LATIN AMERICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01184R000301550001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 39
• Document Creation Date: December 22, 2016
• Document Release Date: December 14, 2010
• Sequence Number: 1
• Publication Date: January 18, 1985
• Content Type: REPORT

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Latin America
Review 25X1
Seaga is having in pulling Jamaica out of its economic doldrums.
The spontaneous outbursts this month protesting sharp increases in
petroleum prices underscore the growing difficulties Prime Minister
that it will face major obstacles in pursuing this aim.
Over the past year, the Soviet Union has implemented a number of
political, economic, and cultural policies to enhance its influence in
Mexico. We expect that Moscow will try to increase its impact but
Isle of Youth, the site of 21 secondary
training.
schools for some 12,000 foreign students, has revealed that the
highly touted education program includes a strong dose of military
Uruguay: Sanguinetti and the Military) 25 25X1
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the areas of foreign policy and the military budget.
President-elect Sanguinetti has indicated that he will generally
pursue cautious policies to avoid angering the predominantly
conservative and anti-Communist military. Military leaders,
however, may be displeased with some steps he is likely to take in
i Socret
ALA LAR 85-003
18 January 1985
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The overwhelming defeat of Prime Minister Price and his longtime
ruling party in national elections last month was a dramatic setback
for the party's small but influential leftist faction, and divisive party
infighting seems likely
Dominica: Election Prospects) 33
Faced with a deadline this September for calling elections, Prime
Minister Charles is increasingly concerned about the left-leaning
opposition and the island's prolonged economic difficulties. I
Cuba: New Housing Lawl
36
Continuing Debt Pressures =
35
Colombia: General Vega Appointed Defense Ministe~
36
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Articles have been coordinated as appropriate with other offices within CIA.
Comments and queries regarding this publication may be directed to the Chief,
Production Staff Office of African and Latin American Analysis,
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Jamaica: Economic Recovery
Proves Elusive
Recent spontaneous outbursts protesting sharp
increases in petroleum prices underscore Prime
Minister Edward Seaga's growing difficulties in
pulling Jamaica out of its economic doldrums.
Slumping US demand for Jamaica's bauxite and
alumina, low world prices for sugar and bananas, and
sluggish inflows of foreign funds have wreaked havoc
with the country's balance of payments and dampened
economic growth. As a result, Seaga's early gains in
reducing inflation have been wiped out, the
unemployment rate now matches that inherited from
the Manley administration, the exodus of scarce
skilled workers has picked up, and Seaga's popularity
has sunk to a record low. Current domestic and
international trends offer little hope that Jamaica's
economy will register much, if any, growth this year.
In these circumstances, social tensions are likely to
rise. As a result, Kingston's willingness to crack down
on the drug trade may flag, and pleas for increased
US aid are likely to become more intense.
Economic Hopes Dashed in 1984
Jamaican officials during the first half of 1984 were
involved in intense-and often acrimonious-
negotiations to obtain IMF funding. To qualify for
new Fund credit, Seaga met a number of
preconditions that included:
? Unifying the exchange rate and instituting an
auction mechanism with a constrained floating rate.
? Eliminating almost all import licensing
requirements.
? Reorganizing the government-owned sugar
company.
? Phasing out subsidies on most foods and basic
commodities.
? Implementing sharp hikes in electricity and
telephone rates.
? Tightening restrictions on credit and monetary
expansion.
In keeping with the process of adjustment, the
government presented a budget for the fiscal year
beginning in April that slashed the deficit from 18
percent to 8.3 percent of GDP, mainly by cutting
6,000 public-sector jobs and raising taxes more than
10 percent. To cushion the impact on low income
earners, Seaga began a food stamp program, reduced
income taxes on the poor, and increased the minimum
wage. When the United States declined to purchase
additional bauxite for its strategic stockpile, the
budget was slashed even further, mostly by cutting
current expenditures. With these measures in hand,
Jamaica qualified for a one-year, $143 million
standby agreement in June. Jamaican officials
optimistically predicted that, despite the belt-
tightening adopted to obtain IMF support, Jamaica in
1984 could duplicate the 1.8-percent increase in real
GDP recorded in 1983.
The economic results, however, were disappointing.
Seaga estimated that Jamaica experienced a 1-
percent economic decline in 1984, although the rapid
growth in drug trafficking complicates measurement
of Jamaica's actual national income. We believe that
a major factor in this deterioration was the continued
slump in traditional agriculture. Production of sugar
and bananas-Jamaica's leading farm exports-and
the domestic food harvest were severely hurt by low
world prices, bad weather, misguided regulations, a
shortage of necessary imports, and tight domestic
credit. Government spending cuts and high interest
rates buffeted the construction sector. Manufacturing
Secret
ALA LAR 85-003
18 January 1985
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Marijuana-known in Jamaica by its Hindi name
ganja-has long been associated in Jamaican culture
with the poor. Grown for local consumption and
increasingly for sale to Jamaican brokers supplying
the US market, marijuana has become the most
lucrative crop for many farmers. As banana and
sugar prices have fallen, many growers have shifted
to marijuana as afar more valuable alternative than
such domestic crops as manioc, yams, or beans.
Many farmers plant marijuana on small plots,
totaling only a few dozen plants concealed among
other crops. Others cultivate ganja more
systematically, transplanting young seedlings from
ganja nurseries to larger fields of up to several acres.
We believe marijuana smuggled into the United
States probably earns the Jamaican economy $100-
225 million annually, assuming that Jamaican
brokers keep half their profits and send the rest out
of Jamaica immediately without cycling the money
through the local economy. The export crop is about
70-percent commercial grade marijuana, according to
the Drug Enforcement Administration (DEA), and
costs US wholesale buyers $50-100 per pound. The
remainder is sinsemilla, an especially potent form of
marijuana that costs between $60-200 per pound. US
wholesalers pay Jamaican brokers, who assemble the
shipment, arrange for loading the aircraft or boats,
and provide security by bribing local police if
necessary. The brokers pay the farmers and other
incidental workers, and the rest is profit
The net economic impact of marijuana is difficult to
assess and is hotly debated in Jamaica. Some,
including influential newspaper columnists and
politicians, believe that trafficking provides major
economic benefits to Jamaica and should be
legalized. These proponents often mistakenly quote
the total US retail value of the crop-about $2.5
billion-as the sum earned by Jamaica. Foreign
exchange earnings from marijuana are equivalent to
as much as one-third of Jamaica's export receipts.
We believe that most of the money brought into
Jamaica, however, is allocated for consumer imports
and soon returns to the United States. As a result, we
doubt that much drug-related money cycling through
Jamaican banks becomes available to finance
producer goods, or local investment.
aimed at the local and regional markets was crimped
by tight credit and import restrictions. Production of
textiles for sale in the US market, however, was
buoyed by the 806.3 and 807 provisions in the US
Tariff Schedule and Jamaica's exclusion from quotas
under the international Multifiber Arrangement,
which attracted a number of US and East Asian
investors.
Performances in the bauxite/alumina and tourist
sectors were little better. Bauxite production
increased about 12 percent over the 1983 level, when
output sank to the lowest level in 20 years. This
improvement occurred in the first half of 1984,
however, and reflected final shipments under a US
strategic stockpile agreement and accelerated
deliveries from the Reynolds Jamaica Mine prior to
its closure in June after 40 years' operation there.
Bauxite production declined sharply in the second half
of 1984 in response to declining world demand for
aluminum and high operating costs that have long
hurt the profitability of US- and Canadian-owned
bauxite/alumina operations in Jamaica. Tourist
industry growth was slowed by reduced spending on
advertising; a strong US dollar that increased
competition from Mexico, Western Europe, and other
areas; and bad publicity stemming from the Grenada
intervention and growing domestic security problems.
The deterioration in Jamaica's foreign payments
situation in 1984 mirrored that in the domestic
economy. Export earnings stagnated. A $60 million
increase in nontraditional farm exports was not
enough to offset sluggish sales of Jamaica's leading
foreign exchange earners. Despite a plummeting
Jamaican dollar-its value in 1984 had fallen 35
percent by the time the free float was instituted in
November-imports remained fairly strong. Seaga
relied on bureaucratic harassment and jawboning to
dampen currency demand at the twice-weekly foreign
exchange auctions. This hostile environment
discouraged potential investors and accelerated
capital flight, according to the US Embassy in
Kingston. Under IMF pressure, Seaga belatedly
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relaxed these methods and instituted further interest
rate increases and credit restrictions to try to mop up
Grim Economic Outlook
Any recovery in 1985 will hinge largely on an increase
in bauxite/alumina sales, tourism, and sugar and
banana exports as well as on Seaga's ability to
stimulate investor interest-particularly in
nontraditional agriculture and light manufacturing-
and to tap foreign capital markets. Current domestic
and international trends provide little basis for
optimism that the economy will post much, if any,
growth in 1985. Nor is Seaga likely to make any real
headway in slashing unemployment and inflation. F_
excess liquidity and dampen demand.
