EUROPEAN REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01184R000200630001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 22, 2016
• Document Release Date: September 17, 2010
• Sequence Number: 1
• Publication Date: January 30, 1985
• Content Type: REPORT

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European Review
EUR ER 85-004
30 January 1985
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European Review
East Germany: Good Year for the Economy
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Austria: Building on Environmental Policy
replace the Free Democrats as the nation's third-largest party.
Rapidly worsening damage to West German forests from acid rain
has pushed Bonn into the unusual position of taking the lead in
Western Europe on an international issue. Chancellor Kohl intends
to make environmental protection a main theme at the economic
summit in May. Domestically, the emotional attachment of West
Germans to their forests and other natural resources has united the
nation on the need for urgent action, although controversy has flared
over the exact content of legislation. The dying trees also have been
a key factor catapulting the Green Party into position possibly to
particularly in the area of intra-German relations
East German attitudes and behavior during the past year, especially
with regard to East-West relations, suggest a new assertiveness that
is uncharacteristic for one of the most cautious and conformist allies
of the Soviet Union. This assertiveness seems founded on an increase
in the self-confidence of the East German leadership as the result of
longstanding trends. We expect East Berlin to continue its course,
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Hungary: Kadar Ponders His Future
Speculation is growing in Budapest about major leadership changes
that will occur at the Hungarian Communist Party Congress in
March. Some claim that the 72-year-old Kadar will retire
completely and some claim that he will still maintain a senior
statesman's role. Barring a sudden decline in his health, we believe
Kadar will continue as party chief but will realign the leadership in
a way to set the stage for the grooming of his successor. None of his
potential successors would be likely to deviate much from his
economic reforms and political style, but none would have Kadar's
experience, prestige, or shrewdness. A new leader would probably
have more difficulty withstanding Soviet pressure to adopt more
orthodox policies.
A leading Czechoslovak Communist paper, at Moscow's behest, has
recently echoed East German, Austrian, and Latin American
Communists' calls for a worldwide meeting of Communist parties.
The proposal is likely to draw support from the Spanish-who until
recently were against such a meeting-and French parties, but the
Japanese, Italians, and Yugoslavs are opposed. A worldwide
conference is unlikely for the next few years, but some regional
meetings are possible. The Soviets are probably pushing for a
worldwide conference because they see significant propaganda
advantage in convening a conclave that would project the image of
international Communist unity and provide a platform for attacking
US nuclear policies.
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Some articles are preliminary views of a subject or speculative, but
the contents normally will be coordinated as appropriate with other
offices within CIA. Occasionally an article will represent the views
of a single analyst; these items will be designated as uncoordinated
views.
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Controversy over the Hainburg Dam and the election of four Green deputies to
Voralberg's provincial parliament have brought home to the Austrian Government
the need for an environmental policy that will respond to growing ecological
concerns among the country's voters, especially the young. The first step was taken
recently when the Sinowatz government announced Western Europe's most
ambitious program to reduce automobile pollution. By 1988, auto emission
standards are to match those in the United States; the program also entails tax
breaks for users of catalytic converters and the introduction of lead-free gasoline.
By taking this step, the Sinowatz government clearly hopes to recoup from the
Hainburg controversy. Two months ago, opponents of a proposed dam on the
Danube occupied the proposed site, blocked clearing operations, and clashed with
police; they claimed that it threatened one of Europe's few remaining wetlands.
Sinowatz came under fire from the Austrian press for insensitivity to the country's
ecological future and from members of his own party for indecisiveness when
confronted with an illegal demonstration. A court injunction shortly after the new
year rescued the government by halting further construction, but Sinowatz now
must contend with Austrian labor. The unions form the backbone of Sinowatz's
1 Secret
EUR ER 85-004
30 January 1985
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Socialist Party-the senior member of the governing coalition-and they
supported the dam's construction in the interests of job creation and economic
growth.
East Germany Good Year for the Economy
East Berlin has reported economic results for 1984, calling them the best in the
country's history. Reported growth of national income reached 5.5 percent, up
from 4.4 percent in 1983 and 2.5 percent in 1982. Industrial production and
productivity rose 4.2 and 7.7 percent, respectively, while unit production costs fell
2.3 percent. Retail sales growth accelerated, suggesting at least stabilization of
real personal consumption after a probable decline in 1982-83
While the regime's self-congratulatory announcement is exaggerated-growth
rates were higher in the early 1970s-the East Germans have reason to be pleased.
They managed more rapid growth, ran a current account surplus that we estimate
at $1 billion, and further reduced hard currency debt. They may even have run a
trade surplus with the USSR for the first time since 1974. We attribute the
improvement largely to domestic adjustment measures begun in 1981-82,
including more efficient use of labor and investment resources. The country still
has significant problems-including an industrial base in considerable need of
modernization-but economic growth prospects for 1985 are good by East
European standards.
