Major International Developments

in 1985





Chapter II. Major International Developments in 1985



 1.   Overall Characteristics


(1)   The international situation in 1985 was characterized by considerable developments in the relationship between the United States and the Soviet Union while not many changes took place on a regional level. The two countries resumed arms control and disarmament negotiations and also held a summit meeting. A new administration headed by General Secretary Mikhail Gorbachev was inaugurated in the Soviet Union.

  In January, 1985, the United States and the Soviet Union held a foreign ministerial meeting to set the guidelines for new arms control anti disarmament negotiations. And, talks were resumed in Geneva in March. When Soviet General Secretary Constantin Chernenko died in March, Gorbachev, the youngest member of the Politburo, took over the post. Gorbachev drastically reshuffled and rejuvenated the leadership of the party and the administration in a short period of time. In July, Eduard Shevardnadze, a Politburo member, succeeded Andrei Gromyko, then-Foreign Minister, who had been in the office for 28 years. In April, Gorbachev cited "acceleration of social and economic development" as the major task of the country at the Central Committee Plenum of the Party.

  Against this background, it was observed with keen interest how such Gorbachev's policy would influence Soviet diplomacy. Indeed, the Soviet Union began taking a more active diplomatic posture. The two countries held a summit meeting at the initiative of the United States, from November 19th to 21st. It was the first U.S.-Soviet summit in six and a half years and also the first one since the Soviet military intervention in Afghanistan. Unusually long talks, lasting more than five hours, were held by the two leaders alone. A joint statement issued after the meeting confirmed some points shared by the two countries such as the principle of 50 percent reductions in the nuclear arms of the U.S. and the USSR "appropriately applied" and the idea of interim INF agreement. The joint statement also indicated that the two countries would promote dialogue. It was agreed at the meeting that General Secretary Gorbachev would visit the United States in 1986 and President Ronald Reagan would visit the Soviet Union in 1987.

  However it is assumed that the two countries remained wide apart in their basic positions on arms control and disarmament. The future bilateral relationship should be observed carefully in judging the outcome of the second summit scheduled to be held in the United States.

(2)  With regard to other movements by major countries, the following points deserved attention.

  (a)   The Soviet Union expanded the scope of its diplomacy by actively approaching Japan and West European nations, seeking closer ties with North Korea and establishing diplomatic relations with Oman and the United Arab Emirates.

  (b)   The tendency was observed that the relations between China and the Soviet Union were becoming broader in non-political fields such as economy, trade and exchanges of visits including those at the deputy prime minister level. However, basic differences remained unsolved in the political field regarding China's "three obstacles."

  (c)   China maintains its "independent" posture by not forming an alliance with any major 777power, while strictly observing its four-point modernizations policy in the domestic arena.

  (d)   The Sino-U.S. relationship witnessed, generally speaking, continuous and smooth developments.

(3)  As for regional developments in Asia, the overall situation in the Korean Peninsula and, in particular, moves concerning dialogue between North Korea and the Republic of Korea were viewed attentively against the backdrop of prospective two sports meetings in Seoul, the 1986 Asian Games and the 1988 Olympic Games. In the Philippines, the Marcos administration collapsed in chaos after the presidential election, and Corazon Aquino formed a new government in February, 1986. The Aquino administration faces enormous tasks such as economic reconstruction and decision of the policy toward the communist forces. In Cambodia, the coalition government of Democratic Kampuchea lost major strongholds in the Thai-Cambodian border area as a result of a dry-season military offensive launched by Vietnam from November 1984 through March 1985. Since then, the coalition government has been stepping up resistance activities in Cambodia. In March 1986, the coalition government presented for the first time an eight-point proposal aimed at a "comprehensive political settlement" on the Cambodian problem.

  In Oceania, New Zealand rejected port calls by U.S. warships in February, 1985, which brought about a setback in the bilateral relationship. In August, the South Pacific Non-Nuclear Zone Treaty was adopted.

  The situation in the Middle East remained generally deadlocked. In spite of the so-called "Hussein-Arafat agreement" (February) and various other developments in 1985, there was no specific progress toward achieving peace in the region. A series of terrorism incidents resulted in tension between the United States and Libya. In April 1986, the United States bomb77ed targets in Tripoli and Benghazi, as an exercise of the right of self-defense, claiming that there was clear evidence for Libya's involvement in the explosion at a discotheque in West Berlin and other incidents of terrorism. As for the Iran-Iraq conflict, the situation has remained basically at a stalemate, although there occured some incidences such as the Iraqi attack on Kharg Island (the latter half of 1985).

