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May 7, 2002
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March 7, 1950
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Approved For ease 2002/06/11 : Clk-RD -0109d,d00200050010-4 Weekly Contributions Latin America Division, ORE CIA 7 March 1950 CURRENT DEVELOPMENTS NORTHERN AREA: In Mexico, lbrxist unity oonferenoe next July is not expected to be successful (p. 2). CENTRAL AREA: In Brazil, the Communists are carrying on a virulent cam- paign against the Rio Meeting of US Ambassadors (p. 2) SOUTHERN AREA: In Chiles a step towards the left has been taken with a new predominantly leftist cabinet (p. 2), In Argentina, UK-Argentine trade relations are not expected to be substantially improved by forth- coming negotiations (p. 3). SPECIAL SUBJECTS The Current Communist Situation in Latin America 4 The Current Situation in Peru 6 BS-Argentine Relations . . . ............. . . .? 9 DOCUMENT NO. /0 NO CHANGE IN CLASS. 0 , DECLASSIFIED CLASS. CHANGED TO: IS S C NEXT REVIEW DATE? AUTH: H 7 i.A / DATE. 404.? i. * 1 REVIEWER _ Approved For Release 2002/06/1>MM-01090A000200050010-4 25X1 Approved For Iease 2002/06/1146FP79-0109 00200050010-4 Weekly Contributions, D/LA (CIA Working Paper) 7 'Lava 1950 MEX1CO: Marxist tkiir Conference Scheduled Axtbez'attmpt cons?ll4ater= Communist groups and unaffiliated Marxists will be nada next JILlYs.t.ocording to an arasouncemeat by the splinter groups, Acci6n Socialista DnilicaLla (ASU) and Mavimiente Reivindicador del Partido Zomanieta (LIP0); these groups are evident,' going ahead with p1aaa.7ex a ''Congress of Marxist Unite despite their failure in a recent n2sting to adherence of important Marxist elements, including t11,,, Fartido ,30n nista Mexican? (PCM), The failure of the unification attempt of last januer5, oa? in a large meaeure, be attributed to the government's sustained al. Communist drive. D/LA esti:tate:1 that the July coa?;ress will not prove aro, more succesaful because the government, ,::arsistcat with its policy of limiting the capabilities of opposition grouos? may L. expected again to renew its anti-Cammunist camraal&i. 2. BRAZIL: Virulent Communist Cammlasjallestlio Laataaa of US AnbassadZars the trazilian Communists are cerrying on a w..11-planned widely organized campaign against the conference of IL Azka6sadors being held in Rio de Janeiro this week. The Ccraciuiis'-s ara alsc a attacking the visit of Bka Kennan and Assistant Secretary of State Miller atom they term as "Yankee spies". The BraziIim police havo stated that this campaign is more virulent than anyth-ng in their recent experience; they have taken preventative neasuees against ta.. Communist organizers and have already made several araests. the Communists may be able to stage some demonstraLials requiring Ithe police will be able to restoe order betel the demonstrations reach serious proportions. The amy units in ar IMMediately adjacent to the city of Rio, mcreovor, am eutire4 to the goeornment and can be used in any emargeacy. 3 CHILE: Goverment love Towards the Left In the face of current adversities Chile has taken a step towards the left by installing a predominantly 1eftis, coalition cai net in place of the former one, which was composed of parties both the left and the right. Such a step is likely to lor,o ?rosident Gonzilea Videla to alter his previous middle-of-the-road policy of collaborating with both rightist and leftist groups in favor of a more leftist orientation. He may also, as a result of the cabinet change, be somewhat restricted in his use of the Defense of hemocraaa Law and the Special Powers Act which have proved iasaluaale weapons to him for maintaining order and controlling Communist threata. an the other hand, it ie unlikely that Congress, containing a large Conservative bloc, will enact dangerously radical ..Loasures, While it is true that the Cormaists any find a more friendly attitude from Approved For Release 2002 -RDP79-01090A000200050010-4 Approved ForWease 2002/06/11 : CIA-RDP79-010961400200050010-4 SECRET Weekly Contributions, WY, 7 March 1950 (CIA Working Paper) sone of the parties in the now cabinet, D/IA estimates that the neve to the left will net result in sufficient Communist strength for the Communists to become an immediate threat to the stability of the government. 