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December 12, 1952
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Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 COPY NO. 151 ASSISTANT DIRECT07,0NE UVD1.0 ET SEC INFORMATION 1. 7'1 3 NATIONAL INTELLIGENCE ESTIMATE CONDITIONS AND TRENDS IN LATIN AMERICA AFFECTING US SECURITY NIE ? 70 DOCUMENT NO. I NO DHANC.:;!-:- N CLASS. i TO: TS S .....---_,.....__ I / CLAaS. C.,HA;':c.:"-D 0 '''''.? NEXT REVEW CATE: _ AUTH: HR 70-2 DATE: ../ ' __ t.:_ii-? I REVIEWER: L21254 ' ' Y Published 12 December 1952 E. DECLA;;;;sr?_,D The following member organizations of the Intelligence Advisory Committee participated with the Central Intelli- gence Agency in the preparation of this estimate: The intelligence organizations of the Departments of State, the Army, the Navy, the Air Force, and the Joint Staff. All members of the Intelligence Advisory Committee concurred in this estimate on 4 December 1952. CENTRAL INTELLIGENCE AGENCY c_T1' '!.! TO 1:71.1r5 PEP,COS C17,7't:41 ViTIR Et Declassified and Approved For Release 2013/01/17 SEC T ,Th#,i,I -? : CIA-RDP79R01012A002400010001-5 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 DISSEMINATION NOTICE 1. This copy of this publication is for the information and use of the recipient designated on the front cover and of individuals under the jurisdiction of the recipient's office who require the information for the performance of their official duties. Fur- ther dissemination elsewhere in the department to other offices which require the in- formation for the performance of official duties may be authorized by the following: a. Special Assistant to the Secretary of State for Intelligence, for the Depart- ment of State b. Assistant Chief of Staff, G-2, for the Department of the Army c. Director of Naval Intelligence, for the Department of the Navy d. Director of Intelligence, USAF, for the Department of the Air Force e. Deputy Director for Intelligence, Joint Staff, for the Joint Staff 1. Director of Intelligence, AEC, for the Atomic Energy Commission g. Assistant to the Director, FBI, for the Federal Bureau of Investigation h. Assistant Director for Collection and Dissemination, CIA, for any other De- partment or Agency 2. This copy may be either retained or destroyed by burning in accordance with applicable security regulations, Or returned to the Central Intelligence Agency by ar- rangement with the Office of Collection and Dissemination, CIA. WARNING This material contains information affecting the National Defense of the United States within the meaning of the espionage laws, Title 18, USC, Secs. 793 and 794, the trans- mission or revelation of which in any mariner to an unauthorized person is prohibited by law. DISTRIBUTION: White House National Security Council Department of State Department of Defense National Security Resources Board Mutual Security Agency Psychological Strategy Board Atomic Energy Commission Federal Bureau of Investigation Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 ?-43-E-etrE=' CONFIDENTIAL CONDITIONS AND TRENDS IN LATIN AMERICA AFFECTING US SECURITY' THE PROBLEM To identify the factors affecting Latin American political stability and cooper- ation with the United States, and to estimate the trends likely to affect Latin Amer- ican political and military cooperation and the availability of Latin American stra- tegic resources. 1100 ? CONCLUSIONS 1. The political instability now evident in Latin America results from serious disturbance of the traditional social or- der by new economic and social forces. This instability is therefore much more fundamental than that which character- ized the personal politics of Latin Amer- ica in the past. 2. The principal politic 1 trend in Latin America is toward nationalistic regimes maintained in large part by demagogic appeal to the depressed masses of the population, of which the Peron regime in Argentina is an outstanding example. Similar, though not identical, regimes already exist in Bolivia and Guatemala. Present circumstances favor their devel- opment in Chile and Ecuador. Peru, Colombia, and Venezuela are the states next most vulnerable to this trend. 3. The general trend toward radical and nationalistic regimes in Latin America is favorable to Peron's efforts to arouse an- ' This estimate relates only to the Latin American republics. European colonies in the area are excluded from consideration. tagonism toward the United States. 'The same nationalism, however, would probably preclude Argentine political control over any neighboring state. 4. The Communist threat to US security interests in Latin America is greater than the limited and declining party membership in the area would suggest, because of the ease with which a relatively few Communists, operating through various fronts, can exploit the social unrest and Yankeephobia already existing in the non-.Communist popula- tion. The Communists, as such, have no present prospect of gaining control of any Latin American_state_by electoral means. raTaTe-mala, however, is an ex- Fcm-ple of how a small Communist minor- ity can penetrate a Latin American gov- ernment and strongly influence its policy. 5. The pressures of social unrest and ex- treme nationalism make it difficult for Latin American governments to render on all occasions the degree of diplomatic, 1 CONFIDENTIAL Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 CONFIDENTIAL' military, or economic support desired by the United States. With the exception of Argentina and Guatemala, they have been reasonably cooperative in the politi- cal sphere. Generally, however, they have not implemented effectively their economic and military undertakings. 