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November 9, 2016
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July 27, 1998
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March 15, 1949
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Approved For Rele a 1999/0 .1T P79-010WA000200010010-8 Meekly Contributions Latin America "branch,, 01Z,, CIA 15 '..arch 1949 B/LA considers particularly important this week: the lack of progress in solving the Peru-Colombia dispute (p. 2), and the easing of tencion in Argentina (p. 2). CUM M, D E.r. OPT."MITS C't flAALs Relations between Colombia and Peru remain tense and no imme- w'_ate solution to the problem safe-conduct for Iiaya do In Torre is expected (p. 2). S+DUTI7ETCT DWISIO N: In Paraguay, where the conservative Democratic Colo- rado Party seems to have gained the upper hand, the political situation is temporarily quiet (p. 2). In Argentina, arrV pressure on the govern- vent has eased as measures are being taken to relieve the economic crisis (p. 2). SPECIAL SUBJECTS Reaction tr US Hon-Participation in the American Comnittee on Dependent Territories . . . . . . . . . . . . . . . . . . . . . . 4 The Current Situation in the Dominican T.epublic . . . . . . . . . . . 6 The Current Situation in Chile . . . . . . . . . . . . . . . . . . v DOCUMENT NO. NO CHANGE IN CLASS. i J ~DEGt_AS:i!r iED C ...4SS. CHANGED TO: T;, S 0 t:'4XT REVIEW DATE: RUTH: H C nArO~ FtI VIEWER: 3I2044 Approved For Release 19 -RDP79-01090A000200010010-8 Approved For Rele a I 999/09 RR% -RDP79-01009dA000200010010-8 Weekly Contributions, B/LA 15 `arch 1949 (CIA i orking Paper) 1. GENE AL: No solution is in sight in the impasse between Colombia and Peru roaming the o rra government's rofusal to issue a safe-conduct for the APF`t leader, Maya de la 5'orro. =otes exchanced between Colombia and Peru have produced no satisfactory result: Col- ombia has maintained a '-serene" tone in its representations, but Peru lids persisted in its refusal because the Odria 'overnm.-nt believes its continuance depends on its firmness in this question. Cons-Itations among the other countries concerning; possible diplomatic means of ~zrbaking the stalemate have not been fruitful, because of general re- luctance to join in measures which might fail, or could succeed only at the cost of considerable loss of face on they part?of Peru. Colour bia has considered placing the matter before the COAS, but has so faf' refrained from such action, which, oven though the majority of the countries would almost certainly support Colombia, would probably re-i suit in breakin; of diplomatic relations by Peru with Colombia. In the meantime, an attack on the Colombian Mmbassy in Lima -vrhere i'a;. a is in asylum, which the Colombians have said they fear and which must be considered a distinct possibility, could easily lead to rethlia- tory violence if not to outriiht acts of vrar. 2. PARAGUAY: The conservative Domocratic Colorados m ear to have pined the u per hag in the recent Colorado 'arty coali- tion mceve which forced the resignation of Provisional President Rolon and placed firmer Education i:_inister ::olas i,opez in control of the government. Democratic Colorados hold all but throe of the cabinet portfolios and control key posts on the part ,?,-'3 governing board. Thus far Democratic Colorado leaders have been satisfied with :olas, who, as leader of the militant Guinn 104 o opposition faction, teas formerly their rival, but pressure i.s be n- exerted to oust Interior nister Liberato ,odrkz;uo t, a staunch supporter of "olas. Thus far :`olas has remained aloof from these latest party machina- tions, but Rodriguez, iLn an. effort to protect his position and check the groiiing pourer of the Democratic Colorados, has maneuvered the appointment of a reliable Cuionista as commander of the infantry. He also controls the Asuncion po11 a force and claims support of the Asuncion cavalry division. As usual, the balance of pourer rests with the cavalry, tvtiich has not openly committed itself. ::uch Jockeying for position can be expected before the 17 April elections. Although armed conflict is possible, it is not inrd.nent. ARGENTINA: Army Pressure -ased; r `eacures Taken thieve Economic Crisis T1.itary threat to the government's stability has been at least temporarily abated principally by agreement that the government should revise its economic policy and stress improvement Approved For Release 1 6ITA-RDP79-01090A00020001 Q010-8 Approved For Rele a 1999/09 W-RDP79-010A000200010010-8 ffC-R Weekly Contributions, B/14 15 March 1949 (CIA lNorking