CHILE: PROSPECTS FOR DEMOCRATIC TRANSITION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00495R001301420041-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 22, 2016
• Document Release Date: September 7, 2011
• Sequence Number: 41
• Publication Date: December 1, 1985
• Content Type: NIE

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Director. \' ) SUM
Central ~TJ
Intelligence
Chile: Prospects for
Democratic Transition
NIE 94-85
December 1985
copy 31 4
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N I E 94-85
CHILE: PROSPECTS FOR
DEMOCRATIC TRANSITION
Information available as of 19 December 1985 was
used in the preparation of this Estimate, which was
approved on that date by the National Foreign
Intelligence Board.
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THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS.
The following intelligence organizations participated in the preparation of the
Estimate:
The Central Intelligence Agency, the Defense Intelligence Agency, the National Security
Agency, and the intelligence organization of the Department of State.
Also Participating:
The Assistant Chief of Staff for Intelligence, Department of the Army
The Director of Naval Intelligence, Department of the Navy
The Assistant Chief of Staff, Intelligence, Department of the Air Force
The Director of Intelligence, Headquarters, Marine Corps
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SFC_RFT
CONTENTS
Page
SCOPE NOTE ...................................................................................... 1
KEY JUDGMENTS .............................................................................. 3
DISCUSSION ........................................................................................ 7
The Transition Period: Strategy of Major Political Actors ............ 7
Perspective and Strategy of Pinochet .......................................... 7
Role of the Security Forces .......................................................... 9
Attitudes of the Political Parties .................................................. 11
Strategy and Tactics of the Radical Left ........................................ 11
The Position of Labor ....................................................................... 12
The Catholic Church ........................................................................ 12
The Economy .................................................................................... 13
Major External Factors ..................................................................... 14
International Financial Support .................................................. 14
Foreign Political Influence ........................................................... 14
Soviet Bloc and Libyan Support for the Far Left ...................... 14
Alternative Scenarios ........................................................................ 15
A Stable Democratic Transition .................................................. 15
An Unstable Transition ................................................................ 16
A Strong Leftist Insurgency ......................................................... 16
Prospects ........................................................................................ 16
Implications for the United States ................................................... 16
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SCOPE NOTE
Chile's 1980 Constitution calls for a presidential plebiscite in 1989
and congressional elections in 1990. The democratic opposition wants to
modify the Constitution, however, believing that President Pinochet
plans to use it to perpetuate his rule well into the next decade.
Opposition leaders are calling for a more rapid and complete transition
to civilian rule and a return of the military to the barracks. Meanwhile,
the radical left has rejected any peaceful transition and continues to
advocate the violent overthrow of Pinochet.
This Estimate assesses the prospects for a peaceful transition to
democratic civilian rule in Chile over the next four years. It begins by
examining the major political forces at work, including the military, the
democratic opposition, and the radical left. It also examines the
economy and various external factors that are likely to affect the
transition. Finally, it discusses alternative scenarios and the influence
the United States may have on the process.
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Isla San
Ambrosio
SansFclix? ' (Chile)
(Chile)
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FALKLAND ISLANDS
(ISLAS MALVINAS)
(administered by U.K.,
claimed by Argentina)
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KEY JUDGMENTS
We believe that Chile's President Augusto Pinochet is likely to
remain in power through 1989, and that he will seek to manipulate the
military, the democratic opposition, and the radical left to perpetuate
his rule. The military wants to restore a stable non-Communist political
system, and there are recent signs that senior officers want Pinochet to
demonstrate more flexibility with the democratic opposition, perhaps
by agreeing to open presidential elections by 1989 rather than a
plebiscite with only Pinochet as candidate. Only the military have the
requisite force to remove him, and, if they believe he is becoming an
obstacle,to a stable transition process, they may decide to oust him. '
The major factor likely to influence military support for Pinochet,
other than the President's own willingness to make necessary conces-
sions, is whether the democratic opposition can continue to demonstrate
a large degree of cohesion, responsibility, and popular support. The
August 1985 National Accord, which implicitly accepted Pinochet's rule
until 1989 but called for a direct presidential election and an end to po-
litical restrictions, was viewed by some key officers as a positive
development. It was signed by 11 political parties representing both the
center-left and the democratic right. It is ambiguous about relations
with the Communist Party, but it excludes radical left groups advocat-
ing violence. Although Pinochet has rejected the Accord, it continues to
gain popular support, and we believe the military will pressure him to
agree to a dialogue with the moderate opposition if present trends
continue.
The Communist Party has indicated it will not sign the Accord, but
views it as a positive step in support of widening opposition to the
government. The Communists probably will seek to cooperate with the
moderate opposition and exploit organized antiregime demonstrations,
but they are not likely to renounce violence as the ultimate means of
overthrowing Pinochet. They have considerable influence in one of the
two main labor confederations in Chile, and can use it to support
popular protests. Organized labor is unable to play a decisive political
role, however, because only 20 percent of the work force is unionized
and labor laws are relatively restrictive.
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The Catholic Church has become a major factor in support of the
moderate opposition in its efforts to open up the political system and
speed up the transition process. Church leader Cardinal Fresno, an
opponent of Pinochet's policies, brokered the National Accord. He is
likely to continue to play a key role in maintaining political pressure on
the government, including attempting to use as leverage the Pope's
projected visit to Chile. Fresno probably will be circumspect in his
dealings with the government, however, because he badly wants the
National Accord to succeed and does not want to appear too partisan.
