LATIN AMERICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01184R000201030001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: December 22, 2016
• Document Release Date: October 22, 2010
• Sequence Number: 1
• Publication Date: July 6, 1984
• Content Type: REPORT

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ALA LA12 84-013
6 July 1984
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3w. reL
Review
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capitalism-Havana is still waiting for its first investor.
More than two years after passing a law that permits direct foreign
investment-fairly radical for a country that has spurned
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Pinochet Chile.
The Chilean Communist Party, the largest and most influential in
South America, has survived years of government persecution to
emerge as an important actor in the conflict over the transition to
civilian rule and a major factor influencing political stability in post-
military.
If current trends continue, which seems likely, the parties forming
the center-right ruling coalition will be defeated next spring by
center-left APRA, which is headed by a charismatic new Secretary
General who is already working to improve relations with the
South America: IMF Austerity Under Attack
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Suriname: Dim Prospects for Aid
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Jamaica: Labor Demands Cloud IMF Agreement0 20
Costa Rica: Debt Payments Froze
n
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Honduras: Opposing IMF Conditions
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The Bahamas: Attacks on Police
21
Montserrat: State of Emergency
Secret
ALA LAR 84-013
6 July 1984
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Articles have been coordinated as appropriate with other offices
within CIA. Comments and queries regarding this publication may
be directed to the Chief, Production Staff Office of African and
Latin American Analysis,
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Overtures
More than two years after the passage of a law that
permits direct foreign investment in Cuba, Havana is
still waiting for its first investor. The legislation-
fairly radical for a country that has spurned
capitalism-was enacted in hope of increasing Cuba's
hard currency earnings, particularly from tourism.
Havana has promoted the law's alleged opportunities
extensively, especially with the Japanese.
Cuba provides some incentives to foreign investors:
? Political stability.
? Relatively well-educated and obeisant workers-
strikes are nonexistent.
? Low wages, although foreign employers must pay
them to the state in hard currency.
? Under the joint venture law, relatively favorable tax
provisions and transfer of dividends and net profits
in convertible currency.
So far, however, investors apparently have decided
that the disadvantages outweigh the benefits:
? Cuban management or comanagement is required,
with the Cubans receiving the same salary as
foreign personnel.
? Foreign partners are limited to 49-percent
ownership and control.
? Foreign investors must guarantee markets for the
products of the enterprise.
? Cuban Government enterprises are given first
option on supplying such items as fuel, raw
materials, tools and equipment, as well as on
shipping and marine insurance.
? Hiring and firing must go through a Cuban state
entity.
The joint companies must pay the Cuban
Government for labor and materials in convertible
currency at the official rate of exchange, which
grossly overvalues the peso.
? Any disputes between the joint venture and Cuban
state enterprises must be submitted to the Cuban
state arbitration system for settlement, making 25X1
Havana both the arbitrator and a party to the
dispute.
? The US economic embargo prohibits exporting US-
produced goods to Cuba and excludes the United
States as a market.
The timing of the joint venture law probably also has
played a part in its failure. A few months after it was
passed, Havana requested rescheduling of its 25X1
convertible currency debt, raising doubts about
Cuba's economic future. In addition, the worldwide
economic recession of 1982-83 discouraged
businessmen from embarking on risky capital
ventures.
If Havana continues to meet the requirements of its
debt rescheduling agreements and the world economy
continues to recover, Cuba may eventually attract a
small amount of foreign capital. Given President
Castro's often stated antipathy toward economic
liberalization, however, we doubt Havana will loosen
the legislation sufficiently to attract substantial
investment. Castro's sentiments toward the West also
will keep alive uncertainties about the safety of
investment in Cuba.
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ALA LAR 84-013
6 July 1984
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Chile: Prospects for
the Communist Party
The Chilean Communist Party (PCCh) is the largest
and most influential in South America. Although
driven underground and persecuted by the military
government that seized power in 1973, the party has
retained most of its cohesion, discipline, and spirit.
Unlike the Socialists-who splintered into dozens of
factions-the Communists emerged from their
clandestineness last year as a united, aggressive
political force. The PCCh is now undoubtedly the
strongest leftist party in Chile and is surpassed in size
and organization only by the centrist Christian
Democrats.
