LATIN AMERICAN TRENDS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A001900010001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 26
• Document Creation Date: December 12, 2016
• Document Release Date: July 9, 2001
• Sequence Number: 1
• Publication Date: October 1, 1975
• Content Type: NOTES

Approved For Release 2001/08/08 : CIA-RDP79T00865A0019000100Q1e-fret
No Foreign Dissem
Latin American Trends
Secret
. 3 8
October 1, 1975
No. 0529/75
Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1
 Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1
No Foreign Dissem/ControZZed Dissem
Warning Notice
Sensitive Intelligence Sources and Methods Involved
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Classified by 010725
Exempt from general declassification schedule
of E.O. 11652, exemption category:
?5B(1), (2), and (3)
Automatically declassified on:
Date Impossible to Determine
Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1
 Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1
S E C R E T
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
October 1, 1975
Brazil: Evolving Energy Policy . . . . . . . 1
Panama: Students; Violence Factor
in the Treaty Equation . . . . . . . . . . . 5
Brazil: Keeping the Faith . . . . . . . . . . 9
Argentina: Another Look At
Presidential Finances . . . . . . . . . . . 11
Inter-American Focus on Labor . . . . . . . . 15
OLADE: Doubtful Prospects . . . . . . . . . . 17
Venezuela: Iron Miners Form
Single Union . . . . . . . . . . . . . . . . 19
Venezuela: Fiscal Impact on
Production Decline . . . . . . . . . . . . . 20
Venezuela/Guyana: Perez and Burnham Meet . 21
Uruguay: Promoting Togetherness . . . . . . . 23
S E C R E T
Approved For Release 2001108/08 : CIA-RDP79T00865A001900010001-1
 Approved For Release 2001/08,6~EP79T00865A001900010001-1
Brazil: Evolving Energy Policy
Despite stepped up oil exploration since 1973,
Brazil has made little progress in reducing its de-
pendence on imported petroleum. Because of the
limited scope of new oil finds, the long lead time
required to develop them, and the lack of alternative
BRAZIL: Projected Energy Consumption
energy sources, Brazil will remain a large oil im-
porter through at least 1980. This prospect is putting
heavy pressure on the Geisel administration to take
the highly controversial step of bringing in foreign
companies to beef up the oil search.
October 1, 1975
Approved For Release 2001 /OCY RI -'DP79T00865A001900010001-1
 Approved For Release 2001/ Ri4fRDP79T00865A001900010001-1
Petroleum
Petroleum meets nearly half of Brazilian energy
requirements. About 80 percent of petroleum supplies
are imported, at an annual cost of about $3 billion--
an outlay that has contributed heavily to recent
balance-of-payments deficits. To reduce dependence
on imports, Brasilia has more than doubled expenditures
on oil exploration since 1973.
Petrobras, the state oil monopoly, increased the
number of exploratory wells drilled from 79 in 1973
to 132 in 1974 and will further expand drilling this
year. Exploration is most active on the continental
shelf, where 19 drilling rigs now are working.
Petrobras has additional rigs on order and plans to
expand its offshore exploration by 50 percent next
year. It is also exploring the Amazon region, parti-
cularly in areas near the Peruvian border.
During the past two years, important strikes have
been made off the coast of Rio de Janeiro and off sev-
eral northeastern states. A strike last May near the
city of Manaus also points to the possibility of sub-
stantial oil deposits in the Amazon region. Although
official estimates are still carried at less than 800
million barrels, Petrobras now feels that recent explo-
ration has established proved reserves of about 2 bil-
lion barrels.
These discoveries should enable domestic oil pro-
duction to cover most of the growth in oil consumption
through 1980 but will not reduce import requirements.
Despite declining output from older fields, total
domestic production is expected to reach 400,000-500,000
barrels per day in 1980, compared with the current
180,000 barrels per day. At the same time, consumption
will rise to an estimated 1.2 million barrels per day
in 1980, compared with 850,000 barrels per day in 1975.
October 1, 1975
Approved For Release 2001/080P79T00865A001900010001-1
 Approved For Release 2001/0 CR1ERDP79T00865A001900010001-1
Faced with a continuing petroleum deficit, Presi-
dent Geisel is convinced that foreign oil companies
must be brought in to help find and develop new fields.
