LATIN AMERICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00792R000100020017-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 27, 2016
• Document Release Date: December 20, 2013
• Sequence Number: 17
• Publication Date: March 13, 1987
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Directorate of
Intelligence
!MASTER FILE COPY
DO NOT GIVE 'UT
UR .14W ON
25X1
0
Latin America
Review
13 March 1987
a
ALA LAR 87-007
13 March 1987
Copy 430
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
25X1
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
25X1
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Latin America
Review
13 March 1987
25X1
Page
Articles Colombia: Guerrilla-Labor Links in the Oil Industry
Guerrilla ties to labor are an increasing threat to foreign oil
investors and to Ecopetrol, the state-owned oil company. Insurgents
have intensified their attacks on oil facilities and are trying to
mobilize labor support for their activities.
Cuba: Growing Popular Dissatisfaction
1
Popular discontent with austerity measures announced by President
Castro last December is increasing and is likely to persist even in the
face of stricter internal controls by the government.
5
Latin America: Developments and Trends in Terrorism and
Insurgency
7
Briefs
Cuba: Restricting Foreign Commercial Operations
Citrus Exports Hamstrung by Mismanagement
Venezuela: New Debt Agreement With Bankers
Guyana: Growing Ruling Party Tensions
Bolivia: Cabinet Changes
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
13 25X1
13 25X1
14 25X1
14 25X1
14 25X1
Articles have been coordinated as appropriate with other offices
within CIA. Comments and queries regarding this publication
may be directed to the Chief, Production Ste, Office of African
and Latin American Analysis,
Reverse Blank
Secret
ALA LAR 87-007
13 March 1987
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
25X1
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Latin America
Review
Articles
Colombia: Guerrilla-Labor Links
in the Oil Industry
Guerrilla ties to labor are an increasing threat to
foreign oil investors and to Ecopetrol, the state-owned
oil company. Activist workers in the country's oil-
producing region?and their allies among river and
port workers?have been among the most militant
elements of Colombia's organized labor movement
since the 1920s. They have occasionally spearheaded
large strikes, and many influential Colombians have
long blamed labor unrest in the oil industry on
subversive agitators.
Since the Cano Limon?Covenas oil pipeline in
northeastern Colombia was completed last March, the
National Liberation Army (ELN) and other guerrillas
have increased their attacks on oil facilities and tried
to mobilize labor support for their activities.
The ELN is
also pressing workers to go on strike along the pipeline
and at production and export facilities, according to
the US Embassy.
The guerrillas' attacks on the petroleum facilities are
apparently intended to disrupt the oil export flow?an
important source of foreign exchange for the
government?and discourage new foreign investment
in Colombia. The ELN, a Cuban-backed Marxist-
Leninist group, advocates the expulsion of all foreign
investors, and is violently anti-American. President
Barco has countered the guerrillas' propaganda with a
media campaign declaring that sabotage to the gas
and oil pipelines hurts the Colombian economy more
than the profits of the foreign investors, but this
strategy has not deterred the rebel attacks.
1
Guerrilla Proselytizing
Despite Barco's efforts to build support for foreign
investment, guerrilla recruiters find a receptive
audience among oil company employees. ELN
sympathizers argue that the area along the pipeline
has not received all the public works projects
promised by the government and the oil companies.
Jobs created during construction of the pipeline?now
completed?are being phased out, leaving many
workers unemployed. Other workers are hired on a
temporary basis, rarely for more than one or two
months at a time, according to a US Embassy source.
According to a labor source of the Embassy, one US
company houses both temporary employees and
temporarily unemployed workers in the same
barracks, where they talk politics and debate guerrilla
propaganda. The same source believes some
temporary workers employed by Occidental
Petroleum are active members of the ELN or the
People's Liberation Army (EPL).
The guerrillas work through legitimate labor unions,
particularly the Communist-backed Unitary Workers
Central (CUT). Both the Revolutionary Armed Forces
of Colombia (FARC)?the country's largest insurgent
group?and the National Guerrilla Coordinator, an
alliance whose members include the ELN, the 19th of
April Movement (M-19), and the EPL, participated in
a mass rally last September to launch the CUT. In
October, the ELN distributed propaganda in support
Secret
ALA LAR 87-007
13 March 1987
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
%-?????? ????
Petroleum Development and Insurgent Operating Areas
Santa
Marta
Peninsula
de In Guniira
Aruba as Netherlands Antilles
(Neth.) el!Neth.)..?.
