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December 20, 2016
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September 19, 2006
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August 2, 1973
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25X1 Approved For Release 20D7102 08:CIA-RDPBST00675ROD2DOD120D42.7 SECRET ` A 0 P_ K S K 0 73 -o T- Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 I CENTRAL INTELLIGENCE AGENCY OFFICE OF NATIONAL ESTIMATES 2 August 1973 ARGENTINA: PERON RETURNS Since Peron's fall from. power in 1955, no party,.-tio l,:ader, and. no formula has succeeded in healing bitter political and social divi- sions, nor in raising Argentina anywhere near its very co,-;siderable economic potential. The resounding Peronist electoral vic?.ory under Hector Canpura in.Ma.rch 1973, and Campora's resignation _f.-om office on 13 July, open the way for Peron to return to the p_esid ncy for a second effort at.national reconstruction. Whether the Per-onists of the seventies will rerun the mistakes and excesses of the; forties and fifties, or whether. they have learned from hard experienc, 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 beccining 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 NVational Estimates and coordinated with appropriate offices in CIA. Comients may be addressed 25X1 to: Approved For Release 2007/02/Otlht 85T00875R002000120042-7 Approved For Release 2007/02E 4D I MP85T00875R002000120042-7 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.inequicies. 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 Approved For Release 2007/0210$': DP85T00875R002000120042-7 Approved For Release 2007/02/0> 5 85T00875R002000120042-7 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.Argent-tea to domestic prosperity and inter- national prestige. Can the P:,ronists 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.aciiieve the political peace and steady economic expansion that most Argentines seek. Still, if. t1 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 ManipuZator 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 SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 Approved For Felease 2007/02/08 : CIA-RDP85T00875 2002000120042-7 SECRET old any' 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 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 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 motiva-.e 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 . . .wear: reed against which Argentines are leaning their hopes of national renaissance. SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 Approved For Release 2007/02/0SE.+ QRff7P85T00875 002000120042-7 7. What about after Peron? Peron's-death or incapacitation would launch.a bitter, and perhpps 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,.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 to many Peronists. Such a crisis.. could speed the. re- emergence of the military as the country's political arbiters. The New Governments Assets 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. Tr:sscending the fact of party SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 Approved For Release 2007/02/c F J 85T00875R002000120042-7 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 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 twen:y.years ago now fits neatly with what has come pected of governments in developing countries. Peron's old theme and aspirant independence from the super powers, for example, con- stitute a widely.accepted concept. Urban labor, always a main bulwark. of Peronism, a revolutionary movement of the poor 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 SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 Approved For Release 2007/02/0?~Ci L 85T00875R002000120042-7 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- t:;.on 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 SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 Approved For Release 2007/02/08S.l 5T00875R002000120042-7 course of action. Also, the Argentines have no set expectations about what Peron wi ll.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 pressu:os 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. SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 Approved For Release 2007/02/08nxMU$5T00875R002000120042-7 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 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 majo 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 favorable turn. Flashy social welfare programs and prickliness toward. business could. discourage domestic entrepreneurs as well-as foreign in- vestors. Approved For Release 2007/02/08EC1A-1'bp85T00875R002000120042-7 Approved For Release 2007/02/08 SE1C ET00875R002000120042-7 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 nsettling.length of time. It-has to cope with.the-revo- lutionary terrorists on the one side and with the conservative. military -- their -- 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 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 Revolutionary Army (ERP), the most active and largest with about 500 militants, is split into several Marxist factions. The Armed Forces of Liber- ation (FAL).is a Marxist-Castroite group, has over 100 members.. Three groups are nominally Peronist: The Peronist Armed Forces-(FAP) with about 400 men; the Montoneros, a small (60-man) ultra-nationalist Catholic group; and the Revolutionary Armed Forces (FAR) (perhaps.50 members). Following the violence that attended Peron's homecoming on 20 June, the Montoneros indicated a willingness to lay down arms. The ERP and the FAP, however, signalled their intention to pursue a violent course. SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 t c Approved For Release 2007/02/08SIS5T00875R002000120042-7 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 Rule 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 the prisons of political captives, to erase..: limits on political freedom, and to declare an. amnesty broad enough to cov r 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 SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 Approved For R~Iease 2007/02/08S 5T00875R002000120042-7 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 depor,`inent 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. Alt;iough.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 SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 c. c. Approved For Release 2007/02SC A bP85T00875R002000120042-7 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 -!ationalism. Indeed, the Peroni:;ts' first proposals indicate that the 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 in most cases; and managemen` -Zcisions for companies.with only minority foreign ownership will be bound by new 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.' SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 Approved For(Release 2007/02/g8, 61P85T0087`5R002000120042-7 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 extr(-melt' dif- ficult for 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 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 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. WVth 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 cont:?ol and discipline all these dis- parate elements. SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 Approved For Release 2007/0:gFC-.'ffiYt-'kDP85TOO875ROO2000120042-7 Implications for US-Argentine Belationo 24. US-Argentine'relat;ions are bound to suffera series o 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 .n 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 mount 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 vigorcus movers and shakers while they examine, behind the scenes, their own SECRET Approved For Release 2007/02/08 : CIA-RDP85T00875R002000120042-7 Approved Fc# Release 2007/02/08 : CIA- DP85T00675R002000120042-7 SECRET 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 aboutfuce 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 tests 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 o.ther Latin American governments to oppose the US more vigorously in international forms. Approved For Release 2007/02/U ~l CA'RDP85T00875R002000120042-7 Approved For Release 2007/02/06E--'ADT85T00875R002000120042-7 27. The US has 'only modest dirciat stakes in 'maintaining .'r:he relatively cordial relations with Argentina-that characterized the period of military rule. There are no :inmiediate 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, bccaine 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 Argent: na too benefits from past bi- lateral ties. Peron's view of his int?.rests vis-a-vis the US can make or break the continuance of a fruitful relationship, Approved For Release 2007/02/0M& K-b P85T00875R002000120042-7