WEEKLY CONTRIBUTIONS LATIN AMERICA BRANCH, ORE, CIA 12 JULY 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200030002-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 9, 2016
• Document Release Date: September 28, 1998
• Sequence Number: 2
• Publication Date: July 12, 1949
• Content Type: SUMMARY

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Weekly. Contributions
Latin?America Brandi:1?M, CIA
12 July 1949
Two items are of particular interest this meek: that on the drop
in Bolivian tin production and that on plotting by Venezuelan diplomatic
officers,
CURRENT DEVELOPMENTS
MERU: Communists in a number of Latin American countries are taking
steps to improve their position (p. 2).
NORTHERN DIVISION: Cubats Chief of Staff, General Prez, may be removed
(p. 2). Guatema1a/3 government, despite denials, appears to have been
involved in the Dominican invasion attempt (p, 3).
CENTRAL DIVISION: The reuniting of Colombia ?sCommunist parties mill
not significantly enhance the party /s strength (p. 3). yenezuel,an diplo-
mats in the US are said to be plotting the removal of Perez Jimenez from
the governing military junta (p. 4).
SOUTHERN DIVISION: In Bolivia, the decline in mineral production has ad-
verse effects (p. /4). The loss to Uruguay of an expected contract to
sell meat to the US has had unfavorable repercussions (p. 5).
SPECIAL SUBJETIS
The Current Situation in Panama . .
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Weekly Contributions, B/LA 12 July 1949
(CIA Working Paper)
1. GENERAL: Communists Atter to Strengthen Position
tecenrialiTais oLatinragigin Communists seem to
indicate that the Communist parties, which, in general, have been
declining in strength and effectiveness (see B/LA 7 Jun 490,
now are taking steps in a number of countries to improve their
position by closing ranks and by attempting to extend their in-
fluence to splinter groups and popular fronts.
In Colombia the two Communist parties have united in an
attempt to further party aims,, No evidence has been reported that
this has resulted in increased Communist strength. In Mexico two
dissident Communist groups (berth outside the "regu3ar" party) plan
to create a single "authentic Narxist Party" at a Marxist congress
of unity scheduled to be held in November.
Recent Communist attempts to extend the party's influence
seem to indicate that loaders agree with the idea expressed by Lome
berdo Toledano: who is reported to have said that, in view of the
unimportant position of Communist parties, the creation of "w-
eaned Liberal parties" is necessary. In Chile, as few Communist
-
sponsored candidates were elected in the Larch elections, the
Communists apparently now plan to direct their efforts, particular-
ly through the use of propaganda, toward the unification of all
political elements discontented with the present government. In
Venezuela the Communists have a sinner schemes there it is planned
to bring all organized labor together, and also to form an alliance
to be called "The Patriotic Democratic Anti-Imperialist Front".
In Ecuador too, attempts to extend Communist Influence are being
made; there, in response to instructions said to haVe been received
fromuexico, the party plans to effect a working agreement between
the Ecuadoran Communist Party and other leftist groups to provide
a united front against Liberals and Conservatives.
These activities, thus far, have not resulted in any
discernible strengthening of the generally mak position of the
Communiet parties in the area. B/LA estimates that even though a
certain increase in Communist activity may expected, there will
probably be no significant improvement in party strength or effect-
iveness in the immediate future.
2. CUBA: Chief of Staff General Pgrezbe ousted. President
MF-nray laarwsiowita o rePIW-General Genovevo
Arez? the Cuban Arpy's Chief of Staff since 1944, Heretofore,.
General Prez' popularity within arey circles has forestalled
maneuvers by his political opponents to oust him and President
Pro has preferred to assume a neutral attitude toward his con-
tinued tenure in office. Recently, however, the arm/ has become
doza8eN7---- 2.
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Weekly Contributions, B/IA
(eia Working Paper)
25X6A
12 July 1949
dissatisfied with General Perez because
veterans' pensions and the army clothin issue hmmtfailen into ar-
rears. Despite the fact that General Perez has always been very pro-
US, it is not believed that his replacement by another officer rould
have any effect on Cuban-US relations.
