NATIONAL INTELLIGENCE DAILY THURSDAY 21 MAY 1981

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83T00296R000300010008-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 20
• Document Creation Date: December 22, 2016
• Document Release Date: April 15, 2010
• Sequence Number: 8
• Publication Date: May 21, 1981
• Content Type: REPORT

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Central
Intelligence
6 /~- r -r Y,
Copy 2 2 9
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Top Secret
Lebanon: Syrian Media Commentary . . . . . . . . . . . . 1
Libya: Aid to Syria and Palestinians . . . . . . . . . . 3
Mexico-USSR: Foreign Secretary's Visit to Moscow . . . . 4
USSR: Maneuvering on CSCE . . . . . . . . . . . . . . . . 6
UK: Controversy Over Defense Spending . . . . . . . . . . 7
China-Vietnam: Exploiting Border Tension . . . . . . . . 8
Thailand: Possible Change in Refugee Policy . . . . . . . 9
Yugoslavia: Continued Unrest in Kosovo . . . . . . . . . 10
Special Analysis
Western Europe: Implications of Mitterrand's Victory . . 11
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Boundary representation is
not n arily authoritative.
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Top Secret
LEBANON: Syrian Media Commentary
The Syrian media have begun to suggest cautiously that Damas-
cus is prepared to accept a political solution to the missile crisis.
public opinion for a compromise.
The newspaper of the ruling Ba'th Party yesterday
said that Syria has successfully defeated US and Israeli
moves to divide Lebanon and made progress toward achiev-
ing a new political accord among the Lebanese factions.
Such claims of victory may be intended to prepare Syrian 25X1
President Assad also gave some hints of flexibility
in his press conference yesterday when he said US media-
tion efforts should not be written off. He noted that
Syria deployed missiles to Lebanon only after Israeli
airstrikes last month and that for years Syrian troops in
Lebanon had "no need for them."
He also claimed that Saudi Arabia has agreed to re-
sume financial support for the Syrian peacekeeping force
Prime Minister Begin praised Saudi efforts to re-
duce tensions yesterday--reversing his earlier criticism
of the Saudi role. Begin also endorsed continued US
mediation.
Soviet Commentary
Soviet commentators appear increasingly uneasy that
Syria may be amenable to a US-brokered solution. A
TASS report yesterday urged Syria to resist any settle-
ment that includes early withdrawal of the Syrian mis-
siles from Lebanon or that affects Palestinian interests.
The Soviets continue to push their own proposal for an
international conference on the Middle East.
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Arab Foreign Ministers Meeting
Arab League Foreign Ministers will meet tomorrow
in Tunisia to discuss the Syrian-Israeli situation. PLO
chief Arafat has been urging such a meeting because
of his concern that Palestinian interests are being
overshadowed by the Syrian-Israeli crisis. Arafat will
ask the Arabs to endorse the PLO's presence in Lebanon
and its freedom to operate against Israel from Lebanese
territory.
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LIBYA: Aid to Syria and Palestinians
Libyan Leader Qadhafi is exploiting the crisis in Lebanon to
increase his influence in Syria and among Palestinian factions and
to enhance Libya's standing in the Arab world.
Qadhafi is eager to demonstrate to President Assad
the value of Libya's friendship and to increase his lever-
age over Syria. Qadhafi may hope that his support will
lead to a revival of the planned merger between Libya and
Syria that was announced in September 1980.
Qadhafi has substantially increased military aid to
radical Palestinian aroups that he has long funded gener-
ously.
The Libyans also have been sending aid directly to
various leftist Lebanese militias and to the pro-Syrian
Christian forces of former President Franjiyah. As a re-
sult, Libya has probably gained additional influence with
radical Palestinian and leftist groups. Since Tripoli
believes the fighting in Lebanon is in its interest, it
probably will try to encourage more fighting even if Syria
and Israel come to an agreement.
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MEXICO-USSR: Foreign Secretary's Visit to Moscow
Foreign Secretary Castaneda's visit to the USSR this week
reflects Moscow's persistent effort over the past few years to
cultivate Mexico and to encourage it not to cooperate with the US.
