1983 FORECASTS FOR AFRICA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00528R000100090010-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 63
• Document Creation Date: December 22, 2016
• Document Release Date: August 19, 2009
• Sequence Number: 10
• Publication Date: January 21, 1983
• Content Type: MEMO

--a4,.A
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MEMORANDUM FOR: NIOs, AG
Attached is a complete set of the
NIOs' forecasts for 1983 for your
information.
FOR M
5-75 101 ED USE IT,DNS PREVIOUS
Date 28 January 1983
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 National Intelligence Council
THE DIRECTOR OF CENTRAL INTELLIGENCE
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
THROUGH : Chairman, National Intelligence Council
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NIC #357-83
21 January 1983
Acting National. Intelligence Officer for Africa
1. Africa is such a crazy quilt of countries and problems that
predictions about future developments there are made at some risk.
Nevertheless, there are some general trends that have been developing over the
past year or so. that will continue and perhaps sharpen in 1983: They are:
-- The economic outlook for Africa is gloomy. Even the countries
with rich resources--there are very few in Africa--will be
constantly grappling with growing external debt burdens with no
assurances that any arrangements that are concluded will markedly
help them.
-- Instability rather than stability will prevail.
-- The prospect of chronic instability will keep the Soviets and
their friends actively involved at relatively little cost to
themselves.
-- Even though most Africans know that the Soviets do not provide
meaningful economic and financial aid, they will often try to
pressure the US and other Western donors for not doing as much as
"Moscow does for its friends." 07
-- The Africans will continue to mistakenly assume that the US has
great influence with the IMF. When the IMF proposes tough
austerity measures on the potential recipients of its loans, the
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US will be constantly pressured to intercede with the IMF to ease
conditions for the assistance because local leaders fear that IMF
remedies are prescriptions for instability and threaten their
rule. When we don't, the US will be faulted and bilateral
relations will occasionally be strained.
-- The Libyans will continue to be meddlesome, but, with few
exceptions, most African leaders have become more alert to
Qadhafi's machinations and the Libyans will not have much success
in spreading their influence throughout black Africa.
2. Expected Developments in Selected Countries
Nigeria: This will be a troubled year for Nigeria because of the
difficult economic situation and the potential effect it will have on the
political fabric of the country as the civilian government moves toward
national elections later in 1983. Nigeria's so called "democratic" system
will be severely tested. There will be episodes of violence that erupt
unexpectedly and, given Nigeria's history of military coups, could prompt
another. President Shagari should be reelected. If he is, this will be good
for Nigeria and Africa. But it will be achieved at high economic cost. As
oil revenues either stagnate or drop further--a $1 drop in the price of a
barrel of oil translates into a $500 million loss in revenue--hard currency
allocations will be increasingly used for the purchase of consumer goods--
rather than meaningful economic development or diversification--in order to
prevent shortages of essential commodities during the almost year long
electoral process.
I also anticipate periodic frictions in US-Nigerian relations, but
that our bilateral relations will remain good. Nigerian leaders may become
increasingly concerned about US willingness to assist them in the current
economic crisis and will continue to press us to bail them out by buying oil
for our strategic petroleum reserve. (We have shown no interest in this when
they have raised it before.) The Nigerians also unrealistically expect that
the US will provide emergency financial assistance on the scale of that
provided to Mexico in 1982.
Horn of Africa: I expect no lessening of tensions in the Horn of
Africa. Even though the Aden Pact has not lived up to our worse fears, Libya
and Ethiopia have persisted in their attempts to undermine Presidents Nimeiri
and Siad and will continue to do so. Both Siad and Nimeiri are vulnerable and
I rate their chances of remaining in power at about even. If they go, it will
be for economic and other reasons related to the internal situation in their
respective countries and will not be the direct result of Libyan and Ethiopian
subversion. Because of the constraints on US military and financial
resources, it will be increasingly difficult to respond to Siad and Nimeiri
with meaningful assistance.
Mengistu faces a number of secessionist challenges from rebels in
various sections of the country. The need for large amounts of arms to retain
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control of these troubled areas--and also to confront the Somalis--will
further cement Mengistu's ties to the Soviets despite periodic strains over
the cost and quality of the Soviet military aid program.
Zaire: There is a better than even chance that President Mobutu will
remain in power throughout the year. Mobutu is not likely, however, to
implement the reforms needed to rid Zaire of its institutionalized corruption
and mismanagement and to revive the country's long-stagnant economy. Although
popular dissatisfaction with Mobutu is widespread, Zairians have long been
accustomed to severe hardship and Mobutu has adroitly blocked the emergence of
any leader or organization around which opposition might coalesce. Mobutu's
excessive expectations for assistance are likely to prompt him to place
increasing pressure on the US--through cajolery or threats--for economic
aid. He will not provoke any permanent damage to Zairian-US relations, but
there are likely to be occasional difficult periods.
Southern Africa: Like 1982, southern Africa will be marked by
growing violence and instability highlighted by Soviet involvement and
aggressive South African destabilization efforts against its neighbors to
counter perceived Communist threats and to blunt cross-border terrorism by
black nationalists.
-- South African support to UNITA will continue and likely increase.
-- The MPLA will be unable to reach a reconciliation with UNITA, a
move--if it occurred--that would enable the Luanda government to
press the Cubans to withdraw.
-- Without the Cuban issue resolved, South Africa will not agree to
an internationally-sanctioned settlement of the Namibian problem.
-- Negotiations on Namibia will drag on inconclusively. In the
absence of a settlement, the military struggle in Namibia and
southern Angola will go on.
-- Turmoil will continue in Mozambique. President Machel will
explore options--better relations with the US, a dialogue with
South Africa--that he hopes will enable him to avoid calling for
Communist assistance including the Cubans. He will avoid making
such a request as long as possible because he fears South African
military retaliation. He ma
y well be
able to get throw h this
year without doina
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1 cannot rue out 25X1
the unexpected and we could
see a grea
ter Soviet and Cuban
involvement with little or no advanced warning.
In South Africa itself, a continuing economic slump in which blacks
have been the hardest hit and an increasingly militant black labor movement
could combine to end five years of relative calm in black-white relations and
make 1983 a difficult and perhaps violent year. Rapidly rising unemployment
and continued high inflation will create additional burdens for blacks. The
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government, however, is likely to continue to tailor its short- and long-term
economic policies to the immediate interests of whites. As the economic slump
continues, blacks could well become increasingly restive, demonstrating their
discontent in frequent but small-scale protests, which could be exploited by
militant black labor leaders, particularly if the government in response to a
white backlash, is unduly repressive. Under such circumstances, escalating
violence cannot be ruled out. Constitutional changes designed to give Asians
and Coloreds some participation in the political process are also likely to
increase black resentment.
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18 January 1983
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
THROUGH . Chairman, National Intelligence Council
FROM . Harold P. Ford
National Intelligence Officer At Large
SUBJECT : World Prospects for 1983
I confine my Prospects to certain key situations which have a good chance
of developing during 1983 and, if so, will impact seriously on US interests:
1. Western European countries will become more troubled, as will their
relations with the United States -- and resistance to INF deployment will rise
substantially.
-- This will particularly mark West Germany, where new, less pro-US
elements of the SPD will increase their influence and perhaps come to
office.
-- Meanwhile, in the FRG and elsewhere in Western Europe we, will see more
in the way of depressed economies, unemployment, and political
disaffection among younger elements of the population.
-- Queasiness will grow over the prospects and possible consequences of
proceeding with INF deployment.
-- There will be continuing uneasiness concerning the constancy of US
policies.
-- There will be an increase in receptivity among West Europeans to
Soviet and pro-Soviet efforts to exploit these situations.
2. The central focus of Soviet diplomacy will be to try to destabilize
Western European societies and divide them from the US -- by a mixture of
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means: new inducements, "reasonableness," and veiled threats. Soviet
purposes:
-- To negate, lessen, or delay INF deployment.
-- To capitalize on W.E. vulnerabilities.
-- To portray the US as the recalcitrant party.
-- To bring to bear formidable pro-Soviet assets and instruments in W.E.
3. World-wide, the Soviets will conduct a continuing program of propaganda
and ofseeming y reasonable overtures concerning various arms control
questions -- if these do not slow down INF, or do not lead to substantial new
arms control positions on the part of the US, our policymakers should be a ert
to the possibility that An ropov will then switch to a tou h new course which
seeks to agitate US/Western soft spots in various parts of the world.
4. It is likely that the Soviets will in fact take some "analogous measures"
in the Western Hemisphere, in the event of INF deployment.
a. At a minimum, the Soviets would deploy SLCM's aboard subs off US
coasts.
b. Construction and some deployment of additional weapons, short of
nuclear-tipped IRBMs or GLCMs, would probably occur in Cuba.
c. Though dependent in part on US moves at the time, there would be a
definite chance (30 percent?) that the Soviets would attempt to introduce
IRBMs or GLCMs into Cuba -- but not into Nicaragua or Grenada.
5. The US will face increasing difficulties because of continuin disarray in
the world's financial an commercia structures -- which will in turn be
importantly affectedby continuing US recession.
-- There will be more cases of default abroad -- possibly even some
instances of debtors' revolt.
-- According heightened pressures on US banking houses will be
registered.
There will be increasing manifestations of protectionism, world-wide.
-- Many LDCs will be unable to maintain import levels.
-- In some instances austerity measures will provoke political
instability.
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6. Assuming that general US policies do not change in the meantime, Israel's
obduracy and occasiona unilateral initiatives will continue to undercut US
influence in the Near East and elsewhere.
-- Israeli leadership will continue to assume that no American
administration will jeopardize such benefits as the US derives from
its close ties to Israel by sustaining markedly tougher policies
towards it.
-- This will apply even if, as seems likely, political instability within
Israel grows -- and a post-Begin government possibly appears.
7. The chances are better than even that the Israelis will attempt to strike
the SA-5 emplacements in Syria, or otherwise prevent their activation.
-- Should this occur, this could lead to the most acute Near East crisis
in some time.
-- The Soviet reaction is unknowable at this time; it would depend on the
timing and nature of the Israeli action and on Moscow's view of the US.
stance at that time.
-- A major military response of some kind by the Soviets would not
necessarily be forthcoming, however, since a number of considerations
would continue to constrain Soviet options.
