WEEKLY CONTRIBUTIONS (Sanitized) ORE, CIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200020009-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 15, 2016
• Document Release Date: August 28, 2002
• Sequence Number: 9
• Publication Date: May 31, 1949
• Content Type: SUMMARY

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'deekl Contributions
I r;;%9 C IA
31Tayl ;9
Of the developments reported on this week the strikes and riots in
Tmlivian tin mines are of particular concern both because of the threat
to rrovcrnmental stability and because of anti-I'S propa-ganda (P. 3).
i;(MMiiaPa? DI`JISI:.7 . In Cuba, there is public op:osition to the fo. ration
of a military intel .i ence service to combat subversive ;roups (p, ~? )
El Salvador's expulsion of a United Fruit Company exocuztivo ?:+4s dictated
by considerations of local policy (p. 2). Guatemalan Chief of Arm-;d
Forces Arana has personal reasons for not enga.n in revoluti.onary acti-
vities (P. 3).
CEUT AL DIVISION: +1 decision by -r?azilas Superior Electoral Court de,:lon?Y
strates the independence of the ?razi? ian. judiciary (p. 3).
Id DIVISION: In '_blivi.a, serious strikes and riots are tak-Inr place
in major tin mines (p. 3),
The Current Situation in Colombia . . ? ? . ? ? . . . . . . . . . . . 5
The ,urrent Situation in Uru uay ? . ? ? s 4 w
The 'Current Situation in Argentina . ? ? . . . 10
DOCUMENTNO.
NO CHANGE IN CLASS. F
DECLASSIFIED
CLASS. CHANGED TO: 73, C
F:F.XT rl;_V1FW DATE: -----_-___~~
AUTI?l: HR 70-2
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" t.
State Dept. review completed
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eekly Contributions,
(CIA f:orking Paper)
31 --'ay 1-Vo
1. CUBA: The Cuban public is a rehensive of the forration of a mili-
tary
at-e li ;ence service S the es bl sshr ont of i. ich
was authorized by the President in a decree of 11 i`.ay. G/Vili has
been described by the Chief of Staff, under whom it would function,
as a small secret group whose purpose would be to exter _inatc all
subversive activities engaged in by clandestine, extreiist or sedi-
tious parties, ;;coups, sects, gangs or individuals. The proposed
organization is regarded by many as presa ;in r the revival of the
notorious strong-ax-,n `an of "achado, which ruthlessly "liquidated"f
anti-'.:achado elements in cold blood, and also of -?atista as detested
military intelligence service, Some Cubans fear that the new organi-
zation will overstep its chief purpose of suppressin. " gangsterisr,
and will become a strorr, arm ,gang, desiirried to throttle all opposi-
tion to the administration. Public indignation ;Ay prevent the
actual establishment of this group. A bill for the s sppression of
GRAS has been introduced into the House of :representatives,
20 EL SALVADOR: US Citi.,en Ousted
the goveruin,^ junta has expelled from the country
J. H. i,`i15on, local manager of the International Railways of Central
America, a United i ruit Cozrpanyl affiliate. As a result of this ac-
tion, striking railway workers have returned to their jobs. 'reports
indicate that ' 'ilson attributes the strike that led to his ouster
to: (1) propaganda circulated art ng :3alvadoran workers Coaru:auni st-
dom!nated A.encican orgrnized labor; (2) a-citation by nei jibori.ni-
Guatemalan rail .porkers who oppose United Fruit Company interests;
(3) radical influences within the Salvadoran ifovernment that seek
to promote mass unionization of the workers and alignment of Tl
Salvador on the side of ''uato--al.a against : icarag-ua and Honduras in
Central American po::Ter--balance i:valries. The -overnnent claims its
action forestalled a public demonstration with anti Ti3 overtoncs,
the control of which would have necessitated force and violence.
estimate; : (1) that . ilson's expuJ s icon was pri-
marily an astute political maneuver on the part of the junta, do?-
si,m,ned to preserve unity, to circumvent the pitfalls of leftism and
rightisms, and to avoid a violent display of political n tagr-onisms
which might endanger major policy objectives; (2) that the junta
particularly desired termination of the strike because of the impend-
ing arrival of representatives of the international any- for --econ-
struction and Development, who will recornend whether or not the
Hank should participate in the :_,inancinr? of the l6- million- dollar
Lerua Hydroelectric Project. The strikers returynd to work on the
day these representatives arrived in an Salvador, US security in
terests have not been involved J _n the dispute.
