LATIN AMERICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00289R000301630001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 34
• Document Creation Date: December 22, 2016
• Document Release Date: July 21, 2011
• Sequence Number: 1
• Publication Date: August 29, 1986
• Content Type: REPORT

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Review
Latin America
ALA LAR 86-021
29 August 1986
Copy 4 31
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Secret
Latin America
ReviewF----] 25X1
Articles Argentina: The Church and Democracy
The Catholic Church, concerned that its traditionally conservative
values are being undermined by President Alfonsin, is engaging in
low-key opposition activities in concert with the labor movement and
elements of the military.
Nicaragua: Peasant Resettlement Program F____-] 5 9F X1
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The Sandinistas believe their policy of moving peasants into
resettlement camps is helping to weaken the insurgent support base
and enhance the government's control in the countryside, but the
program is contributing to growing popular dissatisfaction with the
regime.
Jamaica: Beyond the Local Elections I 11 25X1
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In the wake of the ruling party's defeat in recent local elections,
Prime Minister Seaga is hoping to use heavy government spending
to restore his popularity, while activists in the main opposition party
are clamoring for an early national election before the end of the
year.
Panama: Strained Labor Relations I 13 25X1
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Organized labor's traditionally close relations with the regime,
strained earlier this year over legislation to curtail a liberal labor
code, are likely to face further tensions over austerity measures
expected to be imposed by the government.
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France: Policy Toward Central America 19 25X1
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The election last March of a more conservative government in place
of the Socialists has led Paris to continue a trend toward reducing
support for the Sandinistas. The French are unlikely, however, to
give full support to US policy in Central America.
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ALA LAR 86-021
29 August 1986
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Cuba: Economic Policy Inches LeftwardF--]
Foreign Exchange Shortage 0
Honduras-El Salvador: Improving Communication
Uruguay-USSR: Foreign Minister's Visit to Moscow
Montserrat: Tough Decision 7-1
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Latin American Analysis,
Articles have been coordinated as appropriate with other offices
within CIA. Comments and queries regarding this publication
may be directed to the Chief. Production Std, Office of African and
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Secret
Review
Articles
Argentina: The Church
and Democracy
The Catholic Church has generally supported the
civilian government since Argentina returned to
democratic rule in 1983. Recently, however, the
church has begun to feel its traditionally conservative
values are being undermined by the progressive
agenda of President Alfonsin and his Radical Party
(UCR). To protect its interests, the church is working
with the Peronist-dominated labor movement and
elements of the military. Although the church's
opposition is presently low key and limited to a few
discreet social issues, it could become a greater threat
to the fledgling democracy if Alfonsin does not
remain sensitive to the church's concerns while trying
to modernize Argentine society.
Background
According to the US Embassy, the Argentine
Catholic Church wields considerable social and
political influence, in part because a relatively large
percentage of Argentines-90 percent of whom are
Catholic-actively practice their religion. Although
the Argentine church is politically and theologically
conservative, the US Embassy reports that it has
managed to maintain popular appeal and build a
reputation of concern for the poor by frequently
calling for "just wages" and full employment. The
church also has successfully weathered harsh
criticism for its refusal to denounce human rights
abuses committed by the military during the dirty war
against the terrorism of the late 1970s.
Tensions Under the New Government
Alfonsin and the UCR came to power with ambitious
plans to modernize and secularize society that quickly
antagonized the Catholic hierarchy. According to the
US Embassy, the church viewed the government's
proposed divorce legislation, its plans to modernize
the educational system, and some aspects of
Alfonsin's economic austerity program as potential
threats to Catholic morality and the family.
Moreover, some church spokesmen have publicly
linked the spread of pornography to the return of
democracy.
Divorce. The UCR has already introduced legislation
in Congress to end Argentina's distinction of being
one of only six countries that has no legalized divorce.
The press and US Embassy report that the church has
centered its criticism of the government on this issue,
saying that divorce will destroy the family, which it
considers to be the most important institution in
Argentine society. The Embassy adds that the church
hierarchy also believes that divorce is only the first 25X1
step toward legalized abortion.
Although prodivorce sentiment runs across party
lines, the UCR has taken the brunt of church
criticism, prompting some UCR politicians to call for
a referendum on the question to protect themselves
and their party from ecclesiastical attacks. The
proposed referendum has become the most
contentious part of the divorce issue for the church,
according to press and Embassy reports. Polls show
that the vast majority of Argentines favor legalized
divorce, and the church fears that a referendum could
lead to an embarrassing defeat that would erode its
resolve the conflict before the visit of the Pope,
scheduled for April of next year.
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ALA LAR 86-021
29 August 1986
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The vast majority of Argentine clerics and the bulk of
the episcopate, according to a variety of press and
academic sources, are conservative but not politically
active. Most appear to be neutral regarding forms of
government, being primarily concerned with
protecting church interests and promoting Catholic
moral values under whatever type regime is in power.
Small minorities on the left and right, however, have
staked out more radical positions and have attempted
to link the church to a specific political agenda.
Ultrarightist priests, in our view, are probably more
influential than their numbers because they draw on
an indigenous and well developed Argentine tradition
of ultranationalism, anti-Semitism, and Catholic
integrism. The church's far right wing has
persistently aligned itself with the most reactionary
sectors of the military. Antidemocratic priests, for
example, are involved with a promilitary group called
Family Members and Friends of Victims of
Subversion (FAMUS), which defends the actions of
the military during the war against subversion and
vocally criticizes Alfonsin's policy of punishing
former junta members for human rights abuses.
FAMUS has sponsored masses at which both church
and military leaders attacked democracy and
accused the government of persecuting religion and
the armed forces.
The far left, by contrast, is nearly nonexistent in the
Argentine Church. Some progressive priests were
active in the 1960s and 1970s, but most of them
"disappeared" during the dirty war. The US
Embassy classifies only three of Argentina's 75
bishops as progressive and points out that the only
organization of leftist clerics in Argentina, the
Movement of Priests for the Third World, has
perhaps a dozen members compared to 500 in the
early 1970s. Although worsening economic conditions
could bring more recruits for the left wing of the
church, we believe liberation theology is still a long
way from taking root in Argentina.
Education. One of Alfonsin's major goals is to
modernize the educational system, according to
Embassy and press reporting. The church has publicly
complained that some of his plans-such as greater
student participation in choosing the curriculum and
new methods to promote student creativity-will
undermine traditional Catholic values.
The church, in our view, is even more concerned over
what it perceives as growing leftist control of
education. the
government has appointed many leftwing UCR
members to high-level posts in the educational system.
The church alleges that these leftists are
incorporating the notion of class struggle into all areas
of study as well as into the government's major new
literacy program, and are using the public schools to
spread anti-Catholic propaganda.
Finally, the church fears for the existence of its own
parochial schools, which are state subsidized.
Although the government continues to support
Catholic schools, the US Embassy reports that it is
frequently in arrears on payments to the church. The
church hierarchy worries that budget constraints
might induce the government to cut off subsidies
altogether, a development that could cause some
schools to close, thereby seriously crippling the
church's influence.
Economic Policy. Church leaders continue to talk
about the need to address poverty, which they call a
"ticking time bomb." They frequently link poverty to
the government's economic austerity program, while
taking care not to saddle the democratic system as
such with responsibility for Argentina's economic
woes. We believe that this nuanced position on the
economy has helped the church remain popular and
retain the support of interest groups such as labor and
the Peronists.
