ARGENTINA: A TROUBLED TRANSITION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00302R001101680043-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 22, 2016
• Document Release Date: March 12, 2009
• Sequence Number: 43
• Publication Date: June 3, 1983
• Content Type: SNIE

Approved For Release 2009/03/12 : CIA-RDP86T00302RO01101680043-1
Director of
Central
Intelligence
Argentina:
A Troubled Transition
Special Natioed latch a Esthete
SNIE 91-83
3 June 1983
Copy 3 7 9
 Approved For Release 2009/03/12 : CIA-RDP86T00302RO01101680043-1
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ARGENTINA:
A TROUBLED TRANSITION
Information available as of 20 May 1983 was
used in the preparation of this Estimate.
 THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS.
The following intelligence organizations participated in the preparation of the
Estimate:
The Central Intelligence Agency, the Defense Intelligence Agency, the National Security
Agency, and the intelligence organization of the Department of State.
Also Participating:
The Assistant Chief of Staff for Intelligence, Deportment of the Army
The Director of Naval Intelligence, Department of the Navy
The Assistant Chief of Staff, Intelligence, Department of the Air Force
The Director of Intelligence, Headquarters, Marine Corps
The Department of Commerce
 PREFACE ............................................................................................................... 1
KEY JUDGMENTS .................................................................................................... 3
DISCUSSION .............................................................................................................. 7
The Impetus for Elections .................................................................................. 7
Weakness of the Current Regime .............................................................. 7
Support for Coup Lacking ......................................................................... 7
Key Transition Issues .......................................................................................... 8
The "Disappeared....................................................................................... 8
Corruption and the Falklands War ........................................................... 9
Economic Mismanagement ........................................................................ 9
Party Politics ............................................................................................... 13
Likely Strategies and Outcomes ................................................................ 13
Stability of an Elected Government .......................................................... 14
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 Politically exhausted and discredited, Argentina's armed forces
have promised restoration of civilian rule. The transition, however, is a
troubled one. Seemingly intractable economic problems and civilian-
military disagreement over sensitive political issues aggravate an inher-
ently unstable situation. Moreover, there is some fear that a civilian
government may not be able to survive.
The Peronists, traditionally the country's dominant civilian politi-
cal force, are expected to win the elections scheduled for October. The
Radical Party, however, has a reasonable chance to obtain its first-ever
election victory over the followers of the late Juan Peron. In the
unlikely event that the transition process is aborted, there could be
severe consequences for US interests and bilateral relations with
Argentina.
This paper explores the dynamics of the transition to civilian rule,
as well as the implications for the United States of a Radical or Peronist
victory-or an aborted process.
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 The military in Argentina has initiated a transition process that in
all likelihood will produce a civilian, constitutional government by 30
January 1984, as promised. The armed forces recognize that they are
too discredited to retain power after seven years of rule that have
included human rights abuses, economic mismanagement, and loss of
the Falklands war. Even if President Bignone were ousted in a palace
coup, the transition is not likely to be derailed.
A minority of military officers might like to halt or extend the
transition period, but we believe they lack the necessary support in the
military and civilian sectors to do so. Any coup attempt would almost
certainly be short lived. A coup attempt that is not quickly aborted,
however, could trigger intramilitary violence with highly unpredictable
results,
highly unlikely, and a more limited incident (such as a minor Argentine
raid or an accidental sea or air encounter) might rekindle Argentine
public passions but probably would not prompt civilian leaders to
accept halting or delaying the transition. The armed forces would also
be unlikely to use it as a pretext for doing so.
Military-civilian harmony during the transition and after a new
civilian government is installed will depend in large part on how several
key issues-including corruption, thousands of disappearances during
the antiterrorist campaign, and the political conduct of the Falklands
war-are handled. Armed forces leaders want to protect themselves
against personal or institutional retribution before turning over power.
Civilian leaders recognize the sensitivity of these issues but are wary of
the political consequences of being perceived as having struck a deal
with the military.
The elections on 30 October 1983 will be dominated by two center-
left parties-the Peronists and the Radicals. The Peronists are expected
to win, but they suffer from serious internal splits because of the lack of
a recognized successor to the late strongman Juan Peron. Radical hopes
for winning the election lie in a united effort behind Raul Alfonsin-a
lawyer who is appealing to the labor sector in an effort to supplement
his party's traditional middle class constituency. New voters will
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 account for as much as 30 percent of the electorate-a huge electoral
imponderable. These new voters form a pool from which Alfonsin must
draw support if he is to build his populist coalition.
Most other political parties tend to be small, provincial, and highly
personalistic organizations. None threaten the Peronists or Radicals
nationally, although some might provide marginal support to the major
parties in coalition efforts. Conservative political and economic interests
in Argentina lack an effective national party to articulate their views
and attract broad support. This critical weakness accounts in part for
the historical tendency of conservatives to rely on the military to protect
their interests.
Economic problems will almost surely dwarf all other issues facing
the new government. In 1982, inflation was about 200 percent, with the
trend accelerating; unemployment hovered around 10 to 12 percent,
and the foreign debt verged on $40 billion. As the election date
approaches, economic policy makers are likely to become increasingly
susceptible to pressures for expansionary policies rather than austerity.
