THE NICARAGUAN PEACE PROCESS: A DOCUMENTARY RECORD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M00539R001802760013-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 33
• Document Creation Date: December 22, 2016
• Document Release Date: September 15, 2009
• Sequence Number: 13
• Publication Date: April 1, 1985
• Content Type: REPORT

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The Nicaraguan
Peace Process:
A Documentary Record
April 1985
United States Department of State
Bureau of Public Affairs
Washington, D.C.
w
EXEC REG
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8
Initial Regional Support
8
President Duarte of El
2
The Contadora Framework
Salvador, April 4, 1985
2
Contadora Document of Objec-
tives, September 9, 1983
8
President Betancur of Colom-
bia, April 5 and 7, 1985
3
Nicaraguan Calls for Dialogue
8
President Suazo of Honduras,
1985
April 8
3
Pastoral Letter on Reconcilia-
,
tion From the Nicaraguan
Bishops, April 22, 1984
9
President de la Madrid of
Mexico, April 8, 1985
4
Statement of the Coordinadora
9
President Barletta of Panama,
Democratica Nicaraguense,
April 10, 1985
February 22, 1985
9
President Lusinchi of
5
Document on National Dialogue
Venezuela, April 10, 1985
of the Nicaraguan Resistance,
9
President Febres Cordero of
March 1, 1985
Ecuador, April 10, 1985
6
Communique of the Nicaraguan
9
President Monge of Costa Rica,
Episcopal Conference,
April 10, 1985
March 22, 1985
9
President Alfonsin of Argen-
tina, April 11, 1985
7
President Reagan's Proposal
7
Remarks by President Reagan,
9 Chronology
April 4, 1985
10
Additional References
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The Contadora process had as one of its
agreed objectives "to promote national
reconciliation efforts wherever deep divi-
sions have taken place within society,
with a view to fostering participation in
democratic political processes."
Nicaragua is one of the signatories.
An internal dialogue to promote na-
tional reconciliation has been a central
feature of President Duarte's policy in
El Salvador, where four competitive na-
tionwide elections have been held in 3
years.
The establishment of an effective
dialogue for national reconciliation has
been a critical necessity in Nicaragua
ever since the failure to establish a
working democracy, perhaps the fun-
damental objective of the revolution
against the Somoza dictatorship.
This special report provides basic
documentation concerning the
Nicaraguan peace process, including the
Contadora framework, the proposals of
the Nicaraguan Catholic bishops and the
various opposition groups, and the posi-
tions taken since by President Reagan
and leaders in the region itself.
The Contadora Framework
The Contadora negotiations involve five
Central American countries (Costa Rica,
El Salvador, Guatemala, Honduras, and
Nicaragua) and the four members of the
Contadora Group (Colombia, Mexico,
Panama, and Venezuela).
The text of the basic negotiating ob-
jectives agreed to by all nine Contadora
countries is reprinted below. Three of
the 21 objectives deal with the centrality
of democracy and internal reconciliation
to the resolution of conflict in Central
America.
Contadora Document of Objectives'
Considering:
The situation prevailing in Central
America, which is characterized by an
atmosphere of tension that threatens
security and peaceful coexistence in the
region, and which requires, for its solu-
tion, observance of the principles of in-
ternational law governing the actions of
States, especially:
The self-determination of peoples;
Non-intervention;
The sovereign equality of States;
The peaceful settlement of disputes;
Refraining from the threat or use of
force;
Respect of the territorial integrity of
States;
Pluralism in its various manifesta-
tions;
Full support for democratic institu-
tions;
The promotion of social justice;
International co-operation for
development;
Respect for and promotion of human
rights;
The prohibition of terrorism and
subversion;
We want to help opposition
groups join the political proc-
ess in all countries and com-
pete by ballots instead of
bullets.
President Reagan,
April 27, 1983
The desire to reconstruct the Cen-
tral American homeland through pro-
gressive integration of its economic,
legal and social institutions;
The need for economic co-operation
among the States of Central America so
as to make a fundamental contribution
to the development of their peoples and
the strengthening of their independence;
The undertaking to establish, pro-
mote or revitalize representative,
democratic systems in all the countries
of the region;
The unjust economic, social and
political structures which exacerbate the
conflicts in Central America;
The urgent need to put an end to
the tensions and lay the foundations for
understanding and solidarity among the
countries of the area;
The arms race and the growing
arms traffic in Central America, which
aggravate political relations in the
region and divert economic resources
that could be used for development;
The presence of foreign advisers and
other forms of foreign military in-
terference in the zone;
The risks that the territory of Cen-
tral American States may be used for
the purpose of conducting military
operations and pursuing policies of
destabilization against other&If'
The need for concerted political ef-
forts in order to encourage dialogue and
understanding in Central America,
avert the danger of a general spreading
of the conflicts, and set in motion the
machinery needed to ensure the peaceful
coexistence and security of their
peoples;
Declare their intention of
achieving the following objectives:
To promote detente and put an end
to situations of conflict in the area,
restraining from taking any action that
might jeopardize political confidence or
obstruct the achievement of peace,
security and stability in the region;
To ensure strict compliance with the
aforementioned principles of interna-
tional law, whose violators will be held
accountable;
To respect and ensure the exercise of
human, political, civil, economic, social,
religious and cultural rights;
To adopt measures conducive to the
establishment and, where appropriate,
improvement of democratic, represent-
ative and pluralistic systems that will
guarantee effective popular participation
in the decision-making process and en-
sure that the various currents of opinion
have free access to fair and regular elec-
tions based on the full observance of
citizens' rights;
To promote national reconciliation
efforts wherever deep divisions have
taken place within society, with a view to
fostering participation in democratic
political processes in accordance with the
law;
To create political conditions in-
tended to ensure the international
security, integrity and sovereignty of the
State of the region;
To stop the arms race in all its
forms and begin negotiations for the
control and reduction of current stocks
of weapons and on the number of armed
troops;
To prevent the installation on their
territory of foreign military bases or any
other type of foreign military in-
terference;
To conclude agreements to reduce
the presence of foreign military advisers
and other foreign elements involved in
military and security activities, with a
view to their elimination;
To establish internal control
machinery to prevent the traffic in arms
from the territory of any country in the
region to the territory of another;
To eliminate the traffic in arms,
whether within the region or from out-
side it, intended for persons, organiza-
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tions or groups seeking to destabilize the
Government's of Central American coun-
tries;
To prevent the use of their own ter-
ritory by persons, organizations or
groups seeking to destabilize the
Governments of Central American coun-
tries and to refuse to provide them with
or permit them to receive military or
logistical support;
To refrain from inciting or support-
ing acts of terrorism, subversion or
sabotage in the countries in the area;
To establish and co-ordinate direct
communication systems with a view to
preventing or, where appropriate, set-
tling incidents between States of the
region;
To continue humanitarian aid aimed
at helping Central American refugees
who have been displaced from their
countries of origin, and to create
suitable conditions for the voluntary
repatriation of such refugees, in con-
sultation with or with the co-operation
of the United Nations High Commis-
sioner for Refugees (UNHCR) and other
international agencies deemed ap-
propriate;
To undertake economic and social
development programs with the aim of
promoting well being and an equitable
distribution of wealth;
To revitalize and restore economic
integration machinery in order to attain
sustained development on the basis of
solidarity and mutual advance;
To negotiate the provision of exter-
nal monetary resources which will pro-
vide additional means of financing the
resumption of intra-regional trade, meet
the serious balance-of-payments prob-
lems, attract funds for working capital,
support programs to extend and restruc-
ture production systems and promote
medium- and long-term investment
projects;
To negotiate better and broader ac-
cess to international markets in order to
increase the volume of trade between
the countries of Central America and
the rest of the world, particularly the in-
dustrialized countries; by means of a
revision of trade practices, the elimina-
tion of tariff and other barriers, and the
achievement of the price stability at a
profitable and fair level for the products
exported by the countries of the region;
To establish technical co-operation
machinery for the planning, program-
ming and implementation of multi-
sectoral investment and trade promotion
projects.
The Ministers for Foreign Affairs of
the Central American countries, with
the participation of the countries in the
Contadora Group, have begun negotia-
tions with the aim of preparing for the
conclusion of the agreements and the
establishment of machinery necessary to
formalize and develop the objectives con-
tained in this document, and to bring
about the establishment of appropriate
verification of monitoring systems. To
that end, account will be taken of the
initiatives put forward at the meetings
convened by the Contadora Group.
Panama City, 9 September 1983
Nicaraguan Calls for Dialogue
The peace process in Nicaragua is
framed by the four documents excerpted
below.
The Nicaraguan bishops' 1984
Easter Pastoral took stock of the
worsening conflict inside Nicaragua and
its spillover into neighboring countries in
Central America. The bishops called for
a dialogue among "all Nicaraguans in-
side and outside the country ... [in-
cluding] Nicaraguans who have taken up
arms against the government."
After the elections of November 4,
1984, had failed to provide either free
competition or reconciliation, the inter-
If Managua proves responsive
to serious negotiations, hopeful
vistas open up for the
beleaguered peoples of Central
America, including those of
Nicaragua.... We prefer to
resolve the conflicts in the
region peacefully.
National Bipartisan
Commission
on Central America,
January 10, 1984
nal political resistance-in a February
statement issued by the Coordinadora
Democratica Nicaraguense-reaffirmed
its interest in genuine dialogue.
While some resistance leaders,
notably Sandinista hero Eden Pastora,
continued to stress the need for armed
struggle as the only way to end the
betrayal of the revolution to the Soviet
Union and Cuba, important leaders from
both the political and the armed
resistance came together to call for
dialogue in a joint statement signed in
San Jose, Costa Rica, on March 1, 1985.
On March 22, the Bishops' Council
then reemphasized its availability to
mediate among all Nicaraguans without
exception or favoritism.
Pastoral Letter on Reconciliation
From the Nicaraguan Bishops,
April 22, 1984
To the priests and deacons in our
dioceses:
To members of religious orders:
To catechists and bearers of the
Word:
To our brothers and sisters in the
apostolic lay movements:
To principals, teachers, and students
in Catholic schools:
To all our beloved faithful:
Grace and peace from God our
Father and Jesus Christ our Lord.
Dear brothers and sisters:
At this solemn Easter celebration,
the ultimate expression of God's love for
mankind through the redemption, we in-
vite you to share more fully in the
spiritual wealth of the Holy Year, which
will be extended in Nicaragua by a
special concession from Pope John
Paul II until June 17, 1984, the feast of
the Holy Trinity.
This extension and the urgent need
in our society for sincere and brotherly
reconciliation through individual conver-
sion have moved us to send you this
exhortation....
1. The Problem of Sin in the World
Pope John Paul II, in his message
for the 17th World Day of Prayer for
Peace on January 1, 1984, expressed his
concern about the current world situa-
tion, a concern which we, too, share:
"Peace is truly precarious, and injustice
abounds. Relentless warfare is occurring
in many countries, continuing on and on
despite the proliferation of deaths,
mourning, and destruction, without any
apparent progress toward a solution. It
is often the innocent who suffer, while
passions become inflamed and there is
the risk that fear will lead to an extreme
situation."
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2. In Nicaragua
A. Belligerent Situation:
Our country, too, is plagued by a
belligerent situation pitting Nicaraguan
against Nicaraguan, and the conse-
quences of this situation could not be
sadder:
? Many Nicaraguan youths and men
are dying on the battlefields.
? Many others look toward the
future with the fear of seeing their own
lives prematurely ended.
? A materialistic and atheistic
educational system is undermining the
consciences of our children.
? Many families are divided by
political differences.
? The suffering of mothers who
have lost their children, which should
merit our great respect, is instead ex-
ploited to incite hatred and feed the
desire for vengeance.
? Farmworkers and Indians, for
whom the Church reserves a special
love, are suffering, living in constant
anxiety, and many of them are forced to
abandon their homes in search of a
peace and tranquility that they do not
find.
? Some of the mass media, using
the language of hate, encourage a spirit
of violence.
III. RESPONSE OF THE CHURCH
1. Conversion and Reconciliation....
2. Confession: the path to
conversion....
3. Dialogue:
The road to social peace is possible
through dialogue, sincere dialogue that
seeks truth and goodness. "That
[dialogue] must be a meaningful and
generous offer of a meeting of good in-
tentions and not a possible justification
for continuing to foment dissension and
violence." (John Paul II, Greeting to
Nicaragua, March 4, 1983)
ness to respect and harmony, in a
climate conducive to true and 4 bjective
deliberation on our problems and a pru-
dent search for solutions. The solution is
reconciliation (cf. John Paul II, Peace
and Reconciliation. Address by the Pope
in El Salvador, March 6, 1983).
If we are not open to objective
acknowledgement of our situation and
the events that distress our people
ideologically, politically, and militarily,
then we are not prepared, in a true and
Christian way, for reconciliation for the
sake of the real, living wholeness of our
nation.
Considering that freedom of speech
is a vital part of the dignity of a human
B. The Church:
One, albeit small, sector of our
Church has abandoned ecclesiastical
unity and surrendered to the tenets of a
materialistic ideology. This sector sows
confusion inside and outside Nicaragua
through a campaign extolling its own
ideas and defaming the legitimate
pastors and the faithful who follow
them. Censorship of the media makes it
impossible to clarify the positions and
offer other points of view.
being, and as such is indispensable to
If we do not sit down to talk,
to try to find solutions to our
problems in civilized ways,
with talks ... the flow of blood
will continue... .
Archbishop of Managua
Obando y Bravo,
April 7, 1985
the well-being of the nation inasmuch as
a country progresses only when there is
freedom to generate new ideas, the right
to free expression of one's ideas must be
recognized.
The great powers, which are in-
volved in this problem for ideological or
economic reasons, must leave the
Nicaraguans free from coercion....
Done at Managua, April 22, Easter
Sunday, 1984 (to be read and published
It is dishonest to constantly blame
internal agression and violence on
foreign agression.
It is useless to blame the evil past
for everything without recognizing the
problems of the present.
All Nicaraguans inside and outside
the country must participate in this
dialogue, regardless of ideology, class,
or partisan belief. Furthermore, we
think that Nicaraguans who have taken
up arms against the Government must
also participate in this dialogue. If not,
there will be no possibility of a settle-
ment, and our people, especially the
poorest among them, will continue to
suffer and die.
Foreign powers take advantage of The dialogue of which we speak is
our situation to encourage economic and not a tactical truce to strengthen posi-
ideological exploitation. They see us as tions for further struggle but a sincere
support for their power, without respect effort to seek appropriate solutions to
for our persons, our history, our culture, the anguish, pain, exhaustion, and
and our right to decide our own destiny. fatigue of the many, many people who
Consequently, the majority of the long for peace, the many, many people
Nicaraguan people live in fear of their who want to live, to rise from the ashes,
present and uncertainty of their future..., to see the warmth of a smile on a child's
They feel deep frustration, clamor for face, far from terror, in a climate of
peace and freedom. Yet their voices are democratic harmony.
not heard, muted by belligerent prop- The terrible chain of reactions in-
aganda on all sides.... herent in friend-enemy dialectics is
halted by the word of God, who
demands that we love even our enemies
and that we forgive them. He urges us
to move from distrust and aggressive-
in the usual manner), Episcopal Con-
ference of Nicaragua.
Pablo A. Vega
Bishop of Juigalpa
President
Miguel Obando Bravo
Archbishop of Managua
Leovigildo Lopez Fitoria
Bishop of Granada
Salvador Schlaeffer B.
Bishop of Bluefields
Pedro L. Vilchez V.
Prelate of Jinotega
Bosco Vivas Robelo
Assistant Bishop of Managua
Secretary
Julian Barni
Bishop of Leon
Ruben Lopez Ardon
Bishop of Esteli
Carlos Santi
Bishop of Matagalpa
Statement of the Coordinadora
Democratica Nicaraguense,
February 22, 1985
The Coordinadora Democratica
Nicaraguense (Nicaraguan Democratic
Coordinating Board) wishes to make the
following known to the people of
Nicaragua and the free peoples of the
world:
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The situation in Nicaragua is
deteriorating daily and has reached a
state of true anguish. The people are
suffering because there is a shortage of
food and the salaries are low; there is no
work, no medicine, no gasoline, no
candles, no toilet paper, no toothpaste,
no spare parts. The people are suffering
because their children are receiving an
education that can be more accurately
described as Marxist-Leninist political
indoctrination. Day and night, young
people live with the fear that they will
be unexpectedly detained and sent to
perform military service in which they
do not believe because it is identified
with the interests of the party. Conse-
quently, some choose to leave Nicaragua
and others join the ranks of the armed
resistance.
Just as our 1978-79 civil war was
basically the result of the political in-
transigence of the Somoza dictatorship,
the current civil war, and most of the
other evils afflicting the Nicaraguan peo-
ple, are basically the result of the intran-
sigence of the FSLN [Sandinista Na-
tional Liberation Front], which has
adopted a Marxist-Leninist program and
departed from the original plan. Approx-
imately six years under the FSLN
government have shown that it has not,
to date, brought about liberation, as its
name suggests, but rather burdens and
subjugation.
... A successful solution will not be
attained piecemeal or through separate
dialogues involving the government and
the farmers, the government and the
cattle ranchers, or the government and
the labor sector or even from dialogues
with foreign governments. A compre-
hensive, fundamental solution [could]
come about through a consensus be-
tween all Nicaraguans on a political,
social, economic, moral, and human pro-
gram for a new Nicaragua based on
democracy sustained in freedom.
... We know that the number of
citizens who no longer expect anything
from such a civilized solution is con-
tinually growing because previous at-
tempts at dialogue have shown that
when the FSLN suggests such a course
of action it is doing so, not with the
honest desire to negotiate, but rather
for the sole purpose of simulating
democratic forms of government for
foreign consumption. Nevertheless, we
believe that there is still a way to bring
about the honest, sincere, and effective
dialogue that we are seeking and we
suggest that the most promising way to
bring it about would be to have it con-
voked, organized, and coordinated by
the Episcopal Conference of Nicaragua.
It shares the people's suffering and their
yearning for freedom, which has
strengthened its moral authority, and it
enjoys the absolute confidence of all sec-
tors.
