LATIN AMERICAN TRENDS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A001300380001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 12, 2016
• Document Release Date: April 2, 2002
• Sequence Number: 1
• Publication Date: July 16, 1975
• Content Type: NOTES

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Latin American Trends
State Department review completed
Secret
135
July 16, 1975
No. 0518/75
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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
July 16, 1975
Ecuador: Waking Up To Economic Reality. . . . 1
Manley Visits Cuba . . . . . . . . . . . . . . 4
Surinam: Independence Date Set,
Problems Remain . . . . . . . . . . . . . . 6
Argentina: The Senate Takes A Stand . . . . . 8
ANNEX
Status of Rio Treaty Negotiations . . . . . . 10
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Ecuador: Waking Up To Economic Reality
The Ecuadorean Government appears to be facing
up to its increasingly serious economic problems
after several months of looking the other way.
Until as late as last month, Minister of Finance
Jaime Moncayo repeatedly postponed coping with pes-
simistic economic forecasts made by the central bank.
Moncayo, a civilian appointed at the height of Ecuador's
oil-produced boom in February 1974,1 1 25X1
feared that the military government wou no-Ed him
responsible for the country's recently developed finan-
cial .ills. During the first quarter of 1975, however,
Moncayo authorized the inconspicuous conversion of
about $28 million of budgeted development funds into
current expenditures.
In June, Moncayo finally proposed, and the cabinet
approved, a number of measures designed to stop the
economic decline. Chief among the moves to be under-
taken are a government austerity program, an expansion
of credit, and the liberalization of foreign exchange
controls. These measures, and other minor ones, ap-
parently were formulated when Moncayo was no longer
able to ignore the advice of his (,wn ministry, the
national monetary board, and the central bank, including
at least 23 separate, formal proposals made to him since
April.
President Rodriguez and his administration have a
built-in bias against economic bad news. The consider-
able popularity of the three-year-old regime is due al-
most entirely to the revenues that have flowed from
petroleum, which has been exploited profitably for about
two and a half years. The government seems to appreciate
that a downturn in the economy is almost sure to generate
a downturn in its political fortunes. The only serious
talk of replacing either Rodriguez or the entire military
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government has, in fact, come during the past six
months or so, the period in which rising inflation
and other economic signs have begun to demonstrate
to the average Ecuadorean that all is not well.
This month, amid rumors that Moncayo may be on
the way out of the cabinet, Natural Resources Minister
Admiral Luis Salazar has announced a bold effort to
increase oil revenues. Apparently bucking informal
OPEC guidelines, Ecuador has lowered the price of its
oil by $0.43 per barrel in the Caribbean and US mar-
kets. This, coupled with another reduction expected
in August, will encourage the Texaco-Gulf consortium
to market Ecuadorean oil on a basis more competitive
with Middle Eastern oil. Until this reduction, the
consortium had argued that Ecuadorean oil was too
expensive to be worthwhile, and had virtually suspend-
ed its operations in Ecuador.
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This new pragmatism is a welcome change from the
alarm that temporarily gripped the government when it
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became apparent that oil was not about to do for Ecuador
what it did for Venezuela. But the average Ecuadorean
is neither an economist nor a politician and is likely
to continue to wonder when all national and personal
problems will be solved by the black gold. The inevit-
able frustrations are almost certain to engender in-
creasing dissatisfaction with the government even if,
as is probable, the economic slump eventually eases.
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Manley Visits Cuba
The importance Havana attaches to developing
ties with Jamaica was reflected in the red-carpet
treatment given to Prime Minister Michael Manley
during a five-day visit to Cuba that ended Sunday.
He was squired around the island personally by
Fidel Castro, as well as by other top Cuban leaders.
The Cuban Communist Party's Central Committee
reportedly decided last fall to give high priority
to establishing close governmental relations with
Cuba's Caribbean neighbors. In keeping with this
decision Havana has received three Caribbean heads
of government in the last three months and Prime
Minister Errol Barrow of Barbados may travel to Cuba
later this year.