6. Eventually the trend toward exagger- ated nationalism, if it continues, will seriously affect Hemisphere solidarity and US security interests in Latin Amer- ica. For the next several years, how- ever, change is not likely to be so far reaching as to reduce substantially the present degree and scope of Latin Amer- ican cqoperation. In particular, Latin American strategic raw materials will continue to be available, although the governments concerned will seek to drive hard bargains in terms of prices and eco- nomic concessions. 2 ? 7. In the event of global war, the Latin Americans would more fully appreciate their community of interest with the Western Powers and would probably show a greater readiness to meet their international military and economic commitments. The Latin American armed forces, however, would not be able to defend critical strategic areas and vital sea routes against serious enemy attack without the direct participation of US forces, although they would be of value in supporting roles. 8. The more immediate threat to US security interests in Latin America, in the event of global war, would be Com- munist capabilities for the sabotage of strategic industries. It is unlikely that a large-scale and widespread Program of sabotage could be sustained, but the sit- uation would favor sporadic Communist successes. DISCUSSION Basic Social Trends 9. In most Latin American countries the old order of society was dominated by landed gentry in alliance with the Church and the Army. There was also a small professional and commercial middle class, but the mass of the population was dependent, inarticu- late, and politically impotent. Within the ruling group politics was highly personal and unpredictable, but the social order itself was stable. 10. In recent years, however, the traditional social orderS has been seriously, disturbed, pri- marily by the, accelerated pace of Latin Amer- ican economic development as affected by structural changes in the world economy, secondarily by ideological influences derived from the world-wide social unrest of the twentieth century. Although 60 to 70 per- cent of the population is still engaged in agri- culture, the development of mining, manu- facturing, and service industries in Latin America during the past three decades has consicterably increased the importance of non-agricultural labor and the urban middle class. In many important countries the pre- ponderance of political power is shifting to politicians whose strength is derived primari- ly from influence over city populations. This development, still incomplete and ill-defined, has given rise to political instability more fundamental than that which characterized the personal politics of the past. 11. In some countries new political leader- ship arises primarily as an accompaniment of industrial and commercial growth. In all countries its rise has been associated with a rapid expansion of governmental opera- tions. The leaders of the newly-important population groups include functionaries -s-Ere-azz. CONFIDENTIAL* Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 -e Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 'CONFIDENT IA/I staffing government ministries and state- controlled enterprises, military, professional, and business men, and trade union leaders. The majority do not have strong ties to? the traditional- border. The most characteristic attitude among political leaders of this new type is a -Strong tendency toward nation- alism. - 12. Older social elements and institutions have adapted themselves with varying de- grees of success to the rise of this new and essentially urban political leadership. Intel- lectuals, who formerly had their spiritual home in European capitals and were at- ? tached to the oligarchy by ties of family and patronage, are now predominantly both so- cialistic and nationalistic in temper. The military, nationalistic by tradition, have shown considerable interest in the prospect of industrialization. They are sometimes neutral toward the old order, or even hostile when alignment with "progressive" forces suits their purposes. The various national Catholic hierarchies have for the most part striven to preserve the traditional social order, but in a few countries Catholic laymen have organized Christian socialist parties in an ef- fort to counter anti-clerical and agnostic tend- encies of the urban population and to divert the masses from a more radical course. Only the landed interests have in general made no effort to accommodate themselves to the new situation. 13. Relations between the masses of the peo- ple and the new, essentially urban, leadership ,are much less stable and clear than were those between the people and the landed aristocracy. Personal politics and "feudal" loyalties are being superseded by the imper- sonal relations of Capital, Labor, and Gov- ernment. The aspirations of urban popula- tions, especially those of organized labor, are often exploited by demagogues and directed toward objectives incompatible with the de- velopment of stable and moderate govern- ment. The masses in general are poverty stricken, politically inexperienced, and high- ly susceptible to demagogic appeals. 