NATIONAL INTELLIGENCE DAILY THURSDAY 10 MAY 1984

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00970R000200030037-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 20
• Document Creation Date: December 22, 2016
• Document Release Date: June 8, 2010
• Sequence Number: 37
• Publication Date: May 10, 1984
• Content Type: REPORT

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Central
Intelligence
CCY~Sl 5l
a Iona n e igence Daily
Thursday
10 May 1984
CPAS NID 84110JX
701G1ey 1984
copy 2 O J
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Top Secret
Contents
Honduras-Nicaragua: Helicopter Shootdown ............:...............
Eastern Europe-USSR: Reaction to Olympics.Boycott ............
Libya: Implications of Attack ......................................................
Panama: Election Returns Trickle In ...................................:......
China-UK: Resumption of Hong Kong Talks .............................. 7
Lebanon: Kidnapings Claimed by Islamic Jihad ........................ 8
USSR-US: Ustinov Says US Preparing for War .......................... 8
Special Analyses
USSR-China-Vietnam: The Soviet Dilemma .............................. 10
Mexico: The Politics of Austerity ................................................ 13
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10 May 1984
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Top Secret
HONDURAS- Helicopter shootdown
NICARAGUA:
The downing of a Honduran helicopter by Nicaragua on Tuesday
may have resulted partially from pilot error, but more incidents
are possible as Managua improves its air defenses.
Press reports indicate that Tegucigalpa, while admitting that the
helicopter had strayed off course, has withdrawn its Ambassador
from Managua to protest the shootdown.
Honduran Armed Forces Commander Lopez has told the US Embassy
that the helicopter was on a routine flight from Tegucigalpa to Tiger
Island but that the pilot was inexperienced. The US defense attache
says that poor weather and Honduran negligence in maintain
navigation instruments may have been contributing factors.
Comment: The Hondurans are unlikely to retaliate with any significant
military action, although skirmishes along the border are probable.
Tegucigalpa may use the shootdown for diplomatic and propaganda
purposes during Contadora negotiations and to rebut criticism of its
military cooperation with the US.
Managua's continuing effort to improve air defenses reflects the
Sandinistas' growing concern with their inability to track flights over
their territory. The Sandinistas often have difficulty distinguishing
their aircraft from those of others. Earl this ear Nicara uan troops
shot down one of their own transports.
Managua probably has asked both Havana and Moscow for more
advanced weapons. The Cubans and Soviets are likely to continue
supporting some improvements to Nicaragua's air defenses, but they
are unlikely to provide them with their more advanced weapon
systems. Nevertheless, the Sandinistas probably will continue their
efforts to set up a more effective radar trackin system and improve
command and control.
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~'?fi9 ~~~P~4
lI:~SVIEIR~I t#:I`DIR?f~(#- f~eaC4i?n 4? ?IyQUVpuCa ~?yc?tt
tDSS~B:
@AOSC?W'S ~~CISI?PB 99?$ $O par$ICipa$e IB8 $11~ ?IjJP~'1~ICS a~DFDaP~PB$1j1
Icas sae~~e~lsed 1$s Las$ lEaepo~ea~e allies. H~ae$ all euCeax$ 1~?e~sa~ala
ae~e likely $o f?11?IRl $I~e S?eie$ leaal.
Only Bulgaria has announced thus far that it will not participate in the
games. Other Warsaw Pact members except Romania reported the
Soviet decision but have not yet announced their own intentions. East
European sports chiefs will meet in Moscow today to discus
course of action, according to Western press reports.
The US Embassy in Budapest reports that the Soviet announcement
was not expected by Hungarian officials, who as of last week
apparently believed there was little chance of a boycott. The chairman
of Yugoslavia's highest sports organization has firmly deriounced the
Soviet move. The president of the Bulgarian Olympic committee has
denied reports from Eastern and Western diplomats that preparations
are under way for "countergames" in Sofia.
C?QO~oQVOeuut: Moscow's action 'is probably unpopular in many East
European countries, and Soviet pressure on its allies to join the
boycott will add to strains within the Warsaw Pact. East Germany will
be particularly displeased because of the strong emphasis it places
on Olympic achievements.
