WEEKLY SUMMARY SPECIAL REPORT CHINA AND LATIN AMERICA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500040019-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 16, 2016
• Document Release Date: December 14, 2004
• Sequence Number: 19
• Publication Date: May 12, 1972
• Content Type: REPORT

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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
China and Latin America
Secret
N2 606
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12 May 1972
No. 0369/72A
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After a decade in which Latin America was just another ideological
battleground in the Sino-Soviet quarrel, Communist China has shifted to a
more pragmatic approach to the region. The naw diplomatic drive that
started in 1969 has paid off: previously, only Cuba had diplomatic relations
with the People's Republic; now, Chile, Peru, Mexico, and Argentina recog-
nize Poking. By combining astute diplomacy with offers of economic aid and
the lure of a potential market for Latin American products, China sh )uld be
able to ensure steady gains in Latin America. Although they are unlikely to
be such as to make Peking a major influence in the region in the foreseeable
future, the Chinese probably will feel amply rewarded if their efforts help
ease Latin America out of its special relationship with the US and into the
"third world"-i.e., those less-developed countries that Peking seeks to
champion against the superpowers.
Before 1959 no other region of the world
appeared less likely to be the scene of Communist
Chinese diplomatic triumphs than Latin America.
The US was well entrenched, and there were
almost no important contacts between Peking and
the countries in Latin America. No Latin Ameri-
can government recognized the People's Republic
of China until Castro took over in Cuba in 1959.
Worse still, most Latin countries maintained dip-
lomatic relations with Chiang Kai-shek's rival Na-
tionalist regime on Taiwan.
i'o Peking, Castro's victory was an encourag-
ing s;gn that Latin America was entering a period
in which economic and political changes would
undermine US influence in the area and lead to
real socialist revolutions. China quickly recog-
nized the new Cuban government and in 1960
extended it economic aid. After some hesitation,
the Chinese granted ideological approval to
Castro's regime by acknowledging its socialist
character. Sino-Cuban relations grew steadily
warmer, particularly after the missile crisis of
1962. Already at odds with Moscow, China at-
tempted to profit from Khrushchev's discomfi-
ture by berating him for "adventurism" and for
letting Cuba down by capitulating to Washington.
Special Report
Despite the opportunities presented by the
missile crisis and growing Latin American nation-
alism, the 1960s were not a decade of great suc-
cess for China in Latin America. In early 1963,
the USSR patched up its differences with Cuba.
The Soviets extended economic aid at a level
China was unable to match. Although Castro ini-
tially avoided taking sides in the deepening Sino-
Soviet controversy, his increasing economic reli-
ance on Moscow inevitably propelled him into the
Soviet camp. By 1966, Chinese relations with
Cuba reached a low point. Castro criticized the
Chinese for reducing rice deliveries, and Peking
recalled its ambassador without appointing a re-
placement. By the late 1960s, Peking and Havana
were exchanging verbal blows over differences in
revolutionary theory and tactics. In 1969, Carlos
Rafael Rodriguez strongly implied that Cuba
would support the USSR if hostilities broke out
between Russia and China.
Cuba was not the only place where the Chi-
nese clashed with the Soviets. Indeed, all of Latin
America was an ideological battleground where
Peking and Moscow competed for influence and
support among the region's Communist parties. It
was an unequal contest. Peking was unable to
weaken the long-standing ties between the Latin
American parties and Moscow; nor could the
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Chinese take advantage of the revolutionary pro-
clivities of the radical wing of the Latin American
left. At most, the Chinese were able to attract
only poorly organized splinter groups. Moreover,
Peking's supporters were prone to ideological and
personal rivalries that led to factionalism. Al-
though pro-Chinese movements eventually
emerged in ten Latin American countries, none
attracted an extensive or influential following,
and none developed into a significant political
force. Maoist ideology and revolutionary tactics
attracted some support in intellectual and student
circles, but few of Latin America's self-pro-
claimed Maoists had any organizational base or
firm ties with Peking.