The Church's Response
After lying low during the first year of Alfonsin's
administration, the church is now turning to political
activism. At their conference last April, the Argentine
bishops publicly deplored the "distressing economic
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Archbishop Arambrou calling
on Catholics to attend rally in
support ofthefamily.F___1
situation of a vast sector of the population" and the
alleged "moral decline" of Argentine society. The
bishops also met with Alfonsin last November to voice
their grievances and discuss government policy. The
church's most confrontational action to date was a
"Rally in Defense of the Family," attended by over
50,000 people in Buenos Aires, at which speakers
lambasted divorce legislation and attacked the
government's economic and education policies.
he Vatican
has also contacted Alfonsin, using the Papal Nuncio
in Buenos Aires-who met with the President in
March-to express Rome's concerns over the issues of
divorce and education. The Nuncio also criticized
individuals in Alfonsin's administration for support of
the anticlerical government of Nicaragua.
Alfonsin is angry over the criticism that he and his
government are receiving from the church, he has
refrained from any hostile public rebuttals. The
President issued a carefully worded response to the
April bishops' statement which declared that the
government shared the church's concerns and asked
for its understanding and support. The US Embassy
adds that Alfonsin has met several times with church
leaders to explain government policies and to assure
them that he will take their interests into
consideration.
Looking for Allies
The Military. The staunchly Catholic military is
probably even more conservative than the church. The 25X1
two institutions have a long history of collaboration
and, according to US Embassy reporting, are united
in opposing educational reform and leftist influence in
Moreover, some military leaders are backing the 25X1
church's position on divorce; 25X1
the schools. The military shares the church's concern
that the teaching of leftist values is "destroying the
family unit and sowing the seeds of Communism."
Both institutions fear expansion of the left in other
areas as well, such as labor and the bureaucracy.
a few officers have even suggested that 25X1
the Army take a formal public stand against the
proposed divorce law. For its part, the church has
supported the military by opposing prosecution of
military officers for human rights abuses.
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Labor. Although many Argentine trade unionists do
not share the church's conservative values, the US
Embassy reports that the stance of church leaders on
poverty and socioeconomic issues has helped to link
the church to the labor movement, which is vocally
opposed to the government's economic policy. The
church's chief purpose in working with the labor
movement is to stop
leftist and Marxist infiltration of the unions. Gaining
allies for its own cause is a secondary goal, according
to Embassy reports
The church collaborates with labor through the
Bishops' Commission on the Social Apostolate, which
teaches the Papal Encyclicals on Social Justice and
gives seminars on issues such as poverty and
education. Church leaders give highly publicized
audiences to key Peronist union leaders, and 0
the Vatican even assigned a
bishop to "advise" Saul Ubaldini, leader of the largest
Argentine labor federation. PressO reports
say the bishops conference is also helping to arrange a
meeting with the Pope for Ubaldini and other labor
leaders.
Outlook
We believe the church will continue to oppose the
government on social issues such as divorce and
education, but will not adopt the strident approach of
the Peronists, labor, or the Marxists. Church leaders
will probably continue to work closely with labor
leaders to stop leftist inroads in that sector, but will be
careful not to antagonize the UCR government by
openly embracing the Peronist political opposition.
For its part, the government will pursue its program
of modernization, however, attempting to make key
social changes as palatable to the church as possible.
Although Alfonsin is likely to sign a divorce law
during the next year, he will probably see that it is
approved by Congress, thereby assuaging church fears
of a popular referendum. The President will also press
ahead with educational reform, but will probably stop
short of ending subsidies to Catholic schools.
Preventing an open split in the near term will be in the
interest of the church and the government, as both
want to assure the success of the Pope's visit to
Argentina next year.
The church could become a greater threat to Alfonsin,
however, in the unlikely event that the President tries
quickly to impose major changes, such as holding a
referendum on divorce, legalizing abortion, or halting
payments to parochial schools. Any of these actions,
in our view, might cause the church to lend the full
weight of its moral authority and political influence to
an antigovernment campaign. Under these
circumstances, the church could become a formidable
adversary, especially if it worked closely with the
Peronists and elements of the military
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Nicaragua:
Peasant Resettlement
Program
The Sandinista policy of moving peasants into
resettlement camps is designed to weaken the
insurgent support base and, by forcing traditionally
independent peasants into government-run
cooperatives, enhance Managua's economic and
political control in the countryside. Although
contributing to growing popular dissatisfaction with
Sandinista rule, the policy represents a tactical plus
and Managua is unlikely to reverse its course any
time soon. Indeed, while a similiar but smaller scale
effort on the east coast in the early 1980s failed, the
camps appear to be permanent fixtures on the
landscape, and the regime, given the multiple benefits
it sees in resettlement, might opt to expand the effort.
The Sandinistas recognize that maintaining rural
backing is crucial to their survival. An extensive
agrarian reform program has been the keystone of
their efforts to win and maintain peasant loyalty. We
estimate that to date, the Sandinistas have confiscated
about 2.2 million hectares, almost two-thirds of the
country's arable land, distributing it to peasants in the
form of state farms, collectives, and cooperatives.
Nearly 400,000 hectares reportedly will be distributed
this year, according to Sandinista leaders. Regime
strategists also have tried to improve health and, with
Cuban assistance, educational services in the
countryside. Underscoring the determination of the
regime to buttress its rural support, Sandinista
officials, most recently President Ortega in his
anniversary speech, repeatedly indicate that the rural
sector is a top priority.
Changing Rural Dynamics
Agrarian reform efforts initially generated
considerable sympathy for the Sandinistas both at
home and abroad, and they have accelerated
distribution of land to disaffected peasants in recent
years, but support for them in the countryside is
eroding. US Embassy officials and press reports show
an upsurge in peasant frustration caused in large part
by falling farm income and pervasive government
influence over agricultural production and marketing.
Many peasants also reject cooperatives as an
unnecessary change in tradition and a restriction of
their independence.
Compounding the problem for the government,
peasant discontent has translated into growing
support for the insurgency. Assessments of insurgent
forces show that rural youths comprise the great bulk
of the rank and file and that peasants or small farmers
account for a significant portion-upwards of 20
percent-of the senior leadership of the Nicaraguan
Democratic Force, the largest insurgent group.
Moreover, local support for the insurgents, including
serving as couriers and providing information on 25X1
government troop movements, enhances insurgent
capabilities.
Sandinista Reactions and Priorities
In response, the regime is moving peasants in areas of
insurgent activity-especially along the northern
border with Honduras but also in Central Zelaya
Department-into resettlement camps. So far, we
estimate at least 60,000 to 80,000 individuals have
been relocated, many forcibly. Official government
data are lacking. however- and the fivnre may he
higher.
some 300,000 individuals were resettled. A recent
academic study put the figure at 100,000. A report in
the Sandinista party newspaper that 50 new
resettlement camps will be constructed in the
Jinotega-Matagalpa area by the end of the year
indicates that the process is continuing, if not 25X1
expanding.
Although the regime publicly justified the first wave
of resettlements in early 1985 by citing the need to aid
peasants displaced by the fighting against US-backed
rebels, military considerations clearly were the top
priority. Observers on the scene indicate that
Managua wanted to create free-fire zones where the
Secret
ALA LAR 86-021
29 August 1986
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Nicaraguan Resettlement Camps
EL
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atagalpa
;Mt y Muy
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CHONTALES
'4uigalpa\4
an Carlos
Nicaragua
International boundary
Departamento boundary
it National capital
0 Departamento capital
Railroad
Road
Dopartonrontos have the same name
as their capitals except where noted.
