CHILE: A NEW OPENING TO THE LEFT?

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A006400020004-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 19, 2016
• Sequence Number: 4
• Content Type: REPORT

Approved For Release 2006/12/19: CIA-RDP79-00927A006400020004-8
Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
special Report
Chile: A New Opening to the Left?
Secret
N2 39
12 April 1968
No. 0015/68A
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SECRET
Chile is involved in it serious political and
economic situation that could result in the elec-
tion of a Communist-supported Popular Front presi-
dent in 1970.
President Frei, now halfway through the fourth
year of his six-year term, is constitutionally in-
eligible to succeed himself. In addition to the
problems posed by his lame-duck status, he is find-
ing himself increasingly isolated politically. His
own Christian Democratic Party is wary of some of his
economic retrenchment plan:; because it fears it will
lose popular support. Most opposition parties would
rather defeat Frei than stabilize the economy. The
Communists continue to be willing to support selec-
tive programs, but only at the price of damaging
concessions from the government.
Meanwhile, the traditional problems of the
Chilean economy persist. One of Frei's priority
goals has been to control the inflation that has
plagued Chile throughout the 20th century. He was
able initially to cut back on the cost-of-living in-
crease through a combination of higher taxation, in-
creased production, and better monetary management.
Last year, however, prices began to get out of hand
again and production slowed down. Frei's proposals
to deal with these problems were severely weakened
in the opposition-controlled Senate. In the absence
of a strong Christian Democratic showing in the 1969
congressional elections, Chile probably will stumble
along until a new administration--possibly with Com-
munist support--takes over in 1970.
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Composition
of
Chil~ea~n
Congress
SENATE
147 Seats
SECRET
* 1 Presently in jail
(PDC) Christian Democratic (PS) Socialist
(PADENA) National Democratic (PCCh) Communist
(PSD) Social Democratic (PR) Radical
(PSP) Popular Socialist (PN) National
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Political Problems
With elections just around
the corner--in Chilean terms--
all parties are beginning to
maneuver for support. The pres-
ent situation could change dras-
tically, but at the moment the
isolation of President Frei within
the Christian Democratic Party
(PDC) and of the PDC from other
political parties decreases the
likelihood of meaningful attempts
to solve Chile's serious economic
and social problems.
The leftist parties expect
significant gains in the congres-
sional elections in March 1969
and a victory in the presidential
election in September 1970, but
they may fall victim to internal
strains. After ten years of co-
operation in the Popular Action
Front (FRAP), the Communists and
Socialists are in major disagree-
ment on political strategy. The
Communists (PCCh), considerably
less extreme than their Socialist
colleagues, are dedicated to gain-
Lng power through electoral ac-
tion. They want to capitalize
on the recent leftist take-over of
the Radical Party machinery and
on the strength of the leftist
wing of the PDC to organize a
broad leftist front like the So-
cialist-Communist-Radical combina-
tion that defeated the PDC in two
senatorial by-elections last year
and elected pro-Castro Socialist
Salvador Allende as president of
the Senate. The Socialists, al-
ready split by a dispute over
intraparty tactics and personali-
ties, strongly oppose cooperation
with the Radicals, whom they con-
sider bourgeois and opportunistic.
Tensions Within the Christian
Democratic Party
The PDC is divided into three
groups. One strongly supports Frei
and currently is in control of the
party leadership. Another is a
left-wing group that is willing to
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SPECIAL REPORT 12 Apr 68
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SEC R ET
break with Frei because he has not
achieved the changes it wants.
On many issues this group is
closer to the Communists than to
the government. The balance of
power is held by a third group
that drifts between the other two,
wanting more far-reaching change
but not willing to break with
-Frei.
After the inauguration of
the administration in 1964, Frei
was content to let PDC affairs
pretty much run themselves. As
a result, the leftist group within
the party increased in strength.
At the national convention last
July, the leftists gained control
of the party's national council,
and then obtained unanimous sup-
port for the "Chonchol Report,"
which elaborated a theory of non-
capitalist economic development.
Frei was able to work out compro-
mises with this group for a while,
but they rebelled at his proposal
for the 1968 wage adjustment bill.
Frei believed that this legisla-
tion was vital to his economic
austerity program, which had run
into trouble during a general eco-
nomic slowdown in 1967. The PDC
leaders, however, feared that sup-
port for this unpopular legisla-
tion would irreparably damage
their election prospects in 1969
and 1970.
His control was probably weakened,
however, by his disregard for party
wishes regarding revisions in the
wage adjustment bill, and the
leftists could regain control of
the party at the national conven-
tion scheduled for this summer.
Intra-PDC tensions will prob-
ably be exacerbated when Radomiro
Tomic returns to Chile from the
United States, where he has been
ambassador since 1964. Although
not trusted--let alone liked--by
the other leftist parties, he en-
visions himself as the leader of
a broad leftist front that would
include the Communists. He has
kept close tabs on Chilean po-
litical developments and often has
tried to exercise his influence
from Washington. His presence on
the scene will be a potentially
disruptive factor that could shat-
ter the party's fragile unity.
