NATIONAL INTELLIGENCE DAILY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00091R000500260001-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 20
• Document Creation Date: December 27, 2016
• Document Release Date: September 19, 2012
• Sequence Number: 1
• Publication Date: April 13, 1987
• Content Type: REPORT

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Director of 1 op-?6C,[
Intelligence
National Intelligence Daily
Monday
13 April 1987
Top ret
CPAS NID 87-085JX
13 April 1987
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Contents
USSR-Cuba: High-Level Visitors to Havana ................................ 2
Ethiopia-Somalia: Impasse in Negotiations ................................ 3
India: New Defense Minister ........................................................ 5
India-Pakistan: Trade Talks Moving Slowly ................................ 5
Japan: Trade Surplus Still Growing .............................................. 6
Egypt-North Korea: Missile Development Cooperation ............ 6
Mexico: Concern About Economic Outlook ................................ 7
Kenya: Moi Moves on Human Rights Image ................................ 7
Special Analyses
Top Secret
China: Old Guard Sustains Momentum ...................................... 9
Nicaragua: Growing Dependence on Foreign Aid ...................... 11
Poland: Status of Church-State Relations .................................. 13
Top Secret
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13 April 1987
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Too Secret
USSR-CUBA:
High-Level Visitors to Havana
Viktor Chebrikov, a Politburo member and chief of the KGB, left Cuba
on 3 April after an eight-day stay. He met with both Castro and
Interior Minister Abrantes, among others, and toured agricultural and
technological enter rises.
policy issues were the main topics of conversation
"socioeconomic developments" in the USSR and Cuba and foreign
Politburo candidate member Yel'tsin, the Moscow city party chief,
met with President Castro and Armed Forces Minister Raul Castro on
his way to and from Nicaragua early last month. According to Pravda,
as over the need to coordinate foreign policy.
An unprecedented number of senior Soviet officials have
traveled to Cuba during the past six weeks, suggesting Moscow
is increasingly concerned about Cuba's economic outlook as well
process of rectifying errors" and "eliminating negative tendencies."
The Cubans hosted the USSR's deputy propaganda chief and
Supreme Soviet Deputy Chairman Voskanyan early this month.
Izvestiya said Voskanyan listened to the Cubans describe "the
Cuban Communist Party Congress and improve productivity.
Castro detailed efforts to implement the decisions of last year's
Soviet and Cuban media reported Chebrikov explained the political
and economic restructuring taking place in the USSR, and Fidel
Castro has repeatedly signaled resistance to Moscow's vision of
Cuban development. Although the Party Congress last year promised
austerity and limited conservation in Cuba-probably under Soviet
pressure-Castro has done little to reverse Cuban trends that run
contrary to the market incentives and economic liberalization urged
by Moscow. The recent deterioration of the Cuban economy probably
aid would be capped at levels achieved in 1984-85.
Comment: Friction in Soviet-Cuban economic relations has been
repeatedly evident in this decade and has centered on Havana's
mismanagement of the Cuban economy, the level of Soviet economic
assistance, and differing views of Cuba's economic future. Moscow
has insisted that Havana emphasize agricultural production-rather
than the accelerated industrial development favored by Fidel
Castro-and stem inefficiency. The Soviets have indicated that future
military relationship, and support for the Sandinistas.
Other possible reasons for these visits include Castro's concerns
about talks between the US and the USSR, General Secretary
Gorbachev's proposed trip through Latin America, the Soviet-Cuban
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ETHIOPIA- I Impasse in Negotiations
SOMALIA:
increased border conflict.
The collapse of talks between Ethiopia and Somalia in their
longstanding dispute over the Ogaden region is likely to lead to
positions-be discussed first.
In three meetings since these talks began in January 1986, the two
sides have yet to agree on an agenda. The Ethiopians argue that
recognition of the de facto border should be the focus of the talks,
while the Somalis insist that "confidence-building measures"-such
as prisoner exchanges or a mutual withdrawal from border
Somali President Siad first proposed the talks in hopes of reducing
frontier tensions and ending insurgent activity in northern Somalia.
