INTERNATIONAL ECONOMIC & ENERGY WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP97-00771R000807640001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 31
• Document Creation Date: December 22, 2016
• Document Release Date: November 3, 2010
• Sequence Number: 1
• Publication Date: August 2, 1985
• Content Type: REPORT

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Directorate of
Intelligence
International
Economic & Energy
Weekly
2 At 1985
DI IEEW $$-031
2 August 1#85
copy 676
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International
Economic & Energy Weekly
2 August 1985
Synopsis 25X1
25X1
.Advanced Composite Materials: Growing Foreign Capabilities
Space WARC: Regulation of the Geostationary Orbit
Energy
International Finance
Global and Regional Developments
National Developments
Comments and queries regarding this publication are welcome. They may be
directed to irectorate of Intelligence
Secret
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International
Economic & Energy Weekly
Synopsis 25X1
1 Perspective-Advanced Composite Materials: Strategic Implications
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commercial development of satellite communications
The International Telecommunication Union (ITU) will convene the Space
World Administrative Radio Conference (Space WARC) in Geneva on
8 August. Proposed changes in ITU radio regulations-a treaty which the
United States has ratified-would affect both future US Government and
25X1 15 Bolivia: Dimensions of Economic Reconstruction
The resounding rejection of the ruling party during recent elections indicates
that voters are fed up with hyperinflation, economic deprivation, and work
stoppages. Much will depend on the ability of the next administration to enact
a market-oriented economic policy, endure criticism and opposition, and
encourage private enterprise.
Advanced composite materials-primarily plastics and metals reinforced with
carbon, metal, or ceramic fibers-are enhancing the performance of military
systems and improving the competitiveness of a variety of commercial
products. Growing foreign capabilities in advanced composites have a variety
of strategic implications for the United States.
3 Advanced Composite Materials: Growing Foreign Capabilities
materials and fabrication techniques.
The United States is generally acknowledged as the broadbased leader in
advanced composites technology and continues to lead by several years in
design know-how. Nevertheless, Western Europe and Japan have closed the
gap in most areas and have developed leading-edge capabilities in a few
11 Space WARC: Regulation of the Geostationary Orbit
iii Secret
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Secret
International
Economic & Energy Weekly
2 August 1985
Perspective Advanced Composite Materials: Strategic Implications
Advanced composite materials-primarily plastics and metals reinforced with
carbon, metal, or ceramic fibers-are enhancing the performance of military
systems and improving the competitiveness of a variety of commercial
products. Growing foreign capabilities in advanced composites have a variety
of strategic implications for the United States. Increasing foreign availability
of advanced composites will complicate US and COCOM efforts to control the
flow of these militarily important technologies and equipment to Communist
countries. The Soviet Bloc countries have already acquired many advanced
composites technologies from Western Europe. Additionally, the growing
diffusion of advanced composites technologies to developing countries promises
to provide even more potential sources for the Soviets.
Diffusion of advanced composites technologies also raises concerns about
weapons proliferation in the Third World. Although the developing world does
not yet possess leading-edge capabilities, a number of countries are acquiring
or developing fabrication equipment that could be used to produce weapons.
Indeed, some Third World composites acquisitions appear more motivated by
military than by civilian applications. We doubt, for example, that Brazil and
Pakistan have justified the sizable expense of acquiring composites technol-
ogies merely for use in meteorological sounding rockets. In the judgment of
one expert, India is acquiring carbon-carbon manufacturing equipment that is
considerably more sophisticated than required for any civil application.
Intense foreign competition, coupled with as yet small, uncertain markets, may
discourage development of the US industrial base for making advanced
composite materials
As the number of foreign suppliers increase-and some will likely
benefit from government subsidies or other targeting measures-some US
firms could have increasing difficulty justifying investments in this area.
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Failure to establish a strong domestic advanced composites supply could, over
time, force military systems builders to rely increasingly on foreign sources of
materials, manufacturing equipment, and know-how. The United States
already relies on foreign sources for Japanese "raw" fibers from which
military-grade carbon fibers are made. Although industry experts generally
agree that the United States can establish manufacturing capabilities rather
quickly for most of these advanced composite materials technologies, other
dependencies could arise. The more rapidly composites technologies are
developed overseas and the longer US firms delay establishing manufacturing
capabilities, the more difficult market entry may become. Even if domestic
research and development in these areas remains at the forefront, US firms
may lack important process and quality control know-how gained only through
experience in production.
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Advanced Composite Materials:
Growing Foreign Capabilities '
The United States is generally acknowledged as the
broadbased leader in advanced composites technol-
ogy and continues to lead by several years in design
know-how. Nevertheless, Western Europe and Ja-
pan have closed the gap in most areas and have
developed leading-edge capabilities in a few materi-
als and fabrication techniques. Although demand
for advanced composites is modest-about $600
million in sales last year and global production of
no more than 20,000 metric tons-usage has been
growing at about 20 percent annually. These fig-
ures understate the commercial and military im-
portance of advanced composites. They provide
special performance benefits in aerospace applica-
tions and are a potentially key technology for
space-based weapons proposed for the US Strategic
Defense Initiative.
Foreign Programs
Advanced composites technologies, both US and
foreign, are spreading rapidly as composite materi-
als suppliers, facing small domestic markets for
their relatively expensive products, seek export
opportunities. Composites fabrication is transferred
to foreign firms through co-production arrange-
ments such as those between Boeing and Aeritalia
and Fuji Heavy Industries, because such processes
are relatively unsophisticated and labor intensive.
These features make composites manufacturing
more adaptable than most high technologies to the
infrastructures of many developed and Third
World countries. Some of the latter, as well as
countries such as Israel, are known
to be particularly interested in
military applications of advanced composites.
Based on staffing levels, we estimate that the size
of the combined foreign, non-Communist effort to
develop and exploit composite materials is roughly
equal to that of the United States where about 150
firms and perhaps 1,500 professionals are pursuing
composites research and developments
Advanced Composite Materials at a Glance
Advanced composites contain two or more compo-
nents-usually a polymer-, metal-, or ceramic-
matrix material reinforced with long load-bearing
fibers. Among their advantages are high strength-
to-weight ratios and good fatigue, fracture, and
chemical resistance.
Composite materials offer a variety of benefits:
? Carbon-carbon composite heat shields have
made possible the current generation of high-
reentry- velocity ICBM warheads.