The economy is likely to continue to be a key factor in influencing
public attitudes toward the Pinochet regime. In 1982 a sharp economic
downturn fueled mass popular protests, but moderate growth in the last
two years has reduced dissatisfaction with government economic poli-
cies. Nevertheless, we project continued economic austerity and only
modest growth in the next few years as Chile attempts to keep its
massive foreign debt commitments and meet International Monetary
Fund requirements. By 1987 or 1988, Pinochet may decide to ease
austerity measures and stimulate economic growth to improve his
political prospects. This probably would cause him serious problems
with Chile's international creditors, but he may be willing to risk that in
order to promote growth.
Because of its heavy $22 billion debt load, foreign financial support
is a major factor in Chile's economic performance and ultimately in
Pinochet's political prospects. The United States played a crucial role in
negotiating a key debt rescheduling agreement this year and undoubt-
edly will be a significant factor in any new agreements that Chile may
seek by 1987. Thus Washington can have some political influence in
Chile depending on the support it lends to future requests for loans, par-
ticularly loans from multilateral sources such as the Inter-American
Development Bank and the World Bank. Major South American
democracies, although desirous of a peaceful democratic transition in
Chile, lack significant influence over domestic politics there. In the case
of Argentina and Peru, they have their own reasons to improve bilateral
relations with Chile.
The Soviets have played a major role in supporting the Communist
Party of Chile and its strategy of attempting to overthrow Pinochet
through violence. Soviet financial support has been crucial to the party's
survival, and Moscow has expanded its aid to include support for
guerrilla training of Chilean subversives in allied countries and the
supplying of weapons to returning militants, some of whom belong to
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the Manuel Rodriguez Patriotic Front (FPMR). Cuba appears to be
coordinating closely with Soviet efforts, and it reportedly is concentrat-
ing its support on the radical Movement of the Revolutionary Left
(MIR), which also receives Libyan support.
We believe that the best chance for a relatively stable democratic
transition to occur by 1989 would be through modification of the 1980
Constitution to permit free and open elections. We believe that there is
a better than even chance that this will occur, particularly if the
democratic opposition is able to hold together. Pinochet would risk
losing a plebiscite in 1989 unless his popularity improves dramatically,
but he may calculate that his prospects for continuing in power are best
served by an open election with several candidates. We believe that the
role of the senior armed forces officers is the most critical variable
affecting the course of developments in Chile. Should Pinochet's
support erode further in coming years, senior military officers probably
would pressure Pinochet not to run in order to avoid an embarrassing
defeat. The possibility remains that he can maintain military support,
but we think it will become increasingly difficult as 1989 approaches.
We believe a transition that followed the current constitutional
timetable and resulted in a plebiscite, with Pinochet as the candidate,
would probably lead to a deterioration in Chile's political stability.
Pinochet would need the united support of the armed forces, major
economic groups, and a significant portion of the middle class to win,
and this currently appears to be lacking. Even should he manage to gain
sufficient support to achieve a victory, his relations with the democratic
opposition are likely to be poor, and prospects for longer term stability
would be uncertain at best.
The radical left is likely to step up its violence in an effort to pre-
vent a successful transition, but there is little likelihood that it can
seriously threaten to overthrow the government. The military and
security forces have good capabilities to counter an insurgency, and
most Chileans favor peaceful change rather than violence. Should
Pinochet remain inflexible on altering the transition process, he would
greatly strengthen the radical left. Under such circumstances, the
radical left might obtain sufficient popular support to mount a viable
insurgency, particularly after 1989.
US interest in promoting a stable democracy in Chile and main-
taining a cooperative relationship could be jeopardized if Pinochet
persists in trying to perpetuate himself in power. This would increase
the risk of instability and raise the possibility of a radical leftist
takeover. The United States can have some influence on Pinochet
through its position in future Chilean debt rescheduling and new loan
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requests. He has shown that he can be responsive to subtle economic
pressure, but there is some possibility that extreme economic pressure
may influence Pinochet to adopt a radical posture on debt repayment.
US influence may help hold the democratic opposition together and
encourage its pragmatic approach toward the Pinochet government.
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DISCUSSION
1. President Augusto Pinochet (see page 8) has ruled
Chile with a firm hand since coming to power as a
result of a military coup that overthrew former Presi-
dent Salvador Allende in September 1973. In 1980 he
took advantage of a booming economy and held a
plebiscite for a new Constitution (see inset), which was
approved by nearly 70 percent of the vote and which
established him as President until 1989. The Constitu-
tion provides for a gradual transition to a democratic,
civilian rule by 1990. It calls for a new presidential
plebiscite in 1989-in which Pinochet can be the
candidate-and congressional elections the following
year. It formalizes Pinochet's rule as President of the
country and establishes as the legislature a four-man
military junta (see page 9), which includes the leaders
of the three major armed services and the Carabineros
(national police). Major political decisions are ap-
proved by the junta, which Pinochet has generally
been able to control.
2. In 1983, Pinochet faced the most serious challenge
to his rule since coming to power. A drastic economic
recession fueled mass popular protests and increased
leftist violence in an effort by both moderate and
radical opposition forces to speed up the transition
process. The President responded by beginning a brief
political dialogue with moderate opposition forces to
ease tensions, but he subsequently suspended the talks
and temporarily ended any hopes of speeding up the
transition process. In late 1984 he imposed a harsh state
of siege and a crackdown on all public demonstrations,
justifying his actions by the danger of rising leftist
terrorist violence. The moderate opposition was essen-
tially divided and largely ineffectual until August 1985,
when the Catholic Church was able to help formulate a
National Accord among 11 political parties for a more
rapid transition to civilian rule. The Accord has attract-
ed widespread popular support and is viewed as a
positive step by some elements in the military.2 Never-
theless, Pinochet has so far adopted a hard line and
rejected any discussions on the Accord.
