WEEKLY CONTRIBUTIONS LATIN AMERICA BRANCH, ORE, CIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200010010-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: November 9, 2016
• Document Release Date: July 27, 1998
• Sequence Number: 10
• Publication Date: March 15, 1949
• Content Type: PERRPT

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Meekly Contributions
Latin America "branch,, 01Z,, CIA
15 '..arch 1949
B/LA considers particularly important this week: the lack of progress
in solving the Peru-Colombia dispute (p. 2), and the easing of tencion in
Argentina (p. 2).
CUM M, D E.r. OPT."MITS
C't flAALs Relations between Colombia and Peru remain tense and no imme-
w'_ate solution to the problem safe-conduct for Iiaya do In Torre is expected (p. 2).
S+DUTI7ETCT DWISIO N: In Paraguay, where the conservative Democratic Colo-
rado Party seems to have gained the upper hand, the political situation
is temporarily quiet (p. 2). In Argentina, arrV pressure on the govern-
vent has eased as measures are being taken to relieve the economic crisis
(p. 2).
SPECIAL SUBJECTS
Reaction tr US Hon-Participation in the American Comnittee on
Dependent Territories . . . . . . . . . . . . . . . . . . . . . . 4
The Current Situation in the Dominican T.epublic . . . . . . . . . . . 6
The Current Situation in Chile . . . . . . . . . . . . . . . . . .
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Weekly Contributions, B/LA 15 `arch 1949
(CIA i orking Paper)
1. GENE AL: No solution is in sight in the impasse between Colombia and
Peru roaming the o rra government's rofusal to issue a
safe-conduct for the APF`t leader, Maya de la 5'orro. =otes exchanced
between Colombia and Peru have produced no satisfactory result: Col-
ombia has maintained a '-serene" tone in its representations, but Peru
lids persisted in its refusal because the Odria 'overnm.-nt believes its
continuance depends on its firmness in this question. Cons-Itations
among the other countries concerning; possible diplomatic means of
~zrbaking the stalemate have not been fruitful, because of general re-
luctance to join in measures which might fail, or could succeed only
at the cost of considerable loss of face on they part?of Peru. Colour
bia has considered placing the matter before the COAS, but has so faf'
refrained from such action, which, oven though the majority of the
countries would almost certainly support Colombia, would probably re-i
suit in breakin; of diplomatic relations by Peru with Colombia. In
the meantime, an attack on the Colombian Mmbassy in Lima -vrhere i'a;. a
is in asylum, which the Colombians have said they fear and which must
be considered a distinct possibility, could easily lead to rethlia-
tory violence if not to outriiht acts of vrar.
2. PARAGUAY: The conservative Domocratic Colorados m ear to have
pined the u per hag in the recent Colorado 'arty coali-
tion mceve which forced the resignation of Provisional President
Rolon and placed firmer Education i:_inister ::olas i,opez in control
of the government. Democratic Colorados hold all but throe of the
cabinet portfolios and control key posts on the part ,?,-'3 governing
board. Thus far Democratic Colorado leaders have been satisfied with
:olas, who, as leader of the militant Guinn 104 o opposition faction,
teas formerly their rival, but pressure i.s be n- exerted to oust
Interior nister Liberato ,odrkz;uo t, a staunch supporter of "olas.
Thus far :`olas has remained aloof from these latest party machina-
tions, but Rodriguez, iLn an. effort to protect his position and
check the groiiing pourer of the Democratic Colorados, has maneuvered
the appointment of a reliable Cuionista as commander of the infantry.
He also controls the Asuncion po11 a force and claims support of the
Asuncion cavalry division. As usual, the balance of pourer rests
with the cavalry, tvtiich has not openly committed itself. ::uch
Jockeying for position can be expected before the 17 April elections.
Although armed conflict is possible, it is not inrd.nent.
ARGENTINA: Army Pressure -ased; r `eacures Taken thieve Economic
Crisis
T1.itary threat to the government's stability has
been at least temporarily abated principally by agreement that the
government should revise its economic policy and stress improvement
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Weekly Contributions, B/14 15 March 1949
(CIA lNorking Paper)
of economic and financial relations with the US. Through Foreign
Minister. $carmiglia and tho new economic directors, the government
has made overtures for US assistance in solving its economic and
financial difficulties, and significant steps have been talmn to
modify Argentina's postwar state trading practices. The next few
months wri1l probably be a period of probation during which array
leaders will determine whether the present administration. is cap-
able of implementing the now policies to Improve Argentina's eco-
nomic situation or whether both a near administration and a now
policy will be necessary. The terms of the agreement for a trial
period apparontly afford 'orcin a relatively free hand in the field
of domestic politics. However, it is probable that Defense Mini-
ster Sosa Molina's 10 :"arch praise of Sefora Peron's social wel-
fare activities was a face-saving gesture to Peron, traded for
the latter's agreement that his wife will confine herself to such
activities and use her porful influence with labor to encourage
production and discourage demands for wage increases.
