Director of Central Intelligence _ NATIONAL ‘INTELLIGENCE _— DAILY Thorsday, 18 May 1989 roved for A Release Date JUN-----4909-- Lud Contents a: P USSR-Chfha: Gorba Ethiopia: § ion Report Reyne West Germany: Hammadi Conviction Raises Terracisi 6, b; aii. Bolivia: Presidential Winner Not Yet Dete Poland; tholic Church Legalized i 12 In Brief ~ - ” t3 Special Analysis Philippines: Communists’ An 14 WS tye ‘ ; Top fccret fl ropecie Ss Top Jeeret 18 May 1989 CHINA: Protests Become a Mass Movement | The growing participation of Comumunist Party an®eovernment officials in che student provesis in Beijing suggests that some reformist leaders may pe manipulating the demoastrations to steengthen their hand against rivals, but the options fer dealing with the protests are hecoming D (3) increwsingiy Mimited. A growing number of the 1 million-plus protesters ia Tiananmen Square yesterday were workers. government cmployces, and menibers of the party_and military, Some of those groups have ties to Zhao or other reform leaders and openly displayed banners identifying their affiliation. Some are demanding that Premicr Li Peng and cven Deng b (3) Xiaoping siep down, Zhao has generally been sparcd criticism, and some banners have called on demonstrators to Support him. ae China’s normally strict internal party discipline apparently has failed to prevent party organizations from throwing their support to the students. A group from the party's theoretical school has joined demonstrators, claiming that party officials across the nation suppor b (3) studéat demands. China's official student union, which students criticized earlier as lacking truc -- — representation, and the Communist Youth League have urged top ‘ @) leaders to meet with student demonstrators and heeet their demands b fos od : QM ihc protests were initially criticat of all of China's top - . =), lcaders; now, although still spoaianeous for the most ffart, they 6 (3) appear to be taking on an increasingly pro-Zhao tone al the cxpense of Li Peng. the architect of China’s current economic retrencliment Zz Any such manipulation by Zhao will widen the leadership division and complicaic corns io deal with the students, b (3) Hi Beijing's range of options is dwindting in any case. The government may Continue making some conciliatory gestures, playing for tinie. hoping the protests will lose steym ance Genceal Secretary Gorbachev = leaves China, But as more xroups join the students, the proiests may pick up momentum. If hardliners prevail, the use of force would risk turning the public against the eatire party leadership and even causing splits in the military and police, sone of whose members at least sympathize with the students, Qa b (3) b (1) b (3) or such a move. hoping (0 use the growing popular support to counter orthodox Party Opponents and regain the upper hand, but much stilt may depend on wheitier Deng sanctions such a move. > 13) =z Tue Topeeret ed ait =~ “SL Serie ToASccret ; : 18 May 1989 Gorbacher Visits Shanghai USSR-C - Soviet General Secretary Gorbachev arrived in Shanghai this morning Jor a one-day visit to China's main commercial port and ta take a good b (3) foo® at a Chinese special industrial cone before returning hore to Moscow tonight. a Gorbachev has met with Shanghai party chief Jiang Zemin and will tour the Minhang Development Zone, where he is to see a Si Japanese joint venture and a “completcty™ Chinese factory. Bui as Gorbachev himself noted at his press conference yesierday, some b (3) events might be canceled because of student demonstrations in Shanghai. > b (3) Gorbachev refused 10 pass judgment on the student demonstrations but expressed the hope that Chinese youth and Chinesc leaders would resolve their differences. On Cambadia, he said the Soviets and Chinese now undersiood cach other's position better and would continue their dialogue. Gorbachev also reiterated -points from his speech at the Great Hall of the People earlier in the riz b(3 : (3) day about seeking a complete demili tion of the Sino-Soviet - — border and increased economic cooperation with the Chinese i> QIUEAR ithough the demonstrations have giseupted many of the b (3) social events on his schedule. Gorbachev was pleased with his reception in Beijing and that the summit accomplished his main 7 goals of normalizing state-and purty relations. Differences over Cambodia apparently were not resolved, but progress may have been made on other contentious issues, The decision to raise the ievel of (8) the Sovict and Chinese delegations discussing the disputed territory Q along the Sino-Sovict border, for cxample. suggests that issuc ts moving ragedly toward a successful conclusion The only major cvent that remains és the issuance of 2 joint communique. Moscow may be still holding out for a formal. signed communique of principics governing the relationship, like the China- US communique of 1972, but recent statements by Sovict and Chinese spokesmen indicate that an informal press communique ts b (3) more likely TopSecret : BE May 1989 6 (3) ? ny ae b (3) b (1) b(3) b (3) ETHIOPIA iation Report