ARGENTINA: PERON RETURNS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R00967A001600030016-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 20, 2016
• Document Release Date: September 11, 2006
• Sequence Number: 16
• Publication Date: August 2, 1973
• Content Type: REPORT

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CENTRAL INTELLIGENCE AGENCY
OFFICE OF NATIONAL ESTIMATES
2 August 1973
ARGENTINA: PERON RETURNS
Since Peron's fall. from power in 1955, no party, no leader, and
no formula has succeeded in healing bitter political and social-divi-
sions, nor in raising Argentina anywhere near its very considerable
economic potential. The resounding Peronist electoral victory under
Hector Campora in March 1973, and Campora's resignation from office
on 13 July, open the way for Peron to return to the presidency for a
second effort at national reconstruction. Whether the Peronists of
the seventies will rerun the mistakes and excesses of the forties and
fifties, or whether they have learned from hard experience and can pro-
vide the peace.and.prosperity Argentines yearn for remains an open
question. Argentine history almost requires a certain degree of pessi-
mism, however.
True, the new-regime possesses greater assets for success.than did
the string of.failed governments -- especially its charismatic leader
and broad popular support. But it will face a number of formidable
problems. Peron must hold together the disparate and feuding elements
of his movement;. maintain his revolutionary mystique without becoming
the captive of.self-defeating xenophobia; contain both the terrorist
extremists and the. conservative military; and launch a belt-tightening
development program in a self-indulgent society. Additionally, the
77-year old Peron adds special personal liabilities as well as strengths
to the new regime.
The return of Peronism will in general have a negative effect on
US-Argentine relations. The implications for the US are discussed in
paragraphs 24-27.
This memorandum was prepared in the Office of National Estimates and
coordinated with appropriate offices in CIA. Comments may be addressed
to:
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New Politics, Old Problems
1. The restoration of Peronism through a decisive electoral
mandate changes the mold of Argentine politics -- a change now dra-
matized by the incipient return to the presidency of Peron himself.
For a generation the military tried to forge a political system that
would extinguish Peronism or at least exclude the Peronists from play-
ing a leading role. The effort failed. Peronism, perhaps revised and
matured yet symbolically intact, has returned to power and there is
little the military or any other political force can do about it.
The military and other traditional power brokers will try to accommo-
date the Peronists and will work at influencing them, but will see little
prospect of controlling or overthrowing their government. In short,.un-
less and until Peron and the Peronists manifest political bankruptcy,
the ball is theirs.
2. This does not mean the Peronists will have an easy time of
it. Argentina presents a challenging political arena for any government.
The country is characterized by few of the problems generally associated
with Latin America. The land is rich, there is sophisticated, European-
oriented culture, and the society is relatively homogeneous and free of
extreme economic. inequities. But if spared stultifying backwardness,
Argentina nonetheless suffers from accumulated frustration that gives
rise to demands for governments to deliver dramatically to make up for
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past failures to achieve national greatness. And at the same time,
the population is afflicted with a penchant for divisiveness and self-
indulgence that induces governmental ineptitude.
3. The showing of Peron's handpicked candidate Hector Campora at
the polls in March 1973, and even more, the enthusiasm expressed in July
to have Peron restored to the presidency, demonstrate the public's hope
that Peron and his movement will be able to perform some kind of poli-
tical miracle and propel Argentina to domestic prosperity and inter-
national prestige. Can the Peronists deliver?
4. Their assets are impressive by the standards of recent Argen-
tine governments. With their charismatic leader and their broad base
of support, the Peronists could operate in a practical fashion to achieve
the political peace and steady economic expansion that most Argentines
seek. Still,.if.the climate is one of opportunity, the history is.of
opportunity lost. And Peron's personal rule will add special liabili-
ties as well as strengths. Indeed, the signs of the first two months
of Peronist rule point as much to negative as to positive tendencies.
Peron, Master Manipulator
5. The step-down from the presidency of Hector Campora, Peron's
electoral stand-in, and the further legal maneuvering now in process
make Peron in effect president-presumptive. Peron -- though 77 years
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old and in parlous health -- has the personal authority to manipulate
his followers and define the course of his movement almost at will.