Although inflation and the disruption of Argentina's
foreign trade, which is unusually important to its economy, have
been allowed to develop to the point where it may be impossible
to avert an economic debacle, there are some encouraging factors.
The new economic administrators evidently will undertake to re-
gain for Argentina its greatest single international economic ad-
vantage by adopting a price policy desir ned to expand the sale of
food surpluses on a competitive basis. Furthermore, they have
given priority consideration to the restoration of Argentina's
previous high international credit standing. Toward accomplish-
ing these objectives they have emphasized the importance of prompt
liquidation of Argentina's outstanding obligations to US exporters
and banks, sounded out the US on the possibility of a commercial
agreement to include a reciprocal credit (Argentino euphemism for
a loan), and requested a clear definition of ECA policy with refer-
ence to Argentine participation in 1'uropoan trade. A particularly
significant and encouraging development in connection with these
efforts is the fact that the notoriously anti-US nationalist ele-
ments in Argentina evidently will not embatrass the administration
in its efforts to carry out the new policies. The gravity of Arg-
entina's present economic situation and the preference of certain
of their leaders for L'S equipment and techniques have induced
them to agree for the time being to a policy of expedient colla-
boration with the US. The next few months will probably prove to
be a crucial period both for the stability of the Argentine econ-
omy and the pattern of USMArgontine relations.
3.
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Weekly Contributions, B/IA
(CIA ;Yorking Paper)
Article 10-49
15 :'.arch ljs9
Reaction to US I3on-Partici tion
in the .lime can o so on open en erritoriea
The US announcement of its decision not to attend the Havana meet-
ing of the committee (scheduled 15 !arch) has received little official
criticism in the other American republics to date but provides a pos-
sible propaganda there for anti-US groups who may be expected to make
the most of it In press, radio, and public demonstrations.
The US stated that it would not attend because (1) the committee's
action might endanger principles embodied in 1311 and inter-American
agreements, and (2) colonial problems should be settled under provisions
of the U1 Charter. It was suggested, therefore, that the other Ameri-
can republics consider the cornnitteo a technical body and reserve their
dedision until committee reports were transmitted by the COAS to its
members, at which time, it was indicated, the US night also express its
views. The only official criticism of the US state:rent,, thus far, has
cone from Guatemala and -- in lesser donree - from :.et co. Six COBS
members (Brazil, Bolivia, Uicaragua, Dominican Republic, Chile, and
Uruguay) supported the IIS position from the begin-ling and five of these
have reiterated their intention to abst61i from attendance at the raeot
ing. Only one of the six -- Uruguay -- appointed its delegate after
the US statement. Among the remaining countries, the degree of onr
thusiasm varies vddely and a numbor have indicated their sympathetic
understanding of the US position.
Only Argentina and Guatemala are actively asserting claims against
Suropean territories in this hemisphere. Argentine Foreign Office offi-
cials at various times have indicated that their government would press
its logitimate claims but viould not make difficulties for the US.
Guatemala -- the prime mover, because of the ion standing Belize contro-
versy, for inter--American action regarding colonial territories -- will
probably be the most vociferous in favor of the elimination of the col-
onial system in the Americas. I.:exico may in the meson give limited
11
support to the Guatermlan position, as she also claims rights to part
of the Belize territory in accordance -with "historical and juridical
precedents".
The possible propaganda use of the fact of US non-attendance at the
meeting is indicated by the cortrnents of the Guatemalan I'orei.M 'sinister
to the effect that the US was show n f the wane attitude toward the will
of the majority in the OAS that Russia revealed by its frequent vetoes
in the UIT. Since seventeen nations at ",ogota voted in favor of holding
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Weekly Contributions, B/LA
(CIA Working Paper)
Article :LO-49
15 (larch 1-949
the meeting at.lvana, the US refusal to attend places it in a minority,
position. Thet-efore, anti-US groups in Latin America --- particularly
the Communists - may be expected to exploit the situation for all it is
worth as a propaganda thorns, playing up the concept that the majority
rules in QAS affairs only When the US favors the majority position.
5.
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Meekly Contributions, B/1A
(C?A. Working Paper)
Situation Memorandum 12-49
15 March 1949
The Current Situation in the Dominican Republic
President Trujillo'a :regime is stable and faces no serious economic
difficulties. Internationally, however, the Trujillo "dictatorship", be-
cause of the Dominican attempt to establish military superiority in the
area and because of the deep hostility of the "democratic" forces to
Trujillo's rrovernmenta]. 'aethode, exerts a divisive Influence in Caribbean
power politics. Cones .ently, even though Tru jillo's own international
policy is general]y pro.-US, the intra-Caribbean rivalries resulting from
opposition to him adversely affect US security interests involving the
solidarity of the American Republics.
