Created: 10/4/1983

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The following intelligence organizations participated in the preparation of the estimate:

Control Intelligence Agency, the- Defense Intelligence Agency, Ihe National Security Agency, and th* intelligence organ* lotion ofDepartment of Stole.

Also Participating:

The Assh'oni Chief of Staff forDeportment of the Army





Evolution of the

The Balance of Fofcej Perspectives and Strategies

The Democratic


The Radiol


Interior Minister Jarpa


Prospects for (he u

Downside Risks

Implications for the United 14

Indicators of Serious Political 15

Selected yj


The erosion this year of President Pinochet's domestic supportgrowthroad-based oppositionfueled toextent by the nation's economic decline sinceirreversibly on the path to political change. Under thefor transition to civilian rule. Pinochet's term of officeongress is to be electedt that to have the option of standing for reelectionivilian toeight-year term. The protest movement has forcedagainst hisnegotiate with the democraticthese questions, as well as other political and economic policies,to preserve his base of support in the military. The fragilitynegotiations raises the danger that Pinochet's continuationcould become the irreconcilable central issue in theThis year will end with the Christmas holidays and thethe three-month Southern Hemisphere "summer" vacation, aperiod of reduced activity that will make the period betweenthe end of December critical for both sides It is thereforetime frame for the primary focus of this



The pace and outlines of what we regard as irreversible political change in Chile will be determined over the next three months by the success, simple persistence, or collapse of negotiations betweenof the government and the democratic opposition. We believe thereair chance (roughlyercent) that these negotiations will progress haltingly through December, erode the cycle of opposition protests, and resultentative agreement for accelerating some elements of the transition to civilian rule. Differences will remain, making thedjajmyiea continuing feature of the political landscape intoar S 1

Neither President Pinochet nor leaders of the democraticwould be likely to embrace an agreement enthusiastically.preference would be to adhere to the transition formula outlined in0 Constitution, suppressing dissent vigorously. The armed forces, however, which are still his chief base of support, and Interior Minister Jarpa apparently are convinced of the necessity of some democratic opening and are moving the President in this direction. Moreover, Pinochet's personal prestige in the military, particularly with the Air Force and Navy, also has suffered in recent months because of his loss of public backing and because of revelations that members of his family have abused their privileged positions. On their part, democratic opposition leaders want to see Pinochet replaced They are coming to realize, however, that insistence on this demand could polarize society and clear theway for the radical left to dominate the opposition movement H ^ft j

We estimate that evenolitical truce or settlement by December, the tranauilizing effects could fade steadily, and by4 attention could focus again on the question of Pinochet's term of office. In an unpredictable atmosphere of political ferment, with new party leaders searching for issues and goals^jvemore years of rule for Pinochet would be increasingly in doubt. ^ ^

Thereesser chance (roughlyercent) that thewhich restsery fragilecollapse over government intransigence, the eruption of violence, the departure of Jarpa. or some


complication. The protest movement would swell and increasingly center on the call for Pinochet'sone issue that comes close to unifying all opposition elements. Polarization and spiraling violence would combine with Pinochet's reluctance to grant concessions and eventually would force the armed forces to choose between repressing the government's opponents or removing Pinochet. We judge that the military high command, acting by consensus and with the subsequent support of the lower ranks, would reolacfijhe President with another officer or some military-civilian body.gPSvV

Even if this downside scenario were to occur, we see within it only about one chance in three that the process would culminate in Pinochet's ouster by yearend; his departure, however, wouldtrong probability bye believe the armed forces would stand by the President longer if, in the military's view, the dialoguebecause of an intransigent opposition demand for Pinochet's resignation. The armed forces would still eventually replace him rather than continue to suppress protests. While there would be widespread disorder under this scenario, we do not foresee open civil war or theof the political system J |p

