LATIN AMERICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01184R000201050001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 22, 2016
• Document Release Date: October 14, 2010
• Sequence Number: 1
• Publication Date: August 10, 1984
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
Direc m i.te o
1"telUgenI WIi I tH F Lt UU?11
00- NON GIVE
MAIN ON 'Al
Review
Latin America
10 August 1984
ALA LAR 84-015
10 August 1984
Copy 3 9 4
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Secret
Latin America
Review (u)
Page
1
25X1
25X1
Cuba's dual strategy for advancing its interests abroad-alternating
between diplomatic approaches and support for radical leftist
groups-is clearly reflected in its activities throughout South
Cuba-Venezuela: Prospects for Diplomatic Relations 5 25X1
25X1
Havana's relations with Caracas are warming as a result of the
Castro government's recent compromise allowing 16 asylees residing
in the Venezuelan Embassy to leave Cuba, but there are still several
stumblingblocks on the way to a resumption of full diplomatic
Nicaragua: Living Standards Drop as Financial Troubles Growl 19 25X1
25X1
The Junta, having used up all the foreign exchange from the harvest
that ended in May, is facing action by foreign banks because of its
failure to make commercial debt payments, but there is little it can
do except squeeze the populace further and implore additional
support from the Warsaw Pact countries.
Shaky Prospects for Government Party I 11 9 FX I
The Democratic Social Party's leadership is riven by dissent that
could lead to the defeat of the party's presidential candidate in the
indirect election next January and the eventual breakup of the party
25X1
Chancellor Helmut Kohl's tour of Mexico and Argentina has
sparked his interest in Latin American affairs and could lead to
greater West German activity in the hemisphere, especially in the
fields of economic and social development.
Secret
ALA LAR 84-015
10 August 1984
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
Guyana's Military: Key to Stability
President Forbes Burnham depends for political survival on
Guyana's relatively well-trained and -equipped armed forces, but
the country's severe economic problems are beginning to cause
dissent in the ranks, where loyalty to Burnham appears to be
waning.
El Salvador: Budget Problems
Dominican Republic: Ties Wit
Guatemala: Foreign Exchange
h the East
Difficulties
IMF Help
Trinidad and Tobago: Seeking
Articles have been coordinated as appropriate with other offices within CIA.
Comments and queries regarding this publication may be directed to the Chief,
Production Staff, Office of African and Latin American Analysis,
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
occi ci
Cuban Activities in
South America
Cuba's dual strategy for advancing its interests
abroad is clearly reflected in its activities in South
America. In Argentina, Havana has responded over
the years to changing conditions and opportunities by
alternating between concerted support for leftist
guerrillas and political approaches, such as the
current effort aimed at strengthening diplomatic
relations. In other countries-Bolivia, Colombia,
Ecuador-Castro feels he can pursue elements of both
tracks more or less simultaneously. Because Cuba
harbors special antagonism toward the Pinochet
government, Havana consistently over the years has
supported Chilean revolutionary groups and not
sought diplomatic ties. In countries where Castro has
seen no opportunities since insurgencies were crushed
in the 1960s and early 1970s-for example, Brazil
and Venezuela-he has generally pursued a
diplomatic strategy, although not completely
abandoning contact with radical left groups.
In June 1983 Cuban Vice President Carlos Rafael
Rodriguez acknowledged publicly what other Cuban
leaders, including Fidel Castro, had admitted in the
past-that one of Havana's basic aims is to foster
socialist revolution throughout Latin America. In
formulating policies to attain this goal, Cuba divides
countries of interest into two broad categories: (1)
"operational targets" where either conditions are ripe
for revolutionary activity or regimes have earned
Castro's particular antagonism (here Cuba
encourages revolutionary groups to cooperate and
foment violence by offering training, arms, funds,
technical support, and advice); and (2) "political
targets" where regimes are less vulnerable and
revolutionary potential is low (here Havana seeks to
improve diplomatic and economic ties to overcome its
isolation, further Castro's Third World leadership
aspirations, and compete with the United States for
hemispheric backing). These strategies are visible in
varying degrees-and in some countries are pursued
simultaneously-in Cuba's dealings with South
America.'
Argentina
Cuban connections with Argentina's insurgent
groups-the Montoneros and the People's
Revolutionary Army-date from at least the early
1970s. Havana provided training, funds, and advice,
particularly after President Juan Peron's death in
1974 led to a resurgence in terrorist activity.
Following the military coup in 1976, Argentine
terrorist groups were crushed, and two Cuban
Embassy employees suspected of aiding guerrillas
were apparently killed. This and growing Argentine-
Cuban trade ties led Havana to scale back its
involvement in 1977, although it has continued to
train, fund, and offer haven to Montoneros, who
fought in the Nicaraguan revolution and are
operating in Central America and elsewhere in the
hemisphere. The Falklands war in 1982 produced
closer bilateral ties and continued Cuban restraint in
fostering guerrilla activity in Argentina. President
Alfonsin's inauguration last December permitted
Castro to improve relations further, including
Argentine trade credits for Havana ($600 million over
Secret
ALA LAR 84-015
10 August 1984
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Secret Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
Chile
Havana has maintained ties to the main Chilean
terrorist group, the Movement of the Revolutionary
Left (MIR), since the late 1960s. The relationship was
expanded after the 1973 military coup against
President Allende,
1979, and especially following the eruption of serious
domestic discontent in Chile last year, Havana has
reportedly infiltrated scores of terrorists into the
country to strengthen the pro-Cuban presence in the
leftist opposition. Castro attaches special importance
to undermining the Pinochet regime, both because of
its strident anti-Communism and because it toppled
Siles established formal diplomatic
relations with Cuba in early 1983, although in
deference to Washington, La Paz has held ties to the
charge level and has not opened an embassy in
Havana. During the last two years several of Siles's
radical advisers
shave been
building an armed cadre to defend the administration
from its domestic enemies (including the armed
forces) or, if the government is overthrown, to carry
out guerrilla warfare.
