WEEKLY CONTRIBUTIONS 41-50 LATIN AMERICA DIVISION, ORE, CIA 10 OCTOBER 1950

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200060002-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 19, 2016
• Document Release Date: March 19, 2002
• Sequence Number: 2
• Publication Date: October 10, 1950
• Content Type: PERRPT

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CONFIDENTIAL 42 /1674
MtalY Contrib211922-.4:22
Latin America Division, ORE, CIA
10 October 1950
Of the items pUblishNI this ueek, D/LA finds of particular interest
that on the probable establishment of a UN unit in the Colombian army
(n. 3) and that on recent anti-Communist developments in Guatemala (n.
CURRENT DEVELOWENTS
GENERAL: Strained Ecuadoran-Peruvian relations are unlitely to lead to
serious trouble (p. 2).
FORM= AREA: In Cuba, the resignation of the senate nresident has brought
to light a rift in the Autatico Party (p. 2). In Guatemala, recent develop-
ments indicate a loss of Communist influence and a government desire far
closer cooperation with the US (p. 2).
CENTRAL AREA: Colombia favors the establiAhmAnek nTTh1 m4#
armed friretact (1,_ 11_
SPECIAL SUBJECTS
The Current Situation in El Salvador . . 60000010060600 y 4, ., 4
The Current Situation in,Surinam.... . 6 0 0 0 0 0 0 00009 a a a 7
CONFIDENTIAL.
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Weekly Contributions, D/LA 41-50 10 October 1950,
(CIA Working Paper)
1. GENITAL:argipz.Uaclor_:E2=an'Llt_arelations uniggyjalacit__2
hoed Conflict
Renewed diocussion of the Ecuarloran-Peruvian bolndary disrute
by the guarantors of the 19421ti0 Protocol (Argentina, Brazil, Chile,
and the US) has increased tension in Ecuearan-Perovian relations.
The traditional ill feeling between Ecuador and Peru has also been
heightened recently by unconfirmed rurcre in each country that the
other is engaging in military maneuvers near the border. Although
it is quite possible that nroueed public opinion, especially in border
towns, may nrovoke one or two einor .,liontier incidents, it is believed
that the desire of both goverrments to avoid an outbreak of hostilities
will preclude the occurrence of any serious trouble at this time.
2. CUBA: Rift in altddigelady
The strength of President Pri'ots narty may be lessened as a
result of the resignation last, week of the politically powerful senate
President, Miguel Suirez Perngndez? who has long beenriajtolLa not Ergs.
with the eresident, bet is nevertheless a strong potential candidate
for the presidency in 1952. it seems unlikely that the rift between
the president and Sudrez Perndrlez will be eliminated in view of the
intensity and long duration of the political rivalry involved. Sures'
political activity will not ne,essarily he anti-Aut4ntico at tars time
but will certainly be anti-hero, and the divided loyalties thus created
within the Autdntico part! is very likely to undermine its strength
both in congress and in its nfgotiat4ens with minority political elements
for support.
3. GUATErALAI Idl:gr_mailIkeelopments Indicate DeelrfteLer?__&2:g
Alignment
Recent anti-Cormuest develonmente in Guatemala indicate
a loss of Communist influenc and a desire, on the nart of the goVern-
ment, to align itself more c.osely with the US in world affairs. In
recent weeks, the government has signed the Rio Treaty desnite Commu-
nist protests, has suPpressei the Communist newspaner Oetubre, and has
banned a Projected workers' echool. The minister of government has
suggested a snecific anti-toialitarian law which would ontlaw Ccomunist
activity, and railvae vorkere have revolted against the Communist
leadership of Manuel Pinto Usage -- a revolt possibly inspired by
Colonel Arbenz, the administration candidate most favored to succeed
President Argrvalo,
It is aeperent that the government, in seeking to align
itself more closely with tie, US, has been instigating and eubiicizing
these anti-Comunist develcnments. It is true that the governmentos
anti-Communist campaign vas not initiated until the effective sunpression
of conservative anti-admintstration parties had rendered Communist help
less necessary to the etatility of the administration and to the success
of the Arbenz candielacy. revertheless, the developments do indicate
that Guatemalan Communist leaders have lett influence, that the govern-
ment can risk suppressive measures against them, and that it rrefere
a nro-US to a rro-Soviet alignment in international affairs.