He is unwilling, however, to risk a domestic backlash by abandoning
Somalia's claim to the Ogaden region.
retaliatory attacks.
raiding dissident camps in the Ogaden have provoked Ethiopian
In addition, Mogadishu's efforts to preempt guerrilla attacks by
18 months
in northern Somalia, it has suffered several defeats over the past
Comment: Although the Somali Army is in no danger of losing control
X99 if Somalia suffers further defeats.
Many Somali military officers blame the decline in military
assistance for their Army's weaknesses. They are likely to increase
pressure on the regime to exact a higher price frvn. Wes Sgt for
renewing the military access agreement with the,.dS;ielx
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Prime Minister Gandhi yesterday appointed K.C. Pant as Defense
Minister to replace V.P. Singh, who resigned amid growing financial
scandals reportedly involving Gandhi's office. According to press
reports, senior Cabinet and fellow Congress Party members last week
had pressed Gandhi to drop Singh for embarrassing the Prime
Minister by ordering an inquiry into a shady arms deal commission
paid while Gandhi was serving as Acting Defense Minister. According
to press and US Embassy sources, Singh's resignation had been
imminent since his removal from the Finance Ministry two months ago
following reports that he was checking into allegedly illegal foreign
holdings of several Gandhi aides and had hired a US detective agency
to investigate the affair.
Comment: Singh's resignation almost certainly will do little to quiet
Gandhi's critics. The financial scandals are only part of a series of
opposition and intraparty challenges facing Gandhi, including his
inability to solve the Sikh conflict in Punjab State and to halt an
erosion of the Congress Party's power in non-Hindi-speaking states.
Singh, long one of the most loyal of Gandhi's aides, almost certainly
will not seek to implicate Gandhi more deeply in the scandals.
INDIA-PAKISTAN: Trade Talks Moving Slowly
India and Pakistan, in accordance with the agreement reached
between Prime Minister Gandhi and President Zia at their meeting in
February, continue to discuss the resumption of bilateral trade.
Pakistan's Ambassador to India met with
the Indian Commerce Secretary earl last month to make plans for a
subcommittee on expandin trade.
Comment: Other than the negotiations on troop withdrawals, these
discussions mark the first time since the Zia-Gandhi meeting that the
two countries have gotten together. Pakistan's determination to
protect its markets and New Delhi's skepticism about Islamabad's
commitment to restoring bilateral trade nonetheless are likely to
delay additional moves. New Delhi probably believes Islamabad is
more interested in impressing the US Congress, which is conducting
hearings on aid to Pakistan, with a show of progress on easing
regional tensions. Although the Indian Government probably will
agree to the proposed subcommittee in principle, it is unlikely to
proceed much further until the Pakistanis show a willingness to
enlarge their list of imports.
Top Secret
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Top Secret
JAPAN: Trade Surplus Still Growing
The Japanese trade surplus, a source of serious tensions between
Tokyo and its trading partners, is headed for another record this year.
The surplus in the first quarter of this year was nearly 40 percent
larger than it was for the same period last year, according to official
Japanese data. Most of the increase, however, occurred in the West
European markets; the surplus with the US grew only slightly.
Comment: If the trend of the past three months continues, Japan's
trade surplus this year may reach $115 billion-nearly $33 billion
more than the record level attained last year. The changing
geographic makeup of the trade surplus suggests that Tokyo will be
under increasing pressure from West European governments in the
months ahead. The strong yen will force Japan to become less
dependent on overseas sales, but the process will be slow and is jast
beginning, as shown by the small decline in export volume last year.
EGYPT-NORTH KOREA: Missile Development Cooperation
Egypt is trying to develop a short-range ballistic missile similar to the
Soviet Scud and hopes to begin production by late 1989 with North
Korean assistance. Cairo wants to produce about 100 missiles a year
eventually, Production
has not gone beyond the prototype phase, however, and the first
motor assembled in Egypt was successfully bench-tested only
recently. The Egyptians, with the assistance of 30 to 40 North Korean
advisers, are doing most of this work at a factory near Cairo.
Comment: If the program is successful, Egypt will be the first country
in the Middle East-other than Israel-to produce indigenously
SRBMs in quantity. Egypt, however, probably lacks the necessary
plant, equipment, and technical expertise, especially in guidance and
control, to begin series production before 1990, even with continued
North Korean assistance. Cairo is likely to persevere as much for
reasons of prestige as in expectation of eventual export earnings.