Opposition to such a move is strong because of fears
that it would weaken the state oil monopoly, a focal
point for Brazilian nationalism. Although the Geisel
administration has been reluctant to move thus far, the
growing pressure from costly oil imports may soon force
action.
Hydroelectric Power
Over the next several years, hydroelectric power
will play an important role in limiting the rise in re-
quirements for imported oil. Brasilia has been develop-
ing this resource rapidly for many years, and current
plans call for hydroelectric capacity to expand from the
present 16 million kilowatts to 40 million kilowatts by
1985. At normal utilization rates these facilities will
provide the equivalent of 930,000 barrels per day of oil
in 1985, compared with 370,000 barrels per day at present.
Because nearly all easily accessible hydropower sites
should be developed by 1985, subsequent electric power
expansion will depend mainly on thermal power sources.
Coal and Shale
The energy crunch has induced Brasilia to take a
second look at its large but poor-quality coal deposits.
Now dependent on imports for nearly half of coal con-
sumption requirements, Brazil is searching for new
technologies to permit greater use of domestic coal for
power generation. It also plans to tap its large oil
shale reserves; completion of a 50,000 barrels per day
shale oil plant is targeted for 1980.
October 1, 1975
Approved For Release 2001/08kCR'BP79T00865A001900010001-1
 Approved For Release 2001 /0& 1&Ii DP79T00865A001900010001-1
Nuclear Energy
Over the longer term, Brasilia is relying on
development of nuclear energy to contain dependence
on foreign energy sources. Its first nuclear power
station, which will have a 3.2 billion kilowatt ca-
pacity, is scheduled for completion in the early 1980s.
The United States will supply enriched uranium for the
plant's first 626,000 kilowatt reactor, scheduled for
operation in 1978. While known uranium reserves are
small, Brasilia hopes that increased exploration and
imported technology will enable it to establish an in-
dependent nuclear industry during the 1980s. To this
end, it recently signed an agreement with West Germany
to obtain assistance in power plant construction,
uranium mining and enrichment, fuel fabrication, and
fuel reprocessing. Plans now call for a 10 million
kilowatt nuclear capacity by 1990 and perhaps as much
as 80 million kilowatts by the end of the century.
(UNCLASSIFIED)
October 1, 1975
-4-T
Approved For Release 2001/0?W.U-RDP79T00865A001900010001-1
 Approved For Release 2001/0'RIIE=FDP79T00865A001900010001-1
Panama: Students; Violence Factor in the Treaty Equation
Students are a significant force on the Panamanian
political scene, the most striking example being the
student-incited rioting in 1964 that led to days of
fighting, a break in relations between the US and Panama,
and dead and wounded on both sides. Those riots and the
martyrs they produced remain an emotional pegpoint for
Panamanian nationalism focused on recovery of the Canal
Zone.
Over the last eighteen months of treaty talks,
Panamanian strongman Torrijos has frequently cited the
possibility of a popular explosion if a satisfactory
treaty is not concluded. For all practical purposes, he
is talking about the students, who represent a volatile
and not entirely predictable factor. Nevertheless, the
government and National Guard have displayed a convincing
ability to manipulate the student groups directly under
their control and to contain and take advantage of the
more violence-prone ultraradicals. who are in opposition to
the government's stand in the treaty talks. The govern-
ment now is conducting a propaganda campaign to isolate
these ultraradicals and cast them as the unknowing tools
of the oligarchy--a line that will stand Torrijos in good
stead if he has to use force to keep them in line.
The largest university student group, the FEP
(Panamanian Student Federation). is responsive to govern-
ment direction. Although Panama's communist party has
traditionally dominated university politics, the govern-
ment promoted a split between the party and its youth wing
in 1974, supporting and funding the dissidents. That dis-
sident faction--known as the Fraccion--exercises control
over the FEP.
October 1, 1975
-5-
Approved For Release 2001/0f/RIE-'bP79T00865A001900010001-1
 Approved For Release 2001/08'RAfRDP79T00865A001900010001-1
The FEP's chief rival--and a cause of concern to
the government--is the Revolutionary Student Front (FER),
which is numerically small but whose shrill, ultraradical,
antigovernment and anti-US sloganeering has sparked recent
demonstrations. Many of the university groups have chap-
ters in the secondary schools, which swell the ranks of
the larger demonstrations. The FER, for example not only
predominates at the Instituto Nacional, Panama's largest
secondary school, but this radical wellspring is in fact
its primary source of strength.
