WEEKLY CONTRIBUTIONS LATIN AMERICA DIVISION, ORE, CIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200050007-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 12, 2016
• Document Release Date: May 7, 2002
• Sequence Number: 7
• Publication Date: February 14, 1950
• Content Type: SUMMARY

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Weeklv Contributions
Latin raraTica D elan, CIA
14 February 1950
CURRENT DEVFIOPLENTS
GENERAL: Many Latin American countries mhich depend mainly upon a
single export product have been adversely affected by declining mar-
kets and falling world prices (p. 2).
CENTRAL AREA: In Venezuela, government tolerance of the iron mines
strike may encourage a petroleum strike (p. 2).
SOUTHERN AREA: In Bolivia, the possibility of withdrawal of the armys
support of the government jeopardizes the continuance of the civilian
administration (p. 3). In Uruguay., the strike of the Communist-
dominated wool workers t union paralyzes the wool industry (p. 3).
In Chile, despite the end of a series of strikes, political and eco-
nomic difficulties continue to beset the Gonzalez Videla government
(P. 3).
SPECIAL SUBJECTS
The Current Inter-American Situation .
The Current Situation in Mexico 8
DOCUMENT NO.
/;CieHANGE IN CLAS
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CLASS. CHANGED TO: IS S
NEXT REVIEW DATE:
AUTH: HR
DATE.
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- note
ve aga ns
of tko04 tatialliterioanooaritatee whose 000flomia et0iIity
to amaJor extent sPO4 a single exPort prodUct.' It is true
t the enjoy 'ogee Oototries (Brazil, Coloabtas pa Salyador? etc.),
Of 100 :fit in the above category -- are now benefiting
4oloes. In other one-product eenntries,1 *ever,
maiWoodi prices have had serious rilisivussimis. In
Via, for Oeccosolve declines in the price of tin have
tantiafly curtailed mining operations; the resulting reduction
na ). ncom and 3,eas of foreign exchange have curtailed foreign
and ].ored the standard of living. In Chiles, the already
avorable 44:mimic situation has beCzi. further iipsirod t7 declining
prices) labor difficulties and growing unrest haveTesulted.
fig inibi1#7 to dispose of its axportable,surplus of rice at
le prices pot only deprives that country of sorely needed
eX01100;b4t'constitites also a further financial burden
? constant:14r mounting carrying and Warehousing charge6.
though Venezuela has not as yut felt any pinch:, the decision of
Urltieh seriously to curtail dollar parchasee of Petroleum, and
DS.companieste reduce petroleum imports into the US mUst inevi-
i#107:reset,in financial constriction for the yOne*vel'an:loverompt.
1
turziA., s
At, in n Iins Encoura e Petroleum strike
-nz on o ene sue governmenTnter-
fere in the strike of 1500 workers of the Iron !nes Company of
re4010141 (aletallehoi subsidiary) became aPPsraht,when:,thg, ?.i 11
Labor, Jeie Rojas Contreras, described the strike is strictly a
'boor dispute. 'the strikes which began 6 February 19500 aim-, at.
ge.increases and improvement of sanitary and transportation condi-
one, The goverhakentla handling of this strike is significant in
ow of the labOrnatOtiations,now pending in the pstrolaam Industry.
' under term of the collo,...,tivo contracts in force between
1-41. -!
he close of which the cleupes govv;.-Liaz mgeE; and'covId4;ariea mAY
1,..* renegotiated, ends this month.. Althugh the wilOus have had
4fficulty in orgatizinft their bargaining rlachinery (D/L4,Wkly?
11 .Jar 50), they appear deternined,*4, prem; for more faircrable term,
he companies 'mill u9tkaacci.4-, in Tiow of the roc,i!nt general cutback'
of.production, resist wage ihcrea5es, and 'may tr t avid my nago-
tAations,
WIA Ostipatee thats. because of the anticipa ted opposition
the ,oil, corp,i4e5 t10 any ConcaSsions and the en4oura4* precedent
nefrifiterventien by the government in the current ire4 Strikes a
ike in the petroleum industry is a distinct Poseibilit* The
. , ?
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Weekly Contributions, D/LA 14 February 1950
(CIA Working Paper)
attitude of the Venezuelan government is uncertain; by tolerating the
iron strike it has to scue extent limited its freedom of action; but
a distinction could undoubtedly be drawn that would, in the govern-
ment's eyes, justify suppression of a petroleum strike should such
a policy be considered expedient.
3. BOUM: President Unable to Form Coalition Cabinet
TWifaent trriolagoitdats formation of a new cabinet of
essentially one party (PUSR) emphasizes the continuing weakness of
his government as well as its increased dependence on arnar support.
