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: 
March 21, 1950
Content Type: 
PDF icon CIA-RDP79-01090A000200050012-2.pdf814.03 KB
Approved For Release`2~002/06/11 : CIA-RDP79-01090A000200050012-2 Weekly Contributions Latin r)a D vie on E0 CIA 21 ttrah 1950 of the items reported on this week, D/LA finds two of particu- lar Interest.. that on the report of the OAS investigating committee (p. 2) and that on the weal: Bolivian government's suppression of a revolutionary attempt (p. Q. GENERAL: The (u S inveetigi tion of the Caribbean situation may be expected to curtail future hostile activities in that area (p. 2). The planned pro-Comcauniat t:TAL meetin in Montevideo has, thus far, poor prospects for au:cess (p. 2).. Both Peru and Colombia appear to be delaying prooiedings on the Rays case (p. 2). NORTHERN AREA: Should Ror1uras' President 4alvez leave the coun- try temporarily, as is rxxected, his absence will have a somewhat unsettling effect (p. 31. In Guatemala, anti-US agitation will increase as the result of the acceptance by Colonel Arbenz of leftist political suppctt (p. 3). In Guatemala, cabinet members have resigned to force the president to make clear his political position (p. 3). CENIBAL AREA: In Brazi+, the cabinet shakeup expected within the next two weeks is not Healy to affect stability or US interests in that country (P. 4). Ecuador's government is subject to irr- creasiag pressure from he International Monetary Fund to devalue its currency (P. 4). SOUTHERN AREA: Bolivia 'a weak government again has been threat- ened with revolution (1. 4). Bolivia is not expected to press its suggestion that a 'Miller Plan" for economic aid be formulated in the US (p. 5). In4.rgentina, rumors of a large US loan have created a delicate si-;bation (P. 5). SPECIAL SUBJECTS The Current Situatio?i in Chile . . . . . . . . . . . . . . 6 The Current Situatic r in Venezuela . . ? ? DOCLn Nfi N& ' * 9 LZ=, N0 ,CHANGE IN CLASS. ^ DECLASSIFIED NEXT REV'lli`. ~:""" Approved For Release 2002/06/11 - W+ WZQ-~1090A0a 24EVIEWER:A Approved For Releas*tP'2002/06/1aI -RDP79-01090A000050012-2 Weekly Contributions, D/LA 21 March 1950 (CIA Working Paper) GENERAL: OAS Investigation of the Caribbean Situation T1W far-reac g and comp a Factors con buting to Caribbean unrest have now been brought formally to the attention of the American Republics by the report and recommendations of the OAS investigating committee, which has recently finished its study of the situation in that area. Of the four countries involved in the controversies which gave rise to the investigation (Cuba, Dominican Republic, Quatemala, and Haiti), the first three were found culpable. If, as is expected, the committees recommendations will receive approval and implementation by the Council of the GAS, they will make a further contribution toward restoring tranquility to the Caribbean. Although ill feeling still exists in the area -- the Dominican Republic, for example, has reportedly threatened to break relations with Cuba -M- the Bork of the committee has already alleviated tension. Me committee's frank report (which has been made public) reeammanding further study of the complex factors underlying Caribbean unrest and the strengthening of existing inter-American machinery, should have a salutary effect on the countries concerned and give added prestige to the CYLS and its instrumentalities. These recommendations, if adequately carried out, will probably curb future hostile activities on the part of the Caribbean countries presently involved, particularly in con- nection with revolutionary plots against their neighbors, (Substance in CIA Wkly, 17 Mar 50. ) 2. Pro-Communist CTAL Meeting in Montevideo Despi o etaoles; the Communist backers of the Ttonte- video Congress of South American Trade Unions appear to be deter- mined to go through with their plans for the meeting. A serious obstacle faced by the pro-Communist CTRL organizers is opposition from the Uruguayan government, which is said to have issued instructions to its missions abroad not to grant visas to persons wishing to attend. Furthermore, the planned Congress has so far evoked but slight interest among Latin American trade unions. Nevertheless, the meeting is now scheduled for 2'7-31 March, and, while it is possible that some prominent Communists may not be able to get to the meeting, it will still serve as a front for Hemisphere-wide secret Communist meetings, and a forum for anti-US propaganda. 3. Peru and Colombia; Delays in the Haya Case Requests for delays in t ya case. ma by both Peru- vlans am Uolombians, Indicate that neither party is anxious to press proceedings before the International Court of Justice and may be willing to make some separate face-saving arrangement to Approved For Release 200'' 1A-RDP79-01090A000200050012-22. Approved For Re1ea2002/OIA-RDP79-01090A000050012-2 Weekly Contributions, D/IA 21 March 1950 (CIA Working Paper) obviate the necebeity for a court decision. The present Colombian adrd rd tration appears ]e ss eager to embarrass Peru, while Peru's domestic situation has changed so that a failure to press Peruvian claims would have a less dangerous effect on government stability. If Haya were allowed to go to Colombia by private agreement, ten- sion between the two countries would be eased and the only unfavor- able effect would be the implied slight to the International Court of Justice, 4. HONDURAS: President to Leave Counparar~i m~a bri poi uncertainty that ensued when President Calvet recently asked for and received congressional permission to leave the country for medical treatment in the US is now dispelled. Rumors circulated to the effect that ex-president Carlas would return to power when Vice President Lozano submitted his "irrevo- cable" resignation, The vice president, who is able but not popular, has withdrawn his resignation, and Calves will probably come to the US this suer. Although there is little organized opposition to the. administration and the political situation is relatively untroubled, it is estimated that the president's absence will have a somewhat unsettling effect. 