0 25 50 Kilometers
0 25 50 Miles
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The Sandinistas are old hands at the resettlement
game. In late 1981 and early 1982, the regime
forcibly transported some 8,000 Miskito Indians who
lived along the east coast near the Honduran border
to resettlement camps in the interior. Then, as now,
most observers believe the underlying Sandinista
goals were to create a free fire zone along the border
that would facilitate counterinsurgency operations
and to deny anti-Sandinista guerrillas support from
disaffected Indian communities. In recent months as
part of the regime's plan to win support among the
Miskitos by offering limited regional autonomy,
Managua has allowed some Indians to return home.
The importance the Sandinistas attach to the
autonomy program, however, suggests that their
willingness to dismantle Miskito resettlement camps
will not serve as a precedent in their current effort in
the West. Press reports also indicate that some
20,000 individuals from southern Nicaragua along
the border with Costa Rica were relocated in late
1984 and early 1985, presumably to enhance the
Sandinista tactical position in the area.
Army could operate without restriction. Moreover,
regime leaders were determined to deprive the
insurgents of material support and intelligence
provided by sympathetic peasants. As extra insurance,
some camps are located near military bases.
Reflecting the military dimensions of the program,
recent US Embassy reporting suggests that the
regime believes that the camps will become key cogs
in its overall counterinsurgency strategy. Press reports
and US Embassy sources claim that military
instructors visit resettlement camps-most organized
as cooperatives-on a regular basis and that some
have formed self-defense units. Members of one
cooperative in the north, for example, are divided into
16-man squads for military functions and receive
training from regular Army troops twice monthly,
according to press reports. Reflecting the program's
military aspects, the regime is accelerating the
organization of new agricultural cooperatives in
combat zones, according to US Embassy officials.
Equally important, resettlement also affords the
Sandinistas an avenue to reorder the economic
structure of the rural sector, a longstanding regime
goal. US Embassy reporting indicates that most of the
camps are organized as cooperatives, the regime's
preferred form of agricultural production, where all
decisions on production, pricing, and marketing fall
under government control. In other camps, even
though the land is privately owned, social services are
managed communally and government pricing and
marketing controls apply. Press reports suggest the
Sandinistas believe that the settlements "constitute
the best way to integrate the peasants and to
guarantee delivery of educational, medical, and other
basic services." Underscoring the importance of the
regime's economic motives, the government-controlled
press characterizes those who believe they can return
to their villages as soon as conditions permit as
operating under an "illusion."
To a lesser extent, relocation of scattered groups of
peasants also provides the Sandinistas with an
opportunity to expand their political control over the
rural sector. For example, resettled peasants can be
more easily incorporated into Sandinista-dominated 25X1
labor organizations, particularly the Rural Workers
Association. Peasants in the camps also receive
political indoctrination. Underscoring the political
objectives of the regime in pursuing resettlement, one
Sandinista official stated that the program was a good
way to create "the new Nicaraguan man."
Judging Successes and Failures
Resettlement has been a tactical plus for the
Sandinistas, undermining the ability of the insurgents
to operate for extended periods in the field, as well as
their combat effectiveness.
rebels infiltrating into Nicaragua from Honduras find
it more difficult to live off the land because of the
regime's depletion of their rural support network. In
addition, we believe the policy, in conjunction with
security sweeps that have resulted in the arrest of
some 1,500 insurgent sympathizers so far this year,
makes the development of organized front groups
more difficult. Moreover, peasant resettlement also
has helped the government to stem, at least
temporarily, the flight of rural dwellers to the cities,
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Sandinista Resettlement Program: A Closer Look
From a regional perspective, the peasant resettlement
effort is unprecedented, both in terms of the number
of individuals involved and the thrust of the program.
In El Salvador, the government's resettlement
program is aimed at returning displaced peasants to
their lands. In Guatemala, under the so-called Poles
of Development program, two dozen villages have
been completed and inhabited. The plan, designed by
the military and endorsed by the new civilian
administration, calls for the reconstruction of 49
destroyed villages. By contrast, the Sandinistas built
approximately 40 camps during the first six months
of 1985 and plan to have constructed some 135 camps
in northern Nicaragua by the end of this year,
according to press reports. Overall, we calculate that
about 2 percent of Nicaragua's total population, and
some 10 percent of the populace in the northern
departments, have been resettled so far.
Despite the scope of the Sandinista resettlement
program, our understanding of how it is administered
is limited. Although the military probably decides
who goes to the camps, civilians almost certainly are
in overall control. A National Emergency Committee
apparently is responsible for central decisionmaking,
but party activists at the regional and local level
probably have a loud voice in how things are run.
Available evidence points to a lack of coordination
among those responsible for camp administration.
For example, heterogeneous groups are apparently
particularly Managua, where the regime's social
services have been overtaxed, according to the US
Embassy.
The resettlement policy has its drawbacks, although
they are probably outweighed in the regime's scales
by its military benefits. Peasant resentment over
being forced to abandon their homes and possessions
on quick notice helps insurgent recruitments, and we
often assigned to the same camp, hampering
integration. Moreover, the Sandinista press reports
conflicts in the camps between regime supporters and
advocates of the insurgents. Although most camps
are organized as cooperatives, there also is no
uniform system of land tenure. In one case, peasants
work camp lands for minimum wages, while in others
the peasants each own a portion of the land.
Anecdotal data paints a generally negative picture of
everyday life in the camps:
? Housing units in the first camps in the Jinotega-
Matagalpa area were substandard; described by
one Sandinista official as "elemental." The camps
also lacked schools, medical facilities, and supply
centers. Months later, although the regime had
reportedly budgeted some 28 million dollars for
construction and food, the same official indicated
that tools and other supplies were often
unavailable.
? Dise malaria, also is a problem,
and infant mortality is high.
? Peasants also reportedly have difficulty adjusting
to living in the close confines of the camps.
? Moreover, security around new camps appears
tight. In one, movement in and out was controlled,
and families were not allowed to leave together.
believe that frustration over the economic restrictions
imposed on camp residents will continue to contribute
to rural disaffection. Economically, the camps
probably are not self-sufficient and represent a drain
on already scarce resources. At the same time, by
contributing to the refugee flow into Honduras and
Costa Rica, the policy has done little to improve
Nicaragua's relations with its neighbors.
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What Lies Ahead
Given the current level of the insurgency, Managua is
unlikely to abandon its resettlement program any time
soon. Indeed, we anticipate that if insurgent activity
picks up as a result of increased US aid, the program
probably will be expanded even though such a move
would add to the pool of potential insurgent recruits
and, by disrupting agricultural production, further
magnify already serious food shortages. Over the
longer run, because of the structural and ideological
benefits regime leaders see in the program, we doubt
that Managua would permit a mass exodus from the
camps, even if the insurgency were to wind down.
Resettlement of peasants from areas experiencing
little or no insurgent activity would be a clear signal
that the regime was giving priority to the ideological
aspects of the program and that it would be expanded
to other parts of the country.
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Jamaica:
Beyond the Local Elections
Prime Minister Seaga appears to be doing little to
cope with the ruling Jamaica Labor Party's (JLP) low
popularity. He is counting on a survey of vote fraud to
deflect blame for his defeat in the recent local
elections, while hoping the economy will soon register
gains attributable to booming government spending.
