LATIN AMERICAN TRENDS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A001600100001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 12, 2016
• Document Release Date: June 10, 2002
• Sequence Number: 1
• Publication Date: August 20, 1975
• Content Type: NOTES

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Latin American Trends
State Department review completed
Secret
August 20, 1975
No. 0523/75
135
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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.
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CONTENTS
August 20, 1975
Argentina: Who Will Lead Labor and Perhaps
the Nation? . . . . . . . . . . . . . . . . .
Chile: Life on the Other Side of the Tracks 3
Colombia: Hike in Domestic Oil Prices . . . . 7
Colombia: Hosting the Occultists . . . . . . . 8
Brazil: Opening the Door to Foreign Oil
Companies? . . . . . . . . . . . . . . . . . 10
Uruguay: Showdown Temporarily Averted,
Problems Remain . . . . . . . . . . . . . . . 12
El Salvador: Coup Plotting Reported . . . . . 13
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Argentina: Who Will Lead Labor and Perhaps the Nation?
Intense infighting for political control of the
Peronist movement and continuing discord within the
powerful Peronist labor confederation (CGT) threaten
to undermine the paramount positions of union leaders
Casildo Herreras and Lorenzo Miguel. Both have been
criticized in the past for their ties to the now-dis-
credited Lopez Rega and for their identification with
the arch-conservative wing of Peronism. Although
Herreras has generally sought to remain aloof from
political battles, he was jeered during a recent public
appearance--an indication of mounting dissatisfaction
with the apparent inability of national leaders to
arrest deteriorating economic conditions.
Shaken and disillusioned by the experience,
Herreras last week offered his resignation as head
of the CGT. It was rejected, but Herreras is report-
edly not the type to tough it out and will probably
step down if workers continue to challenge his authority.
If Herreras goes, it seems doubtful that Miguel
will succeed him. Miguel is the leader of the most
powerful sub-grouping of unions within the CGT and
has long been a prominent spokesman for labor, but
his hold on power may have suffered even more than
that of Herreras as a result of his frequent involve-
ment in controversy.
A more likely candidate is Victor Calabro, the
governor of Buenos Aires province who, like Miguel
and Herreras, comes from the influential metalworkers
union.
In fact, Calabro is being touted in some labor
and political circles as an eventual successor to
President Maria Estela de Peron. Should Mrs. Peron
leave office before her term expires in 1977 and
should Provisional President of the Senate Italo Luder
be unable to serve in her stead, Peronist congressional
and labor leaders, with the military's sanction, have
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reportedly agreed to support Calabro for president.
The governor, who openly aspires to the nation's
highest office, has been soliciting military leaders'
support since at least March 1975. He has had a
significant hand in organizing strikes in his province,
which have exacerbated Argentina's month-old economic
and political crisis.
More conservative labor segments, however, prob-
ably find Calabro an acceptable candidate only because
he is the sole provincial governor with a trade union
background. Under the succession law enacted last
month, governors and congressmen form the pool from
which congress must elect a new president if the in-
cumbent leaves office. Calabro has alienated many
labor leaders and his relationship with Lorenzo Miguel
is less than cordial. In a thinly veiled criticism
of Miguel, Calabro recently denounced labor leaders
for "forgetting their trade union responsibilities,
relying exclusively on political alternatives, and
thereby creating the danger of losing control of
labor to others who do not share their philosophy."
In May 1975 he took exception to calls by Peronist
labor leaders for a political rather than a military
approach to dealing with terrorism.
Such controversial stands have undoubtedly also
angered military hard-liners, but Calabro is report-
edly maintaining contact with several army officers
in the apparent hope of building a populist base of
support.
It is too early to predict the outcome of Calabro's
efforts to achieve greater power. As Argentine poli-
tical groups become more fragmented and factionalized,
however, it becomes clearer that only someone with
strong institutional backing can hope to succeed. To-
day the only institutions that can provide the necessary
support are the military and labor.
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August 20,'1975
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Chile: Life on the Other Side of the Tracks
Since the coup that ousted Salvador Allende,
there has been a great deal of controversy over the
impact of the military regime's economic austerity
policies on the Chilean working class, many of whom
supported the former Popular Unity government. De-
spite official rhetoric to the contrary, most indica-
tions suggest that the lower classes are feeling the
brunt of economic hardship and that their lot is not
improving. The Latin American Trends offers a synopsis
of a recent assessment of this situation by US Embassy
labor attache Arthur B. Nixon.
