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Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Directorate of Secret Intelligence Mexican Policy Toward Central America State Dept. review completed Secret ALA 82-10131 September 1982 Copy 335 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Intelligence Directorate of Secret Mexican Policy Toward Central America This assessment was prepared b Central America Working Group, Middle America/Caribbean Division, Office of African and Latin American Analysis. Comments and queries are welcome and may be directed to the Chief, Middle America/Caribbean Division, ALA, on Secret ALA 82-10131 September 1982 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret Mexican Policy Toward Central America Key Judgments Mexico's assistance in toppling the Somoza regime in Nicaragua in mid- Information available 1979 signaled a new course of providing diplomatic, political, and economic as of 15 September 1982 aid to leftist governments and revolutionary movements and further was used in this report. distancing itself from conservative governments in the region. This shift marked a significant departure in the level of Mexican activity and extent of its commitment in Central America. 25X1 The intellectual foundation of Lopez Portillo's policy, which reflects broadly shared beliefs within the Mexican governing elite, combines a pragmatic calculation of Mexico's national interest and historically rooted sympathy for revolutionary movements. The slowing of revolutionary momentum in Central America in recent months-although causing some reassessment-has not altered Mexico's contention that sooner or later the radical left will come to power in much of the region. The fact that the Mexican Government does not feel threatened by this prospect stems partly from its view that revolutionary leaders are young, impressionable, and susceptible over time to moderating influences from abroad. We believe that Lopez Portillo, in line with his own social democratic 25X1 leanings, would prefer that the less extreme elements in the revolutionary coalitions dominate. But his confidence in Mexico's ability to reach an arrangement even with radical governments is reinforced by the longstand- ing ties Mexico has had with Castro's Cuba. President-elect de la Madrid is publicly on record that he agrees with the basic thrust of his predecessor's approach toward Central America. We expect, therefore, that Mexican policy will remain divergent from that of the US after he takes office this December. Shades of difference between the two presidents' policies are likely to emerge over the next few years, however; and de la Madrid, in our view, probably will temper Lopez Portillo's activism in some instances. This judgment is based on our belief that the restraints on Mexican policy will increase during the next administration. 25X1 Mexico's serious economic difficulties are bound to absorb de la Madrid's attention for the foreseeable future, and Mexico's growing need for US economic cooperation should lead to greater caution in undertaking Secret ALA 82-10131 September 1982 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 initiatives in Central America that would strain bilateral relations. Con- servative groups at home, especially the private. sector and the military, increasingly worry that turmoil in the region will affect Mexico's security; we expect these conservatives to become more assertive-and probably more influential-under de la Madrid. Other factors are the cool-to-hostile response in Latin America to Mexico's policy, growing skepticism about Central American revolutionaries-especially Nicaragua's Sandinistas- among some West European governments and parties that have cooperated with Mexico, and the strain on Mexico's foreign assistance programs caused by its economic crunch. Prospects for narrowing differences between US and Mexican policy are least promising, in our view, in regard to Nicaragua. Despite his misgivings over Sandinista repression and Cuban influence, Lopez Portillo has shown no inclination to reduce Mexico's political or economic aid to Managua, which he has labeled a "true cornerstone" of Mexican foreign policy. De la Madrid has promised to continue the aid, but there are tentative indica- tions that he may be more inclined to use Mexico's resultant leverage to try to moderate Sandinista actions. Defense of Nicaragua-like that of Cuba-is rapidly becoming an integral part of the ruling party's revolu- tionary tradition With Guatemala bordering it on the south, Mexico has a less romantic view of the revolutionary movement there. Madrid, meanwhile, has signaled his intention to provide a "model of coexistence" in Mexico's relations with Guatemala, 25X1 25X1 25X1 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret Mexico's favorable attitude toward Honduras's restoration of a democratic process is qualified by concern that Tegucigalpa is aiding the Salvadoran counterinsurgency effort and harboring anti-Sandinista insurgents that have been harassing the Nicaraguan Government. We believe that Mexico probably will remain careful, however, not to line up against Honduras in its dispute with Nicaragua. Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret Recent. Policies Toward the Region 1 Mexican Relations With Key Central American Countries 11 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Mexico Pacific Ocean r uatan[a1a Iina~Yan Guatemala - w San Salvador* l HQndur El .alvade *Tepuaipaipa Managua ~y Nicara Atlantic Ocean re n 10 =-' Venezuela -' Colombia .. Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret Mexican Policy Toward Central America For the past three years or so, that is, throughout the second half of the Lopez Portillo administration, important differences between the United States and Mexico over Central America have caused friction in bilateral relations ese i erences are a product of divergent interpre- tations of the causes of political instability in the region, the intentions of revolutionary leaders and how best to moderate their behavior, the extent and significance of Cuban and other Communist involve- ment, and-perhaps most important-the conse- quences of radical leftist victories for Mexican and, ultimately, US security. In assessing Mexico's policies and actions in Central America since the spring of 1979, this paper examines the motives for-and the limits on-Mexican behavior, discusses the prospects for Mexico's policy toward Central America after Miguel de la Madrid takes power as President on 1 December, and analyzes the implications of this transition for US policy toward the region. The appendix provides a comprehensive review of the evolution of Mexico's policy toward four Central American countries, facin revolutionary unrest, namely, Nicaragua Guatemala, and Honduras. Recent Policies Toward the Region Mexico's support for the radical left in Central Amer- ica is most dramatically demonstrated in the Nicara- guan ases, but the bias is clear in attitudes toward Guatemala and Honduras as well. F_ Support by the Lopez Portillo government for the Sandinistas, generous even during the Nicaraguan insurrection, has not faltered even when Mexico has found itself out of step with Latin American and other allies. Mexican leaders characterize their backing as Mexico has paid relatively less attention to Honduras, although Lopez Portillo has taken an active interest in the transition to elected civilian government. His 25X1 basically supportive approach toward the Honduran Government, however, gives way to overriding con- cern when Honduran policies affect Nicaragua's San- dinistas and El Salvador's revolutionary coalition. For example, Lopez Portillo has on several occasions 25X1 unconditional, and their vocal defense of Nicaragua tends to rise and fall with the Sandinistas' public concern over US hostility. Nicaragua's international respectability is bolstered considerably by Mexico's stance, especially in Western Europe where many governments look to Mexico for guidance on Latir. By meeting with Guatemalan leaders-including for- 25X6 mer President Lucas-Lopez Portillo has made spo- Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 called for the disbanding of Nicaraguan "counterrev- olutionary" groups in Honduras and the US Mexican Motives and Limitations The late spring of 1979 represented a watershed in Mexico's policy toward Central America. Beginning with Mexico's assistance in toppling former Nicara- guan President Somoza, the Lopez Portillo adminis- tration embarked on a course of providing diplomatic, political, and economic assistance to leftist govern- ments and revolutionary movements and further dis- tancing itself from conservative governments in the region. Although consistent with the Mexican Gov- ernment's sentiments toward Castro's Cuba and Allende's Chile, this policy marked a significant departure in level of activity and extent of commit- ment. In adopting this approach, which in its broad contours probably will guide at least the next adminis- tration, the Lopez Portillo government based its ac- tions on several deeply held beliefs and on a careful assessment of Mexico's national interests. Revolutionary Leftist Victories Are Inevitable. Presi- dent Lopez Portillo and Foreign Secretary Castaneda have publicly expressed their conviction that funda- mental social change is inexorably under way in Central America. Both men believe that the natural outcome of the process-if it is permitted to run its course-will be the emergence of regimes to the left of anything currently existing in Latin America, except Castro's Cuba. Guided by their political phi- losophy-which resembles that of leftwing European Social Democrats-and their longstanding abhor- rence of rightwing military rule, Lopez Portillo and Castaneda have said that they believe most Central Americans will benefit from revolutionary transfor- mation. Mexico's staunch opposition to US intervention to counteract revolutionary forces is, therefore, in part morally inspired. It is given special emphasis by Mexico's own historical experience with the US. It also stems, however, from pragmatic calculations. Mexican policymakers publicly have made clear that they believe such outside intervention only delays the inevitable and at the same time permits the more doctrinaire elements in leftist coalitions to dominate. Thus, they contend, efforts to thwart the revolution- 25X1 ary process, even if immediately successful, will, over time, only produce eventual outcomes more radical than those that would otherwise emerge. Satisfied that the revolutionary tide in the region cannot be stemmed, we believe Mexican policymakers almost certainly have looked to their country's more than 20-year relationship with Castro's Cuba as an instructive precedent. Mexico's outspoken political 25X1 support, economic and technical cooperation, has given Cuba a major stake in maintaining rien - ' es and forgoing subver- sive activities against the Mexican Government. We believe Mexican leaders are mindful of the risks in assisting takeovers in Central America by Cuban- style governments-especially in Guatemala on their southern border. From their perspective, however, attempting to thwart the insurgents-and inevitably 25X1 failing-would needlessly invite externally supported subversion against Mex1co.F_ 25X1 Revolutionaries Are Susceptible to Moderate Influence. The willingness of Mexican policymakers to run this risk partly reflects their benign view of insurgent forces in Central America. It also stems from confidence in Mexico's ability to moderate and even co-opt radical groups-a view that has emerged from dealings with domestic leftists. Lopez Portillo and Castaneda have told US officials that they view most insurgent leaders as, above all, nationalists- men who will want to avoid repeating