5. 0UATE'NALA: Anti-US A tation n - agitation., which may become a threat to US interests In the country, will be aggravated further by the recent campaign alignment of Colonel Arbens with leftist political parties and labor unions, by providing anti-US and pro-Communist agitators with a measure of protection during the forthcoming presidential campaign. (Substance in CIA Wkly, 17 Mar 50.) ~. Cabinet Resignations Test Arevalo's Political Sympathies omes c crisis Is nvol resignation o all but two of President Arevalo'a cabinet ministers who resigned "in order to leave the president free to choose his collaborators during the final year of his term". During the current presidential canr- paign, extreme leftist administration parties are supporting the candidacy of Colonel Arbenz, whereas the moderate Frente Popular Libertador (1rPL) has rejected Arbenz on the grounds that it is opposed to a military candidate. ArBvalo is known to be opposed, in principle, to military leadership, but he has also depended. strongly upon Arbenz for support. Because Arevalo's personal sympathies, if known, could exert a powerful influence over the electorate, D/LA estimates that this mass cabinet resignation may be an attempt, by moderates and extreme leftists alike, to force Arevalo into a position where he must display his political prefer- ences in the current presidential campaign. Approved For Release 2002/ DP79-O109OA00020005001 ~'2 Approved For Releas2002/06/11 : CIA-RDP79-01090A000N X050012-2 :SECRET Weekly Contributions, D/LA (CIA Working Paper) . 9. 21 March 1950 BRAZIL: Cabinet Reshuffle Expected During Next Two Weeks Several ca ins ministers are expected resign during the next two weeks in order to become eligible for election in the 3 October general elections. (A cabinet minister must resign six months prior to the election to be eligible as a presidential candi- date and three months before the election to become an eligible candidate for a state governorship or for the federal legislature.) Although War Minister Canrobert appears to be the only cabinet minister expected to become a presidential candidate (D/LA Wk]y, 29 Feb 50), those planning to become candidates for state governor- ships or for the federal legislature also are expected to resign during this period in order to permit President Dutra to appoint a new cabinet to serve out the present term. This expected cabi- net shakeup is not likely to affect in any way either the political stability of Brazil or the US security interests in that country. ECUADOR : Pressure for Devaluation Increases Ecua is most recent foreign exchange legislation (D/IA Wkly., 17 Jan 50) has caused the International Monetary Fund to put mild pressure upon the government to revise its foreign exchange system with a view to devaluation, Instead of moving toward the abolition of multiple exchange rates (one of the Fund's basic objectives), this recent legislation increases the number of rates by applying multiple exchange rates to exports as well as to imports -- an action which was taken without prior consulta- tion with the Fund, The reason behind the government's failure to consult with the Fund before adopting the new measures in Decem- ber was its feeling that outright devaluation --- a course recom- mended by the Fund last fall -- would be politically dangerous for the administration, The Fund has indicated its disapproval of the government's measure and of the manner in which it was taken. The most extreme sanction available to the Fund is expulsion an action which would most seriously impair Ecuador's international credit position. D/LA estimates that President Plaza will yield to Fund pressure for devaluation and a uniform exchange rate to the fullest extent consistent with the security of his domestic political posi- tion. In view of the likelihood that Plaza will be able to offer some measure of cooperation, and, in view of the now-almost-tradi- tional Fund policy of leniency and compromise, D/LA further estimates that no drastic action will be taken by the Fund against Ecuador. BOLIVIA : Government Discovers LM-PIR Plot Fersisten plo tins by the rightist National Revolutionary Movement (MNR) and other groups, including active army officers, continues to threaten the survival of the present government, The Approved For Releasq-R&MfW "RDP79-01090A000200050012-2 Approved For Rele 2002/06/11 : CIA-RDP79-0109OA00626050012-2 SECRET Weekly Contributions, fl/LA 21 March 1950 (CIA Working Paper) INR, PIR,, government has announced the discovery of a plot by the N and retired army officers to stage a coup during a threatened general strike. A general strike has been considered a possi- bility for some time because of frequent reports that the MN ate. and PIR have been attempting to incite mine and factory workers against the government and because of the general discontent throughout the country (D/LA wkly, 28 Feb 50). Despite the possibility that the L1NR may ultimately gain sufficient support either from the army or from the PIR to stage a successful revolution, D/IA estimates that, for the present at least, the government of Bolivia may maintain its very precarious tenure. 