LATIN AMERICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00289R000201030001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 38
• Document Creation Date: December 22, 2016
• Document Release Date: July 8, 2011
• Sequence Number: 1
• Publication Date: February 14, 1986
• Content Type: REPORT

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Directorate of
Intelligence
d3
Review
" bR F11 r ift MY
AS Th""O' It *U a
D l uT CUE OUT
OR MARK ON
Latin America
14 February 1986
ALA LA R 86-005
14 February 1986
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Review
14 February 1986
Articles Cuba's Policy Toward South America
Havana is emphasizing its moderation in trying to improve bilateral
relations with the new civilian governments in South America, but
President Castro has not forgone support for armed revolution in the
region.
Cuba-Zimbabwe: Upturn in Relations I 9
Despite Harare's past reluctance to accept substantial Cuban aid,
Havana has made some headway in recent months toward
improving relations with this important member of the Frontline
States. Cuba probably will intensify its courtship as the Nonaligned
Movement summit in Harare this August nears.
Nicaragua: The Growing Consumer Squeeze) 11
Food shortages and a phaseout of subsidies have led to sharply
increased prices for staples, while declining real wages have eroded
the purchasing power of consumers.
Although Moscow and its allies probably can continue to expand
their influence in Brazil through contacts with the resurgent left,
they are unlikely to have a major impact on Brazilian domestic
politics under President Sarney's administration.
Brazil: Emerging Competitor in World Tank Market I 19
The expected conclusion this spring of a deal to sell tanks to Saudi
Arabia would signal Brazil's emergence as a competitor in the
market for advanced weapons.
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ALA LAR 86-005
14 February 1986
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The head of the important Oil Workers Union has publicly
criticized government policies toward labor and the oil industry, but
a major confrontation probably will be averted.
Honduras: Impact of Military Shakeup
Ecuador: Despair Over Declining Oil Revenues
Dominican Republic: Easing Austerity
Peru: Mine Workers' Strike
Cuba Chronology
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Articles have been coordinated as appropriate with other offices within CIA.
Comments and queries regarding this publication may be directed to the Chief,
Production Staff, Office of African and Latin American Analysis
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Cuba's Policy Toward
South America
Cuba's foreign policy toward South America over the
last five years has involved an intensive effort to
exploit the democratic transition in many countries by
seeking improved bilateral relations with the new
civilian administrations. President Castro's diplomatic
efforts in the region are part of a wider strategy to end
Cuba's political isolation and gain access to new
economic markets as well as to garner support for
Havana's positions on regional issues and ease US
pressure on Central America. The Cuban leader is
emphasizing "moderation" and trying to develop a
reputation as a responsible neighbor by focusing on
issues of mutual concern such as trade and debt
problems. Castro's "opening" to the Catholic Church
in recent months is, at least in part, another tactic to
improve his image with Latin American leaders.
Castro has not forgone support for armed revolution
in the region. In almost all South American countries,
the Cubans are providing at least minimal support to
the radical left, substantially more in some cases, at
the same time that they are courting the governments.
The Cubans are being cautious in their approach and
advice to the left in most countries because Havana
apparently believes a gradual pace is necessary to
strengthen and unify radical groups. Moreover,
Havana is also using its expanded presence to
strengthen ties to more moderate important interest
groups-parties, unions, and the church-and
individual power brokers willing to champion Cuba's
policies to the detriment of US interests. Indeed, we
believe that attempts to penetrate and otherwise gain
influence in a broad spectrum of political
organizations-including the media-will be a key
Cuban policy goal in South America over the next few
years.
A highpoint of Castro's diplomatic efforts to
ease Cuba's isolation in Latin America was the
official visit to Havana last April of Ecuadorean
President Leon Febres-Cordero. Although Castro
made few gains in terms of substantive agree
ments, he gained considerable political capital
and regional legitimacy from the visit of the
conservative Ecuadorean leader. Castro has
issued an invitation to Peruvian President Garcia
to travel to Cuba this year.
Seeking Regional Acceptance
Castro's drive to refurbish Cuba's standing in the
region has had considerable success. Although most
South American leaders remain suspicious of Havana
and wary of Cuban meddling in their internal affairs,
some leaders apparently believe that Castro's more
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14 February 1986
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moderate rhetoric and his diplomatic overtures
indicate that the prospect of Cuba's promoting
antigovernment activity in their countries has
diminished. They are probably also gambling that the
domestic political gains to be derived from
establishing closer ties to Havana outweigh the risks
of Cuban subversion.
Bolivia, under left-of-center ex-President Siles Zuazo,
was the first country to move toward a
rapprochement, and the two countries resumed
diplomatic relations-broken since 1964-at the
charge level in early 1983. Ecuador followed suit a
year later by upgrading its relations to the
ambassadorial level. Over the past year, Uruguay has
reestablished diplomatic ties and Peru agreed to
improved relations-which had been at the charge
level-by agreeing to exchange ambassadors early
this year. Bolivia named a resident charge to Havana
last May, although relations have cooled since the
subsequent election of President Paz Estenssoro.
Castro probably still hopes that he can persuade
Brazil and Colombia to reestablish diplomatic
relations this year, but Havana's chances were
undoubtedly hurt by recent events such as the clumsy
attempted abduction of a Cuban defector by Cuban
diplomats in Spain last December. Relations with
Venezuela remain cool, and there is no indication that
President Lusinchi is interested in improving them
any time soon.
Although Castro also has had some success in
stimulating trade with South America, Havana's
economic relations in the region are still limited.
Cuba's commerical ties to Buenos Aires have
expanded, in large part because of President
Alfonsin's extension of a $200 million annual line of
credit to Cuba for the 1984-86 period. Cuban trading
companies have established permanent commercial
offices in Buenos Aires, and the two countries have set
up regular air and maritime services. In addition, an
Argentine firm has received a contract to build at
least six large hotels in Cuba.
During the visit of an Ecuadorean economic
delegation to Havana last spring, press reports
indicate that Quito and Havana worked out a
reciprocal line of credit agreement amounting to an
initial $3.6 million. The two countries also agreed to a
barter deal that provides for the exchange of
Ecuadorean grain for Cuban meat. Cuba is providing
Bolivia with technical training, as well as assistance in
health, mining, and agriculture. The two countries
created a joint commission last year to study ways of
increasing bilateral trade. Uruguay also signed a
trade agreement with Cuba last year
Cuba agreed to improve scientific, cultural, and trade
ties, and, following a visit to Havana by Peruvian
Prime Minister Alva Castro, Cuba loaned Peru two
fishing trawlers at no cost to Lima. Colombia and
Cuba have agreed in principle to open commercial
offices, but trade with Bogota-as with Caracas-is
likely to remain limited.
Castro has effectively used multilateral forums over
the last few years to project an image of Cuba as a
responsible actor in regional affairs. Cuban officials
lobbied hard and were successful at getting Cuba's
National Assembly-a rubberstamp body with no
political power-voted into the Latin American
Parliament at meetings in Brazil last June. Havana
then sent some 40 representatives to a follow-on
meeting of the Parliament held in Uruguay last fall.
Cuba also successfully applied for observer status in
the Andean Pact last year and undoubtedly will try to
arrange technical assistance program exchanges with
the Andean countries through the Pact.
