JAMAICA: SEAGA'S PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP04T00367R000100280001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: March 30, 2010
• Sequence Number: 1
• Publication Date: February 13, 1984
• Content Type: REPORT

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Central Intelligence Agency
V&SN Wor4 Q C 20505
DIRECTORATE OF INTELLIGENCE
13 February 1984
JAMAICA: Seaga's Prospects
Summary
Prime Minister Seaga's hope of serving out the full five-year
term won in a snap election last December has been undercut by a
series of economic reverses--the latest being a threat by the
International Monetary Fund's managing director to break off
negotiations on a crucial standby loan agreement. Growing
political tensions and worsening economic conditions had already
increased Seaga's vulnerability to opposition attack and weakened
his control of the tempo and direction of events. Seaga has once
again threated to resign, but even this would not relieve pressure
to return to a two-party government after the electoral reform
measures are implemented in May or June. Failure to produce some
signs of economic recovery by then will fuel demands for a new
general election a contest that Michael Manley could win.
The rise in Seaga's popularity immediately following the
Grenada intervention has been eroded by popular dissatisfaction
with the uncontested December election and the country's growing
financial difficulties. Business support for Seaga's austerity
program is faltering as a result of tight monetary policies--
which are pinching the private sector through high interest rates
This memorandum was requested b Secretary of State George Shultz. It
was prepared by Office of African and Latin
American Analysis. Comments and queries are welcome and should be addressed
to Chief, Cuba-Caribbean Branch, Middle America-Caribbean Division
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and stringent credit--and the government's continuing difficulty
reaching an agreement with the IMF for. a. $167 million standby
loan. Meanwhile, labor unions are calling for higher wages to
counter steep price rises resulting from the 56 percent
devaluation of the Jamaican dollar last year.
Investor and voter confidence probably will continue to
slacken in the coming months. IMF demands--including a free-
floating exchange rate and sharp budget cuts--would increase
prices, further reduce critical imports, and raise
unemployment. The country's foreign financial bind has become so
severe that we expect Kingston to launch an appeal soon to the
Paris Club for the rescheduling of its officially held debt.
Moreover, a break with the IMF and Seaga's threatened moratorium
on debt servicing to private lenders would preclude any
substantial new foreign loans from public and private sources in
the coming months.
Seaga's Strategy
While in Washington this week, Seaga will try to keep IMF
negotiations going and to obtain additional financial support
from Washington and other World Bank members. Seaga's threat to
resign probably is a result of his frustration as well as a ploy
to gain additional concessions from the IMF and Washington.
According to the US Embassy, he will probably argue for the
suspension of some of the tougher IMF demands until after local
elections, required by law to be held by June. Foreign funding
will be necessary to maintain access to critical imports and to
support government expenditures on employment-generating rural
projects before the local elections.
Seaga has threatened to resign in the past, and we doubt
that he will do so now. If he does resign, Deputy Prime Minister
Hugh Shearer would be the most likely successor. Although more
popular than Seaga, Shearer would face the same economic
dilemma. Moreover, the circumstances of his taking power would
in themselves add weight to the argument for a new mandate.
Manley's Strategy
Manley is unwilling
to wait five years to be reelected Prime Minister. He reportedly
believes that he has widespread popular support for his boycott
of the election last December and that Seaga's inability to solve
the country's economic problems over the next few months will
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shift voter su ort to his People's National Party. He is
convinced, that Seaga will be
,forced to call a general election before a end of 1984 and has
personally taken charge of all party affairs to ready it for the
challenge.
Manley has also given tactical priority to repairing the
party's reputation, tarnished by past anti-US rhetoric and close
association with Havana and Moscow. Manley is adopting more
moderate positions and underscoring his support for foreign
investment and the US-sponsored Caribbean Basin Initiative. The
party's leftwing faction--at least for the moment--has been
F_ I
pushed into the background.
Outlook
Continued economic troubles in the coming months could
result in the ruling party losing local elections if they are
held by June. According to US Embassy sources, Seaga may seek
legislation to postpone these elections until fall, expecting an
upswing in bauxite production and tourism that will draw public
support back to his camp.
Whether such a turnaround will occur is uncertain. The
expected recovery in bauxite and tourism earnings is predicated
on a steady improvement in the world economy and could be
undercut by recently proposed taxes on these industries.
Moreover, a failure by Kingston to reach agreement with the IMF
and a compromise with its international lenders would eliminate
any prospects for new essential foreign investment. The
potential for labor unrest will grow as inflationary pressures
worsen.
Demands for a new general election are likely to become more
strident as June approaches and will not be calmed by holding
elections for local offices. Manley has publicly disavowed
violence as a tactic,
People's National Party wi ac ive y encourage demons rations
and strikes. If violence breaks out, neither Seaga or Manley
will be able to control the activities of the criminal gangs
To impose his own timetable for elections, Seaga must
persuade Jamaicans that there is a better chance for economic
recovery under his leadership than under Manley's. If
unsuccessful, Seaga could be faced with the choice of risking
associated with their parties.
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political defeat by acceding to demands for a general election,
regardless of when local elections are held, or jeopardizing
essential private investment by resorting to repressive measures
to maintain order.
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Chronology of Events
Early November Grenada events propel Seaga to lead in polls.
23 November Seaga announces failure to meet IMF targets,
devaluation.
25 November Seaga calls general election.
28 November Opposition announces boycott, charges
violation of solemn undertaking not to hold
new general elections without updated voter
lists, new procedures.
29 November Nominations close; opposition boycott holds in
all 60 constituencies.
Early December Polls show 70 percent want new elections based
on updated lists and indicate a 55-percent
margin for Manley in such an election.
15 December Jamaica's first one-party parliament elected.
30 December More austerity measures, gasoline and
electricity price rises announced.
15 January
Rise in antigovernment sentiment seen in last
minute surge in voter registration.
Mid-February Seaga makes trip to US to break IMF impasse.
SECS ET
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SUBJECT: JAMAICA: Seaga's Prospects
Distribution:
Original -
1 -
1 -
1 -
Secretary of State George Shultz
Executive Director
LA/NIO
NIC JAG
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1 - C/DDI/PES
1 - D/ALA
2 - ALA/PS
1 - ALA Research Director
4 - OCPAS/IMC/CB
9 - ALA/MCD
DDI/ALA/MCD~
(13 February 1984) 25X1
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