Cuba's mistakes of excessive political dependence on the Soviet Union and debilitating economic stagnation in favor of poli- cies more in tune with their own domestic realities. The Mexicans insist that early US pressure distorted Castro's original intentions and forced him into the Soviet camp. They argue, therefore, that a more flexible strategy this time by Western governments will moderate the radicalization of the region. Underlying Mexico's perspective is the view that many of the revolutionary leaders are young, impres- sionable, even malleable-an interpretation that they will not easily abandon judging from their continuing tolerance for Sandinista actions and their lingering view of Castro. For Mexican policymakers then, the insurgents' lack of firmly rooted ideological beliefs, Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret Mexican Foreign Secretary Jorge Castaneda The onset of Mexico's activism in Central America coincides with the appointment of Jorge Castaneda as Foreign Secretary in May 1979. He has been a key force in shifting Mexican policy toward greater sup- port for the revolutionary left. Disappointed at the obstacles to more sweeping social transformation in Mexico, Castaneda has told US officials that he believes in bringing revolutionary situations in Cen- tral America to a boil. together with the support and patience of nonradical governments, leave open the possibility for the emer- gence in time in Central America of what Lopez Portillo has labeled "third alternatives"-regimes less radical than Cuba but better able in his words to "implement egalitarian solutions than Mexico."F__ Political and Psychological Payoffs. We judge that, in the view of the Lopez Portillo administration, the risks inherent in a generally supportive approach toward the radical left in Central America are offset by immediate advantages to the government. At home the policy has helped deflect potential leftist criticism of the administration's shortcomings in socioeconomic areas. It has also strengthened the government's position in trying to appeal to politicized youth at a is ess skeptical than Lopez Portillo of Cuban-and even Soviet-motives, and he has been instrumental in promoting closer communications with Havana. time of growing concern about sustaining public support. Moreover, by fulfilling the government's rhetorical commitment to its revolutionary heritage, we believe that the approach has provided psychologi- cal satisfaction to members of the Mexican governing elite by assuring them of a policy that is to the left of the US. 25X1 Internationally, the policy responds to a frequently expressed belief by Mexican leaders that the country's size entitles it to greater influence in shaping events in the region than it exercised before 1979. In crafting a strategy of assistance-short of military aid-to the radical left, Mexican policymakers also hope to in- crease Mexico's prospects for a leadership role on a Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 ly young party activists deliberately failed to coordi- nate their activities with their counterparts in the Foreign Ministry, whom they view as "hidebound diplomats. " office was significantly expanded, and at least initial new responsibilities, the staff of its international as frequently as four times a year. Befitting the PRI ~ ragua's Sandinista National Liberation Front (FSLN) but excluding guerrilla groups-and meets ber parties-ranging from Social Democrats to Nica~ Lopez Portillo's sensitivity to potential criticism of official Mexican contacts with the radical left in Latin America has caused him to grant a new role in foreign policy to the ruling Institutional Revolution- ary Party (PRI). As president of the PRI from February 1980 to March 1981, Gustavo Carvajal took the lead in cultivating leftists in the region, arguing that Mexico's objective was to strengthen democratic elements within the revolutionary coali- tions. To institutionalize these contacts, PRI spon- sored the creation of the Permanent Conference on Latin American Political Parties (COPPPAL) in Oc- tober 1979. COPPPAL now has more than 29 mem- broader international stage. By working independent- Limits on Mexican Policy. At the same time, several ly of the US and Venezuela and challenging their factors have, in our view, restrained Mexican actions thesis that a centrist alternative can be molded in in Central America Central America, Mexico has been able to enhance its image among West European and nonaligned states.' This sensitivity has increased as the US has emphati- cally demonstrated its determination to resist radical leftist gains in the area. (s) 25X6 25X1 25X1 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret We continue to believe that events over the past few years have not caused Mexican leaders to revise their fundamental assessment of the historical forces at work in Central America. Nonetheless, the failure of trends in some important instances to correspond to their expectations has prompted misgivings. Most notably, senior Mexican officials have privately ex- pressed surprise at the massive turnout for elections in March 1982 in El Salvador and at the inability of the Salvadoran radical left to broaden its popular base according to US Embassy sources. Mexico s lack of success in rallying support in the hemisphere for its Central American nolicv_ in The well-publicized peace initiative that Lopez Por- tillo unveiled last February-advocating direct US- Nicaraguan talks and offering Mexico's good of- fices-established the framework for Mexico's policy toward Central America through 1 December when he leaves office. In the midst of Mexico's most serious economic crisis in modern history, Lopez Portillo continues to be buoyed by the international acclaim given his prescription for easing tension in the region. He underscored this point-while emphasizing that US cooperation on economic matters will not