DCI TALKING POINTS: UPDATE ON CENTRAL AMERICA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R000701830024-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 29
• Document Creation Date: December 19, 2016
• Document Release Date: April 17, 2006
• Sequence Number: 24
• Publication Date: July 9, 1982
• Content Type: REPORT

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Directorate of Intelligence
Office of African and Latin American Analysis
9 July 1982
NOTE FOR: Director of Central Intelligence
This package of materials is for your NSPG
meeting next week. It includes: 1) talking
points updating the situations in each Central
American country, 2) the Key Judgments from the
recent SNIE on Central America, to refresh your
memory, and 3) the country annexes from the SNIE,
also worth rereading.
Attachments:
As stated
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9 July 82
DCI Talking Points: Update on Central America
In El Salvador, both sides have demonstrated improved military
capabilities in the past month, but the net balance is unchanged.
- During the intense fighting in Morazan, the Army suffered heavy
casualties and tactical deficiencies.
-- However, the quick reaction forces were able to gain
control of the situation as the caitrpaign progressed, aided
by greatly improved air support.
- The guerrillas scored an important political victory by holding
Perquin for almost three weeks, but they expended much
ammuniticn and energy in the effort.
-- The insurgents eventually will reinfiltrate Morazan, but
will not be capable of a repeat performance soon.
-- Instead we believe they will resume the war of attrition by
targeting the econanic infrastructure and smaller military
outposts.
-- On the whole, the government's military capabilities appear to
be improving faster than those of the insurgents.
The political picture is more fragile, as divisiveness and
ccenpetition among the parties make governing a halting process beset
by periodic small crises.
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In net terms, the reform effort appears to be progressing,
thanks largely to occasional arnrtwisting by the military.
-- Further distribution of lands under Phase III of the
agrarian reform is still uncertain, but more land titles
are being awarded, and peasant renters evicted illegally by
landowners are being returned by the military to their
plots.
-- The government is arresting and charging civilian and
military human rights abusers
The rightists under D'Aubuisson continue to impede reform, and
President Magana appears unwilling to challenge them directly.
Continuing poor economic prospects will only increase the
pressure on the government and the armed forces.
In Guatemala, Rios Montt's tenuous hold on power continues to depend
on broad military support and the absence of any obvious alternative.
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-- Recent statements by the President have antagonized private
sector and political party leaders
- Rios Montt's reformist tendencies appear genuine, in part
because he recognizes that the government must have popular
support to defeat the guerrillas.
-- Nevertheless, his staunch anti-cc~nunism appears likely to
result in human rights abuses, though not on the scale of
preceding administrations.
The guerrillas are worried about the potential success of Rios'
"hearts and minds" counterinsurgency strategy.
- They have made civilian defense forces a special target and have
been killing peasants in their Western Highlands stronghold
areas as a warning to those who would collaborate with the
government.
-- Neither tactic appears likely to achieve much success, and the
attempt to intimidate Indians probably will be counterproductive
over the long term.
In Nicaragua, the trend toward totalitarian rule continues, as do
aggressive policies aimed at intimidating neighboring states.
-- The recent extension of the state of emergency has enabled the
Sandinistas to subject opposition forces to increasing
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restrictions and harassment.
-- Another Social Christian Party member was jailed late last
month, while others were prevented from traveling abroad.
-- The military buildup and mobilization continue.
- Forces in the Honduran border area have been doubled to
12,000 to counter raids by anti-Sandinista guerrillas.
To score extent, the Sandinistas are using growing threats from abroad
as justification for further radicalization and to mobilize the
population behind them, but they are also genuinely concerned.
-- Anti-Sandinistas have been inflicting an increasing number of
casualties along the northern frontier.
-- Eden Pastora represents a potentially dangerous rallying point
for anti-Sandinista forces, and one with considerable (and
apparently growing) international appeal.
- Moreover, the Sandinistas believe the US is cc~-anitted to their
destruction.
The Sandinistas have made major strides in developing their power
base, but continued economic disarray is causing popular resentment.
-- Economic assistance from Mexico, radical Arab states, Western
Europe, and Soviet bloc countries may continue to keep the
economy afloat, but recovery still appears unlikely in the near
term.
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IV. Honduras is now being targeted directly by regional and domestic
communist forces.
-- Honduras' recent military cooperation with Salvadoran
counterinsurgency operations in the border area has prcxnpted
retaliatory strikes by Salvadoran guerrillas and Honduran
terrorists.
-- These include the destruction of Tegucigalpa's electric
power facilities and the Honduran airline office in Costa
Rica over July 4th weekend, carrried out by.a new action
_____
arm of the Salvadoran FMi~T.
-- Honduras also is under growing pressure from Nicaragua to cease
permitting anti-Sandinista forces to operate frown Honduran soil.
-- Nicaragua's continued military buildup is intended in part
to intimidate Honduras and perhaps eventually to enable
direct strikes against anti-Sandinista camps.
-- At the same time Nicaragua is attempting to put diplomatic
pressure on Honduras.
- The naval commanders of the two countries
recently met to ease bilateral tensions, and
Nicaragua will continue to seek such exchanges.
- Also, Cuba is stepping up training and support for Honduran
leftists in hopes of fomenting wider domestic violence.
In the face of these growing threats, Honduras believes it must have
substantial LRS military and economic aid at very favorable terms.
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-- Without such support, Honduras is likely in the coming months to
try to appease the foreign and domestic left by pursuing more
neutral regional policies.
The civilian government of President Suazo and the armed forces under
Ccmnander-in~:hief Alvarez continue to cooperate closely, not only in
national security policy, but also ~?- danestic political and economic
issues.
-- The political scene is calm, as virtually all forces except the
far left seek to make the transition to civilian rule a success.
-- The economic picture is much less favorable, with little
likelihood of any improvement from last year's dismal .3 percent
economic growth.
-- Facing a vaorsening current account deficit of nearly $400
million this year, Honduras is in serious need of balance
of payments support.
V. In Costa Rica, President Monge's visit to the US last month was
considered very successful, while Nicaragua publicly criticized it.
- The government's continuing nervousness over Nicaraguan military
and covert action was reflected in its expulsion of Eden
Pastora.
-- Despite Pastora's personal popularity and the increasing
anti-Sandinista sentiment among Costa Ricans, the expulsion
was widely applauded for fear that Pastora's activities
would provoke Nicaraguan retaliation.
-- Although Costa Rica is upgrading its woefully inadequate
security forces, it will continue to look to the OAS, the
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US, and regional supporters for protection from Nicaragua.
- Domestic and regional leftists have made no efforts recently to
increase pressure on the government, but planning apparently
continues.
-- Direct action is probable if-as is likely- Monge continues
his anti-~uban foreign policy.
The administration's chief concern, of course, is the economy.
- Monge's acknowledgement that austerity is essential has been
backed up with tougher policies in recent weeks, which should
improve prospects for an IMF agreement, but not necessarily
soon.
-- Nevertheless, pressure from the more free-spending wing of
Mange's party, as well as from coRenunist and democratic labor
unions, may cause some backtracking.
