WEEKLY CONTRIBUTIONS (Sanitized) ORE, CIA 17 MAY 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200020007-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 15, 2016
• Document Release Date: August 28, 2002
• Sequence Number: 7
• Publication Date: May 17, 1949
• Content Type: SUMMARY

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sleekly Contributions
i7F F,9 CIA
7ay 1949
Of the developments reported on this week, finds of particular
interest the item on Ecuador (p. 3); there thence balance of forces
opposed to Galo Plaza appears to be changing, through new alignments,
to a situation unfavorable to the continued political stability of the
government.
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CURRENT DIEVELOP'" :'Ts
UUOP9 hET N DIVISION: Cuban political corrditions do not now, favor a T'S-
Cuban aircraft-clearance agreement (p. 2).
CENTRAL DIVISION: In Ecuador, new alignments amon.s forces opposed to the
President may make the administration's position less secure (p. 3).
Colombia's confrressional elections are unlikely again to be postponed (p, 2).
SOUTIPUM DI`VTSI0?t. Peruts military Junta may be less sympathetic with the
US as the result of the withdrawal from the Junta of Ad iral Saldf as (p. 3),
The Bolivian Government, evidently doubtful of its strength, has yielded
to new demands by labor (p. 3). Chile's econon rmay be serious]. affected
by the lower price of copper (p. 3).
SPECIAL SUDJECTS
i u
ren -], ua..on i.n ' Sri t1sh Guiana . . . . . . . . . . . . .
The Current Situation in Nicaragua . . . . .
r
'~h?C 4.
DOCUMENT NO. rw+sy
O CHANGE IN
CLASS. [~
CL,A a. CHANGE#a rn: IS S _
REVIEWER: _J
State Dept. review completed
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'.Weekly Contributions,
(CTA. lorkirig Paper)
17 'ay 19-9
CUM: Overf l.i'-ht fli- hts for I lita Iti.rcxaft
Cu an p~~ . ica1 con 1. ions aan intro ,zc;e complications into
proposed US negotiations for an agreement to permit US MilitarRy air-
craft to overfly Cuban territory without prior notification. CIA
estimates that (1) discussions on the subject, if instituted., might
be long, difficult and conducive of acrimonious public debate; (2)
Cuba may insist on reciprocal rights for its military aircraft over
US territory as the sine ue non of consent to such an a-rree*ment;
and (7) the influential Cuban nationalists might join with the Co:nr-
munists to oppose the agreement, to the detriment of other Cuban-US
problems that require for solution a general ,y cooperative public
attitude,
The US National 1. i.litary ,stablishment has proposed that
military aircraft which overfly :;uba without intending to land shall
be a]lmved (1) to overfly any part of Cuban territory .-d.thor.t prior
notification other than the filing of routine flight plans; or (2)
if this i; not a.~;roeable to Cuba, to overfly Cuba thro,:I*h air corri-
dors ten miles wide which the Cuban Government shall establish along
direct routes from Florida to the Panama Carial, to the Vernam r.ir
Base in Jamaica, and to the US Naval Air Station at Cuantanamo nay.