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-jeekly Contributions,
(CLa ',orking Paper)
31 1949
3. QUAT LALA: .'.edical reports indicate litical stability, )ldvice
to Co one I;'ranc~.sco J. t-rana o Ua mecas}~ecia.ists
that he "live a normal life" augurs well for the continued stability
of the Guatemalan Government. Arans, a leader in the rrd_lita iy re-
volt of lq). ,t that overthre?::i Ponce and now chief of the :riled forces,
is probably the only man with sufficient strength and. influence to
lead a successful coup against the Arevnlo government, although morn
excitable followers have hoped he would commit himself to such action,
he has consistently avoided involvement in re,rollationar - activity,
stating his preference for legal election to the presidency in 1950.
It is estimated that assurance from US specialists he consulted
in 1947) that his serious diabetic condition will recur "if he #e(
away from normal living" may account for his patient attitude.
4.
B1AZIL: The inde ndCnce of the Brazilian Judiciary has been demon-
strate }Z, the Superior :1'lectoral Courts s decision declarin,-:
unconstitutional the law ti fill congressional vacancies left by the
cancellation of Con.mur .st mandates. :hlereas, a:;cording to the Court,
the Constitution requires that such vacancies be filled by new elec-
tionc, the law called for distribution of the seats among the legal
parties in a proportion based on their previous congressional votes
-~? a solution heavily favoring the government par i and , re,j udici ng
the parties which have gained strength since the 191.5 and l91s.7 elec-
tions. The Court's independence of act-ion was the more impressive
since the claim of unconstitutionality had been filed the small
but growing Social Progressive karts of Adhe. ar de =arros, :governor
of Sao Paulo and presidential aspirant, whom the .overnment Harty
and members of the Dutra administration have continually attempted
to eliminate.
4
5. BJLIVTA : 'Deportation of Labor Leaders sets off 'Strikes and ::lots
nx?incipa ,~ a prompt
boi? isturCiances seem to have
and explosive reaction of the miners to the government's forceful
attempt, after receiving reports of revolutionary plots, to xiach a
showdow,m by deporting over 20 '"s leaders and labor agitators, i.nclu-
In-g Senator Juan LechIn of the Federation of s ine orkers (73x'3).
US i mbasay La Paz reports that, in. spite of its warningg to the i3oli!-
vian Government on 27 .:ay of the dangers to ,'S personnel at the .r,:ine3
the disposition of troops and other precautionary measures were take-,
too late to prevent casualties,
Strike's have spread to all. major tin mines and at least
one railway in the minin;7? area has been affected. Since the rail rays
are controlled by PI,Z-Coss:unist-led unions, there is a possibility
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MAN:
Weekly Contributions,
(CIA Working Paper)
31 May 1949
that the cooperation betuven MIR and PIR groups,
is taking place. If this cooperation eve ops
on any major s a , e stability of the Bolivian Government would be
in great danger. The government should, however, be able to weather
a crisis if t. is not supported by FIR and if the military persist
in the loyalty shown thus far. The decree providing for mobiliza?
tion of the civilians should also provide some additional strength
for the government. In any case, the perennially weak government
faces its greatest test to date. Bolivian tin production and the
general economic situation will be seriously damaged.
The most disturbing aspect of the situation from the stand-
point of US interests is the fact that anti-US slogans and sentiments
appeared to spark the disorders. Both and Communist-led groups
agree in this policy of blaming "US imperia].isdl for their difficulties
with the management of the mines and with the Bolivian Government.
