PROBLEMS FACING CHILEAN PRESIDENT FREI

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005900020002-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 16, 2016
• Document Release Date: January 4, 2005
• Sequence Number: 2
• Publication Date: June 30, 1967
• Content Type: SUMMARY

Approved For Release 2005/01/27 : CIA-RDP79-00927AO0590 0200
Secret
25X1
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Problems Facing Chilean President Frei
Secret
N2 45
30 June 1967
No. 0296/67A
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SECRET
PROBLEMS FACING CHILEAN PRESIDENT FREI
Chilean President Eduardo Frei's assumption of
office in 1964 gave rise to high hopes that the first
Christian Democratic government in South America would
succeed in launching what Frei has called a "Revolu-
tion in Liberty." Some important reforms were enacted
during his first two years in office but irresponsible
congressional obstructionism since then threatens to
nullify his efforts during the rest of his six-year
term. This problem has been aggravated by the emer-
gence within his Christian Democratic Party (PDC) of
a vociferous left-wing group that claims that the ad-
ministration has lost its revolutionary fervor. Dur-
ing the remainder of his term, Frei may be forced in-
creasingly to compromise parts of his legislative pro-
gram.
Problems With Congress
Repeating the success that
put Frei into office in the 1964
presidential election, the PDC won
82 of the 147 seats in the Chamber
of Deputies in the 1965 congres-
sional elections. The party holds
only 13 of 45 seats in the Senate,
however, the next congressional
elections are not due until 1969,
only a year before Frei's term
of office ends.
Much of the obstructionism
against Frei is based on a com-
prehensible political position.
When Frei won the presidency in
1964, he vowed that he would not
govern by coalition, as was the
Chilean tradition, but would avoid
all pacts that compromised his
freedom of action. This policy
has occasionally smacked of a
"holier than thou" attitude that
has alienated some politicians
who were inclined to cooperate with
him. His call for a vote of con-
fidence from the electorate in the
1967 municipal elections elicited
a similar response, and a number
of voters rebelled against his "all
or nothing" tactics.
The opposition in the Senate
is dominated by an informal coa-
lition between the Communist-Soci-
alist Popular Action Front (FRAP)
and the opportunistic Radical Party
(PR). This group gained control
in December 1966, when it managed
to oust the PDC Senate leadership
and elect a pro-Castro Socialist,
Salvador Allende, as Senate pres-
ident. The following month, this
time joined by the conservative
National Party (PN), it refused
Frei the constitutionally required
permission to visit the United
States. It was this vote that
prompted Frei's efforts to use the
April municipal elections as a vote
of confidence in his government.
Although the outcome of the
municipal elections could in no
case have affected the congres-
sional line-up, Frei hoped that
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Composition
Of
Chilean Congress
SENATE
Opp s'/
oti
~(5)
V\I(
PDC
(T3)
(PDC) Christian Democratic
(VNP) National Popular Vanguard
(PS) Socialist
(PCCh) Communist
(PADENA) Notional Democratic
(PR) Radical
(PN) National
CHAMBER OF DEPUTIES
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resounding victory for PDC candi-
dates would give him a better bar-
gaining position in seeking sup-
port for his program. This hope
was fulfilled to some extent, as
the PDC doubled its holdings in
local offices, but the party's
share of the total vote dropped
to 36 percent, down from its 42
percent in the 1965 congressional
elections.
On the surface, at least,
the percentages appeared to bear
out the opposition claims that a
majority of the population opposed
the Frei administration. In prac-
tice, however, local elections
tend to be decided on local rather
than national issues.
Although the electorate did
not give Frei the mandate he had
hoped for, the election does not
indicate a strong trend to any
other party. Rather, the voters
returned to the traditional multi-
party system which had been some-
what hidden in Frei's 1964 and
1965 successes.
Since the elections, all par-
ties have been reassessing their
positions. The Communists--con-
siderably less extreme than the
Socialists with whom they are al-
lied in FRAP--have indicated that
they would be willing to support
Frei's program on a selective ba-
sis. It seems likely that Frei
will be forced increasingly to
rely on this backing, as most other
political parties refuse almost
categorically to support govern-
ment initiatives.