Both alterna tives would eliminate the existinrw requirement - often
ignored by US militar0.r pilots with embarrassing results, especially
If their plane makes a forced landing; in Cuba - that permission of
the Cuban Government be requested before each flight over Cuba and
that the over flying plane shall a vvait this permission before taking
off,
2, COLOL"BIA: Coni,ressional elections are likely to be held as ached-
`-' -~--w-----~--~ -w--~---~- - - __ _ --- - -
u3 a or 5 June : The r overanment s appni.nt; tent of
arrw officers to political positions in the troubled areas of the
country should reduce the rilotin and political terrorism which at
one time caused the president to consider seriously the necessity
for the declaration of a state of siege and a concomjtant p~:stpone:-
raent of elections. "path the Liberals and the Communists have already
selected their candid tes. The Communists had hoped to join forces
with the Liber-als of the extre: ?e .left, but, being; rebuffed, have been
obliged to pres:nt a separate list, The Liberal Part-;'s own choice
of candidates shows a strong leftist tendency within that party,
and, consequently, rnaral of the votes which otherwise would go to
Communist candidates rte;; be expected to fall to Liberal candidates,
Furthermore, if the majority of Conservative candidates are from
the extreme right (the selection if made has not been reported), the
Liberal Party can count on retaining the vote of the rmo,.erate or
Santiata Liberals and trill thereby vein a clear majority in both
Houses,
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seldy Contributi pans,
(,~ A a r'orking Paper)
ECUADOR: The relative security 'Ind stabilit of the Plaza adm nistra-- 25X1
fiian may e, comira to on
'US ssy Qua
ta reporht
t
,
he various Te tis , t ca ro s are gaining strength at the expense
of the Liberals '
q ar o-rE:
r
un ying such opposition, Certain importa
army noff cers have been
flirting with both opposition groups. Should they cast their lot with
the leftist groups, a military leader would, in all probability, emerge,
Any, continuing trend in this direction will destroy the balance that
has existed among the political opposition groups on the one hand and
among the anti.-Plaza military groups on the other ----- a balance which
up to now has been Plaza's main source of strength kly, 19 Apr 49),
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PERiI: The Odria unto ma become sorie~oi t less pro-I..5 as a result
su en and unpublic Z c parttare a US S of 0114
,,.Lni,ster of 'r of 'arino, .' dmiral plaque A. Caldfas, ostensibly for medi-?
cal treatment, The US Embassy believes that Odrfa ray have su ested
the withdrawal as a result of the Admiral's disagreement with various
junta policies and his unconcealed impatience ?!n,-th 25X6
some of the junta members. As Admiral Saldias has been the ? unta
amber "closest t +1,
#
S f
5.
W e
:
rom me standpoint of experience contact
with North Americans and Symnathy with S institutions and ideals"s
his departure has removed a counterbalance to the nationalistic and
anti-US attitude of certain other menbers of the junta.
BOLIVIA : The government' a anting of new demands b, labor nay
indicate that it is too ouht
1al o it
r
s orm strength
in spite of olection gains and ar!r r support - to risk labor dis-
turb.noes, which reportedly for" part of a continuing' ',I-.T plan to
weaken the administration and pave the way for its overt irowrr.
Government attempts to appease labor by awarding considerable in-
creases to Catavi, nine workers :kly, 26 Apr 1;) and by, a'?ree-
ing to subsidize a railroad company enable it to root employee
demands, may encourage other voorkers to ask for increases. The
continued granting of such requests would increase the existing
inflation and accentuate the economic dislocation that has resulted
from a drop in mineral prices.
6, CHILE: Decline in co per prices menaces hilean economy, according
to a report from Ambassador :' seer. s. Tie im ee hate effect
in Ch-"!.le of the recent drop in the price of copper, Chile's princi-
pal export and source of dollar exchan"re from 23 1f2 cents to arr-
., la 1.~ cents? has been. (1) a~decrease in cproduc-
tion., sales$ and emplaymant; ~ (~) a ~. copper produc-
tion., in work on the new
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Weekly Contributions,,
17 May 199
(CIA Working Paper)
plant at Chuquican ta; and (3) an almost complete stoppage in
,ranting of dollar exchange for imports.
If the lower price continues and assuming over-all export
volume to remain the same, the loss in annual government revenue
has been estimated in Chile at not less than 1 billion paper pesos
or '7 percent of the 1949 budget. The probable loss in dollar e
change is placed at as much as US"? 25 million, mulch would exceed
15 percent of total doUlarr receipts anticipated from visible trade
in 1949. As the amount of dollars available to Chile declines,
there will be increasing pressure further to divert its trade to
European soft-currency countries. Should the price decline force
r:, suspension of production by the marginal, high-cost producers,
lbor and social problems resulting from a setback to an industry
which is a major employer-would have to be mete
President Gonzalez Vidal., who in talking, with Ambassador
povrs has said he fears the situation may result in a grave threat
to Chilean political as well as economic stability, has probably
overstated the extent of the threat to the Chilean political stabi-
lity that may result from the decline in the price of copper; he
has in the past been noticeably alarmist and quick to seek US as-
sistance on the grounds that his government is a bulwark against any
Communist threat to US interests in Chile. The Department of State
has wired the US Embassy suggesting that the Ambassador stress the
hope that the Chileans find some other method to make up the budget
loss than by increasing the tax on copper companies, a step which
would weaken confidence of foreign investors in Chile.
