LATIN AMERICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00289R000200920001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 56
• Document Creation Date: December 27, 2016
• Document Release Date: August 1, 2011
• Sequence Number: 1
• Publication Date: October 25, 1985
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000200920001-6
Directorate of
Intelligence
Review
MA'STETIATILEW COPY Secret
Latin America
-s,.er---,.-
ALA LAR 85-023
25 October 1985
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Latin America
Review
Articles Argentina: Election Preview
The vote on 3 November for half of the seats in the lower house of
the National Congress and many seats in provincial legislatures will
largely be a referendum on President Alfonsin's popularity and on
his economic austerity program.
Guatemala: Election Roundup 7
None of the candidates in the presidential election on 3 November
have argued forcefully for reform and austerity measures necessary
to forestall further economic decline.
Brazil:, Municipal Elections) 11
Although no national offices are at stake in mayoral elections on 15
November, the vote may help determine President Sarney's
successor in 1988 and clarify the present chaotic political situation.
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Panama: Strongman Noriega F---] 17
President Barletta's forced resignation in late September
underscores General Noriega's domination of the civilian
government.
Guyana: Hoyte Taking Charge 21
President Hoyte, who assumed office after the recent death of
President Burnham, appears in control and is unlikely to make
major policy changes in the near future.
Chile: Cardinal Fresno, An Emerging Political Actor I 25
Cardinal Fresno, who brokered the national accord proposal for a
transition to civilian rule signed by 11 political parties, has come to
be regarded as a major antagonist by President Pinochet.
Secret
ALA LAR 85-023
25 October 1985
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Mexico: Economic and Political Impact of the Earthquakes I
129
Despite the damage from the earthquakes, Mexico City has
benefited by gaining a temporary respite from international
creditors and strengthened its case for international financial aid.
Mexico: Growing Activism Among Northern Businessmen
33
Members of the northern business community are moving into a
more openly confrontational stance toward President de la Madrid
over what they perceive as the government's antibusiness policies.
Mexico: Mounting Difficulties for New Governor I
35
Mayoral elections in the northern border state of Nuevo Leon on 10
November are likely to weaken Governor Trevino's position
regardless of the outcome.
The Castro regime is supporting independence movements in the
smaller island nations of the South Pacific, while at the same time
preparing to enhance its legitimacy in the region by establishing
diplomatic relations with Australia and New Zealand.
Brazil: Guerrilla Spillover From Peru and Colombia
41
Cuba-Uruguay: Resumption of Relations
41
Caribbean: Mixed Results for CBII
42
Mexico: National Defense Commission FormedF--]
42
Cuba Chronology
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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Argentina:
Election Preview
On 3 November, Argentina will hold its first elections
since President Alfonsin took office in 1983. Half of
the seats in the lower house of the National Congress
and many in the provincial legislatures-which
choose the national senators-will be contested. The
vote, in our view, will largely be a referendum on
President Alfonsin's popularity and on the economic
austerity program he implemented in June. The ruling
Radical Civic Union (UCR) hopes to retain its
absolute majority in the lower house and do well
enough on the provincial level to pave the way for
acquiring working control of the Senate. Most
important, the elections will help determine whether
Alfonsin feels he has the political strength to press
ahead with his bold economic reform package or
begins to heed interest group pressure to dilute the
program.
Alfonsin's Radicals: Flying High
During the first half of this year most knowledgeable
observers were predicting an electoral drubbing for
Alfonsin's centrist UCR. The President appeared to
have no plan to battle an inflation rate of over 1,000
percent, the military was openly grumbling over the
trials of top generals for human rights abuses, and
political pressure from the opposition Peronist labor
movement mounted daily. Polls showed that
Argentines intended to cast protest votes for small
parties of the right and the left and that the Radicals
would be lucky to conserve the support of two-thirds
of the 52 percent of voters who backed the UCR in
1983.
recessive impact, the adjustment program was highly
popular with the public, which, according to the US
Embassy, felt that the President's firm leadership had
saved Argentina from economic chaos. Nearly four-
fifths of the populace supported the measures when
they were announced, and relative price stability-
inflation for September was only 2 percent-has since
kept approval ratings in the 60-percent range. This
positive attitude toward the government and Alfonsin
has directly benefited the UCR. The President has
campaigned extensively for Radical candidates and,
in our view, has successfully linked his personal
popularity to his party's electoral fortunes. The latest
polls show the Radicals with a 2-to-1 lead over their
closest rivals, the Peronists.F___1
Several other government initiatives have bolstered
the political standing of both Alfonsin and the UCR:
? The Beagle Channel treaty with Chile, which was
overwhelmingly approved by a referendum last
year, gave the regime a clear-cut foreign policy
success that at least partially offset the lack of
progress in resolving the Falklands dispute with
Great Britain.
? The trials of the former junta members, after some
initial military protests, have proceeded smoothly.
The prosecutions have underscored Alfonsin's
determination to consolidate democracy in
Argentina, a goal, according to polling data, that is
widely shared by the general public.
This picture changed dramatically in June, when
Alfonsin turned to "shock treatment"-including
wage and price controls, efforts to cut the budget
deficit and restrict monetary expansion, and a new
currency-to curb inflation. Notwithstanding its
? The government's simultaneous trials of leftist
terrorists have enhanced its reputation for
evenhandedness and made clear that the military
trials are not just a vendetta against the armed
forces.
Secret
ALA LAR 85-023
25 October 1985
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The UCR, however, has not rested entirely on
Alfonsin's laurels. The party itself has numerous
positive qualities-especially when compared to the
chaotic infighting that plagues Peronism. Radicalism,
in our view, is the best organized and most dynamic
political force in Argentina. It has an infrastructure in
every province and an energetic youth sector that has
been effectively mobilized during the campaign.
While Alfonsin's leadership of the UCR is virtually
unquestioned, the party has not stifled internal
dissent. A relatively wide range of opinion, from the
center-right to the moderate left, now finds a home
within Radicalism, thereby helping the party expand
beyond its traditional middle-class constituency. Polls
show that today about 20 percent of Radical voters
are blue-collar workers; a slightly higher proportion
are upper middle class; and UCR support is divided
almost equally among individuals with primary,
secondary, and college educations.
Peronism in Eclipse
Peronism has been adrift since the death of its
founder, Gen. Juan Peron, in 1974. No charismatic
leader has emerged capable of directing the disparate
populist/nationalist movement, and the resulting
leadership vacuum, in our view, has allowed a coterie
of discredited political and labor bosses to seize
control of the party. At a "unity" congress in July,
two of the most controversial figures in Peronism-
Vicente Saadi, a leftist with widely reported links to
Montonero terrorists and the ultrarightwing
Herminio Iglesias-temporarily defeated moderate
leaders seeking to reform and democratize the party.
Saadi and Iglesias, along with trade union leader Saul
Ubaldini, have launched a vituperative campaign
against the government's "pitiless" austerity program
and the "usury" of the IMF and the international
banks. The electorate, however, appears unconvinced
that the Peronists possess a viable alternative to
Alfonsin's austerity package. Polls show that only
about one-fifth of voters-down from 40 percent in
1983-intend to cast a ballot for the Peronists in
November.
Part of this poor showing stems, in our view, from the
intense infighting that continues to afflict the party
and demolish the fragile unity achieved at the July
congress. In August, Peronist moderates ousted party
First Vice President Saadi from his post as leader of
the Peronist bloc in the Senate, and in the Federal
District of Buenos Aires a young reformist leader
bested the official Peronist slate in internal party
elections. The most potentially divisive conflict has
occurred in populous Buenos Aires Province, a
Peronist bastion long dominated by party Secretary
General Iglesias. Reformist party members in the
province have spurned Iglesias and are running an
"independent" Peronist ticket in the elections.
We believe a more fundamental cause of Peronist
decline is the party's decaying demographic base.
Once a broad-based movement whose working-class
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core was complemented by significant support from
the middle class and the intelligentsia, Peronism has
become, according to one Argentine analyst, a party
of the "old, the uneducated, and the poor." Polls show
that Peronism is backed almost exclusively by urban
industrial workers and peasants from the
underdeveloped interior provinces-dwindling
segments of the electorate. And in a country with
perhaps the highest literacy and education rates in
Latin America, one study reveals that only 2 percent
of university-educated voters identify with Peronism.
The US Embassy reports that Peronist reformers are
aware of these problems and expect that defeat in
November will finally discredit the party's old guard.
Although these moderates believe they will then be
able to take over the movement and rebuild it on
firmer foundations, any such reconstruction will, in
our view, be a long, arduous, and uncertain process.
Ferment on the Left
Peronism's monopoly of working-class support has,
according to several academic studies, precluded the
emergence of a strong socialist or Marxist current in
Argentine politics. The movement's disarray in recent
years, however, has given new impetus to the
Argentine left, which hopes to lure disgruntled
Peronists into its ranks. Although polls show that
leftists are beginning to make such gains, they must
overcome several obstacles before becoming a major
political force:
? The workers' enduring allegiance to the Peronist
labor movement remains an effective barrier to
leftist influence. The trade unions, unlike the party,
are well organized and fairly effective. Until leftists
achieve prominence within organized labor, Peronist
unions will, in our view, continue to deliver a large
part of the worker vote to the Peronist party.
? The left is plagued by factionalism, byzantine
ideological disputes, and personal quarrels. A welter
of social democratic, socialist, Communist,
nationalist-leftist, and Trotskyite parties are
competing against one another in the November
elections, thus splintering the already small leftist
vote.
Despite these difficulties, one leftist group-the
Intransigent Party (P1)-has made impressive
progress during the past two years. The PI has
traditionally espoused an ill-defined mix of
nationalism and populism. Originally an offshoot of
the UCR, many members-including, in our view,
party founder Oscar Alende-are middle-class
socialists only dimly aware of the radical implications
of their rhetoric. The US Embassy and the press
report, however, that since 1983 the PI has attracted
numerous hardcore Marxists, who have helped party
radicals defeat moderates in recent internal elections.
The PI has moved so far left that, according to one
press report, a delegation of Spanish Communists
visited Argentina last year to study it as an example
of "Eurocommunism."
Polls give the PI from 10 to 15 percent of the vote in
greater Buenos Aires-which comprises over a third
of the nation's electorate-but only minimal support
in the interior provinces. We expect that its
nationwide total will far exceed the 2.4 percent polled
by Alende in the 1983 presidential race. The PI is
aided by an active, youthful membership, and its
aggressive campaign to repudiate the foreign debt and
reactivate the economy is being well received by left-
leaning working- and middle-class voters alienated by
Peronist infighting. Although the PI probably will
control no more than 20 seats in the next legislature,
this will enhance the party's legitimacy and give it a
platform from which to propagate its radical, quasi-
Marxist ideology.
The Right in Disarray
Prior to mid-June, the right expected to make
significant gains in the November elections. The chief
conservative party, Alvaro Alsogaray's Union of the
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Democratic Center (UCD), was attracting a middle-
class following by prescribing free market economics
and rigorous austerity to combat runaway inflation.
Alsogaray's apparent willingness to take drastic
economic measures helped compensate for his party's
scant support outside greater Buenos Aires and his
own association with numerous military governments
since 1955. The prospect of a strong showing also
instilled a spirit of cooperation among the
traditionally fractious right, which saw the contest as
a chance to recover from its 1983 debacle, when
conservative parties polled under 5 percent of the vote.
Alfonsin's economic adjustment program, in our view,
effectively dashed these hopes. By seizing the banner
of responsible economic management from the right,
the President deprived the UCD and other
conservative parties of their main electoral appeal.