Although Michael Manley's reaction to the sweeping
victory of his People's National Party (PNP) has been
restrained, he will face increasing calls from his
supporters to pressure Seaga for a national election
this year before the tourist season begins in
December. Seaga's apparent determination to resist
any calls for an election he almost certainly would
lose could lead to antigovernment demonstrations and
sporadic political violence.
Both Seaga and Manley viewed the local contests as
the first genuine test of their parties' electoral
strengths since the national election in 1980,
according to the US Embassy. Seaga's JLP suffered a
57 to 43 percent loss to Manley's PNP in the 29 July
elections for Jamaica's 13 local parish councils.
Although control of the councils themselves means
little in terms of political power, the outcome of the
municipal polling often is an accurate predictor of the
next national election. Moreover, while Seaga tries to
downplay the significance of the local poll, Manley is
portraying the result as a vote of "no confidence" in
the government and hoping to use the victory to gain
leverage when he starts to push hard for a national
election.
Problems Ahead for Seaga
meeting in early August with his entire Cabinet and
parliamentary party, blamed PNP election fraud and
poor election security by the police and military for
his party's defeat. According to the Embassy, Seaga
has set up an independent commission of inquiry to
investigate the election irregularities, a move he hopes
will distract his critics both within and outside the
JLP. Senior ruling party officials, however, regard the
Prime Minister's accusations of election fraud and
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find scapegoats for a humiliating defeat
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. Moreover,
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Embassy and press reports say that the recent election
was relatively honest and peaceful, despite scattered
irregularities and violence fomented by supporters of
Seaga,
both parties.
Ruling party leaders reportedly plan to insist that
Seaga take steps to revitalize the JLP's image and
organization. party
officials, while not contemplating a direct challenge to
Seaga's leadership, intend to pressure him to change
his leadership style by delegating more ministerial
authority and responsibility. They also want him to
remove members of parliament and JLP-affiliated
government workers who consistently fail to perform
satisfactorily in their jobs
Seaga's avoidance of these problems reflects his
failure to take into account the depth of feeling
against his leadership and desire for change in many
sectors of Jamaican society, according to US officials.
Seaga has indicated he may remove poor performers
from his Cabinet and party hierarchy, but
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ALA LAR 86-021
29 August 1986
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there is widespread decay at the local
level of the JLP that Seaga has not addressed.
Meanwhile, Seaga appears to be pinning most of his
hopes on an economic recovery, but his unbridled
spending is causing major problems with the IMF and
commercial banks. Primarily as a result of a doubling
of government capital spending this year, Jamaica is
out of compliance with IMF standby targets, a
situation that jeopardizes a $400 million commercial
debt rescheduling that requires Jamaica to have an
IMF accord by October. A Fund official has told US
diplomats that it will be virtually impossible to reach
an agreement by then.
Manley, counting on
economic difficulties to erode eaga's popularity,
prefers to concentrate on shoring up his own support
and restoring the PNP's depleted finances, for the
time being.
Manley has instructed his party's rank and file to stop
demanding an immediate election and concentrate
instead on longer term plans to assume power.
Moreover Manley has
reduced the influence of PNP radicals who would
challenge his cautious strategy while bolstering
moderates more likely to accept his political direction.
In light of the PNP's electoral success, Manley risks
appearing weak and indecisive to his followers, but
apparently judges that applying heavy pressure on
Seaga could stimulate public antipathy toward his
party and revive fears that he is reverting to radical
policies.
The stifling of the left within the PNP has reduced
cooperation with the pro-Cuban Workers' Party of
Jamaica to a record low
Supporters of the Workers' Party reportedly
had attempted to establish their organization as a
significant player in the local election, according to
the Embassy. Their candidates, however, failed to win
any of the council seats at stake.
Outlook
PNP rank and file demands that Manley force the
election issue probably will become more strident if
one is not called by the beginning of tourist season in
December. Although Seaga and Manley hope to keep
their followers from engaging each other in violent
confrontations, we believe an upsurge in political
violence between supporters of the two parties is a
distinct possibility. Seaga will continue to resist
foreign pressure to revert to economic austerity until
after a national election. He may hope to forestall
pressure from the IMF by pointing to the
consequences of his electoral defeat and threatening
to rally other debtors to his cause. In a recent
conversation with the US Ambassador, for example,
Seaga said that Jamaica has done as much as it can to
comply with the Fund's requirements and that, if he
and the IMF go their separate ways, he is likely to
influence many other developing countries.
Even from a domestic political perspective, Seaga's
plans are risky. He probably expects that a quick shot
of government spending will help revive popular
support for his party. Although real GNP could grow
as much as 5 percent this year, by early 1987 severe
inflationary pressures and reduced credit because of
foreign debt problems will probably begin to choke
economic activity.
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Labor Relations
Organized labor's traditionally close relationship with
the military and the government has been strained by
recent legislation aimed at curbing Panama's liberal
labor code. Government-labor tensions peaked during
a ten-day general strike last March by the National
Council of Organized Workers (CONATO), an
umbrella confederation that represents labor's
interests with the regime, and have continued as
CONATO withdrew its delegates from various
government organizations. The Panamanian Defense
Forces-through the ruling Democratic
Revolutionary Party-have been trying to woo
CONATO back into the fold, while also working to
limit labor's ability to disrupt the economy. We
believe, however, that additional austerity measures
required of the government to meet lending criteria of
the World Bank and the IMF are likely to lead to
more labor protests. Nevertheless, because of
organized labor's inherent weaknesses and
dependence on government funding, a complete break
with the regime is unlikely.
The Torrijos Years-Close Ties But Little Clout
Organized labor's current estrangement from the
regime contrasts with its privileged position under
Gen. Omar Torrijos between 1968 and his death in
1981. Torrijos's courtship of labor was part of his
strategy to ensure support for his regime from all
sectors of the political spectrum. His 1972 Labor
Code endorsed unionism, the right to strike and
bargain collectively, and worker education, and made
it virtually impossible to dismiss employees. While
Torrijos's code kept labor in the fold, it also ensured
high production costs and discouraged business
investment and expansion, according to the US
Embassy. In response to business pressure, the code
was modified twice during Torrijos's rule, but it still
retained its proworker bias.
Despite labor's favored position during the 1970s,
several constraints have limited its growth and
political clout. First, the relatively high wages earned
by Panamanian workers have discouraged
membership in unions, according to the US Embassy.
In addition, according to the Embassy, unions
traditionally have been excluded by the regime from
recruiting among small businesses, which account for
a large segment of Panama's economy. Trade unions
have been similiarly unsuccessful in penetrating
offshore banking activities and the Colon Free Zone.
As a result, only 17 percent of a work force of over
615,000 is unionized, a figure that has remained static
since Torrijos's era.
A number of other factors have contributed to labor's
lack of political leverage. According to the US
Embassy, workers traditionally look to the
government, rather than unions, to protect their
interests. CONATO, government subsidized and
promoted, has been plagued with ideological
differences since it was launched in 1973.
Transportation workers, critically important for any
strike effort, are heavily influenced by the military. In
addition, unions have been excluded from organizing
among public-sector workers, who represent nearly
one-quarter of the work force. Indeed, public
employees formed their own associations and then
joined in 1984 to form the National Federation of
Public Employee's Associations.
World Bank and IMF.
