such as HAI will be
unable to undertake some of the coproduction
commitments agreed to without capital expansion to
build new facilities or upgrade existing ones, and train
new personnel.
and technology.
The entry of Greece into coproduction arrangements
with US firms is also likely to have some positive
effect on solidifying Greek ties to the United States
and the West in general.- The success of these
industrial arrangements may provide the Greek
Government with something tangible to show the
Greek electorate for allowing US bases in Greece to
remain. This will become particularly significant
when negotiations begin on renewing the Defense and
Economic Cooperation Agreement (DECA), which
expires in 1988.
Outlook
Despite the political rhetoric from Athens and its
desire for defense-industrial self-sufficiency, the
Hellenic Armed Forces prefer US systems and the
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Foreign Military Sales (FMS) program.' Some of the
programs Athens desires involve both commercial and
FMS aspects. A DICA, therefore, will be ratified as
planned and many programs desired by Athens will be
agreed upon. Athens, however, still has much to do to
inititate action with various US industries to acquire
some of the programs it needs and negotiate the terms
and offsets it desires.
' For fiscal year 1987 alone, Athens has requested just under $1.5
billion in FMS credits, three times the current FMS budget limit
for Greece. Preference for FMS is understandable since Greece's
commercial purchases, according to US Defense Department
sources, are paid for out of the armed forces' modernization budget.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Hungary: Worker Discontent
Workers are becoming one of the most outspoken
critics of the Hungarian regime. Their discontent
stems from a perceived decline in the quality of their
lives brought about by stagnating living standards and
a fall in the prestige of their occupations. The party,
sensitized to the danger of worker unrest by Poland's
Solidarity crisis earlier in the decade, has tried to
make the trade unions more credible representatives
of worker interests and has implemented management
reforms intended to give workers a voice in enterprise
decisionmaking. Budapest's strategy, however, is
filled with contradictions and appears thus far to have
done little to diminish the workers' indignation. F_
Worker Grievances
According to official government studies, workers are
having to work more, and under worsening conditions,
just to maintain the living standards they achieved in
the 1970s. Seventy percent of workers work four extra
hours a day (a 50-percent increase over their normal
8-hour day) in afterhours associations, but earn on
average only 25 percent more in wages. These extra
earnings, moroever, have been eroded by inflation.
Whereas a worker could buy an apartment of 50
square meters with seven years' income in the early
1960s, the same apartment today costs 12 years'
income and is no easier to acquire. Official studies
note an increase in psychological stress and in the
frequency of industrial accidents, both partly as a
result of the need to put in extra hours.
The wide disparity in the benefits reaped by after-
hours jobs has also produced tensions at the
workplace. Because wage rates earned in such work
are not carefully regulated, twofold and threefold
differences in wages of identically trained workers are
common even within a single plant. Left further
behind are the many workers who choose not to work
extra hours and those who-because of the nature of
their occupations-are unable to do so.
Trade Unions Blamed
As the pressure on the workers has increased, so has
their public grumbling. Some reportedly have carried
out brief work stoppages in recent years, but for the
most part they have limited their protests to verbal
complaints. The National Trade Union Congress,
held earlier this year, provided a forum for
unprecedented worker criticism of the economic
difficulties facing Hungary. Speakers at the congress
complained about the need to take second jobs, the
housing shortage, inflation, the poor economic
position of pensioners, and the unwarranted income
differentials.
Much of the workers' anger has been directed at the
trade unions themselves, and even union officials
admit that workers do not view the unions as credible
spokesmen for their interests. Workers openly
displayed their contempt for the performance of the
trade unions during last year's competitive
parliamentary election, when 10 of 17 union
candidates running for election were defeated.
Worker spokesmen at the trade union congress made
it clear that they want more influence over union
policy and want union officials to consult with them
more frequently. Speakers also questioned the
relevance and role of the trade unions in view of
recent changes in worker-management relations
resulting from the creation of enterprise councils, in
which management representatives and elected 25X1
workers' deputies are empowered to make decisions on
management, employment, and financial issues. Not
all of the 803 delegates to the congress were mollified
by the opportunity to voice their grievances, however,
as 42 either voted against the final resolution or
abstained, a hitherto unheard-of result.
Secret
EUR ER 86-022
26 September 1986
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 I Il 9 11H.1 1 I I I
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Worker Participation in Management?
