LATIN AMERICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01184R000201110001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 22, 2016
• Document Release Date: August 26, 2010
• Sequence Number: 1
• Publication Date: November 9, 1984
• Content Type: REPORT

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Directorate of
Secret
ALA LAR 84=020
9Navem ei' 1984
398
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z5ecrer
Review
Brazil: The Military and the LeO
civilian president next March
A surge in leftist political activity is making the Brazilian armed
forces increasingly uneasy as they prepare to surrender power to a
of building popular support
The guerrillas plan new tactics to regain credibility and to forestall a
further decline in their ranks, but the government is likely to
maintain the strategic initiative. Moreover, some of the new
insurgent tactics are likely to damage the guerrillas' long-term goal
The morale of Cuban troops stationed in Angola and Ethiopia has
declined recently, largely as a result of the hostility of the local
populace in both countries toward the Cubans and growing pressure
by the UNITA guerrillas in Angola.
problems for Cuban economic planners.
Data presented in a government report on the economy overstate the
rate of growth in the first half of this year and signal impending
Pindling will resign soon.
Prime Minister Pindling's reelection as leader of the ruling
Progressive Liberal Party and the inability of the weak opposition
party to pose a strong challenge tends to discount rumors that
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Jamaica: Rising Political Violence
Netherlands Antilles: Refinery Closure
Barbados: Faltering Economy
Articles have been coordinated as appropriate with other offices within CIA.
Comments and queries regarding this publication may be directed to the Chief,
Production Std, Office of African and Latin American Analysis,
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Brazil: The
and the Left
A surge in leftist political activity is making the
Brazilian armed forces increasingly uneasy as they
prepare to surrender power to a civilian president next
March. In recent months, the military has shown its
displeasure with the growing visibility of illegal
Communist organizations, and some groups in the
armed forces reportedly have been working to
undercut opposition candidate Tancredo Neves, who
is supported by the left. Moreover, scattered terrorist
acts suggest that rightwing paramilitary groups,
may have
resumed operations. Although we believe the armed
forces will allow Neves to take office if he wins the
election, they clearly intend to remain the arbiters of
acceptable political behavior under the civilian
regime.
In the mid-1970s, when Brazil's generals initiated the
process of abertura or political liberalization, they
envisaged a gradual, tightly controlled transition to
civilian rule that would permit them to return to the
barracks with dignity while retaining substantial
political influence. Since 1980, however, a series of
problems-- a three-year recession, a financial
payments crisis, and President Figueiredo's inept
leadership-have eroded the military's prestige and
undermined its control over events. Figueiredo was
unable to impose his choice as the government party's
presidential candidate, many party members are
defecting to the opposition, and Neves now seems
likely to win the indirect election in January. The
armed forces' departure from direct rule appears less
a withdrawal than a rout
Military Concerns
In this atmosphere, the armed forces, in our view, see
the resurgence of the extreme left both as a blatant
repudiation of military rule and as a threat to the 25X1
values that inspired intervention 20 years ago.
Because they associate the opposition with the left and
would prefer a more congenial civilian administration,
many generals have supported government party
candidate Paulo Maluf. In August, Figueiredo
ordered all public officials to back Maluf and sacked
a cabinet officer who refused.
Now, however, few military officers appear to place
much hope in Maluf's campaign,
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Embassy and defense attache-report that the armed 25X1
forces are reconciled to an o osition victory.
According to press reporting, 25X1
most high-ranking officers are willing to accept
Neves's ascension to the presidency because he is a
cautious, moderate politician who has worked well
with the military. They are concerned, nonetheless,
that in return for leftist support he may move to
legalize the Communist Party or appoint radicals to
important posts in his administration.
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Moves Against the Left
The appearance of Communist banners and slogans at
opposition rallies this year has taken on symbolic
importance for the armed forces, in our opinion.
At an opposition rally in Belem last month, police
denied entry to anyone carrying outlawed banners or
placards-and also anyone wearing a red shirt. Those
who protested were detained.