The government probably will fall short of its IMF targets later this
year, but the IMF is unlikely to cut off aid-preferring to work out re-
vised terms with a newly elected government.
A new administration most likely would attempt to broaden its
support for economic recovery by incorporating key sectors-organized
labor, industry, finance, agriculture-into the policymaking process.
Nevertheless, if the victor wins less than a majority, as is likely, it will
have great difficulty abandoning the kind of populist, protectionist, and
redistributive policies that both parties traditionally have favored. A
civilian government also will be somewhat circumscribed by a continu-
ing heavy foreign debt service burden and the policy conditions
attached to new lending by the IMF and private foreign banks.
In foreign affairs, either party will continue to press for negotia-
tions with the United Kingdom over the Falklands issue, and to seek
better relations with Argentina's neighbors and Nonaligned states. The
Argentine-Soviet relationship-which has strengthened considerably
since 1980-will remain essentially the same under a civilian govern-
ment of either party. Buenos Aires will endeavor to maintain and
perhaps expand commercial relations with Cuba, the USSR, and Soviet
Bloc countries while attempting to minimize the risks of political
contamination. Leaders of both parties are anti-Communist, and la-
bor-which is sure to play an important role in the next government-
has historically opposed Communism and Soviet expansionism. Military
leaders probably will continue to reject Soviet offers to sell major
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 weapon systems as long as Argentina retains access to Western arms on
acceptable terms.
Bilateral contacts with the United States probably will resume their
historical pattern of correct relations, marred by intermittent periods of
tension. Under the Peronists, and even more so if Alfonsin becomes
president, Argentina is likely to become less supportive of US policies in
Central America and more critical of US economic policy in the
hemisphere.
The continued preeminence of the Falklands issue for Buenos Aires
probably will cause problems with the United States. Argentina's
current test of faith is the willingness and ability of the United States to
pressure the United Kingdom into negotiations. With this a highly
unlikely development in the near future, bilateral tension is nearly
assured. In its attempts to drum up Falklands support in international
forums, Argentina is likely to trade votes on issues insignificant to
Buenos Aires but important to the United States, giving rise to a series of
bilateral irritants.
Given a successful transition, US interests are not likely to be
threatened directly, although US investment in the petroleum and
financial sectors might be exposed to some increased risk. In interna-
tional affairs, neither a Peronist nor a Radical administration is likely to
create threats to US security interests by aligning Argentina with the So-
viet Bloc and providing the Soviets with access to its port and base
facilities, or by pressing for the development of nuclear weapons.
Moreover, a civilian government will be less likely to pursue adventurist
military policies that would complicate US relations with the United
Kingdom or Chile.
In the unlikely event that the transition were aborted by rightwing
forces, US interests would be adversely affected. US condemnation,
mandated by US support of democracy in the region and the Argentine
transition in particular, would severely strain relations. The repressive
tactics such a regime would probably employ would create serious
problems over human rights issues. An extremely hostile environment
would be created for foreign investment, given the likely termination of
the IMF program, mounting economic difficulties, and a stridently
nationalist bent in ruling circles. Finally, regional peace might be
threatened if a nationalistic regime indulged in saber rattling over the
Falklands or the Beagle Channel in an effort to rally domestic support.
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 The Impetus for Elections
1. Defeat in the Falklands war sealed the political
fate of Argentina's military government. The seeds of
that demise, however, were sown long before, particu-
larly in the form of economic mismanagement. The
Falklands debacle accelerated the move toward restor-
ing civilian rule by undermining the military's prestige
and its willingness to retain power in the face of
seemingly intractable economic problems and rising
political discontent. The postwar declaration by the
armed forces that they would cede power to an elected
civilian government in early 1984 merely constituted
public recognition that they were too discredited to
retain power.
Weakness of the Current Regime
2. The fundamental dilemma of the armed forces
and the Bignone administration is one of managing a
transition from a position of pronounced weakness.
With their legitimacy exhausted and their credibility
at a post-1976 nadir, the ability of the armed forces to
structure a retreat that satisfies their political prefer-
ences and protects their institutional interests is ques-
tionable. Moreover, President Bignone lacks a personal
power base, and this makes him vulnerable and
dispensable. Both military and civilian supporters of
the transition, however, are willing to retain him
because he has identified himself unambiguously with
the transition.
4. Traditional interservice rivalries and animosities
also were exacerbated by the Falklands war. Interserv-
ice coordination is slow and inefficient, and unseemly
battles between the services almost inevitably surface
in the press, further undermining the military's image
and credibility. The Army, however, remains the
dominant service. It is particularly important, there-
fore, that Army Commander Nicolaides now appear to
be in control of his troops, supportive of Bignone, and
committed to a successful transition.
Support for Coup Lacking
5. A large majority of general officers in all three
armed services support the transition-or at least are
resigned to it-and we have no evidence that the
widespread dissatisfaction that led to pressure from
the lower ranks for command changes after the Falk-
lands war has been redirected in favor of blocking the
transition.
6. Nonetheless, support for prolonged military rule
can be found among a minority of officers at all levels.
Their varied reasons include:
- Fear that military institutions and individuals
will be vulnerable to retribution under a civilian
regime.