Havana has engaged in an active support et fort,
training a few hundred ruling party militants, placing
the Cuban-backed Allende government. Thus
significantly curtail its role in Chile and jeopardize its
ties with the MIR or its chances of playing a leading
role in the anti-Pinochet movement. In fact,
MIR has been penetrated and weakened by Chilean
security, however, may be leading Havana to step up
its longstanding support for the Communists (who
advocate armed struggle) and for terrorist factions of
the Socialist Party. In addition, the US Embassy has
concluded that Havana may also be backing the
Manuel Rodriguez Patriotic Front, a shadowy group
that has claimed responsibility for numerous recent
bombings.
Bolivia
Following the failure of Che Guevara's Bolivian
campaign in 1967, successive governments in La Paz
held Cuba at diplomatic arm's length until the
inauguration of leftist civilian President Siles in
October 1982. Siles, his Vice President, and a number
of his advisers had close contact with Havana during
Colombia
Cuba supported guerrillas in Colombia on a limited
basis beginning in the 1960s, but agreed not to
interfere in Colombia's domestic affairs in 1975 when
the two countries renewed diplomatic relations.
Bogota suspended ties again in 1981 when it became
clear that Castro-encouraged by the Sandinista
victory in 1979 and embittered by Colombian
competition that caused Havana to lose its bid for a
UN Security Council seat-had resumed training,
arming, and advising M-19 insurgents. Colombian
President Betancur took office in August 1982,
however, ideologically predisposed to overlook past
Cuban support for his country's guerrillas and to
renew ties with Havana. Recognizing an opportunity,
the Cubans became more circumspect in their
dealings with the insurgents, but continued at least
through last year to provide training and advice to
members of the M-19
Occasional
public revelations of continuing Cuban connections
their preceding years in exile,
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Secret
Colombian military's strong opposition to renewed
diplomatic relations continue to force President
Betancur to hold off on his desire to normalize ties.
Peru
Cuba supported unsuccessful Peruvian guerrillas in
the mid-1960s. In the 1970s Havana eschewed
interference in Peru because of the Soviet Union's
desire not to endanger its growing arms supply
relationship with Lima. In April 1980, diplomatic
relations between Peru and Cuba were reduced to the
charge level-where they remain-because of a
diplomatic dispute and trade problems. The Belaunde
administration has maintained distant, but polite,
relations since it succeeded the military regime in July
1980. We believe that Castro has been wary of
supporting the Sendero Luminoso insurgents because
of their exclusivist Maoist ideology and the potential
risk to Soviet ties with Lima.
for achieving its objectives in Peru are brighter
through its developing contacts with legitimate
parties. Thus, it has provided funds to and courted
leaders of the center-left American Popular
Revolutionary Alliance (APRA) and the United Left
coalition. If APRA wins the presidential election in
March 1985-as currently appears likely-full
diplomatic relations probably will be restored.
Ecuador
For some years Cuba has utilized the Ecuadorean
Communist Party and other local radical leftist
groups to promote anti-US demonstrations and
President Hurtado overrode military objections and
exchanged ambassadors with Cuba, upgrading
relations that had been at the charge level since a
diplomatic incident in Havana in 1981. Febres
Cordero, the conservative president-elect who assumes
office in August, told the US Embassy recently that
he intends to maintain diplomatic relations with Cuba
as long as it does not interfere in Ecuador's internal
affairs. He will probably immediately suspect
Havana, however, if terrorist activity begins to plague
his government.
25X1
25X1
25X1
25X1
25X1
Brazil
Leftist terrorists in Brazil that received Cuban aid in
the mid-1960s were virtually destroyed by security
services. Because the few remaining members have
been unable to organize effectively or stage any
significant activities, Havana apparently has written
them off as not deserving of serious support. 25X1
Moreover, as a result of Brasilia's gradual political 25X1
liberalization since the late 1970s, the pro-Soviet
Brazilian Communist Party has been permitted to
campaign for legal status, further splintering former
terrorist groups and reducing the revolutionary
potential in Brazil. Thus, since the present military 25X1
government took power in 1979, Havana has
primarily sought renewed diplomatic and trade ties.
These efforts have made little progress, but Castro
presumably is counting on the restoration of civilian
rule next year to improve his position with Brazil.
Uruguay 25X1
Uruguay's Tupamaro guerrillas, one of the most 25X1
effective terrorist forces in the world in the late 1960s,
were stamped out domestically in the early 1970s.
Since that time, Cuba has provided safehaven and
training to Tupamaros in exile and possibly a limited
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Uruguay does not have diplomatic relations with
Cuba, a situation that would change only in the
unlikely event that, in the scheduled transition to
civilian rule early next year, a leftist president comes
to power and the military allows him to restore ties
with Havana.
Paraguay
In Paraguay, Cuba since the early 1960s has
expressed only sporadic interest in assisting anti-
Stroessner groups,
because none of these groups has realistic insurgent
potential and thus Castro has not considered
conditions in Paraguay favorable for revolutionary
activities. The Paraguayan Government has no
diplomatic relations with Cuba, and, according to US
Embassy reporting, President Stroessner closely
monitors Cuban and Soviet activities in neighboring
countries. Stroessner, nevertheless, recognizes the
antipathy Soviet Bloc countries feel toward his
regime, and he uses what he views as an imminent
international Communist threat as the main
justification for his authoritarian rule.