14. The degree of disruption produced by the social forces mentioned above varies from 3 country to country. The traditional or- der still persists in Peru, Nicaragua, and the Dominican Republic, for example. On the other hand, Argentina, Bolivia, and Guate- mala are now controlled by politicians who base their power in large part on leadership of the depressed masses. This latter pat- tern is likely to be repeated, with local varia- tions, in other countries which have not achieved, like Mexico, a relatively high level of social and political stability. Basic Economic Trends 15. Latin America has traditionally served as a supplier of raw materials and foodstuffs to the highly industrialized countries of North America and Europe, and has depended on those countries for nearly all of its require- ments of manufactured products. The Latin Americans, however, are no longer willing to accept what they describe as a colonial eco- nomic status. This attitude is accentuated by their experience during and after two World Wars, when, despite large income from exports of raw materials, they were unable to buy the manufactured goods they wanted. They seek a greater degree of economic inde- pendence and stability through such meas- ures as protective tariffs, exchange restric- tions, export controls, and government-spon- sored industrialization. 16. One aspect of the prevalent economic nationalism has been a tendency toward the expropriation and nationalization of foreign- owned utilities and industrial enterprises. This tendency arises from political as well as economic motives. Immediately after the war Argentina and Brazil bought out British railway interests. Recently, the Bolivian Government has nationalized that country's tin mines. In Chile discussion is rather in terms of an expropriation of the product of the copper mines through the establishment of a government monopoly of copper exports. In Venezuela there is occasional talk of even- tually expropriating the oil industry, but there is no indication that the government contemplates such a policy. A related tend- ' ency is illustrated by the unwillingness of Brazil to permit the exploitation of oil re- ? PONFIDENT T AL Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 SECRET 4 sources except on terms providing for close government control of such operations. 17. Progress in industrialization will be in- creasingly difficult to sustain in Latin Amer- ica. Domestic private investors, seeking quick, high profits, are reluctant to finance long-term development enterprises. Foreign private investment capital for desired indus- trial expansion has not been forthcoming in effective quantity in the postwar period, in large part because of the restrictions and uncertainties engendered by the prevalent economic nationalism. Industrialization, , therefore, has been to a considerable extent 'financed with public funds, and cbnsequently its form and direction have often been gov- erned by political rather than economic con- siderations. , Development of new domestic industries and the basic transportation and energy services will probably involve the di- version of capital and other resources from development of the raw material export sec- tor of the economy. 18. Latin America's recent preoccupation with industrial development to the neglect of agriculture has adversely affected the domestic supply of agricultural products as well as the earning of foreign exchange though agricultural exports. Even a rela- tively small increase in agricultural invest- ment could have brought substantial in- creases in agricultural productivity, particu- larly in the growing of food for domestic use. 19. Inflation has increased the economic and political strain in Latin America. It has jeopardized the levels of living of the laboring classes in urban areas, thereby compelling the governments to expand costly social wel- fare programs. Agriculture in general has not benefited from inflation because of the increased cost of manufactures and because of government interference in domestic markets. 20. An economic crisis in, Latin America was averted only by the rise in prices for Latin American export commodities following the outbreak of hostilities in Korea. If the terms of trade should seriously deteriorate many Latin' American economies would be severely shaken. In countries where large-scale pro- grams of industrialization are underway, a marked slackening of those programs would produce grave social and political problems. The countries most vulnerable in this re- spect ? Mexico, Brazil, Argentina, and Chile ? are those which could render the greatest material support to the United States in the event of war. Basic Political Trends 21. The most important political trend in Latin America is toward the rise of radical and nationalistic regimes like those in Argen- tina, Bolivia, and Guatemala. Such regimes are based in large part on mass, support ob- tained by promises to relieve the wants and fulfill the aspirations of depressed segments of the population. Recent elections in Chile and Ecuador have brought to power nation- alistic regimes more likely than their prede- cessors to develop in this same direction. Radical mass movements in Peru and Vene- zuela have been forced underground by rep- resentatives of the traditional order. In their frustration these popular movements are sus- ceptible of exploitation by imitators of Peron's techniques. Even in such relatively stable countries as Brazil, Uruguay, and Mexico there are extremist elements of con- siderable political potential. 22. The mounting pressure for radical politi- cal change in Latin America alarms partic- ularly those governments controlled by the traditional ruling group, as in Peru and Colombia, and stiffens their resistance to any substantial change. This repressive tendency / hinders even moderate change and so renders\ more likely the eventual outbreak of revolu- tionary violence. In Colombia there is al- ready a widespread guerrilla resistance to the regime. 