cause his government to alter its foreign policy-by giving prominent treatment in his 1 September 1982 State of the Nation address to a defense of his policy toward Central America and Cuba. 25X1 Lopez Portillo's recent success in persuading Venezu- elan President Herrera Campins to join in trying to promote a dialogue between Nicaragua and Honduras presumably has given new impetus to his goal of acting as a peacemaker in the region. We believe that Lopez Portillo's desire to build his image as a states- man and his conviction that history will vindicate his policies will ensure that his government will push actively for support of his proposals during the re- maining weeks of his term. 25X1 Lopez Portillo's nationalization of the domestic banks on 1 September and his subsequent moves to rally 25X1 support among leftwing groups in the Institutional ca. The quixotic nature of the Mexican President's 25X1 Revolutionary Party (PRI) have raised concerns that he will take equally dramatic steps in Central Amer-- recent actions make it difficult to rule out entirely a 25X1 radical new Mexican foreign policy initiative Lopez Portillo would have to weigh the domestic benefits of solidifying his credentials with leftists inside and outside the PRI against the risks of antagonizing the military at a time when social unrest is a growing danger. 25X1 Based on de la Madrid's relatively extensive public and private comments, we do not anticipate a major overhaul of Mexico's policy toward Central America Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Excerpts from Lopez Portillo's 1 September 1982 State of the Nation speech regarding Central Ameri- ca and US policy toward the region. On El Salvador: "Today when it is already evident that no other solution [than negotiation] is feasible, our proposal [the Franco-Mexican declaration of August 1981] grows even more realistic and has become a call of alarm. " On Nicaragua: "In good times and in bad, we have remained at the side of our Nicaraguan brothers. Their government, supported by their people, has fulfilled its commitments.... Don't let it be besieged by economic pressures or threatened with armed intervention by artificial dissidents. Leave it alone. To paraphrase Lincoln, I insist that no country is so good that it can intervene in another without its consent." after Lopez Portillo leaves office. We nonetheless believe that the odds are better than even that over the next two years or so de la id will temper somewhat Mexico's approach We look for de la Madrid-like Lopez Portillo in the early stages of his presidency-to pursue initially policies that emphasize social reconciliation, improved rela- tions with the US, and relatively less attention to On Cuba: "We rejected isolation and strengthened the ties that historically link us to those heroic people. Since 1980 we have carried out secret efforts seeking the end of the absurd silence that prevails between the great nations [the US and Cuba] that are separated by only 150 kilometers of the Caribbean. We have also warned, however, that greatness is not equivalent to either force or size and that the differ- ences between Cuba and the US make reciprocal restraint and responsibility obligatory. " On Lopez Portillo's 21 February peace proposal: "It is evident to all that the alternative to negotiation was and is regional war. We assumed our obligation of doing everything possible to avert the disaster.... No one can ever reproach Mexico for not doing everything possible to avoid the cataclysm. " foreign policy. In this framework, we believe it partic- ularly likely that de la Madrid will eschew splashy initiatives that promote confrontation with Washing- ton and heighten political polarization at home, Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret Our estimate of de la Madrid's probable stance on foreign policy issues is based in part on his back- ground. Although his foreign policy experience is largely derived from his international economic exper- tise, de la Madrid has a greater initial familiarity with the US than Lopez Portillo-a fact underscored by his fluency in English and his graduate education at Harvard. Widely viewed as slightly right of center on political and economic issues, de la Madrid in Sep- tember 1981 was greeted enthusiastically as the rul- ing party's presidential candidate by the business community, whose leaders continue to hold him ir25X1 high esteem. Senior military leaders, many of In addition-and of special importance- Mexico's economic difficulties should not only absorb the bulk of de la Madrid's energy but should, in our view, reinforce his desire for cordial relations with the US. ~ whom Shope to have a greater voice on national security matters, have also been heartened. US Embassy sources report that leftists inside and outside the ruling party resent- ed his selection. During the campaign de la Madrid succeeded in patching up differences with the party' left wing-especially with labor leaders, who are likely to judge de la Madrid far more on his economic policies than on what he does in Central America.. 25X1 Bernardo Sepulveda, who is widely regarded as the leading candidate to head the Foreign Ministry under de la Madrid, is a strong Mexican nationalist but-in the view of the US Embassy-is more moderate than Castaneda and generally balanced on issues involving the US and Mexico. Currently serving as Ambassador to the US-where he was sent to gain additional 25X1 experience-the 40-year-old Sepulveda was de la Madrid's chief foreign policy adviser during the early stages of the campaign. He demonstrated in 1975 an early interest in the US by helping to establish an American Studies program at a Mexican research center. 