LATIN AMERICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01184R000301710002-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 28
• Document Creation Date: December 22, 2016
• Document Release Date: January 3, 2011
• Sequence Number: 2
• Publication Date: July 19, 1985
• Content Type: REPORT

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ALA LAR 85-016
19 July 1985
copy 3 9 0
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Review
Articles Costa Rica: Improving the Security Forcel 1 25X1
In response to perceptions of growing threats from Nicaragua and
from domestic extremists, President Monge has increased efforts to
improve the ability of Costa Rica's modestly equipped security force
to preserve internal order and resist external aggression.
Prime Minister Esquivel's government is being challenged by
economic problems, growing drug trafficking, and a territorial
dispute with Guatemala.
President Betancur's government is experimenting with measures
designed to maximize the inflow of foreign exchange that could have
the side effect of encouraging increased inflows of narcotics profits
from foreign safehavens.
Argentina: Emerging Nuclear Supplier
American Embassy, Buenos Aires
Years of heavy investment and consistent government support are
enabling Argentina to approach its goal of becoming a major
exporter of nuclear materials and technology
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Briefs Brazil: The Baumgarten Case
Argentina: Labor's Stance Toward Economic Program
Cuba: Expanding Commercial Ties With African
and Arab States
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ALA LAR 85-016
19 June 1985
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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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Secret
Costa Rica:
Improving the Security
Force
Costa Rica has relied on its modestly equipped, 8,000-
member civil and rural guards for internal and
external security since the professional army was
abolished in 1949. In recent months-responding to
perceptions of growing threats from Nicaragua and
domestic extremists-President Monge has increased
efforts to professionalize the security force while
keeping its size the same. His goal is to improve the
civil and rural guards' ability to preserve internal
order and to resist external aggression until friendly
nations send assistance. Although a consensus on
security measures has been slow in coming, support
for the President's policy appears to have coalesced in
the aftermath of civil guard fatalities in a border
skirmish in late May with Nicaragua.
The present security force is poorly trained, modestly
equipped, and suffers from a rapid turnover rate.
Many members are replaced every four years under
the political patronage system, and others choose
better paying civilian jobs,
At times o clashes between the
Sandinistas and Eden Pastora's insurgent forces in
Costa Rican territory, the guards have been largely
ineffective due to a limited transport capability, lack
of heavy weapons, and inexperience.
Increased activity by Costa Rican extremists on both
the left and the right also concerns the Monge
administration. In May, two demonstrations led by
the Communist Popular Vanguard Party protesting
the presence of US advisers resulted in confrontations
with police. Embassy reporting indicates that
Communists are supplying weapons for land invasions
by unemployed banana workers in the south and
anticipate armed actions against government forces.
On 10 June several hundred members of the Free
Costa Rica Movement-a conservative organization
that reportedly has a paramilitary wing and maintains
its own training facility-attacked the Nicaraguan
Embassy in San Jose in reaction to the 31 May
Sandinista border incursion. The following day Costa
Rican police arrested two members of a rightwing
group that apparently dynamited powerlines in the
northwest to stop the sale of electricity to Nicaragua.
Some civil guard reservists probably were also
involved in the bombing,
Improving Intelligence
The government's vulnerability has prompted Monge
to revamp the Costa Rican intelligence service. The
new Directorate of Intelligence and Security (DIS),
established in February, comprises some 130 armed
men responsible directly to the President. Its tasks
include monitoring subversive activity, surveillance of
refugees, conducting clandestine operations,
countering terrorism, and liaison with foreign security
services. The DIS has the authority to carry out
arrests and to inspect premises without a search
warrant.
To ensure a cadre of professional intelligence officers,
Monge reportedly has sought personal assurances
from leading presidential candidates that his
successor will leave the DIS intact. Only the two top
positions will be appointive. Recent DIS successes
suggest that changes in the organization already are
producing results. Intelligence officers managed to
break a bank robbery case earlier this year and played
a vital role in the capture of a major Mexican drug
trafficker in April.
The Public Security Ministry is attempting to
establish a separate intelligence collection apparatus
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ALA LAR 85-016
19 June 1985
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within the rural guard. While still in the early stages
of searching for personnel and equipment,
After a 13-year lapse,
:1:11 : e eve as Jumped
to $9 million this year. In May, US special forces
advisers began training a 750-man counterinsurgency
battalion-the country's first-at a facility in
northwestern Costa Rica near the Nicaraguan border.
The battalion, which will be equipped with mortars,
antitank recoilless rifles, and its own transport, is
structured to operate as a single unit or as four
independent companies, according to US Embassy
reports. Its mission is to serve as a "trip-wire"-in the
event of an invasion the battalion would be able to
resist for several hours, until friendly countries send
assistance.
military training to some 150 rural guardsmen in
Costa Rica this year,
Previous Panamanian assistance in 1983
and 1984 was of limited help because of a high
dropout rate during training
and in 1983 sent submachineguns, rifles, and
They sponsored a motion
to censure Public Security Minister Piza for allowing
foreign "troops" to enter Costa Rica without
legislative approval. The ensuing debate,
rompted the government to
delay a US helicopter training exercise. In mid-May,
more than 500 students, professors, and legislators
demonstrated against the US presence, and two
smaller Communist-led protests resulted in clashes
with police, according to press reports.