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/- uamagea r ores[ Areas
Sch(eswig-Holstein in West l_annflnv'
`" 1984
Final borders of Germany
have not been established.
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West Germany:
Acid Rain Problems Worsen
Rapidly worsening damage to West German forests
from acid rain has pushed Bonn into the unusual
position of taking the lead in Western Europe on an
international issue. Chancellor Kohl, host this May
for the annual Big Seven economic summit, intends to
make environmental protection one of his main
themes. Domestically, the emotional attachment of
West Germans to their forests and other natural
resources has united the nation on the need for urgent
action, although controversy has flared over the exact
content of legislation. The dying trees also have been
a key factor catapulting the Green Party into position
possibly to replace the Free Democrats as the nation's
third-largest party.
Extent of the Problem
One-half of West Germany's trees are damaged,
primarily because of air pollution, according to the
Ministry of Agriculture's 1984 report. By contrast,
the 1983 report found only 34 percent damaged and
the 1982 report only 8 percent-although part of the
increase probably is due to improved survey
techniques. The devastation is most acute in the
picturesque Black Forest area in the southwestern
state of Baden-Wuerttemberg, where 66 percent of
the forested land is affected. Bavaria-the
southernmost state-is almost as badly hit. These two
states contain 51 percent of West Germany's forests.
While the official figures may exaggerate the growth
of the problem somewhat, the increase is staggering to
West Germans, who revere a walk in the woods
almost as a sacred ritual. The latest Ministry report
has produced outrage and a sense of urgency that cuts
across all political lines. Chancellor Kohl, who calls
the problem one of "inestimable importance," faces
' Acid rain forms when sulfur dioxide and nitrogen oxides from
smokestacks and vehicle exhaust combine with atmospheric
almost no domestic disagreement in laying the lion's
share of the blame on acid rain.'
Getting the Lead Out
Bonn is attacking acid rain with strict antipollution
regulations, stepped-up research and development,
and, on the international level, efforts to promote
environmental cooperation. In 1983, the government
mandated emission standards for large power plants
and factories that will require installation of
"scrubbers" at an industrywide cost of well over $3
billion; plants and factories unable to meet the
standards will have to shut down. Legislation
regulating smaller plants is also being drafted. The 25X1
goal is to reduce sulfur dioxide emissions one-third by
1988 and one-half by 1990. Meanwhile, strict limits
for more than 40 other pollutants are already in force.
After months of squabbling, the Cabinet last
September ruled that larger cars must, by 1988, meet
emission standards virtually identical to those in
effect in the United States; all new cars must be in
compliance a year later. To achieve the reduction in
emissions, catalytic converters and lead-free gasoline
will be needed. Beginning this July, drivers who shift
voluntarily to low-emission vehicles will be eligible for
tax breaks ranging from $350 to $1,000. A further
financial inducement as of July is a 2-pfennig-per- 25X1
liter (less than 1 US cent) reduction of the tax on lead-
free gas and a 2-pfennig-per-liter increase on leaded
gas. The tax change will represent 1 to 2 percent of
the pump price.
Forests Versus Fast Cars
Despite the far-reaching domestic impact and
international implications of the acid rain
legislation-West Germany is well out in front of
other West European countries on the issue-little
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EUR ER 85-004
30 January 1985
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 "Our love of the forests is an
essential part of the German
identity. "
Helmut Kohl,
Chancellor
"The Greens have contributed
to the destruction of our trees
by delaying our nuclear energy
program. "
Franz Josef Strauss,
Bavarian Minister
President
"A speed limit would make no
significant contribution to
traffic safety, energy saving, or
helping the environment."
Werner Breitschwerdt
Chairman of the Board,
Daimler Benz
"A speed limit of 100
kilometers per hour would
reduce nitrogen oxide
emissions by 200,000 to
300,000 tons this year.
Catalytic converters won't
achieve this before 1990."
Christa Nickels,
Green Party
"It's not the Greens that are
creating problems for us, but
our problems that are creating
the Greens."
Klaus von Dohnanyi,
Mayor of Hamburg
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serious dissent has emerged. In sharp contrast, the
idea of imposing speed limits on West Germany's
autobahns has set off a powder keg of controversy.
The famous autobahns are a last frontier of unlimited
high-speed driving, and tales are legendary of
Porsches, Mercedes, and BMWs with flashing
headlights bearing down on unwary foreigners in the
passing lanes. Many West Germans regard driving
fast as a right, and they defend it with an emotional
fervor somewhat akin to that of opponents of gun
control in the United States. A government-
recommended limit of 120 kilometers (75 miles) per
hour has had little impact. Secondary roads do have
speed limits, but past attempts to introduce them on
the autobahns, chiefly on safety grounds, have fallen
flat.