Paper) of economic and financial relations with the US. Through Foreign Minister. $carmiglia and tho new economic directors, the government has made overtures for US assistance in solving its economic and financial difficulties, and significant steps have been talmn to modify Argentina's postwar state trading practices. The next few months wri1l probably be a period of probation during which array leaders will determine whether the present administration. is cap- able of implementing the now policies to Improve Argentina's eco- nomic situation or whether both a near administration and a now policy will be necessary. The terms of the agreement for a trial period apparontly afford 'orcin a relatively free hand in the field of domestic politics. However, it is probable that Defense Mini- ster Sosa Molina's 10 :"arch praise of Sefora Peron's social wel- fare activities was a face-saving gesture to Peron, traded for the latter's agreement that his wife will confine herself to such activities and use her porful influence with labor to encourage production and discourage demands for wage increases. Although inflation and the disruption of Argentina's foreign trade, which is unusually important to its economy, have been allowed to develop to the point where it may be impossible to avert an economic debacle, there are some encouraging factors. The new economic administrators evidently will undertake to re- gain for Argentina its greatest single international economic ad- vantage by adopting a price policy desir ned to expand the sale of food surpluses on a competitive basis. Furthermore, they have given priority consideration to the restoration of Argentina's previous high international credit standing. Toward accomplish- ing these objectives they have emphasized the importance of prompt liquidation of Argentina's outstanding obligations to US exporters and banks, sounded out the US on the possibility of a commercial agreement to include a reciprocal credit (Argentino euphemism for a loan), and requested a clear definition of ECA policy with refer- ence to Argentine participation in 1'uropoan trade. A particularly significant and encouraging development in connection with these efforts is the fact that the notoriously anti-US nationalist ele- ments in Argentina evidently will not embatrass the administration in its efforts to carry out the new policies. The gravity of Arg- entina's present economic situation and the preference of certain of their leaders for L'S equipment and techniques have induced them to agree for the time being to a policy of expedient colla- boration with the US. The next few months will probably prove to be a crucial period both for the stability of the Argentine econ- omy and the pattern of USMArgontine relations. 3. Approved For Release 1999r0'MP A-RDP79-01090A000200010010-8 Approved For Relehe I 999/09 RDP79-0109e 000200010010-8 Weekly Contributions, B/IA (CIA ;Yorking Paper) Article 10-49 15 :'.arch ljs9 Reaction to US I3on-Partici tion in the .lime can o so on open en erritoriea The US announcement of its decision not to attend the Havana meet- ing of the committee (scheduled 15 !arch) has received little official criticism in the other American republics to date but provides a pos- sible propaganda there for anti-US groups who may be expected to make the most of it In press, radio, and public demonstrations. The US stated that it would not attend because (1) the committee's action might endanger principles embodied in 1311 and inter-American agreements, and (2) colonial problems should be settled under provisions of the U1 Charter. It was suggested, therefore, that the other Ameri- can republics consider the cornnitteo a technical body and reserve their dedision until committee reports were transmitted by the COAS to its members, at which time, it was indicated, the US night also express its views. The only official criticism of the US state:rent,, thus far, has cone from Guatemala and -- in lesser donree - from :.et co. Six COBS members (Brazil, Bolivia, Uicaragua, Dominican Republic, Chile, and Uruguay) supported the IIS position from the begin-ling and five of these have reiterated their intention to abst61i from attendance at the raeot ing. Only one of the six -- Uruguay -- appointed its delegate after the US statement. Among the remaining countries, the degree of onr thusiasm varies vddely and a numbor have indicated their sympathetic understanding of the US position. Only Argentina and Guatemala are actively asserting claims against Suropean territories in this hemisphere. Argentine Foreign Office