WEEKLY CONTRIBUTIONS 20-50 (Sanitized) ORE, CIA, 16 May 1950

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200050020-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 15, 2016
• Document Release Date: September 9, 2002
• Sequence Number: 20
• Publication Date: May 16, 1950
• Content Type: PERRPT

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Week1 Contributions 20-50
16
Of the developments reported this week, rods two of partic
lar interests that on Venezuela (p. Li) and tha on Bolivia (p. .
CURRENT DEVELOPMENTS
NORTHERN AREA: The ouster of Haiti's president by a three-man mili-
tary uata ed21 have no basic effect upon that country's foreign
policy (p. 2). In Guatemala, the curtailment of United Fruit opera-
tions sill make expropriation an important issue in the current presi-
deutial campaign (p. 2).
CENTRAL AREA: In Brazil, anti-US feeling has increased since the
announcement of the proposed loan to Argentina (p. 2). Brazil's major
opposition party has named Air Lieutenant General Eduardo Gomes as its
candidate for the coming presidential election (p. 3). In Venezuela,
cabinet changes maybe made (p. 3). Venezuela may sever relations
with the USSR (p. 14 .
SOUT1RN AREA: In Peru, political. opposition to Odria is increasing
(p. 4). Bolivia's government has declared a state of emergency (p. 4).
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SPECIAL SUBJECTS
The Current Situation in Nicaragua. .
State Dept. review completed
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Weekly Contributions,F-_120-50 16 May 1950
(CIA Working Paper)
1. HAITI: President Ousted
The ouster or rresident Estb by a three-man military
junta led by Colonel Magloire will have no basic effect on Haitian
foreign policy. The principal effect of this development will be
to register one more defeat for constitutional government in the
Hemisphere, During Estime es tenure of office since mid-19t6,
Colonel Magloire has in effect dominated Haitian politics, and
his seizure of power, though ostensibly to cope with the popular
disorders of the past week, was probably motivated by his fear
that Estime would attempt to assume dictatorial powers before
the 1952 elections. (Substance in CIA Wkly, 12 May 50.)
2. aUATEMIA: United Fruit to Abandon Plantations
so- MIted Fruit 6speny cisioa to abandon
all. Caribbean Coast plantation operations (Pacific Coast operations
to be continued) will make expropriation an important issue in the
current presidential campaign. This decision was prompted largely
by severe storm damage, which destroyed over half the anticipated
1950 crop and about four-fifths of the bearing acreage, and the
continued ravages of the "Panama" disease. Current contract dif-
ficulties with labor appear to have been of little significance in
this development.
It is believed that the UFCO move will serve to clarify
the attitudes of the various candidates and political factions
toward US business.. Immediate demands for expropriation of some
or all UFCO properties may be expected from the extreme leftist
supporters of Colonel Jacobo Arbenz, on the grounds that the UFCO
retrenchment was an anti-labor device and designed to influence
the election. Arbenz, who has claimed he wishes to encourage US
investment, may be forced to clarify his intentions toward labor
and toward the UFCO,, In contrast, no immediate demands for expro-
priation may be expected from the moderate leftists, whose presi-
dential candidate is Dr. Victor M. Giordani. In view of the
deaireability of maintaining the present level of employment and
material assets which may be abandoned, along with the political
necessity of following a nationalist policy, it is expected that
the moderate leftists will recommend a compromise solution involv-
ing eventual rather than immediate expropriation or purchase. The
present administration, composed of both moderate and leftist fac-
tions, will probably consider the possibility of expropriation
but may be expected to take no action other than that of making
preliminary studies of the matter.
3. iAZIL: Increased Anti-US Feeling Since Announcement of Proposed
Loan to Argentina
able anti-US feeling among many Brazilians
Tiera r no c e
?- some officials as well as the public -? has increased to such an
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Weekly Contributions,
(CIA Working Paper)
20-50
16 May 1950
extent since the announcement of a proposed Export-Import Bank
loan to Argentina that the normally. close cooperation between
Brazil and the US might be adversely affected. Apparently only
one newspaper in Rio do Janeiro has come out with ary statement
that such a loan is just, and that it would better conditions in
the entire Hemisphere. The more widely-read reliable rapers in
Rio have been criticizing the loan. The economic and financial
gains that Brazil has attained through loans from the Export-Import
nk and other sources in the US are ova adoeed by 25X6
Argentina a s n ur g
or ar in contrast z Is a -out war effort, a wide-
spread mistrust of the Perbn government, and a general feeling
among Brazilians that the US has let them down since the end of
the var. For these reasons, then, it appears unlikely that the
anti-US feeling will be assuaged during the, immediate future.