Recent Tensions
The relatively placid relationship between the
government and labor ended following the election of
Nicolas Barletta to the presidency in 1984. Tensions
focused on the new administration's plans to revise
Torrijos's labor code further to meet World Bank and
IMF lending criteria for the release of new money in
1985. Meanwhile, the new public employee group
began to decry alleged mismanagement in
government agencies and accused Barletta of plotting
to cut back public-sector employment to satisfy the
Secret
ALA LAR 86-02/
29 August 1986
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Significant Panamanian Labor Organizations
National Council of 100,000
Organized Workers
(CONATO)
Comment
CONATO has had a limited consultative role in national labor affairs. It represented labor at the legislative
and political levels before the break with the regime in March. It represents most private-sector trade
unionists, but has no real authority over its individual affiliates. CONATO has limited authority to enforce
the decisions of the executive body. Structural changes in 1983 and 1984 gave leftist unions a greater voice in
labor affairs.
Confederation of Workers
39,000
Ricardo Monterrey,
of the (CTRP)
Secretary General Republic
of Panama
Comment
Democratically oriented, CTRP is affiliated with the International Confederation of Free Trade Unions. A
member of CONA TO, it has not supported some initiatives advocated by the leftist faction.
National Confederation of 24,700 Jose Manuel Meneses,
Panamanian Workers Secretary General
(CNTP)
Comment
Aligned with the Communist People's Party, as well as the World Federation of Trade Unions, CNTP
maintains contact with Cuba, Nicaragua, and the Soviet Union. It is strong among food, commercial, and
electrical workers.
Isthmian Labor 5,100 Julio Cesar Pinzon,
Confederation (CIT) Secretary General
Comment
CIT is a founding member of CONATO, but is now estranged. It is politically aligned with the Christian
Democratic Party and affiliated with the World Confederation of Labor. CIT suffers from weak, undynamic
leadership, according to the US Embassy.
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Significant Panamanian Labor Organizations (continued)
Center of Authentic 5,000 Gabriel Castillo,
Independent Workers Secretary General
(CA TI)
Comment
Left of center, CA TI is a frequent attendee at Moscow-sponsored events.
Panamanian Center of 16,500
Transport Workers (CPTT)
Comment
Created by Torrijos, CPTT remains heavily dominated by the military. CONA TO has been unable to secure
CPTT support in strikes because of military pressure.
National Construction 4,000 Eduardo Rios,
Industry Workers Union Secretary General
(SUNTRACS)
Comment
Rios is a CONATO firebrand and left of center politically. Noriega's influence tempers Rios and
SUNTRACS, however.
National Federation of 140,000 Hector Aleman,
Public Employee's Secretary General
Associations (FENASEP)
Comment
The public employee federation takes the place of trade unions for public-sector workers. Influenced heavily
by the military, FENASEP's political orientation is unclear.
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In response to Barletta's proposals to weaken the
labor code, CONATO called a 48-hour general strike
in July 1985, contributing to pressure that eventually
derailed the President's plan and forced the
resignation of his Labor Minister. For their part,
public-sector workers mounted their own six-week
strike at the national electric company to protest the
government's choice to head the utility. They also
carried out a two-day national work stoppage in
August 1985 to protest potential public-sector
cutbacks. In our view, this constant labor unrest
facilitated Barletta's removal by the military in
September 1985.
Government-labor relations worsened when Barletta's
successor, President Eric Delvalle, failed to follow up
on his promise to consult with organized labor before
contemplating any further reforms, according to the
US Embassy. Last March, for example, Delvalle-
pressured by Defense Forces Commander General
Noriega and eager to reach agreement with the
World Bank and IMF-proposed measures that
included cuts in overtime pay for employees of small
businesses, as well as other provisions that
discouraged the use of union labor.
the regime wanted to pass the
legislation quickly to minimize adverse reactions.
CONATO retaliated with a 10-day general strike
that shut down the nation's only oil refinery, food
processing plants, and key ports, creating shortages of
motor fuels and other consumer goods. The military
intervened to stop the strike from spreading, however,
and the demonstrations-several of which turned
violent-did not prevent passage of the new measures.
Defeated, CONATO withdrew from all government
councils and boards in which labor was represented,
and rejected the government's request to name the
worker delegate to the annual International Labor
Organization conference in Geneva. Moreover, at
May Day rallies this year, in sharp contrast to
previous years, CONATO heaped criticism on the
military as well as the Delvalle government for
imposing the labor code reform, according to the US
Embassy. CONATO is also attempting to launch an
independent political movement, the National Popular
Front, which reportedly has the support of all
student groups.
the party will organize more
Healing The Wounds
Since the general strike in March, the military has
attempted to rebuild its relations with labor. For
example Noriega-
through intermediaries-has tried to convince
CONATO affiliates to reconcile their differences
with the ruling party and the military. In addition, he
has sought to discourage union support for
CONATO's plans to form the National Popular
At the same time, CONATO has been licking its
wounds and has backed off from further
confrontations with the regime. CONATO's proposed
National Popular Front has yet to make a public
appearance. Its plan to hold a 24-hour general strike
in late April to protest the March reforms was
canceled because its key affiliates were not willing to
challenge the government.
largest affiliate have been encouraged to avoid public
displays of support for the government, but not to
members of CONATO's
break with the ruling coalition.
Near-Term Reconciliation Unlikely
Despite CONATO's low profile and regime efforts to
mend strained ties, we believe more labor unrest lies
ahead. The Legislative Assembly will probably take
up the issue of reforming the Social Security Fund in
September, with an eye to establishing higher
retirement ages. This issue, as well as likely cutbacks
in public-sector employment rolls, is potentially more
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sensitive to labor than the reforms last spring. In our
view, economic measures under government
consideration to meet additional World Bank and
IMF demands will probably further strain relations
between labor and the regime, despite government
assurances that it will consult fully with labor
beforehand. Delvalle broke similar promises made to
labor last fall, underscoring the government's
determination to risk worker unrest and to placate
international lenders.
While more labor agitation is likely, it will probably
be limited. Its intensity and impact will probably be
muted by CONATO's inherent weaknesses, as well as
efforts by the military to induce labor leaders to toe
the line and return to the ruling party ranks.
CONATO realizes that the military holds the whip in
Panama as well as the purse strings, and that any
precipitous break with the regime would probably be
a setback for organized labor in general, and
CONATO in particular.
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France: Policy Toward
Central America
might come back to haunt him later.
French Prime Minister Jacques Chirac, in private
conversations with high-ranking US officials during
the last six months, has expressed full support for US
policy in Central America and promised to change
France's policy toward the region from that followed
by the previous Socialist government. Since the
election in March, France has indeed been less con-
frontational toward Washington on Central American
issues, but this has been due more to the domestic
political situation in France than any directive for
change. Neither Chirac nor President Mitterrand-
whose office traditionally directs foreign policy-is
willing to take a position on Central America that
against the Sandinistas.
The lack of any strong direction from the top militates
against any major shifts in French Central American
policy in the near future. Following a trend started
when the Socialists controlled the government as well
as the presidency, France will probably continue
gradually reducing support for the Sandinistas in
favor of the Central American democracies.
Disenchantment with the Sandinistas, however, will
not necessarily translate into backing for US policy,
and France is not likely to support active US
measures to apply economic and military pressure
Policy Under the Socialists
French policy toward Central America during the
early days of Socialist rule was blatantly antagonistic
to the United States. Originally, the Socialists
followed a policy of actively supporting revolutionary
groups in Central America on the basis of a view of
global politics that conveniently combined Socialist
ideology with French national interests. Although
France's economic stake in Central America is not
large, the Socialists saw Central America as a
microcosm of broader trends in the Third World. In
their view, inequality, exploitation, and
authoritarianism rather than East-West competition
were responsible for instability in the Third World. In
addition, they believed the United States and the
Trade. France's interest in Central America is
primarily political not economic. French trade with
the five countries of Central America (Guatemala, El
Salvador, Honduras, Nicaragua, and Costa Rica)
accounts for less than 1 percent of France's total
foreign trade. Trade with Nicaragua alone accounts
for about one-third of 1 percent of the total and is far
more significant for Nicaragua than for France. In
1985, France accounted for 6.9 percent of
Nicaragua's exports and 5.6 percent of its imports.