The fuse of the stormy political debate was lit when
the Federal Environment Office found that a speed
limit of 100 kilometers (62 miles) per hour would
substantially reduce nitrogen oxide auto emissions, a
key factor in acid rain. Chancellor Kohl and
Economics Minister Bangemann both quickly came
out against speed limits, the latter warning that
cutting speeds could mean cutting jobs, since West
Germany's automobile industry is geared to turn out
high-performance cars. Just as quickly, however,
Agriculture Minister Kiechle, who is from Bavaria,
broke ranks and spoke out in favor of speed limits.
Most West German politicians shunned the sensitive
topic, and the government's vacillation reflected
popular uncertainty. A poll by the EMNID Institute
disclosed that 55 percent of West Germans would
accept speed limits if it would help save the trees, but
a followup poll by West Germany's most popular
newspaper reached just the opposite conclusion. F_
The most thunderous voice has been that of West
Germany's powerful automobile industry. Not only
does it account for some 17 percent of exports but also
Volkswagen and Daimler Benz are, respectively, the
nation's second- and third-largest employers. The
industry accepted catalytic converters with relative
equanimity after the government agreed to postpone
their introduction from the originally proposed 1986
date. It has mounted a major lobbying effort against
speed limits, however. Automobile manufacturers
argue that the best way to control pollution is for
people to buy new cars that pollute less than older
models. Moreover, industry officials claim, West
German car exports benefit from a reputation for
speed and power honed by the fact that Germans
drive as fast as they want. Environmentalists counter
that the best foreign customers, like those in the
United States, have not lost their taste for German
cars, despite rigorous speed limits.
Bonn's official line now is that the evidence on the
benefits of speed limits is not conclusive and that it
will take no action until results from a large-scale
experiment are evaluated at the end of the year. The
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proceeding with the introduction of speed limits on
three autobahn stretches on a test basis.
Economic Costs
The damage to trees, soil, fish, and buildings
attributed to acid rain is estimated by West German
scientists to approach $1.5 billion per year. The
forestry industry, in particular, estimates its annual
costs, including both smaller harvests and higher
management expenses, in the $350 million range. The
cost is likely to rise considerably in the coming years
as much higher percentages of damaged trees, whose
wood is unusable or of a lower grade, are felled
commercially. The tourism industry expects to be hurt
as well. The auto industry complains about a fall in
new orders due to uncertainty about the effect of the
various new measures, and company officials point
out that the cleaner cars will cost more, use 5 to 10
percent more gasoline, and lose as much as 15 percent
in power and performance.
The Greening of West Germany
The decline of West Germany's forests has been
matched by the equally dramatic rise of the Green
Party-an uncompromising defender of the
environment. Founded just over four years ago, Green
support has grown to as much as 10 percent of the
electorate. The party won over 5 percent of the seats
in the Bundestag in the last federal election, and it is
also represented in six of 11 state parliaments. In
some local governments, the Greens are the second-
largest party. With three state elections this spring,
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the Greens stand an excellent chance of expanding
their influence even further. If present trends
continue, they could overtake the Free Democrats and
emerge from the 1987 national election as West
Germany's third-largest party.
Along with the opposition Social Democrats, the
Greens brand Bonn's environmental actions as "too
little, too late." The Greens demand speed limits now,
and both parties fought the three-year delay in the
introduction of catalytic converters. The Social
Democrats also are pushing a l- or 2-pfennig tax on
each kilowatt-hour of electricity, the proceeds to be
used for pollution control.
Clearing the Air Internationally
Fifty percent of the 7 million metric tons of acidic
materials falling in West Germany annually comes
from foreign sources, particularly France, Britain,
and East Germany, according to government
statistics. International cooperation on acid rain,
therefore, is a priority for Bonn, and the Kohl
government has found itself in the unusual position of
leading Western Europe on an international issue.
Kohl, host this May for the annual Big Seven
economic summit, intends to make environmental
protection one of his main themes. He has also
repeatedly stressed he wishes to discuss environmental
issues with East German leader Honecker when the
two eventually meet.
Bonn views the United States as the leader on
domestic environmental policy, but Kohl may urge the
United States to be more forthcoming at future
international environmental conferences. On the other
hand, the Soviets and East Europeans
are among the world's
major polluters and are doing virtually nothing about
it. They make empty promises and attempt to score
easy propaganda points at international conferences.
The Munich air pollution conference last June, for
example, could well have failed because of East Bloc
insistence on linking arms reduction with
environmental issues, according to the US delegation.
Foreign Minister Genscher last month in Prague did
win some cooperation on cross-border air pollution
with agreement that West German aid would be used
to clean up a Czechoslovak power station.
Bonn's action on auto emission standards, well ahead
of its West European neighbors, has been a source of
consternation within the EC. Last month, however,
the EC finally agreed to compulsory introduction of
lead-free gasoline not later than 1989, although the
Community's target date for auto emission controls
remains 1995. West German Interior Minister
Zimmermann, whose responsibilities include the
environment, believes that Bonn has now achieved
momentum in Brussels and that the EC soon will
adopt Bonn's 1989 date for emission controls as well.
