FORECAST OF IMPENDING DEVELOPMENTS IN NICARAGUA(SANITIZED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81B00401R002000010002-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 54
• Document Creation Date: December 20, 2016
• Document Release Date: February 15, 2008
• Sequence Number: 2
• Publication Date: June 7, 1979
• Content Type: MF

Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0 .04
THE DIRECTOR OF CENTRAL INTELLIGENCE
WASHINGTON, D.C. 20505
7 June 1979
25X1
NSC review completed
MEMORANDUM FOR: Deputy Director for National Foreign Assessment
Acting NIO for Latin America
SUBJECT . Forecast of Impending Developments in Nicaragua
1. This memorandum contains my judgement on the likel 'nq
of events in Nicaragua over the next 18 months or so. 25X1
2. The political ferment and violence in Nicaragua is leading to
an overthrow of the government which, unlike palace revolutions in Bolivia,
Peru, and Argentina, will be a true revolution in the sense that virtually
all social and political structures will be changed radically when the
Au
tt s
s
ett-
4. I believe that a revolutionary council would be t bl' h
e
d
that all vestiges of the Somoza regime must be abolished.
"7 25X1
a
s a representative government after Somoza is ousted, in my
judgement, this would fail because of the intensit of 1 .9 11
.3. While there may be some effort to hold elections in an attempt
to est
b1i h
s a ~s e
headed by "Commandant Zero" or one of the other insurgent leaders. The
National Guard would doubtless be disbanded and replaced by a revolutionary
army with the responsibility for preventing foreign incursions from
Guatemala, Honduras El Salvador, or elsewhere, and to maintain internal
F- I
d
er
or
5. I anticipate that all private enterprises would be nationalized,
probably without compensation. The Revolutionary Council would then set
about establishing a government bearing a strong resemblance to that
established by Fidel Castro after the overthrow of Batista. 25X1
6. A revolutionary court would go through the motions of trying
Somoza and those members of the Somoza regime and the oligarchy who remained
in Nicaragua, finding them guilty of crimes against the Nicaraguan people,
01~, u;'~ za_ ~'E I
State Dept. review completed
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
i;
~.J `?,..i. i
sow own or temporarily derail the train of events. 25X1
10. Omitted from the above scenario is any action the United States
or other nations might take to prevent this eventuality. Without dis-
cussing the various options available, which would require a much longer
paper than this, it is my considered opinion that none would do more than
to 1 d
s
.Y uppor it needed.
executing most, and exiling a few. US and other foreign businessmen would
be expelled from the country and forced to leave behind all their valuables.
Some might be tried and imprisoned for supporting Somoza. u 25X1
7. Early after its establishment, the new regime would recognize Cuba
and probably invite Fidel Castro to visit the country. It would condemn the
US for its long history of support to the Somoza regime, but would probably
heed Castro's advice not to alienate the US totally. Castro would doubtless
offer to send technicians to Nicaragua to assist the new government in
getting established and offer advisors to assist in forming the army and
the security forces. These offers of Cuban assistance would be accepted
with alacrity.
8. Insurgents' success in ousting Somoza and replacing him with a
revolutionary/socialist government would stimulate restive forces in
El Salvador to take similar action against the Romero government and the
so-called "14 families" which control the economy of El Salvador. It
would likely also have profound repercussions in Guatemala where the Cuban-
backed Guerrilla Army of the Poor (EGP) has harrassed the government of
President Lucas. While I do not anticipate that the EGP would succeed in
overthrowing Lucas, its insurgent activity would add to the malaise of
the region.
9. The foreign beneficiary of all this would be Cuba and, indirectly,
the Soviet Union, both of which would view the events as an erosion of US
influence in the Western Hemisphere. The USSR would stay in the shadows
t ; 25X1
but provide Cuba with an
Distribution:
1 - DD/NFA
1 - NIO/W
2 - NIO/LA
1 - NFAC Reg
1-c
1-C
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
THE DIRECTOR OF
CENTRAL INTELLIGENCE
Deputy Director for National Foreign Assessment
NOTE FOR The DDCI
I thought you would be interested
in the attached forecast on Nicaragua
I have also
sent a copy to the Director.
Attachment:
as stated
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 STAT Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Next 2 Page(s) In Document Denied
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
June 11, 1979, 4:00 P.M.
White House Situation Room
-PRM-46: U.S. Policy Toward Central America
AGENDA
1. Overview of the Situation
2. U.S. Objectives
3. Approach and Strategies to the Region
4. National Strategies
-- El Salvador
-- Guatemala
-- Honduras
-- Nicaragua
- Tarnoff State
X -6/6/8 9
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
SECRET
PRM-46
U.S. POLICIES TOWARD CENTRAL AMERICA
I. THE PROBLEMS
Events in Nicaragua and El Salvador have transformed
Central America into a potential arena for revolution and
international conflict. The northern tier of Central America
is gripped by a polarizing dynamic of violence, repression
and radicalization. Pessimism is pervasive and uncertainty
high throughout the region.
The major threats to U.S. interests are:
-- the stalemate in Nicaragua, where the consequences
of Somoza's efforts to perpetuate himself in power
are increasingly endangering our strategic, security,
human rights and development interests;
-- the:.spread of violence and radicalization
--spawned by the resistance of most ruling elites
to peaceful change--- which is increasing both the
temptation and the-ability of Cuba to penetrate the
area; and
the fragility of moderate political forces, which
are being ground between the millstones of revolution
and reaction.
If we vacillate, or choose wrongly, our national security
interests, our prestige, and our relations elsewhere in Latin
America will suffer. If we can contribute to constructive
solutions that facilitate wider political participation and
economic progress, our moral authority and leadership will
be enhanced.
A. NATURE OF THE CRISES
1. General Problems and Common Threats.
The nations of Central America share a number of inter-
related and complex problems:
SECRET
(RDS-3 6/6/89 - Viron P. Vaky)
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
J
~y.:? :_~ ~:tY r~ i:Jp. r
Socio-political fragmentation. With the exception
of Costa Rica, societies are characterized by
deep class and ethnic divisions, endemic violence,
political atomization, distrust and corruption.
Neither the demands of new middle class
entrepreneurs and professionals, nor the minimal
needs of workers and peasants, whose ranks have
been swollen by the population explosion, have
been met. Growing social tensions and defeated
aspirations have become natural breeding grounds
for alienation, rage and terrorism. This, in
turn, provides new grounds for conservative
intransigeance.
Weak government leadership. Except for Costa
Rica and Nicaragua, government leadership in
the region is generally weak and mediocre. Except
for Costa Rica and Honduras, leadership has
.generally been repressive. Movements expressing
pressures for modernization or more basic demands
for equity have been continuously frustrated
by electoral manipulation and violence, much
of it officially condoned or inspired. The
murder, exile, or cooption of opposition leaders
has..htndered evolutionary change, and strained
the legitimacy of existing governments and laws.
Institutional weaknesses. Institutions of all
kinds--from public order and social services
to press and political parties--are being undermined
by socio-economic pressures, human rights violations
and terrorism. These dynamics in turn produce
ineffective governments obsessed with survival,
and a growing tendency to blame the United States
for the region's difficulties.
Underdevelopment. Again with the exception
of Costa Rica, virtually all of the Central
American countries are characterized by gross'
maldistribution of income. The poor majority
suffer malnutrition and illiteracy. Unemployment
and underemployment are high and growing.
Intraregional conflicts retard cooperation, increase
political tensions and hinder the formation of a
stronger regional economy.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
-3-
Recent developments have been exacerbated by'underlying
problems:
-T Economic stress in the form of world inflation,
politically-induced capital-flight, fluctuating
commodity prices, and recession have decreased real
incomes, and lessened the ability of governments
to meet popular needs. Petroleum costs have
quadrupled, with increasingly severe cumulative
effects.