25X1 25X6 Although the new president will want to avoid alienat- ing the party's left wing by any sharp reversal in Central America, we judge that his more conservative instincts, together with his desire to halt growing political polarization, will make him more open than Lopez Portillo to calls for moderation from the mili- tary and the private sector. As PRI's International Affairs Secretary-a post he held from soon after de la Madrid's selection until March-Sepulveda presented a COPPPAL (Perma- nent Conference on Latin American Political Parties) declaration in February that sharply criticized US policy toward Central America. In addition, many of the deputies he selected to assist him in Washington are strong supporters of Mexico's present stance 25X1 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 toward Central America. Sepulveda's first major speech after becoming Ambassador, however, was sufficiently pro-US to draw fire from the Mexican press, and in so doing he may have damaged his prospects or becoming foreign secretary. UN Ambassador Porfirio Munoz Ledo is also known to be seeking the post, but his ties to former President Echeverria and others in the left wing of the PRI militate against his selection, in our judgment. In his public remarks on foreign policy de la Madrid has emphasized continuity with Mexican tradition and with Lopez Portillo. In January 1982 he said that he wants to maintain an "equilibrium" that will enable Mexico to have "very cordial" relations with the US, as well as "excellent friendships" with Cuba and Nicaragua. Emphasizing that Latin America, and especially Central America, will be his major foreign policy priority, he stated in early June that he would adhere to Mexico's fundamental tenets, name- ly, self-determination-the right of each country to choose its form of government, opposition to outside intervention, and promotion of peaceful solutions. In March he echoed Mexico's deep-rooted opposition to US military intervention by stating that "unilateral actions of the great powers for ideological and nation- al security reasons create obstacles to real and demo- cratic solutions." Mexico's current economic crisis is not likely to have a major impact on its Central American oil facility but will reduce other credits that Mexico extends to the area. In early August-on the eve of its second devaluation this year-Mexico announced that it was extending for a third year the same concessional terms for its most important aid program, the joint oil facility with Venezuela. By financing 30 percent of its oil sales to nine countries in the Caribbean Basin in 1981, Mexico granted concessional terms worth an estimated $190 million. Lopez Portillo cited the ex- tension of this program in his 1 September speech in emphasizing that Mexico's financial position would not keep it from making~a regional aid commitment. Because the deferred payments represent just 1.3 percent of Mexican oil exports, a change in the program would not substantially increase revenues. Moreover, it is unlikely Mexico would risk losing these customers. On the contrary, recently Mexico has been improving terms for other customers in an attempt to boost its share of the world oil market. F Defense of Nicaragua-like that of Cuba-is rapidly becoming an integral part of the ruling party's revolu- tionary tradition, and de la Madrid has been particu- larly emphatic in stressing support for Nicaragua in the face of what he perceives as growing US pressure. In late June he publicly promised to reject foreign military or political intervention in Nicaragua and to 25X1 25X1 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Secret continue providing economic assistance. At the same time, however, tentative evidence sug- gests that de la Madrid will be more inclined to exert leverage with the Sandinistas to get them to meet the standards of a "third alternative." Mexico has a duty to provide a "model of coexist- ence" in its relations with Guatemala and that conse- quently "our friendship and cooperation will in- crease." A month later he promised not to allow any trouble against Guatemala to be organized in Mexico. Since Rios Montt took power in March 1982, de la Madrid has reiterated these sentiments. Rios's will- ingness to pursue a dialogue with the COPPPAL 25X1 affiliated Social Democratic Party is likely to rein- force de la Madrid's desire to strengthen ties and may lessen resistance from the left wing of the PRI. 25X1 A decision by de ]a Madrid to reduce support for 25X1 revolutionaries in Central America-a decision we would not expect early in his term-would be a clear boost to US policy. It would also deal a significant blow to Cuba and its allies, who since before the fall of Somoza have counted on Mexico to help discredit governments hostile to Havana and bolster the inter- national legitimacy of the radical left. If de la Madrid follows through with his apparent 25X1 intention to normalize relations with the Rios Montt government, this would facilitate Guatemala's efforts to improve its image in the US and Western Europe. Such a move might thereby reduce opposition from abroad to providing limited military assistance to Guatemala and encouraging Spain to restore its Em- bassy to the ambassadorial level. It is in his public comments on Guatemala that de la Madrid has been the most open in suggesting a probable policy shift. In January he stated that Secret 25X1 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Prospects for narrowing differences between US and Mexican policy are least promising, in our view, in regard to Nicaragua. On the one hand, Mexico may become increasingly inclined to reduce its political and economic support for the Sandinistas if their pattern continues toward increasing repression of moderate groups, more open identification with Marxist-Leninist ideology, and growing reliance on Cuba and the Soviet Bloc. At the same time, we expect de la Madrid to fulfill his promise to provide strong verbal support if he deems that the Sandinistas are under US-inspired military pressure. Mexico's stance toward the CBI. The Lopez Portillo administration