The military regime has signaled its displeasure in
other ways as well, according to US Embassy and
press reports. Federal police recently interrogated the
head of the pro-Moscow Brazilian Communist Party
about the party's support for Neves and its campaign
to obtain legal status. The police also raided party
headquarters in Belo Horizonte and Sao Paulo,
arrested two of its officials, and apparently destroyed
the offices of two of its newspapers. Late last month,
the authorities also moved against the pro-Albanian
Communist Party of Brazil, hitting offices in several
cities and arresting about 40 militants
lower profile
The US Embassy reports that the Army has ordered
field commanders to instruct their troops on the
dangers of leftist subversion. Local units also have
been told to monitor campaign rallies and other 25X1
activities involving the left. Public warnings by high-
ranking officers about the subversive threat probably 25X1
are intended to persuade radical groups to keep a
Rightwing Activities
Scattered acts of violence against targets associated
with the left or critical of the military indicate
rightwing groups are resuming operations. Arson
damaged the Sao Paulo office of Amnesty
International last May and the Brazilian Bar
Association headquarters in Brasilia in June. In Porto
Alegre last month, a bomb destroyed the offices of
Neves's opposition coalition.
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Prospects
The armed forces' commitment to return to the
barracks apparently remains firm, despite their
uneasiness over the resurgent left. Most officers seem
reconciled to an opposition electoral victory, believing
Neves will not threaten their institutional interests
Nonetheless, the military clearly plans to play an
active political role under the civilian regime,
particularly in setting limits on the left. The generals'
recent heavyhanded actions probably were intended to
put both the traditional politicians and the extremists
on notice that there will be no return to the radicalism
of the early 1960s
In opting for democracy, the armed forces may
believe they already have let the genie out of the
bottle. If the civilians can maintain order and keep the
left at the margins of power, the officers probably will
be able to live with the new, less controllable, more
tumultuous political system. Otherwise, the military
may, as it did in 1964, take command of the
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Tactics
Guatemala's various insurgent groups continue to be
plagued with the same problems-a crippled urban
support structure, high combat losses, organizational
disunity, and an improving political climate '-that
prevented them from disrupting the Constituent
Assembly election held in July. To overcome these
problems, the guerrillas plan to adopt new tactics
designed to regain their credibility and forestall a
further decline in their ranks. Their plans include
emphasizing small-scale military operations,
infiltration of political and social groups, and the use
of terrorism. We believe these tactics, even if
employed effectively, are unlikely to cost the
government the strategic initiative. Moreover, some of
them are likely to damage the insurgents' long-term
goal of building popular support for their cause.
he guerrilla groups remain divided by
personality conflicts and ideological differences.
Despite the urging of the Guatemalan National
Revolutionary Union-the umbrella organization
specifically created in 1982 to facilitate tactical
coordination-the insurgent factions have failed to
work together, even on matters of mutual concern
such as mission planning and logistics management.
issue of Guatemalan insurgent unity.
situation was likely to get worse as Cuba focused
more on events in Nicaragua and did not press the
Current Tactics
In an effort to rebound from the setbacks suffered
throughout most of this year, the insurgents have
begun to use tactics that underscore their currently
weakened condition. Their military actions are all low
risk, high profile and are primarily designed to harass
the government and demonstrate to the public that
the insurgency is still a force to be reckoned with.
forces. Local press
Since mid-summer, the insurgents have attacked only
small, isolated Army and Civilian Defense Force units
and have avoided contact with large government
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government forces-some conducted at night-took
place every few days between July and early
November. In two of the largest, 17 soldiers and an
Army engineer were ambushed and killed in Quiche
Department in late August, and seven government
troops were killed in another guerrilla ambush in late
October. At the same time, the guerrillas have
shunned contact with battalion-sized Army units,
such as those that recently conducted sweep
operations in Quiche.
The guerrillas periodically disrupt economic activity
by temporarily seizing towns, cooperatives, and farms
in remote areas. They also appear to be returning to
their earlier strategy of attacking lightly defended
economic targets such as power plants and bridges.
Several such attacks have taken place since late
August, according to press
reporting. These low-risk efforts probably reflect the
insurgents' desire to inflict damage on the government
without expending many resources. Nevertheless,
these tactics-by disrupting transportation and
blocking access to markets-impact directly on the
local populace and probably work against the
insurgents' long-term goal of regaining popular
support.