Romania is likely to delay any major announcements until President
Ceausescu returns home this weekend, but it is likely to attend the
games. Unlike the other East Europeans, Bucharest has not criticized
US preparations for the Olympics.
Holding countergames could help ease disgruntlement among
Moscow's allies and could win support from some Third World
countries. Various Warsaw Pact countries might help host the events.
4?~' S~~Pe4
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Toa Secret
LIBYA: Implications of Attack
Dissident commandos who attacked Tripoli yesterday intended to
kill Qadhafi, but their failure probably has strengthened his
domestic position for the near term.
In statements to the press, the Libyan National Salvation Front
claimed res 'li f r h ack, stating that it was intended to
kill Qadhafi.
Meanwhile, the US Embassy in Tunis reports that Libya seized three
Tunisian border guards on Tuesday. So far, however, Tripoli has
accused only the US, the UK, and Sudan of complicity.
Comment: Qadhafi's domestic position is probably stronger following
the attempt. Qadhafi may use the attack to rally domestic sentiment
against Western "imperialism."
The National Salvation Front's ability to mount attacks inside Libya
probably has been severely damaged. In addition to the deaths of the
commandos, valuable information on the Front's activities in Libya
may have been compromised when the dissidents were interrogated.
.Tunis, while seeking the return of its captured border guards, will try
to convince Qadhafi of its innocence in the raid. It will expect US
support if relations with Tripoli degenerate.
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4 10 May 1984
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Top Secret
Vote counting has resumed following violent clashes between
government and opposition forces on Monday, but an of
tally probably will not be available until later this week.
Official results announced yesterday showed progovernment
candidate Barletta ahead of opposition figure Arias by some 22,000
votes. Thirty-three of the country's 40 electoral circuits have reported
thus far, and the US Embassy says that results from four of the
circuits have been challenged. The Electoral Tribunal will have three
days to adjudicate the disputes and announce a ruling.
To speed up the process, the government on Monday lifted the
requirement that the presidential vote count be delayed until the
Comment: More disturbances are possible as long as the final
announcement of the results is delayed. Both sides canceled political
rallies on Tuesday, apparently in an effort to avoid more clashes
between their supporters. Ironically, the slow vote count is largely
caused by the numerous safeguards the opposition demanded durin
debates on the massive Electoral Code promulgated last year.~~ 25X1
The military has been restrained in dealing with demonstrations, but it
will act quickly, and possibly harshly, if the situation appears to be out
of control. Noriega, moreover, probably will move swiftly against Arias
if the military's longtime antagonist is elected and a ears ready to
challenge Noriega's authority. 25X1
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Top Secret
CHINA-UK: Resumption of Hong Kong Talks
Talks on Hong Kong's future resumed yesterday with China and
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the UK at an impasse over fundamental differences. ~ 25X1
The UK has been trying unsuccessfully to obtain Chinese agreement
on specific administrative arrangements for Hong Kong after China
regains control in 1997. China refuses to be bound by a detailed
accord on how it will manage the territory and prefers agreement on a
general statement of principles. The two sides exchanged different
draft agreements outlining these approaches last month.
Beijing also has attempted to legitimize a greater role for China in
Hong Kong before 1997 by proposing the establishment of a joint
liaison group after an agreement is signed to ensure a smooth
transition. Foreign Secretary Howe deferred this proposal during his
visit to Beijing last month, arguing that such a body would give the
impression of a Sino-British condominium in Hong Kong and
undermine British authority.
In the last round of talks in late April, the Chinese tried to speed up
the timetable agreed to during the Howe visit, which called for a draft
agreement in September, a debate in the Parliament in autumn, and
signing by the end of the year. Other differences remain on the issues
of citizenship, internal security, civil service, land leases, and civil
aviation.
In Hong Kong, investor and public confidence has declined since
Howe announced on 20 April that the UK would leave Hong Kong in
1997. The local stock market fell 15 percent in two weeks, and the US
Consulate reports an increasing number of people are preparing to
leave.