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Situation '?emorandurar -~2- 9
'Meekly Contributions
(CIA ":"orking Paper)
31 !ay:.9L.9
The Current situation in Colombia
(Suiary: The current situation contains no serious threats
to US security interests. Colombia is faced with political
tension during the election period,, Communist stron^th is
decreasing, The principal economic probler^ is imbalance in
international payments. Coffee sales remain satisfactory 'rat
petroleum intone and prospects for future development have
decreased. The armed forces are a stabilizing influence: in
the county. Colombia has no serious international rc =ie_~e
and is norrrally aliZned with the US. )
clothin, in the current Colombian situation is causing, or ir.-.adiately
portends noticeable impairr:pant of US security interests. Of some concern,
however,, are the circumstances that political stability is not all that
h the country has a good record for surrtaouxztin ;
could be swished, even thoug
difficulties., and that long--term prospects for petroleum are loss bright.
Corti iunist strength is diminishing.
The political situation in Colombia lacks stability at this time be-
cause of the bitterness between the t-cro political parties. '-he a11'?Con-
servative cabinet esta-olislmd on 22 Lay (see .;kly, 21.: r 1i)) is the
0
first since the io ;ota uprisinu to grant no representation to the majority
Liberal Party. To date the police have been successful in controlling de-
monstrations protesting against the new cabinet, but the ;.-ov rnment~ never-
theless, in an effort to assure tranquil elections, has now iorbiddon pcii--
tical parades, demonstrations, and radio broadcasts. The c3ections -ay
well be held as scheduled on 5 June, although it is doubted that the Col--
omb:ian Government will be able to suppress armed clashes entirely,, even
after 5 June, since these elections '?""' comi_n r as the do '.e 'ore he 1350
presidential elections - are important primarily as a significant test of
political strength,
The Communist Party, never too potent a political .force in Col..) -bia, i.s
apparently losing strength. The Communists were una'')le to -ain an ,alliance
for election purposes even with the extre:.e leftists of the Liberal i'arty,
ror~d.cally, Colombia's chef dif fig .1ty, perhaps, has 1;been the imbal-
ance ante in its international payments. Colombia's outflow of C-o1cl and foreign
exchange was equal to USC5'5) million in 1` !.7, i,S ;72 million in 19h'., and was
.
increased to the equivalent of i.S`sd21.i. million for the first ouar-Wr of 19110
By 1 April 19149, Coloznoia is total foreign exchange reserves had decreased
to 9 566 million. A subsequent embargo on exchange releases superficially
improved Colombia's reserve position, but caused commercial gjments to
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Weekly Contributions,
(Cm Working Paper)
Situation P;'emorandum 32-49
31 tray 1110
fall in arrears. Present exchange regulations, which limit weekly ex-
change releases to dollar receipts of the preceding, week, may drive up
the cost of living because of the restriction of imports, but are ex?-
pected to improve Colombia's exchange position.
Colombia's foreign exchange receipts may well remain close to 19)
levels. Coffee exports accounted for 79 percent of Colordoia's 19Itt foreign
exchange receipts; sales for the first quarter of 1949 were almost at 191+8
levels in both volume and value. For the current crop year, conditions
are reported to be favorable, and, should coffee prices remain at approxi-
mately present levels., Colombia's exchange receipts should remain relative?-
ly satisfactory.
Another current economic problem in Colombia, and one of interest to
the US as well. is the decline of petroleum exploration and production.
Although prices in 191 . set an all-time high in Colombian of:L history
with an average value of .'2.511 per barrel as compared with the previous
high of ~'1. 90 per barrel in 191147s in volume 1)4E petroleum exports were
3,92 percent less than 1947 exports. Furthermore, several foreign oil
companies,, none of which had reached the production stage, have recently
decided to cease operations in Colombia. Other companies have curtailed
their operations. VIhile the diminution in new petroleum investments is,
in part, a resit of the improved world supply position., it also reflects
the particular difficulties facing the oil companies in Colorwia --
legislaative obstacles, hampering administrative practices of the Colombian
Government, and extensive labor troubles. Ambassador aulac is of the
opinion that these difficulties would be overcome, provided that any aid
granted to Colombia under Point IV be predicated upon the country's offer-
ing satisfactory facilities to private oil companies prior to or simultan-
eously with the economic aid given by the US, Even though there is no
immediate prospect for improvement, the situation is not at present detri-
mental to US interests because of the improved world supply conditions.
However, from a long-term point of view, if present hindrances to petrol-
eum development remain, the situation. would be harmful to US nterests,
which require that near by sources of petroleum be developed as fully as
possible.