The government's responsiveness to the student sector
has been repeatedly demonstrated. In May, FER-led students
demonstrating over poor school maintenance and conditions
not only prompted the minister of education to meet with
them outside the ministry, but they forced him to walk back
to the school in the rain to inspect the facilities person-
ally. Torrijos first leaked details of the current treaty
negotiation rounds during a general meeting with students
earlier this year, and student clamor helped push him into
declaring a policy of open negotiations. In September,
this led the government to release most of the previously
secret details of the negotiating positions of both sides.
The students, principally the FER, have also carried
out violent demonstrations. The National Guard, however,
monitors student activities closely, and can be presumed
to have advance knowledge of student plans. Despite some
recent reports of misgivings in the Guard concerning the
extent of its control, the government probably still
judges it can manipulate students to its own ends rather
than vice versa.
The Guard has frequently demonstrated in the past
that when it wants to, it can control and manipulate
student demonstrators. In August of 1974, some 500 FER-
led students stoned the US Embassy during the "banana
war," protesting against United Brands. Guard troops
October 1, 1975
-6-
Approved For Release 2001/GRDP79T00865A001900010001-1
 Approved For Release 2001/08g RIAAFP79T00865A001900010001-1
were not in evidence. A month later, students again
took to the streets, despite government warnings, to
protest on the anniversary of Allende's overthrow.
The FER again played a prominent role. This time,
National Guard troops in full battle dress around the
embassy and at intersections for a three-block radius
kept the demonstrators at a distance. During the
stoning of the US embassy on September 23--a demonstra-
tion again spearheaded by the FER--a small Guard force
was present but did not interfere with the stoning
until all windows in the building were broken. Then
the demonstrators were dispersed with teargas. In con-
trast to earlier successfully controlled demonstrations,
there was no liaison with the embassy.
In the wake of that demonstration, the government-
controlled FEP and other student organizations joined
almost all the domestic media in characterizing the
stoning as the action of a minority manipulated by the
old oligarchy, a minority which they said was under-
mining the revolution and playing into the hands of US
provocateurs.
The government apparently is not above more direct
use of students as well. Earlier this year FEP students
overran and vandalized an antigovernment broadcasting
station, apparently as a warning to administration crit-
ics.
It is clear that some of the "pressures" Torrijos
cites are of his own making or under his control to a
greater degree than he would have US authorities believe.
There are, of course, real dangers in such tinderbox
tactics in dealing with students keenly aware of their
potential clout. Torrijos has often said that if the
"explosion" comes, the Guard will have to smash the re-
bellion or lead it--and he has categorically stated he
October 1, 1975
-7-
SECRET
Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1
 Approved For Release 2001 / itOR DP79T00865A001900010001-1
will not smash it. In the event of unforeseen vio-
lence, he could become a prisoner of his public
rhetoric. Torrijos probably also is genuinely re-
luctant to see Panamanian Guardsmen use violence to
control Panamanian students. During a recent demon-
stration in Colon, Guardsmen were dispatched without
arms in an effort to avoid provocation and bloodshed.
The students ignored a Guard order to disband and even
briefly crossed into the Canal Zone. Such successful
defiance of the Guard could easily whet the appetites
of radical students.
However, there are sobering considerations which
ought to restrain Torrijos in dealing with the stud-
ents. The radicals among them deride his administra-
tion as a "caricature of a revolution" and charge he
has sold out to the US. If the students get out of
control, Torrijos could suddenly find himself in the
unaccustomed position of being a major target of their
protests. Under present conditions the students serve
his purposes in pressuring the US to agree to Panamanian
terms for a treaty and so secure Torrijos' place in his-
tory. Should uncontrolled violence erupt and indefinite-
ly postpone the talks, it would frustrate Torrijos'
ambition to succeed where all his predecessors have fail-
ed.
As long as Torrijos feels he has even some chance
of securing an acceptable treaty, therefore, he is likely
to do all he can to keep a firm grip on his tiger's tail.