Comment: The persisting serious differences will make it difficult to
reach agreement by the Chinese deadline of September. China-
apparently confident in its ability to maintain Hong Kong's prosperity
even without active British cooperation-appears to be trying to win
more concessions using the deadline as a threat. With Parliament
likely to debate the Hong Kong issue this fall, Prime Minister Thatcher
may be reluctant to make further concessions.
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~(~(~~f~?Rl: C~u~lo~a~u~uga Cla~uo9vedl ~~ DaVaQavu~ ~Dulhadl
An unidentified telephone caller has claimed that .Islamic Jihad
kidnaped the US clergyman in Beirut on Tuesday. He also stated that
US diplomat Buckley and journalist Levin were being held as part of
the campaign to force all Americans off Lebanese soil. In the same
call, the Islamic Jihad spokesman said the new kidnaping was meant
"to renew our acceptance of the challenge made by Reagan to fight
terrorism." The mainline Shia Amal militia was warned "not to
intervene in the subject, so that we do not harass any of its
members."
C?uvoovoeo~4: The method of the new kidnaping-three or four armed
men forcing the victim into acar-closely resembles that used in the
previous kidnapings in Beirut. Islamic Jihad is the name used by the
Iranian-sponsored terrorists who bombed the US Embassy and the
Marine barracks in Beirut and the US Embassy in Kuwait. The
Hezballah-radical Lebanese Shias-are the probable kidnapers.
The Americans could be used in bargaining for the release of
terrorists condemned to death by Kuwait for- the bombing of the US
Embassy and other facilities.
4DSSf~-~~: Q~~40P9?1! Sa~~ QD~ I~P~~~POP~~ ~?P @ii~~P
Defense Minister Ustinov's charges, in an article published in Pravda
yesterday, that the US seeks military superiority over the USSR in
order to abolish "socialism" is another reflection of the more militant
posture Moscow has adopted toward Washington. Ustinov compared
US intentions with the threat to the USSR during World War II. He
claimed that recent "peacemaking" speeches by US leaders are
meant to camouflage preparation for war, and he quoted General
Secretary Chernenko that anv attack on the USSR will meet
"immediate retribution."
C?ovuovueo~4: Ustinov's truculence contrasts with his tone in an article
published in December that appeared to try to allay public concern
about the threat of a conflict, as well as with his election speech in
February. Ustinov's current militancy, recent speeches by Chernenko,
and the announcement that the USSR will not participate in the
Olympics all suggest that the Soviet leadership has adopted a tougher
posture even thou h this may increase alarm among the Soviet
public ~ 25X1
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In Brief
...likely to increase Tripoli's influence further ... Voltan radical
regime still dependent on France and Western donors.
Western Europe -Defense attache reports the Inflexible, France's sixth SSBN, has
begun sea trials ...deployment expected early 1985 with France's
first MIRVed SLBM ...will add 96 warheads to French strate is
missile forces ...will double present total.
Toa Secret
9 10 May 1984
- US Embassy confirms Libya has disbursed $10 million interest-
free loan to Upper Volta to support balance-of-payments deficit
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Boundary representation is
not necessarily authoritative.
Toy Secret
10 May.1.984
tnam ., South
Paracel
Islands
China
Sea
~~
Cam Ranh Spratly,
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Top Secret
Special Analysis
USSR-CHINA- The Soviet Dilemma
VIETNAM:
BeiJing's carefully calibrated show of force against Vietnam-
which started while President Reagan was still in China-seems
designed to demonstrate to the Soviets and their Vietnamese
allies that China will not be intimidated by the steady Soviet
military buildup in the area, to convey the impression that China
is acting with US approval, and to embarrass the Soviets and
complicate Moscow's relations with Hanol.
Chinese leaders have become increasingly disturbed by Moscow's
unwillingness to ease Chinese concerns about Soviet "encirclement"
after almost two years of talks. By increasing tensions now, Beijing
clearly wants to signal Moscow that it will not simply acquiesce and
that it is prepared to risk new strains in Sino-Soviet relations to
protect its security interests.
