GUATEMALA: CHALLENGES TO THE CEREZO GOVERNMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90T00114R000100230001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 27, 2016
• Document Release Date: February 10, 2012
• Sequence Number: 1
• Publication Date: May 5, 1987
• Content Type: MEMO

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DIRECTORATE OF INTELLIGENCE
5 May 1987
GUATEMALA: CHALLENGES TO THE CEREZO GOVERNMENT
SUMMARY
After almost 16 months in office, President Cerezo continues to enjoy broad
support but faces complex problems on a number of fronts. His poor management of
the economy is becoming an increasingly contentious issue. Pressures from
international lenders to pursue economic stabilization policies are conflicting with
popular demands in Guatemala for economic growth, more jobs, and land reform.
Human rights abuses constitute a sensitive area in which Cerezo has had to balance
public expectations against the concerns of the armed forces. Likewise, the President
must consider military attitudes carefully in his dealings with the left and in pursuing
an independent foreign policy. The armed forces are concerned that his reluctance to
limit the political activities of insurgent-backed radical groups will increase popular
support for the insurgents. They also fear that his "active neutrality" policy is too
accommodating to Nicaragua and has jeopardized increased US aid.
Economic and foreign policy issues probably will remain Cerezo's top priorities
over the next year. We believe he will continue to pursue modest stabilization
measures unless popular unrest grows significantly. He almost certainly will maintain
some distance from Washington on Central American issues and try to avert the
isolation of Nicaragua in the region. We foresee no serious coup threat as long as the
President does not meddle in internal military affairs, resists pressure to prosecute
officers for past human rights abuses, supports the armed forces' counterinsurgency
efforts, and moves cautiously in dealings with Soviet Bloc countries and Cuba.
This memorandum was prepared by
Office of African and Latin American Analysis. It was coordinated with the
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Directorate of Operations. It contains information available ~s of 30 April 1987.
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Questions and comments are welcome and should be addressed to Chief, Middle
America-Caribbean Division, ALA
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Central Intelligence Agency
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Popular expectations for change and reform are high as Cerezo nears the 16-month
mark in office, and he faces difficult choices in balancing competing political and economic
interests. While press and US Embassy reporting indicates that Cerezo's middle- and
lower-class constituents are anxious for economic improvements, land reform, and
guarantees against future human rights abuses by security forces, the military and
conservative ruling elite are suspicious of his moderate-leftist tendencies and remain uneasy
that he may institute changes that would threaten their interests. In addition, the military
and elite are increasingly worried that the government's inability to turn the economy
around could spark civil disorder and strengthen the insurgency.
Cerezo's main challenge is to consolidate democratic rule while retaining the support
of the armed forces. US Embassy and that his deference
to senior military officers and his sensitivity to key military concerns have strengthened
relations with the High Command, especially Defense Minister Gramajo. Some of the
President's recent actions, however, have heightened high level military fears that Cerezo is
intent on advancing officers loyal to him. We believe Gramajo's removal of Cerezo's
hand-picked Chief of Staff in February, only one month after his appointment, was a warning
to the President that the military will not tolerate civilian interference in such decisions.
here also is considerable military concern--especially
among junior officers--about Cerezo's reformist image, which has led to reports of coup
talk
The way Cerezo has comported himself in office has irritated many military and private
sector leaders. the President's critics point to his frequent
trips abroad with large retinues, his indecisiveness on key issues
Cerezo has
appointed friends and party loyalists--many of them unqualified to high office. Moreover,
while Cerezo has sought consensus on key policy issues, some party officials, businessmen,
and military leaders have complained that he is unpredictable and relies on cronies rather
than experts for advice.
Coping With Rising Expectations
The Economy. Press and US Embassy reporting indicates the President's poor
management of the economy is becoming an increasingly contentious issue. Although the
stabilization program implemented last year helped reduce the budget deficit and inflationary
pressures and was key toe Guatemala's success in negotiating a one-third cut in its 1986
debt obligations, differences with the IMF over export policy and exchange-rate unificatio n
have hindered Guatemala's efforts to negotiate a standby loan. Moreover, the economy
failed to grow in. 1986, and business confidence is low. Indeed, private investment remains
at levels comparable to the early 1970s, according to World Bank statistics. US Embassy
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reporting indicates that labor groups are increasingly impatient for higher
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wages and more work programs; some groups are planning widespread work stoppages and
other civil disturbances over the next several months.