  In Africa, repeated crackdowns on black riots by the South African government invited international criticism against apartheid.

  The situation in Western Europe was generally stable. In France, a coalition of conservatives and reformists (so-called cohabitation) was formed as the result of a general election in March 1986. Progress toward an integrated Europe was seen in the structural reform of the EC and political cooperation among European nations. In January 1986, Spain and Portugal officially joined the EC.

  In Eastern Europe, the leaders of the Warsaw Pact nations sat down together when the pact was extended. There were a number of other summit talks among them since the new administration was inaugurated in the Soviet Union. They aimed at reinforcing solidarity within the Eastern bloc through these talks. Each country in the region is facing economic difficulties and seeking ways to break through their problems.

  In Latin America, regional efforts continued for peace in Central America while a civil war persisted in Nicaragua, the country in focus. There is increasing concern again about the growing accumulative debts of some countries in the region.

(4)  With regard to international economy, 1985 could be described as a year when industrialized countries were urged to take joint steps toward a coordinated policy. In the face of slower economic growth and growing financial and trade imbalances, industrialized democracies stepped up efforts to coordinate policies on the macroeconomic level in an attempt to sustain economic growth without inflation. Finance ministers of the five industrialized democracies held a meeting (September 1985) and agreed to cooperate closely in rectifying the overvalued dollar. In Spring, 1986, joint steps were taken to cut interest rates. At the Tokyo Summit of seven industrialized democracies and the EC (May, 1986), the leaders agreed to implement multilateral surveillance of the macroeconomic policies of the participating nations in order to step up policy coordination. The summit leaders also agreed on further cooperation in assisting developing nations to overcome their difficult problems and to play a more substantial role in the world economy.

  Curbs on inflation, interest rates reductions and an adjustment of exchange rates, coupled with a substantial drop in oil prices since the beginning of 1986, are positive factors for the world's future economy. However, whether or not the economy will keep steadily growing without inflation under such new developments will depend on further efforts of each country.


 2.   Relations among the United States, the Soviet Union and China


(1)   U.S.-Soviet Relations

  On March 12th, 1985, the United States and the Soviet Union began new arms control and disarmament negotiations in Geneva on the basis of a joint statement by U.S. Secretary of State George Shultz and Soviet Foreign Minister Andrei Gromyko in January, 1985. They had agreed that the subject of the negotiations would be a complex of questions concerning space and nuclear arms -- both strategic and intermediate-range -- with all these questions considered and resolved in their interrelationship. They agreed that the three major points of the negotiations would be: (a) reduction of strategic nuclear arms; (b) reduction of intermediate-range nuclear arms; and (c) handling of defensive and space arms.

  It is assumed that the Strategic Defense Initiative (SDI) of the United States was one of the factors which motivated Soviets to resume the negotiations in response to the United States' initiative. The Soviet Union is believed to aim at blocking SDI through the negotiations. However, the United States firmly maintains that research under the SDI program does not violate the ABM treaty and says it will continue to promote the research.

  In March, 1985, U.S. Vice President George Bush handed President Reagan's personal letter to the new Soviet General Secretary Gorbachev when he attended the funeral services for General Secretary Chernenko. In the letter, President Reagan proposed holding a summit meeting. Gorbachev indicated in his letter to Pravda (April) that both the United States and the Soviet Union were positive on holding a summit. In July, the two countries announced that they would hold a summit in November. There were active moves on both sides toward the summit after the announcement. At the end of July, Gorbachev announced that the Soviet Union would unilaterally suspend nuclear testing from August 6th to the end of the year. The United States, which attaches a considerable importance to the question of verification involved in a nuclear test ban issue, proposed once again accepting Soviet observers at its nuclear testing grounds in Nevada. At the end of September, Foreign Minister Eduard Shevardnadze delivered Gorbachev's personal letter to President Reagan. In the letter, Gorbachev presented for the first time a specific Soviet counterproposal on arms control. In October, Gorbachev visited France and announced an outline of the Soviet counterproposal which included a 50 percent reduction in nuclear arms reaching each other's territories. He also proposed holding direct negotiations with Britain anti France over intermediate-range nuclear missiles in Europe. It is assumed Gorbachev took the diplomatic offensive with its effect on public opinion in the West in mind. In October, Gorbachev held talks with the leaders of the Warsaw Pact nations in preparation for the summit with President Reagan. President Reagan, in turn, made a proposal on the settlement of regional conflicts at the general assembly of the United Nations in late October. Reagan also held talks with Japan and other major democracies in the West to prepare for the U.S.-Soviet Summit. In November, Reagan made a new proposal in response to the Soviet counterproposal on arms control and disarmament at the Geneva negotiations.