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6 13 April 1987
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Top Secret
Mexico: Selected Economic Indicators, 1983-86
Real GDP Growth
Percent
Inflation
Percent change in CPI
120
1
-6 1982 83 84 85 868 0 1982 83 84 85 86
Public Sector Deficit
Share of GDP
0 1982 83 84 85 868
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13 April 1987
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Top Secret
Mexico's economy declined at an annual rate of 5 percent last
quarter, and financing the federal deficit continued to absorb more
than 90 percent of domestic credit, according to preliminary Mexican
data. The private sector fears that this slump-caused by the delay in
disbursing new foreign loans-will prompt President de la Madrid to
overstimulate the economy later in the year, according to the US
Embassy. Businessmen are reportedly concerned that the new money
will be used primarily to create jobs and otherwise pump up the
economy, activities that would fuel inflation-already running at
125 percent on an annual basis.
Comment: Even with new money, the government's economic growth
target of at least 2 percent this year is in jeopardy, and plans to
reduce inflation to 80 percent or less are virtually unattainable. With
the economy now performing below target and national elections a
little more than a year away, de la Madrid probably will opt for higher
spending-even if it means higher inflation-over more conservative
policies, such as cutting the country's deficit.
KENYA: Moi Moves on Human Rights Image
Kenyan President Moi is acting to prevent international criticisms of
his country's record on human rights from causing the US, West
Germany, and Sweden to reduce foreign aid.
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Last Wednesday, Moi told the US
Ambassador that he opposes abuses of human rights, but implied
that some violations might occur without his knowledge or approval.
Earlier last week, another senior official assured the US Ambassador
that Moi had ordered police to halt strong-arm tactics a a, inst 25X1
undocumented aliens. numerous
instances of suspected police brutality against alleged Kenyan E::
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Comment: Moi's increasingly autocratic behavior has helped to
create an environment conducive to human rights violations by
subordinates, but there is little indication that he sees this issue as
anything more than a public relations problem. Despite the recent
criticism, Kenya's record on human rights compares favorably with
those of other Third World countries, and Western donors are unlikely
to reduce aid substantially unless there is a sharp deterioration in that
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In Brief
may seek emergency Saudi aid.
Syrian official says wheat supplies will run out before harvest in
June, according to US Embassy ... claims problem given low
priority by leadership ... additional imports from France unlikely,
preparatory to major Nicaraguan incursion.
Nicaraguan, Honduran troops exchanged fire in minor border
clash over weekend ... press indicates Hondurans strengthening
positions to deter Sandinistas ... incident probably not
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Europe
revision to be permitted after next year's Olympics.
elected this year under existing constitution ... opposition blamed
for lack of agreement on constitutional reform ... discussion of
-- South Korean President Chun today announced successor will be
Nakasone's sales tax plan and blow to sagging prestige.
party taking some losses nationwide ... failed to recapture key
governorship of Fukuoka ... press portraying loss as setback to
- Partial results of local elections yesterday show Japanese ruling
presentation indicates move intended only as propaganda.
Warsaw Pact's proposal for defense spending freeze ...
authorized by Pact foreign ministers last month ... low-level
- Romania y presented to NATO ambassadors in Bucharest
willing to exert strong pressure against deal.
- Dutch firm Fokker has told US diplomats it plans to service Libyan
civilian aircraft despite US sanctions ... pleading financial
hardship ... probably doubts US, Netherlands Governments
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Special Analysis
The annual session of China's nominal legislature that adjourned
Although both sides of the political debate staked out
unambiguous positions, Chinese policy pronouncements prior to
the more authoritative 13th Party Congress this fall will probably
reflect a tenuous balance between reform and Marxist orthodoxy.
featured uncharacteristic displays of open
disagreement amid ritual assertions of leadership unity. By
publicizing the relative frankness of the proceedings, Beijing
may have made progress toward neutralizing the widespread
impression, both at home and abroad, that the National People's
Congress is a "rubber stamp" without true deliberative powers.
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portend procedural obstruction of reform measures.