3. MWA: Official C lic'tin the DominigAlgivasion Attempt
planes used in the recent Domini-
can invasion attempt were based in Guatemala, and that Guatemalan
Air Force planes and pilots took part in the invasion preparations
with the full knowledge and cooperation of President Arevalo and
Foreign Minister Afton Meany,
Although President Arevalo has officially denied that
:ruatemalans were involved in the invasion, it is evident from this
and other information that the Guatemalan Government aided the re-
volutionists at least up to the time of the departure of their
planes from Guatemalan territory.
24,
COLOMBIA: Unification of the two Communist Parties
er inzr-ToRth-s?or ZoTirizakIRF-6-or7617ffiir The conditions
under which a merger would be mutually acceptable, the Colombian
Workers Party (PCO - a group of dissident Communists who separated
from the parent organization in /947) was reunited with the Colombian
Communist Party (PCC) by act of the latter's Central Executive Com-
mittee on 3 June 1949. Both factions abandoned the rather extreme
demands they had made as conditions precedent to unification, Re-
portedly, the only conditions finally laid down were: (a) members
of the PCO meet individually submit written application for member-
ship in the FCC, and (b) the POC will not discriminate against such
applicants nor attempt to establish responsibility for any activities
of applicants prior to the date of application. The unification of
the two groups had for some time been urged by Colombian Communists
living in Europe and by the Communist leaders in neighboring coun-
tries(
Reports received during the month following the merger
seem to indicate that it 'was entered into more with the hope that it
mould arrest the declining vitality of Colombian Communism than with
any conviction that it would produce any significant advancement of
the Communist program in Colombia.
B/LA does not believe that this merger will result in any
significant increase of political power for Colombian Communists,,
3.
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Weekly Gontribetions? B/LA 12 July 1949
(CIA Working Paper)
5. VENEWW_Ilipg(2matic Plottim
0AIA'D'tfri"Ecii-TeIrnirin The US are plotting to oust Ann allag-
25X1X6 nez
25X1X6 The plotters are reported to include ? in addi-
tion to other diplomats -- Ambassador Pocaterra? Mario Vargas, and
RiSmulo Betancourt and other AcciOn Denocr5tica leaders. The scheme
is said to contemplate, in AZITTE-E3-ER-Rnoval of Prez JimLez3
the resignation of Delgado Chalbaud from the army and his subsequent
appointment as civilian president of Venezuela. Delgado Chalbaud is
reportedly a party to this plot.
p/LA believes that there may well be plotting among
Venezuelan diplomats in the US, but that they are more likely to be
engaged in political jockeying for a redistribution of power than to
be lanning a real revolution. Both Delgado Chalbaud and Prez
Jimenez are probably aware of the existence of such a conspiracy.
It is improbable that Delgado Chalbaud would be party to any plot
involving the use of one part of the armed forces against another.
It is doubtful whether Betancourt enjoys the confidence of the Vene-
zuelan diplomats, and if Al) is involved in such a conspiracy it is
probably at most a token participation.. The change in the junta ap-
parently desired by the conspirators would be unlikely adversely to
affect US security interests in the area.
6, BOLIVIA: Drop in Mineral Production has Adverse Effects
fflierliina.171:61-137MTAMiliare'SWW'seriousiy
affected Bolivia's economy and may affect adversely US interests in
stockpiling and in maintaining a readily available Western Hemisphere
source of metals, especially of tin.
Bolivia's national economy has been affected by the de-
crease in revenue from metal exports, especially governmental re-
venues. Estimated fiscal receipts have been reduced nearly six per-
cent as a result of the drop in tin production alone. Officials
also estimate that there will be a US$10,000,000 deficit in foreign
exchange receipts as the foreign exchange budget was calculated on
the basis of earlier estimates of 1949 tin exports. Under these de-
preciative pressures, the boliviano has reached a new low of 102 to
the dollar on the gray marii77-37-Compared with the officiel rate of
42 bolivianos to the dollar. Unless there is an unexpected recovery
inns meETE market, Bolivia can scarcely escape further labor con-
flict, deficit financing, and decreased purchasing power as it seeks
to adjust to the new situation.
4.