The 1980 Constitution calls for the military junta to
name a presidential candidate-who also may be Pino-
chet-to be voted on in a 1989 plebiscite. If the junta
cannot agree on a candidate, the National Security
Council, made up of senior military officers and some
civilians, would choose a candidate. If the junta or
Council cannot agree on a candidate, or the designated
candidate does not win the plebiscite, Pinochet would
remain in power for another year. After the additional
year, the transitional provisions of the Constitution
would expire and an open presidential election would
take place. There would be a runoff if no candidate
received a majority in the first round. The winner
would serve an eight-year term as the new president.
The Constitution also provides for congressional a ec-
tions in 1990. The lower house's 120 deputies would be
freely elected, but some of the senators will be appoint-
ed by the junta. The Constitution provides for a single-
member-district representational system instead of a
proportional one. It also prohibits any groups that are
antifamily, proponents of violence, totalitarian, or based
on class struggle from being recognized as political
parties and participating in the elections.
Several provisions of the Constitution dealing with
"national security" allow the armed forces a political
veto, and they leave the way open for a continuation of
military control of the government under vague cir-
cumstances. The Constitution also gives the President
broad powers to arrest, expel, or internally exile subver-
sive persons without right of appeal.
The Transition Period: Strategy of Major
Political Actors
Perspective and Strategy of Pinochet
3. We believe that President Pinochet fully intends
to remain the leader of Chile for the foreseeable
future, despite increased popular opposition to his rule
and more questionable military support for his candi-
dacy in the 1989 plebiscite. He wants to carry out the
political timetable embodied in the 1980 Constitution
without concessions, which he expects will leave him
in firm control well into the next decade. He has an
almost messianic belief that he needs to continue to
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Over 12 years after leading the military coup that toppled Marxist
President Salvador Allende, General Pinochet continues to rule with
a firm hand. A masterful tactician, he has survived through reliance
on his own toughness and political instincts and by using authoritar-
ian methods and playing opponents off against each other. Pino-
chet's political agility and resilience have seen him through several
crises, including massive opposition protests in 1983, personal
financial scandals in 1984, and more recently a high-level police
death squad investigation. the Presi-
dent's response to his latest challenge, the opposition's National
Accord, is vintage Pinochet-polemical, sarcastic, and unyielding.
Although his present term lasts until 1989, our evidence indicates
that he is already maneuvering to remain in office beyond 1989.
Embattled Crusader
Strongly anti-Communist, Pinochet places a crusadelike emphasis on
fighting Marxism and has pledged to eliminate it from the country.
He considers all methods of fighting Communism legitimate. He
makes little distinction between Communist and leftist democratic
opposition, and he regards the nation's politicians as well-meaning
fools, according to a generally reliable source. He is convinced the
democratic opposition does not understand the nature of the
Communist threat-especially the democratic left, which he views
as historically prone to penetration by Marxists. As suggested by
remarks he made in a speech last year, the President believes he
alone can prevent a Communist victory in Chile, and he fears that
all may be lost when his rule ends because no one else has the
necessary strength or determination to confront the Communists.
The President is the target of relentless propaganda campaign
attacks by the USSR and its allies-a campaign that reinforces both
his beliefs about Communist aggression and his uncompromising
stance
all e
Circling the Wagons
A consummate military leader, Pinochet runs the government like
an army. In remarks reported in the Chilean press, he has said that
he is a military man before anything else, and he has compared
himself to the Roman emperors, who were military leaders as well as
political strategists. Through application of state-of-siege and state-
of-emergency powers, he tightly controls the political pulse of Chile.
Uncomfortable with negotiations, he is completely inflexible when
dealing from a position of strengt
When he is forced to deal, his instincts are to raw a negotiating line
as stubbornly and carefully as a line of defense.
Pinochet deliberately surrounds
himself with a cadre of like-minded political advisers. As his inner
circle of longtime cronies has gradually dwindled through retire-
ments and removals, he has begun to cultivate a younger generation
of technocrats who generally share his viewpoints and whose loyalty
to him is absolute. We believe the President is becoming increasing-
ly isolated from all but his hardcore supporters. He frequently
ignores and works around th se officials
liberal
Personality and Health
Pinochet's authoritarian rule reflects his own personality: he has a
strong need to have things under control, and his characteristic
reaction to dissent and social disturbance is repression. In addition,
he has a "black and white" mentality and is uncomfortable with
act in a more discriminating, conciliatory manner when it is clearly
expedient to do so. His general rigidity leads us to believe, however,
Career and Personal Data
Pinochet grew up in a middle-class family in Valparaiso and
attended the University of Chile for two years, specializing in
judicial and social science. He graduated from the Chilean Military
Academy in 1936 and was commissioned a second lieutenant. An
ambitious infantry officer with considerable initiative, he steadily
worked his way through the ranks, generally in infantry assign-
ments. Described before the 1973 coup as singularly apolitical,
Pinochet has never been involved in partisan politics. As command-
er of the 6th Army Division-a post he held in the late 1960s-he
had the complete confidence of Christian Democratic President
Eduardo Frei, and he subsequently won the trust of President
Allende, who personally selected him for the key post of command-
Pinochet is interested in sports, including fencing and horseback
riding, and he exercises daily. He prides himself on being a
historian, and he has written several books on political geography.
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govern after 1990 to ensure the institutionalization of a
stable, "protected" democracy designed to prevent a
return to the political chaos and growth of leftist
influence that occurred under Allende. Concerns
about his physical safety, as well as that of his family
and senior armed forces colleagues, may also figure
strongly in his plans to continue in office.