- Philosophical opposition to a democratic
government.
3. Military efforts to run the government are com-
plicated by both intraservice and interservice rivalries.
The intraservice problem remains but is less critical
than it was in the immediate aftermath of the war
when discontent in the ranks-especially in the
Army-prompted frequent rumors about command
shakeups. The selection of new commanders, the
retirement of many senior officers in the Navy and the
Air Force, and the concentration of efforts on institu-
tional recovery have produced a more settled, al-
though far from quiescent, atmosphere within the
individual services.
- Expectation on the part of rabid anti-Peronists;
that the followers of the late Juan Peron will win.
again.
- Desire to retain the lucrative sinecures in state
companies.
7. A coup attempt by a small coterie of disgruntled
officers would be unlikely to succeed. Not only would
their numbers be insufficient, but other critical ele-
ments would be missing, such as a high degree of
interservice coordination and a receptive or passive
civilian environment. The situation would probably be
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 reminiscent of the aborted effort by the Air Force to
oust Peron's widow from the presidency in December
1975. Such an incident would have little impact on the
military's commitment to the restoration of civilian
rule.
Civilian and military support for such plots is lacking,
however, and they probably would have little chance
of success.
9. Similarly, we do not expect that renewed adven-
turism with respect to the Falklands would derail the
transition. The lack of interservice cooperation and
coordination, along with other clear military deficien-
cies, makes another full-scale assault on the islands
highly unlikely. Also unlikely, but more probable,
would be a limited incident that might result from an
accidental encounter with UK ships or aircraft; a
junta-approved action designed to nettle the UK de-
fense forces; or a unilateral action undertaken by a
single Argentine service-most likely the Navy. A
minor incident of limited military consequence might
rekindle Argentine public passions over the Falklands
but would not be perceived in civilian circles as
sufficient reason to terminate or postpone the transi-
tion process. Any hint that the government might use
such an incident as a pretext to do so would probably
provoke widespread civilian protests.
Key Transition Issues
10. Military reticence about the transition in part
reflects anxiety over unresolved issues in which signifi-
cant military interests-institutional and individual-
are at stake. Chief among them is responsibility of the
armed forces for abuses committed during the anti-
terrorist campaign, especially disappearances. Other
sensitive matters include the political conduct of the
Falklands war, the Beagle Channel dispute, corrup-
tion, and economic mismanagement, including the
staggering growth of the foreign debt.
11. Armed forces leaders feel vulnerable on these
issues and want them dealt with before the turnover of
power creates an environment in which public pres-
sure for investigations and punishment would be hard
for a civilian government to resist. Potential civilian
heirs to the presidency also have an interest in early
resolution. Such sensitive issues would threaten to
destabilize any new government by provoking almost
immediate problems with the armed forces.
The "Disappeared"
12. It is on the "disappeared" issue that the armed
forces feel most exposed and least able to compromise.
The dimensions of the problem remain unclear. While
estimates vary as to the number of persons missing as a
result of 1975-79 counterterrorist operations, the fate
of perhaps 7,000 to 10,000 people is probably in-
volved. Most of them probably died at the hands of
security forces personnel.
13. The prospect of massive, Nuremberg-style retri-
bution triggers military anxieties. Armed forces leaders
refuse to apologize for their counterterrorist methods
and are committed to protecting their personnel from
any sort of judicial processing for alleged abuses. To do
otherwise would not only risk internal rebellion but
seriously blemish the only outstanding success of post-
1976 military goverment-the triumph over terrorism.
14. The junta document on the counterterrorist war
released on 28 April was primarily an attempt to calm
fears within military ranks about possible future pun-
ishment. It was issued amidst an ever-increasing
stream of media revelations about abuses and accom-
panied by an "Institutional Act" apparently intended
to assign military courts exclusive jurisdiction over
military personnel accused of "dirty war" crimes.
Although the junta stated that no further information
would be published, the document contained no de-
tailed data on disappearances and little new informa-
tion on any facet of the war.
15. Predictably, the report was strongly condemned
by representatives of all nonmilitary sectors. Moral
indignation inspired much of the criticism, but a large
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 measure of political opportunism was also present as
campaigning politicians benefited from another
chance to blast the military for its sins. There remains
a strong possibility that the junta will issue an amnesty
law before the elections. It will probably be necessitat-
ed by a belief within the armed services that the
"final" report and "Institutional Act" do not provide
adequate protection for personnel who were involved
in the counterterrorist effort.
16. Until the last year or so, most civilian political
leaders treated the "disappeared" issue with extreme
caution, when not avoiding it entirely. It was left to
human rights organizations to demand from the armed
forces an accounting for those allegedly missing. As the
transition process began to unfold, demands for such
an accounting became common coinage among critics
of the military from political parties, labor unions, the
Church, and human rights groups. Most political party
spokesmen are still somewhat cautious, however. A
position that is appropriately outraged-although
vague on solutions-is an essential weapon in the
arsenal of any presidential aspirant. A candidate who
adopts an inflexible stance, however, could quickly
become trapped after he is elected. If he compromises
he will lose some measure of civilian support
17. The cautious civilian stance probably reflects a
fairly accurate assessment of public attitudes. Counter-
terrorist excesses are not widely condoned. They are
perceived, however, as the unavoidable byproduct of a
struggle forced on the country by subversives. Most
Argentines probably believe that moral imperatives
dictate some form of accounting for abuses but not one
that would involve a detailed public exposure of
events or retribution against numerous military and
security officials.