The armed forces remain loyal to the Colombian Goverment rather than
to either the Liberal or Conservative Pa- ties., and are there ore a eta-
bilizing influence in the country. Colombian armed forces totaled about
258000 men as of 8 Uarch, with the army and the military police making up
21,000, Under the supervision of the US `;ilitary :''fission, the -':ar College
and the service schools in Bo:;ota have been conducting numerous field exec'
cises on battalion level, with stress being placed on combined arms. The
bulk of the present equipment of the armed forces is of little military
value because of obsolescence and poor maintenance. However,, the morale
of the forces is reported to be good.
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Weekly Contributions,
(CIA Working Paper)
Situation ;Memorandum 324.9
3? ;.'w 1,) 9
Geography and the inherent preference of the Colombian pccple for ern culture insure a foreign policy generally oriented to that of the US
and its closest associates. During peacetime, Colombia may from time to
time take action running counter to US policy and desires (as in support-
ing the recently defeated fIraz7lian resolution on Spain in the United Ua-
tions). In case of war, however, the US is assured of Colombian support,
In relations with other Latin American countries, Colombia's dispute nith
Peru concerning asylum for the APRA leader, liaya de la Torre , has been of
major importance. Although the case has not been settled, the two coon
tries have agreed to submit the question to the Vague Court, and the ten
sign between them has now virtually disappeared. It has been reported
that Colombia and Ecuador signed a military alliance under the stimulus
of the tension over the Playa case.,
7.
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Fteckly- Contributions,
(c11+, ': orkiric Parr)
situation 'enorandum 3 1,9
The current Situation in Uruua
31 1949
(5zarmary: The position as to US security interests continues
favorable, The (;overnnent is relatively stable politically.
The econo: is situation., somevhat weal:tined in the last quarter,
is still no cause for serious concern. Conunists are losing
rround. 1Aa d-force morale has roce!,tly improved. 's
international position shows sins of being less intransi ont, )
Uruguay continues to be conspicuous among Latin American countries
as a bulcrarl to the 133 ?r)terest in sta.) lit;r and dc"'ocracy of -?ovcrnmonts.
US interest in iierriisphore solidarity, occasionally a rpa1 re ' by ru;r~.a;ran
over-zealous denunciations of "dictatorial" governments, has gained b,'
(a) renewal of Uruguayan i'aras>aayan relations, (1D) Uruguay's doocision not
to introduce the a: tter of ~`enezuelan political prisoners to the ?': `oner-
al Iascrualy, and (a) the cor:.parative raoderat. ness of truguayan attitude
at the ILO meeting,
political situation continues to develop alon;- the lines indicated
in eeitl for 1 "arch 190. The Patlle Berres government remains
sta a anc has surrnounted, at least temporarily, the major political and
economic problems posed by the relentless i errerista opposition. It is
a reasonable expectation that the -,-overnraent -vn.ll be able to maintain it-
self until the 1950 elections.
After three -Lontlis of enerall ' favorable business conedtio.~13, the
economic outlook has recently caused r:11d concern in business and govern
mental circles. `)oriestic trade is satisfactory while intern tional trade
is slu- ..ish. Sales of wool for export are -trery slow and failure to sell
this product at satisfactory prices could. seriously diminish Lriaguay's
foreign exchange ineoxae -- especial,, in dollars thus adversely affect
ink; the entire ecorion . T.eports that meat -prices in uri. peon narks is
are droppin ; give added reason for concern, since meat is sccc_:d only to
wool as a source of foreign exchan?e. in order to stirralatc foreign trade
and assure markets and satisfactory -.-prices for available surpluses of priri
cipal products, Uruguay is developirr a broad trade program through the
ne?otiat3.on of nu^ erous trade a:-:regiments. i5specially si'nifi.cant is the
negotiation, now nearly completed, of a "n.?w model" ?:S-Uru say ':rcaty of
t riendship, ''conori.c ")evelopraunt and Cor-nierce, which may mate Uruguay a
test, case for -resident T'runan's l-oint 11. pro rar to encou,~T-e the export
of US industrial technignne and commercial capital to -underdeveloped
countries.