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Secret
Diplomatic Relations
Cuba-Venezuela: Prospects for
Cuban-Venezuelan relations are warming as a result
of the Castro government's recent compromise
allowing the departure from Cuba of 16 asylees
residing in the Venezuelan Embassy in Havana since
1980. We believe this action increases prospects for an
upgrading of diplomatic relations in coming months.
Castro's intentions are unclear to us, however,
because a second major bilateral dispute is still
apparently unresolved. This concerns the fate of anti-
Castro activist Orlando Bosch, who, along with three
accomplices, is accused of blowing up a Cubana
Airlines flight in 1976, killing all aboard. He remains
in prison in Venezuela but has yet to be convicted.
Castro has long insisted that Bosch be tried and
sentenced before Havana would normalize relations
with Caracas. We do not know whether Castro will be
satisfied with the much-publicized request of
Venezuelan prosecutors on 11 July that Bosch and his
confederates be convicted of murder and given
maximum terms.
Several recent instances of cooperation between
Havana and Caracas, especially in the commercial
arena, suggest that economic ties will strengthen even
if diplomatic relations are not upgraded soon. Havana
continues to push its two-and-a-half-year-old
campaign to improve relations with numerous Latin
American countries and to promote its image as a
"responsible" international actor. Castro probably
regards progress in drawing closer to Caracas as
favorably affecting other South American holdouts,
notably Bogota and Lima.
Recent Developments
In early June, Caracas and Havana reached an
understanding on the status of the 16 Cuban refugees
lodged in the Venezuelan Embassy in Havana since
the 1980 Mariel exodus, whom Castro had
persistently refused to recognize as political asylees
entitled to leave the country. Under the formula
adopted to resolve the impasse, the refugees would
"voluntarily" renounce their claim to political asylum,
depart the Embassy but remain in Cuba for a while
under government guarantees for their safety, and
then be allowed to leave Cuba at intervals. The latest
available information is that all but one of the 16
refugees have left the Embassy and are being treated
correctly by Cuban authorities.
The announcement of the compromise on the asylees
came despite two violent incidents a few weeks ago
outside the Venezuelan Embassy-when young
Cubans seeking admittance were shot by Cuban
guards-leading to several sharp exchanges between
Caracas and Havana. The Venezuelan Foreign
Minister publicly expressed his government's anger
over Cuba's behavior. The US Interests Section in
Havana even reported that Havana's actions
demonstrated that Cuban officials, especially Castro,
cannot tolerate any evidence of public discontent or
foreign involvement with that discontent.
Nonetheless, the two capitals had been negotiating
quietly for sometime on the asylees dispute and
Havana had signaled its readiness to compromise.
Havana had pressed Caracas for two years to send a
delegation to Cuba to negotiate on the asylees
question, intimating a willingness to work out an
arrangement similar to one reached with Lima in
1981 concerning refugees in the Peruvian Embassy in
25X1
25X1
Secret
ALA LAR 84-015
10 August 1984
25X1
2bAl
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
Havana took the initiative by late May to resume the
negotiations interrupted by the uproar over the
shootings, The
Venezuelan Foreign Minister subsequently told the
leftist press that, in line with President Lusinchi's
wish to practice a "pluralistic foreign policy without
any kind of discrimination," an upgrading of
diplomatic relations with Cuba was possible before
the end of 1984.
President Lusinchi and other officials stated to the
US Embassy, however, that, while they welcomed
Havana's action, Venezuela had no intention of
changing the present status of diplomatic relations
with Cuba. They pointed out that the next move was
up to Havana, which in a huff had withdrawn its
Ambassador and closed its Embassy in Caracas in
September 1980-but without breaking relations.'
Several Venezuelan officials expressed doubt,
moreover, that Havana's willingness to be
accommodating on the asylees issue would carry over
to the even more contentious dispute on the Bosch
case. The Foreign Minister, for instance, told the US
Ambassador that this remained a serious irritant for
the Cubans, especially since Venezuelan authorities
had made clear that final disposition of the Bosch case
would be left entirely up to the Venezuelan courts.
Nevertheless, some three weeks after the asylees
agreement was announced, the Venezuelan media
reported that the prosecutors would seek a murder
conviction and the maximum 30-year prison term for
Bosch and his three codefendants. The US Embassy
noted that "political authorities" may have influenced
the prosecutors' actions and that Havana probably
would view the latest development favorably, even
though final court action on the case may be several
years away.
Cooperation in Other Areas
In mid-June Caracas and Havana formally renewed a
lapsed bilateral air piracy agreement. The Venezuelan
Charge in Havana-who evidently staked his prestige
on improved relations-told the US Interests Section
this action reflected his government's desire to
continue the warming trend in bilateral relations. In
early July, Castro sent a special congratulatory
message to Venezuela on the 163rd anniversary of
independence. The Venezuelan Foreign Minister not
only expressed appreciation publicly for the message,
but later stated that he believes Cuba should
participate in peace talks concerning Central America
despite contrary US views.
government-to-
government cooperation in nonpolitical matters is
relatively extensive, although not publicized widely,
and has intensified since the Lusinchi administration
took office in February 1984. Two credit
arrangements were concluded in February and March
1984, calling for a substantial increase in bilateral
The US Embassy in Caracas interpreted
Venezuela's willingness to extend these new credits to
Cuba, which Havana had been pressing for since late
1982, as reflecting the Lusinchi administration's
commitment to expanding trade with Cuba, despite
expected US opposition. The Embassy also noted that
Venezuelan officials had repeatedly misrepresented to
Embassy officers the extent of the evolving Cuban-
Venezuelan economic relationship.
