WEEKLY CONTRIBUTIONS LATIN AMERICA DIVISION, ORE, CIA 21 FEBRUARY 1950

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200050008-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 12, 2016
• Document Release Date: May 7, 2002
• Sequence Number: 8
• Publication Date: February 21, 1950
• Content Type: SUMMARY

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Weekly Contributions
Latin Amer ca v1s on, ., CIA
21 February 1950
CUNT DEVELOFNENTS
GENERAL: Despite reported revolutionary activities in the Caribbean,
trouble is not expected in that area at this time (p. 2).
NJCl tTHF2N AREA: In Cuba, President Pr4o is new policy of "honest govern-
ment" will probably fail and become a political liability (p. 2).
Contemplated US financial aid for Nicaragua would benefit "dictator"
Somoza (p. 3). In Guatemala, Communist-oriented labor leaders may
obstruct ratification of the Rio Treaty (p. 3).
CENTRAL AREA: In Ecuador, President Plaza's party (the WDN) is likely
to be strengthened as the result of the change of directorship in the
Liberal Party (p. 3).
SPECIAL SUBJECTS
The Current Situation in Panama . . . . . . . . . . . . . . 4
The Current Situation in Argentina. . . . . . . . . . . 6
pOCUANG I . /)
NO CCLASSI DLASS. 0 _
CHANGCI)
NEY,T REVIEW n TO: , 3
A, ~- _
25X1
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SECRET
Weekly Contributions, D/IA 21 February 1950
(CIA Working Paper)
1. GENERAL: Reported Revolutions Activities in the Caribbean
Recent evidences of plans a prepare ons he Caribbean
Legion again raises the question of trouble in that area? 25X1
indicate a possible increase in arms shipments from Mexico to .en ra
America and plans for a new attack scheduled for the end of February
(according to several unsubstantiated reports). It is quite likely
that definite revolutionary plans and preparations are being made by
the Caribbean Legion. It is unlikely, hovever, that an actual inva-
sion attempt is imminent, not only because preparations do not seem
to have reached this advanced stage, but also because of the deterrent
effect of the recent visit of the COGS investigating committee to the
Caribbean area,
2. CUBA: President Prio's New Policy of "Honest Government"
i spree pubic disapproval of governments dishonesty, plus
the increasing unificatd on of the opposition in the current by-election
campaign, have caused President Pr{o to announce a new policy of
"honest government". The administration is now reasonably strong,
but if the new policy is not effective, army officers 25X1
planning a coup to overthrow the government) may eventually be able
to win increasing popular support on the basis of the general dis-
satisfaction, Other opposing groups, such as the Communists and
General Batista's PAU, could also be expected to make the most of
such a situation, thus constituting in time a threat to the stability
of the administration.
The president will have difficulty in implementing his new
policy. It is true that he may be in a better position than previ-
ously to govern for the good of Cuba rather than on the basis of
political expediency. He has now paid off his election debts and
has removed from office some of the grafters and political obstruc-
tionists left over from the previous administration; he is no longer
under any obligation Vice President Pujol 25X6
(Republican) and ex-president Grau Autentico , Another favorable
factor is that the new cabinet appointed last week (D/IA Wkly,
7 Feb 50) is, on the whole, an improvement over the previous one.
On the other hand, several factors lessen the chances for success
of the president's new policy. Governmental reorganization in the
interests of efficiency and honesty 25X6
few will actively support such an innovation, while powerful forces
within the president's party will vigorously oppose it. Moreover,
it would be particularly difficult to carry out reforms now because
government employees are frozen in office for six months prior to
each election, Another adverse factor is that the Hlabana mayoralty
election, in which the president's brother is the Autentico candidate,
ma rove to be relatively close requiring special vote-getting
inconsistent with governmental reform.
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';ti:ekly Contributions, D/LA
(CIA Working Paper)
D/LA estimates therefore that a real change in basic ~.?overn-
mental procedure will be difficult and that the anticipa ted failure
to carry out effectively its announced new policy may
prove to be a political liability to the Frio administration.
GUATFFMALA: Possibility of Communists Obstructim Ratification of Rio
cation of the Rio Treaty, expected to be presented
to the Guatemalan Congress convening next month,, nay very well be
delayed as a result of pressure by Communist-oriented labor leaders.
Illustrative of their methods is a recent resolution of the Communist-
dominated national convention of workers' political committee (repre-
senting the majority of organized labor) repudiating the Rio Treaty
and the Atlantic Pact as allegedly "harmful to national Independence
and transgressing the United Nations Charter".
