The attached study concludes that the example of perestroyka and its own
more active diplomacy in the West have prompted the East Berlin regime
to liberalize some aspects of its social policy. Honecker still clings
to the GDR’s centralized economic model, although pressures for CEMA integration and a growing need for
Western economic contacts are prodding him towards decentralization.
Meanwhile, the aging leadership must contend with a more assertive youth
and ambitious
[Page 907]
younger
officials pressing for a further easing of regime controls, pressures
which likely will grow as GDR ties with
the FRG expand.
At the same time, however, the regime is now confronted with an economic
slowdown on top of a long-standing need for substantial capital
investments to modernize the country’s aging industrial base. The GDR evidently calculates that too much
anti-reformism could discourage the kind of Western economic cooperation
it needs and so has begun to hint at possible liberalization of current
foreign trade and joint venture restrictions.
Attachment
Intelligence Research Report2
No. 131
Washington, October 28,
1987
(U) GDR: How Honecker
Copes with Soviet Reforms and “Westpolitik”
(C) Key Judgments
Perestroyka and the imperatives of a more
active diplomacy in the West are forcing the German Democratic
Republic to liberalize domestic policy on a selective, ad hoc basis.
Travel by GDR citizens to the
Federal Republic of Germany has surged, and regime treatment of the
churches has perceptibly improved. Yet, despite more crossborder
movement and pervasive FRG
television, glasnost has yet to penetrate the
East German media.
Economic policy also appears frozen in the cast of the late-1970s
reforms. The GDR’s commitment to central planning and its aversion
to easing the grip of the centralized combines over individual
enterprises run counter to decentralization and enterprise autonomy
trends elsewhere in the Eastern bloc. In light of Moscow’s efforts
to forge closer Council for Mutual Economic Assistance (CEMA) ties, greater Soviet pressure
for conformity in these areas is inevitable. Recently announced
plans to enhance the independence of combines vis-a-vis higher
authorities are thus far token gestures to Moscow, but they indicate
that the GDR is anxious not to
appear totally out of step with Eastern reform currents.
Public impatience with the rigid elements of Honecker’s rule is
growing, reflected in sporadic youth demonstrations and surprisingly
open grumbling by lower level officials frustrated
by
immobility at the top. If contacts with the FRG continue to expand steadily, as seems likely,
domestic pressures for social liberalization are bound to
increase.
At the same time, economic slowdown is reinforcing the GDR’s need for
expanded economic links to the West. The regime realizes that too
much anti-reformism could be a liability in attracting Western trade
[Page 909]
partners and has
already begun to hint at possible liberalization of its current
foreign trade and joint-venture restrictions.
* * *
(C) High Technology
Instead of Perestroyka
With the exception of Romania’s Ceausescu, Honecker is the least
enthusiastic of all bloc leaders on the subject of perestroyka. Proud of a long German tradition of socialism
and economic achievements, the GDR
leadership apparently is convinced it has already found the correct
formula for prosperous as well as stable national development.
Senior officials regularly cite their own economic reforms of the
late 1970s and the more liberal aspects of the East German system as
arguments against the kind of restructuring envisaged by Gorbachev.
Instead of perestroyka, the GDR regime prefers the safer path of
“intensification,” by which is chiefly meant reliance on high
technology as the main engine of economic progress.
(C) But Adaptation Is
Necessary
Honecker has been obliged, reluctantly, to take account of the
powerful impact of the Soviet reform model as well as to modify some
policies in furtherance of his own “Westpolitik.” He has taken a few
steps in the direction of economic decentralization and a greater
market role in the economy, but those changes are basically
cosmetic. Liberalization on the social front is more perceptible,
particularly with respect to freedom of movement, and seems closely
linked with GDR efforts to improve
relations with the FRG and other
Western countries.
But the regime insists on describing these recent policy
modifications in terms of continuity with long-established GDR practices and not as a radical
break with the past. The conservative Socialist Unity Party (SED) leadership, ever conscious of the
GDR’s unique exposure to Western influences and of the Western
orientation of the citizenry, clearly fears that abrupt changes
could undermine the fragile framework of political stability it has
labored so long to establish.
The GDR’s occasional claim to being more liberal and open than other
bloc countries is credible. The GDR
has, for example, been promoting private artisans and trade for more
than a decade, long before the Soviets began experimenting with
expanding their private service sector. It treats religion more
liberally than does the USSR; its
cultural policies have long been more tolerant than Moscow’s; and it
has permitted greater East-West movement of people than has the
Soviet Union.
