CHILE: A CRISIS OF LEADERSHIP

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A006000050003-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 21, 2016
• Document Release Date: September 15, 2008
• Sequence Number: 3
• Publication Date: September 22, 1967
• Content Type: REPORT

Approved For Release 2008/09/15: CIA-RDP79-00927A006000050003-0
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DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Chile: A Crisis of Leadership
State Dept. review completed
Secret
N2 ' 0
22 September 1967
No. 0308 / 67A
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CHILE: A CRISIS OF LEADERSHIP
President Eduardo Frei's election in 1964
caught the imagination of democratic forces in
Latin America by bringing to power an administra-
tion pledged to widespread social and economic
reform within a democratic and non-Communist
framework. Frei has made progress in some areas,
but parts of his program have been blocked or
delayed by an obstructionist opposition in
Developments of recent months, however,
have finally forced Frei to react somewhat more
vigorously against some of his critics. Late in
August., the government arrested leaders of the
conservative National Party for a party state-
ment that criticized the government's foreign pol-
icy and that could be read as giving encourage-
ment to military intervention. The government has
also brought suit against leftist extremists for
a'Llegedly seditious statements, and has banned
public marches and parades, a traditional leftist
form of protest. Any further moves to silence
leftist critics, however, would provoke strong
protest from the left wing of Frei's own Christian
Democratic Party (PDC) as well as from the Commu-
nists and Socialists, whose coalition, FRAP, will
be the PDC's chief opposition in the 1970 presi-
dential election.
Background
President Frei took office
in September 1964 as the head of
a government pledged to tackle
Chile's deep-seated economic and
social problems within the con-
text of the democratic tradition.
He had the backing of the demo-
cratic forces of Chilean society,
and hoped to prove that a govern-
ment of the non-Communist left
could implement reforms that would
Page 1
achieve the results promised by
Communists. Frei pledged eco-
nomic and social development,
as well as an "independent" for-
eign policy that would make Chile
a force in the "third world."
Frei's strong performance in
the presidential election was fol-
lowed six months later by an im-
pressive party victory in the
congressional elections. The
PDC won a majority in the Chamber
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25X1
of Deputies as well as all the
Senate seats that it contested.
The Senate majority is still in
opposition hands, however, and
Frei has had major difficulties
in getting his programs approved.
Since December 1966, the Senate
has been controlled by an informal
coalition of the Communist-So-
cialist front, FRAP, and the oppor-
tunistic Radical Party (PR), sup-
ported to some extent by conserva-
tives. It was this combination
that in January 1967 denied Frei
permission to leave Chile for an
official visit to the United
States, and that also stymied
congressional approval for this
year's joint US-Chile naval ex-
ercise UNITAS.
Problems With the PDC
After Frei's victory, the
PDC was faced with the problem
of changing its outlook from
that of an opposition party to
that of a party with the respon-
sibility for government. Frei
took many of the most able,
moderate party members into his
government, leaving a leadership
vacuum in the party itself. He
considered himself president of
"all the Chileans," not simply
implementer of PDC policies and
dispenser of patronage. As a
result, the PDC found itself ex-
pected to support Frei's programs
without receiving the political
and economic side benefits that
many members expected after the
election victories.
The leadership vacuum with-
in the PDC gave free rein to a
left-wing "rebel" faction that
could not adjust to the problems
of a governing party, and accused
the administration, because of
compromises it was forced to make,
of losing its revolutionary fer-
vor. The rebels, led by Alberto
Jerez, gained control of the party
at its national assembly in July
1967. Their control, however, is
based on cooperation with a less
extreme "third position" group,
and the rebels will be forced to
make some compromises themselves
in order to maintain their posi-
tion.
Even before their formal vic-
tory, the rebels had exposed Frei's
inability to control the party.
Following the formation of the
Chilean committee of the Cuban-
sponsored Latin American Solidar-
ity Organization (LASO), they en-
gineered a party resolution ap-
proving the committee. This dec-
laration set off a storm of pro-
test both inside Chile and in other
countries such as Venezuela and
Colombia that are actively fight-
ing guerrillas supported-by Cuba
and LASO. Shortly thereafter,
Frei denounced LASO and condemned
the Chilean delegates to the LASO
conference as "traitors," but the
party has never rescinded its dec-
laration.
