LATIN AMERICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00912A001000010010-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 21, 2016
• Document Release Date: October 25, 2007
• Sequence Number: 10
• Publication Date: November 30, 1978
• Content Type: REPORT

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roreign
IW
Assessment
Latin America
Review
30 November 1978
State Dept. review completed
Secret
RP LAR 78-014
30 November 1978
L4
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LATIN AMERICA REVIEW
30 November 1978
CONTENTS
Brazil: After the Congressional Elections. . . . . .
The government appears certain to retain
control of both houses of Congress, but the
impressive showing of the opposition party
is a further indication of popular discon-
tent with military rule and seems likely to
make the new Congress far bolder than any
in recent years.
Argentina-Chile: Problems Continue in the
Beagle Channel . . . . . . . . . . . . . . . . . 3
The apparent impasse in diplomatic negoti-
ations sustains our concern that--possibly
within the next two or three weeks--Argen-
tina will resort to some military action to
strengthen its territorial claims in the
Beagle Channel area.
Dominican Republic: Guzman's First Hundred Days. . . 5
The Dominican President has strengthened
his position by restraining growing fac-
tionalism in his ruling party and by re-
moving military leaders inclined toward
intervention, but he appears to be headed
for trouble if he does not come to grips
with the country's serious economic problems.
Cuba: Ties Strengthened With Sao Tome - Principe . . 10
President da Costa's recent visit to Cuba
may lead to even greater cooperation be-
tween the two countries in various technical,
scientific, and military fields.
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El Salvador: Status of Dialogue with the
Moderate OpX>osition . . . . . . . . . . . 12
Spurred on by the rising tide of terrorism,
leaders of the "legitimate" opposition are
once again, promoting the idea of a political
dialogue with the ruling oligarchy and mili-
tary, but history cautions against more than
guarded optimism regarding the possibility
of meaningful reforms.
FOR THE RECORD . . . . . . . . . .. . . . . . . . . . . 15
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Brazil: After the Congressional Elections
With about 80 percent of the votes from this month's
congressional elections counted, the government party
appears certain to retain control of both houses, though
by reduced margins. The impressive showing of the oppo-
0 sition party--it leads in total popular vote nationwide--
is a further indication of popular discontent with mili-
tary rule and seems likely to make the new Congress far
bolder than any in recent years.
Though final results may not be available for some
time, especially from the more remote states, it is al-
most certain that the government will hold about 40 of
the 67 Senate seats and about 220 in the 420-member
1 ,1 Chamber of Deputies. This means that in the Senate the
government will have lost four or five seats, and in the
Chamber its margin will be halved.
Next March President-elect Figueiredo will begin
what is certain to be a trying term of office without
the added complication of a lower house controlled by
the opposition, which had been considered a serious
possibility before the voting. The government's re-
structuring of the party system--a virtual certainty in
any case--is now likely to be less drastic than it would
have been had the opposition won the lower house. More-
over, military opponents of plans by President Geisel
and Figueiredo to liberalize the regime are now likely
to feel more confident of the government's ability to
control political developments.
Nevertheless, the election results constitute a
hollow victory, which top progovernment party members
have already publicly acknowledged. The opposition's
impressive performance continues a trend that began sev-
eral years ago and has grown stronger despite both gov-
ernment harassment and promises of liberalization. In-
deed, the opposition's showing is all the more note-
worthy, given the formidable obstacles the government
has placed in its path. In the end,'the regime protected
30 November 1978
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itself by simply appointing one-third of the Senators
and avoided popular participation in the selection of
new state governors, all of whom were chosen indirectly.
The new Congress will contain a sizable number of
left-leaning nationalists who have not been afraid in
the past to attack the government on a broad range of
issues. Most of these critics come from the urbanized,
economically advanced regions of Brazil, where the ten-
"dency to vote against the government has been by far
most pronounced. Because of this, the military regime
has become increasingly isolated from the most dynamic
population centers and must rely for its support on
relatively backward rural areas.