- Even with a full ccmanitment to austerity, economic recovery is
years away.
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KEY JUDGMENTS
The threat posed by Communist-supported insurgency remains
serious but the momentum of the extreme leftist groups in Central
America has slowed, at least temporarily. A number of developments
during recent months have for the moment strengthened moderate and
democratic groups in the region:
? Fair elections have conferred power on new governments in
Honduras, Costa Rica, and El Salvador, while Guatemala has
moderate leadership; all four governments now have stronger
support than their predecessors.
? Guerrilla forces in El Salvador and Guatemala failed to stop or
disrupt the elections through violence and terrorism. In El
Salvador such forces were repudiated by the people.
? Factional rivalries have contributed to reducing somewhat the
effectiveness of the guerrillas in Guatemala and El Salvador,
despite Cuba's efforts to mediate these internal disputes.
? The previous assumption among many outside observers-Social-
ist International members and others-that victory for the
extreme left in Central America was inevitable is no longer so
firmly held.
? The growth of the exile anti-Sandinista movement and the
increase in defections from Nicaragua point to problems for that
country's Marxist-Leninist regime.
Despite these positive events of late, the dominant aspect of
Central America's future will remain the weaknesses of moderate
societies there, and the continuing efforts of Cuba, Nicaragua, and their
allies to promote Marxist revolutions in the area.
Accordingly, the principal threats to US interests will be posed by
these situations:
? Nicaragua will continue to build the most powerful armed force
in the region and will have help from some 2,000 Cuban security
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advisers. This military force will continue to be used to maintain
internal control, to intimidate neighbors such as Costa Rica and
Honduras, and to build toward a dominant military position in
the area.
? Soviet arms shipments to Cuba, already running at a higher level
than at any time since the 1962 missile crisis, will probably
remain substantial. These will continue to include new and
sophisticated weapons which will free older Cuban weapons for
transshipment to Nicaragua.
? Cuba and Nicaragua will continue to support the guerrillas in
Guatemala and El Salvador while working to build up the
extreme left in Honduras and Costa Rica. At the same time Cuba
and Nicaragua will continue their covert efforts to divide and
intimidate the governments of Honduras, Costa Rica, and El
Salvador.
? For tactical reasons, Cuba and the extreme left may step up
attempts to explore "political solutions" in order to reduce the
level of counterinsurgency efforts by El Salvador, while they use
the next months to regroup, rearm, and mold additional unity
among the guerrillas.
? The danger of assassinations of US officials and moderate Central
American leaders is likely to increase as the extremist leftist
groups seek dramatic ways to seize the initiative.
? Honduras will increasingly become a key target of Cuban and
Nicaraguan subversion. Castro and the Sandinistas will almost
certainly use a variety of methods-subversion, intimidation,
"peace" initiatives, propaganda, etc.-to try to force the Suazo
overnment to reduce its strop ro-U n
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and Nicaragua might then adopt more militant policies against
Honduras:
- They might well attempt to establish an ostensibly home-
grown Honduran guerrilla group in a remote area. In such
a case, Nicaraguans and other foreign extremists would
probably participate.
- And in the event anti-Sandinista exile groups continue to
mount operations into Nicaragua, units of Managua's
ground and air forces may launch reprisals against exile
bases in Honduras.
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? A number of outside entities-including the USSR, Libya, Pales-
tinian terrorist groups,' and various leftist organizations-will
continue to lend a broad array of support to Marxist revolution-
ary movements in Central America. Such support will continue
to include training and arming of some guerrillas.
? Cuba, Nicaragua, and their allies will also continue to augment
their subversive efforts with initiatives for "negotiations and
peace. " These will be designed to attract non-Communist sup-
port for the extreme left, reduce foreign support for the target
governments, divide the target governments, and complicate
relations between the United States and its allies. We consider it
highly unlikely that Cuba and Nicaragua will negotiate in good
faith during the period of this Estimate.
? Meanwhile, the political situation in El Salvador will remain
fragile, its new leaders continuing to have trouble achieving
consensus in the country on national priorities, the reforms, and
the apportionment of power, with the armed forces leadership
seeking to keep repressive forces in check.
? The new government in Guatemala will remain vulnerable to
overthrow, through a combination of possible plotting on the part
of disgruntled military officers and missteps on the part of
Guatemala's new leader, General Rios Montt.
International recognition through tangible support of the positive
changes in Guatemala would strengthen moderate forces.
? Severely depressed economies in El Salvador, Guatemala, Hon-
duras, and Costa Rica will constitute certain of the most critical
challenges to moderate, constructive advance. The slump in
world prices for these countries' agricultural exports is expected
to persist, thereby maintaining pressure on already scarce f oreign
exchange reserves. Violence and guerrilla activity will continue
to harm production, erode investor confidence, limit the accumu-
lation of capital, feed inflation, and contribute to already high
levels of unemployment. Furthermore, needed austerity meas-
ures will be highly unpopular and likely to contribute to
additional unrest. These economies will continue to be dependent
in important measure on strong external support.
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For the longer run, beyond the period of this Estimate, the future
holds many severe threats to US interests in Central America. The many
weaknesses there will grow in the absence of continuing strong interna-
tional support, and there is no guarantee that even such support will en-
able moderate forces there to carry the day. Events have demonstrated,
however, that there is no inexorable downward path ahead.
? The Marxist revolutionaries and their various backers are beset
with numerous weaknesses and constraints.
? There is considerable political vitality in the area-demonstrated
especially by the courageous election turnout in El Salvador.
? Important support for moderate forces and the target govern-
ments has come from Venezuela, Colombia, and other friendly
governments, as well as from the Christian Democrats of Europe
and Latin America along with the international free trade union
movements.
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ANNEX
COUNTRY OUTLOOKS
EI Salvador
1. The prospects appear relatively favorable that El
Salvador's provisional government will be able to build
upon the strong mandate of the 28 March constituent
assembly elections and move the country toward a
national election in late 1983 or early 1984. Although
the government will continually reflect the fragility of
El Salvador's rigid political system, on balance we
fudge that its more moderate and pragmatic elements
are likely to gain greater influence during the period
of this Estimate. The position of these elements will, as
necessary, be reinforced by the military, which
emerged as the major force for moderation during the
month of political infighting that followed the elec-
tion. During that time the armed forces repeatedly
showed that, unlike the major contesting parties, they
had not forgotten who the real enemy is and that they
remain aware that national survival depends on main-
taining foreign economic and military assistance.
2. Nevertheless, the government faces many chal-
lenges in the next few months, including an insurgency
that retains strong capabilities and a war-ravaged
economy that has virtually no short-term prospect for
improvement. Attempts to address these problems will
be complicated by unrealistic domestic and interna-
tional expectations that the recent election will quickly
result in a reduction of violence and economic im-
provement. Perhaps the most serious complication,
however, is the institutional weakness of the govern-
ment itself, which is largely an extension of El Salva-
dor's longstanding political polarization and which, at
this point, remains largely undiminished.