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We expect an economic growth rate of no more then 1 percent this year and anticipate
that Cerezo's commitment to stabilization measures will slowly erode. Living standards are
likely to decline further, undermining plans to enact new income taxes designed to increase
government revenues. Meanwhile, the sharp drop in world coffee prices--Guatemala's major
export earner--will swell the government's budget deficit, hamper efforts to boost capital
spending on infrastructure and social programs, and complicate servicing the country's
poorly structured foreign debt--some 50 percent of which falls due in the next three years,
In our view, Cerezo's efforts to implement a new
stabilization package this summer could be derailed by his desire to defuse popular
discontent with the economy, particularly if consumer prices spiral higher as they did
following the introduction of last year's program. Failure to enact needed
measures--especially exchange-rate stabilization--probably will further undermine both
domestic and international investor confidence in the Guatemalan economy.
Land Reform. Conflicting pressures over the explosive land reform issue are
complicating Cerezo's efforts to establish cordial relations with business leaders and
hindering prospects for recovery in the agricultural sector. US Embassy reporting indicates
that peasants and labor groups are upset with Cerezo's ad-hoc approach, which has
emphasized distribution of small plots from public or purchased lands while landowners
remain suspicious of his long-term intentions despite his assurances that he opposes the
expropriation of private property.
Although the High Command apparently has been reassured by Cerezo's relatively
moderate stance on I nr alistic expectations
recognizes the
among poor farmers.
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need for more equitable land distribution but is increasingly concerne t at the agrarian
reform movement could fuel o ular su ort for the insurgents and ultimately destabilize
the government.
Handling Human Rights
The need to avoid a confrontation with the military also has created a dilemma for
Cerezo as he has worked to defuse popular pressure over the human rights issue. Cerezo's
appointment last year of a special judge to investigate some 1,400 writs of habeas corpus
on individuals who disappeared under military rule, his efforts to institute judicial reforms,
and his recent signing of legislation that provides assistance to relatives of those presumed
to have died in military custody, have relieved pressure for a full accounting of past abuses,
according to the US Embassy. The President also was buoyed by the UN Human Rights
Commission's decision to uphold last year's ruling cancelling the mandate for a special
human rights observer for Guatemala. Although regular protests in the capital by the
leftist-backed Mutual Support Group have kept Cerezo on the defensive, the organization's
increasingly confrontational tactics have alienated many of its moderate
supporters--including Archbishop Penados, who has publicly denounced the Mutual Support
Group as a subversive front, according to the US Embassy. A decline in the number of
politically motivated killings by almost 60 percent last year, according to US Embassy
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figures, also has dampened public fears. Moreover, the Embassy reports that the President's
cautious handling of the issue has eased Army concerns about wholesale investigations and
prosecutions. By balancing reforms in the police and security service
with increased equipment and training in investigative
techniques, Cerezo has demonstrated his commitment to reform without causing a serious
backlash among defense officials.
Nonetheless, some recent developments could refocus attention on Guatemala's human
rights record. The reluctance of Cerezo and the High Command to punish a naval base
commander implicated earlier this year in a kidnaping reinforces popular suspicions that the
military remains above the law, according to the US Embassy. A recent rash of killings and
other acts of violence against labor, human rights, and other social activists have sparked
concern that new right-wing death squads may be beginning a campaign of terror in hopes
of destabilizing the government, according to US Embassy reporting.
Controlling the Radical Left
Cerezo's handling of the Marxist insurgency and far left political groups has the
potential of straining relations with the armed forces. The President has firmly backed the
Army's aggressive counterinsurgency campaign, which has reduced guerrilla numbers to
some 1,200 to 1,500--roughly half the 1982 level--and limited rebel actions to remote areas.