In discussing Central America, the Soviets are
likely to urge the Mexicans toward greater activism in
the region--a role that Moscow believes will help con-
strain US opposition to leftist takeovers there. Presi-
dent Lopez Portillo and other top Mexican officials have
recently expressed increasing alarm about US policy to-
ward Central America. They have been careful, however,
to warn both the US and the USSR against making the re-
gion an area of great power competition, and Castaneda
probably will,be cautious about aligning publicly with
the Soviets.
Both Mexico and the USSR want to expand their
limited trade ties. They evidently plan to sign an
agreement for the sale of Mexican sulfur, which--if
delivered in 1981--would triple the value of Mexican
exports last year to the USSR.
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USSR: Maneuvering on CSCE
Soviet delegates at the CSCE review session in Madrid are of-
fering concessions on secondary issues to attract neutral and non-
aligned support for Soviet positions and elicit Western concessions.
Since the meeting resumed on 5 May, the Soviet dele-
gates have cultivated an image of reasonableness to break
the deadlock and gain agreement to convene a European
security conference. The Soviets are now threatening to
delay, rather than veto, the convening of another CSCE
review session unless the current gathering agrees to
hold a security meeting. The deputy chief of the Soviet
delegation recently estimated that the next session might
be held in three years if a European security conference
were convened, but in five or six years if it were not.
To expedite preparations for a security meeting,
Moscow also is hinting that it would accept the Madrid
rules of procedure. Since the Soviets have always held
fast over this point, they are in effect offering the
West a compromise on rules in order to move forward on
security issues. They also are proffering concessions
that would facilitate family reunifications and accommo-
date Western preferences on resolutions against terrorism
and for strengthening of human contacts.
Moscow hopes these concessions and its recent en-
dorsement of the draft final communique prepared by neu-
tral and nonaligned participants will persuade these
states to urge the West to moderate its insistence on im-
proving the human rights provisions of the Helsinki Final
Act and to alter its criteria for a European security
conference. The USSR seeks, at a future security gather-
ing, Western agreement to confidence-and-security-building
measures that either extend beyond Europe to the west,
or cover naval and air activities if all of European Rus-
sia is subject to such measures.
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UK: Controversy Over Defense Spending
Prime Minister Thatcher has Zaid to rest for the time being
widely published rumors of massive cuts in the UK's defense spending,
but the surrounding political uproar probably has made it more di-- 25X1
ficult for the government to reduce military programs.
The controversy erupted earlier this week when Royal
Navy Secretary Speed seemed to confirm the rumors by
warning publicly of disastrous consequences if the govern-
ment were to make substantial reductions in the surface
navy. Speed, who was then fired by Thatcher, may have
overreacted to some of a wide range of defense budget
options under review. He apparently was trying to force
Thatcher into affirming the basic inviolability of the 25X1
UK's conventional capability.
The affair drew a strong protest from the mostly
rightwing Conservative backbenchers, the heart of
Thatcher's parliamentary support. Although the govern-
ment almost certainly would have rejected the more ex-
treme budget options, this reaction is a warning to
Thatcher not to cut too deeply into the UK's defenses.
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During two days of heated parliamentary debate,
Thatcher and Defense Secretary Nott were forced to reaf-
firm the government's intention to increase defense spend-
ing by 3 percent per year, in real terms. They indicated,
however, that cuts will still have to be made in existing
and planned programs and that difficult choices still lie
ahead. 25X1
The Trident system will remain sacrosanct, but, be-
cause of its longstanding commitment not to let the cost
of the Trident prevent spending on conventional programs,
the government will strive to avoid any deep cuts. The
review probably will recommend that cost-cutting measures
be spread across all the services rather than focused on
one of them. Interservice rivalry and leaks will prompt
more press speculation and demands for further government
clarifications before the review is completed in July.