'a"lie national bud et for 1` 9, the first sul.i tied to Con tress since
1914, provides for the expenditure of 21,.2 -pillion pesos; present sources
of income will produce an estimated r?Ck? million pesos, so that new taxes
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weekly Contributions,
(CIA Corking Paper)
31 Lay 1949,
Situation Memorandum 334t9
will be necessary if a deficit is to be avoided, Tho three major items
of expenditures are: the public debt (22 percent), national defense (12
percent)., and public health (9 percent).
The Uruguayan armed forces, who, unlike those of most Latin American
countries, normally exert slight influence on national politics and are
composed solely of volunteers, are at their usual combined strength of ap-
proximately 13.,,000'- only about 0.5 percent of the total population.
The type and quality of manpower and current training status are reported
good by Latin American standards. Both officers and enlisted men are be-
lieved to be loyal to the present administration, though morale recently
reached a low ebb because of undue presidential influence in military af-
fairs. Tension created by this practice has been relieved, at least temp-
orarily, b; the administration's proposal of measures providing promotions
and increased salaries for the members of the armed forces.
Local Comm nists are gradually losing ground among labor groups. Ue?-
spite strenuous efforts, they were unable to stage significant domonstra"
Lions on Lay Day. However, they continue to participate actively in inter-
national Communist conferences, having sent delegates to the ' ::orld Congress
of Partisans for Peace in Paris and to the Tenth Congress of Soviet Trade
Unions in Moscow,
Tabor, on the whole, is quiet. The only sitgnificant strike was the re-
cent 16-day work stoppage in the Montevideo packing houses, which seriously
interrupted meat production both for local corrumption and for export.
Termination of the strike eras achieved, although the basic issues remained
unsettled.
International relations remain basically unchanged except for the re-
newal of diplomatic relations with Paraguay, broken since the exchange of
recriminatory notes during the Paraguayan civil rear. relations with Brazil
are cordial; with Argentina, strained. Uruguayan participation in the re-
cent ILO conference was less Inflammatory than had 'Neon expected, Anti-
Franco feeling is as intense as ever, both among official ct.:-cles and among
the general populace. The administration's feeling against nrl_litany gov:: rrr-
ments of Peru, Venezuela, and T1 .`.'alvador remains strong. It was only
last-minute reconsideration, at the suggestion of the US, that made the
Uruguay .n delegate to the UTd desist from introducing in the general AsseiAbly
the himm rights question in the case of the detention of Venezuelan poll-
ti-cal prisoners. The US desire not to air the problem before the t.;U1 has caused
Uruguayan officials to question the consistency of US policy, which they
feel advocates democracy but does not always back up the sup sorters of
democratic principles.
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Weekly Contributions,
(CLI '.'!orking Paper)
Situation ::'emorandurn 34-4q
Ilia Current Situation in Argentina
,31 "ay 19-4)
(Summary: L'S security interests are concerned in the lack of
political stability and the possibilities of a move to auth-
oritarianism. The present unstable political situation could
develop in three ~:7ays, the third being considered most probable:
Peron might support the advocates of economic reform with
economic rehabilitation and increase political stability
as a result; Peron may give way to army rule; Peron may
rove toward a clearly authoritarian governmont based on
extreme nationalism. The armed forces are militarily in
good shape and temporarily reluctant to assurao political
control. The econow suffers from inflation and from
stagnation of foreign trade, and prospects for Imn:ediate
improvement are not rood, Internationally, Prgcntina has
been recently less aggressively independent.)
1. Concerns relative to US security interests
Present Argentine political instability is unfavorable for US inter-
est in stability of governments, and the most likely develop ent would be
unfavorable for the 1,3 interest in democratic governments and in I;e-ris-
phere solidarity. Present minor :,ommuni.st capabilities are unlikely to
increase except in case of breakdo-vm of civil authority in a period of
army-laabor strife.
2, Political
At the present moment persisting factors unfavorable for the stability
of the Peron rc :iznc outz.cigh a sinrrle, more recent, favorable factor.
