LATIN AMERICAN TRENDS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A000100360002-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 12, 2016
• Document Release Date: June 28, 2001
• Sequence Number: 2
• Publication Date: January 15, 1975
• Content Type: NOTES

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No Foreign Dirrem
2UITT KOUEN3
Latin American Trends
SOURCED
Secret
January 15, 1975
No. 0492/75
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No Foreign Dissem/No Dissem Abroad
Background Use OnZy/ControZZed Dissem
Warning Notice
Sensitive Intelligence Sources and Methods Involved
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Classified by 005827
Exempt from general declassification schedule
of E. 0. 11652, exemption category:
g 5B (1), (2), and (3)
Automatically declassified
on: Date Impossible to Determine
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LATIN AMERICAN TRENDS
This publication is prepared for regional specialists in the Washington com-
munity by the Western Hemisphere, Division, Office of Current Intelligence,
with occasional contributions from other offices within the Directorate of
Intelligence. Comments and queries are welcome. They should be directed to
the authors of the individual articles.
CONTENTS
January 15, 1975
Argentina: Energy Prospects for 1975 . . . . 1
Argentine Superport Hits Snags . . . . . . . 3
Guantanamo "Fence-jumpers" . . . . . . . . . 6
Cuba: An Olive Branch to the
Dominican Republic? . . . . . . . . . . . 8
Mexico: The Year of the Campesino . . . . . 10
Peru: The Stage is Set . . . . . . . . . . . 12
Panama: Canal Negotiations
Controversy . . . . . . . . . . . . . . . . 14
Economic Outlook for Latin American
Oil Importing Countries . . . . . . . . . . 16
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Argentina: Energy Prospects for 1975
]:ncreased gas and coal production, development
of the nation's vast hydroelectric potential, and
activation of Latin America's first nuclear power
reactor will enable Argentina to cut oil consumption
while providing enough energy to support an expected
5-percent rise in GNP this year. These factors and
a slight recovery of domestic crude output should
permit: Argentina to cut oil imports by about 5,000
b/d.
Domestic crude production is expected to be
around 417,000 b/d. Nearly 40 wells were drilled in
1974 at a cost of $12 million and even more are
planned this year. Most gains, however, probably will
come from increased use of secondary recovery tech-
niques in existing fields. Offshore development is
still in its infancy, but the state-owned petroleum
company has bought another offshore rig for $60 mil-
lion to replace one that sank en route in November.
The new rig, capable of operating in 600 feet of water
and drilling to depths of 18,000 feet, will be used to
explore off the coast of Tierra del Fuego.
Argentina will still have to import some 15 per-
cent of its petroleum needs, 20 percent of its gas,
and more than half of its coal in 1975 even with the
expected recovery in domestic crude output and a
:rapid expansion of gas and coal production. Neverthe-
less, Argentina's lower renegotiated prices for crude
imports will cut nearly $50 million from Argentina's
.import bill despite higher prices for imported coal
and natural gas. Last year Argentina paid Libya an
exorbitant amount to meet its petroleum needs (more
than $16 per barrel c.i.f.).
January 15, 1975
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Consumption of petroleum products stagnated in
1974 and is not likely to increase this year. Con-
servation measures introduced in 1974 included sharp
increases in gasoline prices, lower speed limits,
and controls on private automobile traffic. While
some of these restrictions were eased toward the end
of the year, conversion of thermal generators from
fuel oil to gas and coal firing and a more than 60-
percent jump in non-thermal generating capacity last
year should easily permit further cuts in oil con-
sumption in 1975.
Official claims that Argentina will be self-
sufficient in energy by 1977 appear extremely opti-
mistic. However, continued expansion of gas and coal
production at annual rates of around 9 percent and
20 percent, respectively, and rapid expansion of
hydroelectric capacity should keep fuel imports re-
quirements stable. As a result, energy imports will
not pose a serious threat to balance-of-payments
stability for Argentina in the foreseeable future,
and growth should be unimpaired by energy constraints.
