WEEKLY CONTRIBUTIONS 24-50 (Sanitized), ORE,CIA 13 JUNE 1950

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June 13, 1950
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2!.X1 Approved ForSglease 20022141-0109V000200050024-9 Weekly Co_IntitEtizsgg2haTmmt 13 June 1950 $ CIA The possibility of Brazilian legislation affecting US imports of critical and strategic materials (p. 3) seems to to merit particular attention this week. CURRENT DEVELOWENTS NORTHERN AREA: In Cuba, one result of the June elections has been to strengthen temporarily the Communist political position (p. 2). The Haitian military junta 'a initial activities have been constructive (p. 2). CENTRAL AREA: In Brazil, political pressures in an election year may lead to passage of legislation restricting export of strategic and critical materials (p. 3). The Colombian labor movement is losing its independent capability of serving as a check on arbitrary government action (p. 14). SOUTHERN AREA: The increase in Chilean strikes appears to have primarily a political motivation (p. h). GENERAL: Considerable reaction may be expected in Latin American coffee? producing countries to the recommendations of the Gillette subcommittee (P. 5). SPECIAL SUBJECTS The Current Situation in Guatemala ...... ? ? ? . .6 The Current Communist Situation in Latin America ? ? ? ? . . 9 DOCUMENT NO. No 'HANCE IN CLASS. I -; DECLASSIFIED ASS. CHANGED TO: -3 5 C NEXT REVIEW DATE: _ AUTH: HH DATE/ State Dept. review completed Approved For Release 200.349AiricaTEDP79-01090A000200050024-9 25Xi 25X1- Approved FoNkt? lease 2002/10/21 Ettilitl:W79-0109&000200050024-9 2$X1 Weekly Contributions, (CIA Working Paper) 21r50 13 June 1950 1. CUBA: Communists Gain Politically. from June Elections Tfie nit effect of the June election has been lo strengthen temporarily the Communist position in alba, particularly in the propaganda advantage afforded, The Communists themselves claim that their Partido Socialiata Popular, which joined with the anti- Frio Autinticos, the Republicans, and Batista 's party (PAU) to elect Nicola Castellanos mayor of Habana, has scored a "Communist triumph". Castellanos has admitted that Communist aid was one decisive factor in his victory over Antonio Pries the president's brother. Other "Communist triumphs" resulted from electoral pacts between the Communists and norrOommunists in various parts of Cuba, and the Communists, who for several months have made good propaganda usage of their acceptance in electoral partnerships, are now doing the same with the election victories. It is true that outlawing the Communist Party in the near future, as US EMbassy Habana con- eiders possible, would cancel their election gains. But it is by no means certain that Cuban authorities will find such a move politically expedient at this time. Lesser repressive treasures would have no great effect on Communist strength or influence. 2. HAITI: Milita Junta Activities Constructive ry unta isoo gaconciliatory domes- tic policy. One example is the appointment of a consultative council comprised of twenty-five prominent citizens representing all geo- graphical regions as well as both bleak and Mulatto elements. The state of Beige, which has been in effect almoat continuously since Mardh 1949$ will probably be lifted shortly. If civil liberties are in fact restored, Minister of Interior Magloire can be counted on to deal firmly with any abuse on the part of the press or public. An effort to return to the conservative fiscal practices that prevailed prior to the Estimi regime is evident in the careful review of Haiti's public finances now being conducted. In order to eliminate the $2.3 million treasury deficit incurred under Estimi, general expenditures are being pared by such measures as permanently closing the expensive Exposition. Further economies, such as with- drawing Haiti's application for memberOhip in the International Bank and the Monetary Fund, are being considered. .These economies, how- ever, will not seriously affect previously initiated projects of socio-economic value such as the 1950 census, the Eximhant&financed Artibonite development, the literacy program, and the joint UNICEF- government campaign to eradicate yaws and syphilis. First international acts support the judgments expressed in recognition of the junta by countries of international importance to Haiti. As an earnest of its intention to meet external obligations, the government has paid $315,000 to the US against the $5.5 million 1938 public works loan, leaving an unpaid balance of only $430,000. Approved For Release 2002/10/21 ? DP79-01090A000200050q4-9 Approved FoNtilease 2002/10/21 : CIA-RDP79-0109W000200050024-9 SECRET 25X1 Weekly Contributions, (CIA