~~. NICARAGUA: Somoza Should Benefit if US Financial Aid Materializes
prQpose
d US u -et c]. es a reconnmon tion that 19, 000,400 be appropriated for the completion of the Rare Road, which
will provide Nicaragua with access to the Caribbean, but which is not
part of the Inter-American Highway and is of little military and
commercial significance to the US. Pro Somoza newspapers have played
up this proposed expenditure as evidence of Somoza'a influence with
the US,.
DILL estimates that, should funds be appropriated for the
Rama Road, this will strengthen Somoza's position as Nicaragua's
strong man. If similar aid is not granted to other Central American
countries (which also lack good road connections with the Caribbean),
such an appropriation for Nicaragua will be regarded by these courr-
tries as approval by the US of the Somoza "dictatorship".
21 February 1950
ECUADOR: Chan e_of Liberal Party Director I ke]y to Strengthen ?iCDN
The selection of Julio Theodoro Salem as Supreme Director of
the Liberal-Radical Party should result in strengthening President
Plaza 1s party, the Movimiento Civico Democratico Nacional (i,X;DN),
25X6
thereby serving US interest in the stability of the Ecuadoran govern-
ment;- The former director, Julio Moreno Espinosa, who has guided the
Liberal Party in a policy of vigorous opposition to the Plaza govern-
ment, resigned in January because the MDN Minister of Governs nt,
Guillermo Ramos 25X6
Ramos is pleased tisith the situation as he feels
that e appointment of Salem (,rho like Moreno represents the extreme
wing of his party 25X6
will further aliens e e more moderate wealthy Liberals and encourage
them to support the MCDN. D/LA estimates that such a realignment of
moderate Liberals is very likely to result. While the principal effect
of such a development would be to strengthen Plaza's position, the very
awareness of the Liberal Party's declining influence may well stimulate
its leaders to increased revolutionary activities as the only remaining
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Weekly Contributions, D/LA.
(CIA Working Paper)
Situation Memorandum 9.50
21 February 1950
25X6
25X6
(Sum a - The Arias administration is not yet stcble. The
economic situation is unfavorable,but the president is tack-
ling economic problems with determination. The Communists
maintain their capability for agitation and dissemination of
anti-US propaganda. Student groups continue to figure in sub-
versive activities.
ea ent Arias is currently pursuing a friendly
attitude toward the United States.
-- US security interests wbuld be adversely affected
by another political upset in Panama, and therefore the present
unstable political situation is a disadvantage to the United
States.)
Political
9 Arias administration has not yet attained stability since its
recent assumption of power (November 1949) as a result of a coup arranged
by Chief of Police Eema`no' To date President Arias has not gained suf-
ficient strength to oust Remon and his associates who threaten to force
him, in turn, out of power (D/LA t"kly, 31 Jan). In addition, the presi-
dent has made some unfortunate political moves which have intensified
the resistance to him by alienating former supporters and by supplying
his political opponents with new issues. A coup d?e'tat is therefore
possible, and since Arias has armed his supporters, the ensuing struggle
could be more bloody than the coup which brought him to power. However,
his overthrow is not inevitable because -- unlike his immediate prede-
cessors - he is backed by a majority of the National Assembly and can
therefore more easily implement his policies. He has made sound state-
ments of political and economic policy which have made a good impression
in many quarterse It is estimated that the president may in time be
able to stabilizes his administration, provided that a coup d'etat does
not occur before this can be accomplished.
Economic
Th-a economic situation is unfavorable, but President Arias is tack-
ling economic-problems with determination. It is true that unemploy-
ment continues high because of the layoffs of recent months in the
Canal Zone. Substantially nothing has been done thus far in the current
administration to provide alternative jobs through public works or
other forms of economic development, because the president inherited
25X6
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okiy Contributions, D/ LA. - 2 w 21 February 1(o5O
?:orkin.g Papor)
i uetion i raorandtm 9?5O
-_n airrscsa; empty treasury,, a large fioqting debt and a poor fog ei
sac it rating.. Nevertheless, Arias 13 trying to cut government expenses
.rid balance the bud, et, anccd reportedly will also work to improve the tax
C-6 1ectiota system, to arrango for the oayment of the floating debt, and
o et;tract foreign loans sad. invrestme is for economic developmont, It
is ectarated that there will be no :79a t improvement in Panrma v e economic
V, tustion in the i.mriediate future but that if the political situation
;stabilises it may be possible for the president to lay a foundation for
y:ater? economic progress?