Although France's trade with Nicaragua is not
insignificant, it is doubtful that France could
effectively use trade as a lever against Nicaragua.
Direct Aid. Nicaragua also has been the greatest
benificiary of direct French aid to Central America.
Direct aid has remained fairly steady at $8.5 million
since 1982, roughly double the amount given to the
other Central American countries and has mostly
been in the form of food and medicine. While French
aid has remained steady, aid from several other West
European countries-notably Sweden and the
Netherlands-has increased. The new Chirac
government has indicated that it intends to phase out
aid to Nicaragua after 1987 in favor of the other
countries in Central America.
Loans and Credits. Since 1982, France has given
Nicaragua approximately $15 million a year in loans
and credits, while extending almost nothing to other
Central American countries. Most of this aid has
been tied to the purchase of French goods, thus
artificially overstating the amount of French-
Nicaraguan trade. Furthermore, the French have
often made access to these credits contingent on
repayment of previous credits.
Secret
ALA LAR 86-021
29 August 1986
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Soviet Union were exploiting this unrest to reassert
their own faltering hegemony, thereby risking a
dangerous confrontation.
According to the Socialists, socioeconomic reform
would lead to the domestic political stability needed to
close off opportunities for US-Soviet intervention and
thus restore international stability. France could play
a leading role in this process by supporting
"progressive" (that is, revolutionary) forces.
Optimistic Socialists envisioned a global trans-
formation bringing peace, independence, and
democracy to the nations of the world. In addition to
these altruistic goals, pragmatic Socialists hoped to
increase French influence with other Latin American
countries and enhance France's prestige as a world
power.
Once in power, the Socialists moved quickly to
implement their goals. Paris issued a joint declaration
with Mexico in August 1981 supporting El Salvador's
guerrilla alliance-the Democratic Revolutionary
Front/ Faribundo Marti National Liberation Front
(FDR/FMLN)-and sold arms to Nicaragua in
December 1981. This initial activism, however, was
short-lived and French policy toward Central
America was relatively restrained during 1982 and
1983. Several factors account for this passivity.
Negative US and Latin American reactions to the
joint declaration with Mexico on the FDR/FMLN
and the Nicaraguan arms sale alerted France to the
potential costs of an active policy in the region.
Furthermore, increased repression by the Sandinistas
and lack of popular support for the rebels in El
Salvador gradually persuaded pragmatic Socialists
that their original understanding of these groups had
been flawed. The most important factor explaining
French quiescence, however, was the crisis over INF
deployment in West Germany, which dominated
France's foreign policy agenda after the fall of
Helmut Schmidt's government in October 1982.
Faced with the need for NATO solidarity the French
Government became more reluctant to antagonize the
alleviated French security concerns, while the US-led
Grenada invasion heightened French fears of direct
US military intervention in Central America. France
saw US economic and military pressure on Nicaragua
as a dangerous step down this road and took a number
of actions in various international forums to
undermine US policy. By serving as an intermediary
between Nicaragua and Costa Rica, between the
Sandinistas and the Miskito Indians, and between the
Duarte government and the FDR/FMLN, France
tried to defuse the growing militarization of the
Central American crisis.
While French policy was certainly anti-US during
this period, it was becoming decidedly less pro-
Nicaraguan. At the higher levels of the French
Government, fear of US military intervention in
Central America out-weighed sympathy for the
Sandinistas, especially after 1983. Actually, French
irritation with the Sandinistas began as early as 1982.
The declaration of a state of emergency in March and
Sandinista leader Daniel Ortega's visit to Moscow in
May called Nicaraguan claims of political pluralism
and nonalignment into question. Although disturbed
by these actions, French policymakers were reluctant
to criticize the Sandinistas publicly for three reasons:
they did not want to appear to support US policy in
the region; they did not wish to upset Third Worldists
within the Socialist party who remained strongly
sympathetic to the Sandinistas; and they hoped that
the Sandinistas might still be persuaded to make good
on their promises of political pluralism and
nonalignment. Thus began a pattern of French
officials criticizing the Sandinistas privately, while
defending them in public.
The Socialist government's disenchantment with
Nicaragua reached its zenith, however, after the
Sandinistas expanded the state of emergency last
October. in November
1985 the French Foreign Ministry decided to
withdraw political and economic support for the
Sandinistas gradually, while the Ministry of Foreign
Trade decided in January to curtail trade and aid to
Managua unless political developments in Nicaragua
improved. The Sandinistas' stock with Paris probably
United States on Central American issues.
Toward the end of 1983, France again assumed an
active posture toward Central American affairs.
Successful INF deployment in West Germany
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fell even further in February when they hosted a
conference of anti-imperialist organizations that
called for the independence of France's Caribbean
Nicaraguan ports and the US role in the Nicaraguan
conflict. (France abstained on a resolution calling on
the United States to comply with the ICJ's decision.)
departments.
Policy Under the New Government
Although the tone of French policy has certainly
changed since March, this has more to do with the
vagaries of the domestic political situation in France
than anything else. Chirac's proclaimed support for
US policy in Central America is probably rather thin.
Chirac and his key advisers are not very
knowledgeable about Central American issues, and
Chirac has paid little attention to the region since
coming to power. A dramatic move on Chirac's part
in support of US policy, such as direct contact
between Chirac and Nicaraguan rebel leaders is
unlikely, especially after the death in July of Joel
Fieux, a naturalized Nicaraguan citizen of French
birth, in a Contra ambush.
Chirac has also indicated to US officials that aid to
Nicaragua will be phased out and rerouted to the
Central American democracies. Closer scrutiny
reveals that this really does not represent a radical
departure from policy under the Socialists-the
decision to reduce French aid to Nicaragua had
probably already been made in late 1985 by the
previous Socialist government. Furthermore,
diplomatic relations between France and El Salvador
had been gradually improving since 1983,
culminating in the appointment of a permanent
French Ambassador in April 1985. In any case, the
amount of redirected aid these democracies can
expect from France will be small, since French aid to
Nicaragua has not been very large (see box).
Mitterrand, on the other hand, seems less willing to
become involved in Central American issues than he
has in the past. His reaction to the US House of
Representatives approval of Contra aid in July was
mild compared to his response to the US trade
embargo against Nicaragua announced in May 1985.
Furthermore, Mitterrand apparently did not try to
influence France's position in the UN Security
Council's debate on the International Court of Justice
(ICJ) decision that condemned the mining of
For the time being, Central America is a banana peel
no one wants to slip on. Both Chirac and Mitterrand
probably worry that supporting either the Sandinistas
or the Contras is potentially embarrassing, and each is
wary of making a mistake his opponent might exploit.
With neither Mitterrand nor Chirac willing to take a
leading role, Foreign Minister Jean-Bernard Raimond
is likely to play a key role in determining the
substance of Central American policy. Raimond, a
compromise choice for Foreign Minister, is a career
diplomat, not a Chirac loyalist.
Raimond sees his present task as
preventing the Chirac-Mitterrand rivalry from
causing France any embarrassment, while
maintaining continuity in France's foreign policy.