has maintained a 25X1 generally reserved attitude toward the US-sponsored Caribbean Basin Initiative (CBI). Mexican officials have praised US efforts to use economic assistance to alleviate what they consider the underlying cause of political instability but criticize the US for excluding Cuba and Nicaragua as recipients. Mexico also points to its major financial commitment to the Mexican- Venezuelan oil facility to justify lack of interest in contributing to the CBI. This reasoning, along with Mexico's traditional desire to pursue policies toward the region that are independent of the US, make it 25X1 unlikely, in our view, that de la Madrid will alter Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret Appendix Mexican Relations With 25X1 Key Central American Countries During the 25X1 Lopez Portillo Administration 25X1 25X1 Nicaragua The effort by Mexico and Costa Rica to persuade Mexico's approach toward the Sandinistas represents other Latin American governments to cut their diplo- the first test of Lopez Portillo's concept of supporting matic ties to Somoza succeeded when four other Latin revolutionary movements as a "third alternative" in American governments did so. The Mexicans also Latin Americaf took the lead in the Organization of American States (OAS) on 23 June 1979 to defeat a US-supported _]By offering an alternative pole of attraction, we believe that Mexico is trying to encourage the Sandinistas to avoid exclusive reliance on Cuba and the Soviet Bloc. In our view, it also hopes over time to persuade the Sandinistas to reach an accommodation with their domestic opponents-although on FSLN terms. Toward this end Mexic has repeatedly counseled the Sandinistas against eliminating political pluralism but has been slow to use its leverage on this and other issues. in recent months Mexi- can leaders have been disquieted by the preeminent influence Cuba has established in Nicaragua and the Sandinista evolution toward totalitarianism. But we judge that the prestige the Lopez Portillo government has invested, coupled with its analysis of trends in the region, will continue to prevent it from seriously reexamining its present policy. The Lopez Portillo government's success in helping to topple Somoza bolstered its confidence in pursuing an active policy in Central America and set guidelines for support that it subsequently has given to other Central American revolutionaries. (c) The Lopez Portillo administration's decision to break relations with Somoza on 20 May 1979-at a time when only Costa Rica had taken such a step-was a major benchmark in Mexico's policy in the region. peacekeeping presence in Nicaragua. Courting the Sandinistas. After the Sandinistas took power on 19 July 1979, Lopez Portillo quickly sent Foreign Secretary Castaneda and party chief Carva- jal to Nicaragua to determine the new government's reconstruction needs. On 24 January 1980 the Mexi- can President visited Nicaragua to firm up offers of economic aid and to articulate publicly the basis of Mexico's policy of "unconditional support." He un- derscored his desire that Nicaragua represent a new Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 nationalist revolutionary model independent of Cuba and the US by publicly telling the Sandinistas that they could be the "protagonists" of a new Latin American future-a "third turning point." To accom- plish this, he urged them-in what was to become a recurring message-to avoid the "failings of the Mexican and Cuban revolutions" by maintaining liberty and pluralism along with justice, equality, and security. By implicitly linking Mexican assistance to the pres- ervation of pluralism, Lopez Portillo doubtlessly hoped to discourage the Sandinistas from establishing an orthodox Communist regime. Differences between Mexican and Venezuelan policy toward Nicaragua help illuminate the kind of political system the two regional powers have tried to promote. Unlike Venezuela, whose diplomats have played a major role in unifying and assisting moderate groups in Nicaragua, Mexican officials until recently have shied away from contacts with regime opponents and continue to limit their backing exclusively to the Sandinistas. These differences highlight the fact that Mexican policymakers do expect competitive democracy to emerge in Nicaragua but, reflecting Mexico's own domestic experience, would be content with a one- party state where some marginal concessions, but no real powersharing, were granted to opponents. Thus, even those moves that the Mexican Government has been willing to take in defense of political pluralism have not been aimed at diluting Sandinista domina- tion. threatened by the US co has supplied psychological comfort to the Sandinis- tas by offering vocal public backing when they feel Mexican officials have explained their efforts to de- velop party-to-party links with the FSLN-bilaterally and through the Permanent Conference of Latin American Political Parties (COPPPAL}-as an im- portant aspect of their strategy to try to moderate the Sandinistas. By including, the FSLN in COPPPAL, a largely social democratic grouping, the Mexicans have provided the Sandinistas with an alternative to alignment with Cuba and other Soviet allies. They have been reluctant to use their influence in this organization to pressure the Sandinistas, however, even in the wake of a speech by National Directorate member Humberto Ortega in August 1981, which acknowledged that the Sandinistas rely on Marxist- Leninism as their guide. mains in power. Pressures on Mexico To Reassess Its Policy. Growing concern about Nicaraguan developments among im- portant political forces in Mexico and West European governments and parties has not caused any diminu- tion in Mexican support to the Sandinistas, nor, in our view, is it likely to at least as long as Lopez Portillo re- Having developed close ties to their counterparts in Nicaragua, Mexican business leaders reacted