The upsurge of terrorism increases the intransigeance
of those benefitting from the status quo, and
strengthens tendencies to misidentify the issues
by focusing on terrorism rather than the underlying
core problems.
-- Domestic deterioration is expanding opportunities
'for radicalization and invites external intervention.
The threats of a) radicalization of the region or
parts of it, b) Cuban involvement, and c) serious
international conflict in Nicaragua are all growing
rapidly.,
2. The National Context.
These common trends come together in different, even
idiosyncratic ways in individual countries:
-- In Nicaragua, forty years of personal rule by a
family of classic Caudillos unwilling to share power
appears headed for a violent end.
-- In El Salvador, a conservative military-civilian
ruling group, which fraudulently blocked electoral
change, is now confronted with both centrist and
increasingly violent radical opponents.
-- Guatemala is relatively stable, but its Government
is reacting with repression in an attempt to
guarantee the status quo.
Rds "vim' wa~.w t~
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
-- In Honduras, the region's poorest country, a
military regime is preparing transition to
constitutional rule.
Finally, Costa Rica, the area's only practicing
democracy, is experiencing internal political and
economic stresses stimulated by its neighbors' crises.
3. The Special Impact of Nicaragua.
Events in Nicaragua have become the immediate catalyst
for instability and political turmoil, illuminating starkly
a region increasingly trapped between revolutionary and
reactionary violence.
Just as Costa Rica has long been the area's democratic
ideal, Nicaragua has been its authoritarian nerve center.
The fact that all the power and skill of the Somozas has proved
insufficient to eliminate the Sandinista challenge has terrified
conservatives and inspired revolutionaries throughout Central
America.
There is?.a?.growing consensus that, unless a middle ground
can be developed facilitating Somoza's early safe departure,
current processes of polarization in Nicaragua are more likely
to lead to an extremist regime, possibly with Marxist partic-
ipation, than to the reconsolidation of Somoza's personal
power.
Whereas continued strife in Nicaragua would increase
propensities for repression elsewhere, an early negotiated
transition would have a significant positive impact on
prospects for regional stability and reform.
B. DEVELOPING A U.S. RESPONSE.
Central America is thus undergoing both an immediate
crisis of political authority and an underlying crisis of
social organization and economic development. In addition,
the presence of distinct national crises as well as common
problems creates both regional and country-specific dilemmas.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Neither crisis can be ignored and prompt policy choices
with regard to both are urgently needed.
Structure of this memorandum. U.S. options, and the major
decisions required to implement them, are set forth in Part
III, after a discussion of U.S interests and objectives in
Part II.
Annex 1 provides additional data on regional linkages
and conflicts. Annex 2 analyzes individual country situations
in greater detail. Annexes 3 and 4 elaborate particular options
on Nicaragua and El Salvador.
II. U.S. INTERESTS AND OBJECTIVES
The symbolism of Central America's geographic proximity
and of our deep past involvements creates special U.S. interests
in Central American peace, prosperity and cooperation.
Although U.S. interests in individual Central American
countries are?-tjenerally minor, a number of important interests
are identifiable with regard to Central America as a whole.
In addition to reasonably stable and friendly governments,
these include: --
strategic support for the effective operation
of the Panama Canal, and denial of the region
to use by forces hostile to the U.S.;
security against armed conflicts and external
intervention;
human rights, including the development of
viable democratic institutions; and
-- economic and social development through domestic
reform and increased regional cooperation and
integration.
Individual U.S. citizens and groups assign radically
different and conflicting priorities to these interests.
Some emphasize strategic considerations and security, and
urge support for any government that claims to be friendly
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 ?
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
and anti-communist. Others emphasize development
considerations or human rights, and would deny support to
Bove cents on those grounds. Both viewpoints have ample
support. The resulting divergencies among U.S. interest
groups make formulation of policy toward the region
particularly difficult, and have contributed to a sense of
drift in our relations. -
Non-controversial U.S. interests include the
protection of U.S. citizens and property, control of
narcotics trafficking and illegal immigration, fisheries
and Central American support for U.S. regional and global
economic policies. These interests all require a degree
of Central American cooperation that is hindered by
instability and confrontation.
In light of the threats and conditions identified
in Part I, the following policy objectives would advance
U.S. interests:
-- movement toward more open political systems,
free elections, and democratic processes;
-- strengthening of centrist and moderate groups
and the linkages among them;
-- a diminution in the appeal and power of radical
elements and Castro-linked groups;
?
-- economic and social development which would
improve the services and opportunities available
to the people, and reduce the vulnerabilities
and frustrations that lead to political tensions;
renewed momentum toward greater regional economic
cooperation and integration as an effective
framework to foster modernization and reduce
intra-regional tensions, including demographic
problems;
-- better observance of human rights, an end to
terrorism from both left and right, and a cessation
of such practices as political assassination and
torture;
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
-- resolution of ,the area's international conflicts,
especially the Honduras-El Salvador'dispute; and
a friendly perception of the U.S. and willingness
to cooperate with us for larger goals, including
strategic considerations related to both the
Panama Canal and the hemisphere's security.
In combination, these objectives would advance all
our major interests. The obstacles to their pursuit
include:
-- our influence over Central American events,
although still substantial, is not controlling.
Official assistance and other governmental programs
are relatively limited. Economic assistance,
even if increased, would have a delayed impact;
use of U.S. military force, once the ultimate
sanction for our influence, is not a politically
acceptable option. .
-- our multiple' interactions with the region
-- andthe conflicting priorities assigned to
U.S. interests -- impede the consistent
application of what leverage we do have to secure
any one objective. --
-- particular objectives, though part of a coherent
over-all approach, can conflict in implementation
or in time sequence.
Conflicts among objectives can take varying
forms. They are particularly acute with regard to
U.S. policies toward established governments and
toward military institutions where there is repression.
When does U.S. pressure induce change, and when does
it intensify intransigeance or create a vacuum?
Conversely, when do U.S. attempts to induce change
through close relations inadvertently strengthen a
particular regime or reduce its incentives for reform?
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Depending upon how we prioritize our interests and
objectives and how we analyze each situation, policies
toward particular countries may require both sanctions
and -pport, in varying combinations at different moments.
Such judgements can be extremely difficult in the sharply
polarized atmosphere of Central America, where even
a determination to eschew intervention can alienate
all groups.
Conflicts among objectives, and the interpretations
required to decide on the use or non-use of particular
policy instruments, are only resolvable on a case-by-
case basis. Part III sets forth the decisions we face
now.
III. SPECIFIC STRATEGIES AND DECISIONS
Because of the common context within which each
country is evolving, and the impact of each situation
on others, some regional approaches and regional dimensions
to our policies are required.
It is essential that we reverse perceptions of
U.S. withdrawal or vacillation. This will be important
both domestically and for our influence in Central
America. Steps we can take ,are to:
--.publicly articulate a specific policy with
regard to individual situations;
-- consult closely with Congress to explain
what we are doing (or not doing);
-- convey our positions directly to individual
governments, moderate political forces, and
regional institutions, possibly demonstrating
our concern and interest through one or more
high-level visits; and
-- increase contacts with other interested governments,
including Venezuela, Colombia, Mexico, Panama,
and Costa Rica, exploring also means of working
with the Western Europeans, Canadians, and
Japanese, who share our concerns. Mexico's
recent actions have led it to be perceived
as a key player.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 -9-
Because events are moving very rapidly, an accurate
understanding of the various situations in the region
is iii1spensable. We need to increase informal contacts
with and our understanding of:
-- the left and right extremes, as well as centrists
and moderates; and
-- the military, especially the younger officers.