offi- cials at various times have indicated that their government would press its logitimate claims but viould not make difficulties for the US. Guatemala -- the prime mover, because of the ion standing Belize contro- versy, for inter--American action regarding colonial territories -- will probably be the most vociferous in favor of the elimination of the col- onial system in the Americas. I.:exico may in the meson give limited 11 support to the Guatermlan position, as she also claims rights to part of the Belize territory in accordance -with "historical and juridical precedents". The possible propaganda use of the fact of US non-attendance at the meeting is indicated by the cortrnents of the Guatemalan I'orei.M 'sinister to the effect that the US was show n f the wane attitude toward the will of the majority in the OAS that Russia revealed by its frequent vetoes in the UIT. Since seventeen nations at ",ogota voted in favor of holding -r*- -,. .. Approved For Release 1999AM"'PCTA-RDP79-01090A000200010010-8 Approved For Rele'e I 999/099Q2 9 -RDP79-010 A000200010010-8. Weekly Contributions, B/LA (CIA Working Paper) Article :LO-49 15 (larch 1-949 the meeting at.lvana, the US refusal to attend places it in a minority, position. Thet-efore, anti-US groups in Latin America --- particularly the Communists - may be expected to exploit the situation for all it is worth as a propaganda thorns, playing up the concept that the majority rules in QAS affairs only When the US favors the majority position. 5. Approved For Release 1999?b'Ot IA-RDP79-01090A000200010010-8 Approved For Refe'e 1999/O9RRC 4-RDP79-010?eA000200010010-8 Meekly Contributions, B/1A (C?A. Working Paper) Situation Memorandum 12-49 15 March 1949 The Current Situation in the Dominican Republic President Trujillo'a :regime is stable and faces no serious economic difficulties. Internationally, however, the Trujillo "dictatorship", be- cause of the Dominican attempt to establish military superiority in the area and because of the deep hostility of the "democratic" forces to Trujillo's rrovernmenta]. 'aethode, exerts a divisive Influence in Caribbean power politics. Cones .ently, even though Tru jillo's own international policy is general]y pro.-US, the intra-Caribbean rivalries resulting from opposition to him adversely affect US security interests involving the solidarity of the American Republics. Though the Dominican PPpublic faces no serious economic difficulties, the government is c a.Xronted with f inarre ial problems arising largely from its determination to maintain arms superiority over the Caribbean ' dmo-- araciee". Governmeatal revenues have decreased because of diminished business activity ?,nd a decline in the price of the principal export pro- ducts. Yet the ga'rermment's plan for the 1949 budget includes a military and police appropriation of $18.5 million, representing more than one- fourth of the total ordinary, budget expenses (as compared to 17.4 per cent in Cuba), aid there is in addition a special 325 million public works program rich will include large expenditures for military construc- tion. Total anticipated 1949 expenditures for ordinary and special pro- grams exceed those for 19119 by 57 per cent. In order to meet ordinary budget expenses it has been necessary to levy additional export taxes whose principal impact is on the country's major export industries ---- sugar, cacao, coffee, and tobacco - in addition to new taxes of other types. The source of funds for the special 325 million public works program hap. not been stated; American sources in the Dominican Republic indicate that the special expenditure program may force even higher taxes. Tax increases press most heavily on agriculture since export taxes, which are: the government's major source of revenue, result in decreases in the nit profit of a`riculturai producers. Since profits have been high and wages lorr, especially in the sugar industry, a decrease in pro- fits ma-,- not be a great hardship to the producers, though a substantial further increase in taxes might tend to discourage production. The military superiority of the Dominican Republic acts as a potent psychological factor in Caribbean power politics. Trujillo now has the larger:t and most modern navy and air force in the Caribbean. Current activities include continued improvement of equipment through purchases 6. Approved For Release 19g9#O 7 2'".