WEEKLY CONTRIBUTIONS LATIN AMERICA BRANCH, ORE, CIA 23 AUGUST 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200030008-9
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 9, 2016
• Document Release Date: September 28, 1998
• Sequence Number: 8
• Publication Date: August 23, 1949
• Content Type: SUMMARY

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Weekyy Contributions
Latin America Branch, ORE, CIA
23 August 1949
B/LA suggests particular attention to the item on Cuba-Peru
relations (p. 2), emphasizing a situation potentially adverse to
.he US interest in Hemisphere solidarity, and to the article on
the current but also perennial revolutionary situation in Paraguay
(P. 5).
CURT E VT DEVELOPMENTS
GENIAL= The "Peace and Democracy" Congress in Mexico City 55-10
September will probably bring limited Communist organizational
gains (p. 2). Peru's breaking of relations with Cuba emphasizes
the present impairment of the US interest in Hemisphere solidarity.
CENTRAL DIVISION: Brazilian reports of a Communist conspiracy
are probably exaggerated (p. 3).
SOUTHERN DIVISION: In Chile, threatened extensive strips point
yap the basic weakness of the Gonzales goverment (p. 3).
The Current Situation in Paraguay . . . . . . . . . . . . . . . 5
NO CHANGE IN CLASS. [a
DECLASSIFIED
CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE:
AUTH: HR 70.2,.7' ~_.._~??'
DATE, ` . REVIEWER: 372044
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Weekly Contributions, B/IA 23 August 1949
(CIA Working Paper)
1. GENERAL: Communist Profit to be Small from "Peace" Con ress
he s nsp re "Peace congress will probably take
place as now scheduled in Mexico City from September 5 to 10, due at
least in part to vigorous renewal, of organizing efforts by several
important Latin American Communist leaders who returned in June from
meetings with other Cormmanists in Europe. Funds and other support
reportedly contributed by United States Conrnunists seem to have
helped the organizing campaign.
Communist activity and Communist-inspired publicity and
propaganda for a "Peace" congress has been reported from most Latin
American countries. The main Communist objectives in holding such
a congress apparently are: (1) to clothe the Communists and the
USSR with respectability by gaining the participation of prominent
non-Communist intellectuals in the congresal (2) to link the popular
desire for peace to the Communist cause by identifying Communists
and the USSR as proponents of peace; and (3) to extend Communist in-
fluence by organizing permanent Ccmmiunist--directed peace committees
in each country under centralized control.
Communists are unlikely to be corsplcuously successful in
their first two objectives. Counter-propaganda has effectively dis-
suaded some intellectuals whose inclinations would have led to parti-
cipation in a peace congress if the Communist backing had not been
known and may yet persuade others to decline to participate or at
least to take an independent position at the Congress. Unless
counter-propaganda slackens, it is unlikely that the Mexico City
"Peace" congress will win many converts to the theory that Comment
nism means peace. The third Coxnmuni,st objective has greater chances
of attainment. Organization of permanent peace committees into a
centrally directed Communist front group has already advanced ap-
preciably in some Latin American countries,, and a Communist-directed
Latin American "Peace" organization may wail be formalized at the
September congress,
2. Peru's r tune of di lommratie relations with Cuba on 19
August, as a result of alleged eguNarl e tie -escape of two
asylees from the Cuban Embassy in Lima, has in itself no great Dw-
portance for US security interests, since it merely formalizes a
rift which to all intents and purposes has existed since the present
Peruvian regime came to power. it is important, however, as evidence
of impairment already suffered by the ti? interest in Hemisphere soli-
darity from the Increasing tension between "democratic" and "dictator"
countries of Latin America. The cleavage between the two s,
sharply defined in the Caribbean area, has been of shower ~ppment
2..
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Weekly Contributions, B/IA 23 August 10,149
(CIA Working Paper)
in South America, and the South-American countries have been especially
Loathe to take sides in regard to Caribbean problems. The Cuban Em-
bassy's asylee problem, paralleling as it does the delicate case of
Haya de la Torre's sanctuary, and no doubt acerbated by Cuba's unin-
hibited press and radio comments regarding the Odra regime has not
only served to force the Peruvian government to publish its dislike
for the Cuban government; it may lead to further disturbing of Henn
isphere solidarity if Peru's South-American opponents - such as
Uruguay, Colombia and Chile -- enter the controversy. Moreover, if
the matter passes beyond press and radio controversy and reaches the
OAS for official consideration, the cleavage between the two groups
of countries will become more formal,, and thus more difficult to
repair.