Despite this early evidence of
dissatisfaction with the moderate
leadership, Frei took little inter-
est in the intraparty maneuvering
that had preceded the national con-
vention. Although he clearly op-
posed the Jerez group, he made no
real attempt to influence the con-
vention to accept the moderate
candidates. Since then, Frei has
attempted to regain some control
over the party, but recent
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reports that its leaders have
been discussing legislative co-
operation with the Communists
suggest that he is making little
progress.
One of the first acts of
the new governing group of the
party was to approve the "Chon-
chol Report," a PDC paper by a
political-economic commission
advocating large-scale govern-
ment intervention in the econ-
omy and nationalization of im-
portant sectors of industry.
Parts of this report conflict
directly with Frei's announced
goals.
Shortly thereafter, the new
party leadership attempted to
force Frei to replace his minis-
ters of labor and public health.
Frei refused, emphasizing his
confidence in his entire cabinet
and reminding party leaders that
the choice of the cabinet is his
prerogative, not theirs. Subse-
quent reports, however, claim
that Frei did promise to get rid
of Minister of Economy Santa
Maria and another minister. Santa
Maria has since resigned--whether
under pressure or for personal
reasons is not clear--but his
successor is a strong supporter
of Frei and will probably make
few changes in policy.
Frei's failure to keep his
own party under control under-
mines his position as leader of
the country as a whole. He may
come to believe that a showdown
with the PDC leadership is the
only reasonable course of action.
Depending on the choice of is-
sue, such a confrontation could
split the party--the rebels may
decide that they would have lit-
tle to lose by bolting the party
and throwing their support openly
to FRAP, the Communist-Socialist
coalition. Even if they do not,
the strains will persist and
will weaken the PDC's over-all
position.
At present, there is no con-
sensus on a party nominee for
the 1970 presidential election.
Frei himself will be ineligible
to run in the absence of a con-
stitutional amendment. Moreover,
there is no clear indication
that the PDC candidate will be
able to defeat the Communist-
Socialist (FRAP) candidate, who
probably will also be supported
by at least the key leaders of
the currently left-leaning Radi-
cal Party.
Other Political Problems
Developments within the
other Chilean political groups
complicate Frei's over-all situa-
tion. The Communist Party (PCCh),
deeply involved in the current
debate among Latin American Com-
munists as to the proper means
of achieving power, is one of
the strongest backers of Moscow's
position. PCCh Secretary General
Luis Corvalan is one of the fore-
most proponents of the theory
that conditions in each country
determine the best strategy to
be followed in particular cases.
He stresses that the local Com-
munist party is in the best po-
sition to evaluate the situation
and to decide whether violent
or peaceful methods will be more
fruitful. Because of the bit-
terness of the dispute, the PCCh
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will be pulling out all the stops
between now and 1970 to prove that
a Communist party can come to
power through electoral means.
To this end, the PCCh lead-
ership is playing down talk of
armed revolution in an attempt to
make the party attractive to as
broad a group as possible. In a
defense of this position published
in July 1967 in the World Marxist
Review, Corvalan emphasized th e
a vantages gained by Communist
cooperation with the Socialists
and Radicals. He claims, "The
Communist effort gradually to win
over the masses from the Chris-
tian Democrats, delivering them
from bourgeois influence and
rallying petty-bourgeois support
for the People's Action Front,
is bearing fruit." If a FRAP-
supported candidate wins the 1970
election, the PCCh and Moscow
will have been vindicated. The
Communist stake in fostering dis-
sension within the PDC and in
aggravating Frei's problems is
therefore substantial.
At the other end of the po-
litical spectrum, the conserva-
tive National Party (PN), an amal-
gam of the two oldest Chilean
political parties, opposes the
government's reform programs and
often, as in the case of Frei's
proposed US trip, votes with FRAP
simply to embarrass the government.
Page 4
The Chilean armed forces are
historically apolitical, and most
Chileans are very proud of this
fact. The provocation for any
military action against the gov-
ernment would therefore have to
be extreme.