We therefore respectfully invite the
Episcopal Conference of Nicaragua to
convoke such a dialogue without delay,
providing for the representation of all
Nicaraguans. In addition we request of
the bishops that the dialogue sponsored
by them be attended by guarantors
whose presence would endorse the com-
mitments made to the Nicaraguan peo-
ple.
An honest desire to hold such a
dialogue should be demonstrated in ad-
vance by halting armed actions and lift-
ing the state of emergency for a
reasonable period of time during which
the dialogue should produce results;
through a decree providing for general
amnesty as well as complete and effec-
tive pardons; and through absolute
respect for freedom of expressions,
association, and assembly, as well as the
rights set forth in the laws on amparo
and habeas corpus....
The anguish, the misery, the uncer-
tainty, and the frustration of the
Nicaraguan people all call for national
dialogue. Let us heed that call.
Document on National Dialogue
of the Nicaraguan Resistance,
March 1, 1985
We, democratic citizens, representatives
of all sectors of the Nicaraguan
Resistance, announce to the Nicaraguan
people, to the governments and peoples
of the Americas and of the world, the
following manifesto:
The Present Situation of Nicaragua
In recent years, the Sandinista Front
has submerged our people in a crisis
without precedent in our national
history.
At this time, the impact of this crisis
is evident in the economic, political,
social and moral spheres of the nation.
This situation is rooted both in the
abandonment of the original Program of
Government and the Fundamental
Statute as well as in the interference
of the Soviet bloc in our internal
affairs....
The solution to the national crisis
can only be found through a genuine
understanding among all Nicaraguans
that might end the civil war and lead to
the reconciliation of the Nicaraguan
family.
The proposal [of the opposition, issued on March 1] offers more
than a chance for national reconciliation. It lets Nicaraguans
remove their fate from foreign hands and restore it to
Nicaraguan hands alone.
Washington Post Editorial,
March 17, 1985
Members of the Coordinadora
Democratica Nicaraguense
CTN: Central de los Traba-
jadores Nicaraguenses
(Nicaraguan Workers
Central)
CUS: Confederacion de la
Unidad Sindical (Con-
federation of Labor Unity)
PLC: Partido Liberal Constitu-
cionalista (Liberal Con-
stitutionalist Party)
PSD: Partido Social
Democratico (Social
Democratic Party)
COSEP: Consejo Superior de la
Empresa Privada
(Superior Private Enter-
prise Council)
PSC: Partido Social Cristano
(Social Christian Party)
We wish to emphasize that this ini-
tiative is not taken to search for a quota
of power, but rather it seeks only to
establish in Nicaragua the rule of law
which will permit the people to live
in peace and to go about resolving our
problems within a new constitutional
order....
Therefore, in view of the gravity of
the moment, and conscious of our civic
responsibilities and of the urgent need to
save our people from greater suffering,
we accept the call of the Nicaraguan
Democratic Coordinating Board and
exhort the Sandinista Front, for the last
time, and in definitive and absolute
fashion, to participate in a national
dialogue which will end the national
crisis. This dialogue should follow these
modalities:
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Convocation
The Nicaraguan Bishops Conference is
the entity with the necessary moral
authority to organize and coordinate the
national dialogue. In this regard, we
reiterate the petition made to it by the
Democratic Coordinating Board to con-
vene the national dialogue.
Participants
In order that the dialogue be efficient
and produce the desired results, it is
necessary to structure it in accordance
with Nicaraguan reality. There are two
political tendencies in Nicaragua: the
totalitarian one which for the moment
has accepted the Sandinista Front as its
sion of armed activities, with a ceasefire
in situ; lifting of the state of emergency;
absolute freedom of expression and
assembly; general amnesty and pardon
for political crimes and related crimes;
entry into effect of the right of protec-
tive legal procedure (amparo) and habeas
corpus, adding the granting of full pro-
tection of the physical and moral integri-
ty of those members of the resistance
who participate in the dialogue, in the
event that it should take place in
Nicaragua.
The application of these measures
should be carried out under the supervi-
sion of the guarantor governments.
Wide possibilities are opening up for a political solution with the
participation of all the sectors of the Nicaraguan population. The
example that President Jose Napoleon Duarte gave when he ac-
cepted dialogue in El Salvador is relevant to the current
Nicaraguan picture.
Carlos Andres Perez,
Vice President of the Socialist
International and former
President of Venezuela,
January 6, 1985
vanguard, and the democratic one which
is divided into armed organizations and
civilian organizations; therefore, the
dialogue should be between these two
political tendencies so that both can
name their respective delegates, as
many as the Bishops Conference feels is
appropriate.
Observers and Guarantors
We suggest to the Bishops Conference
that it request the participation of the
Central American governments in the
dialogue as guarantors of the
agreements which may be reached,
given the fact that our fellow Central
Americans are, in the final analysis,
those which have been most directly af-
fected by the Nicaraguan crisis.
The presence of these governments
as guarantors in no way hinders the
presence as observers or even as
guarantors of other governments and
democratic entities of the American
continent.
Minimum Requirements
We support fully the minimum re-
quirements demanded by the Democratic
Coordinating Board in order to initiate
the national dialogue. They are: suspen-
Temporary Permanence of the
Executive
If this dialogue is carried out, we pledge
to accept that Mr. Daniel Ortega con-
tinue acting as head of the Executive
Branch until such time as the people
pronounce themselves in a plebiscite.
During this period, Mr. Ortega should
govern in fulfillment of the promises of
the Nicaraguan Revolutionary Govern-
ment Junta contained in the document
of July 12, 1979 transmitted to the
Secretary General of the Organization of
American States, and in fulfillment of
the original Program of Government,
the Fundamental Statute and the
American Human Rights Convention or
Pact of San Jose....
Initiation of the National Dialogue,
Instrumentation and Deadlines
In order to carry out the national
dialogue proposed by the Democratic
Coordinating Board, on the basis of the
statements contained in this document,
and conscious of the Leninist tactic of
stalling in order to consolidate the
totalitarian program of the Sandinista
Front, said dialogue must begin by
March 20, 1985. This date cannot be
postponed. If by April 20, 1985 the na-
tional dialogue has not begun or has not
progressed in clear and subsCantial form,
it will be definitely suspended by the
Nicaraguan Resistance, thereby ter-
minating the possibilities for a peaceful
resolution of the national crisis.
If the Nicaraguan Bishops Con-
ference considers it useful to hold con-
versations with this group for purposes
of preparations leading to the speedy
realization of the dialogue, we announce
our immediate availability to participate
in such conversations. To that end we
appoint as our representatives Messrs.
Arturo J. Cruz, Alfonso Robelo and
Adolfo Calero.
May love for our fatherland over-
come selfishness and foreign involve-
ment, so that the National Directorate
of the Sandinista Front will respond
positively to this our last effort to grant
to our country a civilized solution.
God Save Nicaragua!
[Signed in San Jose, Costa Rica, March 1,
1985, by Arturo J. Cruz, Alfonso Robelo,
Adolfo Calero P., Fernando Chamorro, Pedro
J. Chamorro, Fernando Aguero, Indalecio
Rodriguez, Carlos Coronel Kautz, Leonel
Poveda S., Claudio Picasso, Jose Luis Velas-
quez, Benjamin Gallo Lacayo, Jaime Morales
C., Zacarias Hernandez, Jose Molina, Ulises
Fonseca, Felix P. Pastora G., Federico
Arguello S., Donald Lacayo N., Jairo
Sanchez, Luz Marina Smith.]
Communique of the
Nicaraguan Episcopal Conference,
March 22, 1985
The bishops of the Nicaraguan Episcopal
Conference after holding a regular
meeting at our Episcopal House in
Managua to meditate, in light of the
Gospel, on the painful current situation
in Nicaragua, wish to inform our faithful
people and all men of good will of the
following:
1. We bishops feel as our own the
pain and suffering of all Nicaraguans,
without any exceptions.
2. While we pray to our Lord Jesus
Christ and to his Holy Mother for our
brothers in the countryside and in the
cities, we would like to cooperate, on the
basis of our pastoral mission as con-
ciliators, in seeking solutions to put an
end to so much pain and so many tears.
3. It should be understood that this
line of pastoral concern should include
all our meetings or talks, be it with the
Nicaraguan Government, or with any
other person or organized sector in
Nicaragua.
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4. We feel that under the current
circumstances, everything stated in our
pastoral letter of 22 April 1984 is still
valid, particularly in relation to the
dialogue as the path toward conciliation.
5. Under the conviction that violence
will never solve a problem from its
roots, we express our willingness to
mediate in an internal dialogue, as long
as the following points are clear:
A. The church cannot impose a
dialogue.
B. A dialogue must be accepted. by
both sides.
C. Our stance must not be inter-
preted as a political position in favor of
a specific party or ideology.
We urge Catholic Church members
to work hard at becoming promoters of
peace and conciliation in their homes,
and we urge our brothers suffering in
one way or the other to share their pain
with Jesus Christ, in order to obtain
forgiveness and achieve harmony among
Nicaraguans.
[Signed in Managua by Msgr. Bosco
Vivas Robelo, Managua's Auxiliary
Bishop and Secretary of the Nicaraguan
Episcopal Conference.]
The members of the democratic
resistance offered a cease-fire in return
for an agreement by the Nicaraguan
regime to begin a dialogue mediated by
the Bishops' Conference of the Roman
Catholic Church with the goal of restor-
ing democracy through honest elections.
To date, the Nicaraguan regime has
refused this offer.
complished this without bipartisan sup-
port in Congress, backed up by the Na-
tional Bipartisan Commission on Central
America, headed by Henry Kissinger.
And that's why, after months of con-
sulting with congressional leaders and
listening carefully to their concerns, I
am making the following proposal: I'm
calling upon both sides to lay down their
President Reagan's Proposal
"In a sincere effort to start a dialogue
aimed at true internal reconciliation
which can bring peace and liberty to
Nicaragua" (Radio address April 6,
1985), President Reagan on April 4,
1985, added his prestige to the building
Nicaraguan peace process.
The President's proposal made clear
that because U.S. support for the
Nicaraguan resistance had peace and
democracy as its priority objectives, that
support would be treated as part of the
peace process.
Remarks by President Reagan,
April 4, 1985
I want to announce today a proposal for
peace in Central America that can
enable liberty and democracy to prevail
in this troubled region and that can pro-
tect the security of our own borders,
economy, and people.
On March 1 in San Jose, Costa Rica,
the leaders of the Nicaraguan demo-
cratic resistance met with a broad coali-
tion of other exiled Nicaraguan
democrats. They agreed upon and
signed a historic proposal to restore
peace and democracy in their country.
What matters is the commitment to democratic institutions
governed by regular popular elections. Unlike the guerrillas in El
Salvador, we are not demanding power, we are demanding only
our rights.... we want a constitutional solution.
Arturo Cruz, Sr. and Jr.,
March 18, 1985
The Central American countries, in-
cluding Nicaragua, have agreed that in-
ternal reconciliation is indispensable to
regional peace. But we know that, unlike
President Duarte of El Salvador who
seeks a dialogue with his opponents, the
communists in Nicaragua have turned,
at least up until now, a cold shoulder to
appeals for national reconciliation from
the Pope and the Nicaraguan bishops.
And we know that without incentives,
none of this will change.
For these reasons, great numbers of
Nicaraguans are demanding change and
taking up arms to fight for the stolen
promise of freedom and democracy.
Over 15,000 farmers, small merchants,
whites, blacks, and Miskito Indians have
united to struggle for a true democracy.
We supported democracy in
Nicaragua before, and we support
democracy today. We supported national
reconciliation before, and we support it
today. We believe that democracy
deserves as much support in Nicaragua
as it has received in El Salvador. And
we're proud of the help that we've given
to El Salvador.
You may recall that in 1981, we
were told that the communist guerrillas
were mounting a final offensive, the
government had no chance, and our ap-
proach would lead to greater American
involvement. Well, our critics were
wrong. Democracy and freedom are win-
ning in El Salvador. President Duarte is
pulling his country together and enjoys
wide support from the people. And all of
this with America's help kept strictly
limited.
The formula that worked in El
Salvador- support for democracy, self-
defense, economic development, and
dialogue-will work for the entire
region. And we couldn't have ac-
arms and accept the offer of church-
mediated talks on internationally super-
vised elections and an end to the repres-
sion now in place against the church, the
press, and individual rights.
To the members of the democratic
resistance, I ask them to extend their of-
fer of a cease-fire until June 1.
To the Congress, I ask for im-
mediate release of the $14 million
already appropriated. While the cease-
fire offer is on the table, I pledge these
funds will not be used for arms or muni-
tions. These funds will be used for food,
clothing, and medicine and other support
for survival. The democratic opposition
cannot be a partner in negotiations
without these basic necessities.
If the Sandinistas accept this peace
offer, I will keep my funding restrictions
in effect. But peace negotiations must
not become a cover for deception and
delay. If there is no agreement after 60
days of negotiations, I will lift these
restrictions, unless both sides ask me
not to.
I want to emphasize that consistent
with the 21 goals of the Contadora proc-
ess, the United States continues to seek:
1. Nicaragua's implementation of its
commitment to democracy made to the
Organization of American States;
2. An end to Nicaragua's aggression
against its neighbors;
3. A removal of the thousands of
Soviet-bloc, Cuban, PLO [Palestine
Liberation Organization], Libyan, and
other military and security personnel;
and
4. A return of the Nicaraguan
military to a level of parity with their
neighbors.
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Now, later today, I will be meeting
with Arturo Cruz, Adolfo Calero, and
Alfonso Robelo [leaders of the -
Nicaraguan opposition] to discuss my
proposal. Democracy is the road to
peace. But if we abandon the brave
members of the democratic resistance,
we will also remove all constraints on
the communists.
Democracy can succeed in Central
America, but Congress must release the
funds that can create incentives for
dialogue and peace. If we provide too lit-
tle help, our choice will be a communist
Central America with communist
subversion spreading southward and
northward. We face the risk that 100
million people from Panama to our open
southern border could come under the
control of pro-Soviet regimes and
threaten the United States with
violence, economic chaos, and a human
tidal wave of refugees.
We strongly support President
Duarte's dialogue with
Salvadoran guerrillas. The
lack of a parallel development
in Nicaragua was 1984s major
disappointment.
Secretary Shultz,
Special Report No. 124,
April 1985
Central America is not condemned
to that dark future of endless violence.
If the United States meets its obliga-
tions to help those now striving for
democracy, they can create a bright
future in which peace for all Americans
will be secure.
So, in the spirit of Easter, let us
make this so. I look forward to working
with the Congress on this important
matter in the coming weeks.
Initial Regional Support
The President's Easter peace proposal
focused attention on the need for
dialogue as essential to peace in Central
America.
President Duarte of El Salvador:
Letter to President Reagan,
'April 4, 1985
Dear Mr. President:
I want to thank you most sincerely
and warmly for your letter delivered to
me today which explains your new peace
initiative in Nicaragua and Central
America. Your initiative and approach
have my complete support and I strong-
ly urge all of the friends of Central
America in your Congress to give it
their full backing. It is the right step at
the right time in our quest for peace and
democracy in this region. We appreciate
as well your continuing strong support
for democracy in El Salvador.
As you know, the Salvadoran people
have just been to the polls for the fourth
time in three years. While we do not yet
have the official results, the apparent
significant victory of my government
and my party is, in my opinion, first and
foremost an endorsement of the efforts
we have made, with the help of the peo-
ple and government of the United
States, to bring peace, reconciliation and
democracy to our own country through
an internal dialogue. We believe our ap-
proach of opening such a dialogue and
offering a full opportunity to all of our
Salvadoran brothers to participate in a
free and constitutional democratic proc-
ess in our country should also be offered
to all of those who are struggling for
democracy in Nicaragua. I speak for all
Salvadorans in warmly applauding your
efforts.
We remain concerned, as we have
been for some time, by the continuing
flow of supplies and munitions from
Nicaragua to guerrilla forces here in El
Salvador which are fighting against my
government and our programs of
reform, democracy, reconciliation, and
peace. This continuing intervention in
our internal affairs is of great concern
to us and we deeply appreciate any ef-
forts which your government can take to
build a broad barrier to such activities-
efforts which a small country like El
Salvador cannot take in its own behalf.
Please accept my personal thanks
for this courageous step and my best
wishes to you and your family.
Sincerely,
JOSE NAPOLEON DUARTE
President of the Republic of
El Salvador
San Salvador.
President Betancur of Colombia:
Press Conference, April 5, 1985
The step the President of the United
States has taken fits perfectly within the
philosophy and within the reach of the
Document of Objectives which the coun-
tries of Central America freely
signed....
Address to Nation, April 7, 1985
I am in agreement with the President in
seeking a dialogue between the San-
dinista government and the opposition
especially the Coordinadora
Democratica-all within the spirit of
Contadora which seeks national recon-
ciliations and for which the President
confirmed to me his support.
President Suazo of Honduras:
Letter to President Reagan,
April 8, 1985
Dear Mr. President:
I have received your kind com-
munication of April 4 by which you
brought to my attention the efforts that
the Government of the United States is
making with the purpose of strengthen-
ing democratic institutions in Nicaragua
and supporting a dialogue between the
opposition forces and the Sandinista
government with the mediation of the
Catholic Churi!h in that country.
Since the month of June 1983, when
my government actively participated in
the drafting of a document known as
"Bases for Peace in Central America,"
Honduras has firmly supported actions
intended to put an end to the armed
conflicts being experienced in some Cen-
tral American countries. We have sup-
ported actions of national reconciliation,
dialogue, and the free manifestation of
popular will as ways which could lead to
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the establishment of authentic demo-
cratic, pluralistic, and representative in-
stitutions in all of the countries in our
region.
In this sense, your initiative has the
enormous merit of supporting negoti-
ated solutions to the Central American
crisis and at the same time positively
supporting the efforts of the Nicaraguan
people to find peace in democracy.
I very much appreciate the advance
notification of actions which your
government will take in the near future.
