WEEKLY CONTRIBUTIONS LATIN AMERICA BRANCH, ORE, CIA 20 SEPTEMBER 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200030012-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 9, 2016
• Document Release Date: September 28, 1998
• Sequence Number: 12
• Publication Date: September 20, 1949
• Content Type: SUMMARY

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Yreo Contributions
Latin America Branch,ORE, CIA
20 September 1949
Of the developments reported this week, B/LA finds that on the
Communist "Peace Congress" (p, 2) of particular interest.
CURRENT DEFM QITS
GENERAL: Communist benefits from th have
been negligible (p. 2), Latin America offers very limited prospects for
immigrant settlement (p. 2).
CENTRAL DIVISION: The Venezuelan Government has thwarted an attempt by
Accion Democratica to regain control of an important oil union (p. 3).
In Colonbia, the present tension over the Liberal Electoral Bill is ex-
pected to result in sporadic violence (p. 3). Ecuador's President Plaza
gives further encouragement to the reestablishment of the political coali-
tion that brow -ht him into office (p. 4).
SOUTEIThI DIVISION: Peru may abrogate its trade agreement with the US,
but could very well fail to adhere to GATT provisions in any new agreement
(p. 4). In Chile, political hazards will attend any move the administra-
tion might make toward currency devaluation (p. 5). In Paraguay, despite
acclaim for the new regime, conditions adverse to stability exist (p. 5).
The Current Situation in Guatemala . . . . . . . . . . . . . . . . 6
The Current Situation in Venezuela .
. 10
DOCUMENI NU.
NO CHANGE IN CLASS. Cl
7 DECLASSIFIED
CLASS. CHANGED TO: TS S( C:1
NEXT REVIEW DATE: ---- V (((,,,
AUTH- ~R
DATH. REVIEWER: 3720-44,
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Weekly Contributions, B/LAC NFIDE TIAL 20 September 1949
25X6A(CIA Working Paper)
2. The limited Pros-Deets for immigrant settlement in Latin
merica are again emphasizesby replies "from LTS Embassies
to a query rom Department of State on the possibility of German
refugee settlemnt. Lost Latin American governments indicate an in-
disposition to consider immigration except on a very limited and
restricted basis, if at all. It is true that the IRO was success-
ful in getting some limited promises of acceptance of displaced
person refugees in Latin American countries; only some of these pro-
mises, however, are being carried out. Argentina, which has taken
the most immigrants during the past two years, prefers - as do the
other Latin American countries -- Spanish and Italian immigrants
because of the relative ease of assimilating them. B/IA estimates
that unless substantial financial assistance is made available for
settlement projects, local political-economic conditions will not
warrant any large increase in immigration to Latin America in the
foreseeable future.
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20 September 1949
3. VENEZUELA: Government Blocks Accion Democritica Attempt to Remove
25X1 X4 Oil Un on roc ora
the junta-approved directors
of the Sindicato de Obreros ypleados Petroleros of Cabimas, the
largest oil workers' union in the western fields, sent a letter of
resignation to the government on 13 Augusts just before the arrival
of the investigating commission of the International Labor Office.
The resignations vre withdrawn after Capt. Camez Calcano, military
commander of the areas threatened the directors with arrest if they
refused to continue serving.
In the light of earlier reports, this incident appears to25X1 X4
be a`Rood example of the methods by which Accion Democritica leaders Zi~ l empting to regain control of the oil workers' unions.
- have previously reported: (1) that the directors of the SOF.P
in Cabimas appeared to be pawns of Gimez Calcano; and (2) that AD
leaders were regaining sufficient control of the membership of the
union so that the directorate was now functioning in name only. It
therefore seems highly possible that the attempted resignation,
which would clearly have embarrassed the government, was the result
of pressure from the pro-AD union membership, and was designed, by
placing these directors in an untenable position.. to rid the union
of leaders foisted upon it by the government-sponsored reorganization.
