EUROPEAN REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00289R000301220001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 35
• Document Creation Date: December 27, 2016
• Document Release Date: August 2, 2011
• Sequence Number: 1
• Publication Date: November 7, 1986
• Content Type: REPORT

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Directorate of
Intelligence
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European Review
EUR ER 86-025
7 November 1986
Seat
2?-
463
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European Review
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Portugal: Continuity in Economic Policy
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Iceland: Prime Minister Applauds Robust Economy
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Italy: Streamlining the Armyl
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The recent US decision to seek new conventional arms control
negotiations in Europe in a bloc-to-bloc forum outside the CSCE
framework caught most NATO Allies by surprise and probably will
evoke continued, vigorous objections, especially from France and
West Germany. Paris's distaste for alliance-to-alliance talks is so
strong that it virtually precludes French participation in a formal
bloc-to-bloc forum, a prospect that the other Allies seek to prevent.
A new antinarcotics program, approved by the European
Community's Interior Ministers last month, includes measures to
combat drug trafficking and abuse as well as increased cooperation
among EC states. Although the program is a first step toward
establishing a unified regional stance against illicit drugs, its
implementation is likely to be halting.F--]
will continue to be wary of undue US influence
Persistent terrorism in Western Europe has prompted members of
the European Community to make new efforts to improve EC
cooperation on counterterrorist measures. But progress probably will
be slow because of the desire of members to retain the flexibility to
act in accordance with their perceived national interests, and they
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West Germany: Modernizing Maritime Air Capabilities
the northeastern Atlantic
Modernization goals of the West German Navy's air arm into the
mid-1990s include reequipping and reorganizing tactical fighter
units, fielding a force of attack helicopters armed with antiship
missiles, and acquiring new maritime patrol aircraft. These
programs, if fully implemented, will strengthen the Navy's maritime
forces in the Baltic and further its aim of expanding operations into
Bulgaria-United States: Prospects for Improved Relations
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Bulgaria is signaling increased interest in improving relations with
the United States following several years of unusually severe strains.
Nonetheless, we believe that Sofia's fealty to Moscow, its dismal
human rights record, and international policies that regularly
conflict with Washington's interests will continue to prevent any
major breakthrough.
Norway: The Labor Government in 1979-81- 29
Lessons for 1986
Some articles are preliminary views of a subject or speculative, but the contents
normally will be coordinated as appropriate with other offices within CIA.
Occasionally an article will represent -the views of a single analyst; these items
will be designated as uncoordinated views.
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EUR ER 86-025
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Portugal Continuity in Economic Policy
Portugal's improving economy has prompted Prime Minister Cavaco Silva to back
away from his plan to provoke a government crisis and an early national election.
The Prime Minister believes he can bolster the reelection prospects of his minority
Social Democratic government by staying in office and taking credit for the
ongoing economic upturn. Real GDP is expected to grow 3.7 percent this year-up
from 2.9 percent in 1985-and 3.5 percent in 1987. Inflation, moreover, probably
will fall 6 percentage points in 1986-to 13 percent-and to about 11 percent next
year. The current account is expected to measure surpluses of $700 million in 1986
and $500 million in 1987.
industrialized West European partners.
Cavaco Silva's decision to hang on to office for at least a while longer suggests he
will continue to pursue an economic policy aimed at lessening state support for
public enterprises, increasing real incomes, and stimulating private investment. At
the same time, -Cavaco Silva lacks the strong parliamentary base he needs to
implement his longer term plans for privatization of inefficient state firms and
fundamental revision of labor and agrarian reform legislation. Portugal will thus
continue to suffer from structural rigidities that will make it difficult for the
country to meet the challenge of EC membership and to be on a par with its more
Prime Minister Applauds Robust Economy
real interest rates, and the large foreign debt-about 55 percent of GDP.
Prime Minister Hermannsson is hailing a buoyant Icelandic economy to boost his
coalition government's chances in the national election due by April 1987. In his
annual policy statement to parliament last month, the Prime Minister gave his
Progressive-Independence coalition credit for the single-digit inflation rate
expected for 1986-a dramatic decline from more than 80 percent in 1983-and
for accelerating economic growth, which is forecast at 5 percent for the year.
Hermannsson also sought to reassure parliament that his government would be
able to manage remaining problems such as the government budget deficit, high
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Reykjavik's successes in controlling inflation and in boosting growth will probably
endure through the runup to the election, although continued improvements rest
on the fragile harmony achieved in February between the government and unions
over a package of anti-inflation measures. Hermannsson must still be concerned
about accusations that he buckled under US pressure in settling whaling and
military cargo shipping disputes and about setbacks his Progressive Party suffered
in the May municipal election. Nonetheless, the support the conservative
Independence Party has from most white-collar workers and a large minority of
blue-collar workers-bolstered by the strong real wage gains achieved under the
current government's economic policies-will weaken opposition claims that they
are the true "workers' parties."
The Italian Army is undergoing a reorganization intended to improve its cost
effectiveness and optimize the use of new technologies-such as elements of the
CATRIN automated command, control, and communications system and
improved automation in logistics-that are entering the Army's inventory. The
reorganization is expected to permit a 16,000-man reduction in the Army's active
strength by 1989 and free 1,500 officers, 1,100 noncommissioned officers, and 900
civilians for reassignment to operational units. To implement this decreased
The program involves a reduction of only 5 to 6 percent in force strength but
nevertheless represents, we believe, an important step in coping with a declining
manpower pool and Rome's tightened fiscal policies. It will focus on streamlining
the command and control levels in operational units and reorganizing portions of
the territorial support system:
? The four divisional headquarters and four regimental headquarters will be
eliminated, and the Army's 24 brigades will be placed under the direct control of
the five corps commanders. Divisional assets, such as artillery battalions,
battalion-sized headquarters units, and other support units will either be
eliminated or become a corps asset. A few brigades will have their missions and
structures altered, and a few others will be shifted from one corps to another to
effect a balance in the corps' span of control. Some operational support units also
will be reorganized and centralized.
? The military health services will be modernized and restructured, and three
medical supply depots will be closed.
? Other Army supply depots will be centralized, resulting in the closure of several
depots and elimination of two repair depots.
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? The Army's draft, recruitment, and mobilization functions will be substantially
consolidated.
? Five major advanced training centers for noncommissioned officers and
technicians will be merged into three training centers.
these changes will not negatively
affect its operational capabilities as long as equipment modernization programs
continue to be funded and stay on schedule. These equipment programs, for the
most part, focus on improved antiair and antiarmor capabilities as well as
increased mobility. Elimination of divisional and regimental levels of control,
however, makes even more critical the Army's need to completely field its
CATRIN system-a complex and expensive system that has stirred some
controversy within the Italian parliament.