Although Alsogaray and other conservatives have
quibbled with many aspects of the program, they have
not offered a substantially different alternative. The
UCD's standing in the polls has dropped in recent
months and Argentina's conservatives have reverted
to their customary disunity. Although the right
probably will improve on its 1983 tally, we doubt that
it will emerge as a major civilian political force over
the next year.
Outlook for Economic and Political Stability
We expect the UCR to preserve its majority in the
lower house and make substantial gains in the
provincial legislatures. This would assure Radical
control of the lower house through 1987 and allow the
UCR eventually to improve its position in the Senate.
Alfonsin would almost certainly interpret such a
result as a vote of confidence for his economic policies.
The President would then be more likely to tackle
some of the vexing economic problems-the large
budget deficit, inefficient public-sector companies, an
antiquated industrial plant-that must be resolved if
his program is to succeed in the long run. Although a
Radical victory in November would by no means
guarantee a vigorous assault on Argentina's economic
ills, a severe electoral setback for the UCR would
almost certainly jeopardize the progress made so far.
Such a surprise defeat would boost the influence on
Alfonsin of advisers who want to sacrifice austerity
EXTRAVIO Per Landru
111111?1IV
--lNo la encuentrof eDdnde estd /a plataforma del
partido?
-eNo se /a habrd ilevado Alfonsin?
-(Alsogaray): I can't find it! Where is our party's Garin
Platform?-Hasn't Alfonsin carried it off?F__1
for job creation and pursue radical approaches to the
repayment of Argentina's foreign debt. If
implemented, these policies probably would reignite
inflation, spur foreign creditors to withdraw new
loans, and cause Buenos Aires's IMF agreement to
unravel.
The impact of the November elections on Argentina's
political evolution will be more complex. We do not
believe, for example, that a landslide UCR victory
that leaves Peronism in shambles and converts the PI
into the government's chief opposition would enhance
overall political stability. This scenario would
strengthen Alfonsin in the short term, while
precluding the emergence of a revitalized Peronist
party as a moderate democratic alternative to the
UCR. The PI and the increasingly militant labor
movement probably would then become rallying
points for opposition to the government, giving
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ultraleftist forces considerable influence should
Alfonsin incur serious political or economic
difficulties.
A less crushing Peronist defeat would, in our view, be
more conducive to long-range political stability. This
would be particularly true if Argentine voters
castigate the party's discredited official candidates
and reward the various "reformist" or "independent"
Peronist slates. The moderate and democratic forces
within Peronism might then be able to pick up the
pieces of the shattered party, do a thorough
housecleaning, and transform it into a working- and
middle-class-oriented social democratic movement.
Such a development probably would take years and
would not immediately threaten the UCR's and
Alfonsin's dominance of Argentine politics. It could
lay the foundation, however, for an alternation of
power between two democratic parties and minimize
the influence of three of Argentina's traditional
sources of political instability-the radical left,
organized labor, and the military.
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Guatemala:
Election Roundup
As Guatemala's election campaign heads toward the
vote on 3 November, the major presidential
candidates are avoiding the issues in favor of more
personalistic politics. Although the campaign has
been conducted amid seriously declining economic
prospects, none of the candidates have argued
forcefully for reform and austerity measures that we
believe are required to forestall further economic
deterioration. Fourteen parties-representing a broad
political spectrum-are participating,
Vinicio Cerezo Arevalo of the
center-leftist Christian Democratic Party (DCG) and
Jorge Carpio Nicolle of the National Centrist Union
(UCN)-both pro-US moderates-are the front-
runners. Neither, however, is likely to win a majority
on the first ballot, necessitating a runoff between the
two top votegetters on 8 December. Although
prohibited under the electoral law from forming
official coalitions after the first round, (sp) there
already are signs of behind-the-scenes maneuvering to
build nonofficial alliances in anticipation of the
Throughout the campaign, Cerezo has quietly courted
the military by giving assurances that he does not plan
to follow the example of President Alfonsin in
Argentina and punish military officers for past
abuses. Moreover, according to the US Embassy=
he has tried to
reassure the armed forces that he will not attempt to
open a dialogue with leftist insurgents as has
President Duarte, his Christian Democratic
counterpart in El Salvador. In an effort to deflect
criticism from Serrano and others that he is too
closely associated with the military, Cerezo has taken
a strong public stance against military interference in
civilian government.
Cerezo's economic platform has relied heavily on his
pledge to find postelection external financial support
to reverse the country's economic slide.
second round.
Key Parties and Candidates
The Christian Democratic Party. The US Embassy
reports that the DCG-representing the center-left-
is run by a well-seasoned leadership that has
attempted to portray its candidate as the only one
capable of attracting foreign investment and reversing
Guatemala's international isolation. Running on a
slogan of "credibility and confidence," the party's
support comes from mainstream lower middle class,
campesinos, labor groups, youth and other reformist
elements, including the Catholic Church. Cerezo's
strategy appears predicated on the belief that he is
unlikely to win a,majority on the first ballot, and US
Embassy reporting indicates that his advisers already
have begun planning for a runoff. Diplomatic sources
indicate party leaders currently believe that Cerezo
would have a better chance of defeating Carpio of the
centrist UCN than he would the center-left
Democratic Party of National Cooperation/
Revolutionary Party (PDCN/PR) coalition ticket
would focus on increasing government revenues by
reforming tax collection procedures. Moreover, his
public statements to date indicate he also would be
likely to concentrate on integrating Guatemala's
peasant farmers into the national economy by
supporting cooperatives and providing financial
credits, rather than embarking on politically risky
land or tax reforms.
National Centrist Union. The UCN-the major
party of the political center-has proved resilient in
the face of defections by key coalition partners from
the right and left. Throughout the campaign, the
UCN has carried out an extensive public relations
effort to keep party coffers solvent and its candidate
in the political forefront. Nevertheless, Carpio's
generally lackluster public showing reportedly has
headed by Jorge Serrano Elias.
Secret
ALA LAR 85-023
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Guatemala: Election at a Glance
Left
Center
Center Right
Right
Extreme Right
Social Democratic
Christian
National
National Renewal
National
National Liberation
Party (PSD)
Democratic Party
Centrist Union
Party (PNR)
Authentic
Movement (MLN)
(DCG)
(UCN)
Center (CAN)
Civic Democratic
Democratic
Peoples Democratic
Institutional
Anti-Communist
Front (FCD-5)
Party of
Force (FDP)
Democratic
Democratic Front
National
Party (PID)
(PUA)
Cooperation
(PDCN)
Revolutionary
Emerging Movement
National Unity
Party (PR)
for Harmony (MEC)
Front (FUN)
The Major Presidential Candidates
Key Dates
Vital Statistics
Vinicio CEREZO Arevalo, DCG
3 Nov 85 National elections
Eligible voters-3.9 million (estimate)
Jorge CARPIO Nicolle, UCN
8 Dec 85 Presidential runoff
Registered voters-2.8 million (estimate)
Jorge SERRANO Elias, PDCN
14 Jan 86 Presidential inauguration;
Registered parties-14
Mario SANDOVAL Ala
MLN
Constituent Assembly
rcon,
dissolved and new Congress
Congressional seats-100
sworn in; new constitution
Governorships-not applicable
enters into force.
Mayoral/local races-329
cost him some support and raised questions among
seasoned political observers about his ability to lead a
verbal offensives during the campaign often have put
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civilian government forcefully.
Not unlike the platforms of his opponents, Carpio's
economic program has been long on generalities and
short on specifics. More recently, he has made his
promise to provide some 250,000 new jobs in his first
year in office the centerpiece of his economic
program. The US Embassy, however, reports that he
has been noticeably silent on details, including how he
would pay for such an expansion.
The Democratic Party of National Cooperation. The
US Embassy reports that the PDCN Serrano-
running third in most polls-has the potential to play
the role of spoiler and is likely to have considerable
clout in a runoff between Cerezo and Carpio.
Embassy reporting further indicates that Serrano
remains one of Guatemala's most articulate,
charismatic, and controversial politicians, whose
him in the political spotlight.
Serrano's party draws a large measure of its support
from evangelical Protestant groups, peasant
cooperatives, and moderate members of the middle
and upper classes. In our judgment, Serrano probably
is correct in predicting that his coalition running
mate's well-known election symbol-a map of
Guatemala-will win him support from illiterate
voters, but we also believe his chances have been hurt
by his party's lack of organization and the
questionable value of evangelical support in a largely
Catholic country.
Serrano's campaign has focused largely on his
allegations that the election is being rigged by the
military. Convinced that he would win a fair contest,
he appears prepared to charge fraud if he is not
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The National Liberation Movement. Historically the
strongest and best organized of Guatemala's
traditional parties, the National Liberation
Movement (MLN) has been openly described by its
longtime leader, Mario Sandoval Alarcon, as the
party of "organized violence." As the party of the
extreme right, support for the MLN traditionally has
come from the most conservative large landowners
and business-oriented segments of the middle class.
More recently, we believe any chance the party had to
win has been considerably dimmed by Sandoval's
refusal to relinquish control to more moderate leaders,
and the decision last summer of the more moderate
right to pull out of coalition.
Furthermore, although the US Embassy reports that
Sandoval has attempted to convince voters that he has
moderated his views,
he is having difficulty escaping his political past. The
MLN has been blamed by some for inciting
antigovernment riots during strikes and
demonstrations over busfare hikes in late August. The
US Embassy also reports that Cerezo has accused
Sandoval of orchestrating an assassination attempt
against him in June 1985.
Minor Parties. In our judgment, none of the minor
parties contesting the election are likely to win a
sizable share of the votes during the first round. We
believe, however, that their significance will increase
during a runoff as the major contenders scramble for
support. Although US Embassy reporting suggests
that most minor parties already have tipped their
hand-at least privately-as to where they will throw
their support in any runoff, we expect hard bargaining
as they attempt to maximize their influence.
Campaign Atmospherics
Overall, the campaign appears to have generated
popular enthusiasm, and the US Embassy
indicate that the major candidates
have each tried to portray themselves as "the new
face" in the political arena. Embassy reporting
indicates, however, that not only have they failed to
articulate a coherent platform, but also none have
succeeded in projecting an image of statesmanship.
Instead, most have resorted to personal attacks that
impugn the honesty and competence of their
opponents. A recent public debate, for example,
quickly degenerated into an emotional exchange of
insults, with Christian Democratic candidate Cerezo
making particularly harsh attacks against his rivals.
We believe the emphasis by the major candidates on
appealing to better educated urban voters has given a
clear advantage to those with access to or control of
Guatemala's major media outlets. Carpio and
Serrano, for example, have made extensive use of two
of Guatemala's major daily newspapers, El Graliico-
owned by Carpio-and La Hora-directed by a
PDCN stalwart. The US Embassy also reports that a
candidate of a minor party has benefited from
political exposure afforded by his popular television
news program.
Despite vindictive personal attacks, all the candidates
have attempted to avoid rhetoric that could incite civil
unrest and provoke the military to delay or cancel the
elections. Antigovernment riots in late August and
early September, for example, led most candidates to
back off from earlier criticism of the regime's
economic policies. Most have avoided public
discussions of politically sensitive civilian-military
relations in the new government.
Outlook
We believe the military remains committed to
carrying out elections and that the current regime will
be able to see the elections through to completion.
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the two top votegetters-now set for 8 December-is
likely. We agree with most local polls-whose
findings are backed by nonpartisan political
observers-that suggest that Cerezo and Carpio are
the most likely candidates to face each other in the
second round of balloting.
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Secret
We expect the interim period between elections to be
marked by increasingly intense maneuvering for
support by first-round winners, while losers jockey for
promises and advantages from political suitors.