He has a successful record to date and, as far as can
be seen, the means to continue it. (SECRET/NO FOREIGN
DISSEM/CONTROLLED DISSEM)
October 1, 1975
-8-
SECRET
Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1
 Approved For Release 2001/0?$/tkffDP79T00865A001900010001-1
Brazil: Keeping The Faith
Brazil's two political parties have reaffirmed
their intention to participate actively in next year's
municipal elections despite the tougher stance recent-
ly adopted by President Geisel in opposition to further
political liberalization. Although national conventions
held by the parties on September 20-21 contrasted sharp-
ly in mood, both ended on notes of unity and optimism.
The government party, the National Renewal Alliance,
is obviously striving to project a more progressive
image. The convention created departments for youth
and women's affairs, and elected a 37-year-old federal
deputy, with links to youth and liberal sectors, to a
high party post. The new party chief, Francelino
Pereira, is not a newcomer, but he apparently brings a
fresh outlook combined with proven vote-getting ability
to the job.
President Geisel himself gave a pep talk to the
convention. He addressed the party as the government's
permanent partner, playing up the important electoral
advantages it enjoys through its association with his
administration and urging it to get out the vote. Geisel
also appeared to be calling on the party to take a more
active policy role, a tack some observers see as an at-
tempt to make the National Renewal Alliance more of a
buffer between the government and public opinion.
Although the opposition Brazilian Democratic Move-
ment appears stronger as the result of its gains in the
November 1974 congressional elections, there are signs
of growing internal friction between the small radical
"authentic" faction and the more traditional majority.
During the convention the "authentic" members managed
to increase their influence within leadership circles
October 1, 1975
-9-
Approved For Release 2001 /08 $C . BDP79T00865A001900010001-1
 Approved For Release 2001/gR RDP79T00865A001900010001-1
by proposing alternative candidates and threatening
to boycott party elections if their demands were not
met. Ulysses Guimaraes, who was re-elected party
chief, attempted to smooth over ideological differ-
ences by characterizing the organization as the "front
of all those who are working for the return of democ-
racy to Brazil."
For the present the Brazilian Democratic Movement
appears inclined to submerge its internal problems and
concentrate on next year's elections. Some of the
younger members, however, are in an increasingly radical
mood as a consequence of frustration over the party's
inability to convert past electoral successes into ef-
fective political actions. (CONFIDENTIAL)
October 1, 1975
-10-
Approved For Release 2001 /O pq3 j pDP79T00865A001900010001-1
 Approved For Release 2001/08kk- DP79T00865A001900010001-1
Argentina: Another Look At Presidential Finances
Political enemies of President Maria Estela Peron
are continuing efforts to investigate the past finan-
cial dealings of her administration.
Radical Party senators have been unable to launch
a special commission (see Latin American Trends,
September 10, 1975), but the congressional committee
reviewing the issue is currently dominated by non-
Peronists and its chairman--a'leading Radical spokesman
--has announced his intention to press forward.
Meanwhile, the influential newspaper La Opinion
published a full-page article on September 21 devoted
to the private Peronist welfare agency that was the
source of funds used by President Peron to satisfy
obligations to other heirs of her late husband's estate.
According to the article, the agency--run by President
Peron, former social welfare minister Jose Lopez Rega,
and their close associates--failed to meet most of the
legal requirements for private foundations, including
the publication of quarterly reports, minutes of board
meetings, and disclosure of sources of funds and dis-
bursements. The article further suggests that this
agency received virtually all its funds from "discre-
tionary" accounts of the Social Welfare Ministry. It is
already known that during his tenure, Lopez Rega con-
trolled the largest share of the federal budget--including
26 "discretionary" accounts whose incomes and expenditures
were not subject to public audit.
The military also has voiced concern over corruption.
During a recent memorial service for an army colonel who
had been assassinated by terrorists, an army chaplain
denounced the "festival of corruption" and stated that
Argentina now lacks "any moral models."
October 1, 1975
Approved For Release 2001/08/08: CIA-RDP79T00865A001900010001-1
 Approved For Release 2001/O'~-gk-RDP79T00865A001900010001-1
Despite continuing efforts by Peron's supporters
to forestall the opposition, the Radical Party seems
determined to conduct a thorough probe. According to
US Embassy sources, there are unconfirmed reports that
Acting President Luder will back the Senate investi-
gation if President Peron attempts to undercut him on
her return from vacation. (CONFIDENTIAL)
October 1, 1975
ss -12-
Approved For Release 2001/08i& U'DP79T00865A001900010001-1
 25X6 Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1
Next 1 Page(s) In Document Exempt
Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1
 Approved For Release 2001/08k 'EP79T00865A001900010001-1
Inter-American Focus on Labor
Latin American governments and trade union organi-
zations are separately preparing inter-American con-
ferences on labor problems. Their differing points of
concern highlight the change in private and official
roles in hemispheric labor matters in recent years.
