LATIN AMERICA REGIONAL AND POLITICAL ANALYSIS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00912A000700010015-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 16, 2016
• Document Release Date: January 4, 2005
• Sequence Number: 15
• Publication Date: May 17, 1977
• Content Type: REPORT

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Secret
Latin America
A
Secret 131.
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17 May 1977
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LATIN AMERICA
17 May 1977
CONTENTS
Peru: Return to Civilian Rule
Discussed . . . . . . . . . . . . . . . . . . . . 1
USSR-Peru: Some Second Thoughts. . . . . . . . . . 3
This publication is prepared for regional specialists in the Washington community by
the Latin America Division, Office of Regional and Political Analysis, with oc-
casional 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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Peru: Return to Civilian Rule Discussed
Peruvian President Morales Bermudez is holding talks
with party leaders that could further his plan to return
the country to civilian rule by 1980. Any transfer to
power will be gradual, and Peru's uncertain economic
situation could delay its implementation.
Last month military leaders expressed their con-
fidence in Morales Bermudez by extending his presidential
term beyond the date early next year, when he was to
retire from the military. Since then the President
reportedly has been discussing a return to representative
government with a wide range of political parties.
Besides conferring with the Christian Democrats and
the Socialist Popular Action, both of which support his
government, Morales Bermudez also has met with Victor
Haya de la Torre's American Popular Revolutionary
Alliance--the Peruvian army's principal antagonist.
Last Friday he was scheduled to meet with the Peruvian
Communist Party and the Popular Action of former presi-
dent Belaunde, who was overthrown by a military coup in
1968.
During these exploratory talks, the parties are
setting forth their views on presidential, parliamentary,
and municipal elections. A civilian advisory group re-
portedly also has been working with the government to
formulate political strategy, draw up an agreement with
the parties, and prepare a new constitution. It is not
clear at present how far the ruling military is prepared
to go in granting popular sovereignty.
In addition to mollifying the military government's
domestic and foreign critics by demonstrating at least a
semblance of movement toward civilian rule, these con-
sultations also are likely to provide Morales Bermudez
with additional civilian political support for the stiff
austerity measures necessary to right the Peruvian economy.
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Such support could also help to keep the President's po-
tential rivals in the military at bay.
Morales Bermudez' economic program is threatened
by a disagreement between his key economic advisers and
some military leaders over budget cuts demanded by the
International Monetary Fund as a prerequisite for badly
needed foreign loans.
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USSR-Peru: Some Second Thoughts
The USSR has growing doubts about the future of its
relations with Peru, a target of Soviet strategy since
1973 and the largest recipient next to Cuba of Soviet arms
in Latin America.
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As part of its larger Latin American strategy, the
Soviets have tried over the years to improve their eco-
nomic relations with Peru. Although the prospect of eco-
nomic benefits has motivated the Soviets they have also
hoped that expanded economic relations with Peru would
improve their political fortunes in the region, an Amer-
ican sphere of influence, and prove to all of Latin
America that there is little to fear from the Soviet Union.
As in other third world countries, the main ele-
ments of the Soviet Union's policy toward Peru since
1968 have been arms deals and, to a lesser degree, eco-
nomic assistance and trade. Since 1973, Lima and Moscow
ave signed a series of arms agreements which, if finally
implemented, will amount to approximately $500 million.
To date at least $175 million worth of Soviet arms have
been delivered, including SA-3 and SA-7 surface-to-air
missiles and more than 300 T-55 tanks. Peru is now taking
delivery of three dozen or more SU-22 fighter-bombers
The Soviets have trained several
hundred Peruvians to work and. maintain this equipment. In
all of their dealings with Peru, the Soviets have offered
low prices, generous terms, and long periods of repayment.
At the same time, the USSR. has attempted to expand
Peruvian-Soviet economic relations. The Soviets have
provided a $6-million feasibility study and technicians
and scientists for the $450-million Olmos hydroelectric
and irrigation project and have offered bids for part of
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the construction of the project's $143-million pilot
tunnel. The USSR has also offered bids on other projects
such as the Andes pipeline and a machine-metal complex
in southern Peru.
The Soviets appear ready to enter into more joint
economic projects with the Peruvians, but Lima has at-
tempted to keep them at arm's length. Peru has been slow
to use Soviet credits and has kept its options open with
regard to other foreign aid and trade, leading Soviet
officials to express their frustration on several occa-
sions and to reassess their position.
From .1968 to 1975, the USSR characterized the Vel-
asco government as a "progressive, military regime" with
whom it could do business and a model for future Latin
American development. Since 1975, however, the Peruvian
revolution has taken an increasingly moderate turn. Al-
though pledging "revolutionary continuity," Velasco's
successor, Morales Bermudez, has softened much of the
rhetoric of the past. For instance, at independence day
ceremonies last July 28, he promised that programs aimed
at creating a "more just political, social, and economic
order" would continue, but he dropped all reference to
"socialism."
This shift reflects the fact that the domestic and
international circumstances which originally led Peru
to improve its relations with the USSR have changed. Eco-
nomic problems have forced the Morales Bermudez govern-
ment to adopt a less radical, more austere economic policy
with greater emphasis on private investment and enter-
prise in order to keep peace at home and encourage much
needed non-Soviet foreign investment. Leftist and pro-
Soviet members of the government and military have been
replaced by more moderate and pragmatic individuals.
President Morales Bermudez seems tent upon loosening
his government's ties with Moscow
Relations between the US and Peru have improved.
With Washington's acceptance of Peru's 200-mile offshore
fishing boundary and Lima's settlement of claims lodged
by US companies, many of the tensions that plagued US-
Peruvian relations in the late 1960s and early 1970s have
disappeared. In addition, the US did not criticize Peru
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as severely as it did Chile, Brazil, and Uruguay for
human rights violations. Washington's veto of the re-
cent Israeli-Ecuadorean aircraft deal may have added
further momentum to Lima's reassessment of its policy
toward Washington. On April 14, Jose de la Puente, Peru's
foreign minister, praised the new administration's more
positive approach to Latin American matters.
was that the US refused to help it update and replace its
weaponry at a time when Peru felt itself strategically
weaker than its traditional antagonist, Chile. Recent
purchases of Soviet arms plus the US embargo on arms
sales to Chile have recast the military balance in the
Andes and have removed both a point of friction in US-
Peruvian relations and some of the reasons for Lima's
interest in improving its relations with the USSR.
In response to the new situation in Lima, Moscow
has increased its efforts to sell the Peruvians more
arms. Recently, the Soviets offered to sell OSA-class
missile attack boats to the Peruvian navy, an offer Peru
rejected in 1975.
At the same time, the
USSR as attempted to improve its relations with Peru's
neighbor to the north, Ecuador, by offering to sell it
advanced fighter aircraft.
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The Soviets' attempts to broaden their influence
among Peru's neighbors is equally risky. Lima would
not appreciate Moscow arming Ecuador, a potential enemy.
Relations between Ecuador and Peru have declined recently,
and Quito has even. discussed the merits of a military
pact with Chile. This point of friction between the
USSR and Peru, however, has at least temporarily disap-
peared because Ecuador has no intention of buying Soviet
aircraft.
For the time being, Moscow will probably be patient
and trust that it--; carefully nurtured relationship with
Lima will survive. Peru is still willing to purchase
Soviet arms, and Soviet war material figures large in
Peruvian strategy. Still, the Soviets apparently realize
that this does not. assure future good relations, and
that Lima may be using the Soviet presence to pressure
Washington to adopt more favorable policies.
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