  During the summit (November 19 - 21), the long talks held exclusively by the two leaders attracted attention. A joint statement indicated that the two leaders agreed on their mutual visits, the holding of foreign ministerial talks, and other efforts to promote dialogue. With regard to arms control and disarmament, the two countries agreed to make early progress in the negotiations in such areas as the principle of 50 percent reductions in the nuclear arms of the U.S. and the USSR "appropriately applied" and the idea of interim INF agreement, in which they shared common ground. However, it was assumed that the two countries remained wide apart in their basic positions on such issues as SDI, the definition of strategic nuclear arms, and the regions subject to reduction of intermediate-range nuclear arms.

  In January, 1986, General Secretary Gorbachev proposed abolishing all nuclear weapons in three stages by the end of the century. And in January and again in May, he announced extensions of the unilateral suspension of nuclear testing which was first implemented in August, 1985.

  In February, 1986, the United States proposed total abolition of SS-20 and other INF missiles deployed in Europe and Asia by 1989. The proposal was made following consultations with other friendly nations and allies, including Japan. In March, the United States made a proposal on the nuclear test ban including the idea of holding a U.S.-Soviet conference of experts on verification in general and the new ways of verification in particular.


(2)   Sino-U.S. Relations

  Relations between the United States and China were basically good throughout the year, as seen by Head of State Li Xiannian's visit to the United States (July) and Vice President George Bush's visit to China (October). There was also an increase in bilateral trade (over 7 billion dollars in 1985).

  The two countries signed an agreement to cooperate for peaceful use of nuclear power when Li visited the United States. Concerning the U.S. Congress attempt to enact a bill to restrict textile imports, President Reagan exercised his veto and scrapped the bill at the end of the year. Although a port call in China by a U.S. warship scheduled for spring was canceled, there were mutual visits by military officials. Chief of Staff of the U.S. Air Force Charles Gabriel visited China (October) and Chinese Deputy Chief of Staff Xu Xin visited the United States (November).


(3)   Sino-Soviet Relations

  Relations between China and the Soviet Union were expanded in the fields of trade (totaling about 2 billion dollars), economy, and human and cultural exchanges in 1985. However, it is assumed that no particular progress was made on the "three obstacles", presented by China for normalizing bilateral relations, i.e. (i) cessation of Soviet support for the Vietnamese invasion of Cambodia, (ii) withdrawal of Soviet forces from Afghanistan, and (iii) reduction of Soviet forces on the Sino-Soviet border and withdrawal of Soviet forces from Mongolia at any of the sixth (April), seventh (October) and eighth (April, 1986) vice foreign ministerial meetings.

  After the Gorbachev administration was inaugurated in March, Vice Premier Yao Yilin visited the Soviet Union in July (the first visit to the Soviet Union by a ministerial-level Chinese official in about 21 years except for occasions of funeral services of Soviet General Secretaries). He signed a long-term trade payment agreement and an economic and technological cooperation agreement in Moscow. In September, the foreign ministers of the two countries held talks at the United Nations and exchanged mutual invitations to visit each other's countries. In October, a delegation of the Supreme Soviet visited China. This was followed by a visit to China by Deputy Foreign Minister Mikhail Kapitsa in December. Then, at the end of the month, Vice Premier Li Peng visited Moscow on his way home from Europe, and held talks with Gorbachev.

  In March, 1986, First Vice Premier Ivan Arkhipov visited China and held the first meeting of the Sino-Soviet commission on economic, trade, scientific and technological cooperation with Vice Premier Li Peng.


 3.   Major Trends in Regional Developments


(1)   The Situation in Asia and Oceania

a)  In the Republic of Korea, a conflict surfaced between the government and the ruling party on the one hand and the opposition parties and the anti-government groups on the other over a revision of the constitution to change the presidential election system.

In February, 1986, the largest opposition party, the New Korea Democratic Party launched "a campaign to collect the signatures of 10 million people," demanding a direct presidential election system. The party held convention at various places to establish local chapters. In Inchon (May), a dispute emerged between anti-U.S. student groups and the New Korea Democratic Party. In the diplomatic field, President Chun Doo Hwan was active in promoting summit diplomacy. He made his second visit to the United States (April, 1985) and his first tour of Europe (Britain, West Germany, France and Belgium in April, 1986). In May, 1986, the prime ministers of Britain and Canada visited South Korea. Economic growth in 1985 stood at 5.1 percent. Although the 1985 figure was not very impressive, there was an increase in export after entering 1986.

