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Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 ~`'"~ `"~ Secret No Foreign Dissem DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY Special Report Latin America Looks to Eastern Europe Secret N?_ 36 29 March 1968 N .a,Ql Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Rese6i12116 :rCIA~RDP79-00927A~30~80006-1 SPECIAL REPORTS are supplements to the Current Intelli- gence Weeklies issued by the Office of Current Intelligence. "l'he Specie! Reports are published separately to permit more c;emprehensive treatment of a subject. They are prepared by the Office of Current Intelligence. the Off?ice of Eeonornic Re- ~ arch, the C)ffi.ce a#~ Strategic Research, and the Directorate of `~i,ience and 7~echnelogy. Special Reports are coordinated as ~tppropnate among the llirectorates of CIA but, except far the ~~arnial substantive exchange with other agencies at the working E~.vel, have not been coordinated outside CIA unless specifically indicated. f'he SPECIAL REPORT contains classifiec~l information affect- i~~g the national defense of the United Stat:.s, within the mean- ing ol? T'itle I S, sections 7r33 and 794, of tti.e US Code, as amended. Its transmission ar revelation of its contents to or re- z-~'ipt by an unauthorized person is prohibited by law. ~'I-[E SPECIAL REPORT MUST NOT BE RELEASED TO la()RF,I(~ly t:OVERNMENTS and must be handled within the l~~?atnewerk of specific dissemination contras previsions of DCIi l ~`7. ~__ .~~ciu~-.E~.--_ Exdud~d from automatic downgrading and dr~ia.?ification "i~i,~..~'~.~.~1~ Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 SECRET No Foreign Dissem LATIN AMERICA LOOKS TO EASTERN EUROPE The recent surge of interest in Latin America in exploring closer relations with the Communist coun- tries of Eastern Europe is shared by governments and individuals of every political hue. It is based primarily on a determination to reduce depend- ence on the US, and on a general lack of progress in industrialization and in obtaining higher prices and more stable markets in developed Western coun- tries for raw materials basic to most Latin American economies. The translation of these and other frustrations into action has coincided with a skillful campaign in the area by the USSR to establish itself as a reasonable and respectable world power not identified with the revolutionary efforts of Fidel Castro. So- viet representatives have made contacts in political and cultural fields, contacts which can prove useful to them over the long term. At the same time the USSR's-East European allies, already active in Latin American trade, have sent numerous missions to ex- plore new possibilities for their own economic ex- pansion. Latin Americans share the disposition to explore thoroughly what the Communist countries have to of- fer, and warnings against the dangers of Soviet sub- version have diminished. This growing curiosity is fostered by psychological compulsions that are con- vincing to governments as disparate in philosophies, economics, and previous Communist trade experience as Venezuela .and Argentina. Arguments that the trade potential is limited and demonstrably fluctuating are offset in Latin American opinion by rising sales to Easterxi Europe of coffee, bananas, and other tradi- tional exports at a time of bumper crops, falling prices, and internal pressures for faster economic development. The Trade Potential The increase from $149 mil- lion to $400 million in Latin American exports (not including Cuba) to Communist countries bey tween 1960 and 1966 is miniscule in relation to world trade volumes. The percentage of increase was significant, however, to the Latin Americans at that time, and it built up favorable trade balances for every Latin American country involved except Venezuela. These SECRET SPECIAL REPORT 29 Mar 68 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Fea006/12116 :CIA-RDP79-0092706080006-1 SECRET SECRET Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 ?.r~ SECRET No Foreign Dissem countries consider it vital to retain their new markets and to find others. To do so, they must soon respond to growing pressures to accept Communist products and credits in return. Latin Ameri- can.officials are convinced that to conduct these growing exchanges most effectively they need con- sular and probably full diplomatic relations. Soundings through representa- tives in other capitals ar_d at the UN have met with a mixture of So- viet interest and restraint that is apparently reassuring to the Latin Americans, none of whom seem unaware that these dealings have political implications for their relations with the US. On the contrary they seem anxious to advertise and justify them while