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December 12, 2016
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May 7, 2002
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February 21, 1950
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Approved For Wrease 2002/06/1 0900200050008-7 Weekly Contributions Latin Amer ca v1s on, ., CIA 21 February 1950 CUNT DEVELOFNENTS GENERAL: Despite reported revolutionary activities in the Caribbean, trouble is not expected in that area at this time (p. 2). NJCl tTHF2N AREA: In Cuba, President Pr4o is new policy of "honest govern- ment" will probably fail and become a political liability (p. 2). Contemplated US financial aid for Nicaragua would benefit "dictator" Somoza (p. 3). In Guatemala, Communist-oriented labor leaders may obstruct ratification of the Rio Treaty (p. 3). CENTRAL AREA: In Ecuador, President Plaza's party (the WDN) is likely to be strengthened as the result of the change of directorship in the Liberal Party (p. 3). SPECIAL SUBJECTS The Current Situation in Panama . . . . . . . . . . . . . . 4 The Current Situation in Argentina. . . . . . . . . . . 6 pOCUANG I . /) NO CCLASSI DLASS. 0 _ CHANGCI) NEY,T REVIEW n TO: , 3 A, ~- _ 25X1 Approved For Release 2002/06/11 : CIA-RDP79-0109OA000200050008-7 Approved For lease 2002/06/11 : CIA-RDP79-0109M00200050008-7 SECRET Weekly Contributions, D/IA 21 February 1950 (CIA Working Paper) 1. GENERAL: Reported Revolutions Activities in the Caribbean Recent evidences of plans a prepare ons he Caribbean Legion again raises the question of trouble in that area? 25X1 indicate a possible increase in arms shipments from Mexico to .en ra America and plans for a new attack scheduled for the end of February (according to several unsubstantiated reports). It is quite likely that definite revolutionary plans and preparations are being made by the Caribbean Legion. It is unlikely, hovever, that an actual inva- sion attempt is imminent, not only because preparations do not seem to have reached this advanced stage, but also because of the deterrent effect of the recent visit of the COGS investigating committee to the Caribbean area, 2. CUBA: President Prio's New Policy of "Honest Government" i spree pubic disapproval of governments dishonesty, plus the increasing unificatd on of the opposition in the current by-election campaign, have caused President Pr{o to announce a new policy of "honest government". The administration is now reasonably strong, but if the new policy is not effective, army officers 25X1 planning a coup to overthrow the government) may eventually be able to win increasing popular support on the basis of the general dis- satisfaction, Other opposing groups, such as the Communists and General Batista's PAU, could also be expected to make the most of such a situation, thus constituting in time a threat to the stability of the administration. The president will have difficulty in implementing his new policy. It is true that he may be in a better position than previ- ously to govern for the good of Cuba rather than on the basis of political expediency. He has now paid off his election debts and has removed from office some of the grafters and political obstruc- tionists left over from the previous administration; he is no longer under any obligation Vice President Pujol 25X6 (Republican) and ex-president Grau Autentico , Another favorable factor is that the new cabinet appointed last week (D/IA Wkly, 7 Feb 50) is, on the whole, an improvement over the previous one. On the other hand, several factors lessen the chances for success of the president's new policy. Governmental reorganization in the interests of efficiency and honesty 25X6 few will actively support such an innovation, while powerful forces within the president's party will vigorously oppose it. Moreover, it would be particularly difficult to carry out reforms now because government employees are frozen in office for six months prior to each election, Another adverse factor is that the Hlabana mayoralty election, in which the president's brother is the Autentico candidate, ma rove to be relatively close requiring special vote-getting inconsistent with governmental reform. Approved For Release 2002/06/ -R -ninon A 000200050008-7 0' 2. Approved Forease 2002/06/1 t~;RDP79-0109400200050008-7 ';ti:ekly Contributions, D/LA (CIA Working Paper) D/LA estimates therefore that a real change in basic ~.?overn- mental procedure will be difficult and that the anticipa ted failure to carry out effectively its announced new policy may prove to be a political liability to the Frio administration. GUATFFMALA: Possibility of Communists Obstructim Ratification of Rio cation of the Rio Treaty, expected to be presented to the Guatemalan Congress convening next month,, nay very well be delayed as a result of pressure by Communist-oriented labor leaders. Illustrative of their methods is a recent resolution of the Communist- dominated national convention of workers' political