We should consider the need to influence and retain
contact with all major institutions likely to play
key roles, including the military.
Consistent with specific country strategies, we
should stimulate regional economic cooperation as a
means of facilitating ties among civilian professionals
and entrepreneurs, providing a moderate framework for
development, and reducing tensions among countries
(See Annex 1). We should:
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
-- Help design regional projects and orient bilateral
and multilateral assistance toward planning
and f,i rranc i ng them.
-- Encourage projects with a regional employment
creation focus.
-- Consider increasing bilateral inputs, including
rapidly disbursing assistance like SSA and
PL 480 as well as AID levels wherever in accordance
with country strategies.
-- Examine the feasibility of a multilateral
consortium approach like the IBRD-led Caribbean
Group.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
1. NICARAGUA: The core issue in Nicaragua is
transition from personal dynastic rule. The dynamics
center on how succession will occur -- violence,
overthrow, coup, negotiated transition agreement,
elections.
Somoza and the Sandinistas are at a military impasse,
neither able to defeat the other. The result is a
downward spiral, increasing polarization and the erosion
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
-10-
of Somoza's staying power. The longer this process
continues, the more likely an explosive, radical
oute=e. The more bloodshed and resentments Somoza
creates, the less likely the prospects for peaceful
change. The longer succession takes to resolve, the
greater the chances of international conflict and
radicalization in what is otherwise an essentially
conservative society.
We have four basic options:
Option One: Support Somoza to put down the Sandinista
insurrection and eliminate the danger of external
intervention, then seek a transition formula with Somoza
and the centrist forces.
Option Two: Seek first to convince Somoza to negotiate
his early departure, then work to design a transition
for a successor government. Stand ready to isolate
him if he refuses.
Option Three: Take an active lead now to catalyze
a negotiated transition, dealing with all sides, offering
to help and proposing ideas.
Option Four: Remain neutral, disassociate from
Somoza, let nature take its-course and wait for a future
opportunity to re-engage.
Option One would seek to avoid a collapse of the
existing order before a succession is in place, and
a possible radical or Cuban-linked takeover in the
resulting vacuum. We would seek to cut off international
support to the Sandinistas; assistance to Somoza would
be more in the nature of not interfering with economic
aid or military equipment, but could involve renewed
U.S. military and economic assistance. Assuming stability
could be restored, we would expect Somoza's cooperation
in negotiating a transition; we would assume that once
his most radical opponents are defeated, Somoza would
not try to perpetuate his family in power with purely
cosmetic changes.
Option Two would try for a transition with the
opposite tactic. It would first involve a frank
statement to Somoza that we believe he should agree
to an early transition formula. We would undertake
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
as many of the following as feasible: continue suspending
all bilateral aid; oppose or delay IFI aid; delay sending
an Ambassador; seek to cut off military supplies to Somoza;
interrupt the IMF standby arrangement if targets are unmet;
encourage opposition elements; seek to obtain support
of other nations for pressure on Somoza; enunciate our
perception that Somoza's intransigeance is the problem;
strengthen our posture on-human rights and strongly condemn
the regime for violations, working with Mexico and Venezuela
to call an OAS meeting to discuss the IAHRC report and
sanctions. We would essentially be in an adversary
relationship to Somoza. We would begin to work with the
opposition to develop a transition plan only when we had
clear indications that Somoza was prepared to negotiate
his departure from power. If Somoza remained intransigeant,
we would continue to apply all legitimate pressures --
including commercial sanctions if possible -- on the National
Guard and the Liberal Party to mount a solution. The
basic premise would be that, unless we force events, Somoza
will not discuss a transition before 1981. An attempt
to negotiate a settlement on what would appear to be Somoza's
terms, would only split the opposition and ensure continued
violence.
Option Three would have us take an active lead
immediately in seeking to bring about a transition, working
with all sides; we would argue with Somoza to accept the
inevitable; encourage the centrist opposition to coalesce
and come up with an action plan; suggest ideas and dialogue
with all sides; offer good offices; seek cooperation of
other nations in our efforts; seek to cut off arms flow
to both sides so as to reduce violence; maintain pressures
as at present on Somoza to make clear we are serious,
and warn him we will disassociate if he remains intransigeant.
We would encourage and deal with elements in the National
Guard and Liberal Party. The premise here would be
that time is of the essence: the situation is now too
volatile and far gone to expect a formula to arise
spontaneously from within the body politic, but fears
of deterioration might very well now be ripe for outside
catalytic ideas to prosper. This option could seek
either agreement on a 1981 time frame or on explicitly
earlier transition as circumstances warrant. It would
move immediately to catalyze a solution by having it
-evolve through the interplay of convincing Somoza and
building a coherent opposition position.
Because Option Three would require a complicated
and subtle orchestration, Annex 3 explains in more
detail what a game plan under this option might look
like.
? a ! i
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
-12-
Option Four is a fallback from Option Two. It
would assume that we have no immediate capacity to
affect the situation and that conditions are not now
ripe `for a successful mediation. We would avoid actions
that could appear supportive of Somoza, and to the
extent that domestic U.S. realities allowed, join other
democratic states in pressuring for a-democratic solution.
While failing to bring a rapid end to the bloodshed,
this approach could keep our options open and.permit
a switch toward active mediation later, e.g.,.'a 1981
formula might appear more even-handed, and more acceptable
to all the opposition, if proposed in 6-9 months.
The risk would be that the situation in Nicaragua might
deteriorate swiftly beyond the point where any mediation
was feasible, and that we would lose an opportunity
for avoiding further violence and a radical (or even
more harshly repressive) turn in events. This option
also may.feed perceptions of U.S. immobility and inability
to influence developments.
Comment. While pros and cons for all four options
are outlined below, it should be emphasized that the
assurance of success-for an .of the options is extremely
uncertain. The-.options must be assessed, therefore,
not only in terms of which is best but which may be
least bad, and which may leave the U.S. positioned
best to deal with confusion,.-disorder, and political
uncertainty in the future as well as problems elsewhere
in Central America.
Option One. Help Somoza Eliminate Sandinista Threat,
Then Seek a Transition.
designed to guard against the contingency of a
radical takeover;
would be supported by major conservative elements
in the Congress and the nation, and would protect
the Administration from a "Who lost Nicaragua?"
problem.
by ending violence and the potential for international
intervention, might make it easier for Somoza
to accept departure from power later without losing
.face.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
? ? -13-
even if unsuccessful, will have demonstrated our
willingness to stand by traditional allies under
liege.
Cons:
-- there is no guarantee that our helping Somoza
will enable him to eliminate the threat; it may
only induce Cuba to up the ante and in fact intensify
the violence and conflict.
-- would pit us against our democratic friends --
Costa Rica, Venezuela, Panama, Mexico.
would associate us with repression and dictatorship;
we would alienate all the opposition.
-- there is no guarantee that, even if the violent
opposition is eliminated, we can persuade Somoza
to truly leave; there may in fact be less reason
for him to do so later and he could resist pressure.
? -- would be opposed by major liberal elements in
the Congress and the nation.
-- if this option were followed and Somoza were
overthrown anyway, the -successor government would
predictably be strongly anti-American.
Option Two. Pressure Somoza, Then Seek Transition.
Pros:
-- a period of sustained external and internal pressure
provides the best chance to force Somoza to negotiate
seriously; if it worked we would be well placed
to assist an orderly transition.
-- our position with-the democracies, including Mexico
and Venezuela, and liberal circles would be enhanced.
-- our credibility with the centrist and FSLN opposition
would be increased.
-- if Somoza hangs tough, our options still remain
open, e.g., work for 1981 elections.
?