3. The unity of purpose that distinguished the
election and the disharmony among the contesting
parties that followed underscore El Salvador's strong
desire for a democratic process on the one hand and
the fragility of its political system on the other. Against
a backdrop of international skepticism and a concerted
guerrilla effort to disrupt the balloting, some 1.5
million voters-perhaps 85 percent of the eligible
constituency-delivered a severe political and psycho-
logical setback to the far left in what even the most
critical observers acknowledge was a generally fair
contest. Nevertheless, the failure of the Christian
Democratic Party (PDC) and of the two leading
rightist parties to win a majority in the constituent
assembly precipitated a month of intense political
infighting that exacerbated already pronounced ideo-
logical divisions. Seeing the country's increased politi-
cal legitimacy thus threatened and concerned over
possible erosion of military unity, the armed forces
high command imposed its prescription for a national
unity government.
4. The net result is a fractious 60-member assembly
with 24 seats held by the PDC, 19 by Roberto
D'Aubuisson's ultraconservative National Republican
Alliance (ARENA), 14 by the more moderate rightist
National Conciliation Party (PCN), and the remaining
three by two other tiny conservative groupings. As
essentially decreed by the military, however, the
executive is led by Alvaro Magana, an independent
with close ties to the armed forces, and three vice
presidents, one from each of the major parties. The
power-sharing arrangement extends to the 15-member
cabinet, with each of the major parties controlling four
portfolios and independents appointed by the military
holding three.
5. Despite the assembly's ideological divisions, its
actions already reveal the emergence of a pragmatic
sense among some of the parties as they seek to protect
and enhance their positions. This has been most
evident in the forging of temporary arrangements of
opportunity, best illustrated by the PCN-ARENA elec-
tion of D'Aubuisson as assembly president and later,
by the PDC-)?CN ratification of Magana as provisional
executive. Significantly, ARENA's opposition to Ma-
gana-17 votes against-even in the face of intense
armed forces pressure is said to have incensed the high
command, which was already smarting at reports of
D'Aubuisson's tampering with military unity.
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n contrast, t e PCN has
shown its political acumen by reinforcing its position
as power broker through the votes on D'Aubuisson and
Magana. By correctly reading the signals from the
military on Magana, it has also firmed up its tradi-
tional links with the armed forces. Similarly, it is likely
that Christian Democratic support for Magana has
increased the party's credibility with the military. At
the same time, the PDC is hoping that the armed
forces' prescription is a further indication that the
mainstream of the officer corps remains pledged to
protecting the reforms of the last two years.
7. Although the military would prefer to concen-
trate on the insurgency, its recent formation of a six-
. man oversight committee to help the executive over
maior policy hurdles and to mediate serious partisan
fighting suggests that it perceives a continuing need to
exercise its power in the political arena. Its involve-
ment may prove propitious, however, in helping a
political center take shape with the PDC, elements of
the PCN, and possibly the small Democratic Action
party, which holds two assembly seats. Such an evolu-
tion would give the Christian Democrats the option of
moving closer to the center-right position of the
military and the PCN on some issues, while also
enabling it to distinguish itself as the clear alternative
for the national election on others. The PCN, mean-
while, would stand to gain the most recognition by
virtue of its prominent swing role, a position it will
increasingly use in preparation for the election.
8. ARENA's prospects, on the other hand, appear
more limited. The party has recently suffered a
number of serious defections from both its hardline
and more moderate ranks. Hardliners reportedly were
disenchanted by D'Aubuisson's bowing to the military
prescription, symbolized when he abstained on the
Magana vote; in addition, a few oligarchs-disap-
pointed at D'Aubuisson's failure to win the provisional
executive himself-allegedly have withdrawn their
funding. Such erosion underscores both the fragility of
ARENA's support and the naivete of some of its
backers. Further defections over the next six months
are likely, particularly among more moderate ARENA
members-some of whom had previously bolted the
PCN-who are concerned about D'Aubuisson's politi-
cal inexperience and fear that party zealots will again
test the military's patience.
9. Despite the apparent erosion of support, ARE-
NA's ability to garner 29 percent of the popular vote
suggests that it has the potential to remain a maior
player in El Salvador's evolving political process. This,
however, will require cultivating an image commen-
surate with its aspirations, a formidable task in light of
its narrow ideology. Furthermore, its leaders have
inadvertently allowed ARENA to be maneuvered into
positions of lesser visibility in the government. This
handicap is particularly apparent in the cabinet,
where the PDC's control of the critical Foreign and
Labor Ministries, the PCN's hold on Public Works and
the Ministry of the Presidency, and the grasp of
military-backed independents on the important Plan-
ning and Interior posts are likely to overshadow
ARENA's generally obscure portfolios. Ironically,
ARENA's maior cabinet post-the Ministry of Agricul-
ture-is one that could prove politically costly to the
party and to the country as well.
10. The increasing importance of Agriculture and
related ministries stems in part from El Salvador's
continuing economic decline, underscored by a 1982
GDP growth rate of minus 10 percent. Industrial
investment and production are down again this year as
a result of the insurgency, a credit squeeze on the
private sector, and lack of foreign exchange to pur-
chase raw materials and equipment from abroad.
Further agricultural deterioration reflects the effects
of persistent rural violence, problems in implementing
the land reform program, and low world prices for
coffee and cotton. Meanwhile, private consumption is
plunging because of reduced incomes and declines in
supplies of domestic and imported goods. Because of
increasingly acute foreign exchange problems caused
by expanding current account deficits, foreign net
disinvestment, and capital flight, the economy contin-
ues to be heavily dependent on official aid from
abroad.
11. To spur production in the severely depleted
cash crop industries and to restore the confidence of
landed investors, the government recently postponed
further distribution of rented land to peasants. Al-
though the new law explicitly protects all current and
pending claims to the land by peasant renters, it has
precipitated strong opposition from the PDC and
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farmworkers organizations, inspired increased evic-
tions by conservative landowners, and given the ex-
treme left a valuable propaganda issue. The fact that
the controversy has all the earmarks of developing into
a major international setback for the government
could once again inspire the military to force its
prerogatives on the political parties, particularly as
any perceived threat to agrarian reform threatens the
continuation of US and other Western assistance.
12. Whatever its ultimate resolution and ramifica-
tions, the action by the assembly underscores the
weaknesses of the unsophisticated body politic. Symp-
toms of these weaknesses will repeatedly be mani-
fested in an inability to separate partisan and personal
goals from common national priorities, and a failure to
put behind the ideological and personalist conflicts
that in the past have thwarted the democratic process
and nurtured violent vendettas among political figures
and groups. Such negative symptoms have, in fact,
further revealed themselves in recent reports of in-
creased activity by rightist death squads. These actions
may proceed from a number of different and contra-
dictory motives, including frustration over the failure
of ultraconservative forces to control the new govern-
ment, abelief that those elements do, indeed, domi-
nate, or a misguided sense that the Western democra-
cies cannot now back away from their commitment to
support the provisional government.
13. The upswing in political violence is unlikely to
abate soon, precisely because the controversy among
disparate political elements over agrarian reform and
other issues will continue and because the military
increasingly will be distracted by its new battlefield
initiatives.
