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December 9, 2016
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September 28, 1998
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August 23, 1949
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Approved For Relea2000/08/29 : CIA-RDP79-0100000200030008-9 Weekyy Contributions Latin America Branch, ORE, CIA 23 August 1949 B/LA suggests particular attention to the item on Cuba-Peru relations (p. 2), emphasizing a situation potentially adverse to .he US interest in Hemisphere solidarity, and to the article on the current but also perennial revolutionary situation in Paraguay (P. 5). CURT E VT DEVELOPMENTS GENIAL= The "Peace and Democracy" Congress in Mexico City 55-10 September will probably bring limited Communist organizational gains (p. 2). Peru's breaking of relations with Cuba emphasizes the present impairment of the US interest in Hemisphere solidarity. CENTRAL DIVISION: Brazilian reports of a Communist conspiracy are probably exaggerated (p. 3). SOUTHERN DIVISION: In Chile, threatened extensive strips point yap the basic weakness of the Gonzales goverment (p. 3). The Current Situation in Paraguay . . . . . . . . . . . . . . . 5 NO CHANGE IN CLASS. [a DECLASSIFIED CLASS. CHANGED TO: TS S C NEXT REVIEW DATE: AUTH: HR 70.2,.7' ~_.._~??' DATE, ` . REVIEWER: 372044 Approved For Release 2000/08/29 : CIA-RDP79-0109OA000200030008-9 Approved For Rele a 2000/08/29 : CIA-RDP79-010% 000200030008-9 Weekly Contributions, B/IA 23 August 1949 (CIA Working Paper) 1. GENERAL: Communist Profit to be Small from "Peace" Con ress he s nsp re "Peace congress will probably take place as now scheduled in Mexico City from September 5 to 10, due at least in part to vigorous renewal, of organizing efforts by several important Latin American Communist leaders who returned in June from meetings with other Cormmanists in Europe. Funds and other support reportedly contributed by United States Conrnunists seem to have helped the organizing campaign. Communist activity and Communist-inspired publicity and propaganda for a "Peace" congress has been reported from most Latin American countries. The main Communist objectives in holding such a congress apparently are: (1) to clothe the Communists and the USSR with respectability by gaining the participation of prominent non-Communist intellectuals in the congresal (2) to link the popular desire for peace to the Communist cause by identifying Communists and the USSR as proponents of peace; and (3) to extend Communist in- fluence by organizing permanent Ccmmiunist--directed peace committees in each country under centralized control. Communists are unlikely to be corsplcuously successful in their first two objectives. Counter-propaganda has effectively dis- suaded some intellectuals whose inclinations would have led to parti- cipation in a peace congress if the Communist backing had not been known and may yet persuade others to decline to participate or at least to take an independent position at the Congress. Unless counter-propaganda slackens, it is unlikely that the Mexico City "Peace" congress will win many converts to the theory that Comment nism means peace. The third Coxnmuni,st objective has greater chances of attainment. Organization of permanent peace committees into a centrally directed Communist front group has already advanced ap- preciably in some Latin American countries,, and a Communist-directed Latin American "Peace" organization may wail be formalized at the September congress, 2. Peru's r tune of di lommratie relations with Cuba on 19 August, as a result of alleged eguNarl e tie -escape of two asylees from the Cuban Embassy in Lima, has in itself no great Dw- portance for US security interests, since it merely formalizes a rift which to all intents and purposes has existed since the present Peruvian regime came to power. it is important, however, as evidence of impairment already suffered by the ti? interest in Hemisphere soli- darity from the Increasing tension between "democratic" and "dictator" countries of Latin America. The cleavage between the two s, sharply defined in the Caribbean area, has been of shower ~ppment 2.. Approved For Release 2000/08/29 C A-RDP79-0109OA000200030008-9 Approved For Releas1000/08/29 : CIA-RDP79-0109000200030008-9 Weekly Contributions, B/IA 23 August 10,149 (CIA Working Paper) in South America, and the South-American countries have been especially Loathe to take sides in regard to Caribbean problems. The Cuban Em- bassy's asylee problem, paralleling as it does the delicate case of Haya de la Torre's sanctuary, and no doubt acerbated by Cuba's unin- hibited press and radio comments regarding the Odra regime has not only served to force the Peruvian government to publish its dislike for the Cuban