4. Should it become clear to Pinochet that he
cannot continue as President after 1989, he will want
to ensure that the military maintains control of devel-
opments. Various reports indicate that, at Pinochet's
request, soundings are being taken within the military
to determine sentiment about how the government
should approach the transition in 1989. His strategy
has been greatly complicated by the emergence of the
National Accord, but Pinochet has shown himself
capable of astute political adjustments. He will resist
concessions until compelled by inescapable political
realities to show pragmatism and flexibility.
5. Pinochet distrusts the current leadership of polit-
ical parties in Chile because of their role in the rise of
Allende. He would prefer to avoid dealing with them
but realizes that he needs to get democratic political
sectors to accept his "protected" democracy if the
system is to work. Pinochet would prefer to keep the
democratic opposition (see page 10) weak, divided,
and incapable of major antigovernment activity so that
he can manipulate it to obtain the most favorable
political conditions. Ideally, he would like the demo-
cratic opposition to accept the legitimacy of the 1980
Constitution and the political system that it entails. He
is especially insistent on the proscription of the Com-
munist and other "totalitarian" parties. To achieve his
objective, he will continue to try to exploit the terrorist
threat from the extreme left, using it as a pretext to
delay the revival of a political dialogue with the
democratic opposition. He will continue to assert that
any political opening only leads to increased violence,
and he will try to alarm the middle class and the
business community by suggesting that a civilian
government would ultimately fall into the hands of the
extreme left.
6. Pinochet will probably begin within the next
year to promulgate legislation that provides for struc-
tural changes required by the 1980 Constitution. Some
of the most important changes relate to the need to
allow political parties to function. He will probably
allow the passage of a noncontroversial electoral regis-
tration law, but will delay as long as possible legislation
covering the legal status of political parties, primarily
because it will allow the immediate commencement of
the political activities that he loathes and which have
Members of the Chilean Junta (top left to bottom right): Lt. Gen.
Julio Canessa, Army Representative; Adm. Jose T. Merino, Com-
mander of the Navy; Gen. Fernando Matthei, Commander of the
Air Force; Gen. Rodolfo Stange, Director General of Carabineros.
been proscribed. After the original weak version of a
law to establish an electoral court was declared uncon-
stitutional, the government promulgated a revised and
strengthened law in November 1985. The electoral
court now will be able to supervise the law regulating
political parties and oversee the presidential plebiscite
and congressional elections, making it difficult for
Pinochet to stack the 1989 presidential plebiscite in his
favor)
Role of The Security Forces
7. The Chilean military believe that they are the
ultimate defenders of the country's territorial integrity
and sovereignty. Unlike many other Latin American
countries, however, Chile has a legalistic tradition that
even military leaders have not flouted with impunity.
The 1973 coup was an institutional military act, and
Pinochet's power was derived from the military insti-
tution, not from a personal political following. Pino-
chet has skillfully consolidated his power by favoring
senior officers in whom he has confidence, arranging
for them to remain beyond normal retirement age.
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Major Parties of the National Accord
The Christian Democratic Party is the largest political party in
Chile-with historical support from roughly 30 percent of the
population-and it plays an important role in defining the
strategy of the democratic opposition. One of the party's biggest
problems is its president, Gabriel Valdes.
Because of his history o association wit tee t
and his vacillating political positions, the military government
The Briones Socialists are at the left of the spectrum of
National Accord signers. They are a small party, a breakaway
faction from the original Chilean Socialist Party-which received
the support of roughly 18 percent of the electorate in the 1970
presidential elections. The party opposes the violent overthrow of
the Pinochet government and supports democratic rule. How-
ever, its views on private property rights are ambiguous.
Juan Francisco FRESNO Larrain
Roman Catholic Cardinal
Patricio PHILLIPS Penafiel
Leader, National Party
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Gabriel VALDES Subercaseaux
President, Christian Democratic Party
Andres ALLAMAND Zavala
Secretary General, National Unity
Movement
Ricardo LAGOS Escobar
Member, Political Commission, Chilean
Socialist Party/Briones Faction
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The government finds its presence in the Accord distasteful
because its leader was President Allende's last Minister of the
The two most important rightist opposition parties-roughly
20 percent of the electorate-are the National Party and the
National Unity Movement (MUN). The National Party has been
one of the strongest supporters of the Accord. The MUN has been
a more cautious supporter, and its party leadership has received
substantial criticism for its accord adherence. The rightist parties
have provided a measure of res tability for the National
Accord in military eyes, although Mthe rightists, who generally
come from a higher economic class, do not necessarily have good
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With the exception of members of the ruling junta and
other senior officers holding governmental positions,
the military also are discouraged from open political
discussions and involvement in politics. For the pres-
ent, Pinochet's principal source of power remains the
military. They remain loyal mainly because Pinochet
is the Commander in Chief, legitimately selected by
the service chiefs.
8. The loyalty of senior officers is tempered, how-
ever, by a strong commitment to their services and to
preserving stability.
some junta members believe that Pinochet's reelection
would be disastrous for the country and are pressuring
him to modify the Constitution and accept direct
presidential elections. If the military-particularly the
Army-begin to believe that Pinochet is becoming an
obstacle to the successful implantation of a stable non-
Communist political system or the preservation of the
military institution, they may move to oust him.
However, Pinochet has demonstrated keen sensitivity
to attitudes within the military and probably would
accommodate demands for policy revisions, if neces-
sary, to maintain institutional cohesion.
9. The Carabineros (national police) have many of
the same institutional qualities as the military services,
and they maintain high standards of professionalism.
Nevertheless, a scandal surrounding the involvement
of Carabineros in the brutal murders in March 1985 of
three leftists and the subsequent resignation of the
Carabinero chief have damaged institutional morale.