Nonetheless, negative public reaction to civil guard
fatalities suffered in a Nicaraguan crossborder raid
on 31 May effectively overwhelmed the criticism of
US aid. In the Legislative Assembly, the motion to
censure Piza failed by a wide margin, and the
deputies condemned Nicaragua instead. Both the
ruling party and the main opposition party closed
ranks behind the President and called for strong
measures-presumably including US aid-against
the Sandinistas. Monge now appears to enjoy a public
consensus for improving the capabilities of the public
security forces, although most Costa Ricans still
strongly oppose reviving a professional military
Prospects
It is likely that security modernization efforts will
continue, given wide public support and the likelihood
of continued tensions with Nicaragua. Because the
presidential candidates of the two major parties are in
favor of strengthening defense capabilitities, the trend
probably will continue after a new administration
takes office in May. Further border incidents with
Nicaragua are likely because Costa Rican security
detachments are scattered along the border, and
Sandinista reconnaissance teams have pursued
insurgents into Costa Rican territory on several
occasions
Nonetheless, the rural and civil guard has a long way
to go before becoming a professional force. As long as
the patronage system prevails, the turnover rate will
be high and security training efforts will have little
effect. While the administration currently enjoys
political support for modernization, economic
constraints-high unemployment and the pressures of
IMF scrutiny-will make it extremely difficult for
San Jose to increase spending levels on security in the
near term. It is unlikely, for example, that the
government will offer salaries high enough to compete
with the private sector, and upgrading of weaponry
and other equipment will depend largely on generous
foreign assistance.
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Secret
Belize:
Challenges Ahead
The seven-month-old government of conservative
Prime Minister Manuel Esquivel is being challenged
by longstanding economic problems, growing drug
trafficking, and a territorial dispute with Guatemala.
Despite Esquivel's desire to address these issues by
cultivating closer ties with the English-speaking
Caribbean-with which Belize shares ethnic,
linguistic, and historical affinities derived from a
common colonial past-economic and other realities
probably will prompt him to turn increasingly to the
United States for economic aid and security
guarantees.
Economic Problems
Belize's economy is facing a difficult adjustment away
from dependence on the sugar industry, which
accounts for more than half of domestic exports. Low
world sugar prices and a reduced US quota have
severely hurt Belize's largest employer. The US
Embassy reports that 93 workers were laid off in May
from one of the country's two main sugar mills, and
the closure of the other major facility in late June is
expected to contribute either directly or indirectly to
the loss of more than 1,000 jobs. Failure to diversify
to other agricultural exports, such as citrus, coffee,
and cacao, is making the production of marijuana-
90 percent of which is destined for the United
States-increasingly attractive to planters in northern
Belize, according to US Embassy reports. Although
Belize's location, climate, and favorable
land/population ratio make agricultural
diversification feasible, a weak infrastructure,
together with high energy costs, have impeded efforts
to attract badly needed private-sector investment
from outside sources.
Esquivel appears early in his administration to be
having more success than his predecessor in
developing foreign investment and technical
assistance opportunities. US Embassy reporting, for
example, indicates that a visit to Belize in early
March by a South Korean investment team laid the
groundwork for follow-on visits later this year to
discuss prospective Korean plywood manufacturing
and cannery plants in Belize and joint ventures in
fishing and other fields. Seoul, however, is likely to
link such assistance to the establishment of diplomatic
relations between the two countries. Taiwan officials
also appear interested in hydropower, hotel, and air
service projects in Belize and reportedly have offered
to provide a technical assistance mission once an
official request is received. US investors, meanwhile,
are helping local businessmen to diversify the
country's agricultural base by developing citrus,
cattle, and lumber operations. Marking an important
new source of foreign exchange earnings, Belize 25X1
resumed meat exports to the United States in June for
the first time since 1980 following its recertification
by US authorities last April.
Despite these modest gains, high unemployment and
underemployment-which combined hover around
40 percent-and planned austerity measures in
adherence to an IMF standby program, threaten to
undermine popular support for the government.
Opposition leaders, for example, quickly used the
recent sugar mill closing to organize a peaceful
demonstration by some 1,600 workers to protest not
only the mill's closure, but also Esquivel's economic
policies in general. US Embassy officials assess that
pressure on the government to provide jobs is likely to
increase as Belize's young population-over
50 percent of the country's inhabitants are under age
20-and the influx of growing numbers of unskilled
immigrants from Central American countries further
strain the economy and government services.
Belize and the Caribbean
Historically, Belize has maintained extensive 25X1
economic links with other English-speaking
Caribbean states through its membership in regional
agencies such as the Caribbean Community and
Common Market (CARICOM), the Caribbean
Development Bank, and the Caribbean Association of
Industry and Commerce. Nevertheless, these
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ALA LAR 85-016
19 June 1985
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institutions continue to suffer from a lack of capital
for production and export financing, and have been
ineffective over the last decade in coordinating
regional development projects. US Embassy
reporting, for example, indicates that CARICOM
members still exchange only modest amounts of
goods, mainly raw commodities, and intraregional
trade in agricultural produce accounts for less than
1 percent of total imports.
Belize has attracted some investment from Jamaica
and Trinidad and recently agreed to a CARICOM
proposal for a protective policy for regional produce.
The size and absorbtive capacity of Caribbean
markets, however, are likely to remain too limited to
stimulate export growth in Belize. Capital flow into
the region under the auspices of the US Caribbean
Basin Initiative probably will stimulate individual
Caribbean economies, but any expansion of Belizean
trade with the area is more likely to be a side effect of
its gearing up for growing access to US markets.
Growing Drug Trade
Despite Esquivel's willingness to cooperate with the
United States on drug eradication programs,
burgeoning marijuana cultivation and trafficking, as
well as corruption among some senior officials,
threaten to undermine the integrity of internal
security and law enforcement measures. The US
Embassy reports that the drug trade is becoming
increasingly institutionalized, as the number of
Belizeans who profit from it continues to grow. The
Minister of Home Affairs has noted publicly that
members of the National Police and other government
officials are involved in corruption related to drug
trafficking. There are also growing indications of
significant smuggling activity in the triborder area
with Guatemala and Mexico, which may heighten
concern that the narcotics underworld possibly serves
as a conduit for arms trafficking in the region
In an attempt to counter anticipated opposition from
growers and traffickers to renewed aerial spraying,
Esquivel is seeking foreign assistance in creating a
Bureau of Narcotics Control, Prevention, and
Treatment to educate the public and build popular
support for the drug eradication program, according
to US Embassy reporting. Although CARICOM
members have attempted to foster regional
cooperation on law enforcement measures to curtail
drug activity, lack of resources and corruption
probably will continue to undercut such efforts.