Budapest introduced management reforms in 1985
that were designed in part to enhance workers' sense
of integration and responsibility by giving them a
greater voice in enterprise decisionmaking. In general,
the reforms give the workers the right to participate
in the selection of managers and members of the
enterprise councils in all but the most important state
enterprises. The council members, some of whom are
workers' deputies, are to have the authority to
determine the managers responsibilities and the right
to control enterprise assets.
These election procedures, like the union elections,
are complicated and allow the authorities the
possibility to screen the nominees. Several enterprise
directors have admitted to US Embassy officers that
the reform has been meaningless for the most part.
Some directors apparently use their authority to
appoint the members of the council that in theory are
to elect and supervise him. As with the union
officials, old habits die hard, and many factory
managers seem unwilling to adopt new managerial
styles.
Despite this, the reform worked to the advantage of
workers earlier this year. Enterprise councils granted
wage increases to the managers, and the managers
responded by giving raises to the workers. This
widespread practice led to greater-than-planned wage
increases in the first quarter of this year and forced
the regime to step in and limit the ability of councils
and managers to grant wage increases.
Winning the Allegiance of the Workers
The critical tone of the congress presumably
disconcerted the leadership, although it was a
conscious decision by the party to make trade union
proceedings more open-and, thus, more relevant to
the membership-that provided the opportunity for
workers to speak so bluntly about the problems they
face and the grievances they have regarding union
performance. The decision to revamp union policy
grew out of the leadership's determination after the
outbreak of the Solidarity movement in Poland in the
early 1980s to prevent an alternative workers'
movement from taking root in Hungary. A Central
Committee resolution in 1983 urged the unions to
more effectively represent the interests of workers,
develop democratic methods for union activities, and
better inform workers of economic policies and
problems. Karoly Nemeth, the party secretary on
whose report the Central Committee resolution was
based, cautioned party officials not to violate trade
union autonomy through patronizing and unjustified
interference in their affairs. Instead, he encouraged
the party to exercise guidance of the unions through
the political and educational work of Communist
union members.
Although much has been made in speeches and in the
press of the unions' new role since the 1983 Central
Committee resolution, little has been done to make
the workers feel greater allegiance to the unions. The
only clear responses to the party's new guidelines
occurred late last year and early this year when the
unions organized competitive elections for shop
stewards and enterprise-level representatives and
opened their congress to more candid debate.
the new electoral method was
part of the renewed emphasis on greater participation
by the rank and file and could add
to the unions' legitimacy. Comments to US Embassy
officers by other union officials, however, make it
clear that the election process has yet to be
standardized or institutionalized and that a great deal
of confusion surrounded the voting. The officials
conceded that the elections produced few surprises
and generated little enthusiasm that might be
translated into worker support for the unions.
The unions are apparently having some difficulty in
adapting to their new role. Officials who have made
their careefs by transmitting party policies to the
workers are now expected to determine their needs
and aspirations and represent them to the party,
without, of course, compromising the policies. Many
union officials probably fail to understand their new
tasks or disagree with them and-in either case-are
not doing much to implement them.
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
The Dilemmas Ahead
The pressure from workers is not likely to decrease in
the near future. Indeed, regime plans to improve the
economy's poor performance threaten their interests
on a number of fronts. The failure of the trade unions
or the new enterprise councils to defend worker
interests on the following issues will lower their
credibility and further alienate workers from the
party:
? The regime seems inclined to limit the use of
afterhours work associations, which have given
workers the opportunity to earn the extra money
they need to stay afloat, in favor of a piecework
wage system that is designed to increase
productivity during normal work hours. The loss of
sources of extra income will heighten worker
support for price freezes or wage increases not
linked to productivity.
? Budapest does not appear ready, however, to allow
wages to rise. The regime is committed to tying wage
increases to productivity in order to keep inflation at
tolerable levels. It is also, at a time when it is
grappling with a heavy foreign debt burden,
attempting to control domestic demand. Allowing
wages to increase might stimulate domestic
consumption beyond the economy's ability to satisfy it.
