WEEKLY CONTRIBUTIONS LATIN AMERICA BRANCH, ORE, CIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200010007-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: November 9, 2016
• Document Release Date: July 27, 1998
• Sequence Number: 7
• Publication Date: February 23, 1949
• Content Type: REPORT

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1deckly Contributions
Latin America 13rane , OI CIA
23 February 1949
During the past weeks two developrnonts are found to be of particular
interest. The Argentine Government's last-hour attempt at reform may be
too late (p. 5). The Bolivian Government's charges of Peruvian support
of revolutionaries may impair relations between these countries and there-
by affect US interests in hemisphere unity (p. 4).
CUP NT D E t,LOPT'^NTS
GENERAL: Latin American countries are not expected to find grounds for
objection to US part WAI,on in the North Atlantic Pact (p. 2).
2 Y&& 1 DIVISIW: X~
Haitian Dominican animosity nay ha
effect on Hemisphere unity (p. 3).
CRITRAL DIVISI(X : Ecuador's unpopular administration is temporarily secure
because opposition groups checlanate each other (p. 4).
SOUTI EE N DIVISION: Bolivia has charged Peru with complicity in a plot
ani has declared a state of siege (p. 4). In Parag 's government, a
rift has developed between arnj leaders and civilians (p. 5). Argentine
economic reforms may come too late to avert a crisis (p. 5).
SPECIAL SUBJECTS
Bolivian Communist Activities, Present Capabilities and
Future Capai l.lities . . . . . . . . . . . . . . . . . . -. . . .
Current Situation in Honduras . . 3-1
Current Situation in Cuba . . . . . . . . 13
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23 February 1919
1. GENERAL: Effect of North Atlantic Pact in Latin America
Chances for serious objections by Latin American countries
to I participation in the projected North Atlantic Pact now appear
slight.
Some of those countries might have found two grounds for ob-
jection: adverse effect on the Rio defense treaty, and lessened chances
of getting US arms for their armies, but neither of these possibilities
has emerged as a problem of any c onsequ nce, Apprehension might have
"own expressed by some on the grounds that extended US commitments under
the North Atlantic Pact could increase their obligations under the mu-
tual defense provisions of the Rio Treaty. That these objections did
not materialize can be attributed to a considerable extent to early De-
partment of State action in telling Latin American governments that US
participation in the Pact would, in fact, constitute a powerful deter-
rent to any potential aggressor, and thus strengthen the security of
the Americas. Resentment might have been expressed in certain countries
by military leaders who felt that the US obligation under the Pact to
send arms to European countries would lessen their chances of getting
US arms at a favorable discount. This issue has not yet appeared, nor
is it expected to find particularly vigorous expression. The Hemisphere
arms-standardization program - advocated by US authorities but lacking
the legislative action necessary for complete implementation .-. still
stands as approved policy and probably seems not to have been pushed
much further back by the never proposal. .Also, it may be that delayed
legislative implementation of this program and renewed availability of
alternative sources for arms purchases have cooled Latin American inter-
est in the whole idea.
Communists in Latin America have not yet used the North Atlan-
tic Pact to any extent as a subject for ants-US propaganda, A certain
amount of drumming on this theme may be expected soon, however, but such
appeals in Latin America are expected to be ineffective. Any allega-
tions the Communists might make are not likely to disturb the various
Latin American governments, partly because of the general decline of
Communist prestige in the area and partly because of the early consulta-
tions and assurances of the Department of State.