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CHINA-VIETNAM: Exploiting Border Tension
China is using increased tension along its border with Viet-
nam primarily to encourage opposition by the Association of South-
east Asian Nations against the Vietnamese occupation of Kam uchea 25X1
and to push for Chinese participation in a settlement.
An authoritative article in People's Daily on Tuesday
condemned Hanoi's support for a regional conference that
excludes China instead of an international conference on
Kampuchea, which Beijing and ASEAN support. With the
ASEAN Foreign Ministers scheduled to meet in mid-June
and the international conference tentatively planned for
July, Beijing probably decided to reinforce its position 25X1
that it must be involved in any settlement.
According to press reports, the level of fighting
is the highest since China invaded Vietnam in 1979. The
Chinese claim to have killed more than 250 infiltrating
Vietnamese troops since 7 May. Hanoi asserts that the
Chinese have shelled Vietnamese villages after seizing 25X1
high ground inside Vietnam.
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THAILAND: Possible Change in Refugee Policy
Thailand mau be moving toward a tougher policy on Indochinese
refugees.
The Supreme Command of Thailand has informed the
International Committee of the Red Cross that Vietnamese
refugees no longer will be accepted overland via Kampu-
chea. The government is considering consolidating the
number of refugee camps and stepping up the cross-border
repatriation of Kampuchean refugees. It also hopes to
expedite departures to third countries.
Popular sentiment in Thailand is overwhelmingly
against the refugees. Bangkok clearly hopes that by
making the route more difficult it will reduce the at-
tractiveness of Thailand as a refugee transit point.
The Thai Government has enjoyed an international
reputation for humanitarian treatment of refugees, how-
ever, and the revelation of these stringent measures may
endanger international support for such high-priority
issues for the Thai as the impending UN-sponsored confer-
ence on Kampuchea. The new policy will meet strong oppo-
sition from the Red Cross and the UN High Commissioner
for Refugees.
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Italy
Republic boundary
Autonomous province
boundary
o 100
TIRANE
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Belgrade is still relying on ad hoc measures to prevent addi-
tional unrest in Kosovo Province, but problems with ethnic Albanians
will continue there and may spread.
Provincial leaders closed Pristina University after
students demonstrated twice in a week and had again de-
manded that Kosovo, an autonomous province of Serbia, be
granted republic status. Belgrade has refused, fearing
that it would antagonize the Serbs and aggravate the na-
tionalities problem in other parts of the country.
Although the Yugoslav leaders believe that the uni-
versity is the center of nationalist activities in Kosovo,
its closure is unlikely to dampen sentiments, which are
apparently more widespread. Leaders in the neighboring
Republics of Macedonia and Montenegro also seem worried
about their Albanian minorities.
Five Albanian nationalists on trial in the Macedonian
capital of Skopje have been convicted of "hostile activity"
against the state over the past two years. In Montenegro,
authorities have admitted that they are having problems
with "nationalistic excesses."
Purges and resignations in the local party, the media,
and the university in Kosovo continue, but the leadership
in Belgrade appears unable to deal with the basic problems
of Albanian-Serb animosity and the backward economy in
Kosovo. Preoccupation with the situation in Kosovo may
account for the delay in electing a new secretary of the
party presidium to replace the incumbent, whose two-year
term expired last week.
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WESTERN EUROPE: Implications of Mitterrand's Victory
For most of France's neighbors, the costs and benefits of
Francois Mitterrand's presidency Zook about even. Several govern-
ments believe that the departure of President Giscard could hurt
West European economic cooperation, especially within the EC. This
could aggravate already strained relations on Community internal
problems and increase French pressure for trade protection. Most
West European governments, however, view Mitterrand as likely to be
more willing to coordinate foreign policy within the EC forum. He
should differ little from Giscard on major policy issues, but his
attitude toward the EC's Middle East initiative is closer to the
Dutch position, which leans toward Israel. Mitterrand's policy
toward the Third World also may differ substantially from Giscard's.
The EC governments' efforts to assess the economic
impact of Mitterrand's election on the Community are com-
plicated by the need to await the outcome of the French
legislative elections and Mitterrand's decision on the
composition of his government.