government; it may lead to further disturbing of Henn isphere solidarity if Peru's South-American opponents - such as Uruguay, Colombia and Chile -- enter the controversy. Moreover, if the matter passes beyond press and radio controversy and reaches the OAS for official consideration, the cleavage between the two groups of countries will become more formal,, and thus more difficult to repair. BRAZIL: Press reports have greatly exa erated the sco of the Communist cons ra c was quas e y e police of Porto Alegre cap o nde do Sul) last week. There is no evidence of a revolutionary movement timed to break out simultane- ously in several states. On the contrary, what seems to have been planned in P6rto Alegre was a local outburst of violence in connec- tion with an attempt to hold a "regional peace conference" which had been forbidden by the police. Police action in this case followed the pattern established in other efforts to prevent the holding of local conferences in preparation for the Mexico City "Congress for Peace and Democracy" - the "preventive" arrest of Corranunist leaders, followed, by way of justification, by announcement of the discovery of a revolutionary plot. Nevertheless, the tenacity with which the Communists are trying to go through with the scheduled "peace" meet- ings, though it is no proof of a conspiracy, does support the police in their belief that further-violence may be attempted. CHILE: Strikes May Threaten Government's Stabilit proposed strike that w suld call out the 00,000 white- collar workers of the powerful National Junta of Employees (JUNECH) now appears to be the chief threat to the Chilean administration. If this strike should materialize in the near future,, climaxing disturbances that began 16 August with student-labor rioting over increased Santiago transit fares and grew into serious Communist- instigated strikes, it is to be expected that the Socialist CTCH, now supporting the government,, will feel forced to join in. In this case the Communists, now attempting to foment strikes, will gain increased prestige and the President, largely without labor support, may find his position untenable. Approved For Release 2000/4&9-' t-RDP79-0109OA0002000300083-9 Approved For Releas000/08/29 : CIA-RDP79-010900200030008-9 Weekly Contributions, B/LA 23 August 1949 (CIA Working Paper) Indiscriminate use of drastic repressive measures by the government would play into the hands of the Communists and other administration Opponents and would further alienate labor. On the other hand, Gonzalez' attempts to pursue a more leftist policy to pacify labor are not expected to benefit the administration at this late date, and may prove harmful if the conseriratives, until now allies of the Executive, are alienated by the proposed reform. President Gonzalez, if faced by the disintegration of the pro-gavsrrnment coalition under stress of the present crisis and by the economic paralysis of the country in a general strike, might retire, at least temporarily, in favor of a junta expected to in- clude the present Minister of National Defense and the Minister of Interior Admiral Holger (who handled the 1947 coal strike crisis) B/IA estimates that such a junta could restore order but could do little to solve the basic political and economic problems of the country. The retirement of President Gonzalez at this tame, as a result of a protest movement led by Communists, who are capitalizing on a general groundswell of discontent, would be a setback to UE interests in democratic stability. Whether the JUNECH strike takes place or not, the basic political instability of the government has been exposed and height- ened by increasing economic difficulties occasioned by the decline in copper prices and the continued upward spiral of living costs. No substantivee, long-orange improvement in this situation is fore- seen as long as agrarian reform is blocked by rightist elements and as long as Chile remains dependent upon copper and nitrate exports,. Approved For Release 2000/08/29 : CIA-RDP79-0109OA000200030008-9 Approved For Releas - 2000/08/29 : CIA-RDP79-01090 00200030008-9 SECRET Weekly Contributions, B/IA (ci?1 Working Paper) Situation Memorandum 47-L49 The Current Situation in Para 23 August 1949 ( A split in the governing group and dissatisfaction azao military threaten the stability of the present regime: and mar a three-ninth period of relative calms Communists re- main of little importance. Indications of a r.