BRAZIL: Press reports have greatly exa erated the sco of the
Communist cons ra c was quas e y e police of
Porto Alegre cap o nde do Sul) last week. There is no
evidence of a revolutionary movement timed to break out simultane-
ously in several states. On the contrary, what seems to have been
planned in P6rto Alegre was a local outburst of violence in connec-
tion with an attempt to hold a "regional peace conference" which had
been forbidden by the police. Police action in this case followed
the pattern established in other efforts to prevent the holding of
local conferences in preparation for the Mexico City "Congress for
Peace and Democracy" - the "preventive" arrest of Corranunist leaders,
followed, by way of justification, by announcement of the discovery
of a revolutionary plot. Nevertheless, the tenacity with which the
Communists are trying to go through with the scheduled "peace" meet-
ings, though it is no proof of a conspiracy, does support the police
in their belief that further-violence may be attempted.
CHILE: Strikes May Threaten Government's Stabilit
proposed strike that w suld call out the 00,000 white-
collar workers of the powerful National Junta of Employees (JUNECH)
now appears to be the chief threat to the Chilean administration.
If this strike should materialize in the near future,, climaxing
disturbances that began 16 August with student-labor rioting over
increased Santiago transit fares and grew into serious Communist-
instigated strikes, it is to be expected that the Socialist CTCH,
now supporting the government,, will feel forced to join in. In
this case the Communists, now attempting to foment strikes, will
gain increased prestige and the President, largely without labor
support, may find his position untenable.
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Weekly Contributions, B/LA 23 August 1949
(CIA Working Paper)
Indiscriminate use of drastic repressive measures by the
government would play into the hands of the Communists and other
administration Opponents and would further alienate labor. On the
other hand, Gonzalez' attempts to pursue a more leftist policy to
pacify labor are not expected to benefit the administration at this
late date, and may prove harmful if the conseriratives, until now
allies of the Executive, are alienated by the proposed reform.
President Gonzalez, if faced by the disintegration of the
pro-gavsrrnment coalition under stress of the present crisis and by
the economic paralysis of the country in a general strike, might
retire, at least temporarily, in favor of a junta expected to in-
clude the present Minister of National Defense and the Minister of
Interior Admiral Holger (who handled the 1947 coal strike crisis)
B/IA estimates that such a junta could restore order but could do
little to solve the basic political and economic problems of the
country. The retirement of President Gonzalez at this tame, as a
result of a protest movement led by Communists, who are capitalizing
on a general groundswell of discontent, would be a setback to UE
interests in democratic stability.
Whether the JUNECH strike takes place or not, the basic
political instability of the government has been exposed and height-
ened by increasing economic difficulties occasioned by the decline
in copper prices and the continued upward spiral of living costs.
No substantivee, long-orange improvement in this situation is fore-
seen as long as agrarian reform is blocked by rightist elements and
as long as Chile remains dependent upon copper and nitrate exports,.
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SECRET
Weekly Contributions, B/IA
(ci?1 Working Paper)
Situation Memorandum 47-L49
The Current Situation in Para
23 August 1949
( A split in the governing group and dissatisfaction
azao military threaten the stability of the present regime:
and mar a three-ninth period of relative calms Communists re-
main of little importance. Indications of a r.-apprtx:maent with
Argentina are noted in the signing of tentative commercial and
military agreements between the two countries,
- Although a US interest in stability is adversely
affected by current Paraguayan political trends, Paraguay's
impact on US security interests is so slight that neither any
of the changes in government which appear pos:tible at this time
nor Paraguay's increased oriente.tion towards Argentina is im-
portant to basic US interests.)