Resentment runs strong because many Carabineros
believe the institution was unfairly forced to take the
whole blame to protect the Army and the National
Information Center (CNI), the Chilean intelligence
service. The naming of the highly regarded Rodolfo
Stange as new Director General will probably improve
morale and smooth over hard feelings, but the way in
which the case and others like it are handled will
determine future Carabinero attitudes. Nevertheless,
the Carabineros are not capable of mounting a serious
challenge to Pinochet without the support of the other
military services.
Attitudes of the Political Parties
10. After being mired in a self-defeating impasse
with the government from late 1983 through the first
half of 1985, the parties of the center left, the so-called
Democratic Alliance, found a tenuous convergence of
views with the democratic right in the National
Accord. The Accord, brokered by Catholic Church
leader Cardinal Fresno (see page 10), marks the first
time since Pinochet came to power that the democrat-
ic political parties of the left and right have managed
to present a common front. It came about because the
participating parties concluded that the government
cannot be driven from office and that the only path to
democracy is through negotiation. Other principal
factors that allowed the Accord to emerge are the
distancing from the regime of important conservative
political sectors and the willingness of the democratic
left to exclude from the Accord radical leftist parties
advocating violence.
11. The National Accord has begun to alter the
balance of domestic forces by threatening both the
regime and the far left with increasing isolation. It is,
however, a fragile agreement that could break apart
eventually because the underlying differences be-
tween the signatory parties remain. The most divisive
issues are the ambiguity of some left-of-center demo-
crats in their relations with the Communist Party and
its front groups, and the unwillingness of these same
parties to produce a clear definition concerning re-
spect for private property rights. Largely because of
these issues, some of the rightist parties have received
strong pressures from their membership against con-
tinued adherence to the Accord.
12. The parties backing the National Accord have
begun a campaign to obtain signatures of support from
Chilean citizens, and they organized a successful mass
demonstration in November 1985 in support of the
Accord. They hope the government will eventually be
pressed to begin a dialogue in search of a negotiated
transition. The Accord does, however, implicitly ac-
cept the 1980 Constitution, and thereby Pinochet's
continuation in power until 1989.
Strategy and Tactics of the Radical Left
13. The radical left (see inset on page 12) calls for
the use of all means to overthrow Pinochet and
advocates class struggle to prepare the country for
eventual popular rebellion. It has been working to lay
the groundwork for an insurgency by means of bomb-
ings and other violent acts intended to polarize the
population. While generally opposed to negotiations
with the government, the radical left accepts them as a
useful tactic to unify the opposition, as long as they are
carried out in conjunction with other means, including
violence. It has indicated that it does not intend to sign
the National Accord under present circumstances. The
Communist Party will seek to take advantage of the
National Accord's weaknesses, and will undoubtedly
participate in protest activities sponsored by the Ac-
cord signers.
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The letter criticized the Accord, however, for failing
to call for concrete proposals to end the dictatorship
before 1989, for not addressing the abuses of the
security forces, for accepting the Constitution of 1980,
and for failing to address the plight of the Chilean
poor. The Communists view the Accord as an example
of widening opposition to the government, but are not
prepared to eschew violence in order to be accepted.
For now, the radical left will try to keep its options
open by strengthening cooperation with various Ac-
cord participants, particularly at the universities and
The radical left consists of the Chilean Communist
Party (PCCh) and the other parties and front groups
that make up the Communist-dominated Democratic
Popular Movement (MDP). The Communist party,
founded in 1922, is one of the oldest Communist parties
in the hemisphere and has traditionally attracted about
16 percent of the Chilean vote. For most of the time
before 1973, the Communists were accepted as a
legitimate political grouping that participated in the
Chilean democratic system. After 1973 the party and its
front groups went underground and its leadership went
into exile. The party, believed to be the best organized
political group in Chile, reportedly has expanded its
membership in the last few years and now has an
estimated 20,000 to 30,000 activists, in addition to a
sizable youth wing. It is particularly well organized in
the lower-class neighborhoods, which comprise roughly
40 percent of the population of Chile's largest cities. F
Allied with the Communist Party is the Movement of
the Revolutionary Left (MIR). Founded in the mid-
1960s, it has conducted sporadic political violence since
Pinochet came to power. Government security forces
successfully infiltrated the MIR during the late 1970s,
and the MIR's activities have been restricted since.
There are recent signs, however, that the MIR is
regrouping, and the government fears that it will
resurge. The number of MIR activists is estimated at
about 200 to 400.
The Manuel Rodriguez Patriotic Front (FPMP) was
formed in late 1983 and, according to a variety of
reliable sources, the PCCh reinforced its commitment
to violence by supporting the creation of the group.
While the FPMP is not currently fully controlled by the
Communists, the party is making every effort to assert
its influence over the Front and gradually incorporate it
into the PCCh. We believe the Front numbers 500 to
600 activists, and it has claimed credit for most of the
bombings and sabotage throughout the country since
1984.
The other main group in the MDP is the Chilean
Socialist Party, Clodomiro Almeyda faction, named
after a Foreign Minister under Allende. Its adherents
include Marxist-Leninists from the old Chilean Socialist
Party.
14. In an open letter to Cardinal Fresno in Septem-
ber, the Communist Party acknowledged some posi-
tive aspects of the Accord, including the call for the
observance of human rights, the need to return to
democracy, and the restoration of political activities.
in the labor movement.