? The new bankruptcy law, which went into effect
1 September, has the potential to create a pool of
100,000 to 150,000 unemployed workers if it is
used-as advertised-to close all unprofitable
enterprise These
workers will be granted a retraining benefit for 15
months-at full pay for nine months but the
subsequent three months at 75 percent full pay and
the last three at only 60 percent. Although it may
well be possible for the regime to find new
employment for these workers, it seems unlikely
that this can be done within nine months or that all
will be satisfied with their new occupations.
According to press reports, more than 700 coal
miners resigned this summer apparently in protest
of government plans to close some pits and
introduce longer working hours in others in an effort
The probable reluctance of the regime to back down
on these issues, which are keys to the success of its
recovery program, will undermine its efforts to
alleviate worker discontent and further expose the
inherent contradictions in its policies affecting
workers. On the one hand, it wants to convince
workers they have a stake in the system by giving
them greater influence over enterprise decisionmaking
and making their unions more responsive to their
concerns. Yet it is unwilling to countenance worker
interference with regime policy on important issues.
This was demonstrated by the regime's limitation of
the prerogative of the worker-elected managers and
the worker-management councils to raise wages and
makes it extremely unlikely that the unions or the
councils will oppose the regime line on afterhours
work associations, wages, or the closing of loss making
enterprises. The regime's dilemma is that if it sticks
with its economic policies it cannot hope to win over
the workers, whereas if it changes its policies to do
that it risks ruining its chances of overcoming the
stagnation that has afflicted the economy throughout
Despite the frustrations of its labor force, Hungary at
present does not seem to be on the verge of a
Solidarity-style outbreak. For the near term at least,
the workers probably will continue to express their
resentment in private and nonpolitical ways. But
several more years of economic stagnation could
indeed turn workers to more overt political activity
and confirm the worst fears of Hungary's leaders.
25X1
2.5X1
25X1
to cut costs without hurting production.
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 I. _ I. ._ __IL_ I _ . 1 _ _ II L. 1 1] ;
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Romania: Ceausescu's Middle
Eastern Peace Offensive
Recent signs of intensified diplomatic activity in the
Middle East have encouraged Romanian President
Ceausescu once again to try to mediate the Arab-
Israeli dispute. As the only East European leader on
good terms with virtually all major actors in the
region, Ceausescu has been able to play a constructive
role in peace efforts in the past, but his limited real
influence in the region and fixation on the necessity of
encouraging direct talks between PLO leader Arafat
and Israel lessen the possibility that his efforts will
bear fruit.
Visitors and Emissaries
Following talks with Arafat in Bucharest last month,
Ceausescu dispatched high-ranking special envoys to
Cairo, Damascus, and Amman. One of the envoys had
had talks with Israel's leadership earlier in the
summer, and a ranking Israeli foreign ministry
official was in Bucharest at the end of August. Senior
Romanian officials informed the US Embassy that in
his talks with Ceausescu Arafat said privately he
would be willing to attend an international peace
conference that would include representatives of
Israel, the Arab states, the United States, the USSR,
and "other nations which could make a contribution"
based solely on UN Security Council Resolutions 242
and 338 (which imply full recognition of Israel). He
also reportedly said he would be willing to have West
Bank Palestinian leaders participate in his delegation.
Although Arafat may have outlined this position in
private to encourage Ceausescu's support, to do so
publicly undoubtedly would cause a rift within PLO
ranks and seriously jeopardize Arafat's leadership.
Arafat has made similar private assurances to other
leaders in the past but usually retracts his promises to
avoid serious internal dissension.
In these meetings, Bucharest appears to have been
pushing Ceausescu's longstanding set of Middle
Eastern peace proposals, which are similar to the
standard Soviet position with minor differences.
Romania proposes a peace conference attended by
Israel and all Arab parties, including the PLO, which
it recognizes as the sole legitimate representative of
the Palestinians, as well as the US and USSR (but not
necessarily chaired by the superpowers-a difference
from the Soviet plan), along with other states that
could play a constructive role (conceivably, but not
necessarily, including Romania). It envisions a final
settlement based upon recognition of the sovereignty
of all states in the region, including Israel, and the
creation of a Palestinian state.
Long Record of Effort
In the past, Ceausecu has tried to use his unique
position as the only Warsaw Pact state maintaining
full diplomatic relations with Israel while preserving
excellent ties with all Arab states and the PLO to
encourage the parties in the region to engage in direct
talks with one another. Both former Egyptian
President Sadat and former Israeli Prime Minister
Begin gave Ceausescu credit for encouraging their
first 1977 summit during visits by each to Bucharest
earlier that year, although there is little evidence that
Ceausescu did more than gently push each leader to
deal directly with the other.