In addition, according to the Embassy, the new
administration evidently tried to conceal its approval
of a request by the Cuban airline, Aero-Caribbean, to
promote regular tourist flights to Cuba. These flights,
which began in April
1984, are handled by a local tourist agency run by
Cuban sympathizers living in Caracas, and by mid-
July were being scheduled on a weekly basis.
Additional recent bilateral commercial contacts have
included discussion of possible Cuban cooperation in
the Venezuelan sugar industry and exploratory talks
on expanding Cuban purchases of Venezuelan
chemical products,
Another area of Cuban-Venezuelan cooperation is a
weekly airlift by the Venezuelan Aeropostal airline of
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Secret
Cuban refugees from Havana to Caracas under a
Family Reunification agreement signed by the two
governments in 1979.
Cuban Government, anxious to get rid of dissidents-
there may be as many as 150,000 Cubans awaiting
exit permits-has attempted to accelerate emigration
to Panama and Venezuela in recent months. Despite
some recent tightening of immigration procedures,
Caracas does not
plan to terminate the Family Reunification program,
and there is no sign that the issue has become a
matter of contention between Venezuelan and Cuban
officials.
Prospects
We believe that Havana is optimistic about progress
to date in drawing closer to the Lusinchi government
and anticipates reopening its Embassy in Caracas
within the next few months. The US Embassy in
Caracas has commented that the gradual
improvement in Cuban-Venezuelan relations appears
to be following a prearranged pattern, whose key
elements may have been worked out by the previous
administration and later-under pressure from his
party's left wing-endorsed by President Lusinchi.
The Embassy concluded that a decision has been
reached to allow normalization of relations to occur
provided Castro takes the initiative.
The most likely scenario, in our view, is that within a
few months Havana will seek Caracas's concurrence
that it reopen the Cuban Embassy in Caracas. We
believe that Venezuelan authorities will agree to
accept a Cuban charge, if by then most of the former
asylees have left Cuba. Nevertheless, further action
on the diplomatic front will depend on developments
in the Bosch case
From Havana's perspective, we believe there is strong
incentive to bring the warming process to some
concrete result because of the demonstration effect 25X1
with other South American countries Cuba currently 25X1
is cultivating. For instance, Havana probably
calculates that Colombia and Peru might be
influenced by an upgrading of Venezuelan-Cuban ties
to improve their own relations with the Castro 25X1
government-in Colombia's case, through a
resumption of diplomatic relations suspended in 1981,
and, in Peru's, with an exchange of ambassadors.
Finally, Cuba is motivated in its courtship of
Venezuela and other countries, by a strong interest in
portraying itself as a responsible member of the 25X1
international community and thus to counter what it
views as US efforts to isolate it as a pariah.1 25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Secret
Nicaragua: Living Standards Drop
as Financial Troubles Grow
standards continue to decline.
US Embassy sources report that the Junta has used
all the foreign exchange it earned from the harvest
season that ended in May. To finance its immediate
needs, the government has resorted to selling crops-
almost certainly at a discount-that will not be
harvested until November at the earliest. Harvesting
delays caused by the insurgency have lowered the
quality of the current cotton crop, cutting government
earnings by about $8 million.
repayment schedule it signed in February,
should Nicaragua fail to sign a new agreement
or to make any payments by the end of 1984, the
banks may try to attach Nicaragua's meager foreign
assets.
In recent public speeches, Junta members have
emphasized the need for further sacrifices by the
people, who are already suffering heavily from the
economic decline. The US Embassy reports that, even
in some agricultural areas, market shelves are bare of
such basic items as beans and rice. It adds that much
Unable to alleviate the problems, the government has
responded by:
? Mounting a propaganda campaign to convince the
populace that economic times were worse under
Somoza.
? Delaying implementation of the sharp food price
hikes announced in June.
? Stepping up land distribution to campesinos in the
central highlands.
Moreover, Managua has decided to classify all
economic information, according to the US Embassy.
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Despite the regime's claims that national problems
are the fault of US policy, much of the populace
nonetheless appears to lay the blame for its declining
living standards primarily at the government's
doorstep. With no financial relief in sight, the 25X1
Sandinistas will have little choice but to squeeze the
populace further and to implore the Warsaw Pact
countries for additional support. Now that strikes
have once again been legalized, however, the regime
may be confronted with renewed labor strife.
Secret
ALA LAR 84-015
10 August 1984
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
,3ecret
Brazil: Shaky Prospects for
Government Party
The government's Democratic Social Party (PDS),
created under another name 19 years ago as a prop
for the military regime, has fallen on hard times.
With its constituency badly eroded and its leadership
riven by dissent, the party's presidential candidate
could lose the indirect election next January. Even if
its nominee wins, the PDS will be an anachronism
under a liberalized, civilian government next year and
is likely to break up, leading to an eventual
restructuring of Brazil's political spectrum
A Party in Decline
The PDS-following defeats in key gubernatorial,
legislative, and municipal elections two years ago-
has continued to lose public support. A recent poll in
an important southern state indicated that only 15
percent of the electorate preferred the PDS, compared
with 25 percent in another poll in the same region a
year ago. One PDS congressman told the US
Embassy that, if state elections were held now, the
party would lose 10 of the 13 state governments it
presently controls. In an atmosphere of political
liberalization, notes the Embassy, the PDS suffers
from its image as the most conservative of the five
legal parties and from its identification with the failed
economic and social policies of the lameduck military
regime.