Even with presidential power at his disposal, Campora was merely a
political servant of Peron. Similarly, all important Peronist leaders
-- cabinet members, agency chiefs, provincial bosses -- appear to hold
positions solely at Peron's sufferance. So long as Peron is alive and
reasonably effective in office there is almost no chance that any other
leader can challenge him. In short, while he lives, Peron has the power
to be either the salvation or the ruination of the second Peronist era.
6. Though Peron retains his ability to manipulate other leaders
and to evoke mass support and energy, his 17 years of exile seem to have
solidified certain negative characteristics to the point of caricature.
His vanity comes across as megalomania, his opportunism appears un-
bridled, and he trades on unpredictability to keep everyone, including
his own lieutenants, off balance. Perhaps his sense of history will
motivate him to serve his country more honorably this time around,. or
at least to avoid past pitfalls and errors, But then his advanced age
and long absence from the country are bound to cause a certain misread-
ing of current problems and realities. For the most part he seems a
weak reed against which Argentines are leaning their hopes of national
renaissance.
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7. What about after Peron? Peron's death or incapacitation .
would launch a bitter, and perhRps bloody, power struggle for control
of the movement, and by extension, of the political system. A Peronist
leader who could maneuver his way to the presidency would stand.a good
chance to use his governmental position to take over titular control
of the movement...To retain control, however, he would have to provide
shrewd, even ruthless leadership in order to accommodate some challengers
and quash others.
8. In any case, Peron's first choice is not to designate a
Peronist crown prince. He wants to name Radical Party leader Ricardo
Balbin as his vice president. If this option is played out, it-contains
a built-in constitutional crisis in the event of Peron's incapacity:
Balbin would likely be unacceptable to many Peronists. Such a crisis
could speed the re-emergence of the military as the country's political
arbiters.
9. Peron.has the first majority government Argentina has known
since the early days of his first presidency (1945-1955). The Peronists
captured almost all the provincial governorships and a working majority
in the legislature,.a rarity not only for Argentina but for any of the
multi-party systems of Latin America. Transcending the fact of party
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strength is the psychological lift that the Peronist victory brought..
with it. The prospect of a fresh start has broken the population's
habitual cynicism.and won for the new regime active public support.
This palpable popular enthusiasm gives the Peronists the chance to se-
cure and further enlarge the broad constituency they now hold.
10. The Peronists are no longer the brambles they were in.the
forties and fifties but rather a cross-sectional, respectable alliance
in step with the national mood. Their basic cerebral impulses are
mdoerate and pragmatic. Much of what was bold and controversial in
Peronism twenty years ago now fits neatly with what has come to be.ex-
pected of governments in developing countries. Peron's old third-world
theme and aspirant independence from the super powers, for example, con-
stitute a widely. accepted concept. Urban labor, always a main bulwark
of Peronism, is no longer a revolutionary movement of the poor but.an
entrenched and potent interest bloc able to influence any Argentine
government with or.without Peron. The Peronists now include significant
numbers from the middle class and from big business. Yet the Peronists
also did very well among new young voters who are essentially anti-
establishment in their political views. The rural and urban poor are
still solidly with Peron.
11. The Peronists have the upper hand with the military, tradi-
tionally the arbiter of Argentine politics. Forced by public pressure
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to withdraw their stiff pre-inaugural conditions for stepping down, the
armed forces now-have little inclination to challenge the authority: of
the new government. Despite lingering reluctance to see Peronism re-
vived, the military leaders recognize the inescapability of the situa-
tion and are making.an effort to adjust. The widespread popular dis-
dain for the armed.forces and their own sense of failure during seven
years of direct rule.-- to control terrorism,. eliminate strikes, curb
inflation, and ease economic uncertainty -- have subdued what little
ambition remained. within the military to hang onto the government. It
will take a considerable accumulation of Peronist errors to give the
military a taste for ruling again.