Cumn?Bonaire
Sierra Nevada
de
Santa Marta
Cartagena
,
CAS
dovetias
,
Seiiaraa de
?* Panama
PANAMA
Sem.. de
San Lucas -Ayacuc
Tumaco
Major oil refinery
threatened
by insurgents Arauce
a o Norte
Casabe
Venezuela
Area of frequent
insurgent attacks
Cocorna
Salgar
*BOGOTA
-41 A play
Villavicencio
Casanare
Colombia
0 100 200 Kilometers Areas Netherlands Ant:17ee
1.?....l....,J, ? Meth ) ' '1., -s 1Nath'
100 200 Miles Santa o
Marta
Barranquilla-, ' .,..e?------ -s)
Cartagena ? ('-' xs GA1tAcA1*?\,..
..
fli;ArfaA,
Pnarna.
Covet as.
TibB Venezuela
, ?
AL:Ey
?:.
Ecuador
Oilfield
Crude oil pipeline
existing
under construction
Refinery ?
.0 200 Kilometers
200 Mlles
'furnace.
ear
*BOGOTA
C b i a
Peru
Iquitos.
Secret
Sounder, representation
not ...eerily trothorfteilre
709686 (541388)3-87
*s.?
Ecuador
OUITO*
Brazil
Principal Insurgent groups
FARC (Revolu)ionary Armed MI EPL. (People's Liberation
Forces of Colombia) tid Army)
I-1 M.19 (19th of April 171 ELN (Nationa) liberation
LJ Movement) Army)
Note: America Battalion's activity coincides with M-19's southwestern territory.
All principal groups also have urban guerrillas in Bogota and other major cities.
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
crz-7,77;;;
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
ELN Form Letter
Below is an informal translation of an ELN form
letter to business firms requesting support for a
strike. This letter is addressed to Intercontinental, an
airline that operates in Colombia.
Arauca, November 11/86
Sir:
Manager "Intercontinental" Company
L. C.
(locality) (city)
Friendly greetings.
Through this letter, we are requesting you to cancel the regular
flights of your firm, given the (labor) mobilization developed
through the THIRD CIVIC STRIKE of the intendency and in
which the Araucan community is participating. The problems of
(the city of) Arauca are identical to those of the rest of the region,
and this is the right time for us to achieve our objectives. The
people of Arauca have given profits to Intercontinental and we hope
this will contribute to the solidarity of the company.
Cordially:
Civic Committee of the Sarare and Arauca
of the third indefinite strike in the Sarare and Arauca
oil regions, and asked the area business community to
support the stoppage. Ecopetrol's 11,000 workers are
members of the CUT by virtue of their affiliation with
the Communist-led Syndicated Workers Union
(USO).
all
the major insurgent groups are emphasizing political
activity, including manipulation of organized labor.
Guerrilla influence is strong in some agricultural
labor syndicates?notably among flower and banana
growers?but the oil sector is particularly vulnerable
to infiltration and agitation. Ecopetrol's management
recently charged the USO with involvement in a wave
of sabotage against oil facilities, according to the
Embassy. The terrorist acts, which coincide with a
ORIENTE EN ARMAS
FRENTE GUERRILLERO
EFRAIN PABON PABON
EJERCITO DE LIBERACION NACIONAL
Pamphlet distributed by the National Liberation
Army urging support for a general strike in the
oil-producing Arauca region
period of negotiations for a new labor agreement, have
included systematic destruction of vehicle tires,
damage to pipeline valves resulting in the loss of more
than 130,000 barrels of crude oil and more than 2
million cubic feet of gas, and ruptured water facilities
in Cartagena, Tibu, and Cicuto.
The guerrillas are likely to intensify their campaign
against the oil industry as they gain confidence and
learn to gauge the impact of their attacks. A high-
level Occidental representative commented to
Embassy officials that the sophistication of several
pipeline attacks suggests inside knowledge, perhaps
gained from workers who are guerrilla sympathizers.
3
Secret
? Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
7X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
erei
President Barco has launched a new military initiative
to protect the northeastern oil region, but systematic,
coordinated attacks on oil facilities would severely test
the government's limited counterinsurgency
capabilities. Barco has so far failed to counter leftist
labor activism, and in the absence of an aggressive
democratic labor strategy, we believe guerrilla
influence over organized labor?and particularly in
the oil industry?is likely to grow. Guerrilla links to
labor will, in our view, lead to greater economic
damage to oil facilities and strain labor-management
relations for Colombian and foreign investors. Over
the longer term, if Bogota cannot provide better
protection to oil developers, accelerated strikes at oil
facilities could deter foreign investors and seriously
weaken Colombia's fledgling oil export industry.