China's emphasis on revolution adversely
affected Peking's efforts to establish relations
with Latin American governments. The Chinese
tried to play on Latin resentment of the US,
particularly after the anti-US disorders in Panama
in 1964 and Washington's intervention in the
Dominican Republic in 1965. But Peking's con-
tinuing call for armed revolution almost com??
pletely canceled out the effect of the appeal to
anti-US nationalism. It proved easy to outbid the
USSR and its friends in Latin America in mili-
tancy, but almost impossible to dispel the fears of
Chou and Che before friendship turned to polemics.
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Latin American governments that Peking meant
to subvert them. For example, Brazil appeared to
be on the verge of forging official ties with the
People's Republic in 1964, but the opportunity
disappeared after the military coup against Presi-
dent Goulart. Subsequently, the strongly anti-
Communist military regime expelled the Chinese
commercial officials who had been in Brazil for
only a few months. Later, Mexico took action
against the Chinese by closing the New China
News Agency office in Mexico City. By 1971,
only Chile, in addition to Cuba, had accepted a
permanent official Chinese presence, a trade mis-
sion that had been in Santiago since 1964.
Peking Shifts Gears
When the Chinese in 1969 emerged from the
Cultural Revolution and returned to the fields of
diplomacy, calls for violent social revolution were
muted in favor of demonstrations of Chinese sup-
port for the national interests of small, under-
developed nations, no matter what their political
leanings. China drastically curtailed and, in some
cases, perhaps eliminated its financial subsidies to
Latin American political groups. In Peru and Bo-
livia, for example, financial support for the pro -
Chinese Communist parties apparently ended.
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Diplomatic or economic ties
$100 Economic aid
million
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Chinese Represedtation
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SOUTH ATLANTIC OCEAN
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Political operations such as those mounted
through vocal Chinese cultural institutes in various
Latin American countries also felt the pinch. In
correct Maoist fashion, Peking stressed that local
pro-Chinese organizations must be self-reliant.
Several have been told to support themselves on
the proceeds from sales of Chinese publications,
souvenirs, and art. The Chinese undoubtedly will
attempt to maintain and expand their political
and cultural contacts throughout Latin America,
but in the future China is likely to supply funds
only to well-defined, well-organized projects or
movements that give some promise of a political
return for Peking.
Peking has paralleled this hard-headed ap-
proach to Latin American Communist parties
with a more flexible and pragmatic effort to es-
tablish and improve relations with local govern-
ments. In Latin America, this new diplomacy
bore first fruit in the newly favorable climate of
Chile; the Allende regime established diplomatic
relations with China in January 1971, just two
months after it took office. The following June,
Peru agreed to exchange permanent trade mis-
sions, and five months later Lima and Peking
moved on to diplomatic relations. Chinese com-
mercial contacts with Mexico led to Mexican rec-
ognition in February 1972. Later the same
month, Argentina agreed to exchange ambassa-
dors with Peking. Chinese personnel arrived in
Guyana on 11 March to open a permanent trade
mission. At present, Sino-Ecuadorean negotia-
tions are under way in London; they are expected
eventually to produce formal economic or dip-
lomatic ties.
In the past year and a half, Peking also has
tentatively improved its relations with Cuba. A
Chinese ambassador arrived in Havana in Decem-
ber 1970 after a four-year absence. Havana re-
sponded to this gesture by returning its envoy to
Peking in June 1971. Both sides now refrain from
publicizing their differences on such sensitive
topics as revolutionary strategy in Latin America
and Cuba's role in the region. Instead, Chinese
media have attempted to point up Peking's anti-
Special Report
The $41-million handshake: Chou and Peruvian Minister Maldona
imperialist bond with Havana by defending Cuban
actions directed against the US, such as the sei-
zure of the vessels Layla Express and Johnny
Express. A five-year trade and payments agree-
ment was signed in May 1971. The annual trade
protocol signed at the same time provided for
$120 million in trade. The trade protocol for
1972, signed in March, called for a trade level of
about $100 million. A poor Cuban sugar harvest,
however, probably will cause the level to fall
below this figure. The Cubans also reportedly
want to conclude a new cultural agreement with
Peking in 1972.