The Position of Labor
15. The vast majority of organized labor would like
to see a return to democracy, but workers are difficult
to mobilize because they are concerned that antigov-
ernment actions, including strikes, will jeopardize their
jobs. According to current labor laws, employers can
fire any employee who remains away from the job for
more than 60 days. Under 20 percent of Chile's labor
force is unionized, although union membership is
concentrated in key economic sectors such as transpor-
tation and mining. The two main labor confederations
are the National Workers Command (CNT), headed
by leftwing Christian Democrats but heavily influ-
enced by the Communists, and the more moderate
Democratic Workers Central (CDT). Both the CNT
and CDT support the National Accord, although they
would like to see workers rights spelled out in the
agreement. The CNT advocates social mobilization
against the government, including protests. The CDT
usually will not cooperate with the Communist-domi-
nated Democratic Popular Movement (MDP) or the
CNT in protest activities. The CDT supports a moder-
ate coalition of worker and professional associations
that reject party control of the labor movement or
collaboration with the Communists.
16. Church-state relations during the Pinochet re-
gime have never been good. The church is highly
critical of the government's human rights record,
concerned about the lack of progress in the democratic
transition, and fearful that the absence of a govern-
ment-opposition dialogue could lead to polarization
and greater violence. Shortly after the imposition of
the state of siege in November 1984, relations reached
a particular low, with the government forbidding
certain church seminars and refusing to allow the
leader of the church's human rights organization to
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return to Chile from a Vatican meeting. Subsequently,
the church hierarchy, led by Cardinal Fresno, appar-
ently with the encouragement of the Pope, sought to
reduce strains in its relationship with the government
in order to be in a better position to help bring about
government-opposition reconciliation. The Chilean
church reportedly succeeded in discouraging the Pope
from visiting Chile this year, arguing it would give
Pinochet too much recognition. A papal visit is now
tentatively scheduled for early 1987.
17. The government knows that because of the
strength of the church in Chile it cannot afford to
alienate it completely. The government is convinced,
however, that many bishops and priests are Commu-
nists or leftist sympathizers and is determined to keep
them from causing problems for the government.
Church pressure for Pinochet to agree to a dialogue
with the supporters of the National Accord is likely to
continue, but Cardinal Fresno is aware that his role in
the formation of the Accord is a delicate one. He has
taken great pains to avoid being viewed as too active
politically or too partisan. Thus, despite his well-
known dislike of Pinochet, Fresno can be expected to
continue to be circumspect in his dealings with the
government because he badly wants the National
Accord to bear fruit.
The Economy
18. Over the next few years, Pinochet faces three
formidable economic challenges-servicing Chile's
nearly $22 billion foreign debt (see chart), generating
investment to stimulate domestic growth, and restruc-
turing the economy by diversifying and expanding
exports to adjust external accounts. Although bankers
rescheduled its 1985-87 debt and provided supplemen-
tary funds for balance-of-payments support in 1985
and 1986, Chile will need additional financing by
1987 to avoid suspending its debt servicing.3 However,
to obtain banker support, Santiago must adhere closely
to the performance criteria of its IMF fund facility
and the World Bank economic restructuring program.
Pinochet must decide whether once again to stimulate
growth-risking a confrontation with foreign credi-
tors-or face domestic criticism and social dissatisfac-
tion by implementing austerity measures over the next
several years
19. We believe that Chilean economic growth is
likely to be in the 0-to-3-percent range over the next
few years as the government responds to its strict IMF
and World bank programs. Meanwhile, Santiago's
unwillingness to raise interest rates or reduce con-
sumption further to spur savings will leave its banks
with a dearth of investment funds. The government is
likely to encourage allocation of scarce investment
funds into developing its present export base and
markets for copper, wood products, fish, and fruit.
growth to
governmen
20. Since 1983, Chile's tough economic adjustments
have served as a catalyst for protest, and we believe
Pinochet will face more of the same over the next few
years. The withdrawal of government programs aimed
at slowing the erosion of living standards will probably
boost discontent next year among a wide variety of
groups-including pensioners, lower-class workers,
middle-class businessmen, and professionals. Conse-
quently, in our judgment, over the next 12 to 18
months, there probably will be a sustained effort by
both moderate opposition groups and the radical left
to capitalize on this social dissatisfaction. By 1987 or
1988, however, Pinochet may decide to ease austerity
measures and turn to domestically generated economic
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ease political pressures and improve the
is prospects in the 1989 and 1990 elections.
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Major External Factors
International Financial Support
21. Because of its heavy debt load, foreign financial
support is a major external factor in the future perfor-
mance of the Chilean economy, and ultimately in
Pinochet's political prospects. Much depends on the
continued willingness of foreign lenders and investors
to involve themselves further in a country where they
see the possibility of political instability. The US role
in helping with the restructuring agreement this year
was crucial, and will undoubtedly be as significant in
new agreements that Chile may seek. Official credi-
tors, including the US Eximbank and the US Com-
modity Credit Corporation, agreed for the first time to
postpone Chile's principal payments-those due in
1985-86.
US assistance of this type
will continue to be important because Chile reportedly
hopes to receive the bulk of its new financing in the
future from multilateral lending sources. The Inter-
American Development Bank and the World Bank
have been big lenders in the past and must continue to
be so if Chile is to have growth.
Foreign Political Influence
22. West German foundations have been the undis-
puted leaders in support of democratic organizations
in Chile, providing over $1.5 million a year. Other
West European countries, along with Canada, have
provided smaller amounts of political funds, and their
influence on domestic politics has been minimal.
Because political parties lack legal status in Chile and
are prohibited from raising their own funds, nearly all
foreign assistance to political groups must be chan-
neled indirectly through think tanks, or through social
action and humanitarian projects. Accountability of
such funds is often at a minimum, and on several
occasions money has benefited the radical left because
of inadequate controls. Most West European funding
has gone to organizations connected with the left or
center-left because of the political affiliation of the
sources and because the moderate right supported the
Pinochet regime throughout the 1970s.