Working Paper) 24-50 13 June 1950 After more than a year without exchanging ambassadors, it seems likely that Haiti will resune full diplomatic relations with the Dominican Republic, thus contributing to the easing of congenital friction between the two countries. The conTlete calm prevailing during the month following ex- president Estimate ouster may be accepted as an augury of the present gowernmentte continuing stability. There is little likelihood that the Junta, supported as it is by the army, clergy, press, and busi- ness community, eill be seriously embarrassed by the opposition of the small Communist Party (PS?), by Daniel Fignoljts amorphous labor organization (M(P), or by the disgruntled political clients of former president, who is now exiled in France. BRAZ1I Draft Leeislation Would Curtail Mineral Exports to US rbIu, repy appV'fie oneffon silttea of the Chamber of Deputies, can, if enacted, seriously affect US imports of several important critical and strategic minerals. This bill woulds prohibit the exportation of fissionable elements as *all as the minerals of thorium and uranium; give general control to the Brazilian National Security Council of the exportation of rare metals and those minerale *doh contain them, as well as essential einerals whose known reserves are insufficient for the internal re- quirements of the country; and give to the same agency the control L',7f the execution of the general policy of mining, beneficiation, ena iodastrialization of minerals that contain rare or fissionable elawaete, Although this bill was aimed particularly at monazite, it '1g3 t)tiolf indicated by Brazilians that other minerals -- such as beryl' And eireonium? and possibly tantalite, columbite, lithium ores, and tungeten ores -- are considered utilizable in nuclear-energy applies- time., If the inclusion of these ores in the list of those required ror nuclear-energy purposes cannot be justified, an attempt may be made to include them under those of which the reserves are too small roe Brazilian requirements. It is also true that further exports of manganese from the only producing area -- Minas Gerais state -- could be curtailed under this bill. The pressure for this bill, seems to come principally from those seeking to make political capital of the issue --- extrema eationalists and the Communiats and the politicians merely striving Iv win votes during the period prior to an election in which it Appears that nationalism ? "Brazil for the Brazilians" -- will be A,x1 important issue. The proponents of this bill, however, may also have aimed it at the foreign firms now exporting these raw materials, in an effort to force them to establish plants in Brazil to bene- rieiate the ores and so to give further employment to Brazilians and increase the inflow of foreign capital investment. Approved For Release 2002/10/21:U - 090A000200050024-9 3. Approved For Release 2002/10/21 :65M)P79-01090/201150200050024-9 25X1 Weekly Contributions, (CIA Working Paper) 24e50 13 June 1990 Although other alining legislation, including an over-all mining code, has been under study in the Brazilian legislature for more than two years, election year political pressures way possibly force passage of this bill before the October elections. 1.6 COLOMBIA: Labor Movement Weaker 7"iiirairEreiZirdent force capable of checking arbi- trary government action is becoming weaker under the Conservative regime. The present administration apparently with the objective of discouraging the now-Liberal-dominated OTC (Colombian Workers' Confederation), has failed to confirm the legality of the CTC convention results of 6May, in which the Communists were ousted 25X1 from leadership WILly, 9 May 50). In addition, the administra- tion has dela action on a request to declare that the dissident Communist-led faction has no status, thus keeping both factions in a questionable legal position. In the present situation, only the Conservative-and-Churoh-tecked UTO (Unien of Colombian Workers) has a legally recognized governing body. The present administration may be expected to continue to oppose any labor organization it does not control. In the case of the Liberal CTC? two paths of action are now open. It may delay its decision on the status of the Communist-led faction of GTO for a protracted period even though it is not expected to take positive action encouraging that faction, in an attempt further to weaken the Liberal organization. Alternatively, it may finally bring about a decision adverse to Liberal-sponsored OTC in the still-pending legal 25X1 case l 24 Jan 50). There is apparently no group in Colombia both willing and able to make an effective protest against either alternative. 