Nevertheless, there are already signs that the extrem-
ists are becoming isolated by government, military,
and domestic resection of rightist violence. These signs
have been especially reflected in the armed forces'
recent arrest of a number of rightist vigilantes and
members of the government's security forces, and by
the assembly's assertion of its commitment to restoring
a semblence of law and order through its unanimous
appointment of an independent and fully staffed
supreme court. Moreover, even the ultrarightist ARE-
NA has publicly condemned recent violent acts by
extremists aligned with the party, and has unanimous-
ly endorsed declarations by the other parties and the
press for greater military control over undisciplined
security forces.
14. On the military front, the balance appears to be
shifting in the government's favor. The government
gained a strong psychological boost from the elections,
and the recent return of a third quick-reaction battal-
ion and nearly 500 junior officer candidates from the
United States provides the Army with the additional
manpower and leadership necessary to undertake
more aggressive military operations against the insur-
gents. Furthermore, the expansion of the helicopter
inventory to 20 UH-1Hs and the acquisition of some
180 military trucks have improved mobility greatly.
15. Nevertheless, weaknesses remain. Basic infantry
training is generally poor, command and control are
weak, and intelligence capabilities still need much
improvement. Although overland and naval interdic-
tion capabilities have improved somewhat, defenses
are still porous, and the government has almost no
capability for air interdiction. Finally, despite recent
expansion, the 28,500-man military and security force
still lacks the 10-to-1 force advantage over the some
4,000 to 5,000 guerrillas generally considered neces-
sary to defeat an insurgency.
16. The guerrillas, for their part, still have not
recovered from the demoralizing effects of the suc-
cessful elections. Insurgent unity has been shaken by
recriminations over the failed preelection offensive,
and desertions have increased. Furthermore, the guer-
rillas are hurting from the disruption of their supply
network. Stocks of ammunition, medical supplies, and
even food remain depleted.
17. Nevertheless, the insurgents retain strong capa-
bilities, and many appear to be resigned to a pro-
tracted military struggle. The guerrillas are especially
entrenched in northern and eastern El Salvador, where
they have large networks of well-defended base
camps. (See next page for map of insurgent organiza-
tion.) These support increasingly better armed and
trained guerrilla forces. It will take a major sustained
government offensive effort to dislodge them.
18. Furthermore, the Cuban and Nicaraguan arms
pipeline remains open, assisting the insurgents in
rebuilding their supply inventories and permitting
stockpiling for future offensive operations.0 25X
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19. Overall, while the military appears to be gain-
ing the upper hand, a decisive victory over the
insurgents probably is still well down the road. Much
will depend on the new government's ability to avoid
divisive quarrels and address the country's worsening
economic problems.
Guatemala
20. The March coup that placed the reformist Rios
Montt government in power has given Guatemala new
opportunities to end its international isolation, acquire
needed foreign assistance, and reverse guerrilla mo-
mentum in gaining Indian recruits. Despite public
support and military backing for anticorruption and
human rights measures, however, General Rios Montt
still has only a tenuous hold on power
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While ongoing political maneuvering could hamper
the military's counterinsurgency efforts, it has made
strides in formulating a multifaceted approach to the
problem. The guerrillas are well entrenched in some
parts of the Western Highlands and are receiving
increasing Cuban assistance, but their persistent dis-
unity, their inability to carry out scheduled operations,
and new government programs to gain the allegiance
of the civilian population suggest that the insurgents
will not succeed in achieving maior advances in the
months ahead.
21. Rios Montt appears to be the driving force
behind the new government, deriving his political
power from personal popularity and support for his
policies from most iunior officers and key military unit
commanders. By taking steps to curtail government
corruption and human rights abuses he is addressing
the concerns of many of the junior officers responsible
for the coup. The iunta has arrested dozens of former
officials involved in corruption, canceled several pub-
lic projects that were sources of graft, and established a
high-level oversight committee for new projects. Na-
tional police units implicated in rightwing murders
have been disbanded, policemen accused of abusing
human rights since the coup are being arrested or
relieved of their duties, and civilians not authorized to
carry weapons are being disarmed. The actions have
contributed to a decline in civilian deaths, particularly
politically motivated murders in Guatemala City.
22. While the public welcomes the reduction in
violence and military officers support reforms that
may bring increased foreign assistance, the stability of
the junta is still threatened by several factors, particu-
larly those stemming from the enigmatic personality
of the junta leader. Rios Montt's ambiguous, rambling
public speeches often undercut the pragmatic direc-
tion of his policies.
ios ontt s critics a so ave more concrete
complaints. His increasing preference for making de-
cisions on his own is antagonizing senior commanders,
particularly the other two junta members. And senior
officers are pushing for further steps to curb the
influence of iunior officer advisers, whose interference
in military command assignments has unsettled mili-
tary discipline.
23. Rios Montt's disinterest in economic and busi-
ness matters is particularly distressing to the private
sector, which witnessed a previously strong economy
grow by only 1 percent last year. The economy is
expected to stagnate again this year as international
market conditions and the insurgency have caused the
demise of tourism and a drying up of commercial
credit, reduced private investment, and increased
capital flight. Rios Montt's claims that Guatemala does
not need bilateral foreign economic assistance have
added to the unease among business leaders, although
government officials are approaching friendly nations
and international lending institutions for assistance to
help cover balance-of-payments deficits.
24. Rios Montt does not appear to be in imminent
danger of being ousted, given his continuing support
from key military commanders and most iunior offi-
cers. Among these groups there appears to be an
awareness that another change in government-par-
ticularly to a more rightist orientation-would ieop-
ardize growing international recognition of Guatema-
la's reforms, damage the military institution, and
detract from their primary task of defeating the
insurgents. Political opponents of the former govern-
ment appear divided in their response to Rios Montt's
programs and many are willing to allow the reforms
time to take root. Finally, Rios Montt benefits from
the fact that there are no obvious candidates-from
either the senior or the iunior officer ranks-who have
the personal following to lead the country.
25. Rios Montt, a staunch anti-Communist, is dedi-
cated to moving forward with a progressive counter-
insurgency program, but is emphasizing new aspects
designed to elicit civilian support in this effort. He has
offered the guerrillas a monthlong amnesty during
which they can surrender their arms without fear of
retribution. Following the amnesty period the Army
would implement a national defense plan involving a
major near-term effort to undercut the insurgents. In
preparation, the Army has recently been increased to
approximately 17,400 men, with plans for the immedi-
ate mobilization of an additional 5,000 veterans, re-
servists, and civilians for six months. These troops will
be deployed in heavily contested areas in the Western
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Highlands and near the capital. The government has
announced that it will institute a state of emergency in
these areas.
26. The junta is giving special emphasis to organiz-
ing loyal peasants into civilian defense forces (CDF).
Approximately 6,000 partially armed peasants turned
out for a progovernment rally in the Western High-
lands, and plans in that region call for including an
eventual 17,000 participants. While the Army has
been reluctant to provide these unproven forces with
adequate weaponry-fearing that guns would fall into
guerrilla hands-the civilians have already engaged
the guerrillas on several occasions with some success.
