Document Type: 
Document Number (FOIA) /ESDN (CREST): 
Release Decision: 
Original Classification: 
Document Page Count: 
Document Creation Date: 
December 12, 2016
Document Release Date: 
May 7, 2002
Sequence Number: 
Case Number: 
Publication Date: 
February 14, 1950
Content Type: 
PDF icon CIA-RDP79-01090A000200050007-8.pdf1.02 MB
25X1 Approved For Release 2002/06/11 : CIA-RDP79-01090A000200050007-8 Approved For Release 2002/06/11 : CIA-RDP79-01090A000200050007-8 4 Approved For herase 2002/06/ - . 9-010901.60200050007-8 Weeklv Contributions Latin raraTica D elan, CIA 14 February 1950 CURRENT DEVFIOPLENTS GENERAL: Many Latin American countries mhich depend mainly upon a single export product have been adversely affected by declining mar- kets and falling world prices (p. 2). CENTRAL AREA: In Venezuela, government tolerance of the iron mines strike may encourage a petroleum strike (p. 2). SOUTHERN AREA: In Bolivia, the possibility of withdrawal of the armys support of the government jeopardizes the continuance of the civilian administration (p. 3). In Uruguay., the strike of the Communist- dominated wool workers t union paralyzes the wool industry (p. 3). In Chile, despite the end of a series of strikes, political and eco- nomic difficulties continue to beset the Gonzalez Videla government (P. 3). SPECIAL SUBJECTS The Current Inter-American Situation . The Current Situation in Mexico 8 DOCUMENT NO. /;CieHANGE IN CLAS ECLASSIFIED CLASS. CHANGED TO: IS S NEXT REVIEW DATE: AUTH: HR DATE. EMgWER:. 79UraniX- Approved For Release 2002/06/11 : CIA-RDP79-01090A000200050007-8 L, 25X1 1r ApprOed,Release2002/06/11:0A-RDP79-0 (*POP 5000i-13 - note ve aga ns of tko04 tatialliterioanooaritatee whose 000flomia et0iIity to amaJor extent sPO4 a single exPort prodUct.' It is true t the enjoy 'ogee Oototries (Brazil, Coloabtas pa Salyador? etc.), Of 100 :fit in the above category -- are now benefiting 4oloes. In other one-product eenntries,1 *ever, maiWoodi prices have had serious rilisivussimis. In Via, for Oeccosolve declines in the price of tin have tantiafly curtailed mining operations; the resulting reduction na ). ncom and 3,eas of foreign exchange have curtailed foreign and ].ored the standard of living. In Chiles, the already avorable 44:mimic situation has beCzi. further iipsirod t7 declining prices) labor difficulties and growing unrest haveTesulted. fig inibi1#7 to dispose of its axportable,surplus of rice at le prices pot only deprives that country of sorely needed eX01100;b4t'constitites also a further financial burden ? constant:14r mounting carrying and Warehousing charge6. though Venezuela has not as yut felt any pinch:, the decision of Urltieh seriously to curtail dollar parchasee of Petroleum, and DS.companieste reduce petroleum imports into the US mUst inevi- i#107:reset,in financial constriction for the yOne*vel'an:loverompt. 1 turziA., s At, in n Iins Encoura e Petroleum strike -nz on o ene sue governmenTnter- fere in the strike of 1500 workers of the Iron !nes Company of re4010141 (aletallehoi subsidiary) became aPPsraht,when:,thg, ?.i 11 Labor, Jeie Rojas Contreras, described the strike is strictly a 'boor dispute. 'the strikes which began 6 February 19500 aim-, at. ge.increases and improvement of sanitary and transportation condi- one, The goverhakentla handling of this strike is significant in ow of the labOrnatOtiations,now pending in the pstrolaam Industry. ' under term of the collo,...,tivo contracts in force between 1-41. -! he close of which the cleupes govv;.-Liaz mgeE; and'covId4;ariea mAY 1,..* renegotiated, ends this month.. Althugh the wilOus have had 4fficulty in orgatizinft their bargaining rlachinery (D/L4,Wkly? 11 .Jar 50), they appear deternined,*4, prem; for more faircrable term, he companies 'mill u9tkaacci.4-, in Tiow of the roc,i!nt general cutback' of.production, resist wage ihcrea5es, and 'may tr t avid my nago- tAations, WIA Ostipatee thats. because of the anticipa ted opposition the ,oil, corp,i4e5 t10 any ConcaSsions and the en4oura4* precedent nefrifiterventien by the government in the current ire4 Strikes a ike in the petroleum industry is a distinct Poseibilit* The . , ? Approved For Releas : CIA-RDF'79-01090A000200050007-e- Approved14 Release 2002/06/11 : CIA-RDP79-040A000200050007-8 SECRET Weekly Contributions, D/LA 14 February 1950 (CIA Working Paper) attitude of the Venezuelan government is uncertain; by tolerating the iron strike it has to scue extent limited its freedom of action; but a distinction could undoubtedly be drawn that would, in the govern- ment's eyes, justify suppression of a petroleum strike should such a policy be considered expedient. 