For my part, I want to reiterate once
again that the government over which I
preside will not hesitate even for an in-
stant in its efforts to achieve a com-
prehensive, regional agreement which is
fully verifiable, as is specified in the
Twenty-one Objectives approved by the
Central American countries in the
framework of the Contadora negotia-
tions. In this sense, my government
shares and supports the ends that you
pursue with this important initiative.
Please accept, Mr. President, my
congratulations for this decision while at
the same time I reiterate my sentiments
of personal respect.
ROBERTO SUAZO CORDOVA
Constitutional President of the
Republic of Honduras
President de la Madrid of Mexico
Excerpt From Office Communique,
April 8, 1985
pleasure with the support President
Reagan is giving to the Contadora
Group's effort.
President Lusinchi of Venezuela:
Press Conference, New York,
April 10, 1985
We believe that [President Reagan's pro-
posal] is valid, as it explores a possibility
for a peaceful solution to the internal
crisis in Nicaragua. The Nicaraguan
Government would not lose anything by
entering into conversations with the op-
position.
President Febres Cordaro of Ecuador:
Press Conference, New York,
April 10, 1985
I've already looked favorably on the call
for a dialogue. If the left has been sug-
gesting in general a dialogue between
the guerrillas and the legitimately con-
stituted government in El Salvador, and
all the parties in Guatemala take part in
the democratic process, why can't there
be a dialogue between the Sandinista
Government and the opposition forces?
President Monge of Costa Rica
Letter to President Reagan,
April 10, 1985
Chronology
June 1979
Anti-Somoza opposition issues com-
munique from San Jose, Costa Rica,
promising first free Nicaraguan elections
in 100 years.
Resolution of 17th Meeting of Con-
sultation of Foreign Ministers of the
Organization of American States (OAS)
calls for installation of democratic
government in Nicaragua including
representatives of all groups opposing
the Somoza regime.
July 1979
Anti-Somoza opposition sends cable
promising free elections to the Secretary
General of the OAS.
Anti-Somoza opposition coalition
assumes power in Nicaragua; United
States begins economic assistance.
October 1979
General Romero is overthrown in El
Salvador by military and civilian group
promising extensive political, social and
economic reform.
April 1980
Alfonso Robelo resigns from
Nicaraguan Government after San-
dinistas pack Council of State with its
supporters by enlarging the membership
from 33 to 47.
Cessation of hostilities is, in Mexico's
opinion, an indispensable objective for
the promotion of a climate appropriate
for dialogue and negotiation among the
countries of the area and among the dif-
ferent political groups within each coun-
try. President Reagan's proposal to en-
courage cessation of hostilities could
constitute a forward step in the solution
of this delicate conflict.
President Barletta of Panama:
Excerpt from Foreign Ministry Bulletin,
April 10, 1985
In President Barletta's opinion, there
exist positive elements in President
Reagan's proposal. Above all, the pro-
posal moves forward both on the cessa-
tion of hostilities in Central America as
well as on dialogue instead of confronta-
tion. President Barletta indicated that in
any case it is important to open a
breathing space that would permit
deeper study of President Reagan's pro-
posal in order to determine its true
scope. President Barletta indicated his
I feel obliged to convey my enthusiastic
support for [the President's] pro-
posal.... As a Costa Rican, I should
note that my position is justified above
all because it is a proposal for a peaceful
solution to one of the great problems of
our time in Central America, aimed at
achieving peace and making possible
democracy. Having for many years
resolved our problems in a peaceful
manner, through the exercise of
democracy, Costa Ricans fervently
desire that all the peoples of Central
America likewise receive the benefits
which such procedures convey and that
by their means they may resolve their
problems, thus definitively distancing
Central America from the nightmare of
war, both international and civil.
President Alfonsin of Argentina:
Washington Post, Interview,
April 11, 1985
I think [President Reagan's proposal] is
a positive policy that, if taken up by
Latin America, might produce some for-
mula for a solution.
March 1980
Agrarian reform begins in El
Salvador.
November 1980
Sandinista security forces murder
Jorge Salazar. Business group (COSEP)
and independent political parties
withdraw temporarily from Council of
State.
January 1981
Salvadoran FMLN guerrillas, using
arms supplied by the Soviet bloc through
Nicaragua, launch "final offensive"
against the Salvadoran Government;
United States suspends aid to
Nicaragua.
March 1982
Constituent Assembly election in El
Salvador.
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October 1982
Declaration of San Jose (signed by
Belize, Colombia, Costa Rica, the
Dominican Republic, El Salvador, Hon-
duras, Jamaica, and the United States)
calls for internal reconciliation and
democracy in each Central American
country as requirement for regional
peace.
January 1983
Contadora peace process launched
by Foreign Ministers of Colombia,
Mexico, Panama, and Venezuela.
February 1983
El Salvador Peace Commission
established, including a representative
from the church. Efforts focused on pro-
moting the participation of all social
and political sectors in the democratic
process.
April 1983
President Reagan announces ap-
pointment of a Special Envoy for Cen-
tral America. Focus included facilitating
internal dialogue in both El Salvador
and Nicaragua.
September 1983
21-point "Document of Objectives"
signed by the five Central American and
the four Contadora countries.
December 1983
Nicaraguan opposition Coordinadora
issues nine-point communique calling for
dialogue leading to open elections.
February 1984
Nicaraguan armed opposition FDN
offers to lay down arms in exchange for
participation in elections.
April 1984
Easter pastoral letter of the
Nicaraguan bishops calls for dialogue,
including with armed opposition.
May 1984
Jose Napoleon Duarte elected Presi-
dent of El Salvador in run-off election.
September-October 1984
International and regional efforts to
induce Sandinistas to allow open, fair
competition for November 4 elections
fail.
October-November 1984
Salvadoran President Duarte calls at
UN General Assembly for dialogue with
armed opposition; meetings between
government and FMLN take place Oc-
tober 15 at La Palma and November 20
at Ayagualo.
February 1985
Statement calling for church-
mediated dialogue issued in Managua by
the opposition Coordinadora.
March 1985
Document on national dialogue of
the Nicaraguan resistance issued in San
Jose, Costa Rica.
Communique of the Nicaraguan
Episcopal Conference, accepting media-
tion role in dialogue.
Legislative and municipal elections
in El Salvador; fourth free election in 3
years.
April 1985
President Reagan calls on Nicaragan
Government to accept dialogue.
Resolution of the 17th Meeting of Con-
sultation of Ministers of Foreign Affairs
of the Organization of American States,
Washington, D.C., June 23, 1979 (OAS
Document 40/79, rev. 2, June 23, 1979).
Cable from the "Junta of the
Government of National Reconstruction"
of Nicaragua to the Secretary General of
the OAS, Dr. Alejandro Orfila, July 12,
1979.
Final Act of the Meeting of Foreign
Ministers of Countries Interested in the
Promotion of Democracy in Central
America and the Caribbean, October 4,
1982 (Bulletin Reprint, U.S. Department
of State, Bureau of Public Affairs,
Washington, D.C.).
Reagan, Ronald, Central America:
Defending Our Vital Interests. Address
before a joint session of Congress,
April 27, 1983 (Current Policy No. 482,
U.S. Department of State, Bureau of
Public Affairs, Washington, D.C.).
Statement in La Prensa of the Coor-
dinadora Democratica Nicaraguense,
Managua, Nicaragua, 26 December 1983
(FBIS, January 5, 1984).
The Wall Street Journal, "Socialist
International Leader Sends Daniel
Ortega His Regrets," (January 11, 1985,
p. 19).
Motley, Langhorne A., The Need for
Continuity in U.S. Latin Americaan
Policy. Based on a statement before the
Subcommittee on Western Hemisphere
Affairs of the House Foreign Affairs
Committee, January 29, 1985 (Current
Policy No. 655, U.S. Department of
State, Bureau of Public Affairs,
Washington, D.C.).
Shultz, George P., America and the
Struggle for Freedom. Address before
the Commonwealth Club of California,
San Francisco, California, February 22,
1985 (Current Policy No. 659, U.S.
Department of State, Bureau of Public
Affairs, Washington, D.C.).
Cruz, Arturo and Arturo Cruz, Jr.,
"A Peace Plan for Nicaragua." (The New
Republic, March 18, 1985, Issue 3,661,
pp. 17-18.)
Calero, Adolfo, "A Struggle by
Nicaraguans, for Nicaragua."
(Washington Post, April 7, 1985, p.
A-10.)
Facio, Gonzalo, "El Plan Reagan
para ]a paz en Nicaragua." (Diario Las
Americas, April 9, 1985, p. A-5.)
Sustaining a Consistent Policy in
Central America: One Year After the
National Bipartisan Commission Report
(Special Report No. 124, April 1985,
U.S. Department of State, Bureau of
Public Affairs, Washington, D.C.). ^
Published by the United States Department
of State - Bureau of Public Affairs
Office of Public Communication ? Editorial
Division ? Washington, D.C. - April 1985
Editor: Colleen Sussman - This material is in
the public domain and may be reproduced
without permission; citation of this source is
appreciated.
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Bureau of Public Affairs
United States Department of State
Washington, D.C. 20520
If address is incorrect
please indicate change.
Do not cover or destroy
this address label. Mail
change of address to:
PA/OAP, Rm. 5815A
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n
 Special
Report
No. 124
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United States Department of State
Sustaining a Consistent
Policy in Central America:
One Year After the National
Bipartisan Commission Report
Report to the President
From the Secretary of State
April 1985
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 CONTENTS
L
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1 Letter of Transmittal
2 Summary
3 Central America
One Year Later
3 Economic Stabilization
and Growth
6 Human Development
7 Building Democracy
10 Security
13 The Search for Peace
15 APPENDIX A: Summary of
Commission Report
18 APPENDIX B:
Legislative Update
20 APPENDIX C: Foreign
Assistance for Central
America: FY 1983, 1984, 1984
Supplementals, and 1985;
FY 1986 Request
Letter of Transmittal
Mr. President:
The National Bipartisan Commission on Central America reported in
January 1984 that the crisis in Central America engages vital moral and
strategic interests of the United States. During the summer and fall, the
Congress made available funds that enabled us to begin to act on many key
Commission recommendations.
This study assesses how we are doing. A year is a brief period in
the history of Central America. But we have begun to change popular at-
titudes as well as official policy. After years of relative indifference, we are
putting a lot more than words into our support for equity, reform, and
freedom for all our neighbors.
The events of the past year, while not conclusive, added up to a
better year for many Central Americans. The ravages of poverty and
violence can be measured by the hundreds of thousands of persons dis-
placed within their own countries or moving to neighboring countries and
the United States. But in most countries, the economic decline of recent
years was stemmed; political life was more free. In El Salvador President
Duarte talked directly to guerrilla leaders; while in the regional Contadora
negotiations, some progress took place, buttressed by the effort we under-
took at Manzanillo.
Only in Nicaragua did countertrends prevail. While democracy was
becoming stronger elsewhere, the Sandinistas continued to betray the
democratic principles of the anti-Somoza revolution, refusing to hold free
elections or to talk to those Nicaraguans forced again to take up arms
against dictatorship. While claiming to seek peaceful solutions, the San-
dinistas are militarizing Nicaragua and supporting armed insurrection in
other countries in ways that serve Soviet goals of destabilization and
conflict.
Every American has a stake in helping our neighbors to build work-
ing democracies free of internal or external threats to their freedom and
security. A great deal remains to be done. But the fundamental message of
the attached study is that hard work and steadiness are making a real
difference.
Sincerely yours,
The National Bipartisan Commission
on Central America (referred to in this
study as "the Commission") was named
in July 1983 by President Reagan to
advise on "a long-term United States
policy that will best repond to the
challenges of social, economic, and
democratic development in the region,
and to internal and external threats to
its security and stability."
Henry A. Kissinger served as Com-
mission Chairman. The Commissioners
were: Nicholas F. Brady, Henry G.
Cisneros, William P. Clements, Jr.,
Carlos F. Diaz-Alejandro, Wilson S.
Johnson, Lane Kirkland, Richard M.
Scammon, John Silber, Potter Stewart,
Robert S. Strauss, and William B.
Walsh. Senior Counselors were Jeane
Kirkpatrick, Winston Lord, William D.
Rogers, Daniel K. Inouye, Pete V.
Domenici, Lloyd Bentsen, Charles
McC. Mathias, William S. Broomfield,
Jack F. Kemp, James C. Wright, and
Michael D. Barnes. Harry W.
Shlaudeman served as Executive
Director.
This study of where we stand in
developing the long-term approach
recommended by the Commission was
prepared by the Department of State
and the Agency for International
Development, with assistance from the
Departments of Defense and the
Treasury, the United States Informa-
tion Agency, and the Peace Corps.
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Summary
The report submitted to the President
on January 10, 1984, by the National
Bipartisan Commission on Central
America is at the core of U.S. policy in
Central America. The Commission con-
cluded that fundamental strategic and
moral interests of the United States re-
quire a long-term national commitment
to economic opportunity, human devel-
opment, democracy, and security in Cen-
tral America.
The Commission proposed a com-
prehensive approach-an active
diplomacy in support of democracy, sup-
ported by economic aid to get at root
causes of poverty and social unrest and
by security assistance to protect
peaceful development.
The Commission recommended an
immediate supplemental appropriation of
$400 million and an additional $8 billion
in economic aid for the succeeding 5
years. The Administration's proposal
was similar: a $400 million fiscal year
(FY) 1984 supplemental, $5.9 billion in
appropriated funds, and $2.0 billion in
insurance and guarantees for FY
1985-89.
The Commission also recommended
increased military assistance to permit
the application of modern, humane coun-
terinsurgency strategies which require
greater mobility, more training, higher
force levels, and more equipment. The
Administration proposed a $259 million
supplemental for FY 1984 and $256
million for FY 1985.
Bipartisan congressional majorities
approved increases in both economic and
military assistance close to what the
Commission recommended and the
President proposed for FY 1984-85.
Current Strategy
Our increased economic assistance is
being used to:
? Arrest declines in incomes,
employment, and economic activity
through major balance-of-payments
assistance;
? Establish the basis for long-term
economic growth through improvements
in economic policy and the infrastructure
needed to export;
? Assure the widest possible dis-
tribution of the benefits of growth
through assistance aimed at improving
health, education, and housing for the
poorest groups; and
? Support democratic processes and
institutions through assistance for the
administration of justice, technical train-
ing, and the development of leadership
skills.
At the same time, security coopera-
tion has been put on a firmer profes-
sional footing. The improved perform-
ance of the armed forces of El Salvador
and the increased readiness of those of
Honduras are directly linked to in-
creases in both the quantity and the
steadiness of U.S. security assistance
and military cooperation.
Results
In Central America as a whole, regular
elections have become the norm, and
economic decline has been stemmed.
After a decline of 4% in 1982-83, gross
domestic product (GDP) grew by 1.2% in
1984-not enough to offset population
increases but enough to mark a clear
turnaround.
The longer term economic frame-
work recommended by the Commission
is beginning to take shape. Traditional
development assistance -concentrated
in education, nutrition, health, and
agriculture-has been strengthened. In
addition, we have begun to work with
governments and legal organizations to
improve the administration of justice
and to develop new programs for leader-
ship training, and other support for
democratic institutions. The trade credit
insurance program has been established.
The Caribbean Basin Initiative, proposed
by the President in 1982, took effect in
January 1984, further opening the U.S.
market to Central American as well as
Caribbean nations for 12 years, until
1996.
A key problem is that Nicaragua
continues to support-with Soviet and
Cuban resources-antidemocratic forces
throughout the isthmus. The security
threat to other countries posed by this
communist challenge diverts government
revenues from development to defense
and weakens the productive forces
needed to support self-sustaining
growth.
The United States continues to sup-
port a verifiable and comprehensive
peace settlement that implements the
Contadora principles. Whether or not an
agreement is reached, however, substan-
tial amounts of U.S. aid will continue to
be needed to strengthen our neighbors'
well-being and security.
Next Steps
This year we again seek bipartisan sup-
port for the balanced and mutually rein-
forcing mix of political, economic, securi-
ty, and diplomatic activities that the
Commission concluded we should pursue
simultaneously. For FY 1986, the Ad-
ministration's economic assistance re-
quest totals $1,053 million; the military
request is $261 million. Legislation that
would authorize appropriations for non-
military programs for FY 1986-89
would provide a critical assurance of
U.S. commitment and an important tool
for public and private planning in Cen-
tral America.
In our FY 1986 foreign assistance
authorization proposal, we also have re-
quested the statutory authority to carry
out three additional recommendations of
the Commission:
? To support comprehensive pro-
grams to improve the administration of
justice, including investigative and en-
forcement aspects necessary to assure
that evidence is obtained and provided
to courts in a professional, timely, and
humane manner. Any activities other-
wise subject to the Foreign Assistance
Act's prohibition on assistance to police
(section 660) would be subject to prior
notification to the Congress.
? To allow aid recipients to use local
currencies generated from appropriated
funds to help compensate former owners
of land transferred under land reform
programs. This would enable the com-
pletion of the titling procedure in El
Salvador, give increased security to the
new owners, and provide capital for
domestic investment by local en-
trepreneurs.
? To help organize and to join a
regional. forum to provide Central
Americans, from the private sector as
well as from government, an opportuni-
ty to participate in the formulation of
strategies for achieving common objec-
tives. The recommendations of this
organization would be taken into ac-
count in allocating bilateral economic
assistance. ^
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Almost as soon as the Commission
issued its report, developments in Cen-
tral America began to confirm the ac-
curacy of its analysis and the soundness
of its judgment. In early 1984, many in
the United States, in Western Europe,
and even in Latin America believed that
El Salvador was caught in an endless
war between the guerrillas of the left
and death squads of the right. But the
Commission saw a different future. It
saw electoral democracy, reform, and
political dialogue as realistic alternatives
to the antidemocratic violence of the ex-
treme left and right-provided El
Salvador's democrats got the support
they needed.
Today, El Salvador's problems are
closer to resolution than a year ago. In
1984 there were two rounds of national
elections leading to the presidential in-
auguration of Christian Democrat Jose
Napoleon Duarte; the trial, conviction,
and imprisonment of the murderers of
four American churchwomen; changes in
military and security personnel and in
the procedures which govern their
behavior; improved economic and
military performance; a marked reduc-
tion in the number of political crimes;
and President Duarte's initiation of a
dialogue with the FMLN/FDR [Farabun-
I do not think [the outside
world] has changed. It is the
situation in El Salvador which
has changed, especially since
my election as president.