Campaign rhetoric is likely to continue to focus on
personal attacks, with each candidate attempting to
discredit the other.
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Brazil:
Municipal Elections
President Sarney has remained largely aloof from the
current mayoral campaigns and no national offices
are at stake, but the elections scheduled for 15
November nevertheless will significantly affect the
shape of Brazil's mutating political system. For
example, the outcome in the cities of Sao Paulo and
Rio de Janeiro may, in our view, help determine
Sarney's successor in 1988. In the shorter term, the
contests will clarify the presently chaotic political
scene by wiping out many of the tiny political parties
that have sprouted up since the country returned to
democracy early this year. They may also give Sarney
a political boost by weakening a party in the coalition
government that has undercut many of his programs
while strengthening political forces more closely allied
with the President.
Election Trends
Brazilian elections-especially on the local level-
traditionally revolve around candidates' personalities,
the influence of local political bosses, and the control
of patronage and campaign funds. Broader political
issues and ideologies usually play a secondary role.
Most political parties are loosely organized, plagued
by infighting, and lack strong national leaders.
Currently, the only party possessing a national
organization is the Brazilian Democratic Movement
Party (PMDB), the center-left force which was the
principal opposition to the old military regime and is
now the largest partner in Sarney's coalition
government, although he is not a party member. Even
the PMDB, however, has failed to present a united
front during the current campaign.
The squabbling among PMDB leaders has boosted its
rivals' chances in many cities. Foremost among these
is President Sarney's centrist Liberal Front Party
(PFL), which opposes the PMDB in many local races
despite their alliance at the national level. Press
reporting indicates that the PMDB may win little
more than half of the city halls up for grabs in
November, and that it may not run well in many
politically important southern and central cities.
Nonetheless, the PMDB is capable of rallying its
forces in the final stages of the campaign, and could
reverse its downslide. The results in Rio de Janeiro
and Sao Paulo-Brazil's major industrial centers-
will be crucial to both the future of the PMDB and
the fortunes of several politicians who hope to succeed
Sarney.
The most prominent contenders for the presidency are
two leftist leaders-Senator Fernando Henrique
Cardoso of the PMDB in Sao Paulo and Governor
Leonel Brizola who heads the Rio de Janeiro-based
Democratic Workers' Party. The death of President-
elect Neves in April left the PMDB without an
identifiable national leader to succeed Sarney. Many
PMDB militants dislike and distrust the President
and view him as a transitional figure. Several key
moderate PMDB leaders believe that Cardoso is an
attractive alternative to both Sarney and the
demagogic and unpredictable Brizola, according to
the US Embassy. Brizola has long advocated radical
policies anathema to Brazil's political elite, and the
military harbors longstanding hostility toward him
stemming from his role in the civilian government
that the armed forces overthrew in 1964.
The Rio Election and Brizola's Future
Brizola, in our view, has virtually staked his political
career on the Rio race. His party's mayoral candidate,
Senator Saturnino Braga, is widely viewed as a
stalking-horse for Brizola; the campaign is being
fought over the Governor's personality and record in
office, rather than over Braga's image or program.
Brizola also is casting the campaign as a vote of
confidence in the Democratic Workers' Party and
hopes that a Braga victory will help him to expand the
largely Rio-based party into other regions in time for
next year's Congressional and gubernatorial elections.
Polls show Braga running neck and neck with his
opponents from the PMDB and the PFL.
Secret
ALA LAR 85-023
25 October 1985
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Secret
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Leonel de Moura Brizola (63) ... Governor of Rio de
Janeiro State since March 1983 and founder-leader
of the Democratic Workers' Party ... charismatic
and phenomenally successful campaigner given to
populist rhetoric . .
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ZoA]
.. has
won widespread praise for his efforts to educate Rio's
slum children ... exiled to Uruguay by the military
in 1964 as a dangerous radical ... returned to Brazil
in 1979 under general amnesty of Figueiredo regime
... married to sister of leftist President Joao
Goulart, overthrown by military in 1964.
that a PMDB-PFL front is unlikely because of the
strong personal animosities that divide Braga's
opponents. We concur with the Consulate's view that
the outcome of the election will hinge on the moves of
12 or so minor party mayoral candidates. Most of
them are expected to withdraw from the race as
election day nears and sell their support to one of the
three main contenders-Braga, or his PMDB, or PFL
opponents.
The Sao Paulo Election and the PMDB's Future
Another race with national political implications is
the mayoral contest in Sao Paulo. Polls show the
voters are almost evenly divided between Cardoso, a
PMDB leftwing intellectual, and Janio Quadros, an
eccentric 68-year-old ex-President of Brazil, running
on the ticket of the small rightwing Brazilian Labor
Party.
Cardoso leads the PMDB in the national Senate, and 25X6
radical Brizola.
is popular among liberal middle- and upper-class
Brazilians. He also has received significant financial
backing from a group of Sao Paulo entrepreneurs,
according to the US Embassy. These businessmen,
including members of the media elite, probably see
Quadros-whose checkered political career has
created as many enemies as friends-as too
unpredictable to support. More important, they
consider Cardoso to be the top PMDB contender for
governor of Sao Paulo next year and for the
presidency after that, according to the Embassy.
Although his leftwing views are hardly compatible
with those of the conservative businessmen, they view
Cardoso as the most electable alternative to the more
Nevertheless, the PMDB is not fully behind Cardoso's
candidacy. Regional rivalries-especially between the
States of Sao Paulo and Minas Gerais-have proved
stronger than party loyalty. The US Embassy reports
that many PMDB leaders outside of Sao Paulo fear
that a Cardoso victory will further concentrate the
party's power in Sao Paulo State. The Embassy also
reports that Sarney's recent appointment of Dilson
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Fernando Henrique Cardoso (about 53) ... PMDB
standard bearer in the Sao Paulo mayoral race ...
senator from Sao Paulo State since 1983.. .
handpicked by the late President-elect Tancredo
Neves to lead the governing coalition in the federal
legislature ... internationally known sociologist and
author ... onetime University of Sao Paulo professor
who turned politician in middle age ... moderate
reformer and self-styled socialist who lost his
political rights and his professorship in the late 1960s
as a result of his opposition to military regime ...
founder and still head of Brazilian Center for
Analysis and Planning, a prestigious academic think
Funaro of Sao Paulo as Finance Minister completed
what many in the PMDB resent as that state's
domination of the President's economic team.
Quadros' flambouyant rightwing populism has won
him a substantial working-class and lower-middle-
class following. This is complemented by support from
Janio Quadros
Janio da Silva Quadros (68) ... Brazilian Labor
Party candidate and current front-runner in Sao
Paulo mayoral contest ... volatile and given to
rightwing populist rhetoric ... still charismatic and
.. resigned the presidency in
1961 after eight months in office, blaming "occult
forces" conspiring against him ... suffered a 10-year
suspension of his political rights after the 1964
military takeover ... was active in opposition politics
during the remaining years of military rule F_
many small and large businessmen and from about
half the directors of the conservative Sao Paulo State
business federation who, according to the US
Embassy, find Quadros' volatility less threatening
than Cardoso's leftwing politics. In addition, Sarney's
Liberal Front has endorsed Quadros, thereby splitting
the PFL from its coalition partner in Brasilia. In
return for PFL support, Quadros is expected to assist
Foreign Minister Setubal if he runs for governor of
Sao Paulo on the Liberal Front ticket next year,
according to press reports. The US Embassy believes
that Quadros could again be a factor on the national
political scene if he wins the Sao Paulo election.
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Outlook for Sarney
We believe major PMDB losses in southern and
central Brazil would strengthen the President's hand
in dealing with the PMDB-controlled Congress.
Sarney's relationship with the PMDB congressional
leadership has been uneasy; party leaders have stalled
action on several of his initiatives, including a bill to
elect a constitutional assembly and his proposed
"national social pact"-a broad-based agreement
designed to strengthen the President's meager
political base. Moreover, any serious PMDB losses at
the polls would make it easier for the President to
reshuffle the PMDB-dominated Cabinet he inherited
from the late President-elect Neves. The US Embassy
reports that Sarney is likely to accept cabinet
resignations by May 1986, when many ministers are
legally required to leave the Cabinet if they want to
campaign for congressional or gubernatorial office.
An electoral setback for the PMDB would, in our
view, permit Sarney to implement Cabinet changes
even sooner, choosing fewer ministers from the
PMDB and more from his own party and from
political independents.
Implications for Brazilian Politics
A victory by Braga in Rio de Janeiro would enable
Brizola to extend his party organization beyond Rio
and establish alliances with other leftwing politicians.
Such an effort probably would enable Brizola's party
to field candidates in next year's congressional
elections and position him to make a presidential bid
when Sarney's term expires in 1988. A Braga victory
might also provide the glue to maintain Sarney's
shaky coalition. We believe that fear of Brizola could
keep the PMDB-PFL alliance functioning-at least
on the national level-through the constitutional
assembly slated for early 1987. The threat of a
Brizola candidacy probably would spur moderates in
both parties to collaborate closely in the assembly to
enact electoral rules that would minimize the
controversial Governor's chances of reaching the
and they probably would become adversaries, running
rival slates in coming congressional and gubernatorial
elections.
The outcome in Sao Paulo also will affect the
restructuring of the Brazilian party system and the
succession to Sarney. We believe a Cardoso win-
especially if combined with a Braga victory in Rio-
would partially reduce the impact of PMDB losses
elsewhere and keep the party relatively united.
Although many PMDB leftists might defect to
Brizola, in our view, Cardoso would have a chance of
holding the broad-based movement together if he
emerged as the major barrier to a Brizola presidency.
Such a development would limit the growth of
Sarney's PFL and help keep the governing coalition
working in tandem over the coming year.
If Cardoso fails in his mayoral bid, the Brazilian
party structure could become even more fluid.
Recriminations over defeats in Sao Paulo and other
key cities almost certainly would intensify the already
considerable infighting in the PMDB and severely
weaken the party. This scenario would be most likely
if a Braga loss in Rio lessened the threat from Brizola
and the concomitant need for Brazil's establishment
politicians to hang together. Irrespective of Brizola's
fortunes, however, the PMDB would be forced to
streamline and consolidate its political base, acquire a
popular leader, and repair at least some of its
divisions. Without such reforms, either Sarney's PFL
or perhaps a disparate coalition headed by a
charismatic leader such as Quadros might eventually
replace the PMDB as Brazil's major political force
and provide the country's next president.
presidency.
A loss by Braga, however, would diminish Brizola's
presidential prospects, thereby reducing the incentive
for the PMDB and the PFL to work together. Under
such circumstances the bad blood between the parties
on the local level might extend to national politics,
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Secret
Panama:
Strongman Noriega
The forced resignation of President Barletta in late
September underscores the central political role of
Defense Chief Manuel Noriega and the continuing
fragility of civilian government in Panama.
Noriega
has constructed an impressive power
base over the years, with close ties to all of Panama's
important institutions. Although the Defense Forces'
involvement in a murder scandal has fanned
antimilitary sentiment and sparked some grumbling
in the ranks, we believe Noriega's position remains
secure. The Defense Chief will continue to exercise
control over the civilian government and President
Delvalle will dance to his tune. Like Barletta, Delvalle
may be pushed aside at any time.