? Carbon-fiber-reinforced plastics (CFRP5) have
made possible new, highly maneuverable
aircraft.
? CFRPs-the only commonly used advanced
composites-are improving fuel efficiency in ve-
hicles by reducing weight, and can reduce fabri-
cation costs of large complex parts.
? Metal- and ceramic-matrix composites are po-
tentially the best materials both for high-tem-
perature engine parts and for ultrastiff, dimen-
sionally stable parts needed in systems such as
space-based weapons.
The West Europeans have capabilities second only
to the United States in advanced composites tech-
nologies. These technologies are important to West
European consortiums, such as Airbus Industrie, as
well as to the individual countries. Composites are
an important materials theme in the European
Commission's new Basic Research in Industrial
Technologies for Europe Program (BRITE).
France, the United Kingdom, Italy, and West
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Germany have major capabilities in composites,
and several others-the Netherlands, Sweden, and
Spain-have capabilities for fabricating carbon
fiber reinforced plastic (CFRP) parts adequate for
many military applications:
? France has developed or acquired leading-edge
capabilities in advanced composites, particularly
in carbon-carbon materials, in support of its
aerospace programs. The French maintain their
leading-edge status with a strong research and
development effort supplemented by acquiring
key technologies elsewhere, through arrange-
ments such as corporate takeovers and joint
ventures.
? The United Kingdom has strong indigenous capa-
bilities for developing, producing, and using ad-
vanced composites. Leading firms in the field are
Imperial Chemical Industry and British
Aerospace.
? The Italians and the West Germans also have
strong capabilities for fabricating CFRP parts,
primarily for airframes. Unlike the other major
players, West Germany appears content to pur-
chase needed composite materials from external
sources. F 25X1
The Japanese have focused more on the develop-
ment and use of inexpensive advanced composite
materials for potential applications outside the
small Japanese aerospace industry.
have been eroded, and foreign firms have seized the
initiative in developing many of the newer materi-
als. Meanwhile, differences in national capabilities
are becoming blurred because transfers of ad-
vanced composites technology have been common
among firms in many of the developed countries.
Regarding the most important materials:
? The Japanese have a significant and widening
lead in carbon fibers that has already given them
60 percent of the global market. Japanese firms
are well positioned to dominate the commercial
production of these materials by the 1990s.
? West European and Japanese firms have demon-
strated polymer matrix materials with properties
comparable to the best materials developed in the
United States.
? The French lead in technology for carbon-carbon
composites, combining expertise in the manufac-
turing technologies of weaving and infiltration.
? The United States and Japan lead other non-
Communist countries in technology for metal-
matrix composites. Japan may lag the United
States in the sophistication of its metal-matrix
technology, but has taken the lead in commercial-
izing these composites.
? Although details are sketchy, we think France
and Japan may have developed some ceramic-
matrix composite materials with properties supe-
rior to comparable US materials.
The United States is considered by most experts to
have the best manufacturing technology for design-
ing and fabricating parts from advanced composite
materials:
Foreign Technical Capabilities
West European and Japanese firms are developing
state-of-the-art capabilities for some important ad-
vanced composite materials. Some long-held US
technological leads in older advanced composites
? The US lead is largest in design, as illustrated by
the composite wings}
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? The United States is generally considered to have
the best technology for consolidating epoxy
CFRPs into finished parts-the size of such US-
made parts is unmatched elsewhere.
? The United States leads Italy, Japan, and France
in technology for automated tape-laying of
CFRPs, as measured by the sophistication of
equipment used in production.
Despite the general US lead in composites manu-
facturing, foreign competitors have developed lead-
ing-edge capabilities in some technologies:
? France has superior technology for weaving fibers
into three-dimensional composite shapes. Weav-
ing equipment made by the French firm Brochier
et Fils achieves more even fiber spacing than does
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comparable US equipment, resulting in more
reliable carbon-carbon parts.
? France and the United States lead in technologies
for infiltrating those woven shapes with matrix
materials.
? A West German firm makes the best filament
winding equipment.
Applications Outlook
Industry experts generally agree that the aerospace
industry will be the largest single market for
advanced composites. Leading-edge use in the
United States and abroad will continue to be in
military aircraft, missiles, and helicopters. Next-
generation fighter designs being developed in West-
ern Europe and the United States may use up to 50
percent CFRP composites. Although demand for
advanced composites for missile and space applica-
tions likely will remain modest for many years,
large missiles typically use
these materials.
We expect a considerably slower increase in the use
of advanced composites in large commercial jet
airliners. The forthcoming Airbus A320, scheduled
for initial operation in 1988, will have only about
10 percent composites in its airframe. Moreover,
the first use of composites in load-bearing struc-
tures in large commercial airliners may not even
occur this century because of concerns about pas-
senger safety, high per-part development costs, and
availability of new lightweight metal alloys.
In the automobile industry, advanced composite
materials have yet to find broad applications be-
cause of their high cost and competition from new
metal alloys. For body parts-the largest potential
application-many US and West European auto
firms have focused on using weaker short-fiber
composites from which parts can be fabricated
quickly and cheaply by processes such as injection
molding. Nevertheless, foreign as well as US auto
firms are beginning to use advanced composites in
parts such as drive shafts, axles, and springs.
Moreover, Japan's auto firms, in line with the
intense national effort to develop low-cost, pitch-
based carbon fibers, appear considerably more opti-
mistic about the prospects for CFRP parts in
automobiles than their competitors. One reason for
this optimism could be the potential for producing
fuel-efficient large cars. Another reason is that
Japanese advantages in manufacturing costs-
widely believed to be on the order of $2000 per
automobile-leave them more latitude to use costly
advanced composites in performance-enhancing
parts.
Advanced composites are beginning to find their
way into a wide variety of industrial applications,
from nuclear centrifuges to commercial robots. If
costs can be brought down, perhaps by commercial-
ization of moderate-cost pitch-based carbon fibers,
we believe the use of advanced composites in
industrial applications would grow rapidly. Gains
in industrial uses, as well as further inroads in
aerospace and automotive applications, will come
largely at the expense of the aluminum and steel
industries. Within this range of potential applica-
tions, we believe that aggressive West European
and Japanese firms will continue to be major
materials suppliers.