If the EC fails to do so, Bonn will go it alone, invoking
the article in the Treaty of Rome that allows for
individual regulations in case of danger to health or
environment. The EC also is considering stricter
German-style emission standards for large factories,
but agreement any time soon is highly improbable.
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East Germany:
New Assertiveness
East German attitudes and behavior during the past
year, especially with regard to East-West relations,
suggest a new assertiveness that is uncharacteristic
for one of the most cautious and conformist allies of
the Soviet Union. This assertiveness seems founded on
an increase in the self-confidence of the East German
leadership as the result of longstanding trends. We
expect East Berlin to continue its course this year,
particularly in the area of intra-German relations,
although it may move in a more subdued manner than
in early 1984.
Differences With Moscow
For most of its 35 years, East Germany has had a
reputation as one of Moscow's most conformist allies,
anxious to avoid any signs of public differences with
the Soviets and usually cautious in its dealings with
the West. During the past 12 to 15 months, however,
East German actions, particularly those in its
relations with West Germany, have been more like
those of maverick Romania. Several observers have
raised the possibility that this behavior indicates the
emergence of a "new" East Germany more willing to
pursue its particular interests. We believe the
evidence of East Berlin's assertiveness over the past
year is considerable:
? At least since West Germany made its first DM 1
billion loan guarantee in mid-1983, East Berlin has
pursued good relations with Bonn more avidly than
it has expressed fidelity to Moscow's East-West line.
Party and state leader Honecker's pledge to "limit
the damage" to East-West relations caused by INF
deployments was followed by a string of intra-
German agreements, the meeting of Honecker and
West German Chancellor Kohl at the funeral of
former Soviet President Andropov, and a second
large loan. This all led up to weeks of Soviet
pressure against the East German course, including
tough public criticism in Pravda, before Honecker
finally postponed his trip to West Germany. East
Berlin continues to signal to the West Germans that
further intra-German progress will eventually be
possible, while suggesting that further major
developments may have to await a general warming
of East-West relations.
? In late 1983, Honecker said that deployment of new
Soviet missiles in East Germany "caused no joy"
there. East German rhetoric continued to emphasize
dialogue with the West, often in contrast to Soviet
statements. In July, for instance, the East German
party newspaper toned down anti-Western language
in the communique of a Pact ideology secretaries'
meeting.
? East Germany joined the Soviet-led boycott of the
Los Angeles Olympics, but without lending strong
propaganda support and with some signs of
disgruntlement.
? Despite chilly US-Soviet relations, the East
Germans have signaled new interest in improved
relations with Washington. In February 1984 they
gave Assistant Secretary of State Burt a high-level
reception, and in June they sent high-level
representatives to the US Embassy's celebration of
the 10th anniversary of bilateral diplomatic ties.
Although there are persuasive reasons for concluding
that the apparent East German-Soviet differences of
the past year are real, it cannot be ruled out that they
may be sham. East Berlin's apparent differences from
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EUR ER 85-004
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Moscow on East-West issues could be a tactical move
intended to further divisions within NATO. If this
were the case, the appearance of divisions within the
Warsaw Pact would be intended to encourage the
West Germans and other European NATO members
toward special relationships with East European
countries that could complicate NATO's
decisionmaking~
Numerous East German officials, however, including
diplomats, foreign policy experts, and party
secretaries Axen, Haeber, and Naumann have
acknowledged various difficulties with Moscow,
The warm intra-
German atmosphere that drew fire from Moscow,
moreover, had real costs for East Berlin in raising
popular expectations of steps East Berlin was
unwilling to take. The regime was unlikely to have
incurred such costs just to pull the wool over Western
eyes
Reasons
We believe East Germany's new assertiveness reflects
an increased self-confidence arising from the
country's performance over recent years and from a
number of external factors. East German leaders have
reason to be satisfied with their success in
maintaining relative domestic tranquillity and
economic stability during recent years. Despite the
potential disruptive influences of events in Poland and
of the anti-INF campaign in West Germany, the
party remains firmly in control. It is even reasserting
a degree of influence over Protestant church activities
that it had let lapse during 1983 because of the
Luther Year ceremonies and the need to show
tolerance for the autonomous peace movement the
church sheltered.
At the same time, East Berlin was weathering
external financial difficulties much better than most
of its East European neighbors. By the time of the
first "jumbo" loan from West Germany in July 1983,
for instance, East Germany had already weathered
the worst of its debt service crunch and was inspiring
renewed confidence among bankers. In the aftermath
of the Solidarity period, East German leaders
probably also saw themselves as more important to
the Warsaw Pact. The huge Soviet-East German
Mukran ferry project,' for instance, demonstrates
Moscow's need for links to East Germany other than
through Poland.
East German leaders probably were encouraged to
test their room for maneuver by developments in
Moscow. Former Soviet leader Andropov's suggestion
in a February 1983 Kommunist article that East
European experiences and, implicitly, views could be
as valid as Soviet ones and his friendly meeting with
Honecker in May of that year may have contributed
to East Berlin's desire to move forward in its relations
with West Germany. The confusion about the Soviet
leadership situation later that year and the perceived
weakness of General Secretary Chernenko since then
may also have led the East Germans to believe that
they could and should take some risks in pursuing
Pact policy and interests as they saw them.