Beijing also may want to convey a similar message to Washington-
"that China can project its power in the region and that it is prepared
to confront the Soviets or, in this case, a Soviet ally. In doing so, the
Chinese want to underscore their importance in US strategic .
calculations.
Thus far Beijing has portrayed its military objectives in fairly
restrained terms, justifying its moves as responses to Vietnamese
provocations. The Chinese could calculate, however, that stronger
action, including a possible assault on the Vietnamese-held islands in
the Spratlys, would increase the Soviets' dilemma.
The Soviet decision to postpone "indefinitely" First Deputy Premier
Arkhipov's visits to Beijing, which was scheduled to begin today,
indicates a desire to play it safe. The Soviets probably calculate that
Arkhipov's presence in'Beijing during a major Sino-Vietnamese flare-
up would further complicate their relations with Hanoi, reduce their
options for a response, and add to Vietnamese suspicions about
Moscow's reliability. Postponing Arkhipov's talks in Beijing is the
least that Moscow can do to demonstrate support for the Vietnamese.
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China's actions against Vietnam could force the USSR to make
additional difficult decisions in the next few days and weeks. The
Soviets will have to weigh the political risks of inaction against the
risks of taking military steps. They presumably realize that an airlift of
critical supplies, an increased Soviet naval presence in the South
China Sea, military exercises on the Sino-Soviet border, and other
low-risk actions will not deter the Chinese. Ultimately, Moscow's
words and actions will be based on its evolving assessment of how far
the Chinese intend to go, how well the Vietnamese resistance holds
up, and how m ina is prepared to exert to overcome that
resistance.
The Soviets have limited military capabilities to intervene with their
own forces to assist the Vietnamese along their northern border.
Moscow, however, probably is reasonably confident that the greatly
strengthened Vietnamese forces in that area will enable Hanoi to
withstand whatever the Chinese do along the border. The Soviets
would, nonetheless, provide an airlift of critical spare parts and
ammunition and, if necessary, a sealift to replace whatever the
Chinese destroy. They also would increase their naval presence off
~ Clhuo~e~e c~44aoC~ ?ru 41~e S~Pa4Vfla
Beijing may. believe that a strong show of force in the Spratly
Islands-where Hanoi's ability to counter the Chinese on its own is
limited-would create tougher problems for Moscow. The Chinese
may have decided to force the Soviets' hand-calculating that
Moscow will respond weakly to Vietnamese requests for assistance-
to create new strains in Soviet-Vietnamese relations.
If the Chinese occupy the islands, Hanoi may ask the Soviets to
blockade the Spratlys with surface ships or submarines to prevent
any Chinese resupply efforts, to use its strike aircraft in Cam Ranh
against Chinese ships or the occupied islands,, or to provide support
for a Vietnamese effort to retake the Spratlys.
The Vietnamese have some capability to attack Chinese forces in the
Spratlys. Some of Hanoi's fighter aircraft are equipped with AS-7
missiles that could be used to support an attack on Chinese ships or
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Top Secret
The Soviets probably would try to persuade the Vietnamese to yield
to the sudden seizure of any of the disputed islands. They might argue
that Chinese aggression would be likely to result in a shift in ASEAN
attitudes toward the Vietnamese and that Hanoi should exploit the
seizure diplomatically rather than attempt to retake some worthless
reefs.
In the past, the Soviets have been anxious to avoid armed conflict
with the Chinese. If naval fighting were to become prolonged and
Vietnam were losing, however, the Soviet leadership might feel
compelled to use its air and naval assets in the South China Sea on
behalf of their Vietnamese allies.
The problem for the Soviets is -that any harsher response risks
jeopardizing their current dialogue with the Chinese and their
leverage within the triangular relationship. Nonetheless, the Soviet
reaction to Chinese aggression would be influenced by their likely
calculation that they and their Vietnamese allies were facing a
challenge-abetted by the US-designed to portray the USSR as an
unreliable ally. Beijing's willingness to make the current show of force
and to jeopardize the Arkhipov visit indicates that-when given a
choice-Beijing assigns higher importance to security issues than to
possible economic benefits Moscow might offer.