Havana continues to use forums such as the Latin
American Economic System (SELA) and Latin
groups in international forums that exclude the
United States to promote Cuba's identification with
its regional neighbors, and Havana expressed an
interest in joining the Latin American Integration
Association last year. Cuba is being careful to avoid
obvious attempts at politicizing such bodies,
preferring to use its presence to solidify its desired
image as a serious Latin American partner. Cuban
Vice President Carlos Rafael Rodriguez chaired the
SELA meetings in Venezuela late last year, for
example, and reportedly took pains to conduct
unbiased and objective meetings.
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There are also some indications that Cuba may
attempt to rejoin the Organization of American
States (OAS). Although he has scornfully described it
as "the US Ministry of Colonies," Castro might be
considering a bid for OAS membership as a useful
show of regional support for Cuba. Even if such a bid
were defeated, he might consider the exercise
eminently worthwhile, provided another country-
perhaps Nicaragua-was promoting Cuba and the
vote was polarized with the major South American
democracies in favor and conservative regimes like
Chile, Paraguay, and Grenada blocking Havana's
entry.
Nurturing South American Leftists
During the past five years, the Cubans have been
more circumspect in their support of armed revolution
and the use of violent tactics in South America, but
Castro is continuing to provide support and guidance
to most of the region's leftist organizations. While
Havana has been careful not to jeopardize its
improved diplomatic standing in the region, support
for revolutions abroad is an intrinsic part of
Castroism, and the Cuban leader is unlikely to agree
to cease providing such support in exchange for short-
term political gain with democratic leaders. Indeed,
Castro's diplomatic successes thus far have not
required a reciprocal cutoff of assistance to
revolutionary groups in the region, only more caution
in providing such aid. Havana clearly has become
more selective in distinguishing between those
countries that are suitable targets for subversion and
those where a political approach is more appropriate.
The Cubans are advocating a two-pronged strategy of
maintaining pressure on President Pinochet through
terrorism while urging their leftist allies to forge links
and cooperate with moderate opposition groups to
position themselves to exploit the military regime's
The Cubans,
I believe that Pinochet has
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lost much of his middle-class support and that 25X1
Chilean leftists should emphasize political actions
such as propaganda, recruiting, and coordination of 25X1
opposition activities this year. Moreover, the Cubans
have a host of contacts in nonradical leftist
organizations that have eschewed violent tactics thus
far. In some cases, the Cubans have advised these
groups to abandon the moderate opposition led by the
Christian Democrats and to join the far left political
coalition led by the Communist Party.
For the short term, Chile is the only country in South
America where Cuba is openly supporting subversion,
probably reflecting Havana's assessment of the high
"revolutionary" potential there and Castro's personal
disdain for the military regime. Castro also perceives
support for antigovernment groups in Chile as being
less risky in terms of the potential political backlash
because of the Pinochet regime's international pariah
status and may believe that subversive efforts against
Chile will help ease pressures on Cuban policy
Chilean leftist groups are not prepared for full-scale
revolution, Cuba probably believes that a gradual
increase in violence will help sustain domestic and
international pressure on Pinochet, as well as help
leftist recruiting.
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Argentina Full relations at ambassadorial level; political ties correct
but not warm; 67 Cuban diplomats resident in Buenos
Aires,
large rensa Latina o ce and three Cuban trading
companies operating; commercial ties expanding; air and
maritime service established last year; Argentina extend-
ed Cuba $600 million line of credit spread over 1984,
1985, and 1986.
Bolivia Full relations at charge level; diplomatic ties correct but
President Paz Estenssoro has cooled relations since his
election last summer; resident Bolivian charge to Havana
named last year; approximately 40 Cuban diplomats
resident in La Paz; Prensa Latina office operating; Cuba
providing 50 to 150 scholarships at any given time.
Brazil No relations; good chance relations will resume this year
although still not assured; unofficial Prensa Latina rep-
resentative operating.
Colombia Relations were suspended in 1981 and neither country
has resident representation, but Castro and President
Betancur have developed personal working relationship;
there is some chance that diplomatic ties could be
restored this year, but there is strong domestic opposition
in Colombia; Prensa Latina operating; Cuba has mari-
time agreement to use Cartagena port.
Ecuador Full relations at ambassadorial level, but President
Febres-Cordero cool to Cuba; nonetheless, his visit to
Havana last year a highlight of Castro's diplomatic
efforts; some 24 Cuban diplomats in Ecuador,
operating; limited trade agreement signed last year.
Paraguay No relations.
Peru Diplomatic relations are being upgraded to ambassado-
rial level this year; Castro and President Garcia sparred
over debt issue last year, but Garcia may visit Havana
this year; 35 Cuban diplomats in Lima
Cubana Airlines and
Prensa Latina operating; joint trade commission estab-
lished in 1985.
Uruguay Full relations at ambassadorial level established last
year; five Cuban diplomats in Uruguay; trade relations
resumed last year but trade negligible.
Venezuela Formal relations exist, but Cuba has no official represen-
tation in Caracas; Venezuelan charge resident in Ha-
vana; President Lusinchi cool to Cuba and improved
relations not expected soon.
Havana believes conditions are opportune for leftist recruit-
ing and infiltration of labor organizations; Cuba does not
envision armed revolution in near term and is counseling
moderate path for leftists now; Cuba continues limited
training and funding of longtime Montoneros and People's
Revolutionary Army allies.
Cubans are frustrated by divisions among leftists and proba-
bly will work to strengthen and unify them; Havana provides
limited training and funding to a host of leftist parties and
small radical groups.
Castro wants to open diplomatic relations and apparently is
not providing tangible support to small, radical MR-8 group;
Cuba has a number of sympathetic friends among state and
national politicians, journalist and labor groups; Cubans
giving funding and training to leftist Workers Party; Cubans
courting progressive church leaders.
Castro sees President Pinochet as under pressure, although
he recognizes overthrow might not come for years
Havana advising mix of
terrorism and coordinated political action with moderate
groups to pressure Pinochet.
Castro probably still holds out hope for diplomatic relations,
and Cuba only incrementally increasing support to leftist
groups; Cuba could step up funding, training, and arming of
leftist M-19 allies if an unfriendly government is elected this
year; Havana providing limited aid to Revolutionary Armed
Forces of Colombia.
Cuba will try to mask its support to leftist groups but is
encouraging some to prepare for armed revolution; Cuba
provides training and probably some funds to Alfaro Lives,
Carajo terrorist group; Havana has close ties to Revolution-
ary Socialist Party of Ecuador and maintains relations with
Ecuadorean Communist Party.
Cuba views Paraguay as a pariah state but has no allies there
to oppose government.
Havana may seek better ties to Tupac Amaru insurgents but
will limit support for now to protect political interests; Cuba
apparently has no ties to the Sendero Luminoso guerrillas.
Castro sees an opportunity for the left to develop into strong
opposition; Cuba has good ties to leftist Broad Front, which
includes the Communist Party; Havana also has well-placed
sympathizers in ruling Colorado Party and opposition Blan-
cos; Cuba funds and trains some members of Tupamaro
guerrilla group but is advising them to rebuild organization
and avoid violence for now.