In the short run, EC leaders will be most concerned
over the effect of Mitterrand's domestic economic policies.
Stimulative measures of the kind he has in mind could
throw France out of phase with its partners. Higher in-
flation and increased EC export penetration of the French
market could call into question France's continued mem-
bership in the European Monetar System and adherence to
intracommunity trade rules. 25X1
Mitterrand's election is unlikely to lead to any
breakthroughs on several divisive issues and may even
aggravate them. For example, EC members may find it even
more difficult to agree on reform of the Common Agricul-
tural Policy. West Germany's push for rapid phasing out
of national subsidies to domestic steel industries may
meet with even stiffer opposition.
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The French also will work harder for adoption of
EC-wide limits on Japanese auto imports, which Bonn op-
poses. In addition, Mitterrand's concern over protecting
jobs is not likely to ease the French position on the
four-year-old debate between Paris and London over access
to British coastal waters by French fishermen.
The continuation of the close collaboration that has
typified Franco-German relations since the mid-1970s will
depend on the ability of Chancellor Schmidt and Mitterrand
to establish a sound working relationship. While Giscard's
defeat could lead to a reduction in bilateral cooperation,
Schmidt will try to prevent this. Despite his lack of
respect for Mitterrand and his support of Giscard's re-
election, Schmidt may have an easier time dealing with
Mitterrand, who is less overbearing than Giscard.
Good relations with Mitterrand could mitigate eco-
nomic problems anticipated in the EC and strengthen the
Chancellor's influence on foreign affairs issues. Schmidt
may find that cooperation with Mitterrand appeases critics
within the left wing of his Social Democratic, Party who
were suspicious of his deference to Giscard.
Mitterrand's victory also could facilitate West
Germany's ambitions to develop greater EC political co-
operation. Mitterrand is more "European" than Giscard,
and he may welcome this approach, especially since EC
members have announced they will include security issues
in their political discussions.
Little Advantage for the UK
The British, for now, probably will not have to con-
tend with the Franco-German partnership that has been so
prominent within the EC, and London's influence on EC
decisionmaking may show a slight increase. Nonetheless,
Mitterrand is not likely to be more accommodating to the
UK on EC internal issues, and economic doctrinal differ-
ences will place additional strain on his relations with
Prime Minister Thatcher.
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London, on the other hand, may find it easier to
use its approaching term as EC President to direct EC
foreign policy deliberations along lines consistent with
British policy, which has generally been closer to that
of the US than have the policies of the other EC members.
The UK's ability to win EC support for its proposals,
however, will be hindered by Mitterrand's preoccupation
with domestic affairs and possible French differences on
Middle East and African issues.
The concern displayed by most of the smaller EC
members about their vulnerability to the whims of Schmidt
and Giscard is offset by a new concern that the EC may be
weakened by the loss of a firm Franco-German relationship.
The impact of Mitterrand's election on the domestic
politics of the EC members also is cause for concern.
Italy's Christian Democrats are worried that their So-
cialist partners in the governments will make substantial
gains in regional and local elections next month. Gov-
ernments in the Netherlands, Belgium, Greece, and Spain
also expect that Mitterrand's victory will encourage
efforts by local Socialists to exert influence.
For Spain and Portugal, Mitterrand may be an even
tougher obstacle to their entry into the EC than was
Giscard, who wanted to postpone enlarging the EC primar-
ily to ensure farm support for his reelection. Mitterrand
favors continued delay because of high French unemployment
and concern over industrial and agricultural competition.
EC members will delay dealing with the Community's
basic problems at least until fall, when the direction
of French policies should be clearer. The EC summit in
late June, originally expected to launch negotiations for
farm policy reform, probably will focus on exchanging
ideas.
There also will be little action in the near future
to further EC political cooperation. Mitterrand's elec-
tion could give the EC-Ten a face-saving way to postpone
additional action on their Middle East initiative until
the end of the year.
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Ton Seerer
Top Secret
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