Prospects
The guerrillas apparently believe the new tactics will
stave off a further decline in their strength and
counter the Army's highly successful
counterinsurgency and civic action programs. In our
robably will
their cause.
increase popular resentment against the rebels and
further erode what remains of popular support for
guerrillas or risk reprisal by the government.
Similarly, the insurgents' ability to penetrate and use
political and social groups is likely to remain limited
because of the weakness of their urban networks.
Continuing government operations against safehouses,
front groups, and other urban support structures
probably will disrupt the rebels' attempts to rebuild
their strength in the cities, recruit, and obtain
financial support. Although some small leftist parties
might be willing to accept manipulation by the
insurgents, they would need to conceal their ties to the
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Active Army patrolling probably will continue to keep
the guerrillas off balance and on the move, thereby
hampering their ability to regroup. Although the
rebels' reversion to more traditional tactics involving
small units in low-risk operations probably will reduce
their combat losses, these tactics are unlikely to
recapture the strategic initiative.
The guerrillas are likely to react to these mounting
political and military problems by retreating even
further to isolated parts of the country and conducting
sporadic forays into populated areas and ambushes
against small Army units. In the cities, they probably
will resort increasingly to terrorism in an attempt to
dramatize their presence and provoke a government
overreaction.
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Cuba-Angola-Ethiopia-
Growing Morale Problems
The morale of Cuban troops stationed in Angola and
Ethiopia has continued to decline over the past two
months largely as a
result of the hostility of the local populace in both
countries toward the Cubans and growing pressure by
the UNITA guerrillas in Angola. An upswing in
South African and UNITA military activity in
Angola over the past year or so has forced Havana to
increase its presence there to probably as many as
35,000 military personnel. The Cuban military
presence in Ethiopia, however, has declined to some
2,000 to 2,500 troops
local comman ers have placed tighter
security restrictions on Cuban military personnel
following a shooting incident in Luanda in August
that left one Cuban and three Soviet soldiers dead.
The new regulations limit the movement of off.-duty
Cuban soldiers in the Luanda area and require that
noncombat personnel wear civilian clothes to
distinguish them from Cuban troops. Visitors have
been prohibited in troop quarters and soldiers have
been urged by their com
The Cubans are suffering increasing casualties from
raids by UNITA on towns where there are Cuban
garrisons. The Luena area of Angola reportedly has
been the site of several clashes between Angolan and
UNITA forces, and one UNITA attack was repulsed
only by the decisive intervention of the Cubans.
the situation in Luena
was so dangerous, Cubans could not move freely
outside their compound
Despite nine years of heavy Cuban assistance,
Angola's security situation continues to deteriorate.
Luanda's efforts to turn back the insurgents have not
prevented the continued expansion of UNITA's area
of operation, and there may
now be strong sympathy within the Angolan military
for a diplomatic solution.
Situation in Ethiopia
Cuban troop morale also is low in Ethiopia, where the
Cubans have had no active combat role since the
Ethiopian victory over Somalia in 1978 in the Ogaden
war. Although as many as 17,000 Cuban troops may
have been deployed at that time, most of them have
been withdrawn, leaving at most 2,500 Cuban
military personnel there. The remaining contingent 25X1
does little but garrison duty. President Castro has
prohibited his troops from taking a direct part in the 25X1
war between Ethiopian Government forces and
Eritrean insurgents in the north primarily to avoid 25X1
casualties, but also to avoid angering some Arab
states that are sympathetic to the insurgents.
A West European military attache recently observed 25X1
Cuban troops in Dire Dawa that were poorly dressed
and apparently in ill health, according to US Embassy
reporting. The attache's Cuban counterpart attributed
the poor morale to a lack of military duties and
admitted that alcoholism and venereal disease were
increasing among enlisted men. Off-duty Cubans 25X1
often were observed armed with assault rifles and
pistols. 25X1
Moreover, relations between Cuban military
personnel and the Ethiopian people are strained. The
Cubans reportedly have taken advantage of their
status and protection by the Mengistu regime to
commit crimes against Ethiopians that go
unpunished. Ethiopians are treated as inferiors, and
Cuban military advisers have reportedly beat 25X1
Ethiopian recruits senseless when they failed to
measure up to Cuban standards.