25X6A
ICONcI I 'TAIL
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3. HAITI: Haitian Dorinican Animosity and intra-?Caribbean relations
dun er~ in ; an a ;onism betty on these tw? countries has been
spectacularly emphasized by the "Roland incident,". ;`dhether or not
Haiti's version of the story- coincides with the actual facts, the inci-
dent is a significant illustration of the serious part that such opera
bouffe antics can play in the foreign affairs of those Caribbean coun-
r_ es where the governments are dominated by individuals hostile to
one another. Although unlilvly to result in hostilities, this situation
has a divisive effect on intra-Caribbean relations and does tend to
impair Hemisphere unity. To the extent that it does so, it is adverse
to such US securit interests as are dependent upon the solidarity of
all 21 WYA ,'kQ90A000200010
Col. Astrel Roland.,
Haitian charge in Ecuador, conspired tiro th a --Dominican cabinet member to
overthrow the Haitian Government. As the first step in the plot,
Roland's Belgian mistress, L'.le. Verbraeken, gained access to President
Tstire in the guise of a writer interested in iiai l.ian folklore, and
made amatory advances which were rebuffed by ~,stitrc She then approached
Col. 'agloire., key Haitian political figure and Commder of the 11.11i-
tary Department of the Palace. : "agloire was amenable to her suggestions,
and a hotel rendezvous was arranged. During the ?veting, 2le. Verbraek-
en offered I agloire a sandvrich., but, smelling danger, he insisted she
taste it first. Lpon doing so, she became violently ilk.., and, when
charged with trying; to poison -.-agloire, admitted her complicity in her
lover, Roland's, plot.
On the basis of this and other "evidence", Roland was ordered
to return to Port--air-i'rince, and the Dominican Republic was formally
requested to dear him asylum, Despite this request., Roland., masq?ierad
ing as a r chaiic, flew to Ciudad Trujillo on a Dominican plane. Sub-
sequently, over a radio station owned by the brother of Dominican Presi
dent Trujillo, Roland directed to his countr,/ , n several inflammatory
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T!ITA (!TA
broadcasts consisting mostly of vituperative excoriations of President
Fsti4. The Haitian Government responded with similar vilifications
of Roland. IastLm6 construed Roland's broadcasts as a personal affront
by Trujillo and is reported by the US Ambassador to be in "an aggres-
sive mood" and to feel that he "will have to fight Trujillo",
The FstirA-controlled Assembly, subsequent to the broadcast,
called on the President to implement compulsory military service legis-
lation and has passed a bill calling for a faced national defense loan
of 4~3 million. (The latter measure has evoked hearty protests from
the wealthy and influential elite, and the president of Haiti's Chamber
of Coerce has described the situation as "tense and likely to lead
to internal disorder".) On 17 February, Haiti proposed that the Rio
Treaty be invoked against the Dominican Republic on charges of "moral
aggression".
In all probability, the provocative actions of the Dominican
Republic were in retaliation against anti Dominican remarks made in
public by members of a Cuban good-will mission which recently visited
Port-au-Prince. B/LA believes that Lstime does not anticipate actual
conflict with the Dominican Republic,. He has, however, become enraged
by Roland's plot and by Trujillo-s apparent complicity in it, and, at
the same time, finds it a useful incident far raising the additional
cash his government so urgently requires,
4, ECUADOR: The uropular Plaza adi;dnistration is temporarily secure
because tie opposition groups checkmate each a- ier, The
Liberals are wary of precipitating a coup because of the fear than in
the ensuing chaos th^ left-wing elements in the country would be the
victors. On the other hand, the Socialists fear that any revolutionary
action would bring in a rightist government with the Conservative Party
in power because a Conservative is Vice-President, '.ithin the array
there also exists a checkmate. The dissatisfied officers are led by
Col. Carlos Mancheno and Lt. Col, Cesar Alfaro, who are by no means
leftists, while the subversive movement among the enlisted men i,
Communist-inspired?
5. BOLIVIA'-PERU: Bolivia Charges Peruvian Complicity in Plot
'I're in Government declared a'~`sTa e; o siege on
19 February and protested to Peru concerning the part allegedly played
by the Peruvian LTinister of Development in a subversive plot. A revolt
was said to have been planned by the Bolivian rightist 'MR., involving
Polivian exiles in both Argentina and Peru. Col. Ll.osa, a Peruvian
cabinet minister, is charged with having given "decided moral and
material support" to Bolivians who were thus enabled to cross the border
In,
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and prepare supplies for the revolutionary attempt, The Bolivian de-
claration regarding the 4X4s accompanied by swift moves to arrest
LIII and labor leaders, reported several vveks
ago that the Bolivian Government planned to declare a state of siege
and to jail important TiTJR leaders prior to the Lay elections it would
norm appear that the plot allegations are being used in the government's
vigorous attempt to relieve its critical insecurity (CIA F:eekly for 4
Feb 49). An additional move in this direction is the reorganization
of the cabinet. The IHertzog governmet has momentarily consolidated
its position by its frontal attack on the plot, but if important TIM
leaders --- and their secret sympathizers within the Bolivian armed
forces -- have escaped, the major trial of the government is merely
deferred,
In Peru, the plot charges will no doubt embarrass Col.