From the floor of the NPC, delegates questioned aspects of policy
that Premier Zhao Ziyang outlined in his government work report; and
the nomination of a new public security minister received a token
show of "nays." A law establishing village committees for local self-
government was first delayed and later endorsed only "in principle"
by the conclave. The draft law will go to the NPC Standing
Committee-dominated by archconservative Peng Zhen and
disgruntled old-guard figures-for final review, a move that may
Peng Asserts Power.
Zhen expounded on a long list of contentious topics.
Also unusual during the NPC was the proliferation of freewheeling
press conferences that gave wide currency to a variety of views, most
of which were vaguely critical of the reforms or reformers. A military
spokesman disclaimed an Army role in the ouster of former General
Secretary Hu Yaobang; members of the Legislative Affairs Committee
explained the anticipated holdup in the village council regulations and
the controversial delay of a state enterprises law last month. Peng
Peng once again demonstrated his power as chairman of the NPC by
using its meetings as a personal forum. During his outing with the
Hong Kong press, he expanded-perhaps disingenuously-on the
need for Deng Xiaoping alone among the party elders to remain on
the Politburo. He also parried a host of reformist complaints, denied
the existence of "conservatives" within the leadership, and gave his
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Economic Straws in the Wind
The delegates endorsed a resolution that culled from Zhao's report
the most orthodox passages for special emphasis. In registering the
criticality of grain production and underscoring the need for caution,
thrift, scaled-down investment, and national self-reliance
resolution repeated a litany of conservative concerns.
Despite the conservative tone of the session, Zhao's report-
apparently endorsed in its entirety-indicated he will continue to
press for market-oriented reforms that reduce central control. Zhao L
referred to a major review of China's reform program now under way
that, will detail a comprehensive,
coordinated reform "blueprint." Slated for release next month, this
study almost certainly will reaffirm the need for price reform and other
controversial measures while reassuring critics of prudent
implementation.
Beijing is emphasizing "business as usual" following Hu's ouster, and
controversial policies are likely to remain on hold, at least through the
party congress. Chinese media have treated the NPC's public give
and take as evidence of true deliberation and "socialist democracy."
The main benefactors of the additional political weight now ascribed
to the NPC are Peng and his associates who have been shunted there
from high party posts since 1982.
Although reformers have tightened fiscal and monetary policies, they
have only limited control over several major problems. For example,
their ability to boost grain production is heavily dependent on the
weather, which has been poor this year. Reducing China's
troublesome foreign trade deficit also requires increasing exports of
textiles and other light manufactures, which may be difficult because
of heightened protectionist sentiments in the West.
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Nicaragua: Annual Assistance by Nicaragua: Sources of Foreign
Source, 1979-86 Economic Support, 1979-86
Million US $
- Soviet Bloc-Cuba - Multilateral
- Latin America - Middle East
-OECD
I ~ ~ I
0 1979 80 81 82 83 84 85 86
Top Secret
Million US $
USSR
Mexico
OECD
Eastern Europe
Multilateral
Latin Americas
Cuba
Middle East
Other
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Special Analysis
Growing Dependence on Foreign Aid
Foreign financial assistance to Nicaragua nearly quadrupled
from $200 million in 1979, the year the Sandinistas seized power,
to almost $800 million last year. Aid from Communist countries
accounts for all of the increase, although the West provides
about 20 percent of Nicaragua's foreign aid. The Soviets are
likely to supply whatever additional assistance is needed to keep
the Nicaraguan economy afloat despite Moscow's warnings that
the Sandinistas must show more accountability for Communist
Soviet Bloc and Cuban assistance to Nicaragua has expanded
rapidly, soaring from $17 million in 1979 to almost $600 million last
year Of the nearly $2 billion in
economic assistance provided by those countries since 1979, more
than one-half has been disbursed over the past two years; Moscow
alone provided $235 million in 1985 and $325 million last year./-]
July Victory sugar refinery
the Cubans specialize in technical cooperation and project
maintenance. They also built Nicaragua's largest industrial facility, the
irrigation project on the Pacific coast
several development projects, including an oil storage facility and an
The USSR probably uses CEMA meetings and bilateral talks with Bloc
countries and Cuba to coordinate Communist aid packages to
Nicaragua. While the great bulk of Soviet Bloc aid is for oil, raw
materials, and consumer goods, Moscow also is funding and directing
The sharp increase in foreign assistance has done little to stem the
deterioration of Nicaragua's economy. According to an official
Sandinista study, the regime has failed to use investment assistance
on projects that provide immediate returns but instead has directed
much of it to long-term projects that drain scarce resources and
produce few economic benefits. Moreover, most Soviet Bloc and
Cuban aid has been spent on consumable goods rather than on
development projects needed to generate economi rowth,
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Declining Western Aid
As Managua has increased domestic repression and moved closer to
Communist countries, economic support from the West has gradually
declined. Until 1984, the OECD countries, Latin America, and
continued
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Top Secret
multilateral lending institutions provided
Nicaragua's Communist benefactors
The US cut off aid credits to the regime in 1981, credits from most
multilateral lenders dropped in subsequent years, and Latin American
aid fell sharply after 1983. Disbursements from Western Europe
began to decline in 1984.