Labor federations, once a major political pressure
group and revolutionary force in much of Latin America,
have been losing dynamism and governments have recog-
nized the political advantage of taking an interest in
social issues.
Latin American labor federation leaders are trying
to decide whether the long ineffective inter-American
labor organization, ORIT, is badly ailing or dead.
Agreement is broad that "restructuring" of the regional
labor umbrella is essential, but particular issues and
clashing personalities seriously divide the affiliates.
ORIT's parent organization, the International Confeder-
ation of Free Trade Unions (ICFTU), had tried for some
time'to dictate a settlement to the faction-ridden
Latins, but Latin insistence on autonomy finally made
ICFTU leaders back off. ICFTU is annoyed by the anoma-
lies presented by inter-American labor: for example,
US labor, the AFL-CIO, is part of ORIT but not affil-
iated with ICFTU; Argentine labor participates in ICFTU
and not in ORIT.
Recent talks between Latin and US labor represent-
atives seem to have turned the Latins, especially the
Venezuelans, away from the idea of a Latin-only labor
central. Most now agree that US representation--ac-
companied by financial support--is desirable. This
majority includes Argentine labor, which, however, has
traditionally denigrated ORIT as subservient to the US.
For the Argentines to join a hemispheric labor organi-
zation, a change of name and leadership will be a mini-
mum requirement.
October 1, 1975
~F-1R5F-
Approved For Release 2001/08/d$`:~I'A1~ 79T00865A001900010001-1
 Approved For Release 2001/OS .aRIEDP79T00865A001900010001-1
Latin labor leaders will meet in Mexico October
11-12 and ORIT's executive board will confer on the
13th and 14th. Labor representatives hope that these
conferences will formulate recommendations for a re-
vised inter-American organization for presentation to
the eleventh World Congress of the ICFTU in Mexico
scheduled for October 17-25.
While Latin labor leaders are mired in these
organizational difficulties, their governments are pre-
paring for the fifth Inter-American Conference of Labor
Ministers, an OAS conference to be held in Guatemala
November 21-28. Their more substantive agenda includes
employment policy, operation of the labor market, tech-
nology and employment, and a roundtable on transnational
enterprises: their effect on labor relations and the role
of the ministries of labor. The Mexican delegation is
expected to present a paper on the treatment of migrant
labor working abroad. This topic, especially the prob-
lems of undocumented migrant workers, has potential for
emerging as another contentious issue in broad inter-
national forums. The problem is a sensitive one in
various bilateral relationships in the hemisphere-
between the US and Mexico, Honduras and El Salvador,
and Colombia and Venezuela among others. (CONFIDENTIAL)
October 1, 1975
-16-
Approved For Release 2001k-f ATRDP79T00865A001900010001-1
 Approved For Release 2001 /08/(f8'- qg-1 P79T00865A001900010001-1
OLADE: Doubtful Prospects
The 15-member Latin American Energy Organization
(OLADE) recently concluded its sixth ministerial meet-
ing without reaching any decision on the two most
important matters facing the conference--creation of
a Latin American energy market and a mechanism to fin-
ance its activities. There was general agreement that
OLADE is ineffective, but none whatever on any specific
plan of action to remedy this defect. Less than half
the member nations bothered to send their energy min-
isters and this evidence of the half-hearted support
given the organization raised open doubt that it would
ever go much beyond the talking stage.
The lack of progress stems from an inability to
reconcile the conflicting interests of the oil import-
ing and oil exporting nations of the region, and more
important, to decide who is going to finance the organi-
zation. Venezuela, attending as an observer, was under-
standably wary that its image as a rich oil-exporting
nation was going to cause it problems. As a result,
the Venezuelan delegation resolutely refused to be drawn
into the role of becoming OLADE's principal benefactor.
The Perez government doubts that the organization's
goals coincide with its own hemisphere objections and
believes that OLADE is not worth the effort and expense.