Milestones in Noriega's Military Career
July 1962
September 1962
1968
Graduated from Peruvian Mili-
tary Academy
Commissioned Second Lieuten-
ant in National Guard
Supported General Torrijos's bid
for control of military
government
December 1969 Backed General Torrijos during
countercoup
Noriega has been a key figure in the military since
1970, when Gen. Omar Torrijos appointed him
Assistant Chief of Staff for Intelligence as a reward
for his loyalty during an attempted coup the previous
year. During 12 years as Chief of Intelligence, July 1981
Noriega developed a wide range of contacts and
influence, often employing ruthless methods in
attaining his objectives
In 1983, Noriega was promoted to General
and assumed command of the National Guard when
the incumbent, General Paredes, retired to run for
President. Noriega then executed a series of political
maneuvers calculated to increase his authority, which
included reorganization of the Guard into a
conventional military organization-the Defense
Forces of the Republic of Panama-to assume the
defense of the Panama Canal when the United States
cedes control in the year 2000. He also frustrated
Paredes' bid for the Presidency and instead
engineered the election of technocrat Nicolas Barletta
last year
Building a Power Base
Noriega, a crafty politician, has-magnified his
influence by cultivating bonds with a number of
institutions. Of these, the military-the primary force
April 1982
December 1982
August 1983
September 1983
Named Assistant Chief of Staff,
Intelligence, with concurrent pro-
motion to Lieutenant Colonel
Torrijos killed in air crash
Named Deputy Chief of Staff
while continuing as Assistant
Chief of Staff, Intelligence
Promoted to Colonel
Named Chief of Staff
Promoted to Brigadier General
Reorganization of National
Guard into Defense Forces of the
Republic of Panama
Secret
ALA LAR 85-023
25 October 1985
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Secret
in Panamanian politics for over 30 years-is the most
important. He has placed loyal officers as heads of the
military zone commands and most other significant
units, including intelligence.
intelligence to assert his authority.
the Defense
Chief threatens opposition parties with repressive
tactics and maintains close ties to the leadership of
the government coalition.
Fear of military reprisal-even
subtle-has contributed to the inability of opposition
parties to unite and challenge the Defense Forces'
dominance. The military's strong links to the ruling
Democratic Revolutionary Party, which was
established by Torrijos, allow the Defense Chief
ample opportunities for manipulation, in our view.
Furthermore, Noriega has garnered influence in
another party controlled by his brother-in-law. F_
Noriega's extensive financial empire adds to his power
base.
organizations and is owner or co-owner of a variety of
legitimate companies. His business interests include
construction, air and bus transportation, and
maritime services, as well as a newspaper holding
company that, with the exception of the opposition
paper La Prensa, virtually controls the major news
media. We believe such dealings cement the Defense
Chief's relationship with an important segment of the
private sector.
Holding the Reins
Noriega-
through behind-the-scenes manipulation of the
Legislative Assembly and the ruling party-has an
inside track in shaping domestic policy.
To establish a formal role for the military in the
civilian government, Noriega last October secured the
creation of a National Security and Defense Council,
which he made into a minicabinet to evaluate a full
range of policy matters,
The council provides a vehicle for the
imposition of unpopular decisions without directly
associating the military with the measuresF
Noriega also has moved to gain prominence in the
international arena, taking advantage of regional
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 L -
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instability to enhance his domestic political role. We
believe his recent visits to Costa Rica, Nicaragua, and
Honduras to offer mediation services-as well as calls
on Asian, South American, European, and US
leaders-are intended to cast him as a statesman.
Meanwhile, the General cultivates Panamanian leftist
elements by maintaining contact with Cuban and
Sandinista leaders and Latin American leftists, as
well as Soviet and Eastern Bloc trade representatives.
Intimidation keeps the Defense Chief's opponents off
balance. Even though the brutal murder of one of
Noriega's critics in September sparked widespread
condemnation of the military, opposition groups were
unable to organize a challenge to the Defense Chief
because he made it clear he would not tolerate
Within the military, however, the murder case has
caused discontent because the scandal has damaged
military prestige. Noriega's longtime rival in the
military hierarchy,
If the scandal drags on, or if
another political crisis occurs, some elements within
the Defense Forces may conspire against Noriega
again.
Outlook
Noriega's dominance, in our opinion, remains nearly
absolute. Within the Defense Forces, he seems to hold
most of the cards. In October, he used the military
promotion cycle to shore up his position by advancing
trusted officers. He seemingly is in a strong enough
position to affect a facade of unity by retaining less
reliable officers until they can be retired gracefully.
The Defense Chief also is master of the political
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Delvalle said soon after taking office that he would
support the Defense Forces on all political matters.
He further strengthened the Defense Chief's hand by
appointing new Cabinet members who answer to
Noriega, according to the US Embassy. The
President, who is in delicate health and lacks an
independent political base, is unlikely to defy Noriega
on any issue. Although pleased by Delvalle's
subservience, Noriega probably would view him as a
liability in a political crisis and may oust him within
the next six months. In such an event, Noriega-who
to date has demonstrated a preference for behind-the-
scenes machinations-would be likely to install a
civilian president or a junta until new elections could
be held, rather than take power directly.
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Secret
Guyana:
Hoyte Taking Charge
We anticipate no major changes in Guyana's domestic
or foreign policies in the near future despite the recent
death of President Forbes Burnham, who had ruled
the country for more than two decades. In accordance
with Guyana's Constitution, Prime Minister Desmond
Hoyte became President, and Deputy Prime Minister
Hamilton Green was named Prime Minister in
August. Hoyte has declared his intention to follow
Burnham's socialist policies and says elections will be
held by March 1986, as constitutionally required. For
now he appears in control and gets high marks for his
initial political moves. Nonetheless, faced with a
battered economy and growing social discontent,
Hoyte will be hard pressed to provide workable
economic solutions while maintaining unity within the
government and the ruling People's National
Congress (PNC). After the elections, Hoyte may
jettison some of Burnham's more radical advisers and
rhetoric-less because of his ideological bent than as
a prudent way to shore up his position.
A Beleaguered Economy
Burnham's dream of a "cooperative republic" with a
state-controlled economy backed by economic self-
reliance had become a severe financial burden by the
time Hoyte took office. The country's economy is
crumbling. Economic output in 1984 stood at only 75
percent of the peak 1976 level. Production of sugar
and rice-key hard currency earners-are well below
1985 production targets, and lack of foreign exchange
is prompting the government to seek more barter
trade. Trinidad and Tobago, Guyana's only remaining
major oil supplier, suspended its oil credit facility in
September due to Guyana's inability to pay arrears of
$217 million; future purchases apparently will be
made in cash. Guyana will repay its existing debt to
Trinidad through monthly exports of 3,000 tons of
rice, a Guyanese staple already in such short supply
that Hoyte recently ordered troops to distribute it to
socialist path over the near term, but the President is
under increasing domestic pressure to reverse
Guyana's economic deterioration. Last May, after
four years of acrimonious relations with the Burnham
government, the IMF declared Guyana ineligible for
further credit, thereby ending urgently needed loan
support from other Western sources. The Caribbean
Development Bank, for example, subsequently
reaffirmed its 1983 decision not to lend Guyana
additional funds until it repaid $7 million in arrears.
Guyana's poor track record with the IMF and the $19
million the country already owes the Fund make it
unlikely that an accommodation will be reached soon.
Aware of his potential vulnerability stemming from
the flagging economy and his lack of a personal base
of power, Hoyte is trying to consolidate business and
labor support:
? In August, he appointed a 15-member committee
composed of businessmen to advise him on private-
sector matters, a move well received by the public.
? Since then, he has held discussions with business
representatives to discuss greater private-sector
involvement in the formation of economic policy.
? He recently was appointed honorary president of the
ruling-party-affiliated Guyana Labor Union,
replacing Burnham. Regular elections for the
position are expected this month, providing Hoyte
with an opportunity to turn his formal ties with the
labor movement into political support.
prevent hoarding and maintain public order.
Hoyte, who has pledged never to denationalize state
corporations, which control 85 percent of the
economy, is unlikely to deviate much from Burnham's
Secret
ALA LAIR 85-023
25 October 1985
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Secret
? In meetings with officials of Guyana's influential
Trade Union Congress (TUC), Hoyte's open and
friendly manner, in contrast with Burnham's
repressive approach, has favorably impressed TUC
leaders, according to the Embassy.
Moreover, continuing disunity within the TUC-
controlled by the PNC for 20 years until independent
and opposition unions won control of the executive
committee by one vote in September 1984-and the
prolonged absence from Guyana of TUC President
George Daniels suggest that progovernment unions
will regain control of the TUC in the coming months,
further strengthening Hoyte's position.
Fractious Domestic Politics
At the ruling party congress in August, where he was
confirmed as party leader and presidential candidate,
Hoyte underscored his intention to follow in
Burnham's political footsteps. By pledging fidelity to
his predecessor's governing philosophy, Hoyte will be
able to attack adversaries as traitors to the party and
to Burnham, its founder. Lacking Burnham's
authority and charisma, Hoyte has no significant
support among party rank and file and draws his main
backing from the government and corporate sectors.
Prime Minister Green-Hoyte's chief rival for the
party leadership-recognizes that his political future
depends on the continuing strength and unity of the
PNC and has agreed to su ort Hovte now. ^
Green's
wait-and-see attitude is based on his belief that he
holds the real power in the party. As a result, we
believe that Green-whose primary source of support
is among party rank and file and the military-will
continue to work to enhance his popularity with senior
PNC and military officials with an eye toward
eventually taking Hoyte's place.
Despite Hoyte's assurances, high-ranking radicals in
the PNC anticipate difficulty in maintaining
Burnham's leftward thrust
Neither Hoyte nor Green favors the
radical left. As a result, party members expect that
the influence of such PNC hardliners as Elvin
McDavid and Richard Van West-Charles-political
advisers to Burnham-will decrease as Hoyte, backed
by party moderates, strengthens his control.
McDavid's recent reappointment to the PNC
executive committee, in our judgment, was in keeping
with Hoyte's effort to keep peace with radical
elements until elections are held. According to the
Embassy, after the elections, some PNC members
believe Hoyte will fire McDavid. We believe Hoyte is
likely to appoint McDavid to a post abroad, thus
removing him from the domestic political scene
without alienating his radical supporters.
A national election is not constitutionally required
until next March, but most observers expect it will be
held in mid-December. Last month, the Guyanese
military-which is responsible for transporting ballot
boxes from polling places to counting sites-held a
mock election exercise at Guyana Defense Force
headquarters, and PNC activists have held seminars
on election procedures. Many observers believe the
ruling party would lose a fair election, assuming
ballots were cast along racial lines. Indo-Guyanese,
who make up slightly over 50 percent of the
population, traditionally have supported the
opposition People's Progressive Party (PPP), while
Afro-Guyanese-who comprise 43 percent-have
backed the ruling party. We believe, however, that the
PNC-as in the past-intends to rig the vote to
ensure its continued control of the government. Hoyte
has categorically refused to permit foreign observers
to supervise the polling process, echoing one of
Burnham's last public pronouncements.
To keep the PPP off balance as election preparations
go forward, Hoyte is continuing talks on formation of
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a coalition government. The negotiations-
encouraged by.Cuba and the Soviet Union-were
initiated last year under Burnham, who probably was
motivated by promises of Soviet Bloc trade and aid
agreements. Publicly, Hoyte and Cheddi Jagan-
Marxist leader of the PPP-are calling for
cooperation between the parties, and two meetings
have occurred between the leaders to discuss the
merger.
Although we believe that, to keep the
Cubans and Soviets at bay, the leaders will continue
the talks, we doubt Hoyte would risk a split between
the moderate and radical factions in the PNC by
agreeing to a power-sharing arrangement.