The Senate by-election held
on 11 June indicates continuing
trouble for Frei. The Socialist
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candidate, supported by FRAP and
the Radicals, won the election,
beating the PDC candidate by 13,000
votes out of a total of 114,000
cast. The seat had already been
held by a Socialist, and the PS
candidate was extremely popular,
but the Communists appear to be-
lieve that the margin of victory
indicates a strengthening of left-
ist forces generally. The biggest
loser was the PN, which had hoped
to prove that there is still room
for a conservative political party
in Chile.
Split in the PDC
In addition to difficulties
with other political parties, Frei
faces problems within his own
party. The left wing of the PDC,
composed primarily of younger mem-
bers lacking experience with the
responsibilities of government,
has consistently accused Frei of
compromising revolutionary prin-
ciples and of moving too slowly
in implementing his reforms. These
members see the recent election
results as a repudiation of the
present party leadership, which
strongly supports Frei.
The PDC holds together on im-
portant issues, but "rebel" snip-
ing at the government heartens the
opposition and complicates Frei's
position. The leftist group made
strong bids for the party presi-
dency in 1965 and 1966, and the
municipal election results are sure
to encourage them to try again
this year. It is this group that
has been strongest in advocating
informal cooperation with the Com-
munists. At the very least, PDC
policy statements probably will
be more leftist in the future, as
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the leadership attempts to placate
the left wing.
Economic Problems
One of the most important
parts of Frei's campaign program
was the "Chileanization" of the
country's vital copper industry.
The government now has an interest
ranging from 25 percent to 51 per-
cent in the three major copper
companies--all of which are jointly
owned by US companies. The high
price of copper over the past year
has financed a large part of Frei's
reform program, and has improved
Chile's balance of payments and
external debt position. In Decem-
ber 1966 Frei announced that the
additional revenue obtained from
copper would enable his government
to dispense with budget support
loans from the United States, at
least for a time.
In recent months, however,
the price of copper has dropped,
and revenues have fallen short
of budget projections. The pros-
pect of a sizable budget deficit
that would endanger the economic
stabilization program has led
Frei to start discussion of an-
other US budget-support loan as
insurance against a continued low
price of copper. He also is ex-
ploring the possibility of coop-
erating with other copper produ-
cers such as Zambia to stabilize
the price.
With the prospect of a budget
deficit compounded by recent wage
settlements Frei will be hard
pressed to keep the rate of in-
flation from exceeding the 17
percent of 1966. Sharp curbs on
government investment expenditures
and a tightening of credit to the
private sector are now being dis-
cussed within the administration.
Such moves, however, might be de-
feated by the Senate, either be-
cause they would be unpopular or
because the opposition would wel-
come a new opportunity for a show
of strength.
In addition to the stabiliza-
tion program, Frei has called for
an extensive agrarian reform ef-
fort. The implementing legisla-
tion is tied up in Congress, how-
ever, and the government's exist-
ing authority has enabled it to
resettle far fewer farmers than
had been hoped. Early in June the
congresssional opposition forced
the government to cancel a plan
for continuation of tax benefits
to the Pacific Steel Company--
part of Frei's program to encour-
age foreign investment--and to
withdraw its plans for institu-
tionalizing the social develop-
ment program "Promocion Popular."
Foreign Affairs
Congressional obstructionism
also has hampered Frei in the exe-
cution of his foreign policy. The
most obvious instance of this was
the Senate's veto of his trip to
the US last January. Frei's per-
formance at the Punta del Este
summit meeting in April demon-
strated that he remains a popular
figure in hemisphere affairs. His
shaky political base has, how-
ever, made him somewhat less in-
fluential recently in inter-Amer-
ican councils.
Frei nevertheless continues
to be a major advocate of regional
integration, and has led Chile's
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campaign for an automatic tariff-
cutting mechanism in the Latin
American Free Trade Association.
He can be expected to continue
promoting these and other aims
of the recent inter-American sum-
mit meeting, although domestic
politics will restrict him some-
what.
Outlook
Unless Frei can mobilize pub-
lic opinion to a much greater ex-
tent than has been possible re-
cently, he will be increasingly
stymied in his attempts to legis-
late social and economic reform.
This could further dilute his sup-
port within his own party, which
may well regard its defeat in the
1970 presidential elections--in
which Frei cannot compete--as in-
creasingly likely unless more of
its programs are enacted soon.
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