Situstion in gists Addis Ababa capigal by last night, but the situation re the Defense civilian support artillery and (re government forces are conducting house-to-ho 1 b 3 suspected coup ploters and have carried out summary executions The former Army commander for Tigray Province—-whose court- martial was a factor in setting off the cous was executed b (3) An early evening curfew was imposed, bul the regime has the public by radio to return to ~or a poputace bracing for mote fighting by boarding food and other supplies b (3) a] p ¢ ains fluid, Fighting around which was occupied by coup plotters, and at The North Coyperelaced activity, meanwhile, has shifted outside Showa. the and East ventral province hI! b3 the EPLF has accepted a plan broadcast from Asmera—apparenily by aspokesman for the rebelling military units—calling for 2 cease-fire s. and formation of a transitional government named the head of the National Seyoum Makonnen, Ethiopia's new ected as one of the few officers to sland up to Mengistu aad blame him for the Army's recent defeats ia Tigra eee EP forces marched unimpeded into Asmera 5 / 43 yesterday b (3) b (1) b (3) b (3) we The outcome of the coup hinges increasingly on developments in the north and east. The extent of support in the cond Revolutionary Army for the coup plotters remains uncicar. however, it would increase the likelihood of a face-off between r Er northern Army units and pro-Mengisty forces to the south. Top fan e b (3) D(1) b (3) Topfescre b (3) Fe 3 18 May 1989 Menpistu’s Response b (1) b43) Safety of US Personnel. will reopen «9 (3) “HOLL Addis Ababa remains closed, bul tomorrow. Comment: The 690 US citizens in the capital could still be at risk if unrest spreads in response to the government's campaign of retribution or if essential services break down b (3) 4 (3) is mas 1989 | Topfrecret 3 rn PANAMA; Regime Options on Hold Defense Chief Noriega has put options for an intePm government on hoid whiie he gauges the opposition’s staying power, the depth of hemigpheric condemnation, and Washington's next mov. q@@@® b (3) The general strike called by the opposition yesterday was largely unsuccessful, Roughly 50 percent of businesses in Panama City and Colon were open at worker b (3) abs cis was high usiness was slow. C Mion supporters stayed.off the streets, and the police presence was heavier than normal, (a) “The OAS foreign ministers late yesterday agreed to a proposal to condemn the regime's electoral abuses and to send a three-member delegation to Panama bul avoided a formal call for Noriega to step down. SP t; (3) GMM oricgs apparently @ refraining from a decision on an b (3) interim governmental arrangement until the dust settles at the OAS and foreign media attention dies down, He probably is confident that the OAS will not produce a cat! for him to step down and that its enthusiasrn for addressing Panama problem will wither, particularly (Sllowing the opposilion's dismal strike performance Nonetheless, Noriega may be anticipating her US moves should the diplomatic efforis stunb|¢, ae, b (8) a Tophecre b (3) N +. § 1K Mag 1989 EL SALVADOR D(1) b (3) 5 (1) b (3) b (3) Insurgents Launch Offensive - Marxist insurgents last week began a nationwide military effort to disrupt the economy, discourage foreign investment, and ARBNA government into negerictions EE py 3) ihe campaign includes sabotage and harassing attacks against military posts. concentrating in rural areas gainst the National An assassination attempt occurred Tuesday a guerrilla h Assembly President-—who was on an carl The military has responded aggressively to the rebel attacks conducting frequent patrols in contested areas. A controversy over the selection of a new defense minister, meanwhile, has led the high command to order severatunis in the capital on alert in response to threats that Air Force Commander Bustillo will use force if necessary 0 Stop the nomination of Chief of SiaiT Ponce iii ‘ (3) QR Despite a recent series of military setbacks, the insurgents are still stromg enough to attack lightly guarded cural Largets: they probably are not able to overrun a fortified milit installation. They will continue to sike targets of opportunity in San Salvador and may attempt additional assassinations, The lapse of ihe unofficial border agreement may allow the rebels freer use of Honduran territory asa Sanctuary and staging base. 5 (3) Although Bustiiloappears convinced that he has been passed over for defense minister, a final decision on the appointment probably has not been made. Bustillo is not likely to incite his subordinates to violence, but the imbroglio threatens 10 drive a wedge between the Army and the Air Force and distract attenti war effort. SEE , |; (3) arn | 18 May 1989 ENEZUELA: Labor Dissatisfaction Grows - The general strike the Venezuctaa Confederation of Workers (CTV) is holding today highlights organized labor's unhappiness with the ies of President Perez and heralds widenin se Action (AD) party. (JR. A special CTV congress last month called the strike us a way to protest the lifting of price controls