Under Burnham, the military was a key factor in the
PNC's tenure in power. In return, the overwhelmingly
Afro-Guyanese officer corps has owed its privileged
position to the PNC. Hoyte has taken steps to ensure
the continuation of mutual support. One of his first
acts as president was the promotion of the two top
officers in the Guyana Defense Force. Moreover, in
meetings with senior military officials, Hoyte has
emphasized his intention not to interfere in military
affairs the
military's lower ranks are grumbling that Hoyte-like
Burnham-has ignored their interests while favoring
the officer corps. Nevertheless, we believe Hoyte can
count on the support of the military as long as he
continues to protect its perquisites and there is no
widespread civil unrest
Washington, but we do not expect an early move in
this direction, because his position is not yet
sufficiently strong to risk alienating anti-US radicals
in his party.
We believe that Guyana's relations with the Soviets
will remain close in the near future at least. The
purchase of three MI-8 helicopters, arranged by
Burnham, has gone through as planned. On 16
October the helicopters arrived in Georgetown. El
The Embassy says that relations between Guyana and
Cuba appear to have cooled temporarily as a result of
the role the Cuban medical team played in Burnham's
death, but we would not expect any lasting damage to
the relationship. Havana apparently regards Guyana
as the best available base of operations to restore the
credibility and influence with regional leftists that
Cuba lost in the aftermath of Grenada. As a result,
Cuba is likely to continue to court the Guyanese
Government by providing medical and agricultural
advisers and offering scholarships and training for
Guyanese. The Cubans maintain a relatively large
presence in Guyana-65 people, including Embassy
staff and families, doctors, and those assigned to work
in various Guyanese Government ministries,
Foreign Policy Shifts
We anticipate little change in Guyana's foreign
policies at least through the election period.
Nonetheless, we believe Hoyte's more pragmatic style
and his narrowed options in dealing with the country's
prolonged economic decline suggest that over the
longer term he will pursue a more balanced foreign
policy than his predecessor. Any changes are likely to
be undertaken cautiously, however, to preserve party
unity.
~Hoyte has directed the ruling party to tone down
anti-US rhetoric. In September, the Embassy
commented that local press reporting was taking a
more evenhanded approach to the United States. We
believe Hoyte may hope to improve relations with
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Chile: Cardinal Fresno,
An Emerging Political Actor
A widely respected church leader with a reputation
for prudence and moderation, Cardinal Juan
Francisco Fresno Larrain has emerged as a key
political actor as the result of his recent success in
brokering the national accord, a moderate proposal
for a transition to civilian rule signed by 11 leading
political parties. As a result of that role, Fresno has
come to be viewed as a major antagonist by President
Pinochet. By pressing ahead in coming months to
persuade the armed forces to accept him as a
mediator in the transition negotiating process, the
Cardinal almost certainly will continue to occupy the
political limelight and will also be viewed even more
negatively by Pinochet.
In the process, Fresno has scored well with politicians
and opposition leaders, who now look to him as a key
ally in the struggle to promote a return to civilian
rule, and also has evidently succeeded in quieting the
unrest prevalent among activist priests-thereby
strengthening his influence over the church hierarchy.
Fresno's fruitful efforts on behalf of the national
accord and his continual tweaking of Pinochet's beak
should enable him to maintain the support of the
politicians and avoid internal church dissidence.
Should he let up, however, he risks losing support both
from politicians and priests, and would become
vulnerable to manipulation by the government.
Initially, Fresno seemed to move deliberately down a
middle path in regard to all of these sectors, an
approach consistent with the low profile he adopted in
the late 1983 dialogue sessions (a series of
negotiations between former Interior Minister Jarpa
and the leaders of the opposition front group, the
Democratic Alliance). In those negotiations, Fresno,
then newly appointed Archbishop of Santiago, served
as a mediator and intermediary who facilitated the
start of talks, but he was not an active proponent of
one particular position. Thereafter, even though
Fresno did not assume a high profile, he progressively
moved farther away from the regime and after
November 1984 (when a State of Siege was
reimposed) embarked on a deliberate effort to bring
the opposition together and to confront the regime.
On assuming the senior position in the Chilean
Catholic Church, Fresno privately accelerated his
work-already begun in the months preceding his
promotion-to bring the opposition together. The
Embassy reports he met behind the scenes with a
range of pivotal political, labor, and business leaders
to try to discover areas of agreement and to stimulate
the creation of a broad civic front that he hoped would
in turn encourage movement toward negotiations by
the government.
Architect of the National Accord
Last summer Fresno became the third cardinal in
Chilean history. His appointment was well received in
many segments of Chilean society and became a
source of national pride. It also underscored the
Pope's support for democratization in Chile-the
Vatican hoped Fresno's red hat would give him
greater authority and freedom to pursue his moderate
course in political and church affairs, according to the
appointment as Cardinal was greeted warmly by the
President, but viewed with caution by the political
opposition and within the church.
In July he followed up with
a meeting of leaders of democratic left, right, and
center parties. Moreover, he met several times with
Interior Minister Garcia to emphasize that his goal
was not to overthrow the government, but to reach an
understanding with the administration, according to
Embassy reporting.
Playing the role of coordinator with determination
and enthusiasm, Fresno drew on his knowledge of
each group's views on the transition and related
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With his ruddy charm and easy manner, Fresno, 71, would be an impressive
church leader in any country, according to US diplomats. Warm and effusive, he
is able to convey hard truths without generating hostile reactions. Equally
important, he has shown the patience to work steadily despite criticism from both
inside and outside the church, temporary setbacks, and little cooperation from the
administration. Thoughtful and pastoral, Fresno does not feel at home in the
political arena, but believes he has an obligation to serve the Chilean people.
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Embassy officials say that those around
him can sway him, but not beyond certain parameters.
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University of Santiago and earned a degree in canonical law at the Gregorian
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served for 16 years as bishop of La Serena, a provincial mining area 300 miles
north of Santiago.
according to the US Embassy.
issues. He confronted the politicians with a surprising
amount of common interests he had uncovered. He
successfully urged them to cooperate with each other
and to exclude the Communists and the radical left,
who endorse the use of violence to gain power,
Fresno then asked three advisers to draft a set of
transition guidelines for the political parties to follow.
Under his guidance the document was drafted and
debated and the politicians were able to compromise
on their main differences. They overcame the major
sticking point-whether to endorse Communist
participation in the political process-by proposing
that a new constitutional tribunal ban totalitarian
parties. The carefully crafted accord is flexible and
moderate, calling for legislation to establish direct
presidential and congressional elections without
specifying a timetable. It rules out putting military
officers on trial for political crimes, a point included
to win armed forces' backing for the document.
Ally of the Politicians
Fresno's success in brokering the national accord
assures him of a leading role in continued efforts to
renew transition negotiations. The fragmented
political parties look to him as their point man in
pressing the government to respond to the increasingly
popular accord. Indeed, in early September Fresno
disturbed many political leaders when he briefly
considered withdrawing from the national accord
process and leaving future negotiations in the hands of
the politicians, according to the US Embassy.
Proponents have initiated a petition campaign at the
grassroots level to show broad-based support for the
accord, and they expect the Cardinal to attempt to
open talks with the government.
Force in the Church
Fresno's defense of human rights and his
condemnations of government repression, coupled
with his firm stance against the use of violence by the
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opposition, strengthen his hand within the church. He
has dealt effectively with activist priests at the lower
levels, who had frequently accused him of being a
government pawn and of ignoring the plight of the
poor. He has publicly attacked ecclesiastics who have
made polemical declarations on political issues.
Furthermore, he suspended a priest who expressed
support for a leftist terrorist group last year.
We believe Fresno's efforts to rein in leftist priests
probably stem from his belief that involvement in
radical political activity will eventually hurt the
Opponent of the President
The relationship between the Cardinal and the
President is openly hostile as a result of Fresno's role
in the national accord process and Pinochet's own
intransigence on negotiations with the opposition.
Independence Day mass, Pinochet's icy countenance
was obvious as he exchanged at best, a perfunctory
handshake with Fresno. In addition, the Embassy
reports he delayed a broadcast of the Cardinal's
sermon.
This was in marked contrast to 1983, when Fresno
was named Archbishop of Santiago. At that time the
President attended Fresno's first mass, invited him to
lunch, and sent the cleric a Bible for his birthday,
according to press reports.
In addition to putting Pinochet on the defensive, we
believe Fresno's initiative threatens the President by
revealing divisions within his administration-
including the armed forces-over the transition. A
number of civilian and military officials have praised
the accord as a possible starting point for negotiations,
according to Chilean press and US Embassy
reporting.
Outlook
Fresno's sudden prominence adds a vital new
ingredient to the political game. Despite his success in
brokering the accord we think his most difficult
task-convincing the administration that the
opposition's position is sincere and that it should agree
to negotiations-still lies ahead. Fresno can probably
remain in the background as long as the accord
continues to gain adherents and moves ahead under
its own steam, but when the bandwagon effect begins
to diminish, he will have to step forward again. We
believe Fresno will attempt to woo those officials
sympathetic toward negotiations, a move likely to
exacerbate the already chilly relations between the
Cardinal and Pinochet. If Fresno can win support
among military officials as a legitimate mediator, he
may be able to bypass the intransigent President and
successfully apply pressure for negotiations.
Should Fresno fail to gain support from within the
armed forces, he will risk increasing opposition from
other sectors, including pressure from the left to
abandon dialogue and resort to violence, dissension
from activist priests, and growing impatience among
politicians who signed the accord. Such events may
temporarily strengthen Pinochet's hand, but in the
longer term Fresno's failure probably would increase
polarization within the regime between the
President's hardcore supporters and moderate
elements disposed toward negotiations. Moreover, if
Fresno discredits himself as a viable mediator, there is
little likelihood in the next few months that anyone
else could play a similar role.
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Mexico: Economic and Political
Impact of the Earthquakes
The two earthquakes that struck Mexico last month
claimed over 7,000 lives and caused approximately $3
billion in damage. The disaster, however, did not
irreparably harm the Mexican economy, although it
will delay economic reform. Nonetheless, Mexico City
has been able to gain a temporary respite from
international creditors and probably has strengthened
its case for additional international financial
assistance. Domestic criticism of the government's
handling of the relief effort is likely to mount in the
weeks ahead but, in our judgment, will not result in
major unrest. The assistance Washington and private
US citizens have rendered Mexico City in the
aftermath of the disaster, despite initial Mexican
reservations about accepting such help, probably will
modestly improve the overall climate of bilateral
relations in the near future.
A Damage Assessment
The death toll from the quakes on 19 and 20
September is still rising. As of mid-October, 40,000
persons were known to have been injured-10,000
seriously-and at least 30,000 were homeless.
Another 1,500 were believed still trapped in the
rubble. Of the more than 400,000 US citizens in
Mexico at the time of the quakes, 10 have been
confirmed dead and 21 are missing.
are likely to cost $500 million, the Embassy reports,
and will not be completed for a month or more,
leaving hundreds of thousands of residents of the
capital of 17 million without running water. Millions
of dollars will be required to rebuild government
ministries in Mexico City or elsewhere, including
those of Budget and Planning, Commerce,
Communications and Transport, and the Navy.
The quakes did little damage to the country's
industrial and manufacturing infrastructure, although
some textile plants in the downtown area of the
capital were destroyed. The country's petroleum
facilities, which are largely concentrated in
southeastern Mexico, apparently were virtually
untouched. Only minor damage was reported to the
country's transportation system or agricultural sector.
Although adequate food supplies were available in the
capital, some distribution problems arose, and the
government received hundreds of complaints of price
gouging on basic commodities, such as bread,
tortillas, beans, milk, and sugar, according to the
Embassy.
The Relief Effort
The Mexican Government initially sought to play
down the severity of the tragedy, according to
Embassy and press reports. Apparently out of
Less than 2 percent of Mexico City was destroyed.
