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November 9, 2016
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July 27, 1998
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March 8, 1949
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I, Approved For Relee 1 499/09/ 79-010000200010009-0 aek2Contributicns latin Nnerica Branch, CIA ..arch 1949 FJCPIMLfl fl4 DIVISION4: In Haiti the administration, shaken by a strike, has declared martial later (p. 2). Cuba is close to a break in relations with the USSR (p. 2). SOUTFTEi N DIVISIOPI: Argentsna 4 s bargaining parer has dir finished. judging y ^om trade proposals recently made by European countries (p. 2). The USSR may formally claim territory 1n the Antarctic (p. 3). The Current Situation in Peru . . . . . . . . . . . . . . . . . . 4 DOCUMENT N0. ~ NO CHANGE IN CLASS. ^ UECLASSIEIED ('.A".S. CHANGED TO: TS S C fEVIEW DATE: 'H; HR 7f) 13 DAIE? ~EVIEWER; a72044 Approved For Release 19 -RDP79-01090A000200010009-0 Approved For Releaa I 999/09/gi6i RDP79-010 000200010009-0 Weekly Contributions, B/LA & Larch 1949 (CIA Working Paper) 1. HAITI: Administration Shaken by Strike :a is aw has evn ec are~throughout Haiti as the re- sult of a "general walkout" of markers in protest against salary withholdings under the terms of the million compulsory defense loan law (B/LA VWy for 23 Feb 49). The US `:1litary Attache is of the opinion that, while no disturbances have been reported as yot, the situation could result in the fall of the present government. B/IA concurs with the Military Attache that the strike could result in the overthrow of the administration if the situa- tion is allowed to deteriorate. President :stirr4, however, has in the past demonstrated singular resourcefulness in surmounting poli- tical crises, and he can be expected to take vigorous measures to ensure the security of his regime. 2. CUBA: Cuba is close to a break in diplomatic relations with Soviet F~'ussia Since Cuba customarily has few dealings v'ri.th the USSR, a brew c+of relations in reality would constitute little car festive change in Cuba's position vis-a-vis the Soviet Union. Such a move, however, could possibly be us c by President Prio as a ful- fillment of his campaign promise to corabaat Cor.Lmun:ism. If this should be the purpose behind the break in relations, it would mean that the Cuban Coiunist Party (PSP) may not be outlawed at present (Ii/LA is'k1,y for 19 Oct 48). Outlagring the party might be political- ly inexpedient at this time in view of the potential strength of President Prto's rival, ex-President Batista., who is currently flirting with the Communists as part of a maneuver to strengthen his position. 3. ARGENT11IA : Diminishin Ar entine bargaink wer is evident in tra proposa .a recen .1.y zna by European countries. The terms of the British and Italian offers for new trade agreements with Argentina are indicative of the terms other i:auropean countries will demand. The principal characteristics of those offers are no dollar payr,nts to Argentina, lower prices for Argentina exports, and increased Argentine acceptance of items hitherto classified by Argentina as "unessential.", such as whiskey, automobiles, certain textile products, etc. (B/LA 7kly for 23 I?.'ov 48). Argentina's ex- tensive trade agreements prograra,which included the extension of large credits to various European countries, has backfired somewhat. These countries generally refuse to use '_CA dollars to purchase the few Argentine commodities authorized, insisting that, under the terms of their respective agreements, Argentina accept payment in imports, many of which are adin. ttedly considerably above US prices. 2. Approved For Release 499911 RA DP79-01090A000200010009-0 Approved For Releake 1999/09/p RDP79-0109000200010009-0 Weekly Contributions, B/LA 8 Larch 1949 (CIA Working Paper) During the first eight and one-half months of the ECA program, Argentine sales constituted only `'207 million or 1.2 per cent of total FCA purchases in Latin America of ;;216.5 million, Unless European countries benefitting from the Economic Cooperation Administration cease discrimination against Argentina and include Argentina in ECA dollar purchases, the Argentine economic crisis can be expected to be aggravated. 4r ANTARCTICA: Formal Soviet claims to territo in Antarctica may e presage y recent pronouncements the Soviet A11 Union Geographic Society and by considerable propaganda to the effect that the USSR will not recognize as valid any settle- ment of disputed Antarctic claims without Soviet participation. The assertion of such a claim may be in conflict with US object- ives. During the latter half of 19148 the US sought informally to obtain the agreement of the seven claimant powers (USSR was not then among them) to an eight-pour international re a for Pntarctica which mould include the US. In August of 1%6 the Department of State indicated that in the event that agreement to the condominium proved unobtainable the US would assert a formal claim in order (1) to safeguard the US position and rights, (2) to forestall any Soviet attempt to become a territorial claimant in the unclaimed sector, and (3) to place the US an an equal legal footing with other negotiating countries and prevent the USSR and other non-claimant powers from claiming the right to participate in discussions for an international regime on the grounds that the US is not a claimant. The attempt to secure agreement to an eight-power condominium proved unsuccessful notably because of the opposition of Argentina and Chile. The Soviet announcement concerning their rights in the Antarctic may be designed to (1) spur the US to make a formal claim, thereby gaining a 'propaganda iteri concerning US imperialism, and (2) pro- voke discord between the US and one or more of the seven powers claiming Antarctic territory. 