Consequently, Esquivel probably will look beyond the
Caribbean and rely mostly on US help
Foreign Policy
Since gaining independence in 1981, growing
international and regional recognition of Belize as an
independent state makes it possible for the Esquivel
government to focus on immediate security concerns,
such as the longstanding territorial dispute with
Guatemala. Prospects for resolving the dispute have
improved recently with the inclusion in the new
Guatemalan Constitution of an article that will
empower a new civilian government in Guatemala
City-scheduled to take office in January-to
negotiate more directly with the government of
Belize, rather than through London. The turnaround,
in our view, is important because it reflects at least de
facto recognition by the Guatemalans for the first
time of the reality of Belizean sovereignty. Although a
permanent settlement appears unlikely in the near
future, Esquivel probably will request US assistance
in facilitating future negotiations with Guatemala.
Belize has remained relatively isolated from the
political instability and violence of Central America,
and Esquivel has said that he will not condone the
presence of US troops in the country for fear of being
drawn into the regional turmoil. While we expect
Esquivel to take a cautious attitude toward US
military activities, he probably will cooperate with
Washington on some matters of regional policy. For
example, Esquivel already has agreed to the
construction of a Voice of America broadcasting
station in Belize. Anticipating the eventual
withdrawal of the British, we believe Belize ultimately
will turn to the United States in an effort to bolster
internal security and may request a specific
arrangement with Washington for defense against an
external threat. In the interim, however, Esquivel is
attempting to improve morale and professionalism in
the 600-man Belize Defense Force
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JCI I CL
Outlook
Esquivel is unlikely to depart significantly from the
foreign policy objectives of his predecessor and almost
certainly will remain committed to limited
involvement in Central America. Nevertheless, his
government probably will be more aggressive in
pursuing Western economic aid as well as military
guarantees from the United States. Although Belize
probably will continue to maintain close cultural,
economic, and political ties with other countries in the
Caribbean, the region's inability to marshal sufficient
resources to meet its economic and security goals
probably will prompt Belize to draw closer to the
United States.
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Colombia:
"Narcodollars" and the
Balance-of-Payments Problem
Only two countries in Latin America-Colombia and
Paraguay-have survived the negative economic
forces that buffeted LDCs over the past several years
without rescheduling their external debt service
obligations. We judge that, in the case of Colombia,
inflows of drug money helped sustain its international
position during the years that the "oil price shock"
crippled other nonpetroleum producing countries.
More recently, however, traffickers have brought
fewer dollars back to Colombia, and this, combined
with a sustained depression in the coffee export
business, has substantially reduced foreign exchange
receipts. In an effort to avoid harsh austerity
measures, President Betancur's government is
experimenting with measures designed to maximize
the inflow of foreign exchange. This could have the
side effect of encouraging increased inflows of
narcotics profits to Colombia from foreign safehavens.
Background
We calculate that drug money first became important
in Colombia's external account balance about a
decade ago when funds from the burgeoning cocaine
trade were added to the already substantial receipts
from the marijuana business. Most academic research
estimates indicate that, by the mid-1970s, drug
money accounted for at least the equivalent of 15
percent of all foreign exchange receipts. The
clandestine inflow of US dollars was sufficient to
create a major upheaval in the exchange markets;
from 1975 through 1981 the value of the dollar on the
Colombian black market was consistently below that
offered by the Central Bank.
The annual drug money flow into Colombia
apparently peaked in 1980 at about $2 billion.
Although the Central Bank opened a "ventanilla
siniestra" (no questions asked window) in 1980 to
capture additional drug money revenues, the inflow
shrank to less than $1 billion in 1984, according to US
Embassy estimates. The traffickers' disinclination to
return funds to Colombia-a concern shared by
legitimate businessmen-resulted in part from
Colombia's deteriorating economic situation. It also
Before the Colombian traffickers discovered gold,
drug revenues generally entered Colombia as:
? Dollars or other dollar instruments smuggled by
traffickers. An unknown portion of such cash is
exchanged for pesos on the currency black market.
? Pesos supplied by exchange houses against dollars
received in Colombia or elsewhere. A considerable
share of these receipts may be reported falsely as
tourist revenues.
? Smuggled goods.
? Under invoiced imports with the discounted balance 25X1
paid in dollars abroad.
? Receipts for phony or overinvoiced exports.
reflected increased financial sophistication by
traffickers, who began to hold more of their profits
outside the country in dollars rather than spending
them in Colombia to enhance their lifestyle and their
position in society.
After 1982, trafficker disenchantment-reflected in
reduced dollar inflows-was reinforced by actions
taken by the newly elected Betancur administration.
In October 1982, only two months after taking office,
Betancur closed the notorious "ventanilla siniestra."
The government campaign against traffickers
following the assassination of Justice Minister Lara in
May 1984 also altered patterns of drug money
movement. Clandestine dollar flows into Panama
Traffickers have rearranged their
trafficking routes and sought cocaine refining sites
elsewhere, thus redirecting new investments to non-
Colombian sites. Some traffickers also have left
Colombia with their money.
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ALA LAR 85-016
19 June 1985
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Colombia: Official and Black-Market
Dollar Exchange Rates, 1974-85
0 1974 75
Black market
official
Betancur's Policy Changes
Faced with a worsening international cash flow and
under intense pressure to turn around a deteriorating
economy, Betancur has proposed two measures
designed to reverse capital outflow:
? A tax amnesty on funds from abroad provided that
they are invested in high-priority development
projects during a specified time period.
? Legalized entry of imports purchased with private
foreign exchange held abroad.
These measures, if enacted, could have the additional
effect of encouraging inflows of narcotics dollars.
Most of the funds held abroad by Colombians are in
the hands of traffickers rather than legitimate
businessmen. The traffickers, most of whom are also
engaged in smuggling other contraband, will
especially welcome the second provision, which
legalizes such contraband transactions.
Neither of these measures has been approved, but
some evidence suggests traffickers take Bectancur's
proposals as signifying a new relaxed attitude and
may already be moving more drug money into
Colombia. During the first few months of 1985,
$91 million entered the country under the heading of
service income, including tourism, financial transfers,
and "other." Tourism alone showed income of
$9.3 million in the last week of February, compared to
less than $1 million during that period in 1984.