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Weekly Contributions, B/LA 12 July 19149
(CIA 'ilorking Paper)
Even if prices are not lowered in a new US contract now
under consideration, 1949 tin production in Bolivia is expected to
reach only 32,000 metric tons --- instead of the 38,000 considered
possible at the first of the year. Although the International Tin
Study Group states that the morld supply of tin is now adequate for
commercial purposes, this is without reference to military plans
for stockpiling. Production of lead, zinc, and copper has also
declined in Bolivia. While supplies of these metals are adequate
for all present purposes, as indicated by falling prices, the reduc-
tion in Bolivian output and in reinvestment in facilities will tend
to make it difficult to restore full production rapidly in the event
of an international emergency, Since Bolivia is an important suo-
pliers especially of US tin, the expected decline in production and
ability to produce may have significant strategic implications for
the US,
7, URUGUAY: Loss of US Meat Contract a Severe Blow
ijiaae7aeieae--Z77--ITFIE;7trKrqyrfgrKrgentina? rather
than Uruguay, has been awarded a three million dollar meat contract
-- after renegotiation of the original bidding in which Uruguay had
been leer-- has adversely affected the prestige of the present Uru-
guayan Government and has impaired US-Uruguayan relations as well,
and may have consequences even nom far-reaching.
The announcement set off a barrage of criticism of both
the US and the Batale Berres government. Uruguay vs loss of a con-
tract it already considered won could scarcely have happened at a
worse time for the Ba tile Herres government. Dollar exchange has
been lost just when Uruguay is feeling the pinch of its failure to
sell sufficient wool to the US when its dollar funds are dangerously
low. Both Communists and Herreristas have made considerable politi-
cal capital of the incident, while members of the government party
have with greater or lesser sincerity revived the plaint that the
US is forgetting its wartime friends. While it appears somewhat
inconsistent for Uruguayans to blame both their own government and
the US, both Herreristas and Communists maintain that Uruguay's pre-
sent discomfiture is a natural result of the Batllista policy-of
subservience to the US. Ill feeling for the US generated by this
incident is so widespread that fl/LA estimates tat even the renego-
tiation of the entire meat deal, if offered, could not restore en-
tirely the former cordiality of US-Uruguayan relations. Signing of
the long-pending US-Uruguayan trade treaty is likely to be postponed
if not abandoned.
US relations with other Latin American nations may also
be adversely affected by the incident, since Uruguay has considerable
5.
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Weekly Contributions, B/L& 12 July 1949
(CIA Working Paper)
influence on Latin American public opinion, and a reversal of its
role as a strong supporter of US policies would be both conspicuous
and of great effect. This effect would be heightened if the inci-
dent were taken as an example to show that small nations that sedu-
lously support US policies need not expect preferential treatment
in economic affairs --- an interpretation already given it by anti
US groups in Uruguay.
6,
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Weekly Contributions, BiliA
(CIA Working Paper)
Situation Mbmorandum 39.149
The Current Situation In Panama
12 July 1949
(Summary: US security interests are not seriously affected
by current developments. The Diaz administration has sur-
vived all opposition attempts to overthrew it. The govern-
ment continues its hostile attitude toward Communism. The
economic situation is grave. The Nntional Police remains
loyal, but future improvement in efficiency is doubtful.
There has been a tendency toward participation in Central
American power-balance rivalries.)
The basically unstable araz administration has survived all attempts
to overthrew or to humiliate it. Its powers of survival were demonstrated
during April when the Minister of Government announced the uncovering of
another plot to oust the government. Several of those involved succeeded
in eluding the police and fleeing the country; others, including two ex-
presidents, were apprehended and jailed. Subsequently, the National As-
sembly declared by a vote of 28 to 9 a ostate of siege? and thereby sus-
pended certain constitutional guarantees.
Shortly after this event, however, an incident occurred that vividly
demonstrated the basic instability of the government. The Minister of
Public Works, on I May, in self defense, shot and fatally wounded a
West Indian Negro, who had recently been dropped from the payroll of the
Ministry of Public Works for reasons of econonor? but who was also a mem-
ber of the is de rra --- the administration's private terroristic
organization compose o armed ruffians who go about carrying lead pipes
concealed in newspapers. Even though the deceased was a notorious thug
with a criminal record, the big funeral held for him was attended in full
force by the in de uerra as well as by President D/az? the Minister of
Government an us cc, and other high officials. President Diaz thus
publicly demonstrated the extent to which he is obligated to the pie do
WU estimates that this incident basically weakened theps7-
tiini-bf the government because it will sharpen racial animosities and will
encourage the ie de rra to increase its demands on the government to
the point where f1atter may find itself unable to meet them. In such
an event, there is no assurance that the terrorist organization might not
turn to opposition elements for employment. Regardless of the turn of
political events, however, it is not believed that US security interests
will be seriously affected.