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ekly C-ntributions, D/A, 4l5O
(CIA Working Paper)
4. COLDA3IA: UN Unit Probable i
The Colanbian army chief of staff 7s strong approval of
Oecritary Acheson's suggestion for training UN units within the armed
.farces will probably result in the setting up of such a unit in Colom-
bia, should the General Assembly adopt the suggested resolution. The,
Current readiness to suenort the US in thisproposal may Probably be
gttrOUted in part to ColaMbian interest in securing the equipment
Which would presumably be made available to a UN unite Primari17,
however, it is believed that the action should be attributed to the
sincere interest or the Colombian people in UN action and to the
leadership of the Colombian government in this respects further proof
Of which was the offer of the frigatec"Almirante Padilla", Although
Colembien army unit would need considerable asAstance in equi.,. Dt
and training, the readiness of the Colombian army to fight would add
somewhat to ur manpower res-rves and, in addition, would he a propa-
ganda asset in the US effort to mobolize af:tion against Compunism.
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Wele17 Contributions, Din, 41-50
(CIA Working Paper)
Situation Memorandum 61-50
RIFFMNk4e0 000200060002-2
10 October 1950
!...211m1SsmallataaamAaJELAkedm
(Suestary -e After twenty-ono months of rule by decree under a
revolutienary junta, El Salvador returneA to constitutional
government under an elected rresident on 15 September. Liberal
provisions in the now constitutien have aroused opposition among
conservatives. The economic situation remains favorable, but
businessmen fear goverment control and comnetit4on. Ccemuniate
continue to have little influence in national affairs. There
has been no change in the Military seturtion, vith the army
continuing to manifest loyalty to Osorio. El Salvadoes foreign
relations continue, in general, amieable and cooperative.
-e US security interests are favored by El Salvador s
nosition but have been dipregarded in El Salvador's nee
claims to offshore waters.)
12511:4PE-21
The most outptanding recent political develoement has been the return
to oopstitutional government and the inauguration Of Major Oscer Osorio
.as president on 15 SepteMber. The now constitution, prepared by a nro-
Ostrio assembly and signed on 7 Seetember, has al-eased anxiety, resentment,
and opposition among conservatives, eh? see their lonestanding economic
autonomy and political influence threatened by the expropriation proeesione
in the new conetitution, by the anti-monopoly clauses, by the provisions
for government eneration of ntivate companies In event Of crisis, end 'by
thp ililnImAiwwlorrEnA rerireqralevo nag.Aw4m4ntna
-.Economic ;
Salvador's economic situation continees to be very favorable.
?Businees conditions have been better than usual for the season between
coffee harvests, and finapcial indices (bank assets, bank deposits, and
money in circulation) are well above comparative figures or former years.:
Record coffee erioes continue to maintain foreign exchange reserves at a
high level. Palle confidence in the government's Lempa River hydroelectric
project (for which a $12 million International Bank loan was granted laet
year) has been demonstrated by the rapid and complete sale of the $5.2
million domestic bond issue needed to Complete the financing. Initiation
of construction getivities (by a US firm) will benefit local employment
and businreTeeeProrMaili4e2CMCIalike: dA1411044)41060114113216Magt2Osorio
to eut into effect his program for promoting-the industelele-uniicultural,
CONMENTIAL
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Weekly Contributions, D/LA, 41n50
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Situation Nembrandum 61-50
POTIM1k00200060002-2
10 Qcteber 1950
The Cuvrent Situation in El Salvador
(Sugmary nn After twenty-one months of rule by decree under a
revolutinnary /unto., El Salvanor returnen to conatitutional
government wider an pleated president on 15 September. Liberal .
provisions in the new constitutien have aroused oppositint among
eonsenvatives. The economic situation remains favorable, but
busineemen fear government control and cmPntitn on. Coemmiste
continue to have little influence in national affairs. There
has bean no change in the tilitary eiturtion, vital the
continuing to manifest loyalty to Osorio. El SaIveder("p fpreign
relationeeontinee, in general, amicable and cooperative.
ee US security interests are favored by El.Salvadoes
UN position but have been disregarded in El Salvador's new
claims to offshore waters.)
12224912
The most outstanding recent political develonment has been the return
to constitutional government and the inauguration of Major Oscer Osorio
Its president on 15 September. The new constitution, prepared by a nron
Ostrio assembly and signed on 7 Sentember, has arensed anxiety, resenteent,
and opposition among conservatives, eho see their long-standing economic
autonton and political influence threatened by the exeropriation provisions
in the new constitution, by the antimonopoly clauses, by the provisipne
for government pneration of ntivate compaeleo in event of crisis., and by-
the unprecedented pro-labor nrovisione,
Economie
El Salvador's economic situation continues to be very favorable.
Business conditions have been bettor than usual for the season between
coffee harvests, and financial indices (bank assets, bank deposits, and
money in circulation) are well above comparative figures for fume- years.