With their knowledge of local terrain, they also serve
an intelligence function and are making it difficult for
guerrillas to cache arms and move freely.
27. The Army still faces mobility, intelligence, lo-
gistic, and equipment problems. It has serious difficul-
ty moving men and materiel throughout a country five
times the size of El Salvador. There are insufficient
aircraft for the expanding task of the counterinsur-
gency. Inadequate communications prevent coordina-
tion of air and ground forces, and residual peasant
distrust of government troops hinders the gathering of
intelligence. New programs will require several
months and greater resources than currently available
before substantial gains can be expected in the coun-
terinsurgency effort.
28. External assistance to the Guatemalan insurgent
movement, particularly from Cuba, is on the increase,
and guerrilla activity is correspondingly expanding.
The return of trained combatants, increased arms
flows, and the continuing deterioration of the econo-
my could again increase the level of guerrilla activity
significantly by the end of the year. But there are
already some signs that the military is gaining new
acceptance among the peasantry, and the government
will be in a position to further weaken the insurgents'
rural support base if it presses forward with reforms.
Therefore, the course of the insurgency over the next
several months will depend as much on the govern-
ment's initiatives as on guerrilla tactics and level of
external assistance. In this regard we fudge that the
insurgents will not make major advances in the near
term.
29. Recruitment and training continue to be the
primary focus of the insurgents. The increase in their
numbers over the past year reflects their success in
provoking repression by the prior government. Army
abuse of civilians, which the iunta is trying to stem, has
been an important factor-along with poor economic
conditions-in the growth of popular support for the
guerrilla movement.
30. We estimate that there are some 3,000 to 4,000
insurgent combatants in Guatemala.
Nevertheless, guerrilla units
num eying as ig as 0 to 300 have staged attacks
over the last six months. This and the breadth of
insurgent activity reinforce a general picture of sub-
stantial growth in guerrilla ranks, and reflect the
insurgents' ability to call upon organized local forces to
expand their numbers for specific missions.
31. The guerrillas have concentrated on economic
sabotage and political terrorism, while avoiding major
confrontations with full-strength Army units. Since the
coup, however, the insurgents have placed new em-
phasis on attacking the civilian defense forces in order
to discourage Indian cooperation with the military.
This demonstrates guerrilla recognition that the Army
is more effectively competing for the support of the
peasantry. At the same time, consistent abuse of
civilians by the guerrillas could undermine their re-
cruitment efforts. The insurgents, backed by Havana,
also have initiated a broad propaganda campaign to
discredit the new government, another indication of
guerrilla concern about the potential of the junta's
reforms.
32. Cuba remains the principal ally of the guerrilla
movement, providing training, arms, funds, and inter-
national propaganda support.
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Further increases of aid will probably follow
the same pattern of "supply-following unity" that
preceded maior Cuban involvements in Nicaragua and
El Salvador. Nicaragua, echoing Cuba, has also been
pushing the insurgents toward unity.
sonnel. Much of Suazo's focus has been on Honduras's
serious economic problems, which include an unfi-
nanced budget deficit of $100 million and the likeli-
hood of a third consecutive year of nearly zero
economic growth. His first step in implementing an
austerity program has been to reduce the govern-
ment's overstaffed bureaucracy, but-conscious of the
need for reform-he is struggling to preserve the
agrarian reform and some other social programs.
35. Suazo has also won high marks for gaining the
confidence of the military, especially Commander in
Chief Alvarez. The two men share strong anti-Com-
Honduras
33. While the Suazo government is providing Hon-
duras with its most competent leadership in years, its
pro-US stance and firm response to radical leftist
forces in the region have made the country a growing
target for Cuban- and Nicaraguan-backed subversion.
Havana and Managua are pushing the extreme left in
Honduras to accelerate preparations for revolutionary
violence and are stepping up attempts to caiole or
intimidate the Hondurans into adopting a more neu-
tral stance. The Honduran radical left is splintered, is
relatively small, and-at least for the present-faces
an inhospitable operating environment given popular
satisfaction with the recent return to civilian rule.
Nevertheless, the trend toward increased domestic
terrorism and especially heightened concern about the
military threat from Nicaragua have caused a growing
sense of vulnerability among Honduran leaders. These
fears are being exacerbated by what the Hondurans
view as inadequate assistance from Washington, and,
in the absence of substantial US backing, Honduras
probably will begin in the months ahead to pursue
more cautious policies in the region in order to
appease its foreign adversaries.
34. The Suazo administration's solid performance
during its four months in office is enabling it to build
on the general public support that greeted the coun-
try's first civilian government in a decade. The Presi-
dent's no-nonsense emphasis on public probity, com-
petence in government, and fiscal responsibility has
struck a responsive public chord after years of official
corruption and ineptitude. By staffing government
ministries with a mixture of talented young people and
seasoned technical specialists-selected predominantly
from the mainstream of the Liberal Party-he has
significantly upgraded the caliber of government per-
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and other dissidents, the military appears unified
behind Alvarez, who is widely regarded as the coun-
try's most able military commander in some time.
36. Persuaded that it was only a matter of time
before Cuba and Nicaragua would step up efforts to
subvert Honduras, Suazo and Alvarez have crafted
policies designed to thwart that challenge. The Hon-
durans have been partially successful in curbing over-
land arms shipments from Nicaragua to the Salva-
doran insurgents. Moreover, Alvarez has taken the lead
in developing closer ties to senior military leaders in El
Salvador and has demonstrated a growing willingness
to provide blocking forces to try to encircle Salvadoran
insurgents. On the diplomatic front, Honduras has
cooperated in the formation of the Central American
Democratic Community and in other US-endorsed
initiatives designed to unify Central American govern-
ments. Reflecting a growing fear of the Nicaraguan
military buildup, Honduras recently signed an agree-
ment that allows US military aircraft access to Hon-
duran airports.
37. These actions-and especially Tegucigalpa's de-
cision to permit greater activity in Honduras by anti-
Sandinista insurgent groups-have in turn prompted
Havana and Managua to reassess their strategy toward
Honduras. From Cuba and Nicaragua's perspective,
present circumstances have invalidated their "peace-
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ful corridor" approach, which posited that in the short
term the main priority was to funnel arms through
Honduras into El Salvador and Guatemala and that
efforts to destabilize the government in Tegucigalpa-
by provoking a backlash-would jeopardize more
pressing goals. Consequently, Cuba and Nicaragua
have set in motion plans to accelerate preparations for
insurgency in Honduras.
38. The Honduran Communist Party-probably
the country's largest extreme leftist group, with some
1,000 members and sympathizers-is taking the lead
in intensifying efforts to lay the groundwork for
insurgency. Following a trip to the USSR and Cuba in
early 1982, Secretary General Padilla Rush purged the
party of its remaining "softliners" and won an en-
dorsement fora "prolonged popular war" strategy.
The initial phase of his plan calls for increased terrorist
activities and an acceleration of paramilitary training
abroad. Subsequently, Fidel Castro reportedly has
emphasized the need for haste. This, together with a
report that Honduran radicals are being sent to Cuba
fora "crash" paramilitary course, underscores Ha-
vana's desire to shorten the timetable.