Jamaica is one of the countries where the Cuban
leadership has pinned its greatest hopes for an en-
hanced role. Manley and Castro already share views
on numerous Third World issues, and by this visit
Manley undoubtedly expects to improve his credentials
with the non-aligned movement. The Castro regime is
optimistic about expanding its influence with Kingston
beyond cooperation in international forums. Manley's
shift toward socialism is of recent vintage and
Havana wants to help him move further to the left by
assisting him in developing organized grass-roots sup-
port tied to his People's National Party
There are indications that Cuba has already start-
ed to pursue this objective. Last August during a trip
to Jamaica representatives of Cuba's Union of Young
Communists concluded a youth exchange agreement. Over
170 Jamaican students now are in Cuba working in housing
construction. Havana doubtless expects some of these
students to be leaders in the molding of Jamaican popular
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organizations. During Manley's visit, a delegation
from his party discussed with Cuban Communist Party
officials the activities of the Cuban party and its
relationship to mass organizations. This is not the
first interchange between representatives of the two
parties. In May the president of the National Youth
organization of Manley's party visited Cuba, and in
late June a Cuban Communist Party contingent traveled
to Jamaica. In providing technical advice and train-
ing, the Cubans would not be moving into a vacuum.
Jamaica has well established labor unions, and Manley
as well as his opposition has already begun to marshal
the urban poor.
Manley's search for what he called "practical
ways in which our two people could cooperate" may lead
to the sending of Cuban technicians to advise in the
fields of fishing, shipping, and sugar and food pro-
cessing. Cultural exchange programs are already on
the upswing. Cuba reportedly has plans to send writers
and other intellectuals to emphasize the black cultural
heritage it shares with Jamaica and to extol what
Havana views as its success in solving the problem of
racial discrimination. Castro has promised to return
Manley's visit next year.
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Surinam: Independence Date Set, Problems Remain
Surinam--the source of alm9st a fifth of US
imports of bauxite and alumina-will become independ-
ent on November 25. The date was firmed up by Suri-
namese Minister President Henck Arron during his recent
trip to The Netherlands.
Arron will become chief executive of the new
nation, which has been internally self-governing since
1950. The moderate Arran will have to cope with myriad
domestic problems, many of which stem from Surinam's
polyethnic makeup. His creole-dominated government
will have to be sensitive to the demands of the large
Hindustani (East Indian) minority, which is generally
opposed to independence. Hindustani frustration reached
a crescendo in May during the visit of Dutch Prime
Minister den Uyl, when demonstrations broke out and
some young extremists set fire to buildings in the cap-
ital city of Paramaribo.
Foreign policy questions will also preoccupy
Arron's administration, the principal one being the
longstanding border dispute with Guyana. At the same
time Surinam is seeking closer relations with Venezuela,
which it views as a customer for its bauxite and a
source for both petroleum and economic aid.
Some labor spokesmen are already calling for the
nationalization of the aluminum companies, including
the Surinam Aluminum Company, the wholly-owned sub-
sidiary of the Aluminum Company of America. Arron
agrees that the government should receive more revenue
from the companies, but he wants to maintain a healthy
climate for foreign investment and has pledged to work
for joint ventures with new foreign investors.
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Arron will no doubt want to maintain good relations
with the US because he views Washington as a potential
source of aid. He maintains that if the Dutch fail to
provide enough economic and military assistance, he will
turn to the US for help.
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Argentina: The Senate Takes A Stand
Argentine legislators have moved to fill the post
of provisional president of the Senate, which had been
left vacant since last April in accordance with the
wishes of President Peron. Italo Luder, a moderate
Peronist who heads the chamber's Foreign Relations Com-
mittee, now becomes next in line for the Presidency
should Maria Estela de Peron leave office. The move
by the Senate is a tactical defeat for the President,
who had deliberately kept the post open in hopes of
precluding a move to oust her and to ensure her con-
trol over the presidental-succession, should she
decide to resign.
The election itself reflects at least a temporary
erosion of the Peronist chain of command and highlights
Mrs. Peron's failure to manage her own government
coalition. The selection of Luder, who is not likely
to be easily controlled by the President's wily mentor,
Jose Lopez Rega, may presage further problems for the
chief executive.
In keeping with the spirit of rebellion in which
he was elected, Luder appeared to snub Mrs. Peron in
his acceptance speech by not even mentioning her name
and calling for "a new political framework: pluralist
dialog." The 58-year-old senator from Buenos Aires
Province gave special thanks to the loyal opposition,
the Radical Civic Union, which had unanimously supported
him.