The result was a further erosion in the standard of
living for most Jamaicans. We estimate that inflation
in this import-dependent economy approached 40
percent in 1984. As a result, real wages for many
Jamaicans fell roughly 25 percent because of the
government's success in restraining most wage
increases to no more than 15 percent. Some ground
also was lost in the battle against unemployment-
Jamaica's most intractable social problem. Public-
sector layoffs, rationalization of the sugar and banana
industries, and the Reynolds pullout were the major
factors in pushing the unemployment rate to nearly 30
percent-roughly on par with that inherited from the
Manley administration. Shortages of skilled workers,
managers, and professionals worsened in response to a
resurgence of the exodus of trained personnel that had
characterized the Manley years
Political Fallout
While economic woes have badly eroded Seaga's
popularity, he continues to control the pace and
direction of political events. The two-day outburst
this month to protest petroleum price hikes
notwithstanding, the anticipated wave of popular
protests has not occurred. We believe this is due
largely to the abhorrence of most Jamaicans for a
repetition of the violent political warfare that swept
the island in 1980, the inability of the ideologically
divided opposition to parlay economic woes into a
political bonanza for itself, and Seaga's astute
political management
Seaga, nonetheless, probably will encounter stiffer
political challenges this year. Michael Manley and
other People's National Party leaders consider
Seaga's only mandate to have been conferred by the
1980. election and that his legitimate claim to office
will end in late 1985. Opposition parties boycotted the
election held in 1983. The opposition recently
committed itself publicly to intensifying its "elections
now" drive. Moreover, worker dissatisfaction with the
government's wage restraint policy is likely to lead to
increased labor unrest.
The likelihood of reviving the bauxite/alumina sector
is bleak, despite currency devaluations that have cut 25X1
local costs. Even in the unlikely event that world
demand for aluminum picks up significantly, US
producers probably would satisfy their needs from
lower cost operations in Guinea, Australia, Brazil,
and elsewhere before trying to increase purchases
from Jamaica. The manager of the ALPART alumina
refinery, the largest US investment in Jamaica, in
October indicated to US Embassy officials that its
owners may close down operations. The plant
processes more than 15 percent of Jamaica's bauxite
production, earns 10 percent of the island's foreign 25X1
exchange, and employs 1,200 workers. The manager
claims that only complete exclusion from the
government's bauxite tax would keep the plant open.
Any relief for ALPART would prompt demands for
equal treatment from other local producers and might
not increase production sufficiently to maintain vital
government revenues from this source. In any case,
Jamaica's eroding competitiveness will severely limit
government plans to take up the slack in sales by more
vigorously diversifying markets for Jamaican products
through countertrade.
Continued growth in the tourist industry will depend
largely on the strength and duration of the US
recovery and on the government's ability to get a
handle on the recent upsurge in domestic crime,
violence, and harassment of tourists by drug peddlers.
The surge in violent crime in late 1984 has not
resulted in canceled reservations but has prompted
added protective measures that have increased costs.
Although serious security problems could dampen
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investor enthusiasm, the possible institution of casino arrangement is forged. At the same time, continued
gambling for tourists probably would kindle investor economic distress is likely to diminish further the
interest. Seaga government's willingness to pursue drug
The prospects for agriculture are mixed. Recent
currency devaluations should increase the
competitiveness of food production in both the foreign
and domestic markets. Sugar and banana prices are
likely to remain too low in 1985 to encourage much, if
any, increase in production of traditional crops despite
progress in streamlining government commodity
boards. Government efforts under the Caribbean
Basin Initiative's trade provisions, nonetheless, will
continue to encourage the expansion of such higher
value products as spices, cut flowers, and winter
vegetables
Shortages of foreign investment and loan capital will
continue to crimp the performance of most sectors,
particularly heavily import-dependent manufacturing
activities. Economic and political uncertainties are
prompting a number of international banks to
decrease their loan exposure in JamaicaF
With the
IMF standby accord scheduled to end in mid-1985,
Jamaica probably will have to weather some months
without a new Fund program as negotiations with the
IMF drag on. Jamaica's medium- and long-term
external debt of $2.2 billion-excluding debt to the
IMF-exceeds that of any Caribbean country,
including Cuba. Kingston's recent moves to
reschedule that portion of the public debt coming due
through March 1985 will further discourage potential
lenders. Still, Jamaica's relatively low wages-recent
devaluations have cut production factor costs well
below those in Hong Kong-and proximity to the US
market will lure some investors.
Assuming the economic outlook remains bleak and
that opposition pressure will intensify over the near
term, Kingston almost certainly will seek additional
US aid with an increasingly urgent tone, especially
after the current IMF standby program ends in mid-
1985. We believe Seaga will request help in such
forms as additional bauxite purchases, support for the
country's security forces, and concessional loans to
tide the economy over at least until a new Fund
traffickers
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Over the past year, the Soviet Union has implemented
a number of political, economic, and cultural policies
to enhance its influence in Mexico. Moscow seeks
good relations with Mexico City to promote Soviet
aims in Central America and the Caribbean, foster
tensions between Mexico and the United States, and
influence developments within Mexico. The Mexican
Government, for its part, uses ties to Moscow to
reaffirm its independence of Washington in
international affairs and to improve its standing with
Mexican leftists. We expect the Soviets to continue
efforts to increase their influence in Mexico, but they
will face a number of major obstacles in pursuing this
aim.
Recent Diplomatic Activity
In the past year, several important Soviet officials
have visited Mexico to discuss substantive matters
and attend ceremonial functions. They have included
Vice President of the Presidium of the Supreme
Soviet Kosholev and CPSU Central Committee
Secretary Kapitanov. Meanwhile, according to the
US Embassy in Moscow, the Kremlin has given
Mexican officials traveling to the USSR a
particularly warm reception, and the Soviet media
have accorded Mexican-Soviet developments
extensive coverage.
Moscow has used such diplomatic contacts, among
other things, to:
? Praise the government of President de la Madrid for
pursuing a foreign policy independent of
Washington.
? Express gratitude for Mexican efforts to bring peace
to Central America and for defending Nicaragua's
interests in the Contadora talks.
? Note its satisfaction with Mexican attempts in the
United Nations and elsewhere to promote nuclear
disarmament.
The de la Madrid government has adopted positions
more sympathetic to the Soviet viewpoint in some
areas, particularly those not central to Mexico City's
key interests. For example, Mexico City has refused
to criticize the USSR for shooting down a Korean
airliner in September 1983. In addition, the Mexicans
have voted against the United States in the United
Nations more often in recent years.
Economic Initiatives
The USSR also has been seeking to expand economic
cooperation with Mexico, both within the framework
of a Mexico-CEMA joint commission and on a
bilateral basis.
The Soviet Union and six other CEMA members
sponsored a trade exposition in Mexico in November
1984 which was the first of its kind in Latin America.
The stated aim of the exhibition was to familiarize
Mexicans with products manufactured in CEMA
countries and to broaden commercial and scientific
cooperation with Mexico
On a bilateral basis, Mexico and the USSR earlier
this year signed a nonbinding protocol calling for each
to purchase a minimum of $40 million of the other's
products annually. At present, the value of their trade
is far less and, in the case of Mexico, accounts for less
than 1 percent of the country's overall trade. Each 25X1
country has cheaper sources of supply for the products
the other exports. Moreover, bilateral trade has
declined in the past several years, principally as a
result of Mexico's economic difficulties and its
austerity policies, which also have limited imports
from other countries.
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ALA LAR 85-003
18 January 1985
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 Mexican-Soviet Relations: A Brief Chronology
1924 Mexico becomes the first state in the Western hemisphere to establish diplomatic relations with the
USSR.
1929 Mexico severs relations, denouncing Soviet involvement in the Mexican labor movement as
interference in its internal affairs.
1937 Leon Trotsky begins a sojourn in Mexico that will last until his assassination in 1940, an event that
will further aggravate relations.
1942 Mexico agrees in the atmosphere of World War II and at US urging to reestablish diplomatic
relations with the USSR; the countries have few contacts in the years that follow.
1959 Mexico expels two Soviet intelligence officers for promoting a Communist-instigated railroad strike.
1971 Mexico declares five Soviet intelligence officers persona non grata in retaliation for North Korean
training, with apparent Soviet complicity, of Mexican "revolutionaries, " members of the
Revolutionary Action Movement.