14?, ARGENTINA: T.Inxt1(eAr,inoTradeRelations 1-Yribiti.Yf-a-C-tii--ryUK-Argentinetrade relations, which edvereely affect Argentina 'a economic stability, are not expected to be substan- tially improved by the forthcoming negotiations between the two coun- tries. In these negotiations, which include establishing the neat price and trade goals for the second year of the June 1949 comnercial agreement, Argentina is in a poor bargaining position with its princi- pal customer, the UK, Argentina 'a critical shortago of sterling has been due to a reversal of its traditional favorable balance of trade with the UK and to dependence on British supplies of fuel and other essential materials. The UK is therefore in a good position to press for continued low meat prices, for revision of Argentine exchange rates favorable to the DK, and for conmitments to liquidate financial and commercial arrears. The UK will probably agree to expand its purchases in Argentina, while the Argentines mgy malm sore concessions regarding their exchange rates. Although there has been no indication as to the extent the Argentines may prepared to resist British pressure, there is resentment against the UK for reducing purchases partly to maneuver Argentina into an unfavorable trade position. There is also increased evidence that Argentina is becoming disillu- sioned with such strictly bilateral trade schemes which, in this instance, has resulted in aggravating trade difficulties and reducing the total volume of trade. /n view of these circumstances, there is little reason to expect that the new negotiations will produce results any more fever- able for the Argentine ?comely than the commerical agreement of June 1949, (D/LA Wkly., 6 Jul 0). 25X6 Approved For Release 2002/06/11 ? 090A000200050010-4 ? Approved For Meese 2002/06/159MRDP79-01094000200050010-4 7 Marc .195,1 Exceptions t? the 11110011113 declining trend in CommuulSt tb and influence in Imitill'Alarieta have appeared during the roe 141pever, CommssIstAstivitiss have continued at about the mess 10 leirel,and Coomeedet-0001bilities in Latin America still ile- emaU.) freed* and Current tett pas ee no pities of the Connunist parte3 in Let= eh have been concerned largely with the problems of t'ontinuiut. to east, eemphaeis has teen placed nu labor organizations in some areas and*Illiaittical deals in,ethers. To regain pcpaar support and to colint,.. . ast-the've0 damaging charge or UsSe contrel made against local Communist Perties; the international aspects or Coemuniam have been generally eoft- pPdalled.aleilocal issues have.beeh emPhasieecl. The "Psas" campaign hab * 10et ssteat? its momentum, thheecit bas gone ou quietly- in some places, The Coiemnistedomipated contodtraciiin de Trabajadores de la A,me.riea Ourwi eiPonsoring'a'South Ameriean labor conforence planned for March e? Communist straftefilthbod slightly in Mexico, 'Argentina, and ColonSirTiriag the eaMt quarter: largely because of ulternment sponsore6 ant i4COViniat activity, Xsxtco during the pest three.,pQnths, the adminietration has been 4 more or less systelsati41411tieComieuniet campaige. When the 8 hegan'to criticize thitgOleessent and the president. Communia4 e of t oil, unions was masettered dee of office and z'splaced by opportunbte, who may also' bee4 _ertee.but who favor the administratIon., When Ceet0ipistsbegon to use the taki istrikeefor organizational purposeew the goeipeemeilt declared it illeeal end -broke up a union meeting with some vieleielheen4unfavorable puelicitye -Recently the President activated a youth greet to compete with Communise and other political elements seeking to: develop support in that sector, In Argentena, the comnettee on inti-Argeatine activities ha3.prcoeode4 to'eloSeVeoraraunist neespapere, and Party and frentegroup headquarters in eeeious provinces and a purge of Commoniste from the officially sepported lubor federation (CGT) ha e also been continuing, In Colombia the. Communist Tarty headquarters was raided; and the Came mupisteinflUenced