40. Although the Honduran Communist Party re-
mains Havana's most responsive instrument, the Cu-
bans are also working with other Honduran radical
leftist groups and are trying to promote unity among
them. Early this year, after months of preparation, the
Communists joined with four other groups to form the
National Directorate for Unity. The five groups
agreed that because of their small membership-
which totals an estimated 2,000 members and sympa-
thizers-their priority over the near term would be to
mobilize popular support. Like the Communists, how-
ever, the other four parties reportedly have endorsed
the strategy of accelerated preparation for prolonged
41. While terrorist activity is almost certain to
escalate in coming months, the extreme left will face
serious obstacles as it attempts to gear up for insur-
gency. The lingering distrust and animosity among the
leftist movements was underscored by the failure of
three of the groups to send representatives to the
meeting of the National Directorate for Unity that had
been scheduled for late April. The lack of experience
of the Honduran terrorists has been reflected in recent
bungled bombings and in the failure of the perpetra-
tors of the April hijacking to achieve most of their
aims. The infusion of foreign-trained cadres will give
the radical left an important boost. But public reaction
to the hijacking and other indicators suggest that they
will face an unreceptive operating environment as
well as better trained and more proficient security
forces.
42. Nicaragua-whose strategy presumably is close-
ly coordinated with Havana's-is also using a variety
of tactics to try to get Honduras to curb its support for
anti-Sandinista insurgents and otherwise reverse its
pro-US policies. After anti-Sandinista forces blew up
two bridges in mid-March, Nicaragua recalled its
ambassador and threatened to break diplomatic rela-
tions. The Sandinistas significantly increased troop
strength and Cuban advisory presence in the border
region and coupled these actions with stepped up
diplomatic pressure. Counting on its significant mili-
tary edge to give it leverage, Nicaragua has pushed for
bilateral talks with Honduras to be held at the level of
commander in chief and has emphasized the need to
dismantle "counterrevolutionary" camps in Honduras
and establish joint border patrols.
43. Concerned that it was being placed on the
defensive diplomatically, Honduras countered with its
own peace proposals, which stress the need for inter-
national involvement in monitoring any settlement
with Nicaragua. On 23 March, Foreign Minister Paz
Barnica announced a Honduran plan whose key ele-
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ments include international supervision and vigilance
at the border and other sites in both countries, reduc-
tion in foreign military advisers, agreed-upon limits
regarding the acquisition of modern weaponry, and a
halt to regional arms trafficking. Honduras launched a
diplomatic campaign to obtain support for its plan and
has gained endorsement from a broad range of Latin
American governments, including Mexico.
44. Having failed to intimidate the Hondurans,
Nicaragua has recently shifted tactics and is now
adopting a more accommodating demeanor. Less than
a week after Nicaragua's Defense Minister Humberto
Ortega reiterated his government's insistence on face-
to-face talks with Alvarez in Managua, the chief of
staff of the Sandinista Army arrived in Honduras for
talks with his Honduran counterpart. Sandinista repre-
sentatives went out of their way to appear cordial and,
while offering no important concessions, succeeded in
persuading the Hondurans to agree to attend followup
discussions that would prepare the way for a meeting
between Commanders in Chief. As an additional
gesture, the Sandinistas released 38 Honduran fisher-
men whose arrest in March helped to sour relations.
45. The new flexibility demonstrated by the San-
dinistas underscores the fact that increasingly effective
border raids are taking atoll-one Nicaraguan official
reportedly claimed that the Sandinistas have suffered
some 300 casualties in recent months. The Nicara-
guans presumably are also motivated by a desire to
strike a deal with Honduras that would prevent
former Sandinista leader Eden Pastora from using that
country as his base of operations. Although the Hon-
durans have demonstrated no willingness so far to alter
their negotiating position, some evidence indicates that
frustration with the United States is causing key
Honduran leaders to talk about reassessing their policy
toward Nicaragua.
46. Honduran disgruntlement with the United
States has its origins in what is widely perceived in
Tegucigalpa to be a lack of US responsiveness to the
pressing needs of a country that increased its own
vulnerability to support US interests. Against this
background, General Alvarez in particular has been
incensed by the US role in the Falklands crisis-a
response that is colored in part by his lengthy training
on uras as as e t e nite tates to pro-
vide either F-4 or F-5E fighters free of charge and has
requested US aid in financing the purchase of new
Canadian-built transport aircraft. The Hondurans also
need artillery and antitank missiles to offset Nicara-
gua's growing armor and artillery inventories. The
Suazo government's prospects seem bleak for finding
other governments-particularly in Latin America-
that would provide substantial help in these areas.
Nevertheless, there appears to be more than posturing
behind Tegucigalpa's disillusionment with the United
States, and in the absence of concrete reassurances the
Hondurans probably will soon begin to back away
from their pro-US stance on regional issues.
49. The Monge government will return Costa Rica
to policies more consistently in line with US interests
in Central America and less given to the fiscal and
political eccentricities that characterized the Carazo
administration. Nevertheless, Costa Rica faces unprec-
edented economic problems that will defy quick solu-
tions, the strong likelihood that leftist extremists will
attempt to exploit the economic situation, and the
probability that the woefully inadequate security
forces will be unable to stem the country's use as an
important link in the guerrillas' regional arms supply
network. Additional challenges involve an increasingly
volatile situation along the northwestern border with
Nicaragua, as well as the possibility of Cuban and
Nicaraguan clandestine operations calculated to desta-
bilize the Monge government. Although its strong
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democratic institutions should enable Costa Rica to
withstand these challenges, the tranquillity that has
previously distinguished the country from much of the
rest of Central America will be seriously threatened in
the future.
his has
50. Costa Rica's virtual bankruptcy constitutes the
broadest and longest term threat to social peace.
Economic activity will drop some 6 percent in 1982,
and imports will decline because of poor export
performance, scarcity of foreign exchange, and lim-
ited access to credit. Unemployment will soon reach
14 percent-extremely high by Costa Rican stand-
ards-and consumers are facing triple-digit inflation.
Despite Monge's willingness to test public resolve and
that of his own party through strict austerity, complete
economic recovery probably is years away.
51. The economic situation carries with it opportu-
nities for Costa Rica's small Communist coalition.
Although tactically and ideologically divided, the co-
alition was stung by its poor showing in the February
election and may be ready to abandon its generally
nonviolent policies. The likelihood that the austerity
measures will spark some strikes could play into the
coalition's hands, particularly as its largest component,
the Costa Rican Communist Party (6,000 to 7,000
members) effectively controls more than 50,000 labor-
ers. Communist-inspired violent strikes by banana
workers before the election could be a harbinger, and
coalition representatives have been quick to challenge
Monge's initial austerity package.
