WEEKLY CONTRIBUTIONS LATIN AMERICA BRANCH, ORE, CIA 13 SEPTEMBER 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200030011-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 9, 2016
• Document Release Date: September 28, 1998
• Sequence Number: 11
• Publication Date: September 13, 1949
• Content Type: SUMMARY

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=Mr-11W "11111-0 M Mogan
'Jeekly Contributions
Latin America Branch CIA
13 September 5f49
CURRENT DEVELOP'.'ENTS
GEL: Tension between Colombia and Peru over the Haya de la Torre asylum
25e is expected to subside (p. 2).
E NTRAL DIVISION: Venezuela's junta will rely on the US to maintain oil
production (p. 2). In Colombia, the government's anti-labor action is
likely to give Conservatives political advantage (p. 3). Brazil's appoint-
ment of an ambassador to Spain is not expected to influence other Latin
American countries which do not already have official representation in
:3pain (p. z).
SOUTUEflN DIVISION: In Paraguay, the forced change of presidents will have
little effect on that countries domestic or foreign policies (p. 4).
SPECIAL SUBJECTS
The Current Situation in the Dominican T;epublic
The Current Situation in Chile . . . . . . . . .
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NEXT REVIEW DATE: ~``'~7/ 6
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DATEC FJ s _1F;EViEWER: _ X7204 A 11
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(CI/ Working Paper)
13 September 11,149
1. GENERAL: The Ha asylum controver between Colombia and Peru is
moving; towar ju ' cia sett ement. t: i le unable to agree
on the terms in which the case should be submitted jointly to the
International Court of Justice, Colombia and Peru have now agreed
(31 August) that the case shall be submitted to the court, and that,
prior notice having been given, proceedings may be initiated by
either party. For all practical purposes, this means acceptance of
the compulsory jurisdiction of the court for this particular case.
It is expected that the two governments will ratify the agreement
signed by their plenipotentiaries and that Colombia will take the
case to the court within a reasonable time. Inasmuch as this agree-
ment terminates the stalemate which has surrounded the Maya case,
25X6A the tension it engendered should subside.
xF
25X1X4
and is anxiofO ~1 rid antaeonizing labor
e of companies in Venezuela, anticipating increasing-
ly serious competition as the Middle East oil fields approach full
production,, have complained to the government that high labor costs
may force them to curtail production. The junta undoubtedly reco ._
nizes the low production cost of VViddle East oil as a potential ---
but not immediate - threat to Venezuela's oil income; but it also
is faced w;.t tment to maintain existing labor union contracts
',TEUEZt1EI,A: Junta to :tell on "US Security Interests" to ..`aintain
Oil-Production
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in Venezuela, (O t he expects the US to do is not clear
13 September 2.049
companies. He believes that because of the proximity of Russia to
the fiddle East fields, the US will riot permit its security inter-
ests to be jeopardized by a drastic curtailment of oil production25X1X4
In view of
fact that CIA has ved no evidence that his statement has been
repudiated by the junta, B/LA considers it highly probable that the
junta will not take positive steps of its own to reduce production
costs, but will seek to escape from its dilemma by leaving it to
the US to take whatever measures may be necessary to maintain the
volume of Venezuelan oil production,
COLOMBIA: Government's Anti-labor Action Like. to Give Conserva-
tivetjca A van e
e ~.o om a overnmen "s initiation of a court action
to dissolve the Colombian Confederation of '"corkers (CM, a CTAL
affiliate) has confronted the Liberals with two alternatives,
either of which may cost them a crucial number of votes in the
coming presidential elections. As one alternative, the Liberals
can back the CTC in its fight for existence both :Jy delaying the
legal proceedin~,s through individual Liberals in key positions and
b,. providing encouragement and financial support for a general
strike. This would alienate right-living liberals because it .ould
Five aid to a number of important Communists who occupy positions of
leadership in the CTC. If., on the other hand, the Liberals do
nothing to prevent the dissolution, many rank-and-file union mem-
bers may Yell feel. that the Liberals are no better champions of
labor than the Conservatives.
In all probability., the Liberals will, insofar as pos?
ble, avoid taking a public stand as a party and attempt to delay
any legal action against the CTC until after the election. In any
event, the Conservatives are likely to gain politically by this move.