Secret 4
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
I3V%I CI
Cuba: Growing Po ular
Dissatisfaction
Popular dissatisfaction with austerity measures
announced by President Castro last December is
increasing and is likely to persist even in the face of
stricter internal controls by the government. Although
Castro is concerned about public reaction, he
nevertheless will have little choice but to tighten
austerity to address Havana's hard currency crisis.
Pressure to get rid of malcontents might make Castro
more amenable to renewing emigration agreements
with the United States.
The measures have brought higher prices and reduced
workers' privileges, increasing popular frustration and
sparking sporadic outbreaks of unrest, minor acts of
sabotage, and passive resistance.
A poster displaying the
slogan "We prefer Reagan with blood to Castro with
hunger,"
illustrates the increasing openness of discontent.
Doubling the busfare did not increase revenues, as the
regime had expected, but instead cut receipts by one-
half as bus ridership declined significantly,
A factory in San
Antonio de Los Banos was burned down recently and
stores in another town were boycotted in protest
against shortages of goods,
Many Cubans are
skeptical about the regime's direction, particularly as
they are aware that it contrasts with Soviet General
Secretary Gorbachev's tilt toward increased material
incentives and economic efficiency in the USSR.
Some Cubans are openly questioning the
internationalization of the revolution in Angola,
Nicaragua, and elsewhere, calling the country's
presence there a political luxury Cuba can no longer
afford. Still other Cubans reportedly are angry that
they have to make sacrifices at home while the
government spends scarce Cuban resources on
economic and military aid to other countries.
5
For the moment, official concern over the popular
discontent may have discouraged the government
from adopting even more stringent austerity
measures.
Internal pressure on Castro to impose more austerity
probably will increase, however, especially as Cuba's
desperate economic situation makes the need
inevitable. Outbursts and minor acts of sabotage are
likely to persist, but Cuba's internal security forces
probably will be capable of dealing with the situation.
Moreover, to relieve some of the pressure, Castro may
be interested in renewing immigration agreements
with the United States.
Secret
ALA LAR 87-007
13 March 1987
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
22I-6(1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Sendero Luminoso Operating Regions and
Government Emergency Zones
Boundary repreeentstan is
not necessarily authoritative
LI"
Metropolitah
25%
% Percent of Sendero Luminoso
attacks by region, Mar-Dec 1986
Region boundary
- Government emergency zones
0 150 Kilometers
150 Miles
Secret
6
709497 (A01292) 2.8
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Secret
Latin America: Developments
and Trends in Terrorism and
Insurgency
Latin America: "Developments and Trends in
Terrorism and Insurgency" is a monthly feature in
the Latin America Review. It is intended to identify
incidents that may become trends, to provide analysis
of important events that may not have been covered in
other publications, and to track changes in terrorism
and insurgency over time. Contributions from other
offices are welcome.
Insurgent groups continue to be a major concern for
the Peruvian and Colombian Governments. The
insurgents' politically focused violence in the past
month includes the spillover of activity by Peru's
Sendero Luminoso (SL) group into neighboring
Bolivia and the first signs of preparations by
Colombian insurgents for mayoral elections scheduled
for March 1988. Peruvian authorities are showing
new resolve by instigating raids on terrorist-ridden
universities and creating special courts to prosecute
insurgents. Colombia is moving to strengthen its
counterinsurgency capabilities and to improve
security protection for residents in high-risk areas.
Peruvian President Garcia, increasingly frustrated
with his government's inability to stem rising violence,
has called for an all-out war against terrorism.
7
Garcia also instructed the police to carry out a major
raid against three universities in the Lima area that
both he and the security forces have long believed to
harbor insurgent leaders. On 13 February, 4,000
police stormed the schools, detaining 795 people and
seizing 650 pounds of explosives, most of
those initially arrested were later released
Sustaining his counterterrorism momentum, Garcia
called an extraordinary session of congress to approve
several bills, including one establishing special, secret
tribunals to prosecute terrorists. Garcia and the
military believe that many judges?intimidated by
insurgent threats?have been giving captured
terrorists light sentences or allowing them to go free.
US Embassy reporting indicates that public and
military anger over this issue became acute last
October when a popular Navy admiral was
assassinated by a terrorist team led by a woman who
had been in custody three months earlier but was
never brought to trial. The law also establishes stiff
minimum prison sentences for persons convicted of
terrorism or aiding an act of terrorism.