1973 Mexican President Echeverria becomes the first Mexican head of state to visit the Soviet Union,
restoring relations to an even keel.
1975 Mexico and the USSR sign a major Scientific and Technological Cooperation Agreement.
1976 President Echeverria reportedly is irritated by a Soviet espionage attempt to penetrate the Office of
the Presidency. relents when the Soviets hastily
withdraw the offending "diplomat. "
1978 President Lopez Portillo pays an official visit to Moscow. Leaders of the two countries conclude a
new consular agreement.
1984 Several important Soviet officials visit Mexico to discuss substantive matters and attend
observances marking the 60th anniversary of diplomatic relations.
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In recent years, Mexico has sold the USSR coffee,
cocoa, and other agricultural products, as well as
sulfur and pipe for an oil pipeline. The USSR's chief
exports to Mexico have included T-25 tractors, which
are assembled in Mexico for domestic and foreign
sale, industrial machinery, and light manufactured
goods
In keeping with its general trade policy toward the
Third World, Moscow increasingly has sought to
revitalize commercial relations through countertrade
and joint ventures. The Soviet Union earlier this year
agreed to send technicians to help modernize and
expand Mexico's iron and steel industry. In return,
Mexico will provide the USSR with iron and steel
products, including pipes for the Soviet petroleum
industry.
Mexico to acquire advanced US oil-related
technology, including drill bits, blueprints, and
Cultural and Educational Cooperation
Cultural exchanges between the two countries also
have become more numerous in the past year. Many
of the events the Soviets have sponsored-theatrical
performances, folk concerts, fine arts exhibits, films,
and the like-have been associated with the 60th
anniversary of Soviet-Mexican diplomatic relations,
which occurred in 1984. The Soviets also have
promoted cultural ties through organizations such as
the Mexican-Soviet Institute of Friendship and
Cultural Exchange. Seven such centers in Mexico
sponsor Russian language training, offer lectures, and
provide access to Soviet and Communist literature. F
About 150 Mexican students are studying in the
USSR, according to Mexican officials. Ninety are
under a bilateral exchange agreement, and the
remainder, under the sponsorship of Mexican
a Plenary votes in UN general assembly as reported by US State
Department.
Communist groups. While many of the officially
sponsored students attend technical schools
throughout the USSR, the unofficial ones are
concentrated at Patrice Lumumba Friendship
University in Moscow, which provides political
training to Third World students. There are few
Soviet students in Mexico.
Soviet Objectives
The Soviets almost certainly view their diplomatic
efforts in Mexico as part of a broader attempt both to
enhance and legitimize their presence in Latin
America. They want to support their interests and
those of their clients in the region. The Soviets value
Mexico because of its longstanding friendship with
Cuba, their single most important client state in the
Third World. Moscow also wants to ensure that
Mexico City maintains its political and economic
support for the regime in Managua. Mexico has been
Nicaragua's principal advocate within the Contadora
group
The Soviets also use Mexico as a conduit for advice
and support to Central American groups they favor.
The fact that Mexico City has long provided a haven
for Latin American revolutionaries and their front
organizations has facilitated this activity. The
government of Mexico generally has granted foreign
dissidents of all ideological persuasions considerable
latitude so long as they do not interfere in Mexico's
internal affairs.
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Another Soviet objective in Mexico is to drive a wedge
between the United States and its southern neighbor
by exploiting nationalist and anti-US sentiment. In
Mexico, as elsewhere in the Third World, the Soviets
have used disinformation tactics and media
manipulation to influence the Mexican people and
government
According to the US Embassy in Mexico City, the
USSR has fabricated stories and had them planted in
the Mexican press to discredit the United States.
Among recent examples have been articles suggesting
that the United States engaged in chemical warfare in
Grenada and that terrorists, including members of the
Ku Klux Klan, threatened the safety of foreigners
attending the Los Angeles Olympic games. US
Embassy officials in Mexico City believe that the
Soviets and Cubans have Mexican reporters, some of
whom enjoy wide readership, on their payrolls.
In addition to direct Soviet disinformation efforts,
leftist and nationalist Mexican newspapers frequently
take anti-American stands and distort US policies.
Articles from Soviet and Cuban news services
routinely appear in the Mexican Government
newspaper El Nacional, as well as in more Marxist-
oriented publications.
Mexico itself is also a target of Soviet intelligence.
The Soviets probably recognize that they can best
pursue their political objectives by giving priority to
state-to-state relations with Mexico City. Mexico's
espousal of revolutionary causes and Third World
issues affords the USSR an opportunity to align itself
with Mexico on many issues and to gain propaganda
advantage by emphasizing similarities in policy.
Nonetheless, we have no evidence that Moscow is now
seeking to subvert the Mexican Government by
supporting terrorist or guerrilla groups.
The Mexican Perspective
In pursuing relations with the USSR, successive
Mexican governments have attempted to balance
their desire to demonstrate independence from
Washington with a wish to avoid actions that would
antagonize the United States. Mexico's leaders do not
appear to be particularly concerned about the
possibility of Soviet subversion and are more
interested in using the relationship to improve their
standing with domestic leftists and other Third World
nations. At the same time, we believe that the de la
Madrid administration is wary of Soviet intentions,
especially given occasional bilateral differences in the
past, and that the Mexican Government closely
monitors Soviet activities
We know little of Soviet contacts with leaders of
Mexico's Government and ruling party. We believe,
however, that Moscow has modest influence with
Mexico's leftist parties which, although small, weak,
and divided, have a disproportionate following among
Mexican youth.
Mexican officials probably are aware of Moscow's
modest support for the Unified Socialist Party and
other leftist parties. They do not appear to view the
Unified Socialist Party as a major threat to their rule,
however, since the leftists eschew violence and serve
as a counter to the even stronger center-right
National Action Party. Moreover, the leftists'
participation in elections lends credence to the
government's claim that the Mexican system is open
and democratic.
Moscow's efforts to gain greater influence also are
obstructed by the anti-Communist attitudes of much
of the Mexican church, most business leaders, and
military commanders. The military is basically pro-
Western, according to the US defense attache in
Mexico City, and the Mexican Government has
neither purchased Soviet arms nor accepted Soviet
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military advisers. The USSR and Mexico have done
little more than exchange accredited military
The Mexicans, for their part, will continue to pursue a
largely self-defined, highly nationalistic foreign
policy. Mexico City recognizes that the Soviets lack
the ability or willingness to assist Mexico in
overcoming economic difficulties and that Moscow
will be unable to offer investment funds or markets
for Mexican goods on the scale that Washington will.
Consequently, bilateral economic ties are unlikely to
expand significantly even though trade may increase
somewhat as the Mexican economy improves. The
greatest potential for increased commercial dealings
probably lies in countertrade, since neither country
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attaches.
The majority of the leaders of Mexico's influential
Roman Catholic Church are conservative, at least as
compared with their counterparts elsewhere in Latin
America. As a result, the general attitude of the
church in Mexico is one of mistrust of the Soviets.
Nonetheless, there exists a vociferous and active
minority of church leaders, especially in the south,
who espouse "liberation theology" and cooperate with
local leftists.
Prospects
We believe the Soviets will continue efforts to
increase their influence in Mexico over the next
several years but that they will realize few dramatic
breakthroughs. The gains they achieve are unlikely, in
our judgment, to jeopardize Mexico's nonaligned
status, imperil its stability, or significantly threaten
US interests in Mexico.
The greatest likelihood-we view it as an 80-percent
probability-is that Mexican-Soviet relations will be
friendly over the next several years but that each
country will exercise considerable caution in its
dealings with the other. We expect the Soviets to act
with circumspection, reasoning that they have more to
gain by maintaining Mexico City's favor than by
antagonizing it. Consequently, Moscow is not likely to
increase significantly its support for Mexican leftist
groups unless they show signs of becoming a more
viable political force. This, in turn, could occur in the
unlikely event the left acquires a charismatic leader,
succeeds in uniting disparate factions, or is able to
exploit more effectively Mexico's economic and social
problems
In official exchanges, Soviet and Mexican officials are
likely to stress points of convergence on international
questions. Moreover, the Soviets will seek to exploit to
their advantage any turbulence in Central America,
attempting to divert US attention and resources from
other areas more important to the USSR. They will
also try to use events in Central America for
propaganda advantage.
appears willing to spend hard currency. Mexico is 25X1
likely to insist on commercially viable terms in trade
deals, including possible oil swaps.
We expect the Soviets to continue to try to capitalize
on low-cost cultural, educational, and scientific
exchanges to increase their presence in Mexico. We
do not believe, however, that much of substance will
emerge from cooperation in these fields. Nor do we
believe that the conservative Mexican military will be 25X1
likely to purchase Soviet military hardware unless
weapons offered are made available on exceptionally
favorable terms.