In North Korea, economy still appeared sluggish. From October, 1985, ministers concerned with economic affairs and other officials were reshuffled four times in preparation for the third seven-year program. There were also further moves to pave the way for the succession to Kim Jong Il. Relations with the Soviet Union have been strengthened since Chairman Kim Il Sung visited Moscow in May, 1984. In August, 1985, delegates consisting of representations of the Soviet Communist Party, the Soviet administration and military attended the 40th anniversary celebration of the country's liberation. In February, 1986, Foreign Minister Eduard Shevardnadze made the first visit as Soviet foreign minister to North Korea. The two countries issued their third joint communique since April, 1985.

There were new developments in promoting dialogue between North and South. Following the Inter-Korean Red Cross Conference and the Inter-Korean Economic Talks, the two countries began preliminary meetings for a conference of Parliament members in July, 1985 and sports meetings in October to discuss how to hold the Seoul Olympic Games in 1988. In September, for the first time since the division of the Peninsula, mutual visits by Red Cross groups and groups of performing artists were realized between Seoul and Pyongyang. However, in January, 1986, North Korea notified South Korea it was suspending all dialogue in view of Seoul's announcement of the joint military exercise "Team Spirit '86" with the United States.

b)  In China, the leadership led by Deng Xiaoping, Hu Yaobang and Zhao Ziyang continued in 1985 to pursue policies giving top priority to economic reconstruction with the aim of attaining their four-point modernization plan.

Party leadership was rejuvenated at a meeting of the National People's Congress in September and plenary meetings of the Central Committee held before and after the Congress. The meetings also reconfirmed the continuation of the present policies. Around the autumn of 1985, the government again stepped up efforts to correct "unhealthy tendency", imposing strict punishments.

In the spring of 1986, the seventh five-year plan (1986 - 1990) was officially approved. The government made it clear it would firmly maintain its basic position to revitalize the economy at home and keep its open-door policy toward foreign countries. It also confirmed promotion of economic reforms. In June, 1985, China decided to reduce military personnel by one-million in two years as part of its effort to modernize the armed forces. Externally, China continued active diplomacy in line with its basic policy, i.e. "independent foreign policy".

c)  The Cambodian problems remained deadlocked again in 1985. ASEAN continued its diplomatic efforts in search of "a comprehensive political settlement" focused on the withdrawal of Vietnamese troops and respect for the Cambodian people's right of self-determination. In July, ASEAN proposed at its foreign ministerial meeting that "an indirect dialogue" should be held between the Democratic Kampuchean coalition government anal Vietnam (possibly, including representatives of "the Heng Samrin Regime" as part of the Vietnamese delegation) in an attempt to pave the way for starting dialogue among the parties concerned. In August, Vietnam announced at a foreign ministerial meeting of the three Indo-Chinese countries that it would "withdraw all troops from Cambodia by 1990." Vietnam made other diplomatic moves as well. But it virtually rejected the ASEAN proposal on "an indirect dialogue. "Vietnam also immediately issued a statement rejecting an "eight-point" proposal put forward by the Democratic Kampuchean coalition government in March, 1986. Thus, there was no substantial change in Vietnam's basic position to seek acceptance of the current situation in Cambodia as a fait accompli.

Tension continued along the Sino-Vietnamese border with no moves seen for improved relations.

In the Philippines, the Marcos administration collapsed in February, 1986, after 20 years of reign and a new administration led by Corazon Aquino was inaugurated. Since Benigno Aquino, a former senator, was assassinated (1983), the political and economic situation in the country had been deteriorating. President Ferdinando Marcos, advancing the schedule, held a presidential election in February, 1986, to tide over the situation. However, anti-Marcos forces reacted against the way the election was conducted, claiming irregularities had been committed. Under these circumstances, some members of the national army began demanding President Marcos' resignation. Opposition forces and a large number of citizens joined them. Marcos left the country for the United States and Aquino formed a new government. In March, President Aquino proclaimed a provisional constitution and announced a political schedule for the enactment of a new constitution. The Aquino administration is yet to surmount many difficult problems such as economic reconstruction and the handling of Communist insurgents in the country.

