(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T01017R000707030001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: January 12, 2017
• Document Release Date: March 3, 2011
• Sequence Number: 1
• Publication Date: January 27, 1986
• Content Type: MEMO

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Central kttdligenoe Agency L
27 January 1986
Summary
A total suspension of planned US military assistance to Peru, even though it was
scheduled to be meager in 1986, would probably further damage an already strained
bilateral relationship. It would also undercut pro-US elements in the Peruvian military,
probably reinforce Moscow's diplomatic and military influence in Lima by making
Washington appear to be an unreliable partner, and might deepen anti-US sentiment in
the general populace.
Past efforts to pressure Peru by reductions In aid have provoked hostile reactions.
The US twice cut economic aid to Peru in the 19911s during President Belaunde's first
term and suspended military aid in 1999 after General Juan Velasco, who seized power
the previous year, claimed a 204 mite offshore fishing zone and began seizing US tuna
boats. This cut-off was a factor In fire subsequent decision of the Velasco regime to
purchase Soviet arms. laying the, louodatien for the present Soviet-Peruvian military
relationship.
This memorandum was requested by National Security Council staff member Jacqueline
Tillman. It was prepared by South America Division, Office of African and Latin
American Analysis. Information as of 24 January 1985 was used in the preparation of this
paper. Questions and comments may be directed to the Chief, South America Division, ALA,
/ 41
DATE / 131 j8(
MC No ALA M 0?ooo `J
oCR 3
P&PD
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Lessons Of The Past
Previous US efforts to influence Peru by restricting aid produced unfavorable -- and
probably unintended -- consequences. Angered by President Belaunde Terry's handling of
a dispute involving a US oil company in the mid-60's, the US cut economic assistance
from approximately $83 million in 1964 to $36 million in 1965. Two years later the US
froze development loans to Peru after Belaunde approved the purchase of Mirage jets from
France. These US reprisals affronted Peruvian nationalism and, by discrediting the civilian
government, probably helped facilitate the 1968 military coup which brought to power a
radical populist regime less friendly to Washington than the generally pro-US Belaunde.LI
Relations between the US and Peru reached a low point during General Velasco
Alvarado's rule (1968-75)., The Velasco government, eager to assert its populist,
anti-imperialist nationalism, expropriated the International Petroleum Company (IPC) in
October 1968 and, claiming a 200-nautical-mile offshore jurisdiction, began to seize and
fine US tuna boats in early 1969. The US responded by cutting off military aid, whereupon
Peru expelled the US Military Assistance Advisory Group.
Following these developments, Peru distanced itself from US policy in Latin America
and sought an active leadership role in regional affairs and the Third World. Within the
Western Hemisphere, Lima led the fight to lif, ?rganization of American States (OAS)
sanctions against Cuba, quickly established diplomatic relations with the East European
countries, and dramatically strengthened its ties with Moscow. The Soviet Union, in turn,
helped Peru construct the northern fishing port of Paita, and in 1974 began supplying tanks,
artillery, and combataircraft, laying the foundations for the military relationship that
Ircanomfe Sanctions An d Recent IIIlaterst Ties
US assistance programs were largely restored in the late 1970's, but Peruvian
dependence on US aid never achieved its pre-1965 levels. In 1979 the US pledged nearly
$100 million, including $55 million in development loans and housing guarantees and $37
million in PL 480 (Food for Peace) funds. In recent years, these modest levels of economic
assistance have been augmented by small amounts of military aid, including IMET funding
under which Peruvian officers receive military training in the United States.
Peru's failure to keep its FMS and AID payments current, however, subjected it
automatically to US legislative sanctions in 1985. These sanctions had a direct impact on
US-Peruvian military cooperation last October when the Brooke-Alexander Amendment
forced suspension of the IMET program for Peru. F_~
US aid to Peru in 1986 would have been less than at any recent time even without
currently proposed cutbacks. As of December 1985 projected military assistance for Peru
was $19.2 million ($10 million in FMS funds, $8.35 million in military assistance, and
$850,000 in IMET aid). Even these small sums, however, would have been useful to the
25X1
25X1
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I I
Peruvians. For example, the Peruvian Air Force, whose budget has been trimmed for
austerity reasons, was counting on $1.5 million in FMS credits to e spare parts for
its 23 T-37 aircraft, only six of which are currently operational.
Implications For Future US-Peruvian Relations
Garcia will probably view further cuts in US aid as a tactic by Washington to force a
softening of his position on repayment of Peru's debt obligations to US lenders. At a
minimum, he would respond with more anti-US rhetoric intended to bolster his image as a
nationalist. He would almost certainly try to exploit a US aid cut-off to rally domestic
opinion and reinforce his claim to a Latin leadership role on a variety of hemispheric
issues
includin
Cont
d
,
g
a
ora and arms reduction, as well as debt.
Elimination of US military assistance might, as the case of the T-37s indicates, have
some marginal effects on Peruvian counterinsurgency and, possibly, anti-drug efforts, but
its overall impact on military capabilities would not be significant. The symbolic effect of
suspending US arms assistance on the attitudes of Peru's military leaders, many of whom
are still favorably disposed to the US despite Peruvian dependence on Soviet weapons,
might be of more consequence. In addition to insulting Peruvian national pride, the cut-off
would vindicate those military advisors who have, arue4 stns itii4 ;M& that $he US is an
unreliable supplier. Suspending IMET assistance would affect AN 1l*K64 Of Peru's armed
services, including the Navy which has so far refused It M ntains a
relatively close working relationship with the? U Ufa'
ilit
national security, military leaders of &K political der S~ Ounc with mPeru's
1 Ee' a Il~ m~l~ta ry
aid cut-off to maintain their cr
dibili
e
ty
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Original
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4
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Requestor
DDI
NIO/LA
NIC/AG
PDB Staff
C/PES
DDI/CPAS/ISS
D/ALA
ALA/PS
ALA Research Director
CPAS/IMC/CB /
ALA/SAD
ALA/SA/AN
(27 January 1986)
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