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
-- fur capacity to exert pressure on Somoza is limited,
and his tenacity and belief that he can outlast
us is intense; it is unlikely we could force
him to conclude he had to leave.
-- U.S. Congressional circles will resist the
orchestration of sanctions, increasing the chance
we will only convey an ambiguous posture -- as
at present.
-- we may not have the luxury of waiting a few months.
The situation is deteriorating too fast. The
more time passes the greater will be the dissolution
of the middle, the quicker the polarization, the
more likely a violent outcome.
we do not have assurance that our options are
open if Somoza hangs tough; this strategy in fact
indirectly encourages a National Guard coup -- a
very uncontrollable tactic.
Option Three.. Stimulate a?Negotiated Transition Now
-- would provide an immediate new alternative now
when it is desperately needed, since one cannot
emerge spontaneously and time is of the essence.
-- would define a positive U.S. position publicly
and focus international attention on the key issue
of succession.
-- would encourage the centrist opposition and give
them a rallying point. Some FSLN sectors might
support it if Somoza's departure apeared likely
before 1981.
-- would, if successful, deal with the problem of
what takes Somoza's place and the threat of
radicalization by negotiating an orderly re-
placement and transition.
-- would magnify the chance of accomplishing this
by involving all actors, including important
institutions such as the Guard.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
would be supported by other nations and democracies
and would be consistent with our human rights
_-and democratic policies.
even if unsuccessful, would increase our visibility
and demonstrate our concern.
Some believe that unless we have first forced
Somoza to agree to leave and negotiate the process,
would ensure a costly repetition of the mediation
experience.
Somoza might believe he could play along to
relieve pressure and eventually outstare us.
pushing or stimulating negotiations may split
the centrists if we accept a 1981 formula and
further discredit us if we fail; may only alienate
the FSLN and reinforce conviction that violence,
is the only solution.
an agreement between Somoza and the more
conservative sectors of the opposition would
somewhat alter the nature of the conflict but
could not end it, and could align us once again
with Somoza.
if it fails, could compound the skepticism induced
by the failure of the international mediation,
lessening our credibility as a mediator in future
opportunities.
Option 4. Neutrality
recognizes what is in reality our weak
leverage with which to shape events, and the
impossibility of outright intervention.
with no satisfactory openings now, waiting may
present us -- and the OAS -- with better grounds
for re-engaging later.
avoids identification with a repressive regime,
and keeps our options open for dealing with a
successor government.
L.,r y ~..
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
reduces risks of being exploited by either Somoza
or his opposition.
Cons:
abandons any immediate attempt to shape events,
exposing U.S. interests to the luck of the draw,
and risking a radical take-over.
-- pleases no one fully; the U.S. will be criticized
and lose credibility.
-- will at least temporarily strengthen the perceptions
of U.S. impotence or lack of interest.
2. EL SALVADOR. The volatility of the Salvadoran
situation results from the region's most serious social
crisis. Violence from both sides is rapidly escalating,
and a temporizing government has been unwilling to
take the necessary steps to allow an off-again, on-
again "dialogue" with opposition forces to make headway.
After two years of false starts during which repressive
actions by the Government have increased, the centrist
forces are skeptical of Romero's intentions. Meanwhile,
the left is now displaying a mounting ability to challenge,
if not immediately threaten the Government. This defiance
may push the Regime into even more repressive actions
or become the catalyst that convinces virtually all
national decision makers that a political opening is
essential.
The intensity of the Salvadoran crisis makes dis-
engagement impractical. It would gain us credit with
few of the contending groups, and would leave us with
no capacity to influence the resolution of the crisis.
On the other hand, simply backing the Romero regime
unconditionally is no more promising, both because
of its unacceptably repressive nature to date and its
weakness.
The only practical option we have is to seek
to push the Government, the political opposition
elements, and major sectors of society into cooperation
and accommodation so as to consolidate a political
opening and mount necessary human rights reforms.
The legislative and municipal elections of 1980 would
offer the necessary peg on which to hang a dialogue
to that end.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
?
Basically, this strategy would involve the following
elements:
_-~-- Public definition by us that we believe dialogue
and internal accommodation and reform offer
the only peaceful solution to the nation's
problems, and an announcement by us that we
will support efforts by the Government and
the opposition to this end;
-- We would tell Romero the same thing,-"define
for him the things he should do--electoral
reform, amnesty, wider political participation;
-- We would increase our contacts with economic/
business/military elements that currently
support Romero to gain their support or
acquiescence for a process of political opening;
-- We would do the same thing with labor, the
PDC and the MNR,'urging them to close ranks,
participate in a meaningful dialogue and develop
proposals for-the Government to consider;
-- We would seek out.constituent elements of
the BPR for the same purpose;
-- We would make clear-to the Government--and
to other actors--that our support will be
conditioned upon progress.
The second question is more difficult. Basically
there are two possibilities:
an "encouragement" approach, which would involve
some immediate indications of support as
encouragement to enable Romero to move in
the right direction, although on-going assistance
and help would be directly related to progress;
In this strategy, the basic tactical decisions
for us are 1) how deeply involved we should become,
and 2) what tactics we should employ with the Romero
Government. As regards the first, a fairly active
stance is unavoidable. Movement toward dialogue is
not likely to arise spontaneously. The current situation
is still polarizing to the extremes.
0
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
-- a "reciprocal" approach, which would begin
with a distanced posture and would extend
;. support only after the Romero Government had
taken steps.
The "encouragement" approach is based on the premise
that Romero's capacity to-move is limited and that
he needs evidence of our support to overcome his right-
wing supporters' opposition to liberalization; it also
assumes some unwillingness of the ruling elite to trust
our word that we will actually restore normal relations
and economic and military assistance if progress takes
place. This approach might, however, weaken our credibility
with the Church, labor, and the centrist parties.
The "reciprocal" approach is based on the reverse
premises, viz., that Romero wants to move as little
as possible and will use "dialogue" to gain time and
split the opposition as he has for the past two years.
This approach assumes that, unless pressured, Romero
will not produce. The problem is that pressure alone
may not be enough.
Although the tactical.differences may seem subtle,
the operational questions are real. For example, in
the "reciprocal" approach we would maintain our current
posture--oppose or delay alL non-BHN AID and IFI loans,
refuse all licensing of Munitions Control (MC) items
and FMS cash sales; and not request FMS credit or IMET
authorizations. We would loosen up in this regard only
after a designated series of steps had been taken.
The "encouragement" approach would support BHN
loans, sign the pending AID loan, and consider MC
licensing applications and FMS cash sales for non-lethal
items, all to demonstrate to Romero and others that
we will support Romero in moving to a dialogue, but
with a clear warning that we would tighten up if progress
lagged.
Annex 4 spells out the "encouragement" and "reciprocal"
variants of the dialogue option in greater detail.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Key questions are:
-:'e') While we press for dialogue, what position
do we take on:
--non-lethal MC and FMS items
--Ex-Im loans
--IFI loans
--AID BHN projects
b) What specifically would we require as evidence
of progress?
3. GUATEMALA. Guatemala is reasonably stable
and stronger than its neighbors, but the governing
military-civilian coalition is ineffective and repressive.
Discontent is ignored or eliminated. Societal tensions
and political alienation are mounting under the surface
and could undermine an effective electoral transition
in 1982.
The issue in Guatemala is the existence of major
basket one human rights violations, especially assassination
of civilian leaders, and a pattern of repression that
could over time lead to a crisis similar to that of
El Salvador. Guatemala has also been unhelpful with
regard to the Nicaraguan mediation and our efforts
to deal with that situation constructively. As an.
important country in the Common Market arrangement,
Guatemala's initiative and cooperation could be an
important spur to regional integration if it were so
inclined.
