impose economic sanctions to pressurize Balts into
relaxing citizenship laws. Agitation for military
intervention to protect
Russian minorities;
deterioration in
sharp
Russian/Latvian relations.
4.
economy:
Russia: non-implementation or failure of the economic reform programme: hyperinflation and plummeting industrial output. Debt-rescheduling and IFI balance of payments assistance at risk.
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nationalist forces in Russia and a slowdown in reform. We could come under increasing pressure to give security guarantees to the CEES.
Economic assistance from the IFI in 1992, debt rescheduling, and Western economic assistance generally in 1993 is conditional on Russia agreeing and sticking to an IMF agreed reform programme. Failure would delay Russian integration into international economic structures and damage British trade.
Working with IMF and other Western governments to encourage a satisfactory reform programme. Much would depend on the reasons for eventual non-implementation and on the alternative policies followed by the Russian government.
5. Yugoslavia: internal conflict in Serbia, triggered by the power struggle of Panic and Cosic versus Milosevic. Attempt to overthrow Milosevic sparks civil war in Serbia. Renewed Serbia/Croatia conflict over the Serbian
enclaves. Serbs in enclaves side with Serbs in B-H. Risks to UN peacekeeping force.
6.
Yugoslavia: fighting
in the Kosovo (this would cause major refugee problems,
See below.
No direct interests but fighting would add a major new dimension to the Yugoslav crisis and the severest
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2
London Peace Conference in continuous session in Geneva co-chaired by Lord Owen and Cyrus Vance. UK has contributed to UN peacekeeping force and has supplied 1,800 British troops to Bosnia.
We have been working with
others for CSCE observers in the Kosovo. The Secretary of State