23. Where power has already passed, as in Mexico, from the traditional to a new politi- cal leadership, the governments are also hos- tile toward mass movements and toward poli- ticians seeking power on a new wave of revo- lution. The weakness of these otherwise stable political machines lies in their many unfulfilled promises to the urban masses, SECRET Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 SECRET promises impossible of fulfillment during the present phase of economic development. Chile affords a recent example of one such liberal and moderate regime which has suc- cumbed to this weakness. Only in Mexico is the existing political machine strong enough to permit a reasonably confident estimate that it would be proof against overthrow by a demagogic opposition. 24. The military retain considerable political influence in all Latin American countries. In those such as the Dominican Republic, Nicaragua, and Paraguay, where the tradi- tional order has not been seriously disturbed by new social and political ideas, military and national leadership are essentially iden- tical and no conflict between the two is likely except in terms of a palace revolution. In countries where the old order is under attack, but has not been superseded, the position and future conduct of the military are less clear and predictable. The Venezuelan Army, for example, put the liberal AcciOn Democratica into power in 1945, but turned it out again three years later. The vacillation of the Army between the old and new orders, in Venezuela and elsewhere, appears due to the fact that the new sort of civilian political leaders, while promising to satisfy military aspirations, also sponsor radical changes in the social order. Yet even where the Army has taken direct control, as in Peru and Vene- zuela, the resulting governments have been sensitive to popular demands for social im- provement. Where demagogues gain mass support, as in Argentina, or where govern- ments are responsive to a relatively broad and articulate electorate, as in Mexico and Uruguay, the capacity of the military for in- dependent action and their influence upon the government tend to lessen. 25. Peron's success in Argentina has stimu- lated the existing trend toward demagogic and nationalistic regimes in other countries, as in Bolivia, Chile, and Ecuador. Peron has fostered this trend by giving material or moral support to like-minded national lead- ers. The trend, however, is primarily the consequence of national conditions and aspi- rations in each case. Even if other govern- ments should adopt domestic and foreign policies closely resembling those of Peron, their essential nationalism would preclude their becoming mere satellites of Argentina. 26. The trend toward radical nationalism in Latin America is adverse to US security in- terests, for a common expression of such na- tionalism is Yankeephobia. This spirit is in conflict with the idea of hemispheric soli- darity and cooperation. As expressed in Ar- gentine policy, it involves withdrawal into a "third position" of neutrality between, even active opposition to, both the US and the USSR. In practical application this policy adversely affects only US interests. Peron is actively endeavoring to induce other Latin American states to adopt this "third posi- tion." He has had no apparent success so far, but the general trend is favorable for his purposes. Basic Military Trends 27. The primary function of Latin American, armed forces has always been the mainte- nance of internal order. Although, interna- tional wars have occurred within the area, they have been rare and are outside of nor- mal expectation. Latin American military establishments have never been developed in the expectation of having to resist invasion by a first-class military, power without the support and assistance of some other major power. 28. The Latin American governments have now agreed to a coordinated approach to the general problem of Hemisphere defense, with the assignment of tasks to particular states under an over-all plan and the preparation of their ?forces to perform the tasks assigned. Such planning is proceeding through the agency of the Inter-American Defense Board. At the same time various Latin American forces are being modernized ?and developed under US influence. This influence is exerted through joint US?Mexican and US?Brazilian defense commissions, US military missions in all other Latin American countries except Nicaragua and the Dominican Republic (the present armed forces of which were estab- lished under US auspices) , the training of SECRET Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 SECRET 6 Latin Americans at Service schools in the Canal Zone and the United States, various bi- lateral mutual security agreements, and the provision of limited quantities of US military equipment. 29. The major Latin American powers gen- erally desire to improve their air and naval forces and to achieve a reasonable degree of self-sufficiency in ground strength. Unskilled manpower is available in adequate numbers, but these states generally lack the industrial and financial resources, the skilled techni- cians, and the qualified officers to achieve this goal by their own efforts. Any considerable improvement , and expansion of Latin Amer- ican armed forces will therefore require US? assistance in training and in the provision of military equipment. Moreover, even in the best circumstances, the Latin Americans would never expect to meet attack by a first- class military power without direct US air and naval support. Communism in Latin America 30, The Communist threat to US security in- terests in Latin America is greater than pres- ent party membership in the area would sug- gest, because of the ease with which a relatively few Communists operating behind labor, intellectual, and other fronts can ex- ploit the social unrest and Yankeephobia al- ready existing in the non-Communist popula- tion. Guatemala is a prime example of how a small Communist minority can penetrate a Latin American government and strongly in- fluence its policy. 