Under cither scenario, we do not expect that the radical leftable to make significant gains in the short term. It may be theof this that has led to the recent reported consensusCommunist Party and the Movement of the Revolutionaryin favortrategy of armed struggle. This effort is aimedgovernment repression and undermining the dialogue.therehance that this tactic could succeed, it is morefail because, of the government's awareness of the ploy, thelosses over the last yearalf, the public's distasteand the strength and efficiency of the security forces.though the Soviet Union has an intense interest in seeingthe fact that the anti-Communist military is likely to continuepolitical power means no significant concrete gains forsame would be the case for 'Havana, which would continuemighttraining forprobably counsel against hasty actions by the

Even though the severe two-year downturn in the Chileanwas largely responsible for catalyzing the opposition movement, at this point the likelihood of modest economic recovery by yearend will not reverse the process. Organized labor, whichey role in the early protests, has been replaced by political coalition leaders, who have given the antigovernmentrimarily political dynamic.

Thus, according to the US Embassy and our own estimate, the government's success inodest recovery and thethat official unemployment will be reduced toercent by December will not significantly ease political pressures on the

TheUnited States has various strategic, political, and diplomatic interests in Chile,ubstantial economic exposure Since US arms sales and economic and military assistance programs were suspended in the, however. Washington has hadimited capacity to influence events. Pinochet is still interested in obtaining US certification of improved human rights practices, which would permit resumption of such programs, but he alsoairly successful record ofolitical settlement in Chile would have both positive and negative effects on US interests. The gains would include more respect for human and civil rights and probable eventual renewal of military cooperation. The drawbacks could include greater assertiveness on the. part of leftist and nationalist groups interested in reducing political, trade, and financial ties with the United States in favorore Third World pattern. These negative risks would be greatly increased under the downside scenario. The government could come under the control of highly nationalistic military officers, who might rescind diplomatic, security, and military exercise cooperation. At the same time, economic policies could come under the influence of some business and other civilian or military sectors that are seeking drastic changes, which could lead to reduction of imports from the United States and susDensionof principal and interest debt servicing payments


of Ihe Criiii

he two-year economicPinochet's perceived aloofness from popularhad combined lo undermine his domesticbringing it lo its lowest point since heAllende in the military coopovernment's stubborn refusal to adjustpolicies in the face of tbe worldwas partly responsible for the severityeconomic crisis, which was manifestedpercent drop lo CNP,er centfalling teal wages, and widespreadMoreover, when the drying upolicy change, especially athe government .it fm*liquidity crunch badly J

Pinochet's growing vulnerability,opponents began organizing to press for changeseconomic and political policies. Inthe Christian Democratic-dominated Project (PRODEN) became thepolitical-labor coalition to organize andacceleration of the constitutional timetable,the transition to civilian ruleoriginally called Multlpartidarla and nowtheParty; the center-left Christianand Social Democratic Parties; and (heParty and factions of the Socialistmore specific demands in March and aplan in August- Other far-left factions ofParty formed the SociahstLabor coalitions also organized early in thepress union demands. The National Workersincluded unionists from the five largestand was led bv RodolfoeadCopperworkert Confederation. Severalgroups, lawyers in particular, participated inas

eginningay. Ihe opposition coalitions beganday of national protest" each month. These were largely peaceful protests urging

Chileans'to keep children home from school, boycott stores and public transportation, and bang pots and pans in the evening. Labor was instrumental Inthe early protests, until the government cracked down on striking copper miners, and an attempted national strike in June failed to draw widespread support, thus aggravating divisions within labor. Since then, the political coalitions, andChile's largest party, the Christian Democratic Party (PDCX have seized leadership of the democratic opposition movement.j

he government "responded to protests through the summer with selective repression (arresting protest organizers and firing striking workers) and limited concessions (granting debt relief to truck owners and allowing some exiles tosugust and another "day of national protest" approached,one centering for the first timeall for Pinochet'sgovernment reassessed Its strategy. With some of bis advisers counselingand uncertain whether the military woulda complete crackdown, Pinochet appointed former Senator Sergio Jarpa as his new Interior Minister,ell-known conservative politician andwas authorized to begin negotiations withopposition leaders. Wheneople were killed In protests immediately after larpa took office, theto grant concessions increased. Since that time, Jarpa has met with opposition political labor, and human rights leader

he Democratic Alliance hasist of demands that, informally at least, has become the agenda for negotiations between the government and the democratic opposition:

End to the state of emergency.