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Effects at Home
Morale is also on the downswing in Cuba. Castro
claims that there are over 100,000 veterans of foreign
service-most are probably from the nine years of war
in Angola. the
horror stories of soldiers returning from Angola are
alarming the population and, as the war drags on,
increasing numbers of Cubans apparently prefer to
turn in their party and workcards rather than serve in
Angola.
Cubans have long been disturbed by the continuing
casualty flow in Angola, and may apparently see the
involvement there as costly and having little tangible
return. As news of the recent problems in Angola
spread, popular attitudes on the Angolan relationship
are likely to deteriorate further, and incidents in Cuba
that embarrass Havana and complicate its ties with
Luanda are possible. Harassment of Angolans
working or studying in Cuba is likely to increase as
Cuban frustrations mount. Faced with this situation,
Castro probably will be particularly wary of any
Cuban troop withdrawal settlement that appears to be
a military defeat
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Cuba: Mixed Economic
Performance
Havana has boasted in a report to its Western
creditors that its economy during the first half of this
year registered strong growth and increased worker
productivity. The data presented in the report
however, signals impending
problems for Cuban economic planners. Mounting
imports from the West and the weakened
performances of sugar and nontraditional exports
have contributed to a swelling hard currency trade
deficit. This deficit could exhaust Havana's meager
foreign reserves, add to its unwieldy Western debt,
and undermine its chances to complete another
official debt rescheduling next year.
The estimated real growth of Cuba's gross material
product during the first half of this year probably will
be closer to 3 percent than the 9.9 percent that
Havana claims.' The US Interest Section in Havana
agrees that economic activity appears to have
increased earlier this year, based on observed
construction and transportation activity. The
government's report, however, apparently overstates
the rate of growth by failing to take account of
inflation, estimated by the Interest Section to be close
to 7 percent. Furthermore, the assertion that all
sectors of the economy grew by at least 6 percent is
contradicted by data presented later in the same
report that indicates declining output of several
commodities.
Havana claims that more than 80 percent of the
growth results from increased productivity. This claim
reflects the government's effort to spotlight the
success of highly publicized incentive programs
introduced into roughly half of all economic
establishments over the past two years. In reality,
however, the spurt in economic activity probably is
Gross material product (GMP), measures the value of goods
produced and services used by the productive sectors. It does not
include services such as passenger transportation, finance,
insurance, public administration, the Army, or internal security
more the result of sharply increased imports. Earlier
restraints on imports-applied in 1982 and 1983
while Havana grappled with foreign exchange
shortages and two debt renegotiation exercises-
apparently have been abandoned. According to the
Cuban data, imports from the Soviet Bloc rose 19
percent, while those from the West jumped 69
percent, probably largely the result of expanded lines
of credit from Argentina and Spain. Past trends and
official Cuban policy suggest that as much as 76
percent of the imports from the West consisted of raw
material and intermediate goods that would have
contributed directly to economic growth.
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The resurgence of imports from the West was not 25X1
balanced by any comparable increase in hard
currency exports, indicating that Havana will be hard
pressed to sustain this pace of economic growth over
the next few years. The hard currency trade deficit
grew to $156 million by June and would have been
even larger without the resale of $179 million worth of
Soviet-supplied petroleum, according to Cuban data.
The trade deficit is likely to widen further as the
demand for energy to sustain growing economic
activity cuts into the petroleum available for re-
export. Furthermore, Havana's drive to stimulate
production of nontraditional exports appears to be
floundering. Falling production and sales of nickel,
citrus, coffee, and textiles-products touted as central 25X1
to Havana's export promotion drive-account for
much of the decline. According to the
report, the decline in the value of sugar owing to the 25X1
weak world market for that commodity accounted for
less than half of the sharp drop in total exports to
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Despite the short-term growth sparked by the surge in
imports, Havana's runaway trade policy is likely to
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aggravate Western creditors. The widening trade
deficit suggests that the government may be falling
well short of the targets on the hard currency trade
balance and foreign reserves negotiated with official
creditors in debt rescheduling exercises earlier this
year. Furthermore, an attempt to finance the deficit
with new Western credits-if they were to be
forthcoming-probably would push Havana over its
target for total foreign debt. Under this year's
rescheduling agreement, Havana must meet these
targets before official creditors consider rescheduling
the 1985 debt.