leboeefederation (CTC) wee discouraged by various device Gains: On the other hand, there have been *light political gaina in Cozmarg7Strongto or influence in Guatemala, El Salvador, and also possi- bly cube. The second of the tee major Guatemalan labor federation e joined .1 Approved For Release 2002/06/9-01090A000200050010-4 Approved For ease 2002/06/1MCGTA-RDP79-0109 00200050010-4 Weekly Contributiore, DVLA 7 March 79 (CIA Working Paper) Situation Memorandum 12-50 the CTAL and the WTI recent.1,y aid Connevist sympathizers in. that coeetse eepertedly are working in the leftist parties, *bleb aro supperting eelenell Aebenz e- the leading presidential candidate for tho. coming eleetione. tleetemale? 'Communists have not oily been tolerated, bite also Communiet ,f t- eeoups have been government subeidized; and Communistically inclined eersons eave been given government jobs_ As a consequence, in the, coming queeter, Communists may be able to gain further political influeece in this coenesTe Li 1 Salvador COMMUDi3t5 have combined twe political parties and coetd p. b: identify themselves with the Liberal elements dissatisfied with the sot- dedacy of Major Osorio, in Cuba, the Communista are preparing to join fereee slith the Batista-Orau opposition to Prio for a by-eleetion, When thi3 ie accomplished, as seems likely, the Cuban Communists will have made a diestiect gain Slight gains have been noted in Coerurdst influence tn labor in Veeezuela, Peru, Costa Rica, and Nicaragua. In these ecentries? Communist labor aetietty has been tolerated since the present regimee consider this no threat to Lhene It is estimated that, although some farther labor gain might accrue to tne Communists, the governmenta in each eaee could easily contain esesh gaine No Chan es In the other countries various faceore have reoulted ia ee change n Communist strength; In Brazil, Bolieia, and Chile, Compuniste have been arreated, fined? Sailed, and deported; Communist propaganda hee been seized; aeti-Communist propaganda hes been geeorated, and general zee pression of the Qommuniste eontinued, This repression ba s prevented the Communists frem meking any paints in those ceautries. Probable Future Develo ments. In Mexico an Argentina it is estimated the in the coming three meethe the Cotmunists will lose some more of their strength and propaganda eaehineey through anti-Communist governeent action, while in Guatemala and Cuba they will score further gains. In the other Letin American eoentrias it ie lieved that the Communists during thia period eill maintain their orgeni;;a: tion, activities, and propaganda at about the same lo y leeel as in the pal* quarter q The nPeaceo campaign may be expected to go op quietly in seme places, but no hemiephereseide HPeace" meetings will terse plc e 000n. The CTAL Labor Conference will probably be postponed,. but eeen held may else be a front for hemisphere-wide secret. Cemmunist meetings, end a forum for anei- US propaganda Anti-US propaganda tied to popular locel eseves, mayn in some instances, Desalt in delay or obstruction ef developments desired by OS, such as the signing of the Rio treaty by aeatemala. Ceesseniet control of labor in transport, port, communicationa, and strategic meteesiala ip noe expected to increase during the period, and Communist-inenieed or prolonged strikes will not seriouely affect etc flew of Latin Ampriean materials to the US*, Approved For Release 2002/06/1 9-01090A000200050010-4 5. Approved Foreaee 2002/06/11 : CIA-RDP79-01094400200050010-4 SECRET Weekly Contributions I)/Lk (CIA Working Paper) EilWation Memorandum 13-50 The Curr nt Situation in Peru MINI?101?110.0. ?1? 