3. BOUM: President Unable to Form Coalition Cabinet TWifaent trriolagoitdats formation of a new cabinet of essentially one party (PUSR) emphasizes the continuing weakness of his government as well as its increased dependence on arnar support. The Liberals and Social Democrats have been unwilling to eeter the administration because of mutual distrust and rivalry existing between them and the PUSR and because they hope to avoid any share of the blame for the country's deteriorating economic conditions. The failure of the president's third attempt in six months to form a "democratic" coalition cabinet is of greater seriousness at this time because of an army etatement that it would not tolerate another one-party cabi- net. The president's inability to comply with the army's demands may, therefore, cause the army to 'withdraw its support from the present administration and make the continuance of civilian government in Bolivia even more dubious,. h, URUGUAY: Strike of ComnunistDominated 1bol Workers' Union Ine current strike of Uruguay's wool graders illustrates the production-sabotage capabilities of strategically placed Communist unions. /n this case, the union seems merely to have taken advantage of the strong market conditions prevailing at the peak of the wool season to demand a thirty-percent wage increase. But the strike has paralyzed Uruguay's vital wool industry and could be quite damaging to Uruguay's current economic situation, which depends so largely on wool sales to the US as a source of dollar exchange. It nay be that in a period of war or other national emergency the Uruguayan govern- ment would find means to limit such work-stoppages if not to prevent them. The present strike, however, seems likely to be prolonged. 5. CHM Strikes End But Troubles Persist Chile's 12-day wave ot strikes las ended, but the basic'eco- nomic problems which touched off the strikes remain unsolved and are Zurther complicated by political repercussions which threaten the rather precarious stability of the Gonzalez Videla government. Although tht ;P:orkers have accepted promises that their demands will be considered ana have agreed to return to their jobs, they continue to be dissatis- fied with their economic position and will probably press for better living standards. Gonzilet Videla has been forced to adopt a more conciliatory attitude by the resignation of the coalition cabinet over the labor situation and its replacement by one composed largely of Radical menbers. Meanwhile, political parties have taken advantage of the situation to press their demands, adding to a serious economic situation a deteriorating political one. Approved For Release 20 79-01090A000200050007-8 RET 3. -.-Approved eleate; : , 2/06iff .01A-41:)079,9,11,90AQ002944*19007-8: FbrUarde ?91)1 ' ,' ?, .,,,,, 0 , iii, are' td ' , 14114t36 that the prospect for att4i1714;J:40'1-1045P114 tleal realifmtlq.ntq ar14 'possibl..y'a anew ' ' 1-ti; - , thp, ad therefore little real progress kil'Is 1 i Ajc ili:Ifftil:114:11talt.t;delco,:i%le'liIlliii7ii,!! ' but that et.ious 71.a1c; l' __ _ _, Pat_ tPal problems 17111 probably make his p6r3?4-icr? ir,. '7. j '*4 ,-reardml.?7 cliqlcult. . r I A FgriRPIPA: : . ,. ? . 06/11 : CIA-RDp76-01090A000?lq r Approved Yr Release 2002/06/11SDP79-0140A000200050007-8 Weekly Contributions 0/Lit (CIA Working Paper) Situation Memorandum 7-50 The Current Inter-Ameriean Situation 14 February 195C (8nmxn The invocation of the Rio treaty (for the secona time since it came into effect) at the request of Haiti and the Dominican Republic should provide a clearer indication of its effectiveness in settling disputes of this nature. Though ill feeling continues to exist among several Latin American countries, there has been some improvement recently in this regard. In general, Latin America con tinues to support US 'world policies, and, although its feelings of neglect by the US (especially along economic lines) have not been entirely dissipated, they have been assuaged. -- Inter-American solidarity has improved somewhat -within the past few menthes and if this condition can be maintained over a considerable period of time, the US security position in the 'Western Hemisphere 'will be enhancedo) Intre-ffemi8phere issues OAS and inter-American treaties: The most significant intereAmerican event-V-M7-57WEEIgrrnons-'--Eriarthe invocation of the Rio treaty at the request of Haiti and the Dominican