d)  In Southwest Asia, active domestic and foreign policies by Indian Prime Minister Rajiv Gandhi were conspicuous. Gandhi consolidated his political position through his victory in the general election held at the end of 1984. Against this backdrop, he actively tackled the Punjab problem (the Sikh campaign for greater autonomy in Punjab State; the two sides agreed on an accord in July) and the Assam problem (the conflict between aborigines in Assam and new settlers; an agreement was reached in August). However, tension continues in Punjab over implementation of the accord. Gandhi further promoted the policy of liberalizing the economy, which was introduced in 1980. There was no change in India's diplomatic policy of placing importance on the relationship with the Soviet Union (Gandhi visited the country in May as his first foreign visit as prime minister and also stopped in Moscow in October on his way home after he attended the general assembly of the United Nations). Nevertheless, relations with the United States were reinforced as seen in Gandhi's visit to the country (June) and a summit with President Reagan at the time of the United Nations General Assembly (October).

In Pakistan, martial law was lifted in December for the first time in eight anti a half years and the military administration was transformed into a civil administration. There were positive developments in relations between India and Pakistan as evidenced by several rounds of summit meetings. In December the leaders of the two countries agreed not to attack each other's nuclear power facilities. Pakistan and Afghanistan held proximity talks (Geneva; June, August and December) over the Afghan issue through the mediation of the United Nations. But there was no substantial progress on the issue of withdrawing Soviet troops from Afghanistan - seen as the key to a solution of the problem. In Sri Lanka, the conflict between Sinhalese and Tamils was temporarily quelled in the middle of the year through the good offices of India. But the situation has not accordingly been stabilized.

In December, leaders of the seven South Asian countries held their first meeting in Dacca and formed the South Asian Association for Regional Cooperation (SAARC).

e)  In Australia, Prime Minister Robert Hawke's ruling Labor Party tided over difficulties caused by the issue of cooperating with the United States in MX missile testing (February) and the unsuccessful tax system summit (July). A former Finance Minister, John Howard, became the leader of the opposition Liberal Party (September). Externally, the country maintained a diplomatic policy placing emphasis on its relations with Japan, the United States and other industrialized nations as well as neighboring Asian and Pacific countries.

With regard to New Zealand, its relations with the United States have been strained since it rejected port calls by U.S. nuclear warships (February). In December, a non-nuclear bill was submitted to its Parliament.

In the South Pacific region, the South Pacific Non-Nuclear Zone Treaty was adopted at the 16th South Pacific Forum in August. The Soviet Union concluded a fishery agreement with Kiribati also in August.


(2)   The Situation in North and Latin America

a)  In the United States, President Ronald Reagan succeeded in "restoring American power and prestige" during his first term of office by reinforcing defense capabilities, supported by economic recovery. Reagan has been maintaining the same policy line since having been re-elected for a second term. Reagan gained greater prestige at home through his handling of the Achille Lauro incident (October) and by holding a summit with the Soviet Union (November). On the other hand, difficulties in the second-term of Reagan Administration were evidenced in its policies toward Congress on such issues as aid to anti-government forces in Nicaragua, the federal budget, and trade. Attention is being paid to whether or not it will be possible to reinforce defense capabilities while reducing the financial deficit under the Gramm-Rudman-Hollings Law (enacted in December). Reagan has been maintaining a high popularity rate of over 60 percent (public opinion polls).

b)  In Canada, the Progressive Conservatives led by Prime Minister Brian Mulroney actively promoted dialogue with domestic political groups as seen in the meeting of the heads of the federal and provincial governments and the people's economic summit. Mulroney also tried to revitalize the economy by relaxing restrictions. Externally, Canada, placing importance on its relations with the United States, reached agreement with her on modernization of the air defense system in North America (March). Canada also started negotiations with the United States on free trade.

c)  The situation in Central America remained tense in 1985.

The Contadora Group consisting of Mexico, Panama, Colombia and Venezuela continued to work for a peaceful settlement of Central American issues in 1985. In October, the group presented "its final draft Agreement for Peace and Cooperation in Central America" to the region's five countries (Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica). However, the mediation effort has run into difficulty because of Nicaragua's reluctance to sign the agreement.

In May, the United States announced economic sanctions against Nicaragua. In July, Congress approved humanitarian assistance (27 million dollars) to anti-government forces (Contra). In 1986, President Reagan asked Congress to approve additional aid to anti-government forces in Nicaragua.

d)  The decrease in prices of crude oil and other primary products and worldwide business stagnation cast a shadow on the economy in Latin America which has shown some signs of recovery in 1984. The cumulative external debts of Latin American countries reached 368 billion dollars (the end of 1985). The major debtor nations (the Cartagena Group) have held four meetings since June, 1984. They made an appeal for political dialogue between the debtor and creditor countries, correction of high interest rates and an increase in inflow of capital.