3. Approved For Release 199910 A-RDP79-01090A000200010009-0 Approved For ReleaYe 1999/09/,W RDP79-010 000200010009-0 71eekly Contributions, B/I,A (CTA Working Paper) Situation i. emoranduri 11-49 'arch l)49 The Current Situation in Peru The present Peruvian Government is dangerously insecure and faces. serious economic problems. Because it combines political insecurity with military powr, it is the object of suspicion on the part of its ne3ghr bore who fear that it might provoke international incidents to divert at- tention from domestic problems The situation is of concern to the 'U'S not only because of its effects on hemisphere solidarity and tranquility, but because the fall of the present Peruvian Government could easily bring into potter factions opposed to specific US interests in the area. General Odria and his junta assumed power on 30 October 19i , after overthrordng the moderate Bustamante administration. The junta has lacked popular support from the beginning, and is now opposed by members of the .outlawed APPA Party, largest political .;coup in Peru; the outlawed Gommun- ist Party; democratic ~ustamantistas; and the wealthy cotton and sugar producers, who have been alienated by the junta's social and economic measures. At the sae time, those measures have failed to gran sig.^,riificant support from the labor groups for whom they were designed. 'wen -mithin the junta, Odra faces a real threat in the rivalry and plotting of Colonel Llosa, the sinister of Development, who rakes no secret of his presiden- tial ambitions or of his willingness to use force in order to attatin them. Llosa apparently counts on considerable strength within the array and among the wealthy elite of the country. Odria's fear of what losa might do is reportedly the main reason why a safe-conduct was refused to Hays de la Torre. Only the support of array leaders keeps Odria in power and that support might be withdrattmn at any time if caaditions deteriorate further. 7hile the junta exercises all executive and legislative powers and maintains a state of siege, it has also authorized a commission to pre- pare an electoral statute. This move may indicate that the junta - either by choice or through necessity -- seeks a return to constitutional government. If an honest election could be held, it would be a move con- forming with US preference for democratic procedures, but there is little possibility of such an election in the near future. i.oreover, the govern- rant that would probably replace the present junta -- either through a staged electoral performance, or by a coup on the part of Colonel Llosa and his group ?-- would not necessarily be as favorable to specific US aims in the area as Odra 'a junta is at present. Internationally, Peru has aroused Colombia by its refusal to grant Iiaya de la Torre safe-conduct from the Colombian hhassy in Lima. Col- ombia fears possible attacks on the embassy or even on the jun,le frontier Approved For Release 1999 A-RDP79-01090A0002000100109-0 Approved For Releas' 1999/09/QAIRDP79-0109000200010009-0 Weekly Contributions, B/IA (CIA corking Pger) Situation P.;emerandum 1149 8 Finch 1949 between the two countries, but there is little indication that the Odrla government would venture so far. The minor war of nerves between Peru and Colombia is intensified by persistent reports that close ties exist between the Peruvian junta and Argentina. It is alleged that an agreement has been signed providing for prior consultation between the twe before 'faction of an international character on the South American continent" is to be taken. Additional international friction resulted recently when Dolivia charged that Colonel Llosa and other Peruvians had aided the revolutionary attempts of Bolivian exiles in Peru. Bolivia, however, appears to be satin-- f;,ed with the Peruvian reply to these charges. T concmically, the Odr s.a regime inherited a difficult situation from the Dustamante administration. During 1917 both the production and export of principal Peruvian commodities declined, causing an imbalance in foreign trade which was reflected in continual exchange difficulties. Periodic shortages of foodstuffs also developed. The expansion of credit and cur- rency disproportionate to the output of goods and services caused infla- tion; the value of the sot declined, both in terms of domestic goods and in terms of dollars. Despite recent revisions of exchange regulations and attempts to control prices of essential goods, the situation has not improved. Efforts to encourage exports and restrict imports were of some slight effect in 1948, so that a modest favorable balance of trade was at- tained. Regardless of this one positive factor, public dissatisfaction with the general ineptness of the Odria administration in economic affairs continues to increase, sparked by the bitter criticism of influential businessmen whose special interests have been adversely affected by gov- ernment action. This public lack of confidence constitutes an additional threat to the junta's stability, which will be further weakened if the food shortage predicted for mtd-1949 proves to be, as expected, the most severe yet experienced in Peru. As a possible means of relieving its economic situation, the junta has under ,consideration a new law governing the exploitation of national petrol- eum resources. Some reports indicated that the law might permit Peru to turn to the US for technical assistance and even for financial aid. Peru- vian capitalists are so opposed to US participation, horiever, that it is unlikely that either the present Peruvian Government or its izmediate suc- cessor could approve a petroleum policy as favorable to foreign participation as the petroleum law proposed during the ."uzsta_ante administration, 1.7hile petroleum is the principal Peruvian issue of present interest to the US, other US interests may be affected by the attitude of the junta as shorn to date. Several junta members, as well as a large number of 5. Approved For Release 1999/0W211, A-RDP79-01090A000200010009-0 Approved For ReleaYe 1.999/09/CRDP79-010000200010009-0 Tloakly Contributions., B/IAA (CIA 7. orking Paper) Situation L norandum L--).9 : ,arch 19)4.9 Peruvian citizens, prefer to look to (Argentina rather than to the US as a source of capital., cooperation and political support. This preference is not necessarily anti-US but, in combination with extreme Peruvian national- ism, its effect may be to retard the adoption and implementation of measures of interest to specific US nationals -- if not to the US as a nation. ?:Jhile this pro-Argentine tendency is strongest among; the Per-avian capital- ists vtho are reported to support Colonel Liosa as a possible successor to Odria, no government succeeding Odria is likely to be less nationalistic than the present administration. Approved For Release 1999/ =I!~-DP79-01090A000200010009-0 Ea,