The lack of fluidity in the current situation
suggests no particularly active U.S. role at present.
Reasonable objectives would appear to be to persuade
the Government to put a halt to political assassinations
by right wing death squads, to work toward a civilian
Presidency through a reasonably open electoral process
in 1982, and to play a constructive role in regional
cooperation. U.S. influence and leverage is relatively
small, but the basic Guatemalan desire for a cooperative
relationship with the U.S., especially given the Belize
question, might give us some prospect for working out
a useful relationship.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
-20-
Basically, we could:
_:- follow a low profile policy of as normal
relations as are consistent with human
rights conditions and simply wait to see
what happens; or
-- add somewhat more active steps of discussing
human rights assassination questions with
the Lucas regime to seek an improvement in
this situation, -increasing contacts with
enlightened elements in the military and society
in general to stimulate support for a fair
election and a civilian President in 1982.
Since we have few major carrots, the most effective
way to seek improvement in the human rights and electoral
picture may be to maintain contact, engage in consultation
on regional cooperation and dialogue frankly on human
rights making clear our position and holding out the hope
of greater cooperation if the human rights situation improves,
while also developing ties with moderate forces in the
military and civilian political groups, and the church.
A more active posture could be to suggest to Lucas
steps to end political assassination and official involvement
in violence. Such steps could include:
-- Centralization of intelligence and anti-subversive
activities in a single office with clear prohibition
on use of torture, with immediate notification
of all arrests to that office and open access
to that information; and
-- prohibit hiring of regular military personnel
by private landowners.
-- In addition, the naming of a highly respected'
special prosecutor to pursue investigation and
prosecution of those responsible for the Fuentes
Mohr and Colom Argueta assassinations would also
be helpful.
With clear evidence of government steps to halt political
assassinations and the level of violence, we could respond
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
positively with increased economic cooperation.
=-f there is continuing failure to take such steps,
we could reduce our AID levels, suspend commercial sales
for military and police use, oppose IFI loans, and publicly
hold the government accountable for protecting its citizens'
lives.
As in El Salvador, the immediate question for us
is thus what kind of a relationship we maintain
with the Lucas Government. What positions do we take
with regard to such as:
AID loans
IFI loans
FMS or MC items
4. HONDURAS: A transition from a military-dominated
to a civilian government is scheduled via elections to
be held in April 1980. Underdevelopment and a relatively
rich endowment of land have so far spared Honduras the
socio-economic-problems, or the human rights violations
which have soured U.S. relations with Nicaragua, El Salvador
and Guatemala. Traditional parties survive as controlled
outlets for political activity.
Our principal objective in Honduras is to assure
that the process of transition to civilian government
proceeds apace. The symbolism of U.S. support for
Honduras' efforts may also be useful in our dealing with
the more immediate crises in other countries.
The key question is the extent to which we are
willing to commit economic and military resources
to back our political preferences. Bilateral and
multilateral assistance programs are partially needed
to facilitate Honduras' economic development. Increased
resource availability would support both short and long
term U.S. goals.
The key question is should we give Honduras top
priority in the reprogramming of regional assistance
programs, to spur and consolidate current directions
of Honduran policy and to ready an immediate U.S.
"bonus" to support the transition to civilian
government?
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
REGIONAL LINKAGES AND CONFLICTS
Central American unity has been a powerful but un-
attainable ideal throughout the region's history. Some
form of regional integration seems the logical answer
to the fragmentation that weakens economic growth and
fosters instability. Economic links increased.-dramat-
ically during the last two decades, but the interests
of local power groups still militate against more extensive
integration.
The Central American Common Market. The formation
of the Central American Common Market (CACM) in 1962
gave economic integration a historic forward push. Intra-
regional'trade, which accounted for $33 million of exports
in 1960, grew to $703 million in 1977 in spite of disrup-
tions since the 1969 El Salvador-Honduras "Soccer War".
This regional trade stimulated the growth of industrial
sectors in all Central American countries, particularly
Guatemala and El Salvador. In addition, a network of
integration institutions -- centered around CABEI (The
Central American Bank for Economic Integration) and
SIECA (The CACM Secretariat) -- strengthen the role
and regional consciousness of the technocratic elites
which are becoming an increasingly important factor in
the region.
The trade policy of the CACM centered on increased
internal trade and protection to promote import substitu-
tion in consumer goods. Effective in the 1960's, it has
lost dynamism in the 1970's.
The treaties creating the CACM expire in 1980. While
it is doubtful that the Central Americans will abandon the
degree of economic integration they have achieved, it is
also doubtful that they will find the political will
for major initiatives. A normalization of relations
between El Salvador and Honduras (see below) would improve
the atmosphere.
The "Northern Tier Entente". Shared fears of insurgency
and worry about the "domino effect" have led to an informal
alliance among the military-dominated regimes of El Salvador,
Guatemala, Honduras and Nicaragua. This involves activities
? ~ Pte. +~ t~w, '~"~ ""'~
.'r..~ ado..
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex One, page 2
2-
such as information exchange about opposition and subver-
sive elements, and even cooperation against such groups.
The P-L,6sidents meet, sometimes secretly as in their
consideration of the situation-in Nicaragua, to coordinate
actions.
Other Cooperation. Cross-border linkages of a
nongovernmental, non-economic character are relatively
weak. Opposition groups appear to lack the unity of
vision or resources to match the regional perspective
of the ruling economic and military elites. Cooperation
between insurgent groups is more a question of emotional
solidarity and occasional safe-havens than of operational
coordination.
REGIONAL CONFLICT
Conflict within Central America is substantial.
Sources of tension include:
-- Salvadoran Overpopulation. The flow of Salva-
doran migrants into other countries is a constant
irritant and was the-basic cause of the "Soccer War"
with Honduras.-
-- Nationalism. Local pride and patriotism are
very strong, and easily exploited by regimes anxious
to divert attention from internal problems.
-- Permeable Frontiers. Individual countries
have little control over movements of persons from
one country to another, a fact which guerrilla groups
can exploit.
-- Disparities in Development and Ideology. The
contrast between democratic, relatively advanced Costa
Rica and her northern neighbors is only the most striking
example.
-- Economic Rivalry. Central American economies
are basically competitive, not complementary.
Central America is now the scene of three inter-
national conflicts:
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex One, page 3
El Salvador-Honduras. A complex of issues, the
most basic of which was Salvadoran migration, led
to on warfare in 1969. The border between the two
countries has been closed since, disrupting the normal
flow of people and goods. Tension has remained high,
but the parties have submitted the dispute to mediation,
which is now going on.
Guatemala-Belize. Guatemalan claims to Belize
have delayed the U.K.'s timetable for Belizean indepen-
dence. If internal Belizean support for independence
grows, which seems likely, the impasse could increase
tensions, and provide an opportunity for potential
armed conflict and external intervention.
Nicaragua-Costa Rica. FSLN use of Costa Rican
territory has heightened. tensions, leading to a closing
of the frontier and a rupture of diplomatic relations.
THE ROLE OF OUTSIDE POWERS
The United States. The impact of the United States
on Central America is enormous and varied. Official
activities and,policies are but part of the picture.
Economically, the U.S..presence is overwhelming.
About one-third of total Central American trade is with
the U.S. The U.S. share of foreign investment is per-
haps half of the total. The U.S. provides the lion's
share of development assistance through the multilateral
development banks.
The United States is also the most important foreign
cultural and intellectual influence in Central America,
in spite of the region's Hispanic heritage. The Central
American elite send their children to the United States
to be educated. The middle class aspire to a suburban
American lifestyle. The poor in astonishing numbers
leave their villages for the long and dangerous trip
to work as illegal immigrants in North America.