The East Germans also understand that the
appearance of disagreement with Moscow, by giving
an opening to those in the West who wish to practice
policies of differentiation, may help ensure their
continued access to Western financing and
technology. In the face of increasing economic
demands from the Soviets and the need for industrial
modernization, this consideration may have some
weight. East Berlin may also be trying to protect itself
from a future East-West debt crunch by cultivating
an image that distinguishes it from its allies.
Although the East German leadership operates by
consensus, there is some reason to believe that
differences with Moscow have caused internal strain.
Observers of East Berlin continue to report rumors of
"neoconservative" views among East German leaders,
meaning dissatisfaction with aspects of policy that
displease some Soviets, such as the wave of emigration
in 1984.
' The project involves construction in East Germany of six large
ferries, each with a capacity of up to 103 railcars and 12,000 tons of
cargo, as well as building piers, railyards, and support structures at
both ends, for a service in the Baltic Sea between Mukran on East
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Some level of success in dealing with the Soviets
remains a make-or-break test for Honecker,
particularly in view of East German officials'
generally realistic appraisal of their dependence on
Moscow. He has not yet failed that test, however, and
seems firmly in place. His international travels have
somewhat restored his image as a statesman, and
recent approving references to him in the Soviet press
suggest that he has nearly completed his fence-
mending in Moscow. The only current point of
contention may be Honecker's desire to visit Rome
early this year
Outlook
The self-confidence revealed by East Germany's
recent assertiveness is likely to persist. Indeed, East
Berlin leaders seem to believe that their country has
somehow "come of age." East Berlin has clearly
shown tactical flexibility, for instance, in
accommodating to Soviet desires since September
without foreclosing options for the future. There is no
doubt that East German assertiveness remains subject
to events in Moscow, but it appears that East Berlin's
restraint is no longer something Moscow can assume.
Whatever the degree of assertiveness in the future, we
expect it to be most apparent in the field of East-
West, and particularly intra-German, relations. In
relations with the Third World, East Germany is
accustomed to gaining favor by supporting Soviet
objectives. Its only significant interests there-trade
and raw materials supplies-are unlikely to require
East Berlin to change its habit. In intra-German
relations, by contrast, any of several low-level
agreements between Bonn and East Berlin could be
concluded,' and we expect some of them in the second
half of 1985 unless Soviet-US relations are chilly and
Moscow takes the initiative to prevent them.
Rescheduling Honecker's postponed trip to West
Germany, however, would be virtually impossible
before late 1985 and unlikely until well into 1986.
Virtually any significant change in the Soviet
leadership situation could influence East Berlin's
assertiveness. Even under the present leadership, East
Berlin's room for maneuver can be limited by Soviet
reactions to the public statements of West German
politicians. Bonn's linkage between its second
"jumbo" loan guarantee for East Berlin last July and
East German travel concessions, for instance,
increased Moscow's doubts about Honecker's
projected trip. It was not the facts of the deal,
moreover, but the suggestion of strong West German
influence on East German policy that seems to have
affected Moscow.
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Hungary:
Radar Ponders His Future
Speculation is growing in Budapest about major
leadership changes that will occur at the Hungarian
Communist Party Congress in March. Some claim
that the 72-year-old Kadar will retire completely or
assume a less demanding post than First Secretary
and play a senior statesman's role. Barring a sudden
decline in his health, we believe Kadar will continue
as party chief but realign the leadership in a way that
will set the stage for grooming a successor. None of
his potential successors would be likely to deviate
much from the economic reforms and relatively
relaxed political style that have been hallmarks of his
regime, but none would have Kadar's experience,
prestige, or shrewdness. A new leader would probably
have more difficulty withstanding Soviet pressure to
adopt more orthodox policies.
Budapest thrives on political gossip, and the amount
of speculation normally goes up every time a party
congress approaches. During the months preceding
the congresses in 1975 and 1980, Budapest was rife
with speculation about Kadar's departure and other
leadership changes. Some of it, as now, probably
originated with people trying to breathe life into their
personal ambitions. But time has made Kadar's
succession a real issue, and there is reason to believe,
as some reports indicate, that Kadar wants to address
it in a sensible, orderly fashion before his health
deteriorates.
Kadar's Options
Elevation to a senior statesman's role might appeal to
Kadar as a means to preside over a smooth transition
of power and secure his political legacy and place in
Hungarian history. Kadar would not be the first East
European leader to take such a step. More than a
decade ago Yugoslavia's Tito, then in his mid-
seventies, created a collective party executive and took
on what was supposed to be a less demanding
supervisory role.
Budapest's relations with Moscow.