8. Iran will become a focus of increased US concern.
-- Iran will probably wear down Iraq, or at least begin to emerge from
the long stalemated war in better relative condition than Iraq.
- Iranian fundamentalism will continue to thrive, even in the event of
the death or departure of Khomeini.
-- Iranian fundamentalist influence will get an enormous boost if Iranian
pressures contribute to an overturning of Saddam in Baghdad, and
especially so if he should be replaced by a fundamentalist Iraqi regime of
some sort.
-- The USSR under Andropov will meanwhile follow a more subtle course
toward Iran than it has previously -- one which seeks to keep the Afghan
war from spilling over into Iran, to bank on Iranian elements other than
the Tudeh or overt Communists, and to play for the long-run splintering of
Iran.
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9. Pro-Soviet and pro-Cuban influence/presence in Central America and the
Caribbean Basin will increase.
-- Sandinista Nicaragua will continue to grow in relative power in the
area, and -- with Cuban, Soviet, and other support -- will continue to
assist insurrections there. Anti-Sandinista efforts will suffer from
identification with the Somoza past.
-- The scene will probably not improve in El Salvador and may deteriorate
-- the result of guerrilla pressures and government/military
factionalism and fecklessness.
-- The Cubans and Soviets will continue to nail down their positions in
Grenada and Suriname, and to look to St. Lucia and elsewhere in the
area for further such inroads.
10. The USSR and the PRC will improve their relationship.
-- The key question is, of course, how much? Perhaps an unknowable.
There.are numerous pushing and pulling considerations on both sides, there
are differences on these questions within both leaderships, and there will
be periods of hot and cold ahead as the two sides probe the other's asking
prices, etc. Also, China will not want to cut itself off from a US
connection.
-- There nonetheless is an even chance that within a year or so there
will be measurable movement toward improved relations between the USSR and
the PRC. Not only in trade., cultural exchanges, and atmospherics, but
also in:
o Some drawdown of troop strengths along Sino-Soviet and Sino-
Mongolian frontiers.
o Some Soviet restraint on Vietnam, in return for some Chinese
military drawdown along Vietnam's northern border.
-- Such a degree of Sino-Soviet detente should not occasion great
surprise or panic abroad. Many powerful forces will continue to make the
USSR and the PRC wary neighbors and adversaries.
11. The chief bright spots for US policy in the world will include:
-- Japanese policies under Nakasone.
FRG policies if the CDU remains in power. (It may not.)
Reactions against Qadhaffi in Africa and the Near East.
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-- The opportunities afforded the US to improve its position in the Arab
world.
-- The probable continuing exclusion of the USSR from mainstream events
in the Near East.
-- Reactions against the USSR because of Afghanistan.
-- Domestic economic constraints on Soviet policies.
-- Soviet heavy-handedness in many of its dealings with LDCs.
-- Concern among LDCs not to permit the USSR or its associates to gain
too great a degree of influence in their countries.
-- Some long shots:
o dos Santos succeeds in holding off Cuban and Soviet pressures in
Angola.
o Certain leaders expand hesitant efforts to date to improve
relations with the West (e.g., in India, Congo, Guinea, and Benin).
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NIC #0476-83
National Intelligence Council 18 January 1983
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
THROUGH: Chairman, National Intelligence Council
FROM: Lincoln Gordon, NIO at Large
SUBJECT: Perspectives for 1983--Some Politico-
Economic Interdependencies
1. As an NIO-at-Large without specific geographical or
functional responsibility, I did not expect to engage in the
1983 forecasting game beyond making a few suggestions to
colleagues. The dismal state of the world economy and uncer-
tain prospects for early and sustained recovery lead me to
two items of political speculation which you may find of
interest and which are not included in the contributions of
others. The items are not high probability forecasts, but
they are much more than outside contingencies. They bear
directly on US interests, and their likelihood might be
lessened by timely US initiatives.
2. LDC Indebtedness and Brazilian Radicalization.
Maurice Erns memorandum of 23 December mentions
"a debtors' revolt led by Brazil" as a possible major shock
to the international financial order. In the absence of a
creditor-led initiative to restructure the debt burden toward
longer maturities and lower interest rates, I see serious
danger of a Brazilian lurch to a kind of populist nationalism
systematically opposed to US foreign policies and hostile to
US and other Western direct investors. The self-imposed
austerity program stretches the limits of popular tolerance
at a time of political liberalization, and the US and other
"economic imperialists" are a convenient scapegoat for rally-
ing an alliance of Brazilian businessmen seeking protection
from both trade and investment competition, chauvinistic
military officers, skilled workers suffering real wage losses
and the threat of unemployment, and the traditional
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marginalized unskilled workers and peasants (perhaps
politically mobilized by the Church). Fuzzy-minded followers
of anti-capitalist "dependency" theory are well represented
in the opposition parties which won the most important State
and Congressional elections last November.
This scenario does not point toward a Brazilian Cuba or
Nicaragua, but the regime would be systematically unfriendly
to the United States and a leader in Third World-"Non-Aligned"
movements against Western interests. It would be susceptible
to Soviet manipulation. It would stifle further economic
development for at least several years and cut off the
promising prospect of Brazil's "graduation" into full First
World status. In addition to leading a "debtor's revolt," it
might try to organize a protected "Southern" economic bloc.
3. A British Labour Party Victory? The conventional
wisdom foresees a clear Thatcher victory if she calls a
British general election next fall. I am impressed by the
volatility of the British electorate and the crucial impor-
tance of economic conditions to the outcome. By election
time, the Falklands victory will have lost its glamor (unless
there is a second installment). The other critical factor is
the disarray within the Labour Party, but that may be papered
over. There are encouraging signs that the Thatcher economic
medicine of the last three years is finally producing
positive results. My contingency scenario envisages a
moderately expansionary government budget and some signs of
growth and reemployment in the early summer, then cut off by
the inability to win export markets, new pressures on the
balance of payments, and another installment of "STOP" in
the UK Stop-Go sequence of the last 25 years.
,1.
Lincoln Gordon
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SUBJECT: Perspectives for 1983--Some Politico-Economic
Interdependencies
DCI/NIO/AL:LGordon/tb (18 Jan 1983)
Distribution:
Original -
DCI
1 -
DDCI
1 -
ExDir
1 -
SA/IA
1 -
ER
1 - DDI Registry
1 -
C/NIC
1 -
VC/NIC
1 -
NIO/Econ
1 -
NIO/LA
1 -
NIO/WE
1 -
NIO/AL
(Ford)
1 -
NIO/AL
(Heymann)
2 -
NIO/AL
(Gordon)
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CONFIDENTIAL
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THE DIRECTOR OF CENTRAL INTELLIGENCE
National Intelligence Council
NIC 0500-83
18 January 1983
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
THROUGH : Chairman, National Intelligence Council
FROM : Hans Heymann, Jr.
National Intelligence Officer at Large
SUBJECT : Nuclear Proliferation - 1983 Forecast
1. The Context: I assert in this forecast that the economic
conditions and market forces that will be with us in 1983 and beyond will
have a significant impact on the rate at which Third World countries will
be able to pursue the nuclear weapons option. Lest I be accused of
adopting a narrow economic-deterministic view of the world, let me
acknowledge at the outset that I recognize that a nation's "propensity to-
proliferate" is basically a function of political and psychological
considerations--how possession of nuclear weapons would contribute to (or
detract from) the nation's security and what membership in the "nuclear
club" would do for its prestige. Where such security or prestige
considerations exert an irresistable push--as they do in Pakistan--economic
constraints will somehow be overcome. But in most countries of potential
proliferation concern--Argentina, Brazil, Egypt, South Africa--the
political and psychological pressures are not overarching. There the issue
of whether the requisite technology is affordable and accessible matters a
good deal.
2. The Forecast: It is in this context that I call attention to two
trends that have been visible for some time but that will come into muc1
sharper focus in 1983. They will importantly affect--though in opposite
directions--the ability of countries to pursue the nuclear weapons option.
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(1) Nuclear Energy Retrenchment and Economic Stringencies --
The first trend--which will work to slow the proliferation
momentum--is marked by the sharp cutback that has occurred in nuclear
power programs worldwide. The cutback is a consequence of the changed
energy outlook (including the protracted oil glut), the recession-
induced reduction in electricity demand, the pinch of high capital
costs, severe economic distress and unprecedented levels of foreign
indebtedness in most potential proliferating countries. These factors
operate to limit severely the economic attractions and the financial-
feasibility of acquiring a complete, independent fuel cycle. As a
result, it will be far more difficult now for most Third World
countries to argue credibly for a comprehensive nuclear program on
grounds of "long-term energy independence" and to use such programs as
a cover for a nuclear weapons effort.
This, of course, will not foreclose the possibility that some
countries may pursue the weapons option directly (by clandestine
diversions or openly) but developing countries have hestitated to
adopt such a course, since it would alienate the supplier country
support that almost all of them will require for many years to come.
(2) An Increasingly Frenetic International Nuclear Marketplace --
The second trend--which may work to accelerate the proliferation
momentum--is an outgrowth of the first. It takes the form of an
increasingly fierce competition among the established nuclear
suppliers for a dwindling market and the progressive emergence of an
international "grey market" in nuclear technology and equipment. This
"grey market" involves newly emerging supplier countries functioning
outside of the safeguards regime and small nuclear vendor firms able
to circumvent or operate beyond the reach of established export
controls.
There is no need to dwell on the consequences of the dramatic
decline of the power reactor market for most of the "big six" supplier
countries--US, USSR, France, West Germany, Canada and Sweden. (US
reactor vendors have not received a single domestic reactor order
since 1978 and none for export since 1979. No less than 95 reactor
orders have been cancelled and numerous others delayed. Some other
countries are a little better off, but the entire industry is dogged
by enormous overcapacity.) The result is a frenetic competition for
the dozen or so reactor export orders that are still in prospect. In
this.environment, it will be increasingly difficult to maintain
safeguards and Supplier Guidelines discipline.
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The problem is aggravated by the accession of an ever- lengthening
list of LOCs into the nuclear equipment and materials export market,
some--like Argentina, Brazil, and China--operating entirely outside
the safeguards regime.
Finally, and most problematic for the nonproliferation effort, we
see the steady expansion, especially in Western Europe, of a network
of eager vendors and brokers increasingly experienced in packaging
sophisticated nuclear components for unrestricted sale to would-be
proliferators. The existing export control system of the major
supplier nations was never designed to police this kind of activity,
nor is there the political will among these nations to intervene
forcefully in such market activity.
