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December 9, 2016
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September 28, 1998
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July 12, 1949
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Approved For Relea*2000/08/29 . 79-0109150000200030002-5 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 . . ?'mlmitlin,11Pmmmmm.o., 0 0 4 0 DOCUMENT NO. NO CHANGE IN CLASS. 0 /4..)EC.LASS1FIED C SS. CHANGED TO: TS S NEXT REVIEW DAT E: AUTFI: HP 7 DATE/ REVIEWER: 372044 ,A14 Approved For Release 2000/08/29 : CIA-RDP79-01090A000200030002-5 Approved For RelPiese 2000/08/2StroMA-RDP79-01696A000200030002-5 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. Approved For Release 2000/08/29 : CIA-RDP79-01090A000200030002-5 Approved For Release 2000/0?1PCIA-RDP79-01/130A000200030002-5 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. Approved For Release 2000/08/29 : CIA-RDP79-01090A000200030002-5 Approved For Release 2000/0812?bialA-RDP79-00A000200030002-5 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. Approved For Release 2000/08/29 : CIA-RDP79-01090A000200030002-5 Approved For Rese 2000/08/itiFtiA-RDP79-01t40A000200030002-5 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. Approved For Release 2000/ /29 : CIA-RDP79-01090A000200030002-5 Approved For R64aSe 2000/08/29G:RVA-RDP79-0'490A000200030002-5 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, Approved For Release 2000/08/29 : CIA-RDP79-01090A000200030002-5 Approved For Rettrrse 2000/08qc:rRIA-RDP79-0*0A000200030002-5 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. Approved For Release 2000/08/29 : CIA-RDP79-01090A000200030002-5 Approved For Re4eise 2000/08329MCIA-RDP79-0160A000200030002-5 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. Approved For Release 2000/08/29 : CIA-RDP79-01090A000200030002-5 Approved For Re+ease 200 /08i2LjzialRDP79414390A000200030002-5 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. Approved For Release 2000/004knitIA-RDP79-01090A00020003002-5