19. From the civilian politician's perspective, criti-
cism on these issues is a cheap, effective, and indis-
pensable component of any politician's antimilitary
rhetoric. Nothing need be proven. The bad political
judgment displayed in the Falklands invasion and in
the subsequent failure to negotiate a settlement before
humiliating military defeat is obvious. Corruption is
taken for granted by a cynical Argentine public.
Media revelations involving the alleged misdeeds of
prominent military officers are all the more satisfying
because of repeated military pretensions to moral
superiority.
20. Nevertheless, civilians will be cautious about
attacking specific military figures or promising specif-
ic and dramatic reprisals that could only serve to sour
relations with the armed forces. Criticism of the
military has escalated sharply from all quarters during
the transition, but military tolerance is finite. The
closing of several periodicals and an early February
display of junta pique accompanied by threats of legal
action reminded the civilians that some restraint was
still necessary.
Economic Mismanagement
21. Long before the Falklands defeat sealed the
military's political fate, armed forces rule was being
undermined by obvious economic failures. Passive
acceptance of military rule was turning into active
opposition as groups largely quiescent since 1976
began displaying opposition to official economic poli-
cy. So intractable did the problems appear that, even
before the war, many officers preferred abandoning
power to continuing an apparently fruitless struggle to
manage difficult economic problems.
22. The early years of military rule had brought
domestic economic improvements under the guidance
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 of Economy Minister Jose Martinez de Hoz. Policy
reforms restored growth and halved inflation. Good
world markets boosted earnings from agricultural ex-
ports, thereby helping to overcome payments prob-
lems. After 1979, however, excessive dependence on
the exchange rate mechanism to dampen inflation
produced a seriously overvalued peso, led to internal
market distortions, and laid the foundation for future
balance-of-payments problems.
23. Since late 1979, Martinez de Hoz and his
successors have been guilty of the kind of sharp policy
turns and reverses that have exaggerated Argentina's
economic difficulties over the years. In 1982 alone,
policy shifted from a somewhat promising stabilization
effort before the war, to a more populist, expansionary
thrust in the wake of defeat, to the moderate austerity
efforts now being implemented under Economy Min-
ister Jorge Wehbe. With these policy gyrations, the
economic disruption occasioned by the war, and the
impact of global recession, 1982 marked a second
straight annual drop in gross domestic product
(GDP)-5.5 percent-coupled with accelerating infla-
tion (about 200 percent for the calendar year). Foreign
debt, which expanded rapidly
after
1979,
stood at
about $38.7 billion at year's
economic indicators.)
end.
(See
charts of
24. Wehbe, who took over in August 1982, gradual-
ly tightened monetary policy and introduced reforms
designed to slow inflation without provoking an un-
manageable political backlash. In simplest form, his
approach involves subsidizing domestic industrial re-
covery through export taxes on agricultural production
and a combination of rebates for industrial exports and
controls on industrial imports. This scheme is support-
ed by daily minidevaluations of the exchange rate
pegged to the difference between rates of internal and
external inflation.
25. Wehbe's chief successes to date have been
refinancing and restructuring Argentina's foreign
debt, tasks not yet completed. The refinancing pack-
age is composed of a $1.1 billion syndicated bridge
loan, about $2.2 billion in IMF facilities ($1.65 billion
standby agreement and $570 million in compensatory
financing), a $500 million BIS bridge loan, and a $1.5
billion midterm private bank loan still being negotiat-
ed.' The Central Bank is also renegotiating payments
schedules on $6 billion of 1982 public-sector principal
arrears and $8.7 billion in 1983 maturities. If all the
pieces fall into place, the debt profile will be altered to
one in which a large part of the debt that would fall
due in 1983 would not be due until 1987 or later.
26. Wehbe's task will not get easier during the
remaining months of the transition. Political uncer-
tainty and the government's weakness will inhibit
consistency in policy implementation and discourage
foreign and domestic private investment. His room for
maneuver will also depend upon the aggressiveness
with which a renascent labor movement forces its
wage demands. Should the unions threaten social
peace through massive strike activity, political consid-
erations will take increasing priority over economic
ones in the decisionmaking process. Finally, Wehbe
has no solid political base even within the armed
forces, where Air Force critics of his efforts have been
vocal at times. His most solid leverage consists of
continued Army support and general acceptance of
the need to maintain IMF financing by making an
earnest effort to comply with agreed guidelines.
27. Wehbe's susceptibility to pressures from various
quarters was evident in early 1983 when labor and
military sectors forced acceptance of Argentina's first
unemployment insurance program. Subsequently, in
March, dissatisfaction within the military and else-
where over surprisingly high inflation figures for
January (16 percent) and February (13 percent) forced
Wehbe to accept a price controls scheme that features
subsidized interest rates for participating businesses.