sharply to the arrest of three senior Nicaraguan private-sector officials in October 1981. According to US Embassy 25X1 25X1 25X1 25X125X1 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Secret sources, senior business leaders privately expressed their dismay to Lopez Portillo, and local employee associations sent messages urging the Mexican Presi- dent to seek the release of the Nicaraguan business- men. Moreover, by taking out newspaper ads con- demning the arrests, the Businessmen's Coordinating Council-Mexico's most prestigious private-sector group-took the unusual step of implicitly criticizing the government's continued backing of the Sandinis- tas. Lopez Portillo's subsequent successful effort to secure the release of the Nicaraguan business lead- ers-although not entirely attributable to Mexican private-sector entreaties-suggests that the President is not immune to such pressure. Lopez Portillo made a halt to the Sandinista military buildup an integral part of his peace initiative announced on 21 February. The Mexicans have also found themselves increasing- ly out of step with erstwhile foreign supporters of the regime in Managua-including the governments of Panama and Costa Rica and several West European social democratic parties. Nevertheless, Mexico's backing of the Sandinistas has not faltered. Despite grumbling at the COPPPAL conference in November 1981 over Sandinista repression, the orga- nization-with Mexican backing-decided to hold its February meeting in Managua. Of even greater sym- bolic importance was Lopez Portillo's decision to make his third visit to Nicaragua immediately after the COPPPAL meeting. The growing differences over Nicaragua between Mexico and most members of the Socialist International were accentuated when, at about the same time as Lopez Portillo's visit to Managua, the SI had to cancel its meeting scheduled for Caracas because of refusal by the host Democratic Action Party to permit the Sandinistas to attend. We believe that Lopez Portillo's trip to Managua 25X1 demonstrates that his government will continue its 25X1 strong support until it leaves office in December, barring a decisive shift leftward by the FSLN. His decision to make the visit contingent on the release of the three Nicaraguan business leaders was an encour- aging indication of Mexico's willingness to begin to use its considerable leverage. At the same time, 25X1 however, Lopez Portillo made it all the more difficult to retrench by labeling assistance for Nicaragua a "true cornerstone" of Mexican policy. His emphasis on the external threat to Nicaragua, moreover, sug- gests that his fear of US-backed pressure will contin- ue to outweigh his uneasiness with Sandinista repres- sion. 25X1 Lopez Portillo's Peace Initiative. The importance the Mexicans give to the peace initiative that Lopez Portillo announced in Managua has been reflected in their aggressive efforts to implement his proposals. To accommodate US concerns, Castaneda publicly 25X1 agreed on 14 March that the agenda for possible discussions between the US and Nicaragua should be broadened to include a halt to Sandinista arms ship- ments to the Salvadoran insurgents.) 25X1 Presumably to increase pressure on the US, Mexico's UN Ambassador announced in late March that the US and Nicaragua would soon begin talks in Mexico City. At the same time, however, Castaneda under- scored his government's desire for an easing of ten- sions when he told a French journalist that the 25X1 Sandinistas had made "an error of youth" in not accepting the proposal offered by the US in Augu 25X1 1981. Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 25X1 25X1 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 25X1 In his State of the Nation address on 1 September Lopez Portillo reaffirmed the importance of his peace proposal, arguing that the alternative to negotiations is regional war. By Joining Venezuelan President Herrera Campins in urging Nicaragua and Honduras to hold discussions, the Mexican President signaled that he intends to continue actively pressing for diplomatic solutions until he leaves office. Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Iq Next 3 Page(s) In Document Denied Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret Guatemala Geopolitical realities have caused Mexico to pursue what we regard as a more hardheaded approach toward Guatemala than it has elsewhere in Central America. Although Mexico's distaste for rightwing military regimes ensured distant relations with the Lucas administration until it was deposed in March 1982, an appreciation for the stability that that government brought to Mexico's southern border prevented Mexico government continues to react cautiously to Rios the Mexicans have been discouraged by the failure of past efforts to coax the Guatemalans toward greater moderation, however, and the Lopez Portillo supplying petroleum to Guatemala. Government-to-Government Relations. Lopez Portillo signaled his intention to use personal diplomacy and promises of closer ties to try to encourage a moderate evolution in Guatemala by meeting with former Presi- dent Lucas near Tapachula, Mexico, on 18 September 1979. Lopez Portillo promised that he would soon travel to Guatemala, and both governments agreed to establish working groups to deal with major bilateral issues. Foreshadowing the later inclusion of Guatema- la in the Mexican-Venezuelan oil facility, Mexican officials also raised at the meeting the possibility of Mexican leftists sharply criticized the decision to 25X1 meet with Lucas and intensified pressure on the government to break relations, especially after an incident at the Spanish Embassy in Guatemala City in January 1980 in which local security forces killed a group of peasants and radical leftists who had occu- pied the mission. Although the proposed presidential visit was postponed indefinitely, Mexico resisted left- ist calls for withdrawing its Ambassador. A Mexican Foreign Ministry official told US diplomats that his government still hoped Lucas would take steps to foster domestic pluralism and that Mexico was trying '25X1 through such moves as encouraging Spain to reestab- lish ties, to avoid exacerbating the Guatemalan Go-? 