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NATO: Conventional
Arms Control-The View
From Europe
Initial Allied reactions to the US decision to seek
conventional force reductions in Europe in an
alliance-to-alliance forum unassociated with either
the Conference on Security and Cooperation in
Europe (CSCE) or with the Stockholm Conference on
Confidence- and Security-Building Measures and
Disarmament in Europe (CDE) have been almost
uniformly negative. Most Allies-especially the West
Germans and to a lesser extent the British-are
concerned that the bloc-to-bloc construct, together
with US insistence that Allied negotiators be
instructed exclusively by the Alliance's North
Atlantic Council, could well prevent French
participation. They seek a compromise that will make
it unnecessary to choose between US and French
positions.
The French Approach
Initial French reaction to the US position has
predictably been the most negative. Paris has made it
clear in Alliance discussions, as well as in bilateral
talks with Washington and Moscow, that it desires
any future conventional force reduction negotiations
in Europe to take place in a CSCE framework. It was
France's idea for a multilateral security conference
under CSCE auspices that resulted in the original 35-
nation CDE, and Paris's early support of the CDE
gives that forum-together with its potential
successors-special appeal in French eyes. Paris has
repeatedly stressed the advantage of CSCE meetings
over alternative forums by arguing that the linkage of
human rights and security issues under CSCE gives
the West leverage to pressure the East on the former
by holding out the prospect of progress in the latter.
French distaste for virtually any bloc-to-bloc forum-
as opposed to CSCE, which includes the European
neutral and nonaligned states and entails only
nonbinding NATO consultations-can be traced
principally to Paris's belief that leadership in formal
talks between alliances naturally falls on the United
States and the Soviet Union and thus diminishes
French influence and freedom of action. The French
have consistently refused to participate in the 13-year-
old Mutual and Balanced Force Reduction (MBFR)
talks, which focus on Central Europe, for a variety of
reasons. But one of their most important concerns-
anxiety about being too closely associated with
NATO at the talks-would apply to a broader bloc-
to-bloc forum as well. A senior French official has
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like to use MBFR as a lever to bring France "back
into NATO"-a goal he believes the Soviets share
because it could strengthen arguments for eventually
including French nuclear systems in Alliance totals
during nuclear arms control negotiations. The official
added that Paris "would not play that game."F- 25X1
writing" now would force them to admit that
Gaullism was finished.)
Without the facade of a multilateral forum in which
alliance-to-alliance negotiations could take place on a
de facto basis, we believe Paris will find it very
difficult to participate alongside other NATO Allies
in talks with the East. Although the prospect of being
the only NATO ally not taking part in the talks
probably would cause the French considerable
concern, Paris may well choose to be excluded rather
than compromise its independence. Several French
diplomats have said they see no alternative to the
CSCE context, and a Belgian spokesman said that
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Although Paris seeks to be included in any new
conventional arms control talks, it probably does not
view negotiated force reductions per se as necessary or
even desirable any time soon. A senior NATO official
who recently visited France told US diplomats that
the French seemed to think that the concept of
conventional disarmament was nonsense; what they
really wanted, he said, was the negotiation of
additional confidence- and security-building measures
(CSBMs) beyond those already agreed upon in
Stockholm in September. Moreover, French public
opinion is not exerting any demands on the French
Government for "bold new steps" in conventional
arms control, the conservatives face no imminent
domestic political challenge, and Paris could well
choose to emphasize CSBMs in any future talks
without fear of public or opposition criticism. Indeed,
the prospect of participating in another multilateral
CDE that concentrated simply on additional CSBMs
in conjunction with the existence of an independent-
bloc-to-bloc forum on conventional force reductions
might meet minimal French demands for "progress"
in conventional arms control and thereby strengthen
French resolve to sit out the reduction talks, a
development that would trouble Bonn and London.
Other Allied Reactions
We believe that most NATO Allies, including West
Germany and the United Kingdom, desire French
participation in future conventional force reduction
talks to encourage closer French cooperation with .
NATO and to ensure that any eventual Allied force
reductions are allocated among as many countries as
possible. Largely because of concerns that Paris would
not participate in a non-CSCE forum, neither London
nor Bonn favor a new negotiation distinct from
CSCE. The British position on continuing with
MBFR is unclear; the West Germans, however,
probably seek to replace that forum with discussions
covering broader territory. In any event, the Allies
hope to avoid prolonged discord within NATO over
the future of conventional arms control.
The West German Problem. West German officials
have conceded in principle the advantages of alliance-
to-alliance talks for conventional force reductions, and
Bonn apparently prefers another CDE conference
with a bloc-to-bloc subgroup to discuss reductions
while all 35 states negotiate additional CSBMs.
Despite US rejection of this approach, it is designed to
induce French participation and is unlikely to be
easily abandoned by Bonn; West German diplomats
recently told US officials that France "must be
brought along." Indeed, if France decided not to join
with the Alliance in new European-wide arms control
talks, West Germany would face a dilemma: either
agree to a new bloc-to-bloc forum hoping that the
Soviets would consent to French nonparticipation in
exchange for an acceptable quid pro quo or forego a
new forum and remain with MBFR. The latter option,
however, would be very unattractive, and we suspect
that Bonn ultimately would reject it. West Germany
has always been displeased with MBFR's focus on
Central Europe, which emphasizes West German
forces and territory, and apparently has concluded-
based largely on Soviet statements-that the talks are
going nowhere. Although Bonn favors a multilateral
CSCE security conference in place of MBFR, the
West Germans might eventually consent-with
substantial reluctance-to new negotiations that
offered some hope of ameliorating Germany's
demographic problem' rather than depend
indefinitely on the deadlocked MBFR talks.
Much of Bonn's desire for French participation may
be based on simple numbers. If French forces are
counted with those of other NATO members, West
Germany-like other Allies-could take smaller cuts
in any reductions agreement, which presumably
would allocate such cuts among all participants. Bonn
also may be concerned that the Soviet Union will
either refuse to accept a forum that does not include
the French or demand that NATO compensate for
' The West German Army faces a growing shortage of draft-
eligible males that may worsen to 70,000 annually by the early
1990s, and unilateral cuts in the strength of West German forces-
which now number 495,000-are likely, although Bonn remains
committed to maintaining the present figure. Moreover, current
plans indicate that there will be few additional funds available for
defense through the end of the decade, and any increases in the
early 1990s will be absorbed by solutions to the manpower problem
as well as the requirement to fund several major procurement
programs simultaneously. Bonn, therefore, would benefit from a
conventional arms control agreement that codified a military
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French nonparticipation by taking disproportionate
cuts in the armed forces of its other members.
