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December 15, 2016
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August 28, 2002
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May 17, 1949
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25X1 Approved For Release 2002/10/x-P79-01090A000214Gt20007-1 sleekly Contributions i7F F,9 CIA 7ay 1949 Of the developments reported on this week, finds of particular interest the item on Ecuador (p. 3); there thence balance of forces opposed to Galo Plaza appears to be changing, through new alignments, to a situation unfavorable to the continued political stability of the government. 25X1 CURRENT DIEVELOP'" :'Ts UUOP9 hET N DIVISION: Cuban political corrditions do not now, favor a T'S- Cuban aircraft-clearance agreement (p. 2). CENTRAL DIVISION: In Ecuador, new alignments amon.s forces opposed to the President may make the administration's position less secure (p. 3). Colombia's confrressional elections are unlikely again to be postponed (p, 2). SOUTIPUM DI`VTSI0?t. Peruts military Junta may be less sympathetic with the US as the result of the withdrawal from the Junta of Ad iral Saldf as (p. 3), The Bolivian Government, evidently doubtful of its strength, has yielded to new demands by labor (p. 3). Chile's econon rmay be serious]. affected by the lower price of copper (p. 3). SPECIAL SUDJECTS i u ren -], ua..on i.n ' Sri t1sh Guiana . . . . . . . . . . . . . The Current Situation in Nicaragua . . . . . r '~h?C 4. DOCUMENT NO. rw+sy O CHANGE IN CLASS. [~ CL,A a. CHANGE#a rn: IS S _ REVIEWER: _J State Dept. review completed 25X1 Approved For Release 2002/*a4~1 -Rd -01090A000200020007-1 C'. -, Sn Approved For Release 2002/10/10 : EiA`*3P79-01090A000 20007-1 '.Weekly Contributions, (CTA. lorkirig Paper) 17 'ay 19-9 CUM: Overf l.i'-ht fli- hts for I lita Iti.rcxaft Cu an p~~ . ica1 con 1. ions aan intro ,zc;e complications into proposed US negotiations for an agreement to permit US MilitarRy air- craft to overfly Cuban territory without prior notification. CIA estimates that (1) discussions on the subject, if instituted., might be long, difficult and conducive of acrimonious public debate; (2) Cuba may insist on reciprocal rights for its military aircraft over US territory as the sine ue non of consent to such an a-rree*ment; and (7) the influential Cuban nationalists might join with the Co:nr- munists to oppose the agreement, to the detriment of other Cuban-US problems that require for solution a general ,y cooperative public attitude, The US National 1. i.litary ,stablishment has proposed that military aircraft which overfly :;uba without intending to land shall be a]lmved (1) to overfly any part of Cuban territory .-d.thor.t prior notification other than the filing of routine flight plans; or (2) if this i; not a.~;roeable to Cuba, to overfly Cuba thro,:I*h air corri- dors ten miles wide which the Cuban Government shall establish along direct routes from Florida to the Panama Carial, to the Vernam r.ir Base in Jamaica, and to the US Naval Air Station at Cuantanamo nay. Both alterna tives would eliminate the existinrw requirement - often ignored by US militar0.r pilots with embarrassing results, especially If their plane makes a forced landing; in Cuba - that permission of the Cuban Government be requested before each flight over Cuba and that the over flying plane shall a vvait this permission before taking off, 2, COLOL"BIA: Coni,ressional elections are likely to be held as ached- `-' -~--w-----~--~ -w--~---~- - - __ _ --- - - u3 a or 5 June : The r overanment s appni.nt; tent of arrw officers to political positions in the troubled areas of the country should reduce the rilotin and political terrorism which at one time caused the president to consider seriously the necessity for the declaration of a state of siege and a concomjtant p~:stpone:- raent of elections. "path the Liberals and the Communists have already selected their candid tes. The Communists had hoped to join forces with the Liber-als of the extre: ?e .left, but, being; rebuffed, have been obliged to pres:nt a separate list, The Liberal Part-;'s own choice of candidates shows a strong leftist tendency within that party, and, consequently, rnaral of the votes which otherwise would go to Communist candidates rte;; be expected to fall to Liberal candidates, Furthermore, if the majority of Conservative candidates are from the extreme right (the selection if made has not been reported), the Liberal Party can count on retaining the vote of the rmo,.erate or Santiata Liberals and trill thereby vein a clear majority in both Houses, Approved For Release 2002/.e1t'c;iA RDP79-01090A000200020007-1 2. Approved For Release 2002/10/10: CAc 79-01090A0002%920007-1 seldy Contributi pans, (,~ A a r'orking Paper) ECUADOR: The relative security 'Ind stabilit of the Plaza adm nistra-- 25X1 fiian may e, comira to on 'US ssy Qua ta reporht t , he various Te tis , t ca ro s are gaining strength at the expense of the Liberals ' q ar o-rE: r un ying such opposition, Certain importa army noff cers have been flirting with both opposition groups. Should they cast their lot with the leftist groups, a military leader would, in all probability, emerge, Any, continuing trend in this direction will destroy the balance that has existed among the political opposition groups on the one hand and among the anti.