A lawyer by profession, Luder is a specialist in
constitutional law and a noted academician. He is frank
and direct and has been described as level-headed and
sensible. Luder is a pragmatist in foreign policy mat-
ters. He has stated that ideology, passion, and national
shibboleths should have no place in foreign affairs,
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although he recognizes that a foreign policy must be
packaged and presented in such a way as to be accept-
able to domestic opinion. He has told US Embassy
officers in Buenos Aires that he favors a close re-
lationship between the United States and Argentina
that would be mutually beneficial without infringing
on Argentina's sovereignty. He visited this country
briefly on a foreign leader grant in mid-1974.
With seemingly no one currently on the political
scene who could capture the Argentine imagination,
Luder appears to be one of the best of the available
candidates. As one journalist commented when Luder
was jeered by an ultra-right-wing Peronist group,
"With enemies like that, Luder can't be all bad."
His election, at the very least, is a plus for con-
stitutionalism in Argentina.
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Status Of Rio Treaty Negotiations
An OAS conference of plenipotentiaries is meet-
ing this week and next in Costa Rica to draw up and
sign a protocol of amendment to the Inter-American
Treaty of Reciprocal Assistance (Rio Treaty). The
amendments have been under deliberation since 1973,
when the OAS General Assembly created a Special Com-
mittee to propose reforms of the inter-American
system.
The dynamics of hemisphere affairs lend an ele-
ment of unpredictability to even the most mundane
inter-American assemblies, and dealing with this
treaty--under which the Cuba sanctions were imposed
and which attempts to define "aggression"--holds its
own particular risks of provoking conflict. Odds
nevertheless seem to favor the adoption of a protocol,
which would become operative upon deposit of the in-
struments of ratification by two thirds of the treaty
signatories. Treaty members include all OAS members
except Barbados, Grenada, and Jamaica.
The following gists a State Department report by
T. E. Taylor providing background information on the
negotiations and analyzing the principal proposed
amendments.
From the beginning of the Special Committee's
deliberations in June 1973 there have been two camps
representing distinct points of view: 1) those who
look upon the Rio Treaty as an instrument of US
imperialism and thus in need of radical change, and
2) those who are comfortable with the treaty as it is
but nevertheless desire some minor, mostly cosmetic
changes.
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Peru led the first group, with Mexico the chief
of staff. Argentina was a charter member of this
group but gradually dropped out as the Peronist govern-
ment shifted rightward. Chile's defection in September
1973 was more precipitate. Panama seldom participated
in the substance of the debate, but continually sup-
ported the more radical group. Venezuela sporadically
took part but after mid-1974 was rarely active.
Fundamentally, this group has little use for the
Rio Treaty. But its members hesitate to denounce it
because a) they would be isolated from most of their
Latin brethren, b) they still see some advantages in
remaining under the US umbrella and c) the treaty is
the only effective peaceful-settlement mechanism
available. They trained their attack on the following
provisions:
a. Applicability of the treaty to armed attack
from outside the hemisphere. They reasoned that the
US is the only country likely to be attacked by an
extra-continental power; let the US take care of it-
self. In the unlikely event that one of the Latins
is attacked by an extra-continental power, the US
would leap in anyway, so why undertake any obligations
for what is inevitable?
b. Coverage of non-signatories in the hemisphere.
This was partly aimed at Canada and interlocking cover-
age of NATO and the Rio Treaty, which would supposedly
tie the Latin Americans to European problems. Some
concern has also been expressed that non-signatories
were getting a free ride.
c. Coverage of territory outside the hemisphere.
There has been opposition not only to coverage of at-
tacks on US forces outside the hemisphere but also to
the wide maritime zone provided for in the present
treaty.