President Duarte,
The Nicaragua of 1985 is less demo-
cratic, more heavily armed, and more
closely tied to the Soviet bloc. Support
from Western Europe and democratic
Latin America is less than it has ever
been. Just as a harsher Somoza dictator-
ship sparked more rebellion, so the com-
andantes' communism has bred increas-
ing armed and unarmed resistance.
Whether and, if so, how the Sandinistas
can adjust their behavior to the needs of
their people and their neighbors is now
clearly the most important of Central
America's current dilemmas.
Though less in the news than either
El Salvador or Nicaragua, Guatemala-
Central America's most populous coun-
try-also produced political drama in
1984. Shattering the stereotype of
hopeless polarization, the Guatemalan
electorate turned out in record numbers
on July 1, 1984, to support the political
center in elections that were open and
honest. The Constituent Assembly is
scheduled to complete its task this sum-
mer. General elections are scheduled for
October 27, 1985.
Costa Rica and Honduras feel some-
what less secure today than at the
beginning of 1984. This underscores two
other key Commission findings: that
each Central American country is direct-
ly affected by events elsewhere in the
isthmus and that the United States is
logically regarded as the one nation with
both the moral responsibility and
military strength to defend the region's
democratic course. For both Costa Rica
and Honduras, the antidemocratic
policies of Sandinista Nicaragua and the
apparent lack of consensus in the United
States about what to do to help move
Nicaragua in a more democratic direc-
tion have raised concerns about the
longer term reliability of the U.S. com-
mitment.
The past year gives reason to believe
u
y
,
that the direction we have begun to
do Marti National Liberation Front/
Revolutionary Democratic Front] guer-
rillas. At the same time, the United
States increased both economic and
military assistance while West Germany,
the United Kingdom, and Japan all
resumed or increased aid during 1984.
In Nicaragua, the Commission's
analysis-and warnings-were also on
the mark. The consolidation of a
Marxist-Leninist regime with support
from Cuba and the Soviet Union con-
tinued and was perceived by Nicaragua's
neighbors as increasingly threatening.
take-if consistently sustained-can
bring lasting and beneficial change for
all Central Americans. But it also re-
mains evident throughout Central
America that this will require both the
reliability of a long-term U.S. commit-
ment and the confidence that this com-
mitment will continue to be tied to
equity, reform, and freedom. For a
region so close to our own borders, no
other outcome is compatible with the na-
tional interests of the United States.
Economic Stabilization
and Growth
To help reverse economic deterioration
and the social and political unrest it
engenders, the Commission recom-
mended an immediate additional $400
million in U.S. assistance for emergency
stabilization in 1984 and additional funds
for balance-of-payments support to
finance essential imports for the private
sector in 1985. The Commission also
recommended economic policy reforms
to achieve stabilization, recovery, and
economic development.
Except for Nicaragua, Central
America's downward economic spiral has
been halted. A regional increase in GDP
of 1.2% in 1984 followed GDP declines
of 3.3% in 1982 and 0.8% in 1983. In El
Salvador, where the economy declined
calamitously by 25% from 1980 to 1982,
GDP leveled out in 1983 and rose an
estimated 1.5% in 1984. Our current
estimate is that regional GDP (still ex-
cluding Nicaragua) will further rise by
2.5% in 1985.
While this is impressive progress
and a cause for renewed hope in the
region, population increases mean that
per capita income levels will not be
restored at 1979 levels until at least the
early 1990s. For example, Costa Rica,
El Salvador, Honduras, and Belize all in-
creased GDP in 1984, but only Costa
Rica achieved a positive per capita
growth rate.
U.S. assistance programs were
critical in achieving these results. Their
continuation is essential if these positive
trends are to continue.
Stabilization
Economic stabilization is an essential
first step in the economic recovery and
development process and, therefore, in
the achievement of our goals in Central
America. The modicum of stability
brought about in the region in 1984
reflected positive changes in Central
American economic policies as well as
U.S. assistance flows.
In Belize, major steps were taken to
reduce the fiscal deficit.
In Costa Rica, U.S. economic
assistance supported the government's
implementation of policies that improved
substantially the country's fiscal and
balance-of-payments positions.
El Salvador and Guatemala pro-
vided stronger incentives to exports
through improved exchange rate
policies.
19
1984
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In Honduras, the government im-
posed a moratorium on central govern-
ment guarantees of debt incurred by
autonomous agencies and raised revenue
from tariff reform.
In Panama, the government made
progress in implementing its stabiliza-
tion program and is discussing with the
International Monetary Fund (IMF) and
World Bank continuation of stabilization
and structural adjustment programs.
U.S. economic assistance in the
amount of $274 million from the FY
1984 supplemental and $607 million
from the FY 1985 Continuing Resolution
provided balance-of-payments support
for vital imports and other assistance
for economic stabilization. These funds
also provided local currency credits for
development activities. In addition,
assistance totaling $190 million was
authorized to lay the foundation for
long-term growth and development. This
substantial assistance also helped to
make possible the policy reforms that
contributed to the fragile stabilization so
far achieved.
Long-Term Growth and Development
The Commission recommended that the
Central American nations adopt eco-
nomic policies that would lead to private
sector-led, free market-oriented develop-
ment with an emphasis on nontraditional
exports and increased agricultural pro-
ductivity. It recommended U.S. assist-
ance to regional programs and institu-
tions. The Commission also stressed the
need to seek ways to assist the Central
American economies through U.S. trade
and investment programs.
For growth to take place, the Cen-
tral American countries must create the
conditions for increasing domestic sav-
ings and attracting productive invest-
ment. Improving investment conditions
means stabilizing the economy :and en-
suring that risk takers, whether foreign
or domestic, can reap the benefits of
their investments when they succeed.
Only when economic and other risk-
affecting conditions are such that
domestic savers are rewarded for their
thrift, and investors for their enterprise,
will flight capital return home and new
foreign investment begin to flow once
again to the region.
This shift away from the statist,
import-substitution, antiforeign model of
the past 20 years requires considerable
political preparation and entails serious
economic dislocation. These reforms
would be difficult to carry out in
peaceful and secure societies; they are
especially hard to manage in fragile
democracies caught up in the turmoil of
armed insurgencies.
Against great odds, real progress
has been made.
Belize has liberalized prices and
taken steps to encourage livestock ex-
ports. The Agency for International
Development (AID) has provided a $5
million line of credit through the Central
Bank of Belize for lending to productive
enterprises through commercial banks.
Contract assistance also is available to
local and foreign investors in the
preparation of private investment ini-
tiatives, primarily in agribusiness.
Costa Rica, where GDP grew by
about 6% in 1984, has Central America's
most comprehensive economic reform
program. It adjusted its exchange rate
to maintain export competitiveness and
enacted a currency law reform which ex-
pands opportunities for private banks. A
new IMF standby and a World Bank
structural adjustment loan were ap-
proved in March. Other efforts are help-
ing to lay a foundation for long-term
growth.
? A nongovernmental investment
hank to develop investment packages for
new export activities is being created
with AID assistance.
? A coalition of private business
organizations is working with AID to
provide training in U.S. business schools
to entrepreneurs, bankers, and teachers.
? State enterprises are being
divested.
? AID is financing infrastructure in
the form of rural road construction,
agricultural research and extension,
marketing services, production credit,
and land titling for the rural population
in an area in northern Costa Rica.
? PL 480 food commodity assistance
is generating over $20 million in local
currency to provide credit to farmers
and promote increased agricultural pro-
ductivity.
El Salvador has improved incentives
to exporters by permitting them to sell
their earnings on the more favorable
parallel exchange market. The govern-
ment also has improved the manage-
ment of foreign exchange and has taken
a more active role in the promotion of
nontraditional exports.
? A project supported by AID is
being implemented by the Ministry of
Foreign Trade to explore new market
opportunities in the United States and
other countries.
? An international trade fair was
organized with AID support and
technical assistance from the U.S.
Foreign Commercial Service which at-
tracted U.S. and other foreign investors
to El Salvador. Several investment pro-
posals resulted.
? A new business organization, "The
Salvadoran Foundation for Economic
and Social Development," is working
with AID assistance to help small
business owners, traders, and skilled
crafts people develop and promote new
export products.
? A new private finance company is
being organized with AID assistance
that will provide financial and technical
support for productive enterprises. The
new facility should add flexibility, ini-
tiative, and expertise to the commercial
banking system.
Guatemala has legalized the parallel
exchange market to improve incentives
for exporters. Many activities are receiv-
ing AID assistance.
? Credit and technical support is
being provided to rural industry and ar-
tisan enterprises.
? $16 million in food commodity im-
ports is generating local currency which
will be used for the settlement of idle
but arable productive lands now in the
public domain.
? Land terracing and small-scale ir-
rigation is being introduced in the
highlands.
? Research is underway to develop
or adopt technologies to increase pro-
duction and exports of fruits, vege-
tables, flowers, and plants.
Honduras participates in a joint
Honduran-U.S. Economic Working
Group which has been formed to develop
a rational economic policy framework
which favors growth and development.
Measures advanced by the group to
reduce the fiscal deficit have been
enacted by the government. Fiscal incen-
tives were also enacted to promote non-
traditional exports.
? AID recently helped establish a
confederation of 10 commodity pro-
ducers' associations, which provides
prospective buyers or investors with
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"one-stop" assistance, arranges meetings
with producers and local investors, and
provides information on subjects from
production and price information to
taxes and export licenses. This initiative
is helping to diversify exports from
near-exclusive reliance on coffee,
bananas, sugar, and beef to a mix of
winter vegetables, seafood, melons,
pineapples, and other fruits and their
byproducts.
? Assistance is also being provided
to develop the nonprofit, private Hon-
duran Agricultural Research Founda-
tion.
? U.S. funding is helping thousands
of farm families to cultivate hillsides,
produce beef and dairy products, and in-
crease the cultivation of coffee on small
farms which had been affected by coffee
rust.
Panama has committed itself to dif-
ficult economic reform measures that
are required to manage its huge external
debt, reduce fiscal deficits, and create a
better economic climate for long-term
growth. The new government has intro-
duced tariff reforms, removed some
price controls, enacted new tax and
budget measures, and is trying to sell
some public enterprises to the private
sector. U.S. assistance is:
? Helping to work out revisions of
Panamanian labor laws, port administra-
tion, and electricity rates that will make
Panama more attractive to foreign in-
vestors;
? Working with the private sector
to establish an export development bank
to provide medium- and long-term lend-
ing to export businesses; and
? Intensifying assistance to
Panamanian businesses to develop and
promote export-oriented products.
Regional Programs
The Commission also recommended sup-
port for regionwide programs.
? A trade credit insurance program
has been established which will provide
guarantees for up to $300 million in
trade credits this fiscal year.
? Representatives of the Central
American governments agreed in
December 1984 to guidelines for revision
of the Central American Common
Market's (CACM) common external
tariff with precise changes to be detailed
in 1985. We are hopeful that these revi-
sions will pave the way for reduction in
the level of protection of goods produced
within the region, thereby encouraging
local producers to become more com-
petitive.
... these countries are under
economic siege. In 1977, 1 bar-
rel of oil was worth 5 pounds
of coffee or 155 pounds of
sugar. To buy that same barrel
of oil today, these small coun-
tries must provide five times as
much coffee (nearly 26 pounds)
or almost twice as much sugar
(283 pounds). This economic
disaster is consuming our
neighbors' money, reserves,
and credit, forcing thousands
of people to leave for other
countries-for the United
States, often illegally-and
shaking even the most estab-
lished democracies. And eco-
nomic disaster has provided a
fresh opening to the enemies of
freedom, national independ-
ence, and peaceful develop-
ment.
? The Commission also recom-
mended the creation of a Central
American development organization to
provide an advisory forum for dialogue
among all actors-government,
business, and labor-on development
issues. The Administration continues to
seek the authorization of Congress for
U.S. Government participation in such
an organization.
? The Overseas Private Investment
Corporation has continued its support
for U.S. investors in Central America
and expects to increase its role as new
opportunities evolve.
The Caribbean Basin Initiative
The thrust of the Commission's
economic recommendations are par-
alleled by the Administration's philos-
ophy for the Caribbean Basin Initiative
(CBI). The 12-year U.S. program of
preferential duty-free treatment was im-
plemented on January 1, 1984, for im-
ports from 20 countries and territories
in the Caribbean Basin. Belize, Costa
Rica, El Salvador, Guatemala, Hon-
duras, and Panama have all been
designated.
The fundamental objective of the
The Commission recommended that
the United States provide an emergency
credit to the Central American Common
Market Fund to refinance part of the
trade deficits that CACM members have
accumulated among themselves. An
AID-financed study by independent con-
tractors identified difficulties with this
approach. We are proceeding cautiously.
We note that Honduras has decided to
stimulate its intraregional trade by
adopting a new payment system that
will allow market forces to play a major
role in determining exchange rates on
transactions within the CACM system.
We have pledged to support this major
reform with $20 million in economic sup-
port funds, which will allow the clearing
of Honduran arrearages in the Central
American Clearing House.
? A recent AID-financed assessment
concluded that the Central American
Bank for Economic Integration has been
an important institutional factor in past
regional development, has the capacity
to contribute significantly to further in-
frastructure development and increased
industrial production and trade, and can
effectively utilize financial assistance
from AID. A development assistance
and economic support fund (ESF)
loan/grant is planned to assist the bank
during 1985.
domestic investment in the beneficiary
countries in efficient and diversified ex-
port production. As countries take ad-
vantage of the opportunity of preferen-
tial entry to the U.S. market, the result
should be increased employment, better
balance-of-payments positions, enhanced
government revenues, and a more diver-
sified and stable industrial structure pro-
ducing for both domestic and export
markets.
The results after 1 year of ex-
perience are hard to interpret but,
nonetheless, promising. U.S. imports
from the six Central American
beneficiaries rose by $220 million, an an-
nual growth rate of 12% for the region
as a whole. Although less than the rate
of growth of U.S. imports from the
world (26%) or from Latin America as a
whole (15%), when these gross figures
are disaggregated, they reveal impor-
tant gains in nontraditional exports (that
is, exports other than bananas, coffee,
sugar, and other commodities), especial-
ly from countries that maximized the ef-
fect of the CBI tariff benefits by follow-
ing flexible exchange rate policies. Ef-
forts to develop economic and political
climates that support private invest-
ment, innovation, and export will be
crucial to the ultimate success of the
CBI.
President Reagan
February 24, 1982
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Third-Country Support
The Commission called for efforts to en-
courage other industrial countries to in-
crease support for Central American
growth and development. U.S. officials
have focused on encouraging other
developed countries to improve export
opportunities for Central American
countries.
In September 1984 the European
Community (EC) and the five Central
American states decided to negotiate a
framework agreement for economic and
technical cooperation.
Canada has already increased aid,
and Japanese assistance also has grown
more modestly.
Mexico and Venezuela have made
major contributions by enabling Carib-
bean Basin countries to apply part of the
price of oil they purchase to develop-
ment projects. In 1980, Mexico and
Venezuela established the San Jose ac-
cord whereby they provide concessional
credit for petroleum purchases by Cen-
tral American and Caribbean countries.
The accord was renewed in August
1984.
Human Development
The Commission warned that economic
growth and democratic institutions will
have unstable foundations if malnutri-
tion, illiteracy, poor education and
health, inadequate housing, and popula-
tion pressures are not addressed.
Health Initiatives. AID is develop-
ing new health initiatives and expanding
ongoing programs to fulfill Commission
recommendations. To benefit those
most prone to infectious diseases and
malnutrition-the rural and urban
poor-the United States has obligated
or authorized more than $50 million for
health services. Technical assistance is
concentrated on such sectors as health
economics and financing, hospital ad-
ministration, epidemiology, and im-
munization. A regional program to im-
prove the nutritional impact of food aid
is,in the final planning stages.
A new $8 million Central American
regional project promotes a simple, cost-
effective technology that cuts deaths
from diarrhea, the major killer of
children in the developing world. More
than 3 million packages based on oral
rehydration therapy have been dis-
tributed in Honduras alone. Through ef-
fective health services and mass media
campaigns, rural and urban Hondurans
have become aware of the value of this
treatment to combat the debilitating and
life-threatening effects of dysentery. In
one study area, the mortality rate for
children under the age of five was
estimated to have dropped by 40% after
introduction of oral rehydration therapy.
Infant mortality in Honduras dropped
from 88/1,000 in 1980 to 78/1,000 in
1984, in large part due to the program's
success.
term decisions on capital investment and
crop selection and is essentialtifor access
to credit.
? In El Salvador, the agrarian
reform program since 1980 has broad-
ened land ownership by transfer of 20%
of Salvador's arable land to peasant
families totaling 570,000 persons. Most
had been landless. As of February 1985,
64,785 provisional and 12,589 definitive
titles had been issued.
? In Honduras, an AID-financed
land-titling project registered 14,000
titles benefiting roughly 75,000 farm
family members. This achievement more
than triples the 4,000 titles granted over
the previous 50-year period. The plan is
to register up to 70,000 titles by 1987.
Also in Honduras, we are preparing
to extend a cooperative development
project. In the pilot effort, some 1,300
small farmers with 9,600 acres of land
were organized into four cooperatives,
producing both food and export crops.
They received $3.5 million in credit for
which they have an exemplary repay-
ment record. Their export sales alone
generated $2 million in foreign ex-
change, and they have capitalized their
cooperatives with more than $250,000.
Demographic Goals. The Central
American nations hope to reach their
demographic goals by decreasing crude
birth rates 1% per year over the next
decade. Both education and material
support are essential to this effort. In
FY 1984 the United States financed $5.6
million for support of voluntary family
planning programs in Central America.
AID has budgeted $15 million for
population programs in Central America
for FY 1985. In administering programs
to assist the free choice of Central
Americans in determining family size,
AID complies with the August 1984 U.S.
policy statement on population
assistance.