Since then, Ceausescu has tried to keep himself well
informed of developments in the area, and most of the
major players there, for their own reasons, have
wanted to keep good relations with him. For the
Israelis, diplomatic recognition by Romania remains
their only official tie to Eastern Europe-although
negotiations are underway with Poland for the mutual
opening of interest sections and there are active
cultural relations with Hungary-and demonstrates
that it is possible to maintain good relations with both
Israel and even the most radical of Arab states. Good
relations with Bucharest are also considered essential
for ensuring the continued emigration of Romanian
Jews to Israel, which currently runs at a rate of
approximately 1,000 to 1,500 per year.
Secret
EUR ER 86-022
26 September 1986
--11 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
At the same time, Ceausescu is one of Arafat's best
political friends, taking him far more seriously than
almost anyone else. Romania also has actively
pursued trade and close political ties to Arab states
ranging across the political spectrum from Libya and
Syria to Egypt and Jordan.
For Ceausescu's part, his diplomatic activities in the
region significantly enhance his claim to international
statesmanship. Although he has avoided taking stands
so divergent from those of Moscow as to needlessly
antagonize his Soviet allies, there is every evidence
that his policy is arrived at independently and he does
not go out of his way to push Soviet interests in the
area. Aside from his general opposition to political
and economic boycotts-with the public exception of
those directed at South Africa-Ceausescu
apparently regards his relationship with Israel as a
cornerstone of his good relations with Washington
and with the American Jewish community. Israeli
diplomats have told us that Romania has tried
repeatedly to interest them in joint export or third-
country marketing deals in Asia and Africa, although
we do not know to what extent Bucharest has
succeeded in these efforts. On the other hand,
Romania regards the Arab states as valuable
potential markets for its exports, including
armaments, and as important sources of petroleum for
its oversized and unprofitable petrochemical industry.
Romania has avoided the blacklisting of its exports in
the Arab world because of its trade with Israel
through the establishment of bogus companies for use
in dealing with the Israelis.
The Current Push
We believe the current flurry of Romanian diplomatic
activity in the region was sparked by indications of
some movement in the "peace process," including
recent anticipation of a conclusion to the Taba
territorial dispute between Israel and Egypt, the
resulting summit between Israeli Prime Minister
Peres and Egyptian President Mubarak, the summit
between Peres and King Hassan in Morocco, and
efforts to coax Jordanian King Hussein into the
negotiations. Ceausescu also feels he has closer ties to
Peres and his Labor Party than to Israeli Foreign
Minister Shamir, who is scheduled to replace Peres as
head of government next month. In the past,
Ceausescu has demonstrated a pattern of asking for
briefings from his regional contacts when there were
signs that the pace of diplomatic activity was picking
up and then trying to interject himself into the
negotiations.
efforts, however, have consistently stumbled over his
fixation that the next step in the peace process should
involve direct talks between Israel and the PLO and
his overestimation both of Arafat's influence as PLO
leader and willingness to publicly repeat the
conciliatory assurances he may have given Ceausescu
. Since we do not believe that
Ceausescu has the influence to persuade Arafat to
make such public statements and do not expect the
Israelis to alter their longstanding refusal to deal with
the PLO unless Arafat does so, we expect that all
sides will, as usual, give the Romanian leader a polite
hearing but that his effort will not succeed beyond
this. Should the parties reach some sort of
compromise through other, more direct channels,
however, they can also be expected once again to
praise Ceausescu's constructive efforts.
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
East Germany-USSR:
New Rail Ferry Link
East Germany and the Soviet Union on 2 October will
inaugurate rail ferry service between Mukran, East
Germany, and Kleipeda, Lithuania-a major project
that will provide both countries with significant
economic benefits. The service, in addition, may
provide limited support to Soviet military forces in
East Germany.