Moreover, the West Germans may believe that an
"uninvolved" France would be less likely to cooperate
bilaterally with various NATO members, including
Bonn, on a wider range of military issues.
Additionally, the Kohl government may feel itself
under domestic political pressure to achieve
movement in conventional arms control talks. A West
German official close to the MBFR talks recently told
a US diplomat he did not believe it would be possible
to simply continue the negotiations under current
circumstances; the West German public, he said,
would not understand a further stalemate in the talks
with no more moves on NATO's part. Bonn, in our
view, also probably anticipates the day when a US-
Soviet agreement limiting intermediate-range nuclear
weapons in Europe would refocus attention on the
conventional imbalance on the continent and wants to
address that problem in an arms control forum.
Moreover, the government wants to counter the
opposition Social Democratic Party's appeal for a
radical restructuring of NATO (and Pact) forces to
downgrade their "offensive" capabilities. Finally,
Bonn almost certainly views progress toward a
conventional arms control agreement as valuable
political capital against SPD criticism of its support
for US arms control policies-particularly following
the failure of the Reykjavik meeting to produce a
nuclear arms control agreement.
British Concerns. Although Washington has rejected
use of a CSCE forum for conventional arms control
talks, British statements indicate London believes US
objectives could still be met, and French participation
ensured as well, by loosely linking new bloc-to-bloc
negotiations to CSCE and by formulating a relatively
vague mandate for Alliance control of Western
delegations in new talks.
A senior British official recently told US diplomats
that Washington's decision would make it virtually
impossible to bring the French into the conventional
arms control process and that new talks without the
French would be "no achievement." Nonetheless,
London's desire for a new forum with French
participation, while strong, probably is less intense
than that of Bonn. In contrast to West Germany,
British security interests are less affected by MBFR.
London would not, for example, face the prospect of
either large troop reductions or Eastern inspections of
British territory if MBFR continues as the only
conventional force reduction negotiation.
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The prospect that disagreements over the forum
question may make it difficult for NATO to develop
any "bold new steps" soon in conventional arms
control-as pledged by Alliance foreign ministers at a
meeting in Halifax last spring-is of particular
concern in London because approaching elections
apparently have made the British especially conscious
of the public relations impact of conventional arms
control progress. The US Embassy reported last 25X1
spring that the government, reeling from major
setbacks in the May local council elections and
Parliamentary byelections, was becoming increasingly
worried about its vulnerability to opposition charges
that it was excessively beholden to the United States
on defense and arms control issues. In addition,
London's NATO representative recently commented
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that public opinion will require that the CDE be
"reactivated" with minimum delay to work on further
CSBMs.
In our view, despite the political vulnerability of the
Labor Party over its own defense platform, London's
anxiety about NATO conventional arms control
policy is likely to become more pronounced as the
election approaches. Indeed, according to Embassy
reporting, the British concluded by September that
the West must not arrive emptyhanded at the CSCE
review meeting in Vienna this month. The Warsaw
Pact foreign ministers meeting on 15 October
proposed that the CSCE meeting mandate a second
CDE to negotiate substantial reductions in
conventional forces, and the Pact probably will use
the CSCE conference to formally reissue its Budapest
Appeal of last June-which calls for two-stage
reductions, amounting to 500,000 troops in each
alliance, by the 1990s.
Implications for NATO and the United States
Allied dissatisfaction with the US proposal will evoke
several high-level demarches from NATO members
urging Washington to reconsider its decision-
particularly if, as we expect, Paris remains adamant
against participation in an MBFR-type arrangement.
Even the Belgians-who have been particularly
supportive of US positions in conventional arms
control-have been taken aback by the US approach.
A Belgian diplomat recently told US officials that
conventional force reductions in Europe were
essentially a European affair and that Washington
could not insist that its position prevail in the face of
united European opposition. Some NATO members
may argue that eliminating any prospect of force
reduction negotiations from the CSCE would
effectively gut its security. component and weaken
Western leverage on human rights, that a bloc-to-bloc
security conference under loose CSCE auspices could
always be agreed upon by the Alliance without risking
any substantive interventions by the neutral and
nonaligned states, and that a relatively flexible
mandate for Alliance management of Western
delegations could be coupled with various French
Long and intensive debate within NATO over the
forum question has made it impossible for the
Alliance's task force on conventional arms control to
reach a consensus before the CSCE review meeting in
Vienna, which opened on 4 November. This
development undoubtedly has exacerbated Allied
concerns. Indeed, press reports of NATO "inactivity"
in the face of appealing Eastern conventional arms
control proposals at the CSCE meeting probably
would increase anxiety in some NATO capitals-
particularly London and Bonn-over the extent to
which their political opposition may be able to exploit
Allied disunity.
Allied concern over a stalemate within the Alliance
over conventional arms control would probably
increase if the political fallout from the Reykjavik
meeting eventually led to a perceived decline in the
credibility of the US nuclear deterrent. Even the
French, who presently oppose large negotiated
reductions in NATO forces and are unlikely to agree
to substantial cuts of their own, might rethink their
position if they perceive real progress toward new
nuclear arms control accords. According to the US
Embassy in Paris, a presidential aide commented last
month that conventional arms control would become
all the more important if agreements on nuclear
weapons materialized.
Regardless of the fate of the US-Soviet nuclear arms
talks, the desire for the uninterrupted continuation of
the conventional arms control process is strong in
several European capitals. This desire makes it
possible that NATO ultimately might accept-with
considerable reluctance-a regionally broadened
MBFR-type approach to new discussions with the
East even without French participation, provided the
Soviets are amenable. Moscow, however, presumably
would see little advantage in agreeing to a course of
action that reduced US isolation within NATO
unless the Soviets could obtain Western approval of,a
negotiating framework which, like MBFR, offered the
prospect of disproportionate constraints on West
German armed forces.
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Whatever choice of forum is ultimately agreed upon
within NATO, the implementation of any
conventional arms control cuts is unlikely to be
pushed by the Allies for at least several years. Few
Allies seek large conventional force cuts that are not
offset by even greater Soviet withdrawals-an
unlikely prospect. Moreover, most NATO members
probably would support a relatively firm verification
regime over which negotiations for a conventional
force reduction a reement probably would be
prolonge
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EC: New Antidrug
Measures
A new antinarcotics program, approved by the
European Community's Interior Ministers last month,
includes measures to combat drug trafficking and
abuse as well as increased cooperation among the EC
states. Although the program is a first step toward
establishing a unified regional stance against illicit
drugs, we believe its implementation will be some
time in coming.