Economic experts say that the depressed tourist
industry could not possibly have generated such sums.
We conclude, therefore, that the increased "earnings"
represent drug money entering Colombia through the
exchange house system-a mechanism regularly
employed to transfer drug revenues under the cloak of
tourist income.
The Gold Rush
An action taken by the government last year also has
the effect of encouraging inflow of narcotics profits.
As a quick fix to reverse the decline in foreign
exchange holdings, in March 1984 the Central
Bank '-the sole legal purchaser of locally produced
bullion-set a peso price for gold some 30 percent
above the world market level. The declared purpose of
this measure was to prevent illegal gold exports, but
the net effect is to enable the Bank to finance the
current account deficit in part by reselling smuggled
gold for foreign exchange. During 1984 gold
purchases by the Bank totaled 700,000 troy ounces,
but domestic output was less than 500,000 troy
ounces.
gold the Bank had purchased, as well as 2.5 million
troy ounces from its stockpile in 1984.
through his finance, planning, development, and agriculture
ministers, who constitute a majority of its board of governors.
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Production a
Thousand troy ounces
L -_ I- _L_ _L I I I I I i __L
0 1974 75 80 84
Based on amount reaching smelters.
Fad of period.
Stockb
Million troy ounces
80 1
85
Costa Rica almost certainly is one source of gold for
traffickers. According to the San Jose press, Costa
Rican officials claim that up to 70 percent of the
country's gold output is being smuggled abroad
despite premium prices offered by the government.
They allege that traffickers are the principal
purchasers. The Costa Rican press speculates that the
traffickers are outbidding the government for local
bullion, but we consider it more likely that they obtain
a discount by offering to deposit dollars in offshore
bank accounts held by the sellers.
Venezuela as a supplier. The officially recorded gold
output of Brazil, Peru, Bolivia, and Ecuador in 1983
was 1.8 million troy ounces, and, in our view,
substantial unrecorded output probably enters the
underground trade. Whatever its origin, we judge the
gold entered Colombia from neighboring areas via
established smuggling routes exploited by traffickers.'
Outlook
We believe that at present only a small fraction of the
money earned by Colombia's traffickers actually
returns to the country. According to our estimates,
traffickers remove between $3 and $6 billion annually
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have supplied at most only 70,000 of the 200,000 troy
ounces of non-Colombian gold apparently acquired by
the Colombian Central Bank.
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Current account balance
-159
-1,895
-2,895
-2,838
-2,840
-2,995
Trade balance
-238
-1,544
-2,189
-1,755
-1,650
-1,495
Exports, f.o.b.
4,062
3,219
3,215
3,002
2,950
3,205
a Estimated.
b Projection.
Reflects tightening of nonessential imports and accelerated
monthly devaluation pace.
d Reflects easing of import restrictions to comply with IMF-
monitored self-imposed economic adjustments.
from the United States-a sum at least as large as the
projected Colombian current account deficit for 1985.
In addition, Colombian traffickers obtain large profits
from Europe, the second most important market, and
are establishing operations in such other affluent
areas as Australia and the Persian Gulf.
The availability of such large revenues may be too
much temptation for any financially strapped
government to withstand. How far the Colombian
Government will go to siphon off some of the
enormous dollar pool will depend on a number of
factors. Other economic options will affect attitudes
within Colombia toward accommodation of drug
money movements. In the short term, interim bank
loans under IMF monitoring may reduce the
temptation to attract drug money, but persistent
economic problems-austerity and depressed living
standards-may provide an incentive over the longer
term to turn a blind eye to the source of the needed
revenues. Antidrug pressure from the United States
and other consuming countries, as well as the
behavior of the traffickers themselves, also will
influence government actions. A relatively low profile
by traffickers could lead to easing of government
pressure on them and eventual facilitation of their
financial transactions. A new round of trafficker-
promoted violence on the other hand, undoubtedly
would cause an outraged government to close all the
drug money windows.
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Oecret
Argentina:
Emerging Nuclear Supplier
Following is the text of a recent telegram from the US
Embassy in Buenos Aires on Argentina's efforts to
become a major exporter of nuclear materials and
technology:
After years of heavy investment and consistent
government support to its nuclear program,
Argentina's 30-year vision of becoming Latin
America's first nuclear supplier is now approaching
reality. Through umbrella agreements with
18 countries, Argentina trains foreign nuclear
physicists and engineers at its research facilities and
exports nuclear materials and technology such as
uranium concentrate, zircalloy tubing and
radioisotopes, research/training reactors, nuclear
laboratories, and production facilities. By the end of
the decade, important materials sensitive to
nonproliferation may be on the Argentine
Government's supplier menu, including heavy water,
enriched uranium, and plutonium.
Through nuclear exports, the country hopes to gain
international prestige and political leverage as well as
to realize earnings. The recently concluded
agreements with China and Algeria gave a much-
wanted boost to Argentina's nuclear industry. And
while Argentina has little chance of competing
broadly with traditional nuclear supplier countries,
political factors, including Argentine Government
nonproliferation policies, make Argentina an
attractive alternate in some cases.
Argentine Export Capabilities
Argentina, with ongoing assistance from the West
Germans and Swiss, and from Canada and the United
States in the past, has nearly acquired the full nuclear
fuel cycle. At present, Argentina can export nuclear
materials such as yellowcake (natural uranium),
uranium dioxide, zircalloy tubing, and radioisotopes
for research, medicine, and agriculture. Current
exports of nuclear services include basic training of
nuclear physicists and engineers in Argentina,
radiological protection and safety techniques, and
postgraduate research for foreigners in Argentina's
nuclear laboratories. Argentina also exports research
and training reactors, production plants for
radioisotopes, and physics, chemistry, and biology
laboratories.