As elsewhere in Latin America and the Caribbean,
U.S. Government programs and official presence have
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex one, page 4 --~ `.-y --.?
Cuba. Since Cuba's efforts to foment revolution
in Latin America failed dismally in the late 60's, Cuba
has followed a two-pronged strategy of cooperating with
"progressive" governments while maintaining contact with
revolutionaries in countries with right-wing military
regimes. Thus, in Central America, Cuba has developed
close ties with Panama and has sought normal relations
with Costa Rica while at the same time providing some
financial assistance, training, asylum, and propaganda
support to revolutionary groups in Nicaragua, El Salvador,
Guatemala and Honduras. .
Cuba has been cautiously skeptical about the
short-term prospects'of revolutionary groups in Central
America. Cuban attempts to encourage unity among the
various factions of the left have not been very suc-
cessful. In addition, the Castro Government probably
fears that direct Cuban military involvement so close
to the U.S. might provoke a strong response. Cuban
international activities have, therefore, been largely
focussed on Africa.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
declined considerably over the past decade. Economically,
the U.S. has generally lost ground as the EC, Japan
aftd intra-regional trade have assumed increasing economic
impo-rtance.
Our emphasis on human rights, partly in response
to increasing authoritarianism in Central America,
has produced sharp reactions:
-- Conservatives, especially in the militaries,
feel we have cut them adrift and use human rights
policies to encourage their opponents.
-- Centrists appreciate our human rights posture,
but would have us play a more activist role in
altering political structures.
-- Leftists suspect that the absence of anti-
regime intervention reflects either our satisfaction
with-the status quo, or a fear of fundamental
change, or that it masks more subtle and sometimes
not yet identified "new forms of control."
All groups share to one degree or another the
? belief that our hesitation to employ our power openly
reflects indifference, lack'of leadership, even impo-
tence.
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex One, page 5
Since the FSLN offensive last fall, however,
Havana may have revised upwards its estimate of prospects
for.ihange in Central America. In Nicaragua, Cuba expects
a prolonged guerrilla struggle, and is providing the
FSLN advice, training, financial assistance, and some
arms. By the same token,_ Cuba undoubtedly will seek
improved contacts with revolutionary groups in Guatemala,
El Salvador and Honduras, encouraging them to unify
their efforts.
Panama. Set apart by its deep involvement with
the U.S., Panama is nonetheless an important force
in Central America, with links to both military forces
and radical opposition movements.
Mexico had remained largely inactive during the
current crises before breaking diplomatic relations
with Nicaragua in late May and urging other Latin
governments to follow suit. Lopez Portillo apparently
hopes to nudge the U.S. into seeking Somoza's rapid
departure.
Venezuela provided some economic assistance im-
mediately after the OPEC price increase in 1973, and
under President Perez encouraged the FSLN in Nicaragua
-- to the extent of almost directly intervening.
President Herrera is likely--to moderate that support,
and broaden it to include Christian Democratic movements
in Panama, Guatemala and El Salvador.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
COUNTRY SITUATIONS
Though many of the underlying sources of unrest
are similar, Central America remains fundamentally
fragmented. Each country has distinct governing arrangements
and unique problems.
The analyses in the pages that follow seek to
identify the major problems and dynamics in the four
countries under review: Nicaragua, El Salvador, Guatemala,
and Honduras.
~a.s~? i... v,r E SE. ie~. i
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex 2, page 2
1. Nicaragua
The problem in Nicaragua is personal dynastic
rule. Whereas other countries evolved toward a modern
state structure with a partially institutionalized
military establishment, the Nicaraguan government and
National Guard remain essentially the personal instruments
of the Somoza family.
Faced with a major challenge to his rule, Somoza
appears grimly determined to hang on until the end
of his term in May, 1981. If he remains until then,
he will attempt to manipulate the selection of his
successor.
The Guard has remained loyal and has contained
the FSLN.. But the cost has been considerable, and
the Guard's reaction to either a serious military defeat,
to continued hit and run attacks, to a popular uprising
in Managua, or to a prolonged strike by public employees,
has yet to be tested.
Somoza's.=.Lf'beral Parr'controls the electoral
machinery and retains substantial strength among public
employees, rural sector groups and Somoza dependents
and associates.
The centrist Broad Opposition Front (FAO) is composed
of business and the tra'Td-i a'tta opposition parties
and is supported by the Church. Despite some defections,
it remains basically intact but demoralized by the
failure of the international mediation and of non-violent
tactics. The FAO is now balked -- unable to achieve
its major goal, which is to remove Somoza from power.
As this situation persists, the moderate FAO will
probably lose strength while various elements withdraw
from politics, return to the Somocista fold, or --as
appears increasingly to be happening -- turn to the
Sandinistas (FSLN).
These factors, plus their spectacular and well-
reported exploits, have enabled the Sandinista
movement to attract growing domestic and international
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex 2, page 3
support as the standard bearer of democratic aspirations
in Nicaragua. The Sandinistas include both radical
and more moderate factions united by hatred of Somoza.
While they have shown that-they are capable of uniting
for specific periods and purposes, they have not shown
the military capability to defeat him. They seem now
to be growing relatively stronger vis-a-vis Somoza
and the FAO.
The Sandinista movement includes a number of disparate
elements, but several of its key leaders are clearly
Marxist in orientation. A Sandinista victory would
predictably be followed by a struggle for power between
Marxist leaders, who desire to establish a revolutionary,
socialist state, and others, probably a majority in
the growing Sandinista ranks, whose principal aim is
simply to overthrow Somoza.
The Nicaraguan conflict has brought economic collapse
in its train. Govermnent revenues have fallen off,
forcing a morato-r.ium on foreign debt payments. Massive
private capital flight has created a severe balance
of payments problem. Investment is nil.
The outcome of the Nicaraguan crisis is unpredictable.
A National Guard coup or an unexpected collapse in
the face of FSLN pressure are both possible -- or Somoza
may tough it out until 1981 and then attempt to govern
from behind the scenes. The essential reality of Nicaragua
today is a bloody standoff: neither Somoza nor the
FSLN can eliminate the other.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex 2, page 4
2. El Salvador
El Salvador is ruled by a conservative military-
civilian coalition. It has progressively declined
in effectiveness as well as legitimacy as successive
regimes have been forced to resort to ever greater
electoral fraud and repression to retain power.
Under a constitutional system in place since 1962,
military candidates are regularly elected to the Presidency
under the banner of the official Partido de Conciliacion
Nacional in managed elections. Internal migration
and industrialization have resulted in the rapid growth
of urban middle and working classes desirous of a larger
share of political and economic power. The primary
political expression of these groups, the Partido Democrata
Cristiano (PDC) competed at the polls with increasing
success in the late sixties and early seventies and
? is widely believed to have been defrauded of the Presidency
in 1972 and 1977..,
The Molina regime (1972-77) resorted increasingly
to repression to maintain power. This alienated larger
segments of Salvadoran society and, in particular,
precipitated a conflict with Catholic Archbishop Oscar
Romero which has attracted international attention.
During the same period, the activities of urban guerrillas
grew increasingly serious.
Under the lackluster, unimaginative President
Romero (no relation to the Archbishop), El Salvador
has sunk deeper in a morass of violence, repression
and governmental ineffectiveness. The President's
bitter dispute with Archbishop Romero, the mounting
boldness of urban terrorists and the country's economic
problems have cost him a considerable degree of support.
He has responded with tentative moves toward conciliation
with the PDC, efforts to repair the breach with the
U.S. brought about by human rights violations and a
tough, conservative line to retain his essential military
and economic support.
P -led o osi 'on 2% * Am 42 - Tr are not
benerom t e growing discontent with the regime.
