Foreign Relations of the United States 1977–1980; Volume XV; Central America, 1977–1980

325. Memorandum of Notification Prepared in the Central Intelligence Agency for the Special Coordination Committee¹

Washington, December 5, 1980

SUBJECT

• Additional Funds in FY 1981 for the Covert Action Program in Nicaragua

1. CIA proposes to intensify its covert action program in Nicaragua in a manner consistent with the Presidential Finding of 19 July 1979.² This will require additional funds, bringing the FY 1981 total to $1.7 million. This amount is accommodated in the FY 1981 amended CIA budget for covert action on which Congressional action is possible this week.³

2. Background: The above-cited Presidential Finding authorizes the provision of funds and guidance to assist moderate elements in Nicaragua to resist attempts by Cuban-supported and other Marxist groups to consolidate their power. The SCC in July 1979 approved funds of $750,000, of which $650,000 were spent in FY 1980.⁴ On 6 October 1980, in response to a request for $1.2 million in FY 1981, the Chairman of the SCC authorized the continuation of funding in FY 1981 at the level of $650,000, with a statement that the funding level could be adjusted at a later date. Because recent developments in Nicaragua indicate that the moderate democratic forces probably are engaged in a serious struggle for survival, we have raised our estimate of FY 1981 requirements to $1.7 million.

3. The Nicaragua Situation: Actions by the GRN/FSLN during the past month have clearly demonstrated that it intends to control all activities of the private sector and independent political parties. In early November, the GRN/FSLN prohibited a rally by the Nicaraguan Democratic Movement, one of the four non-FSLN political parties, sponsored a takeover of the party’s headquarters, and made its leader a target of abuse. At the 12 November meeting of the Council of State, 11 representatives of the moderate sectors walked out in protest when it became clear that the FSLN would allow only pro-FSLN groups to stage rallies and meetings. Most serious of all were the events of 17 October. GRN security forces shot and killed a leading businessman and carried out a coordinated series of arrests of private sector and political representatives on charges of arms trafficking and other counter-revolutionary activities. Other private sector representatives have been threatened. These actions of the GRN/FSLN against moderate sectors fighting for their existence make our support to them at this time critical. We plan to identify funding channels within Nicaragua but will pass a major portion of the funds through third country organizations.

4. Program Activities and Expenses in FY 1980: Of the $650,000 expended in FY 1980, [dollar amount not declassified] was provided to [less than 1 line not declassified] newspaper; [dollar amount not declassified] was given through [less than 1 line not declassified] to support [1 line not declassified] and a monthly subsidy of [dollar amount not declassified] was given to [1 line not declassified]. The [less than 1 line not declassified] received [dollar amount not declassified] to help finance [1 line not declassified] that focused attention on the problems of the private sector. A member organization of the [1 line not declassified] was given [dollar amount not declassified] with which to provide financial assistance to two independent labor unions and two political parties. [1 line not declassified] served as a conduit for [dollar amount not declassified] half to the private sector and half to government-approved social projects. The Agency has also generated considerable propaganda on such subjects as the increasing Cuban, Soviet, and East European involvement in Nicaragua and continues to encourage third countries to become active both as funding channels and as participants in the effort to assist independent and democratic elements in Nicaragua. Elements of the private sector of a friendly Latin American country have agreed to channel [dollar amount not declassified] to the [1 line not declassified] and [dollar amount not declassified] is earmarked for support to church-affiliated organizations engaged in campaigns against Marxist indoctrination. Miscellaneous expenses were [dollar amount not declassified].

5. Based on the 6 October 1980 approval to continue the covert action program in Nicaragua at the funding level of $650,000 approved for FY 1980 and the proviso that further adjustments in the funding levels could be made later, the following funds have been obligated so far in FY 1981 in response to the critical need for increases in activities and funds:

(a) [dollar amount not declassified] was provided to a [acronym not declassified] member organization for operating expenses, membership drives, and organizational expansion.

(b) [dollar amount not declassified] was obligated to support organizational activities of [3 lines not declassified].

(c) [dollar amount not declassified] was provided to [less than 1 line not declassified] newspaper for equipment and newsprint purchases and other operating costs.

