CHILE AFTER TWO YEARS OF MILITARY RULE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A002600240001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: December 12, 2016
• Document Release Date: April 3, 2002
• Sequence Number: 1
• Publication Date: October 21, 1975
• Content Type: IM

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Secret
lntelligence Memorandum
Chile After Two Years of Military Rule
Secret
October 21, 1975
No. 0767/75
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October 21, 1975
Chile After Two Years of Military Rule
The military junta that replaced Salvador Allende remains solidly in control
after completing two years in power on September 11. There is every reason to
expect that the junta, or something like it, will still be running Chile two years
hence. Neither its status as an international outcast nor the grave economic and
social problems it must deal with have produced any substantial wavering in the
Pinochet government's determination to follow the course it has marked out. In
essence, this calls for maintaining an authoritarian style of rule and setting its own
pace for any easing of security measures or of restrictions on political activity.
Pinochet's reported ouster of four influential civilian advisers- all exponents of the
hard line-may be a first step in the direction of a more moderate approach.
The regime still commands the backing of the influential upper classes and a
majority of the middle and lower middle classes. The people of the poorest
economic strata, who supported Allende so stalwartly, have been rendered apathetic
by their preoccupation with the struggle to survive and intimidated by their fear of
the armed forces. The political parties have largely been silenced; those on the left
have been outlawed and the others have been "recessed." Despite strong support
from Moscow and Havana, Chileans in exile abroad pose no direct threat and many
concede that they have little hope of overturning the government. Unity within the
armed forces seems assured as long as Pinochet can avoid a further serious deteriora-
tion in the political or economic situation. We do not foresee things worsening to
the point that that unity would be threatened. There is, in sum, no base of
opposition from which a successful challenge to the authority of the present regime
could be launched.
For the first time since seizing power, leading military officials apparently are
beginning to discuss the country's political future-a subject that had been shunted
aside by the moratorium on all political activity and the need for emergency
economic measures after the coup. Growing international criticism and a few
encouraging economic indicators may be prompting President Pinochet and his
This memorandum was prepared by the Office of Current Intelligence with the assistance of the
Bureau of Intelligence and Research, Department of State, which concurs in its principal judg-
ments. Comments and queries ma be directed to I of the Office of Current
Intelligence,
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advisers to give more :thought to the kind of political structure they want to
establish in place of what they have termed an outmoded system of "un-
restricted ideological pluralism." Their ideas about what should transpire in
the years ahead are vague, however, suggesting that the path toward any sort
of institutional reform will be long and arduous. Pinochet has frequently
asserted that the armed forces should not relinquish control for some time to
come, and he has still not outlined a timetable for political "normalization."
Contradictory statements by various government spokesmen suggest
that there is little consensus about what type of political and legal system
should be created. A commission has been at work since November 1973
drafting a new constitution to replace the 1925 document, but completion is
evidently a long way off. Pinochet has announced that provisional con-
stitutional statutes in certain specific areas are in preparation. Although
some officials anticipate a constitutional referendum before 1980, their
optimism may be premature.
Pinochet provided his thinking on Chile's future political structure in a
televised interview ~ n September. The president said that under a new
constitution he saw ??oom for no more than three political parties. He clearly
intends to exclude the Communists, Socialists, and far leftist factions of
other parties. Senior army generals have raised the possibility that these
parties would represent the conservative, centrist, and moderate leftist seg-
ments of the political spectrum. Pinochet's statements cast some doubt on
whether this last category would include the Christian Democrats, the
country's largest and best organized political entity. What does seem certain
is that the military will set strict guidelines for overseeing any future political
process. To avoid what Pinochet termed the "unrestricted ideological
pluralism" of many ,;mall parties, a substantial minimum registration would
be required for legal 1-ecognition.
Some political exile groups, notably the less extreme members of
Allende's former coalition, have reached an agreement with left-wing
Christian Democrats to organize a united front. This unity will probably
enable them to capitalize on the widespread anti-Chilean sentiment abroad in
hopes of undermining the regime at home. The exiles probably cannot
mobilize much support within Chile, and their propagandizing will amount
to more a nuisance than a threat to the junta.