The Communists will play an important political role
during the next few years. Their actions will in part
determine whether President Pinochet accedes to
opposition demands for a quicker transition to civilian
rule or attempts to govern under the existing
Constitution until 1989. In the long run, the party also
will influence whether or not post-Pinochet Chile
succumbs to the political instability that plagued the
nation prior to 1973.
A Classic Party
From 1956 until 1973 the Chilean Communists
consistently defended what they termed "the peaceful
road" to socialism. The PCCh established a
reputation as a parliamentary party that adhered to
democratic rules. Under the Allende regime the
Communists were a moderating force that restrained
the revolutionary wing of the Socialist Party. Some
analysts have described this policy as at least an
incipient acceptance of pluralism and democratic
principles, a kind of Eurocommunism. Academic
studies have revealed, however, that devotion to
democracy and liberal freedoms never played a role in
Chilean Communism. The pseudoegalitarian attitudes
that characterized the party prior to 1973 were purely
opportunistic and tactical. The classic Marxist-
Leninist goal of the eventual abolition of all non-
Communist parties and the installation of a PCCh
dictatorship subsisted beneath the ostensibly
In all other respects, moreover, the Chilean
Communists have avoided even the appearance of
deviating from Marxist-Leninist orthodoxy. The
PCCh has always maintained a rigidly pro-Moscow
foreign policy, enthusiastically defending, for
example, the Soviet invasion of Afghanistan. It also
has followed Moscow's lead on matters of domestic
political strategy. Furthermore, the party's
organization-a network of cells that has generally
obeyed orders with almost military discipline-
conforms to classic revolutionary models.
A few cracks in this hierarchy have occasionally
become visible-mostly involving disputes between
younger and older party members or between exiled
leaders and those who remained in Chile after 1973-
but they have never threatened the organization's
structural soundness. This cohesion has enabled the
PCCh to maintain, according to US Embassy
estimates, 15,000 to 20,000 active members inside
Chile. It has also placed the PCCh in the forefront of
the clandestine anti-Pinochet resistance.F_
Peaceful Versus Violent Opposition
Through 1980 most PCCh opposition activity was
akin to pamphleteering because the party still
supported the "peaceful road" to socialism. In that
year, however, exiled Secretary General Luis
Corvalan announced adoption of a strategy of armed
resistance to the military regime.
the new strategy was adopted
primarily because of the success of armed insurrection
in Nicaragua. We believe that Soviet pressure also
played a role, as well as a feeling that the party's
previous strategy of seeking an agreement with the
democratic rhetoric.
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ALA LAR 84-013
6 July 1984
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had failed.
fell into line. Although we believe that many older
Communists within Chile continue to be skeptical
about the utility of violence against the Pinochet
regime, this group remains less influential than the
coalition of younger, more dynamic party chiefs in
Chile and exiled leaders who advocate terrorism and
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armed struggle.
The differences between these groups, however, have
senior Communist never threatened party unity, largely, in our view,
leaders in Chile initially rejected-the call to arms as
"irresponsible, unrealistic, and self-destructive," but
I
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because the post-1990 line has been implemented with
considerable tactical flexibility. The commitment to
violence has never precluded the option of peaceful
pressure on the regime. During 1983, for example, the
party-hoping to attract the democratic opposition
into a united front against Pinochet-repudiated
violence several times. It was only when the
democratic opposition formed the Democratic
Alliance coalition, which excluded the Communists,
that the PCCh definitively returned to its hardline
stance. Even then, the party refused to foreclose on its
option to compete openly within the existing system
by creating in September 1983 the Popular
Democratic Movement, a Communist political front
that includes ultraleftists and radical Socialists.
Thus far, Communist efforts to foment armed
resistance have been frustrated. The party has failed
to mobilize Chile's large population of unemployed
slumdwellers. Sporadic violence among this group
flared during protests last year, but
Such random violence has further
urban poor, but the party's infrastructure i
is held in check by the government's frequ
and deportation of Communist organizers.
diminished
among the
n the slums
ent arrest
The party also has failed to convert its influence in the
trade unions into pressure on Pinochet. The US
Embassy estimates that nearly a third of opposition
that currently the chances for a successful strike are
even smaller: moderates still control the labor
movement, and the government's judicious mix of
economic reforms and repression has kept the
opposition disunited and dispirited.