The Liberals and Social Democrats have been unwilling to eeter the
administration because of mutual distrust and rivalry existing between
them and the PUSR and because they hope to avoid any share of the blame
for the country's deteriorating economic conditions. The failure of
the president's third attempt in six months to form a "democratic"
coalition cabinet is of greater seriousness at this time because of
an army etatement that it would not tolerate another one-party cabi-
net. The president's inability to comply with the army's demands
may, therefore, cause the army to 'withdraw its support from the present
administration and make the continuance of civilian government in
Bolivia even more dubious,.
h, URUGUAY: Strike of ComnunistDominated 1bol Workers' Union
Ine current strike of Uruguay's wool graders illustrates the
production-sabotage capabilities of strategically placed Communist
unions. /n this case, the union seems merely to have taken advantage
of the strong market conditions prevailing at the peak of the wool
season to demand a thirty-percent wage increase. But the strike has
paralyzed Uruguay's vital wool industry and could be quite damaging
to Uruguay's current economic situation, which depends so largely on
wool sales to the US as a source of dollar exchange. It nay be that
in a period of war or other national emergency the Uruguayan govern-
ment would find means to limit such work-stoppages if not to prevent
them. The present strike, however, seems likely to be prolonged.
5. CHM Strikes End But Troubles Persist
Chile's 12-day wave ot strikes las ended, but the basic'eco-
nomic problems which touched off the strikes remain unsolved and are
Zurther complicated by political repercussions which threaten the
rather precarious stability of the Gonzalez Videla government. Although
tht ;P:orkers have accepted promises that their demands will be considered
ana have agreed to return to their jobs, they continue to be dissatis-
fied with their economic position and will probably press for better
living standards. Gonzilet Videla has been forced to adopt a more
conciliatory attitude by the resignation of the coalition cabinet over
the labor situation and its replacement by one composed largely of
Radical menbers. Meanwhile, political parties have taken advantage
of the situation to press their demands, adding to a serious economic
situation a deteriorating political one.
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Weekly Contributions 0/Lit
(CIA Working Paper)
Situation Memorandum 7-50
The Current Inter-Ameriean Situation
14 February 195C
(8nmxn The invocation of the Rio treaty (for the secona time
since it came into effect) at the request of Haiti and the Dominican
Republic should provide a clearer indication of its effectiveness in
settling disputes of this nature. Though ill feeling continues to
exist among several Latin American countries, there has been some
improvement recently in this regard. In general, Latin America con
tinues to support US 'world policies, and, although its feelings of
neglect by the US (especially along economic lines) have not been
entirely dissipated, they have been assuaged.
-- Inter-American solidarity has improved somewhat -within
the past few menthes and if this condition can be maintained over a
considerable period of time, the US security position in the 'Western
Hemisphere 'will be enhancedo)
Intre-ffemi8phere issues
OAS and inter-American treaties: The most significant intereAmerican
event-V-M7-57WEEIgrrnons-'--Eriarthe invocation of the Rio treaty at the
request of Haiti and the Dominican Republic and the resultant sending of
an OLS committee to investigate the situation in the Caribbean area, This
second recourse to the treaty followed the pattern established by the COAS
in the Costa Rican-Nicaraguan disputes and once again the decision to use
the treaty received the unanimous support of the Council members qualified
to vote. As a results the effectiveness of the Rio treaty will probably
be strengthened, 0/LA believes that this action on the part of the OAS
has at least temporarily alleviated the tensions prevailing in the Carib-
bean.
There have been no new ratifications of the Rio treaty or of the Pact
of Bogota, though the Oaatemalan government plans to present the Rio treaty
to the next legislative session. With regard to the Charter of the OAS -
the fundamental document of the inter-American system - Brazil and Honduras
are expected shortly to deposit their instruments of ratification (which
would bring the number of ratifying states to five)s, while most of the other
Latin American countries are planning to initiate the ratification process
within the next few months. The expected increase in the number of states
ratifying the Charter (especially should this number include the major
American republics), and the anticipated successful application of the Rio
treaty in the troubled Caribbean area should benefit inter-American solidar-
ity and enhance the US security position in the Western Hemisphere.
Relations among American states: Revolutionary changes in government
or charges of inerventioniiiThternal affairs made by some, nations against
others, particularly in the Caribbean, continuo to cause strained relations
5r.