BRAZIL: Brazil will. appoint an ambassador to Spain to fill the
posh: which., in comp Lance wit s the recommendations of the
.United Nations General Assembly, was vacated in 1946. This action
of President Dutra was apparently taken at the insistence of Foreign
"inister Fernandes, who is known to feel that Brazil has been at a
commercial disadvantage by not having an ambassador in Ladrid, The
government will attempt to justify this action by pointing out t1 t
tie Brazilian proposal in the last General Assembly to set aside
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13 September 1649
the 1946 UN recommendation was expressly opposed by only 15 of the
nations represented` (The Brazilian resolution required a two-
thirds vote to become effective and the final vote was 26 for, 15
against, and 16 abstentions.) Having taken this action to normalize
its own relations with Spain, the Brazilian Government will not,
13/LA estimates, make a second attempt to have the 19911.6 resolution
rescinded at the UN this fall. Of the other Latin American countries
which do not have chiefs of mission in Madrid, none is expected to
be immediately influenced by Brazil's example of sending an ambassa-
dor.
PARAGUAY: The forced resignation of President xolas Lopez and his
rep cement Federico Graves? leader o the Colorado
Party, is the outcome of a rivalry between the two men that had
divided the entire government into opposing groups (see B/LA :.kly
for 23 Aug L9). The issue was determined without resort to arms
because the key military unit --- the Cavalry Division ---? was per-
suaded by the Commander in Chief of the Armed Forces to support
Chaves instead of following the lead of its commander, Colonel
Mallorqu{n. Once Yallorqu(n had been ousted (to take refuge in the
Brazilian :3ibassy), it became clear that Chaves held such overwhelm-
ing military power that there was nothing the President could do but
resign. Except for a possible increase in arzrj- inflaeence, the change
of presidents will have little effect on Paraguay's domestic or for-
eign policies,, r`hile Kolas Lopez had increased Paraguay's ties with
Argentina, there is little reason to suppose that Provisional.Presi-
dent Chaves will make any changes in this respect. Chaves is a con-
servative and closely linked by economic interests to Argentine que--
bracho and lumber interests so that he is equally aware of Paraguay's
economic dependence on Argentina.
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(CIA Working Paper)
situation Memorandum 5C)449
13 .;eptember 19149
The Current Situation in the Dominican Republic
(Summary -- There is no effective opposition to Trujillo with-
in type Dominican Republic. The economic situation is favor-
able. Trujillo is anti-Russian and continues to suppress
Communism. Dominican defensive capabilities are increasing;
the armed forces are on a semi-alert basis and training of
the navy and air force has been accelerated.
- Intra-Caribbean rivalries adversely affect the
US security concept of solidarity of all 21 American Re-
publics.)
Political
There is no effective opposition to Trujillo within the country al-
though up to one-half of the population is reported as theoretically op-
posed to, or tired of, the present regime. Popular opposition appears to
be centered in the towns of Puerto Plata and Santiago but no one inside
the country seems to have the stature of an opposition leader. All of the
Dominicans who are vigorous leaders of activities against Trujillo are in
exile. Juan BoschI Juan flodra guez, and .Iguel Angel Ramf rez, who are
leaders of the Caribbean Legion, are Dominican exiles.
Economic
?" 'l~"`ie present economic situation is favorable and the country's terms
of trade are more advantageous than they were a year ago. The value of
exports for the first half of 1949 was only 4 percent under last year's
exports, due to the early shipping of the 19L1E-149 sugar crop at a relative-
ly high price and to the high price of coffee on the world market. Im-
ports for January-June, excluding armaments, were 41 percent less in value
than those for a similar period of 1948 and there was a favorable balance
of trade for January-June. Purchases of armaments abroad, however, which
apparently are not included in the import figures, are probably using up
much of the country's excess foreign exchange holdings. The tobacco crop,
now moving into export channels,, is a bumper crop (about 30,000 tons) and
is selling at rising prices. The next coffee crop, which -will be harvested
beginning in October, will be larger than that of last year. Domestic
commercial activity is improving somewhat, after a drastic decline in
volume during the first half of 1949. It is estimated that the economic
situation will continue favorable during the remainder of 19)49 and that
the government will be able to continue its present emphasis on rmlitary
activities vdthout great difficulty.
WI ET'A
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FI --BHTIAL 13 e temb r l(Y19
Weekly Contributions B I.