A Soviet-East European specialist, Raimond does not
have a strong background in Central American
affairs, but he has laid down some principles for
France's future Central American policy that
emphasize continuity over change. Raimond
continues to support the Contadora process and the
EC's policy of granting aid to all the nations in the
region, including Nicaragua. He also stresses that
France will reject military means to bring about
change in the region and will continue to support the
principle of nonintervention in internal affairs.
Raimond recently observed to US diplomats that,
unlike Cuba, Nicaragua is not yet a member of the
Soviet Bloc-clearly implying that he is unlikely to
support Nicaraguan rebels. Nevertheless, he says
France will not undercut US policy in the region, and
he is unlikely to seek a confrontation with the United
States on Central America.
As part of his effort to ensure continuity in French
foreign policy, Raimond has left in place at the
Foreign Ministry several officials responsible for
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Chronology of French Policy in Central America
Socialist International admits National Revolutionary Movement (MNR), left-
wing party in El Salvador headed by Guillermo Ungo, as member; grants observer
status to Sandinista National Liberation Front; calls for suspension of economic,
diplomatic, and financial support for Somoza regime; provides Sandinistas
financial and organizational support.
Socialist International calls for "active solidarity" with Democratic
Revolutionary Front (FDR), political ally of guerrilla movement in El Salvador,
headed by Guillermo Ungo and including his party, the MNR. EC Commissioner
Cheysson advocates providing food and medical aid for Nicaragua.
28 August 1981 France signs joint declaration with Mexico recognizing FDR/FMLN-
Democratic Revolutionary Front/Faribundo Marti National Liberation Front "as
a representative political force" in El Salvador.
March 1982
July 1982
Early 1983
Foreign ministers from nine Latin American countries-Argentina, Bolivia,
Colombia, Chile, Guatemala, Honduras, Dominican Republic, Paraguay, and
Venezuela-sign joint statement condemning French-Mexican joint declaration
as interference in Salvadoran internal affairs.
France finalizes $15 million sale of "defensive" weapons to Nicaragua; included
two patrol boats, two Alouette-3 helicopters, 45 trucks, 7,000 air-to-surface
rockets, and training for 10 Nicaraguan naval officers and 10 pilots. Eleven Latin
American nations including Mexico, Brazil, Venezuela, and Colombia express
displeasure with French action.
Sandinistas declare state of emergency in Nicaragua. Constituent assembly
election in El Salvador; overwhelming turnout for candidates of center and right.
Sandinista leader Daniel Ortega meets with Mitterrand and Cheysson in Paris,
after meeting with Brezhnev in Moscow. French grant Nicaragua $15 million in
aid, but caution Nicaragua to maintain "genuine nonalignment."
France unsuccessfully tries to gain support of new Socialist government in Spain
for joint diplomatic initiative toward Central America.
February 1983 Roving Ambassador to Latin America Antoine Blanca announces French
intention to upgrade diplomatic relations with El Salvador to the charge level.
November 1983 Foreign Minister Cheysson meets with Salvadoran Foreign Minister Fidel Chavez
Mena in Paris. First official contact between Socialist government and the
government of El Salvador.
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Cheysson sends letter to Colombian President Betancur proposing multinational
force to remove mines from Nicaraguan ports planted by US-backed rebels. Letter
reportedly authorized by Mitterrand.
French offer resolution in UN Security Council calling for freedom of navigation
in Central American region (vetoed by United States). Mitterrand meets with
Guillermo Ungo, leader of FDR.
France hosts border talks between Nicaragua and Costa Rica. Mitterrand meets
with Salvadoran President Duarte in Paris, encourages negotiations with
FDR/FMLN.
September 1984 Second round of Costa Rican-Nicaraguan border talks hosted by France. France
attempts to solicit Canada, the Netherlands, Norway, Sweden, and Mexico for
multinational peacekeeping force. EC, Contadora, and Central American
countries meet in San Jose, Costa Rica. French leak letter from US Secretary of
State George Shultz calling on conference participants not to grant political or
economic assistance to Nicaragua. France and West Germany facilitate
negotiations between FDR/FMLN and Duarte government at La Palma.
November 1984 Nicaraguan election, French Government declines to send official observers.
However, French National Assembly sends Jean Natiez, president of French-
Nicaraguan friendship group as representative. Indication of PSF rank-and-file
support for Sandinistas.
1985 French lead European members of Inter-American Development Bank protest US
veto of $58 million development loan to Nicaragua.
January 1985 Inauguration of Daniel Ortega as President of Nicaragua, France sends low-level
delegation.
April 1985 Sandinista-Miskito Indian negotiations held in Mexico. France, Sweden,
Canada, Mexico, Colombia, and the Netherlands attend as observers. France
upgrades relations with El Salvador to ambassadorial level, appoints Alain
Roquier as resident Ambassador.
US declares trade embargo against Nicaragua. French protest embargo at Bonn
summit. Mitterrand meets with Ortega in Paris 13 May, after the Nicaraguan
President's official visit to Moscow.
June 1985 Costa Rica rejects French offer to mediate talks with Nicaragua in Paris.
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Chronology of French Policy in Central America (continued)
20 June 1986
25 June 1986
July 1986
French officials facilitate negotiations for release of Ines Duarte, kidnaped
daughter of Salvadoran President.
French UN delegation collaborates with Nicaragua to draft General Assembly
resolution criticizing US embargo against Nicaragua. Resolution passes 84-4-37.
French legislative election results in conservative majority.
Chirac indicates support for US Central American policy in meeting with
Secretary Shultz, although other Gaullists voice reservations.
Chirac foreign policy speech calls for French "modesty" in Central America.
Nicaraguan Vice President Sergio Ramirez pays official visit to Paris. Meets with
Mitterrand and Foreign Minister Raimond, but not Chirac.
French Embassy in Nicaragua refuses to send report by independent Nicaraguan
human rights agency (Permanent Commission on Human Rights) to Paris unless
data on human rights changed to reflect French Embassy figures (that are based
on Sandinista figures).
Chirac states 'full support "for US policy in meeting with special envoy Habib.
Also indicates that France will phase out aid to Nicaragua in favor of Central
American democracies.
US House of Representatives approves $100 million in aid for Nicaraguan
insurgents. Sandinistas shut down La Prensa the country's only independent
newspaper, indefinitely.
In UN Security Council, France abstains on Nicaraguan resolution condemning
US support for Contras. Joel Fieux, naturalized Nicaraguan of French birth
killed in Contra ambush in Nicaragua.
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Central America appointed under the Socialists,
especially Remy Lahaye, the pro-Sandinista director
for Central America. Furthermore, actions by French
officials in Managua indicate they remain strongly
sympathetic to the Sandinistas. As a result, much of
the information French policymakers receive on
Central American affairs carries a bias against US
policy.
Outlook
In the short run, the strains of domestic politics will
keep the French from undertaking any major new
initiatives toward Central America. Support for the
Sandinistas is likely to wane gradually. France will
probably oppose military solutions to the region's
problems, as well as policies aimed at isolating
Nicaragua diplomatically or economically, but not in
a way that might provoke a confrontation with the
United States.