Elements of the Program
The new seven-point plan, proposed by UK Home
Office Minister David Mellor at the October plenary
session of the European Parliament, calls for more
severe penalties for drug traffickers, seizure of
traffickers' assets, and better antinarcotics
cooperation between the EC states and their law
enforcement agencies, particularly in tightening
controls on travel into the EC region. Other measures
include an agreement to exchange drug liaison
officers and station them in drug producing regions, to
establish antidrug abuse campaigns aimed
particularly at youth, and to adopt measures to
improve treatment and rehabilitation services for
addicts. In addition, the Interior Ministers agreed to
extend national and EC aid to producer countries to
help finance enforcement efforts aimed at curbing
drug output. The EC's previous involvement in
combating illicit drugs has been confined to studies
and debates in the European Parliament.
Earlier Efforts
To date, most West European countries have done
little collectively to combat the increasingly severe
drug problem facing the region. The regional groups
that do exist, such as the Council of Ministers'
Pompidou Group, have focused on drug abuse and
treatment-the issues most directly affecting the
populations of West European countries. In any event,
they have had no authority to implement measures to
combat illicit drugs. Without a uniform stance against
drug trafficking, drug dealers have altered their
routes to avoid countries that have improved their
antinarcotics efforts, and drugs have continued to
enter the region at increasing rates
In response to domestic and international pressure,
many EC member states have recently increased
funds and personnel devoted to their antinarcotics
efforts and made more severe the punishment that
drug traffickers may receive. In addition, several EC
members, such as Italy and France, have recently
signed bilateral agreements to improve antinarcotics
cooperation. Some members, including Britain, have
increased antinarcotics assistance-both through
contributions to the United Nations Fund for Drug
Abuse Control (UNFDAC) and direct offers of
equipment, personnel, training, and resources-to the
governments of drug producing countries.F__1
Prospects and Implications
We believe that progress toward implementing a
regional antinarcotics program will be slow and
halting. The EC institutions have only limited
authority in this realm, and opinions differ among
member countries about the severity of the drug
problem and the most effective approach to reducing
it. The legislatures of the individual countries, not the
EC Ministers, must approve most of the measures in
the antinarcotics program, and this almost certainly
will result in delays in implementation. Budget
restrictions in most countries could also impede the
realization of some measures that require large sums
of money, such as improved treatment and
rehabilitation programs and antidrug abuse
campaigns. And while this new plan calls for laws
with stiffer punishment for traffickers, actual
sentences will be imposed by the judiciaries of the
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individual countries. Many judges have tended to take
a relatively lenient approach and sentence most
traffickers to less than the maximum term.
Although the Ministers approved EC aid to drug
producing countries, this aid probably will prove to be
small, given the modest budget of the Community.
We believe the aid will serve largely as a signal to
drug producing countries and other countries
concerned with the drug problem that the West
Europeans are interested and willing to take steps to
eradicate it. This gesture also may lead to additional
public support for US-sponsored antinarcotics
initiatives, but it is still likely to fall short of US
desires. Many West European officials have stated,
for instance, that they support direct measures in drug
producing countries such as crop substitution
programs and police training. They, however, do not
support eradication operations similar to those taken
by the United States in Bolivia.
In our judgment, a unified approach to the drug
problem would provide the most effective
antinarcotics strategy for the West European
countries, but this is likely to be some time in coming.
We believe that a regional program will be most
beneficial if it is implemented before the EC's goal of
creating a frontier-free internal market by 1993 is
achieved because such a market will eliminate border
controls between member states and could hamper
drug control efforts. Some gradual progress toward a
coordinated effort seems likely in the short run as
those countries that have been less concerned become
more aware of the severity of the problem and initiate
efforts to cope with it. The posting of drug liaison
officers in European countries and in drug producing
regions should improve overall antinarcotics
cooperation and could promote a uniform
antinarcotics stance.
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EC: Counterterrorist
Cooperation
Persistent terrorism in Western Europe has prompted
the members of the European Community to make
new efforts to improve EC cooperation on
counterterrorist measures. After years of lethargy and
lack of initiative in this area, the EC's Trevi group has
begun meeting more frequently in an attempt to
strengthen joint efforts against terrorism. In addition,
the EC Foreign Ministers established a permanent
Working Group on Terrorism in January 1986, which
is also charged with beefing up antiterrorist measures.
In spite of this upsurge in activity, progress is likely to
be slow because of the desire of members to retain the
flexibility to act in accordance with their perceived
national interests. EC members will continue to be
wary of undue US influence in these forums as well.
Recent Developments
The newfound EC interest in counterterrorist
cooperation has been primarily channeled through
two vehicles: the so-called Trevi group and the EC
Foreign Ministers Permanent Working Group on
Terrorism.
The Trevi Group. Trevi is an acronym for Terrorism,
Radicalism, Extremism, Violence International-a
group that brings together the Interior and Justice
Ministers of the EC countries, as well as other senior
security officials, for regular consultations at various
levels on internal security and terrorism questions
within Europe. The Trevi group actually dates back to
1976 but has had little impact until recently.
EC leaders, prompted at least in part by signs of a
coordination of terrorist activity across national
borders, began to invigorate the Trevi group under the
Italian presidency in 1985.' Recurrent and highly
publicized terrorist acts and-at least equally
important-the desire to convince their own publics
and Washington of their determination to take
The Trevi Group
At the founding meeting of the Trevi Group of
Justice/Interior Ministers and other officials on 29
June 1976, EC ministers agreed to..
? Exchange information about past terrorist events.
? Exchange information about police procedures,
technology, training, and equipment.
? Promote exchanges of police personnel.
? Arrange for mutual aid and cooperation in
combating future acts of terrorism.
? Establish greater cooperation in other areas,
including the security of civil aviation, the
protection-of nuclear facilities, and the management
of emergencies arising from natural or accidental
catastrophes, particularly fires.
Trevi holds meetings at several organizational levels:
? At the top of the hierarchy are the ministers, who
have some decisionmaking powers.
? At the next level is the Committee of Senior (High)
Officials. It is composed of directors of police and
security services and senior ministry officials. The
Committee is primarily a consultative body that
prepares the way for ministerial conferences.
? There are also three working groups currently
active. Working Group I handles exchanges of
intelligence and information and threat analysis;
Working Group II covers coordination of technical
police activities; and Working Group III deals with
organized crime on an international level.
Secret
EUR ER 86-025
7 November 1986
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effective action against terrorism have ensured a
continuing focus on counterterrorist cooperation. In
April 1986, largely in response to the US-Libyan
crisis, the ministers decided in principle to meet
semiannually and to hold extraordinary meetings at
short notice when events require.