Under the military's political liberalization program,
the loyal constituency of the PDS-which previously
included many middle-class and urban voters-has
narrowed to Brazil's most backward regions and
politically unaware social groups. The US Embassy
reports, for example, that, although the party still
retains some support among conservative-to-moderate
groups throughout the country, it now relies mainly
on rural areas in the impoverished northeast, where
landowning bosses trade peasant votes for pork-barrel
economic assistance and other favors.
The PDS has been further weakened by successive
factional splits over specific issues, according to US
Embassy and press reports. Last year, dissident PDS
legislators rebelled against the party tradition of
rubberstamping the leadership's proposals and
demanded both a larger role in policymaking and a
greater share of patronage. To underscore their point,
they helped to repeal two of the administration's
wage-restraint laws. Early this year, another dissident
group joined the widespread public clamor for direct
presidential elections, against the government's
wishes.
Beyond this, PDS members-like those of most
Brazilian parties-generally lack commitment, and
many are willing to switch to another party.
Grassroots organization is weak, according to the US
Embassy, and members tend to view the party as an
artifice created by the government for its own
purposes. A survey of congressmen late last year
indicated that, because of these problems and internal
squabbles, over half of the PDS legislators wanted to
change parties.
The PDS Presidential Candidate
The most divisive issue now confronting the PDS is
the nomination of its presidential candidate. Federal
Deputy Paulo Maluf, despite bitter opposition from
President Figueiredo and some other PDS leaders, has 25X1
led in the race for the party nomination for months
because of his adroit use of political favors. According
to the US Embassy, at least half of the PDS members
of both congressional houses support Maluf, even
though none of the party's state governors and only
half of its congressional leaders do.
The Embassy
reports, however, that Maluf's lead has been eroding
and an upset victory by the other remaining
contender, Interior Minister Andreazza, is still 25X1
possible. 25X1
Secret
ALA LAR 84-015
10 August 1984
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Secret
The battle for the nomination has provoked an open
split among PDS leaders, some of whom view Maluf
as aggressive, corrupt, and unpopular with the general
public. When prospective voters in seven large cities
were asked last month to indicate a preference among
the three leading presidential contenders-including
one from the opposition-fewer than 13 percent
picked Maluf. Efforts by some party leaders to hold a
primary election to select a more attractive candidate
were defeated by Maluf supporters in June, which,
according to the US Embassy, prompted two party
presidents to resign one after the other.
Anti-Maluf sentiment is so strong that some
prominent PDS politicians probably will vote for an
opposition candidate in the electoral college. Last
month, according to the US Embassy, two of the
party's presidential aspirants-including Vice
President Chaves-announced that they would forgo
their candidacies, boycott the convention, and form a
dissident Liberal Front. The Embassy reports that
Chaves's group appears to include as many as 63 of
the 361 PDS electors. They have agreed to support
Minas Gerais State Governor Tancredo Neves-the
likely opposition nominee-in the electoral college.
Some PDS governors who back Andreazza also have
indicated publicly that they will vote with the
opposition if Maluf receives the PDS nomination. F
PDS Prospects in the Election and Beyond
As a result of the disarray in the PDS, its control of
the electoral college-which once seemed assured-
now appears uncertain. The US Embassy recently
estimated that, in a two-man race between Maluf and
Neves, defections across party lines could drastically
reduce the PDS's nominal 36-vote majority in the
686-member electoral college. The new party
president, a Maluf supporter, has admitted publicly
the possibility of defeat.
The PDS nominee's chances in the electoral college,
we judge, will hinge on attracting some votes from the
opposition to compensate for the likely loss of PDS
electors. The US Embassy notes that the secret
balloting in the electoral college will make it difficult
for party leaders to maintain unity behind their
preferred candidates. Maluf could be expected to use
his formidable political skill to woo wavering electors
and keep his PDS support intact. Andreazza probably
would be less successful in such an effort. Neves-
another veteran political horsetrader-will strive to
hold together a crazy-quilt coalition of opposition
groups. At least 15 to 20 opposition members are
susceptible to PDS blandishments, according to the
US Embassy.
In view of the debilitating factionalism among the
present political groups, their lack of programmatic
consistency, and past Brazilian practice, we and many
local observers expect a general restructuring of
parties over the next two years in preparation for
congressional elections in 1986. After a civilian
administration takes office next year, the PDS is
likely to splinter or be replaced by a new, more
broadly based political party. We believe that, if
Maluf is elected, he will need to improve his public
image to function effectively as president, and will
thus move to muster popular support for his
administration by attempting to form a more unified,
representative party. Finally, the PDS dissidents,
according to a knowledgeable US Embassy
informant, may merge after the election with
substantial opposition elements to form a new
majority party.
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Secret
Bonn's New Activism
West Germany-Latin America:
Chancellor Helmut Kohl's tour of Mexico and
Argentina has sparked his interest in Latin American
affairs. His statements during the trip suggest his
enthusiasm could generate greater West German
activity in the area. Agreements reached during visits
to Bonn by Central American leaders earlier this
summer suggest that this new surge of interest will
focus principally on the area's social and economic
development. In political terms, we expect Bonn to
become somewhat more supportive of US policy in the
region although it will continue to endorse regional
solutions, such as the Contadora initiative. Bonn's
role, however, will be limited by economic constraints
and public opinion.
