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December 12, 2016
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November 19, 2001
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August 30, 1949
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Approved For Release 2002.1179-01*A000200030009-8 Wee. v Contributions Latin 7merica Branch am, CIA 30 August 19L9 13/LA considers the items on the ousting of General Prez (p. 2) and on the Guatemalan situation (p. 2) are particularly worthy of note. CURRENT DEVELOF.T.NTS GENERAL: The ousting of Cuban Chief of Staff Prez will probably mean greater freedom for Caribbean Legion activities (p. 2). NORTHERN DIVISION: Expected Guatemalan disturbances, the outcome of which is uncertain, may result in widespread violence imperiling the lives of US citizens and tourists (p. 2). CENTRAL DIVISION: (See Situation Memorandum on Colombia, p. 6, and article on Ecuadoran political party situation, p. 4.) SOUTHERN DIVISION: Argentine newspaper and radio attacks on Chile are unlikely to result in a break in relations (p. 2). The Bolivian Governr ment is faced with a serious revolt (p. 3). SPECIAL SUBJECTS Reorganization of !DN Improves Prospects for Stability of Ecuadoran Government ............. 11 The Current Situation in Colombia 6 DOCUMENT NO.------ ?'CHANGE IN CLASS. 11 ,ft DECLASSIFIED CLASS. CHANGED TO: TS S C NEXT REVIEW DATE? Atii It HR 70-2 DATE. 40..*TifIREVIEWER: 372044 A State Dept. declassification & release instructions on file Approved For Release 2002/01fititMDP79-01090A000200030009-8 Approved For Release 2002/02/06M-RDP79-01090V00200030009-8 Weekly Contributions, B/LA 30 August 1949 (;IA Working Paper) 1. CARIBBEAN: Caribbean Le ion members will,prolt_501.212aaith reater freedom on Cuban territory as a result o1 the ousting o Cuban Chief ofStaff, General Prez, by President Prio, In 1947 General Prez as largely responsible for quash- ing the original Dominican invasion attempt. Unauthorized nego- tiations with President Trujillo (probably concerned with fore- stalling President Prfo's pro-Legion maneuvers) are said to have been an immediate cause of Pgrez, dismissal. Although there are reports from Ciudad Trujillo of an imminent Caribbean Legion sponsored land, sea, and air attack on the Dominican republic -- perhaps between 5 and 10 September -- B/LA believes that there still remains much planning and organizational work to be done before still another attack can be launched by the Legion against the Dominican Republic. The ousting of Prez will probably permit the Legion, however, to move its headquarters from Guatemala to Cuba and to operate an Cuban territory with greater facility than heretofore. 2, GUATEMALA: US citizens could be im.s_Filed disturbances that Viii-Er6i7g5WaRrIlLTETi coun ry.--VER-iitiMates that revolutionary disturbances, more severe in character than those of 1S-19 July, will occur in Guatemala within the next 14 months (prior to elections scheduled for late 1950). It is not believed that President Argvalo can successfully continue his present policy of placating the conservative opposition without antagonizing leftist support. The conservative opposition is growing and consolidating, especially within the army. Communist- influenced leftist civilians have retained the arms issued to then during the recent disturbances. The political outcome is not cartains but the expected move by one side or the other to insure control of the government may result in 'widespread violence of such a nature as to imperil the lives of US residents and tourists, especially those in the rural areas. 3. ARGENTINA: Senora Per6nis desire for vengeance on the Chilean Telegati311-TET-UU the opposition to her campaign for the chairmanship of the Inter-American Commission of 'j;amen has led to strained relations between Chile and Argentina. The Chilean Ambassador has protested to the Argentine Foreign anister concerning Argentine radio and press attacks against the Chilean 2. Approved For Release 2002/02/06 : CIA-RDP79-01090A000200030009-8 Approved FoNgoilease 2002/02/M4e-RDP79-010994000200030009-8 'eeekly Contributions, B/LA 30 August 190 (CIA Working Paper) Government's handling of the recent Chilean strikes and against President Goneglez Videla personally. The Chilean Ambassador is said to feel that if the situation continues, he will "be con- strained" to take some personal action. This, Embassy Buenos Aires believes, may result in his finding some excuse to return to Chile, Although an undercurrent of Chilean suspicion of Arg- entina makes relations sometimes difficult between the two countries, Chile seems to prefer not to make an issue of thin particular affair. Therefore, saving some deliberate Argentine Intention not now apparent, the strained relations should not deteriorate to an open break, 4. BOLIVIA: The TM revolutiona Atte it, which began with simul- taneous attacks in severe cities, has not yet been suppressed, There have been sore defections among army units, and indications of armed participation by pro-LNEminers groups. The government has attempted to control the situation by extend- ing the state of sieee? mobilizing all men between the ages of 19 and. 50, attacking rebel-held centers by air and landl.and has requested additional fighter and bomber planes from the US to facilitate the attack on remote centers of opposition. Although surprising strength has been