In the near future, Argentina hopes to be capable of
exporting enriched uranium (1986), plutonium (1988),
and heavy water (1987). The Argentines will also add
the capability to export low-enriched fuel elements for
research reactors (1986) and of producing small- and
medium-power reactors (up to 300 MW) by the end of
the century. Moreover, the Tandar ion accelerator,
scheduled for operations this year, will give Argentina
a facility unique in Latin America for physics
research.
Current Nuclear Cooperation
Argentina has nuclear cooperation accords with a
number of countries. While many of the agreements
are inactive, Argentina is supplying significant 25X1
nuclear training, technology, and material to several
countries:
? Algeria. Argentina will construct in Algeria a
nuclear research reactor similar to the RA-6
training /research reactor at the atomic center in
Bariloche. The bilateral agreement also provides for
cooperation in the production and utilization of
radioisotopes in medicine, industry, and agriculture,
as well as Argentine National Atomic Energy
Commission (CNEA) grants to Algerian scientists 25X1
for training in Argentina.
? Brazil. In addition to the basic nuclear accord, there
are agreements between the atomic energy
commissions of Brazil and Argentina for human
resources training and technical information
exchange. Argentina loaned 240 tons of yellowcake
and is providing 140,000 meters of zircalloy tubing
for Brazil's Angra fuel elements. Brazil is
fabricating the pressure vessel for the Argentine
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Table 1
Argentine Nuclear Products
Embalse Power Reactor
In operation
Yes
Cobalt-60
Arroyito Heavy Water Plant
1987/88
Yes
Heavy water, 250 tons per year
Atucha Heavy Water Plant
1985
Heavy water, 3 tons per year
Uranium Concentration
In operation
Yellowcake, 180 tons per year
Uranium Conversion, Cordoba (FRG)
In operation
Yes
Uranium dioxide, 180 tons per year
Uranium Conversion, Cordoba (NTL Line)
1987
No
Uranium dioxide, 150 tons per year
Fuel Element Fabrication, Ezeiza
In operation
Yes
Atucha I fuel elements
Fuel Element Fabrication, Ezeiza
In operation
No
Embalse fuel elements
Special Alloys Plant, Ezeiza
In operation
?
Zircalloy tubing
200-percent enriched uranium, 500 kilos per
year; uranium hexafluoride; zirconium
sponge; sulfur hexafluoride
RA-1 Research Reactor, Constituyentes
In operation
Yes
Radioisotopes
LEU Fuel Fabrication, Constituyentes
1985
No
Low enriched uranium fuel
RA-3 Research Reactor, Ezeiza
In operation
Yes
Radioisotopes
Radioisotope Production Plant, Ezeiza
In operation
Yes
Radioisotope preparation/packaging
Radiosterilization Plant, Ezeiza
In operation
Medical, other products
Atucha II reactor. Recently, the two countries
agreed to increase mutual access to each other's
nuclear facilities.
? Chile. In 1983 Argentina and Chile signed a
supplementary nuclear agreement, under which
radioisotopes produced in Chile's research reactor
will be provided to Argentina when the latter's
RA-3 reactor is out of service. The accord also calls
for cooperation in fuel cycle and heavy water
technology, areas of Argentine expertise. In August
1984 the two countries concluded an agreement for
assistance in the manufacture of nuclear fuel
elements for research reactors, the training of
Chilean personnel, and the construction of an
experimental fuels manufacturing plant.
? China. Although no details have yet been
formulated, Argentina and China are studying
cooperation in nuclear power plants, the nuclear fuel
cycle, low-power reactors, and technician training.
? Colombia. In December 1981 Argentina and
Colombia agreed on a two-year action plan,
extended in 1983, for nuclear cooperation calling for
exchanges of nuclear experts and scholarships and
for training Colombian scientists in Argentina.
Argentina completed an evaluation study for the
installation in Colombia of a pilot plant for the
treatment of uranium ore and the production of
yellowcake. The Colombian Institute for Nuclear
Affairs also adopted in 1982 an Argentine proposal
for the installation of a 3-MW research, training,
and radioisotope production reactor, including a
radioisotope-handling facility and associated
laboratories, at an estimated cost of $50 million.
Aside from some technical contacts, no action has
been taken to implement the project because of
Colombian budget restrictions.
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Table 2
Argentine Nuclear Agreements
Algeria
Bolivia
1970
1971
Brazil
1980
1980
Canada
1976
1976
China
1985
Colombia
1967
Venezuela
Yugoslavia
10 years Renewed until 17 February
1985
? Peru. Initiated in 1977, "Project Peru" commenced
with the installation in laboratories in Lima of a
zero-power reactor for research and training. A
second phase, presently under way, involves the
construction of a 10-MW reactor at the nuclear
research center being constructed at Huarangal. In
addition to the reactor, Argentina is building a
radioisotope production facility and laboratories for
radioisotopes, radiological protection and safety,
and nuclear physics and chemistry research.
Argentine financing includes a $90 million loan.
Enriched uranium for the reactor is being provided
by the Soviet Union and has already been delivered
to Argentina for fabrication into fuel elements. The
project suffers from delays caused by Peruvian and
Argentine economic difficulties; completion of the
project is presently scheduled for the end of 1986.
? Uruguay. Argentina has trained Uruguayan
scientists in CNEA facilities and supplies
radioisotopes for use in medicine and agriculture.
Prospects for Future Cooperation
According to CNEA's director of international
cooperation, Roberto Ornstein, agreements are under
negotiation with four additional countries. Nuclear
discussions recently took place with Guatemala and
Turkey, according to press reports. Under present
agreements, the Argentines have discussed building a
subcritical facility for Bolivia, and undertaking a
feasibility study for the construction of a nuclear
center for Uruguay. According to Ornstein,
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Argentina is also discussing additional nuclear
cooperation with Indi
Government sources indicate CNEA President
Constantini recently concluded a confidential
agreement with the West German firm Kraftwerk
Union (KWU) under which CNEA is to act as the
KWU representative for Latin America. Reportedly
signed in West Germany following the October 1984
IAEA meeting in Vienna, the agreement authorizes
CNEA to export nuclear reactor parts designed with
West German technology.