25X1 We believe that concern by the Mexican armed forces that the Guatemalan insurgency would spill over into the Mexican border region has been an important factor in shaping Mexico's policy toward Guatemala. 25X1 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 25X1 25X1 25X1 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret 20 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret At the same time, however, the maneuvers aggravated Mexico's relations with Guatemala by raising unreal- istic expectations on the part of the Lucas government regarding military cooperation. agreed to cancel the meeting. In September 1981 Lopez Portillo resumed efforts to reduce tensions by scheduling a meeting with Lucas. The Mexican President, we suspect, sought conces- sions on two issues of importance to Mexico. Heart- ened by Guatemala's willingness to compromise in its territorial dispute with Belize, he hoped to ensure that Lucas would not oppose Belize's move to independ- ence. Lopez Portillo evidently also wanted to solicit Lucas's help in dealing with the growing exodus of Guatemalan refugees. The announcement of the Franco-Mexican declaration on El Salvador, coupled with Lopez Portillo's public endorsement of Belizean independence soured the atmosphere, however, and- yielding to domestic pressure-both governments Thereafter, the Mexicans, we believe, abandoned any hope of improving ties so long as Lucas held power. In line with its commitments under the oil facility with Venezuela, Mexico continued to supply oil to Guate- mala; however, in 1981 Mexico financed $22.5 million of its about $75 million in oil deliveries with conces- sional credits. Moreover, to avoid further straining relations, Mexican officials responded in relatively measured tones to public charges last fall by senior Guatemalan military leaders that the Mexican Gov- ernment was assisting Guatemalan insurgents. Since the coup on 23 March, President Rios Montt's government has made an effort to improve relations with Mexico. Encouraged by Rios's judicious han- dling of the seizure of the Brazilian Embassy as well as by his initial steps to curb official violence and 25X1 5X1 implement social welfare programs, the Mexicans have given cautious indications of wanting to mend fences. Castenada's recent characterization of rela- tions with Guatemala as "cordial" was one signal.) 25X1 25X1 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Honduras Mexico has given far less attention to Honduras than to other countries in Central America. We believe that Lopez Portillo, nevertheless, sees in the Hondu- ran experience an opportunity to spotlight a possible reformist alternative to the revolutionary violence sweeping the area. Consequently, he has made sup- port for the transition from military to civilian rule the main focus of his government's policy toward that country. 25X1 September 1981-some two months before elections to choose a civilian successor to Paz-Lopez Portillo gave the Honduran leader a red carpet welcome. With an obvious eye to Guatemala, he publicly praised the Honduran process as worthy of emulation. Secretary of Government Olivares-Mexico's highest ranking cabinet member-represented Lopez Portillo at the inauguration of President Suazo in January. And Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 COPPPAL, which has no Honduran member parties, soon thereafter echoed the official Mexican position by referring to the "hope generated by the Honduran election." Tempering Mexico's enthusiasm for developments in Honduras, however, has been the Lopez Portillo gov- ernment's concern about growing Nicaraguan-Hon- duran hostility. Worried that continuing border skir- mishes may escalate and lead to US involvement, the Mexicans have urged Honduras not to harbor anti- Sandinista insurgents. Lopez Portillo addressed this issue publicly in his Managua speech on 21 February by calling for the disarming of former Nicaraguan National Guard members who use Honduras as a base for cross-border raids. The declaration issued by COPPPAL at its February meeting in Managua was even more explicit in urging Honduras to adopt a position of neutrality toward Nicaragua. Mexico has been careful, however, not to line up against Honduras in its dispute with Nicaragua. Toward this end Castaneda has publicly praised the Honduran peace plan that was presented to the OAS on 23 March as consistent with Lopez Portillo's peace initiative, and Mexico has supported it in internation- al forums. Lopez Portillo's meeting with Honduran Foreign Minister Paz Barnica on 2 April presumably was also intended to demonstrate Mexico's evenhand- ed position. The Mexicans are also increasingly worried about Honduran military collaboration with El Salvador. In late June a Mexican Foreign Ministry official, citing reports of a Honduran blocking operation in the Salvadoran border region, told the US Embassy that he was concerned that such action could lead to an "internationalization" of the conflict. Reflecting what may become a recurring theme among Mexican lead- ers, the official also expressed unease regarding grow- ing military dominance in Honduran foreign policy decisionmaking. By September Lopez Portillo was sufficiently concerned about the dangers of "regional war" that he made that subject a major topic in his State of the Nation address. Several days later he joined Venezuelan President Herrera in offering to facilitate talks between Honduras and Nicaragua. 7 Approved For Release 2008/09/18: CIA-RDP83S00855R000100190002-3 Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3 Secret Approved For Release 2008/09/18: CIA-RDP83SO0855R000100190002-3