Unless they can reach an agreement with Romero and
enter elections with assurance of measurable success,
they will continue to lose supporters to those who
no longer believe in democratic solutions.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 BOO401 ROO2000010002-0
Annex 2, page 5
5 -
The radical left, now represented principally
by the Bloque Popular Revolucionario (BPR), appears
to be the principal beneficiary of the. decline of the
centrist parties. The BPR is a coalition of the main
Salvadoran teachers' union and-student and peasant
groups. Its principal appeal is to urban working and
lower middle classes, and.its real support among peasant
agriculturists, nil at first, may be increasing. The
BPR is heavily influenced by the Marxist cadres of
the FPL (Fuerzas Populares de Liberacion), the principal
terrorist organization, and by revolutionary intellectuals.
Its program calls for a socialist revolution in El
Salvador.
Terrorist groups have also become increasingly
prominent. The FPL has been mentioned. FAPU and the
ERP have also carried out spectacular kidnappings,
assassinations and other exploits in behalf of the
? "left". Right wing counter terror has predictably
also increased, sometimes linked to government security
forces, sometimes simply to?powerful private interests.
Although an entente with the PDC and a resolution
of his dispute with the Church probably offers Romero
his best chance to reduce tensions, restore business
confidence and dissipate support for the guerrillas,
hardline elements in the military favor stepped-up
repression and could precipitate a coup. Although
there is some reformist sentiment among younger military
officers, a military coup from this side is less likely
in view of the fact that key military positions are
in the hands of Romero supporters.
?: 'may .~.-~w.-n
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Guatemala is relatively stable, but the governing
military-civilian coalition is ineffective and repressive.
Discontent is ignored or eliminated. Presidential
succession takes place with regularity every four years,
on the basis of managed elections. The dominant,
conservative military faction and its civilian allies
have succeeded in controlling the Presidency through
military candidates throughout the '70's.
The opposition in Guatemala is divided, and intimidated.
A minority within the military, represented by unsuccessful
Presidential candidate Ricardo Peralta, would support
a moderately reformist government. New parties of
the right. and center left have been intimidated by
the assassination of their most prominent leaders.
The labor movement is weak and divided.
While enjoying something of a resurgence since
being decimated in the early 1970's, leftist guerrilla
groups are isolated from the large but unassimilated
Indian population in rural areas and out-gunned by
right-wing terrorists in the- cities.
Weak leadership by the current Lucas Government,
its obvious tolerance of right-wing violence, and its
unwillingness or inability to take effective action
about acknowledged socio-economic inequities, have
contributed to a sense of drift and malaise among politically
conscious Guatemalans. Yet the economy is strong (though
inflation is a worry), the balance of payments continues
positive, and reserves continue to grow.
Viable civilian presidential candidates in 1982
seem the best hope for wider participation in the political
system, and could bolster government legitimacy.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
4. Honduras
Socially and economically the most backward country
in Central America, Honduras is also the most politically
tranquil. The absence of modernization allows -the traditional
Conservative and Liberal parties to maintain some hold
on the people's political consciousness. The private
sector is weaker than in other countries and the more
independent military is less ideologically defined
and more responsive to popular pressures.
Land is relatively abundant and fairly evenly
distributed. Occasional peasant outbursts have been
effectively dissipated through a combination of reform
and coercion. The latest cycle of pressure and response
occurred in the mid-1970's when the Military Government
approved an agrarian reform law in response to pressure
by the sizeable peasant unions of Social Christian
? or ORIT affiliation.`- The Government's gradual abandonment
of the agrarian "reform, however, may portend future
difficulties.
Elections for a Constituent Assembly are scheduled
for April 1980, and will be the first major electoral
test coming up in Central America. It remains to be'
seen whether the traditional parties, which are losing
influence in some sectors, especially among youth,
can channel emerging pressures for change. In the
near term, however, no political force other than the
military can challenge the traditional parties -- and
the military appears inclined to return government
to civilians.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
PRM 46: Annex 3
NICAB&GUA: GAME PLAN FOR STIMULATING PEACEFUL TRANSITION
In the short and medium term, the following are
possible developments:
-- Somoza hangs on and holds scheduled 1981 elections;
-- Somoza is incapacitated or killed, in which
case an immediate assumption of power by the
National Guard and Liberal Party is likely,
followed by a struggle for effective power;
-- Continued violence, terrorism and repressive
reaction creates sufficient discontent to
prompt a National Guard or establishment coup;
-- The Guard collapses, the regime is overthrown,
and a struggle for power ensues between FSLN
factions, members of the FAO, and surviving
beneficiaries of the Somoza system.
-- Violence and bloodshed become so serious that
international mediation, negotiation or good
offices again become a possibility.
These different scenarios have three common characteristics:
-- Somoza is no longer in sole control of events.
Even were he to hang on and hold elections
in 1981, the wide distrust that these would
be anything but manipulated elections would
result in continued opposition and polarization.
-- In each case, the existence of a vital, significant
political "middle" is essential to avoid a
radical outcome.
No reconciliation, negotiation, or transitional
evolution that can provide a peaceful alternative
to violence is likely to emerge spontaneously.
So long as the Somoza symbol remains, internal
forces (i.e., Sandinistas) and external forces
(Cuba, Torrijos) will continue to stir the
pot.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 _~ Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex 3, page 2
A peaceful resolution of Nicaragua's succession
crisis will require a) the strengthening of independent
political opposition capable of coherent political action;
and_* the willingness of Somoza and the institutions
supporting him--the Guard and the Liberal Party--to cooperate
in building the psychological and institutional environment
within which a true transition can be negotiated and
effected. Participation-and cooperation by more radical
elements such as parts of the FSLN would be desirable
and feasible should the political momentum for a negotiated
transfer of power be established.
Common ground among these factions does not now
exist. Some external catalytic stimulus is required
if a transition capable of pacifying the nation is to
be achieved. So long as Somoza insists on a 1981 formula,
no negotiated solution will achieve all our objectives.
We can nevertheless seek to attract a sector of the opposition
to a 1981 formula, recognizing that violence and polarization
will continue at least until Somoza's retirement is an
accomplished fact.
U.S. strategy under Option Three would aim at creating
the conditions and-stimulating the pressures for a settle-
ment. We would take the-lead immediately so as to recapture
the political momentum for a peaceful solution, working
with both the opposition and Somoza himself to effect
a transition. We would not=attempt to dictate details
or particular time frames. Allowing them to evolve from
the interplay among Nicaraguans, we would seek as prompt
a resolution as possible.
Tactical Elements
1. Initially, we would maintain our present cool
posture regarding Somoza to retain pressure on him.
Thus we would:
Continue to suspend bilateral security'
and new economic assistance programs.
Minimize other economic assistance--Exim,
CCC, IFI loans.
Make a major effort to halt arms shipments
to both sides.
2. We would utilize Ambassador Pezzullo's arrival
as the device for undertaking an active role. We would
Approved For Release 2008/02/15: CIA-RDP81600401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex 3, page 3
para U . his activities by a high level public speech
or statement defining our view, calling for a negotiated
resolution, and expressing our willingness to assist.
We would actively seek the cooperation of other countries
and the OAS to have them join us in a unified effort.
3. Inside Nicaragua, our efforts would seek to:
A. Build an effective, coherent, moderate
political opposition capable of seizing the political
initiative. To this end we would:
provide advice on organization and tactics
and generally encourage the FAO and other
opposition groups to develop political -:
action programs.
?
Provide advice and help in constructing
a specific plan or proposal for a real
transition either through the 1981 elections
or earlier. For example, an action plan--
simi'lar to the mediation proposal or the
FAO proposal of last October-- might be
drawn up for immediate implementation
calling for:
-- Citizenship registration of all Nicaraguans
under international supervision starting
now;
Revision of the electoral law with
the aid of outside experts beginning
now;
Preparation of new electoral registers
with international supervision; ?