Though the Dominican PPpublic faces no serious economic difficulties,
the government is c a.Xronted with f inarre ial problems arising largely from
its determination to maintain arms superiority over the Caribbean ' dmo--
araciee". Governmeatal revenues have decreased because of diminished
business activity ?,nd a decline in the price of the principal export pro-
ducts. Yet the ga'rermment's plan for the 1949 budget includes a military
and police appropriation of $18.5 million, representing more than one-
fourth of the total ordinary, budget expenses (as compared to 17.4 per
cent in Cuba), aid there is in addition a special 325 million public
works program rich will include large expenditures for military construc-
tion. Total anticipated 1949 expenditures for ordinary and special pro-
grams exceed those for 19119 by 57 per cent. In order to meet ordinary
budget expenses it has been necessary to levy additional export taxes
whose principal impact is on the country's major export industries ----
sugar, cacao, coffee, and tobacco - in addition to new taxes of other
types. The source of funds for the special 325 million public works
program hap. not been stated; American sources in the Dominican Republic
indicate that the special expenditure program may force even higher taxes.
Tax increases press most heavily on agriculture since export taxes,
which are: the government's major source of revenue, result in decreases
in the nit profit of a`riculturai producers. Since profits have been
high and wages lorr, especially in the sugar industry, a decrease in pro-
fits ma-,- not be a great hardship to the producers, though a substantial
further increase in taxes might tend to discourage production.
The military superiority of the Dominican Republic acts as a potent
psychological factor in Caribbean power politics. Trujillo now has the
larger:t and most modern navy and air force in the Caribbean. Current
activities include continued improvement of equipment through purchases
6.
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(CIA. Working Paper)
Situation bmorandu n 12-49
15 Larch 1949
abroad and the importation of foreign technicians to reinforce the air
force and navy and to assist in the training pro ;rant of these services,
the manpower of which is to be increased substantially during, 1949.
The nature and practices of the Trujillo government have not -only
produced h substantial and energetic body of Dominican exiles but have
also aroused in the "democratic" countries distrust and fear that are a
serious. divisive factor in Caribbean politics. Though Trujillo does not
appear either to fear prompt attack from abroad or to plan immediate ag-
gression on his own part, he undoubtedly considers it necessary to main-
tain a considerable armed force as a precaution against future attempts
by Dominican exiles aided by other "democratic" forces in the Caribbean.
These two groups make no secret of their intention to work, directly or
indirectly, as circumstances permit, for the overthrow of the Trujillo
"dictatorship", Tihcent conflict between Trujillo and his adversaries has
been characterized chiefly by Tru jillo's use of the radio and press in
opposition to the propaganda measures-of the "democracies". It is also
probable, though by no means yet proved, that Trujillo was involved in a
recent plot to overthrow the Estime regime in Haiti.
Trujillo continues his general support of the US internationally.,
and has indicated the Dominican Republic's agreement with the UTMS pcsition
regarding the North Atlantic Fact. Tha government has also indicated of-
ficially that it shares US concern over the wave of uprising's in Latin
America and the US desire to stren:thon democratic and constitutional
governments, Despite the Dominican Tepublic's support of the US interna-
tionally, the vigorous opposition to Trujilio's regime by the Caribbean
"democracies" creates a rivalry that impairs those US security interests
that are dependent on the solidarity of the American republics.
7.
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(CIA Working Paper)
Situation L'omorandum 13-49
The Current Situation in Chile
15 ::arch 1149
(Summary: The Chilean administration's recent election victory is
expected to guarantee continuance of major policies. Thou-h overt Commun-
ist activity has been restrained, underground operation may increase and
the government may encounter increasing difficulty in carrytnL out the
anti-Communist program. Labor relations may cause the government more
difficulty than was the case during the past year. Born' dissatisfaction
exists in the armed services. Although serious economic problems remain
to be solved, considerable progress me made durin_; the year, and there
-ts reasonable hope for further progress. In international relations,
Chile continues to be sensitive to actions of the US and other Latin Ameri-
can states.)