The reporting officer points out that gaining
an insight into the attitudes of Chilean workers is
difficult because of a general reluctance to talk to
strangers and the probable fear that any criticism of
the government might be reported and cause reprisals.
Nevertheless, he has formed a firm impression that
living conditions for a majority of Chileans have
deteriorated rapidly in the last year and that working-
class support
for
the present government has virtually
disappeared.
The
major reasons are unquestionably
economic, but
the
government's abuses of human rights
contribute to
some
extent.
Middle-class salaried professionals and technicians,
if still employed, are compensating for their loss of
purchasing power by seeking less expensive quarters
and by reducing or eliminating the "niceties" of food
and diversion. Moving down the economic ladder into
the skilled, semi-skilled, and laboring categories,
the sacrifice verges on hardship. This hardship is
becoming increasingly severe. Many blue-collar employees
have virtually eliminated meat from their regular diet
and are consuming larger amounts of the cheapest filling
starches. Many are economizing by finding more modest
living quarters or sharing quarters with families or
friends.
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Firm data is lacking on the decline in purchasing
power, but unemployment in the Santiago area is running
about 15 percent. Trade union and other sources believe
that actual unemployment is higher and will probably
continue to increase, as the economy turns down under
the influence of the government austerity program.
The government has embarked on a number of measures
to help the unemployed and the poor who are hardest
hit, but its resources are limited. Only a small per-
centage of the unemployed have been assisted by the
"leaf raking" projects devised to alleviate the situa-
tion.
In today's Chile it is difficult for one from
the relatively affluent side of the tracks to realize
the extent of the problem, but the superficial signs
are everywhere. In Santiago's central business
district, adults and children beg and shabbily dressed
persons of all ages sell small items that range from
cheap ballpoint pens to individual bandaids. While
the writer admits that he did not know Chile under
Alessandri or Frei, he saw few beggars or walking
street vendors during Allende's years in power. After
9 p.m. the beggars and vendors are replaced by young,
obviously needy prostitutes. There has also been a
sharp increase of beggars who go from door to door in
the upper-class residential areas.
The generally depressed economic conditions are
also reflected in Chilean dress. Increasingly,
Chileans in the working upper level appear less stylish.
Those in the middle levels are shabby and the bottom
level of the population is downright ragged. The
better restaurants serve fewer, while the hash houses
are full. Shops attract crowds of window shoppers,
but few can buy. The pawnshops are doing a land-office
business; one source claimed their business had in-
creased tenfold in the past year.
Labor leaders provide further evidence of a serious
and growing social problem. All voice frustration at
their inability to solve the problems of their member-
ship. When a worker is laid off, he appeals to the
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union for help and, receiving none, resigns from it.
One astute trade union official privately predicts
actual starvation unless something is done to help the
needy or reverse the economic trend. Prospects for
either seem unlikely at this point.
The director of the Catholic Church's Committee
for Peace claims that parish priests have so far
organized over 150 soup kitchens in Santiago's slums,
but that there is a clear and present need for at
least 500 more in the capital. Committee workers
claim that isolated acts of desperation such as sui-
cides and the sacking of food stores in slum areas
have occurred, but have not been reported in Chile's
controlled media. Most observers contend that the
government will not allow publicity on these incidents
for fear they will spread and further damage its image
abroad.
Many non-Marxists believe that whatever popular
support the junta might have enjoyed among the working
class has virtually vanished. Many who supported
Allende's overthrow now claim that the junta's economic
performance has created widespread disgust with the
government and the military among the lower and middle
classes. Few foresee that this disenchantment can or
will be organized into effective protest, however.
The firm and effective control exercised by the govern-
ment in all areas will prevent the organization of either
constructive or violent opposition in the predictable
future. Most labor leaders do predict spontaneous
acts of desperation such as neighborhood food riots
this winter, however, but they feel that few persons
outside the immediate neighborhoods will hear of them.
Union leaders believe that any attempted general protest
would be quickly and brutally repressed.
The growing disapproval of the government among
workers is becoming more and more evident. For example,
for months after the coup, movie screen appearances of
General Pinochet or other junta members brought a
spontaneous and enthusiastic demonstration of crowd
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approval. These same appearances now provoke few cheers.