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Space WARC: Regulation of the
Geostationary Orbit'
The International Telecommunication Union (ITU)
will convene the Space World Administrative Ra-
dio Conference (Space WARC) in Geneva on 8
August. This planning conference-called at the
behest of a coalition of developing countries-will
consider a new system of national access to radio-
frequencies and orbital slots for geostationary-orbit
satellites. Proposed changes in ITU radio regula-
tions-a treaty which the United States has rati-
fied-would affect both future US Government
and commercial development of satellite communi-
cations. Implementation of the new procedures will
not be considered until the second session of Space
WARC, scheduled for 1988. Under a worst case
scenario, the outcome could threaten Western mili-
tary communications systems
While the agenda, accepted by the United States,
technically empowers the Space WARC to consid-
er all space telecommunications services, we believe
that most of the effort will focus on broadcast (TV)
and fixed-satellite services. Another potentially
controversial topic is a new service dedicated to
radio broadcasting from space. Political issues
ranging from Soviet opposition to the US Strategic
Defense Initiative (SDI) to a challenge to Israeli
credentials could also come up.
The key technical issue at this first session, sched-
uled to run through September, is coming up with a
new method for planning use of orbital slots and
frequencies. Currently, a country planning to
launch a satellite must publish information about
the satellite no earlier than five years in advance,
coordinate with other countries to avoid interfer-
ence with existing systems, and then register the
system with the ITU.
Many of the developing countries want to establish
a system of prior planning that would permanently
assign orbital slots and frequencies to each country,
regardless of current use patterns. Most major
telecommunications users, including the United
States and the Soviet Union, oppose this approach
for the most heavily used frequency bands on
grounds that it would create inefficiencies in their
operations and stifle future developments in the
space telecommunications industry.
Other technical sticking points may include:
? Europe, Africa, and Asia need to agree on up-link
frequencies (earth-to-satellite transmissions) for
their television broadcast satellites. US military
communications could interfere with some of the
proposed frequencies.
? The agenda calls for this session to adopt a plan
created in 1983 for television broadcast satellites
for the Americas. Key countries from the other
two regions, including the Soviet Union and some
West European nations, oppose adoption of the
plan until they have settled on the allocation of
the up links. US commercial operators will find it
difficult to secure financial backing for television
broadcast satellites until a plan is internationally
recognized.
? Most members of the conference, except the
Soviets and their allies, would like to agree on
setting up a new satellite service for radiobroad-
casting from space. The frequencies considered so
far interfere with existing users; the conference
probably will agree to broaden the range of
frequencies to be considered.
The political issue most likely to plague the United
States at Space WARC is a Soviet-inspired attack
on the SDI under the guise of restraining "nonpea-
ceful uses of outer space." We believe Moscow will
propose a principle on peaceful use of the geosta-
tionary orbit that attempts to corner the United
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The Geostationary Satellite Orbit
A geostationary satellite is launched into a circu-
lar orbit in the plane of the equator at an altitude
of approximately 35,800 kilometers. It orbits the
Earth at the same rate as the Earth's rotation.
When viewed from the Earth, the satellite appears
suspended over a fixed point on the equator. Earth
stations remain directed at such satellites without
the need for expensive, complicated tracking equip-
ment. Among the functions of satellites in this
orbit are telecommunications and broadcasting.
Geostationary satellites using the same frequency
bands may interfere with each other or with other
systems on the same frequencies. Interference de-
pends on:
? Separation between the areas on Earth the satel-
lites are servicing.
? The technology in the satellite and its Earth
stations (particularly the directivity and polar-
ization of antennas).
? Separation between the satellites.
? Other systems, not in the geostationary-satellite
orbit or on Earth (such as aircraft and ships),
sharing the same frequency bands.
Space technology is rapidly evolving, allowing a
greater satellite communications capacity and
closer spacing of like-frequency satellites than
before.
States on disarmament issues. Several other politi-
cal issues likely to draw fire include: the UK-
Argentine dispute over the Falklands and territo-
ries, special treatment for LDCs, sovereignty
claims to the geostationary orbit by the equatorial
countries-primarily Colombia, Ecuador, Kenya,
and Indonesia-and anti-Israeli rhetoric
The stakes are high. The geostationary orbit plays
a key role in the economic and military security of
many developed countries, especially the United
States, which makes more use of this orbit and
frequency spectrum than any other nation. A long-
term, detailed plan that allows each country equal
orbital slots and frequency assignments in frequen-
cy bands of US interest would jeopardize US
commercial and government interests. Among the
US concerns are protection of:
? US government communications systems.
? Commercial communications and broadcasting
satellites.
? Global satellite operations.
? US policies for competitive access to the geosta-
tionary orbit.
? US monetary contributions to ITU operations.
Key Countries and Groups
We believe that investment in space systems, affili-
ations with global and regional telecommunications
systems, and political alignment will, for most
nations, determine positions at the Space WARC.
The industrialized nations have the greatest stake.
A few developing countries have their own satel-
lites-most merely subscribe to international
systems.
? The developing countries. The 101-member Non-
Aligned Movement (NAM) will work actively in
the Space WARC to organize LDC positions.
Brazil, China, India, and Indonesia, however,
have their own communications satellites and
consequently will be less eager to make changes
which could affect existing systems.
? The Soviet Bloc. The Soviet Union is the second
heaviest user of the geostationary-satellite orbit
and, like the United States, will seek to protect its
access to the orbit and the frequency bands
allocated for use by satellites. We believe the
USSR will try to achieve this objective but, at the
same time, try to appear to side with the LDCs.
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LDCs and some major satellite-owning
countries agree on rigid plan
In frequencies not used by the United States
Neutral
Probable
In commercial frequencies
Negative
Possible
In frequencies of US concern
Negative
Probable
US isolated against rigid plan
In frequencies not used by the United States
Neutral
Possible
In commercial frequencies
Negative
Unlikely
In frequencies of US concern
Negative
Possible
Consensus with US agreement on new
flexible approach for regulating orbit
In frequencies not used by the United States
Positive
Possible
In commercial frequencies
Positive
Possible
Regions differ/Regions I and 3 plan,
Region 2 delays a
In frequencies not used by the United States
Neutral
Possible
In commercial frequencies
Neutral
Possible
In frequencies of US concern
Negative
Possible
Stalemate/declare failure
Positive
Possible
LDCs pass rigid planning; no
satellite-owning countries support
In frequencies not used by the United States
Neutral
Unlikely
In commercial frequencies
Neutral
Unlikely
a The ITU divides the world into three regions-Region 1 (Western
Europe, Africa, and the USSR), Region 2 (the Americas), and
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? The Western nations. In our judgment, the West-
ern industrial nations will agree generally with
US objectives, but differences exist. The West
European nations, under the apparent guidance
of the United Kingdom, oppose incorporation of
the Western Hemisphere broadcasting plan into
the ITU radio regulations, according to State
Department reporting. We believe they want to
finish their own broadcasting plan first so that all
the regional plans can be reviewed at the same
time. Australia, Canada, and Sweden indicate
that they support variations of rigid planning.
