58. Memorandum From Nelson Ledsky of the National Security Council Staff to the President’s Assistant for National Security Affairs (Powell)1
SUBJECT
- Deputy Secretary Whitehead’s East European Trip
John Whitehead visited Yugoslavia, Hungary and the GDR last week in his latest swing through Eastern Europe.2 The timing was good in providing the East Europeans with a read-out of the Summit,3 about which they were all delighted. But overall, the region is becoming more volatile. Following is a capsule report from Rudy Perina, who accompanied Whitehead.
If the limits of Glasnost are tested first in Eastern Europe, the most likely candidate now is Hungary. The leadership changes last month brought a new generation to power and created great expectations of [Page 195] radical political and economic reform.4 Although the new Party leader, Karoly Grosz, told Whitehead that he plans to move with circumspection, the pent-up pressures for change may push him forward faster than he expects. He plays to the rhetoric of reform and told Whitehead that the Hungarian economy was like a suit which the tailor had spoiled and which was easier to re-make from scratch rather than repair.
Grosz is a man very much in the Gorbachev mold: young, outgoing, and by appearances supremely self-confident. But, as with Gorbachev, one gets the impression that to some degree he is “winging it” and may not realize all the difficulties ahead. His Washington visit at the end of July will be the first by a Hungarian General Secretary.5 We have recommended that the scheduled meeting with the President be expanded to an official working visit. The State Department agrees that this would be a good way to acknowledge the vanguard role that the Hungarians now hold in Eastern Europe.
Yugoslavia is worrisome. Much of the Whitehead visit was spent discussing how the Yugoslavs will gather an additional $125 million in bridge loans by the end of the month to qualify for an IMF stand-by which they negotiated. They will probably squeeze through but it will be close. The Yugoslavs hinted that they were not convinced the U.S. was backing them all the way in the IMF or in securing bridge loans. They particularly complained about access of their Ambassador to the Treasury Department in order to present Yugoslavia’s case. We are checking to see if they are being frozen out of Treasury.
Like the Hungarians, the Yugoslavs all sound like converts to Reaganomics when discussing the market-oriented reforms they plan to implement. But the country is bankrupt, the central government very weak, and the people cynical about real change. There have been recent [less than 1 line not declassified] reports about a possible military takeover to keep some of the more independent republics like Slovenia under control. We hope that together with the West Europeans we will be able to help the Yugoslavs get through a very difficult period.
The GDR, with Honecker at the helm, remains a part of the old Eastern Europe, reluctant to follow the changes in Moscow. Whitehead’s 90-minute meeting with Honecker revealed very little new thinking or progress on bilateral issues. The GDR economy is in relatively better shape than others in Eastern Europe because of the massive infusion of West German money, and Honecker clearly does not feel pressured to implement major reforms. The appeal of Glasnost is spreading within the population, however, and the question is how long Honecker can resist the type of generational leadership change that occurred in Hungary.
- Source: Reagan Library, Rudolf Perina Files, Chronological Files, Chron June 1988 (2). Secret. Sent for information. Drafted by Perina. A copy was sent to Danzansky. The top of the memorandum is stamped “Natl Sec Advisor has seen.” Powell placed a checkmark next to it and hand wrote, “Thanks. CP.”↩
- June 5–16.↩
- Reagan and Gorbachev met in Moscow May 29–June 2. See Foreign Relations, 1981–1988, vol. VI, Soviet Union, October 1986–January 1989, Documents 155–165.↩
- On May 22 Karoly Grosz replaced Kadar as the General Secretary of the Hungarian Socialist Workers Party. See Documents 346 and 347.↩
- See Documents 359–361.↩