A Clash of Leadership Styles
(S/NF/NC/OC) Yet the regime’s constant references to its economic
successes (arguably the most impressive in the bloc) and rejection
of perestroyka (both economic and social)
have created the appearance
[Page 910]
of stasis at a time of ferment in the East, and they invite
Soviet resentment. Honecker’s relationship with Gorbachev reportedly
is poor; [less than 1 line not declassified]
Soviet Central Committee staffer spoke in blunt terms of a “mutual
antagonism.”
(C) In certain respects, the GDR
regime indulges in the kind of Brezhnev-era tendencies Gorbachev has
targeted. Honecker is still accorded personality cult treatment: His
75th birthday last August was the occasion for an extravagant media
celebration lasting several days. The party daily, Neues Deutschland, devoted the bulk of several issues to
Honecker greetings and photos.
(C/NF) Honecker also favors the lavish shows that even Bulgaria’s
Zhivkov now denounces as “pompous displays.” GDR events connected with the
year-long celebration of Berlin’s 750th anniversary were on such a
massive and expensive scale that some citizens openly expressed
disapproval. Inhabitants of Dresden and other cities flaunted bumper
stickers commemorating the anniversaries of their hometowns, and
workers angry about shipments of scarce food commodities to Berlin
staged at least one work stoppage.
(C) No Media Glasnost
For Now
Until recently, GDR media were
almost totally unaffected by glasnost. They
still incline heavily toward self-congratulation, preferring
bombastic reports of economic achievements to critical evaluation of
problems. Given the fact that virtually the entire population has
access to West German television, this persistent resistance to glasnost is difficult to justify. The East
Berlin media, for example, ignored last June’s youth disturbances,
despite graphic FRG television
coverage of the events. Media staffers as well as intellectuals and
younger people are surprisingly candid in acknowledging
disappointment with GDR news
coverage, but well-placed officials do not expect change, given
Honecker’s personal opposition to openness.
(C) Straws in the
Wind?
Notable exceptions have, however, appeared in connection with the
GDR’s current diplomatic offensive in Western Europe. Earlier this
year, Neues Deutschland uncharacteristically
reprinted in full the responses of several West European leaders to
letters written by Honecker promoting Eastern disarmament proposals.
These responses included explanations of Western disarmament views
and criticism of some Eastern positions.
Honecker’s FRG trip in early
September provided more vivid glimpses of a possibly creeping glasnost. The heavy East German coverage
featured some sharp critiques of the regime by FRG officials, and the joint
communique, published in the East German press, included FRG views on human rights and German
unity.
[Page 911]
These flashes of openness could very well have been tactically
motivated, but they correspond to Honecker’s broader approach in
linking domestic liberalization (so far largely limited to religious
and travel policy) with improvements in the GDR’s relations with the
West, chiefly the FRG. He seems to
be signaling that the GDR is
willing to accommodate some Western concerns about domestic
repression in exchange for recognition of its legitimacy and
expanded economic ties. But whether this quid pro quo approach
constitutes a durable commitment to more openness is
questionable.
(S/NF/NC/OC) Generation
Gap
The June disturbances, and other scattered protests last summer,
suggest increasing public impatience with Honecker’s rigidity,
especially among youth. Senior officials (many of whom experienced
considerable privations in the earlier years) openly complain that
today’s youth are not prepared to pay the price they did for today’s
comforts and security. Last March, Honecker went so far as to
confide [less than 1 line not declassified]
that he was concerned about young East Germans’ drift toward
pacifism and opposition to the Soviet troop presence.
Younger officials reportedly disagree with their seniors about the
desirability of glasnost and
“democratization,” and periodically give vent to their frustrations
in conversations with Western acquaintances. Early this year, some
party organizations of the intelligentsia and younger cadres
reportedly were engaging in lively discussions of Soviet domestic
reforms, despite injunctions of higher authorities not to do so.
(C) Relieving Popular
Pressures
It is difficult to gauge the extent of popular impatience with the
leadership’s seeming inflexibility at a time of change in much of
the Eastern bloc. Nevertheless, Honecker has taken a series of ad
hoc, preemptive measures to defuse rising frustrations. Recognizing
the enormous attraction that travel to
the West has for GDR citizens (and
bowing to FRG pressures), he has
drastically liberalized the regime’s travel policy over the past two
years. By the end of 1987, about 1 million non-pensioners (in
addition to 1.5 million retirees) will have received permission to
visit the FRG, whereas only 30,000
younger GDR citizens could travel
there annually in the early 1980s.
Moreover, Honecker implied to his FRG hosts in September that further relaxations were
likely. Indications this year have been that the categories of those
eligible to travel have been continually broadened and now include
more youth groups and government officials with access to “state
secrets.”
New avenues of bilateral contact are also opening for a broad
spectrum of the GDR populace.