Conflict between poveerful ;coups at the policy r. kin level continues
unabated, particularly tha'. between Foreign I'inister : ramu ?l.ia's economic
reform ,;rou.tp and ;>eiiora Peronss obstructionist clique. 'i.?ne President's
hold on essential army and essential labor support (see0 kly, 26
Anr 49) has weakened and .theme is no present indication that he is able
to arrest this trend, The economic situation - which possibly should
be rated the major factor in army disaffection, labor discos :ant and -;ov?-
ernnent instability -?? continues to deteriorate (see 5 TI, Is
true that the recent Argentine initiative for a joint 11,E Argentine effort...
to improve the economic situation 3.s a favorable factor; but it J is doubt-
ful that this step has been taken in time and that Peron can or will pro-
vide the 'r .muglia group with adequate backin ; and authority to inplernent
even this limited hope,
..This situation will pro)ably develop in one of three ways. Hirst,
and least likely, is that Peron vrill muster the determination and the
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(CIA Working Paper)
Situation Memorandum 314-J 9
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CIIA-RDP79-01090A000200020009-9
power to repress the internal conflicts in his government long enough to
give the new proposals a trial and that they will be successful in alle-
viating the economic situation; such a result, hoover, would be favor-
able not only for the stability of the Peron government and for US-Argen'-
tine relations but also for US interests in economic and political stabi-
lity in the inter--American coiw:unity of nations. The second possibility
more likely than the first but less probable than the third possible
development - is The replacement of Peron by an array junta either through
a coup or as a result of his voluntary retirement. The third possibility
the development which appears most probable at the present time -- is
that Peron will temporize and maneuver to postpone a real solution but
will find himself forced to resort to increasingly authoritarian and
demagogic measures to maintain himself in power,
if the present Argentine ^rovernznt should be overthrown by the arrr{y,
widespread violence would probably precede the establishment of effective
military control, because Peron, under the influence of his wife, could
be expected to call on their fanatical labor following to resist a mili-
tary threat to the regime. The resultin=g period of confusion would of-
fer possibilities for Communist exploitation, limited though the capa?-
bilities (see 3. below) of this group are. Even if. Peron were to with-
draw from the scene voluntarily, as now seems relatively unlikely, it is
improbable that a stable government capable of avoiding arn4--labor con-
flict would result, because sharply conflicting interests under present
economic stress would prevent agreement on a mutually acceptable succes-
sor, if Peon leaves the government in the present crisis either as a
result of force era eure or voluntarily,, the succeeding regime will pro-
bably adopt pressive measures that will have adverse effects on US
interests similar to those to be expected of Peron if, as is expected, he
attempts to stay in power through au 'noritarian methods.
If Peron rescrts to increasingly authoritarian measures, his actions
will have serious implications for US security interests in item sphere
solidarity and democratic stability. An emergency authoritarian program
could be expected to accelerate the nationalization of foreign-owned.
properties, including those of the US. It would also curtail civil
liberties - including freedom of speech - and would alarm neighboring
countries - particularly Uruguay, Chile, and brazil -- thus undermining
Hemisphere solidarity by aggravating the tension between "democratic"
and "dictatorship" countries, Finally, Peron under these circumstances
would be apt publicly to blame the US for Argentina's economic adversities
and revert to the anti-US "Third Position" a oreign policy with concilia-
tory gestures to the USSR. Even under these circumstances, however, his
activities would hardly pass beyond a stubborn Insistence on Argentine
independence of the Past-,'nest conflict, and no substantial Argentine-
Soviet collaboration need be expected.
31 laay 1949
ll.
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Weekly Contributions,
(CIA"; orking Paper)
Situation ?emorandura 3L- / 9
~1 T.ay 1';49
3, Subversive
The Communist Party of ^rgentina, thor.gh nur rically wreak (O,000
dues-paying members and O0,O00 non-Corrnunist sypipathizers) and split by
internal dissension is, nevertheless, so strate~ ' -ically entrenched in key
industries that it is a source of genuine concern to the i eron i;overnment,
particularly since labor has become increasingly discontented as the oco--
norQ; has deteriorated, The Peron re{rime has undertaken increasingi,v i:.r-
portant anti-Communist measures dvrin~ the past year., cspeciail:v a"ter
the Cotarnnists dropped their policy of expedient collaboration (based.:cn
)'w-on's nuisance value to the ''S) and attaci:ed the administration's consti-
tutional reform program in Docei;ber 1%)W, These anti-C%onni;nist measures
have included denial of some information media, increasing numbers of ar-
rests, and intensified vi ;ilance against sabota:-e. Particularly important
a ':ong the rq~ rime Is anti-cozrmnunist measures eras the rocent dissolution of
the Soviet--sponsored Slav Union, an action rrh ch may be preliminary to o'.t-
lai i.ng the Comrmnist Party.
