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Secretary of State for Defence had underlined the need for continued restraint on arms sales to Argentina, to which Mr Cheney had responded sympathetically.

ONFIDENT

German Democratic Republic

Previous Reference:

CC(89) 28.3

THE FOREIGN AND COMMONWEALTH SECRETARY said that Mr Egon Krenz

replaced Mr Erich Honecker as Chairman of the Council of State of the German Democratic Republic (GDR). Mr Krenz was talking of positive changes. The media was now a little more aen. Promises had been made of freer travel. But there was no sign that the regime was prepared for genuine political reform. The GDR authorities wanted to avoid the use of force against demonstrators because of possible Soviet displeasure and West German and international reaction. But the situation remained volatile

In a brief discussion, it was noted that at the meeting of the Nuclear Planning Group in Portugal on 24/25 October, the West German Defencester, Herr Stoltenberg, had confirmed that the total figube fast Germans travelling to West Germany this the total figure of Bast year had been over 50,000. Of these approximately 140,000 had come from East Germany of which half had been legal emigrants and half refugees. The remaining 360,000 had come from the Soviet Union and survivin German minority populations in other Eastern European countr Herr Stoltenberg had said that whereas a month ago the woy German Government was taking the line that it was proud to on these new responsibilities, more recently the inflow of gees was causing political problems in West Germany.

ke

TIA

Hungary

Previous Reference: CC(89) 28.3

THE FOREIGN AND COMMONWEALTH SECRETARY said that Hungary had made further strides towards democracy including the creation of a new Republic (no longer a "People's Republic") on the anniversary of the 1956 Uprising. The new constitution laid the basis for a Western style multi-party

Parliament was already dismantling traditional instruments of party control, including the Workers' Militia. Much of the perty and the perquisites enjoyed by the former Hungarian east workers' Party were being rescinded. Assessments were how hanging about the prospects for the Presidential elections, which were due to take place soon. Leading Communist officials had caleated that they would be able to maintain their influence through a strong Communist President and through playing an important role in a coalition government. Both these calculations now seemed less plausible. The Opposition was becoming more credible and steadily gaining support. The Hungarian Socialist Party candidate for the Presidental election, Mr Imre Pozsgay, was

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