Llosa in his rivalry with Junta President Odra (B/LA t k) r for E Feb
49), even if he is not forced from the Junta.
US interests , neither in Peru nor in Bolivia, scorn to
be affected at this time.
6. PARAGUAY : A rift has developed between the arumv leaders and the civil
tans in a government o ovisr.ona Presi en o on, Arum
leaders wanT_Vo1on to continue in the presidency., while the united
Colorado Party., under civilian leadership, backs Education Linister
LIolas Lopez for the post, Tension has mounted as a result of a meeting
17 February in which the difference of views became patent. The civil-
ians claim that party unity requires that 2;iolas Lopez be supported.
Although elections have been scheduled for 17 April, colon could
probably remain in office with or without benefit of elections if In
addition to his expected army support he receives the support of Lt.
Col. Canata, commander of the 1sunei6n cavalry. The outcome of this
struggle is unlikely to have any effect on US interests in the area,
7. AfG ITINA: AM%ntina Seeks US Aid in Crisis
and not yet wholeheartedly, it is true to avertvitsjd verthro~r i y
seeking US aid and cooperation., and to this end the government seem
c filling to accept some sacrifice of the politically valuable appearance
of national economic independence. The armarr, whose influence in the
present goverment is increasing to the point of dominance., is support-
ing moderate and cooperation-minded Foreign LTinister Bramuglia, some-
tines apparently against Peron himself.
A number of important steps tmmrd cooperation and toward
orthodox rehabilitation of the Argentine economy already have been
taken. The Peron government recently requested IS views on the
SAL
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desirability of accepting a Soviet offer to pay dollars or gold for
Argentina's entire exportable surplus of fats, oils, and hides.
Tontative overtures for rembership in the I orld Bank and Monetary fund.
represent a complete reversal of Argentine postwar international finan-
cial policy. Drastic revision of Argentina's economic and trade policy
by moves tovrard loner prices and reduced state intervention is exenr-
plified by the dismissal of i..iguel :ix nda, former economic czar,
Argentina's withdrawal from the International ',iheat Confer-
enao seems a step away fror., rather than one toward, international co-
operation. This action may have been due to that government's estimate
that the short-run advantage of obtaining Creator amounts of urgently
rx3eded industrial imports through barter sales at higher-than-world-
market prices more than offsets the long-run advantages obtainable
through cooperation in grain rnarke Ling, which would involve 'a c o , t it--
rent to a two-dollar-per-bushel =d mum for wheat.
Peron's economic advisers have informed the US that they
consider a substantial.bllar loan indispensable to a solution of the
crisis. If such a loan is granted, Argentina's natural wealth and
ability toe xport food surpluses should, theoretically, rake repayment
quite within Argentine capacity, despite adverse trenr s in world market
conditions. The Peron administration, however, has not yet offered a
definite corrmtrnent to adhere to economic policies best suited to ensure
prompt payment. Nor have other commitments.- such as favorable treatment
of US business, increased cooperation in international agencies, and
abatement of anti US propaganda, been made, she Peron administration's
ability to rake and keep such commitments will be influenced by the
rianner in which they may be exacted in relation to public, and especial-
ly in relation to nationalist, sentiment favoring economic independence.
If such a loan is openly granted Argentina, unfavorable reaction may be
erpocted from other Latin American states -- notably Chile, Uruguay and
:brazil --? at ghat they would consider manifest is support of the autiz
oritrarian and expansionist Peron regime.