12. The Peronists have set out to disarm other old enemies as
well. They were careful to patch old squabbles with the Roman Catholic
Church and with the local Jewish community. They have sought to dis-
sociate themselves from radical fringe elements that call themselves...
Peronist. They have seemed disposed to share the government with other
political parties in order to minimize carping from the opposition and
to spread around the responsibility for dealing with national problems.
13. Finally, Peron enjoys wide latitude on most issues, especially
in the important areas of foreign and economic policies. This is.partly
because the vague.Peronist platform of social justice, economic indepen-
dence, and fraternal internationalism has pinned him to no specific
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course of action. Also, the Argentines have no set expectations about
what Peron will come up with, but are disposed to give him a free hand.
In foreign affairs a broad consensus seems to prevail for a more asser-
tive Argentine projection into the international scene and there is no
important group pressing for any particularist alignments. Similarly
there is ample maneuvering room in economic matters as the country's
economic cycle turns toward a highly favorable agricultural and export
year. World food shortages offer privileged marketing opportunities
similar to those Peron enjoyed in the immediate post-World War II period.
Liabilities and Uncertainties
14. The many fallen governments of the recent past are testimony
to the difficulty of ruling the Argentines. Shifts in public mood are
quick and frequent.. The country's political and economic ills, while
not debilitating,: are many -- spawned by the Argentines' penchant.for
discord and by their small appetite for sacrifice. Various privileged
groups, notably the.pampered labor unions, are keenly sensitive to
government policies that affect their interests and often let loose
heavy pressures that undercut sensible measures before they can bear
fruit. In short, Argentines have demanded much from government but
have been willing to give little. Their rejection of corrective belt-
tightening schemes has left a trail of meandering economic policy.
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15. Among the.many uncertainties the country now faces, several.
are unique to Peronism. Even with Peron having stepped forward to re-
lieve the early ambiguity of leadership, party unity remains fragile,
as the. groups united for electoral convenience in the Peronist Front
now are vying to pull the movement in opposite directions. For one
thing, the militant Peronist youth, upon whom the electoral victory was
largely dependent, want to throw their weight around, Labor's.expecta-
tion of a dominant role in the movement could pit it against the youth
and other equally. expectant and rival groups in the front. Even within
the labor movement, rival Peronist factions are already at each others'
throats in the important industrial city of Cordoba.
16. The competing policy requirements for consumption vs. develop-
ment and for order vs. change will exacerbate factional divisions and
jealousies among the sectors. In this regard, the excess symbolic bag-
gage of Peronism could be a major source of trouble. Pragmatic in-
stincts can be overwhelmed by the movement's visceral need to emphasize
a special mystique and to create an aura of change. For example, poli-
cies aimed at placing Argentina's economic independence in bold relief.
could be costly, especially as the economic cycle rolls past its now
favofable turn. Flashy social welfare programs and prickliness toward.
business could-discourage domestic entrepreneurs as well as foreign in-
vestors.
DUr
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17. The most immediate problem facing the Peronists is the re-..
fusal of some terrorist groups to quit their commitment to revolutionary
violence. The need rapidly to assert control over these rebels has pro-
duced an air of crisis that might prolong the government's shake-down
period for an unsettling length of time. It has to cope with the revo-
lutionary terrorists on the one side and with the conservative military
-- their prime target -- on the other.* Initially, the Peronists seemed
intent on dealing with the terrorists without recourse to the armed:forces,
through partisan-commandos from their youth and labor ranks. But the
military probably would field their own corps of counterterrorists:in .
response to any softness toward the problem exhibited by the government,
especially if active and retired officers continue to fall as victims.
In these circumstances, a triangle of retributary violence among.the
Peronists, the military, and the terrorists could convert the present
occasional chaotic disruptions into an endless cycle of vengeance and
There are five major extremist groups. The People's Revolutionar
Army (ERP), the most active and largest 25X1
is split into several Marxist factions. The Armed Forces o L2 er-
ation (FAL).is a Marxist-Castroite group, 25X1
Three groups are nominally Peronist: The -erontst Arme Forces (FAP)
the Montoneros, a small ultra-nationalist 25X1
Catholic group; and the Revolutionary Armed Forces (FAR) 25X1
Following the violence that attended Peron's homecoming on
2D June, the Montoneros indicated a willingness to Zay down arms.