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'Weekly Contributions, D/IA 2 - 14 February 1950
(CIA Working Paper)
Situation Memorandum 7-50
between certain members of the OAS, The situation has eased somewhat
recently, however, as a result of OAS action and the gradual -weakening
in the peeition of the militant Latin American democracies against
recognizing rightist revolutionary governments e Bolivian's resamptien
of relations with Venezuela e and Chilean-Guatemalan-Uruguayan recogei-
tion of the Arias rhino in Panama indicate a trend toward unanimity
on the recognition problem.
Extra 11"4aUlteattsern
UN and specialized agenciesx Latin American countries continue to
cuppo e . on matters relatfng to its straggle with the USSR in the
Fowevere on other matters (especially if the issues concerned are
of particular interest to Latin America), these nations continue to fol-
low an independent line as evidenced in the last session of the General
Assembly when two resolutions which have little chance of implementation
and which were opposed by the US (regarding Nationalist China ss charges
against the USSR and the internationalization of Jerusalem) were adopted
with considerable Latin American sapport,,
Latin American republics continue to regard the UN specialized agen-
cies as sources of help in developing their economies, bat maw differences
between these countries and the US on certain economic matters dealt with
by these agencies remain unresolved. However, renewed efforts on the part
of the US may gradually iron out some of these difficulties. To the extent
that these efforts succeed, Latin American attitudee may become less obstruc-
tive to the fail realization of US international economic policy oblectives.
Relations with nations outside the Western Henis.here: Spain: The
US dee s on o suppor a i reso u ion ea ng open ? each power the
decision to restore normal diplomatic relationo with Spain will probably
result in its adoption at the next GA session. D/L& expects that the overe
whelming majority of Latin American nations will support such a move,
USSR: There has been no change in the status of diplomatic relations
between Russia and the five Latin American countries 'which maintain repre-
sentatives in MOSCOW? The increasing intensity of the anti-Communist cam-
paign in some of these nations, however, may eventually cause a break,
None is expected to exploit its relations with the USSR to the detriment
of US security interests,
China: Mexico has withdrawn its diplomatic representatives to the
Chinese ffitionalist government, and Ecuador has been considering a similar
moves Though it is expected that at least a majority of Latin American
nations will wait upon US action before extending recognition to the
Peiping government, the complications brought about in the UN due to the
Soviet attitude on Nationalist China may possibly cause some of them to
vote for the ousting of the UN Nationalist Chinese representatives.
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Situation Memorandum 7-50
? 3 . 14 February 190
SuRport of *portant US foreign policies: The Latin American govern,
meats continue to support the ud its cold war with the USSR and to
realise the importance of ECA, the Atlantic Pact, and the Military Defense
Assistance Act MAO. These nations are eager to receive the technical
assistance envisaged in,the Point Pour program, but are worried about the
possibility of competing economies being established in the colonial areas
of the world as a concomitant feature of that program. Though their feel-
ings concerning US neglect of hemisphere matters in favor of other areas
have not been entirely dissipated, the recent Havana meeting and the pro-
jected meeting in Rio de Janeiro of US chiefs of missions have causes
favorable reactions throughout Latin America. These meetings, coupled
with recent visite of high US Government officials to that area, are inter-
preted by Latin Americans to be an indication of renewed interest in hemi-
sphere affairs on the part of the US government; and, insofar as our
southern neighbors are convinced that we have not forgotten them or their
problems in the midst of our preoccupation with Europe and the Far East,
this will contribute toward strengthening continental solidarity.
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Ueekly. Centributions? D/LA.
Working Paper)
diteation Hamorendum 6-50
14 February 1950
The Cerroit Situation in Mexico
(Stmelarz -- The Alemgn adminiatration is in a stable posi-
tion 85 eapabilities of pcliticai opposition have declined in
recent monthe. Unfavorable events in labor have lessened the
administration's tight control of that element. The econoric
situation has been improving steadily. The military continues
to support the civil administration. Subversive capabilities
have declined. Mexico's trade agreements are increasing in
number and scope, and relations with foreign countries remain
cordial,
-- US security interests have been affected favorably
by the decline in Communist political capabilities and by
general improvement in the economic situation, and unfavorably
by the administration's difficulties in controlling labor.
There is a possibility that Argentina's "grass roots" friend-
ship campaign in Mexico might adversely affect US security
interests.)
Political
--MDT the last three months, the stability of the Alemgn administra-
tion has been further consolidated. Favorable factors include continued
disintegration of the left-wing oppositionist Partido Popular, a pledge
of army support to the idea of subordination of military to civil
authorities, and the government's success in disrupting plans far a
Marxist unity conference by publicizing an alleged plot to overthrow
the government (see Subversive). The government was well sup-orted by
the congress which, during the last session, enacted all of the legis-
lation sponsored by the administration. Considering the lack of effec-
tive opposition to the governing group, 0/La estimates that the Alemgn
administration Will remain stable during coming months.