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has shifted its emphasis from preparation for mass
violence to terrorism, seeing this as more suited to the
underground conditions that the Communists are now
forced to operate.
The Terrorist Connection
We believe the PCCh's covert strategy now centers on
terrorist tactics as the best way to confront the
Pinochet regime. We suspect that the party is trying
to goad the government into a blanket repression that
could force the democratic opposition to make
common cause with the radical left. Within this
scenario, overreaction by the authorities to PCCh-
inspired terrorism would raise political tensions and
possibly re-create the polarization that characterized
Chilean society at the height of last year's protests.
Only under such circumstances could the party place
itself in the vanguard of an active and growing anti-
Pinochet mass movement.
The Communists began serious preparations for a
terrorist campaign early in 1980.
Although a few isolated bombings were carried out
inside Chile, little of consequence was achieved until
the fall of 1983, when the Communist-controlled
"Frente Cero" group was implicated by the press in a
series of terrorist incidents.
The number of terrorist incidents has increased
markedly since then
The US Embassy speculates that the Soviets
and Cubans may have increased support for PCCh
terrorism in recent months because of their perception
that the Cuban-backed terrorist Movement of the
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Revolutionary Left has been infiltrated by Chilean
security. Finally, we judge that the extent of recent
terrorist actions-dozens of bombs have been
simultaneously detonated-points to the PCCh.
Neither the Movement of the Revolutionary Left nor
several existing Socialist bands possess the human or
financial resources necessary to carry out such an
extensive offensive.
Perhaps the best indication of PCCh involvement in
recent terrorist acts is the emergence of the Manuel
Rodriguez Patriotic Front that has claimed
responsibility for a number of bombings and has
interrupted radio programs to transmit revolutionar
that the Front will grow in importance and that it
may, over the next year, eclipse the Movement of the
Revolutionary Left as the principal Chilean terrorist
organization.
Communist Fronts
The PCCh's clandestine activities are complemented
by an overt campaign that stresses mass mobilization.
commission considers the Popular Democratic
Movement to be the linchpin of open Communist
political activity and its creation to have been the
party's "single most important accomplishment" in
1983. The Movement was designed to reduce
Communist isolation from the political process and to
reestablish the traditional alliance between the
Communist and Socialist Parties.
To date, however, it has achieved very limited success.
Both the Movement and the PCCh are illegal, and we
doubt that the 1980 Constitution will be amended to
permit them to function openly any time in the near
future. The Communists are perhaps more politically
isolated now than before the Movement was created,
because their advocacy of armed resistance has
alienated the Christian Democrats and other centrist
parties. An alliance with the Socialists has been
achieved, but only at the expense of confirming the
Socialists' split between a hardline faction in the
Movement and several democratic groups that refuse
to collaborate with the Communists.
The party's other main tools of influence are the
sundry fronts created by various interest groups. But
these organizations-for women, slumdwellers,
intellectuals, artists, and so forth-have been
relatively ineffective in opposing Pinochet.
Nevertheless, they do enable the party slowly to
expand its influence among sectors that have not
traditionally supported the Communists and will
probably enhance overall PCCh leverage once Chile
returns to a pluralist political system.
Outlook
Despite their isolation and extremism, we expect the
Communists to play a significant political role in
Chile during the next few years. Factionalism among
the Socialists has facilitated the PCCh's dominance of
the left, and the party probably could muster its
traditional 15 percent of the vote if allowed to
participate in free elections. The party's ingrained
pro-Soviet stance and its ability to infiltrate other
groups will assure that it remains a threat to
democracy, political stability, and US interests in
Chile. The degree of Communist influence will be
largely determined by two interrelated factors: the
nature of the Chilean transition to democracy and the
Communists' decision on peaceful versus violent
political strategies.
We view the most probable scenario as one in which
the government and the opposition hammer out a
transition plan that excludes the Communists. In such
circumstances, the party would probably continue its
terrorist campaign and thus remain ostracized by the
democratic parties. In our view, the PCCh is likely to
remain on the sidelines during the initial stages of any
return to civilian rule. Pinochet is determined to keep
the Communists proscribed, and the Democratic
Alliance will probably not demand the legalization of
a party dedicated to violence. We believe this scenario
would help assuage conservative fears that
Communism is the sole alternative to Pinochet's rule.