5. CHILE: gyittStrilLesarPoliticallyred UTF/5iii7,--nonscon, and?g46-0ifid-electric company workers, totaling 10,000, have now joined the almost constant series of strikes since President Oonzglez Videla's return from the United States. Employers report that the unions are avoiding discussion or issues and assert that the real strike ,motives are obscure; some of the strikeredemands are, in fact, patently unreasonable. A decree ordering nitrate and copper workers back to work has been ready for presidential signature since 7 Jens, but has not yet been reported signed. 25X1 believes that these strikes constitute a political maneu- ver to create pressure to force passage of Finance Minister Vial's yege-incraase and taxation bill in the Chilean Senate where severe opposition is expected. Delay in signing the back-to-work order fur- ther indicates that the president does not consider the situation dangerous to stability or to the national economy. Approved For Release 2002/10Wittligr PN-01090A00020001024-9 Approved For 'Release 2002/10/21 :scaVID79-0109Nd00200050024-9 25X1 Weekly Contributions, (CIA Working Paper) 24,50 13 June 1950 6. GENERAL: Gillette Retort Will Arouse Adverse Reaction Thera is certain to be considerabie reaction among the coffee-growing nations of Latin America to last Friday's announce- ment of the recommendations of the Gillette subcommittee which had been studying the cause for the sharp rise in coffee prices. Al- though the Gillette report will have no official status unless adopted by the US Senate, many Latin Americans will claim the sub- committee's report is US intervention in purely local affairs, as has already been stated by some Colombian officials, and it can be expected that they will continue to point up the considerable post- war rise in prices of their imports from the US. If these recogr mendations do become officials it is possible that discussions of a US-Brazil treaty for the elimination of double taxation may be seriously handicapped, that negotiations for increased US exploita- tion of the vast manganese deposits in Brazil may become more difficult, and that the increasing anti-US feeling may be further aroused. Approval of the Gillette report 'would stimulate latent anti-US sentiment in Colombia and would seriously embarrass nego- tiations for the US-Colombia trade treaty, Similar reactions can be expected in other coffee-producing countries. Approved For Release 2002/100aterti.7"9-01090A000200050024-9 Approved ForlItgilease 2002/10/21DM-RDP79-0109M00200050024-9 25X1 Weekly Contributions, 26-50 (CIA Working Paper) Situation Memorandum 36-50 The Current Situation in Guatemala 13 June 1950 -- The activities of Colonel Jacob? Arbenz, PAR presi- den . candidate, continue to dominate the political scene* Resignation of Communist leaders from the PAR may benefit Arbenz, who must now compete for popular support with Dr* Victor Giordani? candidate of the large, moderately leftist FPL* In economic affairs, the decision of the United Fruit Company to abandon its Atlantic Coast banana plantations will have important politie. cal and economic repercussiaasj however, no imnediate effect on the national oconoey is foreseen* Communists appear to be isolating themselves politically by their excessive zeal in attacking the US* The arpy and air force remain weak politi- cally and militarily* Relations with the US have deteriorated, but indireot attempts at conciliation may be forthcoming* -- The possibility that the Communists may become estranged fra2 their political host party, thereby weakening their influence, is the most significant development effecting US security interests0) 1+INN I Political ----TS-political scene continuos to be dominated by the activities of Colonel Jecobo Arbenz and his leftist supporters* Th9 campaiga alignment of Arbenz (presidential candidate of the Partido Aocion. Revolnoionaria) with organized labor has given pro-Communist labor leaders the means and the opportunity to disseminate vicious anti-US propaganda* Although Arbenz himself has adopted a nationalistic, anti-imperialistio campaign line, it has been more temperate than that of his extremist Jupporters? sone of whom have now resigned from the PAR on the grounds that its loaders are yielding to "imperialistic" (i0e0? US) pressure* The resignations of these pro-Communists may benefit Arbenz by relieving him (as PAR candidate) of the responsibility for their actions, since it is clear that Arbenz does not wish to appear as a pro-Conmuniet himself or as an irreconcilable opponent of US business intimate* Arbenz? the strongest candidate, new has to contend with a rival Dr0 Victor Giordani? candidate of the moderate loftiat Frente Popular Libertador who may find support