10. "Miller Plan" Pro osed for Latin America The ivsan government rece-nTly proposed that the US formulate a "Miller Plan" as a Latin-American counterpart to ERP. This suggestion, which was prompted by the desire for financial aid to check further deterioration in Bolivia's difficult economic situ- ation, reflects the general belief by Bolivian leaders that the needs of Latin America, as well as those of Europe., justify a plan for US economic aid (D/LA Ilkly, 2g Feb 50). It is not expected, however, that the Bolivians will press this proposal further at this time. U. ARGENTINA: Rumors of a US Loan Zunting rumors in Argentine business circles of an impending large US loan (600 million) to Argentina coincident with the visit to Washington by Senor Ramon Cereijo, President of the National Economic Council, has created a delicate situation regard- ing future US-Argentine relations. Despite continued official denials of any interest in a US loan and despite the government's failure thus far adequately to meet US suggestions for improvement., Argentine optimism concerning prospects for improved US-Argentine relations has increased and been widely publicized, especially as regards Asst. Secretary Killer's visit to Argentina (D/LA Wkly, 29 Feb 50) and the visit to Washington by Sr. Cereijo, It is true that, should the results of discussions with the US not be satis- factory, and if the economic situation does not improve., Argentina is prepared to launch a vigorous anti-US campaign, the groundwork for which already has been laid by the congressional "anti- Argentine activities" committee (D/LA Wkly, 17 Jan 50). As the situation now stands, however, the Peron administration continues to make overtures directed toward the accomplishment of improved economic relations with the US, Approved For Release 2002/06/11 : C ;8DP79-01090A000200050012-2 4ZWff11'P,_ 5. Approved For Rele 'e 2002/06/11 : CIA-RDP79-01090A00r'Mb0050012-2 Weekly Contributions, D/LA (CIA Working Paper) Situation Memorandum 15-50 The Current Situation in Chile 21 March 1950 The recent realignment of political parties in the cabnedoes not seriously affect the basic stability of the government. The economic situation continues to be the most pressing problem facing the government. The armed forces remained loyal to the government during the recent strikes and are expected to support the new cabinet. The Communists appear temporarily to have abandoned their technique of exploit- ing favorable opportunities to create trouble. Chile's inter- national relations zemain cordial in general. -- Recent changes have not significantly affected US security interests.) Political 3Ra realignment of political parties in the new coalition cabinet (D/LA V kly, 7 Mar 50) does not seriously affect the basic stability of the Chilean government, but will probably alter government policy and reduce the power and prestige of the President. The new coalition appears to enjoy wide popular support, especially from the politically inportant white-collar unions that exerted great pressure to effect the cabinet changes. In Congress, hover, the balance of power is so delicate that the coalition will be forced to rely on the support of opposition groups to enact the legislation it desires. It appears likely that the now coalition will continue the former government's industrialization pro- gram and will try to implement a broader social plan that will appeal to the white collar workers and at the same time will be acceptable to certain opposition groups in Congress. The ooaliticW a success in this program will depend on its ability to work out an economic program. that will be feasible as well as politically acceptable. According to present indications, the chances for this are very poor. Should the new coalition fail to meet the exigencies of the present situation, further political and labor disturbances would be certain to arise. The President, however, is likely to retain his post but may at least temporarily have to adopt a more leftist orientation and abandon his formerly successful technique of political extemporization in the face of crises. Economic Cole's unfavorable economic situation remains the most pressing problem facing the government. At the turn of the year economic gains were small compared with the over-all economic decline, and prospects Approved For Release 2002/06/11 : CIA-RDP79-01090A000200050012-2 Approved For Rele 2002/06/11 : CIA-RDP79-01090A00Oir050012-2 SBCRLT Weekly Contributions, D/LA 2 (CIA Working Paper) Situation Z!Iemorandina 15-50 for noticeable improvements in 1950 appeared dim. The significerAco of a small favorable trade balance was overshadowed by the considerable drop in volume and value of