`CFA-RDP79-01090A000200010010-8 Approved For Rele'e I 999/09 :IR -RDP79-010 A000200010010-8 Weekly Contributions, B/Lt. (CIA. Working Paper) Situation bmorandu n 12-49 15 Larch 1949 abroad and the importation of foreign technicians to reinforce the air force and navy and to assist in the training pro ;rant of these services, the manpower of which is to be increased substantially during, 1949. The nature and practices of the Trujillo government have not -only produced h substantial and energetic body of Dominican exiles but have also aroused in the "democratic" countries distrust and fear that are a serious. divisive factor in Caribbean politics. Though Trujillo does not appear either to fear prompt attack from abroad or to plan immediate ag- gression on his own part, he undoubtedly considers it necessary to main- tain a considerable armed force as a precaution against future attempts by Dominican exiles aided by other "democratic" forces in the Caribbean. These two groups make no secret of their intention to work, directly or indirectly, as circumstances permit, for the overthrow of the Trujillo "dictatorship", Tihcent conflict between Trujillo and his adversaries has been characterized chiefly by Tru jillo's use of the radio and press in opposition to the propaganda measures-of the "democracies". It is also probable, though by no means yet proved, that Trujillo was involved in a recent plot to overthrow the Estime regime in Haiti. Trujillo continues his general support of the US internationally., and has indicated the Dominican Republic's agreement with the UTMS pcsition regarding the North Atlantic Fact. Tha government has also indicated of- ficially that it shares US concern over the wave of uprising's in Latin America and the US desire to stren:thon democratic and constitutional governments, Despite the Dominican Tepublic's support of the US interna- tionally, the vigorous opposition to Trujilio's regime by the Caribbean "democracies" creates a rivalry that impairs those US security interests that are dependent on the solidarity of the American republics. 7. Approved For Release I 99 1 A-RDP79-01090A000200010010-8 Approved For Release I 999/09 jo1 -RDP79-010 000200010010-8 Weekly Contributions, f/LA (CIA Working Paper) Situation L'omorandum 13-49 The Current Situation in Chile 15 ::arch 1149 (Summary: The Chilean administration's recent election victory is expected to guarantee continuance of major policies. Thou-h overt Commun- ist activity has been restrained, underground operation may increase and the government may encounter increasing difficulty in carrytnL out the anti-Communist program. Labor relations may cause the government more difficulty than was the case during the past year. Born' dissatisfaction exists in the armed services. Although serious economic problems remain to be solved, considerable progress me made durin_; the year, and there -ts reasonable hope for further progress. In international relations, Chile continues to be sensitive to actions of the US and other Latin Ameri- can states.) Although the present government of Chile lacks solid political sup- port for its legislative program, it has emerged from the 6 Larch connres- sional elections -,ith sufficient prestige to enable President C-onzalez Videla to continue during the foreseeable future his opportunistic balanc- ing of disparate forces united in their opposition to Com:nunisr, The ad- ministration can be expected to direct major effort toward strengthening its precarious political base through encouraging non-Communist labor org- anizations, passage of riuch--needod social legislation, easing of incipient dissaffection in the armed forces and continuing the ambitious program for the improvement of economic conditions. In the international field the Chilean Government tzill pro5ahly continue its criticisnq of military acces- sion to political power in Latin !+merica, its cultivation of close politi- cal and oconomic relations with the US and its vigorous assertion of the Chilean position in the Uid and in the Antarctic. The Communist Party, suppressed under the Special Porters Lnw, and out- lawed by the Defense of Denocracy Lavr of 7 September 1-Y408, is reportedly still a force to be reckoned with, particularly in labor tieeiere it has no effective rival. The Communists have been able to retain this position in labor due to the inability of the other political. parties to fill the gap or the absence of labor leaders able to form a strong non-political, non-Communist organ i ation, latent ability of the Coirnnnists to resume their openly aggressive tactics if riven the opportunity has been evidenced during the recent period of suspension of the President's Special Powers in an attempted demonstration in Santiago, a concerted return