28. Oscillation between such ad hoc expansionary
measures and maintenance of Wehbe's established
program to meet IMF requirements will probably
persist throughout the transition. In the last quarter of
the year, as the military's tenure winds down, the
government will probably be less resistant to expan-
sionary measures. Given the economic consequences
of political uncertainty, it is reasonable to expect about
a 2-percent recovery in production during 1983, with
inflation ranging between 200 and 300 percent. Rec-
ord grain exports and continued import restraints
' Completion of negotiations on the $1.5 billion loan is being
delayed by an Argentine prohibition on the remittance of profits by
UK banks-a measure passed during the Falklands war.
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 Real GDP
Percent change
Consumer Prices
Annual average
percent change
Agricultural Production 130 Manufacturing Output 110
1970=100 ^ 1976=100
Public Sector Deficit 0 monsoon External Debt 40
Percent of GDP Billjon US S
Current Account
Million US S
Interest Payments on
External Debt
Percent of exports
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 should permit a reduction in the current account
deficit to about $1 billion, a shortfall that can be
covered if the projected debt refinancing package is
completed.
29. Argentina complied with agreed guidelines for
the first quarter of its IMF agreement (see inset) and
may do the same for the second-quarter review in
June but will probably fall short of some internal
targets as the election approaches. If for any reason the
government should feel forced to cancel the accord, it
could trigger a highly negative series of events. A
likely withdrawal of new foreign lending would force
a sharp drop in imports and economic activity, further
stimulating inflation. Eventually Argentina would
probably be forced to declare at least a temporary
moratorium on all debt servicing, including interest.
out the year. Elements opposed to elections may
become increasingly anxious and desperate as the date
approaches, but they will find it increasingly difficult
to generate widespread support for stopping a process
so near completion. (See inset.)
While we judge the possibility of a success-
ful coup to be low, a coup attempt that is not
swiftly put down could produce several high-
ly undesirable situations. Among them:
- An all-out struggle for control in the
armed forces, including violent con-
frontations, during which the civilians
would remain on the sidelines.
Buenos Aires concluded a 15-month stand-
by agreement with the IMF in February. In
return for $1.65 billion in IMF assistance and
commercial bank lending support, the Ar-
gentines promised to implement the reforms
to improve the country's economic perfor-
mance. Under the terms of the agreement,
Buenos Aires promised to reduce the public-
sector deficit from 14 percent of GDP in
1982 to 8 percent this year and limit credit
expansion to 170 percent. The government
also agreed to raise interest rates, public-
sector tariffs, and wages and to devalue in
line with the rate of inflation. The stabiliza-
tion program hoped to achieve 5-percent
real growth this year, while reducing infla-
tion to 160 percent and halving the current
account deficit to $1 billion, but they are
incompatible targets.
Prospects
30. The chances that Argentina will reach elections
on 30 October and a restoration of civilian rule on 30
January 1984 are perhaps 85 percent at this point.
With the election timetable established, momentum in
favor of the transition will continue to build through
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- An apparent victory by antielection
military sectors that would provoke ac-
tive and eventually violent civilian
resistance.
- In the highly unlikely and worst case
event, a violent intramilitary clash in
which civilian sectors would choose
sides, leading to a complete breakdown
of law and order.
In all these cases the outcome would be
highly unpredictable. Particularly in the
worst case, opportunities might be created
for the emergence of a new military strong-
man, for decisive action by well-prepared
extremists of the right or left, and for med-
dling by foreign interests.
Opportunities for Soviet interference
would increase given the collapse of law and
order, but Moscow's in-country resources
would be limited. The Argentine Communist
Party (about 50,000 members) has no work-
ing-class base and is not violence prone. It
repudiated those involved in the subversive
violence of the 1970s
It is
viewed as nonthreatening by the military,
which excluded the Communists from a
1976 ban on parties advocating the violent
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 overthrow of the government. Few of the
violence-prone revolutionaries who fled the
country in the 1970s have returned to Argen-
tina, and the labor movement's staunch anti-
Communism makes it an unlikely Soviet
proxy. Perhaps the best Soviet hope, there-
fore, would lie in the possible emergence of a
leftist or reformist military clique from
among young officers, something akin to the
group that led Peru in the early 1970s. To
our knowledge, however, such a group cur-
rently does not exist.
31. Argentina's civilians are returning to power by
default. The popular mood is clearly antimilitary, but
the array of civilian alternatives provokes only limited
public enthusiasm. Despite the deaths of the nation's
dominating civilian caudillos, Juan Peron and Ricardo
Balbin, political parties are offering little that is new in
terms of personalities or rhetoric. Thus, there is little to
allay the cynicism of an Argentine electorate inured to
repeated civilian as well as military failures in govern-
ment. In 1973, at the close of the previous military
government (1966-73), many Argentines entertained
hopes that an older and wiser Peron might somehow
mold a consensus that would permit political stability
and economic growth. The Peronist debacle of 1973-
76 smashed those illusions. Today Argentines prefer
civilian to military rule, but they view the transition
without exaggerated expectation.
with three small parties. The coalition serves the
interests of its members by emphasizing their common
opposition to military rule and providing a vehicle for
authoritative expressions of dissent. However, the im-
portance of the Multipartidaria has faded in recent
months and will continue to do so as the electoral
campaign sets the coalition members against one
another.