Eduardo Gosnes Nominated for Presider
M conven an o they so emocratica Nacional
(UDN)a the major opposition party, nominated (reported unani.uously)
Air Lieutenant General Eduardo Cones as candidate for the ~ October
presidential election. In what appears to be an effort to establish
a bargaining position with other parties, toe UDN has not as yet
nominated a running mate for Gomes. The nomination of Gomes prac-
tically eliminates the possibility that Osw.1.1do Aranha will be
a candidate as well as the possibility of an electoral collabora-
tion of the government party (PSD) and the -MN against the "popu-
lar" forces of Vargas and Barron, The UDNys action is likely to
force other parties to make their nominations during the next
few weeks. Although it now appears likely that the campaign will
become heated, it is estimated that there viii be no coups, either
from the right or left, and that relatively democratic elections
will be hold.
USIA: Possible Cabinet Changes
Tile oppos onto some. civilian members of the cabinet
to the decree outlawing the Communist Party may result in cabinet
changes in the- near future. One of the ministers likely to be re-
placed is Augusto Mijares, Minister of Eduyation, who is reported
to have opposed the decree on grounds that the educational system
would be impaired because of the difficulty of finding replacements
for Communist teachers, Much of the pressure for outlawing; the
Communists apparently carte from the military, and it is prcbable
that the more liberal among the civilian cabinet members fear that
the measure signifies a reversion to the harsh repressive practices
which marked the early months of the regives, and portends a delay
in the restoration of normal political activities.
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Weekly Contributions,,
(CIA Working Paper)
_ L
20-50 16 May 1950
6" Break With USSR Innminent
Insistent rumors ram racas are to the effect that
the Venezuelan government will break relations with the USSR, and
a reliable source believes the break may occur this week. Anti-
Gominanist officials are urging drastic action against all Commr-
nists, including the splinter "Black Communist Party" which was
not affected by the decree of 13 May outlawing the regular Comur
nist Party. Severance of relations with the USSR has reportedly
been under consideration for some tines, and only the occasion has
been lac .
estimates that there is a strong probability that
diplomatic re one between Venezuela and the USSR will be broken
in the immediate future. The severance of relations would deprive
the Soviet Union of an important channel for the direction of
Communist activities in Latin America.
7. PERU: Opposition Presidential Candidate Nominated
OKA is chances or a v ua unco-FUNM election have
been further impaired by the fact that the two main opposition groups,
Union. Revolucionaria (UR) and the Liga Democratica, have joined forces
and have nominated retired General Montegne as their presidential
candidate. It is true that the government has employed repressive
measures against various opposition leaders and that the government-
controlled National Electoral Board has rejected the UR request for
registration as a political party. Nevertheless, the reported deter-
mination of the UR to make a new attempt to secure registration and
its union with the Liga indicates that Odr{a will find it difficult
to eliminate opposition. Further, the nomination of General Montagne,
who enjoys considerable prestige among aM officers, may cost Odria
part of his array support. Thus, while Odria'a control of the gov-
ernmental machinery is still adequate, the scheduled election pre-
sents a real problem and he may find it necessary to make further
adjustments in order to avoid an embarrassing outcome, or even real
danger, to his regime.
S. BOLIVIA: State of Emergency Declared
governmen s UcIUM a state of emergency as a result
of a strike by teachers and students, which began on the morning of
15 Nay, Government officials believe that the factory workers may
join the strike. The situation is reportedly quiet but the army is
ready to take control of all public services in the event of violence..
Although the stability of the government continues to de-
teriorate, it is believed that the strike - an indication of the
chronic discontent arising from the serious economic situation -
does not in itself constitute an immediate threat to the survival
of the present government.
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S CRET
C M I Z T AL
Weekly Contriibutions,
(C fl Working Paper)
2f0
16 1950
Situation Memorandum 28-50
The Current Situation in Nicaraua
(Sumani. -- General Somosa, new president, appears to be
in secure control of Nicaraguan political life. Communists.,
whose organizational activities among the labor unions have
suffered setbacks, continue to be ineffective. The economic
situation, temporarily improved by high coffee prices, con
tinues to be one of uncertain stability. The military sit-
uation is unchanged., with the Guardia Naoional remaining
loyal to Somoza and capable of maintaining internal order.
In foreign affairs., Nicaragua continues to cooperate with,
and to seek financial aid from, the US. Efforts have been
made to improve further Nicaragua Is relations with neighbor-
ing anti-leftist 'governments.