The US Embassy reports that Cerezo also has resisted foreign and domestic pressure to
abolish the military's "model village" program and the 750,000-strong Civil Defense Force,
key elements in Army strategy. Although the insurgents remain capable of high-visibility,
low-risk acts of terrorism and economic sabotage, they have made no military gains since
Cerezo took office. Believing the rebels are on the ropes, the officer corps is concerned
about Cerezo's stated interest in talking to guerrilla leaders, according to
but has been reassured somewhat by his hardline condition fora formal
dialogue--that guerrillas must first lay down their arms.
The President's reluctance to limit the political activities of insurgent-backed radical
groups, however, is creating some friction with the armed forces. The rebel
are taking advantage of the more open political climate to try to
reestablish urban networks and infiltrate s t u d .
Managing Foreign Policy
Foreign policy also has created problems for Cerezo, although we believe most
Guatemalans support his main goals--ending the country's international isolation and
securing more foreign economic assistance. To attain these objectives, according to US
Embassy reporting, the President has sought to demonstrate his independence from the
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United States while carving out a role for himself as a regional peace broker. His policy of
"active neutrality"--meaning Guatemala supports neither side in the Nicaraguan conflict but
works to avert Managua's isolation in the region--serves both purposes. By distancing
himself from Washington, in our opinion, Cerezo has appealed to West European and Latin
American governments that oppose US policy in Central America. Indeed, US Embassy
reporting indicates that the President is convinced his independent stand was instrumental in
winning promises of some $300 million in economic aid from Western Europe, South
America, and Mexico last year. Some Guatemalans, according to the US Embassy, also
believe that Cerezo's neutral policy toward Nicaragua has pursuaded the Sandinistas to
restrict their support for Guatemalan guerrillas.
Another manifestation of Cerezo's independent foreign policy is his flirtation with the
Soviet Bloc and Cuba.
In late February, the Soviet Ambassador to Costa Rica made a well-publicized
trip to Guatemala City, where he discussed the prospects for diplomatic relations with
Foreign Ministry officials and made a number of public appearances. In April, Cerezo
established formal ties with Yugoslavia, with which former military regimes had maintained
low-level economic and military ties.
The President's foreign policy initiatives have caused some concern within the
that many officers believe his neutrality policy is too
accommodating toward the Sandinistas and has led Washington to withold substantial
increases in military aid despite Guatemala's transition to democratic rule. Although the
armed forces did not object to the establishment of relations with Belgrade,
the visit of the Soviet Ambassador heightened military fears that Cerezo
may indeed plan to establish relations with the USSR or Cuba.
Cerezo's policy toward the Nicaraguan conflict also has put him at odds with other
Central American democracies. Cerezo views the proposed peace plan of Costa Rican
President Arias as competitive with his plan for a Central American Parliament to reduce
regional tensions. US Embassy reporting indicates Cerezo will try to modify the plan to
enhance his own prestige, but El Salvador and Honduras are concerned that he will disregard
their security interests in trying to forge an agreement. While he has told US officials he
plans to push Managua for political reforms--particularly through his proposed Central
American Parliament--we believe his principal objective is to secure Nicaraguan agreement
to a regional settlement.
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Cerezo Looks Ahead
We believe economic and foreign policy will remain at the top of Cerezo's agenda
during the coming year.
In addressing the economy, the President probably will continue to pursue modest
stabilization goals--including trade and exchange-rate reforms and measures to
stimulate investment. Cerezo's concern about his popular standing and fear that
economic stagnation could spark unrest may compel him, however, to resist
pressure to move faster on economic stabilization. He is certain to argue with IMF
and US officials that economic assistance to carry out programs for employment,
housing, and rural development is vital to the stability of his government and to
prospects for democratic rule in Guatemala.