How the two trends described above will net out in effect is, of
course, difficult to predict. My own guess is that the constraints
imposed by the first trend will impact more powerfully on
proliferation ambitions than the enhanced access to nuclear technology
provided by the second.
3. Troublesome Country Problems: For 1983, there is only one
country--Pakistan--whose proliferation activities will continue to be
intensely troublesome and from which several other country problems
radiate. While Zia will try to be cautious about his continued weapons-
related activities, he will not be able to avoid further raising the
anxieties of those who feel threatened by his actions. Most prominent
among these are:
India, whose current efforts to keep the historic Indo-
Pakistan hi ostility within bounds will be sorely tried. The
chances are that Pakistani progress towards an explosive
capability will remain sufficiently ambiguous this year, to
permit Indira Gandhi to put off the tough choices she will
eventually face for coping with the impending Pakistani
nuclear threat to India's security.
Israel's perception of the Pakistani threat is alread
far more alarmist than India's.
Nevertheless, given Israel's more
immediate security problems closer to home (Soviet SA-5s,
controversial West Bank settlements and other politically
divisive domestic problems) the Israeli leadership will want
to avoid taking the kind of provocative action against the
Pakistani facilities this year.
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THE DIRECTOR OF CENTRAL INTELLIGENCE
National Intelligence Council
NIC #674-83
25 January 1983
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
VIA : Chairman, National Intelligence Council
Assistant Natonal Intelligence Officer for East Asia
SUBJECT : Prospects for 1983 in East Asia and the Pacific
1. This region should remain relatively stable in 1983. Separate from
US bilateral relations with the individual countries of the region, but
impacting on them are three broad areas of activity:
-- Leadership changes. Japan's Nakasone is not likely to make
significant changes in policy toward the US. The possibility of a
return to Labor Party rule in Australia and New Zealand, however,
could result in decreasing military cooperation with the US. The
leadership of China, Taiwan, North Korea, Vietnam and Burma is in
transition with continuity of existing policy uncertain for years
beyond 1983.
-- Sino-Soviet relations. The dialogue between Chinese and Soviet
leaders could lead to improved trade relations and possibly to some
reduction in forces along the border, but major differences are
likely to persist over Soviet occupation of Afghanistan, Chinese
support for resistance forces in Kampuchea, and other issues. Should
the results of this dialogue alter Moscow or Beijing's policies
toward Korea or Vietnam new problems or opportunities might arise for
the US.
-- Economic performance. East Asia will continue to grow faster than
other Third World areas, though Indochina and the Philippines are
notable exceptions. North Korea's foreign debt problems will not be
resolved. Japan's trade balances and surplus in current accounts
will continue to cause friction. Chinese economic growth will be
erratic and the US role in it, especially in petroleum, will be
significant. Technology transfer will be an issue of increasing
importance: US to China; Japan to the USSR, China and North Korea;
and Japan to the US and China.
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-- Military trends. Most military trends in East Asia will remain
adverse, as growth and modernization in the Soviet Far East, North
Korea, and Vietnam continues to outpace military programs in
neighboring countries. The North Korean military buildup and two-
front war strategy will remain the most dangerous threat in the
region. Japanese military capabilities will continue to fall short
of US expectations. The Soviets will continue to have difficulties
in trying to derive political influence from military growth.
3. Country Prospects:
A. Japan: There will be no significant policy changes by the
Japanese Government on subjects of interest to the US in 1983.
Incremental increases in Japanese defense spending will take
place in an atmosphere of more frank public discussion of the
Soviet threat. Modest moves to further open the Japanese market
to US exports of manufactures will be accompanied by a more
realistic open dialogue on these difficult questions. As
exemplified by his quick trip to Seoul, Nakasone will take
dramatic gestures to improve relations with neighbors. While
much of this will complement US efforts, we cannot assume that
all of it will do so.
B. China: For the US, the key element in PRC activities will be the
nature and extent of the Sino-Soviet dialogue. For the PRC, the
single most important factor will be Washington's treatment of US
unofficial relations with Taiwan. We anticipate continued modest
improvement in Sino-Soviet relations, though without the
development of cooperation or intimacy in areas of concern to the
US. We do not envisage a Sino-Soviet detente leading to parallel
activity against US interests in Kampuchea, Vietnam or Korea.
While there will continue to be difficulties in Sino-American
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trade--technology transfer, textile exports, etc.--the economic
ties will continue to expand in such areas as petroleum
exploration. Sino-Pakistan relations will retain their symbolic
significance, while Sino-Indian ties will continue to normalize,
though without a border settlement.
C. Philippines: We do not expect the deteriorating economy and
growing itical opposition to President Marcos to adversely
affect our military base review negotiations or other US
interests there.
D. Australia-New Zealand: Both countries will have national
elections in 1983 with a return to power of Labor Governments by
no means ruled out. Relations with the US would be election
issues in both countries, though basic military security ties
would not be in danger.
E. Kampuchea: Absent changes in Chinese or Soviet policies, we see
little likelihood of major alterations in the continued low level
insurgency.
F. Thailand: The history of replacement of leadership through
relatively bloodless coups rather than elections, suggests a
change of government in this manner is likely. Relations with
the US are unlikely to be an issue nor would they be affected.
G. Republic of Korea: President Chun Doo Hwan's quest for
legitimacy remains unfulfilled, complicated by exogenous economic
factors. His increasing isolaton and imperial style of rule
widens the gap between his government and many Koreans.
Relations with the US are more formal than in the past.
H. North Korea: Severe economic difficulties have not produced any
lessened investment in building up Pyongyang's military
machine. However, Beijing and Moscow obviously lack enthusiasm
for any North Korean adventurism; the uneasy peace on the Korean
peninsula should continue.
r?~
Herbert Levin
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THE DIRECTOR OF CENTRAL INTELLIGENCE
National Intelligence Council
NIC #10431-82
23 December 1982
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
THROUGH: Chairman, National Intelligence Council
FROM: Maurice C. Ernst, NIO/Economics
SUBJECT: Perspectives for 1983: The Free World Economy
Attached are my thoughts on the trends and contingencies in the global
economy in 1983. Last year I accepted the conventional view, and was dead
wrong. This time the uncertainties seem even greater and the world economy
more vulnerable to shocks. As a bottom line, I would give high odds on a
continued economic slide in the next several months, medium odds on the
start of a recovery later in the year, and low, but not insignificant odds
on a severe drop at some time in 1983.
Maurce C. Ernst
Attachment,
As stated
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NIC #10431-82
23 December 1982
SUBJECT: Perspectives for 1983: The Free World Economy
DCI/NIC/NIO/Econ:M.Ernst:bha(23 Dec 82)
Dist:
Orig - DCI
1 - DDCI
1 - ExDir
1 - SA/IA
1 - ER
1 - DDI Registry
1 - C/NIC
1 - VC/NIC
2 - NIO/Econ
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Perspectives for 1983: The Free World Economy
Conventional wisdom sees the global economy beginning to recover from
the current recession within six months or so, the same as last year's
estimate, but with a year's delay. Should large additional delays occur,
the risks of severe protectionist measures and of a backlash from LDC
debtors will increase substantially.
The world economy is still sliding downward. Industrial production
continues to fall in the US and has now declined for three successive
quarters in Western Europe.. World trade began declining in the latter part
of 1981; the decline accelerated to a rate of 11 percent in the third
quarter of this year, and fourth quarter results are likely to be even
worse, reflecting the deepening recession in several European countries and
in major LDCs such as Mexico and Brazil.
World economic recovery will probably have to begin in the United
States, where real personal incomes are rising slowly and housing starts
are up, while inventories and unfilled orders are falling. The European
business cycle seems to be lagging ours; unemployment, even though as high
as in the US, appears to be politically more tolerable in Western Europe
because of the generosity of social insurance coverage; public sector defi-
cits are relatively even larger than in the US; and in most European
countries there is even greater aversion to adopting potentially inflation-
ary monetary policies.
The non-OECD countries are a major drag on the OECD economies, instead
of the source of stimulus they were during the 1975 recession. A dramatic
decline in commodity prices, coupled with the sharp decline in
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international bank lending stimulated by the debt crises in Poland,
Argentina, and Mexico, are forcing large cuts in both LDC and East European
imports. Many of the LDCs have been forced into severe austerity.
Mexico's monthly imports are running about one-half of last year's rate.
Brazilian imports are falling and.further substantial cuts will be neces-
sary. Other LDCs in financial difficulties, which include most countries
in Latin America and Africa, either have already or will soon have to make
import cuts in order to meet foreign debt obligations despite reduced ex-
port earnings. Import growth also has ceased in OPEC countries, reflecting
the softness of the oil market and the shift of most OPEC countries from
surplus to deficit in their balance of payments. East European countries
have cut their imports from the West by 15 to 20 percent and no near-term
recovery is feasible, because of the large debt overhang, not only in
Poland, but also in East Germany, Hungary, Romania, and Yugoslavia.
Although Western governments and the IMF have been providing substan-
tial additional financing to countries in major financial difficulty,
especially Mexico, Brazil, and Argentina, substantial net new bank credit
will be needed to prevent a further contraction in imports during 1983.
The major banks appear to be making the necessary.comnitments, but on con-
dition that the recipient implement rigorous austerity programs negotiated
with the IMF.. These programs have not yet had much impact on most people
or firms, and they have yet to be subjected to domestic political processes
in the subject countries. As their impact on the employment and real in-
comes of various social groups become evident, political resistance to
these programs is likely to grow and the chances of substantial slippage in
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the programs will increase. Such slippage could trigger new financial
crises, force even more debt reschedulings, and further curtail new bank
credit. Other factors which are likely to force further cuts in the im-
ports of the developing countries in the absence of Western economic
recovery are:
o LDC export earnings would continue to slide even if commodity
market prices level off, as longer term contracts expire.
o Many LDCs would no longer be able to draw down foreign
exchange reserves as these reserves have fallen to danger-
ously low levels.
o Commercial lending to LDCs not yet facing major financial
difficulties would. probably slow further.
In the industrial countries, industrial production could continue to
slide because of falling export demand and a continuing drop in business
investment. The decline in LDC imports forced by financial troubles is
already costing the US nearly one percent of GNP, and perhaps one-half of
one percent in other OECD countries. Social insurance, however, is a
strong stabilizer for personal incomes, and greatly diminishes the possi-
bility of a downward economic spiral.