Progress was seen in Latin American moves toward democracy in 1985 and 1986 with governments shifting from military to civil in Uruguay, Brazil and Guatemala.


(3)   The Situation in Western Europe

  The political situation in Western Europe remained relatively stable. It is worth noting that a conservative-reformist coalition government (cohabitation) was formed in France for the first time since the Fifth Republic was inaugurated in the country. It came after the opposition conservative coalition (Rassemblement pour la Republique (RPR) and Union pour la Democratie Francaise) scored a victory in the National Assembly (Lower House) election held in March, 1986. The head of the RPR, Jacques Chirac, assumed the post of prime minister. Britain, West Germany and Italy faced their respective problems. But British Prime Minister Margaret Thatcher, West German Chancellor Helmut Kohl and Italian Prime Minister Bettino Craxi succeeded in overcoming these difficulties. The year 1985 saw election victories of ruling parties in Greece (June), Norway and Sweden (September), Portugal (October) and Belgium (October). In February, 1986, Mario Soares of the opposition Socialist Party won the presidential election in Portugal. In March, the Socialist administration led by Spanish Prime Minister Felipe Gonzalez held a referendum to decide whether or not the country should remain a member of NATO. The majority was in favor of staying. In February, Swedish Prime Minister Olof Palme was assassinated. Ingvar Carlsson succeeded the premiership.

  Overall, economic performance improved slowly in major European countries in 1985. The rate of increase in prices slowed down, but unemployment rates remained high (as of the end of December, 1985, the jobless rate of nine EC countries excluding Greece averaged about 11.1 percent)

  In January, 1986, Spain and Portugal officially joined the EC. The number of member nations increased to twelve.


(4)   The Situation in the Soviet Union and Eastern Europe

a)  General Secretary Gorbachev (who assumed the post in March 1985) attempted to consolidate his position in a short period of time by reshuffling the Politburo, Secretariat, members and government ministers and local administrations. In major personnel changes, the post of prime minister held by Nikolay Tikhonov was taken over by a Politburo member, Nikolai Ryzhkov; a Politburo member and a Central Committee Secretary, Grigoriy Romanov, who was assumed to be Gorbachev's political rival, and another Politburo member, Viktor Grishin were dismissed from their posts; and two secretaries, Yegor Ligachev and Lev Zaykov, were promoted to be full members of the Politburo.

Gorbachev has been dealing with the revitalization of the economy as the most important domestic task. He has set a target to double the national income (annual increase rate: 4.7 percent) over the next 15 years (1986 - 2000). He reshuffled government and party officials concerned with economic affairs including the prime minister, reinforced discipline by promoting a (self-) criticism campaign, improved the economic control machinery, and promoted scientific and technological progress. These policies were confirmed at the 27th Congress of the Soviet Communist Party (February - March 1986). Gorbachev's policy of economic reforms is based on the idea of making the best of the advantages of the centrally-planned economic system. Therefore, there is no sign of change, for the present, in the basic framework of the economic system in the Soviet Union.

Gorbachev also carried out a major reshuffle of diplomatic officials including the foreign minister, the secretary in charge and ambassadors. He showed a great interest in relations with the United States as seen in his acceptance of a U.S. proposal to hold a summit (November). He devoted a large portion of his speech to the U.S.-Soviet relations at the Party Congress. At the same time, he sought improved relations with Western Europe, Japan, China and other neighboring countries as evidenced by his visit to France (October) prior to the U.S.-Soviet summit and Foreign Minister Eduard Shevardnadze's visit to Japan (January, 1986).

b)  After Gorbachev assumed the post of General Secretary, mutual visits by heads of state took place between the Soviet Union and the East European countries, the Warsaw Pact was extended (April, 1985), and leaders of the Warsaw Pact countries held meetings several times. These moves were apparently intended to reinforce solidarity between the Soviet Union and the East European countries.

East European countries held party congresses prior or subsequent to the Soviet Communist Party Congress to decide on basic guidelines for political and economic management in the latter half of the 1980s (Hungary, its 13th, March, 1985; Czechoslovakia, its 17th, March, 1986; Bulgaria, its 13th, April; East Germany, its 11th, April) (Rumania held its 13th convention in 1984). There was no change in the post of party secretary general in any of these countries. Efforts were directed toward finding ways to revitalize their respective economies.