carrying on behind-the- scenes exchanges which, however unsophisticated,are carefully considered. The Andean Group In South America the re- gional economic Andean Group-- Bolivia, Chile, Colombia, Ecua- dor, Peru, and Venezuela--best illustrates various stages in stepping up ties with Eastern Europe from a minimal base. Chile has resumed or estab- lished relations with the USSR, Czechoslovakia, Poland, Hungary, Bulgaria, and Rumania since Eduardo Frei became president in November 1964. His expressed belief in the advantages for Chile of wider political and economic ties was considerably buttressed by his hope that for- mal relations with Moscow in par- ticular would give his adminis- tration a more leftist image, curb the influential Chilean Com- munist party, and serve as a bridge toward reducing Cuban med- dling in other Latin American countries. His hopes are un- realized, but nearly one hundred Eastern Europeans have become an accepted part of the. Chilean scene. The personable and effective Soviet ambassador Anikin, who left in early March, established a rapport with leaders of most Chilean political groups and captained a successful cultural and propagandistic effort that established Soviet bona fides among Chileans. He scrupulously avoided raising suspicions and minimized contact with Chilean Communist leaders who, nevertheless, have benefited politically from his successes. Despite these suc- cesses and a stream of delega- tions from the USSR and other bloc countries, economic results for Chile have been small. There has been no significant trade in- crease since resumption of rela- tions, and a $57 million credit from the USSR remains untouched. President Frei has shown a growing disenchantment in recent months with the domestic politi- cal effects of the Soviet pres- ence, and his government's lack of enthusiasm toward Soviet offers has been the greatest blow to economic implementation of the new ties. Nevertheless, he is reported by several sources to have recommended that all mem- bers of the Andean group restore relations with the USSR. SECRET Page 3 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Rase06/12116 :CIA-RDP79-00927P~6380006-1 SECRET CC-MMUNIST ECC-NCIMIC CREDITS and GRANTS to LATIN:AMERIC:A 1958- Dec 1967 SECRET NO FOR~I~N DlssEM ?Extended Drawn Recipient Country. Iota( USSR Eastern Europe . Total USSR Eastern Europe Argentina b2.7 44.0 18.7 36:.5 31.3 5.2 Brazil 313,b 88.0 225.b 29.0 0 29:0 Ch%~e 54.8 54.8 0 0 0 ` 0 Ecuador 5.0 0 5.0 0 0 0 Uruguay 10.0 0 10.0 Q 0 0 M i 1 i o n U S$ 44b , l 1$b . 8 259.3 65.5 31 .3 34 , 2 90036 S-b8 SECRET Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 ~...> ~/ SECRET No Foreign Dissem Colombia did so in January 1968, following a year of in- creasing trade and cultural con- tacts with Communist European countries. President Carlos Lleras Restrepo reportedly be- came convinced during this pe- riod that the advantages of bloc relations outweighed possible drawbacks. Lleras has frequently expressed his rationale for in- creased relations with Communist countries as a right to badly needed markets and a responsi- bility to become familiar with more of the non-Western areas of an increasingly interdependent world. The semiofficial Colombian Coffee Growers' Association, one of the most articulate advocates of expanded Communist ties, has been conducting the growing trade with the U55R under a barter agree- ment. Lleras decided, however, that government-to-government of- ficial relations would be more effective in realizing the full potential of exchanges. He also .renewed diplomatic relations with Yugoslavia and Rumania and con- sular relations with Poland and Bulgaria. President Raul Leoni of Vene- zuela has done most of the ground- work toward resuming full rela- tions with the USSR and in his state of the union message on 18 March he indicated that the move would be made soon. Leoni re- cently admitted that Venezuelan hopes of using the possibility of relations to exert leverage on Moscow against Castro have been abandoned. It appears that guerrilla activities, recently at a low level, have less to do with the decision than considera- tions that resumption of rela- tions with the U5SR may affect his party's chances in next De- cember's elections. In the mean- time, a Venezuelan economic dele- gation will soon visit the -USSR and other Communist countries to explore trade and credit possi- bilities. In Ecuador, substantially increased sales of cocoa, cof- fee, and bananas to East European countries have encouraged business- men and officials to step up ex- ploration of further possibilities. Several sources claim that Ecuador will join the rest of the Andean Group in re-establishing diplo- matic relations with the USSR