.The global economy could be further slowed by financial instability.
Large-scale LOC reschedulings are reducing bank liquidity while pressure
from regulatory authorities may force banks to make longer provisions for
loan losses, thereby cutting into profits. Many domestic firms, as well as
foreign governments, are in serious financial trouble. And interest rate
deregulation in the US will further cut into bank-profit margins. With
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many banks in a weakened position, a variety of shocks could trigger major
liquidity crises, and threaten widespread insolvency. Some of the most
worrisome, if unlikely, candidates for major shocks are:
o Default on debt obligations in Mexico, Nigeria, and perhaps
Venezuela, should the soft oil market lead to a large abso-
lute decline in oil prices.
o A debtors' revolt led by Brazil, with demands for a one or
two year moratorium on interest payments.
Even if major financial shocks, such as these, should occur, the
chances are high that prompt Central Bank action would keep all but a small
number of commercial banks operating. Consequently a financial panic--
taking the form of a generalized contraction of credit--will probably be
avoided or, once started, quickly halted. But there is a significant pos-
sibility of financial disruptions that would boost demand for liquid
assets, push up interest rates, and further curtail lending to LDCs and
other weak borrowers.
A continued economic recession would have a possible silver lining--it
could keep oil demand so low as to occasion the collapse of OPEC and a
large decline in oil prices. Such a price decline would stimulate economic
activity in the industrial West, slow inflation and ease the payments prob-
lems of many countries. But it would also create severe problems for the
oil exporting countries, forcing the wealthy ones, like Saudi Arabia, to
curtail foreign assistance and the use of foreign labor, and pushing the
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poorer ones, like Mexico, to the brink of debt default. Energy markets
would be chaotic and energy investment plans severely disrupted.
On the upside, the economic upturn, when it comes, may be more rapid
than generally expected. Most forecasters not. only miss turning points in
the business cycle, but also understate both the extent of the decline and
the speed of the upturn. Once the recovery begins, the prices of some
commodities may spurt because of the low level of inventories, and LDC
earnings will rise.
The fallout of a continued and perhaps increasingly severe economic
recession would be felt in a variety of ways. In the industrial West,
pressure to reflate economies, even at the risk of rekindling rapid infla-
tion in the longer term, will become even stronger. In the LDCs, painful
austerity will generate a political struggle over economic policies; in
some countries the struggle will take the form of highly nationalistic,
populist reactions against foreign businessmen, bankers and the United
States. The necessity of having to generate large trade surpluses by cut-
ting imports in order to pay interest on debt may trigger a debtors'
revolt, which could spread quickly. The political stability of some LDCs,
notably Mexico, will be severely tested, although economic factors alone
are unlikely to bring Communist or extreme left governments to power in any
country.
Even if the recession does not persist much longer, protectionist
measures will multiply and affect a growing part of world trade, often
taking the form of de facto cartelization of major industries, such as
steel and textiles. Unemployment will remain high even with economic
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recovery; many basic industries seem destined for long-term stagnation; a
lasting or worsening recession would make things even worse. The severe
erosion of US political support for free trade, threatens to remove what
was the greatest barrier to cartelization. Most LDCs are most certain to
respond to enforced austerity by imposing quantitative restrictions on
their imports, as well as through devaluation. They are also likely to
subsidize exports in one way or another and engage in as much barter trade
as possible. West European countries have too much stake in intra-European
trade to reimpose many barriers, but many feel little compunction about
restricting imports from the outside, especially Japan and the Far Eastern
NICs. US trade would be damaged by this process, both directly and
indirectly.
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in a few days)
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National Intelligence Council
NIC #0314-83
13 January 1983
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
VIA : Chairman, National Intelligence Council
FROM
Acting NIO for General Purpose Forces
SUBJECT : 1983 Forecasts - NIO for General Purpose Forces
1. The attached point paper highlights key military developments
expected in 1983 (or beyond). They are divided into two major areas:
elaborate on any of these that interest you.
I. Expected Major Trends in Soviet General Purpose Forces
in 1983 (or beyond)
.
II. Possible Significant Military Developments Worldwide in
1983 (or beyond) that Could Lead to Regional Desta ilization.
2. You will note that many of the regional forecasts cover conflict
areas where political factors outweigh military considerations. Although
we have coordinated this paper with the regional NIOs, we believe you will
find fuller treatment of these potential trouble spots in their forecasts.
Further, a cursory review of Part II might lead one to conclude that the
Soviet provision of,arms outside the Bloc in 1983 could cause worldwide
destabilization. While some of these arms transfers are indeed probable,
the accomplishment of many of them during the next year or two would
constitute a new policy for the Soviet Union and ould, in any case, be
militarily and economically infeasible.
3. We are indebted to SOVA and OGI for much of this input and can
Attachment: A/S
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SECRET NIC #0314-83
MEMORANDUM FOR: DCI
DDCI
VIA : C/NIC
FROM : Acting NIO/GPF
SUBJECT : 1983 Forecasts - NIO for General Purpose Forces
Distribution:
DCI (w/att)
DDCI (w/att)
Exec. Dir. (w/att)
SA/DCI (w/att)
Exec. Reg. (w/att)
C/NIC (w/att)
VC/NIC (w/att)
DDI Reg.- (w/att)
DDI (w/att)
NIC/EO (w/att)
NI0/AL (H. Ford) (w/att)
NIO/AL (L. Gordon) (w/att)
NIO/AL (H. Heymann) (w/att)
NIO/AF (w/att)
NIO/EA (w/att)
NI0/E (w/att)
NI0/LA (w/att)
NI0/NESA (w/att)
NIO/USSR-EE (w/att)
NIO/SP (w/att)
NIO/WE (w/att)
NIO/W (w/att)
NIC/AG (w/att)
D/SOVA (w/att) 3 cys.
D/OGI (w/att) 3 cys.
A/NIO/GPF (w/att) 2 cys.
NIO/GPF (w/att)
NI0/GPF File (w/att)
NIO/GPF Chrono (w/att)
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I. Expected Major Trends in Soviet General Purpose Forces in
1983 (or beyond)
-- Continued force restructuring, experimentation with new
doctrinal concepts such as Operational Maneuver Groups, command
and control improvements, and implementation of new Pact-wide
alert system.
-- Little real change (either growth or reduction) in force
size and manning.
-- Little impact from arms negotiations.
No major increase in forces committed to Afghanistan but
more aggressive operations against insurgent forces; possibility
of cross-border operations against sanctuaries in Pakistan. The
NIO/W has commented that although Brezhnev was content to muddle
along in the last two years, there is reason to question whether
Andropov is either willing or able to continue an ambiguous
course. He also believes that the operational choices we cite
would require substantial increases in Soviet force levels. We
agree that a major land campaign across the borders (which we
believe is unlikely) would require substantial additional forces;
more limited cross-border raiding or air attacks still are
possible and could be handled with present forces.
Continued modernization of weapons and support systems.
? Ground Forces
-- Confirmation of deployment of T-80 to Soviet forces
in East Germany and in USSR; enhanced frontal armor
protection and mobility.
-- Continued conversion of Soviet units to a new
structure with better combined-arms capabilities.
-- Continued deployment of SS-21 and SS-23 missiles
plus nuclear-capable artillery in Eastern Europe.
-- Formation of several new active (very low strength)
divisions in Central USSR and along Southern
periphery.
-- Continued increases in artillery--much SP.
-- Possible deployment of first low-energy tactical
laser weapon system.
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? Air Forces
-- Flight testing of new heavy, long-range transport
(similar to but larger than C-5).
Probable initial deployment of MI-26 (HALO)
heavy-lift helicopter.
-- Continued testing and possible deployment late in
the year of two new fighters equipped with
lookdown/shootdown systems. Possible wider
deployment of SU-25 close-air-support aircraft.
-- Development and flight testing of RAM-Q, a possible
close-air-support fighter-bomber similar to the US
A-6.
? Navy
-- Continued CVA program development: completion of
catapult/arresting gear test facility; start of
carrier construction; first appearance of new
carrier aircraft.
-- Launch of new class of attack submarine (follow-on
to V).
-- Deployment into Mediterranean of new class cruiser
(BLK-COM-1) offering first opportunity for close-
aboard collection.
-- First Typhoon SSBN operational deployment (has
implications in deployment of general purpose
forces assigned for SSBN protection).
-- First accurate SLCM (SS-NX-21) becomes operational,
perhaps testing under way with converted Y-Class
(ex-SSBN).
-2-
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II. Possible Significant Military Developments Worldwide in 1983
(or beyond) that Could Lead to Regional Destabilization
East Asia
-- A Chinese SLBM will become operational (but probably not
before 1985) as the Chinese begin to expand SSBN operating
areas. The US will be faced with the problem of redirecting
general purpose naval forces to monitor PRC SSBN movements.
-- The Soviets could reach an agreement either this year or
next with the PRC on a mutual reduction of forces along the
Sino-Soviet border. While a token reduction is most likely, any
Soviet forces withdrawn could be redeployed to the European or
Central Asian USSR. Should these forces be substantial, NATO
and/or the US Central Command would have to reassess planning to
accommodate the increase. Such forces could be used as a
bargaining chip in the MBFR arena, but it is much more likely
that they would be redeployed to the Central Asian USSR.
-- China's arms exports to Pakistan, Egypt, and other
countries could well begin to provide enough hard currency for
the PRC to begin importing high technology components in a long-
overdue effort to modernize its armed forces. Japan, Vietnam,
Taiwan, India, South Korea and the USSR would be anxious over
this development.
-- The firepower and mobility gap between North and South
Korea continues to increase as new North Korean units and
equipment are introduced. At some point, possibly as early as
late this year, these developments could present an unacceptable
level of risk in terms of US reinforcement capabilities and
requirements and could force the US to choose among a number of
undesirable options: increase US forces in Korea; devote more
equipment and manpower to rapid redeployment; greatly expand
military aid to South, Korea. As long as the absence of any
Soviet or PRC backing continues to inhibit North Korean
adventurism, the situation does not warrant exceptional alarm.
-- The Soviets are unlikely to increase greatly their
military support to Vietnam because of their desire for
rapprochement with the PRC. We consider it likely, however, that
the Vietnamese will mount increasingly aggressive combined arms
operations in Laos and along the Thai-Kampuchea border, which
Thailand will view as more threatening. While we do not expect
overt attacks into Thailand by Vietnamese forces, miscalculation
by either side will become much more likely.