7 March 1950 1 (Summary The Odria regime, deapite groming polithoal opposi- trZ7igintains its stability. The economic situation continuee to show some improvement. The armed forces renain eubstantially loyal to the government, Although the Apriatas have .become somewhat.boldere they are unable to make a major mohe; the Communists do not at present constitute a significant force. Peru's relations with other countries have increased in -- The situation as to US interests has been advereely affected, to a slight degree, by delay in the issuance of a petro- leum law favorable to foreign capital end by the Perevien govern,. mentls failure to allow payment of ?a large commereial arrearage due the US.) Ptlitical The Odria regime, despite growing political oppoaithon, maintains its stability. Some political groups oppose the decree eoverning tee 2 July elections and feel that the reaignation of Odria on the day of the election in order to run for President will not ;satisfy relevant constitutional. provielens. Nrther dissatiefaction ia engendered by Odrfals failure to meet conflicting demands for congressional seats --. lately the object of a strenuous campaign by interested Individuals. Nevertheless, Odria still has the nominal support of the major legal parties, of most of the former independent congressmen, sad of the powerful Miro Quesada and Prado factions. . Since he controls the armed forces and has arranged matters so thit the Apristas, Peru ,s most numerous r 25X6 political groups' 10dera should be able to look formard to victory D/Is'. estimates that the dissatis- 25X6 faction of various political groups and portions of the armed forces is not likely to threaten the tenure of the Junta prior to he election. Economic Peru's economic situation continues to show some improvement despite unfavorable factors While the national budget for 1950 is nominally balanced, it authorizes a total expenditure 43 percent more than the 1949 total. Such a large increase in the budget was a shock to cohnhee- cial circles. Contrary to the recommehdatione of the nein Uission, no provision for nen taxes has been made. Thee, it aepeees thlt the goveri,- ment will again be forced into deficit financing with Ito attendant evile. Of concern to the US is the report th,t the new petroleum proposals SEC Approved For Release 2002/06 : CIA-RDP79-01090A000200050010-4 6. Approved For Oease 2002/06/1 woriRDP79-01090140200050010-4 WOekly Contributions, D/L?'. - 2 - (pIA Working Paper) Situaticn Nemorandum 13-50 7 March inStead of being iesued as a decree -- may be held up until Congres can enact them into levee In such a co nationalists in Gongrese 7ou1fl be certain to make many changes with the prabable .asult that thc final law would be considerably less attractive to foreign cdpital. In the last menthe the sal has conthlued to .1.,predate but, appar:, to have found its level. As foreign e:!zchangoie;:rj_fficient for :U7.,port!:, no major varietions are anticipated in the exchAnu rate for the imir. diate future. Prospects for cotton, Peru's most iportant export, are more favorable than at this time in 1949, while the 1949 sugar harvesi. is expected to exceed slightly that of 1914/3 In general, economic prospects for the next quarter appear reasonably promising.. 14114FThe Odria regime maintains control of the armsd forces despite the existence of various disaffected and subversive groups. The government is. keeping under surveillance General Noriege, (Minister of :lar), Col. Alfonso Llosa and Col. Monteza, reportedly plotting separately against the regime, and hes arrested other officers. Col. MonteLa represents the most dangerous threat because he has the support of influential . December marked the close of the training period for the Peruvian army, after which conscripts were dismissed and a new class of 17,000, was inducted, for a two-year period. There has been, therefore, the normal decline in efficiency and morale, Appropriations for the armed forces., though increased in amount, still constitute 20% of the total budget. The Air Force has been disappointed over a US decision refusing export permits for 4 jet planes on which down payments had been made. Subversiveipristas . -- the most numerous ?roup opposing the present regila -- remain disorganized by continued repression and surveillanee and con- sequently are so weak that they are unable to make any major move at this time, Nevertheless, as a result of the slight decline in the strength of the Ddria rpgiifie, they have become somywhat bolder. Their potential for causing difficulties in the future, therefore, is sig- nificant primarily in relation to the inner weakness of .the Qdria regime which could develop over the longer term. The Commanista?