There have been some followup actions. At the
initiative of the Dutch, for example, a meeting of
chief police officers from European airports was held
in The Hague in late May 1986 to coordinate methods
of dealing with high-risk flights-such as those from
the Middle East. In London in late September at an
emergency meeting convened at France's request, the
ministers agreed to a wider exchange of intelligence
information on terrorist activities and announced that
a communications system dedicated to antiterrorist
action would be set up to link their police forces. More
recently, the Interior Ministers created a working
group to examine ways to coordinate national policies
on entry visas and to toughen identity checks at
external community frontiers. The working group also
will consider ways to prevent abuse of the right of
asylum.
Permanent Working Group on Terrorism. In January
the EC Foreign Ministers decided to replace an ad
hoc committee on terrorism with a permanent group
that will function as one of the regular working groups
in European Political Cooperation-the member
states foreign policy coordination system.
Organizational and procedural matters are still being
resolved, and the working relationship with the Trevi
group has yet to be clarified. Still, in preliminary
discussions in March, the group agreed to reject all
attempts at blackmail in connection with hostage-
taking. Participants explored the possibility of greater
uniformity in visa requirements, controls on the size of
foreign missions, and measures to prevent abuses of
diplomatic immunity, but no decisions were reached.
Contacts With the United States
Washington has no formal relationship with the EC
groups,
The EPC Working Group
EC Foreign Ministers' 27 January 1986 Terrorism
Statement setting up Permanent Working Group on
Terrorism:
The twelve have now decided to intensify these
efforts and to promote common action,
particularly in the following areas, both to
improve their own defenses against terrorism
and to discourage those who support it:
? Security at airports, ports, and railway
stations.
? Control by member states of persons entering
or leaving the community and circulating in it.
? Visa policies with respect to the problem of
terrorism.
? Abuse of diplomatic immunity.
They have decided to establish a permanent
working body with a precise mandate, within the
European Political Cooperation, which will
monitor and give impetus to the implementation
of the above mentioned measures.
Trevi member states reluctantly agreed that the
chairing country could brief the United States on
proceedings, but in practice the thoroughness of the
briefing has varied according to the disposition of the
presidency country. The Netherlands was quite
forthcoming earlier this year after the Trevi Troika-
the past, current, and next chairman-met with US
Attorney General Meese in an attempt to expand
contacts with third countries. In May the Working
Group on Terrorism also agreed to support a formal
mechanism for EC third-country contacts.
Outlook
EC members recognize the utility of working-level
contacts, but obstacles to more active cooperation
remain high. In the past France has preferred
bilateral cooperation, and Greece-because of its
close ties to Arab states and fear of terrorist
retaliation-has often taken obstructionist stances in
ministerial debates. Coordination has also been
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hampered by rivalry and distrust among internal
security, law enforcement, and foreign ministry
officials within each country. Furthermore, member
states do not share all available information. F
Effective action is likely to be slow in coming. Visa
controls, for example, run counter to the EC's policy
of easing border controls for EC citizens, and most
states are unlikely to emulate France's recent move
requiring entry visas for non-EC nationals. Italy, for
example, has quietly dropped visa requirements for
some North African states it had initiated earlier this
year.
Still, the apparent unanimity regarding the need for
improved EC counterterrorist cooperation is a positive
development. Moreover, continued terrorist violence
in Europe may compel member states to agree to at
least a few concrete measures. The French, for
example, are displaying more interest in multilateral
cooperation since the recent series of bombings in
In the short term, more progress is likely to be made
in pooling information and in strengthening law
enforcement capabilities than in controversial areas
such as standardizing extradition legislation and visa
controls. Most states, for example, lack the financial
and personnel resources to implement far-reaching
visa policies but may be willing to enforce stricter
controls on specific countries and to explore other
ways of curtailing the mobility of terrorists. In the
long term, the real test of the effectiveness of these
counterterrorist groups will depend on the willingness
of members to agree on politically sensitive
measures-such as sanctions against states sponsoring
terrorism-and risk economic or political
repercussions at home.
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West Germany: Modernizi
Maritime Air Capabilities
Modernization goals for the West German Navy's air
arm into the mid-1990s include reequipping and
reorganizing tactical fighter units, fielding a force of
attack helicopters armed with antiship missiles, and
acquiring new maritime patrol aircraft. These
programs, if fully implemented, will strengthen the
Navy's Baltic capabilities and further its aim of
expanding operations in the northeastern Atlantic.
Completion of the Navy's overall program, however,
will depend on its ability to compete for increasingly
scarce funding as a number of major defense
procurement programs peak in the early 1990s.
Because of the high cost of the Navy's modernization
plans-which call for new frigates and submarines as
well as aircraft-the service will need an expanded
share of the defense budget or will have to stretch out
some programs.
Tactical Fighter Modernization
The primary missions of the Navy's two tactical fighter
wings are reconnaissance and strike operations against
Warsaw Pact shipping in the Baltic. The wings' overall
effectiveness in these roles is increasing as their aging
F-104G Starfighters are replaced by PA-200 Tornado
attack aircraft.
~~ began converting in September. The second
wing will receive its full complement of Tornados by
the end of 1987, but delays in crew training will
nrevent the unit from comnle conversion until
his will leave the
Navy with only one u y operationa tactical fighter
wing through most of 1987.
The twin-engine Tornado is more survivable due to
improved electronic warfare systems and can more
accurately deliver a broader array of weapons.' The
aircraft can be refueled in flight using another
Tornado as a tanker, but training in this technique
reportedly is minimal. 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 antiradiation missile.
The Navy contends that neither the West German nor
other NATO air forces can provide adequate fighter
protection for naval air units and surface ships
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superiority fighter squadron in each tactical fighter
wing to fill the gap. A wing's two attack squadrons
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.
for a naval fighter-if the Navy is willing to wait. The
EFA program is currently in the design definition
phase, and a firm development decision is not
expected until 1987. The first of 250 aircraft for the
West German Air Force will not enter service before
1996. Early cost projections place the German share
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New Attack Helicopter Force
A Kiel-based naval search and rescue squadron with
22 Sea King Mk 41 helicopters is converting to the
antishipping role. The West German Navy envisages
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against Warsaw Pact surface combatants.
The Sea King
modification program under way includes a new
surveillance radar, improved communications
equipment, and provision for the British Sea Skua
antiship missile.
Secret
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The Navy is also expanding its inventory of Sea Lynx
Mk 88 antisubmarine warfare (ASW) helicopters
from 12 to 19. The Lynx serves as the primary long-
range ASW weapon on the fleet's six F-122 Bremen-
class frigates. Each frigate can carry two Lynxs.
The
additional Sea Lynxs on order are needed to equip two
new F- 122 frigates and to provide spares. The attache
reports that the Lynx force has been plagued by poor
availability due to lack of spare aircraft and repair
parts. The order for additional aircraft also includes
provision for improved logistic support.