B/LA believes that the government will continue to take
firm measures to prevent AD leaders from regaining outright control
of important oil workers' unions.
It. COLO?J1BIA : Crisis Imminent
Po itica ens on in Colombia has increased since both
political parties realized, on analyzing the results of the June
congressional elections, that the Liberal Party could not be sure of
gaining the presidency in 1950 even if it avoided the split ticket
which had been disastrous in 1946. Although the Conservatives
gained in the June congressional elections, the Liberals won a major-
ity and are anxious that the presidential election should be held in
conditions as similar as possible to those in June.
The Liberal-sponsored amendment to the 194 electoral
code, which advances the date of the presidential election from June
1350 to November 1949 (see ../LA '` e C~or: unists mad a - e
s a l e - ;-& iices, riots, vi.o ence and sabotage in an attempt to main-
tain this position, their political host organization the extreme
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CONFID2NTIAL
'weekly Contributions, B/LA 4- 20 September 1949
(CIA :7orking Paper)
Situation T omorandum 52-149
leftist parties and unions -- do not, it is believed, have the strength
to oppose the unified army-backed conservative movement that is now dev-
eloping.
International
Guatemalats foreign policy remains unchanged. Its guiding principles
continue to include: opposition to the "dictatorships" of Central America,
the Caribbean and Spain; the defense and preservation of democracy in the
fact of attempts by anti-democratic regimes to destroy it; and opposition
to "colonialism" in America and alignment on the side of the US in the
event of an East West war.
Guatenualats relations with the other republics of Central America
and the Caribbean have recently deteriorated because of the widely ac-
cepted belief in the government's complicity in the activities of the
Caribbean Legion and in the assassination of Colonel Arana, Following
Aranals assassination and the suppression of the conservative array revolt,
M. Salvador expelled Jose Manuel laortuzy, an important Guatemalan left-
ist union leader and congressional deputy, Major Osorio, dominant figure
in the Salvadoran junta, has openly expressed his fears of a Guatemalan
invasion and has expressed his determination to seek aid, if necessary,
from Guatemalats arch-enemy, General Somoza of Nicaragua. Suggestions by
the US that the Inter-American. Peace Commission investigate Caribbean un-
rest has placed Guatemalats policy of aiding the Cari:)bean Legion under
international censure. To the detriment of Arevalo's government, both at
home and abroad, Nicaraguan and Dominican propaganda is exploiting the
murder of Colonel Arana as evidence of Communist dominance and the use of
terroristic political methods. Moreover, representatives of the Guatemalan
Army itself, as well as the exiled leaders of the 1-19 July revolt, are
actively seeking support abroad in a campaign to discredit, and possibly
overthrow, the Guatemalan Government.
In the face of these developments, administration leaders are seek-
ing to improve the standing of their government with the US, to minimize
their involsr event with the Caribbean Legion, and to discredit the "dictat-
orships" by issuing counter-propaganda.
B/LA believes that existing tension within the country will prevent
Guatemala from achieving these immediate objectives and that until the
present struggle between the army, conservatives and moderates on the one
side and the liberals and leftists on the other is decided in favor of one
or the other of the contestants for power,. Guatemala's foreign policy will
be inconsistent and ill-defined both toward the US and toward intra-area
political problems.
CONFIDENTIAL,
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Weekly Gontribu ;ions, B/L A CONFIDENTIAL 20 September l9L 9
On. 'worldng raper)
Situation L mox anduxa 53"99
(Summary - the political situation in Venezuela is vxr-
eMsyTuut not critical. Increased oil production has
:,proved econonr's..c conditions for the present; long-term
prospects are threatened by competition from I addle
Last petroleum. The increased tempo of Corr4aunist anti
vities has resulted in no visible achievements. The
armed forces have been favored with a budgetary in-
creases while budgets of all other departments have
boon .r?oduced.