during 1968. A study on the advisability of this step re- portedly was made by the Ecua- dorean Foreign Ministry in February and officials expect to sign a trade agreement with the USSR in the near future. A shipload of bananas for Communist countries left Guaya- quil in February on the first of six new refrigerated ships bought specifically for this trade. Government publicity em- phasized that this new trade sig- nified "economic independence." Poland has offered to finance all or part of Ecuador's massive electrification program and a Czech trade mission is at present visiting Quito in an attempt to stimulate trade. Recent agreements with Hun- gary and Poland guarantee payment of trade imbalances in dollars, and Ecuadoreans seem to feel that this and the beneficial effects of recent sales overshadow the prospect of soon being forced to import Eastern European goods under the barter system in order to retain markets there. SECRET Page 5 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Fas~006/12116 :CIA-RDP79-00927 SECRET No Foreign Dissem The Peruvian foreign minister announced on 15 March that nego- tiations are under way to estab- lish consular relations with Po- land and Czechoslovakia and that a trade mission will soon visit those countries. Peru as yet has no trade with the USSR and diplomatic relations do not seem imminent. The Soviet minister in Brazil said in January, however, that the Peruvian Government had asked to send a commercial/diplo- matic delegation to the USSR. Restoration of full relations is known to be under study in Lima and the impetus from other Andean Group members may speed the process. Sales of Peruvian fishmeal in 1966 placed that co-untry third, though far behind Argen- tina and Brazil, in non-Cuban Latin American exports to East- ern Europe. Despite some con- cern among the influential Peru= vian military oversecurity risks, conservative entrepreneurs, con- gressmen, and news media are campaigning far more trade with the bloc. The Belaunde govern- ment newspaper claims that bloc trade is essential if Peru is to diversify its exports, The paper has urged decisive action to assure that other countries do not pre-empt "this market of vast potential." The Bolivian Government's concern over world prices for its major export, tin, and re- sentment over US sales of tin stockpiles were President Bar- rientos' expressed reasons for his recent public offer to re- store commercial relations with the USSR in return for tin pur- chases at "reasonable prices." Economic necessities may have overcome Barrientos's charge in 1967 that the USSR indirectly supported the Cub an-backed guer- rilla activity in Bolivia. As in the case of other small countries, Bolivia's minor Com- munist trade has been primarily with Czechoslovakia. Atlantic Coast Countries The Atlantic Coast countries' experience with Eastern Europe is more extensive and of longer standing, in both economic and diplomatic relations. Apart from Cuba, Argentina and Brazil have the largest Communist trade by volume. Of all the Latin Ameri- can countries Uruguay in 1962 sold the highest percentage of its ex- ports to Eastern Europe. Argentina's pragmatic view of relations with Communist coun- tries is that they have provided significant if fluctuating mar- kets in recent years for traditional wool, wheat, and meat exports which are meeting re- sistance in Western markets for a variety of reasons. Instead of discouraging the Argentines, the sharp drop in exports to Com- munist markets in 1966 seems ac- tually to have encouraged their efforts to re-gain these outlets and expand them. The Ongania government keeps the representatives from all the Eastern European countries resi- dent in Buenos Aires under close surveillance. For their part the Soviets are downplaying any politi- cal role and are concentrating on the military regime's interest SECRET Page 6 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Release 2006/12116 :CIA-RDP79-00927A0.06300080006-1 SECRET No Foreign Dissem in revitalizing the Argentine economy. Despite preference for Western financing for the huge E1 Chocon hydroelectric project, Argentina has not com- pletely discouraged Soviet of- fers of partial backing while waiting for a firm commitment from the World Bank. Uruguay too believes that its fluctuating trade with the Communist countries justifies greater efforts to stabilize rather than to abandon it as un- reliable. Skeptical of the pros- pect of recovering markets in Western Europe because of Common Market policies, Uruguay has suc- ceeded in reviving sales to East Europe from their low of 5.3 per- cent of total exports in 1965. They may soon reach 8 to 10 per- cent, considered normal, although the high water mark of 16.8 per- cent in 