In middle-class neighborhoods they are generally met
with silence. Labor leaders report they now provoke
whistles (the Latin American counterpart to our booing)
in working-class areas. For the time being, however,
Chilean workers will have little alternative but to
vent their frustration through this type of protest,
since they appear unable to ize a serious challenge
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Colombia: Hike in Domestic Oil Prices
To stimulate oil exploration and to stem declining
production, the Colombian government has decided to
permit higher ceiling prices for old and new crude.
Newly appointed Mines and Energy Minister Juan Jose
Turbay apparently was instrumental in the action,
which will boost the price paid by Colombian refineries
for crude and from old wells to $3.50 a barrel--up
from $1.65 a barrel, one of the lowest prices in the
world.
Prices for new oil range from $5.50 to $7 a barrel,
with the higher prices applying to deep wells and wells
in distant regions. The government has long recognized
the need for higher oil prices, but shrank from the
anticipated political consequences of pushing up energy
costs.
The country's oil industry has suffered heavily
as a result. Production has been declining since 1970
and exports of crude oil stopped in early 1974. No
important commercial well has been drilled in 11 years,
and recoverable reserves now total 628 million barrels--
only 10 years' consumption at the current rate. Explora-
tion has dwindled from an average 46 wells per year in
the early 1960s to 19 wells annually in the 1970s.
With demand for energy rising 8 percent a year
and oil production falling rapidly, fear of a large
import bill for oil is adding to the government's
worries. Last year oil imports cost $3 million.
Most oil companies, which must give first priority
to domestic consumption, will react to the new prices
by expanding production of old oil, allowing Colombia
to meet its domestic requirements at least through 1976.
The companies also will expand exploration, although
production from new discoveries probably will not add
substantially to domestic supplies much before 1980.
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Colombia: Hosting the Occultists
The first World Congress of Witchcraft, to begin
in Bogota on August 24, is already generating a pre-
dictable mix of interest and scorn in the press. That
the meeting will be held in Latin America is no coin-
cidence, however, as occultism has deep roots in Latin
cultures, particularly in the New World. In surprising
ways it touches daily life and politics, and even in
as advanced a society as Argentina's the influence
of a practicing astrologer and medium like Jose Lopez
Rega can be felt as high as the presidency.
Many Latin Americans--a majority of them, accord-
ing to Columbia University anthropologist Charles
Wagley--have a basically supernatural concept of the
causes of events in their lives and of natural phenomena.
Although beliefs of African and American Indian origin
differ from region to region, others deriving from
southern Europe, such as medieval folk medicine, are
widely held throughout Latin America. Indeed, the
belief in witchcraft that was known in the Spanish,
Portuguese, and French cultural heritages may be
stronger in Latin America today than it remains in
the Old World.
The meeting in Bogota will bring together spirit-
ualists from many cultures. Chief among the announced
participants are Israeli mentalist Uri Geller, Italian
surrealist Federico Fellini, American ESP researcher
Edgar Mitchell, Colombian fantasist Gabriel Garcia
Marquez, and Brazilian-American anthropologist Carlos
Castaneda, who spent five years with the Yaqui Indians
of northern Mexico as a sorcerer's apprentice. They
and others will conduct seminars, demonstrate techniques,
and exhibit paraphernalia. A highlight of the con-
vention will be private demonstrations of Haitian
voodoo and Brazilian macumba rites.
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Two prominent happenings at the congress are
expected to be quite serious attempts to communicate
with the late Juan Peron and Salvador Allende. Some
delegates have already expressed an interest in con-
sulting with Peron about the political turmoil that
has plagued Argentina since his death, and there is
also interest in questioning Allende about the cir-
cumstances of his death in the Chilean coup. In
addition, Bolivian delegates have pledged to look into
alleged government corruption in their country and
also to work what magic they can to provide Bolivia
with its long-sought outlet to the sea.
Observers of the meeting will no doubt be hard
pressed to take much, if any, of it seriously. Never-
theless, it could well provide a rare public glimpse
of the shadow world of fatalism and pseudo-science
lying not far beneath the surface of Latin American
society.
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Brazil: Opening the Door to Foreign Oil Companies?
President Geisel 25X1
favors a owing foreign petroleum com-
panies to explore for oil in Brazil at some unspecified
time in the future. He hopes to bring about this influx
of technology without triggering a nationalistic back-
lash.
Brazil depends on imports--mostly from the Middle
East--for 80 percent of its petroleum requirements. The
substantial increase in oil prices during the past year
and a half has made a significant dent in the nation's
foreign exchange holdings and contributed to its current
economic slowdown.