Republic and the resultant sending of an OLS committee to investigate the situation in the Caribbean area, This second recourse to the treaty followed the pattern established by the COAS in the Costa Rican-Nicaraguan disputes and once again the decision to use the treaty received the unanimous support of the Council members qualified to vote. As a results the effectiveness of the Rio treaty will probably be strengthened, 0/LA believes that this action on the part of the OAS has at least temporarily alleviated the tensions prevailing in the Carib- bean. There have been no new ratifications of the Rio treaty or of the Pact of Bogota, though the Oaatemalan government plans to present the Rio treaty to the next legislative session. With regard to the Charter of the OAS - the fundamental document of the inter-American system - Brazil and Honduras are expected shortly to deposit their instruments of ratification (which would bring the number of ratifying states to five)s, while most of the other Latin American countries are planning to initiate the ratification process within the next few months. The expected increase in the number of states ratifying the Charter (especially should this number include the major American republics), and the anticipated successful application of the Rio treaty in the troubled Caribbean area should benefit inter-American solidar- ity and enhance the US security position in the Western Hemisphere. Relations among American states: Revolutionary changes in government or charges of inerventioniiiThternal affairs made by some, nations against others, particularly in the Caribbean, continuo to cause strained relations 5r. Approved For Release 2002/06/11 : CIA-RDP79-01090A000200050007-8 ApproveAttit Release 2002/607CIA-RDP79-0q0A000200050007-8 'Weekly Contributions, D/IA 2 - 14 February 1950 (CIA Working Paper) Situation Memorandum 7-50 between certain members of the OAS, The situation has eased somewhat recently, however, as a result of OAS action and the gradual -weakening in the peeition of the militant Latin American democracies against recognizing rightist revolutionary governments e Bolivian's resamptien of relations with Venezuela e and Chilean-Guatemalan-Uruguayan recogei- tion of the Arias rhino in Panama indicate a trend toward unanimity on the recognition problem. Extra 11"4aUlteattsern UN and specialized agenciesx Latin American countries continue to cuppo e . on matters relatfng to its straggle with the USSR in the Fowevere on other matters (especially if the issues concerned are of particular interest to Latin America), these nations continue to fol- low an independent line as evidenced in the last session of the General Assembly when two resolutions which have little chance of implementation and which were opposed by the US (regarding Nationalist China ss charges against the USSR and the internationalization of Jerusalem) were adopted with considerable Latin American sapport,, Latin American republics continue to regard the UN specialized agen- cies as sources of help in developing their economies, bat maw differences between these countries and the US on certain economic matters dealt with by these agencies remain unresolved. However, renewed efforts on the part of the US may gradually iron out some of these difficulties. To the extent that these efforts succeed, Latin American attitudee may become less obstruc- tive to the fail realization of US international economic policy oblectives. Relations with nations outside the Western Henis.here: Spain: The US dee s on o suppor a i reso u ion ea ng open ? each power the decision to restore normal diplomatic relationo with Spain will probably result in its adoption at the next GA session. D/L& expects that the overe whelming majority of Latin American nations will support such a move, USSR: There has been no change in the status of diplomatic relations between Russia and the five Latin American countries 'which maintain repre- sentatives in MOSCOW? The increasing intensity of the anti-Communist cam- paign in some of these nations, however, may eventually cause a break, None is expected to exploit its relations with the USSR to the detriment of US security interests, China: Mexico has withdrawn its diplomatic representatives to the Chinese ffitionalist government, and Ecuador has been considering a similar moves Though it is expected that at least a majority of Latin American nations will wait upon US action before extending recognition to the Peiping government, the complications brought about in the UN due to the Soviet attitude on Nationalist China may possibly cause some of them to vote for the ousting of the UN Nationalist Chinese representatives. Approved For Release 2002/06/11 ? CIA-RDP79-01090A000200050007-t Approved hdRelease 2002/06/11468nDP79-014A000200050007-8 Weekly Contributions, DA& (CIA Working Paper) Situation Memorandum 7-50 ? 