Alternative Outcomes
There are a number of indicators that would lead us
to believe that Soviet activities in Mexico warrant
greater concern. We believe there is a 1 in 10 chance
that three or more of these events will occur before
the end of de la Madrid's term:
? An announcement that de la Madrid plans to visit
Moscow or to receive one of the Kremlin's most
senior officials.
? Conclusion of a major trade deal, possibly involving
increased sales of petroleum to Moscow's clients in
the region or of Western oil technology.
? A major decline in the Mexican economy, which
would add to dissatisfaction with the government
and present the Soviets with new opportunities.
? A dramatic increase in the number of Mexican
students being trained in the USSR.
? Soviet sales of military equipment to Mexico and
training of Mexican intelligence or military
personnel in the USSR.
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? Mexico's increasingly positioning itself with the
USSR and Cuba in international forums such as the
United Nations.
? A major falling but between Mexico City and
Washington, as might conceivably follow collapse of
the Contadora talks.
? A general strengthening of the left, which could
lead to greater Soviet support for Mexican leftists.
? A sharp rise in political instability which could
encourage Soviet sponsorship, either direct or
indirect, of groups trying to overthrow the Mexican
Government.
We think there is also a 1 in 10 probability that
Mexican-Soviet relations will markedly deteriorate in
the next several years. Indicators of such a trend
might be a shift in Mexican foreign and domestic
policy to the right, a further weakening of the
Mexican left, or exposure of Soviet meddling in
Mexico's internal affairs. Under such circumstances,
Mexico City would become less receptive to Moscow's
influence.
Implications for the United States
Mexico's long-held desire for independence from the
"colossus to the north" will provide Moscow with
opportunities to increase its influence at Washington's
expense. Nevertheless, geographic and economic
realities, strengthened by anti-Communist sentiment
in a variety of key sectors, will sharply constrain
Moscow's leverage. Mexico City will continue taking
foreign policy stands that agree with Moscow on
issues such as Central America, but these positions
will be generated more by Mexico's perceptions of its
own interests than by Soviet blandishments. Mexico
City, however, recognizes that continued economic
help from the United States is essential and will be
careful not to provoke more than occasional rebukes
from Washington
In our estimation, therefore, the Soviets will have only
limited success in their efforts to gain influence in
Mexico over the next several years. We believe the
threat the USSR poses to Mexico is of a less
immediate and longer term nature. Much will depend
on changes in Soviet objectives, on how conditions
evolve within Mexico, particularly in the economic
domain, and on the level of tension in Central
America. Meanwhile, US interests will best be served
if the Mexican political system and economy remain
strong and sufficiently resilient to withstand the
formidable challenges they now face
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Cuba: Cracks in the Isle of Youth
Showcase
One of the Castro regime's most appealing Potemkin
villages is the group of 21 secondary schools for some
12,000 foreign teenagers on the Isle of Youth, a large
island south of the Cuban mainland. The regime
explains that the schools are Cuba's unselfish,
disinterested contribution to improving the plight of
the Third World through education. Ethiopian youths
orphaned by the war in the Ogaden in 1978, for
example, are offered scholarships that provide for all
their physical and educational needs through junior
and senior high school, which in some cases amounts
to a stay in Cuba of up to eight years. The schools,
which have received generous coverage in Cuban
publications intended for foreign audiences, have
become a mainstay of the itinerary of showcases that
Havana displays for foreign visitors.
secondary education ro ram includes a strong dose
of military trainin .
Foreign Student Enrollment on
the Isle of Youth
Total 11
21
11,925
Ethiopia
4
2,386
Mozambique
4
2,303
Angola
4
2,193
Nicaragua
2
1,196
Namibia
2
1,180
Congo
1
588
Sahara Democratic
Arab Republic
(Polisario)
1
580
South Yemen
1
547
Guinea-Bissau
313
evidence to date to belie Cuba's claims that the
students receive only academic training.
The Isle of Youth
The sparsely populated Isle of Pines-an island of
some 2,200 square kilometers lying south of western
Cuba-was renamed the Isle of Youth in August
1978 in honor of the burgeoning population of
teenagers sent there to work in the citrus groves while
attending high school. As new schools were built
among the groves, some were earmarked for foreign
students to complement the Castro regime's growing
political and military involvement in Africa. By mid-
1979, some 6,000 young people from Angola,
Ethiopia, Mozambique, and Namibia-sponsored by
the South-West Africa People's Organization
(SWAPO) guerrilla organization-were attending
classes and doing agricultural work on the island.
Today, that figure has doubled and new schools have
been opened for pupils from Nicaragua, Guinea-
Bissau, Sao Tome and Principe, Congo, Ghana, the
Saharan Democratic Arab Republic (the self-
proclaimed government of the Polisario), and South
The Isle of Youth is ideally suited for isolation of the
foreign students. Separated from the rest of Cuba by
the Gulf of Batabano, the island can be reached only
by tightly controlled air and sea routes, and those
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tiring of the scholastic routine or work in the fields
have no way to escape.
The.high school program on the island began in 1971
when the first of the now more than 60 secondary
schools was built, with the intent of drawing young
Cubans away from the influence of their parents and
providing an easily controlled labor force for the
expanding citrus industry. The influx of foreign
students began after the Cuban intervention in
Angola in 1975, which opened up a new era of
enhanced Cuban influence in the Third World.
Today, the student body-Cuban and foreign-
comprise well over a third of the total population of
the Isle of Youth.
The scholarships offered by the Castro regime to
foreign students are based on bilateral agreements
between Havana and the governments of the recipient
countries. There seems to be little variation in the
details of the arrangement. The standard agreement
requires Cuba to cover the cost of tuition, room and
board, books, clothing, transportation within Cuba,
and pocket money for both the students and the
teacher-chaperones who accompany them. The
country receiving the scholarships must pay the
salaries of the teacher-chaperones as well as all
transportation costs to and from Cuba. F__1
Political Indoctrination
Havana clearly sees the program as an important
element of propaganda, enhancing Cuban prestige
while flaunting the alleged superiority of Cuba's
social system. The provision of scholarships-many
are offered to sons and daughters of government
officials and other important political figures-leaves
the recipient countries in Cuba's debt and provides
Havana the opportunity to politicize the youths, some
of whom will eventually play a key role in the political
life of their homelands.
Although some recipient countries take special pains
to emphasize that courses in Marxism-Leninism are
not part of the curriculum, there can be no doubt that
substantial politicization takes place at the schools.
Marxism-Leninism is the basis of the Cuban
educational system, and, while formal classes on the
subject may not be part of the curriculum for foreign
students, informal indoctrination is achieved through
Saharan students in their school's 'friendship
room. "Note the stacked toy rifles in front of a
mockup of a desert camp
the Cuban interpretation of such subjects as
economics, sociology, and history. Moreover, because
Havana controls virtually all news and entertainment
reaching the students, they have no alternative
sources of information about world events. F_~
It is the students themselves who provide the best
evidence of their indoctrination. One Nicaraguan
described the work-plus-study regimen at the schools
to a visiting Western journalist as "the
implementation of the Leninist concept to form the
new Soviet man." The schools are adorned with
revolutionary banners and political decorations, and
the student body is taught to parrot revolutionary
slogans.
In addition to the informal indoctrination provided by
the Cuban Education Ministry, Cuba's Institute for
Friendship With the Peoples in mid-1983 wanted to
begin its own political orientation for the youths,
Perhaps as a result of the proposal, the
political work of the Education Ministry is now
supplemented by elements of the Cuban Communist
Party at each of the schools. The party Central
Committee's Revolutionary Orientation Department,
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which oversees the Castro regime's propaganda
apparatus, has cells at each school and holds weekly
meetings "to discuss existing problems and
difficulties."
The Schools
Each school is a self-contained unit comprising about
600 students, 50 teachers, and 20 support personnel.
Like the students, the staff lives at the school and
provides 24-hour supervision. Each school compound
contains three main buildings: one for classrooms and
labs, workshop, bookstore, library, and administrative
offices; a second for student and staff dormitories, a
theater, and a dispensary; and a third for general
storage, dining room, and kitchen. The school is
surrounded by some 600 hectares of citrus groves
where the students cultivate the soil and pick fruit as
part of the daily work-study program in effect at all
Cuban secondary schools in the countryside. The
students are also responsible for groundskeeping
duties within the compound and for the internal
cleanliness of the school buildings. Their labor
presumably helps to defray the costs for Havana of
educating the foreign students.
For recreation, each school is equipped with athletic
fields. The school for students from Ghana, for
example, has baseball and soccer fields, two volleyball
courts, and two basketball courts, one of which has
been converted by the students into a badminton
court. The school also has a 16-mm projector, and
Ghana's Ministry of Information has provided films
for itj
Usually, only one nationality is present at a school.