Kohl's Visits
West German officials recently told US diplomats
that they consider the Chancellor's tour in July a
great success,
Kohl is now looking for ways in which the West
Germans can assist those countries on their paths
toward democracy and a better economic
performance. In Argentina, he claimed that Bonn
would act as "Latin America's sponsor" in the
European Community and publicly endorsed the
Argentines' desire to renegotiate their sizable foreign
debt. In Mexico, Kohl lauded the government's efforts
to improve its credit standing and called for increased
foreign investment there. West Germany is already
the second-largest foreign investor in Mexico after the
United States.
fulfill the commitments made to creditors.
Stern 25X1
Not all of Kohl's pronouncements were laudatory,
however. West Germany's approximately $4 billion in
loans to Argentina-the most extensive after the
United States and Great Britain-very likely
prompted his comments that Buenos Aires should
reach an agreement with the IMF before expecting
new investments from abroad. He also pointed out
that the first step in overcoming a financial crisis is to
Yet, on balance, Kohl appears to have emphasized the
positive, recognizing the need for leaders like
Argentina's Alfonsin to score some economic
successes in order to maintain the momentum of
democratization. US officials report that Kohl
accepted the argument that Argentina, as a leader in
Latin America, can set an example for others.
Secret
ALA LAR 84-015
10 August 1984
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
Secret
Central American Visitors
In addition to Kohl's tour, West Germany officially
received two important visitors from Central
America-Presidents Duarte of El Salvador and
Monge of Costa Rica. Kohl's Christian Democrats
had assisted Duarte and his party throughout El
Salvador's presidential campaign, largely through the
party's Konrad Adenauer Foundation, and the
invitation that was sent after Duarte's victory came as
a surprise to few. During his visit from 16 to 19 July,
Duarte succeeded in winning final approval for a
resumption of West German development aid,
suspended since 1979. US officials in Bonn report that
Economic Aid Minister Warnke will travel to San
Salvador in September to sign the formal agreement.
Bonn has justified the resumption of government-to-
government aid of $18 million by pointing to the
successful elections in El Salvador and by endorsing
Duarte's goals of negotiated peace, an end to human
rights abuses, and social reform.
The visit by President Monge in June offered Bonn
another opportunity to show its support for Latin
American democracy. Over the past five years, Costa
Rica has received more West German aid than any
other state in the region, approximately $40 million.
US officials note that the program has never
encountered serious obstacles, largely because of the
country's well-established democratic institutions.
Foreign Minister Genscher announced that he would
attend a proposed meeting of foreign ministers from
the European Community and Central America in
San Jose this September, an idea he is generally
believed to have originated.
The Implications
We believe that Kohl's tour and the Duarte and
Monge visits point to a more active West German
effort in Latin America. We expect that Bonn, while
focusing its efforts on social and economic
developments, will also be somewhat more supportive
of US regional policies. West German officials
appreciate US interests in the hemisphere, especially
in Central America, and they recognize that a US
role is imperative if solutions for the area's problems
are to be found. The West Germans do not want to
see Washington become so preoccupied with Latin
America, however, that it neglects its European
interests. As a result, in our judgment, Bonn would
like to supplement US efforts by offering additional
economic aid. West German officials continue to
believe that social injustice and slow economic
development underlie the region's political instability.
They often express concern that Washington appears
to neglect this aspect and concentrates on Soviet
meddling instead.
budget deficit.
The Domestic Framework
It would be much easier for Bonn to sell a new
activism to the public if it could work more
extensively through the European Community. Even
if this hurdle can be gotten over, however, we believe
that domestic constraints will require the Kohl
government to move cautiously, particularly in
Central America. Bonn simply cannot afford to
expand foreign aid significantly when domestic
programs continue to be pared back to reduce the
Latin American developments, however, still capture
the popular imagination in West Germany. US
officials note that Chancellor Kohl's new enthusiasm
is matched by that of the public in general. Much of
this interest focuses on human rights abuses, which-
in turn-has often led to criticism of perceived US
support for regimes involved in such abuses.
Moreover, the West Germans apply a higher moral
standard to Western-and especially US-actions in
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Secret
We believe that, although the Kohl government would
like to offer more substantial support for US policy, it
will find it easier to emphasize regional efforts to
arrive at a negotiated solution. Nevertheless, recent
favorable developments, such as the elections in El
Salvador and Argentina, may permit West Germany
to take measured steps in support of specific US
efforts.
The Nicaraguan and Salvadoran Examples
Nicaragua and El Salvador provide examples of both
the continuity and change in West German attitudes.
Many West Germans oppose US policy toward
Nicaragua-particularly sponsorship of the anti-
Sandinista guerrillas-as a throwback to an era when
the United States either supported dictators like
Somoza or undermined professed reformers like the
Guatemalan Arbenz. The Sandinista revolution still
holds a romantic attachment for leftist intellectuals in
West Germany, while others have not given up hope
that Managua can be brought back to the published
that spoke out against Duarte during his visit.
radical groups in West Germany, such as the Greens,
We believe the democratization process under way in
El Salvador-and possibly the lack of the same in
Nicaragua-are changing attitudes in West
Germany. We expect, therefore, that similar
developments elsewhere in Latin America will make it
easier for Bonn to assist the region's social and
economic progress as a part of a more general support
for US policy in Latin America
25X1
25X1
25X1
goals of the 1979 revolution.
Attitudes toward El Salvador appear to be changing,
however, and US officials note that even the Social
Democrats have soured on the insurgent opposition. In
particular, the guerrillas' attempt to disrupt the
electoral process in El Salvador has convinced leading
Social Democrats that the insurgent movement is not
to be trusted. Press reports also note that it was only
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
secret
Guyana's Military.