The ERP and the FAP, however, signalled their intention to pursue a
violent course.
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havoc. Perhaps envisioning this, Peron now appears to be making his
peace with the armed forces, on whom he may call for increasing support
in the battle against the terrorists.
A Clouded Perspective after Two Months of Peronist RuZe
18. The first phase of the Peronist administration, with Campora
as president and Peron as power behind the throne, developed in a manner
that pointed up both the liabilities and assets that the Peronists have
to contend with. The regime's opening moves showed a clever mixture of
boldness and moderation and the Peronists seemed at first confident.and
united. The government dealt shrewdly with the armed forces, firmly.tuck-
ing them back.in the barracks while restructuring the military: command
in a manner that did not offend them. The Peronists read accurately.the
public desire for a.libertarian era at home and for vigorous diplomatic
activity abroad.. First acts in office, though in good part a response
to pressure, nevertheless served to dramatize the new politics: They
moved swiftly to empty the prisons of political captives, to erase
limits on political freedom, and to declare an amnesty broad enough to
cover wanted political criminals as well as Peron himself. They asserted
a catholic diplomacy by establishing relations with Cuba, East Germany,
and North Korea and-promising closer links with South Africa and Arab
countries.
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19. On the other hand, Campora was barely established in office
before the problems. associated with Peronism began to emerge. The
President seemed unable or unwilling to discipline militant groups
initiating actions on their own that were embarrassing to the government.
Stories spread about Peron's dissatisfaction with Campora's deportment
in office. The most.negative development came when Peron's homecoming
on 20 June degenerated into a bloody fray, apparently between Peronist
factions. The obvious need for clear leadership and a strong hand prob-
ably contributed to.the rapidity with which Peron has moved to formalize
his de facto position of power.
20. Although the leadership, including Peron, feel compelled to
tighten their control over dissidents and militants and probably intend
to hold to a generally pragmatic, even conservative, course, they will.
face imposing obstacles, The way they apply their vague program for.
social justice, economic independence, and national reconciliation
could come to depend more on the kinds of pressures and reactions each
step produces at home and abroad than on any grand design. The Argen-
tines' nationalist aspirations have many parallels with those in Mexico,
and Argentina seems to want the same somewhat contradictory goals:
closer control over business, but more business. Unlike Cuba, Peru,.
and Chile, Argentina has no particular foreign-owned devil affronting
national dignity. (And the US, accounting for only about half the
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foreign investment, is a less conspicuous target.) The economy-is
already under heavy state control, with government primacy in communi-
cations, aircraft. production, shipbuilding, railroads, steel, energy
and petro-chemicals, and partial ownership in a wide range of other
industrial and financial activities.
21. Nevertheless, the atmosphere is one of increasing nationalism.
Indeed, the Peronists' first proposals indicate that the threat.to the
welfare of foreign investors -- despite their relative unobtrusiveness
-- is real, not merely rhetorical. Legislation has been drafted to es-
tablish a system. for tight control and direction of all foreign invest-
ment. Under the draft terms, certain areas are closed to foreign. capital;
strict limits for the repatriation of capital and remittance of profits
are established; divestiture of majority foreign ownership and control
is required inmost cases; and management decisions for companies.with
only minority foreign ownership will be bound by new governmental re-
quirements and controls. Contrary to Peron's expressed desire to.attract
new capital,. especially from Europe, the basic principles of the-draft
laws are too restrictive to be attractive. Moreover, the detailed.,. .
nature of the proposed regulations seems to leave little doubt that they
were drawn so as to be applied vigorously, damaging though they would.
be to the investment climate and suicidal though they might prove for
Argentina's own development aspirations.
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22. The initial emphasis on domestic programs is for austerity.