Havana sees little hope for the radical left although Cuba
may fund and provide training to two tiny groups; Cuba has
considerable influence with largest leftist party, the Move-
ment Toward Socialism.
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Havana is backing violence-oriented leftists in other
South American countries, particularly in Colombia
and Ecuador, but tangible Cuban aid has been
modest, and the Cubans have tried hard to conceal
their involvement. Ecuador's Foreign Minister told
US Embassy officials that Castro had assured
President Febres-Cordero during his visit to Havana
last April that Cuba was not involved in internal
Ecuadorean affairs. Castro even said he would
counsel his leftist contacts there toward moderation.
Elsewhere in the region, Cuba is counseling leftists to
forgo violence, to build their organizational strength,
and to foster alliances with legal left-of-center parties
and other interest groups. This is true with the
Montoneros and the People's Revolutionary Army in
Argentina, and the Tupamaros in Uruguay-groups
with which Cuba has longstanding ties and which
receive some Cuban training and financial support,
but which are operating in countries where Cuba does
not believe conditions are propitious for armed
struggle. Havana has relations with several Bolivian
leftist groups, but Cuban officials are frustrated by
the factionalization of the left there and apparently
are providing only minimal help. The Cubans
apparently have no contact with the radical Sendero
Luminoso in Peru, although Havana reportedly has
ties to the smaller, but active, Tupac Amaru insurgent
group. Havana has limited relations with the small
radical groups in Brazil and Venezuela, but there is
no evidence that Cuba is actively supporting
opposition elements in Paraguay.
in South America.
Building a Support Network
Cuba's efforts to build political and economic ties to
South America not only help strengthen Castro's
reintegration into regional affairs, but, also, a wider
Cuban presence permits Havana to influence and
penetrate important political groups in some countries
and to broaden its infrastructure for supporting the
radical left in others. Toward these objectives, Cuba
not only employs its diplomatic personnel, but also its
commercial enterprises, media outlets, civilian air,
and maritime services, and even visiting legislative,
cultural, and sports delegations. In addition, it uses a
network of regional and international Communist
front organizations-as well as friendship
organizations-to promote Cuban and Soviet policies
The political liberalization that has been part of the
democratization process in South America also will
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allow greater freedom of contact between Cuban
personnel and sympathetic members of political
parties, unions, church groups, youth organizations,
local media, and other groups through which Havana
can recruit and build a cadre of pro-Cuban advocates.
In both Peru and Uruguay, for example, Havana has
well-placed allies in the ruling parties, the
legislatures, the major opposition parties, important
left-of-center political coalitions, and labor
organizations. Havana also has influential friends in
Brazilian opposition parties and in the Brazilian
Congress, and the Cubans appear to be trying to
develop closer relations with labor groups there. Ties
are already strong to Bolivian unions and student
groups. Castro also appears strongly interested in
better relations with Catholic Church leaders,
particularly in Chile, Peru, and Brazil.
Outlook for Cuban Activities
Castro has exploited the return to civilian rule in
several South American countries over the past five
years, in large part by successfully expanding
diplomatic relations. He has done so by moderating
his rhetoric, by limiting his support for revolutionaries
in selected countries, and by mobilizing friendly
forces to lobby on Havana's behalf. These tactics
could pay off again in Brazil or Colombia over the
next year. Aside from Chile, where we expect Castro
to increase efforts to strengthen and broaden the
armed and political resistance, the Cubans are likely
to continue their gradual approach to increasing their
presence and influence in most of South America. We
expect to see a virtual onslaught of Cuban
delegations-political, commercial, cultural, sports,
and others-traveling through South America, as well
as an increase of regional youth leaders, labor
officials, and politicians making their way to Havana.
Despite Havana's progress, there are still a number of
roadblocks to its making rapid headway in the near
term. Many South American leaders view the opening
of relations with Cuba largely as a symbolic
expression of their independence from the United
States and a move to quiet domestic leftist opposition.
They remain suspicious of Havana because of its
covert activities in the region and its ties to influential
interest groups in their countries. Uruguayan
President Sanguinetti, for example, has restricted the
new Cuban Embassy in Montevideo to five diplomats
and has made it clear to Havana that he will not
countenance Cuban meddling in Uruguayan domestic
affairs. Indeed, none of the region's heads of state
have any ideological affinity with the Castro regime
and, while official exchanges are likely to increase
substantially, most of the South Americans will
maintain fairly cool, albeit politically correct,
relations with Cuba.
The Cubans are unlikely, moreover, to develop a
significant trading relationship with South America
aside from their credit arrangement with Argentina.
Havana's exports are limited to a few primary
products-sugar, nickel, and citrus-that are either
commited to the Soviet Bloc or are also produced by
the South Americans. Moreover, the Cubans are
imposing austerity measures at home, and Havana's
economic planners are trying to hold imports down.
Castro is likely to continue trying to establish a
commercial presence and to seek credit and barter
arrangements, but trade levels are not likely to
increase substantially in the near future.
Havana's progress in strengthening ties to leftist
elements in the region will be somewhat constrained
by its desire to improve political and economic
relations with civilian governments. The Cuban
efforts will also be hampered by continuing
divisiveness among leftist groups in some countries.
Moreover, Cuba's problems in Central America are
more immediate and currently of higher priority for
Havana and will divert some of Havana's attention
and resources from South America. On balance,
however, we believe the Cubans will make some
inroads with the left because Havana appears willing
to continue supporting a host of groups. Castro's
cautious approach, focusing on rebuilding the base of
support and the capabilities of the left in countries
such as Uruguay, Argentina, and Bolivia, probably
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will have some success. Cuban training and arming of
more violent groups in Chile, Colombia, and Ecuador
probably also will be reflected in a rise of violence and
agitation in those countries.
The Soviet Union undoubtedly approves of Castro's
approach to South America. We see little evidence of
Soviet-Cuban disagreement regarding their strategic
goals in the region or the tactics used to attain these
goals. Moscow and Havana appear to agree on a
policy of subversion in Chile while being careful not to
damage their political objectives elsewhere. Unless
Castro decides to promote armed revolution in
countries such as Argentina or Peru, where Moscow
has important economic and political stakes-a
development we view as unlikely in the next few
years-Moscow and Havana probably will continue to
work along parallel tracks in the region.
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Cuba-Zimbabwe:
Upturn in Relations
The recent exchange of high-level visits by Cuba and
Zimbabwe has resulted in agreements to expand
bilateral technical cooperation. Despite Harare's past
reluctance to accept substantial Cuban aid, Havana
has made some headway in recent months toward
improving relations with this important member of
the Frontline States. Cuba, intent on manipulating
the Nonaligned Movement summit in Harare this
August, probably will intensify its courtship of Prime
Minister Mugabe.
Embassy reporting indicates that a Zimbabwean
official has admitted that Harare cannot handle the
estimated 5,000 visitors expected at the summit with
the existing facilities and will rely on Cuban workers
to construct villas
. Havana, however, will be hard pressed to
assist in the construction of facilities given the rapidly
approaching August deadline.