-apprtx:maent with Argentina are noted in the signing of tentative commercial and military agreements between the two countries, - Although a US interest in stability is adversely affected by current Paraguayan political trends, Paraguay's impact on US security interests is so slight that neither any of the changes in government which appear pos:tible at this time nor Paraguay's increased oriente.tion towards Argentina is im- portant to basic US interests.) Political The present one- arty government, which had been functioning with relative smoothness and had been making some progress in its pacifira- ti.on and rehabilitation program, is now so seriously split that a show- do-in is imminent. The schism has developed from the rivalry between Federico Chaves,, the Colorado Party +:Iiief, and President Molas, who aspires to control of the government and the p rty; it extends from the cabinet, through the rank and file of the parry, and. also through the arr. Chaves is supported by his own faction,, the older Democratic Colorados, and may receive the backing of the Democratic Colorado youth as well. Molas is supported by the extremist Cuiones. A third minority group within the party supports the Minister oT- V"rior, Mallorqu , who has not yet indicated which side of the major schism he will join. Norr-Colorado elements are unimportant, as their leaders are in exile. Army leaders, who helped install the present c5vilian government and who, as is usually the case in Paraguay, will be the deciding factor in the government's continuation or overthrow, are dissatisfied with their subservient role in the "colas regime and are taking; sides in the political struggle. The division in the arm is somewhat similar to that within the Colorado Party: Chaves appears to ;,ave the preponderance of strength, but the key to the military -- and therefore, to the political - situation is the First Cavalry Division commanded by Lt. Col, Mal.lorqu1n, the 1 other SECRET 5 Approved For Release 2000/08/29 : CIA-RDP79-0109OA000200030008-9 Approved For Releas2000/08/29 : CIA-RDP79-010900200030008-9 Weekly Contributions, i3/LA -2-- (CL Vdorking Paper) wituation Memorandum 17-49 23 August 19149 of the Minister of Interior. Both brothers have refused to take a stand as between Molas and Chaves and their strategic position is strong, though it is unlikely that they can do more than sell their support to at side or the other. A reconciliation between the major contenders is possible if Mal lorquln'e cavalry refuses to act, but the forceful expulsion of one ? up by the other seem more likely. Because of the basic instability of Paraguayan political institutions, any reconciliation would be short- lived, and a successful expulsion of one group by the other would not lead to long-term political stability. Aside from the setback to US interests in Hemisphere stability which another revolution would repre- sent, none of the changes in the Paraguayan government that appear pos- sible at this time would seriously affect these interests. Subversive Communist influence remains of little importance,, nor have there been any real subversive moves against the government from other direc- tions. There is no reason to believe that the plot (said to be headed by ex~-President Frutos, many Ouionse and former members of the police force under the Gonzales regime),,, which the government claims to have thwarted, was of any great importance. Closer commercial relations with Argentine, following the general pattern of a pro-Argentina orientation (see International), have been the keynote of the government's current economic policy. As a result of steps taken by President Moles Lopez soon after his inauguration, an agreement has been drafted in Buenos Aires by a joint Argentine- Paraguayan commission whereby Paraguay would supply Argentina vdth timber, yerba mate, rice, cottonseed oil, and Paraguay's entire coco oil production. Argentina would garnish the capital for and set up an oil-pressing factory in Paraguay.. would supply Paraguay with mini- == quantities of wheat, textiles and dairy products; and would reduce freight rates on the Argentine-owned river boats. Msndez Paiva, Para- guayan Minister of Finance, is reported to have stated to other officials 6. Approved For Release 2000/08/29 : CIA-RDP79-0109OA000200030008-9 Approved For Relea`sej2000/08/29 : CIA-RDP79-01091 p00200030008-9 Weekly Contributions, B/LA (CIA Working Parer) Situation i*xucrandum 47-49 23 August 1949 $-ha t the g avern ent f s interest In improving connnr rcis 1 relations with Argentina is only an eccxnomie measure without political significance, be claimd that Argentii'a is the only country vrith vrtUch Paraguay can -cacti an uW rstanding "itrsout long iicgotiatiorw aad the only country that -w i..ll supply what is:. for Paraguay a subs tarrb gal a : . o money.. US interests in stimulating the ec onox t of uxxlorp dvil eged natio'axa and insuring the economic strength of the other ittwr ,can Republics would be served by a short-term agreement of this type to t :ex extent that it has a salutary effect on the Para6-uayan economry, if