Consequently, it has dragged its feet on joining, al-
though OLADE was the brain child of a former Venezuelan
president, Rafael Caldera. Perez has specifically
objected not only to the size of the budget--that would
be prorated among the members, with Venezuelan paying
more than 50 percent of the total--but also to the over-
ly ambitious and unrealistic projects.
Perez indicated. earlier t is year
t at he wou c continue to withhold support until the
October 1, 1975
-17-
SECRET
Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1
 Approved For Release 2001/0&litEDP79T00865A001900010001-1
organization is "scaled down" to meet Caracas' speci-
fications. (See Trends, February 26, 1975). The re-
sults of the recent ministerial meeting in Mexico City
are not likely to change his opinion.
The major accomplishments were the election of
Carlos Miranda of Bolivia as permanent secretary and
the choice of Quito as its headquarters. A four-point
"plan of action" issued at the conclusion of the meet-
ing was notably unspecific. The next ministerial meet-
ing will be held in Costa Rica next May. (SECRET/NO
FOREIGN DISSEM/CONTROLLED DISSEM)
October 1, 1975
-18-
Approved For Release 2001 /0 c:' 1 ' DP79T00865A001900010001-1
 Approved For Release 2001/08/0$EC,-I579T00865A001900010001-1
Venezuela: Iron Miners Form Single Union
The government has backed the formation of a
single trade union to represent the iron miners in
an effort to ensure a measure of labor peace in an
industry that has been plagued by wildcat strikes
this year. The new union, SUTRAHIERRO, replaces
seven small unions and includes all former employees
of the Orinoco Mining Company and Iron Mines Company
who are now employed by the government-owned Guayana
Development Corporation.
Elections for union officers will be held on Octo-
ber 30. The importance of these elections far out-
weighs the union's potential three or four thousand
members. The metals industry looms large in President
Perez' economic development plans, and government
leaders are eager to prove that Venezuela can run a
large nationalized industry efficiently and without
interruption in production. Consequently, Perez'
Democratic Action Party (AD) is making an all-out ef-
fort to win these elections against long odds. Be-
sides AD, all other major political parties are.throw-
ing considerable resources and effort into making a
good showing. The marxist Movement Towards Socialism
(MAS), in particular, is encouraged by evidence of
strong support among the workers as well as by Perez'
threat earlier this year to use military forces to end
the wildcat strikes. Realizing that it is in a weak
position among the workers at present, AD has been try-
ing to postpone these elections as long as possible in
the hope that the hard feelings would die down. Now,
with the deadline for petroleum nationalization coming
up and the prospect of similar labor problems among the
petroleum workers, AD apparently believes it has no
choice but to try to sew up the iron mines as soon as
possible. If AD loses the elections, then the govern-
ment will have to brace for a renewal of labor strife.
The new union leaders' first order of business will be
the renegotiation of working contracts. (CONFIDENTIAL)
October 1, 1975
(-R19 _19-
Approved For Release 2001/08/0?E&X-RDP79T00865A001900010001-1
 Approved For Release 2001/08cgkFFDP79T00865A001900010001-1
Venezuela: Fiscal Impact of Production Decline
Caracas is beginning to run into budget problems
as a result of reduced oil production and revenues.
Oil production this year is likely to be 20 percent
below the 1974 level; another 8 percent drop, to 2.2
barrels per day, is planned for 1976. Reflecting the
drop in oil revenues, the Perez government next month
will present a budget bill to Congress that calls for
a 16 percent cut in expenditures in 1976.
The impact of the cutback will fall mainly on the
Venezuelan Investment Fund, established in 1974 as a
means of channeling surplus oil revenues into economic
diversification projects and foreign aid. Allocations
to the Fund were cut to $1.7 billion in 1975, from $3
billion in its initial year. The 1976 budget bill al-
locates no money to the Fund; other government expendi-
tures will continue at about the 1975 level.
Because of emerging financial constraints, Caracas
will be more cautious in making new foreign aid commit-
ments and will have to establish priorities on its
ambitious development plans. It had originally planned
to spend about $10 billion on domestic development pro-
jects in 1975-79. Investment in the petroleum and iron
and steel industries undoubtedly will continue to receive
the highest priority; financing of other projects, such
as construction of a merchant fleet, a railroad, and a
pulp and paper mill, may be delayed. (CONFIDENTIAL)
October 1, 1975
-20-
Approved For Release 2001/008CCTA=RDP79T00865A001900010001-1
 Approved For Release 2001/08/B1E~79T00865A001900010001-1
25X1A
Venezuela/Guyana: Perez and Burnham Meet
Guyanese Prime Minister Forbes Burnham's meeting
with President Carlos Andres Perez on September 20-22
was a largely symbolic gesture emphasizing the cordial
relations now existing between the two countries.