End to the application of Articlef0 Constitution, which gives the Presidentpowers to suspend civil liberties.

Promulgation of an electoral law.

Recognition of political parties.

Return of exiles.

Free press and free assembly.

Investigation of deaths during theugust :tt and rehiring of Eiicd

tha end of August, the governmentthe state of emergencystate of disturbance"allowedxiles to return,roost media censorship,rocesslegalize political parties by early nota plebiscite to allow election of" authorizedCol rally for the first time In yean, andmeasures toewwere not enough to head off furtherInore constructive atmosphereseL the stage for continuing talks In theJ

The Balance of Fortes* Perspectives ond Strategies

The Democratic Opposition

democratic opposition enjoyedthrough July in maintaining unity andCo-emmeM concessions, however,pasture and activities of the far left have atstrained that unity andilemma They recognize thatgaining leverage with the government hassolely from their ability to continuedemonstrations. If In exchange forconcessions they agree to scaleeven if against their best efforts,reduce public support for tbebargaining power could beIn either case, the moderates risk losingInitiative to the fir left, which willof falling or selling outt chances for success. Valdes. however,left-of?center elements in the democraticthat (avor demanding Pinochet'second, more moderate opposition faction evidently prevailed on this issue late Last month when the call for the President's resignation was dropped from the Democratic Alliance's list of demands. Theseopposition leaders probably are arguing forthe question of Pinochet's tenure for now. while concentiatina on gaining all of the other concessions possibl

nder these circumstances, the Democraticprobably will continue negotiations with the government in the weeks ahead, but will also continue to stage periodic protests- If public support for the demonstrations begins to wane because of government concessions or general weariness, the moderates might increasingly have to work with the radicals, whose organizationertite givereaterto stage protests In poor neighborhoodsfj

The Radical Lett

la Tbe radical lelt. Including the terroristof the Revolutionary Leftactions of the Socialist Party, and the Communists beginning to arriveonsensus mate

' Jver

ic past several years these organizations, Tactions within them, and elements inside and outside the country have debated the choice between armed struggle or nonviolent activities designed to win them acceptance Into the broad-based oppositionWith the Socialists probably IrrecoociUbly split into semipermanent factions over this Question, and tbe MIR firmly committed to violence, only thelargest and best organizedof the farur>dec>ded|

y late August, however.between the government and theopposition repoitedly alarmed the radicalsthe prospectompromisedeflate the <tpccail:unat this poiS

central committeeroad program ofviolence and cooperation with the MIR and the radical SocialistsjAlmeydabring down the government.




[several leaders of these groupsPopular Action Coordinator" and planned violent activities to occurugust (on these dates, terrorists assassinated the military governor of Santiago and staged severalhe goal of these plans was not to topple the regime but to undermine chancesompromise settlement byovernment


the Communist Party were reconsidering thearmed struggle because it threatened to isolateand reduce their popular standing. Also,was said to be scaling back its efforts becauseheavy losses. With the Democratic Allianceto embrace the far left,trategyis the only reasonable alternative for theprobably for most of the PCCh as well. Thus,that the bulk of the radical left will continueviolence in an effort to thwart anythe government andto

defuse the political


far, Pinochet has not taken the radicals'his presumed preference for using force

believe that the oppositions momentum and military sentiment in favor of concessions have persuaded him that awould be counterproductive at this time. It is because of his overriding concern to stay in office that he reportedly acceded to military concerns bvJarpa and authorizirnjnegotiations with the democratic opposition H

e assume that Pinochet's strategy also will reflect concern about sustaining the modest economic recovery that began earlier this year. This could be Jeopardizedovernment crackdown and an ensu-

this point, we suspect Pinochet still hopesas little as possible to his opponents in ordertime and foster split* in their ranks. At thebe will attempt to persuade the military thatnegotiating in good faith and will play on its fearspoliticians, in case conditions Inand his position is threaten;

ing backlash of opposition violence. He may therefore regard continuing negotiations with his democratic opponents as the best strategy to rebuild foreign and domestic confidence in the economy. Retardingflight and encouraging foreign investment will be

difficultivenolitically uncertainand the fact that the status of ihe free market experiment is In doubt-1