-- increased productivity, curbs on inflation, and a slowdown on-.the
growth of consumption. In his first regime, however, Peron introduced
the consumer bias into Argentine society, and it will be extremely dif-
ficult for him to hold the line for long against the demands from or-
ganized labor for more, and the pressures from the left for social
programs to help the.hardcore poor. It would be more in character for
the Peronists.to.subordinate such concerns as monetary policy and the
business climate to.partisan social and political objectives, es-
pecially as resistance to the belt-tightening develops.
23. The kinds of pressures the government will be subjected-to
from the youth and other radicals are already visible. The more .
activist among the Peronists have occupied government offices, class-
rooms, hospitals, and radio stations demanding the rapid ouster of.all
remnants of the old regime and the.imposition of Peronist directors.
It is not hard to see this kind of militancy catching on and causing
a series of complications for the'sober efforts of the moderate.Peron-
ists. With Peron in personal command, the militants are likely to find
it harder to convert.the movement to their liking. Yet, even Peron will
be hard pressed.to effectively control and discipline all these dis-
parate elements.
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Implications for US-Argentine Relations
24. US-Argentine relations are bound to suffer a series of set-
backs under Peronism. Whether problems develop as minor or major will
depend on which Peronist clique is favored by Peron in the foreign
policymaking sphere. At a minimum, the US Government will be in for
some oratorical buffeting as Argentina at times lines up with or:tries
to influence sibling "revolutionary" regimes in the hemisphere. More-
over, the course of US-Argentine relations will be sensitive to-inter-
course between.Brazil and the US. The traditional rivalry between
Argentina and Brazil,.heightened in Buenos Aires by the economic.boom
in Brazil, has-now sharpened in Brasilia because of Brazil's dis-
trust of Peron. The Argentine dislike for what they call the US-Brazil
axis has already.led the Peronists to talk of a strengthened.union.of
Spanish-American nations. Finally, US investors will suffer. whichever
of the new penalties Peron chooses to enforce against foreign firms
in Argentina.
25. Possibly.the Peronists interpret recent statements of US
willingness to accept diversity in the hemisphere as meaning that
Washington will tolerate a certain amount of flak from new Latin Ameri-
can governments in search of national identity. They may feel the need,
during their early.months in office, to project themselves as vigorous
movers and shakers while they examine, behind the scenes, their own
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situation at home and their options abroad. In this case, they might
try to signal the US that they intend to avoid extreme positions in
bilateral affairs and delay implementation of the terms of nation-
alist legislation. Peron has already dropped hints of his own will-
ingness to maintain cordial ties with the US as a means of helping the
investment climate,
26. But even if Peron begins with friendly overtures, the US
will have to be prepared for his aboutface at any time. Peron's
capacity for holding to incompatible positions is legendary; indeed,
inconsistency and surprise are his method of operating. Therefore, it
is possible that sooner or later he will be willing to incur the costs
of playing the complete antagonist to the US. He may conclude that,
over time, contention in his own movement will so require, or that
jumping on the anti-US bandwagon with both feet is necessary in order
to stay ahead of other "independent" regimes in South America with
aspirations for hemispheric and Third World leadership. In this
instance, Peron might opt for full and rapid nationalization or trump
up charges of US manipulation in Argentine political affairs, He
might also attempt to lead other Latin American governments to oppose
the US more vigorously in international forms.
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27. The US has only modest direct stakes in maintaining. the
relatively cordial relations with Argentina that characterized the
period of military-rule. There are no immediate national security
concerns, no major official installations, no dependency on Argentine
exports. But private investment, though highly diffuse, is consider-
able ($1.4 billion). And the cost to our regional policies would be
considerable if Buenos Aires, like Havana and Santiago, became hard-
line antagonists. To.a certain extent, the US can avoid contributing
to an adversary relationship with Argentina over the new government's
symbolic manifestation of independence. Along with forebearance, the
US can also make it clear that Argentina too benefits from past bi-
lateral ties. Peron's view of his interests vis-a-vis the US can
make or break the continuance of a fruitful relationship.
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