Without full support from these countries, the
United States will face an uphill struggle in
avoiding some form of fixed assignments.
? Other groups with influence. Only countries can
vote at ITU conferences. Other bodies, however,
both international and regional may speak, sub-
mit papers, and lobby at ITU sessions. INTEL-
SAT and INTERSPUTNIK probably will play
the biggest roles.
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Possible Outcomes and Implications
national security purposes.
We believe there is a good chance that Space
WARC will make decisions detrimental to US
interests. The delegates may either make decisions
outright at the first session or ask an intersessional
group to study some provisional choices. Odds are
that the LDCs and some major satellite-owning
countries will agree on a rigid plan affecting some
frequencies currently used by the United States for
would be in a position to take reservations.
The best hope for the United States is that other
satellite-owning countries stand firm on maintain-
ing flexible procedures for regulating the orbit,
or-as a fallback position-limit planning schemes
to just enough of the spectrum to satisfy LDC
demands. If the satellite-owning countries remain
united in opposition to whole-scale planning,
then-even if the conference votes for such a
scheme-the more advanced countries probably
The next best hope for the United States is that the
conference make only provisional decisions on regu-
lating the orbit and the spectrum, leaving it to an
intersessional study group to determine feasibility
and make recommendations to the 1988 session.
This would allow time to put additional pressure on
other satellite-using countries to stand firmly be-
hind a more flexible approach to planning.
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Bolivia: Dimensions of
Economic Reconstruction
The resounding rejection of the ruling party during
recent elections indicates that voters are fed up
with hyperinflation, economic deprivation, and
work stoppages. With labor discredited and the
radical left divided, the current front-runners-the
final selection of the president by the Congress is
scheduled for today-are promising to attempt
economic reconstruction. The implementation and
success of such efforts, however, will depend on the
ability of the next administration to enact a
market-oriented economic policy, endure criticism
and opposition, and encourage private enterprise.
Anatomy of a Crisis
Economic policy under President Siles was geared
to gaining popular support for the government by
granting massive wage concessions, and increasing
government spending and subsidization by printing
money. The results have been disastrous:
? Inflation-running at 8,900 percent for the 12
months that ended in June-is the highest in the
world and caused industrial production to decline
22.4 percent in 1984.
? Thirty percent of the labor force is unemployed or
underemployed, and real wages have fallen 20
percent, according to the US Embassy. Conse-
quently, strikes for increased wages continually
disrupt the economy.
? Decreasing per capita income has resulted in
sharp cutbacks in consumption of basic food
items. A UNICEF study states that 60 percent of
Bolivia's children suffer malnutrition.
The economy is also reeling under major structural
problems. Controls on bank interest rates in the
face of galloping inflation have destroyed the incen-
tive to save. In May, private commercial bank
deposits totaled only $11 million, according to the
Change in money supply
Ratio of public-sector
deficit to GDP
Ratio of external public
debt to GDP
-6.6
-8.6
-3.7
297
328
2,177
230
210
1,890
7
18
23
46
55
80
US Embassy. Inept administration and economic
controls have driven the mining sector to the brink
of bankruptcy, with tin production falling 25 per-
cent over the past year. Massive cash transfers to
government-owned enterprises, consumer subsidies,
and tax evasion caused a fiscal deficit equal to at
least 23 percent of GDP in 1984, according to US
Embassy reporting.
Government price controls have led to massive
smuggling, as well as thriving black markets.
Smuggling by Bolivian producers accounts for the
fact that in 1984 Peru's official tin production far
exceeded its reported production capacity. On the
black market, consumer staples are bought and sold
at premium prices, and a dollar fetches 12 times
the official exchange rate. The US Embassy reports
that as much as 50 percent of all economic activity
takes place outside of the formal economy.
La Paz has refused to work with bankers and the
IMF and is now in default on its commercial bank
debt. The government claims that its foreign cur-
rency reserves are exhausted. The US Embassy
Secret
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Trade balance
399.0
275.0
224.0
Exports, f.o.b.
827.7
756.8
695.0
Imports, f.o.b.
428.7
481.8
471.0
Net services and transfers
-492.8
-458.6
-469.0
reports that the current account deficit rose to $245
million in 1984, despite the suspension of interest
payments to foreign banks.
Campaign Promises
The two front-runners in the current bid for the
presidency both favor a return to more market-
oriented policies aimed at reinvigorating the econo-
my. Former President Hugo Banzer, who won the
count of valid votes by a narrow 2.7-percent margin
but is unlikely to emerge as president from the
congressional balloting, has publicly promised dras-
tic measures beginning with the deregulation of
exchange rates, prices, and interest rates. He says
he would reduce the fiscal deficit by cutting gov-
ernment employment and raising taxes, and by
selling off or shutting down inefficient government
mining companies.
obstacles.
Victor Paz Estenssoro, who probably will be select-
ed president with the support of a leftist coalition in
Congress, has yet to announce a comprehensive
economic program. According to the US Embassy,
Paz favors a more gradualist approach, promising
to move exchange rates and consumer prices to-
ward market levels over time. He has also promised
to reduce fiscal deficits, improve the management
of state enterprises, and remove current export
According to press and Embassy reports, both
candidates would promote agricultural develop-
ment. Banzer believes the government should en-
courage privately owned farms in the underdevel-
oped lowland, providing a greater incentive to
increase production. Paz, too, wants to expand
private agriculture, as well as cooperatives. The US
Embassy reports that Paz wants to attract interna-
tional assistance and provide subsidies to farmers to
convert from coca cultivation to staple crops.
According to the US Embassy, both Banzer and
Paz plan to promote foreign investment-although
neither has announced specific measures-as well
as renew talks with the IMF. Foreign investment
would provide a much-needed source of capital and
management skills, especially in the oil and gas
sector. An IMF agreement will be required to
renegotiate commercial debts, resume regular debt
payments to private banks, and reestablish trade
credit lines to revive imports already pared to the
bone.