Recent agreements with the FRG on
[Page 912]
culture, environmental
protection, and scientific-technical cooperation are welcomed by the
GDR’s cultural and technical elites, which reportedly have long
chafed under their isolation from Western counterparts.
(C) Special
Relationship With the Churches
But in dealing with outspoken critics, Honecker again has shied away
from Gorbachev’s high-profile approach, preferring instead to build
on established GDR practices. In
the late 1970s, he adopted a more liberal stance toward religion and
allowed the churches to serve as a forum for dissidents and banned
artists. This year, that trend accelerated perceptibly:
- —
- A leading GDR Protestant
bishop remarked in a Der Spiegel
interview last May that the Protestant clergy had been
successful in intervening on behalf of conscientious
objectors and individuals denied travel rights.
- —
- The GDR permitted a
Protestant convention to be held in East Berlin last June
and tolerated an outpouring of criticism from the
participants. An estimated 10,000 fulltime participants and
hundreds of Western guests attended the relatively
free-wheeling discussion groups and entertainment events,
and in an unprecedented move GDR television gave live coverage to the
closing ceremonies.
- —
- The much smaller Catholic community held its first
national convention in Dresden in July, drawing an
impressive 80,000 attendees and setting the stage for
bolder-than-usual discussions about the church’s social
role.
- —
- And on the eve of Honecker’s FRG visit in September, authorities did not
interfere with an unsanctioned peace
march organized by the East Berlin Evangelical Church,
apparently the first such unofficial event in the GDR.
Radical Protestant activists view these official gestures, in
conjunction with the amnesty announced July 17, as presenting an
opportunity to press for more liberalization. The Evangelical
leadership, however, meeting in a national synod in late September,
opted for a more conciliatory approach, arguing that a
confrontational stance would only encourage conservative officials
to block further progress.
The Economy
(C) A Strong Commitment to Centralization. As
recently as September 29, Honecker in an interview with Finnish
reporters reaffirmed his confidence in the present GDR economic management system based
on combines (large, vertically integrated monopolies which control
most phases of production for a given kind of output). He paid
tribute to GDR economic reforms of
the late 1970s which established the combine system; he opined they
would ensure sustained economic achievements through the year
2000.
[Page 913]
(C) Honecker cited a host of economic and social achievements
(including 4.3 percent growth in national income last year,
introduction of advanced computer production, and stable consumer
prices) as proof of the soundness of his policies. He pointedly
noted that the GDR had accomplished
all this “without structural crises or social disruptions,” an
apparent reference to fears in Eastern Europe that Gorbachev’s
ambitious “restructuring” campaign risks social instability. Other
ranking GDR officials have
privately echoed this aversion to radical change, occasionally
pointing to the problems encountered by such reform-minded countries
as Hungary and Yugoslavia.
(C) Nervousness About Appearance of
Inflexibility. Honecker did, however, reveal some
sensitivity to the increasingly obvious divergence between his
centralized combine management system and the growing trend toward
enterprise autonomy in much of the rest of the bloc. He pictured the
highly centralized combines as genuinely autonomous economic units
able to carry out most of their research, financing, and production
tasks with their own resources. He sought to dispel the image of
rigidity by claiming that the GDR
had always been open to improvements in “management, planning and
economic cost accounting.”
(C) In a subsequent article on the Soviet Revolution in the SED’s ideological journal, Honecker
was more specific about what new steps the regime has taken, citing
the recently
increased role of prices and credit in the GDR economy. He went a small step further in an
interview with Belgian journalists and denied that Soviet experience
was inapplicable to the GDR,
asserting that “friends” can always learn from one another.
(C) GDR Economic
Structure—a Brake on CEMA
Integration? Honecker’s reluctance to restructure the GDR’s
homegrown central planning system ultimately will be difficult to
sustain as Gorbachev and other reform-minded bloc leaders slowly
move to decentralize their national economies and introduce more
market-based ties among the CEMA
states. The GDR Ambassador to the
US touched on this problem in a
June 30 meeting with Assistant Secretary of State for European
Affairs Ridgway3 by noting that further integration of CEMA economies was complicated by the
members’ increasingly disparate economic policies.
(C) The CEMA economic secretaries
conference in Sofia in September highlighted some of the frictions
the GDR had been facing by noting
the necessity of “harmonizing” the mechanisms of national economies
to facilitate more efficient CEMA-wide operations. The gathering examined the course of
restructuring in the member countries’
[Page 914]
national economies, an exercise which must
have been disagreeable to the anti-perestroyka parties.
(C) One reason Honecker is skeptical about Moscow’s campaign for
closer CEMA cooperation and direct
enterprise links is his concern that these new ties could bring even
greater outside intrusion into the tightly controlled GDR economy. For example, direct
cooperation between East German enterprises and their counterparts
in other CEMA countries, should
the latter become more autonomous, will run up against the GDR firms’ obligation to defer many
decisions to combine management and still higher state authorities.