(CONFIDENTIAL)
January 15, 1975
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Argentine Superport Hits Snags
(Condensed from the Latin America Economic Report
January 3, 1975)
Construction of a multi-million-dollar naval
port facility at Cabo San Antonio has been postponed
indefinitely, only a few weeks after President Peron
had pledged "very special attention" to the project.
Although the need for studies of hydrographical
conditions is the official explanation for the delay,
most sources believe that the government simply can-
not afford this project. Economic Minister Gomez
Morales noted recently that Argentina's biggest prob-
lem is a fiscal deficit of nearly $3 billion. He
now intends to cut current government expenditures
by between 10 and 15 percent, and freeze all big
public investment projects which do not have "real"
financing available. This rules out most projects
that lack foreign investment. An exception, however,
is the planned expansion of the Buenos Aires subway
to which the government has already committed $150
million.
The decision to suspend work at Cabo San Antonio
automatically strengthens the Uruguayan alternative
project for a deep-water port probably at La Paloma.
A preliminary study by the Inter-American Development
Bank suggests that a port capable of handling ships
of up to 100,000 tons could be built there at one
tenth the cost of the Cabo San Antonio complex. A
good deal of Argentine trade could then be routed
through Uruguay at a much lower cost.
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FALKLAND ;LANDS
Rio Gallegos (U.K.;
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There are strategic arguments against this alter-
native, however. Argentina is not predisposed to have
so much of its trade handled through a foreign port.
The navy especially is miffed by the delay and unwill-
ing to drop its proposal. Naval chiefs are now arguing
that Cabo San Antonio is important because all of their
present facilities are "strategically vulnerable."
(CONFIDENTIAL)
January 15, 1975
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Guantanamo "Fence-jumpers"
The number of Cubans finding refuge at the US
Naval Base at Guantanamo declined to 29 last year--
the lowest total since the Castro regime came to
power.
This decrease is in keeping with the trend
toward a dwindling number of "fence-jumpers." Their
number reached a high of 1000 in 1968 but dropped
steadily in succeeding years, especially after 1970
when the Cuban government tightened security by com-
pleting three barbed-wire fences and a mine field
extending nearly 18 miles along the west, north,
and east boundaries of the base. Construction of a
fourth fence was begun in 1974.
The pattern of exodus over the years can be seen
in the following figures:
Year
Number of "fence-jumpers"
1964
35
1965
72
1966
136
1967
518
1968
1000
1969
786
1970
384
1971
133
1972
48
1973
75
1974
29
A growing awareness by the Cuban people of the
permanency of the Castro regime and a gradual adjust-
ment to life under it have probably also contributed
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to the decrease in number of refugees. Increasingly,
"fence-jumping" has become a last resort for those
with compelling reasons to leave. Last year, five
of the fugitives were military deserters, and of the
remaining 24, 20 had prison records.
The physical rigors demanded in escaping to
Guantanamo are reflected in the fact that 25 of last
year's "fence-jumpers" were adult males; 18 of these
were 30 or younger. The effectiveness of the mine-
and-fence barrier caused many refugees to enter the
base by water through Post 21, where Guantanamo Bay
broaches the fence line. In 1974, however, only
three entered at this post, possibly because of
stepped-up patrolling by the Cuban security forces
in upper Guantanamo Bay. (CONFIDENTIAL/NO FOREIGN
DISSEM)
January 15, 1975
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Cuba: An Olive Branch to the Dominican Republic?
Havana may be trying to signal the Balaguer
government that Cuban policy toward the Dominican
Republic does not include violent revolution. The
Cubans must have been pleased by the Dominican vote
in favor of lifting the OAS sanctions in Quito last
November and may now look upon the Balaguer admin-
istration as susceptible to careful Cuban cultiva-
tion.