Record coffee rices continue to maintain foreign exchange resetves at a
high level. Public confidence in the government's Lempa River hydroelectric
project (for which a $12 million International Bank loan was granted lent
year) has been demonstrated by the rapid and complete sale of the $5.2
million domestic bond issue needed to complete the financing. Initiation
of construction activities (by a US firm) will benefit local employment
6-qd busiWiloveTiroriMaie2CRI1PRIP: CAALIWAID-Viet0hebgAregbbilat2Osorio
to put into effect his program for nromoting_the industrial, agricultural,
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Weedy Contributions, D/LA, 41-50
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Situation Memorandum. 61-50
10 October 1950
and commercial development of the country. However* oneosition may be
expected from wealthy businessmen and coffee producers who fear that the
government may take over control of profitable, ptivatelyemanaged organi-
zations such as the Cempanfa Salvadorena de Cafe, the Mortgage Bank, and
the Central Reserve Bank. Such a move might be in accord with ()series
determination to combat the traditionally-tight credit situation through
the creation of a government finance agency which will extend Small, long-
term, low-interest loans. Businessmen are also concerned about the nossi-
bility of increased taxes, of social legislation which may favor increased
wages and workers" compensation payments, end of expropriatien on the basis
of "social necessity?. Although ()series nrogramewill give the government -
control over a greater portion of El Salvador's wealth, thereby reducing
the stabilizing influence of the country's Ultra-conservative cenitalists,
it may promote a degree of economic diversification and an increase in
nroductivitye The most immediate effect will probably be an increase in
government employment and the creation or expansion of a few favored
business enterprises.
UllItamor
There has been little change in the military situation. The army
remains capable of maintaining internal order and continues to be loyal
to MWor Osorie, the new ntesidente It is possibly true that Major Oscar
Bolanoss-dominant member of the former government junta, sounded oat army
support for a plan to prolong his junta government. Beaver, Bolanos, who
now has Accented the post of minister of defense, apnerently abandoned
tnis elan. In recent months, some new army equipment has been acquired
in the US. Interest continues in plans for a coast guard which, if
established, may provide El Salvador with a means of patrolling its newly
claimed 200-mile offshore territorial unit (see International).
Sebveesine
Communists continue to exert little influence in national affairs.
Political activity has been slight since the defeat of the anti-Osorio
coalition candidate in the March presidential election. Greatest activity
has been among university student grouno. Communists ...rare able, in June,
to stage a student erotest against the Lempa river dydroelectric project
(denounced as "ITS imperialise), and they were active in initiating, and
erolonging, the student strike in July. Largely through the ?mite
Revolucionario Estudianta Communiste have engaged in organizational work
directed toward the formation of a new youth organization, a new clandestine
organization, and new Marxist study greens. In the field of labor, activity
nes been slight but has increased since the nublication of two basic labor
laws by the junta government. These laws (which will nreoumably be supported
by Osorio) legalize comnany and trade unions nut forbid federalization and
carefully circumscribe union activities. .Communiets have therefore laid
plans to conseidete oprosition and to agitate for the unification necessary
if labor is to became influential.
AlNeenieetteeeletedaergintinleUtenntIneitlitel7tee04040.10*213006enene2evelen
during caning months, ?emu/1.st influence is not exnected to increase.
ter> r"!V97.777'19,11 A ?
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Weekly Contributions, AAA, 41-50
(CIA Working Paper)
Situation Memorandum 61-'50
10 October 1950
international
El Salvador's relations with its neighbors, with the US, and with
other conntries continue to be, in general, cooperative and amicable,
though the recent claim to sovereignty over offshore waters (see D/tA Wkly?
12 Sep 50) nrovides grounds for international controversy. Desnite pro-
tests from the US and Great Britain, El Salvador incorporated in its new
constitution a Claim to absolute sovereignty over the high seas to a dis-
tance of 200 miles offshore. This claim, conflicts with US commercial
and defense interests, will lead to further controversy. Moreover, a
nationalistic trend, as illustrated in the new constitution; may eventually
lead to conflicts between the government and US business interests in the
country. In recent months the government has ratified the OAS charter and
the Bogot?Pact and in the Korean controversy has given fall suOnort to
the UN. The government continues to look to the United States for technical
aid and advice.
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Situation nemorandmn 62-50
The Current Situation in Surinam
10 October 1950
Oamm177---The political situation is now relatively calm after
one ratherestormy controversy in the Staten in July. Economic
conditions have not improved in the period from April to August.
The Dutch army garrison at Paramaribo and Surinam's small force
of policemen continue to be of no military importance. No sub?
versive movement is known to exist in Surinam. No matter of
importance affecting Surinam's international relations has arisen
in the past six months.
--US security interests have not been affected by
recent developments in Surinam.)
Political
e political situation is now relatively calm after a rather stormy
controversy in July centering around the djsmissal of a doctor from the staff
of the public hospital. Last March, ninister of Education and Public Health
Lou Lichtveld dismissed Ellm H. C. Van Ommeren, government surgeon in the
public hospital when the latter, apparently motivated mainly by personal and
professional jealousy, refused to obey an order of his superior. Dr. Van
Ommeren, who is a member of the Staten, retaliated by proposing in that body
a motion of censure againet the minister. Although Van Ommeren's party, the
National Party of Surinam (NPS), had in. a party congress approved this par?
lianentary move, when, the motion cane to a vote eight of the twelve NPS Staten
members resigned from the party and voted to sustain the minister. For a
while it was feared that this split in the NPS, which is the majority party
in the Staten, would cause the government to fall and necessitate new elections.