Kadar also might opt for a party presidency as a way
to concentrate his energies on guiding Hungary
through particularly difficult times. The government
must carefully balance the new economic reform
program, replete with uncertainty and
decentralization, with the need for central
management of resources to improve the balance-of-
payments picture. Meanwhile, the heavy foreign debt
repayment schedule and continuing dependence on
imported energy and other raw materials render the
Hungarian economy extremely vulnerable to external
shocks. At the same time, the changes in the
Kremlin's geriatric leadership-and the potential for
more-have injected an air of uncertainty into
In our view, the assumption of a senior statesman's
role would have serious drawbacks for Kadar. It
would not be easy for a man long accustomed to
holding the reins of power to step back from the arena
of daily politics. In addition, the Hungarian Party
chief might be wary of any new arrangement in which
a designated heir apparent could threaten his
authority. We suspect Kadar would prefer to avoid
these pitfalls. The guidelines for the party congress
recently published by the Central Committee give no
hint of coming changes in the party's structure or
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statutes that probably would be required to create a
new position for him.
Instead, Kadar may choose to retain the First
Secretaryship and move more slowly toward a
transition
a lesser post as one of several deputy premiers. We
believe that Marothy's chances to win the party
leadership in the near future have been seriously
damaged but that at his age he has plenty of time to
recover.
Szuros, 51, whose future appears to be bright, may
gain a Politburo seat at the party congress. A former
Ambassador to Moscow and East Berlin, he has spent
his entire career as a foreign affairs specialist and
only gained his party secretary position a year ago. He
appears to enjoy Kadar's favor, but he now seems too
junior and too inexperienced to be a serious contender
for the party's highest office
today's leading
contenders to succeed Kadar include Ferenc Havasi
and Karoly Nemeth, who are both Politburo members
and party secretaries, Politburo member Laszlo
Marothy, and party secretary for international affairs
Matyas Szuros. As party secretary for economic
affairs, Havasi, 55, is closely associated with the
economic reform program, which has long been the
focal point of Hungarian politics. On the negative
side, he has relatively little experience in other policy
areas.
Nemeth, 64, has been the number-two man in the
party for more than a decade. Moreover, his long
tenure as secretary for cadre affairs has given him the
opportunity to build a network of supporters
throughout the party bureaucracy. He appears to lack
the stamina and verve demanded of a party leader,
however,
Marothy, an ambitious politician who won a
Politburo seat at 38, is Kadar's favorite for the
succession. Marothy, however, suffered an apparent
demotion last month when he lost his job as head of
the Budapest party organization and was appointed to
Kadar's successor must, of course, have Moscow's
blessing. Since Chernenko came to power, the
Kremlin has shown little enthusiasm for Hungarian
economic policy, which could reduce Havasi's
chances. Szuros could also encounter difficulty in
securing Soviet favor. During the past 18 months, he
has written several public statements asserting the
primacy of Hungarian national interests over
responsibilities to the Soviet Bloc.
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Another change
in the Soviet leadership, however, could again affect
Moscow's attitude toward potential replacements for
Kadar. Soviet party secretary Gorbachev, for
example, is rumored to be more favorably inclined 25X1
toward Hungarian economic reform
The Impact of Leadership Change
We do not expect that any of Kadar's potential heirs
would place Hungary on a radically different course.
Kadar has used his long tenure in office to eliminate
opponents gradually from leadership posts.
Consequently, all of the leading succession candidates
are loyal Kadar lieutenants who seem to share his
basic views and who are closely associated with his
policies. More important, none of the contenders is
likely to reverse policies that have made the Kadar
regime one of Eastern Europe's most successful and
popular governments.
On the other hand, Kadar has proved extremely adept
at gauging the level of Soviet tolerance for Hungarian
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political and economic liberalism. Not only does he
enjoy high prestige as the Warsaw Pact's senior
statesman, but he also seems to have Moscow's trust
and forebearance as the man whose controversial
policies rebuilt Communist rule in Hungary after the
1956 catastrophe. A less experienced and less
effective successor will be less able to protect the
Hungarian experiment against any Soviet pressure for
a return to orthodoxy.
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Secret
The Call for a Worldwide
Communist Party Conference
A leading Czechoslovak Communist paper, at
Moscow's behest, has recently echoed East German,
Austrian, and Latin American Communists' calls for
a worldwide meeting of Communist parties. The
proposal is likely to draw support from the Spanish-
who, until recently, were against such a meeting-and
French parties, but the Japanese, Italians, and
Yugoslavs remain opposed. A worldwide conference is
unlikely for the next few years, but some regional
meetings are possible. The Soviets are probably
pushing for a worldwide conference because they see
significant propaganda advantage in convening a
conclave that would project the image of international
Communist unity and provide a platform for
attacking US nuclear policies.