Limited Cooperation Accords
US Embassy reporting indicates that Havana will
send some 40 doctors to Zimbabwe and has developed
an ambitious educational exchange program with
Mugabe reportedly is impressed by Cuba's
educational programs but, because of his wariness
over Cuban intentions, probably views the accord as a
way to satisfy Havana's repeated calls for expanded
cooperation without opening the door all the way to
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Mugabe met
with some of the 122 Zimbabwean students currently
studying in Cuba but apparently discounted their
complaints of mistreatment by Cubans. Recruitment
for the program appears to be lagging, according to
the US Embassy, because of reports that have filtered
back to Zimbabwe of poor housing, inadequate
stipends, racial discrimination, and isolation from the
Cuban population.
Malmierca's Visit
Diplomatic relations between the two countries were
also enhanced by Cuban Foreign Minister
Malmierca's visit to Zimbabwe last month. Mugabe
personally arranged air transportation for the Cuban
delegation from Lesotho, where it was stranded as a
result of the coup. This assistance lends credence to
recent press statements by Havana that described
bilateral relations as excellent. Topics discussed in the
meeting included issues and logistics of the
Nonaligned summit and the planned opening of a
Zimbabwean embassy in Havana.
Outlook
Cuba's intensified efforts to court Zimbabwe
underscore Havana's aim to manipulate the agenda
and outcome of the Nonaligned summit. While
undoubtedly aware of Havana's intentions, we believe
Mugabe will have difficulty controlling Cuban
activities at the meeting, in view of the substantial
assistance he will need from Havana to carry out the
event. Cuba showed at the Nonaligned Foreign
Ministers' meeting in Luanda last year that it can
provide interpreters and advisers, as well as other
types of logistic support for such events. Cuba, having
persuaded Zimbabwe to host the summit, will have to
come through on its pledges or risk embarrassing both
Mugabe and Castro. Zimbabwe's receptivity to
expanded cooperation beyond the Nonaligned summit
will be tied in large part to the success or failure of the
summit. Moreover, if the experience of the
Zimbabwean teacher trainees is anything like that of
other foreign students on the Isle of Youth, we believe
Mugabe's support for cooperation with Havana may
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Nicaragua: The Growing
Consumer Squeeze
Nicaraguan consumers are tightening their belts as
the economy deteriorates and the regime commits an
ever larger share of its budget to the war effort. The
Sandinistas' gradual socialization of the economy has
led to a highly centralized distribution system, and
rationing of basic foods-which began in 1983-is
increasingly haphazard. Food shortages and a
phaseout of subsidies have led to soaring staple prices,
while declining real wages have eroded purchasing
power. Prospects for improvement are bleak, and the
regime will rely on shipments from the Soviet Bloc to
maintain minimum consumption levels while using
state-of-emergency powers to prevent manifestations
of discontent.
Food Distribution Controls
On seizing power in mid-1979, the Sandinistas
centralized food distribution through the newly
created National Basic Foods Corporation, which was
given sole authority to import, export, and sell basic
foodstuffs to retailers. Over time,
the organization:
? Operated the previously privately owned
supermarkets in Managua.
? Created "people's stores" to supply basic goods at
subsidized prices.
? Supplied foodstuffs to commissaries in some
workplaces, which were replaced in mid-1985 by
two central commissaries in Managua.
? Furnished priority supplies to some private stores, in
exchange for pledges to sell controlled items at
official prices.
? Built marketplaces with stalls for private vendors in
neighborhoods throughout Managua with the
apparent hope of closing the Eastern Market, the
capital's bastion of small-scale free enterprise.
? Subsidized foodstuffs and consumer goods by
enforcing wholesale and retail price ceilings. F_
During the first two years of Sandinista rule, food
imports and donations compensated for the sharp
decline in agricultural production during the
revolution. Per capita food imports increased by more
than 250 percent in 1980 and remained steady the
following year, according to press and US Embassy
reporting. By 1982, however, a falloff in donations
and the growing shortage of foreign exchange limited
the flow of foodstuffs from abroad, leading to
frequent shortages.
In response, Managua set up a system of "guaranty
supply cards," first for sugar, then for rice, beans,
corn, cooking oil, salt, sorghum, and soap. Each
family was guaranteed the right to buy at least a
specified amount of each product per month through
government outlets at official prices. A more stringent
fixed ration system established in 1983 for these eight
products remains in effect today, with Cuban-style
ration cards distributed by the neighborhood
Sandinista Defense Committees. Nonetheless,
supplies of these goods have become increasingly
scarce, giving impetus to a prospering black market.
The regime now uses the block committees and other
mass organizations to police neighborhood markets to
ensure that official prices are honored, according to
the US Embassy.
')FVI
Shortages are caused partly by inefficient handling
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and distribution For
example, ur ensome
customs procedures prevent prompt use of donated
goods. Censored press articles claim that regime
incompetence is hindering distribution of available
supplies of cooking oil and grains. We believe low
producer prices drive many farmers to divert goods to
the black market.
Soaring Food Prices and Declining Real Wages
By early 1985, Managua could no longer afford huge
and growing food subsidies, in part because of
escalating military expenditures.
50 percent of the 1985
budget was allocated to the military, up from 25
percent in 1984. US Embassy and press reporting
Secret
ALA LAR 86-005
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Nicaragua: Economic Indicators, 1978-85
Consumer Price Growth
Percent
Real Per Capita GDP
Index: 1978=100
Real average wage
Real minimum wage
Real Wages
Index: 1978=100
I I I I I I I I 1
85 30 1978 80 85
goods also rose sharply.
85 30 1978 80
indicate that the government, citing the drain on its
budget and the need to curb speculation, sharply
boosted official prices for rice, beans, and other
staples in February 1985 and again on several other
occasions during the year-the first substantial
increases since 1979. Black-market prices of these
percent.
The price rises for staples have had a major impact on
inflation. Between 1979 and 1984, the consumer price
index rose by an average of 35 percent per year,
according to IMF data. Based on US Embassy
reporting, we estimate inflation last year at about 300
Minimum wages, boosted by 40 percent soon after the
Sandinistas took power, remained virtually frozen for
several years despite the rising prices. Three
adjustments last year, and another hike of 50 to 100
percent in early January, did not keep pace with
inflation. Analysis of official data indicates that
minimum wages, deflated by price increases, fell by
one-third during 1985 alone, while the average
purchasing power of all workers dropped by one-fifth
last year. Compared with 1978, real minimum wages
have declined by 50 percent, and real average wages
by two-thirds.
Plunging Consumption
US Embassy reporting indicates that the steep decline
in purchasing power has altered consumption
patterns. The limited data available indicate that per
capita consumption of food staples increased in the
first two years of Sandinista rule-when food imports
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Nicaragua: Prices for Basic Foods Cordobas
Product Unit Official Prices ' Free Market Prices
December December January January
1984 1985 1985 1986
Cooking Gallon 60.00 NA 350 3,000
oil
The current official exchange rate is 70 cordobas per US dollar
and the black-market rate is 1,300 per dollar.
were high and prices subsidized-but have fallen
steadily since the end of 1981.
monthly salaries less than the cost of basic minimum
consumer items . The
plunge in real wages has wiped out savings; restricted
the use of private automobiles, dining out, and the
purchase of imported goods; and otherwise
dramatically altered lifestyles of professionals and the
middle class, according to US Embassy reporting.