The government has said repeatedly that it could
more easily continue the liberalization effort begun by
Geisel if it retained a majority in Congress. Although
it has achieved that goal, the stage is clearly set for
potentially troubling challenges from--if not outright
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Argentina-Chile: Problems Continue in the Beagle Channel
The impasse in diplomatic negotiations between
Argentina and Chile on the Beagle Channel dispute sus-
tains our concern that Argentina will resort to military,
action in defense of its territorial claims in the area.
The next two or three weeks have been identified by an
important Argentine military commander as the outer limits
of his nation's patience toward the Chileans.
On 24 November the Argentines accepted a Chilean
proposal that a meeting between the two countries' Foreign
Ministers take place to select an outside mediator.
According to an official communique released this week,
the meeting will be held in Buenos Aires on 12 December.
Santiago appears to be in a more conciliatory mood, but
neither side has indicated that it is ready to resolve
basic differences.
Argentine President Videla has sought publicly to
portray his country as the conciliatory party in the dis-
pute, but he gave clear warning that his government will
defend any threatened Argentine interests. At the same
time, the Argentine media and various Argentine officials
are expressing continuing frustration over Chile's in-
flexibility.
General Suarez Mason, commander of the principal
Army units in Buenos Aires, presented one of the most
definitive and hawkish assessments of the current situa-
tion to the US Ambassador. He said all corps commanders
are scheduled to meet with the President and the junta
on Tuesday to review the Beagle Channel matter. The gen-
eral said that Argentina would not make a military move
before then, but asserted that if Chile does not resume
negotiations by mid-December, Argentina would take a
military initiative.
30 November 1978
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President Antonio Guzman visiting grandson at a local hospital
30 November 1978
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Dominican Republic: Guzman's First Hundred Days
Since his inauguration on 16 August, Dominican
President Antonio Guzman has strengthened his position
by restraining growing ruling-party factionalism and by
/removing military leaders inclined toward intervention.
3/ J Yet the widely respected President appears headed for
trouble next year if he does not come to grips.with the
country's serious economic problems.
5
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Jacobo Majluta
Vice President
Major General Perez y Perez
Recently retired military chieftain
6
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Jose Francisco Pena Gomez
PAD Chairman
Jorge Blanco
Senate minority leader and
PRD President
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On balance, Guzman is consolidating his position
around moderate and conservative forces. He has sur-
rounded himself with a cabinet of highly qualified tech-
nocrats and a band of close advisers drawn from his
family, old-guard political loyalists, and members of the
conservative Santiago business community. Although he
has been charged with "cronyism" and nepotism--he has
appointed at least eight close relatives to official po-
sitions--Guzman has formed a competent government that
apparently has widespread public support.
The Military
Guzman's swift removal of entrenched "political"
flag officers has surprised experienced Dominican observ-
ers--mainly because he appears to have come out on top.
Within hours of his inauguration the new President side-
lined the generals who tried to overturn his election
last May, and has since sent them into "golden exile"
abroad. In early November he ordered the retirement of
-.Major General Enrique Perez y Perez, long the head of a
major military faction, after the general twice refused
assignments abroad. The ousting of Perez y Perez, how-
ever, has been controversial because he was respected as
a professional soldier in the military and business com-?
munities.
5
Guzman has kept the highly conditional support of
the military establishment, but he has done little to
change the political nature of the Dominican armed forces.
Middle-level officers are pleased with the increased
headroom for promotions, and most military personnel
probably approve the departure of corrupt generals who
had grown rich from rake-offs and other illegal business
practices. Nevertheless, Guzman has placed his own po-
litically ambitious generals in key positions, and the
typical flag officer remains a wealthy businessman with
considerable influence in the civilian world.
Labor and the Left
Guzman's government has relaxed the antilabor policy
that prevailed during the 12-year rule of former Presi-
dent Joaquin Balaguer, launching an intense competition
7 for recruits between rival labor confederations. Although
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CARIBBEAN SEA
30 November 1978
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Rio
San Juan
",Cabrera
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Guzman is determined to keep labor in check, the unions
have shown little inclination to cooperate with the gov-
ernment.