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 Approved For Releas
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feekiy Contributions,
17 ; .ay 1`i9
P
)
'
aper
/orking
(CIA a
Situation t,;e rorandu i 2
9-4 _9
The Current Situation in Nicaragua.
(Summary: There has been no significant chance in the .Iicara-
guan situation during the past three months. Political calm
prevails, the economic crisis persists, and there are indica-
tions that General So.:aoza plans to assun direct control of
the government, Internal opposition to Soraoza is at a low
level and the Guardia Nacional remains loyal to h:im. The
small. Communist moves nt continues its efforts to gain a hold
ovor labor, and to abstain from political activity. icara?-
guan revolutionary factions continue to be active in Cluaterlala,
arid. an integrated anti-Somoza movement may be consolidated in
the future. In international affairs, Nicaragua continues to
support the US.)
The, situation in Nicaragua remains essentially as reported three
months ago II' Ikly, 15 Feb 119) and in subsequent articles, COILS action
in the Costa llican dispute, which had the effect of fore stall.i.ng an inva-
sion of Nicaragua by the anti-Somoza Caribbean Legion kly, 1 ' ar 9) 25X1
-was followed by a period of political caln during- which ",eneral Soz!roza re-
tired to his plantation to oversee his sugar"-cane harvest.
The harvest completed, Soraoz a returned to Lanagua to face the ti: rsen-
in; economic situation caused by an acute dollar shorta?e,g a poor coffee
harvest and falling sesame prices 26 Apr 91. Apparently 25X1
s
hoping for ?3S aid, he has attempted o s ?.immulate interest in the , icara,.;aan
canal. project or completion of the .ar4:a road. Either of these projects, if
undertaken, would bring much-needed dollars into the country. 25X6
Somoza has also criticized the -,-over: rent of President 1'041A XI
and inept handling of the economic crisis. The seriousness of the situation
was emphasized by the publication, on 7 Papri_l, of now decrees for the sta'bi-
lization of exchan e - reetrio the granting of commercial credit,
limiting loans to 90 days or loss and prevent-in,, their extension, limiting
non-ossential imports, outlawing the purchase and sale of exchange by indivi-
duals, and closely supervisinrg all monetary transactions. The new decrees,
following closely the recorLuonclations made recently by a cor_~mission of the
International T-lonetary Fund, are not universally popular. .toffee growers
(the leading exporters) have hoped to be allowed to retain a percentage of
the dollar exchange realized from coffee exports for their own use. In
critic izen the icom n government, Sorzoza may therefore attract the sup_-ort
of this influential group, which prefers dollars to cordobas. His actions
also lend support to the rumor that he plans to resur;c 3ract control of
the government ?-?~? something which could be accomplished with ease due to
the lour level of internal opposition activity and the continued loyalty of
the Guardia iNacional lcly' 15 Feb )1.9).
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Weekly C,ontriboutions,
(CIA corking Paper)
Situation i memorandum 299
17 l 9W)
The sanall Partido Socialista do I3iaarua (Communist) continues its at-
tempt to consal a#e ids i Thence r groups F_~ 7ikly, 15 Feb i.9).
As have the anti-Communist, government sponsored lar'or 'groups, it too has
initiated an effort to organize a single general labor confederation, over
which it hopes to gain eventual control. It is also engaged in preliminary
attempts to organize the coffee -so rkf rs . and to bring vomen laborers under
the control of the party. The party is avoiding political activity at the
present time,, due to its lack 'of strength and the terms of its a t-reement
with Somoza.
Although internal opposition is at a low ebb, various Nicaraguan ?N-
vo:l u-Uoraary factions continue their activities in Guatemala, and there is
a possibility that sufficient unity may be achieved in the future to permit
an integrated attack against Somoza. Consolidation of the Caribbean Legion
in Guatemala, the internal situation in that country, and President Are-valo's
personal sympathies may serve to strengthen the revolutionary movement.