(CIA ajorking Paper)
5 .tuation I.'.emorandum 50-49
Subvorsive
Trujillo does not allover Comvnurnists to gain strength in the country
and would prevent anti-US agents from operating in the country and using
the coasts as clandestine bases for enery submersible craft in case of war,
t ilitaa
the military capabilities of the Dominican Republic via--a-vas revolu-
tioru ry forces in the Caribbean is increasing. All militnxy -aircraft are
now armed except primary trainers (52 out of :"7 planes are armed), and
practically all of the air force planes are in flying condition. Governs
meat agents are trying to buy t*5 more planes. Training of the air force
and. navy has been accelerated and discipline and morale have improved, Capabilities and discipline of the well-trained array continue high. AA1-
thoW-~h the loyalty of a few individual officers may be subject to question,
to date there is no evidence that the exceptional loyalty of the armed
force. to Trujillo has diminished in any way.
Lern tional.
D ct,a r Trujillo is concerned over threats to his regime from the
11--r, bbean Legi-:n. Government representatives have been most active in
accusing the "democracies" of fomenting war and unrest. Although 13/iAil
:ices not believe that a formal conflict between the "democracies" ?- Cuhao
Guateraala, Costa Pica and Haiti - and the "dictatorships" -- the Dominican
i:epu.blic and 'Nicaragua - is Likely at this this, tensions, unrest and
revolutionary activities in the Caribbean area have hac' a divisive effect
;ri inter-American relations that is adverse to the US security concept of
Hewn sphere solidarity.
t TL '
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(CIii Working Paper)
Situation Memorandum 51-49
The Current Situation in Chile
13 September 1949
(Suirana~ - Recurrent political problems arising from the
basic incompatibility of government coalition parties, to-
gether with increasing economic distress, threaten the
stability of the Gonzalez administration.. Mounting rest-
lessness in labor's ranks has proved advantageous to Con-
anunist activity. The armed forces remained loyal to the
government during the crisis of mid August. Tension in
Chilean Argentine relations has been renewed.,
--- Developments in Chile have impaired US secur-
ity interests in Hemisphere stability and solidarity, the
first by the deterioration in the political and economic
stability of Gonzalez Videla's governments a declared
friend of the democracies in general and of the US in
particulars and the second by the deterioration in Chilean-
Argentine relations and by Chilean efforts to force accept-
ance of their thesis of the division of Hemisphere coun-
tries into opposing groups ..w democracies and the totali-
tarian states.)
Political
Recurrent political problems - arising from the basic incompatibility
of the parties forming the pro-government coalition and aggravated by in-
creasing economic distress - have further threatened the present administration. In mid August student labor rioting follovmd by sporadic strikes
over spiralling living costs resulted in the granting of special powers to
the Executive,, the renewal of repressive measures against the Communists:,
and a cabinet crisis which threatened to upset the present delicate politi-
cal balance. Prompt and aggressive action by the President to control the
disorders, the continued loyalty of the armed forces to the government.,
and the rescinding of transit fare increases (-which originally touched off
the rioting), together with administration promises of economic reform,
prevented more serious developments; these disorders, however, have served
to expose the popular discontent with the Gonzalez administration and to
heighten the uneasiness prevailing among pro-government parties.
Although a serious break between President Gonzalez and the Radical
Marty has been avoided for the present., and although the promotion of a
leftist opposition bloc under Radical aegis appears improbable for the
CONIFiDF,NTIAL
7.
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(C -JA i;orking Paper)
Situation ".'emorandwn. 52-L.9
51' CI't!~,T
Qjgj:jjDF.N114L
13 September 19L9
near future the Radicals still appear anxious to reclaim their place of
leadershi.p2 norrCoxnmumist left and have proposed an economic pro-
grant that, is equd:-
valent to state social-ism,
To add further to the administration's problems, the conservative
tsierwnts of the govern orit coalition, particularly the Liberals, are dis-
p1q)ri.ng a gracing displeasure with administration economic policies. The
Liberal Party wishes to reduce government spending and discontinue present
exchange rates and foreign trade controls. Although the recent disorders
hava served to reaffirm their support of the Executives it is probable
. ;nt friction. will develop over any government; sponsored measures opposed
to the Liberals' Iirogrram,
F'i_nall_y,, the ri ht-w .ny Socialist nembers of the pro- overr ent coal!-
have been negotiating regarding, unity with the 1ef -5MY#oni71ar
rNts? a part of the governrient's opposition, ands
went so far as to tell President Gonzalez
during; the August disturbances that in case of a mineral strike they too
would feel forced to participate.
In shorts the dilemma of the government is that rowing popular dis-
content. uneasiness among, prcr?goverrmten.t "leftist" parties, and deepeni
economic distress call for prompt and effective measures to combat a
*athering crisis., while at the same tii any effective economic st :ps
vrc~t Ld probah3y adversely affect the wealthy group on which the a0ni1nistra-
ti_on. depends for support in the congress. It is estimated that the best
the President can do in the immediate future is to obtain passage of a
compromise program,, probably pleasing to no one group but innocuous enough
to prevent an open break in the coalition.