52. The regional character of Central America's
insurgencies is also increasingly apparent in Costa
Rica. Over the past year, the country has been the
scene of numerous terrorist incidents, at least some of
which apparently were undertaken in support of the
Salvadoran and possibly Guatemalan guerrillas. Q
prompte t e new government to announce the cre-
ation of a special antiterrorism squad-a clear signal
that Monge expects subversive activity to increase and
a tacit admission that the security forces are inad-
equately prepared for such an eventuality.
54. This fear is well founded. Lacking a standing
army, Costa Rica relies on the 7,000-man Civil Guard
as its first line of defense. The Guard, however, is
poorly trained and generally armed only with pistols
and carbines. Few of its crew-served weapons are in
working condition, almost all ordnance is unservice-
able, and cannibalization of weapons parts is wide-
spread. The Guard's ability to provide national de-
fense has been further weakened by Cuban
penetration and by the economic situation. The im-
pact that the economic crisis is having on defense was
recently highlighted by reports that only 65 of the
Guard's 360 patrol cars purchased three years ago are
now operational.
55. Costa Rica's security inadequacies have been
underscored by increased leftist subversion in Guana-
caste Province, which abuts Nicaragua.
T e San inistas are also said to be recruit-
ing land squatters in the area for eventual deployment
to El Salvador, and encouraging the takeover of
ranches both near the border and along the inter-
American highway. Strong pro-Sandinista sentiment in
Guanacaste, meanwhile, allows Nicaragua to maintain
plausible denial and to use squatters to monitor Costa
Rican security force movements.
56. Guanacaste also shelters many of the approxi-
mately 10,000 Salvadoran refugees in Costa Rica.
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57. The arrival in Costa Rica in April of Nicara-
guan war hero Eden Pastora and his assertion that he
will unseat the Sandinista hierarchy have heightened
tensions between San Jose and Managua. Monge's
decision to expel Pastora reflects Costa Rica's desire
not to repeat its involvement in the kind of counter-
revolutionary activity that led to the overthrow of
Anastasio Somoza and its fear that Nicaragua would
use the Pastora threat to iustify an invasion of Costa
Rica. At the same time, Monge realizes that attacks
staged from Costa Rica ^ould ultimately jeopardize the
centerpiece of his regional defense policy: the plan to
request an OAS peace force to protect Costa Rica's
borders in any war in Central America-a pointed
reference to potential Sandinista aggression.
58. Nicaragua and Cuba are concerned by Monge's
reliance on the Rio Treaty, which comes amid other
signals of Monge's strong opposition to Communist
subversion in Central America. These have included
Monge's refusal to rule out US military assistance for
Costa Rica, his willingness to counter Communist
propaganda in regional forums, and his decision not to
renew relations with Havana. Nevertheless, Castro's
operatives have the necessary infrastructure in Costa
Rica to support clandestine operations designed to
destabilize the Monge government.
Nicaragua
60. Since coming to power in July 1979, the Sandi-
nistas have followed a gradualist strategy for the
establishment of aMarxist-Leninist state in Nicaragua,
closely patterned after the Cuban model. While con-
centrating on the buildup of the military, the militia,
the security services, and the Sandinista mass organiza-
tions, the regime has gradually restricted the activities
of the private business sector, the independent media,
and the opposition political parties. In recent months,
however, the Sandinistas' siege mentality-developed
during the long struggle against Somoza-has been
reinforced by their perception of renewed US effort to
check leftist forces in Central America. Consequently,
the regime has accelerated efforts to consolidate its
control.
61. The Sandinistas regard recent diplomatic pres-
sures against Nicaragua, their deteriorating economy,
increasing activity by foreign-based opponents, the
failure of the left to gain power in El Salvador, and US
military aid to Honduras as evidence of Washington's
conspiracy to destroy their revolution. Although the
regime would prefer to avoid a premature crackdown
on moderate groups that would jeopardize access to
Western financial sources, the recent increase in inter-
nal and external pressures has propelled it toward
greater repression of opposition elements and mass
mobilization of the population.
62. Since the declaration of a state of emergency in
March suspending most civil liberties, the regime has
halted virtually all opposition political activity. The
imposition of prior censorship and the banning of
nonofficial radio newscasts have given the Sandinistas
almost total control over the media, effectively deny-
ing the moderates the means to take their case to the
public. Editors of the prestigious independent newspa-
per La Prensa have been so intimidated by numerous
government-ordered shutdowns that they frequently
anticipate-and refrain from publishing-those press
items likely to anger the regime. Several opposition
party and labor union activists have been arrested on
unspecified security grounds, and some moderate
leaders have been denied permission to leave the
country.
63. Businessmen, meanwhile, have been hit with
recent economic decrees that allow the regime to
control commerce and production and impose "war
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taxes." Although business leaders fear the decrees
threaten the existence of the private sector, they also
are aware of the risks that a confrontational approach
toward the regime would entail. Rather than resisting
the government's measures, many businessmen prob-
ably will opt for quietly leaving the country.
64. Relations between the Sandinistas and local
Catholic Church leaders also have deteriorated in the
past few months as the bishops have continued to resist
the regime's authoritarian methods. In February the
bishops issued their strongest public attack yet on the
regime's human rights record in a letter denouncing
Sandinista actions against the Miskito Indians. The
Sandinistas in turn have increased their pressure by
temporarily closing aChurch-owned radio station,
taking steps to control the curriculum in the country's
large Catholic school system, and imposing Cuban
textbooks on some of the schools. The regime also
continued its efforts to sow dissension by backing the
Church's radical wing and to discredit Archbishop
Obando y Bravo by linking him to Washington and
exiled opposition elements. The Church, however,
recently demonstrated its deep support in Nicaraguan
society by successfully resisting Sandinista attempts to
prevent public attendance at traditional Holy Week
religious ceremonies.
65. The Sandinistas have used the crisis atmosphere
during the state of emergency to stir up popular
antagonism toward the United States and strengthen
their network of neighborhood defense committees
and the militia as instruments of social control and
regimentation. Neighborhood committees-patterned
after the Cuban model-have been instructed to
increase their vigilance over the population and report
"counterrevolutionary" activities to the security
forces. Militia recruitment drives were accelerated
during the first two months of the emergency, and
harsh measures have been used to coerce or punish
those who resist recruitment. In early April, 105
peasants fled to Honduras after being threatened with
imprisonment and confiscation of their property for
refusing to loin the militia.
66. Through a combination of pressure and patri-
otic appeals, the Sandinistas have succeeded in in-
creasing discipline in the labor force-a maior accom-
plishment after strikes, absenteeism, and work
stoppages became almost endemic last year. Appeals to
revolutionary fervor and nationalism apparently have
strengthened the dedication and discipline of the
Sandinista rank and file in the government, armed
forces, and mass organizations.
67. Increased repression and revolutionary mobili-
zation during the state of emergency have led several
opposition leaders to conclude that a mixed economy
and even the remaining vestiges of pluralism will not
survive under the Sandinistas. Moreover, Eden Pas-
tora's denunciation of the Sandinista leadership has
provoked fears among moderate leaders that-given
their vulnerability to Sandinista anger-a serious chal-
lenge from Pastors would lead to an even stronger
repression of independent groups. Former iunta mem-
ber Alfonso Robelo and several other key moderates
have given up trying to stop the Sandinistas' move
toward totalitarianism from inside Nicaragua, and
with some of their followers they have gone into exile
to carry out their opposition to the regime. Other
moderates are making preparations to flee the country
or go into hiding. Many of those who will not or
cannot leave have been intimidated by arbitrary ar-
rests and bullying by Sandinista thugs. They probably
will try to disassociate themselves from Pastora,
Robelo, and other exiles.