a.w,.. Venezuelan foreign trade policy is telling
to rive away from US-favored freer trade and xn ultilat--
eralism, and US interests my be unfavorably affected
by problems arising from revolutionary activities of
Accion i)emocratica in foreign countries)
Political
r poli.tical situation in Venezuela is characterized by increasing
uneasiness, although there is no clear evidence of a diminution of the
junta's ability to control the situation. Factors contributing to the
present state of tension are: (1) revolutionary activities of Accion
Democratica both wit in and outside the country; (2) evidence of grading
V n among the enlisted men and the younger arm- officers; ( )
rumors of conspiracy within government circles aimed at changing the corrr-
position of the juI'ttc
The revolutionary activities of AD appear to constitute an increasing
substantial threat to stability. The junta itself fears that Betancourt
2l. ively directing; leans for an uprising, US Embassy Caracas reports.
a a coup is being planned, and that the AD uflnder-
ground is )roving strength and organizational efficiency (see 3/3J1 ,fly
for 6 Sep 49). The success of any AD plots however, would undoubtedly
depend on the existence of widespread disunity in the ar7rZr.
There are indications of increasing disunity within the ar; r. ,h_i.le
AD may be able to capitalize to some extent on the reported discontent of
the younger army officers (see B/IA 'Jkly for 19 Jul 49);, it is more
likely that most of them gill remain loyal to the government. The inf i uence
of A:: among the enlisted men is probably increasing, as evidenced by the
recent arrest of 20 sergeants from the military school in Caracas foss
alleged conspiracy. Such isolated incidents,, as the latter and the Laracay
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Weekly Contributions,, 33/LA
(GIA .",orking Paper)
Situation Liemorandtmi 53-49
TO - E39'-41OA000200030012-4
20 September 7.949
episode of 31 Hay, however.. afford no truly reliable gauge either of the
extent of disunity or of the govern nt's ability to control a more general
uprising. 25X1 X4!
Since the coup of November 1910', have
from time to time reported the existence of conspiracies within t 6M4rr-
2U6a4med at removing one or another of the junta members? while
have repeatedly asserted that the junta is strongly uinited.
If the present tension increases and if the stability of the government is
seriously threatened., it may be expected that the more tolerant Delgado
Chralbaud will be replaced by Perez Jimenez in order that the stricter
measures of control which may be necessary -grill be executed more effectively
by a more arbitrary and uncompromising officer.
Economic
=6 economic situation has improved,, for the present, at least,, Yri.th
an increase of oil production approaching peak levels. Long-term pros-
pects for the econo , however, are less promising, since the petroleum
industry will soon have to face increasing competition from 107-cost
kiiddle East oil. The governrrnt,, continuing its study of petroleum policy,
has extended the life of the National Commission on Petroleum and T:"ineral
Policy six months from 1 July. Oil companies are pessimistic about the
attitude of the new tinister of Fomnto, Egafia, who favors the policy of
granting new concessions only to companies in which the government and
private Venezuelan capital jointly participate with foreign oil companies.
Although the oil policies now under consideration may be less favorable
to the oil companies, no serious thrust to US interests is seen thus far,
Development of the rich iron deposits south of the Orinoco is proceed-
ing rapidly. The Iron tines Company of Venezuela, a subsidiary of .thle??
hem Steel Co., expects to begin exporting in 1950, reaching eventually a
production of 3,000,000 tons a year. The Oliver Iron fining Co., a US
Steel subsidiary, whose concessions are estimated to contain up to several
hundred million tons, may develop an exportation of up to ton million tons
annually, Shipments of ore by US Steel await the development of transporta-
tion facilities by extensive dredging of the Vrinoco or by the construction
of a railway from Ciudad Bolivar north to Puerto la Cruz. The construction
of either transportation route would open the territory south of the Orin-
oco to f uather development.
A Comm munist propaganda campaign c:laimi qlg that mass dismissals had oc-
curred in the oil, industry led to a government census of unemployed. The
census found 8,601 unemployed in the entire country as compared with Com-
munist claims of 17,000 dismissals in the oil_ industry alone. The census
FUDENTIAIN
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Situation l Memorandum 53- i.9
-3...