-On the other hand, represent such a small group numerically that it 1t3 unlikely that they will constitute a significant force during the coming:. months even? if the regime continues to tolerate their activities. International , Peruls foreign relations have increased in cordiality. It is trio that commercial relations with the US have been, adversely affected by the Peruvian governments disregard of its large comucrcial debt to the Approved For Release 2002/06/11i, -RDP7 -01090A000200050010-4 7, 111 Approved For ease 2002/06/11 : CIA-RDP79-010981.00200050010-4 SECUT Weekly Contributions: /VILA (CIA Working Paper) '3ituation Uemerandam 13-50 7 March 1950 US in favor of a relatively small current debt to Arentina, Furthermoi Lb e imminent reopeninz of Peru's long-stahding boundary disIpte vath Ecuador at a mectin:: of the guarantor nations of the 1942 hio Protocol may cause difficulties. On the other hand, a ?cruvian-alcuadoran trade agreement has-bec,n drawn up in draft, and Bolivia as :raently appointd an Ambaseador to Peru afteu leaving that post vacant for over a year, Peru and Colombia have :,ppointed al hoc justices, who will be incor- porated into the International CouR.oP justico, tc rc7icvrthe Eaya de la Torre asylum case, l'eras close ties with Spain an indicated by - the Spanish Ambassadorqs decoration of rerals Foreign 'iniater and the arrival in Lima it mid42ecember of a Spanish Police Mision, On 20 Dec.,ef bet' 1949, a Peruvian-Italian commercial ,grecmont,vhich provides for the exchange of products on thz basis of sterling credits %Ls approved by the junta. 4,1e,001% Approved For Release 2002/06/ . CIA-RDP79-01090A000200050010-4 Approved Forlikease 2002/06/11 8FAMIDP79-010960100200050010-4 Weekly Contributions, DAA (CIA Working Paper) Article 4-50 US-Argentine Relations 7 March 1950 An important development in Latin America is the increased possibility form improvement in US-Argentine relations that would advance US interesta both in Hemisphere solidarity and in economic stability in Argentina? Lem- ing peat months persistent economic dislocations and the pressure of an increasingly stringent financial situation (with shortages not only of dollarn but also now of sterling) have intensified Fern's recognition of the necessity for at least limited economic collaboration with the US. Recent events indicate some progress in this direction, in spite of continuing difficulties, The head of Argentinaqe National Economic Council, for example, has sug gested that a US-Argentine Treaty of Friendship and Economic Development might assist in solving mutual problems and in attracting foreign capital? More recently the Argentine government, now regarding financial assistance from the US Government as essential to improved economic stability, has offered certain assurances that it will revise its economic policy so as to qualify for such US aid, Even though preseat dollar earnings are so reduced as to preclude any quick liquidation of Argentine dollar arrears to US rims, regular payments lave already been undertaken a falumonthe ago. Furthermore, Feral now realms nizes the importance of satisfyine the leeltimato needo of US business operat- ing in Argentina, particularly for assurances against expropriation, Roth the necessity for cooperation with the US and PerOnts present attitude toward the above problems warrant some hope for their amelioration. It is true that PerOnla political commitments to state control of industry and his depend- ence on the support of nationalists opposed to collaboration with the US will make any conciliatory move difficult for him. On the other hand. Continued economic deterioration -- reflecting not only the lack of improvement under present circumstances of US-Argentine trade but also the growing unfavorable balance of trade with the UK, Argentinals best customer -- will have its own political repercussionn. Therefore unless Per6n is able to solve his diffi- culties -- which is unlikely even with retrenchment -- the settlement of some of the outstanding US-Argentine trade and financial problems will become more urgent for him, Approved For Release 2002 RCP79-01090A000200050010-4 9,