the arms of the Caribbean Legion are being
move g. j.n quan a. y, omn os to fli.ca to Guatemala. Since the Legion organi-
zation has been divided in the past between the two countries (with the
greater portion in Costa Pica) this development represents a consolidation
of the organization at a single base, and may presage renewed ac t:ivity
based on a reorientation of plans,. Increased Guatemnalan support of the
Legion could develop out of the domestic political situation, if the liberal
Arevalista parties see in the presence of Legion arms and personnel a means
of counteracting the influence of the Guatemalan Army under Colonel Arana,
This development is not improbable,. in view of the approaching elections
and the growing strength of the conservative opposition., which looks to
Colonel Arena as Arevalo's siccessor. It is possible also that President
Arnvalo"s personal sympathy for Professor Ld?lberto Torres - a fe1l.oy lir-
tellectual and Central American Unionist ---r may develop into increased sup-
port for the Legion. In the past, the Independent revolutionary faction of
Torres and Castillo Ibarra worked. closely with the Liberal revolutionary
faction of Posendo Arga" llo, Jr, (part of the Caribbean Legion), and it is
possible that Areva.lo's support of the Legion was due, in part,, to his de-
sire to help Torres, After 'Torres vas seized and imprisoned by .aomoza last
year, Arevalo as interest in the Legion was observed to wane, but nor that
Torres has been released and is back in Guatemala, Arevalo's support of
Nicaraguan revolutionary ac t-ivity may be expected to increase -.,v, contin-ent
upon general recognition of Torres as loader of the movement? As yet there
is no indication that An"'valo plans to give substantial military assistance
to any of the revolutionary factions. Ik never, if a compromise in leader-,
ship is worked out among any of the groups concerned (Liberals, Independents,
Conservatives) his assistance may be forthcoming.
At the moment, therefore, the SIicaraguan revolutionary situation is in
a state of flux,, out of which may emerge a stronger and better organized
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t cek1y Contributions,
(C. 'forking Paper)
Situation emorandum 29,..149
17 I'ay 19
opposition movement based upon corn-promise. There is apparent sdmpathy be-
tween the Conservative faction (led by Chamorro) and the Rodriguez faction
of the Caribbean Legion. There is also sympathy, and a recor'd'
ecord of coopera--
tion, between the Independent faction of Torres and the Liberal faction of
i'tosendo Argiielio, `'Jith Arguello J.r, rs leadership distasteful to some Lib-
erals and wakened by the recent failure of his Costa fioan plans, tir~'ith
aged General Chamorro rumored to be less active in the Conservative l('.ader-
ship sokiy, 15 iTeb 1;9), and zi; .th Torres in a position to obtain aid
from ~ent hrevalo, a rocombination of Nicaraguan revolutionary forces
n: t only appears to be in order, but a distinct possibility,
In the field of international relations, aeara`?r:an officials have re-
cently made pointed and emphatic statements expressing their solidarity
T..th the US point of view, .'mbassy Nicaragua reports that "this propaganda
barrage . , . may be the prelude for some request".
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Weekly Contributions,
(CIA 'for'king Paper)
L 1.
_i ua tion Memorandum 30-49
The Current Situation in British Guiana
17 "ay 1949
(Summary: British Guiana is not at this time of direct import-
ance to US security interests. As a Crown colony it has but
little self-government. Its present economic importance de-
perids to a considerable extent on its two main exports, sugar
and bauxite. Economic problems of some concern are those due
to underdeveloped resources and lack of labor supply. Possi-
bilities for future development are promising, but no appre-
ciable change can be expected soon. There are two main labor
unions, both with leftist leaders, but Communism does not ap-
pear to be a threat. British Guiana os relations with other
countries involve no problems of consequence; there is gerr-
eral opposition to joining a federation of the Rritish ; est
Indies, but interest has been shown in cooperation with the
other two Gutanas, )
British Guiana is not at present of direct importance to US security
interests, The US Air Force is deactivating its base at Atkinson Field,
since it is not considered necessary in the present scope of the Air Force
plans for defense. In case of emergency, however., the lease a_7reermnt is
still in effect and the base could be reactivated. The strategic value of
t'tritish Guiana lies in its bauxite, over r0 percent of the total production
of which is exported to Canada. Although the population is not hostile to
the USs, its attitude is somevtat adversely influenced by the racial prejud-
ice associated with the US.