The governmer;t's outlawing of the leftist parties that supported
Allende and the ban on all political activity by the remaining parties have
squelched any well-organized channel of domestic criticism. The moratorium
has posed a real dilernma for the Christian Democrats. If they refrain from
any political role they risk becoming atrophied, while on the other hand a
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position of outright defiance could provoke total proscription. Party leader
and former president Eduardo Frei has tried to avoid a direct confrontation
between the party and the government, but his statements and those of
other party functionaries have bordered dangerously on the limits of
criticism tolerated by the junta. Extreme right-wing advisers have urged
Pinochet to ban the party, but he has preferred to preserve the fragile modus
vivendi, probably to avoid inciting additional censure from European coun-
tries where the Christian Democrats have influential friends.
Pinochet's recent proposal to form an advisory council of state that
would include all former presidents, as well as other prominent citizens, can
be viewed as primarily an effort to mollify foreign critics of the regime's
anti-democratic practices. Frei would not participate without clear cut
guarantees of an early return to democratic rule, however. And that appears
increasingly unlikely in view of Pinochet's categorical rejection of any
reversion to the status quo ante. This viewpoint was further highlighted by
the government's stinging rebuff to recent statements by party leaders
indicating a desire to reach an understanding with the military regime. What
Pinochet may have in mind is to divide the Christian Democrats and at the
same time make it impossible for them to cooperate other than on his terms.
If Frei rejects the invitation to join the council, Pinochet can then proceed
without the Christian Democrats, putting the blame on them for being
obstructive and uncooperative. The council, which in any case is not ex-
pected to wield much influence, might then emerge as a handpicked body of
sycophants.
I Ithere is widespread sentiment within the armed
forces for broader civilian participation in the government. As in other
policy areas, a division of views probably does exist within the junta on the
desirability of a move in this direction. Civilian advisers, particularly those
on the economic team, already play a significant role in some aspects of
policy making, but the military dominates the cabinet and much of the
bureaucracy. Military leaders are likely to give continued lip service to this
idea, but the paucity of "nonpolitical" civilians will retard any strong shift
toward greater civilian encroachment in the administration. Some cosmetic
changes may be made in response to continued international pressures on
Chile, but the armed forces-and the army in particular-are not likely to
yield their prerogatives in key areas of responsibility.
Disagreements within the junta, which nearly erupted into an open
clash in August between President Pinochet and General Leigh, the air force
member of the junta, have been smoothed over for the moment. Pinochet
apparently bowed to the demands of his three junta colleagues and agreed to
consult more regularly before making important decisions and appointments.
Although tempers have been cooled, the apparent strong differences between
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Pinochet and Leigh will very likely put them at odds again. While General
Leigh's outspoken statements to some extent represent a devil's advocate
role, he also resents Pinochet's tendency to run a one-man show with little
respect for the views of his ostensible partners. He has repeatedly stated that
the government must show more concern for the impoverished sector of
Chilean society. His recent ccmments suggest that he is trying to put some
distance between himself and the president by advocating more relaxed
economic and political policies. Leigh's candid remarks have frequently
antagonized the President, but the latter has compromised where necessary
to preserve the unity of the junta. Pinochet obviously is loath to present a
divided face to a generally hostile outside world at a time when the
government still has more than enough problems to deal with.
Despite these internal differences, it appears now that there will be no
major shifts in the junta's basic outlook. Its composition may change in
time, but Pinochet seems assured of his primary position. Navy dissatisfac-
tion with the performance of junta member Admiral Merino, who has been
notably inactive, may result in his replacement at some point. Leigh might
also consider resigning or leaving the government if disagreements with the
President become irreconcillable. There is at least a remote chance that the
navy, air force, and Carabineros will gradually relinquish all political activity
and, in essence, leave Pinochet and the army in charge of the government. In
no case, however, do we ant.cipate a change in the army's predominant role.