We judge that Moscow is unlikely to provide the hard
currency necessary to finance Havana's freewheeling
purchases from the West. The Soviets have refused to
bail out the Cubans in past hard currency debt
crunches. Moscow probably also believes that the
Cubans have been too extravagant in their trade
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The Bahamas: Pindling
Still on Top
Despite pressure from both the ruling and opposition
parties, Prime Minister Lynden O. Pindling remains
firmly in control of the government. His recent
reelection as leader of the ruling Progressive Liberal
Party and the inability of the weak opposition party to
pose a strong challenge tends to discount rumors that
Pindling will resign from office in the near term.
Although the Prime Minister may face serious
charges when a Commission of Inquiry into
government corruption presents its report later this
year, we believe that he is determined to remain in
office and will take whatever steps he deems
necessary to maintain his position until his term ends
in 1987.
in September 1983, an NBC news report alleged that
senior government officials, including the Prime
Minister, had accepted bribes to protect drug-
smuggling operations in the islands. In response,
Pindling called for the formation of a Royal
Commission of Inquiry to investigate the charges.
Although the Commission originally was expected to
finish hearing testimony in June 1984 and to present
its findings in September, proceedings did not
progress as quickly as hoped. As a result, Commission
members now anticipate releasing the report in late
December.
The investigation reportedly has failed to find any
evidence directly linking Pindling to drug payoffs.
Nevertheless, a number of financial irregularities-
most notably Pindling's acceptance of a large finders
fee for the sale of a government-owned bridge-and
the resultant unfavorable coverage in the foreign press
have severely damaged Pindling's public and party
support.
The resignation on 8 October of Deputy Prime
Minister Arthur Hanna-leader of the anti-Pindling
faction in the ruling party-apparently was designed
to set the stage for an effort by dissident party
members to oust Pindling with a call for a vote of no
confidence when Parliament convened on 10 October.
Hanna's plan for a vote of no confidence was scuttled
by the refusal of the opposition Free National
Movement to cooperate
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Lacking the
support of opposition parliamentarians needed to
topple Pindling, Hanna apparently abandoned the
plan.
Pindling then moved to strengthen his control of the
The strength of Pindling's
support within the party was demonstrated when his
handpicked candidate for the party chairmanship
defeated the incumbent-a strong Hanna supporter-
by an overwhelming 302 to 107 margin.
With Pindling's control of the party stronger than
ever and those most tainted by the Commission
hearings removed from leading government and party
positions, the Prime Minister is now likely to focus on
developing a strategy to deal with the results of the
Commission report. Pindling probably calculates that
many of the accusations will be discounted because
the testimony consists largely of unsubstantiated
third-party evidence, much of it from convicted
criminals and known drug traffickers, The
postponement of the report's release is likely to work
in Pindling's favor. Over a year already has lapsed
since the initial accusations were made, and public
interest probably will continue to wane in the next few
months.
Pindling may choose not to release the entire report,
but the chances for a leak make this a risky tactic.
After Pindling and the Cabinet study the report, it is
scheduled to be released to the Parliament and the
Attorney General's office. Although Attorney
General Paul Adderley has warned that he will pursue
legal action against Pindling if there is strong
evidence of wrongdoing, we believe that Adderley is
unlikely to do so. Adderley is politically vulnerable
because he is the only Cabinet minister not holding an
elected seat in Parliament and he can be dismissed by
the Prime Minister at any time. Although such a
move would imply guilt on Pindling's part, it is a risk
he probably would be willing to take if the
Commission's report further damages his reputation.
If he took such action, Pindling would also probably
estimate that Adderley's unpopularity-his arrogance
has gained the Attorney General many enemies in
both the ruling and opposition parties-would
dampen any public disapproval of the dismissal.
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Latin America
Briefs
US military personnel provide backup support.
Some members of the multinational Caribbean Peacekeeping Force stationed in
Grenada may be withdrawn following the elections on 3 December. The unit is
made up of about 300 men from the Jamaica Defense Force and small contingents
from Antigua, Barbados, Dominica, St. Kitts-Nevis, St. Lucia, and St. Vincent.
The peacekeeping force has the primary responsibility for security in Grenada
until a restructured indigenous police force is ready around April 1985. Some 200
governor general requests further assistance.