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d. The broad language in Article 6 which pro-
vides for possible action under the treaty in case
of an aggression which is not an armed attack, an
extra-continential or intra-continental conflict, or
"any other fact or situation that might endanger the
peace of America." Virtually all Rio Treaty action
to date has been taken under this article, and some
Latins think it just gives the US a vehicle for mis-
behaving.
e. The requirement for a two-thirds vote to lift
sanctions. The Cuba experience (Quito, for example)
has sharpened this. In its most extreme form, the
argument might be stated: "The US can always get the
votes of enough subservient countries to block the
lifting of sanctions." Peru, Mexico, and others favor
a formula that would lift sanctions when they lack two-
thirds support--in other words, lifting by one-third
plus one.
in addition, Peru sought to introduce "economic
aggression" into the treaty. In the end, Peru agreed
not to insist on substantive treatment of economic
offenses in the Rio Treaty but succeeded in getting
tentative approval of an article stating that a sepa-
rate treaty will "guarantee" economic security.
The second group--an overwhelming majority--was
generally complaisant in responding to the first
group's peripheral demands but stood firm on what it
considered essential. The leadership of this side was
never clear, but Guatemala, Ecuador, Uruguay, and
Brazil provided a core around which the other countries
tended to rally. This group was concerned primarily
with defending the treaty's usefulness and secondarily
with making improvements. The "pro-treaty" side con-
centrated on:
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a. Defense of the "hemisphere concept." They
sought to safeguard the peace of the hemisphere, not
just the security of the individual signatories.
b. Preservation of broad authority under Article
6 for meetings of the Organ of Consultation in the
event of threats to the peace. The small countries
were particularly zealous in defending this authority.
While some acknowledged that the vagueness of Article
6 had lent itself to abuse, such countries as Uruguay,
Ecuador, and Costa Rica identified it as the very key-
stone of their national security: A large country will
hesitate before it threatens a smaller neighbor if it
knows that the strength of the hemisphere is backing
the small country's integrity.
Most of the members of this group also felt the
sanctions should be subject to lifting by a simple
majority vote. Despite some reservations expressed
privately, all except the US supported the collective
economic security article.
Analysis of the Principal Proposed Changes
Article 2. This was a classic case of an effort
to bridge fundamental differences by deleting the speci-
fic in favor of the general. The more radical countries
objected above all to language that specifies that dis-
putes should go to inter-American peaceful settlement
procedures before being referred to the UN. They believe
that the US can obtain more support for its views in the
regional system than in the UN, where the Third World
has a vast majority. But Article 52 of the UN Charter
states that "every effort" shall be made to achieve
pacific settlement of local disputes through regional
arrangements "before referring them to the Security
Council." Elimination of "before" from the Rio Treaty
and substitution of general language was a compromise
acceptable to nearly all.
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Article 2 (bis). This proposed new article states
that "integral economic security" shall be "guaranteed"
in a "special treaty." Its inclusion is clearly designed
to apply pressure on the US to agree on a treaty on col-
lective economic security to the advantage of the devel-
oping countries.
Article 3. The amendment changes coverage of the
principle of "an attack against one is an attack against
all" from "American states" to "contracting parties."
In the new language, only Article 6 could cover attacks
on hemispheric countries not parties to the treaty
(e.g., Guyana). A troubling change proposed separates
treatment of extra-continental and intra-continental
attack and introduces some ambiguities with respect to
extra-continental attack.
Article 4, which defines the zone of application
of Article 3, has not yet been worded pending prepara-
tion of certain cartographic studies. There is a con-
sensus that Greenland will be excluded, the entire
Caribbean included, and the Atlantic and Pacific cover-
age sharply reduced. Canada will be included in the
zone of application.
Article 6. Has a long and tortuous text but is
the core of the treaty. The first group of countries
labored long and hard to eviscerate it, but the proposed
text is nearly as broad and flexible as ever.
Article 6 (bis). This addition requires the consent
of a state before the Organ of Consultation could give it
"direct assistance."
Article 9. This aims at defining aggression and its
proposed text deviates from the UN definition. An
important change was the deletion of an attack on "marine
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and air fleets" as a specified case of aggression.
This Ecuadorean amendment received widespread Latin
approval.
Article 17. The present treaty states that all
decisions under the treaty must be taken by two thirds
of all signatories. The new language would make an
exception: Sanctions under Article 8 would be rescind-
ed by a simple majority. Only Chile opposed this pro-
posal when Ecuador advanced it but even Chile finally
switched to an affirmative vote, leaving no opposition.
It is this article, unamended, that has stymied efforts
to lift OAS sanctions against Cuba.
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