Employment Programs. In El
Salvador, AID contributed to 137,000
full-time jobs in 1984 as part of public
works employment programs for the
general population and displaced per-
sons. Contributing to these employment
levels were AID-financed imports of raw
materials and intermediate goods.
Housing and Infrastructure. The
Commission recommended emphasis on
development of housing and infrastruc-
ture, specifically urging $200 million in
housing guaranty resources to be
allocated over 5 years. For FY 1985-89,
$125 million in development assistance,
up to $75 million in economic support
fund (ESF), and some $450 million in
local currency generations from ESF
programs are currently projected for
housing and infrastructure. The em-
phasis is to be on rural infrastructure
development, the use of labor-intensive
technology, and the installation or
upgrading of infrastructure to support
urban shelters. In 1984, $50 million were
in use or programmed for Honduras and
Panama. Housing guaranty programs
also are being discussed with the
Governments of El Salvador and Costa
Rica.
Food and Agricultural Assistance.
To help meet the immediate nutritional
needs 'of the poor, U.S. concessional
food assistance programs (PL 480) to
the region increased from about $90
million in FY 1983 to $106 million in FY
1984 and to $111 million this year.
Commitments to Central American
agricultural projects and programs in
FY 1984 were $76.5 million and $10
million in FY 1984 supplemental funds.
In addition, local currency generations
from PL 480 programs equivalent to
$93.8 million were directed toward the
agricultural sector. Such assistance pro-
grams have helped to expand agricul-
tural cooperatives, broaden land owner-
ship, and enhance resources available for
agricultural credit and investment.
Access to Land. A key element of
our human development programs in
Central America is expansion of access
to land where additional U.S. resources,
both human and financial, are being ap-
plied. Land ownership encourages long-
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Humanitarian Relief. The U.S.
Government also has expanded humani-
tarian relief efforts as recommended by
the Commission. One-half million
displaced Salvadorans have benefited
through the Health and Jobs for Dis-
placed Persons Project and through U.S.
contributions to international and
private organizations. In August 1984,
AID authorized an additional $60 million
for El Salvador which, over the next 3
years, will finance vital services such as
health and sanitation services and in-
creased food deliveries and relocation.
Congress earmarked $7.5 million for
humanitarian relief for Miskito Indian
refugees in southern Honduras; the
funds are being used for medical serv-
ices, immunization, and oral rehydration
therapy, and transportation facilities to
improve emergency access and provision
of agricultural inputs such as seeds and
tools.
Educational Opportunities. The
Commission also recommended support
for programs designed to bring about
substantial improvement in the avail-
ability and quality of educational oppor-
tunities. Thus, using a mix of FY 1984
supplemental and FY 1985 funds:
? In El Salvador, AID is beginning
a $17.68 million program to improve the
quality of primary education and make it
more available to poor children.
? In Honduras, AID will be pro-
viding $10.86 million to reproduce and
distribute textbooks to primary students
nationwide.
? In Costa Rica, AID is using $4.33
million for a program of selected train-
ing activities needed for development.
? Panama is receiving $3.1 million
for participant training programs to im-
prove the productivity of selected
exported-oriented firms.
? A $2.05 million project in Belize
will provide management, public ad-
ministration, and technical skills to help
the private sector identify and develop
jobs for the unemployed.
? In Guatemala, $22.7 million are
being used to implement bilingual educa-
tion for Indian children. In December
1984, the government adopted a law
legalizing the use of Indian languages in
public schools and creating a national
bilingual education program which these
funds will support.
Scholarships. AID and the United
States Information Agency (USIA) have
developed new special training and ex-
change programs under which 10,000
Central Americans will be educated in
the United States through FY 1990. The
programs cover a wide spectrum, from
undergraduate education for poor
students to advanced research oppor-
tunities.
The Central American Peace
Scholarships Project (CAPS) was
launched by AID in February 1985. The
project will provide scholarship oppor-
tunities in the United States to approx-
imately 7,000 Central Americans over
5 years, primarily from lower income
families. CAPS will offer English
language and remedial education as an
integral part of the program and has The Commission report identified one
built-in incentives to reward countries strong trend in the region: "Democracy
that emphasize concern for lower income is becoming the rule rather than the ex-
youth, women, and minorities. Leader-
ship potential is an important selection ception." Democratic patterns continue
criterion. on. to develop in El Salvador, Guatemala,
sh
Hon
Some 1,200 long-term and short- Honduras, and Panama, while
democracy remains the norm in Belize
term participants should be in training and Costa Rica. The Sandinistas,
in the United States by the end of FY however, continue antidemocratic
1985. By FY 1986, participants are to policies in Nicaragua.
include 450 long-term scholars and 900
short-term trainees. Under the CAPS
project, $2 million from the FY 1984
supplemental appropriations was used to
finance the Georgetown University
"Central American Students Project."
More than 100 Central Americans will
participate, as well as some 70
faculty/administrators from Central
America and the United States.
The USIA plan for scholarships in
Central America, totals $9.5 million in
FY 1985. It increases International
Visitors, Fulbright, and university
linkage grant programs and establishes
a new program for undergraduates.
Some 430 individuals, one-third of them
faculty and administrators, will par-
ticipate in these programs; 3,000 Central
American students, at graduate and
undergraduate levels, will be involved
over the next 5 fiscal years.
Peace Corps. Working with AID
and USIA, the Peace Corps is expanding
cooperation with Guatemala, Honduras,
Belize, and Costa Rica. The Peace Corps
has no operations in El Salvador (for
security reasons) or Nicaragua (where
the Sandinistas in 1979-80 rejected U.S.
offers to send volunteers). A program in
Panama is under consideration.
In the Caribbean Basin, the Peace
Corps aims to increase agricultural pro-
ductivity and exports. In response to the
Commission's recommendations, the
Peace Corps' goal is to raise the number
of volunteers from about 600 to 1,000 in
1985 and to focus cooperative efforts
with AID on education. Approximately
80% of the increase in volunteers will be
placed in formal and nonformal educa-
tional projects. Participating in AID-
funded education programs whenever
and wherever possible, the other 20% of
the volunteers will be assigned to rural
self-help housing, health/nutrition, and
small enterprise development. There has
been good response from AID Country
Missions to joint education efforts with
the Peace Corps.
Building Democracy
Democratic Practices
In El Salvador democratic political
development was affirmed by presiden-
tial elections in March and May 1984 in
which nearly 80% of the Salvadoran
electorate turned out in the presence of
hundreds of international observers to
elect Jose Napoleon Duarte. Nine
political parties representing a broad
range of opinion campaigned in the
March 1985 legislative and mayoral elec-
tions, which completed the constitutional
renewal despite guerrilla attacks and
harassment.
Political murder in El Salvador by
"death squads" declined dramatically
from the levels of previous years, par-
ticularly after President Duarte took of-
fice. Urban killings by guerrilla groups,
however, have increased.
Due to the guerrilla threat, the state
of siege restricts some constitutional
rights. Nevertheless, the government
has reinstated the right of assembly for
political parties and peaceful organiza-
tions, including church and labor groups.
Groups sympathetic to the guerrillas
have freely run advertisements and held
marches, demonstrations, and a human
rights congress dominated by anti-
government speeches.
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Guatemala held a nationwide elec-
tion on July 1, 1984, to select delegates
to a Constituent Assembly. More than
72% of those eligible cast ballots without
official interference. Moderate parties
won a majority in the Constituent
Assembly, which is drafting a new con-
stitution prior to national elections
scheduled for October 27, 1985, and a
runoff, if necessary, in November. The
new Congress will be seated in
December 1985, and a new civilian presi-
dent will be inaugurated next January.
The Guatemalan military is maintaining
the scrupulous neutrality it adopted for
the Constituent Assembly election.
Honduras continues to consolidate
the democratic system begun with the
1981 Constitution and presidential elec-
tion. Following the replacement of the
chief of the armed forces and other
military officers in March 1984, their
successors reaffirmed military support
for civilian rule and the 1985 elections.
Labor and peasant organizations con-
tinue to operate freely and to play a
major role in national events. The cam-
paign is underway for presidential and
congressional elections scheduled for
November 1985. The succession will be
the first transfer of power from one
elected president to another in Honduras
since 1927.
Panama returned to democracy on
October 11, 1984. The inauguration of
President Barletta and his civilian
government culminated a process of
political opening begun in 1978. Isolated
incidents of violence and a slow vote
count punctuated by charges of fraud
marred the election, which was other-
wise peaceful and marked by a large
turnout of voters. The new president
has pledged support for the principles of
democracy, and, for the first time since
1968, the legislature has significant
powers.
Belize held its first postindepend-
ence national elections on December 14,
1984. They were peaceful, open, and
honest. The opposition won control of
the Parliament and the ruling party
handed over power on December 17.
Costa Rica remains steadfastly
democratic despite pressing economic
problems. As President Luis Alberto
Monge told the International Labor
Organization in Geneva on June 12,
1984: "Democracy works as a means of
settling the problems of production and
to win battles in the struggle against
underdevelopment and poverty." As a
country whose citizens demand respect
for the rule of law, Costa Rica has stood
up to Sandinista intimidation, most
recently over the Christmas eve kidnap-
ing from the Costa Rican Embassy in
Managua of a young Nicaraguan who
had sought asylum there. President
Monge's strong economic policies,
backed by an independent legislature,
produced the highest growth rate in
Central America in 1984.
Nicaragua continued to be the sole
exception to the general trend of
democratic progress in Central America.
During 1984, the Sandinista National
Liberation Front (FSLN) increased
totalitarian controls over Nicaraguan
Government and society through elec-
tions that excluded the major democratic
opposition coalition and its candidate,
former Sandinista junta member Arturo
Cruz. Following closely the Cuban
model, the FSLN runs the Sandinista
Popular Army, the Sandinista Popular
Militia, the Sandinista Defense Commit-
tees, the Sandinista Neighborhood Com-
mittees, and other mass organizations.
Centralized government control of the
educational system, as well as radio
news and all television programming, is
in the hands of FSLN cadre assisted by
Democracy works as a means of settling the problems of produc-
tion and to win battles in the struggle against underdevelopment
and poverty.
President Monge,
June 12, 1984
some 2,000 Cuban teachers. The govern-
ment publishes one newspaper, enjoys
the uncritical support of a second, and
exercises stringent prior censorship of
the only opposition paper, La Prensa.
One of its most effective instruments of
political control is the ration card issued
by the Sandinista Defense Committees.
Since August 1984-when the govern-
ment took over the distribution of corn,
beans, rice, cooking oil, sugar, salt,
soap, and sorghum-the ration card has
become an instrument of control affect-
ing the means to acquire even basic
staples.
issues that might otherwise be exploited
by antidemocratic forces. The trend
toward more democratic government
provides many opportunities to increase
our support for democratic institutions
and processes from the national to the
community level.
To help individual Central American
countries carry out fair elections and to
build a permanent institutional capacity
within the region to provide this assist-
ance, AID is supporting the Center for
Electoral Advice and Promotion, an
autonomous, permanent activity of the
Inter-American Institute of Human
Rights located in San Jose, Costa Rica.
The center is a key source of technical
advice and assistance to electoral
Responding to internal and external
pressures, the Sandinistas held national
elections on November 4, 1984. Pro-
tracted negotiations took place with the
opposition over electoral conditions, but
the Sandinistas insisted on keeping their
inherent advantage as party, govern-
ment, and armed forces rolled into one.
Censorship of the press, harassment and
intimidation of the opposition, and a
short campaign period forced the prin-
cipal opposition parties to coalesce and
then to withdraw from the election.
Since the "election," the Sandinistas
have suppressed or forced into exile
many of the remaining leaders of the
democratic opposition.
Democratic Institutions
The Commission identified strengthen-
ing of democratic institutions and sup-
port for countries in transition to
democracy as essential to U.S. interests
in Central America. This recommenda-
tion reinforces for Central America the
President's 1982 announcement to the
British Parliament that the United
States would make a major effort to
help "foster the infrastructure of
democracy around the world."
Our objective in Central America is
to help develop or strengthen institu-
tional capacity for peacefully brokering
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tribunals and private institutions on
designing acid implementing electoral
systems and procedures; for observation
and evaluation by impartial experts of
how elections are conducted; and for
sponsorship of conferences, research,
and other activities that generate broad
support for representative democracy.
We also support efforts to improve
electoral systems on a country-specific
basis. The FY 1984 El Salvador election
project enabled the Central Elections
Council to modernize and improve its
registration and vote tabulation pro-
cedures, to conduct a broader public
education campaign on eligibility re-
quirements and voting procedures, and
to expand the number of international
observers present at the May 1984
presidential election. The system
developed also was employed for the
March 1985 legislative and municipal
elections.
In Honduras, AID has provided $5
million in locally generated currencies to
the recently established National Elec-
toral Tribunal to help develop a nonpar-
tisan, comprehensive national voter
registration system. This funding has
been used primarily for computer equip-
ment and technical training and
assistance.
In leadership development and civic
education, AID is helping to finance pro-
grams of the Partners of the Americas
aimed at promoting the democratic proc-
ess in decisionmaking at the community
level. Civic leaders are being prepared
as trainers in techniques of problem
solving, community action, and civic
responsibilities, so that they may help
the citizens of their communities become
informed participants in the local
political process.
We also are developing a pilot
regional leadership development pro-
gram with a private institution in Costa
Rica, the Center for Research and
Training in Political Administration,
which would offer young political leaders
from the Central American countries
professional, nonpartisan training in
grassroots organizations, labor-
management relations, local govern-
ment, interest groups, negotiations, and
public relations.
Another important assistance area is
support for legislative bodies. AID pro-
poses to facilitate sharing with Central
Americans a highly successfully ex-
perience in the Dominican Republic.
With AID assistance, a Dominican
university developed and implemented a
training program for new legislators in
1982. The Dominican Congress is now
planning to establish a center which will
train legislators, members of the ex-
ecutive branch, and city council; under-
take studies on policy issues; maintain a
reference center; and provide intern-
ships for students. We plan to assist
representatives from the Dominican
university and Congress to work with
appropriate institutions in Central
America to develop similar programs.
USIA also has increased its pro-
gramming of U.S. speakers traveling to
Central America and International
Visitors invited to the United States to
discuss democratic processes. For exam-
ple, special delegations of journalists and
legislators from Costa Rica, El Salvador,
Guatemala, and Honduras were brought
to the United States to observe the
November 1984 U.S. elections.
Nongovernmental efforts to
strengthen democratic development
abroad also have increased, particularly
those of the National Endowment for
Democracy and affiliated institutes of
the U.S. Chamber of Commerce, the
AFL-CIO, and the Republican and
Democratic Parties. The Free Trade
Union Institute of the AFL-CIO has
provided assistance in the form of loans,
medical assistance, and family resettle-
ment support to democratic trade
unionists from Nicaragua now living in
exile in Costa Rica. The National En-
dowment for Democracy has given a
grant to the Center for Political Studies
in Guatemala for activities aimed at
bolstering the transition to democracy.
The Endowment has also funded na-
tional seminars in Honduras to promote
political awareness among non-Marxist
labor and peasant leaders.
This innovative and long overdue
focus on the political and organizational
dimensions of democracy has received
widespread support in Central America.
Administration of Justice
Implementing the recommendation of
the Commission report, we have begun
an intensive effort to help the Central
Americans strengthen their judicial
systems. Indeed, in his speech to the
November 1984 General Assembly of the
Organization of American States (OAS),
Secretary Shultz highlighted the impor-
tance of the administration of justice to
the consolidation of democracy
throughout the hemisphere.
In September 1984, the United
States committed $9.23 million in FY
1984-85 ESF funds for a 3-5 year pro-
gram in support of the Salvadoran
Government's effort to strenthen the ad-
ministration of justice. This program in-
cludes:
? Support for a revisory commission
to identify the legislative, procedural,
and administrative problems that pre-
vent the judical system from functioning
effectively and to design and oversee the
implementation of solutions to those
problems;
? Support for a criminological in-
stitute, which is to include a permanent
investigative capability and a modern
forensic laboratory;
? Support for a judicial protection
capacity (which began with U.S. funding
to provide security for the trial of the
murderers of the four U.S. church-
women) to help shield participants in the
judicial process from intimidation; and
? Assistance to the court system to
improve general efficiency and respon-
siveness.
Under the program, an intensive,
6-week training of the initial group of in-
vestigator recruits was completed in
Puerto Rico, and a full-time trainer-
consultant in criminal investigation has
been assigned to work with the unit and
to assist the Government of El Salvador
in planning the operation of the
criminological institute.
The efforts of President Duarte,
continuing those of President Magana,
demonstrate the Salvadoran Govern-
ment's commitment to improving the ad-
ministration of justice. Despite the
notable success evident in the May 1984
conviction of the killers of the U.S.
churchwomen, President Duarte still
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faces an extremely difficult political task
in brokering enduring reforms among
the executive, legislative, and judicial
branches. Strong, continued U.S. sup-
port will be necessary.
Significant changes also are being
made elsewhere in the region. A new
criminal code went into effect in Hon-
duras on March 13, 1985. The need to
improve the judicial system has already
become a nonpartisan campaign pledge
by candidates of both the government
and opposition parties. Guatemala
abolished secret courts on September 7,
1983. Administration of justice and
On March 22, 1985, the United
States and ILANUD signed an agree-
ment to begin a 5-year, $10 million
regional project to expand training and
technical assistance to Costa Rica, the
Dominican Republic, El Salvador, Hon-
duras, and Panama and to Guatemala as
it returns to civilian rule. This project
will enable ILANUD and third-country
experts to provide technical assistance
to all elements of national judicial
systems-from legal reform commis-
sions to Supreme Courts to justices of
the peace, from court administrators to
prosecutors and public defenders. The
project will provide scholarships for
Security
One way to fight the terrorists, the drug traffickers, and all who
abuse human life and dignity, is to develop the capacity of our
legal systems to render independent, fair, timely, and accessible
justice.... It is fundamental that in a democratic society all
citizens have access to means for effective enforcement of their
civil, political, economic, and social rights.
Secretary Shultz,
November 12, 1984
human rights are key concerns in the
drafting of the new Guatemalan Con-
stitution.