-3-
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South Asia
-- In an attempt to discourage India's proclivities toward
diversification of arms supplies, we expect the Soviets to
provide at least some of the following in 1983: T-72 armor
technology, MIG-27 fighters, air-to-air missiles, associated
electronic "black box" components, and/or more advanced SAM
systems. We expect all of these by 1985. Such arms in Indian
hands will further intensify the Indo-Pakistani imbalance.
-- We believe the Soviets will continue their commitment to
Afghanistan and introduce (some in 1983 and all by 1985):
countermeasures against hand-held SAMs being used sporadically by
insurgent forces, ground attack fighters (MIG-23, MIG-27 and
advanced SUKHOI fighters), improved helicopter gunships, and late
generation armored vehicles (T-72 tanks and BMPs). A few
thousand Afghan soldiers, trained in advanced systems and
politically indoctrinated, will return from the USSR as the
Soviets attempt to reconstitute Afghan army forces. We believe,
however, that the Afghan Army will remain unreliable.
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Near East-Africa
It is highly possible that Iran, increasingly better
equipped with Western arms obtained for hard currency and
confident of victory, will mount a large-scale offensive,
attempting to unseat Husayn.
-- We consider it possible that the Soviets will secure a
major military basing agreement (port facilities and air bases)
with Libya or Syria in 1983 or 1984 and deploy tactical air units
for "advisory/training" duties, enhancing Soviet capability to
provide air support to naval and amphibious forces operating in
the Mediterranean.
The Soviets will try to press upon Algeria improved
weaponry such as the upgraded T-72 tank, MI-26 HALO helicopter,
SU-25 and MIG-29, F-class submarines (possibly T-class or K-class
submarines later), possibly the SA-14 (for SA-7) and SA-13 (for
SA-9) missiles, increasing their influence in all parts of the
Algerian armed forces. Algeria, seeking a middle course, will
nonetheless be hard pressed to resist the favorable terms
offered.
-- Within the next two years, the Soviets are expected to
provide Libya ground, air and naval systems comparable to or
identical with those cited above for Algeria. Combined with
Egypt's Western arms imports, the severity of any possible
conflict between Libya and Egypt will be-increased.
-- The Soviets, continuing their interest in monitoring and
maintaining a presence along Western sea lines of communication,
will arrange for increased port availability/reconnaissance
aircraft basing in the southern Atlantic and Indian Oceans.
To assist in offsetting increased threats from South
Africa and UNITA, the Soviets will provide Angola with improved
weapon systems (such as the SA-9 SAM system and MIG-21
aircraft). Because Angolan forces have only a limited ability to
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to absorb technology, delivery of more advanced weapon systems
such as SA-6 SAMs or late generation aircraft like the MIG-23 and
MI-25 helicopter gunship would require additional Cuban pilots
and technical personnel.
-- The -Soviets may provide Mozambique with SAM defenses (SA-
2, 3, 7) and improved fighter aircraft (MIG-21 and MIG-23).
Cuban pilots would have to fly any delivered MIG-23s.
-- While we believe that South African military incursions
will become increasingly adventurous, we do not expect decisive
outcomes in any of the conflicts on their borders in 1983.
-- We do not expect decisive outcomes in the imbroglios in
Morocco, Chad, or the Horn of Africa in 1983.
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Latin America
-- The Soviets may substantially improve Cuban air defense
forces and capabilities, threatening SR-71 reconnaissance
flights, probably not in 1983 but likely by 1985. When it
occurs, the Cubans may announce that airspace violations by
reconnaissance aircraft will be met with force.
- A major new airfield is being constructed in Grenada with
Cuban/Soviet assistance, indicating that the Soviets may be
considering providing Grenada with fighter aircraft. Even an
obsolete model, such as the MIG-17, would constitute a potential
threat to other Caribbean islands and shipping lanes.
- Despite recent Nicaraguan denials, the Soviets could
provide Nicaragua with MIG or other model fighters. SA-2, SA-3,
or SA-6 SAM systems; MI-8 HIP helicopters; and/or OSA-I/II
missile attack boats could also be provided. Such acquisitions
would make the Nicaraguan air and naval forces substantially
superior to those of its neighbors.
-- We believe that Argentina will attempt to broaden and
deepen its arms imports from Western sources in order to avoid
the effects of short-term embargoes. While quite unlikely, the
Soviets might reach an agreement with Argentina to provide an
array of modern armaments including the T-72 tank, artillery;
MIG-23 and MIG-25 aircraft; MI-8 HIP and MI-24 HIND helicopters;
OSA guided missiles torpedo boats, amphibious craft, and Nanuchka
guided missile patrol craft. Such acquisitions could threaten
Chile or the Falklands. The Soviets will continue to offer a
wide range of weaponry on favorable terms, but Argentina is
unlikely to be receptive.
-- In an attempt to retain influence in South America, the
Soviets could decide to provide Peru with T-72 tanks, the BMP, or
improved artillery on favorable terms in 1983, steps that Ecuador
and Chile would regard as potentially destabilizing. Soviet
provision of air and naval arms to Peru is unlikely at this
time.
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THE DIRECTOR OF CENTRAL INTELLIGENCE
National Intelligence Council
NIC 459-83
18 January 1983
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
VIA: Chairman, National Intelligence Council
FROM: Charles E. Waterman
National Intelligence Officer for NESA
SUBJECT: Prospects for 1983 in the Near East and South Asia
1. A number of unresolved US policy issues will remain under debate
during the upcoming year. Their resolution could, of course, affect
developments in the area. Specifically:
-- Should more tangible pressure be exerted on Israel in
order to pursue the Reagan initiative?
-- Will we supply major sophisticated weapons systems to moderate
Arabs, in particular Jordan?
-- Will a suitable formula for talking with the PLO be found and
.acted upon?
-- Will it be politically feasible for the US to "stay the course"
in recreating Lebanese security?
-- Is the present hands-off "mix" in our relations with Iran and
.Iraq satisfactory? If not, should we "tilt" towards Iraq;
pursue positive openings in Iran; or encourage anti-regime
activity in Iran?
-- Will Pakistan's nuclear program be an impediment to closer ties
planned with that nation?
-- Is-our balance in relations with Pakistan and India
appropriate, or should we more aggressively attempt to follow-
up recent modest overtures from India?
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-- Is our mix in relations with Algeria and Morocco appropriate,
or should we more aggressively attempt to follow-up recent
indicators that Algeria may wish closer relations?
2. Regardless of US policies, a number of non-country specific trends
merit examination prior to discussing specific geographic areas:
-- Fundamentalism: Where manifested in recent years, non-
governmental fundamentalist movements have proved disruptive to
established regimes. In their political form, these movements
have tended to appear under authoritarian regimes which
repressed secular forms of alternative political activity --
and when political/economic frustrations are high. During the
past year, politically meaningful Shia or Sunni fundamentalist
activity has been noted in many Arab countries, the latter most
form most notably in Syria and Egypt. Although intangible and
less conspicuous than in the aftermath of the Iranian
revolution, the overa appeal and adherence to fundamentalist
modes of thought probably continues to increase area-wide, and
will continue to do so in 1983.
-- Economic factors: Negative repercussions of the petroleum
glut, and resultant diminishing revenues in the producing
states, will impact more severely in the Near East and South
Asia area than elsewhere. Specifically, the following effects
will begin to appear: slowdown in economic and security
assistance from petroleum producer states to resource-poor
regional states; slowdown in economic development activity with
resultant absence of contracts and diminution of remittances
from third country workers in the producing areas. Finally.
less disposable income could over time tend to diminish the
political influence of both more moderate producer contries
such as Saudi Arabia, and that of radicals such as Libya and
Iran.
-- Soviet influence: Despite potentially negative effects on Arab
stability arising from the Palestine dispute, Soviet influence
in the Middle East proper is at its lowest point in 15 years.
Their most significant recent move has been to deploy the SA-5
missile in Syria, an action portending a direct Soviet combat
role in that country. The political implications of such a
move are significant. The Soviets may be attempting to obtain
for themselves many of the capabilities for influence on both
sides of the conflict that the US currently enjoys. This means
enhancing the intensity, durability, and quality of their
direct military involvement with Syria; possibly opening a
meaningful dialogue with Israel; and increasing their
acceptability to moderate Arabs. These goals are not
necessarily mutually exclusive.
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3. Country Predictions:
A. Lebanon: After tortuous negotiations, at least a limited
disengagement of forces is likely to emerge by mid-1983. A
complete withdrawal is possible but by no means certain - and
even this will not mean the end of foreign -- especially
Syrian, Israeli, and Palestinian -- influence and competition
in Lebanon. Both Tel Aviv and Damascus will continue to
exploit Lebanon's numerous fissures to advance the position of
their respective proxies. Other Arab states, including Egypt
and Libya, and France may become more active. While the
Phalange will remain the preeminent Lebanese militia, it will
not go unchallenged. As events in the Shuf have demonstrated
the non-Maronite militias remain capable of impeding Phalangist
plans. While a return to full-scale civil war seems unlikely
given the Phalange's strength and the general war weariness,
considerable instability is likely to continue. Should
complete troop withdrawals not occur, Palestinian and leftist
Lebanese guerrilla actions against the IDF may intensify as
some southern Lebanese turn against Israel. Intermittent
Israeli-Syrian clashes may occur as well, including more air
battles. The Soviet role in the latter development will be
critical and likely to escalate. In general, the trend will
continue towards solidifying a Syrian zone of influence in the
north, and an Israeli zone in the south - albeit within formal
Lebanese sovereignty.
B. Jordan: King Hussein increasingly appears likely to make an
announcement of Jordanian willingness to join in direct peace
talks with Israel conditioned on a settlements freeze and
progress toward troop withdrawals from Lebanon. PLO leader
Arafat and. the Fatah majority seem likely to back, at least
tacitly, Hussein. Syria will lead the anti-Jordanian camp,.
including rejectionist Palestinians, and try to intimidate
Amman, possibly by a troop buildup on the border.