No formal agenda was prepared and the meeting was
"open-ended" to allow the two leaders to get acquainted
and to see how they hit it off. A brief communique
issued at the end of the visit avoided specifics and
stated only that the two leaders "had studied ways" to
intensify cooperation. Perez agreed to visit Guyana,
but no date was set. For Burnham the meeting was a
chance to explore the possibility of further economic
and political cooperation with a rich and powerful
neighbor at a time when Guyana is planning the economic
development of the interior and is increasingly con-
cerned over the security of its borders with neighboring
Surinam and Brazil.
The Venezuelans, for their part, rolled out the red
carpet for the Guyanese visitors. Apparently as a re-
sult, Burnham extended by an extra day his "informal"
visit that included four meetings with Perez, at two of
which they were accompanied only by the Guyanese ambas-
sador to Caracas. The Guyanese were reportedly highly
satisfied with the mood established between the two
chiefs of government. According to one official,
Burnham can now simply pick up the telephone and call
Perez on a minor request or problem, and relations with
Venezuela are better than at any time since Guyana's in-
dependence. Shortly after his return to Georgetown,
Burnham told his cabinet he now feels a climate has been
created that will make agreements easier to reach. He
also believes that Perez has clearly signalled he wants
a definitive solution of the longstanding border problem.
October 1, 1975
-21-
Approved For Release 2001/08/0'L1 079T00865A001900010001-1
 Approved For Release 2001/08MCii P79T00865A001900010001-1
Burnham told Guyanese officials that he and Perez had
agreed to appoint a joint committee to discuss outstand-
ing differences, but had not specified the makeup of
the committee nor set a timetable for it to begin its
work.
The Venezuelans, as usual, appear to have gotten
more than they gave. Aside from fortifying his posi-
tion with third world countries, Perez obtained Guyana's
support for essential elements of his foreign policy:
defense of basic exports, SELA, producers organizations,
and nationalization of the petroleum industry, without
having to make any financial or economic commitments.
He did make a meaningless gesture, at no cost to him-
self, on the border dispute. Venezuela has previously
used joint commissions to deal with border disputes
with Colombia and the Netherlands Antilles without ap-
preciable progress in reaching a mutually acceptable
solution. Indeed, once their post-trip euphoria wears
off, the Guyanese may realize they were conned by the
Venezuelans and begin to question why Burnham made the
trip at all. (CONFIDENTIAL)
October 1, 1975
-22-
Approved For Release 2001 /08Td$'C: -- ZbP79T00865A001900010001-1
 Approved For Release 2001/08/6lF1'P79T00865A001900010001-1
Uruguay: Promoting Togetherness
President Bordaberry's visit to Chile during that
nation's independence day observance was the capstone
of his recent efforts to improve economic and political
ties with like-minded governments in the southern cone.
Bordaberry had previously met with the chief exec-
utives of Bolivia, Paraguay, and Brazil, which like
Uruguay and Chile have military-dominated governments
with distinct anti-Marxist bents. He hopes to find
allies to counter what he views as a world-wide Marxist
campaign to discredit the staunchly anti-Communist re-
gimes. Also, he sees an urgent need to upgrade the
region's economic infrastructure, and he hopes to achieve
that objective by creating a strong network of bilateral
agreements. In recent months Bordaberry has signed ac-
cords with neighboring governments to promote trade,
transportation systems, and inter-connecting hydroelectric
projects.
In Santiago, Bordaberry's call for cooperation found
a particularly receptive and appreciative audience. Be-
cause both countries have been targets of Marxist prop-
aganda, there is a feeling of kinship between them. Many
officials in the Bordaberry government believe that if
Chile had not borne the brunt of these attacks, Uruguay
would have been the preferred victim. (CONFIDENTIAL)
October 1, 1975
-23-
~3-Approved For Release 2001/08/0P&43RD79T00865A001900010001-1
W
 -Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1
Secret
Secret
Approved For Release 2001/08/08 : CIA-RDP79T00865A001900010001-1