exports. The slight gain derived frora the 2 cents per pound increase in the price of copper over that proraiL ng in mid-1949 was threatened by the possibility that the US might reimpose the 2 cents per pound import excise tax on copper. Plans for expansion of agricultural output at lower cost to the consumers have been jeopardized by serious drought conditions which may necessitate considerable foreign exchange outlays to m ke up expected deficits in food supplies. Infla- tion has bad a disturbing effect on labor-management relations a well as on the population in general. The recent cabinet changes, which caused a realignment of political groups in congress, have reduced the chances for Imminent legislative implementation of either the economic program agreed on in December or any comparable long-range plan. Although the general situation may be alleviated somewhat by the small benefits that will be derived from the new industries - chiefly steel and petroleum -~> as well as from projected bilateral agreements designed to conserve dollar exchange, the basic problems w- unfavorable exchange position, deficit spending, continued inflation, and the unfavorable position of copper? -?? are not likely to be resolved immediately. Milita The armed forces remained loyal to the government during the recent wave of strikes and aided not only in preserving order but also in operating certain public utilities. The retention of General Barrios as Minister of Defense in the new cabinet is likely to satisfy the prestige of the military and assure their continued support. The remiinl of Admiral Bolger as Minister of Interior appears to be a political move directed against the President rather than against the armed .fez'ceps,, Subversive T a ommunists did not participate to any great extent in the recent wave of strikes and appear to have abandoned -w at least temporarily -- their technique of exploiting favorable opportunities to create 1;rouble. Instead, they now appear to be courting minority groups in Congress as well as certain parties in the new coalition in an effort to effect the repeal of repressive legislation, such as the Defense of Democracy Iiw. While some of the parties in the cabinet are rather friendly to the Covr- munists, it does not appear that the total gain in Communist influence will be sufficient to make any radical change in the political situation. International TUtile international relations remain cordial in geniral, most noteworthy is the continuing display of great friendship for Approved For Release 2002M%T11 : CIA-RDP79-01090A000200050012-2 Approved For Rele 2002/06/11 : CIA-RDP79-01090A000050012-2 S=R ET Weekly Contributions, D/LA (CIA corking Paper) Situation Memorandum 15-50 Argentina. The now coalition government is expected tc continue this trend and to be at the same time pro-US and anti-USSR, especially in the UTd where Chile has played a leading role. A significant fta.ator locally, and in US-Chilean relations as well, Is the forthcoming visit of Presi- dent Gonzalez Videla to the US. Although the unsettled political situa- tion in his country makes the timing of the visit somewhat inopportune for any campaign to gain tangible evidences of US friendship, the visit will nevertheless serve to renew traditional ties between the US and Chile and may help Gonzalez Videla to regain some of his waning prestige. g. Approved For Release 2002/06/11 : CIA-RDP79-0109OA000200050012-2 Approved For ReleNtL 2002/06/11 : CIA-RDP79-01090A00 0050012-2 Weekly Contributions, D/LA 21 March 1950 (CIA Working Paper) Situation Memorandum I6-&0 The Current Situation in Veaezue7.a (Summary ?? The military junta's control appears to be firmly established. The prospect of severe reductions in oil production, while creating an uneasy economic situation, contains no imminent threat to political stability. Communism has suffered minor set- backs, and has made no significant advances. The work of the US army mission is beginning to bear fruit. Venezuela has no major problems in its international relations. -- Most unfavorable to ITS interests is the prospect of sharply curtailed oil production, -which may deprive the US of a large part of one of its most important foreign markets.) Political The political situation continues calm, and the military junta appears to be more firmly established than at any time since the coup of November 1948. Reports concerning a rift within the triumvirate have declined. Al- though the threat of revolutionary activities by Accion Democratica exiles cannot be altogether discounted, such threat is no longer immanent. Progress towards the reestablishment of some semblance of a consti- tutional regime will undoubtedly be slow, although the first steps in that direction have been taken. Municipal councils have been named (D/1,A kly, 10 Jan 50); a first draft of the new electoral law is under discussion by the electoral commission. No date has been set for elections, which will probably not be held before late 1950 Prospects for continued stability are good. The present petroleum crisis (see "Economic" below) will probably not have political repercussions of such magnitude as to endanger the government's stability. Economic The economic situation has become less favorable primarily because of the threatqned restriction of oil imports by the US. Passage of re- strictive legislation now before the US-Congress might cause a reduction of exports to the US by as much as 250,000 barrels a day. Two steps have been taken to avert US restrictions: 1) the companies have agreed to re- duce production by 100,000 barrels a day; 2) a mission of Venezuelan business Hers now in the US is attempting to gain support of US exporters to convince Congress of the danger to the US export market of contemplated restrictions. Approved For Release 200O00?T%- A-RDP79-01090A000200050012 2 Approved For ReIe 2002/06/11 : CIA-RDP79-01090A000050012-2 ,Weekly Contributions, D/LA - 2 - 21 Farcb.. 