committee (repre- senting the majority of organized labor) repudiating the Rio Treaty and the Atlantic Pact as allegedly "harmful to national Independence and transgressing the United Nations Charter". ~~. NICARAGUA: Somoza Should Benefit if US Financial Aid Materializes prQpose d US u -et c]. es a reconnmon tion that 19, 000,400 be appropriated for the completion of the Rare Road, which will provide Nicaragua with access to the Caribbean, but which is not part of the Inter-American Highway and is of little military and commercial significance to the US. Pro Somoza newspapers have played up this proposed expenditure as evidence of Somoza'a influence with the US,. DILL estimates that, should funds be appropriated for the Rama Road, this will strengthen Somoza's position as Nicaragua's strong man. If similar aid is not granted to other Central American countries (which also lack good road connections with the Caribbean), such an appropriation for Nicaragua will be regarded by these courr- tries as approval by the US of the Somoza "dictatorship". 21 February 1950 ECUADOR: Chan e_of Liberal Party Director I ke]y to Strengthen ?iCDN The selection of Julio Theodoro Salem as Supreme Director of the Liberal-Radical Party should result in strengthening President Plaza 1s party, the Movimiento Civico Democratico Nacional (i,X;DN), 25X6 thereby serving US interest in the stability of the Ecuadoran govern- ment;- The former director, Julio Moreno Espinosa, who has guided the Liberal Party in a policy of vigorous opposition to the Plaza govern- ment, resigned in January because the MDN Minister of Governs nt, Guillermo Ramos 25X6 Ramos is pleased tisith the situation as he feels that e appointment of Salem (,rho like Moreno represents the extreme wing of his party 25X6 will further aliens e e more moderate wealthy Liberals and encourage them to support the MCDN. D/LA estimates that such a realignment of moderate Liberals is very likely to result. While the principal effect of such a development would be to strengthen Plaza's position, the very awareness of the Liberal Party's declining influence may well stimulate its leaders to increased revolutionary activities as the only remaining Approvedd Pore eis+g1v 2706/11: CIA-RDP79-0109OA000200050008-7 3. Approved For lease 2002/06/11 : CIA-RDP79-0109000200050008-7 Weekly Contributions, D/LA. (CIA Working Paper) Situation Memorandum 9.50 21 February 1950 25X6 25X6 (Sum a - The Arias administration is not yet stcble. The economic situation is unfavorable,but the president is tack- ling economic problems with determination. The Communists maintain their capability for agitation and dissemination of anti-US propaganda. Student groups continue to figure in sub- versive activities. ea ent Arias is currently pursuing a friendly attitude toward the United States. -- US security interests wbuld be adversely affected by another political upset in Panama, and therefore the present unstable political situation is a disadvantage to the United States.) Political 9 Arias administration has not yet attained stability since its recent assumption of power (November 1949) as a result of a coup arranged by Chief of Police Eema`no' To date President Arias has not gained suf- ficient strength to oust Remon and his associates who threaten to force him, in turn, out of power (D/LA t"kly, 31 Jan). In addition, the presi- dent has made some unfortunate political moves which have intensified the resistance to him by alienating former supporters and by supplying his political opponents with new issues. A coup d?e'tat is therefore possible, and since Arias has armed his supporters, the ensuing struggle could be more bloody than the coup which brought him to power. However, his overthrow is not inevitable because -- unlike his immediate prede- cessors - he is backed by a majority of the National Assembly and can therefore more easily implement his policies. He has made sound state- ments of political and economic policy which have made a good impression in many quarterse It is estimated that the president may in time be able to stabilizes his administration, provided that a coup d'etat does not occur before this can be accomplished. Economic Th-a economic situation is unfavorable, but President Arias is tack- ling economic-problems with determination. It is true that unemploy- ment continues high because of the layoffs of recent months in the Canal Zone. Substantially nothing has been done thus far in the current administration to provide alternative jobs through public works or other forms of economic development, because the president inherited 25X6 Approved For Release 2002/05L$A.