LATIN AMERICA WARNING AND FORECAST MEETING JUNE 1986

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP93B01478R000300020034-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 23, 2016
• Document Release Date: July 15, 2013
• Sequence Number: 34
• Publication Date: June 25, 1986
• Content Type: MEMO

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L.) c.) STAT
SECRET/
The Director of Central Intelligence
Washington, D.C. 20505
National Intelligence Council
MEMORANDUM FOR:
VIA:
FROM:
SUBJECT:
NIC 03037-86
25 June 1986
Director of Central Intelligence
Deputy Director of Central Intelligence
National Intelligence Officer for Warning
Robert D. Vickers
National Intelligence Officer for Latin America
Latin America Warning and Forecast Meeting
June 1986
1. The following items were discussed at the Intelligence
Community's Warning and Forecast Meeting held on 18 June 1986.
Mexico
2. If Mexico fails to obtain an IMF agreement by the end of June,
President de la Madrid may well suspend payment on his country's foreign
debt. This could happen as soon as 1 July when large debt payments
($1.8 to $2 billion) fall due. The 17 June replacement of Finance
Minister Silva Herzog was probably intended to reduce differences on
Mexico's economic team, possibly in preparation for taking stronger
action.
- De la Madrid does not believe he can sell the tougher IMF
demands to his constituents.
? He wants an agreement that would give him and Mexico some
"breathing room."
It is doubtful that Mexico would repudiate its debt obligation
totally. A more likely scenario is one of delay in payment.
A restraint on Mexico is the fear of hurting its international
credit rating.
Other Latin American debtor countries--especially Brazil and
Argentina?will be watching the US reaction in hopes that they
too might get some relief if Mexico succeeds.
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Regional US banks are unlikely to lend Mexico any more and would
probably write off their loans rather than risk additional
funding.
Because of their large exposure, the major US banks are not yet
at that point and would probably be willing to lengthen payments
and even grant new funds.
WARNING ISSUE: Mexico may declare a debt moratorium if the IMF
and international lenders continue to hold it to what it considers to be
excessive demands in terms of reforms and austerity measures. Other
debtors will watch the US reaction closely.
Haiti
3. President Namphy's public addresses on 4 and 7 June have had a
calming effect on the Haitian populace. His announced timetable for
elections was particularly well received. Minister of Interior and
Defense, Colonel Regala also is reported to have improved his image with
his recent public appearance; although pressure for his removal and that
of Finance Minister Delatour has not totally dissipated and could easily
flare up again. Meanwhile, the economy continues its downward trend
adding to popular frustration and impatience.
The Church hierarchy recently issued a statement of support for
the government; this has been helpful.
The military is relieved that the demonstrations have ended
since they were preparing to react more forcefully against the
crowds.
Two government-run companies that had been losing money are to
close on 30 June. The resultant employment could lead to a
resumption of demonstrations.
Before they stopped, the demonstrations had begun to take on
anti-US overtones.
2
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WARNING ISSUE: Although pressure on the Haitian government has
eased as a result of the election timetable, violence could flare up
again, and Namphy has few additional cards to play.
Nicaragua
4. There have been no major changes in the balance of forces since
March 1986). However, there has been a modification in Sandinista troop
disposition in recent weeks that is noteworthy. The bulk of Sandinista
forces have dropped back from the Honduran border and have now formed a
defensive line north of Lake Apanas. While this may lessen the
likelihood of another large incursion into Honduras, that possibility
should not be discounted.
OD 4=1.
The Sandinistas have fallen back tactically but have not
permanently given up the territory. This may be only a rainy
season strategy.
The recent arrival of 10-11 helicopters will improve Sandinista
reaction capability. Thus far, they have not successfully used
helicopters against the insurgents.
There are believed to be enough Nicaraguan pilots for the new
helicopters, consequently there will probably be no increase in
the number of Cuban pilots present in the country.
The Sandinistas realize that they will not eliminate the Contras
any time soon.
By the same token, they are not afraid of being overthrown by
the Contras.
Meanwhile on the insurgent side:
Morale is high, and they have enough arms for a while.
They are searching for other sources of support--beside the
US--and have been somewhat successful. They now have enough
funding to keep them going at a reduced level.
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JELACI
They are operating more like guerrillas, hitting unguarded or
poorly-guarded targets.
Weaknesses include lack of strategic planning, no political
infrastructure inside Nicaragua, leadership problems and
logistics shortfalls.
WARNING ISSUE: The threat of a Sandinista attack into Honduras
has receded with the advent of the rainy season, but their longer-term
strategy is unclear.
'4(4119
Robert D. Vickers,
4
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SLUKt I
,)
Participating in the NIO/Latin America Warning Meeting of
18 June 1986 were representatives of the following agencies:
DIA: DIO/DIA
DIAC/DB3C3
DIA/DB3C2
DIA/DC4A
JSI-4B
DIA/AT-5
Department of the Navy
National Security Agency
National Security Council
CIA Participants:
ALA
OGI
DIA
CRES
LDA
OIR
OSWR
DO/LA
NIO/W
ICS/HC
NP IC
FBIS
JPRS
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