1962 seems unlikely to be reached again. The Uruguayan Government suspects that bloc representatives encourage the chronic and damaging labor agi- tation that besets Uruguay, but has a relaxed and permissive attitude toward the activities of those representatives. Rela- tions with the USSR have recovered from a low point in late 1966-- when several Soviet officials were ousted--mostly because of deter- mined Soviet efforts to mend diplo- matic fences. A renewed Soviet effort to get Uruguay to sign a $20-million trade credit pend- ing for two years may be success- ful. Although Brazil's diplomatic attitude toward the USSR cooled when Joao Goulart was ousted in 1964, the Castello Branco govern- ment sent its minister of economy to Moscow that same year to ex- plore expansion of economic rela- tions. This ambivalence has con- tinued. Suspicion of Soviet po- litical motives has not kept Bra- zilian trade with the USSR from rising proportionately with its total trade in recent years, and in 1966 a Soviet credit of $100 million was accepted. As has hap- pened with Soviet credits to other Latin American economies, this one is still waiting for feasible projects. Brazil's fears of Soviet sub- version, however, have apparently been allayed by the gradual ar- rival of a new, younger, more af- fable and more trade-minded group of Soviet representatives. The recent tolerant attitude has been marked by a relaxation of vigilance over just what the numerous Soviet and other East European representa- tives in Brazil are doing. As re- cently as 25 March, Foreign Min- ister Magalhaes Pinto urged greater trade with Communist nations, par- ticularly the Soviet Union. He as- serted that the USSR is "as in- terested in placing its goods in our markets as we are in placing ours in theirs." Brazil's size and economic potential make it an attractive target and the USSR is persist- ing in efforts to exploit its regained respectability. A trade office has been established in the major industrial city of Sao Paulo and projects to utilize the credit agreement are being actively sought. A longstand- ing Soviet interest in assisting the exploitation of oil bearing shale has been revived. The Costa a Silva government has re- affirmed its interest in Communist SECRET Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Rs06/12116 :CIA-RDP79-00927,6380006-1 SECRET No Foreign Dissem trade possibilities by revi- talizing an interministerial agency to coordinate and promote all aspects of economic exchanges with Eastern Europe. Brazil al- ready has diplomatic relations with all countries there except East Germany, which has large trade offices in Rio and Sao Paulo as well as in several other Latin American countries. Like them Brazil finds East Germany a useful trading partner. Middle America As with most of its foreign policy, Mexico's relations with Eastern Europe are unique among Latin American countries. It has had diplomatic relations with the USSR since 1924, except for a short period in the early thirties, and with Poland and Czechoslovakia since 1952. The presence of over one hundred employees in the Soviet Embassy in Mexico City is inconsistent with the negligible amo-unt of trade between the two countries, although some Mexican sales to Communist countries are probably masked by statistics. Mexico shows little interest in increas- ing its trade with the bloc, perhaps because its rate of eco- nomic development-and its diversi- fied trade pattern make the effort not worth the problems involved in barter agreements and unfa= miliar equipment. Soviet-Mexican diplomatic relations are merely perfunctory. President Diaz Ordaz did not find time to accept a farewell call by the recently departed Soviet ambassador, a rather marked snub for a diplomat who had represented a major power in Mexico for six years. There seems to be a tacit understand- ing that so long as the numer- ous Soviet representatives do not meddle in domestic Mexican affairs or effectively assist the rather sorry Mexican Commu- nist parties, their activities will not be curbed. These ac- tivities seem to be directed primarily toward the US and, to a lesser degree, toward support for Central American Communist parties. Only in the fields of the arts and propaganda, tradition- ally dominated in Mexico by left- ists, have the Soviets found a receptive attitude. Soviet cul- tural institutes have not thrived, however, and a recent Soviet lec- turer seems to have met with some challenge to his observations on the bourgeois nature of the Mexi- can Revolution. The small countries of the Central American Common Market share with the Andean Group the move active recent interest in exploring greater sales opportuni- ties in Eastern Europe. A cone bination of bumper