LATIN AMERICA LOOKS TO EASTERN EUROPE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A006300080006-1
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 19, 2016
• Sequence Number: 6
• Content Type: REPORT

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~`'"~ `"~ 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
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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
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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 $57 million credit
from the USSR remains untouched.
President Frei has shown a
growing disenchantment in recent
months with the domestic politi-
cal effects of the Soviet pres-
ence, and his government's lack
of enthusiasm toward Soviet offers
has been the greatest blow to
economic implementation of the
new ties. Nevertheless, he is
reported by several sources to
have recommended that all mem-
bers of the Andean group restore
relations with the USSR.
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CC-MMUNIST ECC-NCIMIC CREDITS and GRANTS to LATIN:AMERIC:A
1958- Dec 1967
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NO FOR~I~N DlssEM
?Extended
Drawn
Recipient Country.
Iota(
USSR
Eastern
Europe .
Total
USSR
Eastern
Europe
Argentina
b2.7
44.0
18.7
36:.5
31.3
5.2
Brazil
313,b
88.0
225.b
29.0
0
29:0
Ch%~e
54.8
54.8
0
0
0
` 0
Ecuador
5.0
0
5.0
0
0
0
Uruguay
10.0
0
10.0
Q
0
0
M i 1 i o n U S$ 44b , l 1$b . 8
259.3
65.5
31 .3
34 , 2
90036 S-b8
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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.
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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
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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
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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
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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
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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
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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
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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
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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)
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