Additional major cuts in Western aid are unlikely. US embassies in
Western Europe report that the key remaining donors-Spain,
Sweden, Norway, and the Netherlands-are committed to
maintaining ties to Managua. the focus of
Western aid has shifted in recent years from emphasis on
development projects to humanitarian aid and technical assistance.
The Soviet Bloc and Cuba probably will supply, even if reluctantly,
whatever economic aid it takes to buy the Sandinistas time to
consolidate the regime and restructure their economy along
"socialist" lines. Although Moscow probably would prefer to pace the
growth in assistance, Nicaragua's economy is in such dire straits that
much more aid will be needed to satisfy current consumption needs.
As long as the insurgency continues, major development projects
probably will remain on hold. Whatever the outcome of the fighting,
Managua will need several billion dollars to rebuild its economy.
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Top Secret
Special Analysis
POLAND: I Status of Church-State Relations
The possibility that the Polish regime will grant legal status to
the Catholic Church appears to be increasing as the papal visit
to Poland in June nears. Warsaw hopes that more cooperative
relations will shore up its legitimacy, while the Church wants
legal recognition of its status as Poland's leading independent
institution. Powerful factions in the regime and the Church still
oppose any agreement, however, and relations could deteriorate
after the euphoria of a papal visit if the regime disappoints
Church hopes for moderate reform or if the Church is unable to
convince moderate opponents to give regime reforms a chance.
The meetings between Pope John Paul II, leading Vatican officials,
and President Jaruzelski in January reportedly resulted in an
understanding to pursue greater cooperation that could culminate in
the regime's recognition of the Church's legal status. Jaruzelski said
that he would slowly implement reform, acknowledged that the
regime needed the Church to help achieve national reconciliation, and
claimed to have Moscow's blessings for his dealings with the Church.
Church, Regime Objectives
A final draft agreement on the Church's status reportedly has been
prepared At a
minimum the Church probably hopes for an enlarged educational
role, clarification of its tax status, increased media access, and a
guarantee the regime will not interfere in administrative matters.
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Jaruzelski probably hopes to isolate opposition radicals by having the
Church endorse his "slow but steady" approach to political reform.
He also wants the Church to call for patience and cooperation while
the regime enacts painful economic reforms, and he may hope to
manipulate the Church into sharing responsibility for some of these
reforms. Cardinal Glemp, however, is probably leery of that prospect,
fearing that reform failures would be blamed on the Church.
The Church does not want reform to stagnate nor does it want open
confrontation between the regime and the population, and it probably
hopes it can convince the regime to honor reform commitments.
Through this mediation, the Church hopes it will increasingly be seen
as an interpreter of events in Poland and arbiter of the regime's
performance without losing its credibility with the people.
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will implement.
The regime and the Church also may find themselves at odds if the
regime is unable, or unwilling, to pursue reform as its part of the
bargain or if the Church does not use its influence with the faithful to
caution patience as the regime pursues reconciliation. Moreover, to
avoid a rancorous split between moderates and radicals in the
opposition and to retain reformist credentials, the Church may be
forced to endorse a more ambitious reform agenda than the regime
Seeking Western Support
As the regime courts the Church, the latter may expect the West to
accept it-and not the secular opposition-as the principal
interpreter of political developments in Poland. It will probably
increase efforts to secure Western aid for Church-supported projects.
The Church may also take a more sanguine view of regime prospects
and objectives than will the independent opposition. It may also be
less sympathetic to such secular opposition political goals as strongly
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