The Argentine nuclear industry also is intensely
interested in participating in the Chinese nuclear
power program, and there have been several
Argentine visits to China to discuss possible
participation. In addition, Argentine participation
with West Germany in China was discussed during
recent CNEA visits to West Germany. The results of
the Argentine-German consultations reportedly were
"very positive."
With the startup of the Tandar ion accelerator this
year, Argentina hopes to make the facility the
centerpiece of atomic physics research in the country
and an important research center for Latin America.
Under the ARCAL (Regional Agreement for
Cooperation in Latin America) there are nine projects
with various Latin countries for research at Tandar.
The Argentine Government also wants to have
Tandar become the site of a Latin American center
for applied physics.
Argentina's Objectives as a Nuclear Supplier
Argentina hopes to become the nuclear supplier of
choice for Latin America, offering the full range of
nuclear services, including research reactors, heavy
water, low-enriched fuel elements, and eventually the
construction of small power reactors (150 to 200
MW), which the Argentines believe will be easier to
construct and be more useful for the smaller electric
networks found in Latin countries. Through these
exports, the Argentine Government hopes to realize
earnings to justify years of heavy investment in its
nuclear program.
More important, many in CNEA and the nuclear
industry see nuclear cooperation and exports as the
only way to guarantee Argentine freedom of nuclear
action internationally and to assure the very survival
of the nuclear industry. Industry spokesman Raul 25X1
Boix Amat believes internal Argentine demand for
nuclear energy is insufficient to justify the economic
existence of a discrete nuclear industry, and,
according to CNEA's Jaime Pahissa Campa,
"Argentina can only survive the enormous
international pressures aimed at stopping its nuclear
development if it establishes a firm network of
international ties with countries that share its position
with regard to maintaining independence."
Argentina also sees its role as a nuclear supplier as a
means to increase its leadership role in the region,
furthering political interests by reinforcing
cooperative ties. At the 1983 Argentine-sponsored
First Colloquium for Nuclear Energy Authorities of
Latin America, attended by nuclear representatives
from 13 Latin American countries, then CNEA
president Adm. Carlos Castro Madero called for a
"Latin American community that is solid, integrated,
stable, and linked by development in all fields. Latin
Americans have the right to ... all technology that
contributes toward improving the quality of life in our
countries." More recently, President Alfonsin in May
1985 ceremonies commemorating the 35th
anniversary of Argentina's nuclear program
emphasized the importance of nuclear cooperation to
regional integration.
Argentine industry cites the transfer of technology
under "Project Peru" as an important example of
cooperation and integration between Latin American
countries. According to industry spokesmen, the
transfer of advanced technology "no longer is the
exclusive right of just highly industrialized countries."
Nonproliferation Implications
Alfonsin's government this year committed itself to
IAEA safeguards on all nuclear exports but, in
conformity with the Argentine Government's policy
on its own program, has not opted to seek full-scope
safeguards as a condition of supply. The government
sees this policy as contributing to Argentine export
competitiveness. For example, the government's
willingness to export nuclear technology to Algeria
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without requiring full-scope safeguards was probably
a factor in its winning a contract to build a nuclear
reactor over US competition.
At the same time, the Argentine Government is aware
that lack of full-scope safeguards on its own nuclear
program may cost it nuclear exports. The prime
example is Westinghouse's inability to associate with
Argentine companies in bidding on a nuclear power
plant in Egypt because of Argentina's incompletely
safeguarded nuclear program. (Even so, the rejection
of Argentine participation was characterized in May
by CNEA adviser Carlos Rinaldi as a superpower
attempt to frustrate Argentina's nuclear program in
order to avoid competition.)
Nonetheless, the government believes its "strict
compliance" with IAEA "information circular/66"
safeguards is an important contribution to the global
nonproliferation effort. In citing the safeguards
provisions of the nuclear accords with Algeria and
China, CNEA international cooperation director
Ornstein stated that Argentine exports will create
important new safeguards links to these countries.
Even with safeguards, Argentine exports of sensitive
nuclear material, such as enriched uranium and heavy
water, would affect US interests were exports made to
Middle and Far Eastern countries such as Libya,
Iran, or Pakistan. While this is unlikely under
Alfonsin, we cannot rule it out under future Argentine
governments. Thus, US efforts to win Argentina's
acceptance of full-scope safeguards on its own
program, as well as to promote a responsible
Argentine attitude toward nuclear exports, are
increasingly important as Argentina's capabilities as a
nuclear supplier grow.
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3VICI Cl
Latin America
Briefs
President Sarney's government has launched its first inquiry into human rights
abuse during the era of military rule. The government has opened an investigation
into the 1982 murder of Alexandre von Baumgarten, a prominent Brazilian
journalist who reportedly had compiled information on activities of the Brazilian
National Intelligence Service (SNI). Retired rightwing Gen. Newton Cruz, who
was a senior SNI officer at that time, is widely believed to have been involved in
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Many officers are concerned se will lead to rosecutions of 25X1
other military personnel.
There is little popular support in Brazil for Argentine-style trials of military
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The powerful General Confederation of Workers (CGT) is restraining its criticism
of President Alfonsin's tough new anti-inflation program, even though the plan
may well lead to higher unemployment and real wage cuts. The Confederation,
which has close ties with the opposition Peronist party, vehemently rejected the
program when it was first announced in mid-June. With polls subsequently
indicating widespread public support, however, labor leaders shifted to a more
cautious posture. Although they have continued publicly to insist that the
government avoid massive layoffs and maintain equitable wage levels, CGT
leaders also have been engaging in talks with government officials about various
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aspects of the program, according to the US Embassy
Labor's wait-and-see posture gives Alfonsin some political breathing room to
implement his program. According to the US Embassy, however, neither side has
any illusions that the Confederation's de facto truce with the government is
permanent. With Congressional elections scheduled for November, labor bosses
will be looking for ways to turn public opinion against Alfonsin and his Radical
Party. We expect the CGT and its Peronist allies-who also have shown restraint
toward Alfonsin's economic program-to criticize and exploit politically any 25X1
upsurge in inflation or other signs that the program is faltering.