When some countries, however, have fewer than 600
students to send to Cuba, the nationalities in a school
are mixed. Angola, Mozambique, Ethiopia,
Nicaragua, Namibia (SWAPO), Ghana, Congo, and
South Yemen all have sent groups in multiples of 600
and thus have no intermingling of nationalities unlike
the smaller contingents from Guinea-Bissau and Sao
Tome and Principe. The length of stay on the Isle of
Youth depends on each student's previous level of
education; some are selected to spend as much as
eight years on the island
Military Training
Despite broad coverage of these schools in the Cuban 25X1
media and in the press of the countries having
students on the Isle of Youth, there has been no
mention as yet of military training in the curriculum.
The first hint that the curriculum included military
studies surfaced when a Namibian student, in talking
with a Western visitor, said he would return to Africa
after his schooling and would help to liberate his
homeland. When pressed about military training, the
student became reluctant to continue the conversation
and was later questioned closely by a Cuban official
at the scene.
in addition to its conventional academic departments,
has a military department monitored by the Cuban
armed forces. The military department is given equal
emphasis with the academic departments, and the
courses stress the military responsibilities of the
individual, as well as an orientation toward developing
militias and other military reserve organizations.
Most of the subject matter deals with conventional
warfare, although there is some instruction on
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countering chemical warfare and other less
conventional tactics. The classroom work at the
secondary schools is supplemented by field exercises,
usually for one week, at six-month intervals. Each of
the secondary schools participates in these exercises
on a rotational basis. The exercises consist primarily
of demonstrations and lectures, with minimal hands-
on experience, and are not intended to provide
intensive, practical training to the students.
two military schools that
operated autonomously from the secondary schools
and from each other. Both military schools are
attended exclusively by male students. One provides
training to students from Nicaragua, South Yemen,
Angola, Congo, and Mozambique.
the length of training for each national group
this military school has no fence
around it because the Cubans want it to look like one
of the secondary schools, which are all of similar
design. The military school is located about 8
kilometers from the town of La Fe,
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,ea re$
additional artillery training is provided for
Training at this school includes conventional
academic subjects, as well as small arms and artillery
familiarization and survival courses taught by armed
forces personnel. The military courses last from
several months up to a year. Part of the training,
consists of a weeklong
survival exercise in the field where each of the
brigades of students learns how to find its way across
country in rough terrain. During the exercise, the
students are taught how to forage for food, traverse
swampy areas using ropes, build shelters, use knives in
combat, and set up ambushes.
the second military school is
exclusively for Nicaraguan students, and provides a
five-year training program. Upon completion of their
studies at this facility, the Nicaraguan students are
selected to attend Cuban and Soviet military
academies and later to serve in the Nicaraguan armed
forces.
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of Youth
~he
first military school as well as the artillery range to
the east of La Fe. the
school is flanked on its east side by an obstacle course
and a field training area, on the southwest by artillery
training positions, and on the north by a parking area
for trucks. Except for the obstacle course and the
artillery positions, which are not readily visible from
the road, the military school could easily be mistaken
for one of the many secondary schools that dot the
island. The photographic survey also confirms the
location of the second military sch
is used only by Nicaraguans.
there have been frequent
disciplinary problems with the students enrolled at
both the secondary schools and the military training
facilities. The most common problems include
speaking out against Communism, disobeying orders,
and the students' intense desire to return home. Many
students find it impossible to adjust to the cultural
changes and hundreds sometimes have to be sent
home in the early stages of the training. Students also
resent the rigid discipline-the brigade structure and
three dormitory inspections daily are designed to
discourage individualism-and many have been sent
home for poor behavior. One African contingent of
2,400 scholarship holders was apparently reduced by
about 15 percent in the first year largely because of
the problem of incompatibility.
With little to occupy their off-hours, the students have
developed their own pursuits to pass the time. The
pregnancy rate among the female students is high and
has caused many to be sent home short of completing
their studies. Even the secondary schools for Cuban
students on the island have gained a bad reputation
because of the pregnancy problem.
Deporting Troublemakers
The African students, in particular, reportedly have
had trouble adapting and have stolen food from
farmers, damaged school property, and sold their
clothing to farmers and then reported the items as
stolen. In 1984, the government deported large
Typical Weekday for Foreign Students
on Isle of Youth
Reveille; prepare for the day; first
dormitory inspection.
Students enter dining hall for breakfast
by brigade.
Go to work or classes by brigade.
Students return from work or classes;
second dormitory inspection; lunch by
brigade.
Back to classes or work by brigade.
Work or school ends for the day;
recreation; prepare for third
dormitory inspection.
Formal dormitory inspection.
Students go to dinner by brigade.
Recreation.
Bedtime.
Lights out.
numbers of Angolan students by air to Luanda,
The most serious incident that has come to light thus
far involved Angolan students in 1982. Angered by
the work regime, the curriculum, and their Cuban
instructors, the students rebelled by cutting down
citrus trees and destroying sugarcane
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Angolans reportedly died before the students were
brought under control.
These longstanding problems at the Angolan schools
apparently required President dos Santos's personal
attention during his trip to Cuba last March.
Although he did not have time to visit the schools, he
reportedly sent an intermediary with a message for
the students and teachers promising some reforms
would be made. Complementing the carrot, dos
Santos also resorted to the stick. Reportedly, two
dozen students expelled by the Cubans for criminal
activities and insubordination were sent home in
April. The tough treatment they received was
intended as a deterrent to promote discipline among
those still in school.
Problems at the schools are not limited to the Angolan
students. The US Embassy in Addis Ababa learned
from local officials that Ethiopian students returning
home were not in the best of health, because of their
diet in Cuba that consisted primarily of starch with
little protein. Some reportedly had mental problems
caused by trying to cope with the hard life in Cuba,
while others had trouble readjusting to Ethiopian life
after coming home. One senior Ethiopian Government
official noted that, in sending the children to Cuba,
his government is accomplishing the opposite of what
was intended: returning students were embittered at
the Ethiopian Government and at Communism in
general.
Nicaraguan students caused problems not long after
they first arrived on the Isle of Youth in 1980. Their
most persistent complaint was not being able to attend
Mass on Sunday because of Cuban efforts to restrict
religious practices. The matter was not resolved until
Nicaraguan Archbishop Obando y Bravo visited the
Conclusions
While the Cuban media consistently give glowing
accounts of the program's alleged success, Havana
may in the long run find that, far from shaping the
future leadership of its allies in the Communist mold,
the hardships endured at the schools cause many
potential leaders to return home harboring animosity
toward Cuba and its politicoeconomic system. In
theory, the scholarship program has great political
and humanitarian appeal, but, like so many of
President Castro's grandiose schemes, the practical
application of the program is hampered by political
complications, ideological restrictions, managerial
ineptitude, and a lack of material resources.
Moreover, the military training aspect may make
Cuba's scholarship offers unpalatable to a number of
Third World countries without contributing
significantly to the skills of those students who go
through the abbreviated course at the first military
school. On the other hand, the second military school,
used as a preparatory academy solely for Nicaraguans
prior to their graduation to officer training schools in
the USSR and Cuba, may play an important role in
the ideological formation of those youths who will
eventually provide the leadership of the Nicaraguan
armed forces.
In any case, we believe Castro is likely to continue
promoting the program because of its showcase value.
It is a tangible demonstration of Cuban generosity
and underscores Havana's permanent commitment to
helping the Third World overcome underdevelopment.
Castro has been aware of the program's shortcomings
for years, and judging from his efforts to expand it-
four specialty polytechnical schools serving 1,800
students will open this September-he has decided
that its merits far outweigh its drawbacks.F__1
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Uruguay: Sanguinetti
and the Military
The Uruguayan armed forces will turn over power to
President-elect Julio Sanguinetti on 1 March, ending
more than 11 years of military rule. Predominantly
conservative and anti-Communist, the military
strongly favored Sanguinetti's centrist Colorado Party
over its center-left and leftist rivals in the November
1984 election. Sanguinetti has indicated that he will
generally pursue cautious policies to avoid angering
the armed forces. Military leaders, however, may be
displeased with some steps he is likely to take in the
areas of foreign policy and the military budget.
some officers have
remained opposed to the restoration of civilian rule,
but most support it out of desire to shed responsibility
for the country's worsening economic difficulties. The
armed forces have also been influenced by the return
of democracy in neighboring Argentina and other
South American countries.
The Commander in Chief of the Army, Gen. Hugo
Medina, has been a key figure in the transition
process.