It is entirely possible that the sharp changes in economic
policy have been too long delayed to avoid a major political upheavals
oderate elements now directing the administration are th~rentened by
increasing activity of extreme nationalist anti-US forces which Peron
evidently felt it necessary to appease in his 18 February reiteration
of his devotion to the principle of economic independence. 1{ urthexmore,
the acute labor problem agravating the inflation through strikes for
wage increases and through reduced productivity threatens to become
worse. Should present efforts to redirect the Argentine economy and
to obtain international assistance in the crisis fail and should
Peron be forced from office, any of three developrrrnts might occur:
first, Peron might he replaced by a military junta, not necessarily
6.
r-
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23 February 199
hostile to the US; second, extreme nationalists ?-?- either military
or civilian -^ hostile to the US might come in at the policy-making
level; third, violence, accompanied by a serious breakdov n of govern-
ment and economic activity, might break out bet en the military and
labor forces. Such a situation night lend itself to Communist ex-
ploitation..
2 A L
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.Article *-49
Bolivian Communist Activities,
Present Capabilities and Posses Future CaEabilities
Coramanisrn in Bolivia is not likely seriously to impair US security
interests. Communist activity is limited largely to propaganda. Present
Communist capabilities are slight and it is estimated that these capabili-
ties are not likely to increase greatly in the next few years.
Clearly recognizable Corrnuiist activity in Bolivia is almost entirely
limited to continuous local anti--US propaganda, and a local adaptation of
the usual Communist line. In addition, some Communist activity may be con-
tributing to (1) the increased sympathy for the USSR shown by PIF (Partido
Izquierdo Revolacionario) leaders; (2) the continued activity of Slav
groups; (3) clandestine and irregular immigration; and (.) continued agita-
tion in the PIT--controlled labor unions affecting transportation, and labor-
organizing activity among petroleum and tin-nim workers.
Present capabilities of Bolivian Communists are limited. They have no
political party of their own, because a statutory provision outlaws the
Party as such. The Communists have been unable to overcome the political
inertia of the illiterate highland Indians who make up the bulk of the
Bolivian laborers, and have been unable to organize other politically or
militarily effective groups. Further, the repressive political and military
strength of the conservatives has been a major deterrent to the development
of Communism. The number of Communists in Bolivia is considered negligible,
though a list of some 500 suspected Communists has been drawn up.
Communist political influence, where it exists, is exercised mainly
through the PIR, which holds slightly more than a third of the elective
parliamentary seats, and yrhieh, though it is denied participation in the
cabinet, participates in the executive branch of the government. In addi-
tion., some Communist suspects hold parliamentary seats, and also some gov-
ornment jobs.
Some Communist influence is also extended through various front or irr-
fi.ltrated groups for youths, women, immigrants, Slavs, Jens, and labor --
all of which have been reported to maintain contacts with similar groups in
other countries. The most important such group is the PILL-controlled labor
federation, CSTB, which boasts affiliation of unions claiming membership
of over 751,000 of the l25, 000 organized workers of Bolivia, including 10,000
railway workers, 9,000 textile wwkers, tt,000 drivers of taxis, trucks,
etc,, and smaller numbers of construction workers, newspaper workers, air-
line employees, and miners. The CSTB is a mmber of the Con unist-dominated
GTAL, and follows the C'TAL-Communist line propaganda.
8.
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23 February 1949
Present Communist capabilities for impairing US security interests in
Bolivia appear to be slight. The number of Communists is limited, and they
lack militant organization. In addition, they are relatively ineffective
in influencing political-economic life in the country through labor organiza-
tions and other groups, as contrasted with the influence exerted by the
Bolivian .Array, which is not known to be penetrated by Communists. f?ovvver,
it is estimated that in case of war between the US and the USSR., the Com-
munists at present (1) through their influence in the CST3 could start som
strikes., but those could be effectively controlled even by a weak goverrr-
mont; (2) could effect some sabotage of mines and railamys that would temporarily reduce: tin output; and (3) could set off some popular demonstrations
=: ding to the political instability of the governmcnt, or join with other
slemonts in causing its fall, but could not capture control of the government.