During the past year, the United
States supported a conference of Cen-
tral American bar associations in Costa
Rica, a workshop on the administration
of justice at the annual meeting of the
Inter-American Bar Association in
Panama, and participation of Central
Americans in an American Bar Associa-
tion meeting in Texas. The Inter-
American Bar Association is making the
administration of justice the central
theme at its September 1985 annual
meeting.
The U.S. Government funded
scholarships for students from El
Salvador, Honduras, and Costa Rica for
graduate study at the University of
Costa Rica. Law School. We also pro-
vided funding for Central American
judges and prosecutors to participate in
courses at the UN-affiliated Latin
American Institute on the Prevention of
Crime and Treatment of Offenders
(ILANUD) in San Jose.
graduate legal training and continuing
legal education at the University of
Costa Rica and support an enhanced law
program at the University of Honduras.
It also will involve bar associations and
other organizations able to contribute to
strengthening networks of legal profes-
sionals committed to judicial reform and
to the exchange of ideas and information
on improvements to the administration
of justice. This innovative project sup-
ports the 3-5 year program for El
Salvador.
The Administration strongly concurs
with the Commission's recommendation
that we help to strengthen the entire
process of administration of justice, in-
cluding support for agencies responsible
for criminal investigations. An exception
to Section 660 of the Foreign Assistance
Act enabled us to move ahead with
training and other support for the in-
vestigative and judicial protection pro-
grams in El Salvador. In the FY 1986
Foreign Assistance Authorization bill we
requested that the exception be ex-
tended to all of Latin America under
carefully defined conditions and subject
to prior notification to the Congress.
The Commission encountered a sobering
security situation in Central America.
During the 1970s, the steady growth of
Cuban military power, backed by the
direct Soviet military presence in Cuba,
was accompanied by reductions in U.S.
military presence in the Caribbean
Basin. Then, after the Sandinistas came
to power in Nicaragua in 1979, the
U.S.S.R. shifted from opposition to sup-
port of Cuban advocacy of armed strug-
gle. The belief that revolutionary condi-
tions prevailed throughout Central
America, especially in El Salvador, was
widespread.
Summarizing the strategic signifi-
cance of Central America to the United
States, the Commission consensus was
that our national security interests in-
clude:
? Preventing developments that
might require allocating large resources
to defend the southern approaches to
the United States;
? Forestalling threats to the Carib-
bean shipping lanes;
? Avoiding a proliferation of
Marxist-Leninist states that would in-
crease violence, dislocation, and political
repression; and
? Ending the erosion of our ability
to influence events, which would result
from a perception that we were unable
to protect vital interests so close to the
United States.
In 1984, El Salvador's elected
government and increasingly profes-
sional armed forces made significant
progress in dealing with the guerrilla
war as a political as well as a military
struggle. But the activities of Cuba and
Nicaragua, with sizable Soviet coopera-
tion and material support, continue to
pose a serious threat to Central
American governments and to U.S. in-
terests in the region. Direct Soviet arms
deliveries to Nicaragua and Nicaragua's
continued support for the armed in-
surgency in El Salvador underline again
the gravity of current security concerns
and of the potential strategic risks at
stake.
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Nicaragua
For all of these reasons, the con-
solidation of a Marxist-Leninist
regime in Managua would be seen
by its neighbors as constituting a
permanent security threat.
Because of its secretive nature, the
existence of a political order on
the Cuban model in Nicaragua
would pose major difficulties in
negotiating, implementing, and
verifying any Sandinista commit-
ment to refrain from supporting
insurgency and subversion in
other countries. In this sense, the
development of an open political
system in Nicaragua, with a free
press and an active opposition,
would provide an important
security guarantee for the other
countries of the region and would
be a key element in any negotiated
settlement.
The Commision Report,
Chapter 7
In the year since the Commission issued
its report, the Sandinista National
Liberation Front (FSLN) further con-
solidated its control over the Nicaraguan
Government and continued its military
buildup. After the November 4 "elec-
tions," Soviet arms deliveries increased
dramatically. During the past 12 months
Nicaragua:
? Increased its armed forces to
62,000 active duty personnel and a total
force of 119,000, including reserves and
militia, while announcing the intention
to expand even further through man-
datory conscription;
? Acquired Soviet MI-24 Hind at-
tack helicopter gunships;
? Expanded its military inventory to
150 T-54, T-55, and PT-76 tanks; 200
other armored vehicles; and some
300-400 surface-to-air missiles;
? Neared completion of a runway
long enough to service any aircraft in
the Soviet or Cuban inventory at Punta
Huete outside Managua; and
? Deepened security links to Cuba
and the Soviet Union as well as to
radical states, such as North Korea,
Libya, and Iran.
Nicaragua serves as a conduit for
money, arms, munitions, medical sup-
plies, and communications and logistical
support to the Salvadoran guerrillas.
The Salvadoran guerrillas maintain
training facilities and command and con-
trol centers in Nicaragua. However,
there are indications that some
Salvadoran guerrilla units are experienc-
ing difficulties in receiving supplies. This
disruption of supplies is due to several
factors, including more effective in-
telligence and patrol operations by
Salvadoran Government forces, more ac-
tive Honduran patrols along the border
and in refugee camps, and armed
resistance activities within Nicaragua.
There might be an argument for
doing nothing to help the govern-
ment of El Salvador. There might
be an argument for doing a great
deal more. There is, however, no
logical argument for giving some
aid but not enough. The worst
possible policy for El Salvador is
to provide just enough aid to keep
the war going, but too little to
wage it successfully.
The Commision Report,
Chapter 6
The Administration and Congress
approved the Commission's recommen-
dations to significantly increase military
aid to El Salvador. This assistance is
already making a positive difference in
the military situation.
As recommended by the Commis-
sion, U.S. military aid has been ad-
ministered with close and continual at-
tention to human rights considerations.
Under Public Law 98-332, the Ex-
ecutive now reports to Congress on El
Salvador every 60 days. The four
reports issued so far document steady
improvements in respect for human
rights by the Government and armed
forces of El Salvador. The number of
civilian deaths attributable to political
violence has declined sharply. The
Federal Bureau of Investigation is in-
vestigating individuals residing in the
United States who may be directing,
financing, or otherwise involved in
"death squad" activities in El Salvador.
In its treatment of the guerrilla war
in El Salvador, the Commission felt that
it was imperative to settle on a level of
aid related to the operational require-
ments of a humane counterinsurgency
strategy and to sustain that aid over
time. The Commission specifically
recommended providing the Salvadorans
with increased air and ground mobility;
increased training; support for higher
force levels; greater stocks of equip-
ment; and better troop conditions,
especially an improved capability to
evacuate the wounded and to provide
prompt medical attention.
These recommendations formed the
basis for the Administration's request
for increased assistance to El Salvador,
which was included in two supplemental
appropriation bills passed by Congress.
In June 1984 the Congress passed an
urgent supplemental including $61.8
million in military assistance. In the FY
1984 supplemental, the Congress ap-
propriated an additional $70 million.
Together with the FY 1984 Continuing
Resolution, military assistance for El
Salvador in FY 1984 amounted to $197
million. Though short of the $243 million
requested by the Administration, it was,
nonetheless, a substantial increase over
the $81 million appropriated for FY
1983. For FY 1985 Congress appro-
priated $128.25 million, $4 million short
of the amount requested.
With U.S. support, including train-
ing as well as materiel, the Salvadoran
Armed Forces have been able to main-
tain the battlefield initiative. They are
now larger, better trained and led, and
have improved mobility and communica-
tions. In addition, the military now has
an aeromedical evacuation capability
which, together with an expanded corps
of trained medics, has improved morale
and decreased the mortality rate among
wounded Salvadoran troops. The arrival
of two C-47 aircraft with mounted
machine guns has provided the armed
forces with the capacity to respond to
units under attack by guerrilla forces.
On January 7 and 8, 1985, a Salvadoran
Army battalion withstood a guerrilla
force twice its size because of the critical
help of the armed C-47s. The Salva-
doran military will occasionally suffer
some battlefield setbacks, but it is un-
doubtedly a better military force now
than a year ago.
As anticipated by the Commission,
this improvement in the military situa-
tion for the Salvadoran Government con-
tributed to the FMLN/FDR decision to
accept President Duarte's October 1984
offer at the United Nations to meet with
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the insurgents. This historic step offers
some hope for the eventual reincorpora-
tion of FMLN/FDR members into the
greatly strengthened Salvadoran
democratic process. The short-term
results, however, have been disappoint-
ing. That the guerrillas have by no
means abandoned the goal of complete
power is evidenced in their intransigent
November 30, 1984, demands for power-
sharing, recognition of areas "under
guerrilla control," the amalgamation of
government and guerrilla forces, and the
formation of a new government as
preconditions for elections.
Still, the guerrillas are beginning to
demonstrate a lack of resolution in the
face of the Salvadoran military's in-
creased effectiveness and profes-
sionalism. The increased ability of
government troops also has strength-
ened President Duarte's hand in dealing
with the armed forces as an institution.
The more self-confident military knows
that the peace dialogue can be limited to
a constitutionally based discussion of the
FMLN/FDR's participation in the demo-
cratic process.
The humane pursuit of the war has
been a central theme for President
Duarte and his government. At La
Palma and again at Ayagualo,
Salvadoran officials proposed an agree-
ment to end all attacks on the economic
infrastructure and populated areas.
Although their proposals were rebuffed
by the FMLN/FDR, President Duarte
has enforced strict compliance with rules
of engagement to minimize noncom-
batant casualties. The government's Na-
tional Plan envisions the extension of
increased government services and pro-
grams to the civilian population in con-
flictive areas. We strongly support ef-
forts to monitor closely the rules of bat-
tlefield engagement and to increase
assistance to the National Plan to help
displaced persons.
Other Regional Security
Developments
Beyond El Salvador and Nicaragua, the
principal security concerns of the Com-
mission report, significant security
developments took place in Honduras,
Guatemala, and Costa Rica.
Honduras. The military buildup in
Nicaragua has placed new pressure on
Honduras to modernize its small armed
forces, less than one-fifth the size of
Nicaragua's expanded military ap-
paratus. U.S. security assistance to Hon-
duras ($77 million in FY 1984) helped to
upgrade the mobility, firepower, and
reaction capabilities of the Honduran
military. With our assistance the Hon-
duran Armed Forces are being restruc-
tured to respond to security threats
from Nicaragua and from Salvadoran
guerrillas seeking sanctuary along the
border with El Salvador. We have
developed a pattern of close cooperation
with Honduras on regional issues. We
have been discussing with the Hon-
durans how both security and economic
aspects of that relationship might be
revised to reflect current circumstances
and to achieve mutually shared objec-
tives. These discussions are continuing.
Guatemala. The Commission noted
the continuation of insurgency in
Guatemala and the successful efforts of
the military to combat the guerrillas
through aggressive small-unit patrols
and civil affairs programs. In the past
year the Guatemalan Army continued to
limit guerrilla operations in rural areas.
The Mexican Government's decision in
1984 to move Guatemalan refugees from
border camps to a region further inland
helped improve Guatemalan-Mexican
relations and deprived guerrillas of
possible sources of logistics support and
recuperation.
Guatemala's enlargement of the local
civil defense force to 900,000 members
also has played a key role in reducing in-
surgent activity. These largely unarmed
forces, while defending their com-
munities, also provide intelligence on
guerrilla movements, thereby limiting
guerrilla mobility in the countryside.
Despite army successes, the shortage of
spare parts for helicopters and other
supplies hampers the government's
ability to respond to guerrilla activity.
The insurgents have promised to inten-
sify their activities in the months leading
up to general elections in October 1985.
Although some abuses at the local level
continue, the Guatemalan military now
accepts the political need to allow dis-
sent and to focus not on indiscriminate
repression but development as the best,
long-run counterinsurgency strategy.
The Commission encouraged civic
action to address the root causes of in-
surgency. The Guatemalan Government,
in fact, devotes considerable army man-
power to such activities, which they
designate "civil affairs" and which em-
phasizes the need for overall coordina-
tion of rural development. In addition,
the National Reconstruction Committee
has rebuilt several dozen towns de-
stroyed in heavy fighting in 1981-82 and
is encouraging refugees and displaced
persons to return to their homes and
land.
Costa Rica. Tensions between
Costa Rica and Nicaragua increased in
1984 and early 1985. Armed incidents
along their common border pointed to
Costa Rican vulnerabilities. U.S.
assistance is directed at upgrading Costa
Rica's border-monitoring capabilities,
professionalization of Civil Guard per-
sonnel, and the development of a reac-
tion unit for preserving border integrity.
U.S. Security Assistance
and Military Presence
The United States is committed to pro-
viding the necessary security for the
protection of democratic processes in the
region. This "security shield" consists of
military assistance, training, exercises,
naval maneuvers, and construction pro-
grams, including:
? $321 million in FY 1984 and $237
million in FY 1985 in military assist-
ance-MAP grants, FMS credits, and
IMET;
? Training under IMET of military
personnel from five Central American
countries-748 with FY 1984 funds and
1,076 with FY 1985 funds in U.S. and
Panama Canal area schools (these
figures exclude soldiers trained by U.S.
Mobile Training Teams sent to specific
countries for brief periods of time);
? Enhancement of regional military
cooperation through major combined ex-
ercises, such as "Ahuas TARA II" and
"Granadero I" as well as a series of
small-scale deployment exercises to
enhance the joint readiness of U.S. and
allied Armed Forces in the region;
? U.S. naval deployments near Cen-
tral American waters and the "King's
Guard" combined naval surveillance and
interdiction exercises with the Honduran
and Salvadoran Navies in the Gulf of
Fonseca; and
? Completion of airfield improve-
ments at Palmerola and La Ceiba that
increase Honduran military mobility.
In the fall of 1984, the School of the
Americas operated by the U.S. Army
was moved when, in compliance with the
Panama Canal Treaty, its operations in
Panama were discontinued. The school
has reopened at Ft. Benning, Georgia,
and will be in full operation by
December 1985.
In 18 months of operation, the
Regional Military Training Center in
Honduras trained some 9,000 Central
American military and security person-
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nel. One cf its notable contributions was
to facilitate the rapid, but professionally
sound, buildup of the Salvadoran Armed
Forces during the critical election year
of 1984. The Salvadoran military now
has its own basic training center at La
Union.
These U.S. security assistance and
military activities were in harmony with
the Commission's judgments and recom-
mendations. However, the gap in the
military capabilities among the region's
individual countries increased substan-
tially during 1984.
? Despite some $77 million in U.S.
security assistance, the modernization of
the Honduran Armed Forces did not
keep pace with the Nicaraguan military
buildup.
? Despite $9 million in MAP and
$133,000 in IMET, Costa Rica was in a
similar situation, with its 8,000 Civil and
Rural Guards relying almost exclusively
on small arms.
The security threat-primarily in
the form of Soviet-bloc arms deliveries
to Nicaragua and the expansion of the
Sandinista armed forces and paramili-
tary organizations-may still be growing
at. a faster pace than the policy and
response capabilities of the United
States and the Central American
democracies.
U.S. support for regional diplomatic
peace efforts is strong, consistent, and
undiminished. We have repeatedly made
clear in private communications and
public statements our willingness to sup-
port and abide by a comprehensive and
fully verifiable implementation of the
Contadora Document of Objectives of
September 9, 1983.1
During 1984, U.S. diplomacy pur-
sued the Commission's recommendations
that we test "Nicaragua's willingness to
enter into a general agreement" and
support efforts of the Contadora Group
to find a comprehensive reciprocal and
verifiable approach to the Central
American crisis.
The Office of the Ambassador at
Large and Special Envoy for Central
America has proven to be an effective
means for implementing this diplomacy.
The incumbent, Ambassador Harry W.
Shlaudeman, made 27 trips to Latin
America between March 1984 and
March 1985, holding 139 meetings with
chiefs of state and senior Foreign
Ministry officials.
The Contadora Process
The Contadora process has been the
centerpiece of diplomacy among the
regional countries since early 1983.
Although negotiations were stalled in
February 1985 by a dispute over
political asylum between Nicaragua and
Costa Rica, the Contadora Group
scheduled a new round for April.
... we would surely welcome
genuine Nicaraguan interest in
peace. All we are asking is that
the Sandinistas commit themselves
to specific, concrete, and far-
reaching actions that would show
their good faith interest in
peace-actions involving no more
than they committed themselves to
5 years ago[:] stop exporting
subversion to their neighbors; ...
reduce their bloated military to
restore regional balance; sever
military ties with Cuba and the
Soviet bloc; and begin to honor
their promises to the Organization
of American States to create a
democratic, pluralistic system.
Vice President Bush,
February 28, 1985
Three drafts of a final agreement
were prepared in 1984. A draft "Con-
tadora Act for Peace and Cooperation in
Central America" was prepared by the
Contadora Group in June. After initial
discussions, the Contadora Group
prepared a second draft which it
presented to the five Central American
states on September 7. Nicaragua an-
nounced on September 21 that it would
'The nine countries participating in the
Contadora process formally agreed to this
document as containing the objectives of
their negotiations. These countries are the
four members of the Contadora Group (Co-
lombia, Mexico, Panama, and Venezuela) and
the five Central American countries (Costa
Rica, El Salvador, Guatemala, Honduras, and
Nicaragua).
sign this draft provided it was not
modified and called on the United States
to adhere to an additional protocol.
The other Central American govern-
ments welcomed this draft as a positive
step but cited the need to strengthen
provisions for verification and control
and to provide for a more balanced and
orderly implementation of its security
provisions in particular.
U.S. spokesmen noted that the
September 7 draft was much improved
and that its elaboration was a positive
step in the negotiating process. We also
stated our view that provisions for
verification needed to be strengthened.
In consultations with Contadora par-
ticipants, we stressed that our textual
reservations are in no way to be equated
with opposition to an effective treaty,
which we would support.
On October 20, El Salvador, Costa
Rica, and Honduras proposed another
draft, incorporating the specific changes
they felt necessary. Extensive consulta-
tions among the Contadora participants
as to how the September and October
versions might be reconciled took place
on the margins of the OAS General
Assembly in Brasilia November 12-16
and have continued through normal
diplomatic channels.
The elaboration of several drafts in
1984 suggests that the Contadora pro-
cess could make rapid progress in 1985.