Beyond the Candidates' Proposals
Based on the experiences of governments that have
been successful in breaking hyperinflation, we be-
lieve additional fiscal discipline would be necessary.
A currency reform accompanied by strict control
over the printing press is a prerequisite. To control
the money supply, we believe La Paz will need to
separate the Central Bank and Treasury functions.
A temporary wage and price freeze could be im-
posed to ensure public support and dampen infla-
tionary expectations. Most governments that have
been successful in breaking the inflationary spiral
have also implemented wage restraints
Beyond this, La Paz must, in our view, rein in its
state-owned enterprises. Eliminating subsidies to
state companies would help decrease the deficit and
free up credit for the more productive private
sector. Capital formation and domestic investment
would be encouraged by restoring positive real
interest rates on regulated bank accounts.
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Secret
Hyperinflation During the Weimar Republic
The German Weimar Republic endured hyperinfla-
tion for 18 months. By November 1923, prices were
increasing at a rate of 30,000 percent a month,
causing price signals to go haywire. Prudent activi-
ties-such as savings and investment-became fol-
ly, but speculation created wealth. Moreover, real
wages fell, despite indexation that merely escalat-
ed the hyperinflationary spiral.
At the end of 1923, a determined and tough-
minded Reichsbank president, Hjalmar Schacht,
implemented a series of measures that halted
inflation and stabilized the economy:
? A new currency was issued and backed by mort-
gage bonds on Germany's land and physical
assets.
? In order to regain control of the money supply,
the Central Bank refused to accept private cur-
rency issued by businesses and municipalities in
a total amount as great as that of the official
currency.
? The amount of credit outstanding was frozen,
and the subsequent shortage of money caused
hoarders to convert foreign currency into marks,
bolstering the exchange rate. The credit freeze
also led to an inflow of money that had been held
abroad.
? Government employment was cut.
? New taxes were imposed, and real income from
taxes already in place increased dramatically as
restoration of order made collection easier, and
currency stabilization ended the incentive to lag
tax payments.
? Loans of special marks backed by gold were
made on a "constant value" basis, payable in
gold marks sufficient to represent the original
value, not the depreciated value, of the loan.
Thus, debtors no longer benefited from inflation.
We believe La Paz needs to diversify exports to
restore debt-servicing capacity. Tin-the tradition-
al export mainstay-will continue to lack competi-
tiveness on the world market because of high
production costs
Natural gas sales to Argentina, now the largest
foreign exchange earner, are vulnerable because
Buenos Aires has its own gas deposits. To this end,
Bolivian gold and lithium deposits could be exploit-
ed, and natural gas sales negotiated with other
South American countries, particularly Brazil. Ac-
cording to the World Bank, uncultivated fertile
lowlands could produce large legal export crops.
Given the resounding defeat of the ruling party in
the current election, we judge that most voters-
weary of hyperinflation-would provide initial sup-
port for a thoroughgoing economic reform and
stabilization program. It is also clear from past
attempts at economic adjustment in Bolivia that
popular opposition would develop in response to
government layoffs, tax increases, and the retrac-
tion of subsidies, and could easily cause the govern-
ment to backslide in key areas.
Military and labor reaction will also be crucial.
he largely conservative
military establishment blamed Siles's vacillating
economic policies and his failure to deal firmly with
labor for causing serious social unrest. Consequent-
ly, we judge that the armed forces would probably
support stabilization measures. In contrast, the
Confederation of Bolivian Workers would push
hard to obstruct the government. Although labor
will continue to be a major obstacle, the internal
divisions within the country's largest worker's con-
federation and the public disenchantment with
excessive strikes should work to the advantage of
any new government. If the government tries to ban
strikes, however, as occurred during Banzer's first
administration, such action could lead to violence
that would undermine stabilization.
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Beyond the political challenges, economic recon- The drug sector, the only portion of the economy
struction will be difficult to put into practice. We where government does not intervene, would con-
judge there is insufficient technical talent to imple- tinue to thrive as the sole viable economic alterna-
ment thoroughgoing reforms. Moreover, the high- tive.
land Indians in the past have resisted relocation to
the lowlands-a key feature of agrarian reform.
would continue.
Without reconstruction, however, Bolivia's formal
economy will likely be paralyzed by hyperinflation
that could move into seven digits. Virtually all
economic activity would probably occur through
barter and on the black market. Savings would
become nonexistent, while external insolvency
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L___
Inadequate OPEC
Price Cuts
Energy
meet Mexican competition.
Token price reductions agreed to at last week's OPEC ministerial meeting are
unlikely to alter the market's view that the organization is impotent. The oil
ministers agreed by majority vote to cut medium-grade oil prices by 20 cents
per barrel to $27.20 and to lower heavy crude prices by 50 cents to $26. The
organization plans to meet again in October to discuss production quotas.
Industry sources of the US Embassy in Riyadh claim the Saudis do not plan to
carry out their threat to flood the market with oil unless OPEC fails in
October to agree to a new output allocation scheme. In that case, the Saudis
may be willing to risk a price war to regain their share of the market. OPEC
needed to cut heavy oil prices about $1.50 per barrel to bring them in line with
spot market rates, and Venezuela would have to lower prices even further to
ushing the Oil could flow through the new Iraqi-Saudi pipeline in September before the
L4raqi-Saudi line is fully operational, according to the US Embassy in Riyadh. Saudi
Pipeline Into Service authorities have tentatively approved the contractor's unusual plan to operate
the line manually for several months until electronic controls are installed.
Project managers believe construction will not be complete before early
November, and early export rates will be limited to about 200,000 b/d,
according to the US Embassy in London. Early use of the line will minimize
the effect of delays in completion and support Iraq's request for a higher
production quota at a special OPEC meeting proposed for October. Although
the line could be manually operated at 500,000 b/d, Riyadh may claim safety
concerns to limit the flow of Iraqi oil into a tight market. Unless other
producers cut back, even a small increase in Iraqi production would add to
price pressures.
Secret
DI IEEW 85-031
2 August 1985
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akeup at National
1Vicaraguan-Mexican
Oil Deal
The National Iranian Oil Company (NIOC) has replaced its marketing
manager because in May he used barter deals to move bulging stocks at the
Sirri transshipment terminal, according to a source of the US Embassy in
Kuwait. The new marketing chief disapproves of barter. In May the president
of NIOC stepped down amid similar criticism of sales policies. These
personnel moves reflect serious disputes within the regime over oil policy. The
Oil Ministry and NIOC prefer cash sales, but lack of hard currency has
pushed other ministries to meet import needs through barter deals. NIOC is
blamed by the Consultative Assembly (Majles) for Iran's foreign exchange
shortage but is also criticized for selling oil too cheaply when it attempts to in-
crease sales.