31. During the period 1944-1947 the Stalinist Communist parties in Latin America had some 330,000 members and polled an aggre- gate of about a million votes in various na- tional elections. Since then party member- ship has fallen to about 200,000. Most of this decline has occurred in the three most im- portant Communist parties, those in Brazil, Chile, and Cuba, each of which has lost about half of its members. In many countries the Communist Party is now officially suppressed. In none is it an important electoral factor. The Communists, as such, have no present prospect of gaining control over any Latin American government by electoral means. Their direct participation in national politics is significant only in Guatemala. 32. The Communists have had some success in their efforts to gain control of Latin Amer- ican labor by establishing reliable Commu- nists in key positions in strategic labor unions and in national labor federations. They domi- nate completely the international Confedera- tion of Latin American Workers (CTAL) . In recent years Communist control of labor unions has been somewhat curtailed by gov- ernment action, but such action has also af- fected and antagonized non-Communist labor leaders. In Chile and Venezuela, for example, government restrictions on union activity have tended to give Communist and non-Com- munist labor groups a common sense of per- secution and a common cause. Moreover, even where Communists have been ousted from official positions of union control, they retain some influence as rank-and-file labor leaders or as officials in non-Communist unions. Furthermore, the Communists have sought influence among the mass of unorgan- ized workers. Through their influence in labor they have a capability for interrupting the operations of strategically important in- dustries by means of strikes and sabotage. 33. The Communists have also been success- ful in penetrating Latin American educational systems, intellectual circles, and those patri- otic organizations formed to give expression to the new spirit of ultra-nationalism. In this way they seek to instill prejudice in the rising generation, to intensify socialistic and na- tionalistic tendencies among the intelli- gentsia, to assume a patriotic coloration for their own activities, and to give such direc- tion to nationalism as will most effectively hinder Latin American cooperation with the United States. 34. In the Latin American armed forces, how- ever, the influence of Communists and Com- munist sympathizers is slight. In general, the officer corps constitutes the strongest op- position to Communism in Latin America. 35. Since the outbreak of the Korean war the USSR has shown a markedly increased inter- est in Latin America. This increased atten- SECRET Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 Declassified and Approved For Release 2013/01/17 : CIA-RDP79R01012A002400010001-5 SECRET 7 tion has been reflected in the larger volume of Soviet broadcasts to Latin America, the movements of important Communists, and the resolutions of recent Communist-spon- sored conferences. COOPERATION WITH THE UNITED STATES Political Cooperation 36. Since World War II the inter-American system has been subjected to new strains. Isolationist and anti-US sentiment among Latin Americans has been kept alive or strengthened by the political, economic, and social problems reviewed above. Latin Amer- icans believe that the US does not appreciate the urgency of these problems. They in turn do not fully understand the demands of the global situationS upon US attention and re- sources, and resent the failure of the US to give them the financial and military assist- ance which they believe they should have. 37. The outbreak of hostilities in Korea posed a clear test of Latin America's willingness and ability to cooperate with the US in support of UN objectives. Initial enthusiasm was dis- played in the united support given by Latin America to the UN decision for action in Ko- rea and to the resolution passed in the Council of the Organization of American States ap- proving this action. The five nations which had not yet ratified the Rio Treaty quickly did so. (Guatemala, however, has not as yet de- posited its instrument of ratification.) Later, all but Argentina voted for the UN "Uniting for Peace" resolution and all supported the re- affirmation of inter-American unity which came out of the March-April 1951 meeting of the American Foreign Ministers. In addition to this political support, Latin America agreed, in principle, to increase its output of strategic raw materials. 38. More recently, Latin American govern- ments, except those of Argentina and Guate- mala, have given excellent support to the US on all the important political questions on which the US and the USSR were opposed dur- ing the sixth (1951) session of the UN General Assembly. Moreover, they have moved with caution on the issues of Iran, Egypt, Morocco, and Tunisia, despite their strong desire to support the national aspirations of other peo- ples. Finally, since the beginning of 1952, five Latin American governments ? Cuba, Colombia, Ecuador, Peru, and Chile ? have entered into bilateral military assistance agreements with the US. Two others ? Uru- guay and Brazil ? have signed such agree- ments, but have not yet ratified them. 39. Some considerations tend to counterbal- ance this record of governmental cooperation. In the weeks after the opening of the Korean conflict initial Latin American enthusiasm gave way to an attitude of caution and calcu- lation. Fear of a global war has been ex- ploited by