Minimum wage earners are postponing purchases of
clothing and other basic consumer goods because a
pair of pants-to cite one example-costs the
equivalent of half a month's earnings. In addition,
many Nicaraguan housewives report that price and
supply constraints are causing a sharp deterioration in
family diets.
Shortages-even of basic rationed staples-are
widespread, despite increased shipments of foodstuffs
from the Soviet Bloc last year. Since last Christmas,
nearly all basic staples-rice, beans, sugar, cheese,
milk, chicken, and meat-have been in extremely
short supply in government-run outlets, and cooking
oil has been practically unavailable anywhere for
several months. According to the US Embassy, this is
the first time so many scarcities have occurred
simultaneously. While many middle-income
consumers are resorting to the black market-where a
pound of rice, for example, costs nearly five times the
official price-to satisfy basic food needs, the US
Embassy reports that this option is not open to lower
income families, that must reduce their food
consumption or find additional work to make ends
meet.
Bleak Prospects
The outlook for consumers remains grim.
the harvest of key staples this
year will be significantly lower, in part because of
poor growing conditions. Inefficient government
economic policies, increased land confiscations, and
the growing squeeze on the private sector also are
hindering agricultural production. Foreign exchange
constraints will limit food imports, although the
Soviet Bloc probably will continue to provide enough
to satisfy minimum consumption needs.
The regime's commitment to eliminate remaining
subsidies on consumer goods and foodstuffs-
probably will push official prices higher, and black-
market prices almost certainly will rise as well.
The calls by Sandinista leaders for a "survival"
attitude in the face of mounting pressures suggest
they expect supply problems to continue. Managua is
likely to push for more Soviet Bloc donations while
trying to deflect blame for the shortages to private
vendors and continuing to redistribute land to bolster
support among the peasants. The regime will rely on
the expanded state of emergency to prevent strikes,
consumer demonstrations, or other manifestations of
discontent. There may be further spontaneous
reactions, however, such as the murder of a price-
control inspector in a Managuan marketplace in mid-
January as he tried to cite a vendor for price
violations.
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Relations
The transition from military to civilian rule in Brazil
has brought a slight thaw in relations with the Soviet
Bloc. The Sarney administration probably will move
gradually to expand economic and cultural ties but
will maintain merely cordial political and diplomatic
relations. Moscow and its allies probably can expand
their influence through increased contacts with the
resurgent left, although we believe they are unlikely
to have a major impact on Brazilian domestic politics.
Bilateral Ties
Brazil maintains full diplomatic relations with all
Bloc nations except Cuba, although bilateral ties are
most extensive with the Soviets. In contrast to the
military government's reluctance to cultivate new ties,
the Sarney administration has adopted a friendlier
attitude toward the USSR and its allies. We believe
President Sarney hopes to preempt an issue that the
left might attempt to use against him at home and to
explore potential avenues for expanding exports, thus
enhancing Brazil's ability to service its foreign debt.
The new tack also reflects Brazil's longstanding
conviction that it is an emerging democratic power
that should have viable relations with both
superpowers.
The friendlier tone of relations with the Soviets is best
illustrated by the Foreign Minister's visit to Moscow
last December, the first high-level visit since 1961.
The lack of any significant expansion of bilateral links
as a result of the visit was reflected in the absence of
ceremonies announcing major new accords. Instead,
the trip was more symbolic than substantive,
reflecting Brasilia's cautiousness toward expanding
ties. The President, some key advisers, and the
military-which is still influential in foreign policy
decision making-remain suspicious of the Soviet
Union's motives and troublemaking capabilities.
to Brasilia, according to US Embassy estimates.
Brasilia and Moscow recently set up a bilateral
commission to engage in periodic, but not regularly
scheduled, consultations on political matters.
The Soviets do not sell arms or provide military
assistance to the staunchly anti-Communist Brazilian
armed forces, which
opposed to strengthening links.
Even cultural ties are almost moribund, reflecting
Brazil's historical lack of interest in the Soviet Bloc.
At present, no cultural agreement exists and Brazilian
officials do not seem eager to sign one, according to
the US Embassy. Although Brazilian-Soviet cultural
centers exist in five major cities, including Sao Paulo
and Rio de Janeiro, they apparently restrict their
activities to teaching Russian
The East Germans maintain
similar centers. Student exchanges and scholarships
also are limited.
Economic Ties
Economic links between Brazil and the Soviet Bloc
nations are unusually limited. There are no economic
assistance programs sponsored by Communist
countries in Brazil. A number of intergovernmental
commissions foster trade and investment, but they are
generally insignificant and meet infrequently.
Although Brazil's private- and public-sector
enterprises have struck deals to obtain energy and
mining technologies from the East, Brasilia, for the
most part, pays only lipservice to expanded
technological cooperation. This accounts for the small
number of Soviet Bloc technicians in Brazil.
Diplomatic, Military, and Cultural Presence
Despite the warming trend, the Soviet Union and its
East European allies have only 53 diplomats assigned
Secret
ALA LAR 86-005
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Brazil has been disappointed by its efforts to expand
trade with the Soviet Union and Eastern Europe. The
Communist Bloc's low-quality goods have met market
resistance, limiting increases in Soviet sales.
Simultaneously, Soviet hard currency stringencies
and larger recent harvests have choked off Brazilian
attempts to expand exports, especially in view of
Brasilia's reticence to extend large-scale credits to
Soviet Bloc purchases. Brasilia has been burned by
offering trade credits to East European debtors that
whowere unable to meet obligations during Brazil's
acute balance-of-payments difficulties in 1982-83;
bad debts from Poland are still a political issue.F_
Although Brasilia capitalized on the US grain
embargo to increase commodity sales to Moscow
rapidly in the early 1980s, trade between Brazil and
the Soviet Bloc is now declining. In 1984, for example,
Brazil exported $1.4 billion to Communist Bloc
countries (5 percent of Brazil's exports), but imported
only $420 million (3 percent of its imports).
Preliminary 1985 trade data indicate Brazil's exports
to Communist nations dropped 36 percent to only
$900 million, and imports declined 33 percent to only
$280 million.
Growing Leftist Contacts
On the domestic front, the civilian government's
commitment to political liberalization has fostered a
more propitious atmosphere for Soviet Bloc activities.
The lifting of censorship will facilitate Bloc
propaganda efforts that have been minor and largely
ineffective. Sarney's decision to legalize radical leftist
parties has allowed those groups with strong ties to
the Soviets to rebuild. During the national municipal
elections last November, some leftist parties
performed well, capturing several important
mayoralties.
Moscow has provided funds and advice to the
Brazilian Communist Party, which has reportedly
doubled its membership from 6,000 to 12,000 under
civilian rule. The Kremlin probably also maintains
ties to the 8 October Revolutionary Movement, a
political remnant of the 1970s' guerrilla movement.
On the other hand, the Maoist Communist Party of
Brazil has continued to rebuff Soviet overtures.