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It would also make the prospect of free elections less
threatening to the regime by eliminating the
possibility that they could produce a Socialist-
Communist majority reminiscent of the Allende era.
We believe a less likely possibility to be a negotiated
settlement between the government and the
democratic opposition that leads the Communists to a
fundamental rethinking of their strategy away from
terrorist tactics. Even if the PCCh abjured violence,
however, it would be hard pressed to convince either
the regime or the Democratic Alliance of its sincerity.
Nevertheless, if the Communists were to halt all
terrorism and publicly announce a return to the pre-
1980 policy of the "peaceful road" to socialism, they
might in time regain some influence with sectors of
the democratic opposition. The Socialists, in
particular, might be tempted to cooperate with a
"reformed" PCCh, and the Christian Democrats
would probably be reluctant to participate in elections
without the Communists if the party appeared to have
turned over a new leaf. On the other hand, a less
politically isolated PCCh would make the government
and the conservative parties more leery of a return to
civilian rule. These developments, in turn, would
greatly complicate government-opposition relations
and increase political and social tensions during and
after any transition to democracy.
The least probable scenario hinges on the total
collapse of talks between the government and the
opposition. If Pinochet and his democratic opponents
fail to agree on terms for a peaceful return to civilian
rule, the Communists would probably step up their
terrorist campaign in the hope of provoking a
heavyhanded response from the regime. Should
Pinochet respond with a blanket crackdown on the
entire opposition-as opposed to his probably careful
targeting of the PCCh and the radical left-he could
quickly return Chile to last year's level of political
polarization and mass protest. With dialogue
definitively replaced by open confrontation, the
Communists would gain adherents as the only major
party that had consistently refused to negotiate with
the dictatorship. The Communists probably would
also attract democratic leftists convinced that, despite
all its faults, the PCCh alone possessed the energy and
discipline to apply sufficient pressure to perhaps
topple the Pinochet regime.
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Peru: An Early Look at
the Presidential Election
If current trends continue in Peru, we believe the
American Popular Revolutionary Alliance (APRA)
party will defeat the present center-right ruling
coalition in the presidential election in March 1985.
The party's secretary general and presidential
standard bearer Alan Garcia has built on APRA's
impressive victory in the municipal elections last year
to gain a headstart in the race for the presidency. The
US Embassy reports that the center-leftist Garcia
probably cannot obtain the simple majority needed to
secure a first-round victory. Nevertheless, if he
continues to hold the vital middle in the political
spectrum, he probably can win a runoff. We expect
the military to tolerate an APRA victory, but we also
believe it would launch a coup if the far left triumphs,
either by itself or in alliance with APRA.
The Belaunde administration's misfortunes form the
backdrop for the 1985 presidential and congressional
elections. A deteriorating economy, aggravated by
climatic catastrophes, persistent insurgency, and
major municipal election setbacks, have badly eroded
President Belaunde's base of support. In the last three
years, popular approval of his administration has
declined from 60 percent to less than 18 percent.
Recent IMF approval of a new funding agreement
will provide temporary economic relief, but the
associated austerity measures will further cut into the
President's popularity. Peruvian security forces have
reduced the capabilities of the Sendero Luminoso
insurgents in Lima and prevented the guerrillas from
disrupting municipal elections last November
everywhere except in the group's stronghold in the
southeastern Andean highlands. Nevertheless, the
insurgents' resilience has embarrassed the
administration, heightened public anxiety, and
provoked strains in civil-military relations.
The Center-Right Alliance
The Popular Action and the Popular Christian Parties
comprised Belaunde's governing coalition until April
1984, when the Popular Christians withdrew because
they believed that association with the unpopular
ruling body was hurting their electoral prospects.
Although the two center-right parties will continue to
cooperate on most issues, restoring the coalition will
depend on the willingness of the Popular Action Party
to support the presidential ambitions of Popular
Christian leader Luis Bedoya.
Popular Action is seriously divided between factions
led by Javier Alva Orlandini and Manuel Ulloa.