A Forum for the Soviet Line
The World Marxist Review Conference held on 4-6
December in Prague was the latest of its regular
conclaves. The parties usually agree on a theme
beforehand in order to minimize divergent interests,
but invariably Moscow inspires cooperative parties to
introduce a theme on the floor of the conference that
has not been coordinated in advance. Disagreements
usually start at the outset of deliberations over the
Review's quality and content, since there is a basic
contradiction between the journal's mandates to
respect the independence of each party and to support
proletarian internationalism-a code term for loyalty
to Moscow.
The bitterest dispute usually erupts over the themes
pushed by the Soviets. In 1977 Eurocommunists
clashed with pro-Soviet parties over Soviet leadership
of the world workers' movement and Moscow's
proposal to convene a world party conference. In 1981
both the theme of the meeting-criticism of China-
and the renewed "spontaneous" call by the
Czechoslovak delegation for a world conference
occasioned considerable dissent. A second
Czechoslovak proposal to establish an executive
committee of the editorial board to serve as
spokesman between meetings led West European
representatives to accuse the Soviet Union of
attempting to reestablish hegemony through a
permanent organ reminiscent of the Cominform. The
Italians subsequently threatened to suspend their
World Marxist Review representation.
Parties Unite on Struggle for Peace Somehow ...
The debate over the unplanned theme during the 4-6
December meeting was characteristically heated,
illustrating vast differences in regional Communist
priorities. Moscow proposed "the danger of nuclear
war" as the central theme and termed the prevention
of the militarization of space as critical. Latin
American representatives reportedly wished to 25X1
emphasize "the struggle against imperialism," and
the West Europeans insisted on the primacy of "the
struggle against unemployment." According to the
Czechoslovak press, the Soviet topic carried the day
and the conference emphasized that all
Communists-above all, those from the Socialist
countries-must unite to "develop an action program
... [and] ... act as organizers of the mass peace
movement."
Serious differences among the participants made it
unlikely that they would subsequently agree on a
unified plan of action. Czechoslovak Central
Committee staffer Ivan Hlinka admitted in an article
published in Bratislava Pravda that the Japanese
Communists "diverged from the course."~
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... but Disagreement on a Worldwide Conference
It was in this atmosphere of disagreement that pro-
Soviet parties, almost certainly at Moscow's behest,
raised the issue of holding the first worldwide
Communist conference since 1969. Not surprisingly,
the delegates at Prague did not reach a consensus.
The communique did not mention renewed calls for
the conference made publicly and at the meeting by
Latin American, Austrian, and East German
delegates:
Writing in the 8 January Bratislava Pravda, Hlinka
added a Czechoslovak voice to the calls for a global
conference and also implied support for prior regional
meetings.
While the French, Spanish, and other parties have
staunchly opposed similar proposals in the past, the
current lack of a Eurocommunist front may mean
that the Italian and Japanese Communists will
emerge as the major opponents of a meeting. The
Yugoslavs are also likely to pose objections. After the
December meeting, they and the Italian Communists
restated publicly their rejection of a worldwide
conference, reflecting their longstanding belief that
Moscow and its surrogates would use such a gathering
to restrict other parties' independence. On 13
December a leading Italian Communist openly
opposed the "untimely and impractical" idea, a day
after Borba, a semiofficial Yugoslav daily, criticized
the "persistent repetition" of "outdated" ideas.
The staunchly independent Japanese Communist
Party (JCP) in December, as at previous World
Marxist Review meetings, opposed the proposed
global conference because of inevitable Soviet control
over its proceedings.)
The Japanese criticism of the Soviets in
Prague provided evidence that recent bilateral
contacts between the JCP and the Soviets have not
narrowed differences on approaches to the
international Communist movement.
After the Prague Conference
The small, pro-Soviet Austrian party has endorsed a
worldwide Communist party conference. Although
there has been no further indication of West
European backing, we expect the Portuguese and
Greek Communists and some minuscule hardline
West European parties, factions, and splinter groups
to support a global meeting and to criticize the
Eurocommunists. Pro-Soviet minorities in the
Finnish, British, Belgian, and Dutch parties almost
certainly would like to use a meeting as a tool in their
struggle to replace Eurocommunist majorities in their
party leaderships or to create new parties altogether.
Splits in these parties, while destructive of
Communist unity, could at least provide Moscow with
more reliable organs in Western Europe for "peace"
propaganda.
The Spanish Communists appear to have changed
their minds since the Prague meeting./
The party leadership strongly desires
to blunt the growth of (and Soviet support for) a rival
pro-Soviet Communist party that has attracted
important defections from the older group.
Nevertheless, the older party's leaders are trying to
attract moderate ex-Eurocommunists back to the fold
and are unlikely to take an active pro-Soviet role.
They probably would be relieved if Italian
Communist opposition to the meeting scuttled it.
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Like the Spanish Communists, the French party-
silent so far on the proposal-is less likely than the
Italians to oppose a worldwide Communist meeting.
Although French party boss Marchais-who acted for
a while like a Eurocommunist-declared at the 1976
Berlin conference of European Communist parties
that further such conclaves were unnecessary, the
French party in 1980 convened a meeting of European
parties that endorsed Soviet security policies.'