The Insurgents Strike Back
Garcia's moves had no immediate impact on the
insurgents, who sustained a high level of activity
during February and early March. Trying to disrupt
and denigrate the celebration marking the birthday of
the late founder of Garcia's ruling party, a Sendero
Luminoso hit squad killed a local APRA official in
Lima on 20 February and detonated two powerful car
Secret
ALA LAR 87-007
13 March 1987
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Secret
Students demonstrating in Lima under Communist Party banner
that reads "stop the barbarity against the universities." Students
and leftist parties protested the police raid on three campuses
suspected of being subversive safehavens, but most Peruvians
supported the move and Garcia's tougher stance against terrorism.
bombs, wounding 10 people, near a street rally where
Garcia was addressing thousands of the party faithful.
Two days later probable Sendero Luminoso terrorists
unsuccessfully tried to kill the Peruvian Attorney
General, although the attack did induce him to resign
several days later. The subversives disabled his car
with a remote control bomb, and then strafed the
vehicle with small-arms fire that wounded his son.
The SL also attacked eight APRA neighborhood
offices in Lima in late February and, on 28 February,
four SL subversives seized a private residence near
the presidential palace and attempted to stage a
mortar attack against Garcia's living quarters
Secret
In addition, the small Lima-based Tupac Amaru
Revolutionary Movement (MRTA) began another
round of bombings, attacks, and propaganda activities
in mid-February after almost a two-month lull in
activity. On 20 February the pro-Cuba MRTA took
over 12 Lima radio stations and forced the employees
to broadcast diatribes against the university raids a
week earlier. Four days later the MRTA carried out
coordinated bombings of 16 neighborhood branches of
Peru's largest bank. The group bombed 14 more of
the bank's branches on 27 February, according to US
8
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
a+
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Two powerful car bombs rocked downtown Lima on 20 February
during President Garcia's speech celebrating the birthday of the
founder of Garica's governing American Popular Revolutionary
Alliance. The explosions, which were clearly audible to the
thousands gathered to hear Garcia, occurred close to the
headquarters of Peru's Investigative Police.
Embassy reporting, and press accounts indicate they
struck another 15 bank offices on 7 March. Few
people were hurt in these attacks and, as in the past,
the MRTA apparently planned their actions to cause
extensive property damage but no deaths.
Interestingly, in its radiobroadcasts the MRTA also
chastised the Sendero Luminoso for its brutality,
clearly distancing itself from the SL and blaming SL
attacks in part for prompting the increasingly
heavyhanded government response to violence.
Sendero Luminoso insurgents also carried out
extensive operations in the countryside last month,
although far less publicity usually accompanies their
9
25X1
actions outside of Lima. Staying true to its strategy of
ridding remote rural areas of any vestige of central
government authority, the SL assassinated several
local APRA officials, intimidated three mayors in one
region into resigning their posts, and murdered a
number of civilian defense personnel and other
peasants they accused of collaborating with the
government. Indicative of the effectiveness of SL's
"selective assassination" strategy, a Peruvian official
announced that the group murdered 42 government 25X1
rural development workers in Ayacucho Department
Secret
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
alone last year. The assassination of rural assistance
officials is increasing throughout the country,
indicating that the insurgents clearly recognize?
more so than the military?the threat that civic action
programs pose to their recruitment efforts.
A review of recent insurgent activity shows a
continuing trend of a geographical expansion of
Sendero Luminoso's operating area.
the group is making
particularly strong advances into Peru's southern
departments of Apurimac, Cusco, and Puno?which
border Bolivia. SL is recruiting
effectively in those areas from the ranks of the United
Left (IU) coalition?Peru's major opposition party?
and particularly from its radical Maoist Peruvian
Communist Party?Red Fatherland faction. We
believe the crushing defeat suffered by the IU in
municipal elections last fall convinced many of its
members to forgo legitimate political activity and
defect to the SL to pursue armed revolution. Seven
members of the Red Fatherland group were captured
in Bolivia in February, according to US Embassy
reporting, during a robbery that was part of their
initiation into Sendero Luminoso's ranks.
peasant
support base, and the protection of regular SL
militants, the capture of the inductees in La Paz and
the group's growing strength in Puno Department
suggest that SL insurgents probably will increasingly
cross into Bolivia for safehaven, rest and recuperation,
and supplies.