Key to Stabilit
Guyana's military establishment has become, in the
Caribbean context, a relatively well-trained and
-equipped force on which the charismatic Forbes
Burnham depends for political survival. The military,
which still retains some British traditions, is almost
exclusively Afro-Guyanese, and over half the general
population is of East Indian descent. Although no
match for the Venezuelans or Brazilians, the force is
capable of protecting Burnham from any domestic
threat as long as it chooses to do so.
Over the years, Burnham has ensured the military's
loyalty by providing pay raises, scarce foods, and
other benefits. There is increasing evidence, however,
that the country's severe economic problems are now
beginning to cause considerable dissent within all
ranks. Signs of discontent over the growing
politicization of the military and the increasing
influence of Soviet Bloc countries have also been
noted.
The Guyana Defense Force
The Guyana Defense Force (GDF) consists of an
army, navy, and Air Corps with a fully mobilized
strength of about 6,400. According to the Embassy,
the army accounts for some 65 percent of this total,
with an estimated 2,850 regular troops and at least an
equal number of reserves. The small Air Corps and
navy are estimated by the Embassy to have a
minimum of 300 and 200 personnel, respectively, and
a maximum combined strength of 900.
The Guyana Defense Force was created in 1966 when
the indigenous colonial forces of British Guiana were
turned over intact by the United Kingdom upon
Guyana's independence. Almost all GDF officers
currently above the rank of lieutenant colonel were
trained by the British, and are judged by the Embassy
to be highly competent, well-trained professionals.
The British have maintained their military training
relationship with the GDF, and, since the early 1970s,
GDF field officers have also received training in
Cuba, East Germany, and North Korea.
The army includes one infantry brigade with an
estimated 2,250 men and women, the beginnings of a
second brigade with 450 to 600 personnel, and a
special forces battalion of unknown strength. Most of
the GDF first brigade is stationed in the vicinity of
Georgetown, and company-size units are rotated on a
periodic basis to remote outposts in the interior and
along the disputed border with Venezuela. When the
second brigade is activated, it probably will be
headquartered at Makouria, near the confluence of
the Essequibo, Mazaruni, and Cuyuni Rivers,
according to the Embassy. The headquarters of the
special forces battalion is probably colocated with the
first brigade headquarters at Timehri International
Airport, south of Georgetown.
The GDF has a relatively large inventory of weapons
supplied by Brazil, North Korea, Yugoslavia, Cuba,
:25X1
Britain, and the United States Guyana has 25X1
also approached the USSR and East Germany for
arms, but so far has apparently been unsuccessful.
The army is equipped with British and Brazilian
armored cars, and a wide variety of heavy artillery
and antiaircraft guns.
According to the Embassy, the Air Corps has more
pilots than aircraft. Its aircraft inventory includes
nine Bell helicopters-six of which are probably
Secret
ALA LAR 84-015
10 August 1984
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
secret
operational-six Brettan Norman Islander transports,
one Beech King Air, and one Skyvan cargo aircraft. It
also can requisition light transport aircraft from
Guyana Airways. These unarmed aircraft are used to
ferry GDF personnel between posts in the interior and
for medical evacuation. According to the Embassy,
Guyana has contracted to buy two EMB-111 armed
reconnaissance aircraft from Brazil to be used for
paradrops and marine patrols.
The Embassy estimates that there are almost 100
unimproved airstrips under 2,500 feet long in Guyana,
but only three or four asphalted strips longer than
3,000 feet. With the exception of the few all-weather
strips, none of these facilities is equipped with beacons
or night navigation equipment. This would severely
restrict GDF resupply operations due to the lack of
night navigational equipment in addition to the lack
of spare parts and qualified maintenance technicians.
Guyana's navy primarily provides limited maritime
support to the ground forces. It has one 103-foot
British Vosper-Thornycroft patrol boat armed with a
single 20-mm cannon and several crew-served 7.62-
mm machineguns, and three 40-foot Vosper-
Thornycroft fast patrol boats provided by the United
Kingdom in 1971. It also has two 30-foot East
German river patrol boats equipped with rocket
launchers, in addition to two North Korean patrol
boats. However, the North Korean vessels have had
engine problems since delivery in 1979. The navy also
utilizes a number of small motorboats to resupply
remote GDF outposts along Guyana's inland
waterways.
Paramilitary Forces
In a general mobilization, Guyana's paramilitary
forces would be incorporated into GDF line units.
These organizations include the Guyana People's
Militia, the Guyanese National Service, and the
Tactical Services Unit of the National Police. The
Embassy estimates that the People's Militia has a
strength of 1,200 to 1,500, but notes that it is poorly
organized and lacks discipline. The strength of the
National Service is unknown, but according to the
Embassy, some 1,000 to 2,000 young recruits are
selected annually for an 18-month basic training
program. Since 1975, an estimated 15,000 to 20,000
personnel have reportedly been trained by the
National Service-a significant manpower pool that
the GDF could call upon in a general mobilization.
The regular armed forces are short on training,
equipment, and leadership, however, and could absorb
few new men.