Top Secret
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Special Analysis
MEXICO: The Politics of Austerity
President de la Madrid, who will visit Washington beginning on
Monday, has instituted harsh austerity measures without causing
widespread unrest or instability. His administration's record thus
far demonstrates the resilience of Mexico's political system and
the capacity of its leaders to manage unaccustomed stress. Only
isolated strikes and demonstrations have taken place, and the
government remains firmly in control. Maintaining calm will
become increasingly difficult, however, as austerity policies
keep living standards below levels achieved during the late
1970s. Some disruptive incidents seem inevitable, but de /a
Madrid's political skill and the flexibility of the political system
are likely to forestall serious disorders.
Mexico had virtually no foreign exchange reserves and foreign debt
exceeded $88 billion when de la Madrid assumed the presidency in
December 1982. Inflation and unemployment were rising to new
heights, while imports and the rate of economic growth were falling.
The Mexican people were angry and frustrated by departing
President Lopez Portillo's economic mismanagement. Criticism by
opposition groups of official waste, corruption, and inefficiency had
further reduced public confidence in the ruling party to an alltime low.
Holding the System Together
De la Madrid has depended on organized labor-the ruling party's
largest and best organized power base-to sell the measures needed
to restore financial order. The willingness of the unions to accept cuts
in real wages has given him the time to launch a recovery program,
build his reputation as a leader, and convince international bankers of
his commitment to keeping Mexico living within its means.
The President's skillful handling of the intricate give-and-take that
characterizes Mexico's authoritarian political system also has helped
maintain stability. De la Madrid's keen sense of the political
consequences of his economic moves has prolonged his honeymoon
with the voters and undercut potential causes for antigovernment
sentiment. Judicious use of the government's security apparatus has
put potential troublemakers on notice to keep protests from getting
out of hand.
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To help restore public trust in the system and deflect the impact of
austerity, de la Madrid has emphasized his commitment to a more
honest and responsive government. A vigorous anticorruption
campaign is the centerpiece of this effort.
Problems in Prospect
The difficulties for de la Madrid are not over. He will have to make
politically risky moves if he is to get the changes in the economic
structure that are necessary to prevent recurring financial crises. The
financial crisis could change quickly into.a political one if differences
among the governing elite over economic strategy were to become
Most Mexicans accept the need for austerity, but the sacrifices they
have made already limit de la Madrid's choices. If key interest groups
see inequities in public policy, they could demand that de la Madrid
reverse major aspects of his program. Organized labor faces its
second straight year of declining real wages. Alienation of this group
would pose the greatest threat to stability and austerity.
Longstanding inequities in the present political system have been
heightened by the economic decline of recent years, and de la Madrid
will need to address these problems. Efforts to reform the ruling party
so that it better reflects the growing importance of the middle class
might increase divisive intraparty tensions. Disaffection by the middle
class, however, probably would lead to greater support for rightist
opposition parties and increase pressures to expand the role of
opposition political groups.
The US Embassy reports that strategists are divided over what steps
are needed to revitalize the party. Failure to follow up on the
anticorruption campaign, especially within the ruling party, risks a
backlash by the public.
De la Madrid's skill and the Mexican political system will be sorely
tested if the government moves ahead-as it appears determined to
do-with the austerity program. The public will have to make more
sacrifices. Unemployment will row, livin standards will drop further,
and bankruptcies will multiply.
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The greatest potential for spontaneous trouble probably is in urban
squatter areas. Opposition parties are not likely to sponsor violence,
but their frustration with blatant electoral fraud 6y the ruling party
could lead to antigovernment demonstrations.
The ruling party's established lines of communications with the
grassroots and the demonstrated flexibility of the governing elite
should head off serious disorders. De la Madrid may use force
selectively to maintain order, but the momentum generated by his
strong early showing, the flexibility of Mexico's institutions, and the
absence of alternatives to the ruling party probably will allow him to
avoid severe political and economic disruptions.
Top Secret
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