The Project
The agreement on the 273-nautical-mile "Bridge
Across the Sea" project signed in Moscow in June
1982 gave East Germany most of the construction
responsibility. The East Germans are building an
entirely new port at Mukran, just south of the
Sassnitz on Ruegen Island, which will be dedicated to
the rail ferries. The East Germans are building both
facilities to change railcars between the wide Soviet
and the narrower European gauges and a yard where
cargoes will be transferred between cars. The East
Germans also must improve the road and rail
networks and infrastructure around the comparatively
isolated Mukran site. The Soviets, by contrast, have
had a less extensive job in modifying their existing
port of Kleipeda. Despite the inauguration of service,
neither facility is yet complete.
The East Germans are constructing all six ferries,
three of which will belong to the Soviets. Modeled
after vessels now in operation between Ilyitschovsk in
the Crimea and the Bulgarian port of Varna, the 190-
meter-long, 11,700 deadweight-ton ships will carry up
to 103 Soviet-gauge railcars on five tracks on each of
two decks at up to 17 knots. They also can carry
wheeled or tracked vehicles and will accommodate
several passengers. The Mathias Thesen Shipyard in
Wismar has delivered the first ship, the "Mukran," to
the East German state shipping line and the Soviets
are scheduled to take delivery of two ships next year.
Two vessels are slated for completion in 1988, and the
last in 1989.
The project has experienced some problems-such as
intermittent parts shortages-but it has received
priority in resource allocation, so service will begin
slightly ahead of the original target of 7 October, East
Germany's national day. We expect some supply
problems to continue but anticipate that the ferry
service will be fully operational by the end of the
decade. We do not know the total cost of the project,
but the East Germans in 1985 estimated the cost of
the Mukran terminal alone at the equivalent of about 25X1
$700 million. 25X1
The Economic Effects
The link will provide both sides to economic benefits
and significantly boost bilateral seaborne commerce:
? It will cut transport costs by about 80 percent,
transit fee payments to Poland.
and reduce 25X1
? Ferries are expected to be able to make round trips
in 48 hours, cutting delivery times by at least half
when compared with shipments through the
congested Polish rail network.
Secret
EUR ER 86-022
26 September 1986
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 II I I I 'I I I I 1 1 1.1 i
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Soviet-East German Rail Ferry Link
Im. dnrnmant ha s not racopniisd
Etonia, Latvia, and Lithuania
. 9oundarrapnaanttion
thoritet ve.
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
? Sea freight is less vulnerable than land
transportation to disruptions from possible political
instability in Poland-a particularly great concern
in 1981-82 when the project was initiated.
When all the ships are operating, the East Germans
expect the service to carry 5.3 million metric tons of
cargo annually, including 3 million tons of East
German imports. By comparison, total bilateral
seaborne trade was scheduled to be 8.5 million metric
tons in 1985.
Military Implications
The project has limited security implications,
explaining East Germany's original designation of the
venture as a "national defense" effort. High-level
East German officials, including Politburo members,
are apparently monitoring closely the construction at
Mukran, and senior Soviet military officers have
inspected the work.
The link will moderately increase the Soviets' ability
to deliver military materiel to the GDR in peacetime
and could be a secondary means of moving supplies
and possibly units from the western USSR in the
event of war. Speed and security from land attack are
particular attractions. Use of the ferries during
wartime would be a slight but still useful addition to
Soviet transportation capability; we calculate that
even using all six ships, the Soviets could provide only
a small fraction of their huge wartime logistic needs.
Moreover, the vessels, the port of Mukran, the rail
network, marshaling yards, transloading facilities,
and the rail bridge between Ruegen Island and the
East German mainland would be vulnerable to
possible NATO air and naval interdiction.
Outlook
Even though ferry service will begin ahead of original
schedule, there is no assurance that it will operate
smoothly. When all six ships are sailing, a ferry will
arrive and depart from each port every eight hours,
straining the rail transloading yard at Mukran, in
particular. The East Germans must solve their special
transloading problem or be forced to use already
scarce labor to manually transfer cargoes from car to
car. If they cannot keep the trains on land moving, the
advantages of the ferries themselves will be
diminished. Because of the high costs and prestige at
stake in this project, we anticipate heavy pressure
from the senior political leadership to ensure that the
kinks are worked out before the whole fleet is plying
the Baltic. If the system does work smoothly, the new
ferry link should considerably facilitate trade.