3 . 14 February 190 SuRport of *portant US foreign policies: The Latin American govern, meats continue to support the ud its cold war with the USSR and to realise the importance of ECA, the Atlantic Pact, and the Military Defense Assistance Act MAO. These nations are eager to receive the technical assistance envisaged in,the Point Pour program, but are worried about the possibility of competing economies being established in the colonial areas of the world as a concomitant feature of that program. Though their feel- ings concerning US neglect of hemisphere matters in favor of other areas have not been entirely dissipated, the recent Havana meeting and the pro- jected meeting in Rio de Janeiro of US chiefs of missions have causes favorable reactions throughout Latin America. These meetings, coupled with recent visite of high US Government officials to that area, are inter- preted by Latin Americans to be an indication of renewed interest in hemi- sphere affairs on the part of the US government; and, insofar as our southern neighbors are convinced that we have not forgotten them or their problems in the midst of our preoccupation with Europe and the Far East, this will contribute toward strengthening continental solidarity. Approved For Release 200ffeltri151:461CrP71090A000200050007-8 7 Approved FS04elease 2002/06/11 : CIA-RDP79-01694000200050007-8 SECRET Ueekly. Centributions? D/LA. Working Paper) diteation Hamorendum 6-50 14 February 1950 The Cerroit Situation in Mexico (Stmelarz -- The Alemgn adminiatration is in a stable posi- tion 85 eapabilities of pcliticai opposition have declined in recent monthe. Unfavorable events in labor have lessened the administration's tight control of that element. The econoric situation has been improving steadily. The military continues to support the civil administration. Subversive capabilities have declined. Mexico's trade agreements are increasing in number and scope, and relations with foreign countries remain cordial, -- US security interests have been affected favorably by the decline in Communist political capabilities and by general improvement in the economic situation, and unfavorably by the administration's difficulties in controlling labor. There is a possibility that Argentina's "grass roots" friend- ship campaign in Mexico might adversely affect US security interests.) Political --MDT the last three months, the stability of the Alemgn administra- tion has been further consolidated. Favorable factors include continued disintegration of the left-wing oppositionist Partido Popular, a pledge of army support to the idea of subordination of military to civil authorities, and the government's success in disrupting plans far a Marxist unity conference by publicizing an alleged plot to overthrow the government (see Subversive). The government was well sup-orted by the congress which, during the last session, enacted all of the legis- lation sponsored by the administration. Considering the lack of effec- tive opposition to the governing group, 0/La estimates that the Alemgn administration Will remain stable during coming months. Economic ---The- end of 1949 and beginning of 1950 mark a noted improvement in the Mexican economic situation. The only important unfavorable factor is the public debt, which remains high and requires about one-fourth of the national budget for servicing. The stabilization of the peso at 8.65 to the dollar -- an extremely low exchange rate discouraging imports and encouraging exports -- has resulted in a favorable trade balance for 1949 for the first time since 1943. Other favorable factors in 1949 were; abuadant harvests (except for corn); increased mining production, due chiefly to the absence of labor troubles; advances in development Of petroleum resources, including contracts with private oil companies for exploration and limited development and completion of twice as many Approved For Release ? -RDP79-01090A000200050007-8-4 Approved NoRelease 2002/06/11 ? CIA-RDP79-0168A000200050007-8 SECRET Weekly Contributions, D/LA - 2 - 14 February 19'e0 (CIA Working Paper) Situation Memorandum 8-50 wells during 1949 as in 1948. It is estimated that the current govern- Ment budget