34. At stake in the intraparty battles is control over
the reorganized parties and nominations for offices
from the presidency down to provincial and local
posts. These battles are particularly intense within the
Peronist and Radical camps, in part because of the
deaths of Peron and Balbin. Personality conflicts and
ideological tensions long held in check by their domi-
nating paternalism have been unleashed in the inter-
nal struggles in both parties.
Likely Strategies and Outcomes'
35. The elections will be a Peronist-Radical affair
with the Peronists the favorite if they patch up their
internal differences. A united Peronist effort should
elicit strong support in traditional Peronist constituen-
cies such as urban labor, small and middle-size busi-
ness, the bureaucracy, and proponents of strongly
nationalist economic and international policies. For
good measure, the Peronists will probably work out
deals with small parties such as the Movement for
Integration and Development, the Popular Conserva-
tive Party, and the Christian Democrats. None are
important enough to be labeled swing groups, but each
could provide marginal support for the Peronist presi-
dential ticket.
Party Politics
32. The contest among political parties for the
presidency and control of lesser seats of power will
soon begin in earnest, once internal party reorganiza-
tions and the process of selecting candidates for the 30
October elections are completed. To date, the political
game has been played on two levels. On one level, the
contest pits all civilians against the military as all
aspirants to office seek to validate their antimilitary
credentials. The second level of politicking involves
intraparty contests.
33. The antimilitary campaign has been coordinat-
ed in part through the Multipartidaria, a five-party
coalition that includes the country's two major parties,
the Peronists and the Radical Civic Union, along
36. Radical hopes for defeating the Peronists lie in a
united effort behind Raul Alfonsin. He alone among
Radical aspirants has the potential to appeal beyond
historical Radical constituencies and make a dent in
Peronist domination of the labor vote. Alfonsin pro-
jects a populist image domestically. His outlook on
international affairs is skewed by a pronounced anti-
US bias. He views "imperialism" as responsible for
many of the hemisphere's economic, social, and politi-
cal problems and firmly believes Argentina has been
victimized by domestic speculators and foreign
bankers.
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 37, To have a chance, an Alfonsin campaign will
have to be extremely well organized and financed. He
must court the labor vote in the industrial suburbs of
the Federal Capital that fall into the Buenos Aires
Province voting area, even though he will surely lose
to the Peronists there by a wide margin. He will have
to make up the difference in the other three key
voting areas, the Federal Capital itself, Cordoba Prov-
ince, and Santa Fe Province (see map on page 6). It is
more important to Alfonsin than to the Peronists to
seek extraparty alliances. Dozens of small parties will
eventually crowd the ballot, and many will seek a
deal, offering to support the Radical or Peronist
presidential ticket in exchange for major party support
for their provincial slates.
38. Parties on the right and left of the political
spectrum cannot mount a serious national challenge to
the Peronists and Radicals (see table). Although a
conservative coalition was able to capture 15 percent
of the vote in the 1973 elections, the absence of a
national conservative party to give institutionalized
expression to conservative political and economic
views remains a critical weakness in Argentina's party
system. In the October contests, center-right aspirants
will be further handicapped by the support lent to
post-1976 military governments by prominent civilian
conservatives. The nonviolent left is equally divided
and doomed by its inability to shake Peronism's grasp
on labor's vote. Revolutionary groups have no constitu-
ency, and parties advocating violence are outlawed.
39. If there is a true swing group in the elections, it
may be those who have come of age since 1973 and
will be voting for the first time. New voters may make
up as much as 30 percent of an electorate roughly 18
million strong. It is difficult to gauge the impact of the
1973-76 Peronist period or the ensuing years of mili-
tary rule and repression on the political perceptions
and preferences of new voters. If to this group are
added those who have had only one opportunity (1973)
to vote in a presidential contest since 1964, the sector
of the electorate for which we have no reliable voting
history jumps to well over half. The new voter pool
may open avenues for Alfonsin and the Radicals in
traditional Peronist constituencies, and it should at
least increase the "undecided" vote from which Alfon-
sin must draw to build his new coalition.
40. The presidential contest will be governed by
procedures established in the 1853 Constitution-that
is, a single vote with an electoral college system. This
would appear to favor the party most likely to gain a
plurality, the Peronists. At present, an electoral law
governing the apportionment of congressional seats has
yet to be decreed. Both the Peronists and Radicals
favor granting the victorious party an automatic ma-
jority in the Congress. The smaller parties, of course,
are insisting upon proportional representation
formulas.
Stability of an Elected Government
41. The stability of a civilian regime is already a
matter of discussion in civilian and military circles.
Implicit in the concern being voiced is the fear that
any civilian government's chances will be undermined
by the absence of fundamental change in the country's
political structure, behavior, and attitudes. This con-
cern is well placed, particularly given the difficult, if
not crippling, economic situation a civilian administra-
tion is likely to inherit.
42. Relations With the Military. The armed
forces will not abandon their self-arrogated mission as
the nation's ultimate political arbiter. Under the best
of circumstances, they would reconcile themselves to
constitutional subordination to civilian authority, and
the civilians would avoid gratuitous and demagogic
antimilitary rhetoric that would inhibit cooperation
with the armed forces after the elections. Neither of
these conditions will be fulfilled entirely. However,
the stability of the new civilian government will be
improved to the degree that they are met.