-Plaza military groups on the other ----- a balance which up to now has been Plaza's main source of strength kly, 19 Apr 49), 25X1 PERiI: The Odria unto ma become sorie~oi t less pro-I..5 as a result su en and unpublic Z c parttare a US S of 0114 ,,.Lni,ster of 'r of 'arino, .' dmiral plaque A. Caldfas, ostensibly for medi-? cal treatment, The US Embassy believes that Odrfa ray have su ested the withdrawal as a result of the Admiral's disagreement with various junta policies and his unconcealed impatience ?!n,-th 25X6 some of the junta members. As Admiral Saldias has been the ? unta amber "closest t +1, # S f 5. W e : rom me standpoint of experience contact with North Americans and Symnathy with S institutions and ideals"s his departure has removed a counterbalance to the nationalistic and anti-US attitude of certain other menbers of the junta. BOLIVIA : The government' a anting of new demands b, labor nay indicate that it is too ouht 1al o it r s orm strength in spite of olection gains and ar!r r support - to risk labor dis- turb.noes, which reportedly for" part of a continuing' ',I-.T plan to weaken the administration and pave the way for its overt irowrr. Government attempts to appease labor by awarding considerable in- creases to Catavi, nine workers :kly, 26 Apr 1;) and by, a'?ree- ing to subsidize a railroad company enable it to root employee demands, may encourage other voorkers to ask for increases. The continued granting of such requests would increase the existing inflation and accentuate the economic dislocation that has resulted from a drop in mineral prices. 6, CHILE: Decline in co per prices menaces hilean economy, according to a report from Ambassador :' seer. s. Tie im ee hate effect in Ch-"!.le of the recent drop in the price of copper, Chile's princi- pal export and source of dollar exchan"re from 23 1f2 cents to arr- ., la 1.~ cents? has been. (1) a~decrease in cproduc- tion., sales$ and emplaymant; ~ (~) a ~. copper produc- tion., in work on the new 25X1 Approved For Release 2002/10/10 "CJAAZBP79-0109OA000200020007-1 . Approved For Release 2002/1 0/1 Y' 1I W -RDP79-01090A00 0020007-1 Weekly Contributions,, 17 May 199 (CIA Working Paper) plant at Chuquican ta; and (3) an almost complete stoppage in ,ranting of dollar exchange for imports. If the lower price continues and assuming over-all export volume to remain the same, the loss in annual government revenue has been estimated in Chile at not less than 1 billion paper pesos or '7 percent of the 1949 budget. The probable loss in dollar e change is placed at as much as US"? 25 million, mulch would exceed 15 percent of total doUlarr receipts anticipated from visible trade in 1949. As the amount of dollars available to Chile declines, there will be increasing pressure further to divert its trade to European soft-currency countries. Should the price decline force r:, suspension of production by the marginal, high-cost producers, lbor and social problems resulting from a setback to an industry which is a major employer-would have to be mete President Gonzalez Vidal., who in talking, with Ambassador povrs has said he fears the situation may result in a grave threat to Chilean political as well as economic stability, has probably overstated the extent of the threat to the Chilean political stabi- lity that may result from the decline in the price of copper; he has in the past been noticeably alarmist and quick to seek US as- sistance on the grounds that his government is a bulwark against any Communist threat to US interests in Chile. The Department of State has wired the US Embassy suggesting that the Ambassador stress the hope that the Chileans find some other method to make up the budget loss than by increasing the tax on copper companies, a step which would weaken confidence of foreign investors in Chile. Approved For Release 2002/10/10 : CIA-RDP79-0109OA000200020007-1 Vey - 4. Approved For Releas : CIA-RDP79-01090A0000020007-1 feekiy Contributions, 17 ; .ay 1`i9 P ) ' aper /orking (CIA a Situation t,;e rorandu i 2 9-4 _9 The Current Situation in Nicaragua. (Summary: There has been no significant chance in the .Iicara- guan situation during the past three months. Political calm prevails, the economic crisis persists, and there are indica- tions that General So.:aoza plans to assun direct control of the government, Internal opposition to Soraoza is at a low level and the Guardia Nacional remains loyal to h:im. The small. Communist moves nt continues its efforts to gain a hold ovor labor, and to abstain from political activity. icara?