Opposition to the military government from the remnants of leftist
groups remaining in Chile is largely checked by the vigilance of the security
forces. The controversial Directorate of Intelligence (DINA) has clamped
down sternly on all potential and real dissidents. DINA's heavy-handed
methods, the source of much of the furor over human rights abuses, make it
unlikely that anything more than occasional minor acts of terrorism or
sabotage will disturb the present tranquility. Indeed, the absence of signifi-
cant armed opposition to the regime and the international clamor over
internal security practices seem to be slowly drawing high officials into
curtailing the activities of the anti-subversion agencies. Pinochet recently
ordered the circulation of decree demanding compliance with
existing procedures for de a cons roughout the country. The action
reportedly came after an investigation verified that maltreatment of pris-
oners is continuing and that people are being arrested and imprisoned
without notification of their relatives.
The excesses of security forces have stimulated wide expressions of
international concern, but there have been few echoes at home, except
among the church hierarchy and the recessed political parties. Whatever
doubts Chileans may have about the propriety of their government's
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behavior, they tend to consider it a domestic affair and resent any outside
interference or questioning. Nevertheless, a few notable voices are being
raised in favor of greater liberalization. General Leigh has expressed his own
conviction that the government should undertake a process of "detente" and
has argued against holding political prisoners indefinitely or jailing anyone
on ideological grounds.
With little appreciation for the international repercussions, however,
the government continues to take steps that are certain to create unfavorable
reactions. After a dozen former Allende officials were released on September
12, it was revealed that some charges were still pending against them. Now
the navy has begun a secret trial against nine individuals-including some of
those released in September-on charges of subversion. If indictments are
made, the case is likely to become a cause celebre to rival the controversial
1974 air force trials. The inclusion of Luis Corvalan, secretary general of the
outlawed Chilean Communist Party, will provide Moscow and Havana with
renewed ammunition for their attacks on Chile.
The measures Pinochet announced recently to put his government in a
better light have done little to quiet even his mildest critics. The decision to
reduce the state of siege is no more than a gesture; it is supposed to allow
limited review by civil courts of cases previously considered by courts-
martial, but it could easily be circumvented. Unless the government shows a
genuine determination to abide by measures designed to limit abuses of its
arbitrary power-and so far it has not-it cannot expect to inspire confidence
about its intentions.
Chile is still struggling through an agonizing period of economic
readjustment to overcome the problems inherited from the Allende era and
even before. The difficulties are staggering, for Chile must deal with an
inflation rate that is one of the world's highest and a serious balance-of-
payments problem brought on by sharply reduced world copper prices and
costly imports of foodstuffs, petroleum, and capital goods. Government
economists are issuing optimistic forecasts that some improvement is in
sight, but the government's ability to make a go of its economic strategy will
depend a great deal on the general pace of the world-wide economic and
industrial recovery.
Meanwhile, the high social cost of the government's austerity program
is worrying those military leaders who are most apprehensive about the
regime's ability to cope with the social dislocation caused by the de-
flationary program. Unemployment, for example, is up from 10 percent in
late 1974 to an estimated 18-22 percent in recent months. While the
SEGRET
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government has sought to alleviate suffering among the lower classes by
making periodic wage readjustments and maintaining low-cost public service
employment projects, these palliatives have barely touched the more glaring
problems. The past winter has caused severe hardship, particularly among the
lower classes.
Among the negative projections, industrial output is expected to drop
20 percent for the year and a slump in domestic demand will reduce real
GDP by 10 percent in 1975. The low price of copper on the world
market-it dropped from an average of 93 cents in 1974 to an average of 57
cents so far this year--is the most important reason for the country's failure
to increase export earnings and reduce its foreign debt. which now totals
almost $4 billion. Brazil's :-eported decision to increase copper purchases
from Chile and the likelihood of Brazilian investment in Chilean copper
mining enterprises might bring some relief. In any case, copper production is
not likely to increase much in the short term. Production is expected to slip
nearly 10-15 percent this year, mainly as a result of an agreement among
producing nations to curtail shipments in order to prop up the world market
price.