In the mid-1990s, the Navy plans to modernize and
expand the combat helicopter force by acquiring 72
multirole NH-90s to, replace its Sea King and Sea
Lynx aircraft. The NH-90 program is a five-nation
effort designed to meet NATO requirements for both
a military transport and a naval combat helicopter.
suitable for operations from frigate-size ships. The
West European firms participating in the program are
completing a design and work-sharing study. The
twin-engine helicopter, which will incorporate the
latest technologies, is expected to be in service by
1993.
equipped for both antisubmarine and
antiship missions-will replace the Lynx on Bremen-
class and planned F-124 frigates.
IIn
wartime, elements of the helicopter wing not required
aboard frigates would reinforce German forces
operating in the Baltic.
Maritime Patrol Aircraft-MPA-90
In the mid-1990s the Navy also plans to replace its
aging fleet of twin-engined BR 1150 Atlantique I
maritime patrol aircraft. Naval Air Wing Three
includes two maritime patrol squadrons, based at
Nordholz, with 14 ASW and five electronic
surveillance versions of the Atlantique I. The units'
principal wartime role is ASW operations in the
North Sea. In the early 1980s, the Ministry of
Defense concluded that continued updating of the
French-built Atlantique I fleet was no longer cost
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but are handicapped by interoperability problems in
communications and data processing. The majority of
maritime reconnaissance aircraft in NATO's Atlantic
Command are versions of the P-3, and a West
German decision in favor of the Atlantique II with
European ASW systems is unlikely to significantly
solve these difficulties.'
effective, and the Navy was directed to develop a
replacement-designated MPA-90-to enter service
in the mid-1990s. The Navy reportedly wants an
aircraft with sufficient endurance to operate over the
northeastern Atlantic and with modern ASW systems
to counter new-generation Soviet submarines. By
March 1986, preliminary studies were complete and,
The latter is the basic Atlantique
airframe with improved ASW and communications
systems. A final choice is not expected until late 1987
with up to 18 ASW and five electronic surveillance
(ELINT) aircraft likely to be ordered.
The Atlantique II must be considered the front-
runner in the MPA-90 competition. The Navy
reportedly is pleased with the performance of the
Atlantique I airframe and would like to avoid the
costs involved in converting to a new airframe. Naval
planners reportedly concluded that the most cost-
effective solution was combining the Atlantique II
airframe with the more capable ASW systems used on
the P-3C/IV. this preferred
option was eliminated, however, because of US
opposition to a hybrid system. On the one hand, the
Atlantique II is likely to be less costly and may have
an edge because of continuing strong interest by both
Bonn and Paris in Franco-German armaments
cooperation. The domestic political gains and
industrial benefits of buying European will also play a
major role. On the other hand, while more costly, the
larger four-engine P-3C/IV does offer the Navy the
open-ocean endurance and the greater NATO
interoperability it is seeking.
Outlook
West German naval air units are the only NATO
tactical air forces earmarked solely for maritime
operations in the Baltic area. Current equipment
modernization programs will enable them to more
effectively counter Warsaw Pact naval forces.
However, growing Soviet air capabilities-including
new air superiority fighters such as the MIG-29
Fulcrum-mean West German naval air units will
still operate in a hostile environment. In addition to
the issue of fighter protection, German naval aviators
have reportedly expressed concern about inadequate
airborne early warning and battle management
capabilities as well as the lack of specialized
electronic warfare aircraft. Solutions to these
problems are unlikely in the near future.
Improved airborne ASW capabilities-both sea based
and shore based-are essential to the Navy's efforts
to expand its operations in the northeastern Atlantic.
Pursuit of this objective, however, is handicapped by
the Navy's modest potential for open-ocean ASW.
is a
key element in making this more than just a paper
mission for the Germans.
Long-term modernization and the addition of an air
superiority role will depend on the Navy's ability to
wrest a larger share of overall defense resources in a
tight budget situation
has only about 9 percent
manpower and usually receives a similar share of the
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budget.
Nevertheless,
we believe the other services will strongly resist.
Moreover, the Navy has had only partial success in
implementing previous modernization plans in the
face of the priority placed on forces for NATO's
central region.
The outlook for full implementation of the Navy's
program is mixed, at best, with the air superiority
fighter acquisition and helicopter force expansion
probably the most vulnerable. In addition to budget
constraints, the Air Force is likely to resist attempts to
partially usurp its traditional air superiority role and
decentralize control of the available fighter forces.
Within the Navy, Baltic-related programs will also
face competition from projects supporting a larger
role in the North Atlantic. Finally, modernization
may depend heavily on multinational programs such
as EFA, NH-90, and F-124 remaining on schedule
and within cost projections.
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Bulgaria-United States:
Prospects for
Improved Relations
Bulgaria is signaling increased interest in improving
relations with the United States following several
years of unusually severe strains. It has worked to
resolve several outstanding bilateral issues in recent
months and taken other steps to show its desire for
more active dialogue. We believe Sofia is now
susceptible to making further concessions to upgrade
political, economic, cultural, and scientific ties to at
least the levels of the late 1970s. But, in the broader
sense, we believe that Sofia's fealty to Moscow, its
dismal human rights record, and international policies
that regularly conflict with Washington's interests
will continue to prevent any major breakthrough.
Longstanding Strains
Bulgaria's relations with the United States have long
been among the coolest of any of Moscow's East
European allies. As one of the most loyal Soviet Bloc
members, Bulgaria has based its policies toward
Washington largely on the Soviet line, echoing
Moscow's stances and rarely taking steps that the
Kremlin might view with disapproval. Moreover,
Bulgaria's represssive human rights policies-
symbolized during the past two years by harsh
treatment of its Turkish minority-its continued
efforts to steal high technology from the West, and its
close ties to radical Third World regimes have further
exacerbated relations. Even the interest in closer ties
expressed more recently by top Bulgarian officials
frequently has not been matched by a willingness to
cooperate at the working level.
Bilateral ties have undergone some fluctuations in
recent years in response to international and other
developments. Following an easing of tensions in the
1970s, as Soviet-US atmospherics improved, they
worsened again in the early 1980s as a result of
increased strains between Washington and Moscow
and allegations of Bulgarian involvement in drug
trafficking and the assassination attempt on the Pope.
Relations grew so strained between 1982 and 1984
that Bulgarian officials routinely charged Washington
with singling out Bulgaria for harsher treatment than
the other hardline Soviet Bloc countries.
Signs of Thaw
Since late 1984, the Bulgarians have taken
increasingly obvious steps to signal interest in
improved relations. The steps so far have been limited
and in some cases designed to address problems of
Sofia's own making. The most notable have been:
? Narcotics control. On 3 October, after almost two
years of US efforts, Bulgaria formally agreed to
cooperate with a US Drug Enforcement
Administration signature program under which it
would notify the US Embassy of heroin seizures
exceeding 1 kilogram and turn over to the USDEA
samples of intercepted contraband. Eleven days
later, Sofia turned over its first sample from a
seizure. It also has indicated its willingness to take
part in international conferences on narcotics
control, such as the one in Vienna next year.