The GDR could then be vulnerable to
pressures from CEMA partners to
reduce the power of the central ministries over the affected
combines or of the combines over their subordinate enterprises.
(C) Premier Willi Stoph
highlighted GDR fears on this score
when he invoked the principles of “self-determination” and “complete
equality” in his address to the 43rd CEMA Conference on October 13. In paying tribute to
enhanced CEMA cooperation, he
carefully reasserted the role of ministries, combines, and central
planning organs.
(S/NF/NC/OC) The Solution: Strengthen Combine
Autonomy. There are signs the Honecker regime has begun,
reluctantly, to consider some modest modifications. Economics
Secretary Mittag reportedly told [less than 1 line
not declassified] in August 1986 that the GDR would allow more decentralized
investment decisions in response to Moscow’s reforms.
(S/NF/NC/OC) Another senior economic official, in a meeting [less than 1 line not declassified] last
April, provided more details, indicating that, as of January 1,
1988, some combines are to receive expanded autonomy in investment
decisions. Investments of less than 5 million Deutsche marks would
be the responsibility of combine management; larger investments
would need the approval of higher authorities. The official said the
regime was planning more ambitious steps, so that ultimately nearly
all investment choices would rest with the combines.
(S/NF/NC/OC) Speaking at the party’s June plenum, Politburo member
Horst Dohlus unveiled these plans and specified that initially only
17 combines would receive broader self-financing rights. An article
in the party ideological monthly Einheit
subsequently stressed that these changes represented merely a
continuation of adaptations the party had made over the years.
(C) The measures under consideration apparently are limited to the
combines only and probably will not affect individual enterprises’
freedom of action. Other announced changes include plans to provide
more incentives to private entrepreneurs and expand the use of
performance criteria in determining wages to another 400
enterprises. These moves suggest that Honecker is ready to consider
marginal modifications if pressed, but that he is unwilling to alter
the combine-based system itself.
[Page 915]
(S/NF/NC/OC) Western Trade Considerations Argue for
Domestic Adjustments. It is noteworthy that the
above-mentioned GDR official seemed
[less than 1 line not declassified] to
convince [less than 1 line not declassified]
that his country was not impervious to economic reforms. Similarly,
a SED economic specialist predicted
[less than 1 line not declassified] last
December (prematurely, as it turned out) that a joint-venture law
would be enacted in the summer. GDR
economic officials [less than 1 line not
declassified] in September also reportedly expressed
interest in gradual reforms.
(C) The GDR leadership, currently
seeking expanded economic contacts with the industrialized West—the
FRG in particular—may calculate
that the appearance of hostility to reform could be a liability.
Honecker himself is frequently confronted with embarrassing
questions from Western journalists about his resistance to perestroyka. During his visit to the FRG, he and his accompanying entourage
heard repeated criticism from local business leaders who targeted
the GDR’s rigid foreign trade administration as an obstacle to
increased inner-German trade.
(S/NF/NC/OC) Joint Ventures in the Offing?
Perhaps in response, Mittag hinted at prospects for flexibility.
[less than 1 line not declassified],
he praised existing “well-established forms of cooperation” with
West Germany and stated that the regime would look toward “new forms
of cooperation.” [less than 1 line not
declassified] Mittag claimed that the GDR was studying a number of
joint-venture proposals.
(C) It is unlikely that the GDR is
reconsidering its ideological opposition to joint ventures with
Western firms, though more direct contacts between firms might be in
the offing. Inner-German trade to date has been limited primarily to
simple purchase and sale of commodities, to the virtual exclusion of
enterprise-to-enterprise cooperation.
(C) There are, however, two exceptions: Volkswagen, which has a
license to begin producing motors for GDR domestic autos in 1988, and the Salamander firm,
which provides technical know-how for GDR shoe production. These might serve as models or
encourage the regime to experiment with more direct forms of
cooperation between combines and Western firms as one way of
overcoming the stagnation in inner-German trade of the past three
years.
(S/NF/NC/OC) A Growing Need for FRG Economic Links. Honecker
clearly wants to stimulate GDR-FRG trade, in part
because the GDR badly needs
investment to modernize an aging industrial base and because East
Germany’s economic performance has sagged lately (growth slowed in
the first half of 1987 to 3 percent, the lowest semiannual rate
since 1982). Accordingly, he took with him to the FRG a sizable economic delegation,
which included the directors of 23 combines. [less
than 1 line not declassified] the visitors submitted a
hefty package of requests for economic assistance, including at
least 800 million Deutsche marks in new trade credits.