7.
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Weekly Contributions, B/LA - 2 - 12 Joly 19I1.9
(CIA Working Paper)
Situation reraorandum 3944.9
The conservative Diaz administration continues its hostile attitude
toward local and world Communism. There appears to have been no increase
in the strength of the small Communist minority during the nest few months.
A future increase is not foreceen at this tine.
Panama's economic situation renains unfavorable and the governnent's
fiscal situation is grave, but not desperate". Reduced US expenditures
in the Canal Zone have caused a sharp decline in national income. The
oosteor-Siving index fell to 183.0 at the end of May from the March ac-
mes of 187,6. In Panama City- alone, it was estimated that there were
5,000 heads of families without employment during April. March internal
revenue collections were $400,000 below the previous year; the budget
remains unbalanced; and the Ministry of Public Works, as an economy meas-
ure, instituted a five-day working meek on 1 Ley in order to effect a
monthly saving of $20,000. Despite enormous governmental and general in-
terest in agricultural development ? regarded by many as Panama's most
pressing problem? little has been accomplished in the way of devising
and executing a positive program. The Sinclair Oil Compapy has ceased
all prospecting and drilling operations in the country, and its equipment
is now being crated for shipment to the US. (A field crew of some 200
individuals were employed on this work during the past three years, and
01,173,000 was spent on drilling two male, both of which were dry,) B/LA
estimates that, in the absence of increased US expenditures in the area,
the Country's economic situation mill remain adverse. Unemployment will
rise, security prices mill continue to decline, bankruptcy proceedings
will inorease? the national income will fall still further.
The National Police Force remains loyal to the administration. It
acted with promptitude and dispatch in the suppression of the April re-
volt of pro-Arias conspirators. Ringleaders were quickly arrested aad
those who eluded the police and escaped the country have not returned.
In order to increase the mobility and effectiveness of his forces, Police
Chief RemSn is now seeking to purchase four 0-45's so that he may rapidly
transport his men to strategic points about the countryside in order bet-
ter to suppress revolutionaries should the need arise. B/LA believes,
however, that Chief of Police Ream will be unable further to increase
the efficiency of the police; adverse economic conditions and President
Diaz' subservience to the2.1.219....Erusyr_a will prevent him from doing so.
In foreign policy natters, the government continues its friendly
attitude toward the US. AJs02 it is shoving an increasing interest in
/addle American relationships. On 13 April the President signed the Na-
tional Assenbly law? passed by a vote of 27 to 12 -- approving the U&'
Panamanian Air Transport Agreement and thereby demonstrated that the two
--- 8.
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Weekly Contributions, fl/LA
(CIA Working Paper)
Situation Yiemorandum 39-49
- 3 -
12 July 1949
countries vere able, by diplomatic means, to effect an agreement on a
highly controversial sebject. Meanyhile, the governennt has requested
of the US the assistance of a technical aviation expert to help prepare
the national airport to function as an international air center. The
failure of the neighboring Costa ?dean Government to take requested re-
strictive measures toward pro-Arias conspirators has encouraged Panama
toward participation in Central American power-balanoe rivalries. As a
backhanded slap at Costa Picas the Panamanian Government sent a good-
will mission of high officials to visit Costa Rica's neighbor and "enemy",
Nicaragua. Also, Panama plans to raise its legation at Managua to an ere.
baasy. President Diaz is said to desire to see Niearaguan cattle inported
into Panama. Such a move would both improve Diaz' personal relations
with Ntcaragua's dictator, Somoza, who owns a good portion of that coun-
try's cattle, and hurt Diaz bitter personal and polatical enemy Harmodlo
Ariav, who owns a good portion of Panama's cattle. A is true thnt
Penemanian participation in Middle American par-balance rivalries must
be considered an adverse development from the standpoint of the US sec-
urity concept of Hemisphere solidarity based on the unity of all 21
American Republics. BiLA believes, hawever, that since the government is
not motivated by much more than personal political vendettas, the results
of this recent tendency, so far as US security interests are concerned,
will be ephemeral and of no great consequence.
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