? Embassy access. On 26 September, following
repeated US complaints, the Bulgarian Government
removed portable metal barriers that it had placed
in front of the US Embassy in Sofia 10 months
earlier on the pretext of protecting the Embassy
from an unspecified terrorist threat. The removal
has allowed several hundred Bulgarians a day
access to a USIS window display.
? Economic ties. Sofia recently has shown greater
willingness to turn to the United States for trade
and credits. Bilateral trade during the first six
months of 1986 was double that of the same period
last year-up from $50 million to $99 million. Most
of the increase came from a tripling of imports-
primarily of US corn, fertilizer, and wheat-to
compensate for poor domestic agricultural
performance. Last year, after a six-year lull in
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Bulgaria: Imports from US: 1st 6 Months of the Year"
Million US $
80
0 -~-
1982
I According to US Statistic
Bulgaria Total US Trade With CEMA 6,1985'
Mullion US
a%~& mid
a According to US Statistic
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borrowing from the West, Sofia negotiated $570
million in new loans from a syndicate that included
US and other banks. Bulgaria also stressed its
desire for improved economic ties-particularly
with individual US firms-during visits this year by
a deputy trade minister and a parliamentary
delegation.
? Arms shipments. Bulgaria this year appears to be
adhering to a promise, made by Foreign Minister
Mladenov in December 1984, to halt arms
shipments to Nicaragua's Sandinista government.
Before that pledge, Sofia regularly shipped arms to
Managua, and its record last year is ambiguous.
? Divided families. The Bulgarian Foreign Ministry
has resolved pending divided family cases in most
instances, allowing Bulgarian citizens to join their
relatives in the United States.
Bulgarian officials have accompanied these actions
with increased rhetorical and symbolic support for
improved relations. Most recently, Bulgarian leader
Zhivkov urged expanded scientific ties at a meeting
with US scientists in Sofia. Ambassador Zhulev in
recent months has called repeatedly for establishing
more normal relations. Official Bulgarian attendance
at the Embassy's 4 July reception was the largest in
Bulgarian Motivations
Several factors seem to be prompting Sofia's
increased show of interest in better US ties. Chief
among them, in our view, is economic necessity. As
this year's increased agricultural imports
demonstrate, Sofia looks to the West to cover specific
shortfalls in performance. But even more important,
the United States and other Western countries are
prime sources of the high technology Bulgaria needs
to generate long-term growth. This technology is
unavailable from Bulgaria's partners in the Soviet
Bloc and is, we believe, essential to implementing
Sofia's program of economic modernization. Bulgaria
would also like to enjoy the benefits of accession to
GATT (General Agreement on Tariffs and Trade),
both as a mouthpiece for Moscow and for its own
economic interests.
Political and national image factors also are
important. Achieving better ties with Washington
would appeal to Sofia's elevated sense of its own
importance and at the same time ease its innate
insecurity about its role on the world stage. Bulgarian
leader Zhivkov, at 75 the senior party chief of a
Warsaw Pact country, has long believed that small
nations such as Bulgaria have an important role to
play in international relations. Sofia may also believe
that the Soviet-US climate is now more conducive to
Bulgarian overtures to Washington as long as they do
not produce results counter to Soviet interests. Indeed,
Moscow may be encouraging such overtures.
Outlook
We believe that Bulgaria will probably carry forward
with diplomatic and other initiatives to improve US
ties in the coming months, barring a major downturn
in Soviet-US relations. We do not, expect, however,
any change in its close orientation to the Soviet Union
and Soviet policies. Nor do we believe it will
substantially improve its record on key domestic or
foreign policy issues.
Nonetheless, we believe that Sofia is probably more
susceptible than it has been at any time during the
past several years to making at least marginal
improvements in some areas. These areas could
include human rights-especially better treatment of
Catholic and Protestant religious sects and ending
jamming of Western radiobroadcasts-further
movement on narcotics control, improved commercial
climate for US firms, nuclear safety cooperation, and
at least discussions on compliance with US technology
controls.
Sofia is probably most likely to respond positively in
areas that can be discussed on an issue-by-issue basis.
The Bulgarians probably would be most responsive to
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a judicious mixture of pressure and incentives. The
following are some incentives that could induce
movement:
? Economic ties. Sofia is interested in intensifying
official forums for economic exchanges-such as
the US-Bulgarian Economic Council, scientific and
trade seminars, and business roundtables. The
Bulgarian leadership seems to respect and listen to
US business leaders and is eager to bring more US
expertise, in the form of joint ventures and
consultations, to Bulgarian soil.
? Technology sharing. Bulgaria is highly interested in
increased access to US technology, even if slightly
outmoded. Nuclear safety technology in particular
is of increased interest in the wake of the Chernobyl
accident. Sofia may be willing in return to improve
controls on legal acquisition of advanced
technology. In a conversation with the US
Ambassador in early October, Deputy Prime
Minister Markov expressed interest in a technology
control verification system, possibly including end
user checks and plant visits, to determine Bulgaria's
compliance with US laws. Nonetheless, Sofia is
continuing its illegal diversion of advanced
technology from the West, much of which is
destined for Moscow.
? Official contacts. The Bulgarians would welcome
assurances of an increase in the number and level of
official bilateral contacts. Sofia especially values
exchanges-such as past briefings by US officials
on arms control issues-that help it project the
image of an important and autonomous player in
European political affairs.
? Other exchanges. Sofia remains highly interested in
stepping up exchanges in culture, science and
technology, and other fields. Bulgarian officials
recently expressed a willingness to discuss CSCE
Basket III human rights issues including
information, education, and tourism.
Regardless of any new agreements, Bulgaria will
probably do little more than the minimum to meet US
interests and will avoid actions that would interfere
with its other policy objectives. Particularly in
economic areas, numerous bureaucratic obstacles will
continue to exist to hinder even those improvements
approved by top Bulgarian officials.
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Secret
Norway: The Labor Government
in 1979-81-Lessons
for 1986
Viewpoint
This article does not represent a DI or CIA position;
it is solely the view of the author. It has not been
coordinated nor reviewed.
Norwegian Labor Party leaders believe that taking
strongly pro-NATO stands on security issues
threatens the cohesion of the party's left-of-center
political base-a lesson brought home by Labor's
previous tenure in government in the late 1970s and
early 1980s. Labor leaders seem to calculate,
moreover, that concessions to the domestic left cost
little since they meet with only mild US criticism and
do not affect Norway's standing in NATO.