2
0 September '1949
2 -L.
Will continue on a periodic basis, and the government apparently intends to
take active measures to prevent unemployment.
There are indications that the ,blue" oil workers' unions (formerly
controlled by AD) are regaining strength, and appear to have successfully
resisted Communist pressure for "labor unity". It has been reported that
AD labor leaders are regaining control of the "blue" unions and that they
plan to form a national federation of oil workers to replace Fedepetrol.
It is doubtful, hew ver, that the government vrould tolerate the establish
went of a new oil morkers a federation unless the unions first had been
pur,ad of AD influence.
Recent developments in the foreign trade policy of Venezuela hays
been at variance with US policy objectives. Pressure from domestic pre
ducers has led to increased duties and lower import quotas on a variety of
commodities. It also has been reported that the government is now serious-
ly considering the advisability of entering into bilateral and barter agree-
ments with Latin American and European cotmtxles as a means of preser?.rin
these markets for Venezuelan royalty oil., which faces increasing competi-
tion from the sterling area. These developments indicate that the Vez-
zuelan Government wi..ll probably make independent trade policy decisions
based on its conception of domestic requirements, and by so doing ignore
rather than oppose US interests in freer world trade and nultilateralism.
Subversive
a pattern of Communist strategy in Venezuela has become more sharply
defined during the past three months, with the development of three parallel
but distinct programs of action and propaganda. First is the program of
syndical unity,, a campaign for the merger of Communist and. non-Communist
unions at the local level, with the ultimate objective of creating a
Communist-dominated labor federation. This program will probably fail be-
cause of the strong resistance it has met and Trill continue to face from
the former AD unions. The political program of the Com unis ts, returning
to the "popular front" strategy,, aims to create an alliance with Union
Republicana Democratica (IJF'tD) and other leftrvring elements. Although URD
s c .taW itself, such an alliance is distinctly possible.
The third program of the Communists is a vigorous propaganda offensive
centering about the theme of impending economic crisis., at the same tine
advocating measures such as increased taxation of oil companies, higher
tariffs and import restrictions, which would only hasten such a crisis,
Although Communist strategy appears to have entered a now phase of aggres-
siveness without encountering strong interference from the t ovcr oment,
there is no evidence of any real gain in Communist strength.
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(CIA . orking Paper)
Situation L emorandum 53-49
4 -' 20 September 199
r'ilitarr
The armed forces of Venezuela perfox, i a function of continuing import-
ance as the primary instrument for the maintenance of domostic order.
The national defense budget for 1919-50 has been increased by 1 million
bolivares over that of the preceding year (representing 11 percent of.the
to al u get as compared with 7 percent in 1914''-49), while the budgets of
all other departments have been reduced. The significance of these fig-
ures is diminished, however, by the fact that the budget for the tlational
Guard is included for the first time in the ?.Ministry of :Defense budget.
Arms and equipment continue to be purchased from 'European sources, The
difficulty of obtaining arras from the US was cited by the Embassy as a
po 3sible basis for a rumor circulating in Juno to the effect that the
contract of the US Army Mission would be cancelled. No further reports
have substantiated this rumor, and the mission appears to be operating in
a cordial atmosphere of cooperation.
International
ro serious problems at present disturb the international relations of
Venezuela, although an issue of grave significance will arise if it be,-
comes clear that any foreign government is tolerating revolutionary acti-
vities of AD within its territory. A commission of the International
Labor Office.. invited by the Venezuelan Government to investigate labor
conditions and the status of unions, arrived 22 July. Its findings have
not yet been published, kith the recognition of the Venezuelan Government
by Cuba (19 July) and Costa Rica (6 Aug) the number of Latin American
governments maintaining no formal diplomatic relations with Venezuela has
been reduced to four (Bolivia., ghile, Guate!rala,, and Uruguay).
'.: FQ TIAI
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