In Poland, a parliamentary election was held (October, 1985) for the first time since martial law was imposed (1981). In Hungary, a general election was held with plural candidates running in all electoral districts for the first time in the post-war period (June, 1985).

1985 was the final year of the five-year economic plan for East European countries. But their economic activities were slow in general due to a drought and sluggish exports to the West. As a result, economic performance was slightly worse than the previous year, putting a brake on the recovery trend seen since 1983.

In Yugoslavia, economic improvement remained the foremost task for the government. In Albania, the First Secretary of the Labor Party, Enver Hoxha, died in April, 1985. The Chairman of the Executive Council of the National Assembly, Ramiz Alia, succeeded the post.


(5)   The Situation in the Middle East and Africa

a)  Prospects for peace in the Middle East remained gloomy. There were various moves by the parties concerned after the so-called Hussein-Arafat agreement in February, 1985. But developments including the bombardment of the PLO headquarters in Tunis by Israeli forces in October and the hijacking of an Italian passenger air liner the "Achille Lauro" by Palestinian guerrillas also in October brought the peace process begun in February to a standstill. A dialogue scheduled between Britain, Jordan and Palestine was also canceled.

In February, 1986, Jordanian King Hussein and PLO Chairman Arafat discussed in Amman the idea of allowing the PLO to attend international conferences on the condition that the PLO accept United Nations Security Council Resolutions 242 and 338. But they failed to reach agreement. On February 19, King Hussein announced that political coordination with the PLO leadership would be impossible until the PLO restores credibility and consistency, even though the Hussein-Arafat agreement was still effective.

b)  The Iran-Iraq conflict, which had been in a stalemate, saw a new development early in March, 1985, when an Iraqi attack on economic facilities in Iran triggered mutual attacks on cities. Battles spread to each other's capitals simultaneously (abated in mid-June).

In August, Iraq, which had attacked tankers before, began bombing attacks on Kharg Island, principal Irani oil export terminals, and continued attacks on shipping and targets on the island. In retaliation, Iran enforced searches and seizures of vessels carrying cargo to Iraq. In addition, Iran began attacking tankers using helicopters in 1986.

In February, 1986, Iran attacked Iraqi forces on the southern and northern fronts. In the south, Iran occupied the Iraqi port city of Fao.

c)  In January, 1985, Israeli Prime Minister Shimon Peres announced a three-stage withdrawal of Israeli troops from Lebanon. And by June, Israel had withdrawn almost all troops from Lebanon.

In southern Lebanon, fighting escalated among the various factions following the military vacuum left by Israel's withdrawal. As a result of the civil war in Sidon (April) and the strife at Palestinian camps (May), the Shiite gained influence. The hijacking of a TWA jetliner brought the existence of a Shiite political organization, Amal, to wide public attention.

In December, an agreement toward reconciliation was reached among a Christian Maronite militia organization, the "Lebanese forces", the Amal and the PSP (Progressive Socialist Party, Druze faction), under the initiative of Syria. However, moves toward reconciliation have been deadlocked because of opposition by Lebanese President Amin Gemayel and other Christian groups.

d)  In January, 1986, the United States announced total suspension of direct trade with Libya and other sanctions against it on the grounds that Libya was involved in the simultaneous terrorist incidents at airports in Rome and Vienna (December, 1985). The United States asked Western allies to take concerted actions against Libya.

In March, Libya carried out missile attacks on the U.S. sixth fleet which had been engaged in a military exercise off the Gulf of Sidra. The United States charged that Libya violated the right of free passage in international waters, and, in retaliation, attacked and sank a Libyan patrol boat carrying missiles and damaged a missile base in Sirte. In April, a bomb explosion took place at a discotheque in West Berlin. The United States claimed there was evidence indicating Libya's involvement in this incident and other cases of terrorism. And it bombarded targets in Tripoli and Benghazi as measures of what it called self-defense. EC countries also decided on sanctions against Libya, including a reduction in the number of diplomats in Libya.

e)  Africa had been suffering from a drought-caused food crisis since1983, but the situation began improving because of emergency food assistance from various countries and favorable rainfall, except for some areas (Angola, Botswana, Ethiopia, Mozambique and Sudan). However, most African countries suffer from chronic food shortage and they are forced to depend on grain imports. There are also problems concerning the transportation and storage of food. Cumulative external debts are another problem yet to be solved. Thus, the economic crisis in Africa remains serious. Against such economic difficulties, political situations became unstable in some countries. Coups d'etat occurred in Uganda, Nigeria, Lesotho and Sudan.