25X1
In a general mobilization, the Tactical Services Unit 25X1
of the National Police would be subordinated to the
GDF first infantry brigade. The unit is battalion-
size-500 to 800 men-organized and equipped
similarly to a light infantry battalion, whose primary
function is population control. 25X1
Burnham earlier this year replaced his 25X1
personal army bodyguards with police and set up a
paramilitary force within the police, which he
reportedly intends to use as a "private militia" if the
army should fail him. 25X1
25X1
Mechanisms of Control
In the early 1970s, growing dissent within the officer
corps over salary and other benefits culminated in the
formation of a committee of middle-level and senior
officers who presented a list of grievances to Prime
Minister Burnham. Burnham responded by increasing
salaries and providing other benefits. By 1975,
however, he began to remove or reassign to
inconsequential positions all of the officers involved in
the protest. He also instituted a mandatory course in
political indoctrination throughout the GDF and
required that all personnel swear a personal oath of
loyalty to him-a practice that has continued until
today. Burnham also personally approves all
promotions to field grade rank and appoints all senior 25X1
officers. 25X1
Another factor that has worked in Burnham's favor is
that the almost exclusively Afro-Guyanese military,
like Burnham, is dedicated to the preservation of its
dominance over the predominately East Indian
Guyanese population. The senior military leadership,
which includes the Chief of Staff, Brig. Norman
McLean, and the GDF Commander, Col. David
Granger, have thus far supported Burnham's policies.
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
Near-Term Outlook
The charismatic Burnham still enjoys the respect of
the military for his role in achieving Guyana's
independence, but this is rapidly eroding. Although
there does not yet appear to be any organized
opposition-either internal or external-the
likelihood of civil disorders in the near term is high.
According to the Embassy, the growing shortages of
food and other daily necessities, a spiraling crime
rate, and rapidly deteriorating social structure have
created an inflammatory situation. Burnham risks
losing what support he has among the military if he
does not act quickly to improve the plight of its
officers and men. He almost certainly, however,
cannot afford the further drain on an almost bankrupt
economy.
25X1
25X1
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85T01184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Secret
Latin America
Briefs
Rising salary costs triggered by labor unrest are eroding government finances and
reducing the chances for an IMF accord any time soon. After striking postal
workers won pay raises in early July, the Assembly approved substantial wage
hikes for all public employees. Another round of increases could follow if leftists
succeed in provoking additional public-sector strikes.
The new salary hikes and lower-than-expected tax revenues have pushed expected
internal borrowing needs well beyond the $130 million ceiling that the Fund
stipulated last year during unsuccessful loan negotiations. The rising deficit,
coupled with President Duarte's resistance to a devaluation, are dimming
prospects for an IMF loan this year. Instead, Duarte has begun to press for an
increase in El Salvador's US sugar quota and a relaxation of US insistence on
partial devaluation as a condition for economic assistance.
Dominican Republic Ties With the East
President Jorge Blanco's decision to formalize relations with Romania and
Hungary does not appear to signal any fundamental shift in the Dominican
Republic's basically pro-Western foreign policy. The US Embassy described Jorge
Blanco's move as a cautious followup to the establishment of relations with
Yugoslavia-the first Communist country recognized by Santo Domingo. The
announcement called for "promotion of multiple ties of mutual interest" and
hinted at greater cooperation in international forums. Nonresident ambassadors
are likely to be named soon
Political and economic considerations probably prompted the move. Declining
Western purchases of Dominican commodities and the country's falling foreign
exchange holdings have forced Jorge Blanco to look for ways to expand trade.
Santo Domingo earlier discussed barter arrangements with Romania, including
the exchange of Dominican sugar, coffee, and cacao for industrial goods. Jorge
Blanco also probably hopes a more activist foreign policy will enhance his image as
a statesman and distract public attention from the country's dismal economic
situation. He may think this gesture to the Bloc will fend off his leftist critics, but
he is keenly aware that the military and the business community would resist any
significant leftward tilt in Dominican policy.
21 Secret
ALA LAR 84-015
10 August 1984
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Guatemala Foreign Exchange Difficulties
Guatemala's rising budget deficit-which in June prompted the IMF to suspend
its standby agreement-is putting heavy pressure on the government's meager
foreign exchange holdings. Foreign Minister Andrade recently secured from
Mexico credits for oil purchases even more generous than those granted under the
San Jose Accord. Nevertheless, a local oil industry official reports that the
government is considering the imposition of fuel rationing.
Meanwhile, Guatemalan officials took a small step toward devaluation by quietly
authorizing coffee and cotton exporters to sell some of their earnings in the black
market. This move will do little to ease the immediate foreign exchange shortage,
however, and will spur demands from other exporters for similar treatment.
Moreover, official acceptance of dual exchange rates technically violates
Guatemala's standby agreement with the IMF and could make it harder for the
government to reach an accommodation with the Fund.
Trinidad and Tobago Seeking IMF Help
Trinidad and Tobago, hard hit by the slack world oil market-petroleum and
related products account for 90 percent of Trinidadian exports-will soon seek
financial relief from the IMF,
Meanwhile, the government has instituted some limited austerity measures, such
as cuts in consumer subsidies and public jobs in an attempt to accustom the public
to belt tightening before any IMF-mandated adjustments are put into place. The
government hopes this gradual approach will minimize any political backlash
engendered by the anticipated IMF accord. Port-of-Spain also hopes that under
IMF tutelage the economy will improve in time to create a more favorable political
climate for the 1986 general elections.
Until oil prices nosedived in 1982, Trinidad was among the Caribbean's most
dynamic economic performers. As the wealthiest member of the Caribbean
Economic Community (CARICOM), Trinidad served as one of the largest local
markets for regionally produced goods and provided substantial aid to the
Community. Since 1982, however, Trinidad's deteriorating economic position has
sharply curtailed its economic largess.
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
 Se;mt.
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8
Secret
Sanitized Copy Approved for Release 2011/03/22 : CIA-RDP85TO1184R000201050001-8