amens conservatives* anti-militarists and intellectuals, business and professional men, =doyen among portions of the labor movement which may distrust the sincerity of Arbenz' avowed praelabor policy* Of the current political developments, the tandency toward the isolation of the Comnuniats (as indicated by the recent resignations from the PAR) is favorable to US security interests* Approved For Release 200/1ffreirgr-M1779-01090A000200050A1-9 Approved Forltrease 2002/10/?WEERDP79-01090A40200050024-9 2 . Malay Contribations, 4,-60 13 June 1960 (CIA TIOrkiag Peper) Situation Memorandum 36-60 leo:neat) Winost significant economic development of recent months has been the decision of the United Fruit Compagy to abandon its Atlantic Coast banana plantations at Bananera. This deoision, due primarily to severe storm damage and disease conditions, will have both political anti economic repercussions* It is unlikely that operations on the plantations can be, or will be, suddenly discontinued, and the withdrawal maybe gradual over a period of a year or more, In the long run, the national economy may not be greatly affected, since Atlantic Coast bananas represent only about one fifth of total banana exports and continued high coffee prices will compensate for loss of banana income. However, the withdrawal will injure the economy of the Bananera region =drain affect the welfare of some $600 workers and their dependents. As a consequence of the United Fruit ,Company decision, presidential candidates and the administration may find it desirable to clarify their attitudes towards US business. They will, in, effects have to choose between the extreme, impractical approach of the demagogic nationalists Who may demand aggressive retaliatory aotion (mph as expropriation) and a more moderate, more practical, and more conciliatory approach which mould assure cooperation on the part of the Fruit Comm** in minimizing the disruptive effects of the plantation shutdown. There is some evidence that the demogogio nationalist approach will be rejected, or at least ignored, by the candidates and the government. The B114 most radical of the political parties, has already lost its ultraanationalist? pro-Communist contingent. Although the government has not rot responded to the situation, it has recently recognized the need and desirability of cooperating with some US businesses by rejecting the Enloe-Guatemala chicle agreement so at to permit selling to a US chicle buying fire and by granting a US-owned company a contract to exploit lead mines in Unehuetenango. Also there are prospects of agreement on the renewal of the Pan &TOMS= Atel 'elm operating contract. In general, there has been no change in the apparent stability of the national economy as a whole, though economic difficulties within govern - moat agencies are indicated by tranefers of funds and delay in meeting obligations. Current developments in economic policy-tend to favor US business interests. Military" There has been no substantial change in the military situation. The morale of armed forces remains low. Presumably, military funds continue to be diverted for personal and political ends rather than for necessary military expenditures, causing key officers to remain loyal to the adminis- tration and to presidential candidate Arbenz. No substantial change in the military situation is antioipated. Approved For Release 2002/10/21 : CIA-RDP79-01090A000200050024-9 uE011111." 7. Approved ForIttlease 2002/10/9G:1&-RDP79-01091e000200050024-9 - 3 - Weekty Contributions, [240.50 13 June 1950 (CIA. Working Paper) Situation Memorandua 36-50 Subversive ladda.by their canpaign alignment with the PAR and Colonel Arbens? and their affiliation with the CTAL? pre-Communist labor leaders have been extremely successful in flooding the country with anti-US propaganda* On May Day, and at various political rallies, Manuel*Pinto Usage and other leaders have denounced US policy as imperialistic, interventionist, aggres- sive, and hypocritical, while they praised the "nations striving for peace". However, this excessive zeal apparently hampers the Arbors candidacy and consequently has brought about a schism in the PAR, the party through which Communists have exerted political influence. The PAR has officially dis- claimed responsibility for the strongly auti-US slogans recently painted on the walls of the US EMbassy, and its feeling against frank anti-US, pro- USER propaganda has caused the resipatioe of ten pro-Communists* These included Manuel Pinto Usage. and JOBO Manuel Fortuny who, nevertheless, have reiterated their support of Arbens. At the moment, therefore, a reaction to the excessive propaganda of recent months is tending to isolate the