The balancing act, however, will probably not last
very long. Legislative elections are likely to follow
France's next presidential election, which will
probably occur in March 1988. A leftwing president
would seek to gain a governing majority, while a
rightwing president would try to capitalize on his
election victory to expand the right's present razor-
thin majority in the National Assembly. If the
Socialists came back to power, they would probably
again oppose US economic and military pressure
against Nicaragua. They might also try to placate
hardcore supporters of the Sandinistas on the party's
left, by making a few symbolic gestures toward
Nicaragua. For the most part, however, the Socialists
are likely to be cautious in their dealings with
Nicaragua and would probably be reluctant to extend
any new aid-economic or military-to the
Sandinistas without concrete political concessions.
position (as to any position) is probably not very deep.
The French right has traditionally taken less interest
in Latin American affairs than the left and presently
seems more concerned with using limited French
resources to maintain France's traditional ties to its
African clients. Furthermore, broad elements of the
center and right worry that US military involvement
might weaken US commitments to Western Europe
and provoke anti-US sentiment in France as it did in
the Vietnam war. On a more negative note, many old-
and new-style Gaullists on the French right might
argue for a more active role in Central America.
Therefore, if fears of US intervention were to
increase, a rightwing French Government might
become more critical of US policy. For the most part,
however, the right will probably feel there is little to
be gained by provoking the United States over
Central America.
Future French governments of either the left or the
right could revive a more activist French policy in
Central America. The persistent influence of
Gaullism and the desire to play a world role often lead
the French to herald prematurely the decline of US-
Soviet influence as the basis for French opportunity.
In the final analysis, France does not have the power
to shape events in the region, but can only react to
opportunities as they arise. Furthermore, before
making any serious effort to exercise its influence in
Central America, Paris would need to sense that it
could afford to provoke Washington and that
something could be gained by becoming involved in
the region's affairs.
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If the right should take the presidency as well as
maintain power in the National Assembly, the best
the United States could probably hope for in Central
American policy would be a kind of benign neglect.
Although the right would certainly be less reluctant to
criticize the Sandinistas, this would not necessarily
translate into support for US policy. Chirac has
indicated such support, but his attachment to this
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Latin America
Briefs
inept business administration; and insufficient law enforcement
President Castro's latest economic program calls for drastic action against inept
management and corruption, but these are only the symptoms of Cuba's economic
problems, and his efforts are likely to bring minor improvements at best. The
government's economic "action plan" drafted last month aims at combating
widespread cheating on production records, salaries and perquisites; corrupt and
. The plan tightens use of some market incentives and
investment processes, and political exhortations.
relies more heavily on the reinforcement of moral and revolutionary ideals.
Meanwhile, nine ministerial working groups have been established to study long-
term remedies to administrative weaknesses and labor deficiencies, according to
the Cuban press. The working groups' agenda suggests that new policies will focus
on tougher labor discipline, reduced consumption, revisions in planning and
outspoken, possibly forcing the regime to turn to more repressive measures.
The concentration on voluntary labor and deemphasis on enterprise profitability
suggest a move leftward, but probably do not portend a reversion to the radical
policies of the 1960s when Castro attempted a shortcut to "pure Communism."
Castro's current caution is reflected in recent statements warning against
extremist reforms. The Soviets have probably urged restraint on Castro and are
likely to continue to do so. Nonetheless, the move away from market incentives is
likely to dampen economic output. Cuban workers-hit by declining incomes,
shortages, and calls for even greater sacrifices-are likely to become increasingly
worth of imports or about $50 million. In late July,
the delays stemmed from temporary
liquidity problems. Havana's hard currency
shortage is growing more severe. According to a Western press report, in May
HavHavana had only enough hard currency reserves to finance 10 to 20 days'
in August were running about three weeks behind schedule and
Havana is claiming that its commercial arrearages reflect its inability, not its
unwillingness to pay. According to the US Interests Section, Cuban debt payments
stricter import criteria had been implemented and the US Interests Section reports
difficulties.
Havana apparently has slashed foreign expenditures to cope with its financing
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ALA LAR 86-021
29 August 1986
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that all foreign purchases now have to be approved by the economic commission
appointed by President Castro last May. Cuban
front companies in Panama-the purchasing agents for much of Cuba's Western
imports-sharply reduced spending and stopped drawing down credits since May.
Havana also apparently has tightened banking
for the Nonaligned Movement summit.
dollars from Western visitors. In addition,
regulations for foreign exchange transfers and strengthened efforts to acquire US
willing to increase hard currency assistance over 1985 levels
Castro will have difficulty extracting fresh loans from already nervous Western
bankers. According to the Interests Section, at least two West European
commercial banks canceled Cuban credit lines recently and we believe that other
investors will follow suit unless Havana brings arrearages up to date quickly. We
believe Havana is likely to get far less than the $300 million in new credits
requested from commercial creditors as part of debt rescheduling talks scheduled
for early September. Consequently, Cuba may turn once again to the Soviets to
bail it out of its hard currency difficulties. There is no indication that Moscow is
Honduran President Azcona's state visit to El Salvador in late July may lead
temporarily to closer cooperation on security and diplomatic efforts, but the
apparent lack of progress on the longstanding border dispute between the two
countries remains a problem. According to US diplomatic reporting, Azcona and
Salvadoran President Duarte jointly denounced the Sandinistas as totalitarians
bent on subverting the Central American democracies. The US Embassy in
Tegucigalpa reports that efforts are under way to increase coordination of military
operations against Salvadoran guerrillas in the border area. US Embassy reporting
after the visit indicates, however, that the work of a bilateral commission charged
with resolving the border dispute has come to a standstill, suggesting that Azcona
and Duarte could not agree on how to handle the issue before its official
submission to the International Court of Justice in December. After the good will
of the visit wears off, resentment about the border stalemate may again hamstring
the efforts of the two Presidents to improve cooperation against Nicaragua and the
guerrillas.
During his visit to Moscow in late July, Uruguay's Foreign Minister Iglesias
signed a communique supporting nuclear disarmament talks, an accord for
cultural-scientific cooperation, and agreed to continue talks on diversifying trade.
Iglesias-the first Uruguayan Foreign Minister to visit the Soviet Union-hoped
to expand export markets, thereby gaining revenues for his
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Iglesias resented Moscow's clumsy po itica
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maneuvering during the visit, particularly its effort to persuade Uruguay to
condemn Washington's SDI programs. We believe that Iglesias's refusal to do so
and the bland tone of the final joint communique indicate that Montevideo will
keep its political distance from Moscow and that the trip did little to advance
Uruguay's relations with the USSR. The US Embassy in Moscow, however,
reports that the Soviets-who have also recently hosted visits by the Argentine and
Brazilian Foreign Ministers-were relatively satisfied with Iglesias's trip,
presumably viewing it as another milestone in their patient efforts to expand
contacts with South America's democracies.
The UK dependent territory of Montserrat experienced an island-wide protest in
mid-August when virtually all private-sector employees and most civil servants
walked off their jobs over the government's decision to expel an Anglican priest.
The popular priest, Father Alston Percival, was accused of meddling in political
matters and told to leave within a week. The dispute was settled when the
government rescinded the deportation order and Father Percival agreed to leave by
the end of the year.
Despite the agreement, Montserrat is likely to experience additional political
trouble in the coming months. According to US Embassy reporting, the basic issue
behind the strikes, construction of a casino that the priest and much of the
population opposed, remains unresolved. Nonviolent protests have occurred
intermittently in recent years over demands for wage increases, and the US
Embassy in Antigua reports that the recent incident reflects longstanding
dissatisfaction with Chief Minister Osbourne who has been in power since 1978.
The government apparently still intends to go through with the casino project.
Although opposition politicians speculated that the incident would force the
government to call an early election, Chief Minister Osbourne has publicly ruled it
out.
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