23. Chile, with one of the few remaining military
governments in South America, now finds itself virtu-
ally isolated on the continent. In general the switch to
civilian rule in South America has meant a distancing
of relations with Chile. Most of the regional civilian
governments feel that, unless there is progress in
O
human rights and the transition to democracy, rela-
tions should not improve significantly. Other than
Chile's immediate neighbors, only Venezuela and
Brazil have taken a serious interest in Chilean develop-
ments. The Venezuelans are known to be worried
about the Chilean political situation
The Brazilian Govern-
ment also reportedly is concerned about political
trends in Chile.
24. Formal relations between Chile and Argentina
have improved with the successful negotiation of the
Beagle Channel dispute, and efforts to promote trade
are proceeding. President Alfonsin, however, increas-
ingly despairs at the lack of a transition to democracy
in Chile and fears that turmoil in Chile could spill over
into Argentina. He recognizes that Argentina is, never-
theless, constrained from playing a direct political role
in Chile because of the hostility that has so recently
existed between the two countries.
25. Peru's attitude toward Chile is conditioned by
unresolved border issues dating from its loss of territo-
ry in the War of the Pacific in the 19th century. The
1929 Treaty of Lima, which was designed to settle the
unresolved issues, has still not been fully implemented.
Peruvian President Alan Garcia would like to resolve
the border issue once and for all so that he can cut
defense spending and push a regional moratorium on
new arms purchases. The Chilean Government has
been receptive to Garcia's overtures, and several high-
level visits have been exchanged. As a result, Garcia
has been careful to avoid criticizing Pinochet and the
Chilean political situation. Bolivia has long had poor
relations with Chile because of its desire to regain an
outlet to the Pacific Ocean, but moderate President
Paz is unlikely to attempt to interfere in Chilean
politics or allow Bolivia to be used as a base for
support of Chilean radical leftist groups.
Soviet Bloc and Libyan Support for the Far Left
26. Since 1980 the Communist Party of Chile
(PCCh) has followed an anti-Pinochet strategy that has
consistently featured violent means. A variety of reli-
able reporting makes clear that this strategy has been
made in consultation with and at the urging of the
Soviets. At a meeting in Stockholm in May 1985 with
leaders of the main Chilean moderate political coali-
tion, exiled PCCh Secretary General Luis Corvalan
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rejected an appeal from moderates for his party to
renounce armed opposition to Pinochet. Corvalan said
it would violate Soviet global strategy to abandon the
violent path for overthrowing Pinochet. The PCCh has
always received a substantial portion of its funding
from the Soviet Union, and
Soviet financial aid has enabled the party to survive
the Pinochet years. Moscow has now expanded direct
assistance to the PCCh to include support for guerrilla
training of Chileans in Soviet-allied countries, the
return to Chile of some of these highly trained mili-
tants, and shipments of modern weapons to the PCCh.
- Free elections with Pinochet as the government's
candidate.
- Free elections in which Pinochet is not the
government's candidate.
Any of these variations could take place in 1989, when
the plebiscite now is scheduled, or sooner. The selec-
tion of a congress-now slated for 1990-also could be
accelerated. It also is possible that the military would
rig the voting to ensure that its preference is ratified.
We have chosen the most likely scenarios for a stable
and unstable transition, as well as a third outlining a
less likely, but potentially crucial, leftist insurgency.
Cuban President Fidel Castro and Corvalan reporte -
ly met in Havana with a Chilean delegation to the
Cuban-sponsored international debt conference in late
July 1985. old some of the Chilean
delegates that the Cubans and the Soviets have decid-
ed to divide responsibility for assisting the two main
terrorist groups, the Movement of the Revolutionary
Left (MIR) and the Manuel Rodriguez Patriotic Front
(FPMR). The Cubans would concentrate on the MIR
and the Soviets on the FPMR.
to promote increased leftwing violence against both
Pinochet and the US presence in Chile.
Alternative Scenarios
29. Several scenarios for a democratic transition
exist, depending on how a successor would be cho-
sen-by plebiscite or free elections-and whether
Pinochet would be a candidate. These include:
- A plebiscite with Pinochet as the candidate.
- A plebiscite to ratify a candidate other than
Pinochet chosen by the military.
- A plebiscite to ratify a compromise candidate
negotiated by the military and the democratic
opposition.
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30. We believe that the best chance for a relatively
stable democratic transition to occur by 1989 would be
through modification of the 1980 Constitution to
permit free and open elections. The democratic oppo-
sition will need to continue to demonstrate substantial
popular support if it is to compel Pinochet and the
military to negotiate such constitutional revisions. Pi-
nochet may not willingly enter a serious dialogue
unless he perceives that to do otherwise would result in
the loss of military support sufficient to threaten his
removal. If Pinochet were to prove unwilling and
become isolated, the military might agree to remove
him, adopt changes to the Constitution, and oversee a
transition to full democracy. For its part, the demo-
cratic opposition would need to agree to only minimal
changes to the Constitution, and offer firm assurances
for the posttransition safety and immunity from prose-
cution of military leaders, including Pinochet, as well
as assurances that it will oppose participation of the
Communist Party in the transition process, even if the
party should renounce violence
31. This scenario is most likely to occur if:
- The democratic opposition retains sufficient co-
hesion to keep the pressure on Pinochet.
- The military perceive continued antigovernment
demonstrations and violence to be primarily the
result of Pinochet's inflexibility and unwilling-
ness to engage the democratic opposition in
dialogue.
- Pinochet's popularity continues to sag because of
stagnant economic performance.
- The military conclude that their institutional
interests and those of Chile are best served by
agreeing to open elections.
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C
O
An Unstable Transition
32. We believe a transition that followed the cur-
rent constitutional timetable without modification and
with Pinochet as the junta's candidate would probably
lead to a deterioration in Chilean political stability.