shown by the regime in meeting an extremely serious threat, B/IA estimates that it will probably be able to continue in power and gradually reestablish order only if. it is not hampered by further defections by important army units. (Substance used in CIA Daily Summary, 29 Aug 49) 3? Approved For Release 2002/02/06 : CIA-RDP79-01090A000200030009-8 rnms, Approved For Release 2002/02/06 Ed4y.,11DP79-01090ti00200030009-8 Weekly Contributions, 13/LA (CIA Working Paper) Article 17-49 30 August 1949 Reor? anization of 77CDN Improvest or ilyadoran Government Upon assuming office (31 August 1948)4 President Plaza ignored his debt to the MON (lovimiento Clvioo Denocratico Nacional) -- a coalition of moderate Libera m..era oc a is s? an ' ?ependents, which con- tributed much to his election -- and adopted a policy of distributing public offices among all parties in the hope of uniting the poonlo be- hind his administration. His denial of ample patronage rewards resulted in the rapid disintegration of the ncIDN as its disillusioned members returned to their former parties. In time, Plaza lost all organized support except that of the Conservative Party. Although this party 's the beat organized of Ecuadoran parties and has a strong popular follow- ing, political realities are such that exclusive Conservative support is a handicap, Traditionally, the arpy has a very liberal, if not leftist, orientations and too close identification with the Conservatives alien- ates the army --- a daneerous development for ay Ecuadoran president regardless of his popular appeal. Organized opposition crystallized in June of this year when extrem-. ists of the Liberal and Socialist parties gained control of their re- spective organizations, announced a policy of opposition to the eovern- ment? and decided to cooperate in its implementation. The attacker's to be along two lines, one of which was to play up Plaza's Conservative connections in order to win over the army for revolutionary purposes., The second line of attack, adopted in the belief that their combined forces gave them a slight majority in Congress (US Embassy Quito now doubts this is true), involved the plan to force the interpolation of several Plaza ministers and demand their resignations when Congress con- vened on 10 August, -Upon the anticipated refusal of Plaza to permit his ministers to resign, a general strike was to be called which, it was hoped, would result in Plaza's removal. Some good for Plaza, however, has core out of this reorganization of his opposition. The fact that the Iancheno-Te)Teno Espitaosa extremist faction now controls the Liberal Party antagonizes moderate Liberals, among whop are the heaviest contributors to party finances. The deci- sion of the Socialist convention (24-27 June) to join the Liberals in opposition very nearly caused a schism that apparently has only been superficially healed, since the Guayaquil Socialists have little use for the Liberals Lanchenos and his ideas. Public reaction to the inci- pient revolt in Loja and Cuenca (4 July) and to the abortive :ancheno 40FeelBelmr-- Approved For Release 20 /r06 : CIA-RDP79-01090A000200030009-8 4. Approved FoINgelease 2002/02MC:ItiA-RDP79-0109YA000200030009-8 Weekly Contributions, 3/IA - 2 - 30 August 1949 (CIA Working Paper) Article 17-49 coup (26 July) clearly demonstrates that neither the people nor the armu are in a revolutionary frane of mind. The failure of these two ottempts has strengthened the administration in that, under the cir- cumetances, it put the present leadership of both the Liberal and Socialist parties in a bad light. Finally, the destruction and shock of the recent series of earthquakes will, for a little longer at least, nake normal politics appear extremely petty to the Feuadoran people and therefore force the opposition to limit the extent and vigor of their attacks. Plaza, in addition to profiting from miscarriage of opposition plans, has taken steps of his own. He apparently realized early in July that the revival of the ::CDN would offer the most effective in- etrumeat for capitalizing on the ncg-tive advantages he was gaining. On 8 July, his inister of Government, Eduardo Salazar eonez, met with foemer loaders of the =IN to inform them of the president's wishes, of his willingness to finance the party with government funds, and of his decision to remove office holders affiliated with opposition groups and to replace them with ::1CDN personnel (a decision that he has already beirun to carry out). As a result of this and subsequent meetings, MCDN leaders have 'rown so optimistic that they are reportedly considering the idea of running candidates in the November municipal elections in- stead of waiting for the presidential election in 1952 before returning te the electoral battle. The Conservative Party has indicated its readiness to support the :TUT in its plans, thereby completely recon- stituting the coalition which elected Plaza last year. A reconstituted and vigorous :1CDT: would offer a rallying point for moderate Liberals and Socialists who are displeased with the trends developing in their parties. It would be conducive to the formation of a bloc of "CDN and independent nembers of Congress to cope (and with greater prospects of success) with anticipated attacks from Liberal Socialist opposition in Congress. Finally, it mould remove, in appear- ance and in fact, Plaza's present dependence up, n the Conservative Party --- an eventuality which would greatly improve his position with the army. The realization of all or of any one of these three possibili- ties will contribute notably to the security and stability of the Plaza adrinistration. SECRE Approved For Release 2002/02/06 : CIA-RDP79-01090A000200030009-8 5. N.401 Approved For Release 2002/02/06,. CIA-RDP79-0494000200030009-8 SECRET Weekly Contributions, WLA (CIA Working Paper) Situation Memorandum 4S-49 The Current Situation in Colombia 30 August 1949 (.S2eLmLaa.