(d) [dollar amount not declassified] was provided to support organizational and promotional activity of [1 line not declassified] and its youth affiliate. [less than 1 line not declassified] is one of the most active parties in the struggle for democratic pluralism in Nicaragua.

(e) [dollar amount not declassified] was obligated as a subsidy to the [1 line not declassified].

(f) [dollar amount not declassified] was obligated [less than 1 line not declassified] for two third-country media assets.

(g) [dollar amount not declassified] to [acronym not declassified] for labor organizations and political parties.

(h) [dollar amount not declassified] to promote united front activities by the moderate political groups.

(i) [dollar amount not declassified] for national poster campaign protesting the murder of Salazar.

(j) [1 line not declassified] for the purpose of publicizing the plight of the private sector in Nicaragua.

The above obligations and expenditures leave a balance in FY 1981 funds of [dollar amount not declassified].

6. Activities and Expenses in FY 1981: It has become increasingly important, and difficult, to support and strengthen democratic elements in Nicaragua, especially in view of intensified GRN/FSLN repression. Current activities must be continued and expanded during FY 1981.

(a) Domestic and international media operations: The only independent newspaper is under constant attack; its editor has been threatened with arrest, and pro-FSLN militants threaten violence against its management and employees. An independent radio station is in debt to the GRN, which may cause it to close down, and two-thirds of the radio stations have been brought under GRN control during the past year. Depending on GRN actions against the media it does not control, we will have to get funds to them to allow them to resist GRN financial pressures. We will continue to fund international media operations to expose and counter the Cuban and Soviet roles in Nicaragua. Estimated Media Costs: [dollar amount not declassified]

(b) Independent political parties: The small and weak independent political parties, which were not allowed to function effectively during the Somoza regime, are trying to resist GRN/FSLN attempts to neutralize them. Their existence probably can only be preserved by uniting them in a common front. The four parties must be maintained and strengthened. Estimated Costs: [dollar amount not declassified]

(c) Support to the private sector, independent unions, and individuals: [1 line not declassified] has served as a voice speaking out for democratic pluralism, a mixed economy, and free elections. Continued support is needed for its organizations and propaganda activities. [less than 1 line not declassified] have been used to fund independent labor unions and political parties, and can provide organizational and moral support to any individuals or entities selected for assistance. Estimated Costs: [dollar amount not declassified]

(d) Support for third-country activities in Nicaragua: A friendly Latin American country and European elements are acting as conduits for the passage of funds to moderate groups and organizations, and in some cases their participation at our behest has resulted in infusions of their own funds as they became interested in and convinced of the need for our program. Estimated Costs: [dollar amount not declassified]

(e) Support travel of media assets to Nicaragua. Estimated Costs: [dollar amount not declassified]

7. Policy Authority: The activities proposed in this program for FY 1981 are in consonance with the proposal reviewed by the SCC on 17 July 1979 and the consequent Presidential Finding.⁵ We are notifying committee members of a significantly higher level of spending that is consistent with the request now before Congress. Assuming Congressional approval there will be sufficient funds [1 line not declassified].

8. Deadline: The situation in Nicaragua is such that your urgent attention is requested. Please forward any comments to [1 line not declassified] by close of business 12 December.⁶

1. Source: Department of State, Executive Secretariat’s Special Caption Documents, 1979–1989, Lot 92D630, Not For The System, Nov.–Dec. 1980. Secret. Dodson sent the memorandum to Muskie, Brown, Civiletti, McIntyre, Jones, and Turner under a December 10 memorandum.
2. See footnote 3, Document 286.
3. In a December 17 memorandum to Turner, McMahon noted that Congress had “recently acted favorably” concerning the budget amendment. (Central Intelligence Agency, Office of Congressional Affairs, Job 82B00035R: Committee Files, Box 2, Folder 2: Covert Action)
4. See Document 286.
5. See Document 285.
6. Henze sent a copy of the memorandum to Pastor under a December 8 note requesting Pastor’s comments. Pastor wrote on the note: “Called on Dec., 12, 1980 and told him to support the proposal—and do more. RP.” (Carter Library, National Security Affairs, Staff Material, North/South, Pastor Files, Country Files, Box 38, Nicaragua: 12/80–1/81) For additional information related to the ongoing covert action in Nicaragua, see Document 492.