the a acnt sh.3tul.'i continue for an ender: period, however, it.at;i tepid to increase the already considerable er4nc nic i fluencia which Artantim exerelse*s in ?: r aguay., the political contests. POU. ticrxl activity by ~aw leaders is so normal that there is r s^8as^3x tv, believe that e-xrrent intrigues have reduced the military offectivenesa of the am y or the morale of the s' 1dic:rs. The state of 'training and arganizatiom rex in to by US stand..irds, and supplies of uaterie1 insufficient and vilJ. probably continue ,so. But these de- .i"ici.e ncies are unlike: + Itc cut down the fighting qualities of the average Paraguayan soldier, who has proved tie can give a good account f~f himself in any conflict.,, units., such as the Para ,uar. , Artillery Regiment, favor Lolas, iali or- qi& 'u'l d appear to have the deciding vote both in the military and kil it ar y leaders, eti ti t,i siied with the mi. n r ro i,e of the army i a he present regime and `lrct;er st.yct in impprovi,.. their ? ;rsonal pc:si tips:, Are taking a leading part, In poi ,ical affaLrs, Amm-, them is the Car :r~ wander in ChLiefx, General 1AAz de 7 var, who ,as o,tt,a; ^ed considerable power purging all do,,:btftl officers to reply .e the wit-Ax officers subservient or amenable to burry lfz, Aitho a U: s deg Vicar took part n the rainy which placed lto3as+ in the presidencj*, he is reported to i`ovor Chaves at this ti.: . Lt, Cool. : llcrcluin, a t"ttaider of the key militant unit, the First; Cavalry i)ivision,, has not irr!ii.cated. v ich aide he will favor :Ux the current political schism, ks a number of Approved For Release 2000/08/29 : CIA-RDP79-0109OA000200030008-9 Approved For Rel se 2000/08/29 : CIA-RDP79-01 A000200030008-9 Wer r Contributions, B/L (CI& Working Paper) Si'ttiati:on Me random ).a-49 23 August 1c .-9 The most sigificant aspect of Paraguay's current foreign folic; is the recent tx^ nd toward rappr i ent vdth Argentina, The first stop in that dimetion was evident vin Argentina sent an impressive delegation, headed by bolas t friend Dr, Ivanissevich, to attend the Inauguration ceremonies ?----a shay contrast to the y: distinguished g up that was sent to the inauguration of fox nor President Ccir .l.ez, Through his friend Ivanissevich,, Llolas -eras able to array. ;e to send hiv Co nierr-i rr-Chief of the Armed Forces to discuss with Per ire certain Paraguayan-Argentine corm rcia1 problem, As a result of these talks a tentative co zerial and payments agree r was drawn up,:. Further Paraguayan-Argentine agreements, still in the tentative ste ges, includes provisions for the establ.ishn nt of an Argentina po-- lloe_ mission in Asuncican to reargani ze the entire police department and an. Argentine tec ,s isal. rdlitaxy mission to revamp the Paraguayan Military Geographic Institute and collaborate in a project, to survey and alnp Para g y , The signing, w~it?iout consultation with the U , of the Inapi ing agent raay be Of 6rpecial Significance. While the agreement is not a oaii i contract, it does estabI.i,.sh the basis for a subsequent co~r- tract. Furti rmoro, the US l ilitary Attach in Asbunciora consldex . that it is in contravention to the US-Paraguay I i.ita,ry mission con-- tract. Implementation of the, ew agreerent without US consent might erd)arrass the LIS and possibly lead other Latin-American countriev -to di.s::gird U5 military mission contract: in a sir i.l, r manner When it Sutt3 their purpose e The rape ccbemnt with trgent:ina must be view d in terms of Parag a y l s peo:ul3.ar geographic rsi teat Lon, which makes the smaller country something less than a ca ilete1,y free agent, In the first place, the fact tl , t Argentina practically controls Para, .trap effort trade places the latter country- to scarce extent v ithi.n the natural sphere of influence of the fora i th-ris tile moves on Molars t part to mend the rather bad Argentine-Paraguayan relations of the. irust two ears may be coneic1ered only a r .cognItior, of the oconor .e 'af??cta of life." Certain pups -.in Paraguay., further re, believe that their country must., in order to maintain any reality of national independence., Approved For Release 2000/08/29 : CIA-RDP79-0109OA000200030008-9 Approved For Release 2000/08/29 : CIA-RDP79-0109OA000200030008-9 Week-1v Contributions., B/IA (CIA Working Pater) Situation Me rrar du L47449 23 1! ug;u. t 1949 to wome extent balance Argentine against Brazilian influence.; and these V 4czxps can expected to a pose any r w th into tho Argentine ca p, Finally, taragmay:s impact, on. ;FS security interests is so minor that her greater orientation totiar&q Argentina is s3,t.flP.car?t only as it adds in son szr:11 degree to Argentina's capacity to a:C'ect these interests, Approved For Release 2000/08/29 : CIA-RDP79-0109OA000200030008-9