PCC DISCUSSION PAPER -- CHILE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90M01243R001300110001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: December 23, 2016
• Document Release Date: September 17, 2013
• Sequence Number: 1
• Publication Date: November 7, 1989
• Content Type: REPORT

A
Declassified in Part - Sanitized Copy Approved for Release
2013/11/08: CIA-RDP90M01243R001300110001-5
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Remarks To 17: This memo arrived via WASHFAX after
1500 today, too late for your PCC meeting.
STAT
ER 89-4910/1
Executive Secretary
7 Nov 89
Data
2A27 004m
Declassified in Part - Sanitized Copy Approved for Release
2013/11/08: CIA-RDP90M01243R001300110001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/11/08: CIA-RDP90M01243R001300110001-5
ER 89-4910/1
PCC DISCUSSION PAPER -- CHILE
Introduction
Pinochet's defeat in the October 5, 1988 plebiscite set
the stage tor the transition to democracy in Chile.
Presidential and Congressional elections are scheduled for
.December 14, 1989. Christian Democrat. Patricio Aylwin is the
tront-runner in the presidential rare. Aylwin if; from the
relatively conservative wiho of his party, but he is the
Fi
candidate of a broad coalition which includer: :ocial sts and
declared support from the lommunit Party. Opposing Aylwin are
two independents from the center-right: formet Finance
Minister Hernan Buchi and businessman Francisco Javier
Errazuriz.
Considering the wide swings in economic and social policies
in Chile over the past twenty years, it is surprising the
degree to which the three Chilean presidential candidates agree
on maintaining the outlines of the current trep-market economic
model while at the same time incred!;ing social spending.
Aylwin tavors a slightly larger role for the stdte and
restoring power to the unions, hut would encourage the private
sector. to remain the primary engine of growth. Buchi would
retain current policies hut would increase social spending by
relying more on the private sector to provide services.
Errazuriz has a more populist approach which promises free
health ?and education ? for tne poor and elimination of the
mortgage indexation system.
There is some consensus among the candidates that the
greatest political problem facing the new civilian governMent
will be assertingcontrol over Chile's military. However,
Aylwin would have the greolest difficulty in this process.
AylWiri's coalition has declared its intent to pursue justice in
human rights cases and its desire to see President Pinochet
retire from his position as Commander in Chiet. Some members
of his coalition have questioned the military's role in a
democratic society.
The new government will Lake power on March 11, 1990. If
Aylwin, as expected, is elected the next President et chile, he
will need strong support from the U.S. and other countries to
bolster himself in negotiating with the military on the
transition. This ycc meeting has been called to discuss how
the USC should normalize relations with the new civilian
government and respond to its likely request tor assistance.
DECL: OADR
-- I
Declassified in Part - Sanitized Copy Approved for Release 2013/11/08 : CIA-RDP90M01243R00130Z) 110001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/11/08: CIA-RDP90M01243R001300110001-5
us xnterutC
iLta,Amitsallopri,t ?iintqLjitAt.)pkigroti, ,010_00m.tiotA0
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areas 6TTh.s. inter.est JeiJ,nd upen ttie Wlity of thtiriw
government to gain broad support and establish itS legitita0y
in a short period of time. The new government will have to
negotiate with the military on three main issues: the pUrpOt,
of justice in human rights cases, the future of Pinochet4S
Commander in Chief, and the role of the Armed Forces in the new
democratic Chile. The civilian politicians and senior miliiafy
officers do not trust each other. There is mutual suspicion
and great uncertainty abon the intentions of all parties.
(And many U.S. congressmen and staff will be suspicious about
the real authorities of any elected government, especially
while Pinochet remains on the scene.) The U.S. can play a role
in this process by encouraging dialog between the civilans and
the Military, even thouyh _Lir influence wits c armed
services, especially the army, is not great.
A second Erioriti_is to _support free market economic.
policies encouragin9 continued (.1t_owth. It is important that
the Chileans demonstrate to the rest of Latin Ametica that
.democracy is not incompatible with sound economic policies and
growth. The Pinochet government achieved remarkable economic
success at considerable social expense. And, while the
adjustment process continues, the question now is whether
democracy can ?deliver -- both economically and politically. We
also have a strong interest that the Chileans continue sound,
responsible external debt management policies. U.S. investors
have substantial sums at stake in Chile and are looking to the
USG to monitor the situation closely and protect their
interests if necessary.
In order to broaden our relations with the new government_
we must resolve the Letelier case. This is the key to
reopening a security assistance program with Chile and to fully
restoring military and political relationships. We are
confident that an Aylwin government will want to resolve the
case quickly.
In sum, the transition to democracy in Chile will create
new realities, calling for a review of U.S. policy toward the
country. Policy issues to he discussed at the PCC meeting
include:
-- political support for the new government,
-- security assistance,
-- economic assistance,
--narcotics control agiRtancp,
-- restoration of CSP and 0111c eligibility, and
support for further Chilean debt reduction operations.
SECRy1T.
0111Clit- Mott
Declassified in Part - Sanitized Copy Approved for Release 2013/11/08: CIA-RDP90M01243R001300110001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/11/08: CIA-RDP90M01243R001300110001-5
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