After sharply cutting oil deliveries to Managua over the past year and one
half, Mexico has agreed to provide up to 20 percent of its needs in 1985. Mexi-
co City had suspended oil shipments between March and June, ostensibly in
response to repayment problems but also because of political considerations.
to show solidarity with the Sandinis-
tas and maintain political leverage, Mexico City is unlikely to stop oil
shipments completely in the near future.
Brazilian Oil Find
The Brazilian National Oil Company (Petrobras) has discovered a giant
offshore oilfield in the Campos Basin,
The field is believed to contain 1-2 billion barrels of oil and may increase Bra-
zil's oil reserves by more than 50 percent. Petrobras believes the field can be
developed profitably if oil prices remain above $15-20 per barrel.
Brazil's
aggressive offshore exploration is paying off. Oil reserves have increased over
200 percent during the past five years to an estimated 3 billion barrels.
Production has risen dramatically to over 550,000 b/d during the same period.
Petrobras's experience with earlier production systems in conjunction with US
and West European deepwater technology will allow rapid development of the
field despite its depth. In addition, continued exploration in the Campos Basin
is likely to lead to more discoveries.
Secret
2 August 1985
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Secret
Europe's Eastern Europe has undertaken in recent months a resurgence in borrowing
Western Borrowing from Western commercial banks reminiscent of the loan boom of the late
Resurgence
debt to the Fund could begin growing rapidly again.
1970s. Syndicated credits to Bulgaria, Czechoslovakia, East Germany, and
Hungary have totaled nearly $2.5 billion so far in 1985-compared with just
over $3 billion in 1982-84-and have carried favorable terms. Competition
among bankers seems to be due more to high bank liquidity and a lack of bet-
ter lending opportunities elsewhere, however, than to enthusiasm over East
European economic performance and prospects. Moreover, troubled debtors,
Poland and Yugoslavia, are still shut out, and a current loan effort for
Romania faces uncertain prospects. East European borrowers apparently are
using the new bank credits largely to refinance existing commercial debt on
better terms, and not to cover payments deficits. Official and officially-
guaranteed debt is also likely to continue rising. Most Western governments
seem willing to extend more trade credits, and the East Europeans appear
ready to begin importing more capital goods typically financed with these
loans. Debt to the World Bank is likely to increase as a result of major project
loans for Hungary and Yugoslavia. Under present arrangements, the com-
bined obligations of Yugoslavia, Romania, and Hungary to the IMF should
begin to fall this year, but, if Poland joins the Fund in 1986, East European
Gross debt
Commercial
Official
85,841 80,568 81,600 80,795
59,552 52,778 48,110 42,700
21,305 21,110 26,122 30,106
Secret
2 August 1985
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Hungary-World
Bank Agreement
P and Still
eeking Credits
Advanced Technology
and Regulatory
j Concerns of
Airbus A320
25X1
Secret
2 August 1985
and a $125 million cofinanced yen loan from Japanese banks.
Hungary signed a $300 million syndicated loan in June, cofinanced with the
World Bank, and earmarked for the modernization of the petrochemical, food-
processing, and transportation industries. The interest rate was set at 0.75
percentage point over LIBOR for eight years for the commercial bank portion
and 10 years for the World Bank share. Oversubscription of the commercial
bank portion resulted in an additional $125 million credit from Western banks
with the same terms. The loan is part of an $800 million package that also in-
cludes a $250 million Eurodollar loan provided directly by the World Bank
and Canadians have yet to decide.
Poland is seeking $600-800 million in new credits from Western governments
in the wake of last month's rescheduling of about $11 billion in official debt
which became due during the period 1982-84. Its chances of receiving
significant funding soon appear slim. Earlier this year, Warsaw requested $1.7
billion in credits from Western governments, but received no firm commit-
ments. NATO sanctions on new credits to Poland are still in effect, but some
countries, including the United Kingdom and West Germany, have indicated
they will base their lending on economic rather than political grounds. Even
the economic grounds are shaky-a recent survey by US embassies found that
most countries are waiting for complete payments on the 1981 and 1982-84 re-
scheduling agreements and the signature of a 1985 accord before making a de-
cision on new loans. The Poles probably will be at least $500 million short of
meeting the minimum payment required by governments. Even if some
payments are forthcoming, the West Germans plan to grant only $30 million,
while the British and Swedes may provide only small short-term credits. The
Danes probably will not extend any new credits, while the Portuguese, Greeks,
Global and Regional Developments
Use of advanced technologies on the new 150-seat A320 presents difficulties
for airworthiness certification in Western Europe and the United States. The
"fly-by-wire" control systems, advanced cockpit technologies, and "relaxed
static stability" aerodynamics do not technically comply with published flight
standards. The new technologies, nevertheless, have the ability to provide
levels of flight safety and passenger comfort far in excess of existing
commercial aircraft. We believe the Airbus consortium has taken significant
steps to ensure the A320's certification.
future designs.
Overall, we believe that the A320 is likely
to inspire US aircraft manufacturers to apply similar advanced technologies in
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25X1
Argentina Boosts Sales Argentina has scored a major coup in the global grain market by agreeing to
in Brazili n Wheat sell Brazil 1.4 million metric tons of wheat valued at about $150 million for de-
Market livery from October 1985 through July 1986. The accord more than doubles
z
ropfan Technology
for Commercial
Aircraft
the flow of Argentine wheat to Brazil's 4 to 5 million ton-per-year import
market-the largest in Latin America-largely at the expense of higher priced
US wheat. It also will help alleviate Argentine concern over Brazil's bilateral
trade surplus that has ranged from $50 to $350 million over the past five years.
The pact reportedly stems, in part, from high-level pressure in Brasilia to
improve Brazilian-Argentine relations. This pressure apparently outweighed
the technical views of the Brazilian Wheat Board, the sole purchaser of wheat,
which has generally favored US wheat based on product quality, financing,
and shipping arrangements. 50X1-HUM
present round of competition to replace existing short haul fleets.