Even the positive side of the ledger shows only a few modestly hopeful
signs. In recent months the annual inflation rate has been cut to half of
1974's level of 376 percent, but the trend could be reversed abruptly.
Bringing inflationary pressures under sustained control will not be a quick or
easy task. A policy of gradual devaluation probably will help curb Chile's
endemic inflationary psychology in addition to stimulating non-traditional
exports.
The government's restrictive fiscal and monetary measures have helped
to restrain domestic demand and curb imports this year, perhaps by as much
as 18 or 19 percent from 1974 levels. Food imports alone have decreased by
30 percent this year owing to a notable growth in agricultural production (6
percent since last year). These gains, plus a 30 percent annual increase in
nontraditional exports, have encouraged the government to believe that it
can slightly ease the balance-of-payments gap. Better prospects for 1976,
however, will still be conditioned to some extent on a hoped-for moderate
upturn in copper prices. Current indicators suggest that any increase will be
modest at best.
The government is likely to succeed in trimming its deficit to 12
percent of expenditures this Year compared with 55 percent in 1973 when it
assumed power. The slash iir public spending, however, is causing govern-
ment investment outlays to shrink. In addition, uncertainty resulting from
the anti-inflation program ha s made Chilean businessmen reluctant to under-
take new projects. Private foreign investment inflows, on the other hand,
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have picked up slightly but are little more than a trickle at this point.
Continued large capital flows from international financial institutions will be
possible only if Chile can improve its international image.
We continue to believe that if the junta does not see substantial results
from its austerity efforts by the end of the year, Pinochet will soon
thereafter be casting about for possible new policies and new economic
managers. As of now, however, we see at least an even chance that the
current economic team headed by Minister Jorge Cauas will bring about
enough of an economic recovery to guarantee retaining the basics of the
current program.
Chile has had scant success in countering charges that it violates human
rights or generating sympathy and support through diplomatic offensives and
public relations campaigns. It is doubtful that Chile can expect much
support at international forums, where it frequently is a target of condemna-
tion by blocs of liberal and radical nations.
Leftists outside of Chile will never forgive the junta for overthrowing
the first democratically elected Marxist government in Latin America and
suppressing the political institutions that brought it to power. Allende's
exiled followers form a permanent claque of living "martyrs" who manage to
turn sympathy for the junta's executed and imprisoned victims into political
opposition in Western capitals and much of the Third World.
Pinochet is aware of the high penalty Chile is paying for its poor image,
but his actions suggest that this will not deter him from taking a go-it-alone
position no matter what the costs. His last-minute decision to bar a UN
human rights fact-finding mission in July hardened the negative international
attitude toward Chile. Even nations nominally disposed to be cordial and
impartial began to see Chile as the bete noire of international society.
Predictions by Chilean diplomats that Pinochet's September speech would
rectify this situation crumbled when he defended his decision to keep the
UN group out of Chile and held out no hope for a change of mind.
The incident is receiving wide play in the current session of the UN.
The highly unfavorable report of the UN Human Rights Commission
contains shocking charges, and several Western European governments plan
to sponsor a resolution condemning Chile's stand on human rights. There is
little doubt but that this adverse publicity will further accentuate Chile's
ostracism and diminish its ability to attract credit, especially in Western
Europe.
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Continuing international pressures on Chile to change its ways may
produce a token response as growing awareness of its isolation forces the
junta to be more forthcoming. A hopeful sign was the recent release of a
number of labor leaders who apparently had been arrested by security forces
on spurious charges. Pinochet acted in this instance at the behest of US labor
leader George Meany, who protested the action. It is also possible
that more trenchant economic considerations, such as problems in renego-
tiating its foreign debt, will convince the regime that adoption of a more
democratic orientation: is in its own best interests.
Aside from the problem of overcoming its international isolation,
Chile's major foreign policy concern is the perceived threat posed by Peru.