43. Civilian-military tension will persist, with po-
tential flashpoints in the form of issues that might still
be pending such as the "disappeared," corruption, and
mismanagement of the Falklands war. Barring an
immediate and egregious challenge to military inter-
ests, however, the new civilian authorities should enjoy
at least a temporary respite from coup pressure.
Conspirators will find it difficult to muster support
until the civilians have had a chance to succeed.
Likewise, given the current level of military disrepute,
potential coup plotters will probably see the wisdom of
a low military profile for a time while military leaders
attend to professional tasks and the resurrection of the
military's public image.
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 Right of center
Center to center left
Popular Federalist Forces (FUFEPO)
Conservative coalition headed
14.9
Confederation of the Republican
Center (including Alsogaray's
Center Democratic Union).
by Federal Party leader Man-
rique.
Three other conservative
5.75
Federal Party
Democratic Party
Conservative Party
Progressive Democrats (PDP)-
Democratic Socialists (PSD)
alliance
Peronists
candidates
Peronist coalition (FREJULI)
49.59
Christian Democratic Federation b
Popular Conservatives (PCP)
Movement for Integration
and Development (MID)
including MID, PCP, and
part of Christian Democrats
21.3
Intransigent Party (PI)
Communist Party (PCA)
Socialists (several splinters)
Coalition headed by PI leader
Alende and unofficially
including proscribed PCA
7.43
Radical left
Socialist Workers Party (banned)
Montonero Peronist Movement
Coalition headed by
Socialist Workers
0.6
(banned)
Revolutionary Communist
Party (banned)
Argentine Industrial
Union (UIA): particular
representatives of businesses
with international
connections and markets
Argentine Rural Society
Peronists: vast majority of
unionized labor, including
CGT-A, CGT-RA, "62 Or-
ganizations"; small and medi-
um-size businessmen once
represented by defunct Gen-
eral Economic Confederation
(CGE)
UCR: small minority of
organized labor; university
students
No organized in-country
support groups.'
44. Economic Policy. Economic problems will al-
most surely dwarf all other issues facing the new
government as the civilians inherit the military's lega-
cy. Pressure for quick results will be great, perhaps
reflecting expectations generated by imprudent cam-
paign promises.
45. Party platforms have yet to be drafted, but
there is scant evidence of innovative thinking among
the Radical or Peronist economists. In most cases, their
analysis is based on the assumption Argentina is an
extraordinarily wealthy country whose potential re-
mains unrealized because of either the unwitting
mismanagement of incompetents or, more often, the
conspiratorial actions of international interests (Rocke-
feller, et al.) and their domestic accomplices (Martinez
de Hoz, et al.). With free market policies again
discredited, they argue, the state must intervene to
ensure both economic justice and economic independ-
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 ence. There are variations on this theme, reflecting the
sophistication, experience, and general political out-
look of various proponents. The basic assumptions
remain unchanged, however, and will manifest them-
selves in the policies of a Peronist or Radical
administration.
46. The options available to a new administration
will depend in part upon the dimensions of the
winner's victory margin. A Peronist or Radical govern-
ment inaugurated after winning less than a majority of
the popular vote, as is likely to be the case, will have
great difficulty abandoning the kind of populist, pro-
tectionist policies which, despite specific variations,
both parties favor. There is a small chance that the
Peronists might win a majority of the popular vote.
The strength of the resulting mandate would open
more policy options, and in the past Peronist adminis-
trations have implemented austerity programs when
forced by economic realities to do so.
47. A civilian government's options will also be
somewhat circumscribed by the continuing heavy debt
service burden and the policy conditions attached to
new lending by the IMF and private foreign banks.
These constraints could be circumvented by an indefi-
nite moratorium on all debt principal and interest
payments. Such a course, however, would risk default
actions by creditors and would cut off Argentina from
any foreign credits for some time. We do not believe
that economic conditions will 'be so bad in January
1984 as to make such a dramatic initiative appealing
except to an extraordinarily weak civilian government
denied access to foreign financial support.
48. The more likely scenario envisions a Radical or
Peronist administration entering office on the basis of
an electoral plurality and attempting to broaden sup-
port for economic recovery by incorporating key
sectors-organized labor, industry, finance, agricul-
ture-into the policymaking process. Policy directions
are likely to reflect the populist, statist, distributionist
tendencies these parties have demonstrated in the past.
The current IMF agreement will expire soon after the
new government takes office. We would expect that
the civilians' effort to negotiate a new agreement
might curb somewhat their temptation to rely heavily
upon import restrictions, export subsidies, exchange
controls, and generally protectionist policies.
49. Neither the Peronists nor the Radicals question
the positive role of the domestic private sector or
foreign investment "properly" controlled. Neverthe-
less, foreign financial and petroleum interests will
probably take a rhetorical beating in the election
campaign and would be the most likely targets for
punitive action if a civilian government felt the need
to validate its nationalist credentials. Otherwise, the
most probable development is a new foreign invest-
ment law that would be a compromise between the
unrealistic restraints contained in the 1973 Peronist
legislation and the very relaxed conditions established
by the military since 1976.