Prior to the Quito meeting, a member of the
opposition Dominican Popular Movement (MPD) returned 25X1C
to Santo Domingo from a trip to Cuba with the report
that the Cubans do riot want to become involved in
"the export of the revolution" again at a time when
they are establishing formal ties with other Latin
American countries. The MPD member got this infor-
mation from 25X1C
also said
oubted that e Cuban government would support
any attempt by the three leaders of a guerrilla group
now in exile in Cuba to make a guerrilla landing in
the Dominican Republic. (The trio is supported fi-
nancially by the Cuban government but, rather than
organizing and training for a guerrilla operation in
their homeland, all. three are employed in agriculture
and construction.)
A month after the Quito meeting, a Cuban vice
minister of education visited the Dominican Republic
with a Cuban team of gymnasts participating in inter-
national competition in Santo Domingo. While there,
the vice minister said that his government had abandoned
January 15, 1975
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"the export of the revolution" because the policy
had suffered many failures, the economy could no
longer support it, and the US would not permit--as
the Chile experience allegedly proved--another Com-
munist government in Latin America. He said that
the two primary objectives of Cuban foreign policy
were to establish normal diplomatic and economic
relations with other countries and to support Soviet
efforts to achieve detente with the West.
The comments of the high Cuban education official
almost certainly were intended for the ears of the
Dominican hierarchy--presumably as an indirect reply
to the favorable Dominican vote in Quito. It is also
likely that Havana expected
to reach official attention and e p a ay any. tears
that the Castro regime is interested in a repetition
of the Francisco Caamano guerrilla incursion of early
1973. The Cubans, moreover, probably know that the
Balaguer administration has penetrated the MPD and
therefore has probably heard about the report of the
MPD member who visited Cuba. Thus Havana may believe
that the Balaguer government can be persuaded in this
manner to resume formal relations on the basis of a
Cuban pledge of non-interference. (SECRET/NO FOREIGN
DISSEM/NO DISSEM ABROAD/BACKGROUND USE ONLY/CONTROLLED
DISSEM)
January 15, 1975
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Mexico: The Year of the Campesino
With an impressive series of organizational,
budgetary, and political movies over the past several
weeks, the Echeverria administration has begun a be-
lated assault on agrarian problems. The government
is obviously serious about making 1975 the "year of
the campesino," but solutions to poverty, unemploy-
ment, and falling food production in the countryside
are likely to be slow in materializing.
The first step was taken in December--an 80-
percent increase in the 1975 budget allotment for
agriculture to $4.8 billion. Next, came the establish-
ment of a new cabinet-level post for the office deal-
ing with land tenancy. Shortly after that, three
mildly dissident farm organizations unexpectedly signed
a pact with the government's huge National Peasants Con-
federation in support of President Echeverria's
agrarian policies. The latest step came last week when
Echeverria merged three separate government banks deal-
ing with agricultural credits.
The attention given the rural areas comes none too
early. As far back as the late 1960s Mexican officials
became alarmed about the economy. Buried beneath rosy
statistics of economic growth lay some disquieting data
showing that the economy, although growing, was not
developing in a balanced fashion. The gaps in income,
productivity, and growth between the modern, industrial-
ized sector and the traditional, agricultural sector
were becoming more rather than less pronounced.
The chief reasons why the rural sector is likely
to remain depressed for some time are the failure of
the country's agrarian reform and the inefficiency
and corruption of the bureaucracy. Severe drought
and floods have compounded the government's diffi-
culties.
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Agrarian reform seemed like a radical measure
when it was launched after the 1910 Revolution, but
it has slowly been adapted or ignored to suit the
interests of a minority. Statistics reflect the
dramatic inequities. Farms of less than 25 acres
make up 85 percent of all cultivated land, but pro-
duce only 9 percent of total farm output. Monthly
incomes for over 60 percent of the peasant families
are less than $48. Few peasants have adequate credit
facilities, irrigation, equipment, and training in
efficient agricultural methods.