Economic problems are the major task also for African countries. Discussions at the 21st summit meeting of the Organization of African Unity, OAU, in July were centered on economic issues. The meeting adopted the Addis Ababa Declaration which spelled out specific measures to be taken by each member nation toward the solution of economic crisis and problems concerning food supply and agriculture.

In South Africa, riots escalated in black townships in 1985. In July, the government declared a state of emergency (lifted March, 1986). The situation was strained by repeated riots and crackdowns following the declaration. International criticism against apartheid mounted and many countries reinforced sanctions against South Africa. Economic conditions in the country deteriorated, and the Botha administration suspended payment of external debts in September. In January, 1986, the administration announced a domestic political reform plan. But the situation continued to be unstable in South Africa.

In Namibia, an interim government of the MPC (Multilateral Party Conference) was formed with the support of South Africa. But it failed to gain international recognition and invited the criticism of the United Nations Security Council. In March, 1986, South Africa announced it would implement by August United Nations Security Council Resolution 435 on the procedures for the independence of Namibia on condition that agreement be reached on the withdrawal of Cuban troops from Angola.


 4.   World Economic Trends


  The economic recovery of industrialized countries slowed in 1985, the third year since it started (the real GNP growth rate of OECD nations dropped to 2.8% in 1985 from 4.9% in 1984). The financial and current account imbalances of industrialized countries worsened and unemployment rates remained high especially in Europe. 1985 was a year when each country was urged to coordinate policy toward sustained and non-inflationary economic growth.

  The United States' economy had led the business recovery since 1983. But its economic growth slowed (6.5%, 1984 to 2.2%, 1985). The United States suffered large financial ($212.3 billion, fiscal 1985) and current account deficits ($117.7 billion, fiscal 1985). On the other hand, Japan and West Germany increased current account surpluses again in 1985. The imbalance among industrialized countries constitutes an uncertain factor for the world economy. Together with such structural factors as the delay in industrial coordination and employment problems, the economic imbalance gave rise to protectionist moves in many countries. The volume of world trade did not show much increase in 1985 (increase rate dropped from 9%, 1984 to 3%, 1985).

  Major industrialized countries confirmed common policy principles and made known their respective priority policy fields at the OECD Ministerial Council meeting (April, 1985) and the Bonn Economic Summit (May, 1985). Finance ministers and central bank heads of the five industrialized countries agreed (September) that they would cooperate more closely so that exchange rates of major currencies would better reflect the basic condition of each country. Following the meeting, progress was made on correction of the overvalued dollar. The industrialized countries also took joint action to lower interest rates (March and April, 1986). At the Tokyo Summit (May, 1986), the participants agreed to implement multilateral surveillance of national policies by making use of various economic goals, with the aim of further strengthening policy coordination among the industrialized countries. As for the new round of multilateral trade negotiations, it was agreed at a GATT general meeting (November, 1985) that a preparatory committee would be established and a ministerial meeting would be held in September 1986, to discuss the matter. Substantial economic progress was also seen from the autumn of 1985 in such developments as correction of the overvalued dollar, reduction of interest rates and decrease in oil prices. Prospects for world economic growth became brighter. These trends, as a whole, are a positive sign for the future of the world economy. Each country is expected to make efforts to further promote non-inflationary economic growth.

  The economic situation in the developing countries deteriorated because of the slower economic growth of the industrialized countries, the consequent sluggish world trade and the inactive primary product market. There was also an increase in cumulative external debts (totaling 950 billion, the end of 1985). At the World Bank-IMF general meeting (October), the United States proposed a "program for sustained economic growth" in an attempt to step up cooperation among countries concerned for the economic growth of debtor nations. Attention is also being paid to how the decrease in oil prices in 1986 will affect the economies of the developing countries.

  On the international oil market, crude oil prices were generally decided by spotlink, netback or other formulas, under a basic trend of eased situation of demand and supply. OPEC's share of the crude oil supply in the free world kept decreasing until the middle of 1985 because of the cutback in production by Saudi Arabia. However, Saudi Arabia abandoned its role as a coordinator in oil production and began selling oil by the netback formula (crude oil prices calculated backward from the prices of products) around October. In December, OPEC decided "to secure a fair share" at a regular general meeting. Because of these developments, crude oil prices fell sharply to below eleven dollars per barrel in the first quarter of 1986.


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