Pinochet's popularity currently is so low that he would
have great difficulty winning a plebiscite. In the
unlikely event that Chile's economy enters a boom
period before 1989, Pinochet may be able to win.
Pinochet would need the united support of the armed
forces, major economic groups, and a significant por-
tion of the middle class. Pinochet's military support
would probably grow if the armed forces perceived an
increase in violence as the result of the democratic
opening. But, even if Pinochet should win the plebi-
scite, relations with the democratic opposition are
likely to be poor and the prospects for longer term
political stability uncertain at best.
A Strong Leftist Insurgency
33. Should Pinochet continue to be inflexible, un-
dermine the democratic opposition as a meaningful
political actor, and make clear his intention to extend
his tenure until 1997, it would greatly strengthen the
radical left. This would result in increased leftist
recruitment and growing terrorist violence, with the
Soviet Union and Cuba accelerating their efforts to
create a viable insurgent movement, such as occurred
in post-1978 Nicaragua. Should centrist and moderate
leftist parties view legitimate opposition as nonproduc-
tive, they may believe that a temporary alliance with
the radical left to oust Pinochet and the military is a
viable alternative, thus enhancing the prospects for
insurgency. Under these circumstances, a successful,
violent overthrow of the military regime, and Pino-
chet, is a distinct possibility, particularly after 1989.
34. The success of the radical left in creating a
viable insurgency is by no means assured, however.
Too much violence accompanied by relatively little
socioeconomic deterioration or even marginal econom-
ic improvement would risk alienating the middle class
and conservative elements of the lower class. The
military and security forces are capable of strong
resistance to insurgent violence and penetration, and
are likely to contain such efforts unless the moderate
opposition decides to actively join ranks with the
radical left.
Prospects
35. We believe there is a better than even chance
that open presidential elections will be held in 1989
instead of the currently prescribed plebiscite. If the
democratic opposition holds together-it has an even
chance in our view-Pinochet and the military are
likely to feel compelled to modify the Constitution to
allow free and open elections. Pinochet in fact may
calculate that his prospects for continuation in power
may be best served by open elections, particularly
against a number of parties unable to coalesce behind
a single candidate.
36. We believe that the role of the senior armed
forces officers is the most critical variable affecting the
course of developments in Chile.
=the military's support for Pinochet has started to
erode slowly, and should this continue they would
probably pressure him not to run in order to avoid an
embarrassing defeat. On the other hand, should the
democratic opposition fall apart, especially in the
context of widespread violence, Pinochet and the
military will feel little obligation to make concessions
or changes to the Constitution and proceed with the
timetable as scheduled. Pinochet's capacity to neutral-
ize military opposition has been remarkable. The
possibility remains that he can maintain military
support, but we think it will become increasingly
difficult as 1989 approaches.
37. The radical left is likely to step up its violent
tactics and thereby give credibility to Pinochet's con-
tention that he should stay in power to maintain law
and order. It will be difficult, however, for the radical
left to convert widespread popular political ferment
into successful revolutionary violence. There is no
pervasive sense of intolerable oppression, corruption in
government, or class, religious, or ethnic conflict that
could lead to such an occurrence. The terrorists are
desperately trying to change the situation but so far
they have provoked little popular response. Far more
significant for the future is the ennui of the Chilean
population vis-a-vis the regime. Many Chileans are
convinced that it is time for a change, but through
democratic means.
Implications for the United States
38. The complex political process now under way in
Chile could jeopardize US interests in an orderly
transition to a stable democracy and complicate the
maintenance of a cooperative bilateral relationship.
with the Chilean Government. President Pinochet's
dwindling civilian support and his inflexible attitude
toward a transition to democracy, the stagnant econo-
my, and the increased external assistance the radical
left is receiving combine to create increasing political
tensions and an uncertain outcome. The desire of the
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majority of the Chilean people is for an orderly return
to a stable democracy. Pinochet clings stubbornly to
the belief that the Chilean people are not yet ready for
democracy, and he views a political opening as risking
a loss of control of the transition process, thus posing a
serious danger to his rule and raising the possibility of
a takeover by the extreme left
39. US influence over events in Chile is limited, but
there are some important points of leverage. Although
the Chilean Government is suspicious of the United
States, it is viewed as helpful on matters of mutual
interest, such as anti-Communism and foreign debt.
40. Washington also has a major influence on vari-
ous international funding institutions, and its position
on future debt rescheduling can have a key impact on
the Chilean economy. Pinochet is a shrewd politician
who understands the effect of economics on political
posture on debt repayment.
conditions. He has demonstrated that he responds to
economic pressure if he does not appear too obviously
yielding to US pressure-as in June 1985 when he
lifted the state of siege in response to private indica-
tions that US support for Chile's debt restructuring
package was conditioned on such action. There will be
more opportunities to apply economic pressure, partic-
ularly during the 1987-89 period as Chile tries to
balance its foreign debt servicing with its desire to
stimulate increased economic growth. The United
States has interests in seeing that Chile continues to
honor its debt service obligations, however, and there
is some possibility that extreme economic pressure on
Chile could influence Pinochet into adopting a radical
41. Pinochet's tactic of characterizing the National
Accord as a document written by the US State Depart-
ment clearly shows his willingness to appeal to Chilean
nationalism to stiffen resistance to outside pressure.
This appeal has some drawing power, particularly
within the military, but many government officials
recognize the value of a negotiated transition as
advocated by the National Accord. The Chileans have
also shown that they understand points of leverage in
Washington. They have attempted to wage a cam-
paign to influence US policymakers and the US Con-
gress against the signers of the Accord. They can be
expected to continue such efforts in the future
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