Moreover, Marchais is struggling to preserve his
leadership in preparation for his party's congress in
February. He and pro-Soviet hardliners currently
holding sway on the Politburo might promote an
international conference to undermine
Eurocommunist dissidents who advocate greater
independence from Moscow and closer ties to other
West European parties.
A French delegation to any meeting would support
Moscow on major East-West issues. Nevertheless,
party leaders know that their support for the Soviet
invasion of Afghanistan and for martial law in Poland
contributed to the party's precipitous decline at the
polls. Thus they might stress for public consumption
that they retain the right to an independent road to
socialism. French
delegates to an October meeting sponsored by the
World Peace Council (a major Soviet front
organization) supported the Italians in blaming both
superpowers equally for the arms race.
Outlook
A worldwide Communist conference remains a
prospect for the distant future, since there are enough
Eurocommunist and independent parties to prevent
anything approaching a global meeting with an
agreed agenda. A major obstacle yet to be faced is
whether to invite the Chinese. The decline of
Eurocommunism, however, increases the likelihood
that most West European parties would attend a
regional meeting, although participants are unlikely
to assemble until they can agree on at least general
guidelines toward peace, unemployment, and other
issues.
' The Italian, Yugoslav, Spanish, and other parties embarrassed
Marchais by boycotting the conference; he almost certainly would
be delighted if the Italians in particular were isolated this time
The Soviets probably would exploit a conference
because they wish to activate the peace movement.
That is probably more important to Moscow now than
Communist unity. They furthermore believe they are
less vulnerable than Western governments to public
"peace" pressure. Nevertheless, neither global nor
regional meetings would suffice to increase Soviet
influence significantly-much less establish Soviet
control-over the West European peace movement, a
complex web that includes organizations increasingly
inclined to blame both superpowers equally for
international tensions.
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Economic News in Brief
Paris Sends a Strong Signal: The government has
replaced the head of Renault to emphasize that
national companies are expected to be profitable by
the end of the year ... Renault had a bad year in 1984
and has dropped from Europe's largest auto producer
in 1983 to sixth last year ... the new chairman,
Georges Besse, is fresh from saving the nationalized
metals company Pechiney by drastic cost cutting; at
Renault, however, he will face the increasingly
militant Communist-dominated CGT union which is
looking for another victory after its success in
derailing flexibility negotiations in December.
IMF Program in Portugal: Beginning in January
Lisbon raised prices for government-controlled goods
and services by an average of 19 percent ... Lisbon
had promised the IMF to take this step last year to
cut subsidies and to limit growth of the budget deficit
... quarterly increases of some prices will be essential
to restore state enterprises' financial health and
ensure that the government deficit does not surpass
Lisbon's target
Socialization of Greek Industries Promised: Prime
Minister Papandreou has vowed again, as he has since
1981, to socialize key industries such as mining,
shipping, steel, and those engaged in foreign trade ...
over 100 financially weak firms are already under
partial state management ... private investment likely
to continue falling as businessmen fear Athens will
nationalize all private industry.
EC Wine Trade: EC has decided to request GATT
panel proceeding against US Wine Equity Act,
according to diplomatic reporting ... the decision
reverses Community's earlier policy to await Act's
implementation and possible antidumping petitions by
US grape growers ... action was pushed by France
and Italy and was intended to warn United States not
to restrict imports of EC wine.
Progress on Polish Debt: Warsaw recently initialed an
agreement with the Paris Club to reschedule about
$11 billion in principal and interest that came due
between 1982 and 1984 ... terms include an 11-year
rescheduling with a five-year grace period ... the
Poles, however, almost certainly will not be able to
pay the $1 billion required by the agreement this year
because of other financial commitments ... Warsaw
will lobby the Western governments for new credits
and renew efforts to tie repayment to credits. 0 25X1
Yugoslavia's Rescheduling Negotiations Bog Down: 25X1
Third-round meetings in January between Belgrade
and its commercial creditors stalled over Belgrade's
unwillingness to compromise, according to US
Embassy reporting.... Major obstacles remaining
include the structure of consolidation, interest rates to
be charged, and the criteria for future IMF
supervision ... Belgrade's rigid stance may be due to 25X1
the need to appease domestic hardline critics and is
likely to continue to complicate rescheduling
negotiations.
Bulgaria Encourages Part-Time Employment: The
Council of Ministers recently issued a decree
facilitating part-time and flexible time employment
for housewives, students, and retired people ... decree
aims to improve stagnating labor force growth and to
help reconcile family and job commitments for women
... the new edict is unlikely to solve Bulgaria's more
serious problems with quality control and low
productivity growth.
Czechoslovakia's Campaign for Self-Sufficiency:
Prague's attempt to increase food supplies is on course
... second straight record grain harvest has led to
strong agricultural performance in 1984 . . . will
reduce import demand from Western suppliers of
grain and high-protein feedstuff in 1985.
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