4. ?fy.L~tJa
The Argentine r~z -y, with an approximate stren-th of 105,,00 officers
and men, is second to that of ;lrazil in strrn~..:th, and has relatively less
modern equzipn nt than the 'irazilian :,rrry. Present technical proficiency,
quality of manpower, and morale are exceptionally hi ?h by Latin 1unerican
standards. t leaders of the a rr:y, who are the ultimate arbiters of
domestic political power and are predoriinantl',* in favor of colilhoration
vdth the US, have for several Months been restrained frog forcin I'eron's
hand or removing him from. office only b; fear of possible consequences
and by division anon;- themselves. ,n uneasy truce betvrecn the arrtr and
the Senora Peron clique, whose political interference and obstruction it
deplores, is respected by the army only because of its fear that forceful
action - assuming, as is probable, that the Perons mould call on their
fanatical labor follovringr to resist - would probably precipitate violence
and bloodshed' and perhaps a permanent cleavage between the a:?my and labor.
Also the current division among top military leaders stren~ t.--gene f-eron's
hand by enabling- him to play one ggroup off against another. Tut should
discontent Leith economic conditions lead to increasin labor unrest and
disorder, as expected, military opposition to Peron ma;,- stre z, :thong re-
consolidate, and force a shoe>tdo~.w ni.
5,
The Argentine economy is now characterized by danf ere us inflation,
shortages of producers and c unsinner ,goods, financial instabi.l i.. ty, and
some unemployment. ' it low volume of foreign trade has contributed greatly
to dislocations in the domestic econowy. Shortages of esscrat-i.al_ irmort
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Situation VMemorandum 3}} 149
Weekly Contributions,
(CIA 3orking Paper)
31 rrsy 1919
items have closed some factories and threatened others. Government-
sponsored wage increases and other employee benefits have --- in the absence
of compensating increases in labor productivity - increased production
costs. These wage increases have also attracted rural labor into industry,
with consequent decline in agricultural production, the major source of
foreign exchange.
The most important key to the recovery of the Argentine econorn :Lies
in the rehabilitation of foreign trade, which has stagnated during the
last year largely as a result of two factors -persistence in a high-
price policy despite the end of the sellers' market in most export items
and the stultifying effect of state trading. Elements in the government
- represented chiefly by Foreign minister rramuglia and reinforced to a
certain extent by the awry - have sought valiantly - particularly since
the beginning of 1949 __ to secure the adoption of realistic trade and
price policies. Their efforts have to date elargely his
the obstruction of political opportunists who
wife's championship of their cause. It is true that the recent argentine
initiative - for joint Argentine-UTS efforts to increase Argentine exports
to the US on the basis of realistic prices and Argentine commitments to
protect US interests in Argentina - offers some hope for the adoption and
implementation of changes in economic policy essential to relieve the
threats to the stability of the government, prospects for such a develop-
ment,, hoarever,, are not goods, because the Senora Peron clique continues its
aggressive and bitter obstruction to the Ikamuglia reform group and can
be expected to Influence Peron toward an extreme nationalist course,,
6, International
Among the more striking developments in Argentine foreign relations
that have coincided i,ri.th the increasing severity of the economic crisis
have been a sharp retreat from the anti.-US "Third Position" foreign
policy and a decided loss of prestige and influence in Latin America?
There has also been a noticeable cooling of relations with Franco Spain
during recent months as commercial difficulties and personal conflicts
involving Sehora Peron have led to suspension of Argentine sponsorship
of Spain in the UN. Argentina has riven a somewhat more definite indica-
tion of political antipathy toward the USSR during the past year despite
the fact that inability to buy in the ""est has encouraged commercial irr
tercourse with satellite nations,
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