Medina has strongly supported Sanguinetti, believing
him to be the only politician capable of leading the
country through a smooth transition. Medina, said to
be highly respected within the armed forces,
reportedly is working hard to convince fellow officers
that they have no reason to fear civilian rule under
Areas of Agreement
Implementation of the 1984 Accord. Sanguinetti
apparently plans to honor the agreement that he and
his party reached with the armed forces in August
1984, paving the way for the restoration of civilian
rule. The accord-which was strongly opposed by the
Colorados' main rival, the center-left Blanco Party-
provides for limited military participation in the new
government during its first year in office. For
example, it calls for the formation of a National
Security Council, composed of both military and
civilian members, that will serve in an advisory
capacity. It also grants the armed forces a voice in
appointments of senior military officers. A constituent
assembly will be convened later this year to work out
constitutional reforms that would replace these
transitional arrangements.
the military supports Sanguinetti's
approach to the sensitive issue of amnesty for political
prisoners. While the Blancos and the leftist Broad
Front coalition, Uruguay's third main party, advocate
a general and unconditional amnesty for all of the
approximately 500 people imprisoned on political
grounds, Sanguinetti favors immediate release only
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The cases of those jailed earlier on charges of
involvement in far-left guerrilla activity against
elected Uruguayan governments will be considered by
the courts on an individual basis. Military acceptance 25X1
of Sanguinetti's policy on this issue is reflected in the
outgoing regime's recent decision, reported by the US
Embassy, to free many of the post-1973 political
prisoners before leaving office.
Punishment for Human Rights Abuses. Many
members of the Blanco and Broad Front parties have
demanded that the new government use civilian courts
to prosecute military officers accused of committing
human rights violations during the period of military 25X1
rule. Sanguinetti and the Colorados, however, will not
pursue civilian prosecution of these officers, but will
leave the question of trials to the military courts,
according to US Embassy reporting. This is the
a roach that militar leaders have insisted upon.
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Economic Policy. We believe the Sanguinetti
government also will pursue economic policies
acceptable to the military as it confronts a four-year-
old recession, inflation that is 70 percent and rising,
15 percent unemployment, and a $5.5 billion foreign
debt. Sanguinetti and other Colorado leaders have
indicated that they are not planning any sharp
departures from current economic policies. According
to US Embassy and other reporting, the new
government will try to stimulate private industry and
preserve the outgoing regime's free-market approach.
Although the Colorados may seek greater government
control over the banking sector, they do not favor
bank nationalization as advocated by the Blancos and
the Broad Front. The Colorados plan to look to the
United States and other Western countries for aid and
trade concessions.
Labor. Sanguinetti's policy toward the restive labor
unions is also likely to meet with the approval of the
anti-Communist military leadership. His goal is to
weaken the strong influence that Uruguayan
Communists have long wielded within the labor
movement. His plan, which he has discussed publicly,
is to seek legislation providing for secret-ballot voting
in strike calls and elections of union leaders.
Sanguinetti apparently believes that such a reform
would lead eventually to a more moderate and more
pluralistic labor movement. According to US
Embassy reporting, however, the new government
may delay introducing its planned labor legislation to
give moderates within the unions time to get
organized.
Sanguinetti for the most part will follow policies
palatable to the armed forces, for political reasons he
may take some foreign initiatives that would not be
well received by military leaders. Moreover, budget
considerations may force him to cut military spending
below the levels sought by leaders of the armed forces.
Foreign Policy. According to US Embassy
Sanguinetti's foreign policy will emphasize
ties with the United States, Western Europe, and
Uruguay's South American neighbors. Nevertheless,
e also intends to
reestablish diplomatic relations with Cuba, expand
cultural and commercial ties with the USSR, and
possibly upgrade relations with Nicaragua by
permitting Managua to open an embassy in
Montevideo. In addition, we believe he may
periodically criticize US policy in Central America.
Sanguinetti recognizes that the military would be
displeased by such actions. He probably reasons,
however, that military commanders generally support
him and are unlikely to challenge his diplomatic
initiatives early in his administration. He apparently
is more concerned with keeping leftist political
opponents off balance through measures that reflect
an independent foreign policy.
Military Budget. Because of the financial squeeze
facing Uruguay, the new government almost certainly
will closely examine military spending. It is likely to
impose restrictions on military wage increases and on
purchases of new equipment and supplies. Sanguinetti
also has said publicly that he will gradually reduce the
number of military personnel, which has nearly
doubled to 68,000 in recent years. Although these
policies run the risk of sparking military resentment,
Sanguinetti has indicated that he will proceed as
cautiously and flexibly as possible and look for ways
to soften the impact of cuts
Outlook
We believe that the new government's overall policy
mix will be accepted by the armed forces, at least
during the early stages of civilian rule. Moreover,
Sanguinetti is an adroit, careful politician who is
likely to pursue his policies with prudence and
flexibility. He will also be careful to appoint
commanders who favor keeping the military out of
government and focused on professional pursuits.
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The danger of a military move against Sanguinetti
will grow if he proves unable over time to ease
Uruguay's economic troubles and bring labor unrest
under control. A resurgence of leftist-led political
violence stemming from a prolonged period of
ineffectual civilian rule would further heighten the
chances of military intervention.
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elite City
Dangriga
onduras
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District with United
Democratic Party winner
Cayo District where leftist
West candidate was defeated
- District boundary
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secret
Belize: Impact of the Election
The overwhelming defeat of Prime Minister Price and
his longtime ruling party in national elections on 14
December was a dramatic setback for the party's
small but influential leftist faction, and divisive party
infighting seems likely. The victorious United
Democratic Party probably will work for closer
cooperation with the United States and other Western
nations, especially on economic matters, which will be
a top priority for new Prime Minister Manuel
Esquivel. We believe the new administration's
mandate will soon be severely tested by mounting
economic difficulties that will complicate efforts to
maintain modest government services, pay civil
servants, and sustain essential imports-especially
food and fuel-at current levels.
Results and Surprises
Over 77 percent of the country's more than 61,000
eligible voters exercised their franchise in the first
national election held since Belize gained
independence from Britain in 1981. Historically,
however, this was a relatively low turnout for a
general election in Belize, where, for example, almost
90 percent of the electorate went to the polls in 1979.
In addition, the US Embassy notes abstention rates in
several key Belize City districts ranged from 30 to 40
percent, suggesting that the United Democrats were
assisted by ruling party supporters who stayed home.
In the biggest surprise, Price-a moderate who had
won every election since Belize attained self-rule from
the United Kingdom in 1964-lost his seat in the
House of Representatives to a 25-year-old political
novice. Price apparently will try to regroup his party,
he will
soon begin a countrywide tour to assess the party's
organization and support at the grassroots level,
presumably in anticipation of local town board
elections scheduled for March 1985.
Meanwhile, the defeated People's United Party
returns only six incumbents-a mixture of moderates
and conservatives-to the House, where before recent
redistricting it held 13 of 18 seats. The opposition,
however, returned all four of its incumbents and swept
all 10 of the new electoral divisions in garnering 21 of
28 seats in the expanded House.
Setback for the Left
Virtually all of the former ruling party's leftist
candidates, including pro-Cuban Health Minister
Shoman and Education Minister Musa, were
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explain away its election losses. Reporting from the
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odds with Price over his occasional concessions to the
left. Failing that, Musa reportedly is prepared to form
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Curl Thompson
Dean Lindo
Israel Alpuche
Philip Goldson
Elodio Aragon and
Deputy Ruben
Campos
Charles Wagner and
Deputy Sam Rhaburn
Derek Aikman and
Deputy Henry Young
Prime Minister/Defense/
Finance/Social Security
Deputy Prime Minister and
Minister of Home Affairs/
Establishment
Foreign Affairs/Economic
Development
Energy/Communications
Local Government/Social
Services and Community
Development
Attorney General/Housing
Health/Labor/Sports
Education/Youth/Tourism/
Transport
Commerce, Industry,
Fishing, and Cooperatives
would play a role in such a project. Castro probably is
stung by the left's crushing defeat, but he is likely to
continue seeing prospects of formalizing relations with
Belize tied to the long-term fortunes of Shoman,
Musa, and other leftists.