;ith regard to future capabilities., it seems at present most reasonable
to estimate Communists and even leftists will lose; influence in Jolivr a in
the course of the next year or tmo.' It would be only through the unlikely
combination of astute leadership and propitious circ,m?stances that there
could be a rapid and significant increase in Communist influence and capa-
bilities. It is true that there are some factors which tend to favor Corn-
rauni.st develop ant, such as continued weak government., lack of issues within
the VIII to force the Stalinists to show their true colors, economic i.rsstabi-
3-ity, lack of strong a nti-Cornrrunist unionism, fragmentation of conservative
political forces., and the existence of numerous poli.ticall rarmbitious groups
within the arry and the resultant loss of unity as a stabilizing influence.
It is expected, however., that previously listed factors working-, against the
Communists will prove the stronger. Only two possibilities., both remote,
merit particular con ::ent.
The conservative y.?i=t (party of former president Jillarroel) is said to
have boasted that with t1.OO armed men it could seize the goverment by force.
Even if this boast has some substance -- and the Bolivian Government is nor-
. Communists could not necessarily accomplish a
mally very shaky ?? 400 arm.
similar overthrow. To capture the government by force the Communists would
probably, because of lack of popular f ollorai.ng, have to muster mars more
than 400 armed m-n. Violent seizure of the Bolivian Government seems quite
beyond present Communist capabilities.
It is, of course, possible that the ;a:munists m' glit, so e time in the
future, gain a measure of increased political power through treater influence
in the PIB. There are, even now, probably !-:anj Communists in the PIR; the
Marx! st ideolo r of the PIII closely agrees with Stalinist Communism; and
Jose Antonio Arce, founder and president of the PIS.1 as well as other PITT
9.
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Article 8-49
23 February 1949
Leaders, have recently shov,n increased favor tcard Russian foreign policy,
and have disseminated Russian propaganda t1 ough PIl channels. Should the
Communists be able to dominate that party or vdn its leadership, and hence
the party, to their cause, even though party strength declines, they would
gain considerable economic strength through the PIU-controlled CSTF3 unions,
There are at present, hov evar, no indications that any such Cornnunist suc-
cess is ixnn diate],y likely.
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Situation Memorandum 8-49
23 February 19?9
The Current Situation in Honduras
The newly inaugurated Galvez regime is popular, will probably prove
to be a relatively stable and progressive administration, and is in gene-
ral favorable to US interests.
On 1 January 1949.. Tiburcio Carfas, for the past 16 years president
and "dictator" of Honduras, turned over direction of the government for
the next six years to his hand-picked and duly elected successor, Juan
14anuel GFilvez, The latter, .Minister of ,'gar under Carias and one-time chief
legal adviser in Honduras to the United Fruit Company, is capable and
4itrongly favorable to the US, which he has described as the "world's hest
defender of democracy"".
Galvez' program has a broad popular appeal. He advocates: (1) the
advancement of agriculture by the distribution of government lands to small
farmers and the improvement of internal transportation; (2) the improvement
of cultural and educational opportunities and facilities; and (3) fiscal
reform, including the broadening of the tax base and "absolute honesty in
the handling of government funds". Some progress has already been made in
setting up the administrative machinery for the implementation of the pro-
gram. In the matter of ridding the government of corrupt and inefficient
officials, however, Galvez appears to be proceeding cautiously so as not
to alienate Camas, who still wields considerable political power. In
general, the administration is enjoying increasing popularity as the re-
sult of its conduct to date and its apparent desire to improve the lot of
the Honduran people. There seems little likelihood that either the de-
moralized Liberal (opposition) Party or the notorious grafters who are
gradually being removed from office are capable of organizing arty serious
or substantial popular resistance to the regime for some time to come.
Confidence in the new administration, fol.3owi.r.; the uncertainties of
the bitter campaign and pro-inaugural period, has been reflected in a -err -
oral acceleration of business activity. The all-important banana industry
is slowly expanding its operations and continues to furnish the country
with tiatever dollar exchange is needed, and export duties on bananas con-
stitute an important source of government revenue. A large proportion of
Hondurans are small farmers, and their situation will be considerably
improved if, as seems likely, the government carries out its road develop-
mnt plans which will make possible the economical transportation of sur-
plus crops.