The Embassy estimates that of the approximately 1
million buildings in the capital, approximately 3,000
were damaged. Of these, just over one-third were
demolished or are beyond repair. Areas outside the
capital were less severely hit, although at least a half
dozen central and western states sustained significant
damage.
Damage to the infrastructure was less severe than
originally feared. Mexico's international telephone
and telex systems were heavily damaged and could
require up to $1 billion of new equipment, most
imported, to restore service, according to the Mexican
Government. Repairs to Mexico City's water system
nationalistic pride, it did not request foreign
In the immediate aftermath of the quakes, the United
States sent rescue and damage assessment teams to
Mexico. Washington also has donated at least $4
million in cash, relief supplies, and equipment.
Assistance from other governments and private
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depress tourism receipts even though major tourist
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organizations has been extensive, although falling
short of Mexico's disaster-related needs. According to
the Embassy, as of mid-October, 31 countries had
contributed 1,088 tons of relief aid, and the
government's National Reconstruction Fund had
received over $29 million in contributions, not
including a $50 million low-interest commodity loan
from Japan. The IMF has announced that it is
granting Mexico a $300 million emergency loan for
disaster relief; the World Bank is likely to provide a
similar amount. According to the Embassy, insurance
companies will pay about $540 million for property
destroyed nationwide, of which about two-thirds will
go to the private sector. Eighty percent of claims will
be paid in dollars or other foreign exchange.
Short-Term Economic Impact
The direct effects on Mexico's economy-which is
suffering from falling oil prices, sluggish nonoil
exports, and excessive government spending-should
be relatively slight and felt for perhaps only six to nine
months. Nonetheless, despite significant international
relief assistance, Mexico City still will have to redirect
a portion of the already strained budget toward the
relief effort. Although the inflow of earthquake-
related funds will temporarily create jobs and spur
economic activity over this short run, the positive
impact of such activity will be neutralized by the jobs
lost as a result of the earthquakes. The infusion of
foreign exchange will provide a degree of relief to
Mexico's immediate balance-of-payments squeeze,
but price gouging and more rapid money supply
growth are sure to contribute to rising inflation. We
expect the psychological effects of the earthquake to
centers largely escaped damage.
As demonstrated by numerous public statements
the de la Madrid
administration intends to use the disaster to
strengthen its case for financial assistance and new
lending. The country's immediate hurdle of meeting a
$950 million principal payment eased as bankers,
realizing they had little choice, reluctantly agreed to
Mexico's request for a six-month deferment.
Mexican officials
blamed their inability to pay on the earthquakes, but
on the basis of our estimate of Mexico's foreign
exchange reserves, we believe they planned to delay
payment prior to the disaster
International bankers apparently will pursue a
nonconfrontational approach over the near term,
recognizing the emotion surrounding the tragedy and
growing charges by Latin debtors that creditors are
making excessive demands. Lenders also are aware of
growing pressures on de la Madrid to declare at least
a temporary moratorium on debt payments. These
more radical views have been endorsed not only by
Mexico's leftist opposition parties, which have long
taken such a stance, but also by the powerful
President of the Confederation of Industrial
Chambers, labor kingpin Fidel Velazquez, several
large business organizations, academics, and at least
one state legislature.
Nonetheless, de la Madrid has stated that Mexico will
continue to honor its external debt obligations, while
indicating further negotiations to obtain better terms
may be necessary. The President's bottom line is that
the economy must grow if Mexico is to meet its debt
obligations.
Longer Term Economic Implications
Domestic Adjustments. By causing planned economic
reforms to be postponed, the earthquakes will
contribute indirectly to de la Madrid's economic
adjustment problems. Much-needed investment in key
areas, most notably the petroleum sector, will have to
be sacrificed as government expenditures are
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investment activity
redirected to the rebuilding effort. In addition, by
delaying planned cuts in key subsidies until next year,
Mexico City is postponing and worsening the eventual
inflationary impact of price hikes. As the
government's fight against inflation is stymied, there
will be increased pressure on wages and domestic
interest rates next year. As a result, de la Madrid is
likely to be forced to renege again on his promise to
end the slide in real wages. Perhaps more important,
rising domestic interest rates will worsen the
government's already onerous task of servicing its
internal debt and will choke off much-needed private
requested earlier.
nearly $5 billion-far above the $2.5-3 billion
Debt and Foreign Borrowing. Mexico City has
informed foreign lenders that as a result of the
earthquakes its new money requirement has grown to
We believe that by linking the earthquakes to new
receive much of the $5 billion it originally sought
Based on our assumptions of new lending, oil prices,
nonoil export performance, and the eventual
implementation of budget-cutting measures, we do
not expect to see growth in the Mexican economy next
year. Moreover, inflation will remain stubbornly high
at about 50 percent. Although de la Madrid probably
will use the earthquakes to explain this poor
performance, we believe a significant portion of the
blame lies in the government's spending surge before
midterm elections last July.
the government's
performance in the aftermath of the earthquakes has
increased dissatisfaction with Mexico's leaders and
the political system. The initial tendency of Mexicans
to rally behind the government has given way to
questioning of its handling of the crisis.
property they were assigned to protect.
criticism, most lodged by leftist opposition groups, has
charged that the government indirectly contributed to
the disaster by permitting shoddy construction in
many of the buildings that collapsed; that disaster
relief plans were inadequate or poorly implemented;
and that some of the security forces looted the
Leftist parties have particularly called attention to the
plight of the homeless and the fact that disaster
victims have received little relief assistance. In early
October, a recently formed group, the Popular Front
for Solidarity and Reconstruction, headed by long-
time Mexican human rights activist Rosario Ibarra,
sponsored a peaceful march in the capital. According
to the Embassy, approximately 15,000 Mexicans
participated, protesting the government's handling of
the disaster.
Despite these charges and protest activities, the left
has been unable to capitalize on the situation, largely
because their efforts are viewed by many as self-
serving. According to the Embassy, in the aftermath
of the earthquakes a number of self-help committees
were formed in various neighborhoods of the capital
and have been more effective in assisting those in need
than either the government or leftist groups.
The government still could face political difficulties,
however, if wide areas of the capital remain without
water and other public services for an indefinite
period. Similarly, problems would grow if the
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government proceeds with controversial plans to
relocate some citizens rather than rebuild the
neighborhoods most seriously damaged. Political
protests may occur in the weeks ahead, but such
unrest is unlikely to get out of hand because the
military and other security forces appear to have the
capability and will to put down any localized
disturbances.
Although the assistance provided by Washington is
almost certain to create a temporary reservoir of good
will, it is likely to dissipate as Mexico attempts to cope
with its mounting economic difficulties. The disaster
and related reconstruction costs almost certainly will
increase Mexico's financial difficulties in the short
term, making Mexico City all the more dependent on
Washington's help to obtain such external assistance.
This could enhance prospects that the Mexicans will
prove more cooperative on border, narcotics, and
other issues of mutual concern in the near term. The
positive attitude is likely to be reflected in discussions
de la Madrid is tentatively scheduled to hold with
President Reagan in early 1986. Nonetheless, we
believe that the highly nationalistic sentiments of
Mexico's leaders will limit significant policy shifts in
the months ahead and that the earthquakes will have
a negligible effect on the climate of bilateral relations
over the longer term.
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Mexico: Growing
Activism Among Northern
Businessmen
Mexico's private sector has enjoyed a symbiotic
relationship with the government until recently,
despite occasional rhetoric to the contrary. Private-
sector support for the ruling Institutional
Revolutionary Party (PRI) has been a product of
government policies that have protected domestic
firms from international competition, doled out
lucrative contracts, and fostered high enough growth
rates to ensure business profitability. Now, however,
there are signs that some members of the business
community are shifting their attitudes. In particular,
key business leaders in economically critical northern
Mexico are moving into a more openly confrontational
stance with the government and ruling party over
what they perceive to be antibusiness policies,
according to US Embassy reporting. A few have even
begun openly to criticize President de la Madrid and
his leadership. They also have increased their support
for the conservative National Action Party (PAN). De
la Madrid, who is counting on cooperation from the
private sector to spur recovery, is seeking to reverse
this trend, but competing demands from other interest
groups, especially labor, will limit his ability to
mollify disaffected northern business leaders
Traditional Business Concerns
Businessmen in the north have long been among the
most influential in the country because of the
concentration of manufacturing firms in this region,
particularly in the vicinity of Monterrey, Mexico's
third-largest city. Moreover, the preponderance of
Mexico's nonoil exports are generated by the private
sector in this region. Northern businessmen have been
more antagonistic toward the government than their
counterparts elsewhere because they tend to be more
export oriented and generally have benefited less from
the government's protectionist policies.
De la Madrid had his first falling out with northern
businessmen shortly after coming to power in 1982,
when he announced his commitment to state
"rectorship" of the economy and indicated he would
not reverse the decision of his immediate predecessor,
President Lopez Portillo, to nationalize Mexican
banks. Since then, the business leaders have
complained they are consulted less under de la
Madrid than they were under Lopez Portillo. At the
same time, they are convinced that labor has
significantly increased its influence in the past several
years, according to the US Embassy.
Some members of Mexico's private sector are also
disturbed by what they view as the antibusiness
policies de la Madrid has undertaken. Mexico City's
tight restrictions on credit, for example, have virtually
dried up capital available for business investment,
according to the US Embassy. Entrepreneurs also
assert that the unpredictable exchange rates, in part a
result of government actions, impede long-term
planning, and that unnecessary bureaucratic
regulations raise costs of doing business
many northern
businessmen believe the actions de la Madrid has
taken in recent months to make the Mexican economy
more competitive internationally do not go far
Expanding Political Role
Embassy reports note that the concerns of
businessmen in the north have caused them to
increase their political activities significantly in the
past year. While Mexican officials probably dismiss a
modicum of private-sector grumbling about
government policies as normal, they apparently view
the present political activities of some business leaders
and their verbal assaults on the policies of the de la
Madrid administration as alarming. For example, an
unprecedented number of businessmen ran for office
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on the PAN ticket, openly endorsed PAN candidates,
or helped to finance the opposition party's campaign
in midterm elections last July, according to the US
Embassy. In the northern industrial center of
Monterrey, the Embassy reports, business associations
for the first time organized get-out-the-vote
campaigns indirectly aimed at bolstering the PAN
vote. Following the elections, business leaders
purchased newspaper advertisements denouncing the
blatant fraud employed by the ruling party in its
largely successful effort to sweep the congressional
and gubernatorial contests. Despite de la Madrid's
presence, top business groups boycotted the swearing-
in of the new PRI governor of Nuevo Leon in
Monterrey to demonstrate their displeasure with the
conduct of the elections.
The Government Response
The de la Madrid administration, for its part, clearly
wants to maintain the support of northern and other
business interests, since the confidence of the private
sector is essential for economic recovery. At the same
time, the government has demonstrated as recently as
in the elections this summer that it will not tolerate
meaningful opposition to its rule from any group.
Consistent with this attitude, the government
repeatedly has blamed the private sector for the
capital flight Mexico is experiencing and for currency
speculation that has sharply reduced the purchasing
power of the peso. In addition, ruling party officials
have publicly pointed to the association of some
Mexican business leaders with US interests, accusing
those involved of being unpatriotic.