-Basic US security interests have not been threat-
ened by recent developments in Nicaragua and no threat to
these interests is foreseen.)
Political
en rral Somoza ' a political control assured his selection, by Con-
gress, as interim president to sew the remaining year of the term of
President Roman y Reyes' Cabo died on 6 '. Homer, Somoza's accept-
ance of the presidency under these conditions has undermined the recent
Somosa-Chamorro agreement 'Wkly',, 11 Apr 50). This agreement,,
Which provided for preside elections on 21 T k7 50., has now been
rejected by the Chamorro Conservatives, who,, in consequence., have lost
their guarantee of minority representation in a new administration.
Although no i=ediate threat to Samoa tis control is evident,, it is
probable that Somoza will attempt to conciliate the Conservative oppo-
sition through some n formula. This tea cause cancellation of the
proposed presidential election. Haver,,foresees no substantial
change in the political situation in coming months, unless the state
of Somoza's health should force him to relinquish the management of
national affairs for an extended period.
Economic
acaragua 's economic stability has been greatly favored by bumper
coffee crop sales and improved coffee prospects for next year, when
growers will receive the full benefits of the price rise. The current
coffee harvest will bring in $14,ooo o0O, compared to 84061067 in
1949 and a previous high of $8,45r7..,322 in 19W. This coffee prosperity
may influence the goverment to relax the exchange controls established
last year in accordance with the recommendations of the International
Monetary Fund. These have been unpopular with coffee exporters,, who
f
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Weekly Contributions,
(CIA Working Paper)
Situation Memorandum 29-50
1U TIA
OiL
20-50 - 2 - 16 11W 1950
have not been permitted free use of their dollar receipts. Prospects
for relaxation of the controls will be favored by Somoza's current
desire for Conservative support. If it becomes evident to the govern-
ment that an International Hank loan is improbable, less attention
may be paid to correcting unsound financial practices, thereby err
courraging inflation.
Despite current prosperity, the country is still operating under
budget deficits. The national deficit for the year 194.9 amounted to
16,70,000 oordobas, making the total deficit for 194 and 1949 about
31 million cordobas ($6,200,000 at the official exchange rate).
Despite Somoza's promises that he will initiate "sweepin reform and
corrections" in the field of finance and public credit, believes
that Nicaragua's economy will remain subject to inflationary pressures
and momentary political considerations.
Subversive
Nicaragua's weak Communist Party, the PSN (Partido Socialists do
Nicaragua), has suffered setbacks in its attempts to gain control.over
Nicaraguan labor. Unions and other labor groups have tended to affili-
ate with the rye formed, Somoza-approved Federaoion Sindical National
(PSN) rather than with the PSN'-sponsored Confederacion General de
Trabajo (COT). Recently, members of the Managua Casa del pbrero, rep-
resenting twenty labor syndicates and ten mutual aid societies, elected
as officers the entire FSN slate of anti-Commmist candidates in prefer-
ence to the COT slate. Although PSN-CGT agents continue to be active?
there is no indication at present that they will gain much support
within the labor movement, which is a conglomeration of small local
craft unions whose political activities are judiciously restrained
and are generally of small significance.
ilita
- ere has been no significant change in the military situation.
The Guardia National appears to remain loyal to General Somoza and con-
tinues to be capable of maintaining internal order. The recent acquisi-
tion of surplus arms and ammunition, purchased in Canada, has possibly
strengthened the Guardia somewhat, and the present "coffee prosperity"
may haves indirectly,, a beneficial effect on Guardia morale, Guardia
officers have been active as Nicaraguan "good will" representatives
abroad (see International).
International
care has been no recent change in Nicaragua's international re-
lations. The government continues to manifest friendship for the US.
It continues to be aligned with the pro-military, -leftist
9.
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(CIA Working Paper)
20-50
16 Ilfay 19550
Situation Memorandum 28'50
governments of Latin Amerioa. Opposition to the Arevalo government of
Gate gala continues, and efforts have been made to bring about closer
military and political relations with El Salvador and Honduras, which
also fear Guatemalan interference, However, in contrast to his atti-
tude toward Arevalo, General Somoza has stated that be would not be
averse to a rapprochement with Colonel Arbeaz, leading candidate for
the presidency of Guatemala. in general,, efforts are being continued
to gain good will abroad. ( rdia National officers have been promi-
nent in recent missions to El Salvador and Venezuela, Colonel Anastasio
Somoza Jr. and two other officers have received decorations from the
Peruvian government,
MTIAL
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