1950 (CIA Working Paper) Situation ! emorandum 16R ,o The principal effects of a reduction in petroleum prodr etion would be increasing unemployment, reduced government revenues (approximately 60% of which are derived from the petroleum industry), and curtail-ant of pur- chases from the US. Nevertheless, Venezuela's strong currency and h .: absence of external debt would partially offset the impact of reduced oil production. Although a continued petroleum crisis would probably necessi- tate exchange controls and re-employment projects, it is not likely that ,ffio stability of the government would be seriously endangered'',. Negotiations between the oil workers' unions and the companies for revision of the labor contracts ended when the companies reposed to revise wage scales upwards. The possibility is not great that an oil workers' strike will be attempted. The fact that the Communist federation, the Comite Sindical Unitario de Trabajadores Petroleros (Cosutrapet), repre- sented only its own affiliated unions in the negotiations may be construed as a setback to the Communist campaign for syndical unity (1)/L.A Wkly, 31 Jan 50). the strike of iron workers in the Iron Mines Company of Venezuela (a Bethlehem subsidiary) was ended when the junta decreed 17 February that the workers must return to their jobs by 22 February, and that both parties must submit to arbitration by a board of three, representing union, company, and government. The workers will probably gain their strike objective, a contract. Subversive Communism in Venezuela has made no marked advances, and, has sustained a number of minor setbacks during the past three months. The Communist-A1) coalition "Fran t+e Damocra tica" , which is trying to gain control of cultural groups, failed to get candidates elected as officers of the A.sociacion de 9seritores Venezolanos. Slight indications of firmer government policy are seen in the absence of Communist representation on the municipal. councils and in the denial of permission to the - Institato Cultural Vene ,o1ano- Sovietic:o to establish branches outside the Federal District., Although the present petroleum crisis creates a climate favorable to C ommunist propaganda, there is no evidence of a diminution of the government's ability to deal with any labor disturbances which might result from Communist agitation . y iii taEy 1h e Venezuelan army continues to be loyal to the goverunsnt.. Factional cleavages are ill-defined and submerged. The position of the junta has been strengthened by the circumstances attending the arrest in December of Lt. Col. Roberto Casanova (DA A Ikly, 13 Dec 49). .601 1` 10. Approved For Release 2002/06/l f: CIA-RDP79-01090A000200050012-2 Approved For Releee 2002/06/11 : CIA-RDP79-01090A000Z00050012-2 A`ee kly Contributions, D/1 A (CIA Working Paper) Situation 1 emorandum 16-50 w3- 21 March 19'0 The increasing influence of the US array mission has been Liemonetrated in the following ways. 1) The missions's program for recruit, training, limited last year to the Caracas area, is now being carried out throughout 'ffie country. 2) The present airborne train._ng program for 122 men and 7 officers is nearing completion with the (Laparture (23 January) of the remaining 40 enlisted men to attend the basic airborne course at Ft. Bennings. This program has particular value for defense against internal disorders and sabotage. 3) The office of the Inspector ]enaral of the Armed F rces will probably be abolished and a G-3 section or the General Staff set up as recommended by the US mission. Four Do Havilland jet "Vampire" fighters ordered from Great Britain have arrived, and have been received with enthusiasm by the airs force., The government is believed to be considering ada..tional purchases of 22 of these planes, which are easy to operate and ct?nsiderably lees expensive than their US counterpart. International The status of Venezuela's international re]..~tions continues favor- able. In the council of the Organization of Amex: can States, Venezuela supported the invocation of the Rio Treaty in the disput between Haiti and the Dominican Republic. Venezuela's prompt recogiition of the Arias regime in Panama, motivated partially by the hope that Arias would suppress the activities of AD exiles, was rewarded by the cease lion of AD broadcasts from Radio Balboa. No decision has as yet been r%ched regarding ratifi- cation of the charter of the OAS. Venezuela recognized the United States of Indonesia and the Republic of South Korea 3 91arcY_, and Vietnam, Laos, and Cambodia 10 Tlaroh In matters pertain:` ng to the East-West struggle, Venezuela will continue to support the US. Approved For Release 2002/06/11 : Id-RDP79-0109OA00020005001 2-1"