The President most likely will continue trying to balance his goals of an
independent foreign policy with the need to cooperate more closely with
Washington on selected issues. We do not expect Cerezo to alter significantly his
neutrality toward Nicaragua, despite his strong desire for increased US economic
and military assistance. Although he may offer token criticism of the Sandinista
regime and publicly call for internal political reforms in Nicaragua, he probably will
not openly support US objectives in the region. Cerezo probably will be careful
not to split too sharply with Honduras and El Salvador at next month's Central
American summit at Esquipulas and is unlikely to accept an accord that did not
have the support of all the other Central American democracies. We doubt the
President will move to strengthen ties with the Soviet Bloc or Cuba, given the
military's opposition.
Aside from the economy, domestic issues, in our opinion, will continue to take a
backseat. Although Cerezo probably will be under some international and domestic pressure
to investigate future human rights abuses, we believe he will seek to avoid a confrontation
with the military by maintaining a cautious policy. We expect he will continue his balancing
act to avoid political controversy over land reform, but failure to maintain a steady
distribution of land to peasants could spark demands for more radical reforms. We believe
Cerezo will not seriously pursue a dialogue with the guerrillas, although low-level contacts
with insurgent representatives may continue.
Sensitive to military concerns, Cerezo is unlikely to take any steps that would strain
the officer corps' tolerance for civilian government in the near term. We expect the
President to justify requests for US military aid by insisting that the Army's support is
critical, not only to the counterinsurgency effort but also to the survival of democratic rule
itself.
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SUBJECT: Guatemala: Challenges to the Cerezo Government
Distribution:
Orig -- Amb. Jose Sorzano, NSC, Room 391, Old EOB
1 -- Mr. Barry Kelly, NSC, Room 300, Old EOB
1 -- Ms. Jackie Tillman, NSC, Room 300, Old EOB
1 -- The Honorable William G. Walker, Deputy Assistant Secretary of State for Central
America, Room 4915, State
1 -- Mr. Philip Habib, Special Envoy, Room 7245, State
1 -- Mr. Ronald Godard, Deputy Director, Office of Central American Affairs,
Room 4915, State
1 -- Mr. Luigi Einaudi, Director, Office of Policy Planning Coordination/ARA,
Room 6913A, State
1 -- Amb. Morton I. Abramowitz, Director, Bureau of Intelligence and Research,
Room 6513, State
1 -- Mr. Robert Fouche, Director, Office of Analysis for Inter-American Republics/INR,
Room 7358, State
1 -- Mr. David Smith, Chief, Middle America-Caribbean Division/INR, Room 7367, State
1 -- Mr. Robert Pastorino, Deputy Assistant Secretary for Inter-American Affairs, DoD,
Room 4C800, Pentagon
-- LTG John Moellering, USA, Room 2E872, Pentagon
-- Mr. Douglas Mulholland, Room 4324, Treasury
-- ADCI - 7D60
-- SA/DCI/IA - 7E12
-- Executive Secretary - 7E12
-- Executive Registry - 7E12
-- Mr. Daniel Childs, Comptroller - 7C21
-- Director, Office of Congressional Affairs, 7D43
-- Office of Congressional Affairs
-- NIO/LA - 7E62
-- NIO/Economics - 7E62
-- NIC/AG - 7E47
-- C/LA/DDO - 3C3203
1 -- CPAS/IMC/CB/DDI - 7G07 (5 copies)
1 -- CPAS/ISS/DDI - 7G50
1 -- C/LA/LDA/DDI - 1 H39
1 -- D/ALA/DDI (2 copies)
1 -- Production Staff/ALA/DDI - 4F21
1 -- DDI - 7E44
1 -- C/PES/DDI - 7F24
1 -- D/CPAS - 7F16
1 -- PDB Staff - 7F30
1 -- SCIO/CPAS/DDI - 7F27
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1 -- C/ALA/MCD
1 -- DC/ALA/MCD
1 -- C/ALA/MCD/Nicaragua Branch
1 -- C/ALA/MCD/Central America Branch (Files)
1 -- C/ALA/MCD/Mexico/DDI
1 -- C/ALA/MCD/Cuba/DDI
1 -- C/ALA/MCD/Caribbean/DDI
1 -- ALA/MCD Files (5 copies)
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