A recent meeting of Western government and industry aerospace propulsion
experts featured extensive discussions on propfan engines for commercial
aircraft. Although the propfan's efficiency promises savings of up to 8 percent
of direct operating cost, difficult problems remain. Present NASA programs
and industry programs in France, the United Kingdom, as well as the United
States, are seeking solutions to the excessive vibration and cabin and airport
noise associated with the large propeller-driven aircraft. Given these problems,
most experts do not see a program launch until the late 1980s with expected
airline operation in the late 1990s. This limits potential propfan sales in the
23 Secret
2 August 1985
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National Developments
Developed Countries
Japanese Japanese semiconductor manufacturers are continuing to reduce investment
Semiconductor levels for plant and equipment this fiscal year. Although the amounts noted in
Investment Declines Japanese press reports vary, the trend has been sharply downward since
L
Secret
2 August 1985
February when Japanese semiconductor makers were reporting plans to
increase their investment level 10 to 20 percent above the record fiscal 1984
levels (up to 1 trillion yen, or $4 billion by one estimate). By May planned in-
vestment levels were revised downward to 6 to 7 percent less than in FY 84.
Since then, five of the nine major manufacturers-Hitachi, Toshiba, Fujitsu,
Matsushita, and Mitsubishi-have announced planned cuts of 10 to 30
percent. Japanese
semiconductor investment should exceed reduced US levels again by about
$500 million. We believe that the decline is driven largely by the current
downturn in semiconductor sales as well as by US criticism of high Japanese
capital investment levels.
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1
London Steps Up
Fight Against
Unemployment
Spanish Austerity
To Continue
25X1 ZSoviet Oil Credit
Terms for Nicaragua
nation.
The Thatcher government took a series of steps in mid-July to bring down the
13-percent unemployment rate. In a reversal of policy, London said it would
begin to use state funds to encourage companies to shift orders to areas hit
hardest by unemployment. Employment secretary King told a gathering of
business leaders that the "on-your-bike" approach-referring to the govern-
ment's philosophy that workers should relocate to find jobs-has its limits.
London also announced proposals for broad deregulation of small businesses
and removing youth from minimum wage controls to stimulate job creation.
Thatcher can be expected to take even more active measures on unemployment
as national elections-due by mid-1988--draw nearer; polls show the public
continues to view unemployment as the most serious problem facing the
the Socialist trade union unlikely.
Spain's new Minister of Economy and Finance, Carlos Solchaga, has pledged
to adhere to the austerity program introduced in 1982 by former Minister
Boyer. In particular, Solchaga aims to further cut the budget deficit as a
percentage of GDP in an effort to reduce inflation, nudge down real interest
rates, and avoid crowding out private investment. Anticipating pressure to
accelerate government spending before next year's elections, he stated firmly
that an expansionary policy would provide only a short-lived stimulus that
would reverse the progress made thus far. Solchaga tried to strike a less
confrontational stance than his predecessor by offering to discuss economic
policy with labor and business leaders. Nevertheless, we believe Solchaga's
commitment to tough austerity-including wage moderation, pension cuts,
layoffs in declining industries, and labor reforms-makes a reconciliation with
Less Developed Countries
Soviets ascribe to keeping the Nicaraguan regime afloat.
A Soviet diplomat recently told the US Embassy in Managua that the USSR
is supplying roughly 80 percent of Nicaragua's oil needs over the next few
years on commercial terms. He claimed that virtually all economic transac-
tions with the Sandinistas are handled on nonconcessionary terms with only a
few outright donations of wheat, medicine, and vehicles. He said Managua
repaid $7 million for commercial loans last December but admitted problems
with debt service since then. Even though Moscow is trying to show
Washington it is distancing itself from the Sandinistas, it probably has not
changed the highly concessional economic relationship. Specific details are
unavailable, but Moscow appears to be conducting most of its trade, especially
oil, on a commercial basis that includes generous trade credits. Nevertheless, it
almost certainly will be unable to hold the Sandinistas to a strict repayment
schedule because of insufficient funds in Managua and the importance the
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ought Threatens Normal rainfall so far this year in regions of Ethiopia that feed the Nile River
Flow of Nile may indicate a break in the long drought and reduce the threat of a
catastrophic water crisis in Egypt in 1986 or 1987. Even so, several years of
above-normal rainfall will be required to fill Lake Nasser, Egypt's main
reservoir on the Nile. By the end of this month, the lake will have only about
one-fifth of its normal usable volume, and electric power generating capacity
at the Aswan High Dam is already down by about 20 percent, according to the
US Embassy. The Nile supplies 95 percent of Egypt's water and about 85
percent of Nile water originates in Ethiopia. Egyptian authorities are optimis-
tic that the current drought is now ending. If the drought continues through
1986, all usable storage will be gone; by 1987 power generation and irrigation
water release will have to be cut drastically.
Lebanese Economy The Lebanese economy continues to function, albeit at a very low level,
Hangs On
Secret
2 August 1985
according to the US Embassy. Industry is at a virtual standstill due to the poor
security situation, credit limitations, imported raw material shortages, and
competition from tax-free goods imported through the numerous illegal ports.
Commerce has been kept alive by continued government deficit spending via
its bloated payroll and through black-market trade with Syria. Although the
Lebanese pound has recently stabilized at approximately 16 to the dollar, its
fall from nine to the dollar at the start of the year has contributed to price
hikes of approximately 70 percent. One factor reportedly helping the economy
and the pound is the inflow of money-estimated at up to $50 million a
month-to support the Palestinians and the various Lebanese militias.
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Tunisia Sports
a Bumper Crop
M ttania's
Copper Mine
Ta is At least one of the 12 sisal plantations President Nyerere promised to
roceeding With denationalize was recently purchased by a British firm. Further sales and
f onntinnnli7nfinnc cnhcemient nrivnte nnerntinn of the sisal ectntec whnce nrnrjnctinn rlrnnned Rfl
percent under parastatal management, should inject much needed foreign
private investment into the collapsing economy. This revenue, however, would
provide only a fraction of the estimated $200 million a year the government
needs for agricultural rehabilitation. The privatization of the sisal estates, the
sale of the Moproco oilseed processing concern, and recent rental housing
reforms suggest the stage is being set for Nyerere's successor to take even
more pragmatic steps to moderate Tanzania's unproductive socialist policiesr
The government is estimating this year's cereal harvest at 1.95 million metric
tons, up a surprising 90 percent over 1984. Press reporting claims that no
durum wheat imports will be necessary through early 1986 and that limited
exports of barley may be possible for the first time in several years. If the esti-
mates hold true, the bumper crop will provide badly needed relief to Tunisia's
current account and budget deficits. Food imports cost an estimated $350
million last year and food subsidies totaled $320 million. Good weather-after
several years of drought-is the primary cause of the rebound. Nevertheless,
expansion of agricultural education programs and liberalization of government
price controls will be necessary to sustain the turnaround, measures that the
regime probably will be slow to implement.