Communist and Peronist anti-US propaganda, which stresses the theme that Latin America has nothing to gain and much to lose from embroilment in a world conflict. To date, troop contributions for Korea have not been forthcoming, except from Colombia, and the recently negotiated military agree- ments have been subjected to severe attacks by Communist, nationalist, and other anti- US elements. Economic Cooperation 40. The role of Latin America as a supplier of strategic raw materials, particularly in time of war when access to materials in other sup- ply areas may be denied, makes Latin Amer- ican economic cooperation vital to US and Hemisphere defense. Latin America at pres- ent supplies the United States with over thirty strategic mineral, fiber, and chemical prod- ucts. Its output of copper, petroleum, and zinc forms an essential complement to US and Canadian production. The area is the only Western Hemisphere source of thirteen essen- tial materials, including tin, cordage fibers, mica, quartz crystals, and monazite, and it is the principal Hemisphere source of antimony, chromite, manganese, tantalite, and tungsten. The great bulk of these strategic materials comes from Mexico, Venezuela, Peru, Chile, Bolivia, and Brazil. 41. At the 1951 meeting of American Foreign Ministers the United States obtained from the Latin American nations pledges to increase the production and the allocation to the US of strategic materials in short supply. The SECRET Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 SECRET 8 implementation of these pledges has not been as effective as the emergency required. Pro- duction as a whole has not been expanded above general postwar levels. The feelings of Latin Americans respecting this form of eco- nomic cooperation were displayed at the For- eign Ministers meeting by a request that the US proposal for increases in the output of strategic materials be accompanied by assur- ances of assistance for general Latin American economic development. In general, emphasis upon their role as producers of raw materials is resented by Latin Americans as imputing to them a "colonial" status. 42. Latin Americans in general do not oppose the entry of foreign capital for the purpose of exploiting natural resources, but they are be- coming increasingly insistent on exercising control over the scope and form of such invest- ment. This insistence stems not only from a militant nationalism, but also from the con- cern of some leaders for conservation of re- sources and the desire of all to obtain a maxi- mum quid pro quo. 43. With respect to trade with Communist- controlled countries, the great majority of Latin American nations have promised either formally or informally to comply with the provisions of the Battle A4 Nevertheless, some strategic materials, par icularly Chilean copper, reportedly have been transshipped to the Soviet Bloc via third parties in Western Europe. Latin American officials, however, have generally been cooperative when ap- proached by US officials with instances of lax enforcement of trade controls. Military Cooperation 44. The Latin American armed forces are not at present capable of providing adequate de- fense for the area in the event of war, though they would be of some value in supporting roles. 45. All Latin American countries except Gua- temala have established their eligibility for reimbursable military aid under the Mutual Defense Assistance Act of 1949. Most of them have submitted requests for such aid. Gen- erally they wish to purchase the most ad- vanced types of US equipment, types which they do not actually need, in US opinion, and which the US cannot provide, either at all or in the desired quantities, under present pri- orities. Shipments to Latin America under this program have therefore been small. The inability of Latin American governments to obtain desired US equipment for which they were willing to pay has caused considerable , resentment and has led to some purchases of European materiel, to the detriment of arms standardization. 46. Only the five countries which have en- tered into bilateral military assistance agree- ments with the US are eligible for grant aid under the Mutual Security Act of 1951. They are Cuba, Colombia, Ecuador, Peru, and Chile. Shipments under this program have only just begun. Brazil and Uruguay have signed bi- lateral agreements, but have not yet ratified them. Such an agreement is under negotia- tion with the Dominican Republic. Of the nine countries so far approached, only Mexico has declined to negotiate. 47. Latin America's low priority in relation to Europe with respect to US military aid has caused general disappointment and dissatis- faction in Latin American military and po- litical circles. Rivalries and mutual, sus- picions among Latin American states have also led to complaints about inequitable treat- ment in the bestowal of US aid. So far, how- ever, these ?discontents have not seriously affected Latin American military cooperation with the United States. 48. Fourteen Latin American countries have received US Army or Air Force missions, or both, and nine have received US Navy mis- sions. Generally they have been well satisfied with the work of these missions, but have not made optimum use of them. Argentina, how- ever, has allowed its contracts for Army and Air Force missions to lapse without renewal. PROBABLE FUTURE DEVELOPMENTS General 49. Most Latin American governments will be under increasing pressure from urban middle class and labor groups to pursue policies aimed both at increasing and at redistributing the SECRET Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 - ? Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 national income. These policies will involve expensive programs of industrialization and social welfare, often beyond the current fiscal capabilities of the countries which undertake them. Under these circumstances Latin America will continue to be a fertile ground for demagogues of the ultra-nationalist as well as the Communist type. 50. The best immediate prospects for a check upon the extremist forces of social and eco- nomic change are to be found in countries such as Mexico, Brazil, and Uruguay, where moderate urban groups have been established as a political factor. Other nations, such as Colombia, Venezuela, and Peru, have the ma- terial resources for satisfying immediate so- cial needs, but it is doubtful that the leader- ship now in power ? the Army in Venezuela and Peru and the Conservative Party in Co- lombia ? will act in such a way as to allay popular disaffection and ensure political stability. Countries with only limited human and physical resources, such as the Dominican Republic, Nicaragua, and Paraguay, seem firmly set in the traditional social and eco- nomic pattern. The example of Guatemala, however, shows how readily this pattern can be radically changed in such countries by a small but purposeful minority. 51. The general trend toward nationalistic regimes maintained in large part by dema- gogic appeal to the depressed masses may be expected to continue. Such regimes already exist in Argentina, Bolivia, and Guatemala, and present circumstances favor their devel- opment in Chile and Ecuador. Peru, Colom- bia, and Venezuela are the states next most vulnerable to this trend. 52. In any case, the trend toward nationaliza- tion of basic industries, especially those now under foreign control, is likely to develop fur- ther. This trend would not in itself deny US access to strategic raw materials ? the indus- tries nationalized would still have to sell their products ? but the availability of these mate- rials would be affected by political considera- tions to a greater degree than at present. It is also likely that production would decline, at least temporarily, in nationalized industries. Cooperation with the United States in a Situation Short of Global War 53. Both the Communists and the ultra- nationalists, notably the Peronists, by propa- ganda and intrigue, will seek to curtail Latin American cooperation with the United States. The social, economic, and political conditions which have been described will afford them op- portunities for anti-US agitation. It is im- probable, however, that the Communists can gain direct control over the policy of any Latin American state, at least during the next sev- eral years, or that Argentina can gain political control over any neighboring country. It is possible that Peron may succeed in aligning other states in a combination to exact a high price for cooperation, but any such combina- tion would almost certainly be unstable. 54. The pressure of exaggerated nationalism already affects the capacity, and at times the willingness, of Latin American governments to render on all occasions the degree of dip- lomatic, military, or economic support desired by the United States. Eventually this trend toward exaggerated nationalism, if it contin- ues, will seriously affect Hemisphere solidarity and US security interests in Latin America. Nevertheless, in a situation short of global war, the present degree and scope of Latin American cooperation with the United States is likely to remain basically unchanged for the next several years. Definite commitments by Latin American governments will be under- taken hesitantly and their implementation will probably be slow. The present availabil- ity of strategic raw materials to meet US re- quirements will continue, but the govern- ments concerned will seek to drive hard bargains in terms of prices and of economic concessions. Cooperation in the Event of Global War 55. The outbreak of global war would bring to Latin Americans a greater awareness of danger to themselves in the global situation and of their community of interest with the Western Powers. A greater readiness .to meet their international military and economic commitments would probably follow. As long as the US military position in the Western ciftei:tta ' Declassified and Approved For Release 2013%61/17 : CIA-RD-1576170-10712A002400010001-5 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 Hemisphere remained secure, even Argentina and Guatemala might be expected to mod- erate their anti-US propaganda and, eventu- ally, to cooperate in defense of the Hemi- sphere. 56. The Latin American armed forces would not be able to defend critical strategic areas and vital sea routes against serious enemy attack without the direct participation of US forces. They would, however, be of value in supporting roles. In general they would prob- ably be adequate to maintain internal order, to guard against sabotage 'of strategic indus- tries and land transportation routes, and to protect air and naval installations from sabo- tage or small-scale raids. 57. After the outbreak of ?global war the United States could robably obtain anywhere in Latin America, except possibly in Argen- tina7the air and n'aval facilities necessary for U articipation in the defense of strategic areas and sea routes, including consent for the stationing of air and naval forces at such in- stallations. There would, however, be great reluctance, to the point of possible refusal in some cases, to permit the entry of US ground ? forces unless large-kale invasion appeared imminent. Latin American governments would be even more unwilling to admit to their territories the forces of other Latin American states. 