TNF: A Blow to Labor Moderates
In 1979, the year of NATO's "dual-track" decision on
theater nuclear force (TNF) modernization, Labor
appeared the responsible and moderate actor within
the Alliance that it had been in the past.' For
example, Oslo was.preparing to implement its mid-
1970s' suggestion to pre-position military materiel on
Norwegian soil to facilitate the wartime supply of
Allied reinforcements. Norway also came forward
with pro public support of the TNF decision.
Leftward Slippage
The fear of losing leftwing support influenced Labor's
subsequent handling of security policy-often at the 25X1
expense of NATO. In 1980 Oslo tempered its pre-
positioning proposal by allowing supplies to be placed
only in central Norway, rather than in the north as
originally planned. The decision came in response to
leftist fears that pre-positioning in northern Norway
would be seen by the Soviets as provocative.
The strife within the Labor Party over security
issues-especially TNF and pre-positioning-paved
the way for Gro Harlem Brundtland's 1981
assumption of party leadership and the post of prime
minister. Brundtland, herself a moderate, set as her
primary goal the restoration of unity to the badly
fragmented party. She quickly seized on the Nordic
Nuclear-Weapons-Free Zone (NNWFZ) as an issue
that would win points with the left without exacting
any immediate security costs. Brundtland also
reiterated Labor's opposition to the deployment of
enhanced radiation weapons (ERW) and responded to
the August 1981 US decision to produce and stockpile
ERW with a strongly worded public statement
condemning the weapons.
As with the West German SPD, the decision to
support TNF alienated many leftwing Laborites, who
felt that they had not been properly consulted. Labor
moderates-including Foreign Minister Knut
Frydenlund and his State Secretary Johan Jorgen
Holst-undertook to minimize the damage done by
the rift. Specifically, they played up the
"negotiations" side of the dual-track decision and sent
a special envoy to Moscow at the same time that high-
level Norwegian officials were reviewing TNF policy
in Washington. These maneuvers, however, did little
to restore Labor unity on security issues.
'The Labor Party governed Norway from 1973 to 1981 and
returned to power this May in a shaky minority government.
Twisting the Lion's Tale
During Labor's slippage to the left from 1979 to 1981
party leaders apparently became convinced that the
United States would accommodate Oslo's desire to
use international security issues for domestic
purposes. Specifically, Labor noted that Washington:
? Allowed Norwegian emissaries to claim to have
"won" US guarantees to pursue TNF negotiations
with the Soviets.
? Quietly accepted central, instead of northern,
Norway as a pre-positioning locale.
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of NNWFZ.
Secret
EUR ER 86-025
7 November 1986
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? Stopped pressing NATO to accept deployment of
ERW
Thus, Brundtland and other Labor leaders have come
to believe that readily accommodating NATO hurts
the party badly at home, but accommodating the
domestic left wing does not harm Norway's standing
in NATO. The point man between Oslo and
Washington who seems to have taken this lesson most
to heart is Johan Jorgen Holst, State Secretary in the
Foreign Ministry under the 1977-81 government and
currently Minister of Defense.
Implications
The impact of this "domestic front first" track on
current Labor policy was demonstrated in the recent
controversy over ship visits. Holst changed the
standard clearance language for visiting naval vessels
to reemphasize Oslo's longstanding "no nuclear
weapons" policy. He apparently believed that the
United States and other NATO partners would make
only weak objections and that the move would buy
support from the domestic left. Following vigorous US
protests, Hoist retreated to the original language.
Despite NATO's willingness to compromise, domestic
leftists were greatly angered by Hoist's failure to
footnote the October NPG communique. Some have
called for Hoist's resignation, others for an
unequivocal parliamentary resolution that forces
Norwegian opposition to SDI in all international
forums. Thus, while confirming Hoist's belief that the
Alliance is flexible, the October meeting also made
clear that the domestic left remains inflexible and
that Labor's political base can be badly shaken if the
leadership publicly takes pro-NATO stands.
Outlook
Strong US protests and pressure from the nonsocialist
opposition have already had some effect on Labor
security policies. The political fallout from the failure
to footnote the NPG communique, however, will
weigh heavily on Labor's future security policy
decisions. There can be little doubt that it will take
more Allied protests and countervailing domestic
pressure before Labor leaders become convinced
NATO will no longer accommodate Oslo's domestic
concerns and that too much attention to the left could
even drive moderate voters to the nonsocialists.F_
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Norway's footnote to the NATO Defense Planning
Commission communique last May also illustrates
this troubling trend in Labor policy. As a gesture to
domestic opponents of SDI, Holst sought to change
the communique language on defense research and
was both surprised and annoyed that the Alliance
would not go along. Despite flat US refusals, Labor
kept up its request that the language be changed in
last month's Nuclear Planning Group (NPG)
communique. The subsequent US-Norwegian
compromise on wording to highlight US compliance
with the ABM Treaty-which avoided another
Norwegian footnote-will probably reinforce Holst's
belief that when push comes to shove Washington will
continue to accommodate Oslo's political needs.
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Secret
Economic News in Brief
EC agreed on new position for stalled trade
negotiations with non-EC Mediterranean states ...
will import more citrus, farm products ... Spain got
assurances exports will not suffer, dropped objection
... US citrus exports to EC unlikely to decline.
Swedish Army facing $85 million shortfall because of
underestimated personnel costs ... consequent cuts in
reserve training; procurement will reduce readiness
... parliament likely to accept further increase in
1987-92 defense budget.
Iceland threatening to suspend trade agreement if
USSR reduces herring purchases, according to US
Embassy ... Moscow anxious to save hard currency,
but Reykjavik expects gesture from Gorbachev ...
herring third of Icelandic exports to USSR.
EC rejected Bulgarian demands for scientific
cooperation, loans in talks on establishing relations,
according to US Mission to EC ... EC wants trade
pact only ... part of effort to establish ties to East
Turkey began construction of gas pipeline from USSR
last month ... to supply 95 percent of gas needs by
1994, 5 percent of total energy ...Turks to pay 30
percent cash, rest with exports.
Norway began two-month, 10-percent oil export cut
this month ... stockpiling rather than reducing
production ... Oslo announced plan in September,
conditioned on OPEC restraints ... psychological lift
for OPEC, little effect on world price.
September's 1.4-percent rise in prices pushes
Norway's annual inflation rate to 8.6 percent ...
minority Labor government's 7-percent target for
1986 probably out of reach ... higher inflation
anticipated in 1987 due to large wage hikes, probable
surge in money growth ... impact on cost
competitiveness may hinder economic restructuring
necessitated by declining oil sector.
Europeans before EC-CEMA agreement concluded.
Secret
EUR ER 86-025
7 November 1986
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Secret
Secret
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