Expanding Commercial Ties With African and Arab States 25X1
Cuba is seeking increased trade and commercial ties with several African and
Arab states in order to diversify export markets, earn badly needed hard currency,
and provide employment opportunities for its young population. Characteristic of
this push have been Havana's efforts to rebuild commercial ties with Egypt, which
declined severely during former Egyptian President Sadat's regime
Havana also is bidding on a dam construction project in
Algeria, and has sent a delegation there to explore opportunities for increased 25X1
bilateral relations, according to press reports.
In Sub-Saharan Africa, Ghana recently signed its first trade protocol with Cuba,
covering more than 35 Cuban products, including sugar, farm machinery, and
medicines, according to press reports. In addition, the Cubans have offered to sign
commercial accords with Zaire and supply Cuban construction workers for various
industrial and civic projects.
hard currency earnings, they could provide work for large numbers of young
unemployed Cubans, whom the government fears may become discontented
without opportunities to practice newly acquired skills.
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Cuba Chronology
Foreign Minister Malmierca stops in Mexico City en route to Trinidad and
Tobago to attend the ninth meeting of the Caribbean Development and
Cooperation Committee.
He tells reporters that the immigration agreement between the United States and
Cuba will remain suspended until Radio Marti ends.
Politburo member Jorge Risquet delivers a message to Luanda from Fidel Castro
congratulating an Angolan Army patrol that neutralized a South African unit
attempting to blow up oil facilities in Cabinda.
The Cuban National Bank discloses that Moscow pays Havana 10 times the world
price of sugar as part of its long-term support for the Cuban Government.
Education Minister Jose Fernandez is greeted in Caracas by Minister Secretary of
the Presidency Carmelo Lauria and delivers a letter from Fidel Castro to President
Lusinchi.
In an interview with Folha De Sao Paulo, Fidel Castro declares that the world is
enduring a third world war, an undeclared economic war, and charges that
capitalism is to blame.
3 June Minister of Transportation Guillermo Garcia accompanies French Minister Guy
Lengagne on a visit to the Institute of Transportation Research in Havana.
Deputy Chairman of the Council of Ministers Humberto Perez arrives in Bulgaria
and is greeted at the airport by Stanish Bonev.
Vilma Espin meets with more than 200 delegates from 24 countries who are
participating in the Latin America and Caribbean women's meeting in Havana.
Fidel Castro also meets with the delegates.
Malmierca meets in Port of Spain with Errol Mahabir, Minister of Labor, Social
Security and Cooperatives, to discuss expanding existing cultural exchanges and
trade.
Malmierca arrives in Caracas on an unofficial visit to participate in the
International Symposium for Education on Peace.
A protocol for the application of nuclear technology in the economy and other
areas is signed by Fidel Castro Diaz-Balart and his Vietnamese counterpart
Nguyen Dinh Tu.
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At a press conference in Caracas, he claims that there are real risks of a US
invasion of Nicaragua that would originate mainly from Honduran territory.
Brazilian deputies Alfredo Campos and Teodorico Ferraco, while visiting Cuba,
say they believe it is an urgent matter for their government to resume diplomatic
relations with Cuba.
Soviet official Andronki Mel'Konovich Petrosyants and Fidel Castro Diaz-Balart
sign a cooperation agreement on the peaceful use of the atom and construction of
the Juragua nuclear power plant.
Cuba asks Western banks and governments for more flexible terms in the
repayment of its foreign debt. Cuba has $3.4 billion in foreign debts to the West
and has to repay $260 million this year.
Fidel Castro meets with Andronik Melkonovich Petrosyants, Chairman of the
Soviet Committee for the Utilization of Atomic Energy to discuss construction of
the Juragua nuclear power plant.
Carlos Rafael Rodriguez receives Romanian official Ion Ceausescu to review
bilateral economic relations during the present five-year period and the possibility
of increasing these relations.
Guillermo Garcia Frias and French official Guy Lengagne sign a protocol in
Havana which anticipates exchanges and future trade agreements.
Malmierca and Venezuela's Minister Secretary of the Presidency, Simon Alberto
Consalvi, exchange viewpoints on the Central American crisis and the foreign
debt.
Carlos Rafael Rodriguez receives the credentials of Nadew Zekarias accrediting
him as the new Ethiopian Ambassador to Cuba.
In El Nacional, Malmierca says that Latin America must find formulas to present
a common front to its creditors in order to overcome the crisis that the unpayable
foreign debt has created.
Deputy Foreign Minister Giraldo Mazola says Cuba has technical and medical
teams in 15 African countries and is negotiating to send specialists in agriculture
and public health to Burkina.
Havana International Service reports that the thermoelectrical plant located east
of Havana will be completed and that the setup of 500-kilovolt transmission lines
will continue.
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Ministry of Foreign Relations official Alberto Betancourt heads a delegation to
Algeria to discuss increasing trade relations for 1985-86.
Speaking on Namibia at the UN Security Council meeting, Foreign Minister
Malmierca says the presence of Cuban internationalist forces in Angola is not
related to Namibia.
Carlos Rafael Rodriguez receives the credentials of Manuel Pedro Pacavira
accrediting him as the new Angolan Ambassador to Cuba.
Director of the State Sugar Council of the Dominican Republic, Victor Manuel
Buez, asks Cuba to share with his country the financial advantages from the sale
of Dominican sugar to the USSR.
In an interview with El Dia, Fidel Castro says economic integration is needed for
Latin Americans to be able to live and develop independently.
Castro says "socialism offers fabulous prospects for development, the experience of
our country proves it, and what we should be doing is perfecting socialism."
President of the National Assembly Flavio Bravo and his delegation depart for
Brazil to participate as an observer in the 11th regular meeting of the Latin
American Parliament.
Latin American Communist Party representatives meet in Havana and discuss the
Latin American economic crisis, Central America, and Chile.
Havana Radio announces that Minister of Transportation Guillermo Garcia Frias
has been dismissed from his position and will be replaced by Diocles Torralba
Gonzalez, Minister of the Sugar Industry.