?
-- Holding of elections under close
international supervision.
B. Influence Somoza, the Liberal Party and
the National Guard to accept a negotiated solution.
To that end, we would:
-- Have Ambassador Pezzullo lay out
the concept frankly to Somoza and
urge him to negotiate.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex 3, page 4
Warn him that if he does not the
Ambassador would eventually be withdrawn
and our relations get even colder.
Encourage other nations and media
to support the moderate opposition.
Encourage elements in the Liberal
Party and the Guard to support such
a formula.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
-SEL SALVADOR: GAME PLAN FOR INTERNAL DIALOGUE
The U.S. has the opportunity to use its influence
to move Romero perceptibly-faster toward reforms and
a political opening as described in Part III. To do
so, we cannot work only with Romero and his Government,
although we must, of course, take steps in this direction.
Equally important will be how U.S. influence can be brought
to bear to persuade influential military and business
backers of Romero that they have more to gain by allowing
Romero to take this route than by substituting a more
repressive government.
This strategy would require the following steps:
We would instruct Ambassador Devine to seek
an early appointment with President Romero
to explain that a forthcoming U.S. posture
would be predicated on a genuine commitment
(under the "encouragement" option) or on concrete
progress' (under the "reciprocal" option) by
the GOES to an improved human rights practice
and a political opening in the 1980 elections.
We would publicly call for dialogue and announce
how we would support it.
A high-level Department or other USG official
would briefly visit El Salvador, participate
in the dialogue, and explain the parameters
of potential U.S. economic assistance.
During the above-mentioned dialogue, we would
make clear what we expect of the GOES:
-- Preparations for the 1980 elections should
be such as to attract the participation
of the PDC, the MNR and other political
opposition groups.
1 ..`AID
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex 4, page 2
The GOES should seek OAS or other assistance
in preparing for such elections well in
advance of March 1980. The GOES should
invite OAS observers to supervise the
elections."
The GOES should reform its electoral code
(perhaps with the help of the ICJ, OAS
or other competent body), and reconstitute
the electoral commission as a clearly
non-partisan body.
To create a climate for free political
activity, the GOES should declare an amnesty
for non-violent political prisoners and
exiles; observe the right to organize
political parties and trade unions; prevent
ORDEN from harassing opposition groups;
and end disappearances and arbitrary arrests,
and restore the rule of law.
-:-'The GOES should combat terrorism without
resorting to violations of human rights.
We would make clear our intention to speak
out forcefully against human rights violations,
and to review our policy, if such violations
persist or become an established pattern.
We would step up and broaden our contacts with
labor, the PDC and the MNR, urging them to
close ranks, and to participate in a credible
process of political opening.
We would seek out constituent elements of such
so-called "popular-based".organizations as
the BPR in order to encourage their participation
in a peaceful political process and isolate
the extremist element.
.:.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex 4, page 3
ti ;-a/ :i 1 ,use .i
Take a more forthcoming position with
respect to providing economic assistance
to El Salvador both bilaterally and through
the IFI's. Pari passu with continuation
of the dialogue, we would consider positively
a more comprehensive program of bilateral
assistance meeting BHN criteria; support
well-designed development programs financed
through the IFI's; and support the establishment
of a Consultative Group mechanism, headed
by the IBRD, to coordinate economic assistance
to El Salvador;
Routinely approve non-lethal munitions-
controlled items for export to El Salvador;
Support FMS cash sales of non-lethal equip-
ment and supplies to El Salvador;
If, by the end of 1979, the Romero Government
was not in our view sincerely proceeding
toward a political opening, we would review
our policy.
yam' V ~a ~.rK ' -"a
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
We would work closely with Venezuela and Costa
Rica whose governing Christian Democratic parties
have strong ties to Salvadoran political groups.
In order to help support the Romero Government
to proceed along a road of reforms, we would:
-- Increase our contacts with the economic/business
elements that currently support Romero
to try to gain their support or acquiescence
in the process of political opening;
-- Increase our contact with Romero's military
backers (and with those who would tend
to form a coup against him) for the same
purpose.
If we adopt the "encouragement" approach, we
would also:
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Annex 4, page 4
If we adopt the "reciprocal" approach, we would:
-- (As we have already"informed Romero) attune our
responses not to rhetorical commitments but to
concrete steps,. indicating our conditional willingness
to increase economic and security assistance
and to identify ourselves with the "opening"
process.
-- Pending a clear trend of improvement, maintain
our current posture of constraints.
-- As significant human rights improvements are
effected and the political opening proceeds,
first marginally increase our AID levels, and
then alter our stance on IFI and OPIC activities.
-- If the March 1980 elections come off successfully
and human rights abuses are sharply curtailed,
our public tone would identify us with the
policies of the GOES, and we could seek substantial
increases-* 1n economic assistance (with better
chances of, Congressional approval).
-- In the absence of concrete steps amounting
to a significant ?rend toward a political opening,
we would increase our pressures and more closely
identify the U.S. with the forces for change.
Instruments would include IFI loans, our AID
program, Milgroup, Ambassadorial presence and
general public posture.
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 STAT Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 . Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 ICbcq
I
Esteli nOleUa Rtc~~
Rio Pryzapo/ka
ya
ranada
HONDURAS
Plo
Lempira
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
502479 1-76 7541408)
Lambert Conformal Projection
Standard parallels 9?20' and 14?10'
Scale 1:3,200,000
Boundary representation is
not necessarily authoritative
Nicaragua
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
- Railroad
- Road
+ Airport
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
?
GUATEMALA
Jalpatagua~ Frontera +
~+..ax)
Chalatenango ,
Lago de
Guija
San Juan Opico
Quezaltepequ
San
Salvador
( Nueva
Ocetepeque
El Salvad&
San Francisco
'\ Gotera
~ -o desan M'9
Gran
90 89 88
502469 1-76 (541404)
Lambert Conformal Proje ctio n
Standard parallels 13?20' and 14?10
Scale 1:1,300,000
eoundary representation is
not neoeasari ly amhornatioe
H D?URAS
--- Railroad
- Road
T Airport
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
 San
Marcos
Lago de),-
Atitlan
Mazatenaago
Chimalfenango
scuintla
.a Aurora
Airport
Santa Ad
Logo de SantoTomas
Izabal de Castilla
Morales
m
Rio0~
Santa Rost
de Copan
Lago
Peten Itza
_PasiOn
~Salama
,Santa Cruz del Quiche Rio Hondo
Belize
(U.K.)
Belize
~Clty
Gulf of
Honduras
Punta Gorda
de 16-
Bahia Aufatique
502473 1-76 (541403)
Lambert Conformal Projection
Standard. parallels 9?20' and 14?40'
Scale 1:2,800,000
Boun1ary roFresemaron is
nm eeoessanIf awhc,!tao.e
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Guatemala
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
- Railroad
Road
4. Airport
 502476 1-76 (541405)
Lambert Conformal Projection
Standard parallels 9?20' and 14040'
Scale 1:3,400,000
Boundary representation is
not necessarily authoritative
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
?
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Honduras
 Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0
Costa Rica
86
,Nandaimee
Lago
de
Nicaragua
' 'Tilar
Las Canas
86
i
502465 1-76 (541391)
Lambert Conformal Projection
Standard parallels 9?20' and 14040'
Scale 1:2,400,000
Boundary representation is
not necessarily authoritative
a Jose
Santiago'
Saner
Ignacio
CARIBBEAN
84 83
- Railroad
- Road
+ Airport
Approved For Release 2008/02/15: CIA-RDP81 B00401 R002000010002-0