Ulloa's push for the presidential nomination received
a serious setback in April when Alva's faction handily
won internal party elections. We rate Alva as a strong
favorite at the national convention in July, but even if
he secures the nomination he will have to contend
with recurrent threats by Ulloa loyalists to bolt the
party.
Belaunde often has single-handedly held the party
together, but his efforts to find a compromise
candidate have so far been unavailing. Both factions
rejected novelist Mario Vargas Llosa, a political
independent and longtime presidential confidant.
Another darkhorse is former Lima mayor Eduardo
Orrego. He is convinced, however, that the ruling
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party's poor showing in municipal elections last year
indicates that any Popular Action nominee is destined
to lose.
The Resurgence of APRA
The most salient electoral development in Peru in
recent years has been the revitalization of the populist
American Popular Revolutionary Alliance. This
accomplishment is largely attributed to Alan Garcia,
a young reformist leader who has brought under
control the divisive internal struggle that threatened
the party's existence.
APRA's problems arose in 1979 after the death of the
party's founder, Raul Haya de la Torre, when two
factions vied for control. Armando Villanueva,
leading APRA's leftist faction, used his position to
neutralize the opposing moderate majority. The party
had been considered the clear favorite in the 1980
presidential and congressional elections until the
infighting cost it major victories. By October 1982,
however, the moderates united behind new leadership
because of their increasing dissaffection with the
corruption, brutality, and radical leftist leanings of
the Villanueva clique.
As APRA's new secretary general, Garcia, 33,
symbolized a generational shift in power, according to
the US Embassy. Handsome, energetic, and
charismatic, he was also able to portray himself as a
tough but reasonable leader. His public attacks on the
administration and adept manipulation of the media
have kept him and APRA in the limelight. Within the
party, Garcia settled disputes, improved relations
between central and regional leaders, and increased
control over the party's professional and working-class
organizations. He also persuaded the ideologically
diverse elements on the political committee to
cooperate in formulating an electoral strategy. This
increased unity, together with APRA's revived
grassroots structure, allowed the party to capture 38
percent of the vote and most provincial mayoralties in
municipal elections held in November 1983. Three
months later, Garcia solidified his position by
engineering his nomination as APRA's presidential
candidate.
Garcia still faces problems from Villanueva and the
party's left wing.
Garcia probably can meet the challenge by relying on
the party's moderate majority. He has managed, to
date, by regularly consulting with the party's senior
politicians and by paying occasional rhetorical
homage to Villanueva's radical leftist principles.
Although Garcia will continue to make some
concessions to Villanueva, we expect he will maintain
firm control of the party machinery, personally or
through a trusted proxy.
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The Role of the Left
The United Left was formed as an electoral alliance
for the municipal elections in 1980 under the
leadership of Lima's current mayor, Alfonso
Barrantes. Its membership comes mostly from legal
Marxist groups, but its lack of ideological cohesion
has been a major problem. To promote unity for the
1985 elections, coalition leaders agreed in April that
candidates will be selected solely under the United
Left banner and not as representatives of their
respective political parties.
The personal attractiveness of Barrantes has been a
crucial factor in the growth of the United Left, and
his election as mayor of Lima last November gave the
coalition a major base from which to build. Barrantes'
performance as mayor has been hampered, however,
by a shortage of funds and by his lack of
administrative expertise. Despite these difficulties, his
popularity does not appear to have suffered
significantly, according to the US Embassy, and he
remains the United Left's only realistic presidential
possibility. In early May, coalition leaders expressed
support for his candidacy, but he has not yet publicly
Election Strategies and Prospects
The US Embassy reports that, during the campaign,
Garcia intends to stress APRA's independence and its
traditional nationalism and anti-imperialism. He has
stated that APRA will make no formal alliances, but
rather hopes to serve as a magnet for all voters.
Garcia probably will also intensify his attacks on the
unpopular free market policies of the Belaunde
administration by promoting APRA's expansionist
economic platform.
In crafting his electoral strategy, Garcia hopes to
portray APRA as a moderate center-left alternative
between the right and the far left. Throughout the
campaign, he will compete with the United Left to
take advantage of widespread public discontent, but
we believe he will avoid radical positions that could
alienate the majority of Peruvians and especially the
military. He probably faces his greatest challenge in
dealing with growing labor unrest. Garcia must
protect his credentials as the champion of the
disadvantaged by supporting worker protests, but he
must also try to prevent labor-inspired turmoil that
might abort the democratic process.