For their part, even the generally Lima-based Tupac
Amaru subversives apparently carried out
indoctrination and propaganda activity in two regions
outside the capital. In Lambayeque Department in
northern Peru, MRTA members occupied two
universities in late February and called on students to
join the armed struggle. In Arequipa in the south the
group took over a church and lectured the
congregation on the revolution. These actions suggest
that MRTA may be trying to establish small cells in
some of the larger provincial cities where Sendero
Luminoso is not established.
Secret
No Quick Solutions
President Garcia's tough counterterrorism talk in
early February and the highly publicized university
raids were well received by a Peruvian public tired of
growing personal insecurity. The number and
effectiveness of terrorist attacks since mid-January
have demonstrated, however, that there are no short-
term solutions to the still expanding Sendero
Luminoso insurgency and urban terrorism. Garcia
already has taken steps to dampen public
expectation?which he raised with his hardline
rhetoric?that the government can contain terrorism
soon. In a speech in early March, he stated that
Peruvians will have to coexist with terrorism for many
years and called on all citizens to join him in the war
against it. In our opinion, however, Garcia's personal
focus on the problem, his emphasis on civic action and
psychological operations, the planned reorganization
of the intelligence services, the creation of a special
counterterrorism unit, and the special courts and
tough mandatory sentences are all promising
developments which, if carried through, could
improve the counterinsurgency effort over the long
term.
Developments To Watch For
? Sustained movement by the SL into Cusco and
Puno that could prompt the government to declare
another emergency zone, a development that would
further damage Peru's tourist industry.
? Increased MRTA and Sendero Luminoso activity
along the coast, especially in the north, which has
been relatively quiet and has not required a large
security force presence.
? Spillover of SL activity into Bolivia.
? Continued efforts by SL to heighten the political
impact of its terrorist attacks by seeking publicity
and propaganda mileage from them, a development
we noted in last month's review.
? More indications that leftist political party members
are abandoning politics for the armed struggle.
10
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Secret
? Sustained commitment from Garcia to implement
not only tough counterterrorism measures but also
civic action and development programs; any signs of
willingness on his part to involve the military in such
efforts in a major way.
Colombian Developments
Colombian insurgents are increasing their political
and propaganda efforts in preparation for first-ever
nationwide mayoral elections, scheduled for March
1988. The Revolutionary Armed Forces of Colombia
(FARC), the country's largest rebel group, is
attempting to discredit the government and build
local support through propaganda aimed at farmers,
particularly in drug cultivation areas.
Barco is hoping to improve protection for residents of
guerrilla-dominated areas, where many citizens rely
on civilian paramilitary units for defense against the
guerrillas. He recently empowered municipal
governments to form civilian guard units, and he may
be studying plans for a new armed forces civil defense
strategy, according to the US Embassy
The FARC demonstrated another aspect of its
propaganda strategy recently by distancing its legal
political front, the Patriotic Union, from its guerrilla
forces. The Patriotic Union has won a measure of
public acceptance through congressional
participation, and its nominal break from FARC is
designed to protect the rebels' political gains and
allow them to field mayoral candidates even if
FARC's current truce with the government breaks
down. Meanwhile, the National Guerrilla
Coordinator alliance is working to form a similar legal
political front and trying to reach a political and
military accord with FARC.
Both FARC and the Coordinator guerrillas?
particularly the National Liberation Army (ELN)?
have accelerated strikes at government troops and
economic targets. The government's campaign to
protect the nation's major oil pipeline has
concentrated the security forces in northeastern
Colombia, leaving other areas vulnerable to attack. At
the same time, mounting guerrilla violence and
worsening relations with the FARC are hastening
President Barco's drive to improve his government's
limited counterinsurgency capabilities.
Reverse Blank
11
Secret
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Secret
Latin America
Briefs
Cuba Restricting Foreign Commercial Operations
Cuba continues to seek ways to reduce its hard currency expenditures. Its latest
move is to slash the hard currency budgets of Cuban trade missions in Western
Europe and Japan
25X1
25X1
25X1
West European shipments to Cuba declined sharply over the last two months 25X1
of 1986. Further significant cuts in hard currency imports are likely this year, but
Castro is unlikely to meet his publicized goal of a 50-percent reduction.
The hard currency problems may also limit Cuban commercial activities in Latin
America.
Continuing
budget reductions to the Ministry of Foreign Trade over the past two years have
reportedly restricted official travel, reduced commercial work levied on offices
abroad, and nearly eliminated allowable business entertainment expenses. These
measures have curtailed Havana's ability to nurture foreign interest in trade with
Cuba, and could undermine efforts to secure South American replacements for
disappearing Japanese and West European suppliers.
