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Approved For RUfe' 1 July 1982 The Post-Falklands Environment in Latin America I. In South America, despite cooler relations between Washington and several capitals, there is strong sentiment for repairing relations. -- The utility of the OAS has been lessened, but proposals to exclude the US are not likely to prosper. -- Although five countries withdrew from UNITAS naval exercises (to avoid high profile identification with US), this contrasts with the dispatch of Venezuelan military teams to El Salvador (where Caracas' concerns dictate cooperation with US objectives). II. Concerns over other territorial disputes have been heightened. -- Chile will press even harder for some US involvement in its Beagle Channel dispute with Argentina. -- If Argentina's Bignone manages a transition to civilian rule, we would not expect a return to Galtieri's militarily aggressive policies in the Channel. However, he might have to resort to some 25X1 SECRET 25X1 Approved For Rg12e sabre rattling on the Beagle dispute to dampen domestic discontent. Greater military cooperation between Peru and Argentina may persist, increasing Chile's fears that the two (and perhaps Bolivia) could move against it. Chile may take defensive measures that could escalate tensions. Elsewhere, the Falklands war probably has made leaderships more chary of initial use of force. -- Venezuela, however, is saying that historical errors by the US, as well as the UK are to blame for its longstanding territorial dispute with Guyana. Caracas hopes Washington and London ultimately will press Guyana to compromise. In Ecuador, even if the military comes to power, we expect the administration to avoid any border incidents in its territorial dispute with Peru. III. The Falklands episode will fade quickly in Central America, primarily because the-area is caught up in its own crisis and--despite some support for Argentina and .criticism of the US--depends heavily on Washington. In El Salvador, US support will remain the most critical element in the effort to avert Communist takeover. Approved For Release 2007/ ew will persist only in the absence of US assistance, not because of the Falklands. I zz= In Honduras-=, the Falklands aftermath coincides growin with g local perceptions of US unreliability, but this vi Guatemala, the Falklands has permitted the new government to reassert its claim to the former British colony of Belize, but direct action is unlikely; President Rios Montt hopes for a resumption of US aid in the growing war with guerrillas. Nicaragua was antagonistic toward the US before the Falklands, which simply provided another 25X1 l P 1 over the last few months. y Army strongman Daysi. Bouterse 25X1 Opportunity to criticize Washington and seek wider acceptance among fellow Latin countries. Suriname's ties with Cuba have expanded ra d turning g toward Cuba because he is attempting to consolidate his Power base and finds Cuban and advice appropriate models to his needs. SECRET