C. Israel: Begin is likely to call for new elections sometime in
1983 either after the Sabra-Shatilla investigation is completed
or if King Hussein joins the peace process. Israeli electoral
politics are notoriously unpredictable but the odds (and the
polls) favor Begin's reelection. A meaningful settlements
freeze is unlikely, though Begin might accept a limited
duration slowdown which did not halt "thickening" of existing
settlements. In the broadest sense Israel will achieve most of
its foreign policy goals in 1983 -- an acceptable settlement
with Lebanon, continued military preeminence, non-belligerency
with Egypt and Jordan -- but with continued domestic
controversy and strained relations with the US. If the later
worsen appreciably, a Soviet-Israeli dialogue may begin (albeit
within strict limits). Longer term problems, including
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economic stagnation, Ashkenazi-Sephardic tensions, emigration,
Israeli Arab unrest and West Bank violence, will get worse but
not reach crisis proportions.
D. Egypt: Close ties with the US require positive movement in the
peace process. Should Jordan enter the negotiations with PLO
tacit approval, Cairo will be pleased. Even in the best of
circumstances, however, as long as Begin rules Israel the
Egyptian-Israeli relationship will be a "cold peace"
highlighted by distrust and mutual acrimony. Domestically
Mubarak's position is slipping but barring major new economic
problems he should muddle through. There is an outside chance
that a collapse of the peace process could combine with
economic distress to produce serious disorders. In this case
the military is likely to seize power while maintaining a
generally pro-Western foreign policy.
E. Saudi Arabia: Despite decreased oil revenues, continued
domestic stability is likely. There simply is no organized
opposition inside the country of significance. Some increase
in dissension within the royal family is possible, however, if
Fahd is perceived to be ineffectual in reversing the financial
decline. Riyadh will not play a significantly helpful role in
the peace process or with Lebanon or in ending Egypt's regional
isolation but it is not likely to be a major spoiler either.
The Saudis will continue to be essentially passive observers,
not leaders, always seeking Arab consensus and the path of
least resistance. An Iranian breakthrough against Iraq or
Saddam's replacement by a regime willing to accommodate Tehran
would send tremors through the House of Saud, possibly leading
to closer ties with Washington but perhaps just as easily
inducing an effort to "buy" a settlements with Khomeini through
"reparations."
Iran: The clerics will continue to consolidate their standing
in 1983. They face no serious rivals, and in particular all
leftist parties appear increasingly ineffective. Should
Khomeini die, the situation will be less predictable but the
Islamic Republic is likely to remain in one form or another.
As the regime eliminates its enemies at home, more attention
and effort will be devoted to foreign adventures. Iraq will
continue to be the prime target but an increase in aid to the
Afghan mujahedin is also likely since western Afghanistan is
perceived to be a traditional Persian zone of influence. The
emigration of the skilled middle class (estimated at 1-2
million since 1979) will continue to drain the national brain
trust, creating more impotent exile groups, but not endanger
the regime's survivability in 1983.
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G. Iraq: 1983 will be a critical year for Saddam Husayn. He is
too much a "survivor" to be written off but the challenges he
faces have never been greater. The war is likely to grind on,
punctuated by occasional Iranian offensives, with the long term
human and economic trends favoring Tehran. The key unknown is
Iran's ability to bring these advantages to bear. Even without
an Iranian military breakthrough, economic stringencies and war
weariness will test Saddam's abilities. Should he go, a series
of coups is quite possible. Moreover, almost any successor is
likely to try to reach an agreement with Khomeini. A blatantly
pro-Iranian Islamic Republic successor regime would be highly
unlikely, however. There is always the chance -- albeit remote
-- Tehran will decide to opt for a peace agreement. Should it
do so we may have little warning as the two parties will
negotiate directly (they still maintain embassies in each's
capital). A settlement is more likely to be a truce, however,
in a continuing struggle for hegemony in the Gulf.
H. Syria: Damascus will become increasingly isolated as Lebanon
moves toward non-belligerency and Jordan edges into the peace
process. The normally cautious Assad will be tempted to take
dramatic steps to regain the initiative including allowing even
more Soviets into Syria, destabilizing northern Lebanon or
threatening Jordan, but Syria's capabilities are limited.
Domestic unrest, quiet since the February 1982 Hamah uprising,
is likely to intensify again as the opposition revitalizes and
gains access to more foreign backers in Lebanon (traditionally
the home of Syrian exiles).
I. Maghreb: The Saharan war will simmer on without major change,
nor will it bring down either King Hassan or President
Benjedid. Qadhafi will continue to be a noisy irritant but.his
efforts to gain significant influence either in Africa or
Middle East are no more likely to succeed in 1983 than they
have before. Tunisia, ruled by an increasingly feeble
Bourguiba, and a weak economy, has the potential for serious
domestic unrest. If so, Qadhafi would be a destabilizing.
factor.
J. The Yemens: A subtle but important shift in South Yemeni
policy is underway. Aden has made peace with Oman and largely
abandoned the NDF rebellion in North Yemen. Moreover, ties
with Moscow have cooled though they remain close. In 1983 this
trend is likely either to continue gradually or be reversed
following a coup led by more enthusiastically pro-Soviet
leaders. Should the latter occur a marked increase in Saudi
concern about the Yemens is likely with attendant requests for
US aid.
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4. The unexpected in the Middle East is the norm. Most Middle
Eastern leaders a serious health problems (Begin, Fahd, Khomeini,
Numayri, etc.) and could die unexpectedly causing power struggles. In the
last two years, two heads of state have been assassinated (Sadat and Bashir
Jumayyil). Some such event is likely in 1983, as well.
Charles E. Waterman
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National Intelligence Council
SP - 2/83
12 January 1983
Copy ?
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
THROUGH: Chairman, National Intelligence Council
FROM: National Intelligence Officer for Strategic Programs
SUBJECT: Prospects for 1983 in Soviet Strategic Programs
1. My observations are of two kinds: major Soviet program developments in
1983, and major strategic force issues in the national security community.
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Soviet Strate
Proqram Developments
2.~ In 1983 the Soviets will probably initiate the deployment of some major
new strategic weapon systems:
--SS-NX-20 SLBM for the Typhoon SSBN.
--Sea-launched cruise missile on submarines.
--A?ir-launched cruise missile on Bear aircraft, eventually Blackjack
and maybe Backfire.
--AWACS aircraft.
--Modified Galosh ABM interceptors at Moscow.
The offensive missile systems had successful flight test programs in 1982, and
will probably be dep ry limited numbers, a year ahead of our
previous estimates.
3. The Soviets will continue deployments of a variety of new or modernized
strategic systems:
--Replacement of SS-17, SS-18, and SS-19 ICBMs with the more
accurate MIRVed variants. . 25X1
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SUBJECT: Prospects for 1983 in Soviet Strategic Programs
--Deployments of additional long-range MIRVed SS-N-18 missiles on
D-class SSBNs.
--Further deployments of Backfires and Fencer fighter-bombers;
retirement of some older missiles and bombers.
--Further deployments of low-altitude-capable air defense systems:
SA-10 and the Foxhound interceptor.
4. Testing will continue for several new major strategic systems
5. Flight testing will probably begin in
moderniz
6.
ed missile systems
several potentially significant Sov
--Non-acoustic antisubmarine warfare.
--Mobile basing modes for new ICBMs:
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SUBJECT: Prospects for 1983 in Soviet Strategic Programs
--Directed energy weapons for air defense, antisatellite, and ABM.
--ABM capability of new advanced tactical SAM, the SA-X-12.
Important Security Issues
7. INF. This area promises to be the hottest topic in 1983, since this is
the year odeployment. As numerous papers point out, the Soviets will devote
great efforts to derailing the NATO deployments, and they seem willing to
reduce their European SS-20 deployments, whether,in an INF Treaty or in a deal
with the Europeans. Although there are many differing opinions in the
Intelligence Community, I believe:
--The Soviets will continue to try to convince the Europeans that
the best deal they can get is some reduction of SS-20s in Europe.
--Since the Europeans fundamentally do not want to deploy INF
systems, in my opinion they will pressure the US to accept some
sort of agreement, even one which codifies Soviet INF superiority
in Europe.
--The Europeans will, if necessary, seize upon the planned US
deployment of nuclear SLCM to get them off the hook. This problem
was of concern in 1980-81.
--The result may not be a Treaty, but it will have the same effect,
although without verification procedures.
8. In the INF discussions the Soviets will continue the "analogous
response" theme of Soviet forward-based deployments as a response to NATO INF
deployments. -These possibilities include cruise-missile-carrying submarines,
with the prospect of cruise missile launches undetectable until nuclear impact
on Washington, D.C. and elsewhere, and ballistic missile deployments in Cuba
(or Grenada) for short-flight-time attacks. Both of these options will
continue to be alluded to, and both are backed up either by available Soviet
hardware (the SS-20) or by Soviet programs in development (although not
necessarily for Western Hemisphere deployment)--the new SLCM, for 1983
deployment, and a new IRBM, for flight testing in mid-year. The Soviets can
allude to these programs without having to make physical preparations or
deployments. Then the Soviets can get the coercive value of the "analogous
response" but can wait to take actual steps, if taken at all, only after the
US and NATO take steps to deploy. I think the Soviets are dead serious about
.an analogous response, and I believe if the US actually deployed Pershing II
in Germany, the Soviets would follow through with one, maybe both, of the
above options. In my mind Cuba. is a real possibility, not simply a bluff.
They will continue to lay the groundwork for this option. In their minds a
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SUBJECT: Prospects for 1983 in Soviet Strategic Programs
nuclear confrontation would have been brouaht about by the P-II, not by the
Soviets forward basing of missiles. 25X1
9.. START. Progress in these negotiations depends on how the INF issue is
resolved this year. Serious progress in START is possible, in my view, if the
US agrees to include bombers and cruise missiles along with ICBMs and SLBMs,
as the Soviets insist, and if the Soviets agree to include ballistic missile
throw weight in some way or other. The problems that will be difficult,
however, and on which these negotiations could derail, are:
--The Soviets seem absolutely unwilling to include Backfire in
START, and we may have to cover them in INF in a way that
simultaneously satisfies our START objectives. This approach
seems reasonable to me, given Backfire's primary role as a theater
attack aircraft.
--Soviet tests of a number of new and improved ICBMs and SLBMs is
likely to begin
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SUBJECT: Prospects for 1983 in Soviet Strategic Programs
--Depending on how the basing decision for MX comes out, we could
have serious problems with the Soviets in our attempt to maintain
a distinction between silos and deployed missiles for MX, and in
not counting new silos as new fixed launchers.