Foreign Policy
The new government is unlikely to depart
dramatically from its predecessor on most foreign
policy questions. While the conservative Esquivel
probably will abandon Price's generally neutral stand
on East-West issues, he is not uncritical of US policy
and remains wary of Washington's political and
military power. Even so, we believe the new
government will seek somewhat closer cooperation
with the United States on a broad range of issues,
including drug eradication and regional security
policies. Esquivel, for example, already has announced
that his government will crack down on the country's
growing drug problem, and that it would consider
permitting the US Army School of the Americas-
recently closed in Panama-to relocate in Belize if
such a proposal were put forth. The new Prime
Minister also has indicated that he is not opposed to
the recently agreed upon construction of a Voice of
America radio station in Belize, although he did
express concern that the facility might become a
target for Guatemalan insurgents or other radicals
In dealing with Belize's most nagging foreign policy
problem-the border dispute with Guatemala-
Esquivel appears ready to take a harder tack than his
predecessor and has indicated that "dialogue with
Guatemala must start from zero." Nevertheless, we
expect Esquivel to depart from Price's policy of
excluding the opposition by asking People's United
Party members to join the UK-Belize negotiating
party. Such a move, in our opinion, would provide
both continuity to the talks and ultimately contribute
to a nonpartisan approach to the politically sensitive
problem.
Economic Woes
We believe Esquivel will give top priority to Belize's
flagging economy, which remains overwhelmingly
tied to sugar and related products. The recession in
the sugar industry-which accounts for some 20
percent of GDP and almost 60 percent of Belize's
domestic exports-has weakened the country's
balance-of-payments position and strained
government resources. Price had attempted to ride out
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the slump in sugar prices by cutting government
spending, implementing utility rate hikes, and
imposing limited tax increases. Nevertheless, these
measures-coupled with nearly 14-percent
unemployment and a $13 million trade deficit in the
first half of 1984-apparently contributed to the
ruling party's defeat.
The former government's recent success in securing a
$7.2 million IMF standby arrangement should help
Esquivel in his initial efforts to bring about economic
recovery. The Fund is likely to require new taxes,
dismantlement of government subsidies, and
reorganization of inefficient public enterprises.
Adherence to the IMF program may forestall the
need for more drastic measures such as devaluing the
currency, cutting the government payroll, and
reducing public services.
Nevertheless, any prospect of sustained economic
growth will require diversification of Belize's
economic base and long-term development
improvements. In this regard, Esquivel is likely to
focus on the agricultural and tourism sectors, and he
recently indicated that he will pursue increased
foreign investment in Belize, particularly through
closer economic ties with the United States.
Outlook
Efforts by the domestic left to retake the initiative-
and through them the potential for Cuban inroads-
are likely to be undercut if the new government
succeeds in reviving the economy. On the other hand,
lack of progress will quickly end the honeymoon the
new administration currently enjoys. Meanwhile, the
Esquivel government will need increased infusions of
economic assistance, and it almost certainly will seek
relief from Washington through stepped-up economic
and security programs.
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Dominica: Election Prospects
Faced with a deadline this September for calling
elections, Prime Minister Eugenia Charles is
increasingly concerned about the left-leaning
opposition and the island's prolonged economic
difficulties. Efforts by opposition parties to form a
united front to challenge the ruling Freedom Party
apparently are stalemated despite Cuban offers of aid
contingent upon a formal alliance agreement. Since
the 1980 election, popular support for the Freedom
Party has diminished because of the slow pace of
economic recovery. Nevertheless, opposition efforts to
capitalize on the country's financial woes probably
will encounter limited success as long as factionalism
and personality conflicts persist among the opposition
parties.
Opposition Strategies
Cuban prodding of the opposition to unify has had
only limited success to date.
during
the conference of Caribbean leftists in Havana last
June, representatives from the three Dominican
opposition parties-the Dominica Labor Party (DLP),
the United Dominica Labor Party (UDLP), and the
Dominica Liberation Movement (DLM)-were told
that, unless they formed a united front by September
to challenge the Freedom Party in the next election,
all Cuban funding to them would be withheld.
Although this deadline was missed, Havana probably
still would not refuse aid if the parties could reach a
formal agreement soon. Opposition leaders claim that
all three parties have agreed not to field candidates in
the same constituencies, and a roster of candidates
was tentatively approved in a meeting in late August.
Nevertheless, talks apparently remain stalemated over
the choice of a leader F_ I
A victory in a local election in Portsmouth last August
by the United Dominica Labor Party strengthened
the resolve of its leader, Michael Douglas, to head the
proposed opposition alliance
Douglas's party captured all five seats, defeating
candidates from the ruling party and the Dominica
Labor Party. Douglas's hopes, however, will be
diminished by the fact that Portsmouth is Douglas's
home district and traditionally has been the United
Dominica Labor Party's only stronghold. The party
has yet to demonstrate an ability to gain support on a
national level.
The outcome of a legal appeal by former Prime
Minister Patrick John also is likely to affect the
future of the opposition coalition significantly. In
1980, John-then leader of the Dominica Labor
Party-was charged with plotting to overthrow the
government. Although he was acquitted, the
government appealed the decision, and the London
Privy Council is scheduled to hear the case this
month. Efforts by Oliver Seraphine, who succeeded
John as party leader, to improve the Dominica Labor
Party's image could be set back when the case is
reopened, costing the party some popular support.
Moreover, should John be acquitted, he almost
certainly would try to resume a dominant role in the
party, thereby increasing the friction over the question
of alliance leadership
Statements made to the press by leaders of both labor
parties indicate that they are wary about the Marxist
Dominica Liberation Movement participating in a
unified front. The Movement, which had supported
the Bishop government, lost much of its popular
appeal following events in Grenada in late 1983. In
recent months, the Liberation Movement has toned
down its rhetoric. Opposition leaders remain
concerned about the Movement's Marxist orientation,
but they believe that in a close race Liberation
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Movement votes-which accounted for 10 percent of
the popular vote in the 1980 elections-could prove to
be crucial.
The Economic Picture
The economic problems that beset the country during
the late 1970s-especially poor agricultural
performance and dwindling private investment-were
worsened in 1979 by the effects of Hurricane David
on the-island's banana crop. Bananas account for
nearly two-thirds of Dominica's export earnings. As a
result of the storm damage, real GDP declined by 11
percent in 1979. A subsequent surge in foreign aid
largely offset the drop in banana revenues, and,
according to IMF figures, the economy grew by 8
percent in 1980.
The rapid economic recovery in 1980, which was the
Freedom Party's first year in office, unrealistically
raised popular expectations for continued economic
improvement. Low world commodity prices and the
decline of the UK pound sterling since 1980 have
derailed the ruling party's promise to turn the
economy around. Moreover, a heavy wind storm last
August destroyed an estimated 25 percent of the
banana crop, according to the Dominica Marketing
Corporation. Economic output can again be expected
to show little or no growth in 1985 unless sizable
amounts of foreign economic aid are forthcoming.
The government is trying to reduce the country's
dependence on bananas by encouraging agricultural
diversification and expansion of light manufacturing.
Most of the 50 or so manufacturing firms in Dominica
are engaged in agricultural processing, mainly
coconut oil, soap, and lime and grapefruit juice. With
the help of foreign investors, the government hopes to
develop labor-intensive export industries such as
electronics assembly and garment and toy
manufacturing. Much remains to be done, however.
Without significant improvements in air service and
basic infrastructure, foreign investors will continue to
be discouraged. For the same reasons, the
government's plans to develop tourism are unlikely to
meet with much success.
Ruling Party Prospects
Despite Prime Minister Charles's energetic efforts to
attract foreign aid and investment, the progress
achieved so far has not translated into political
support. Unemployment, particularly among youths,
remains high, and prospects appear dim for
improvement in the near term. As a result, popular
support for the ruling party has lessened somewhat,
particularly in the rural districts, where it is regarded
as favoring the middle and upper classes.
Despite the economic problems, the Freedom Party
probably will win a second term, although the
opposition's fledgling electoral cooperation makes it
unlikely that Charles will repeat her landslide victory
of 1980. We believe the Prime Minister will call a
snap election, probably in April or May, hoping the
opposition will be unprepared to put together an
effective campaign. The inability of the opposition
parties to reach an accord on leadership will remain
an overwhelming stumblingblock to full opposition
unity. The possibility of a formal agreement cannot be
ruled out inasmuch as Cuban promises of financial
support might be a strong enough incentive for
opposition leaders to put aside temporarily their
personal ambitions. Such an agreement, however,
would be an uneasy marriage of convenience and
unlikely to last. In addition, memory of events in
Grenada probably would discourage the conservative
Dominican populace from favoring a government with
leftist inclinations and support
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Outel CL
Latin America
Briefs
In an effort to improve what President Castro recently acknowledged as a
phenomenal shortage of housing, the government has passed a new law that will
convert most renters into homeowners. The law, which becomes effective in July,
will permit Cubans who now pay rent to the state to become owners of their homes
and to continue payments only until the price of their residence is met. It also
permits property owners to rent rooms for a limited period and to sell their
property at freely established prices. In addition, the law allows the Cuban savings
bank to make low-interest loans for new construction and home improvement.