Outlook
In the future, de la Madrid, who almost certainly
appreciates the key role of the private sector in the
economy, probably will try to maintain the support of
the PRI's traditional business supporters while
attempting to woo his new business critics back to the
political fold. Incentives to cooperate with the ruling
party will take various forms, ranging from large
government contracts, on the one hand, to the threat
of special tax audits, on the other. De la Madrid may
win favor with some export-oriented entrepreneurs in
the north if Mexico City proceeds with tentative plans
to join GATT. Nonetheless, he is unlikely to be able
to offer enough to satisfy business interests because
other, more powerful interest groups such as labor are
clamoring for a larger share of Mexico's dwindling
resources. Moreover, many business leaders outside of
the north continue to back the government's policies,
undercutting the northerners' influence and the
ability of the private sector to speak with a single
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Mexico: Mounting Difficulties
for New Governor
Mayoral elections in the northern border state of
Nuevo Leon on 10 November will test Governor Jorge
Trevino's political skills and could be a key indicator
of the future success of his administration. In the
wake of his predecessor's hardline domination of the
government, Trevino-a member of the ruling
Institutional Revolutionary Party (PRI)-has adopted
an open style since his election in July tha
has led to an
increase in opposition demands. Although the new
governor almost certainly will survive the elections
politically, his position is likely to be weakened
regardless of the outcome.
Trevino's difficulties began immediately after his
election. His inauguration was marked by large rallies
protesting election fraud and a petition with 100,000
signatures calling for his resignation. Rather than
cracking down, Trevino publicly committed himself to
fair elections in November. A broad-based coalition
has seized on this issue, however, and has presented its
own electoral reform package that would eliminate
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Trevino's credibility also is being challenged as local
leaders pressure him to use his influence with
President de la Madrid to reverse a Commerce
Secretariat veto of a major foreign investment project
in Monterrey. Trevino ran for governor under the
tacit promise that his close friendship with de la
Madrid would bring tangible results to the state.
The upcoming elections, however, remain Trevino's
most immediate test and present a virtual no-win
situation. If the governor conducts honest elections
that result in significant victories by opposition
candidates, he will antagonize his supporters within
the PRI. On the other hand, ensuring PRI success will
lead to additional charges of fraud, a continuation of
protests, and a probable crackdown on his opponents.
Either scenario creates difficulties, but Trevino
almost certainly knows his long-term political
prospects are best served by assuring solid PRI
victories.
Secret
ALA LAR 85-023
25 October 1985
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1500
Kilometers
Tarawa*
Nauru ayaren . Kiribati'
'.~ Solomon
Islands
Hon arat A
Vanuatu,epa<
vna Fiji
^*Suvs
United States
Hawaean w
alanda
Cook
Islands
(U.K.)
French
Polynesia
(Fr.)
Now Cslednia Tonga
(Fr.}
Niue
MZA
Names and boundary representation
aro not nocaasaniy authontahve.
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Cuba: Involvement
in the South Pacific
In the past few months, Cuba has attempted to
establish diplomatic relations with Australia and New
Zealand. the
Australian Government was at first inclined to accept
the Cuban request almost immediately. After the
voicing of US Government concerns over the
upgrading of relations, however, Canberra agreed to
defer its decision for several months. Despite this
apparent sensitivity toward US concerns, we believe
that the labor governments of both Australia and
New Zealand almost certainly will establish
diplomatic relations with Cuba in the next few
months. This will enhance Cuba's legitimacy in the
region, thereby creating new opportunities for Havana
to expand its influence in the South Pacific. The
Castro regime is likely to continue supporting
independence movements in the smaller island nations
while expanding its political and economic presence in
Australia and New Zealand.
Early Cuban Involvement
Despite lacking the cultural and historical links it has
with Latin America and Africa, Cuba has
sporadically supported insurgent groups and
independence movements in the South Pacific for
more than a decade. The independence movement in
East Timor provided Cuba with one of its first
opportunities in the South Pacific. In 1974, Portugal
and Indonesia announced that the former Portuguese
territory would be granted self-determination. The
leftwing Revolutionary Front for an Independent East
Timor, or Fretilin, opposed annexation by Indonesia
and demanded full independence. Indonesia
proceeded to annex the territory in 1976, but Fretilin
engaged in guerrilla activities against the new regime.
The Indonesian Army has been unable since then to
crush the low-level insurgency.
The Castro regime, having supported anticolonial
movements against the Portuguese in Africa during
the,1960s and 1970s, probably viewed the situation in
East Timor as a low-risk, low-cost opportunity for its
interventionist foreign policy. During the mid-1970s,
Havana provided the Fretilin with a broad range of
support. In 1976, Cuba cosponsored an anti-
Indonesian resolution on East Timor in the United
Nations. Cuba apparently gave material aid to
Fretilin as well. According to a press report, Fretilin
leaders visited Cuba in 1976 to seek unspecified
"backing" for their movement. During this period, a
Fretilin official who was engaged in obtaining
weapons for the insurgency was reported to be
planning a trip to Cuba to discuss military matters
and to meet with Fidel Castro.
Cuba apparently also offered training assistance to
Fretilin. In 1976, Fretilin cadres were scheduled to
receive engineering and military training in Cuba.
Although we have no evidence that Fretilin has ever
used such sophisticated weaponry, Cubans in Angola
also trained Fretilin guerrillas in the operation of
SAM-7 air defense missiles.
How instrumental Cuban aid has been in the survival
of the Fretilin insurgency is unclear. Little if any
evidence is available of Cuban material support for
Fretilin after the 1970s. In fact, Fretilin
representatives complained in 1976 of the lack of
support they were receiving from Cuba and the Soviet
Bloc, as well as such countries as Libya and
Mozambique.
The Cases of Vanuatu and Irian Jaya
The decolonization movement in the New Hebrides, a
jointly administered French and British territory,
gave Cuba another chance to establish itself among
the smaller island nations of the South Pacific. Unlike
the East Timorese case, the New Hebrides
decolonization struggle did not involve an
insurgency-the colonial powers had agreed to
independence. During the mid- and late 1970s,
Havana did its part in bringing about England and
France's assent by championing the New Hebridean
struggle in the Committee of 24, the UN committee
that handles independence issues.
Secret
ALA LAR 85-023
25 October 1985
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In July 1980, the New Hebrides became the
independent republic of Vanuatu and invited Fidel
Castro to its independence celebrations. The Cuban
Ambassador to Japan, however, came in Castro's
place. In 1983, in what apparently was an expression
of gratitude for Havana's assistance during pre-
independence days, Vanuatu established diplomatic
relations with Cuba.
While Cuba's involvement in Irian Jaya, or West
New Guinea, has not been as strong as that in East
Timor or Vanuatu, there is some evidence suggesting
that Havana is also supporting a radical independence
movement there. Since West New Guinea, a former
Dutch possession, was acquired by Indonesia in 1963,
the Free Papua Organization (OPM) has opposed
diplomatic relations with the two countries.
there. Cuban activities appear to be largely limited to
efforts to influence the media and local labor groups.
For example, Australian and New Zealand worker
brigades have visited Cuba and returned with glowing
reports of the glories of the Cuban Revolution. In
May, the US Embassy in Wellington reported that
Soviet and Cuban-aligned trade unionists planned to
use a factfinding trip to Nicaragua as a way to
influence New Zealand's voting in the United Nations
on Central American issues. Activities of this type are
likely to increase with the expanded political and
labor contacts Cuba will derive from the upgrading of
A larger and more permanent presence in Australia
and New Zealand also will place Cuba in a better
position to frustrate American interests in the region,
and to spread anti-US propaganda. For example,
recent Australian media reports about the use of US
biological warfare in Nicaragua suggest Cuban
influence. The establishment of diplomatic relations
might logically lead to the opening of Prensa Latina
offices and the mushrooming of such accounts in local
media. In particular, Cuba can be expected to do its
best to promote the Nuclear Free Zone Movement.
On the economic front, both Cuba and Australia
stand to benefit from stronger ties. Havana could gain
an additional source of advanced technology, allowing
it to further skirt the US trade embargo and obtain
more modern industrial equipment.
1985 US Embassy report, a Papua New Guinean
journalist has stated that West New Guineans might
seek aid from Vietnam, Cuba, Libya, or China.
New Opportunities in Australia and New Zealand
Up to now, Cuban involvement in New Zealand and
Australia has been fairly limited, partly because of
the conservative nature of the previous governments
Continued Support for Independence Movements
Despite the conservative, pro-Western stance of the
smaller South Pacific islands, we believe Cuba will
continue to seek opportunities to politically back
leftist-inclined labor groups and independence
movements in the region. The next target of
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opportunity probably will be the French territory of
New Caledonia. As it did with Vanuatu and East
Timor, Cuba has been defending the cause of New
Caledonia in the United Nations since 1980, when
Havana asked that a New Caledonian independence
leader be allowed to present his case before the
Committee of 24. Havana will probably restrict its
efforts to political advice and propaganda support,
given the absence of a viable insurgent movement and
a desire by Cuba to avoid difficulties with France.
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Latin America
Briefs
Brazil Guerrilla Spillover From Peru and Colombia
The Brazilian Army is increasingly concerned over alleged violations of its
territory by Peruvian Sendero Luminoso and Colombia M-19 guerrillas
reports that Army units stationed near the Peruvian
border have been placed on alert.
are receiving supplies from sympathizers and drug traffickers
in the country's poorly policed western provinces.
Although we have no evidence of skirmishes between guerrillas and Brazilian
forces, the chances of such encounters are increasing as Brasilia tightens control
over its porous borders. President Sarney visited northwestern Brazil in mid-
October, and Army officers almost certainly informed him of the potential
guerrilla problem and pressed for the introduction of military helicopters under
Army control into the region. Helicopters would probably increase the Army's
ability to patrol effectively and possibly interdict guerrilla forces in the jungle
terrain of northwestern Brazil, but budget constraints may mitigate against a
quick decision to acquire them.
Cuba-Uruguay Resumption of Relations
Uruguay restored diplomatic relations with Cuba this month after a 21-year
hiatus. President Sanguinetti has decided to restrict the Cuban mission in
Montevideo to an ambassador and three functionaries, according to the US
The US Embassy adds that Sanguinetti believes it will be easier to
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monitor Cuban activities now that Havana has official representation in
Montevideo.
President Sanguinetti probably calculates that recognizing Havana will help
alleviate some of the political pressure that leftist parties are exerting on his
government. Moreover, Montevideo-interested in new export markets for its
strapped economy-sent its first commercial mission to Cuba in 24 years last July,
in an effort to sell beef, dairy products, and chemicals. We expect Uruguayan
relations with Havana will remain low-key. Sanguinetti probably delayed formal
recognition in part to appease the Uruguayan military, and a rapid growth in
41 Secret
ALA LAR 85-023
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contacts with Havana would aggravate the President's relations with the armed
Caribbean Mixed Results for CBI
preconditions for designation as a beneficiary.
Largely because of the precipitous drop in exports, a number of Caribbean and
South American leaders have openly criticized progress under the CBI. Leaders of
the Caribbean Community, during their annual summit meeting this summer,
complained that the CBI is insufficient to meet the needs of the region, especially
the smallest islands. According to State Department reporting, Jamaica's Prime
Minister Seaga has stated privately that he cannot continue to support the
Initiative publicly unless faster progress is made soon. The secretary general of the
Latin American Economic System also complained recently that the CBI has
failed to promote development and has set too many military and political
sizable US disinvestment in the region since early 1984.
The Caribbean Basin Initiative (CBI) so far has been unable to stem the region's
decline in export earnings, but has made a promising start in diversifying the
production and export bases of the 21 CBI-designated countries. State Department
reporting indicates that during 1984, the first year of the program, 268 export-
oriented investments worth about $200 million and more than 31,000 jobs were
created. The region's larger economies-the Dominican Republic, El Salvador,
Jamaica, Honduras, and Panama-reaped the most benefits. US imports from
CBI beneficiaries increased 6 percent during this period. Nevertheless, total US
imports from these countries dropped 18 percent during the first half of 1985,
largely because the region's exports remain dominated by such traditional
products as petroleum, sugar, coffee, and bauxite/alumina, which have
experienced sluggish world demand and low prices. The poor market outlook for
these commodities, particularly petroleum and bauxite/alumina, has caused
National Defense Commission Formed
now serving as a deputy from Chihuahua, will be its president.