With negotiations about to resume, the
key question is whether Nicaragua is
willing to negotiate.
Bilateral Conversations
With Nicaragua
We also have supported the Contadora
process in bilateral talks with Nicaragua
held in Manzanillo, Mexico. These
discussions were begun at the request of
the President of Mexico, acting on
behalf of the Contadora Group.
Secretary Shultz visited Managua on
June 1, 1984, to begin the process. Since
then, there have been nine rounds of
talks between Special Envoy Harry W.
Shlaudeman and Nicaraguan Vice
Minister of Foreign Affairs Victor Hugo
Tinoco. To give the talks the maximum
chance to succeed, the two sides agreed
not to discuss publicly their specific con-
tent. Although the Nicaraguans have
publicly characterized the talks in a
The Search For Peace
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general way, they have largely abided by
this rule of confidentiality, as have we.
In mid-January we decided not to
schedule further bilateral talks due to
concern that Nicaragua was using them
to avoid comprehensive negotiations
within Contadora's multilateral frame-
work. The Manzanillo talks have been
useful in permitting each side to present
its concerns fully to the other, but they
have made no substantive progress. We
undertook the Manzanillo talks in hopes
of facilitating a successful outcome of
the multilateral Contadora process. Any
bilateral agreement necessarily would be
incomplete with respect to all elements
of the regional crisis. Arms and troop-
level reductions, for example, can only
be negotiated between Nicaragua and its
neighbors. Nicaragua, however, appears
to prefer a bilateral agreement, in lieu
of Contadora.
On February 27, 1985, in a move
that appeared designed primarily for
public relations impact, President
Ortega announced Nicaragua's intention
to send home 100 Cuban military ad-
visers; to suspend, for the time being,
acquisition of new armaments, including
"interceptor aircraft"; and to invite a
U.S. congressional delegation to visit
Nicaragua. The moratorium on new ar-
maments systems is potentially signifi-
cant, but only if it proves more far-
reaching and permanent. The offer to
send home 100 of the 2,500-3,500 Cuban
military advisers could be significant,
provided that it would be the beginning
of a continuing withdrawal to be under-
taken in the near term as part of an
overall settlement.
We have communicated to all con-
cerned our willingness to resume
bilateral talks if that would contribute to
a comprehensive agreement within Con-
tadora. On March 2, Secretary of State
Shultz met with Nicaraguan President
Daniel Ortega in Montevideo, Uruguay,
to explore such possibilities. We are
looking to the Contadora negotiations
for evidence of Nicaragua's willingness
to negotiate seriously. Normal diplo-
matic channels remain open to continue
this dialogue.
Internal Dialogue in
El Salvador and Nicaragua
We strongly support President Duarte's
dialogue with Salvadoran guerrillas. The
lack of a parallel development in
Nicaragua was 1984's major disappoint-
ment.
In a speech to the UN General
Assembly on October 8, 1984,
Salvadoran President Jose Napoleon
Duarte proposed to meet military
representatives of the Salvadoran guer-
rillas in La Palma, El Salvador. That of-
fer was accepted by the FMLN/FDR
and meetings took place on October 15
in La Palma and on November 30 in
Ayagualo.
At the first meeting, on October 15,
President Duarte personally offered the
insurgents the opportunity to be reincor-
porated into civil and political society,
including the chance to participate in up-
coming municipal elections. Public hopes
that the talks might lead to an early
agreement to end the war were dealt a
blow by the guerrillas' reversion to un-
compromising demands in the second
round on November 30. This hardening
contradicted public statements made in
the United States by FDR represen-
tatives that guerrilla groups might par-
ticipate in the March 1985 nationwide
municipal and assembly elections.
The dialogue that was begun at La
Palma and continued at Ayagualo has
not yet resolved the major disagree-
ments in the Salvadoran conflict. Its ini-
tiation, nevertheless, crossed a threshold
of enormous significance. That President
Duarte was able to meet with the guer-
rillas and lead his government to those
talks reflects the dramatic change that
has taken place in Salvadoran politics.
President Duarte's initiative began the
process of discussions that make it possi-
ble for the rebels to be incorporated into
their society within a fully represen-
tative political system. We expect the
dialogue will resume after the March 31
elections.
Nicaragua's 1984 elections proved to
be an opportunity for a breakthrough
that was, unfortunately, lost. The will-
ingness of resistance forces to lay down
their arms if allowed to participate in
genuinely free and fair democratic elec-
tions had been on record, in writing,
since December 1983. During the late
spring and early summer of 1984 a coor-
dinated democratic opposition (the Coor-
dinadora) looked to the highly respected
Arturo Cruz, a former member of the
Sandinista government, to lead it in the
November 1984 elections. Although Cruz
did not represent the armed opposition,
few doubted that the entry into the cam-
paign of this former junta member
would help redirect Nicaragua's political
life toward democratization.
Negotiations between the San-
dinistas and the democratic opposition
(brokered by the Socialist International)
took place in Rio de Janeiro in early Oc-
tober 1984. They collapsed, however,
and the Sandinistas withdrew their pro-
posal; the democratic opposition agreed
to participate on the basis proposed but
was powerless to create the conditions
necessary in the face of Sandinista in-
transigence.
The Nicaraguan opposition, armed
and unarmed, continues to seek a
dialogue with the Sandinistas. On March
2, 1985, several resistance organizations
specifically and formally called for a
Catholic Church-sponsored dialogue with
the FSLN. Their manifesto-announced
in San Jose, Costa Rica, by opposition
leaders Arturo Cruz, Adolfo Calero, and
Alfonso Robelo-included the following
elements:
? Convocation by the Nicaraguan
bishops conference;
? Suggestion that other Central
American governments act as guaran-
tors of any agreements reached;
? The presence as observers or
guarantors of any other hemispheric
governments;
? Suspension of all armed activities
and a cease-fire in place; and
? Acceptance of Daniel Ortega "as
head of the executive branch until such
time as the people pronounce themselves
in a plebiscite."
The response, at this writing, of the
Sandinistas has been twofold. On March
7, Arturo Cruz, who was attempting to
present the offer to the Nicaraguan
Government, was denied entry into
Nicaragua. Two days later, the Interior
Minister summoned 10 leaders of the
unarmed opposition to accuse them of
conspiring with anti-Sandinista guer-
rillas.
On March 22, 1985, Nicaragua's
Roman Catholic bishops expressed their
"willingness to mediate in an internal
dialogue." In doing so, the bishops ex-
plicitly recalled their Easter pastoral of
April 22, 1984, which called for "all
Nicaraguans inside and outside the coun-
try ... [including] Nicaraguans who
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have taken up arms against the govern-
ment," eo participate in "a sincere effort
to seek appropriate solutions ... in a
climate of democratic harmony."
The Contadora Document of Objec-
tives calls for "national reconciliation ef-
forts wherever deep divisions have taken
place within society, with a view to
fostering participation in democratic
political processes. . . ." The Sandinistas
based their ascent to power on
democratic claims and promised free
elections. The world is still waiting.
Western Europe
Several West European governments
during the past year have shown an in-
terest in supporting democratic develop-
ment in Central America. West Ger-
many, for example, returned a resident
ambassador to El Salvador prior to the
first round of general elections there
last March and subsequently renewed a
program of economic assistance, sus-
pended since 1979. Many West Euro-
pean governments sent official observers
to both rounds of the Salvadoran elec-
tions.
President Duarte was well received
in visits to Belgium, France, West Ger-
many, Portugal, and the United
Kingdom in July, as was Costa Rican
President Monge during a West Euro-
pean tour in June. The West Europeans
have given the Contadora process and
the U.S.-Nicaraguan talks at Manzanillo
their strong support and encourage-
ment. They have joined us in welcoming
President Duarte's dialogue with
Salvadoran guerrillas.
West Germany's Willy Brandt and
other Socialist International leaders at-
tempted to persuade the Sandinistas to
create conditions to enable the Coor-
dinadora to participate in the election.
When that effort failed, few official
observers attended the Nicaraguan elec-
tions.
Cuba and the Soviet Union
We have made our positions on Central
American issues clear to both the Cuban
and Soviet Governments. In particular,
we have communicated our concerns
regarding Cuban and Soviet military ac-
tivities within and outside Nicaragua.
The Commission's analysis and recom-
mendations reaffirmed our view that we
should discourage other governments
from thinking we would support ini-
tiatives or measures that would tend to
legitimize a Cuban or Soviet role in the
region. ^
APPENDIX A:
Summary of Commission Report
The report, which was dedicated to
Senator Henry Jackson and transmitted
to the President on January 10, 1984,
consisted of the following chapters:
1. Introduction and basic themes.
2. Placed crisis in larger hemispheric
context.
3. Provided historical perspective.
4. Examined prospects for economic
and political development; presents
recommendations.
5. Discussed social issues-health
and education particularly-and makes
recommendations.
6. Explored security issues and
recommends U.S. action.
7. Looked at diplomatic aspects and
offers recommendations on pursuing
negotiated settlements.
8. Conclusion.
-On security and diplomatic issues,
the report dealt with El Salvador, Hon-
duras, Nicaragua, Guatemala, and Costa
Rica. Panama and Belize were included
for discussion of development programs.
MAJOR THEMES SET FORTH
IN THE COMMISSION REPORT
-The crisis in Central America is
acute. Its roots are indigenous-in
poverty, injustice, and closed political
systems. But world economic recession
and Cuban-Soviet-Nicaraguan interven-
tion brought it to a head.
-The crisis will not wait. It must be
addressed at once and simultaneously in
all its aspects. Ultimate resolutions de-
pend on economic progress, social and
political reform. But insurgencies must
be checked if lasting progress is to be
made on these fronts.
-Indigenous reform, even in-
digenous revolution, is no threat to the
United States. But the intrusion of out-
side powers exploiting local grievances
for political and strategic advantage is a
serious threat. Objective of U.S. policy
should be to reduce Central American
conflicts to Central American dimen-
sions.
-United States has fundamental in-
terests at stake: Soviet-Cuban success
and resulting collapse of Central
America would compel substantial in-
crease in our security burden or
redeployment of forces to detriment of
vital interests elsewhere.
-As a nation we have deep and
historic interest in promotion and
preservation of democracy. Report con-
cludes that pluralistic societies are what
Central Americans want and are essen-
tial to lasting solutions. In this case, our
strategic interests and our ideals coin-
cide.
-Central Americans desperately
need our help, and we have a moral
obligation to provide it. The United
States and other nations can make a dif-
ference. But, in the end, solutions will
depend on the efforts of Central
Americans themselves.
-Although there is urgent need for
action, no quick solutions can be ex-
pected. The United States must make a
long-term commitment and stick to a
coherent policy.
-That policy can and should be
bipartisan. Commission found wide con-
sensus on principles and objectives.
POLITICAL AND ECONOMIC
DEVELOPMENT
-Central American economies grew
substantially during the 1960s and early
1970s. But income distribution was
highly inequitable, except in Costa Rica
and Panama.
-Trend toward more pluralistic
political systems in El Salvador,
Guatemala, and Nicaragua reversed in
early 1970s.
-World recession and rising
political violence had catastrophic effect
on region's economies in late 1970s,
early 1980s. All have declined
dramatically. El Salvador's gross
domestic product is off 25% since 1978.
-Even with successful stabilization
programs and restored political stability,
per capita wealth in 1990 would only be
three-quarters of what it was in 1980.
-There must be substantial in-
crease in outside assistance.
-Commission -believes economic
development cannot be separated from
political and social reform. Objective
must be parallel development of
pluralistic societies and strong
economies with far more equitable
distribution of wealth.
-We propose a program of U.S.
assistance designed to promote economic
growth, democratization, and greater
social equity.
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-We encourage the greatest possi-
ble involvement of the U.S. private sec-
tor in the stabilization effort. Recom-
mend the formation of an emergency ac-
tion committee of private sector per-
sonalities to provide advice on new
private-public initiatives to spur growth
and employment.
Recommendations: An Emergency
Stabilization Program
-Leaders of the United States and
Central America should meet to initiate
a comprehensive approach to economic
development of the region and rein-
vigoration of the Central American
Common Market.
-A $400 million supplemental in
FY 1984, over and above the $477
million now in the budget for the seven
countries. There is urgent need to
stabilize economies now going downhill
very fast.
-Focus this assistance on labor-
intensive infrastructure projects and
housing. Unemployment is a critical
problem-politically and economically.
-Establish a program to provide
U.S. Government guarantees for short-
term trade credits. External credit has
dried up. Without it economies cannot
be reactivated.
-Provide an emergency loan to the
Central American Common Market to
permit the reactivation of this vital
organization. Lack of resources in the
market to settle trade accounts among
the countries has stalled it.
-U.S. Government should take an
active role in the efforts to resolve the
external debt problems of Central
America and should encourage the coun-
tries that have not done so to seek
multilateral rescheduling.
-Also encourage commercial banks
to renegotiate at the lowest possible in-
terest rates.
Recommendations: Medium and
Long-Term
-Commission estimates $24 billion
in net external exchange inflows needed
by 1990 to foster a growth rate of 3%
per capita, returning these countries to
pre-recession levels of per capita wealth.
About half-$12 billion-is expected to
come from international institutions,
other donor countries and loans, and in-
vestments from private sector sources.
-U.S. Government will have to pro-
vide as much as $12 billion if these
financing needs are to be met.
-We propose, in this context, a
program of $8 billion over next 5 fiscal
years (FY 1985-89) in U.S. Government
assistance. This would be divided very
roughly into about $6 billion in ap-
propriated funds and about $2 billion in
contingent liabilities covering guar-
antees, insurance, and the like.
-Compared with current projec-
tions for FY 1985-89, these contribu-
tions would constitute an increase of
about $2.8 billion in appropriated funds
and $0.7 billion in contingent liabilities
over the 5-year period.
-Urge that Congress authorize
multiyear funding of this program. Com-
mission believes firm, long-term commit-
ment is essential.
-To give form and structure to the
development effort, suggest establish-
ment of the Central American Develop-
ment Organization (CADO). Perhaps
one-quarter of U.S. aid could be chan-
neled through CADO.
-CADO would consist of the United
States and those countries of the seven
willing to commit themselves to internal
democracy and reform. Continued mem-
bership would depend on demonstrated
progress toward those goals. Adherence
to regional security pact also required.
-Nicaragua could participate by
meeting these conditions.
-CADO's principal body would be a
Development Council with tripartite,
ILO [International Labor Organization]-
style representation. Would assess pro-
gram and progress toward economic
growth, democratization, reform, and
preservation of human rights.
-Other democracies would be in-
vited to join.
Additional Recommendations
-Expanded assistance from the
U.S. Government for democratic institu-
tions and leadership training-neighbor-
hood groups, cooperatives, binational
centers, and visitor programs for leaders
of labor unions, local governments, and
other organizations.
-Require a firm commitment by the
Central Americans to economic policies,
including reforms in tax systems, to en-
courage private enterprise and in-
dividual initiative, to create favorable in-
vestment climates, to curb corruption
where it exists, and to spur balanced
trade.
-Urge extension of duty-free trade
to Central America by other major
trading nations.
-Review nontariff barriers to im-
ports from Central America with,a view
toward using whatever flexibility that
exists within the framework of
multilateral agreements to favor Central
American products.
-Establishment of the Central
American Development Corporation-a
privately owned venture-capital company
which could initially be financed by a
loan from the U.S. Government.
-Recommend that the United
States join the Central American Bank
for Economic Integration.
-Technical and financial support
for export promotion and a U.S. Govern-
ment review of nontariff barriers to
Central American imports.
-Expanded availability of insurance
guarantees for new investments from
the U.S. Government's Overseas Private
Investment Corporation.
-Increased focus in assistance pro-
grams on small business and accelerated
agricultural development-particularly
in production of food for domestic con-
sumption.
HEALTH AND EDUCATION
-Democracy and prosperity in the
region require accelerated human
development. Hunger, disease, and il-
literacy sap a people's vitality and im-
pede the growth of viable democratic in-
stitutions.
-Literacy rates are unacceptably
low in several countries (e.g., Guate-
mala, 45%; El Salvador, 63%; Honduras,
60%), handicapping education efforts
seriously.
-Widespread malnutrition also
handicaps education by sending physical-
ly and mentally underdeveloped children
to school.
-Goals should include a reduction
of malnutrition, elimination of illiteracy,
expanded education, health, and housing
opportunities.
-Initial efforts must be to increase
food assistance to Central America
through the PL 480 programs.
-Commission calls for formation,
under direction of the Peace Corps, of a
Literacy Corps and a Central American
Teachers Corps.
-To meet needs in higher educa-
tion, U.S. Government scholarships
should be raised to approximately 10,000
over 4-6 years, a level comparable to
Cuban and Soviet Union efforts.
-Educational reform can also be
encouraged in the areas of technical and
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vocational education through the expan-
sion of th International Executive Serv-
ice Corps and through closer cooperation
with Central American universities to
improve the quality of education.
-Judicial systems in Central
America can be strengthened by pro-
viding resources for training judges,
judicial staff, and public prosecutors.
-Continuation and expansion of ex-
isting programs for disease control and
eradication, as well as immunization and
oral rehydration.
-Training of primary health
workers, especially nurses, should be ex-
panded and the means developed to in-
tegrate private and public financing of
health services.
-Assistance programs should
target the area's severe housing short-
age.
-Training of public administrators
required to improve public service.
-U.S. Government should provide
more resources to meet critical problem
of refugees and displaced persons-
more than 1 million of them need help.
-In El Salvador there are two
separate conflicts: (1) between those
seeking democratic reform and those
seeking to retain their privileges; (2) be-
tween Marxist-Leninist guerrillas and
those who oppose Marxism-Leninism.
-In discussing the latter we iden-
tify three general propositions about
such guerrilla movements:
(1) They depend on external support.
Without it they are unlikely to succeed.
(2) They develop their own momen-
tum which reform alone cannot stop.
(3) Victorious, they create totali-
tarian regimes, even though they have
enlisted support of democratic elements
in order to project democratic, reformist
image.
-External support comes from
Soviet Union, Cuba, and now Nicaragua.