Although the present government of Chile lacks solid political sup-
port for its legislative program, it has emerged from the 6 Larch connres-
sional elections -,ith sufficient prestige to enable President C-onzalez
Videla to continue during the foreseeable future his opportunistic balanc-
ing of disparate forces united in their opposition to Com:nunisr, The ad-
ministration can be expected to direct major effort toward strengthening
its precarious political base through encouraging non-Communist labor org-
anizations, passage of riuch--needod social legislation, easing of incipient
dissaffection in the armed forces and continuing the ambitious program for
the improvement of economic conditions. In the international field the
Chilean Government tzill pro5ahly continue its criticisnq of military acces-
sion to political power in Latin !+merica, its cultivation of close politi-
cal and oconomic relations with the US and its vigorous assertion of the
Chilean position in the Uid and in the Antarctic.
The Communist Party, suppressed under the Special Porters Lnw, and out-
lawed by the Defense of Denocracy Lavr of 7 September 1-Y408, is reportedly
still a force to be reckoned with, particularly in labor tieeiere it has no
effective rival. The Communists have been able to retain this position
in labor due to the inability of the other political. parties to fill the
gap or the absence of labor leaders able to form a strong non-political,
non-Communist organ i ation, latent ability of the Coirnnnists to resume
their openly aggressive tactics if riven the opportunity has been evidenced
during the recent period of suspension of the President's Special Powers
in an attempted demonstration in Santiago, a concerted return of exiles
to labor centers, and in the determined effort of released Cor miunist n yors
to resume their O5QX7 Under?..round activities designed to strop ;then the
party continue, with an intcnslfed drive for
supporters from a political parties and especially anon- Chile r s iripov-
er. ished working population. The return of Ccraw naniat Deputy Contreras
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Weekly Contributions, 13/LA
(CIA Working Paper)
Situation i..emorandum 1.3-49
15 ;:;arch 1949
Tapia from a visit to Prague and :'oscovr, and reports of I'osca displeasure
over Chilean Communist Party inefficienoy may presage an Internal reorgani-
zation and increased activity. It is probable that such activity will be
eonduated underground or be directed within the bounds of lavr to influence
labor and the ever-present dissidents in all political parties.
The labor situation during 1VIS vas quiet after the turbulence of
19147; however, this peace on titrich the administration deponds for carrying
out its plan to increase industrial production is sornerorhat precarious.
The absence of serious strikes and labor disturbances is attributable to
the government's success, by virtue of the Sr.ecial Powers Law and the Do-
fenne of Democracy Law, in obtaining settlements of disputes before they
reached the strike stare. Labor's lack of well-organized militant leader-
ship since the Coirnmist leaders were exiled has also contributed to re-
cent tranquility in industrial relations. Vigorous opposition both by
anti-government forces and some elements in the pro-"overnnent parties to
the President's Special Powers and the Defense of Democracy tar will tend
to undermine this apparently harmonious pattern of labor relations. It
may further be upset by Communist exploitation of labor discontent with
continuing high living costs and acute housing shortages.
Possible disaffection in the armed forces rontirrues to be of concern
to the administration. Although the pair increase and bonus recently
granted by the Congross may appease the military services for the title
being, basic causes of dissatisfaction persist in lack of equipment,
which threatens to ground the air force by April, and in the onerous duties
imposed under the Special Poc7ers Lava.
The Chilean administration has accomplished very creditable economic
improvement during the past year. This has been achieved largely by vir-
tue of efficient economic administration, substantial ).CA purchases, and
increased foreign private investrient, and has resulted in a balanced bud-
get, a favorable balance of trade, and improved international credit
standing. It is true that all concern for Chile's economic future cannot
be dismissed# certain serious economic problems renain, such ass infla-
tion reflected in over-extended credit and high cost of living; critical
shortage of love-cost housin..r; difficulties in narketin-.. surpluses Includ-
ing coal and a icultural products; and inadequate foreign private invost
m ont in relation to the scale of the industrial dovolopr cnt program. "e-
cent proL ress, however, justifies estimating that Chile's chances for
continued economic improvement are relatively -ood if major political
complications do not occur, President Gonzalez has prorrsised to secure
welfare legislation to relieve pressures occasioned trr the high cost of
living; and shortage of housing; his program also calls for legislative
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(CIA Working Paper)
Situation 1,+dmorandum 13-449
15 1=,arch 19119
action to encourage foreign investment --- -particularly US investment
and tecbnical aid as proposed by President Trw. an in his inaugural address.
Chilean relations with other Latin American states have been dis-
turbed during recent months. Relations with Venezuela, brokcin when Child
referred the matter of a safe-conduct for ex-President Dotancourt to the
QAS,have not been roaumed. Tension between Chile and Argentina has
eased somewhat with renevmd avovmis of friendship ending recriminations
over alleged Argentina participation in a coup attempted in Chile and with
Per&1'3 explanation of his statement concerning a seaport for Bolivia
which had proved offensive to Chile. Continued sensitivity to Argentine
moves, to any tendency teiaard military governments in Latin America and to
US policy in relation to Latin America can be expected,
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