--Soviet testing of a new small-sized solid propellant ICBM, a
likely prospect this year, will raise quite a stir in this
country. The language of SALT II is such that the Soviets could
claim that the new small solid ICBM is a legitimate follow-on to
the SS-13, or is a variant of the medium-sized solid propellant,
through the first 12 test flights--regardless of its true
parameters. It is hard to see how this new missile could be
claimed as an SS-13 follow-on unless its size and characteristics
are much closer to the SS-13 than we are currently estimating.
--Much less likely, but possible, is a discovery on our part that
the Soviets are violating the ABM Treaty, such as with
construction of forbidden interior ABM radars or covert ABM
deployments.
10. MX. The key US strategic program issue is MX. We will continue to be
called upon,, by the President's MX Commission as well as by Congress, to
discuss Soviet capabilities to attack MX. My congressional testimony, now
incorporated in NIE 11-3/8, supplementary work by the DCI's WSSIC, and the
strategic force estimate NIE 11-3/8 should do the job.
11. ABM. A major review of US ABM policy and programs by the NSC is going
to be underta en this year. It will draw upon our completed NIE on Soviet
ABM, and on NIE 11-3/8. In addition the ABM Net Assessment that we are
conducting will be an integral part. I think there will be some significant
debate, at least internal to the Administration, on the issue of whether the
US ought to proceed with a significant expansion in strategic defensive
efforts, including much more research and development in the ABM area.
12. The potential ABM capability of the SA-X-12 SAM in development is
likely to cause a considerable stir this year. The blurring of distinction
between an ABM and an air defense SAM, as a result of the SA-X-12's potential
capabilities, will indicate that the Soviets (and the US, if we choose to
modify the Patriot) could have significant ABM capabilities deployed later in
the 1980s, while remaining within the limits of the ABM Treaty. The Treaty
may nep" be modified, or missiles like the SA-X-12 may need to be banned.
13. Cruise Missiles. The imminence of the Soviet deployment of cruise
missiles will l ely use a reexamination of the inadequacy of US continental
air defense and some pressure to fix it. There is no existing capability to
detect Soviet SLCMs launched from submarines ih normal SSBN patrol areas off
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SUBJECT: Prospects for 1983 in Soviet Strategic Programs
the US coast, and ALCMs launched from bombers could easily underfly US and
Canadian surveillance radar coverage.
14. Non-acoustic ASW. It is possible that the most significant reactions
to the contents of NIE 11-3/8-82 will be to our concern for Soviet progress in
non-acoustic ASW. We are raising the possibility that US SSBNs on patrol
might not be perfectly safe for the rest of the century. This is upsetting,
since an important aspect of our confidence in the deterrent value of our
strategic forces lies in the certainty that submarine weapons would be highly
survivable. Although a Soviet breakthrough would not mean that submarines
would necessarily be highly vulnerable, or that many submarines would be
knocked out, the shattering of the image of total invulnerability could pe_a
serious blow to public perceptions of the deterrent value of this force.
Lawrence K. Gershwin
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SUBJECT: Prospects for 1983 in Soviet Strategic Programs
Distribution:
Cy 1 - DCI
2 - DDCI
3 - ExDir
4 - ER
5 - Chm/NIC
6 - VChm/NIC
7 - NIO/SP
8 - NI0/USSR-EE
9 - NI0/GPF
10 - DDI
11 - C/ACIS
12 - D/SOVA
13 - D/OSWR
14 - DDI/Registry
NI0/SP:LKGershwin:matl I(12Jan83)
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National Intelligence Council
NIC 626-83
24 January 1983
MEMORANDUM FOR: Henry S. Rowen
Chairman, National Intelligence Council
FROM . Stanley M. Moskowitz
National Intelligence Officer for USSR-EE
SUBJECT : 1983 Soviet Forecast
Overview
1. The likely major lines of development in the USSR in 1983:
--Andropov will concentrate on building his political base but'may
run into difficulties as his domestic policies impinge on the
activities of other Soviet leaders.
--Andropov would like a summit with President Reagan as a
legitimization device of his world stature and as a means to
increase public pressure on the US to seek accommodation with the
Soviets.
--Emerging signs that the US administration is becoming more positive
toward a summit and desirous of an arms control agreement will
reinforce Andropov's natural inclination not to make concessions or
significantly alter Soviet behavior in the world.
--The situation in Eastern Europe will continue to be troublesome
and under control but the potential for a major crisis somewhere in
the Soveit empire persists.
--The Soviets will be a much larger factor in the Middle East in 1983
than it was in 1982.
--The brightest spot for the USSR is Central America where events
are running against the US.
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Soviet Domestic Developments
--The USSR is going into a much more turbulent period. It will be
marked by a reshaping of the ruling apparat and an attempt to make
the entire system work better.
--Andropov will continue to use the anti-corruption drive to
simultaneously consolidate his power and strengthen the economy.
--Most Soviets initially welcomed the anti-corruption drive and saw it
as directed against someone else. Its intensification is now
raising fears in both the general population and in party circles.
-For the population, there is the threat of increased controls
over personal lives and tougher penalties for deviation. There are
hints in the press that Andropov will rely on forced labor to
punish shirkers.
-The intelligentsia's hope for a regime more attuned to an open
cultural life is being dashed by a campaign to repress prominent
figures such as Vladimov and even Medvedev.
-For many of the party rank-and-file, Andropov's campaign could mean
demotions, transfers to undesirable locations, and even arrests and
trials.
--The Spring Plenum, traditionally held in May, will tell us more
about how successful Andropov is being at shaping the country and
especially the party.
--There is an outside possibility that his quiet purges will lead
to a resurgence of opposition and some major political infighting.
If so, he will probably emerge victorious and strengthened but there
is also the outside possibility that he will be forced to
demonstrate more "passion for collectivity".
--The Spring Plenum should also tell us more about his plans for the
economy. There is one report that he has invited the Central
Committee members to an "open forum" to discuss the economy. If so,
Andropov will use it to push for change.
--The indications are that there may be more tinkering at the
margins, some moves to increase individual incentives in
agriculture, but no shift in investment priorities (particularly
military) or major reform.
--But Andropov has got the pump primed for change, and there is at
least a 40 percent change that some significant economic reforms
will be started in 1983.
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--Tinkering, combined with greater labor discipline and possibly
a good agricultural crop, will lead to some improvements in the
economy.
--The improvements are likely to be small and temporary.
--Not only will the Soviet Union continue to muddle down but the
frustrations brought about by tightened discipline without improved
living conditions may lead to more spontaneous unrest, as has
already happened sporadically over the last few years.
Eastern Europe
--In Poland, the stalemate is likely to persist. The government is
no longer endangered but its isolation from the population will
continue. It will resist liberalization or increased repression in
the fear that either course could lead to a popular explosion. Any
break in the deadlock would probably occur in a way unfavorable to
the government as some unforeseeable event triggers a resurgence of
opposition.
--In Romania, Andropov faces the mixed blessing of an oppressive anti-
Soviet nationalist regime showing its increasing incompetence to run
the country and a rising danger of political upheaval. Andropov
would welcome the disappearance of Ceaucesau but probably fears the
destabilizing effect on the rest of Eastern Europe, particularly of
a popularly inspired ouster as in Poland in 1970 and 1980.
--In Bulgaria and Czechoslovakia, the leaderships appear shakey and
changes, with all their perturbations that they bring are possible.
--In East Germany and Hungary the situations are better but the
former faces economic and political troubles while the latter is
being ever more closely involved with the Western economic system.
--Overall, ineffectiveness of all these ruling regimes--save that of
Hungary--is creating ever greater doubts about the Soviet model and
is likely to lead to a new explosion somewhere not necessarily in
1983 but almost certainly in this decade.
--Yugoslavia has grave economic and political problems. The
Soviets will attempt to exploit them as best it can. Yugoslavia
will get through 1983 without a major upheaval, but 1984 will be
tougher.
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--The Sino-Soviet dialogue will continue and probably lead to better
relations, particularly in commerce. The dialogue has already
worsened the U.S. position in the USSR-PRC-US triangle but the
damage is likely to be limited by persistant Sino-Soviet differences
over Kampuchea, Afghanistan and probably the border arrangements.
Western World
--The Soviet leadership realizes that the Reagan administration will
not make a grandiose international accommodation with the Soviet
Union but also senses that it is vulnerable to domestic and
international political pressures. Andropov's line of attack,
therefore, will be to face the administration with the alternative
of either risking further international and domestic estrangement or
striking some explicit deal with Moscow. Moscow's main desiderata
are arms control agreements advantageous to the USSR and renewed
defacto Western economic assistance to the USSR.
--Andropov will therefore maneuver to set up a summit--perhaps in
conjunction with an address to the UN General Assembly this Fall.
But rather than make any great concessions to get one, he will count
on and foster domestic and international pressures to push the US in
the desired direction.
Western Europe
--The emphasis in 1983 will be on stopping INF deployment along the
lines of Andropov's December declaration (zero for the U.S., quite a
bit for the USSR).
--Barring unforeseeable clumsiness on the part of one or another NATO
government, deployment will go forward. But the Soviets will not
let the issue die; they are likely to take it up in START and
continue the propaganda campaign.
--If deployment is derailed, Moscow will turn-up the gain as the peace
offensive to help defray a backlash in West Europe. Their big
concern will be a more prominent military role for West Germany.
--Andropov's propaganda campaign will be increasingly burdened by the
unattractiveness of domestic repression and unsavory revelations
about Bulgarian-KGB-Andropov destabilizing operations in Turkey and
Italy and possible participation in the Papal assassination attempt.
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The Americas
--Andropov will not change Soviet support for Cuban or revolutionary
forces in Central America. Interest in a summit meeting may cause
the Soviets to counsel the Cubans to avoid high visibility actions,
but even that is not assured.
--Both the U.S. and the populations of those countries are likely
to be the losers as violence spreads and terror is used against the
population and, to the extent that victorious Marxist movements
adopt the Soviet model, the economies become impoverished.
Southwest Asia-Middle East
--The only two area trends which can be forecast with any certainty
are that the region will remain beset with explosive issues and that
the Soviet determination to remain involved will make the situation
worse.