The de la Madrid administration has taken a modest first step toward the creation
of a formal national security organization. According to recent press reporting, a
Commission on National Defense has been formed within the Federal Chamber of
Deputies, part of Mexico's bicameral legislature. The commission, with 23 of its 31
members from the ruling Institutional Revolutionary Party, will provide a
national-level forum for debate and discussion of defense issues. A retired general,
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The new body probably will help placate those in the military who desire the
institutionalization of a national security apparatus. To date,
has been handled by cabinet-
level ad hoc working groups, whose recommendation's are subject to presidential
approval. President de la Madrid, intent on maintaining executive dominance and
probably leery of creating a unified Army/Navy power base, has resisted
formalizing this structure. The new commission, within the relatively powerless
Chamber of Deputies, allows the President to reward the military's support for
him by granting it greater institutional prestige without drastically upsetting the
existing decisionmaking process within the executive branch. Moreover, ruling
party domination of the commission lessens the chances of its activities
embarrassing the President.
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Cuba Chronology
2 September At the 24th Inter-Parliamentary Union conference in Ottawa, Cuban Central
Committee member Severo Aguirre and his delegation discuss the foreign debt.
The Bulgarian People's Agrarian Union and the National Association of Small
Farmers sign a cooperation protocol in Havana. Carlos Rafael Rodriguez attends
the ceremony.
3 September Rene Capote Anillo, Executive Secretary General of Afro-Asian-Latin American
People's Solidarity Organization, meets in Hanoi with Hoang Tung, Secretary of
the Vietnamese Communist Party to discuss Vietnam's interest in AALAPSO's
work.
4 September Prensa Latina reports that a large fire broke out in a munitions storage warehouse
in the Jaruco-San Jose Zone of Havana Province. The fire claimed nine victims.
5 September West German Vice Foreign Minister Wolfgang Mollermann says his country
wants to intensify its political dialogue and increase its cooperation in various
fields with Cuba.
Minister of the Sugar Industry Antonio Rodriguez Maurell says that sugar
production during the first six months of this year was 103 percent greater than
the same period in 1984.
Melba Hernandez, Director of the Cuban Center for Research on Asia and the
Pacific, meets with Pham Van Dong, Chairman of the Vietnamese Council of
Ministers in Hanoi.
6 September At a meeting of the American Lawyers Association in Buenos Aires, the Cuban
delegation presents a paper on legal aspects of the foreign debt problem.
Foreign Minister Isidoro Malmierca, at the Nonaligned Ministerial Conference in
Luanda, talks about the economic situation of the underdeveloped countries
characterized by unpayable foreign debt.
Malmierca also reiterates the importance Cuba concedes to the struggle for South
African independence and Cuba's position favoring that the Olympic games
should be shared by all of Korea.
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7 September At the NAM conference in Luanda, it is agreed that the next NAM summit
meeting will be held in Zimbabwe.
Vietnam's Minister of Justice, Phan Hien, visits the Cuban-Soviet Friendship
Cooperative in Melena del Sur, Havana Province. He shows interest in the
incorporation of women into the new production process.
8 September Excelsior quotes Isidoro Malmierca during an interview in Luanda as saying
Cuba's position on its military presence in Angola is that it should not be eternal
but should last as long as necessary.
9 September In statements to Havana Radio, Isidoro Malmierca says that the Latin American
and Caribbean situation, particularly Central America, received special attention
at the Nonaligned meeting in Luanda.
PCC member Raul Vivo Valdes arrives in Laos. He meets with Phoumi
Vongvichit, member of the LPRP Central Committee Political Bureau to discuss
bilateral issues.
Three Catholic priests and a church official depart Havana for the United States
to attend a meeting of the American Episcopal Conference. This is the first time
that Cuban clergy have visited the United States in 26 years of Communist rule.
Laotian Minister of Foreign Affairs, Phoun Sipaseut arrives in Havana and is
greeted at the airport by First Vice Minister of Foreign Relations Jose Raul Viera
Linares.
10 September Cuban official Ernesto Melendez says that the document approved at the
Nonaligned ministerial conference in Luanda represents a victory to establish a
new international economic order.
Carlos Rafael Rodriguez receives the credentials of Manuel Orestes Nieto de Casa
as the new Ambassador of Panama. Jose Raul Viera Linares also participates in
the ceremony.
Delegations from nine socialist countries participate in CEMA's 54th meeting on
electricity in Havana. They discuss Cuban thermoelectrical plants and the use of
domestic oil to produce electricity.
11 September Uruguayan Vice Foreign Minister Mario Vernandez releases a statement to the
press saying that Uruguay will soon reestablish diplomatic relations with Cuba.
Division General Senen Casas Regueiro arrives in Mexico City to attend festivities
commemorating the 175th anniversary of Mexican independence.
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12 September Isidoro Malmierca and Phoun Sipaseut exchange views on the recently concluded
ministerial conference in Luanda, the situation in Southeast Asia, and bilateral
relations.
Three Cuban Catholic priests meet with US officials Robert McFarlane and Eliott
Abrams. They say the United States is ready to assist them in obtaining the
release of Cuban political prisoners.
The Latin American Youth and Student Conference on foreign debt opens in
Havana. Fidel Castro attends the opening session.
Vice Minister of Foreign Trade Jose de la Fuente arrives in Prague with Minister
of Foreign Trade Bohumil Urban to discuss trade for 1986-90.
More than 150 journalists from 19 Latin American countries confirm their
participation in a forum on the regional debt crisis to be held in Havana on 17
September.
Overseas Construction Minister Levi Farah visits Algeria at the invitation of the
head of hydraulics, environment, and forestry, Mohamed Rouighi.
13 September Foreign Trade Minister Ricardo Cabrizas arrives in Aden and meets with Haydar
Abu Bakr al-'Attas, Chairman of South Yemen's Council of Ministers.
14 September Algeria Prime Minister Abdelhamid Brahimi and Levi Farah discuss prospects for
strengthening bilateral economic and commercial relations.
Cabrizas and Ahmad' Ubayd al-Fadli, South Yemen Minister of Trade, discuss
bolstering- trade relations in all fields.
15 September In an interview in El Nacional, Senen Casas says that Cuba has withdrawn its
military advisers from Nicaragua and will comply with the Contadora Group's
peace plan for Central America.
Fidel Castro sends a message of congratulations to Daniel Ortega on the occasion
of the 164th anniversary of Nicaraguan independence.
16 September Cuba says it is willing to free more than 70 political prisoners on humanitarian
grounds following an appeal to Fidel Castro by visiting American Catholic leaders
in January 1985.
Cuba signs an agreement with bank creditors to reschedule some $90 million of
medium-term debt due for payment this year. The payments will be spread over 10
years with a six-year grace period.
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The second meeting of the Cuban-Ethiopian joint trade commission begins in
Addis Ababa. Foreign Trade Minister Ricardo Cabrizas and his Ethiopian
counterpart Wollie Checkol preside.
A Dutch agro-industrial delegation representing 18 commercial firms visits Cuba
to meet with over 150 Cuban export and import enterprises.
The delegation says that the Netherlands sees Cuba as a viable trade partner.
18 September China's Ambassador to Cuba, Wang Jin, hosts a reception marking the 25th
anniversary of the establishment of diplomatic relations with Cuba.
Diplomatic sources in Havana report that the United Kingdom has rejected the
appointment of Francisco Ramos as Cuba's new ambassador to London.
Prensa Latina cites official Cuban sources as saying that Venezuela has been
sending oil to Cuba since 1978 as part of a trilateral swap agreement with the
USSR.
Congolese Foreign Minister Antoine Ndinga-Oba arrives in Havana to preside
over the activities of the sixth joint commission for bilateral economic and
scientific-technical cooperation.
19 September Prensa Latina reports that Fidel Castro is considering a visit to "the stinking
entrails of imperialism" to address the UN General Assembly in New York for the
first time since 1979.
In an interview in Warsaw for Prensa Latina, Polish leader Wojciech Jaruzelski
says that Poland and Cuba share true friendship, common ideals, and goals.
At the Latin American Press Forum on foreign debt, Fidel Castro calls for
suspension of Mexico's debt due to the earthquake and modestly offers to
cooperate in any way needed.
Fidel Castro visits the Mexican Embassy in Havana and expresses the Cuban
people's sorrow for the victims of the earthquake.
20 September Poland's Chairman of the Council of National Defense Wojciech Jaruzelski
arrives in Havana en route to the United Nations. He is greeted at the airport by
Fidel and Raul Castro.
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21 September Jaruzelski, Fidel and Raul Castro, Carlos Rafael Rodriguez, Jesus Montane, and
other Cuban officials discuss international issues and bilateral economic
cooperation.
23 September Foreign Minister Isidoro Malmierca departs for the United States to participate in
the 40th UN General Assembly meeting. Topics he plans to discuss include
solidarity with South Africa and foreign debt.
Customs Director Oscar Carreno, speaking at the 26th Conference of Customs
Directors in Havana, says that drugs are neither produced nor consumed in Cuba,
nor is there any trafficking.
Foreign Trade Minister Cabrizas meets in New Delhi with Indian Finance and
Commerce Minister Vishwanath Pratap Singh to discuss trade links between the
two countries and participation in joint ventures.
24 September Cuba is elected to one of the eight vice-presidencies at the general conference of
the International Atomic Energy Organization during its 29th annual meeting in
Vienna.
Rolando Diaz, a top trainer with the Cuban track team, defects in Puerto Rico and
seeks political asylum in the United States, according to Puerto Rican immigration
authorities.
Foreign Trade Minister Ricardo Cabrizas arrives in Bucharest to explore trade
possibilities between Cuba and Romania. Romanian Foreign Minister Ion Stanciu
greets him at the airport.
Fidel Castro and Wojciech Jaruzelski sign a program for development of economic
and scientific-technical cooperation between Cuba and Poland through the year
2000.
26 September At the UNGA, Isidoro Malmierca warns of the possibility that South Africa may
provoke a major armed confrontation with Angola with unforeseeable
consequences.
Malmierca condemns all attempts to militarize space, praises the high-level talks
between the USSR and the United States.
Malmierca speaks of Cuba's support of the Contadora process and his country's
solidarity with the Palestinians.
Malmierca reiterates that the foreign debt of the developing countries is unpayable
and adds that proclaiming this was not resorting to "hyperbole or propaganda."
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Fidel Castro receives Congolese Foreign Minister Ndinga-Oba shortly before
Ndinga-Oba concludes his visit to Cuba.
Havana press reports that Ndinga-Oba met with Carlos Rafael Rodriguez, Jorge
Risquet, and Jesus Montane, and visited industrial centers and places of historical
interest during his 10-day stay in Cuba.
29 September Fidel Castro speaks at the 25th anniversary celebrations of the founding of the
Committees for the Defense of the Revolution. He says Cuba's sugar crop could
fall by 1 million tons next year.
Tanzania's President Julius Nyerere arrives in Havana from New York and is
greeted at the airport by Fidel Castro.
30 September Nyerere and Tanzanian Foreign Minister Benjamin Mkapa begin official talks
with Fidel Castro and Carlos Rafael Rodriguez.
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Secret
Secret
Declassified in Part - Sanitized Copy Approved for Release 2012/03/02 : CIA-RDP87T00289R000200920001-6