Bureaucratic fumbling and corruption add to the
problem. Officially, the countryside has received
a fair amount of assistance. But a large part of
the money destined as credit for the peasant has been
:Lent instead to wealthy landowners or malappropriated.
An official of Nacional Financeria, a largely govern-
ment-owned investment bank, recently claimed that it
would be a miracle if half the revenues planned for
1975 ever reach the campo.
Despite this sad state of affairs, rural revolt
does not seem likely. Politically, the peasants are
weak and easily manipulated by the government. Their
leaders owe their positions to higher authority rather
than to grass-roots support. The peasants, apathetic
and fearful of authority, generally appear content
with the promise of more help from the government.
Even if the peasant is to benefit from the recent
government moves, the signing of the solidarity pact
by the dissident farm organizations makes it apparent
that he is going to benefit only in ways the government
will determine. While ostensibly an endorsement of the
administration's agrarian policies, the pact's hasty
signing and language have the earmarks of official
cooptation--possibly a case of dissident leadership
being enticed by the government to join its fold by
offers of safe sinecures. (CONFIDENTIAL)
January 15, 1975
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Peru: The Stage is Set
The several cabinet--level personnel changes
that have taken place in the past few weeks reflect
President Velasco's concern that more radical of-
ficers who are personally loyal to him retain con-
trol of important government posts. On February 1,
however, what may be the most important cabinet
changeover in the course of the six-year-old revolu-
tion takes place.
On that date, Prime Minister Mercado is scheduled
to retire and be succeeded by Army Chief of Staff
Morales Bermudez. During his two-year tenure, Mercado
gained a reputation as being vain, indecisive, and in-
discreetly ambitious. Morales Bermudez, on the other
hand, is widely respected for his honesty, intelligence,
and economic savoir-faire. In addition, however,
Morales Bermudez' political views, while strongly
nationalistic,are decidedly more moderate than those of
the President. It was this factor that prompted Velasco
last fall to attempt, to maneuver Morales Bermudez out
of the premiership or weaken that post by creating a
new vice presidential slot to be manned by a velasquista.
This proposal was reportedly opposed by most top officers,
and Velasco appears to have resigned himself to having
Morales Bermudez as his second-in-command, at least for
the time beinq.
While policy disagreements between the President
and the new Prime Minister are certain, it is not yet
clear how strongly Velasco will oppose efforts to mod-
erate the radical and at times repressive policies he
favors. Velasco's proven ability to manipulate his sub-
ordinates gives him at least an initial advantage. i1C
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Morales Bermudez already is gearing up
to c a enge Velasco on such important matters as
government subsidies, mass mobilization of civilians,
and government control of business. Observers should
not have to wait long after February 1 to gain in-
sights into how the course of the revolution will be
affected under the leadership of two strong, but
ideologically different, generals. (SECRET/NO FOREIGN
DISSEM/CONTROLLED DISSEM)
January 15, 1975
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Panama: Canal Negotiations Controversy
Early this month the Torrijos administration
launched a counterattack against critics of its
handling of the canal treaty negotiations. On
January 9, the anniversary of the 1964 Canal Zone
riots, Labor Minister Rolando Murgas said that
Panama is on the verge of obtaining a new treaty
that will meet its key aspirations. He added that
Panamanians should now close ranks behind the gov-
ernment.
General Torrijos picked up this theme in a
speech on January 12. He denounced those who are
demanding that he report publicly on the conduct of
the negotiations because this would break his promise
of confidentiality and would provide ammunition to
those in Panama and abroad who want to sabotage the
treaty. He also asserted that the group demanding
"all or nothing" in the negotiations would be the
first to take a plane for Miami if the talks broke
down and a confrontation between Panama and the US
over the Zone developed.