The Militory

oth the democratic opposition and Pinochet recognize that the armed forces will ultimately define the course and extent of political change In Chlle.


leaaersnip of theespecially the pivotalsupport the Constitution0 and Pinochet's continuation as President This is not simply the result of Pinochet's care over the years in hand-picking loyal subordinates for top military posts. It also reflects the conviction of most military leaders that the civilian politicians, especially the Christian Democrats, bear much of the blame for the Marxists' victory under Allende0 and for the ensuing chaos. Because roost observers believe the left probably still retains the support ofhird of thea percentage it has historicallymilitary is In no hurry to return full power to moderate civilians, who they believe could again deliver the country to radicals. The armed forces are alsothat, once in power, the civilians would engagewitch hunt" for military officers responsible, human rights abuses during the Pinochet regime!

espite these reservations.!

irmed services

lavor an acceleration ot some elements of theto civilian rule. Their reasons range fromconcern over the potential for politicaland radicalization of the oppositiona distaste for having to control civil disordersother nonrollitary police functions. We

commanders have made these views known toand, for this reason, the President avoided using troops during ihe protests in early September.also Is probably aware that his personal prestige in the armed forces has declined In recent monthsmeitibersjfjjujjfljjv^have abused their privi-leged pwitior

e do know that some members of the armed forces favor Interior Minister Jarpa's efforts to negoti-

Chilean military is one of the mosthighly professional armed forces in Latinand thus is likely to act in concert wheneveritself to any new political course. Forit appears to favor keeping Pinochet asin the contestimited democraticit will probably throw Its weight behindof the negotiations. Their failure,and an increase in violence and polarliationgreat strain on armed forces unity. If thecame to believe that It must choosebroad opposition on Pinochet's behalfpreserving military unity, we judgewould be replaced. The armed forcesparticularly the Army, might take somereachccision^buMtwouId bethe ranks

Interior Minister Jorpo

Jarpa has become Pinochet's "superminister" for political issues, similar to the powerful economic advisers the President has employed In the past Jarpa is close to the regime, having served capably as Pinochet's ambassador to Argentina until August. Also. Inhen he was president of the NationalChile's largest conservativesupported the government's ban on parties. At the same time, given bis background in politics. Jarpaore Independent figure than any other Cabinetosition he has buttressed recently by establishing his own ties to members of the junta, the Church, the media, and even elements of the opposi-

ersonal motives are unclear. As aambitious professional politician, be may hope to put himselfosition to fill any planned or unplanned political vacuum thot might occur in the



i Jurpa may

fore genuinely want tooThis does not, however, rule out that themight, foe different reasons, agree onat buying time and splitting the opposition. Ithow much license the President hasand more than once the two haveother publicly on the nature of politicalIn late August, for example, Jarpa proposedto clear tbe way for election of" but Pinochet then spokeestablished deadlines" andongress by

arpa is critical to the success of themost importantly because he has come tothe government's willingness to bargain Almost all parties recognize that if he left the jobwhether because of opposition intransigence,with Pinochet, or generallor negotiation would deteriorate. Even if itore skilled and independentthe government would not be able to recapture tbe credibility it would lose- Thus if, as It appears. Jarpa indeed has his own ideas about the transition, be could have considerable latitude and military backing to negotiate virtually any Issue except Pinochet's reslg-natter

Prospects for the Negotiations

ver the next three months, we believe Chile will be caught upycle of anhregirne protests and genernment-democratic opposition dialogue, eachynamic of its own but related to and affected by the other. Neither is entirely under the control of the contending parties, especially the protests, which could erupt in major violence becauseovernment overreact von. radical left provocation, or both Thus, the dialogue aimed al clearing the way to aevening restsery fragile base- Its collapse almost certainly would make Pinochet's continuation in office the central Issue of the political crisis,not yet the

alks between the government and theAlliance were suspended in the aftermath of the protests in early September, but were lesumed at the end of the month for several reasons:

does not want to make his continuation in office the key issue

iy wuutii wen* upset at Valdes's suspension ol the dialogue.