Frei finally forced a show-
down with the party leadership
last January. By means of strong
personal intervention, he was able
to get a vote of confidence for
most of his legislation and to in-
stall sympathetic party leadership.
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The Position of the Chilean
Communists
All this maneuvering leaves
the Communists in a 'very strong
position. They are being wooed
by the Socialists, the Radicals,
the left wing of the PDC, and by
Tomic, and can pose as a spokes-
man for the left. At the same
time, however, they can desert
their leftist allies to vote with
the government, bargaining for
major concessions while projecting
the image of a responsible party
operating within Chilean political
institutions.
This approach was clearly
demonstrated last month during
negotiations over Frei's revised
wage adjustment bill., when discus-
sions were carried on with an
independent leftist senator act-
ing as intermediary. The Commu-
nists finally agreed to support
the bill, although they reserved
the right to object to specific
parts. In turn, Frei agreed to
delete a no-strike provision that
had been opposed by the labor
movement as well as by the PDC
national council.
present debate among Communist
parties as to the best means of
attaining power. PCCh Secretary
General Luis Corvalan, one of
Moscow's strongest backers in
Latin America, is a firm advocate
of electoral action as opposed to
armed revolution. The PCCh there-
fore can be expected to use all
the resources at its disposal to
enhance its electoral position in
1969 and 1970.
Economic Problems
The resignation of Finance
Minister Saez points up Frei's
difficulty in implementing an
effective stabilization program.
Even if the government could im-
plement an anti-inflationary pol-
icy, the PDC probably would lose
so much political support that
FRAP and the leftist Radicals
would. make large gains in the con-
gressional elections next year.
Permitting rapid inflation would
aggravate economic problems, how-
ever, and thus also cut into the
government's popular support.
Either way, Frei and the PDC are
in for trouble.
A further benefit to the
Communists is the divisive effect
that such deals create within
Frei's party. The ]?DC leadership
was annoyed that Frei was willing
to give in to the Communists on
an issue on which he had remained
adamant within his own party. Al-
though the bill had stood no
chance of passing in its original
form, Finance Minister Raul Saez
resigned because he believed the
compromise fatally weakened the
legislation.
The Chilean Communists oc-
cupy an important position in the
Saez's entrance into the cab-
inet in February 1968 was regarded
by some people as an attempt at
rapprochement with the right,
which had been generally ignored
during the early part of Frei's
presidency. The small converva-
tive National Party (PN) now seems
determined, however, to exact re-
venge for Frei's earlier disdain
by refusing cooperation except at
an unacceptable price. Saez's
resignation will weaken business
confidence in the administration,
which in turn may hurt investment
prospects.
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I I
The Chilean economy has been
bouyed recently by continuing
high prices for copper. Even so,
government revenues have not kept
pace with expenditure demands.
Inasmuch as any proposal for in-
creased taxes is likely to en-
counter strong resistance, the
expected drop in copper prices
toward the end of 1968 will put
increasing pressure on the gov-
ernment to seek additional exter-
nal assistance.
The government also faces
problems from the organized labor
movement, whose leadership is con-
trolled by the Communists and So-
cialists. The Single Center of
Chilean Workers (CUTCh) organized
a general strike last November in
opposition to the government's
original wage adjustment proposal,
which was later withdrawn. CUTCh
opposed a provision of the revised
bill that it claimed infringed
the right to strike. Government
attempts to impose limitations on
wage settlements in private in-
dustry probably will foster in-
creasing labor agitation during
1968.
Outlook
For the first time in many
years, more than idle discussion
is being heard of possible noncon-
stitutional action on the part of
the military or the government.
Both Saez and the acting interior
minister referred to possible
"noninstitutional" actions if the
wage'bill was defeated. Although
there has been some speculation
that Frei, with backing from the
armed forces and the national po-
lice, might try to dissolve Con-
gress and rule by decree, there is
no indication that he is seriously
contemplating such action at this
time. Similarly, the armed forces
show no sign of planning to act on
their own initiative.
Fear of such developments,
however, was a factor in prompt-
ing the PCCh to undertake nego-
tiations with the government. The
Communists are afraid that a gov-
ernment move to a hard-line policy
would markedly increase the pos-
sibility that they would again
be declared illegal, as they were
from 1948 to 1958. They believe
that other leftist parties might
welcome such a development be-
cause it would permit them to
siphon off the Communists' popu-
lar support.
The generally leftist trend
in Chilean politics has alarmed
the more conservative neighboring
countries--Argentina, Bolivia, and
Peru. They are especially con-
cerned that Chile might become a
staging area for guerrilla opera-
tions in other countries. Argen-
tina is organizing an interna-
tional military exercise with most
adjoining countries from which
Chile has pointedly been excluded.
The Argentine armed forces re-
portedly are trying to strengthen
contacts with the Chilean mili-
tary in hopes of encouraging
preparations for a coup in the
event of the election of a FRAP-
supported president. PDC gains in
the congressional elections and
a PDC victory in the presidential
election would be little more ac-
ceptable to many Argentines and
Peruvians, who fear the left wing
of the PDC at least as much as
they fear the Communists- I
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Secret
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