UPDATE ON LATIN AMERICAN DEBT SITUATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89B00224R000501830004-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: September 20, 2011
• Sequence Number: 4
• Publication Date: March 12, 1987
• Content Type: MEMO

Sanitized Copy Approved for Release 2011/09/20: CIA-RDP89B00224R000501830004-6
SElZRET
The Director of Central Intelligence
Wnlinpon, D.C. 20503
National Intelligence Council
NIC 01112-87
12 March 1987
MEMORANDUM FOR: Acting Director of Central Intelligence
FROM: Deane E. Hoffmann
National Intelligence Officer for Economics
SUBJECT: Update on Latin American Debt Situation
1. The Latin American debt situation remains in a state of flux.
Unlike previous financial crises in the 1980s, it is not certain that this
will have a positive outcome.
-- President Sarney's decision to halt interest payments was made, I
believe, out of frustration rather than a desire to better Brazil's
negotiating position with its creditors.
-- I doubt Sarney or his Finance Minister Funaro have a game plan to
tackle negotiations beyond telling creditors they need a "political"
solution to debt.
2. In Brazil, economic conditions continue to deteriorate.
-- Import reductions caused by the lack of foreign exchange are
affecting business operations.
-- A seamen's strike has brought foreign trade to a virtual halt.
-- Some US banks have attempted to cap or reduce their short-term trade
credits to Brazil.
-- For their part, Brazilian banks in the US are concerned that some US
banks will take legal action against their assets.
3. The US Treasury is trying to resolve other Latin debt problems to
clear the decks for a hard line against Brazil, but there are several loose
ends.
-- Bankers are working against a 20 March deadline to complete a
Mexican loan.
-- Problems with small banks could also delay planned agreements with
Argentina and Ecuador.
S 4V/,4-c"L.~
Deane E. Hoffmann
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SECRETI
POTENTIAL STOPS ON GORBACHEV'S LATIN AMERICAN TOUR
indicates that Moscow anticipates that it can
combine all its desired stops in one excursion through Latin
America. If scheduling problems remain, however, Gorbachev may
contemplate two trips; one, for instance, in the fall 1987 that
would combine a visit to Mexico City with a trip to the United
States for a summit with President Reagan. At some later point,
perhaps early 1988, Gorbachev might return for a swing through
South America.
MEXICO
Mexico is a high priority stop. Soviet MFA spokesman Gennadiy
Gerasimov acknowleged the coming visit during a press conference
but said that no dates had been determined.
makes the point that Moscow
would like to link or ac ev s stop in Mexico City with a summit
meeting with Reagan in the United States. According to a
Komplektov offered de a Madrid an August-October timeframe for
the visit. De la Madrid reportedly accepted these dates even if
Gorbachev did not go to the United States.
URUGUAY
Gorbachev and Uruguayan President Sanguinetti have officially
agreed to exchange visits and Komplektov apparently worked to
formalize the dates. In February Sanguinetti's Special Assistant
informed the US Embassy in Montevideo that Gorbachev's visit was
tentatively scheduled for next November. Various reporting
indicates that Uruguay was only recently added to Gorbachev's
proposed itinerary. We believe that Moscow may be using
Sanguinetti's compliance as a lure to gain the agreement of the
more reluctant--but more important--states of Argentina and
Brazil.
BRAZIL
Brasilia appears reluctant to commit itself to a visit by
Gorbachev. Komplektov told
Brazilian President Sarney that or ac ev wanted to visit this
year but Sarney wants to delay the visit until 1988. There have
been no official statements in Moscow or Brasilia confirming the
visit.
SECRET
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V -- I I
ARGENTINA
President Alfonsin officially invited Gorbachev to Buenos Aires
during his visit to Moscow late last year. Gorbachev accepted,
and, according to the US Embassy in Buenos Aires, the Argentine
MFA has confirmed that the only question pending resolution is
the exact date of the visit. Nevertheless, a Soviet Embassy
official in Havana implied that there was a special problem in
scheduling the visit to Argentina. According to the US Embassy
in Moscow, Argentine diplomatic officials there claim that
Alfonsin will be tied up with local elections duri a fall 1987
and a visit by Gorbachev would be impossible then.
PERU
Until recently, little effort h been made to incorporate Peru
into Gorbachev's itinerary; but
indicated that by mid-February Lima and Moscow had begun
discussing dates and security arrangements for a Gorbachev visit.
Despite Moscow's economic and military ties to Lima, the
terrorist problem and the direct targeting of Soviet nterests
Peru may discourage a visit by the General Secretary.
CUBA
We have no reporting that indicates that Cuba is on Gorbachev's
agenda, but it would be a breach of protocol for Gorbachev to
exclude Havana from his itinerary. In addition, Gorbachev's
plane would almost definitely stopover in Havana for refueling.
1974
i
.
n
No Soviet leader has been to Cuba since Brezhnev visited
NICARAGUA
Nicaraguan media has speculated that Managua will be a stopover
for Gorbachev but Moscow has given no indication that Nicaragua
will be included. made clear that
Gorbachev knows that such a vise wou highly provocative to
the US and also that several other Latin American states m'uht
refuse to be part of an itinerary that included Nicaragua.
SECRET
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Sanitized Copy Approved for Release 2011/09/20: CIA-RDP89B00224R000501830004-6