.I:,conoanxc
' -11 roust ions from the decline in copper prices continue to be the
most ii ediate problem affecting the deterioration in Chile's economic
position. The trend in business and industrial operations has been do,r--r-
v rd while no corresponding decline in consumer prices has taken place.
Popular dissatisfaction with this situation resulted in the Coi unist?
Inspired labor difficulties of rnic3 Au,;ustand redoubled government ef-
forts to case the situation, So far, a campaign against speculators, a
readjustment of import categories, a subsidy voted to small mine operators,
and a redoubled effort to obtain a loan from the US constitute ,the main
'IT
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Situation ;:lemorandum 51-49
efforts of the administration., measures which are palliative rather than
curative. B/LA. estimates that the basic divergence of viecrs existing be-
tm, en members of the government coalition will make difficult if not
possible any really constructive revision of Chilean economic policy.
Mounting restlessness in labor's ranks boiled to the surface in the
recent riots and abortive strikes. The painfulness t to labor of the gerr-
orall, economic decline which has brought cutbacks in the operations of the
big copper producers has not been significantly alleviated by government
efforts to absorb the unemployed in public works projects or by the cusir-
ioni.ng action afforded by unemployment compensation, measures which are of
necessity temporary. In the opinion of B/LA, this deterioration in the
economic position of the workers., following, as it does, the still well-
remembered ousting of militant Communist, leadership and the subsequent
dispersion of labor's paver' bodes ill for adrunistration hopes of rc
taini.ng labor support _- particularly as It now appears that the 'rost.-
dent's proposals for general social as well as economic reforms will be
vitiated by conservative interests.
Subversive
a dory aunists, quick to take advantage of the government:s dif'i-
cult position and to capitalize on general discontent over living costs,
attempted to turn the August demonstrations into a general strike move-
tent, the movement failed, and renewed government repression of known
Communists has follo ed. Nevertheless, the attempt has indicated the
effectiveness of Communist technique in organizin student labor cormiit;
tees (ostensibly norr-Communist but pliable party tools when needed) and
in reasserting its strength on the rank-andfile level of the unionn.
It is considered that Communist influence, particularly in the labor
fields remains a potentially serious threat, especially in view of labor's
general dissatisfaction with present conditions,
'ilitar
Sze armed forces regained loyal to the government in the recent d.:i.s-
turbances and aided in restoring or preserving order in threatened areas.
This loyalty, however, is not personal loyalty to Gonzalez didela, and
I3/LA estimates that., in a crisis more acute and. not so easily despatched.,
some officers (probably including the new ArcV Chief, of 3taff) would
suggest the President's retiring in favor of a junta.
International
?i a" c:rnational affairs, Chile has withdrawn the last of its diplo-
matic personnel from Venezuela and has continued to regard both the
p IAL
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13 September 131,!.9
Venezuelan and Pertrv Lan g-;overnments with. re aexved disapproval while cor-
dial exchanges betwean Chile and the countries it considers democratic
(Colombi.a,. Ecuador, Uruguay, and Cuba) has groin apace
The unsympathetic treatarent which the Argentine press gve to the
August unrest in Chile, reporting the downfall of "dictator" Gonzalez t
governments led to Chilean protests to Argen-Ana. The tension between
the two countries was increased vrhen the most recent Bolivian revolt re-
vi* ed Chilean accusations that Argentina is aiding and abetting the
13 ivian rebels in hopes of establishing there a sympathetic military re-
g#.'r'e,, thus surrounding democratic Chile with hostile governments -,7ith an
to brining about the eventual downfall of Gonna =.ez Videla4 Chile
vir) id like to see the US publicly draw a line between the democratic
sheep and the militaristic goats (allegedly u der Per6nts leadership) in
the hemisphere and back up US friendship for the democracies with material
aid, a loan to Chile being, of first and foremast importance. The precar-
i.oaus position of the Gonzalez government probably accounts for Chile is
present anxiety regarding additional funds from the US and for the renewed
a` tem st to define US and Ch lean interests as identical in opposing any
extension of Argentine influence, Nevertheless, I3/I.. regards these ac-
c,A ations as detrimental to sUS interest in Hemisphere solidarity since
such charges, whether true or not, tend to divide the :wxenber nations into
opposing camps.
lo,
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