Political
The present one- arty government, which had been functioning with
relative smoothness and had been making some progress in its pacifira-
ti.on and rehabilitation program, is now so seriously split that a show-
do-in is imminent. The schism has developed from the rivalry between
Federico Chaves,, the Colorado Party +:Iiief, and President Molas, who
aspires to control of the government and the p rty; it extends from the
cabinet, through the rank and file of the parry, and. also through the
arr. Chaves is supported by his own faction,, the older Democratic
Colorados, and may receive the backing of the Democratic Colorado youth
as well. Molas is supported by the extremist Cuiones. A third minority
group within the party supports the Minister oT- V"rior, Mallorqu ,
who has not yet indicated which side of the major schism he will join.
Norr-Colorado elements are unimportant, as their leaders are in exile.
Army leaders, who helped install the present c5vilian government and
who, as is usually the case in Paraguay, will be the deciding factor in
the government's continuation or overthrow, are dissatisfied with their
subservient role in the "colas regime and are taking; sides in the political
struggle. The division in the arm is somewhat similar to that within the
Colorado Party: Chaves appears to ;,ave the preponderance of strength, but
the key to the military -- and therefore, to the political - situation
is the First Cavalry Division commanded by Lt. Col, Mal.lorqu1n, the 1 other
SECRET
5
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Weekly Contributions, i3/LA -2--
(CL Vdorking Paper)
wituation Memorandum 17-49
23 August 19149
of the Minister of Interior. Both brothers have refused to take a stand
as between Molas and Chaves and their strategic position is strong,
though it is unlikely that they can do more than sell their support to
at side or the other.
A reconciliation between the major contenders is possible if Mal
lorquln'e cavalry refuses to act, but the forceful expulsion of one
? up by the other seem more likely. Because of the basic instability
of Paraguayan political institutions, any reconciliation would be short-
lived, and a successful expulsion of one group by the other would not
lead to long-term political stability. Aside from the setback to US
interests in Hemisphere stability which another revolution would repre-
sent, none of the changes in the Paraguayan government that appear pos-
sible at this time would seriously affect these interests.
Subversive
Communist influence remains of little importance,, nor have there
been any real subversive moves against the government from other direc-
tions. There is no reason to believe that the plot (said to be headed
by ex~-President Frutos, many Ouionse and former members of the police
force under the Gonzales regime),,, which the government claims to have
thwarted, was of any great importance.
Closer commercial relations with Argentine, following the general
pattern of a pro-Argentina orientation (see International), have been
the keynote of the government's current economic policy. As a result
of steps taken by President Moles Lopez soon after his inauguration,
an agreement has been drafted in Buenos Aires by a joint Argentine-
Paraguayan commission whereby Paraguay would supply Argentina vdth
timber, yerba mate, rice, cottonseed oil, and Paraguay's entire coco
oil production. Argentina would garnish the capital for and set up
an oil-pressing factory in Paraguay.. would supply Paraguay with mini-
== quantities of wheat, textiles and dairy products; and would reduce
freight rates on the Argentine-owned river boats. Msndez Paiva, Para-
guayan Minister of Finance, is reported to have stated to other officials
6.
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Weekly Contributions, B/LA
(CIA Working Parer)
Situation i*xucrandum 47-49
23 August 1949
$-ha t the g avern ent f s interest In improving connnr rcis 1 relations with
Argentina is only an eccxnomie measure without political significance,
be claimd that Argentii'a is the only country vrith vrtUch Paraguay can
-cacti an uW rstanding "itrsout long iicgotiatiorw aad the only country
that -w i..ll supply what is:. for Paraguay a subs tarrb gal a : . o money..
US interests in stimulating the ec onox t of uxxlorp dvil eged natio'axa
and insuring the economic strength of the other ittwr ,can Republics would
be served by a short-term agreement of this type to t :ex extent that it
has a salutary effect on the Para6-uayan economry, if the a acnt sh.3tul.'i
continue for an ender: period, however, it.at;i tepid to increase the
already considerable er4nc nic i fluencia which Artantim exerelse*s in
?: r aguay.,
the political contests.