- guan revolutionary factions continue to be active in Cluaterlala, arid. an integrated anti-Somoza movement may be consolidated in the future. In international affairs, Nicaragua continues to support the US.) The, situation in Nicaragua remains essentially as reported three months ago II' Ikly, 15 Feb 119) and in subsequent articles, COILS action in the Costa llican dispute, which had the effect of fore stall.i.ng an inva- sion of Nicaragua by the anti-Somoza Caribbean Legion kly, 1 ' ar 9) 25X1 -was followed by a period of political caln during- which ",eneral Soz!roza re- tired to his plantation to oversee his sugar"-cane harvest. The harvest completed, Soraoz a returned to Lanagua to face the ti: rsen- in; economic situation caused by an acute dollar shorta?e,g a poor coffee harvest and falling sesame prices 26 Apr 91. Apparently 25X1 s hoping for ?3S aid, he has attempted o s ?.immulate interest in the , icara,.;aan canal. project or completion of the .ar4:a road. Either of these projects, if undertaken, would bring much-needed dollars into the country. 25X6 Somoza has also criticized the -,-over: rent of President 1'041A XI and inept handling of the economic crisis. The seriousness of the situation was emphasized by the publication, on 7 Papri_l, of now decrees for the sta'bi- lization of exchan e - reetrio the granting of commercial credit, limiting loans to 90 days or loss and prevent-in,, their extension, limiting non-ossential imports, outlawing the purchase and sale of exchange by indivi- duals, and closely supervisinrg all monetary transactions. The new decrees, following closely the recorLuonclations made recently by a cor_~mission of the International T-lonetary Fund, are not universally popular. .toffee growers (the leading exporters) have hoped to be allowed to retain a percentage of the dollar exchange realized from coffee exports for their own use. In critic izen the icom n government, Sorzoza may therefore attract the sup_-ort of this influential group, which prefers dollars to cordobas. His actions also lend support to the rumor that he plans to resur;c 3ract control of the government ?-?~? something which could be accomplished with ease due to the lour level of internal opposition activity and the continued loyalty of the Guardia iNacional lcly' 15 Feb )1.9). Approved For Release 2002/10/10 ::$.901090A000200020007-1 5 ./ 8 Approved For Release 2002/10/1Oz: n " RDP79-01090A0000020007-1 Weekly C,ontriboutions, (CIA corking Paper) Situation i memorandum 299 17 l 9W) The sanall Partido Socialista do I3iaarua (Communist) continues its at- tempt to consal a#e ids i Thence r groups F_~ 7ikly, 15 Feb i.9). As have the anti-Communist, government sponsored lar'or 'groups, it too has initiated an effort to organize a single general labor confederation, over which it hopes to gain eventual control. It is also engaged in preliminary attempts to organize the coffee -so rkf rs . and to bring vomen laborers under the control of the party. The party is avoiding political activity at the present time,, due to its lack 'of strength and the terms of its a t-reement with Somoza. Although internal opposition is at a low ebb, various Nicaraguan ?N- vo:l u-Uoraary factions continue their activities in Guatemala, and there is a possibility that sufficient unity may be achieved in the future to permit an integrated attack against Somoza. Consolidation of the Caribbean Legion in Guatemala, the internal situation in that country, and President Are-valo's personal sympathies may serve to strengthen the revolutionary movement. the arms of the Caribbean Legion are being move g. j.n quan a. y, omn os to fli.ca to Guatemala. Since the Legion organi- zation has been divided in the past between the two countries (with the greater portion in Costa Pica) this development represents a consolidation of the organization at a single base, and may presage renewed ac t:ivity based on a reorientation of plans,. Increased Guatemnalan support of the Legion could develop out of the domestic political situation, if the liberal Arevalista parties see in the presence of Legion arms and personnel a means of counteracting the influence of the Guatemalan Army under Colonel Arana, This development is not improbable,. in view of the approaching elections and the growing strength of the conservative opposition., which looks to Colonel Arena as Arevalo's siccessor. It is possible also that President Arnvalo"s personal