democratic opposition docs not want to surrender leadership of tbe protest movement to the violent left.

he military favors

iloris to negs

The Church, the United States, and otheroutside forces are urging continued dia-

e expect the talks will continue to stall now and then during periods of protest activity. The democratic oppositionists are concerned that their limited control over the protests could lead to major, counterproductive violence, but they mutt continue them to maintain leverage with the government. For this reason, Democratic Alliance leaders probably were disappointed that the demonstrations in early September were not larger, sinceh anniversary of Alleodefallajor opposition target date They obviously were relieved, however, that massive violence jid not occur, and they will continue to try to

:urb faW:

aving apparently accepted for the moment that Pinochet's ouster is unobtainable, deracctitic opposition leaders probably will attempt to agreeegotiating strategy that will gain as many of their other demands as possible by December. Sustaining the protests after December will be difficult, because of the onset of good weather and the deeply rooted tradition of "summer" vacations. Thus, the antigov-emment forces are workinghort timetable Moreover, the dialogue It stillairly Informal level In terms of agenda, schedule, and spokesmen for theituation that benefits the government because It increases the time required to get down to hard bargain!i

the talks survive Ions enough to focus onquestions, the timing of the democraticprobably willote contentiousthe elements of that opening Withexcept Pinochet's departure, bothhave implicitly agreed thategalixing politicallebiscite to amend the Constitutionelectionongressreturn of exiles,estricting theuse of special powers under Articleoliberties. The opposition wants these elements in

tuch longer time

two sides probably could agree toearly next year andlebiscitehat would clear the way for election ofBoth processes, however, are potentiallycomplications that could enable thestring out the timing. The legalization of partiesNational Security Council review andto some controversial rulings on leftistConstitutional provisions may not permitvoting by ID card, as was donentime-consuming compilation of electoralbe necessary. Even If this is avoided, the twowould favor forma! voter registrationelections, since It would buy themore time and give theaw

ccording to informed government sources, it would takeoonths to compile electoral registers. Recent esperlence in other countries where political processes have been suspended for some years, such as Argentina, suggests that registration might be completedear or so. Transitioncurrently under way In Brazil and Uruguay,have been more carefully regulated by theand extended over several years.]

he government might consider using theof timing to foster differences within theIronically, however, it may no longer be in the government's best interests to promote the splintering of the opposition, since this would aggravateandacuum that might be filled by the radical left. Thus, we judge that the support of military leaders, the Church, and the public at large for larpa't efforts will increase pressure on Pinochet in the next month or so lo put aside these tactics and allow his Interior Minister to negotiate In relatively good

he administration's hope that giving thetime to recover could undermine the incentive to protest Is not realistic over the nexl few months.

i recent Chilean econom-measures promise to sustain the modest recovery and reduce unemployment toercent by yearend, but probably will not reduce political pressures.considerations are not the key focus they were in the early months of the opposition movement when labor was heavily involved Party leaders have given therimarily political content that promises to endure. Press reports consistently emphasizegrievances at the root of protests in poor neighborhoods, the scene of most of the violentto date. Communist efforts, however,account for much of this, and, in any event, improvement in the economy willarginal impact at best jn such neighborhoods, according to

fter balancing the pressures on both parties against the fragility of the dialogue, we believe thereair chance (in the neighborhood ofercent) that negotiations will progress through December, erode the cycle of opposition protests, and result in aagreement for accelerating some elements of the transition lo civilian rule. We expect some unsettled differences and some new issues at that time, which will make theontinuing feature of the political landscape into next year. But the government probably will take the necessaryof parties andlebiscite to permit early congressionalleadesumption of political activity, into which, opposition leaders can begin to pour their energl*

t least one admonition Is in order, however, under this scenario. We believe that the tranquilizlng effects of political concessions could fade sleadily and that, perhaps byhe air of anticipation created bv the opening would center attention again on tbe Issue of Pinochet's term of office. It is not souestion of whether concessions will mollify the democratic opposition or whet its

feel reasonably confident that the former will obtain in the short term. Bather the questionow much time will political concessions buy forhe resumption of political activity will set many new forces in motion, and. while the resultsill seem very far off to political leaders searching for new Issues and goals. In such anfive more yean of rule for Pinochet would be increasingly in doubt]

Downside Risk*

ny downside scenario, the chances of which are roughlyercent, would begin with the failure to resume or the subsequent collapse of theThis could occur asresult of one or more of the following:


Obvious in innocence on the part of Pinochetovernment crackdown.