Cuba has developed into a leading
military power through Soviet assist-
ance. Since Sandinista victory, Soviets
have come around to support Cuban
strategy of armed road to power in Cen-
tral America.
-There are serious strategic im-
plications for the United States in
Soviet-Cuban support for armed in-
surgency in the region.
-Triumph of hostile forces there
could require us to devote large
resources to defend our southern ap-
proaches.
-This could mean either substan-
tially increased defense burden for the
United States or redeployment of forces
to the detriment of our interests
elsewhere.
-Threat to our shipping lanes in
the Caribbean.
-Increased violence and dislocation
in the area from which we could not
isolate ourselves.
-Erosion of our power to influence
events worldwide as we are perceived as
unable to influence events close to home.
El Salvador
-The war is stalemated, a condi-
tion to the ultimate advantage of the
guerrillas.
-U.S. military assistance is inade-
quate to permit modern, humane, and
successful counterinsurgency.
-Commission recommends that the
United States provide significantly in-
creased levels of military assistance for
greater mobility, more training, higher
force levels, and more equipment.
-Assistance is to be conditioned
through legislation on terminating death
squads, progress toward democracy, and
establishment of the rule of law.
-In Guatemala, such assistance
should only be provided if the same
terms are met.
-Increased military assistance also
needed for Honduras to build a credible
deterrent and to meet renewed efforts
at insurgency.
-Commission concludes that U.S.
security interests are importantly en-
gaged in Central America. Larger pro-
gram of military assistance needed, as
well as expanded support for economic
growth and social reform.
-Success will depend on an end to
massive violations of human rights and
the neutralization of external support
for the insurgencies.
-A successful U.S. political
strategy in Central America requires
resources to promote economic growth;
vigorous efforts to advance democracy
and reform; other inducements and
penalties.
-General strategic objective of U.S.
diplomacy in Central America should be
to reduce the civil wars, national con-
flicts, and military preparations to Cen-
tral American dimension.
-Specifically, we should seek to
stop the war and killing in El Salvador.
Create conditions under which
Nicaragua becomes a peaceful and
democratic member of the Central
American community. And open the way
for democratic development in all coun-
tries.
-Commission calls for negotiations
in El Salvador between guerrillas and
the government to be elected in March
to establish conditions for later
legislative and municipal elections in
which all could participate: electoral
commission with FMLN/FDR represen-
tation, cease-fire, and end to all violence;
international observation of elections.
-Adequate economic and military
assistance from the United States can
help to achieve such a settlement.
-Commission believes military
stalemate works against rather than for
a political settlement based on the
popular will.
-In Nicaragua, consolidation of a
Marxist-Leninist regime would create a
permanent security threat. Nicaragua's
mainland location makes it a crucial
stepping-stone to promote armed in-
surgency in Central America. Cuban
personnel (2,000 military advisers and
6,000 civilian officials); several hundred
Soviet, East European, Libyan, and
PLO [Palestine Liberation Organization]
advisers; extensive arms deliveries
(13,000 tons in 1983) add an external
dimension to the threat posed by
Nicaragua to its neighbors.
-What gives the current situation
its special urgency is the external threat
posed by the Sandinista regime in
Nicaragua; supported by Cuban military
strength; backed by Soviet weapons,
guidance, and diplomacy; and integrated
into the Cuban network of intelligence
and subversion.
-Central American leaders believe
pluralistic political orders are essential
to long-term security.
-An alternative would be an at-
tempt at containment. But that would
threaten militarization of the isthmus-
the creation of garrison states.
Democracy would wither. And the
United States could find itself as sur-
rogate policeman.
-Commission proposes comprehen-
sive regional settlement based on:
(1) Respect for sovereignty and
nonintervention.
(2) Verifiable commitments to nonag-
gression and an end to all attempts at
subversion-covert or overt.
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(3) Limitations on arms and sizes of
armed forces. Prohibition of foreign
forces, bases, and advisers.
(4) No military forces, bases or ad-
visers of non-Central American coun-
tries would be permitted.
(5) Commitment to internal
pluralism and free elections in all coun-
tries.
(6) Provision for verification of all
agreements.
(7) Establishment of an intergovern-
ment council to meet regularly to review
compliance.
(8) Adherence to the overall agree-
ment would be required for membership
in the Central American Development
Organization.
-The United States would support
the agreement and provide assistance
and would commit itself to respect
results of elections within countries as
long as principles of pluralism at home
and restraint abroad observed.
-Commission's proposal based on
and amplifies 21 points of the Contadora
Group.
-Commission fully endorses Con-
tadora efforts.
-Finally, majority of Commission
opposes dismantling existing incen-
tives and pressures for the regime in
Managua to negotiate seriously.
-As for Cuba, Commission sees
little possibility of separating it from
Soviet Union. But the United States
should be prepared to negotiate serious-
ly if Cuba were to show itself prepared
for genuine coexistence, dropping sup-
port for insurgency in Central America
and revolutionary violence elsewhere in
the world.
-As for Soviet Union, establish-
ment of Soviet military base in
Nicaragua is not the major concern.
Before that could have happened, the
crisis would have reached proportions
not containable in Central American
dimensions.
-There is little promise in
negotiating with the Soviet Union over
Central America. Soviets would seek to
cast such negotiations in terms of sphere
of influence, an unacceptable concept for
the United States.
APPENDIX B: Legislative Update
1984 Authorization
At the request of the Administration,
legislation embodying the President's
Central America Democracy, Peace, and
Development Initiative (the Central
American initiative) for FY 1984
through 1989 was introduced in the
House of Representatives on February
21, 1984 (H.R. 4874) by Representative
Dante Fascell (D-FL), Chairman of the
House Foreign Affairs Committee, and
in the Senate on February 27 (S. 2347)
by Senator Charles Percy (R-IL), Chair-
man of the Senate Foreign Relations
Committee.
Each committee sought to act ex-
peditiously on the proposals by including
them as part of the FY 1985 worldwide
foreign assistance bill, the International
Security and Development Cooperation
Act of 1984 (H.R. 5119). Because of in-
ternal disagreements, the House Foreign
Affairs Committee removed the Central
American section from the foreign aid
bill when the committee reported the
legislation to the House of Represen-
tatives on March 15. On May 10, the
House adopted by a vote of 211-208 an
amendment to H.R. 5119 proposed by
Representatives William Broomfield
(R-MI) and John Murtha (D-PA) which
contained most of the President's pro-
posals for FY 1984 and 1985. H.R. 5119,
containing the Central American ini-
tiatives, was then approved by the
House.
In the Senate, neither the initiative
nor the FY 1985 foreign aid bill reached
the floor for consideration. On April 11,
the Senate Foreign Relations Committee
voted out the foreign assistance legisla-
tion (S. 2582), but an amendment by
Senator Mathias (R=MD) incorporating
much of the Central American proposal
failed on a tie vote.
The Senate did not act on S. 2582
before adjourning on October 12. End-
of-session efforts by both authorization
committees to attach the foreign aid
authorization bill, including the Central
American initiative, to the Continuing
Resolution failed in the appropriations
conference for procedural reasons.
However, authorization for the trade
credit insurance program was included
in the Continuing Resolution (P.L.
98-473).
1984 Appropriations
Initial funding for the Central American
initiative was approved by the Congress
in 1984 in the Supplemental Appropria-
tions Act for 1984 (P.L. 98-396) and in
the FY 1985 Continuing Resolution
(P.L. 98-473).
The President sent to Congress on
February 21 a request for legislation to
provide supplemental appropriations for
FY 1984, including $659 million in
economic and military assistance for
Central America. The House Appropria-
tions Committee reported the Sup-
plemental Appropriations Act for 1984
(H.R. 6040) on July 27. This bill, passed
by the full House on August 1, did not
provide any military assistance for El
Salvador and reduced overall funding
for Central America to $156 million. The
House approved this funding level and
passed the bill on August 1.
On August 2, in its version of H.R.
6040, the Senate Appropriations Com-
mittee adopted and reported the full FY
1984 supplemental funding levels re-
quested for Central America. On
August 8, the full Senate approved the
President's request.
The House-Senate conference on the
bill filed its report on August 10 with
Central American funding unresolved.
The impasse was broken the same day
when the House adopted by a vote of
234-161 an amendment by Represen-
tatives Jack Kemp (R-NY) and John
Murtha (D-PA) to restore most of the
Administration's request. The Senate
then accepted the House position, also
on August 10.
Presidential signature of the bill
(P.L. 98-396) on August 22 enabled the
Administration to obtain $510 million for
the implementation of Commission
recommendations. Combined with $61.75
million in emergency military assistance
for El Salvador that the Congress pro-
vided earlier in the Supplemental Ap-
propriations Act for the Department of
Agriculture for 1984 (P.L. 98-322), the
Administration in 1984 received $571.75
million of the President's original sup-
plemental request of $659 million for
Central America.
The FY 1985 Continuing Resolution
(P.L. 98-473), enacted on October 12,
contained additional funding for Central
America. In the Continuing Resolution,
the Congress approved almost all of the
funds requested by the Administration
for FY 1985 in support of the Commis-
sion recommendations. Of a request for
$1,030 million for economic assistance
and $262 million for military assistance,
the amounts appropriated were $979
million and $237 million, respectively.
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1985 Legislation
The Central America Democracy, Peace,
and Development Initiative is contained
in Title IV of the Administration's pro-
posed International Security and
Development Cooperation Act of 1985,
transmitted to the Congress on March 7
and introduced in the Senate (S. 660) on
March 14 by Senator Richard Lugar
(R-IN), Chairman of the Senate Foreign
Relations Committee, and in the House
on March 19 by Representative Dante
Fascell (D-FL), Chairman of the House
Foreign Affairs Committee. The
legislative proposal retains the principal
elements of the 1984 authorization bill,
including multiyear, nonmilitary
authorization and authorities for
economic assistance coordination, ad-
ministration of justice, and land reform.
The Administration's request for FY
1986 appropriations for Central America
is for a total of $1,053 million in
economic assistance and $261 million in
military assistance. Congressional con-
sideration of these proposals began in
mid-March. The proposed initiative
establishes a long-term framework to
build democracy, restore peace, and im-
prove living conditions in Central
America and authorizes nonmilitary
assistance for FY 1987-89. The bill con-
tains amendments to the Foreign
Assistance Act in order to carry out a
number of the recommendations of the
National Bipartisan Commission on Cen-
tral America.
Section 401: Central America
Democracy, Peace, and Development
Initiative. This section amends Part I of
the Foreign Assistance Act by adding a
new chapter 6 entitled "Central America
Democracy, Peace, and Development In-
itiative." The chapter contains six sec-
tions (sections 461-466) which include a
statement of policy, the conditions im-
posed on the furnishing of assistance,
the authorization for the establishment
of an organization to promote coopera-
tion in economic development among the
countries of Central America and the
United States, and a multiyear
authorization of nonmilitary assistance
funds.
Section 461 of the proposed chapter
contains the findings of Congress that
the building of democracy, the restora-
tion of peace, and the improvement of
living conditions in Central America are
important to the interests of the United
States and the community of American
states. The section also stresses the im-
portance of dealing effectively with the
interrelated social, humanitarian,
economic, political, diplomatic, and
security issues to assure a democratic
and economically and politically secure
Central America. Congress further
recognizes that, although the achieve-
ment of democracy, human rights,
peace, and equitable economic growth
depends primarily on the people and
governments of Central America, the
United States can make a significant
contribution through a policy that in-
cludes a long-term commitment of both
economic and military assistance.
Section 462 provides that the Presi-
dent ensure that the assistance author-
ized by this chapter is furnished in a
manner that fosters demonstrated prog-
ress and commitment to the objectives
set forth in section 461. In doing so, the
President under this section would con-
sult with Congress on progress toward
those objectives and on conditions im-
posed on the furnishing of assistance.
Section 463 is a statement of sup-
port for the initiatives taken by the Con-
tadora Group and the September 1983
Document of Objectives agreed to by the
nine countries involved and affirms that
the United States should provide
assistance and support as may be ap-
propriate in helping to reach agreements
which will ensure peaceful and enduring
solutions to the Central American con-
flicts.
Section 464 states the finding by
Congress that the participation of the
United States and Central American
countries in an effective forum for con-
tinuous review an advancement of Cen-
tral America's political, economic, and
social development would further the
purposes of the Foreign Assistance Act.
This section further states the sense of
Congress that the President enter into
negotiations with representatives of
Central American countries to establish
an organization for economic coopera-
tion based upon principles stated in the
section. This section then authorizes the
President to participate in such an
organization, with the Administrator of
the Agency for International Develop-
ment as the U.S. representative.
This organization is not intended to
be a bureaucratic entity in competition
with bilateral or multilateral donor
organizations. The organization should
be composed of public and private sector
representatives from participating coun-
tries and should draw on the experience
of the International Labor Organization
in joining together representatives from
business, labor, and government. The
number of professional staff of the
organization should be kept to a
minimum.
Section 465 contains a multiyear
authorization for the furnishing of non-
military assistance for Central American
countries for each of the fiscal years
1987-89.
Section 466 provides that for pur-
poses of this chapter, the term "Central
American countries" includes Belize,
Costa Rica, El Salvador, Guatemala,
Honduras, Nicaragua, Panama, and
regional programs which benefit those
countries.
Section 402: Administration of
Justice. In accordance with the recom-
mendations of the Commission that the
United States help strengthen judicial
systems and that Congress consider
authorizing the training and support of
law enforcement agencies under care-
fully defined conditions, this section
authorizes the use of funds made
available for economic assistance pro-
grams for projects designed to
strengthen the administration of justice
in Latin American and Caribbean coun-
tries. These projects would include ac-
tivities for judges, prosecutors, and
criminal investigation agencies.
Section 403: Land Reform Pro-
grams. This section amends Section
620(g) of the Foreign Assistance Act to
authorize the President to make
available to governments assistance to
compensate their nationals in accordance
with a land reform program, if the
President determines that monetary
assistance for such land reform will fur-
ther the national interests of the United
States.
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APPENDIX C:
Foreign Assistance for Central America: FY 1983, 1984, 1984 Supplementals, and 1985; FY 1986 Request'
Economic Assistance
Military Assistance
ESF
Development
Assistance
PL 480
TOTAL
MAP
FMS
IMET
TOTAL
1983
10.0
6.7
0.0
16.7
0.0
0.0
0.066
0.066
1984
0.0
3.9
0.0
3.9
0.5
0.0
0.049
0.549
1984 supplemental
10.0
1.4
0.0
11.4
0.0
0.0
0.000
0.000
1985
4.0
6.0
0.0
10.0
0.5
0.0
0.075
0.575
1986 request
4.0
6.8
0.0
10.8
1.0
0.0
0.100
1.100
1983
157.0
27.2
28.2
212.4
2.5
0.0
0.125
2.625
1984
70.0
15.0
22.5
107.5
2.0
0.0
0.133
2.133
1984 supplemental
60.0
6.2
0.0
66.2
7.0
0.0
0.000
7.000
1985
160.0
13.8
28.0
201.8
9.0
0.0
0.200
9.200
1986 request
150.0
14.4
23.0
187.4
2.5
0.0
0.225
2.725
1983
140.0
58.8
43.1
241.9
33.5
46.5
1.300
81.300
1984
120.2
41.1
51.1
212.4
45.0
18.5
1.300
64.800
1984 supplementals
90.2
23.3
0.0
113.3
131.75
0.0
0.000
131.750
1985
195.0
69.7
46.0
310.7
111.8
15.0
1.500
128.300
1986 request
210.0
89.8
50.8
350.6
131.0
0.0
1.600
132.600
1983
10.0
12.2
4.4
26.6
0.0
0.0
0.000
0.000
1984
0.0
4.4
11.6
16.0
0.0
0.0
0.000
0.000
1984 supplemental
0.0
16.6
0.0
16.6
0.0
0.0
0.000
0.000
1985
12.5
40.1
20.4
73.0
0.0
0.0
0.300
0.300
1986 request
25.0
33.0
19.0
77.0
0.0
10.0
0.300
10.300
1983
56.0
31.2
14.0
101.2
27.5
9.0
0.796
37.296
1984
40.0
31.0
19.3
90.3
40.0
0.0
0.940
40.940
1984 supplemental
72.5
7.3
0.0
79.8
36.5
0.0
0.000
36.500
1985
75.0
41.5
18.4
134.9
61.3
0.0
1.100
62.400
1986 request
80.0
45.0
18.0
143.0
87.0
0.0
1.250
88.250
1983
0.0
6.2
1.0
7.2
0.0
5.0
0.450
5.450
1984
0.0
10.7
1.0
11.7
0.0
5.0
0.500
5.500
1984 supplemental
30.0
4.0
0.0
34.0
8.0
0.0
0.000
8.000
1985
20.0
20.0
0.0
40.0
10.0
0.0
0.600
10.600
1986 request
40.0
22.6
0.0
62.6
14.4
4.0
0.650
19.050
Regional Programs
1983
0.0
19.4
NA2
19.4
NA
NA
5.325
5.325
1984
0.0
15.5
NA
15.5
NA
NA
5.294
5.294
1984 supplemental
28.0
9.2
NA
37.2
18.5
NA
0.000
18.500
1985
70.0
51.7
NA
121.7
20.0
NA
5.500
25.500
1986 request
91.5
57.0
NA
148.5
0.0
NA
6.500
6.500
1983
373.0
161.7
90.7
625.4
63.5
60.5
8.062
132.062
1984
230.2
121.6
105.5
457.3
87.5
23.5
8.216
119.216
1984 supplementals
290.5
68.0
0.0
358.5
201.75
0.0
0.000
201.750
1985
536.5
242.8
112.8
892.1
212.6
15.0
9.275
236.875
1986 request
600.5
268.6
110.8
979.9
235.9
14.0
10.625
260.525
'In addition, State Department, Peace Corps, and USIA programs included in the Central America initiative
total $11.5 million (1984 supplemental), $86.6 million (1985), and $72.7 million (1986 request).
'Not applicable.
Published by the United States Department of State ? Bureau of Public Affairs ? Office of Public Communication
Editorial Division ? Washington, D.C. ? April 1985 ? Editor: Colleen Sussman
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United States Department of State
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