68. Although Pastora represents no immediate
threat to the regime, his denunciation of the Sandinista
leadership has had an unsettling political and psycho-
logical effect in Nicaragua. Wall paintings reportedly
have begun to appear in Managua and other areas
suggesting popular support for Pastora, and his call for
the overthrow of the regime has provoked several low-
ranking defections from the Sandinista Army. Never-
theless, Pastora's recent expulsion from Costa Rica and
the willingness of former colleagues in the Army to
repudiate his action suggest he faces an uphill struggle.
69. The recent defection of Central Bank President
Alfredo Cesar has damaged confidence in the Sandi-
nistas within international financial circles, thus add-
ing to the economic costs of increased political con-
trols. Cesar has been personally credited by many
foreign bankers with keeping Nicaragua financially
solvent. The mobilization of reservists during the state
of emergency and the maintenance of military forces
on an alert status have been costly in terms of
processing and distributing fuel, foodstuffs, and other
resources. The diversion of resources to the military
will mean more cuts in government spending for social
services and productive investment, thereby lowering
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the standard of living. The recent economic decrees
and stepped-up confiscations under the agrarian re-
form program have further undermined business con-
fidence and are likely to accelerate the flight of
capital, entrepreneurs, and qualified technical and
managerial personnel.
70. By emphasizing the foreign threat, the Sandinis-
tas have tried to offset growing uneasiness about their
intentions among Western financial supporters. West-
ern aid, however, probably will fall short of the level
needed to support increases in real imports and real
GNP this year, particularly since Managua is not likely
to alter its accelerated drive toward aMarxist-Leninist
state. The regime may give ground temporarily on
individual issues, but the forces behind radicalization
are likely to grow. Safeguarding the revolution re-
mains the Sandinistas' top priority, and portraying the
United States as the cause of Nicaragua's problems
permits them to rally domestic support, suppress the
opposition, and explain away their economic failures.
Moreover, the more serious the armed challenge be-
comes-from Pastora or others-the more swiftly and
brutally the Sandinistas will try to suppress opposition
elements nationwide.
71. The Sandinistas' resolve to step up internal
repression has been strengthened by mounting govern-
ment casualties in clashes with antiregime bands.
Managua's growing concern about unrest in the Atlan-
tic Coast region and about the activities of foreign-
supported guerrilla groups based in Honduras and
Costa Rica has led it during the past several months to
remove by force the Miskito Indian population along
the northern border, to retaliate against Tegucigalpa
by support of violent Honduran
leftists, and to increase diplomatic pressures against
San Jose. The regime also is counting on the intimidat-
ing effect that its continuing military buildup has on
governments in the region. So far, the Sandinistas have
refrained from carrying out retaliatory strikes against
insurgent camps in Honduras for fear that such action
would provoke a maior US military move against
Nicaragua. As their military strength grows, however,
and if the border provocations continue, the Sandinis-
tas will tend to become more belligerent, and the
danger of a maior conflict is likely to grow.
72. The military buildup continues to upset the
regional military balance. The Sandinistas are building
an army and militia force that is intended to defend
against any regional military threat. Even now the
Sandinistas could probably beat back an attack by any
one potential adversary in the region. Managua al-
ready outstrips each of its neighbors in military man-
power, armor, and artillery capabilities. Over the next
year Nicaragua will widen its margin, although its
principal manpower effort will be the professionaliza-
tion of its regular forces. Regular army strength has
stabilized at about 15,000 to 20,000, but the expansion
of reserve and militia units continues. The regular
reserve force now numbers some 20,000, and the new
drive to recruit more members for the irregular militia
has pushed the total reserve figure to more than
50,000. Thus the armed strength available to the
Sandinistas, not including the national police, is some
70,000 personnel. By comparison, the Honduran Army
numbers 13,400 men plus an undertrained reserve
force of 5,000.
73. In April, Managua received
multiple rocket launchers and four heavy ferries for its
T-55 tanks. The rocket launchers give Nicaragua a
mass firepower capability unmatched in the region,
and the tank ferries provide an offensive water-
crossing capability for the armor force.
e icaraguans a so are orming a
new airborne commando unit at Montelimar, and
several AN-26 transport aircraft are on order from the
Soviet Union for the force.
75. The Cubans continue to play a key role in
Nicaragua's military buildup. There are approxi-
mately 6,000 Cubans in Nicaragua of whom some
2,000 are military/security advisers. In addition to
providing technical and training assistance, they have
participated in a number of key construction proiects
such as building a strategic road to connect Puerto
Cabezas with the rest of the country and improving
various airfields to support iet fighter aircraft. More-
over, Cuban special troops are helping in counterinsur-
gency operations and in providing personal security
for Sandinista leaders.
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76. We judge that during the period of this Esti-
mate the Sandinistas will accelerate efforts to build the
institutional bases for a totalitarian Marxist state by
strengthening the mass organizations and their capac-
ity for popular mobilization in support of regime
policies. They also will continue to emasculate the
already weakened democratic forces, but will try to
avoid a total crackdown that would jeopardize West-
ern aid. Nevertheless, a serious armed challenge to the
regime would provoke a swift suppression of opposi-
tion elements and possibly lead to the declaration of a
"socialist state" intended to elicit Soviet support and
protection. The deteriorating economy will remain the
Sandinistas' major vulnerability, but economic woes
will encourage radicalization and the search for scape-
goats. Although Moscow seems intent on limiting its
share of the Nicaraguan financial burden, the USSR
already shows signs of agreeing to a gradual increase of
economic assistance in order to maintain the stability
of the Sandinista regime.
77. Despite a history of factionalism going back to
the mid-1970s, the Sandinista leadership has displayed
remarkable unity during its almost three years in
power, reflecting to a large extent the commonality of
Marxist-Leninist views within its nine-man National
Directorate. Although tensions over tactical disagree-
ments and personality conflicts among Sandinista lead-
ers have not been completely resolved-making a
leadership shakeup almost inevitable in the long run-
cohesion is now being reinforced by their growing
concern about Nicaragua's economic problems and by
their perception that increasing foreign challenges
could threaten their control. We believe that over the
next several months the Sandinista leaders' shared
interests in maintaining unity in the face of foreign
threats-real and imagined-will continue to
outweigh individual desires for primacy and foster a
convergence of views about the need to step up the
establishment of a one-party state. Moreover, the
Directorate is dominated by hardliners who control
the armed forces, the security services, the mass
organizations, and the government bureaucracy. Even
if unforeseen circumstances were to result in a power
struggle, this would prompt further radicalization and
an immediate move against opponents to forestall any
attempt to exploit the Directorate's internal divisions.
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