The resignation of Jarpa or hit assassination.

The democratic opposition leaders, faced with the threat of splintering over strategy and negoti-atlng positions, agreeing to demandesignation in order to preserve their unity

Massive and violent loflist-inspired piotesti.

An overreaction bv troops that resultsarge number of deaths

Terrorist actions bv rightist paramilitary groups, one of which was repotted to be forming last June with the help of the notorious former intelligence chief, Manuel Contreras.

nrominent opposition fig-

he collapse of negotiations before December would add to the size and probably the frequency of opposition protests.emonstrations would center on the call for Pinochet's resignation, and, la response, the President would be inclined to crack down on dissidents. The armed forces would bridle at the prospect of being used to control protests. According to the US defense attache, however, the Carablneros (nationalho would be on the front lines facing protestors, might be the first to break ranks. In any event, the military probably would soon urge the President to make the necessaryof hisbring theopposition back to the bargaining tat

ssuming this failed. Pinochet presumably would know when the military began to debatethe alternative of replacing him He would do all he could to head offove, probably evenplit in the armed forces- Serious military divisions could lead In the short term to major political disorder, violence, and heightened radical activity, though short of open civil war. In view of the losses suffered by tbe MIR over the last yearalf, the public's distaste for violence, and the strength of the security forces, the violence-prone radical left would not be likely to succeed In destabilizing the country. Confidence in the economy, however, would collapse, the recovery would be gutted, and economic chaos would ensue. It is difficult to say how long such disorder would prevail or what would finally emerge fromilitary-dominated government would be more likely tothe military factions would be the best armed of theystem in which the far leftajor role Nonetheless, disorders extending well4 could enhance the potential for leftist participation in the opposition movement fl^Btfl

e do not believe, however, that the situation would reach this stage. Instead, we fudge that the armed forces would defeat any attempt bv Pinochet or others to divide them. They would, by consensus of the high command and with the subsequent support of the lower ranks, replace die President There is only about one chance In three that the downside process would reach this conclusion by yearend. In our view, but it wouldtrong probability bye believe the armed forces would stand by the President longer if. in the military's view, the dialogue collapsed because of an intransigent oppositionfor Pinochet's resignation- The armed forces would still eventually remove him rather thanto suppress protests. In rough order of likelihood, the successor would probably be another Armyilitary junta, an Air Force or Navyonservativeilitary-civilian coalition,oderate opposition

he Soviet Union would welcome the downside scenario Since Pinochet overthrew Allende, the first democratically elected Marxist head of state in Latin

America, the USSR haspecial interest In Chile. The head of the Chilean Communist Party has resided in Moscow for years, Marxist exiles have been support' ed by Bloc countries, and Communist Party policy has reflected major Soviet doctrinal, tactical, and financial influence, but we do not see the Chilean far left profiting significantlyystem that would stilt be dominated by the anti-Communist military.would gain little more than tbe satisfaction of seeing Pinochet ousted, nonetheless, the Soviets would portray his departure as an Indication of the decay of Chiles political system and the milil inability to contain popular discontent!

avana also would welcome Pinochet'sbut would be frustrated by not being able to take advantage of it because of the weakened state of the Chilean left. Cuba would continue to urge careful long-term building of guerrilla and political bases capable of capitalizing on opportunities, unification of leftist efforts, and attempts to affiliate with the broad opposition front Havana would continue toand mighttraining and other assistance to members of the MIR, butto counsel against hasty and suicidal