50. Foreign Affairs. In international affairs, the
Peronists and Radicals would probably pursue very
similar paths:
- Concentration on the Falklands issue with a
stance little changed from that of the current
government.
- An emphasis upon connections with Nonaligned
Movement countries and relations with Latin
American neighbors.
- Correct relations with the United States, but with
a tendency to adopt the role of critical Latin,
American spokesmen on matters such as US
policy in Central America and US international
economic policy.
- The maintenance of commercial relations with
Cuba, the Soviet Union, and Soviet Bloc coun-
tries. The tendency with the Soyiets will be to
protect Argentina's trade interests by expanding
bilateral relations in peripheral areas (for in-
stance, civil aviation, technical assistance) where
the Argentines believe they can minimize the
risks of political contamination.
51. Leaders of both major parties are anti-Commu-
nist and will be wary of Soviet intentions toward
Argentina. Peronists are always quick to point to their
historical domination of the labor movement as the
key to preventing Communist inroads in Argentina.
Elected civilians, along with armed forces leaders, will
remain resistant to Soviet offers to sell arms. Only if
Argentina is denied access to desired Western arms is
the military liable to purchase major Soviet weapon
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 systems. The Argentines will, however, continue to
"play the Soviet card"-that is, hint at the availability
of Soviet weapons in order to broaden their access to
Western materiel on acceptable terms.'
Implications for the United States
52. US interests in Argentina are not likely to be
significantly affected by the installation of a new
civilian government whether it be Peronist or Radical.
However, private US investment in the petroleum and
financial sectors might be exposed to some increased
risk, and troublesome differences are likely to arise on
some issues.
53. In international affairs and forums, a civilian
government's likely policy direction will produce dis-
agreements with the United States, but neither Peron-
ists nor Radicals are liable to create direct threats to
US security interests by aligning Argentina with the
Soviet Bloc and providing the Soviet military with
access to its port and base facilities.
54. The Falklands war added new and important
elements of uncertainty regarding Argentina's long-
range nuclear plans.
Any civilian government will probably continue Ar-
gentina's efforts to develop a complete nuclear fuel
cycle independent of safeguards and to exploit the
country's nuclear achievements for international and
domestic political gain.4
55. Bilateral affairs will probably resume their his-
torical pattern of correct relations, marred by inter-
mittent periods of tension. Policymakers will profess
allegiance to Argentina's Western, Christian traditions
and acknowledge the need for good relations with the
United States. However, Argentine actions will often
reflect more immediate concern for gaining support
on the Falklands, winning or maintaining commercial
advantages, and being perceived as independent from
the United States.
56. Immediate disagreement with the United
States, especially if Alfonsin becomes president, is
likely to arise over:
- Central America, with Argentina probably as-
suming a stance similar to that of the Socialist
International.
- Hemispheric economic affairs, on which Argenti-
na will probably become a more outspoken critic
of alleged US misdeeds.
57. From the US perspective, bilateral relations will
be complicated by the lack of leverage with which to
influence Argentine policies and policymakers. None
of the likely civilian successors will feel particularly
obligated toward the United States, and US influence
with the Argentine military is likely to remain mini-
mal because of the Falklands war and the prolonged
prohibition on US military assistance and sales.
58. The Falklands will remain the crucial issue for
Argentina, and there would appear to be little the
United States can do to satisfy Argentine desires. US
support for resolutions in the UN and OAS in late 1982
improved the acrimonious postwar atmosphere. How-
ever, Argentina's new test of faith is the willingness
and ability of the United States to pressure the United
Kingdom into negotiations. With this a highly unlikely
development in the near future, the Falklands issue
will continue to be a source of bilateral tension. In the
meantime, it will cause peripheral problems as Argen-
tina drums up Falklands support in international
forums by trading votes on issues insignificant to
Argentina but perhaps important to the United States.
Votes running counter to US interests could produce a
series of bilateral irritants.
59. The US ability to influence the lending prac-
tices of international financial institutions and US
commercial banks provides some leverage over Argen-
tine policymakers. Recognition of this fact tempers
anti-US sentiments in some civilian circles, although it
is not likely to be a policy determinant on internation-
al matters considered important by the Argentines.
Perceived US influence in this area can also become a
liability should it become necessary to urge compli-
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 ance with international obligations on a besieged
Argentine Government. Anti-US sentiment could be
aroused easily if the United States were portrayed or
perceived as the lobbyist of the international bankers,
encouraging austerity measures at the expense of the
Argentine working class.
60. In the unlikely event that the transition process
were aborted by a rightwing military coup, the effect
on US interests would be adverse and substantial:
- Bilateral relations would be severely strained by
a strongly negative US reaction to termination of
the electoral process that would be dictated by
US support for democracy in the region and the
Argentine transition in particular.
- Repressive tactics likely to be employed by such
a regime would probably bring renewed prob-
lems over human rights.
- Peace could be threatened because a nationalist
government might turn to saber rattling against
Chile or the United Kingdom to rally popular
support.
- Opportunities for meddling by the Soviets would
increase if there were a severe breakdown of law
and order.
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