The United Left is not likely to win the elections, but
at this point it appears to be in the best position to
challenge APRA. The coalition gained 29 percent of
the vote in municipal elections last November and
would have surpassed APRA if an additional 7
percent of its ballots had not been incorrectly filled
out. The United Left's performance in the election
next year will depend largely on the willingness of its
member parties to compromise on candidate selection
and doctrinal matters in order to present a united
front.
The outlook for the center right is bleak. The
economy is unlikely to improve sufficiently in the
months ahead to give the ruling party much of a
boost. Conscious of this, the Popular Christians
anticipate a victory by one of the leftist groups and
are focusing their efforts on trying to become the
largest opposition force.
The Military Equation
We believe the military, which ruled Peru for 12 years
prior to returning power to civilians in 1980, is a
crucial factor in the elections. The armed forces have
unseated eight presidents in the 20th century and may
do so again depending on socioeconomic pressures and
the possibility that radical leftists will gain
ascendancy.
In our view, the armed forces are more conservative,
but also more apolitical, than when they last took
power from Belaunde in 1968. The last years of
military rule clearly diminished the willingness of the
officer corps to reenter the political arena. According
to US Embassy and defense attache reporting, senior
officers would prefer to devote their energies to
rebuilding the services, but they will nevertheless be
closely gauging the presidential contest.
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The downturn in the economy and the deterioration of
internal security have strained the cordial civil-
military relations that existed at the beginning of the
Belaunde presidency. The military is concerned that
the campaign could resuscitate the sharp tensions
within congress, among the parties, and between the
legislative and executive branches that crippled
Belaunde's previous administration. Consequently,
senior officers do not want the President to allow
politics to hinder his ability to deal with pressing
national problems. More important, we believe the
armed forces want the electoral process to be
dominated by moderate political elements that pose
no threat to the military's interests.
Although APRA has taken steps to expel extremists,
we believe that the military remains deeply suspicious
of the leftist tendencies of some leaders and skeptical
about the intentions of the party as a whole. Garcia's
ability to keep APRA's left wing in line will decisively
influence military reactions, but we doubt that the
armed forces will intervene if the party, under its
present leadership, captures the presidency.
The animosity that in the past caused the military to
repress the party and prevent it from assuming office
has diminished. The US Embassy and the defense
attache report that high-level military officers and
APRA leaders are trying to improve relations. For
example, Alan Garcia took the unprecedented action
this spring of speaking at the military's most
prestigious training center. Moreover, the US
Embassy and the defense attache report the high
command believes Garcia is an acceptable
presidential candidate, implying it would accede to an
APRA victory.
If public opinion polls reflect rising popularity for the
far left during the campaign, however, it would
greatly alarm the military. The United Left's capture
of the Lima mayoralty caused some anxiety, and the
considerable turnout for a leftist-dominated general
strike in March presumably added to that uneasiness.
We believe that senior officers would seriously
contemplate intervening if APRA edges toward an
alliance with the United Left. Such a scenario appears
unlikely in the first round of the election unless
Garcia should unexpectedly lose control of the party
machinery to the Villanueva wing. If APRA's
competition in the runoff election is a center-right
party or coalition, however, pressure for an APRA
alliance with the United Left would intensify and
strengthen the likelihood of a military coup.
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Latin America
Briefs
South America IMF Austerity Under Attack
Severely strained economic conditions and sharply reduced living standards are
prompting South American governments to question whether IMF-supported
austerity programs are acceptable. With nearly all seven major South American
debtor countries presently under, or preparing for, democratic civilian
governments, economic austerity has become more difficult to sustain in the face
of growing domestic discontent. To varying degrees, the governments of those
countries that have undertaken austerity measures to gain IMF loans-Argentina,
Brazil, Chile, Ecuador, and Peru-have begun to consider shifts to growth-
oriented policies and a more radical approach to restructuring foreign debt
payments. These countries at various times have fallen out of compliance with
their IMF programs, but none have yet abandoned efforts to solve their problems
under an IMF framework.