sympathy for Professor Ld?lberto Torres - a fe1l.oy lir- tellectual and Central American Unionist ---r may develop into increased sup- port for the Legion. In the past, the Independent revolutionary faction of Torres and Castillo Ibarra worked. closely with the Liberal revolutionary faction of Posendo Arga" llo, Jr, (part of the Caribbean Legion), and it is possible that Areva.lo's support of the Legion was due, in part,, to his de- sire to help Torres, After 'Torres vas seized and imprisoned by .aomoza last year, Arevalo as interest in the Legion was observed to wane, but nor that Torres has been released and is back in Guatemala, Arevalo's support of Nicaraguan revolutionary ac t-ivity may be expected to increase -.,v, contin-ent upon general recognition of Torres as loader of the movement? As yet there is no indication that An"'valo plans to give substantial military assistance to any of the revolutionary factions. Ik never, if a compromise in leader-, ship is worked out among any of the groups concerned (Liberals, Independents, Conservatives) his assistance may be forthcoming. At the moment, therefore, the SIicaraguan revolutionary situation is in a state of flux,, out of which may emerge a stronger and better organized 25X1 Approved For Release 2002/10/10 : CIA--RQ,P79-0109OA000200020007-1 e_ T 6. Approved For Release 2002/10/1 Q;E;RDP79-01090A000020007-1 t cek1y Contributions, (C. 'forking Paper) Situation emorandum 29,..149 17 I'ay 19 opposition movement based upon corn-promise. There is apparent sdmpathy be- tween the Conservative faction (led by Chamorro) and the Rodriguez faction of the Caribbean Legion. There is also sympathy, and a recor'd' ecord of coopera-- tion, between the Independent faction of Torres and the Liberal faction of i'tosendo Argiielio, `'Jith Arguello J.r, rs leadership distasteful to some Lib- erals and wakened by the recent failure of his Costa fioan plans, tir~'ith aged General Chamorro rumored to be less active in the Conservative l('.ader- ship sokiy, 15 iTeb 1;9), and zi; .th Torres in a position to obtain aid from ~ent hrevalo, a rocombination of Nicaraguan revolutionary forces n: t only appears to be in order, but a distinct possibility, In the field of international relations, aeara`?r:an officials have re- cently made pointed and emphatic statements expressing their solidarity T..th the US point of view, .'mbassy Nicaragua reports that "this propaganda barrage . , . may be the prelude for some request". Approved For Release 2002/10DP79-01090A000200020007-1 7 Approved For Release 2002/10/10 ?'i`-DP79-01090A000020007-1 Weekly Contributions, (CIA 'for'king Paper) L 1. _i ua tion Memorandum 30-49 The Current Situation in British Guiana 17 "ay 1949 (Summary: British Guiana is not at this time of direct import- ance to US security interests. As a Crown colony it has but little self-government. Its present economic importance de- perids to a considerable extent on its two main exports, sugar and bauxite. Economic problems of some concern are those due to underdeveloped resources and lack of labor supply. Possi- bilities for future development are promising, but no appre- ciable change can be expected soon. There are two main labor unions, both with leftist leaders, but Communism does not ap- pear to be a threat. British Guiana os relations with other countries involve no problems of consequence; there is gerr- eral opposition to joining a federation of the Rritish ; est Indies, but interest has been shown in cooperation with the other two Gutanas, ) British Guiana is not at present of direct importance to US security interests, The US Air Force is deactivating its base at Atkinson Field, since it is not considered necessary in the present scope of the Air Force plans for defense. In case of emergency, however., the lease a_7reermnt is still in effect and the base could be reactivated. The strategic value of t'tritish Guiana lies in its bauxite, over r0 percent of the total production of which is exported to Canada. Although the population is not hostile to the USs, its attitude is somevtat adversely influenced by the racial prejud- ice associated with the US. As a Crown colony, l r^itish Guiana has a very limited degree of self- government. There is a legislative council consisting of 1L4 elected mem- bers and 10 appointed by the governor. Politically, the trend is toward the left. The labor candidates, supported by the British Guiana Labor Union Party, fill seven of the legislative seats. The powers of the gov- ernor, however, are so extensive that he can effectively block any legis- lation if he deems it necessary. Property and literacy qualifications greatly limit the size of the electorate thereby giving only .small minor- ity of the population (5 percent) any political power. British Guiana