Geisel, who was president of the state oil monop-
oly PETROBRAS prior to becoming chief executive, has sup-
ported an aggressive exploration program aimed at self-
sufficiency in petroleum. Throughout 1974 the President
toyed with the idea of allowing foreign companies to
explore for oil in Brazil on a contract basis, although
he knew that such a move would bring substantial criticism
from nationalists who would view such an action as alter-
ing Brazil's basic petroleum policy. In late 1974 signifi-
cant new offshore oil discoveries caused Geisel to shelve
plans to open the country to foreign exploration.
After the euphoria associated with the new discoveries
subsided, the Geisel government faced the reality that the
newly found oil would not come into production for four or
five years, and even then Brazil would be far from self-
sufficient. In early 1975 the President asked Minister of
Mines and Energy Shigeaki Ueki to prepare a draft proposal
to permit foreign firms to participate in oil exploration
in Brazil. Under Ueki's proposal, foreign companies would
enter into risk contracts with PETROBRAS for the explora-
tion and sale of petroleum within Brazil. The firms would
retain only a specified percentage of the oil they discovered.
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They could repatriate a limited part of their profits
but must reinvest the remainder in Brazil. The proposal
expressly prohibits foreign firms from refining oil in
Brazil or participating in the nation's petrochemical
industry.
Acting on Geisel's desire to test public opinion
on the matter, Ueki in mid-May publicly floated the
idea that foreign firms might engage in oil exploration.
Reaction was mixed: approval from Minister of Finance
Mario Simonsen and to a lesser extent by some pro-
government congressmen; harsh criticism from Minister
of Industry and Commerce Severo Gomes and opposition
politicians. In the face of this preponderantly nega-
tive reaction, Ueki backed off and said his comments
reflected his own thinking and were not necessarily
the administration's sentiments.
I Geisel still
plans to implement Ueki's formula at a more propitious
time. He believes that from an economic standpoint
Brazil cannot lose, since the foreign oil companies will
be allowed to drill only in less promising areas that
PETROBRAS has no intention of exploring and they will
not be reimbursed if they are unsuccessful. Geisel will
have to wait until he has improved his political standing
with conservative military elements who have long opposed
the entrance of foreign oil firms for any ur ose, how-
ever.
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Uruguay: Showdown Temporarily Averted, Problems Remain
The conflict between civilian and military officials
(See Latin American Trends, August 13, 1975) over control
of the nation's economic policymaking machinery has been
temporarily resolved, but the underlying causes of the
difficulties remain.
Minister of Economy and Finance Alejandro Vegh, who
resigned when the military attempted to cancel a $110 mil-
lion loan he had negotiated with a consortium of foreign
banks, withdrew his resignation after President Bordaberry
and the military high command agreed to let the loan go
through. Vegh, however, failed in his attempt to have
General Abdon Raimundez, vice president of the Bank of the
Republic and an opponent of his austerity policy, removed
from his position.
The dispute and its compromise solution are typical
of the difficulties Vegh and other civilians have had
with military officers who occupy key posts throughout
the bureaucracy. While Vegh may be able to centralize
policymaking on economic matters in his office for a while,
his moves will be closely scrutinized by the military high
command. The conflict between civilian and military of-
ficials over who makes economic policy will continue to be
the nation's major political irritant.
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El Salvador: Coup Plotting Reported
The bloody confrontation between students and
security forces on July 30 has generated coup plotting
and further demonstrations, but several of the ingre-
dients necessary for a viable challenge to the Molina
government seem to be missing...
I here has been no indication that key c.om-
man ers are ready to line up with the plotters. Nor
has any strong military figure emerged to exploit con-
cern over Molina's failure so far to generate enough
popular support to ensure an honest victory in the
legislative elections scheduled for next year.
President Molina, after taking an initial tough
public line against the opposition and blaming events
on a communist conspiracy, is moving to make the best
of a bad situation. He has met with the cabinet and
government legislators and the diplomatic corps to
explain his position, and the administration plans
to take its story directly to the barracks as well.
Security forces monitored a massive demonstration
on August 14 protesting the earlier bloodshed but
did not intervene. Efforts by the major opposition
Christian Democratic Party--anathema to the military--
to organize a legislative investigation of the clash
were beaten back by the government party majority.
As the elections approach, however, Molina's
problems are certain to grow, especially if the
opposition takes an aggressive line.
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