Communists* It is true that the Communists may have resigned from the PAR in order to assure udder popular support for their candidate, Arbens, while leaving themselves free to disseminate anti-US propaganda* However, believes that these resig- 25X1 nations are indicative of a fundamental split between party-line Communists and non-Communist leftists. US interests are favored to the degree that the Communists are isolated and deprived of the facilities and protection of their boat party, the PAR. International In recent months, the conduct of Guatemalava foreign relations with the US has reflected the rabid nationalism evident in the presidential campaign. The influence of extreme nationalists was indicated by Guate- mala's official (though unwritten) request that us Ambassador be recalled on the grounds that his life was in danger because of his "interference" In Guatemalan affairs* This request immediately produced mutually antago- nistio charges of "Communism" and "Imperialism" in US and Guatemalan political circles, which have impaired relations between the two countries* The Guatemalan government, by permitting and facilitating Communist- inspired propaganda attacks against US, has further alienated US opinion* Although Guatemala's anti-US actions have impaired relations with the US, it is believed that worsening relations have focussed attention upon the basic necessity of political and econendo cooperation between the two Countries* While it is unlikely that the Guatemalan government will alter its stand toward Ambassador Patterson (whoso personal unpopularity is not limited to extremists) or prohibit unofficial attacks on US "colonialism" and "imperialism", it is possible that some indirect conciliatory action will be taken* Insofar as relations with other countries are concerned, it is believed that Guatemala's present antagonism toward military dictatorships and anti-labor governments will continue to be emphasised* Approved For Release 2002/10/21 : CIA-RDP79-01090A000200050024-9 Approved For Rase 2002/10/21 : CIA-RDP79-01090A140200050024-9 SECRET 25X1 Weekly Contributions, (CIA Working Paper) Situation Memorandum 3?.-50 21r5o 13 June 1950 The Current Coemunist Situation in Latin America Moat important of Communist activities have been ose connected with the "peace" campaign, the CTAL conference in Montevideo, and the Uruguayan, wool strike. The trend of political influence has been marked by losses in Venezuela, Panama, and Guatemala (including steps toward outlawing of the Communist Party in the two former), and gains in Cuba, Chile, and Trinidad. (beerved trends are expected to con- time, except that the Cuban government may begin some anti- Communist action.) Current Activities ---"""TM7Filianimpaign has been an important theme in al/ Communist activity during the past quarter. Although no overt physical violence directly related to the "peace" movement has yet been reported, the tone of its propaganda is becoming more militant, with emphasis on the for peace by all possible means. Inactive "peace" committees have been reorganized, without much regard for hiding Communist influence in them, and active committees have closely followed instruction from the Faris headquarters of the Partisans of Peace. Communist front-group activity was also used for "peace" and other Communist propaganda pur- poses. During April several woments front groups bold national con- gresses,at each of which "peace" was a main topic an the agenda? Organization of a number of evanescent front groups was started in various countries by the Communists. In each case, the organizational efforts themselves were used for propaganda purposes and as a basis for the collection of funds. Counter-propaganda to the "peace" campaign apparently has not been effective enough to prevent the Communists from collecting funds in the name of "peace" and from securing thousands of signatures for "peace" petitions. The pro-Communist CTAL conference in Montevideo held 27-31 March was used as a vehicle for "peace" propaganda as well as for CTAL organi- zational purposes, In addition to speeches on "peace", a resolution reportedly was adopted to prevent the shipment of essential materials to the US in case of ear. In order be bolster the waning CTAL strength and to give greater force to its propaganda, regional CTAL committees were formed. Nevertheless, the CTAL lost influence during the quarter. Losses included the defection of the Colombian CTC as an affiliate; the dissolution by the government of the Communist-dominated Venezuelan petroleum federation; and the withdrawal of the Mexican Miners' federa- tion from the Lombardo-sponsored UGOON6 which is affiliated with the CTAL and the WFTU. Approved For Release 2002/10/21 : CIA-RDP79-01090A000200050024-9 _.i OUiuif 9. Approved ForIkvelease 2002/10/21 ? CIA-RDP79-0109W000200050024-9 SW= Weekly Contributions, (CIA larking Paper) Situation Memorandemi 37.50 24-50 P* 2 .4?? 