Mauritania has begun the uphill battle to reopen its long-dormant copper mine
with the help of wealthy Arab states-Algeria is a key backer-and foreign
expertise, according to the US Embassy in Nouakchott. The project, however,
has no assured outlets for the ore and is plagued by high extraction costs and
low world prices for copper. In addition, the hasty closure in 1978 has left the
mine in a poor state of repair-tailings were dumped on the most promising
site for new open pit operations. The reopening, scheduled for 1987, would
provide 900 badly needed jobs in the drought ravaged interior. Unless world
copper demand substantially improves, reopening Mauritania's second-largest
industrial project will require substantial subsidies, something the financially
strapped government cannot provide. Moreover, use of outside management
will require a major departure from the government's preference for heavy
state control.
Poor Philippine
Z~~
reports. The government now projects that the economy will contract this
year-it declined by 3.5 percent in the first quarter-and it is searching for
ways to stimulate the economy. Virata contends that adhering to the IMF's
guidelines has kept interest rates at prohibitive levels, depressing business
activity. hopes for an economic recovery are
being dimmed by the expectation that export earnings for the year will decline
27 Secret
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Prime Minister Virata is urging the IMF to set less stringent budget and
Economic Outlook money supply targets in its loan program for the Philippines, according to press
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by 15 percent-in contrast to the 10-percent growth rate originally projected
by the IMF. Virata's lobbying effort underscores Manila's fear that a deeper
recession will further diminish the ruling party's prospects in local elections
scheduled for 1986, aggravate unrest in the increasingly militant labor
movement, and pave the way for further gains by the Communist insurgents in
the countryside. The IMF is likely to grant Manila some leeway, but only if
Manila devalues the peso and enforces long-sought reforms in the sugar and
coconut industry.
25X1
Increased Soviet
Aid to Vietnam
Recent press reports from Hanoi claim Soviet economic aid to Vietnam for the
1986-90 five-year plan will be more than double that for the current plan.
Moscow currently provides Vietnam approximately $1 billion in economic
assistance annually. These reports add detail to the late June announcement of
a new economic package for Vietnam concluded during party Secretary Le
Duan's visit to Moscow. Although we believe the claimed increase is exagger-
ated, the Soviets probably will boost economic assistance-much of it may be
earmarked for oil exploration and development in the South China Sea. Other
reports suggest Soviet interest in building an oil refinery and possibly
beginning offshore oil exploration in the Tonkin Gulf.
Manufacturing
Modernization
Ivestiya reports that robotization, one of the key programs in the current
Soviet modernization drive, has not been cost effective and must be revised. A
recent study of robot use in 52 Soviet machine and instrument manufacturing
plants shows only 9 percent of these robots are used for more complex tasks
such as welding, painting, and electroplating, while 72 percent perform simple
functions such as loading and carrying. This reflects the fact that although the
USSR now produces between 14,000 and 15,000 robots annually, more than
double US production, most Soviet industrial robots are quite rudimentary and
would probably be classed in the United States as manipulators. In the Soviet
plants studied, 91 percent of the newly introduced robots replaced only one
worker-or less-per shift. Thus, installation of such a robot saves only one
annual salary, or 4,000 rubles, but costs 40,000 to 50,000 rubles each.
Polish-Japanese Nissan has recently begun negotiations with Warsaw to construct a large
automobile facility in Poland. The plant, which would manufacture automo-
biles for both the West and East European markets, is seen as a threat by Fiat,
which traditionally has had a lock on the East European auto market
Fiat recently signed an agreement with Warsaw to provide a
million, five-year credit-one of the few Poland has been able to arrange in the
West since its financial crunch in 1981-for modernization of the plant in
Secret
? August 1985
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Secret
southern Poland that produces the Fiat 126. A Warsaw-Nissan pact-which
faces many hurdles such as financing and Poland's poor reputation for
quality-would put further pressure on the major West European auto
producers that already suffer from a serious overcapacity problem and need to
shed more than 200,000 jobs over the next five years.
rious Chinese
L__~Port Delays
Beijing has sent 850 troops to help ease a backlog of more than 500 ships at
Dalian, Qingdao, and Shanghai. The military also will provide wharves,
warehouses, and vehicles to transport and store cargo. Last month Beijing
began confiscating cargoes that were not picked up on schedule. A sharp
increase in trade has intensified the usual delays caused by China's antiquated
and limited port facilities. China has less than 400 berths, and the 5,300 ships
that called at Chinese ports during the first half of 1985 represented a 29-per-
cent increase over the same period last year. Beijing has accelerated plans to
build additional port facilities and associated infrastructure. Meanwhile,
delays of three months or longer may discourage some foreign firms from
trading with China.
Sino-Japanese The latest session of the Bilateral Investment Treaty talks ended with three
Investment major issues unresolved-treatment of investment, free transfer of assets, and
Negotiations Recessed dispute settlement.
China traded in the first half of 1985. This purchase may be part of a broader
effort by China to stockpile strategic metals, or, the Chinese may intend to sell
silver on the domestic market, as part of a battle to soak up excess currency in
circulation and restrain inflation. In the past, China's activity in the silt' r
market has appeared speculative
29 Secret
2 August 1985
negotiating a similar treaty.
(Another round of talks may be
scheduled for this fall. Nakasone has promised Beijing an accord by the end of
this year, and the Japanese seem willing to grant concessions despite Chinese
intransigence. If a Sino-Japanese treaty is signed within the next few months,
China probably will expect the United States to become more interested in
ina's Activity in China bought 20 million troy ounces of silver bullion in early July 1985-
the Silver Market worth about US $123 million. This purchase is larger than the total volume
Sanitized Copy Approved for Release 2011/03/07: CIA-RDP97-00771 R000807640001-7
 Sanitized Copy Approved for Release 2011/03/07: CIA-RDP97-00771 R000807640001-7
Secret
Secret
Sanitized Copy Approved for Release 2011/03/07: CIA-RDP97-00771 R000807640001-7