coffee crops and economic slowdowns has led to encouraging sales already this year and to plans to send trade delegations for further negotiations. Although these sales outside the International Cof-fee Agreement are made at lower prices, E1 Salvador and Guatemala have already shipped in 1968-nearly 60,000 bags of coffee to Poland, Rumania, and Hungary which would otherwise SECRET Page 8 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 ~..r SECRET No Foreign Dissem have brought no income or re- quired expensive storage. Ad- ditional sales to these bloc countries totaling $25 million worth of coffee are presently be- ing discussed, a sharp increase from 1966 sales of $2 million from all Central America to all Communist countries. Such quantity sales will certainly drop sharply, particularly since Colombia's resumption of rela- tions with the USSR and other bloc countries will surely in- volve more purchases of compet- ing high-grade Colombian coffee. In any case a smaller surplus crop is predicted next season and the need for nonquota sales will be less. Meanwhile, the seeming advantages of bloc mar- kets in time. of need thus far have impressed Central American officials . Costa Rican Communists have played a major role in efforts to step up trade relations with the USSR as a means of alleviat- ing their country's growing economic problems. The Trejo~ government has. shown an interest and in January received a Soviet delegation which offered credits and technical assistance for four specific projects. The Soviets have not followed up their offer and have left the matter pending. In Nicaragua, the bandwagon syndrome in viewing East European trade as the antidote to US eco- nomic policies is evident in dec- larations by officials of the right-wing government. One commented that projected US duties would lead to a search for mar- kets behind the Iron Curtain. Culture and Propaganda Cultural, propagandistic, and sports presentations from Communist countries are gener- ally well received in the sev- eral Latin American countries where the governments permit or encourage them. Curiosity gives the performers an entree, and their very presence is flat- tering for countries frequently short on native cultural attrac- tions . ~ The impact of the Ber- yozhka Ballet or the Moscow Circus in Santiago or Bogota, for ex- ample, is certain to be greater than in New Xork. In addition, the quality of most of the Com- munist offerings has been high enough to appeal to critical Latin Americans of many political per- suasions who fancy themselves as cultural connoisseurs. Poet Yevtu- shenko's four-month swing through Uruguay, Chile, Colombia, and Mex- ico seemed effectively to demon- strate to Latin Americans that So- viet intellectuals are not re- strained by their government. The Soviets lead in this field, but other East European countries con- tribute to the tours that have established Communist entertain- ers and soccer teams as part of the scene in much of Latin America. Diplomatic relations are not essential to a welcoming atmos- phere. Although Argentina has had ties with the USSR since 1946, its government is-cold to cultural overtures. The attitude of the Brazilian Government since the ouster of Goulart has also been less than enthusiastic, particularly in 1967. Like Argentina, Brazil tries to nar- row Communist relations to the SECRET Page 9 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For R~s~Q06i12116 :CIA-RDP79-00927P~63(~80006-1 SECRET No Foreign Dissem economic field. In Colombia, how- ever, interest in cultural ex- changes with the USSR rose notice- able along with trade ties before the renewal of diplomatic relations in January 1968. Consular rela- tions were also renewed with Po- land, a. scientific and technical agreement was signed, and a Polish guest conductor had a five- week tour with the Bogota sym- phony. .The active Soviet-Colom- bian Cultural Institute graced its celebration of the fiftieth anniversary of the October Rev- olution with a noted Soviet pro- fessor who was also collecting material for a comprehensive study of Colombia by experts from both countries, which is soon to be published in the USSR. Chilean receptivity to So- viet cultural overtures has been very warm but the Frei govern- ment has dragged its feet during prolonged negotiations for a cultural agreement. The new Chilean ambassador to Moscow, Oscar Pinochet, reportedly felt that former Soviet ambassador Anikin, usually the most suave of diplomats, used pressure tac- tics in an attempt to get edu- cational exchanges that would not be subject to Chilean Government direction. Although the agree- ment has not yet been signed, 12 busy Soviet cultural insti~~ tutes attract students to courses-- including