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improve the deteriorating housing situation. The public, however, may not greet
the changes enthusiastically because strict payment provisions will raise costs for
households that have paid only token amounts for rent. The shortage of
construction materials may also hinder new home construction and renovation.
The government's vigorous publicity campaign for the law probably is intended to
soothe opposition by hardline Communist officials to creating a landlord class and
a free housing market. Moreover, Castro's public support for the law may indicate
that his more pragmatic advisers are gaining influence in economic policy making.
Havana has approached its commercial and Western government creditors to
request the refinancing of principal payments coming due in 1985, only weeks
after concluding the 1984 rescheduling agreement with private banks. A task force
of official creditors is planning to travel to Havana in March or April to assess
Cuba's compliance with 1984 performance targets and to open the third round of
negotiations on Cuba's debt. Under a clause in the last Paris Club agreement,
official creditors agreed in principle to restructure Cuba's 1985 debt if Havana
abided by the 1984 program.
Based on a recent report by the National Bank of Cuba, which shows a surge in
hard currency imports and a lackluster performance of sugar and other exports
during the first part of 1984, Havana probably missed the creditors' targets for
convertible currency trade and balance of payments. Nonetheless, Havana will
probably cite its success in rescheduling payments owed to the socialist bloc,
Moscow's recent agreement allowing Cuba to continue to resell Soviet-supplied
petroleum products for hard currency, and President Castro's calls for economic
austerity measures as evidence of Cuba's creditworthiness.
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Colombia General Vega Appointed Defense Minister
President Betancur has named Gen. Miguel Vega Uribe as Defense Minister
following the recent death of Gen. Gustavo Matamoros after a lengthy bout with
liver cancer. Because Vega has served as acting defense minister for the past eight
months, his appointment probably heralds no major change in the country's
defense policy. Vega was widely considered the preferred candidate of most senior
officers, and his selection probably has bolstered support for Betancur in the
military.
who maintains an uncompromising attitude toward the guerrillas.
a skilled political infighter who is likely to avoid
provoking public confrontations with Betancur. Although Vega is occasionally at
odds with the President over how to deal with the guerrillas,
his differences with Betancur have narrowed as the result of recent protracted
conflicts between the Army and 19th of April Movement insurgents
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Cuba Chronology
25 November- Mozambican Minister of Foreign Affairs Chissano visits Cuba. An agreement on
1 December ideology, a cooperation accord, and a protocol of cultural exchange are signed
between the PCC and Frelimo Party.
I December Raul Castro heads a military ceremony commemorating the 28th anniversary of
the Granma's landing and the founding of the FAR.
2 December Horst Dohlus, member of the Politburo and Secretariat of the Socialist Unity
Party of Germany, visits Havana. Politburo member Jose Ramon Machado greets
him at the airport.
Thousands of Cubans who came to the United States in the 1980 Mariel boatlift
line up at registration centers in the United States to begin the process of
becoming US citizens.
Mpinga Kasenda, permanent secretary of the Political Bureau of Zaire and Luis
Delgado Perez, the new Cuban Ambassador to Zaire, discuss cooperation in the
fields of culture, health, and agriculture.
4 December Havana press reports that a group of Cuban specialists, experts in small water
reservoirs, are currently in Ethiopia to help with the government's plans for
resolving the drought.
5 December Minister of Culture Armando Hart opens a seminar on US minorities. He says the
role of US communities can be decisive in achieving a future of unity and peace on
the American continent.
6 December Three cooperation agreements in the areas of public health, agriculture, and sports
are signed with Zambia in Havana.
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7 December The Vietnamese ship To Lich arrives in Havana after 35 days at sea, signaling the
inauguration of maritime service between Cuba and Vietnam.
The Foreign Ministry reports that the third round of talks on immigration matters
between the United States and Cuba ended on 5 December. Vice Foreign Minister
Alarcon headed the Cuban delegation.
10 December Vice Minister of the Sugar Industry Garcia announces in Mexico City that
Mexico and Cuba will implement a joint program for the construction and
modernization of sugar mills.
11 December Carlos Rafael Rodriguez meets with the secretary of Guyana's People's
Progressive Party, Cheddi Jagan, in Havana to discuss the situation in Central
America and the Caribbean and the world's economy.
US Administration officials report that the United States and Cuba have reached
a basic agreement to return to Havana about 2,500 "undesirable" refugees and to
allow some 20,000 Cubans to immigrate annually.
13 December Justice Minister Reguerira and Cape Verdian Finance and Economy Minister
Lopez da Silva sign a protocol in Havana on economic and scientific and technical
cooperation.
In an interview with Prensa Latina, Foreign Minister Malmierca reiterates that
Cuba supports the negotiations between Venezuela and Guyana to resolve their
disagreement over territorial issues.
14 December Fidel Castro delivers a nationwide radio and television speech in which he terms
the immigration agreement with the United States as "positive and constructive."
Fidel Castro and Ethiopian Chairman discuss the current situation and
cooperation between the parties and governments.
15 December The National Bank of Cuba signs an agreement in Paris with international banks
to reschedule its 1984 foreign debt of approximately $1 billion over nine years,
with a five-year grace period.
17 December Deputy Chairman of the USSR Council of Ministers meets with Cuba's
Ambassador to the USSR Soto to discuss the development of petroleum
production in the Varadero-Cardenas Basin.
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18 December Minister of Industry and Commerce of Equatorial Guinea discusses the
possibilities of developing commercial and entreprenurial activities with Cuban
Ambassador Ortega.
19 December Talks between Yugoslav Deputy Foreign Secretary Loncar and Deputy Foreign
Minister Linares end. The current international situation and the Nonaligned
Movement were discussed.
Zambia's Minister of State for Foreign Affairs -Musuka arrives in Cuba and is
received at Jose Marti International Airport by Giraldo Mazola, Vice Minister of
Foreign Relations.
20 December Politburo alternate member Jesus Montane meets with a delegation from the
OAU's committee of liberation, presided over by Zambian Minister of State for
Foreign Affairs Musuka.
21 December Secretary General of South Africa's Communist Party Moses Mahida arrives in
Havana. He meets with Jesus Montane to discuss South Africa.
Chairman of the Cuban National UNESCO Commission Vicentina Antuna says
in Havana that the United States withdrawal from UNESCO is another example
of US arrogance.
Ambassador to Mali Martin and Bassi Toure, Deputy Director General of
International Cooperation sign a draft cultural agreement for 1985-86.
22 December Raul Castro bids farewell to a delegation, presided over by Division General
Abelardo Colome Ibarra, representing the party, government, and FAR at the
funeral in Moscow of Dmitriy Ustinov.
US officials in New York report that 77 Cubans who used allegedly phony
documents to enter the United States from Spain were denied entry at John F.
Kennedy Airport. Immigration hearings are pending.
23 December Politburo member Julio Camacho Aguilera and deputies of the government discuss
development projects planned for Havana, which include expanding the Nico
Lopez oil refinery and subway construction.
25 December In an interview in Paris, French Cooperation Minister Nucci says that 1985 will
constitute a new stage in French-Cuban cooperation. An intergovernmental
meeting will be held in Havana in January.
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27 December A new housing law is unanimously approved during the 7th Session of the People's
Government National Assembly.
President of Burkina Thomas Sankara sends a message of congratulations to Fidel
Castro on the 26th anniversary of the revolution.
28 December A Soviet naval task force arrives on a friendship visit. The destroyer Otlichny is
accompanied by escort ships Zadornyy and Razitelnyy, a diesel submarine, and a
tanker.
President of the Central Planning Board Humberto Perez tells the National
Assembly that the 7.4-percent growth rate in the economy in 1984 surpassed the 4
to 4.5 percent anticipated in 1983.
Yasir Arafat receives a message of support and congratulations from the Cuban
Communist Party Central Committee on the 20th anniversary of the Palestinian
revolution.
In a speech to the National Assembly, Fidel Castro accuses the United States and
Australia of trying to damage the Cuban economy by sabotaging an international
sugar agreement.
29 December In an interview with Prensa Latina in Belgrade, Yugoslav official Mito Pejovski
discusses bilateral relations and trade with Cuba that amounted to $20-30 million
in 1984.
Raul Castro receives Soviet Vice Admiral Ryabov. Ryabov termed the
strengthening of Cuba's defenses as positive and necessary because of increasing
US aggressiveness.
31 December Head of State Rawlings of Ghana sends a message of congratulations to Fidel
Castro on the 26th anniversary of the Cuban revolution, saying he will continue
drawing inspiration from Fidel's ideals.
Cuban Ambassador to Zimbabwe Perez says in a news conference that there are
about 140 Zimbabweans training in Cuba in different disciplines, and that the two
countries may sign a trade and economic accord next year.
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See
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