Implications for the United States

he United States will potentially be affected in several regards by the course of political change in Chile, yet it has only limited capacity to Influence events. Pinochet is strongly Inclined to resist allpressure andairly successful record of doing so. The absence of significant US economic and military assistance programs and arms sales withalso limits US leverage. We believe, however, that Pinochet is still Interested in obtaining USImproved human rights practices, nonsupport of international terrorism, and cooperation in the Letelier unsunationorder to resume such programs. Specific US interests that could be affected include;

Strategic. Chile controls part of the southern sea transit between the Atlontic and Pacific Oceans through the Magellan Straits, which could be even more important If the Panama Canal were ever shut down; Chile's long coastline parallels important South Pacific sea lanes, Chilelaimant to pert of Antarctica; Chile hasmineral reserves, especially copper and hthhioi.

Political. The course of events in Chile, and Washington's response, will reflect on US policies of support for democratization and human rights worldwide ind also on US policy in Central America; Chile hasonsbtcnt supporter of US positions in international forums, especially on East-West issues.

Diploma tic. Among US allies in Westernonly the United Kingdom consistentlyPinochet because Santiago providesbenefits In Britain's dispute with Argentina over thenly Brazil, among theregional powers, has good ties withthe Pope has publicly called for changes in Pinochet's political and human rights policies

Economic. US banks hold someillion in Chilean loam and already haveisruption in debt repayments; difficulties with the International Monetary Fund (IMF) program could quickly translate into further disruptions in servicing the debt to US banks. US exports to Chile shrank WOO million, orercent, last year in jrjsnoflje^to the decline in economic activity.

olitical settlement in Chile by yearend would have both positive and negative effects on US interests. The gains would include more respect for human and civil rights and probably eventual renewal of military cooperation. Tbe drawbacks could include greater asseitivcness on the part of leftist andgroups interested in reducing political, trade, and financial ties with the United States In favorore Third World pattern. These negative risks would be greatly Increased under the downside scenario. The government could become dominated by highlymilitary officers who resented the refusal of Washington to certify Chileesumption of arms sales and military and economic assistance. They might increase arms purchases from West European. Israeli, and other sources, and might reducesecurity, and military exercise cooperation. They misht alsoarger role in economic policy for some business and other civiban and military sectors


that advocate drastic changes, which could lead to reduction of imports from the United States and suspension of priori pa^ndJnterest debt servicing payments to US

Indicators of Serious Politicolrofesls.-

A na day

Street demonstrations expand beyond the pattern to date of protests in poor neighborhoods and by students to include more middle class Chileans.

Active and passive protest activities begin to occur more frequently than on the monthly day of protest.

Active and passive protests continueigh level despite progress in government-opposition negotiations.

Major demonstrations Intensify in cities outside Santiago.

Protest activities begin to center consbtently around the demand for Pinochet's resignation.

Protesters begin to destroy propertyew buses and autos.

Worker* agree to participate In strikes despite the threat of losing their jobs.

uccessful for more than one

he Oppositions

Political groups begin to rally around one or two central leaders, such as Christian Democrats Gabriel Valdes or Andres Zaldivar.

Zaldivar, president of Christian Democraticbegins to exploit his international connections.

Labor and social organizations become formal partners in the Democratic Alliance

Copperworkers Confederation chief Seguelreceiving support from other unions and confederations as the primary spokesman for all labor.

opposition groups begin Jo coo openly with the Communist Party.


The government reimposes the state ofor state of siege and full censorship.

Pinochet replaces many of the civilians in his Cabinet with military officer*.

The government does not continue to reaffirm standing orders to the security forces to use restraint In controlling protest demonstrations.

The government is forced to impose more severe controb to halt capital flight.

The government shifts to more eipansionary economic policies in violation of IMFtargets.

Pinochet stops appearing in public^


Air Force junta member Matthei publiclywith Pinochet's policies on the transition to civilian rule.

Some members of the armed forces leadership begin publicly to question the use of military forces to control dvil disorders.

A security force unit panics and fireson demonstrators or conversely refuses an order to fire.

forces commanders begin privatelyossibility of removing Pinochet


Moderate media outlets cease counseling against violent opposition to the government.

Radio stations and newspapers begin to attack the administrauorLj-^oticif^even at the risk of being shut

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