Successful operation could also increase pressure on
West Germany to agree to the Soviets' proposal of a
similar project connecting Kleipeda with Kiel. Some
West German interests in economically depressed
northern West Germany favor a link, but Bonn has 25X1
balked at allowing Soviet sailors near sensitive
facilities at Kiel. F__1 25X1
-11 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5 -
 11 11 1. 11 I I -Id I I
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
- Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Yugoslavia: The Hirsute,
Outspoken Tupurkovski
The youngest member of a party leadership in Eastern
Europe, Belgrade's 35-year-old Vasil Tupurkovski,
was in Washington this month for a conference on
Yugoslavia at the Smithsonian's Wilson Center and a
talk on foreign policy at the George Washington
University. The occasion gave local observers a rare
closeup look at a member of Yugoslavia's new
generation of leaders.
Tupurkovski came to the United States with unusual
credentials. Before being elected to the 23-man Party
Presidium at a national party congress last June, he
had earned a master's degree in comparative law at
the University of Michigan and still speaks fluent
colloquial English. The Macedonian Tupurkovski
wears long thick black hair, a long mustache and
sideburns, and dresses in open-necked shirts that he
leaves hanging out over his ample belly-attire that is
strikingly casual even among the sometimes tieless
Yugoslav elite.
At the Wilson Center conference, which was attended
by Yugoslav Embassy personnel and academics,
Tupurkovski
delivered a stilted, jargon-filled talk on
Yugoslavia's nonaligned foreign policy and stayed
silent for the rest of the three-day meeting,
At GWU, however, in the presence of a mostly
student crowd with no Embassy officials present,
Tupurkovski loosened up. He spoke mostly
extemporaneously on topical international issues and
came across as relaxed, intelligent, self-confident, and
assertive-still a product of the system but very much
his own man.
To the extent that Tupurkovski's comments reflect the
views of the new generation of leaders, they suggest
that neither Washington nor Moscow should expect
Vasil Tupurkovski ... 35 years
old ... youngest member of
recently elected Party
Presidium ... reportedly that
body's main person reponsible
for international relations ...
ambitious former youth leader
from Macedonia ... did
contract translations for US
mission ... described by US
diplomats as sharp, gregarious
... expert on international law
and member of new strategic
dramatic shifts any time soon in Yugoslavia's fiesty,
independent-minded foreign policy. The following are
some of the highlights:
Terrorism. Yugoslavia is "very active in the struggle
against terrorism" and has an "important" dialogue
with the United States on the issue. But the subject
has led to "tremendous differences" and
"misunderstandings" with Washington because of
Belgrade's support for the PLO and other "legitimate
struggles of national liberation." Such support is
"probably very unacceptable to you" but is "of
principled importance to us."
Soviet Union. Relations with Moscow are "never
something that go smoothly even when there are no
problems out in the open." A recent example of Soviet
"pressure" came during the Yugoslav Party Congress
when the Soviet delegation complained about
Yugoslav media coverage of the Chernobyl disaster.
Another "point of friction" has been Moscow's stress
on "authentic models of socialism" within the world
Communist movement, although Belgrade's insistence
on independence has helped end the Soviet policy of
Secret
EUR ER 86-022
26 September 1986
25X6
25X6
25X6
25X6
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 I. _-_L_L_Il_ 1_ .I 1_11 1 _I
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
"diktat." Economically, Yugoslavia is trying to lessen
its dependence on the Soviets, but it has "not been
very successful so far," and "we are very conscious of
this."
United States. Belgrade has a "very fortunate" but
also "delicate" relationship with Washington. The
"neoconservative approach" to international problems
of the Reagan administration is "a problem for
Yugoslavia," as is the "intervention by international
financial circles" such as the IMF in Yugoslavia's
internal affairs.
Nonalignment. As a cofounder of the Nonaligned
Movement, Belgrade is "very attached" to its
nonaligned foreign policy, behind which is a broad
consensus of the country's many rival ethnic groups.
However, "we did not support what Qadhafi said" at
the Harare Nonaligned summit, when he deprecated
the movement as allegedly pro-Western. Moreover,
the choice of a future Nonaligned chairman, for
which Nicaragua is actively bidding, must be done
democratically, not by "imposing" any choice.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Iq
Next 1 Page(s) In Document Denied
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
 i 1._ __] I . 1-it I I 11 1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5
Secret
Secret
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000301190001-5