The pro-government sector of the communications
media has joined in the campaign. An editorial by
Radio Libertad labelled the attempts to force the
government to release the details of the negotiations
"a criminal trap" and "a shameful ambush." The station
attacked radio commentators and others attempting to
use the negotiations issue to "stir the emotions of
Panamanians, to activate the rumor mill, and to provoke
conflicts."
The government propaganda campaign is aimed at
the two disparate groups that have criticized Torrijos'
handling of the negotiations---the "ultranationalists"
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and the "oligarchy." The core of the former group
consists of students and members and sympathizers of
the Communist party. The "oligarchy," which domi-
nated Panama until the 1968 coup, is strongest in the
business and financial sectors. Torrijos is probably
correct in his assertion that both groups seek his
ouster, and that they are using criticism of the canal
negotiations as a weapon to try to bring this about.
They are playing on the widespread distrust of US
motives and on the fact that Torrijos is not going to
get a "perfect" treaty to try to weaken confidence in
the government.
As the nature of the compromises that Torrijos
will have to make to get a treaty become clearer and
as movement toward the completion of a draft treaty
continues, the opposition will become increasingly
noisy. Torrijos is likely to be torn between the
desire to show how much he has gained thus far and the
need to keep the negotiations confidential. Although
thus far he has tolerated criticism of the negotiations,
he will not hesitate to stifle it if he becomes con-
vinced that it is weakening his bargaining position.
(CONFIDENTIAL)
January 15, 1975
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Economic Outlook for Latin American Oil Importing
Countries
Most Latin American oil importers are facing
serious balance-of-payments and domestic economic
problems in 1975. Prices for imported petroleum and
food have risen while prices for their major exports
have fallen.
The impact of high oil prices was cushioned during
the first part of 1974 by booming export prices, but
the situation began to worsen after mid-year. Spread-
ing recession and financial strain in the industrial
countries eroded export prices and disrupted capital
flows. By year's end foreign reserves had fallen more
than $1.0 billion. :Economic growth also slipped as
rising oil and food import costs reinforced other in-
flationary pressures, requiring most governments to
cut the expansion of money and credit sharply.
Foreign payments problems will continue through
1975 if--as seems likely---export markets remain de-
pressed while high prices for imported oil and manu-
factured goods continue. To protect foreign reserves,
most countries are now restricting imports, adding
further to inflationary pressures. Money and credit
policies probably will need to be tightened further to
contain inflation, and economic growth will be held to
a slow pace.
Among the larger countries, problems are most
acute in Brazil and Chile. Brazil's export outlook is
fairly good because of strong sugar and soybean markets,
but the inflow of foreign capital faltered badly during
the second half of 1974 and has revived only partially.
Stiff import restraints are now being imposed to prevent
.January 15, 1975
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further foreign exchange losses, and economic growth
will probably be only half the 10-percent annual rate
of recent years. Chile's economy is now deteriorating
rapidly after making some recovery from the Allende
period? Export prospects are poor because of falling
copper prices. Capital inflows remain low despite
favorable investment legislation and the settlement
of outstanding disputes with foreign investors.
Argentina, on the other hand, will probably
experience another relatively comfortable trade
position this year. Nearly self-sufficient in oil,
Buenos Aires is also benefiting from high grain
prices that tend to offset a very poor wheat crop
and the refusal of the European Community to continue
buying Argentine beef.
Among the smaller oil importers, the sugar and
bauxite producers of the Caribbean are faring reason-
ably well. Elsewhere, however, the small countries
of South and Central America generally are confronted
with payments problems and some face special diffi-
culties as well. Uruguay is being hurt by the loss of
its beef markets in Japan and the European Community.
Although the recent agreement for Venezuela to supply
petroleum to the five Central American countries and
Panama at concessional prices eases their balance of
payments problems, prospects for 1975 remain poor.
Moreover, Honduras is suffering from hurricane damage,
particularly to its leading export, bananas.
(CONFIDENTIAL)
January 15, 1975
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