Chile's northern neighbor has acquired a growing arsenal of weapons from
the Soviets and has made rap:ic. strides in improving its military capabilities.
Anxiety over the possibility that Peru plans to avenge its defeat by Chile in
the War of the Pacific (1879-1883) continues to dominate the thinking of
military men in Santiago. War fever swept the border area a little over a
month ago when it w-,is rumored that Peru would strike if Chile ceded a tract
of land to Bolivia in an area of former Peruvian territory. Tensions have
largely subsided as a result of the change of government in Lima. The new
Peruvian r sident Morales Bermudez, is
less Rely o engage in military au-
ventures. Nevertheless, there is a lingering distrust of Peruvian motives, and
Chile will continue to be preoccupied with building up its own forces,
concentrating mainly on defensive preparations in the northern border area.
Chile has had little success in obtaining weapons abroad, and its luck is
not likely to change soon. Mo.3t of the western governments that would be
likely arms suppliers are disinclined to deal with the present military regime.
Strong condemnation of Chile in the UN will further complicate difficulties
in finding new sources of military assistance. Brazil has extended some help,
but Chile is still far from fielding a force to match Peru.
Much of the concern about future Chile-Peru relations is now focused
on the problem of Bolivia's quest for access to the sea. Chile agreed to
negotiate the matter when diplomatic relations were resumed last February,
and La Paz is pressing hard for an early settlement. Chile, meanwhile,
probably has no intention of ceding territory and running the risk of
alienating nationalist sentime;it. Moreover, diplomatic flexibility is con-
strained by the terms of a 192.5' protocol which requires Peruvian consent for
any boundary rearrangement. Santiago apparently is thinking along lines of
granting greater communicat.ons, transportation, and port facilities to
Bolivia, perhaps under some long-term lease arrangement.
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The negotiations have only recently approached the stage of pre-
liminary proposals, and Chile has indicated that it does not want to rush a
solution. It is eager to retain Bolivia's good will in the event of conflict with
Peru, but there is a limit to the price it will pay. Pinochet's reported proposal
to give Bolivia control over a strip of land only if Peru can be persuaded to
grant a similar stretch along its side of the border appears to be a well-
calculated stroke to put the ball in Peru's court. Peru would almost certainly
be unwilling to go along with such a scheme even though it has indicated
support for Banzer's general objectives. As things stand now, there is a good
chance that a stalemate will develop.
In the meantime, the danger of a clash between Peru and Chile over this
or other problems will remain a distinct possibility. Chile can be expected to
use every avenue to keep relations cordial, but there is always a chance that a
diplomatic blunder or a minor border incident could blow up into a con-
frontation. Talks on arms limitation among the Andean nations have brought
the two nations to the conference table to discuss acceptable limits on
weapons procurement, but negotiations are likely to be prolonged and
probably will not have much impact in stemming the headlong momentum
toward acquisition of new and more advanced weapons. At best, these
meetings will serve as a vehicle to allow both sides to talk and perhaps to
lessen suspicions about each other's intentions.
Relations with the US have been cordial but somewhat strained. From
Chile's viewpoint the difficulty stems from the US inability to respond to
Chile's perceived needs, especially regarding weapons that Chile has sought
to balance its currently unfavorable position vis-a-vis Peru. Chile's continuing
excesses in the human rights area make it unlikely that increased US military
assistance will be forthcoming. The Pinochet government still considers the
US to be its major ally and hopefully the chief source of capital and
technology, although the US trade and investment stake in Chile is now
minor. However, growing frustration over a prolonged restriction of US arms
assistance is likely to create bitterness in the months ahead.
Nonetheless, there is little chance that Chile's military leaders will find
a viable substitute for the US even though they are looking actively outside
the hemisphere for new friends and assistance. The most they can hope for is
to ride out the current difficult situation with the expectation that an
improvement in the economy and diminishing world interest in Chilean
affairs will eventually bring greater support from the US and Western
Europe.
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Secret
Secret
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