-- In anticipation of the presidential elec- tion in 1950, the Liberal Party continues its policy of opposition to the Conservatives in order to avoid contributing to any political accomplishment which could benefit the Conservative administration now in power. The prospects for Communist program and achieve- ment are at an all-time low. Colombia has improved its foreign exchange position, coffee sales reuain satisfactory, but petroleum income and prospects for future develop-lent are poor. The armed forces are a stabilizing influence in the country. Although Col- ombia is normally aligned with the US on international questions, recent months have shown a slight divergence in economic policy. -- Nothing in the current Colombian situation is causing or immediately portends noticeable impairment of US security interests. Of some concern, however, are the circumstances that political stability is not all that could be wished, even though the country has a good record for surmounting difficulties, that long- term prospects for petroleum are less bright, and that Colombia's shortaee of foreign exchanee has caused that country to depart somewhat from US-approved prin- ciples of international trade. Communist strength is diminishing,) Political The Liberals seem determined to carry out their announced policy of non-cooperation with the government. The most potentially daneerous manifestation of this determination is the current Liberal attempt to change the electoral law. On 11 August, the Liberal majority passed a bill in the House amending the Electoral Code so as to advance the date of the presidential election from June 1950 to November 1949. Certain Liberals have stated that they want the code amended in order that the presidential election campaign will coincide with the present session of Congress. They feel that, Congress being in session, their coneres- sional majority would give them anadvantage over the Conservatives during the campaign. In the thassy's opinion, however, their princi- pal objective in seeking to advance the election date is to deny the Approved For Release 2002/0 6 : CIA-RDP79-01090A000200030009-?0- Now/ Approved For Release 2002/02108EnCIA-RDP79-0*0A000200030009-8 'eeekly Contributions, B/LA (C/A Working Paper) Situation I'lemorandum W-49 30 August 1949 Canadian Electoral Commission (recently employed by the government) sufficient time to complete the new registration which was ordered by an act of the 1948 Congress. That this bill may be expected to intensi- fy party controversy in Colombia is evidenced by the statement of a Conservative leader, Dr. Augustonamfrez 'breno, that the Conservative Party would not recognize the outcome of the elections if the Liberal plan were carried out. The gvernment, though rather effectively paralyzed by opposition between the Conservative Executive and the Liberal legislative branches, is relatively stab7e? and there is every probability that it will re- main so at least until the presidential elections. increasing political bitterness, however, with minor outbreaks of violence such as preceded tha June elections, is to be expected. Economic .olombia ha a improved its foreien exchanee position in the past three months. Dollar expenditures during 1949 have been only 7.;f3d11 million greater than receipts as of 2 August. i'urthermore, Colonbials commercial indebtedness has been reduced from 1,8.40 million on Ri June to approximately TTS$21 million on 2 August IJO. Although Colombia's foreign exchange position has thus improved, a continued disparity between the official and the certificate or free exchange rate has re- sulted in increased pressure for devaluation of the Colombian peso from two of Colombia's most important econoeic pressure eroups --- the Cof- fee Federation and the National Federation of rerchants. Devaluation requires congressional action, however, and, since it was not included among Liberal Party aims for this session of Coneress? the Lnerals probably mill give priority to political ratters, with the result that devaluation will be postponed, at least. Colombia's foreign exchange receipts may well remain close to 1948 levels. Coffee exports accounted for 79 percent of Colombia's 1948 foreign exchange receipts; sales for the first half of 110 were approxi- mately at 1948 levels in both volume and value. For the current year, conditions are reported to be favorable, and, should coffee prices re- main near present levels, Colombia's foreirn exchange receipts should remain relatively satisfactory. A current econcelc problem in Colombia, and one of interest to the US as well, is the decline of petroleum. exploration and production. - Five petroleum coepanies have withdrawn or announced their intention to 7. Approved For Release 2002/02/06 : CIA-RDP79-01090A000200030009-8 dre vow; Approved For Release 2002/02taiipA-RDP79-010?84000200030009-8 