+ P79-01090A000200050008-7 Approved For Release 2002/06/11 : CIA-RDP79-01090Aad020005000a-7 okiy Contributions, D/ LA. - 2 w 21 February 1(o5O ?:orkin.g Papor) i uetion i raorandtm 9?5O -_n airrscsa; empty treasury,, a large fioqting debt and a poor fog ei sac it rating.. Nevertheless, Arias 13 trying to cut government expenses .rid balance the bud, et, anccd reportedly will also work to improve the tax C-6 1ectiota system, to arrango for the oayment of the floating debt, and o et;tract foreign loans sad. invrestme is for economic developmont, It is ectarated that there will be no :79a t improvement in Panrma v e economic V, tustion in the i.mriediate future but that if the political situation ;stabilises it may be possible for the president to lay a foundation for y:ater? economic progress? `ubvert i.ve _-V; U0-MUni8t'8 maintain their capability for agitation and dissemi- nNtlon of anti-W, propaganda,: It is true that there are few militant Communists in INAnRma., that the Communist Party has chronic financial difficu3.ties, and that there are evidences of some increasing opposition to Communism in labor and student groups and in the administratiorii, Nevertheless, Commvmist leaders are politically astute, the opposition is uncoordinated,, and President Arias is not strong enough to implement his anti=Commwn. st policy, Therefore., it is estimated that, in general, there will, be no substantial decrease in Communist capabilities in cosy nL months:, Student: groups continue to figure in subversive activities? These groups characteristically are used in Political maneuvers by both the Communists or fellow travel er?s? who are a. vary small minority of the gcoups and by conservative ultra-nationalists (l armodio Arias). The frequent similarity of political sins of these two extremist factions t.en'sda to Increfaee the political importance of these student group3:, 25X6 International ,...,...o~yr dent Arias is cu.rretrtl.y pursuing s. friendly attitude tovmrd t ho thaitod 8tstes Na recently obtained retificoticn by the National A?sembiy of a claims convention which Betties Icng-standirg financial ax?Z)blems betweei i nrxna snd the US:0 He takes every apportrua.ity to a;i,phasize the cormunity of interests betweon the two countries and has p.%3d ,sad Pull protection. to oil foreign capital that is used for' nr t:itor~al devoiolr.ment, provided that it respects Psneinanian laws.. It le estimated Uaat< irlportaa t factors in Ari ss' friendly attitude. are his un tf:bls pc;si- aar~ politically arse the unfavorable economic situation of Panama and i:3:xrst: this attitc,d ,.:ill not change radically in the near future, Approved For Release 2002/6 11 : CIA-RDP79-0109OA000200050008-7 5. Approved Fo elease 2002/06/11 : CIA-RDP79-0109000200050008-7 ,ioai:ly Contributions j D/?~~ 21 I'abruary 1950 (CIA ;Torlcing Paper) Situation ::emorandun 10-50 T ho Cent Situ on in Arr-Qnt;Lna ( -The eron governmont concerned over possible lose of vital suneort has during recent months mde drastic efforts to consolidate its position, utilizing incroasingly severe anti-domocratic methods. flew develloenonts oouerrhat favorable to economic adjust*nont have not boon adequate to easo tho continuing problems of inflation, shortage of foreign exchange, and lour productivity; the drought nay aggravate these difficulties. The government has continued its L.~tpi-,'otr unist campaign. or the moat part Vie military a car to be satisfied and loyal. .'ormal relations t7ith tho S remain good even though ?.roe:' c anti-democratic noasuros and his arxnaront desire for expedient ooo- nonic collaboration with the i:; are not reconcilable. --Us socurity interacts are favored by .1cron's recognition of tho need for expedient ocononic collaboration with the U. and by his miti-Ootuiunist measures. On the oUier hand 'l-ho continuation of un- democratic -sracticos and ant i 4 J pro pagc:xla within Argentina, and the possibility of a vitriolic campaign against the US adversely affect 10 interacts in Hemisphere. solidarity end in the ox eneion of democracy.) c The administration has ouJeavorod during roc'ent months to consolidate and entrench its political pager. To this end a congressional cor_mitaeo on anti- Argentine activities (see D/I.A JIL y 17 Jan 50) has closed approximately ono- fourth of Argentina's newspapers and has otherwise restricted the opposition-- which remains disunited in face of the possible application of reproscivo legislation (f/TEA Jkly 25 Get !r9). '.:ho comnittoe has attempted to justify at hone and abroad such action by claiming to need to ?1purl2y" the press and to protect it from foreign influence. :.ioreovor, Peron has publicly sought to arouse pro-Peron nationalism and to create optimism over his government's sta- bility. Those measures are probably des, ed to neutralize the political ill effects of current economic difficulties particularly affecting labor) to reinvigorate i'oron's'support in provincial elections and to anticipate the 1952 presidential elections. Despite curbs on the opposition and Poron's bids for support, the administration has not improved its position. i.iost important has been a noticeable weakening in Poron's vital labor support, but there also have been slight reductions in Peronista voting strength in recent provincial elections; those developments,, plus an