and subsidies, which has led 1G jump some 40 p Beeeplbeetey se wisespcend so leaders they had lust touch with the rank and file, and. as a re they are rethinking their largely cooperative relationship wil 5 government and business, as well as their role in the AD. WP) bs = particularly in economi@hnsterity: pol issues in his Demac March convinced CTV ull Since the riots, wildeat work stopp: Maracaibo—Venezucla’s secon sicily and the center of its oil indusiry Perez is clearly upset with the CTV"s militancy, He publicly denounced the idea of a general strike and vigorously defended his economic program at the CTV congress, That did not, however, stop Perez from announcing on the eve of labor's traditional May Daly demonstrations that the lowest4ytid-publie warkers would get pay supplements to help cover teased food and transportation costs pd shat be was subm bill 10 Congress to create 140, 000 sa fying labor is @ high political priority for Perez OINg so will be difficult. however. because he is determined to intain the integrity of his economic program, and CTV leaders are equally determined to force cha through job actions and demonstrations. Perez will probably continuc to make tactical cencessions and may even allow another round of wage increases to Piacate union rank and file while expluiling his problems at home fo press the inicrnational financial community for help. Sai b3 ? 18 May 1989 rceni since February, seagareagam bs , Top Aecret b (3) Topbecret b (3) 8 18 May 1989 TopBecret pn b (3) di Conviction Raises Terrorist Threat WEST. GERMANY: Flam - Hizhatlah terrorists will threaten aad probably take reprisals against West German inierests to presy Bunn to reiease convicted TWA hijacker b (3) Muhammad Hemmedi. ii | 2, b(1) b (3) D(1) b (3) Several West Germao medica) workers were abducted in Lebanon last week, The demands Je whe re taken reportedly included limiting Hammadi's sentence io five years and releasing b (3) a-Hizballah terrorist imprisoned in Cyprus, aN Q,~, a Bonn tate last week took several actions to reduce its vulnerability in Lebanon, probably in anticipation of ihe Hammadi verdict, [t repeated earlier warnings to West German nationals to leave and withdrew ils Embassy staff from Beirut = eZ . oD b (3) 7 = Comment: Hizballah is likely to take actions against West German personnc! and interests, In January 1987, Muhammad's brother Girected the kidnapings of two West German hostages and probably Le prevent Muhammad's ide those of four Beirut University professors t extradition to the US, Hizballah terrorists can also operate oF Lebanon: Lufthansa aircraft and offices and nonaficial West > German cultural facilities probably are particularly at risk f,2 yare p y = | The court's harsh comments on Hammadi and the stiff sentence = given him restrict Bonn's room for mancuver. If confronted with a Spectacular terrorist incident, West German leaders probably would offer private assurances of an carly retease once Hammadi becomes legally cligible for parole. But they might nat feel obliged to follow through on any promise made under duress. and they would try to G showing weakness to the votcrs and angering the US. i> ok, Dp? - TopAccret B3 b (3) ay 1K 9 13 Lat. (3) BOLIVIA: Presidential Winner Not Yet Determined and the The officiat count of votes cast on 7 May is only half finished. challenging errors in the cougting, Final results are dated so ‘ction favorite Hugo Banzer has a minusculc lead in the i 3 . ruling party's Sanchez de Lozada, who has b (3) insstcd I rat ho ill by a slight margin. Jaime Paz Zamora of the Movement of the Revolutionary Left is 2 percentage points behind the leaders. The parties are discussing various Coalition possibilitics as they mancuver for the carly August ess, which will decide the presiclency since no vote by the Cor candidate reccived a majority of the popular vor. b (3) ee the 60 forces commander has moved to halt Lulk of military intervention on behalf of Banzer, who headed 3 military regime during the 1971-78 period. (3) b| 7 POLAND: Catholic Church Legalized main parties a to be released on 27 May. With only urban area Lotals v: far. pre Poland's Iegislature yesterday passed a law recognizing the Catholic Church. hl b3 QM ving the church legal status is an indicator of the b (3) regime's desperation for popular support, mast immediately to improve fs prospects in neat month's legislative election. The regime also hopes to entice the church. long supportive of Selidarity. inio a more neutral role. Warsaw, which recognized the political opposition in the roundtable accord, has. in legalizing the Chureh, further abandoned its longstanding idcological claim to rule alone. [1 has also confirmed the church's statuses Poland's Icading moral political b (3) To; ecret — , * IR May 198 force. IRAN-SAUDI ARABIA; Tehran Likely To Boycott Hajj Again tran and Saudi Arabia have failed to agrce on conditions for Iranian participation in the Hajj, the annual pilgrimage to Mecca, sctuing back efforts to improve relations. Riyadh b (3) refuses to admit more than 45,000 Iranian pilgrims