It now appears likely, however, that the governanwillmdt to see if the
Staten as presently constituted can function before dissolving the assembly
and calling for new elections. gresent composition of the Staten is 8
Independents, formerly NPS; L. NAT; 1 ST.13 (Surinam Mineworker& Bond);6 VUP
(United Hindu Party); and 2 SLO (Surinam Farmers' Organization)7
Economic
Economic conditions did not improve in the period from. April to August,
but the outlook is much brighter for the coming months. (There is no economic
information available on Surinam for August and September.) As a result of
decreased US demand for bauxite in the first half of 19.50, the largest of
Surinam's three bauxite nines cut back production by 25%. Although the cut?
back in production was not fully reflected in bauxite exports since produc?
tion from one other mine increased slightly in the same period, the reduction
in exports of bauxite MW sufficient to have a slightly adverse effect on -
the economy and the loss of this dollar income has so increased Surinam's
dollar shortage that the government has found it necessary to tighten controls
on imports from hard currency areas for the last six months of 1950.?
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Situation Llemoranchmt 62-50
E MAL 090,60200060002-2
10 October 1950
The government's desire to counteract the trend toward complete depen-
dence on one expert product, bauxite, has been reflected in a number of recent
measures designed to encourage the pursuit of other economic activities.
Further efforts to stimulate gold production included the setting aside of
certain areas rhere miners can prospect for gold without taking out a conces-
sion, and the removal of the royalty which formerly had to be paid on all gold
produced in the country. Probably as a result of these incentives, gold
production has increased considerably in recent months over the 1949 alI-time
low level of production, but there is little chance that the aver-all trend
toward the decline of the gold industry ezi.11 be changed. The government has
sought to aid the citrus fruit industry by the establishment of a central
packing house, with a view to eliminating complaints of Netherlands importers
that a large portion of Surinam fruit is spoiled by the time it arrives in
Belland. The determining factor in the government's decision to build the
packing house at this time was probably the termination on 1 December 1949
of an agreement between the Netherlands and the Serinem Government prohibit-
ing the importation of citrus fruit into the Netherlands from any camahry
other than Surinarn a situation which now forces Surinam to compete with
other nations far the Netherlands trade. A still fur'ehor step in the govern-
ment's attempt to achieve a more eheersified economy is seen in the Netherlands-
ECA financed Lelydorp Plan, a project for the settling of both local and
Dutch farmers on a large tract of fertile land for the cultivation of rice,
peanuts and soya beans. Although these government measures will help to
increase production of fruit and other agricultural products, it is not be-
lieved that they will significantly affect the one-product nature of the Surinam
economy.
Economic conditions: promise to improve considerably in the next six
months. Since bauxite comprises 755 of Surinam's exports and since practi-
cally all of this bauxite goes to the US, Surinam's econargy is particularly
sensitive to every change in US demand for aluminum. The outbreak of war in
Korea immediately-reversed the early 1950 downward trend in US aluminum produo-
tion and since July demand of both civilian and defense industries has been
so great that the aluminum industry, even producing at full capacity, cannot
supply all that is needeth roreover, should there occur some unforeseeable
slackening in industry's demand (a development which is most improbable)
there would still be no slaw down in US aluminum production for some time,
as any available aluminum would now be quickly purchased by the flunitions
Board, which received a large appropriation for stockpiling aluminum in July
and has been unable as yet to acquire any significant quantity for stockpiles,
became of the current scarcity of the metal. These developments assure
Surinam of increased bauxite exports, a greater supply- of US dollars and a
resultant considerably improved economic situation in coming months.
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Situation Memorandum 62-50
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10 October 1950
TJ1e Dutch .army garrison at Paramaribo and Surinamls small force of
native policemen continue to be of no political or military significance.
Subversive
No movement of a subversive character is known to exist in Surinam.
International
----r6"m?a-Mr of importance affecting Surinam's international relations
(which are administered by the Netherlands) has arisen in the past six
months. Surinam did not obtain its hoped-tor associate membership in the
Economic Commissien for Latin America (ECLA) at the third session of that
body in June 1950. However, the Netherlands did recognize Surinam's interest
in this commission by appointing as the Dutch representative, Surinam's
Minister of Education and Public Health Lou Lichtveld,
There have been no further developments relative to the proposed federa-
tion of the Netherlands, the Dutch Antilles and Surinmn. The Hound Table
Conference originally scheduled for Jay has now been postponed until same-
time in 1951.
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