Antonio Rodriguez Maurell is the new Minister of the Sugar Industry.
The Council of State announces the creation of the Cuban Civil Aeronautics
Institute and the appointment of Luis Orlando Dominguez as its president.
Cubana de Aviacion reports that it has enlarged its air fleet with two Soviet IL-76
wide-body cargo planes, which have a maximum capacity of 40 tons of cargo each.
The State Department announces that it will suspend the processing of preference
immigrant visas in Havana on 18 June in response to Cuba's suspension of last
December's immigration agreement with the United States.
Havana press announces that Spain's Prime Minister, Felipe Gonzalez, will visit
Cuba in July.
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National Institute of Tourism President Jose Luis Padron, Foreign Trade Minister
Cabrizas, and Nicaraguan Tourism Minister Herty Lweites open the sixth tourism
convention, Cuba-Tur-85, in Havana.
President of the National Assembly Flavio Bravo says in Brasilia that Cuba will
request firm action from the Latin American Parliament for resolving the
dramatic foreign debt crisis.
In Cuban Socialista, Fidel Castro Diaz-Balart says that in 15 years Cuba will be
able to transfer 25 percent of electricity production to nuclear power stations.
Director of the Cuban World Economy Research Center Jose Luis Rodriguez
announces in Brasilia that Cuba is perhaps the only Third World country in a
position to pay off its foreign debt.
Prensa Latina reports that Cuba has purchased its first distillery from Brazil to
produce fuel alcohol from sugarcane.
Miguel Angel Flores-Alora, Minister Counsellor and Charge d'Affaires ad interim
of Bolivia, arrives in Havana to open the Bolivian Embassy.
At the inauguration of the Alejo Carpentier printing shop in Las Tunas, Politburo
member Jose Ramon Machado says the plan to remodel and modernize the
national press should be completed by 1990.
The US diplomatic mission in Havana stops processing visa applications from
Cubans, effectively ending Cuban immigration to the United States.
In an interview with Hoy, Fidel Castro says the United States will not be able
eternally to impede social changes in Latin America, just as it has not been able to
stop the revolution in Nicaragua and Cuba.
Carlos Rafael Rodriguez accepts the credentials of Antonio Serrano de Haro
Medialdea, accrediting him as the new Spanish Ambassador to Cuba.
Havana press announces that Cuba has been admitted as member with full rights
to the Latin American Parliament, which is meeting in Brasilia.
Speaking at the Latin American Parliament, Flavio Bravo predicts violent
outbursts which would devastate democratic governments if the foreign debt
problem is not solved.
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At the United Nations, Enrique Gonzalez Manet condemns Radio Marti, saying it
is part of the US effort to impose a total dominant system and that its aggressions
were designed by the State Department and CIA.
Foreign Minister Malmierca receives Miguel Angel Flores-Alora, Charge
d'Affaires of Bolivia, to discuss the development of bilateral relations.
The London press reports that Bulgarian, Cuban, and East German troops are
fighting alongside Soviet soldiers in Afghanistan.
Raul Castro, Vilma Espin, Guillermo Garcia, and Miguel Cano Blanco
accompany a high-level delegation of the Uruguayan Communist Party on a visit
to Moa in eastern Cuba.
Carlos Rafael Rodriguez addresses the 40th CEMA session in Poland. He says
Latin America's inability to pay the foreign debt is such an absolute truth that
adversaries have not challenged it.
During a two-day tour of Pinar del Rio Province, Trade and Tourism Minister of
Czechoslovakia Jaroslav Zelko says his country's trade and tourism with Cuba will
increase substantially.
Japanese bankers visit Cuba at the invitation of the National Bank of Cuba. They
meet with the President of the National Bank, Raul Leon Torras, to discuss the
Cuban economy and bilateral relations.
Politburo alternate member Jesus Montane receives Jesus Angel Paz Galarraga,
Vice President of the Socialist Party of Venezuela to discuss Central America and
the Latin American foreign debt.
Raul Castro accompanies a Uruguayan Communist Party delegation headed by
Deputy Secretary General Jaime Perez to Santiago de Cuba to tour places of
historical interest.
Expo Cuba-85 opens in Mexico City. The event seeks to develop bilateral
industrial and economic cooperation and to increase trade fourfold in the short
term.
Roberto Viega meets with members of the Executive Committee of Mexico's
Revolutionary Labor Confederation. He invites them to participate in the
forthcoming trade union conference in Cuba.
Politburo alternate member Jesus Montane meets in Havana with In'am Ra'd,
former leader of the Syrian Social Nationalist Party in Lebanon, to discuss the
international situation, especially Lebanon.
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In his interview in Playboy magazine, Fidel Castro says US-Cuban relations have
worsened "considerably" since President Reagan's election and that he would
meet Reagan in the interest of improving relations.
Minister President of the State Planning Board Humberto Perez and his East
German counterpart, Gerhard Schuerer, sign an economic accord for 1986-90 in
Berlin.
At a press conference in Mexico City, Roberto Viega says that sooner or later the
foreign debt of Latin America will not be payable, and that either we unite or we
sink.
Politburo member Jorge Risquet relays greetings from Fidel Castro to the
symposium being held in Havana on the role of the trade union movement in the
economic and labor education of the workers.
Jorge Debase, head of Cubatur, says Cuba has unveiled ambitious plans that could
soon see tourism challenging sugar as the island's main source of hard currency.
Granma announces that low rainfall and high temperatures over the past two years
have caused water rationing and a rise in diarrheal illnesses in Cuba.
Cuban authorities expell the Havana correspondent of Agence France Presse,
Andre Birufoff, for what is described as "insulting Cuban womanhood."
Fidel Castro and Foreign Minister Malmierca receive Iranian official Dr. Larijani,
who delivers a message from President Khamenei to Fidel. They discuss expanding
ties and the Iraqi war.
Prensa Latina reports that "Air Cubana" will begin weekly flights to Brussels on
10 July. The flights will depart on Wednesdays, stopping in other European cities
before returning on Thursdays.
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