58. In the event of global war Latin American governments would generally agree to an ex- pansion of their armed forces, but would re- ? quire US assistance in the provision of equip- ment and training and would seek to impose as much of the increased expense as possible on the United States. Expanded Latin Amer- ican ground forces, US equipped and trained, could eventually assume major responsibility for the defense of continental areas. It is un- likely, however, that Latin American air and naval forces could ever relieve the US of the major responsibility for air and naval defense. 10 59. Because of the mutual suspicions of Latin American governments, their limited military resources, and popular sentiment against service overseas, it is doubtful that any signifi- cant Latin American force would be avail- able for operations outside of the Western Hemisphere. It is possible, however, that Brazil might be persuaded to provide a divi- sion, as in World War II, and that other coun- tries might provide token contingents. The number and effectiveness of such forces as might be made available for such service would be limited by the amount of US aid available for training, equipping, and trans- porting them. 60. The economic dislocations incident to global war, including curtailment of economic development and social programs, would al- most certainly increase internal tensions and political instability in Latin America. Never- theless, with proper inducements, the produc- tion of strategic materials could probably be increased. 61. In circumstances of global war it is prob- able that all Latin American governments would agree to suppress existing overt Com- munist organizations and would have the ca- pacity to do so. The extent to which the activities of the underground Communist ap- paratus could or would be controlled would vary with the determination of the govern- ment, the effectiveness of the local intelligence agencies and police, and popular attitudes in each country. 62. The greatest danger from Communists in Latin America in time of global war would be that of sabotage in strategic industries. Al- though it is unlikely that a large-scale pro- gram of sabotage could be sustained through- out the area, the dispersion and vulnerability of key targets, especially in essential trans- portation systems, and the general inade- quacy of police and security forces, would favor sporadic success, especially in the period immediately following the outbreak of war. _CONFIDENTIAL Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 1?E, I !VC, I EU SECURITY INFORMATION 1--Igore VII 4 3 120. 1000 80? 600 40? 1 '?UNITED 'bud... e \ --,t ? ,!Pot7I STATES rt,---------?-\ GULF atamoros 'N MEXICO Tampico ? 0 ' Merida -L---- . Cie , .. , ., - Q, . it l' L A N T I C aguey e, 20? ?._-. c_.._\: _me)? Veracruz ?\ --",..,......,-.2. ; ---------- Chromite Manganese Nickel , DOMINICAN 6,? REPUBLIC ---. G. udfasnaii? MAIC.---- 1------ . : SO ?Juan 20? - I Antimony Crutptiate '-',,___ Belize , ? , qs:, i .4.-, -K.1 j -- R-eriectogn sA0.- ---------__---- '122 HoNoums Abaca 1 Bauxit Sisal tu.s I . '-,%., Bisthuth Lead ?c, tt2.,> ' ' Cadmium Mercury Celestite 0'0) .0'. Abacz, CARIBBEAN SEA c s...9.'",,r Zinc i, NICARAG0A . taleth 1 a a :nagua CURAcA0 6? 0 ViN e0/ 54\4301'9 . TRINIAD I n 6.'"'"q1-...'? m---;::::;,-:\__ cosTA'iii'cA---'-6\s r ' ( \ ?-'??-'11)ca-i;-ca-s- I` -13?r"' SP'in IBauxitt . pAriAt4A>, c ) A ? ,,.. N..... ti 4,,' '.-- Oeorgetown Me eitrn ' ."--\. VENEZUELA r.. 1 ?,,,,__ , ,,..?? i, , ,.-- ''''' -(")8?g-94--/ Iron ore Petroleum \_.p.,_..arib. \.... ,Y,) r / ? 7----,, ..1 .1 c3) ( : PRA 'Ye"" Eluenaventure ? / ? ale \ 5,....v. r 1 'k SU[MAiM yUlANA / COLOMBIA A GLAPAGOS ISLANDS ? (Ecuador] ,-, Platinum' o (---'..N.r? - ----,. MO fa if k, e ,.,. ' '';`, ,Quito ?,.....,.._ (f,1 if it w'' ;1, ? ' .. r _ -77- ? - ? ? - o. .. ,,,. - .,_. , Isabela : : BaGI,s E.,y:_,N...0.712AaeD01:k 1 -77-'.I"Belem ,,.'----,'2,_\,. .., Joia7.,' '1 j i lquiotr,,--",.._ "? ; , / , Pit_r1/2c.''','''-- B)) R A(Z ' Sao Luis ortaleza ,:, a Natal 1 I L i'T I C 34=1" \ Recife . _PACI1 _I Copper , Zinc \ PERI"' _ ----,---; 0.- , "\_..-? /'" L-1/4.7.....-? CeildLe , `) , 1 p!ryl Manganesee i ''' \ \ 1,1 A p te ft , ma I . VAAllt /4k 5 BOTrIVIA ' ) -\-......, Mica Monazite Ciit Quartz crystals Tantalite tf'fr ,4c74` "1 11 c I ,J , / et t'f?Ote V t''?? .1, / ' ' I " ' Antimony Paz Tin . 0 C E 4 ,Nr 4,:at? Z Tungsten ,- ? . C.. . Curab6 Ana'''. olis Golan,. ? ( Y'I't 20? ..,? kkr- /' ' SUCTO N III Iquique ?CttoS1 / .,,joote / V\ VitOria . 20? QupARebc;:ehGp: .. -I-a:1? Antofagasta 4 1 1 i Valparafso e.4 Santiago . CHILE ' ' / P ,S Salta 4114 l., .i. , de Janeiro -, Santos -.....?".. Fisuncion. VIlarrica 1. iitiba : Tucuman\ ill I ? .. Floriam5polis P Alegre Cordoba s\S'n Salto z ta Fe , Mendoza ?,, kio Grande ROS. f 10 \ ... 0. ------, U'UGUAY ? A iskt;tAiit 1. k 0 Copper] ' ARGENTINA , ConcepciOn_ -,, Quebracho - rri_ ,r4? eo ros 40? , , '--,, - r Valdivia' Puerto Montt 1 i i Mar del Plata .21 `I' L ? 4'0? LATIN AMERICA I I Railroad (selected) - ,,' o f.,) / ,., , . E A N i Pan-American Highway I 1., ?,,,, r Comodoro Rivadavia 1 .'l ) i ' Copper ' Strategic material . ' ) 1:33,500,000 Scale at the equator 0 50,0 1000 ( o.,..,. .. FALKLAND ISLANDS 's i Rio Go/logos '' Statute M ties 0 500 1000 ? . ort Stanley 4e-----' '.......--77."Stzalt of VG/vellum '-'-' CIC:5? (Sj\--? 1---1 1 1 Kilometers RESTRICTED .4,?-2 -..`-?,\ ( .C.:..,\.? , SOUTH GEORGIA , , 1 .?. \I i . I / , l 120? 100? 80? 60? 40? 20 , . .... . , . ... . . , 12495 CIA, 12-52 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 1 Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5 ,t---SEC1ZET' irdONFIDENTIAL 46. Declassified and Approved For Release 2013/01/17: CIA-RDP79R01012A002400010001-5