is the leading producer of sugar among the British colonies in the '',estern Hemisphere. In spite of the more or less chronic labor absenteeism, sugar production increased in l9t.t 8 and is expected to show even further gains in lc49. Rice, cultivated independently by fast Indians on small farms, is assuming more and more importance. Sugar and rice are both exported to the Empire , the former going chiefly to Canada and the latter to the other colonies in the UWI. The long-range plan of the British Goverment envisages even further development of rice with the view of making British Guiana one of the main rice-producing areas in this hemisphere,, Of the mineral comiodities, diamonds, of which about 40 Approved For Release 2002/10/10 : CIA-RDP79-01090A000200020007-1 8. Approved For Release 2002/10/10,5iDP79-01090A0000020007-1 Week ,y Contributions (CIA Working Paper) Situation 1,11emorandum 3o-49 2 a 17 May 1,M percent are of industrial value, are exported to the UK; gold goes almost entirely to the US. The leading mineral product, however, and a close second to sugar in export importance, is bauxite. British Guiana is Canada's principal source of bauxite. In 1948 production reached its second highest peak in history, totaling 1,871,166 long tons. Although there are at present only two active bauxite producers --- the subsidiary of the Aluminum Company of Canada, which is the leading one, and a sub- sidiary of the American Cyanamid and. Chemical Corp. -- many undeveloped deposits are being examined by other companies, including US companies, }itish Guiana's position is quite different from that of the .IA7I colonies in that its economic problems are due to the lack of labor supply and underdevelopment of its potentially large natural resources rather than to over-population and limited resources. It is estimated that the colony possesses further agricultural possibilities, a -malth of timbers, minerals, and potential hydroelectric power, all of which if properly dev- eloped will place British Guiana in a significant position in the Pritish Empire. The recommendations of the Evans Commission envisage the settle- merit of some of the surplus West Indies population concomitantly with the development of British Guiana's natural resources. Before any steps im- plementing the plan can be taken, a great deal of preliminary investiga- tory work - particularly with respect to transportation and housing -- must be done. Some initial steps have already been taken in this direc- tion. The possibilities of dredging the sandbar at Essequibo River, which would enable large ships to penetrate the interior, have been exa- mnined. Negotiations for the purchase of a grant by a quasi-official British entity for the development of the timber resources are under way. It is not expected, however, that the ambitious plans will come to fruition for many years. The two chief labor unions are characterized by racial as well as oc- cupational differences. The Lanpower Citizens' Association., of -which Ayube V. Edun is the president, embraces the East Indian plantation workers, This organization has been successful in securing collective bargaining agreements with au?^ar employers. The British Guiana Labor Union consists of Negro city workers, led by Hubert U. Critchlow, who is. also president of the British Guiana Labor Party, The attitude of these two important labor leaders is leftist. Both advocate many social and economic reforms (Udun's organization supports nationalization of the sugar industry), and full self- government by 195]. or 1952, The governor's tolerant attitude toward labor is responsible in no small measure for the generally peace- ful settlement of labor troubles, P:Th. Edun denounced the actions of the Guiana United Industrial Trade Union, an unrecognized union headed by Dr, Lachman Singh, which incited the sugar workers to riot last year. A commmisslon of inquiry from Britain was recently in the colony to inquire into the incident and report on the sugar industry as a whole, with spec- ial reference to labor conditions. Labor difficulties are attributed to Approved For Release 2002/10/10 : CIA-RDP79-0109OA000200020007-1 Approved For Release 2002/10/10':'atA DP79-01090AOOOZ00020007-1 i'eekly Contributions, (CIA ',', orking Paper) Situation ..'emorandum 30.49 17 .'~y 1149 - resentment of the concentration of ownership in a very small 7 itish min ority and to the fact that the plantations do not offer steady enough er.- ployment at sufficiently high wages. Communism does not appear to constitute a threat in Uritish Guiana, Although Dr. Singh and :':r. Cheddi. Jagan (member of the legislative council) tend to be militant labor agitators and are allegedly Com i un-i.st-inspired, there is increasing public sentiment against Co untxf:i.sr