English and business training--and offer such attrac- tions as the bargain air tours that carried nearly 500 Chileans to the USSR in late 1967. The Soviet magazine published in Chile and Spanish is well received, and the Soviet nationals represent- Page 10 ing TASS, Pravda, Radio Moscow, and Navosti have made a credit- able record of establishing friendly contacts and of placing material in Chilean publications and TV. Free trips to Moscow for rectors of all eight Chilean universities and for numerous journalists have helped set up a rapport. The number of Latin Ameri- can students going to iron cur- tain countries for university training varies widely, with Bo- livia, for example, now estimated to have 300 students there and Brazil only about 150. Many who seek the fully-paid scholarships in Eastern Europe are not Commu- nist but lack means or cannot get into the usually overcrowded uni- versities of Latin America. They may also be primarily seeking broader experience or more sophis- ticated training, but mos-t are either influenced by the inevi- table political indoctrination or sufficiently repelled by it to withdraw. The opportunities open to graduates of Patrice Lumumba Friendship University have proven very limited to Chileans despite the substantial Communist influ- ence in the country's educational system. Both in Bolivia and in Uruguay, however, a substantial number of graduates are working throughout the educational system. While academic subjects com- bined with subtle political indoc- trination are the order of the day for most Latin American students studying in iron curtain countries, a few carefully selected trainees in the USSR are offered a one-year cadre school course in guerrilla S-EGRET SPECIAL REPORT 29 Mar 68 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 ~/ SECRET No Foreign Dissem warfare. This training program con- concentrates on guerrilla tactics and organization, firearms training, communications, and sabotage. The school emphasizes the peaceful road to power for the most part, but teaches that the final phase of this approach will always be armed conflict in reaction to U5 inter- vention. It has become clear, in the Soviet dispute with Castro, however, that Moscow believes that armed revolution in Latin America has little prospect for success in the foreseeable future. Official tolerance in Latin America of travel to the USSR ap- pears to be directly related to the legal status of the local Com- munist party. The extensive op- portunities for travel to Com- munist areas have undoubtedly strengthened the Uruguayan Com- munist Party, whose Secretary General Rodney Arismendi is closely attuned to Moscow. Science and Technology The launching of Sputnik in 1957 made a deep impression on Latin Americans, and the USSR lost little time in cashing in on its new scientific prestige. In 1958 an agreement with Chile gave the Soviets their first opportunity to make stellar observations in the southern hemisphere. Soviet astronomers arrived in 1962 to help set up the University of Chile observa- tory at Cerro Calan, and teams of their successors still work there under a 20-year agreement for joint use of equipment. The advantages for Chilean scien- tists afforded by the arrange- ment outweigh doubts reported by one source about the dominant role of their more proficient Soviet counterparts. Astronomical work is being expanded by the Soviets at an- other Chilean site, Cerro Robles, which was of particular interest to Soviet astronaut Leonov when he visited Chile in 1966. A large and specially designed photo- electric telescope was installed the following year and some un- identified equipment for Cerros Robles, which was reluctantly admitted by Chilean authorities, may be designed for earth satel- lite tracking. This location would fill a gap in the Soviet worldwide opt'icalspace trading network . Chilean geologists have been flattered by a gift of Soviet re- search material exhibited at the Antarctic Research Symposium held in Santiago in September 1966, and by a Soviet offer to exchange maps and other geological findings. The Soviets also discussed scientific cooperation and joint research in the Tierra del Fuego region with the Chilean Antarctic Institute, possibly in relation to the estab- lishment in February 1968 of the fifth permanent Soviet research station in the Antarctic for glaci- ological and ae~ometeorological observations. Propaganda from Moscow Radio is well chosen to exacer- bate Latin American sensitivities in scientific fields. During the 100 hours of Spanish broad- casts each week, there have been claims of a US military plan to install strategic rockets with SECRET SPECIAL REPORT 29 Mar 68 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Fas006/12116 :CIA-RDP79-00927~}6~080006-1 SECRET No Foreign Dissem nuclear warheads in secret loca- tions in Latin America. TASS has played up the alleged scientific "brain drain" to the US, which deeply concerns many Latin Ameri- can countries. Soviet ships described as engaged in scientific research call frequently at Brazilian ports. An extensive program of ocean- ographic research has been con- ducted off the long Chilean coast by Soviet vessels since 1965, ac- companied by a propaganda campaign lauding its scientific value. Chile has not objected to this activity within its claimed 200-mile terri- torial waters, possibly because of its own limited capacity to exploit their rich potential. In March 1968, a visiting So- viet mission reportedly offered to build fishing ports and to provide machinery, installation and tech- nical assistance for a fish process- ing plant in southern Chile. They also will help introduce Alaskan salmon in the waters off southern Chile, using 35,000 salmon eggs given Chile by the US Peale Corps. There are indications that the USSR is eager to establish an opera- ting base for a fishing fleet in that area. Chile's attitude is in dis- tinct contrast to that of the East Coast countries. Argentina, concerned over extensive Soviet fishing activities in its coastal waters, acted to reduce this ex- ploitation of its resources last year by extending its terri- torial sea to 200 miles and im- posing high licensing fees. Sub- sequently, Brazilian naval offi- cers warned that the large Soviet fishing fleet was moving to its coastal waters. In March, the Uruguayan Government formally protested to Moscow on the mat- ter. Problems for the Latin Americans In their eagerness to seek East European markets, Latin Americans have tended to mini- mize the problems bloc trade will entail. Thus far they have not fully realized that further ex- pansion is unlikely without bar- ter agreements they will doubt- less find onerous. It will be difficult, for example, to find equipment sufficiently adaptable and attractive to replace the Western installations and goods basic to most economies of this hemisphere. In the past, con- cern over a lack of spare parts or repair facilities has made Latin American buyers wary. Presently however, transportation equipment from the bloc is being tr3.ed out in some quantity in Colombia. If it proves acceptable, Colombian interest in purchasing Soviet trans- port planes might be rekindled. Another problem is that hope- ful officials sign government-to- government agreements, which must in large part be implemented by usually conservative Latin Ameri- can businessmen who have some dif- ficulty in dealing with state-run economies. Paradoxically, how- ever, it is the businessmen in several countries who are the most persistent advocates of more eco- nomic relations with Eastern Europe. In some cases they probably want SECRET Page 12 SPECIAL REPORT Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 SECRET No Foreign Dissem to share in the early benefits be- fore the difficulties set in, to make profit from cash sales that make the barter agreements more palatable. The Communist countries, particularly the smaller ones, are sufficiently interested in this small but growing aspect of their trade to send numerous missions to Latin America. Some of these mis- sions are headed by high-ranking officials empowered to make a few concessions. Cash purchases such as the Soviet Unian made fox over $2 million worth of Ecuadorean cacao in January are one. Agree- ments to settle swing balances, presently favorable to the Latin Americans, in convertible curren- cies have been made in some ex- change agreements basically barter in nature. The Soviet credits to Chile and Brazil and the one offered to Uruguay included a commitment to take up to 30 per- Page 13 cent of total imports from those countries in processed goods, a reluctant concession to the Latin American determination to indus- trialize and lessen dependence on uncertain markets for new ma-~ teri als . Prospects The chances seem good that all the Latin American countries will continue to expand their relations with Eastern Europe. The desire to diversify interna- tional contacts is strong, both as a matter of prestige and in response to or in anticipation of domestic political pressures as well as what they consider eco- nomic necessity. Simultaneously, the Communist European countries are obviously increasingly in- terested in seizing every oppor- tunity to weaken or supplant US interests and influence in Latin America. (SECRET NO FOREIGN DISSEM) SECRET SPECIAL REPORT 29 Mar 68 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1 Secret ~ '`~ '" Secret Approved For Release 2006/12116 :CIA-RDP79-00927A006300080006-1