A t ough President Frei
has maintained a satisfactory re-
lationship with the armed forces'
hierarchy, his inability to con-
trol the Senate and his commit-
ment to an economic austerity
program make it difficult for him
to satisfy many of the military's
aspirations.
Economic Problems
The current political uncer-
tainties may seriously hamper the
government's program of stabili-
zation and development. Chile
has suffered many years of rapid
inflation, and price stability
was one of the most important
parts of Frei's campaign program.
According to the official price
index, which may understate the
impact of inflation on consumers,
austerity policies under the new
government succeeded in cutting
inflation from its 38-percent in-
crease over the preceding year in
1964 to a 17-percent increase in
1966. The goal for 1967 was to
limit the rise to no more than 12
percent but, as of the end of
July, deficit financing, wage
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increases in excess of government
guidelines, and the effect of bad
weather on crops had combined to
drive the cost of living 17.3
percent above the level of De-
cember 1966.
The Frei administration has
taken a relatively strong stand
in defending its stabilization
policies against attacks by FRAP
and the FRAP-dominated Chilean
Workers Central (CUTCh). The
administration has taken a hard
line toward illegal strikes, par-
ticularly in the public sector,
and has talked about organizing
a rival labor federation,in hope
of diluting CUTCh's power to tie
up key sectors of the economy.
The PDC has been unable to agree,
however, on the extent of con-
trol the party should retain over
such an organization. The Chon-
chol Report, written mainly by
PDC left wingers, disagrees pro-
foundly with these policies and,
at least by implication, attacks
the government's entire stabili-
zation program.
The assumption of party lead-
ership by the radical wing of the
PDC has increased the fears of
private investors. Even though
response from domestic investors
has been weak, more than US $750
million in foreign private in-
vestment capital had been sched-
uled to come in during the next
four years. Frei has reaffirmed
his commitment to private enter-
prise, but the effectiveness of
his reassurances is undermined
by his demonstrated inability to
control the actions of his party.
The Frei administration also
has reaffirmed its intention to
maintain a "controlled pace" of
agrarian reform--a difficult
course lying somewhere between
the desires of the large land-
holders and the radical left.
Congress delayed this program
for more than two years but the
reform bill was finally passed
this summer with FRAP support.
Some resettlement has been under-
taken since then, but the project
has fallen far behind its origi-
nally projected schedule. At
the same time, the uncertainties
attending the long delay dis-
couraged investment by tradi-
tional landowners and production
stagnated. This situation, to-
gether with the effect of an un-
usually bad winter, will neces-
sitate record food imports in
1967 and probably in 1968 as
well.
Outlook
The net result of the devel-
opments within the PDC and the
other political parties has been
to force most ambitious, non-
rightist politicians to espouse
a militantly leftist line in order
to maintain any sort of organiza-
tional following. The Soviet
ambassador to Chile, who has done
an effective job of persuading the
Chileans to increase their ties
with the USSR, reportedly com-
mented recently that "even if"
the PDC presidential candidate
in 1970 should be elected, he
would be more leftist than Frei.
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Although there are serious
differences of opinion within
the Radical and Christian Demo-
cratic parties, the moderates in
both have shown such ineptness at
political maneuvering that the
present leftist leaderships may
retain control through 1970. In
that case, only the lackluster
conservatives will offer the
voters an alternative, but their
National Party is so discredited
as a supporter of the old order
that it commands very little pop-
ular backing.
Frei's reluctance to in-
volve himself in party politics,
combined with the strains that
exist in other political parties,
may serve eventually to downgrade
the importance of the parties
and to open the field once again
to personalities rather than to
party candidates. In any event,
Frei is unlikely to have much
control over the choice of the
PDC candidate.
Chile has a large and growing
middle class that is primarily
interested in maintaining the
advantages it has obtained in
recent years. Many members of
this group, who voted for Frei
in 1964 as an alternative to a
Communist-backed government, are
likely to be alienated by his de-
lay in implementing promised re-
forms and his continued inept
leadership of the PDC. By fail-
ing to respond to the expecta-
tions of the moderate part of the
electorate, the PDC is likely to
lose substantial political sup-
port, and could even lose the
presidency to FRAP.
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