As a Crown colony, l r^itish Guiana has a very limited degree of self-
government. There is a legislative council consisting of 1L4 elected mem-
bers and 10 appointed by the governor. Politically, the trend is toward
the left. The labor candidates, supported by the British Guiana Labor
Union Party, fill seven of the legislative seats. The powers of the gov-
ernor, however, are so extensive that he can effectively block any legis-
lation if he deems it necessary. Property and literacy qualifications
greatly limit the size of the electorate thereby giving only .small minor-
ity of the population (5 percent) any political power.
British Guiana is the leading producer of sugar among the British
colonies in the '',estern Hemisphere. In spite of the more or less chronic
labor absenteeism, sugar production increased in l9t.t 8 and is expected to
show even further gains in lc49. Rice, cultivated independently by fast
Indians on small farms, is assuming more and more importance. Sugar and
rice are both exported to the Empire , the former going chiefly to Canada
and the latter to the other colonies in the UWI. The long-range plan of
the British Goverment envisages even further development of rice with the
view of making British Guiana one of the main rice-producing areas in
this hemisphere,, Of the mineral comiodities, diamonds, of which about 40
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Week ,y Contributions
(CIA Working Paper)
Situation 1,11emorandum 3o-49
2 a 17 May 1,M
percent are of industrial value, are exported to the UK; gold goes almost
entirely to the US. The leading mineral product, however, and a close
second to sugar in export importance, is bauxite. British Guiana is
Canada's principal source of bauxite. In 1948 production reached its
second highest peak in history, totaling 1,871,166 long tons. Although
there are at present only two active bauxite producers --- the subsidiary
of the Aluminum Company of Canada, which is the leading one, and a sub-
sidiary of the American Cyanamid and. Chemical Corp. -- many undeveloped
deposits are being examined by other companies, including US companies,
}itish Guiana's position is quite different from that of the .IA7I
colonies in that its economic problems are due to the lack of labor supply
and underdevelopment of its potentially large natural resources rather
than to over-population and limited resources. It is estimated that the
colony possesses further agricultural possibilities, a -malth of timbers,
minerals, and potential hydroelectric power, all of which if properly dev-
eloped will place British Guiana in a significant position in the Pritish
Empire. The recommendations of the Evans Commission envisage the settle-
merit of some of the surplus West Indies population concomitantly with the
development of British Guiana's natural resources. Before any steps im-
plementing the plan can be taken, a great deal of preliminary investiga-
tory work - particularly with respect to transportation and housing --
must be done. Some initial steps have already been taken in this direc-
tion. The possibilities of dredging the sandbar at Essequibo River,
which would enable large ships to penetrate the interior, have been exa-
mnined. Negotiations for the purchase of a grant by a quasi-official
British entity for the development of the timber resources are under way.
It is not expected, however, that the ambitious plans will come to fruition
for many years.
The two chief labor unions are characterized by racial as well as oc-
cupational differences. The Lanpower Citizens' Association., of -which
Ayube V. Edun is the president, embraces the East Indian plantation workers,
This organization has been successful in securing collective bargaining
agreements with au?^ar employers. The British Guiana Labor Union consists
of Negro city workers, led by Hubert U. Critchlow, who is. also president
of the British Guiana Labor Party, The attitude of these two important
labor leaders is leftist. Both advocate many social and economic reforms
(Udun's organization supports nationalization of the sugar industry), and
full self- government by 195]. or 1952, The governor's tolerant attitude
toward labor is responsible in no small measure for the generally peace-
ful settlement of labor troubles, P:Th. Edun denounced the actions of the
Guiana United Industrial Trade Union, an unrecognized union headed by Dr,
Lachman Singh, which incited the sugar workers to riot last year. A
commmisslon of inquiry from Britain was recently in the colony to inquire
into the incident and report on the sugar industry as a whole, with spec-
ial reference to labor conditions. Labor difficulties are attributed to
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i'eekly Contributions,
(CIA ',', orking Paper)
Situation ..'emorandum 30.49
17 .'~y 1149
-
resentment of the concentration of ownership in a very small 7 itish min
ority and to the fact that the plantations do not offer steady enough er.-
ployment at sufficiently high wages.
Communism does not appear to constitute a threat in Uritish Guiana,
Although Dr. Singh and :':r. Cheddi. Jagan (member of the legislative council)
tend to be militant labor agitators and are allegedly Com i un-i.st-inspired,
there is increasing public sentiment against Co untxf:i.sr