Economic
---The- end of 1949 and beginning of 1950 mark a noted improvement in
the Mexican economic situation. The only important unfavorable factor
is the public debt, which remains high and requires about one-fourth of
the national budget for servicing. The stabilization of the peso at
8.65 to the dollar -- an extremely low exchange rate discouraging imports
and encouraging exports -- has resulted in a favorable trade balance for
1949 for the first time since 1943. Other favorable factors in 1949
were; abuadant harvests (except for corn); increased mining production,
due chiefly to the absence of labor troubles; advances in development
Of petroleum resources, including contracts with private oil companies
for exploration and limited development and completion of twice as many
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Weekly Contributions, D/LA - 2 - 14 February 19'e0
(CIA Working Paper)
Situation Memorandum 8-50
wells during 1949 as in 1948. It is estimated that the current govern-
Ment budget will show a surplus; and gold, silver, and foreign exchange
holdings of the Bank of Mexico have increased from US$78e8 million
in June 1949 to $132.7 million at the end of December. (The latter
figure was before repayment of $22 million to the US Treasury as a por-
tion of its stabilization commitnentsp)
Private enterprise has been encouraged in Mexico by the signing of
contracts with private oil companies, the government 's decision to leave
the insurance business to private enterprise (as evidenced by the sale
of the government insurance company to private interests), and by the
apparent stability of the exchange rate; private investment, both US
and Mexican, in the development of Mexican industry is now increasing.
The economic situation looks favorable for the beginning of 1950 for all
except importers, the latter being exceptions because of the definite
downward trend in imported goods.
Labor
Unfavorable developments have predominated in Mexican labor during
the past three months both from the standpoint of the Mexican government
and US security interests.
It is true that Mexican labor has shown a sympathetic attitude toward
the London trade union meeting; that there have been signs of growing
favor -- both 'within trade unions and in political circles -- for unifi-
cation of non-Communist labor in a single Mexican confederation; that
labor opposition to Alemgn has been weakened by his assurance that there
would be no change in the liberal Federal Labor Lawebile he is president;
and that the government has dealt successfully with strikes or strike
threats in electric power, 'sugar, and the telephone system.
On the unfavorable side, however, have been left-wing UGOCZT's organi-
zational success in four additional states; the beginning of a new Sinar-
quista (pro-clerical, anti-US) labor and farm =ricer movement; and the
filing of a new rash ef strike notices with the Ministry of Labor. Fur-
thermore, government and police tactics in quelling the Mexico City
taxi-drivers' strikel I 25X6
as even pro-aeministration groups have expressed their
coneemnazion or police tactics.
D/LA estimates that, while recent labor developments have been in
the main unfavorable, the administration still retains its ability to
control labor.L___ I 25)(6
1
Aleman may be expected to grant some concessions to
the left-ring groups to avoid costly strikes.
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Situation Memorandum 8-50
Militr
ontinued army support and loyalty contributes to the maintenlece
of stability in the Mexican government. It is believed that this e!,tea-
tion will prevail through the 1952 elections, as indicated by reoeet
evidences that the army will continue to consider itself subordinate
to civilian authority. This implied non-support of any military asyirant
to the presidency lessens the possibility of political unrest originating
from a military source,
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International
Mexico remains a strong supporter of inter-American and international
organizations. The election of Luis quintanilla to the chairmanship of
the Council of the Organization of American States not only gives Mexico
greater prestige but also increased authority, particularly when the
council acts as the organ for consultation under the Rio Treaty. Recent
official statements by President Alemin and acting Foreign Minister Tello
reaffirmed Mexico's support of continental solidarity against the Soviet
bloc and of the use of existing international machinery for the peaceful
settlement of disputes (the latter in reference to the present Caribbean
situation).
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Argentina seems to be expanding its friendship campaign by making
efforts to win the good Till of Mexican states. Heretofeee? the program
has been directed at the Federal Government and has met with little
success, due in part to lack of popular support but largely to an
unsympathetic Mexican press.
Press reaction to the change in US policy toward the Franco regiee
was one of approval except by the extreme left. The Mexican Foreign Office,
however, expressed indifference. 1)/LA estimates that Mexico 's independent
course with regard te Spain is not likely to undergo any change in the Imme-
diate future. L
an as the Spanish cause is one for which it has had littlo
sympathy, it mi I not be prone to hasten in the wake of the American exam e,
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