--Previous Soviet actions have already brought the USSR perilously
close to direct confrontations with the U.S., when its clients
suffered humiliating defeats. Now, as demonstrated by its recent
SA-5 deployments in Syria, Moscow seems more intent than ever to
play an active role in the region. And to take significant risks.
--The odds are better than even that the Israeli and Soviet forces
will have fought each other by the end of 1983. The consequences
are not knowable, but we are likely to have the USSR as a greater
factor in the Middle East at the end of 1983 than it is at the
beginning.
--In Afghanistan, the USSR is searching for a formula which would
allow it to remain in control of the country's government without
having to be actively engaged in fighting. Since the success of
this approach depends largely on Mujahadin and Western acquiescence,
it is unlikely to work, leaving the USSR with the option of
intensifying its combat operations--something which it will probably
do.
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NIC #0418-83
Notional Intelligence Council 17 January 1983
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
THROUGH . Chairman, National Intelligence Council
FROM Milton Kovner----
National Intelligence Officer for Western Europe
SUBJECT : Western Europe in 1983
Western Europe in 1983 will be subjected to discordant impulses and
pressures that will test the resiliency of national governments as well
as intra-European cohesion and trans-Atlantic ties. Agreement within the
Alliance on the need to counter the Soviet military buildup will mask
considerable divergence about the nature of the Soviet threat and the
strategies to deal with it. Europe's progress toward economic and
political unity will be stalled by the imperatives of economic self-
interest and complications posed by Portuguese and Spanish requests for
accession to the Community. Allied cohesion will be strained by
membership in the Alliance of governments, such as Greece and Spain,
uncertain in their commitment to collective security. And internal
consensus, on both domestic and international issues, will be tested by
elections in the FRG, and probably in the UK and elsewhere. Hence,
securing common objectives, both in the European theater and beyond it,
will pose an increasing challenge to us; and the Soviet Union will be
quick to exploit and exacerbate differences in approach to detente and
East-West relations.
INF and European Security
Although many Western European governments harbor hopes that tangible
progress in negotiations will make INF deployment unnecessary, and some
will seek to postpone final decisions in anticipation of achieving it,
absent agreement in Geneva we believe basing countries will remain firm
in their commitment to NATO's dual decision, and even those currently
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most equivocal about actual deployment -- Belgium and the Netherlands --
will ultimately agree to installation if the FRG, as seems likely under a
Rohl government, adheres to deployment schedules. Certainly prior to the
German elections, and probably well beyond it, the issue will remain
fluid, with many of our allies hedging or shifting their. positions in
response to public pressures. While most Western governments prefer the
zero option and will continue to hold it out as the ideal solution, many
increasingly will argue that at least the appearance of US flexibility in
Geneva will be tactically necessary to mitigate the political costs of
deployment; and the US will be under growing pressure to consider
"interim" solutions while preserving the zero option as a longer term
objective. Should the Soviet Union add convincing substance to their INF
proposals, pressures could increase in some quarters for delay in
deployment lest installation of the missiles preclude chances of ultimate
accommodation in Geneva.
Nevertheless, we believe the odds favor installation of the missiles
and maintenance of a visible "coupling" between US and European defense
-- absent agreement in Geneva and barring political shifts in the FRG or
Italy, for example, not to deploy. However, the issue of assuring
Europe's defense will be the subject of intensive debate well beyond the
"Year of the Missile," fueled by such questions as the proper mix of
conventional vs. nuclear forces, the capacity and roles of the French and
British deterrents, growing French-German defense cooperation, and
Europe's willingness to make up.for US forces targetted for out-of-area
contingencies.
European Community
Forecasts are pessimistic about West Europe's economic prospects in
1983, with predictions of continued low growth and high unemployment
feeding an already evident loss of confidence in Europe's ability quickly
to reverse the trend. Pressures will increase within Europe for
protectionist measures, and although a counter-move to eliminate internal
trade barriers may take hold within the European Community, this may come
at the expense of greater "vigilance" -- promoted notably by France -- at
the Community's external borders.
The EC's major challenges -- advancing beyond the customs union and a
common agricultural policy, finding formulas for more equitable burden
sharing, preparing for another enlargement, and preventing mutually
damaging trade conflicts with its international partners -- will not be
new, but will be even more difficult to meet in the anticipated climate
of low economic growth. The possibility of elections during the year in
Britain will put both London and its EC partners under the additional
strain of weighing EC budget reform and each new proposal against the
resurgent debate in the UK over Community membership and the possibility
of boosting the prospects of the anti-EC Labor Party. France, meanwhile,
Li
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will threaten national protectionism in the hope of selling more of it to
the Community as a whole - and it is less than certain that either
Germany or Britain, themselves under similar pressures, will resist very
strongly or take the initiative to push instead for EC-wide structural
adjustment. Despite pressures from Portugal and Spain to complete
negotiations for their membership in the community, early progress is
unlikely, hung up as it is over the fears of France, Italy, and others
that they would largely be the ones to pay for the EC absorbing the
output of the new members' heavily agricultural economies.
West Germany
The new year will be a troubled one for the Federal Republic.
Whatever government emerges from the elections on March 6 will be faced,
on the one band, with growing unemployment and difficult budget choices
and, on the other, with intense opposition to carrying through with INF
deployment. The elections could leave the country polarized on both sets
of issues and vulnerable to Soviet seduction or threat, particularly on
INF. The most stabilizing result would be a CDU/CSU majority, or,
depending on FPP fortunes, continuation of the present centrist
CPU/CSU-FDP coalition. Barring an SPD victory, which at this moment
seems less likely, other possible alternatives -- a coalition between the
SPD and the Greens, should the latter surpass the five percent threshold,
or a "grand coalition" between the SPD and the CDU/SDU should neither
major party win a majority -- will prove inherently unstable, short-lived
and paralyzing for West German policy-making. If, as we believe, the
CDU/CSIT coalition will achieve a majority, prospects for INF deployment
and a cooperative attitude generally with the US will be improved; but
the new government would also seek a balance through greater attention to
Europe-centered policies.
France
Elections this spring in France will also mark a watershed, even
though the results of the local contests will not change party
representation in the Socialist-dominated parliament. Some falling-off
of support for the Socialist-Communist coalition will be evident, and a
large deterioration in the left's vote will encourage calls for a return
to Socialist fundamentalism. We doubt, however, that Mitterrand will be
deterred from pursuing relatively austere economic policies. While
Mitterrand will prefer the Communists to remain in the government, we
think there are limits to what he will be willing to pay to prevent them
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from leaving. Should they leave, we would expect government
encouragement of a return to proportional representation -- which would
eventually permit the development of a center-left coalition. We expect
little change in French foreign policies, which will continue to
emphasize national freedom of action to protect France's interests and
magnify its leverage within the European Community and the Alliance.
Despite initial misgivings with respect to both the substance and
direction of the effort, France will cooperate in the series of studies
designed to examine the links between East-West trade and Alliance
security. The exercise will represent a delicate problem in Alliance
management, however, since the need for coordination will have to be
balanced against the demands of France and others to minimize the
appearance of "direction" from NATO or other fora on East-West economic
policies.
Italy
None of the three governments formed from the parliament elected in
1979 has been able to make much progress towards alleviating Italy's most
pressing problems -- bringing prices and costs under control, reducing
the very large budget deficit, or significantly improving Italy's fragile
external payments position. Expectations of a government "crisis" that
would force early elections -- the parliament would normally run until
1984 -- has made unpopular economic decisions even less likely; yet the
edginess of politicians about facing new elections may in fact prolong
the stalemate. It is impossible to forecast with any confidence that
this situation will produce a definitive break with the practice of
center or center-left governments in Italy and movement toward either the
"left alternative" of collaboration between the Socialists and Communists
or .an arrangement beween the Christian Democrats and the Communists. But
an increasingly critical political atmosphere is likely in 1983, in which
the PCI may more and more be seen as the key to effective
decision-making. This will be especially true if elections do occur this
year and fail to produce a significant increase in the 9.8% share the
Socialists won in 1979. In the meantime, the PCI will eschew extreme
positions either on foreign affairs; for example, the Communists will not
take the lead in mounting all-out opposition to INF.
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Southern Europe
EC membership is the most important item on the foreign policy agenda
of Spain's new Socialist government, which gives higher priority to
gaining "European" credentials than to moving towards early military
integration with NATO. While we think it unlikely, it cannot be excluded
that Madrid may ultimately seek a French-style membership in the
Alliance. Prime Minister Gonzalez' domestic power base is relatively
secure for the moment, but he will need evidence of progress towards the
popular goal of Community membership to offset divisiveness that could
emerge at home as the government begins to deal with the difficult issues
of a stagnant economy, persistent terrorism, the demands of Basque and
Catalan nationalism, and educational reform. The desire to avoid
domestic polarization will probably continue to incline the government
away from any early redemption of the Socialists' campaign pledge to call
a referendum on NATO membership.
While Madrid will try to keep separate the questions of Spanish
relations to NATO and ratification of the US-Spanish bases agreement in
order to get the latter approved in parliament, a new US agreement with
Portugal extending and expanding our facilities there will be difficult
-- but attainable -- because of political turbulence within the ruling
center-right coalition that could lead to early elections. Portugal's
Socialist Party led by Mario Soares is well positioned to return to
government in a new election. The principal immediate effect of the
political crisis will be to leave Portugual's mounting economic problems
unresolved.
The Aegean will almost certainly remain an area of political
confrontration between.Greece and Turkey with the complex of unresolved
issues and resultant tensions intermittently threatening overt
hositilities. While each side will shrink from precipitating a crisis,
domestic instabilities, more so in Athens than in Ankara, risk making
each less flexible and less inclined to compromise. Public confidence in
the Papandreou government will almost certainly wane as it fails to stem,'
let alone reverse, Greece's economic slide, and the government may seek
new elections - or foreign adventures - to strengthen its mandate.
Turkey's scheduled return to civilian rule toward year's end could make
the military regime more rigorous in defending the country's perceived
equities in the Aegean. Greek-Turkish frictions, however, will make
Athens reluctant to sever its NATO or US connection. Greece will remain
in the Alliance, although unresolved command and control arrangements in
the Aegean will inhibit closer cooperation within the integrated command,
and it will distance itself from Allied consensus on many issues of
concern to us in its pursuit of a more independent foreign policy..
US-Greek relations will become increasingly tense, particularly over the
base negotiations, and we believe some restriction of our military
assets in Greece highly likely.
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