In Brazil's freer political climate, the Soviets are also
trying to expand their relations with leftist groups
that do not have longstanding ties to Communist
states. For example, Moscow is attempting to
cultivate the Workers Party, an umbrella group of
Marxist parties.
the Soviets have provided funding to the party,
w ich won a number of municipal elections in areas
outside of its traditional stronghold of Sao Paulo.
Because the party controls the Unified Workers
Central, the most radical and active labor
confederation in Brazil, it affords the Soviets an
opportunity to increase influence in the labor sector.
Outlook
We believe that Brasilia will probably continue to be
cautious in improving relations with the Soviet Bloc.
Expanded ties are most likely in those areas the
Sarney administration considers innocuous, such as
cultural exchanges. Additionally, Brazil would like to
expand economic relations, in our judgment, but will
encounter Soviet displeasure over Brazil's
unwillingness to reduce its large trade surplus by
importing more Soviet products. In December the
Brazilians extended for three years an agreement to
import $20 million of Soviet machinery and
equipment, but such efforts are small gestures. New
technology transfer agreements will remain subject to
the difficulties of dealing with Brazil's private sector
and state enterprises. In our opinion, unless the
Soviets have a major crop failure, Brazil's trade with
the Bloc probably will stagnate over the near term.
The administration also will monitor closely the
political activities of the Bloc nations.
We believe the USSR is unlikely to have a major
impact on political dynamics in Brazil in the near
future. Despite their recent growth and victories in
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some municipal elections, the leftist parties still
occupy a relatively minor position in the power
structure. The larger centrist governing party-the
Brazilian Democratic Movement-powerful business
groups, and, more important, the military, are
important checks on the left. In addition, even some
leftist politicians apparently oppose close cooperation
with the Soviets. Governor of Rio de Janeiro Leonel
Brizola, the most prominent leftist politician, is
attempting to build support among the middle class
and mend fences with his longstanding enemy, the
military. Therefore, he will probably keep his distance
from Moscow to avoid damaging his presidential
prospects.
At present, we believe there is little chance that the
Soviets could increase their influence through
subversive groups, which do not exist at this time. If
the left's legal right to compete for political power
were rescinded by the centrist majority and the
military-an unlikely event-some groups might
decide to resort to arms and seek Soviet backing.
Buoyed by success in the recent municipal elections,
however, the leftist parties presently intend to stick to
the peaceful electoral route, in our view.
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Osorio tan!
(side view)
Osorio tank
(front view)
STAT
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Brazil: Emerging Competitor
In World Tank Market
Brazil is currently in the final phase of negotiations to
sell $1 billion of its Osorio tanks to Saudi Arabia.
Although several obstacles may yet cause the deal to
come apart, we believe the sale will be concluded this
spring. It would be Brazil's single largest export of
arms and would signify the country's emergence as a
competitor in the market for advanced weapons.
Status of Negotiations
In November, the Brazilian press reported that the
Saudis would sign a $1.5 billion contract with
Specialized Engineers, Inc. (Engesa) to buy 1,000
Osorio tanks, but the report was premature. A
Saudi technical delegation will visit Brazil in
February to discuss the purchase of 500 Osorio tanks
mounted with 120-mm cannons, a deal potentially
valued at $1 billion. These disscussions follow a field
test in Saudi Arabia last summer that pitted an
Osorio prototype, equipped with a smaller 105-mm
Brazilians will roll out the red carpet for the Saudi
delegation, which will probably recommend that the
agreement be concluded. Even so, we believe
deliveries of the tank cannot be undertaken before
late 1987 and could still fall prey to the vagaries of
politics in the Middle East, or possibly a spending
freeze imposed by the Saudis in the wake of lower oil
prices.
Deepening Ties
The negotiations for the Osorio highlight the growing
bilateral ties between Brazil and Saudi Arabia. To
reduce its large trade deficit, Brasilia has been
seeking to expand its exports and technical sales to the
Saudis. In October 1984 the two governments signed
a military-technical accord that cleared the way for
arms sales, for joint production of arms, and for the
transfer of associated technology. In the wake of the
agreement the Saudis 25X1
purchased 25 per the s tock ofesa, the
manufacturer of the Osorio 25X1
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Implications
Even if the Osorio sale falls short of the amounts
currently envisioned, the export contract would mark 25X1
Brazil's emergence as a direct competitor with US
and West European suppliers of advanced weaponry.
The Osorio main battle tank is the most sophisticated
weapon system produced by a Brazilian manufacturer
and can be equipped with a variety of armaments
geared to the needs of the customer. According to
specifications issued by Engesa, the tank is also
equipped with a nuclear, biological, chemical air
filtering system, and computerized fire control and
laser rangefinder systems. Although we believe the
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US Abrams or the West German Leopard II tank, the
Brazilian tank will probably gain a foothold in the
world market because it is cheaper than the US and
West German models and comes free of the political
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ALA LAR 86-005
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Mexico: Oil Union Rift
With Government
The head of Mexico's economically important Oil
Workers Union publicly attacked the management of
PEMEX-the state oil company-and indirectly
criticized President de la Madrid's leadership last
month in his presence. The unprecedented action
reflects the union's dissatisfaction with government
policies toward the oil industry, and with labor in
general. Nonetheless, both the union and the
administration have an interest in seeking an
accommodation, and, in our judgment, a major
confrontation probably will be averted at this time.
The Dispute
The Secretary General of the Oil Workers Union,
Jose Sosa Martinez, charged that government budget
cuts were undermining Mexico's oil industry. He also
asserted that PEMEX was spending more on
paperwork and management salaries than on spare
parts, tools, and maintenance. He noted that the
government and the country as a whole would suffer
unless such policies were reversed. Other union
spokesmen defended Sosa's remarks and pointed out
that the government is not funding sufficient oil
exploration to meet its future production and export
goals.
De la Madrid, for his part, publicly responded that
PEMEX and the oil industry are well managed and
not, as Sosa had implied, on the verge of collapse.
Union Objectives
In speaking out, Sosa almost certainly was serving as
the mouthpiece for Joaquin "La Quina" Hernandez,
who for many years has been the power behind the
throne within the 110,000-member Oil Workers
Union. Under Hernandez' stewardship, the Oil
Workers Union, although affiliated with the powerful
Mexican Confederation of Workers, has enjoyed
considerable autonomy, in part because of its
considerable financial resources.
Hernandez and other leaders of the Oil Workers
Union probably intended to discredit PEMEX head
Ramon Beteta, a presidential favorite who is rumored
to aspire to a Cabinet post or perhaps even to the
presidency. On coming to PEMEX in late 1982, at the
time de la Madrid assumed office, Beteta pushed hard
to clean up the notoriously corrupt Oil Workers
Union. He was successful in limiting the union's
access to many of the lucrative PEMEX maintenance
contracts it once controlled, but his efforts to get
union leaders to undertake a more thorough
housecleaning failed, according to Embassy
reporting.
The oil workers' leadership, like labor leadership
generally, also has been publicly critical of the wage
increases the union has received, including the 32-
percent minimum wage hike the government
announced last December. Although oil workers are
relatively privileged, they too have suffered losses in
real wages since de la Madrid came to power.