To mart, both inside and outside of Honduras, Carlas was a "dictator"
and, as such., was the target of considerable "anti-dictator" sent pmt.
His retirement from the presidency has allovrod Honduras to assume a more
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Situation omorandun 8-49
23 February 149
passive role in Central American-Caribbean powar-balance rivalries, The
Galvoz regime has been the object of favorable comments -- in sharp con-
trast to the situation obtaining during the Camas "dictatorship" - from
officials of such militantly "anti"-dictator" governments as those of Gua-
te*; la and Cuba. G&vez determination to preserve Honduran neutrality --
in itself a stop in the direction of Hemisphere solidarity -- was vigor-
ously expressed in his iaairural address.
In keeping with his pacific intentions, and probably in order to divert
public funds to rd .more productive projects, i lvez has reduced the :size
of the Honduran Army by over 30 per cent. Although the Vala-ce Guard,
irrportant to the stability of the regime, is now reported disorganized as
a result of current changes, it is believed its efficiency will ultimately
be enhanced upon the completion of the present reorganization progrzm1,
The arnr is considered loyal and G .lvez' long experience in administering
the 4"iar Linistry has made hip: adept in handling the military,
There is no know. Communist activity in Iionduras. The now government,
like its prodoeessor, can be expected to suppress arr such activity should
it arise, Also like its predecessor, the new government will maintain a
friendly and cooperative attitude toward the US and can be expected to as-
sume a cooperative attitude toward all moasures designed to strengthen
Hemisphere solidarity and defense,
12.
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Situation Memorandum 9449
23 February 1949
(ate: Current political maneuvers c11 not affect the Prio gov-
ernment's anti-Co unist policies and pro US orientation. Cuban govern?
ment policies toward the US will not be influenced by fluctuations in
the eeonon7 during the next few months.)
President Priie's government appears stable. The plotting of ex-
President Grau against him and the current maneuvers of Senator Aleman
and Vice-President Pujol vill not seriously impair his position because
he now commands the support of the arqr. Chief of Staff, General Perez,
originally a protege of Grau, has publicly affirmed his loyalty to Presi-
dent Prio.
Stgar production for 1949 has been scheduled at 5,68 ndllionthort
tons, as compared to 6.7 million for 190. Cuban sugar experts believe
that most of this year is production can be sold at the current relatively
high price. Since world sugar production now approximates the prewar
level,, however, Cuba does not count on such as in 1950 and thereafter.
Domestic adjustments to anticipated changes in the world sugar situation
are being publicly discussed. Alternatives suggested are: (1) mainten-
ance of existing markets by persuading the US to increase its quota of
Cuban sugar or by underselling other producers on the world market, (2)
reduction of sugar production in order to stabilize prices.
Renewed interest in the diversification of industry has developed
in the face of a decline in the national income that Cuba can derive from
sugar. Cuban manufacturing industries are now feeling the pinch of post-
war readjustment, however. A few industries with lithe competition
from imported goods are still operating at a high level, but others ubich
have to compete with US industry are cutting production. In the textile
industry, the situation is sufficientl=y serious to impel consideration of
government subsidies and unexmploy ont relief.
Important wage disputes have arisen in the sugar and transportation
industries because of the difficulty of maintaining high wage levels in
the face of reduced profits,. 't'emporary soluti.onq have been found through
government tax readjustments. Trio rival groups are seeking control of
the governs nt-recognized norr-Communist Cuban workers' federation (CTC).
Since both are anti?Conanist, the outcome will not affect the present
orientation of the labor mover rit as a whole.
13.
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The Pro adn nistration has made no significant charges in foreign
policy, which remains closely oriented to the US. There is evidence of
a More vigorous opposition to Caribbean "dictatorships", but this is
not likely to lessen Cuba's interest in inter-Arberican and United [cations
affai rs
BAL
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