Peking's goal in Latin America is to expand
its own influence and prestige as a major power.
This obviously involves the undercutting of US
influence and the pre-emption of Soviet attempts
to gain influence. To acc,;mplish this, China seeks
to coax the Latin American nations away from a
special relationship with Washington into a loose
"third world" grouping within which the Chinese
can pose as the champion of the interests of
small, economically underdeveloped countries.
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China seizes every opportunity to persuade Latin
Americans that it is part of the "third world." At
the Afro-Asian table tennis tournament in Peking
last November, the Chinese welcomed observers
from several Latin American countries, and it was
agreed that the next tournament will include
Latin American teams. At the third UN Confer-
ence on Trade and Development in Santiago,
Chile, in April 1972, Peking supported the effort
of "third world" countries to gain economic con-
cessions from the developed nations.
Stressing its "anti-imperialist" history, China
searches for issues on which it can demonstrate its
support for Latin American efforts to achieve
economic and political independence from Wash-
ington. For example, the Chinese provide strong
propaganda support for the Panamanian position
Colombian ping-pong team visits the Great Wall of China.
Special Report
with respect to the Canal Zone, while the nation-
alization of US-controlled industries in Chile (and
elsewhere) is heralded in the Chinese press. These
are treated more as blows against Washington
than as landmarks on the road to socialism.
At the same time, Peking's propaganda line
also strikes out at the USSR. Chinese spokesmen
accuse Washington and Moscow of attempting to
divide the world into two spheres of influence
and call upon Latin Americans to unite with
Asian and African countries in a struggle to resist
domination by the two superpowers. Tnis argu-
ment is used, for example, in trumpeting Peking's
support of the 200-mile limit for territorial wa-
ters. According to Peking, both the US and USSR
oppose the limit in order to control the resources
of the oceans.
The Chinese bolster such political appeals
with offers of economic aid supplemented by the
lure of expanded trade. China's bid for Peruvian
recognition was accompanied by Peking's agree-
ment to purchase by the end of 1972 $30 million
worth of fishmeal and fish oil as well as $45
million worth of copper, lead, and zinc. The ex-
tension of a $41-million loan to Peru the follow-
ing November was accompanied by an agreement
to buy a further $100 million worth of minerals
during the period 1972-74. In December 1971, a
$65-70 million contract to buy Chilean copper
made China Chile's third largest customer for that
product. Previously, the Chinese had agreed to
buy $3.3 million; worth of nitrates. A $2-million
Chinese grant in July 1971 to aid Chilean victims
of an earthquake was a prelude to the $65-million
loan extended to Santiago in February
1972-when Chile badly needed foreign assistance
to rneet its growing economic difficulties. Al-
though most of the loan wil! be devoted to con-
struction projects in Chile, about $12-13 million
will be used to finance imports essential to Chile
during 1972.
Guyana is the third Latin America.i country
since early 1971 to benefit economically from the
People's Republic. In April, Peking granted a
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$26-million loan for use in expanding Guyana's
light industry. China also appears to be interested
in purchasing sugar and may want timber and
alumina as well.
Peking is handicapped in its effort to expand
its influence and economic presence in Latin
America. Chou En-lai and other high-ranking
Chinese officials have admitted publicly that
China is still economically underdeveloped. Its
ability to export modern machinery and tech-
nology is limited, and Chinese industrial exports,
although cheaper, often do not match the quality
of similar products from the US, the USSR, West-
ern Europe, or Japan. Peruvian officials have
noted that Chinese mining equipment is not as
suitable as similar machinery made in Peru. This
disadvantage is partially overcome by the ex-
tremely lenient terms of Chinese economic aid-
usually no interest and a long repayment period.
The loan to Peru, for example, is interest free,
and the first repayment is not due until after a
ten-year grace period.