We believe, however, that debtors will demand increased flexibility on the part of
the Fund and bank creditors to support domestic recovery. If such flexibility is not
provided, some of these countries may confront the IMF with a "take it or leave it"
demand for easier terms. Should cooperation between a debtor and creditors break
down, then the chances are good that such a government would suspend its debt
payments.
The US Embassy reports that Paramaribo may decide soon to stall talks with the
IMF and to concentrate instead on efforts to win restoration of financial assistance
from the Netherlands. A lack of preparedness on the part of the Surinamese
financial team has caused the Fund to proceed slowly with the negotiations.
Moreover, the IMF recommendations have received a cool reception from
Surinamese business leaders, who have rejected the Fund's call for devaluation;
labor has warned that strikes would follow any tax increases.
The Dutch are the only other likely source for the significant level of funding
needed by the cash-strapped economy. The Hague, however, continues to insist on
an investigation into the murders of opposition leaders in December 1982-a
condition strongly opposed by Army Commander Bouterse and others involved in
the incident. The Brazilians, for their part, will continue to offer only modest
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deeply into Surinamers' once relatively high standard of living.
technical, trade, and military assistance to Suriname, according to the Embassy.
With no significant amount of aid coming in, foreign exchange reserves have been
nearly exhausted while a virtual ban on imports has caused food shortages and cut
$300 million in debt.
Jamaica has met the last two conditions necessary to qualify for $144 million in
IMF standby and compensatory funding. Last month, Kingston reported the
satisfactory renegotiation of debt owed to Trinidad and Tobago and announced a
50- to 100-percent price hike for telephone service. According to the US Embassy,
Jamaica will apply the first IMF disbursement to clear foreign payment arrears
before approaching international bankers and the Paris Club to refinance at least
ruling party.
Labor's increasingly vocal demands for wage hikes to help offset the inflationary
effect of recent devaluations could quickly derail the new IMF program. The labor
dispute that closed the Alpart alumina facility in May, which is costing substantial
foreign exchange and government revenue, could spread to other bauxite
companies that do not have current contracts. Public utility workers also staged a
two-day strike in June and have threatened a repeat performance unless the
government concedes to wage demands. Favorable settlements for the relatively
well-paid bauxite workers could fuel the demands of other unions; but tight limits
on government spending under the IMF program will crimp Kingston's ability to
fund civil service wage hikes. Nevertheless, opposition leader Michael Manley,
who is also president of a major labor union, is likely to push for further
demonstrations against government economic policy to increase pressure on the
Costa Rica Debt Payments Frozen
off a new foreign exchange crisis.
Delays in satisfying IMF conditions for a $52 million standby credit and a lack of
foreign exchange have prompted Costa Rica to call a 90-day halt on principal
payments to foreign commercial banks. The banks agreed to the move after it
became clear that the IMF would not approve a standby credit by the 30 June
deadline. According to the US Embassy, the agreement is still not enough to stave
financial bind, however, may cause this deadline to slip as well.
USAID announced last week the disbursement of $23 million, but even quick
release of the remaining $35 million in US aid scheduled for Costa Rica in 1984
would not cover the country's foreign exchange requirements through July. The
banks want Costa Rica to raise domestic consumption taxes and clear arrears to
the IMF in order to come to terms with the Fund by 31 August. San Jose's
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Growing labor opposition to austerity measures is making an IMF program for
Honduras increasingly unlikely this year. To avert a strike on 20 June by the
country's largest union, President Suazo already has modified his new economic
stabilization package. The package still includes higher taxes and spending cuts
designed to satisfy IMF and donor conditions for future assistance.
The IMF also wants a currency devaluation or an expansion of the parallel foreign
exchange market. Tegucigalpa, however, strongly opposes a devaluation, partly
because the lempira's par value with the US dollar has not been changed for more
than 50 years. Moreover, with elections approaching in 1985, the Suazo
government will be reluctant to impose any currency adjustment that would
quickly boost inflation in the country's import-dependent economy.
Several policemen and civilians were shot during attacks on Nassau police stations
in early June, Two civilians were kidnaped and their
vehicles apparently used in the attack; they were later released unharmed. An
anonymous caller who telephoned one police station stated that 40 police officials
and politicians were on "the list to be punished." Hospital personnel who treated
the injured policemen received similar threats. The attacks may have been directed
against individuals involved in drug investigations, but the police still have no
suspects or clues.