Late last month, St. Vincent Prime Minister Mitchell publicly announced that he
intends to withdraw his country's contingent on 5 December unless the Grenadian
indicate a greater need for the security personnel in their home islands.
Although the primary motivation for the withdrawals is economic-the countries
are barely able to afford maintenance of police forces on their own islands, much
less on Grenada-there are political considerations as well. In all of the
participating countries, the continued presence of the peacekeeping force has been
criticized by opposition elements. In addition, increasing violence in Jamaica and
the possibility of unrest in Dominica during the coming election campaign period
gunmen, armed gangs of the ruling party, and police,
A decision by the Worker's Party of Jamaica, a small Communist Party, to arm its
activists in Kingston has caused increased clashes since June between leftist
Worker's Party chief Trevor Munroe wants to goad the
violence and is coordinating his activities with Munroe.
government into declaring a state of emergency to increase pressure for new
elections. member of the main
opposition party is directing small, newly created paramilitary groups to commit
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The paramilitary groups are more organized and better armed than the usual
street gangs that have plagued Jamaica in recent years. Nevertheless, Prime
Minister Seaga, whose popularity is badly eroded by Jamaica's economic
difficulties, is unlikely to call new elections. Instead, he probably will crack down
soon to curb the violence. The timing, so close to the start of the crucial tourist
season in December, could badly hurt foreign exchange earnings and further deter
investors.
Netherlands Antilles Refinery Closure
Exxon's announced plan to close its Lago oil refinery in the Netherlands Antilles
early next year will compound the country's economic troubles. Company officials
decided to shut down the Aruba operation, the largest in the six-island federation,
after a yearlong effort to make the refinery profitable. Royal Dutch Shell, operator
in Curacao of the other refinery in the country, has announced that it also will pull
out unless costs can be cut.
Reduced US oil demand and excess refining capacity have depressed sales of
Caribbean refined products. Such products account for 97 percent of Antillian
export earnings. With other foreign exchange earners-tourism, ship repair, and
offshore banking-already languishing, closure of even one refinery could nearly
cripple the country's economy. A shutdown of both refineries would add about
2,000 workers to the jobless ranks, pushing the unemployment rate to over 40
percent. Growing economic troubles are likely to generate unrest, particularly as
Aruba prepares to leave the Federation in early 1986.
The government estimates that its foreign reserves will be $750 million in the red
by the end of this year unless debt relief can be obtained. Gross reserves now stand
at only about $170 million. The government owes $885 million to Mexico,
Venezuela, and other government creditors, and $35 million in interest to
commercial bankers through the rest of this year. It has proposed a 90-day
suspension of payments on the commercial debts while preparing a rescheduling
proposal to be presented to foreign bankers by 31 December. Officials are hoping
to conclude an IMF agreement by December and a Paris Club rescheduling by
March 1985. We believe the government's timetable may be overly optimistic. In
the meantime, deteriorating economic and social conditions could prompt new
outbreaks of domestic unrest.
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necrer
The Barbadian economy continues to falter despite the economic recovery in the
United States-Barbados's main trading partner-and passage of the Caribbean
Basin Initiative. Formerly one of the Caribbean's strongest performers, Barbados
is likely to register little economic growth in 1984 despite a slight rise in tourism,
its major foreign exchange earner. Excessive government regulation appears to be
limiting the coattail effect of the US recovery and reducing the effectiveness of the
CBI.
Intraregional trade protectionism has hobbled the island's light manufacturing
sector, and in the sugar industry high processing costs and low prices are more
than offsetting the 18-percent rise in sugar production this year. The economic
slowdown has pushed the overall jobless rate to 18 percent-the highest since
1976. Falling exports have prompted the government to borrow heavily at home
and abroad on nonconcessional terms to continue funding ambitious development
projects. Opposition parties are working hard to take advantage of growing public
dissatisfaction with economic hard times to strengthen their hand in national
elections that are constitutionally due in 1986.
The opposition will have an opportunity to make gains in a second byelection to fill
a vacancy in the National Legislature to be held late this month. The runoff is
necessary because the Barbadian High Court, acting on claims by the ruling
Barbados Labor Party of irregularities in the counting of ballots, voided the first
special election held in July. The opposition Democratic Labor Party won the
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