China is admirably suited to provide assist-
ance in some types of agriculture and in such
basic construction projects as roads, railroads,
ports, and certain kinds of light industry. This
type of aid may prove attractive to countries still
heavily dependent on agriculture and engaged in
developing the basis for industrialization. To
states such as Brazil and Argentina, however,
which already are industrialized to a significant
degree, the attraction is the Chinese market, not
the prospec+ of cheap Chinese aid.
China also faces the task of living down a
reputation for subversion. Despite the current
emphasis on conventional diplcmacy and the cre-
ation of good state relations, most Latin Ameri-
can governments remain wary of China's inten-
tions and continued contacts with radical left-
wing movements.
The Chinese
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Latin American Countries Heroically
Defend Their Territorial Sea Rights
FOR a long time Latin American countries have been waging
a sharp struggle against U.S. imperialism in defence of
their rights over territorial waters. Early in 1947, Chile and Peru
took the lead in declaring that their territorial waters extend
200 nautical miles. After that El Salvador and Ecuador followed
suit. Bent on aggression and plunder. U.S. imperialism insists
that the limit of territorial waters should not extend beyond three
nautical miles. This blustering unreasonableness fully exposes
its piratical intentions. Recently, U.S. imperialism in collusion
with social-imperialism put forward a "proposal" for "fixing the
territorial limits to 12 nautical miles" and has tried in vain to compel
the Latin American countries to accept it. In order to defend
their safety and protect their resources, many Latin American
countries, on the contrary, have declared a 200-nautical-mile ter-
ritorial limit in accordance with the characteristics of geography.
marine biology and geology, and the necessity of a rational use of
their resources. By March 1970 Nicaragua, Argentina. Panama,
Uruguay and Brazil had one after another declared the 200-
nautical-mile limit. Al a meeting last August held by 21 Latin A-
merican countries on problems related to the law of the sea, a joint
declaration reaffirming that the Latin American countries have the
right to fix the limits of their own territorial waters was issued. It
was signed by Mexico. Guatemala. Honduras, Costa Rica and
Colombia, together with nine other countries which had declared
the 200-nautical-mile territorial limit. The fact that so many Latin
American countries have joined together to take common action
against U.S. imperialism is a significant devclopanent in the Latin
American people's struggle against U.S. imperialism. This marks
a further decline in the positior of U.S. imperialism as the
overlord in Latin America.
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are fully aware that they are under suspicion, and
they exercise considerable discretion in their ac-
tivities throughout Latin America. They have
taken pains to dissociate themselves from extrem-
ist groups such as the Tupamaros
Peking's present, more practical, foreign pol-
ic, runs the risk of undermining its relations with
the radical left in Latin America. The contradic-
tion between China's revolutionary convictions
and the realities of its international life has been
made sharper by President Nixon's visit to Peking.
Encouraged by its success since 1969, Peking
probably will continue to pursue a pragmatic pol-
icy in Latin America, emphasizing good relations
with existing regimes while playing down its con-
tacts with the radical left. The Chinese regard the
growth of economic nationalism throughout the
region as a well-established, long-term trend that
leads to clashes of int^_rest between Latin America
and the US. Seeking to capitalize on this trend,
the Chinese appear willing to make significant
investments in selected Latin American countries
whenever the opportunity arises. Because Peking
realizes that its own economic weakness makes
impossible an across-the-board economic cam-
paign, it is likely to concentrate the major portion
of its aid and trade in a few countries. Peru and
Chile currently appear to have been singled out
for special attention.
The Chinese seem to be realistic. Faced with
strong economic competition from the US, West-
ern Europe, the USSR, and Japan, the Chinese
almost certainly do not expect to achieve para-
mount influence in Latin America. The lure of
the China market is a strong card in Peking's
hand, but only a modest level of Sino - Latin
American trade is likely to develop. Even when
China buys up worrisome commodity surpluses-
such as Peruvian fishmeal-it probably will ac-
count for only a small proportion of the coun-
try's total exports. Peking will, nevertheless, feel
its efforts are worthwhile if Chinese economic
and political gestures help loosen Latin America's
special ties with the US and move it into Peking's
"third world."
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Special Report
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