13 june 1950 Zn Montevideo, the prolonged strike of Communist wool workers and the shorter sympathy strikes of truck drivers and port workers para- lyzed the movement of wool to us markets for approximately three months withholding an essential coranodity from US markets. Trends 411?"Ifhe political influence of Comaunists continued in divergent trends in the different Latin American countries with significant losses in Venezuela, Panama, and Guatemala; and gains in Cuba, Chile, and Trinidad, The Venezuelan government, largely in reaction to a Communist- instigated petroleum strike, outlawed the "Red" Communist Party and the Co=rurdsta.dominated petroleum labor federation and petroleum labor unions, and also confiscated Communist Party property. The government, however, did not outlaw the splinter 'Black' Communist Party. In Panama, the president issued= executive order to outlaw the Communist Party and all Communist activity. The decree, however, has not yet been enacted by the legislature nor has it passed the supreme court test of constitutionality. . The loss of support of the major leftist party (PAR) by the Comma.- nista in Guatemala may prove to be the beginning of a serious setback to them in that countny. where a Communist Party is net legal. Commu- nist influence, consequently, has emanated largely from a few individuals, who have been able to identify themselves with the PAR. They have been gradually gaining greater political influence through control of labor unions, through active participation in political affairs, and through support from certain key people in the administration. Early in Web however, possibly because of disagreement about Communist propaganda, a schism developed in the PAR and as a result ten Communists and pro- Communists, including two important labor leaders, resigned from that party.. There were also some minor Communist losses. /n Bolivia, although Communist activity'was illegal under a 193$ law, a new law waspassed on April outlawing the Communist Party and any of its subsidiary organi- zations. Communist efforts to develop some political and labor strength In Argentina and Mexico were more than offset by losses sustained from continued anti-Communist government maneuvers in Mexico, and from out- right repression in Argentina. In Colombia, the Communists lost labor influence when the OTC withdrew from the CTL and WFTU and decided to join the anti-Communist world and hemisphere trade union organizations, Communists have made gains, an the other hand, in Cuba, Chile, and Trinidad. The Cuban Communists have increased their Influence as a Approved For Release 2002/10/21 : CIA-RD 90A000200050024-9 10. ? Approved For eease 2002/10/21 ? CIA-RDP79-0109011000200050024-9 25X1 Weakly Contributions, (CIA Working Paper) Situation Memorandum 37'-50 24-50 - 3 - 13 June 1950 result of the collaboration with moderate conservative parties in the recent by-elections and especially in the election of the Habana mayor in which the Communtst-backed candidate won. In Chile, the Communists have been benefitted by the political collaboration of Ibafiez del Campo and thereby have slightly increased their political influence, at least in sane sections of the country. In Trinidad, the Communists revived the. West Indian National Party and may therefore be gaining in strength. ......t=rILtinitm.p.m.upeProbablureevelomenta mums po Influence in Guatemala may be reduced during the coming quarter; in Panama efforts to suppress the Communist Party will probably continue; in Cuba the administration may attempt to reduce the strength of the Communists; but in Brazil and Chile during the per- iod prior to the coming elections, the Communists may make some slight gains, The political status of the Communists in the other countries is expected to change little. Conmunist labor influence is expected to decrease further in Mexico, Venezuela, and Colombia, and also slightly in Chile. On the other hand, in Uruguay and El Salvador, the Communists may further consolidate their labor position. The "peace" campaign is expected to continue, though no Hemisphere- wide "peace" conference is expected during the next three months. Organizational activities will continue with some minor successes prob- able, Anti-DS propaganda will be slightly more 14mited than previously due to closing of some Communist publications, though undoubtedly the Connunists will find a way to continue such propaganda. Approved For Release 2002/10/21 : CIA-RDP79-01090A000200050024-9