Pena Gomez tried early on to form a PRD-backed
national confederation, but he ran into bitter opposition
from independent unions. He will now apparently attempt
to bring the unions together in a series of smaller scale
efforts. Pena's perseverance has so far been overshad-
owed, however, by the militancy of independent labor
leaders who are fast becoming a serious problem for Guzman.
Guzman, in sharp contrast to his approach to labor,
is taking no chances with the radical left. He tried
unsuccessfully to turn back a PRD-sponsored bill granting
amnesty to political prisoners, because he wanted a closer
official scrutiny of those to be released. He allowed
the police to halt a public demonstration--encouraged by
Pena Gomez--in support of anti-Somoza forces in Nicaragua.
He has made clear in his public statements that he will
not tolerate violatons of law and order from any quarter--
including the 200 recently released political prisoners.
His stock with radical groups, which has always been low,
has plummeted at the outset of his administration.
Political Prospects Hinge on the Economy
Guzman's dominant political position and his delicate
truce with the military will probably not last without
discernible improvement in the sliding economy. The
government has apparently been searching for a "master
plan" to tackle serious problems resulting from Balaguer's
mismanagement, but many respected Dominicans have called
it inaction. Guzman's troubles will almost certainly
increase because he is faced wth deep-seated economic
difficulties on the one hand, and his supporters' un-
reasonably high expectations on the other.
Since 1975, the Dominican economy--which showed an
11 percent annual growth rate during the previous five
years--has declined rapidly following a drastic hike in
oil prices and a precipitous decline in the world price
of sugar, which accounts for about 60 percent of the
country's foreign exchange earnings. The growth rate
last year was just over 3 percent, the inflation rate
about 16 percent, and the unemployment rate over 20 per-
cent of the labor force.
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4
Guzman has halted public work projects, tightened
monetary policy, and started to pay off long overdue
foreign debts that have hurt the country's chances for
additional aid. He apparently hopes that his early
record of strict fiscal responsibility will strengthen
his hand with international financial institutions and
pay off in long-term improvement.
The Dominicans who elected the PRD, however, clearly
expect a more dramatic government: performance and quicker
results than Guzman has been able to deliver. The labor
movement has already challenged the PRO's established
position as the "voice of the people," and it probably
represents the most serious short-term problem for the
new government. Military and business leaders are
worried about increased labor activities, and their
allegiance to Guzman could easily slip. In the coming
months, therefore, the PRD government will have to demon-
strate a clear-cut and convincing economic policy or the
present broad support for Guzman will almost certainly
give way to political unrest.
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Cuba: Ties Strengthened With Sao Tome - Principe
President Manuel Pinto da Costa of Sao Tome - Prin-
cipe completed a 10-day official trip to Cuba on 17
November and remained over a week longer on a private
visit. His small, moderately leftist island nation al-
ready receives significant assistance from the Cubans,
and his visit is likely to lead to even greater coopera-
tion. President da Costa brought with him a wide-ranging
entourage of high-level officials--including five cabinet
ministers--reflecting the various technical, scientific,
and military exchanges between the two countries. Da
Costa divided his time between substantive talks with
Cuban Government officials, including President Fidel
Castro, and touring agricultural, educational, and cul-
tural facilities on the island.
The Cubans reportedly have been on the scene since
before Sao Tome received its independence from the Portu-
guese in 1975. After diplomatic relations were estab-
lished in April 1976, Cuba became one of only three
countries to have a resident representative along with
the Soviets and the Portuguese. Since then, there have
been a series of contacts: a delegation accompanying
Angolan President Neto to Sao Tome in April 1976 included
several Cubans; a Cuban delegation visited the island in
September 1976 at the same time as Sao Tome Prime Minis-
ter Trovoada was in Cuba; a Cuban delegation from the
State Committee for Economic Cooperation signed a scien-
tific and technical agreement in Sao Tome in November
1977; and the Sao Tome Minister of Agriculture, Labor,
and Social Security paid an official visit to Cuba in
February of this year.