Weekly Contributices, 13/LA (CIA ':iorking Pape-e; Situation ::emoranthen 4C,-49 3 SNIP 30 August 1949 withdraw from Colombia within the past year, 'i!erthermort) Tropical Oil Company, largest producing comeany in Colombia, has drastically cur- tailed exploration work and now is drilline only one -wildcat nell in Colombia. Shell Oil Company has suspended all wildcat work while Socoey is completing one wildcat and has no plans for further drilline this year. Production of one-third of Colombian petroleum -- that produced on the Del4res concession -- is threatened. with further curtailment. Offi- cial government pronouncements are optimistic as regards the eventual outcome of Law 165 of December 1914Z which authorized the formation of an official company (51 percent Colombian) to take over the DeLares concee- sion in 1951. However, the Embassy reports that foreign oil companies are not interested in the proposed minority participation and that pri- vate Colombian capital will not be forthcomine at the predicted inter- est rates, 1 nven though there is no immediate prospect for improvemente the petroleum situation As not at present detrimental to T:S interests be- cause of the improved -world supply- conditicns, However, from a lone- term point of view, if present hindrances to petroleum development re- main, the situation wield be harmful to VS interests in the development of near-by sources of petroleum as fully as pssible. Subversive ---------- The Conmenietse the only cont ?r sunversive feree in Colombia, are definitely losine strength. The only recent rioteworth,y developnent was the merger (3 June 1949) of the two Communist factiens. 7ven if accepted wholeheartedly by the memberehip of both factions (a proepect 4 no means assured), the mereer will not resit in any sienificant increase in political power for the party, Leports indicate that this merger was entered into more with the hope thet it would arrest the de- clining vitality of the party than with any conviction that it would materially advance the Communist proeram in Colombia. The thorough teounrine reeeived by the Communists in the arm eone. gressional elections clearly demonstrates their declinine influence., and has convinced the leaders of the necessity for a chanee in tactles, The party's influence in the past accrued primarily from its eollabora- tion with Liberals, particularly durine the days of rfaittin. niece GaitAn's assassination, the Liberal harty has been treine cautiously and even hesitatingly to free itself of thie association in the popular mind, The effectiveness of the unfounded Conservative accusation of vorettlit" Approved For Release 2002/02/06 : CIA-RDP79-01090A000200030009-8 Approved For Release 2002/02/06 : CIA-RDP79-01090A000200030009-8 441., Nod ma-paW4gl#M--- Weekly Contributions, p/LA (CIA Working Paper) Situation Vemorandum 48-49 4 30 August 190 Communist-Liberal collaboration in the recent campaign in reducing the Liberal majority in the House has shown the Liberals the necessity for avoiding in fact and in appearance any further collaboration. Since the election, the Liberal Party has given clear evidence of its growing anti-Communist attitude --- a serious blaw to Communist political pros- pects, Seeing the handwriting, the Communists have agreed to abandon their practice of supporting Liberal candidates and have decided to run their ern in the presidential race of next year. The armed forces remain loyal to the Colombian Government and con- tinue to be a stabilising influence in the country. As a result of the tension between Colombia and Peru and the internal political tension born of the June elections the strength of the armed forces has been in- creased to 300000 as of 1 June 194) as compared with a more normal June strength of 25,000, The emphasis of the present training program has been on basic recruit training and on the use of troops in civil dis- orders. The bulk of the present equipment of the armed forces is of little military value because of obsolescence and poor maintenance. International In the international field, Colombia's economic policy has been of concern to the US in the past three months. Colombia entered GATT negotiations at Annecy, but was willing to make concessions on only 2 of 192 items. Consequently, discussions have proven fruitleas, and the US Department of State has cabled the US delegation its opinion that the existing trade agreement as well as negotiations for a new agreement should be terminated rather than postponed at the close of the present meeting of GATT. A second cause of concern to the US is the Colombian policy of refusing to grant dollar exchange specifically for the shipping of goods. Such a Colombian policy virtually forces importers to ship by Gran Colombian Merchant Fleet which accepts payment in Colombian pesos. This is, in effect, discrimination against US shipping. A fur- ther cause of concern is Colombia's most recent barter agreemonL? one with Finland -- which contravenes US economic policy by its arrangement for purchases of paper at higher than world. prices. The Daya de in Torre case is still the most important controversy- in Colombia's relations with other Latin American. countries. Settlement is reportedly being delayed at present by the fact that Peru behind in its quota payments to the International. Court, Approved For Release 2002/02/06 : CIA-RDP79-01090A000200030009-8 9.