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SECRET SECRET/SENSITIVE 2 following adverse trends and concluded that the United States and its MTCR partners must intensify efforts to control missile proliferation: --The number of Third World countries producing or able to produce ballistic and cruise missiles is growing at an alarming rate. By the late 1990's, as many as 15 Third World countries will either have produced or be able to produce missiles. --While most ballistic missiles will be SRBMs, medium or intermediate range ballistic missiles are not far off in the future. Israel is already testing an MRBM and, by the nid-1990's, India will be able to build MRBM/IRBMs. In addition, with regard to SRBMs, the problem of re-engineering to extend their range has already become a reality with Irag's adaptation of the Soviet-designed Scud. --The number of potential suppliers of complete missiles will also grow in the next decade making missiles more available. Potential suppliers will grow beyond the MTCR Seven, Soviet Union, North Korea, Israel and the PRC to include Argentina, Brazil, Egypt, India and Iraq. Moreover, some of these countries are transfering production technology to others, spurring further proliferation. -Proliferation may accelerate even further as incentives grow to procure missiles. Although the current generation of export model missiles is relatively inaccurate, they have acquired great symbolic importance. Technological advances will improve the accuracy and lethality of ballistic and cruise missiles available for export. -While some proliferators will be capable of arming their missiles with nuclear warheads, there is a greater probability that some will arm missiles with chemical/biological weapons. (S) OBJECTIVES OF THE POLICY (U) Specific policy guidance is provided for the following areas --Continuing bilateral and multilateral discussions with the MTCR partners to show strong continued support for the MTCR, to improve the implementation of the MTCR and to continue to explore ways and means to expand participation in the MTCR. -Continuing discussions with the Soviet Union and China on stemming missile proliferation. These discussions should provide the Soviets and Chinese with a broad understanding of the missile ECRETSENSITIVE SECRET