will show a surplus; and gold, silver, and foreign exchange holdings of the Bank of Mexico have increased from US$78e8 million in June 1949 to $132.7 million at the end of December. (The latter figure was before repayment of $22 million to the US Treasury as a por- tion of its stabilization commitnentsp) Private enterprise has been encouraged in Mexico by the signing of contracts with private oil companies, the government 's decision to leave the insurance business to private enterprise (as evidenced by the sale of the government insurance company to private interests), and by the apparent stability of the exchange rate; private investment, both US and Mexican, in the development of Mexican industry is now increasing. The economic situation looks favorable for the beginning of 1950 for all except importers, the latter being exceptions because of the definite downward trend in imported goods. Labor Unfavorable developments have predominated in Mexican labor during the past three months both from the standpoint of the Mexican government and US security interests. It is true that Mexican labor has shown a sympathetic attitude toward the London trade union meeting; that there have been signs of growing favor -- both 'within trade unions and in political circles -- for unifi- cation of non-Communist labor in a single Mexican confederation; that labor opposition to Alemgn has been weakened by his assurance that there would be no change in the liberal Federal Labor Lawebile he is president; and that the government has dealt successfully with strikes or strike threats in electric power, 'sugar, and the telephone system. On the unfavorable side, however, have been left-wing UGOCZT's organi- zational success in four additional states; the beginning of a new Sinar- quista (pro-clerical, anti-US) labor and farm =ricer movement; and the filing of a new rash ef strike notices with the Ministry of Labor. Fur- thermore, government and police tactics in quelling the Mexico City taxi-drivers' strikel I 25X6 as even pro-aeministration groups have expressed their coneemnazion or police tactics. D/LA estimates that, while recent labor developments have been in the main unfavorable, the administration still retains its ability to control labor.L___ I 25)(6 1 Aleman may be expected to grant some concessions to the left-ring groups to avoid costly strikes. Approved For Release 2002pieVerre-RIEW.79-01090A000200050007-8 9. Approved AWIRelease 20,(1041 : CIA-RDP79-01?4A000200050007-8 Weekly Contributions, D/L/ 3 14 February 1950 (01A Working Paper) Situation Memorandum 8-50 Militr ontinued army support and loyalty contributes to the maintenlece of stability in the Mexican government. It is believed that this e!,tea- tion will prevail through the 1952 elections, as indicated by reoeet evidences that the army will continue to consider itself subordinate to civilian authority. This implied non-support of any military asyirant to the presidency lessens the possibility of political unrest originating from a military source, 25k6 I International Mexico remains a strong supporter of inter-American and international organizations. The election of Luis quintanilla to the chairmanship of the Council of the Organization of American States not only gives Mexico greater prestige but also increased authority, particularly when the council acts as the organ for consultation under the Rio Treaty. Recent official statements by President Alemin and acting Foreign Minister Tello reaffirmed Mexico's support of continental solidarity against the Soviet bloc and of the use of existing international machinery for the peaceful settlement of disputes (the latter in reference to the present Caribbean situation). 25X6 Argentina seems to be expanding its friendship campaign by making efforts to win the good Till of Mexican states. Heretofeee? the program has been directed at the Federal Government and has met with little success, due in part to lack of popular support but largely to an unsympathetic Mexican press. Press reaction to the change in US policy toward the Franco regiee was one of approval except by the extreme left. The Mexican Foreign Office, however, expressed indifference. 1)/LA estimates that Mexico 's independent course with regard te Spain is not likely to undergo any change in the Imme- diate future. L an as the Spanish cause is one for which it has had littlo sympathy, it mi I not be prone to hasten in the wake of the American exam e, Approved For Release 2002/06/11 : CIA-RDP79-01090A000200050007-8 eiSirefitl' 25X6