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UNCLASSIFIED 2 UNCLASSIFIED Later this month, the 8th TRIDENT submarine, USS NEVADA, begins sea trials. As called for by our policy, I have assessed our options with respect to that milestone. I have considered Soviet behavior since my June 1985 decision, and U.S. and Allied security interests in light of both that behavior and our programmatic options. The situation is not encouraging. While we have seen some modest indications of improvement in one or two areas of U.S. concern, there has been no real progress toward meeting U.S. concerns with respect to the general pattern of Soviet non-compliance with major arms control commitments, particularly in those areas of most obvious and direct Soviet non-compliance with the SALT and ABM agreements. The Krasnoyarsk radar remains a clear violation. The deployment of the SS-25, a forbidden second new ICBM type, continues apace. The Soviet Union continues to encrypt telemetry associated with its ballistic missile testing in a manner which impedes verification. We see no abatement of the Soviet strategic force improvement program. Finally, since the Geneva summit, we have yet to see the Soviets follow-up constructively on the commitment made in the Joint Statement issued by General Secretary Gorbachev and myself to achieve early progress, in particular in areas where there is common ground, including the principle of 50 percent reductions in the strategic nuclear arms of both countries, appropriately applied, as well as the idea of an interim agreement on Intermediate-range Nuclear Forces (INF) . Based on Soviet behavior since my June 1985 decision, I can only conclude that the Soviet Union has not, as yet, taken those actions that would indicate its readiness to join us in an interim framework of truly mutual restraint. At the same time, I have also considered the programmatic options available to the U.S. in terms of their overall net impact on U.S. and Allied security. x When I issued guidance on U.S. policy on June 10, 1985, the military plans and programs for fiscal year 1986 were about to be implemented. The amount of flexibility that any nation has in the near-term for altering its planning is modest at best. Our military planning will take more time to move out from under the shadow of previous assumptions, especially in the budgetary conditions which we now face. These budgetary conditions make it essential that we make the very best possible use of our resources. The United States had long planned to retire and dismantle two of the oldest POSEIDON submarines when their reactor cores were exhausted. Had I been persuaded that refueling and retaining these two POSEIDON submarines would have contributed significantly and cost-effectively to the national security, I would have directed that these two POSEIDON submarines not be dismantled, but be overhauled and retained. However, in view of present circumstances, including current military and economic UNCLASSIFIED SECRET "INCLASSIFIED