increasing amount of public criticism (such as ;iat resulting from a murder of a Con unist labor leader by pro- vincial police) have boon vigorously exploited by the Radical opposition. D/IA estimates that tho government will. be able to maintain its present degree of stability despite possible decrease in provincial electoral majori- ties and despite the critical economic situation. r O Argontina's economic situation has not improved. It is true that during the past months an increase in Argentina's vital export trade and government Approved For Release 2002/06/11' f 'JPTS"0'I'090A000200050008-7 $::Cli 1 Approver Release 2002/06/11: CIA-RDP79 90A000200050008-7 ;let;~tly Contri'ozzcions, D/IA - 2 - al r'ebruary 1950 (CIA ~7orking Paper) Situation Lonoranduu 10-50 enpha; io on air ic-A,ure .lore levelopnonts in the dircc-c,~on of economic re- ad3ustriont. financial and political considerations, howover, l?avo liuitod the of foo 1ivoneoo of "fors toti,rd eeonoric reform; and inflationt short- agce of orei n =change and low productivity continued These dif_ iculties will probably be ag,,ravatod by the present drought. Indications point to a corn crop (the loading pro-,tier oxport) i nsuff iciont for export, furt':er re- duction of other crops and uncertainty concerning the level of livestock production. This prospective decline in foreign exchange earning capacity coincides with the need -?or large purchases abroad of aCriculural, transport and in- dustrial oqu:ipnent, frith substantial arrears abroad and fifth an already Beale foreign exehzango position, .'etron_clinont therefore appears inevi tablc as an influx of foreign capital, tho only means of averting i c, casino t, be e:. >ectedl at this time. Trade relations t7ith the Ulu have boor, strained; discussions will begin shortly to determine a neu moat price and to sot trade goals for the second year of the 11,1-Argentine aQroerient. Sparii;ah-~u?gcr~ ,_a.e trade's has readied an impasse because, of Spain's default on its cor1nit:1.: nts ar+Yi A?lrgont? a' a ad- verse economic situation. Optimism for expansion of ,;-Argentine trade as a result of the mark of the Joint Argon tinne-L'j Jomnittee for Commercial Studies has boon expressed in both official and privato circles in Argentina, but the government has neither published tho text of the report nor dis- closed plans for its inpionontation, other than tho establi.shnont of a perma- nent Ua-Argentine trade connittee in Buenos Alires. Eeant7?lile7 Peron publicly disavows any intention of obtaining a foreign loan although discreet feelers have been nut out for a possible loan from the Similar feelers Iwo been reported. in the ease of the UK. T.ta " The Arm a;>oarod for the most part to be satisfied and loyal although influential officers are probably sensitive to ioron'a latest concessions to labor and the reappearance of Sonora Peron in labor circles. ; .enevml of the USA' mission agrc :,:lent for a one-year period coincided with increased utilization of the UU: Army mission by the Argentine Army. The ri.litary's efficiency, morale (recently stipulated by a signifieaW,; number of pro- motions),, and quality of manpotior remained exceptionally high by Latin American ata lards. $ubyersivo The Por6n government hoe continued its vigorous ?nti-Conritu3lst can- paign to restrict Communist labor aetivi ti es and to appeal to nati onr2iat sentiment. Communists, for oxsrr!,le, are being purged from the govornmart- dominated labor federation; four important Oomuunict-front organizations tiro raided; the trio leading Communist publ ications mere closed dow.nl. The Co.-z--mists trill endeavor to exploit he administration's difficulties and its repressive measures but police action should p)rove.f any ;protracted 'on- muni; t-inapirod disturbances during coning non_ths. Approved For Release 2002/06/11 : $QE79-01090A000200050008-7 a, 7. Approve or Release 2002/0%/'44;rCIA-RDP79 90A000200050008-7 ?ee':ly Contribationc, VIA _(CIA :'apor) Situation ::ersorandma 10-50 -3 ?l o1. uaryy 1950 do orral relation: Frith the US continue ~:ocxi despite Via irroconc-i'Lability of the Covci nijont's enti-dctiocratic noazure:i and doapi to anti-USS propaganda on the doucst?es front. Unfavort Au prooa reactions in he floriloDhcro, particu- larly in the ,o A?orarzcs Host recent represoive uee urr;.-9 and . ?;;e?n inc~ press attzie a on the 'X continue to eonplicato- S-ArCon,i_ a relations. Lloo -, over, it iicati,?ns point, to a vitriolic anti-UC propagnrxla. ca_ripaign if the econc>xli.c situation deteriorates further and if US ocononic collaboration door not naterialize to t e dofiraito odvantago of Argen:;ina. Chile Argontine relations nerd improved by an exchange of lottorn of r3utual friondahip by the prosidente of tho trio countries. Argontina joined the UK and Chile in a ronc al of their agro z ont to refrain from naval displays in the Antarctic south of Lwtitu do 60 during tic coning season. Approved For Release 2002/0 - P79-01090A000200050008-7g.