of exiles to labor centers, and in the determined effort of released Cor miunist n yors to resume their O5QX7 Under?..round activities designed to strop ;then the party continue, with an intcnslfed drive for supporters from a political parties and especially anon- Chile r s iripov- er. ished working population. The return of Ccraw naniat Deputy Contreras Approved For Release 199981 A-RDP79-01090A0002000' 0010-8 Approved For Rele a 1999/09o1~-RDP79-010WA000200010010-8 Weekly Contributions, 13/LA (CIA Working Paper) Situation i..emorandum 1.3-49 15 ;:;arch 1949 Tapia from a visit to Prague and :'oscovr, and reports of I'osca displeasure over Chilean Communist Party inefficienoy may presage an Internal reorgani- zation and increased activity. It is probable that such activity will be eonduated underground or be directed within the bounds of lavr to influence labor and the ever-present dissidents in all political parties. The labor situation during 1VIS vas quiet after the turbulence of 19147; however, this peace on titrich the administration deponds for carrying out its plan to increase industrial production is sornerorhat precarious. The absence of serious strikes and labor disturbances is attributable to the government's success, by virtue of the Sr.ecial Powers Law and the Do- fenne of Democracy Law, in obtaining settlements of disputes before they reached the strike stare. Labor's lack of well-organized militant leader- ship since the Coirnmist leaders were exiled has also contributed to re- cent tranquility in industrial relations. Vigorous opposition both by anti-government forces and some elements in the pro-"overnnent parties to the President's Special Powers and the Defense of Democracy tar will tend to undermine this apparently harmonious pattern of labor relations. It may further be upset by Communist exploitation of labor discontent with continuing high living costs and acute housing shortages. Possible disaffection in the armed forces rontirrues to be of concern to the administration. Although the pair increase and bonus recently granted by the Congross may appease the military services for the title being, basic causes of dissatisfaction persist in lack of equipment, which threatens to ground the air force by April, and in the onerous duties imposed under the Special Poc7ers Lava. The Chilean administration has accomplished very creditable economic improvement during the past year. This has been achieved largely by vir- tue of efficient economic administration, substantial ).CA purchases, and increased foreign private investrient, and has resulted in a balanced bud- get, a favorable balance of trade, and improved international credit standing. It is true that all concern for Chile's economic future cannot be dismissed# certain serious economic problems renain, such ass infla- tion reflected in over-extended credit and high cost of living; critical shortage of love-cost housin..r; difficulties in narketin-.. surpluses Includ- ing coal and a icultural products; and inadequate foreign private invost m ont in relation to the scale of the industrial dovolopr cnt program. "e- cent proL ress, however, justifies estimating that Chile's chances for continued economic improvement are relatively -ood if major political complications do not occur, President Gonzalez has prorrsised to secure welfare legislation to relieve pressures occasioned trr the high cost of living; and shortage of housing; his program also calls for legislative Approved For Release 199 09'IETr+CTA-RDP79-01090A0002000?p010-8 Approved For Rele a 1999/0%V RDP79-010'A000200010010-8 ieekly.Contributions, B/LA (CIA Working Paper) Situation 1,+dmorandum 13-449 15 1=,arch 19119 action to encourage foreign investment --- -particularly US investment and tecbnical aid as proposed by President Trw. an in his inaugural address. Chilean relations with other Latin American states have been dis- turbed during recent months. Relations with Venezuela, brokcin when Child referred the matter of a safe-conduct for ex-President Dotancourt to the QAS,have not been roaumed. Tension between Chile and Argentina has eased somewhat with renevmd avovmis of friendship ending recriminations over alleged Argentina participation in a coup attempted in Chile and with Per&1'3 explanation of his statement concerning a seaport for Bolivia which had proved offensive to Chile. Continued sensitivity to Argentine moves, to any tendency teiaard military governments in Latin America and to US policy in relation to Latin America can be expected, Approved For Release 1999/ bTA-RDP79-01090A000200010010-8