POU. ticrxl activity by ~aw leaders is so normal that there is r
s^8as^3x tv, believe that e-xrrent intrigues have reduced the military
offectivenesa of the am y or the morale of the s' 1dic:rs. The state of
'training and arganizatiom rex in to by US stand..irds, and supplies of
uaterie1 insufficient and vilJ. probably continue ,so. But these de-
.i"ici.e ncies are unlike: + Itc cut down the fighting qualities of the
average Paraguayan soldier, who has proved tie can give a good account
f~f himself in any conflict.,,
units., such as the Para ,uar. , Artillery Regiment, favor Lolas, iali or-
qi& 'u'l d appear to have the deciding vote both in the military and
kil it ar y leaders, eti ti t,i siied with the mi. n r ro i,e of the army i a
he present regime and `lrct;er st.yct in impprovi,.. their ? ;rsonal pc:si tips:,
Are taking a leading part, In poi ,ical affaLrs, Amm-, them is the Car :r~
wander in ChLiefx, General 1AAz de 7 var, who ,as o,tt,a; ^ed considerable
power purging all do,,:btftl officers to reply .e the wit-Ax officers
subservient or amenable to burry lfz, Aitho a U: s deg Vicar took part
n the rainy which placed lto3as+ in the presidencj*, he is reported to
i`ovor Chaves at this ti.: . Lt, Cool. : llcrcluin, a t"ttaider of the key
militant unit, the First; Cavalry i)ivision,, has not irr!ii.cated. v ich
aide he will favor :Ux the current political schism, ks a number of
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Wer r Contributions, B/L
(CI& Working Paper)
Si'ttiati:on Me random ).a-49
23 August 1c .-9
The most sigificant aspect of Paraguay's current foreign folic;
is the recent tx^ nd toward rappr i ent vdth Argentina, The first
stop in that dimetion was evident vin Argentina sent an impressive
delegation, headed by bolas t friend Dr, Ivanissevich, to attend the
Inauguration ceremonies ?----a shay contrast to the y: distinguished
g up that was sent to the inauguration of fox nor President Ccir .l.ez,
Through his friend Ivanissevich,, Llolas -eras able to array. ;e to send
hiv Co nierr-i rr-Chief of the Armed Forces to discuss with Per ire
certain Paraguayan-Argentine corm rcia1 problem, As a result of
these talks a tentative co zerial and payments agree r was drawn
up,:. Further Paraguayan-Argentine agreements, still in the tentative
ste ges, includes provisions for the establ.ishn nt of an Argentina po--
lloe_ mission in Asuncican to reargani ze the entire police department
and an. Argentine tec ,s isal. rdlitaxy mission to revamp the Paraguayan
Military Geographic Institute and collaborate in a project, to survey
and alnp Para g y ,
The signing, w~it?iout consultation with the U , of the Inapi ing
agent raay be Of 6rpecial Significance. While the agreement is not
a oaii i contract, it does estabI.i,.sh the basis for a subsequent co~r-
tract. Furti rmoro, the US l ilitary Attach in Asbunciora consldex .
that it is in contravention to the US-Paraguay I i.ita,ry mission con--
tract. Implementation of the, ew agreerent without US consent might
erd)arrass the LIS and possibly lead other Latin-American countriev -to
di.s::gird U5 military mission contract: in a sir i.l, r manner When it
Sutt3 their purpose e The rape ccbemnt with trgent:ina must be view d
in terms of Parag a y l s peo:ul3.ar geographic rsi teat Lon, which makes the
smaller country something less than a ca ilete1,y free agent, In the
first place, the fact tl , t Argentina practically controls Para, .trap
effort trade places the latter country- to scarce extent v ithi.n the
natural sphere of influence of the fora i th-ris tile moves on Molars t
part to mend the rather bad Argentine-Paraguayan relations of the. irust
two ears may be coneic1ered only a r .cognItior, of the oconor .e 'af??cta
of life." Certain pups -.in Paraguay., further re, believe that their
country must., in order to maintain any reality of national independence.,
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Week-1v Contributions., B/IA
(CIA Working Pater)
Situation Me rrar du L47449
23 1! ug;u. t 1949
to wome extent balance Argentine against Brazilian influence.; and these
V 4czxps can expected to a pose any r w th into tho Argentine ca p,
Finally, taragmay:s impact, on. ;FS security interests is so minor that her
greater orientation totiar&q Argentina is s3,t.flP.car?t only as it adds in
son szr:11 degree to Argentina's capacity to a:C'ect these interests,
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