this year; Iran is demanding 150,000. Iran rejects the Saudi requirement that pilgrims pledge noto engage in political demonstrations. Tehran is charging that Riyadh’s restrictions arc “un-Islamic” and has rejected an b (3 invitation to a meeting of Islamic affairs ministers in Saudi Arabia ( ) lle Barring an unlikely last-minute compromise, Tehran will boycott the July Hajj as it did last year, The Saudi position has strengthened the hand of hardline Irinian leaders who would like to reverse cfforts to improve bilateral ties. Tehran is now more likely 10 sponsor terrorism in the Persian Gulf to intimidare Riyadh. qa b (3) Tog Secret fs twmay iso B (3) - 18 May 1989 In Brief Europe ~ Milan Pancevsxi named Yugosiar Commo®iai Party Presiden yesterday agrecs with Serbian leader Miloserde* ethnic Albanians, although wary of Serb nationalism advax Ics * tight party control. might steer party from reform. Db (3) — Czechoslovak regime's release of jailed activist Vactav Havel yesterday intended to improve image before Paris CSC E meeting late this month ... probably also response to Soviet pressure may renew leadership debate on dissident policy. mp bl 63° bl b3 z USSR b (3) _ SRE Sve: 16005 withdrawal from Poland to begin shortly... unidentified motorized lank regiment to icave first... regiment may be training unit or part of tank division being restructured b (3) die : b/ b3 6/3 East Asia b/ $3 | Americas — We 6 icp etc between Ecwador, US*bank defused | 3 +». Finance Minister claims bank to return $8] million recently seized .., supportive US statements likely to preserve bitateral | ties. responsible debt policics. b (3) TopSecret n 18 May 1989 D (3) Top Accret p (3} Philippines: Flawed Strategy . The Rowe assassination dors not mark a fundasient Min the ineurgenis’ policy on Americans. Attacks un US imerests have been considered a valid (actic to undermine the government in Manila since long before President Aquino took office in 1986. The CPP icadership probably believes it can exploit current anti-US sentiment and reduce the risk that any further attack on Americans would build sympathy for the US. Nonetheless, the party's logic in Ordering the Rowe assassination and anlibases Campaign has potentially serious flaws: — Recent nationwide polls suggest party leaders may have overestimated the depth of discontent with the Aquino administration and their ability to exploit it b 3 EEE Aquino remains popular—64 percent of respondents still support her-— despite a growing recognition that she has failed to address key problems like government corruption and inefficiency and widespread poverty. Similar polls show negligible support for the insurgents. — The insurgents probably have exaggerated the harm attacks on US interests will do to US-Philippinecelations, specifically to the bases talks. Non-Communist nationalists still dominate opposition to bases, and Communist-sponsored anti-US rallies are poorly attended — Communist leaders appear to assume that attacks on the US will produce either a marked reduction in US military aid or asignifieant increase that coUld be used 10 undercut popular support for Aquino. In focusing on the US, however, the party may overlook Philippine military initiatives, such as deep penetration agents. that have worked well; it also is failing to widen the limited appeal of the party's propaganda. Neither the Rowe attack nor the angibases campaign cnsures lasting cooperation between the political and military wings. Unless party leaders can show a drop in Aquino’s popularity or a serious break in US-Philippine relations, divisions may intensify between the political cadre and the guerrillas, most of whom favor more widespread violence against US and Philippine targets. ae »(:; Toppfecret b (3) 18 May 1989 (3) Special Analysis = PHILIPPIN Communists’ Anti-US Campaign The assassination of US Army Col, James Rowe last month is part of an aah-US campaige by the Communist Party of the Philippines t0 po rivay ihe adaainistes OW of Président riquiny u é aad iv play up tre party's opposition to the US bose: (3) government can do little to prevent violence by the party and almost certainly believes US personnel arc largely responsible for protecting themselves. Communist and nationalist groups probably will cite the Aquino government's condemnation of the assassination and augmentation of security at US facilities as proof that Manila more responsive to US interests than to the needs of Filipinos (3) Party leaders probably did not anticipate the controversy Rowe's killing has created between Washingion and Manila over the pace of the investigation or the Philippine Government's ambivalence toward the US. The insurgents probably arc pleased that the Philippine Congress decided to open hearings on the US military's role in the counterinsurgency and US servicemen’s behavior toward xs fron ja indicate that thegarticipation of f Rowe's murder has reinforced b (1) 6 (3) © administration gives US officials the Philippines. > Press reg: torial jurisdiction continecd To Pe by (3) 14 18 May 1989 TopAecret 3 ro 1a May 1989 (3)