Citrus Exports Hamstrung by Mismanagement
Cuba has the potential to become the world's leader
in citrus production during the next decade. Mismanagement by the state,
however, and a lack of agricultural chemicals and machinery have hampered
citrus production and limited the industry to a secondary role in exports.
Currently, almost all of Cuba's citrus harvest is shipped to CEMA member
countries, earning Havana little hard currency.
Havana will benefit in the
future from the maturing of groves planted a few years ago and may be able to
marginally increase exports to the West. Havana's hard currency crisis probably
will reduce needed imports of Western agricultural chemicals or machinery,
however, and the Castro regime is doing away with the material incentives that
could help boost productivity.
13
Secret
ALA LAR 87-007
13 March 1987
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Secret
Venezuela New Debt Agreement With Bankers
Guyana
Venezuela and its creditor banks reached an agreement last month to revise a $21
billion public-sector debt rescheduling package signed a year ago, according to
press reports. Caracas will pay $250 million in principal payments in 1987, $400
million in 1988, and $700 million in 1989?a total of $2 billion less than under the
previous agreement. Bankers also agreed to reduce interest rates to 0.875
percentage point over the fluctuating London Interbank Offered Rate (LIBOR)?
the lowest rate negotiated by any Latin American country, excluding Mexico. The
new accord is acceptable to most Venezuelan political leaders, labor, and the
business sector, according to press reports, and will probably mute criticism of
President Lusinchi's debt management at least temporarily.
Growing Ruling Party Tensions
Increasing divisiveness in the ruling People's National Congress threatens to slow
President Desmond Hoyte's retreat from the socialist policies of his late
predecessor, Forbes Burnham. old-guard
"Burnhamites" in the party strongly oppose Hoyte's efforts since assuming power
in 1985 to solicit Western investment and improve relations with the United
States. Rank-and-file party members in the bureaucracy reportedly feel
increasingly threatened by Hoyte's steady infusion of "technocrats" in the
government and his plan for a major reorganization of the party. The ambitious
Prime Minister Hamilton Green appears anxious to capitalize on party tensions.
Although Hoyte's economic and political
reforms to attract Western financial support have weakened his support in the
party, we believe that he currently has enough backing in the armed forces to
block any coup attempt unless he insists on slashing the military budget. Still, we
judge that party squabbling may make Hoyte proceed more cautiously in pursuing
reforms in the coming months.
Bolivia Cabinet Changes
The main objective of President Paz Estenssoro's yearly Cabinet shuffle?the
second in this administration?was to replace the most corrupt ministers. At the
swearing-in on 27 February, Paz emphasized the continuity of his policies on
economic reform, antinarcotics, and social issues. He also announced that the new
Cabinet will implement the second stage of his economic plan, including the
development of an employment policy that emphasizes permanent job creation.
Secret 14
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Secret
The two key players remain the same?Guillermo Bedregal at Foreign Affairs and
Gonzalo Sanchez de Lozada as Planning Minister. The most significant change
was the removal of Interior Minister Fernando Barthelemy,
25X1
25X1
Barthelemy's replacement, Juan Carlos Duran Saucedo,
25X1
25X1
who formerly served as Minister-Secretary General of the Presidency, is a
respected lawyer. He has said that the fight against drug trafficking is a key
objective of the government.
Other new faces include Labor Minister Alfredo Franco Guanchalla, who
previously served as labor minister in an earlier Paz administration from 1960 to
1963. His leftist background may improve government relations with radical labor
elements. Less is known about the new Minister of Agriculture and Peasant
Affairs Jose Justiniano Sandoval, but if he lives up to the description by the US
Embassy as a competent problem-solving professional, he will be a definite
improvement over his corrupt predecessor Edil Sandoval. Walter Zuleta Roncal, a
ruling party deputy from Potosi, becomes Minister-Secretary General of the
Presidency. Finally, Jaime Zegada Hurtado, an Air Force major general reported
to be pro-US and anti-Communist, has been named as Aeronautics Minister,
replacing Antonio Tovar, who had sought to provide the Soviets with Aeroflot
landing rights.
We agree with the US Embassy that the Cabinet rearrangement is likely to be an
improvement, with the exception of Zuleta, who is rumored to have a history of
financial misdealings. The new Cabinet probably will also be more moderate and
pragmatic.
Reverse Blank
15
Secret
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9
Secret
o
Secret
o
Declassified in Part - Sanitized Copy Approved for Release 2014/03/18: CIA-RDP88T00792R000100020017-9