Leaders of the Oil Workers Union, which has long
supported the ruling party, probably believe labor has
not received sufficient political concessions-mainly
in the form of public offices-to compensate for
economic sacrifices. Labor officials were disappointed
late last year when the ruling party did not nominate
the candidate labor favored for governor in the
northern state of Chihuahua, where an important race
will be held later this year. With 13 governorships at
stake in 1986 and more party standard bearers to be
named in the near future, the union leadership clearly
wants candidates with strong labor credentials in as
many states as possible.
Secret
ALA LAR 86-005
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To a lesser extent, the union leaders, in lashing out at
PEMEX management and the government, probably
also are motivated by genuine concerns about the
effects that budget cuts could have on the safety of oil
workers and the future viability of the industry. De la
Madrid, in fact, has invested far less than his
immediate predecessor in new equipment, facilities,
and exploration. His critics can point to a recent series
of accidents, including the loss of a PEMEX supply
ship and a gas explosion, as indicative of maintenance
problems.
Outlook
The oil workers' leadership, having attracted the
government's attention, is unlikely to seek a broader
confrontation, in our view. Sosa and Hernandez
almost certainly are aware that de la Madrid could
use his influence, albeit at considerable cost, to
replace them with more politically malleable leaders
should they stray too far. Short of such drastic
measures, however, the government could launch
investigations of some of the questionable means by
which Hernandez and other prominent union leaders
have enriched themselves.
The administration, for its part, probably will seek to
reach an accommodation with the union without
appearing to capitulate. It may offer labor additional
political offices in oil-producing regions, for example.
The government can ill afford to alienate oil workers
or their leaders, since strikes, work slowdowns, or even
sabotage of PEMEX facilities would severely damage
the already ailing Mexican economy. The de la
Madrid administration will also need the political
support of the oil workers and other influential labor
groups in coming elections if the ruling party is to
make a strong showing in key contests without
resorting to extensive fraud.
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Latin America
Briefs
may weaken his legislative and political bases.
The ouster of Armed Forces chief General Lopez by other military officers only
four days into President Azcona's term damaged the civilian President's image and
by reports that he was not informed
of Lopez's resignation until it was a fait accompli, and Azcona has not been
central role in keeping the democratization process on track.
henceforth intend to make all major military decisions. The defense attache
reports that one leading Fifth Promotion officer said the group continues to
support Azcona but will not be as "subservient" as was Lopez, who played a
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With Lopez gone, Azcona has no visible support from powerful military officers.
In fact, several of the colonels supported opposition National Party leader Rafael
Callejas during the elections and may now seek ways of boosting his power at
Azcona's expense. the neutrality of the military under
Lopez was crucial to the formation of a legislative coalition between the President
and Callejas, who also now controls the Supreme Court as part of an agreement
with Azcona. We believe Lopez's departure may make Callejas more reluctant to
cooperate with Azcona because he may believe closer alliance with the Fifth
Promotion will better ensure his political future.
Lopez's removal may lead to other changes in the government.
several of Azcona's Cabinet members had
been nominated by Lopez, and we believe they could be replaced. Foreign Minister
Lopez Contreras, a cousin of the former military chief, told the US Embassy that
his ability to negotiate matters of military interest, such as the Salvadoran border
issue, already has diminished.
Ecuador Despair Over Declining Oil Revenues
President Febres-Cordero is deeply troubled by the sudden plunge in oil prices,
according to US Embassy reporting. Foreign Minister Teran told the Embassy
that the President fears that the resulting economic recession and balance-of-
payments disequilibrium endanger his experiment with free market economics and
threaten to undo Ecuador's recently signed accords with international lenders.
Indicating that the administration has no contingency plan, Teran said that the
President is angered by his helplessness in dealing with the oil market collapse.
The Foreign Minister voiced concern that recession would strengthen domestic
critics of the President's close relations with Washington and the IMF, and could
result in a sweeping defeat for the President's coalition in June's congressional
Although Teran was clearly trying to elicit offers of additional support,
the Ecuadorean economy has
rough sledding ahead. According to the US Embassy, real GDP growth this year is
likely to fall far short of the government's 3.7-percent target-a target based on
earlier estimates of oil exports at $23 per barrel. In the Embassy's view, the
economy will register no growth this year if oil prices continue at the current $19
per barrel level and would decline by three percent should oil prices average $15
for the year. Moreover, oil at $15 per barrel would
produce a balance-of-payments gap that could not be covered by Ecuador's meager
foreign exchange reserves, necessitating an appeal to international lenders for new
loans.
In the less pessimistic case-oil holding at $19 per barrel-revenues from oil
exports would fall $400 million below the government's $1.75 billion target. The
resulting balance-of-payments gap would be more manageable, however, because
soaring coffee prices and the administration's flexible exchange rate policy are
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this year's debt service ($750-800 million) and import needs,
expected to boost nonoil export revenues this year. This would leave total export
revenues $200 million below last year's $2.8 billion-but still sufficient to cover
. Even if oil prices hold at $19 per barrel and a severe balance-of-payments
hoping to give more attention to a growing terrorist threat.
crisis is avoided, the resulting recession is likely to exacerbate Febres-Cordero's
problems with student radicals and the political opposition-at a time when he was
Easing Austerity
final $17 million standby tranche.
Dominican Republic is relying on increased coffee earnings to finance part of
public-sector wage hikes while continuing compliance with IMF guidelines for a
$78 million standby loan. The US Embassy reports that coffee earnings-which
last year accounted for roughly 10 percent of total export sales-could grow by
$90 million this year, helping to avert a crisis among public-sector workers who
threatened strikes and violent protests unless wage increases in effect since last
July were maintained this year. Congress has failed to pass some $54 million in
new taxes needed to pay the wage bill. Last year, the government liquidated
reserves of a state-owned gold mine to meet the payroll while still making IMF
targets. The Embassy reports that Santo Domingo passed the Fund's end-of-the-
year targets by a comfortable margin, paving the way for disbursal in April of the
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response to continued low world prices and declining US purchases.
There is a danger that President Jorge Blanco will cite better coffee prices as a
reason for relaxing economic austerity before the presidential election in May.
Entrenched problems continue to plague the economy, and, if the government
eases fiscal discipline too much recovery may well elude the next administration.
Persistent consumer price inflation, fueled by speculation, is keeping upward
pressure on wages and threatening export competitiveness. The crucial sugar
industry-accounting for about 30 percent of total exports-is in disarray in
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approach in both the private and the public sectors.
Mine workers in southern Peru recently staged the first successful strike since
President Garcia took office last July. The Communist-led union won a 50-percent
pay hike from US-owned Southern Peru Copper Corporation following a two-week
work stoppage involving 6,000 workers. Although other attempts by far-left union
leaders to rally their rank and file continue to fizzle, the mine workers' example
will probably encourage labor militants to take an increasingly confrontational
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Cuba Chronology
January 1986
1 January Nicaraguan President Daniel Ortega, President of the Revolutionary Council of
Afghanistan Babrak Karmal, and Chairman of Ethiopia's Provisional Military
Administrative Council Mengistu send messages of congratulation to Fidel Castro
on the 27th anniversary of the Cuban Revolution.
2 January EKONOMICHESKAYA GAZETA says the volume of trade between the Soviet
Union and Cuba reached $8.8 billion in 1985 and that more than 240 works were
built or modernized with Soviet aid.