The Governor of the British Caribbean colony of Montserrat declared a state of
emergency on 24 June after strikes by public employees disrupted water and
electricity supplies. Power has only been available for 12 hours a day and there is,
no running water. The workers are seeking 12- to 15-percent pay raises, but the
employers have offered only 5 percent and are refusing to negotiate while the
strikes continue. Unless an agreement can be reached soon, the British
Government may be forced to take action to prevent further disaster.
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Cuba Chronology
Half a million Cubans celebrate May Day in Havana by marching through
Revolution Square with signs stressing solidarity with Nicaragua and El Salvador
and pictures of Cubans killed in Grenada and Angola.
During May Day celebrations in Revolution Square in Havana, Roberto Veiga,
Director of the Federation of Workers says that "militarily, Cuba is stronger than
ever."
Madrid press reports that a result of a request by Prime Minister Gonzalez, the
Cuban Government has agreed to receive six members of the ETA terrorist group
expelled from France and sent to Panama.
3 May Granma announces that Cuba and Colombia agree to extend their accord on naval
and air hijackings for another five years.
Granma reports sugar production for the current harvest is more than 1 million
metric tons behind planned goals.
7 May The Soviet Navy fleet that had been anchored off Cuban coasts since 26 March on
an "official, friendly" visit ends its stay.
Barbados Prime Minister Adams tells Parliament that he has been told that Fidel
Castro may seek revenge on those responsible for Havana's "humiliation" last year
in Grenada.
New York Times reports that diplomats in Cuba say that Robert L. Vesco, the
fugitive American financier, has been living a reclusive life in Cuba for more than
a year.
In a news conference with South Korean reporters, Miguel Diaz, the Sports
Ministry's Public Relations officer, says that Cuba will participate in the 1988
Seoul Summer Olympics.
Jose Ramon Fernandez says Cuba is seriously concerned over the atmosphere of
hostility in Los Angeles and the lack of guarantees of security of sportsmen from
socialist countries.
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Transportation Minister Guillermo Garcia Frias visits France and is greeted by his
counterpart Charles Fiterman at Orly Airport. During his visit he will discuss
bilateral cooperation.
Jorge Enrique Mendoza, Director of Granma, says in an article published in
Pravda, condemns the mining of Nicaraguan ports with the participation of the
CIA and other aggressive actions.
Foreign Minister Malmierca meets with Felix Houphouet-Boigny, President of the
Ivory Coast, to discuss the situation in southern Africa after the failure of the
Lusaka conference on Namibia.
Alternate Politburo Member Jesus Montane receives Vietnamese Minister Vo
Dong Giang. Montane expresses Cuba's full support for the Vietnamese people's
struggle against Chinese expansionism.
President of the National Assembly Flavio Bravo and China's Ambassador to
Cuba Wang An meet in Havana and agree to improve and develop friendly
relations.
The Cuban Foreign Ministry issues a statement condemning China's acts of
aggression against Vietnam's northern border provinces since early April.
Foreign Minister Malmierca arrives in Algiers on a four-day official visit. In a
press statement, he discusses the situation in Latin America and condemns US
aggression in that area.
Transportation Minister Guillermo Garcia Frias visits Spain to discuss the
possibility of a bilateral agreement for the construction and sale of Spanish ships to
Cuba.
Cuban and field athletes tell Radio Havana that the decisions made by the
Olympic Committee of the USSR and other socialist nations not to attend the Los
Angeles Olympics are justifiable.
Carlos Rafael Rodriguez presides over the coordination meeting of the Latin
American Economic System in Havana. Hector Rodriguez Llompart says Cuba
supports the call for a meeting on foreign debt.
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The Cuban Olympic Committee in Havana reports that Cuban athletes will not
participate at the 23rd Olympic Games in Los Angeles, but Cuban judges will
attend.
Foreign Minister Malmierca arrives in Rome and discusses the Central American
crisis and Italo-Cuban relations with Foreign Minister Andreotti.
Foreign Minister Malmierca signs a joint communique with Tanzania rejecting
any efforts to link Namibia's independence to the presence of Cuban troops in
Angola and to support liberation movements.
30 May Havana International Service accuses the CIA of biological warfare against Cuba.
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