Between 150 and 300 Cubans are now in Sao Tome, of
which 50 to 100 may be military advisers. Cuban special-
ists provide technical assistance in the fields of con-
struction, public health, animal husbandry, foreign
trade, agriculture, fishing, sports, and education;
Havana has also made a gift of two fishing vessels. In
addition, Sao Tomean students are among the contingent
of African youths studying in Cuba.
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Cuba has given formal on-island military training
to about a dozen members of the Sao Tome armed forces,
including the commander in chief. The Cubans have also
used Sao Tome as a rest and recreation facility for some
of their military personnel stationed in Angola.
The joint communique issued at the end of da Costa's
visit calls for an expansion and strengthening of politi-
cal and economic ties between the two countries. A Cuban
aid assessment team was in Sao Tome at the same time,
probably to explore areas for increased assistance. As
Havana prepares to host the 1979 nonaligned summit, da
Costa's visit has served to underscore Cuba's image as a
stalwart friend of "progressive" African nations, and
also emphasizes Cuban interest in forging relations in
sup-
ilitar
y
the Third World based not only on direct m
rm
l
on -e
port--as in Angola and Ethiopia--but also on
civilian assistance programs.
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El Salvador: Status of Dialogue With the Moderate
Opposition
Leaders of the opposition Christian Democratic
Party are once again promoting the idea of a "political
opening" in El Salvador. Despite past disappointments,
the rising tide of terrorism that threatens both the
"legitimate" opposition and the entrenched government
/ elites has helped motivate the Christian Democrats anew
and has made them guardedly optimistic that the oligarchy
and military may be amenable to at least some reforms.
If not, the Christian Democrats, who have been losing
followers to more leftist groups that have experienced
spectacular growth over the last year or two, will be
faced with the prospect of losing even more of their
membership.
Discussions on political liberalization between the
opposition led by the Christian Democrats and a series
of military-dominated governments have a sad history.
As has been the case with the on-again, off-again talks
with the 16-month-old administration of President Romero,
~e even when discussions have gotten off the round, there
has been little meanin ful followu
The Christian Democrats have now settled on an in-
direct approach to the government and believe their ini-
tial efforts to be promising. They have contacted--and
allegedly won the support of--the powerful National As-
sociation of Private Enterprise (ANEP) for a four-point
program of reform measures. ANEP represents the con-
servative business establishment in El Salvador, but the
spate of kidnapings of the wealthy as well as the per-
ceived corruption of military personnel in the govern-
ment have reportedly led some of its members to conclude
that a "political opening" of some sort is necessary.
In a return concession, the Christian Democrats have
agreed to seek only modifications rather than abrogation
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of the Law for the Defense of Public: Order, which has
given the government wide latitude in detaining and trying
dissidents.
3
1
A key element in determining the outcome will be
the position taken by the Catholic Church. Archbishop
Oscar Romero has been a consistent critic of the regime
during his nearly two years in office, and Salvadoran
Foreign Minister Rodriguez Porth was scheduled to confer
with Pope John Paul II at the Vatican on 30 November.
Next week, church. officials in El Salvador are to meet
with Christian Democratic and ANEP leaders to review the
four-point program to be offered by the moderate opposi-
tion. That meeting had been postponed from mid-November,
possibly to permit a domestic assessment of the discus-
sions. at the Vatican. If Archbishop Romero believes de
velopments are headed in a positive direction, he would
support activity that could broaden political participa-
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FOR THE RECORD
Mexico:* Mushrooming population growth is straining the
structure of Mexico's society and economy and is begin-
ning to put pressure on the political system. The popu-
lation will nearly double by the year 2000; the labor
force will more than double; the number of unemployed
will increase substantially; and Mexico City will have
become by a wide margin the world's largest mass of ur-
banized humanity. Although government measures, includ-
ing the judicious spending of new oil wealth, can do
much to alleviate the situation, the severity of the
problem will also be influenced by the ways in which the
economic and social systems themselves adjust to changing
population pressures. This adjustment process--which
cannot be mapped out with much precision--will no doubt
affect the pattern of population growth as well as such
key variables as the path of economic growth and the
l
i
re
at
onship of economic crrowth to iob creation
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