Havana Radio reports that in 1985 Cuba fulfilled its sugar goals by processing 8
million tons, investments valued at $4.4 billion were made, and exports grew
almost 10 percent.
Peruvian Prime Minister Luis Alva at a press conference in Havana, announces
the imminent arrival of the new Peruvian Ambassador to Cuba and resumption of
full diplomatic relations.
Alva who is also Peru's Finance Minister, reaffirms Peru's refusal to permit the
IMV to mediate the renegotiation of the foreign debt.
4 January Alva tells the press in Lima that his trip to Cuba was very positive and that
relations between the two countries not only will be normalized but also will
expand.
5 January Nicaragua's Commander of the Revolution Jaime Wheelock announces that
Cuba, in a gesture of solidarity and internationalism, has decided to buy all sugar
production from the "Victoria de Julio" sugar mill.
6 January Paris press announces that Jean-Louis Marfaing, the French Ambassador to Costa
Rica, has been appointed Ambassador to Cuba, where he will replace Pierre
Decamps.
7 January Havana press carries a report by a Cuban Foreign Ministry spokesman refuting
rumors about Fidel Castro's alleged death reported by the news media in Miami
and Puerto Rico.
Havana TV announces that tourism is now Cuba's third-ranking economic
activity. During 1980-85 tourism brought in approximately $484 million, and
Havana expects earnings of $648 million in 1986-90.
Secret
ALA LAIR 86-005
14 February 1986
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At a CEMA conference in Budapest, Cuban Institute of Radio and Television
President Ismael Gonzalez says Cuba is prepared to confront all types of radio-
broadcast and televised aggressions.
8 January President of the National Assembly Flavio Bravo receives a delegation of
legislators from the Netherlands.
9 January
Fidel Castro meets with Max van de Berg, Chairman of the Labor Party of the
Netherlands, to discuss the international situation, especially foreign debt, and
party relations.
Poland's Council of National Defense Chairman Wojciech Jaruzelski meets in
Warsaw with Cuban Ambassador Narcisco Martin Mora Diaz to discuss bilateral
interests. Jaruzelski conveys greetings to Fidel.
The Cuban Foreign Ministry condemns US threats of economic sanctions and
military provocations against Libya.
The Council of State agrees to remove Idalberto Ladron de Guevara Quintana
from the post of Attorney General. Dr. Ramon de la Cruz Ochoa will assume the
rest of his term in office.
A protocol is signed at the conclusion of the 14th session of the Hungarian-Cuban
Economic and Technical-Scientific Cooperation Committee. Cuba will send
workers to build houses in Hungary.
10 January Flavio Bravo greets an Ecuadorean parliamentary delegation headed by Averroes
Bucarem. Bucarem says that dialogue and an exchange of ideas and experiences
should exist between the countries.
13 January A radio and television cooperation protocol between the USSR and Cuba for
1986-87 is signed in Moscow by A. N. Aksenov and Ismael Gonzalez.
14 January TASS announces that Alexander Kapto, Secretary of the Communist Party in the
Ukraine, has been named Soviet Ambassador to Cuba.
President of the National Assembly Flavio Bravo arrives in Lima to attend the
Latin American Parliament directors' meeting.
Chamber of Commerce President Jose Garcia Lara welcomes more than 20
businessmen from 18 Costa Rican firms. Attorney Echeverria believes there are
possibilities of developing trade with Cuba.
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Carlos Rafael Rodriguez meets with Eduardo Latorre Rodriguez, Executive
Secretary of the Group of Latin American and Caribbean Sugar Exporting
Countries, to discuss the international sugar market.
16 January A cultural agreement for 1986-87 between Cuba and Italy is signed in Havana.
The agreement includes the areas of science, culture, education, and sports.
Politburo member Sergio del Valle arrives in Guyana and is greeted at the airport
by Guyanese official Van West-Charles. Del Valle will evaluate the efforts of the
33 Cubans working in Guyana.
17 January Nicaraguan Public Health Minister Dora Maria Tellez arrives in Cuba to discuss
strengthening medical cooperation between the two countries.
Cuban Ambassador to Zaire Luis Delgado Perez delivers a message from Fidel
Castro to President Mobutu in which Castro reaffirms Cuba's desire to maintain
cooperative relations.
Flavio Bravo and Peruvian President Alan Garcia discuss topics of common
interest during a meeting in Lima.
18 January A car bomb explodes outside the Cuban airline office in central Luanda but causes
no injuries.
Foreign Minister Malmierca arrives in Lesotho. He is received by Foreign
Minister Vincent Makhele and the ministers of planning, health, and information.
Two Soviet merchant ships are en route to Cuba with hurricane relief. The ships
contain 1,500 tons of galvanized steel plate, more than 500 tons of fibrocement,
and about 1,700 tons of zinc sheets.
A parliamentary delegation from the Japanese Diet, headed by Liberal
Democratic Party deputy Sakarushi, arrives in Cuba at the invitation of the
National Assembly. The deputies will visit important economic centers and
construction sites.
Flavio Bravo meets with Clemente Guido, Vice President of the National
Assembly of Nicaragua, to discuss the positive results of the recent Latin
American Parliament meeting in Lima.
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A Zimbabwean Air Force plane flies Foreign Minister Malmierca out of Lesotho,
where he had been stranded as a result of the military coup that overthrew the
government.
President of Zimbabwean Canaan Banana meets with Isidoro Malmierca to
discuss the coming summit meeting of the Nonaligned Movement.
Minister President of the State Committee for Economic Cooperation Ernesto
Melendez arrives in Sierra Leone to attend the presidential inauguration of Maj.
Gen. Joseph Saidu Momoh.
South Yemeni Minister of Foreign Affairs `Abd al-'Aziz al-Dali receives the
Cuban Ambassador to Aden, who affirms Cuba's support for South Yemen's
struggle for socialism.
The Cuban Episcopal Conference holds its first ordinary session of 1986 to prepare
the topics to be discussed at the Cuban national ecclesiastical meeting that will
take place 17-19 February.
Carlos Rafael Rodriguez receives the credentials of the new Soviet Ambassador to
Cuba, Aleksandr Semenovich Kapto.
Isidoro Malmierca and Zimbabwean Prime Minister Mugabe describe bilateral
relations as excellent and discuss preparations for the eighth Nonaligned
conference to be held in Harare in September.
Talks between the USSR, Angola, and Cuba are held in Moscow on the situation
in southern Africa.
28 January Vilma Espin speaks at a ceremony at Havana University commemorating the
133rd anniversary of Jose Marti's birth. Neither Fidel nor Raul Castro attends.
Havana TV transmits its condolences to the US people for the tragedy caused by
the space shuttle Challenger's accident.
Raul Sendic, leader of the Tupamaros in Uruguay, says in Havana that his
organization supports and defends his country's democratic process, which is now
being threatened.
A Uruguayan Foreign Ministry official arrives in Havana to initiate arrangements
for the installation of his country's embassy in Cuba.
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A PLO delegation headed by Abd al-Rahim Ahmad departs Amman for Cuba to
attend the Third Party Congress and to discuss developments in the Middle East
with Cuban officials.
STAT
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Secret
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