`ubvert i.ve
_-V; U0-MUni8t'8 maintain their capability for agitation and dissemi-
nNtlon of anti-W, propaganda,: It is true that there are few militant
Communists in INAnRma., that the Communist Party has chronic financial
difficu3.ties, and that there are evidences of some increasing opposition
to Communism in labor and student groups and in the administratiorii,
Nevertheless, Commvmist leaders are politically astute, the opposition
is uncoordinated,, and President Arias is not strong enough to implement
his anti=Commwn. st policy, Therefore., it is estimated that, in general,
there will, be no substantial decrease in Communist capabilities in cosy
nL months:,
Student: groups continue to figure in subversive activities? These
groups characteristically are used in Political maneuvers by both the
Communists or fellow travel er?s? who are a. vary small minority of the
gcoups and by conservative ultra-nationalists (l armodio Arias). The
frequent similarity of political sins of these two extremist factions
t.en'sda to Increfaee the political importance of these student group3:,
25X6
International
,...,...o~yr dent Arias is cu.rretrtl.y pursuing s. friendly attitude tovmrd
t ho thaitod 8tstes Na recently obtained retificoticn by the National
A?sembiy of a claims convention which Betties Icng-standirg financial
ax?Z)blems betweei i nrxna snd the US:0 He takes every apportrua.ity to
a;i,phasize the cormunity of interests betweon the two countries and has
p.%3d ,sad Pull protection. to oil foreign capital that is used for' nr t:itor~al
devoiolr.ment, provided that it respects Psneinanian laws.. It le estimated
Uaat< irlportaa t factors in Ari ss' friendly attitude. are his un tf:bls pc;si-
aar~ politically arse the unfavorable economic situation of Panama and
i:3:xrst: this attitc,d ,.:ill not change radically in the near future,
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,ioai:ly Contributions j D/?~~ 21 I'abruary 1950
(CIA ;Torlcing Paper)
Situation ::emorandun 10-50
T ho Cent Situ on in Arr-Qnt;Lna
( -The eron governmont concerned over possible lose of vital
suneort has during recent months mde drastic efforts to consolidate
its position, utilizing incroasingly severe anti-domocratic methods.
flew develloenonts oouerrhat favorable to economic adjust*nont have not
boon adequate to easo tho continuing problems of inflation, shortage
of foreign exchange, and lour productivity; the drought nay aggravate
these difficulties. The government has continued its L.~tpi-,'otr unist
campaign. or the moat part Vie military a car to be satisfied and
loyal. .'ormal relations t7ith tho S remain good even though ?.roe:' c
anti-democratic noasuros and his arxnaront desire for expedient ooo-
nonic collaboration with the i:; are not reconcilable.
--Us socurity interacts are favored by .1cron's recognition of
tho need for expedient ocononic collaboration with the U. and by his
miti-Ootuiunist measures. On the oUier hand 'l-ho continuation of un-
democratic -sracticos and ant i 4 J pro pagc:xla within Argentina, and the
possibility of a vitriolic campaign against the US adversely affect
10 interacts in Hemisphere. solidarity end in the ox eneion of democracy.)
c
The administration has ouJeavorod during roc'ent months to consolidate and
entrench its political pager. To this end a congressional cor_mitaeo on anti-
Argentine activities (see D/I.A JIL y 17 Jan 50) has closed approximately ono-
fourth of Argentina's newspapers and has otherwise restricted the opposition--
which remains disunited in face of the possible application of reproscivo
legislation (f/TEA Jkly 25 Get !r9). '.:ho comnittoe has attempted to justify at
hone and abroad such action by claiming to need to ?1purl2y" the press and to
protect it from foreign influence. :.ioreovor, Peron has publicly sought to
arouse pro-Peron nationalism and to create optimism over his government's sta-
bility. Those measures are probably des, ed to neutralize the political ill
effects of current economic difficulties particularly affecting labor) to
reinvigorate i'oron's'support in provincial elections and to anticipate the
1952 presidential elections. Despite curbs on the opposition and Poron's bids
for support, the administration has not improved its position. i.iost important
has been a noticeable weakening in Poron's vital labor support, but there also
have been slight reductions in Peronista voting strength in recent provincial
elections; those developments,, plus an increasing amount of public criticism
(such as ;iat resulting from a murder of a Con unist labor leader by pro-
vincial police) have boon vigorously exploited by the Radical opposition.
D/IA estimates that tho government will. be able to maintain its present
degree of stability despite possible decrease in provincial electoral majori-
ties and despite the critical economic situation.
r O
Argontina's economic situation has not improved. It is true that during
the past months an increase in Argentina's vital export trade and government
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;let;~tly Contri'ozzcions, D/IA - 2 - al r'ebruary 1950
(CIA ~7orking Paper)
Situation Lonoranduu 10-50
enpha; io on air ic-A,ure .lore levelopnonts in the dircc-c,~on of economic re-
ad3ustriont. financial and political considerations, howover, l?avo liuitod
the of foo 1ivoneoo of "fors toti,rd eeonoric reform; and inflationt short-
agce of orei n =change and low productivity continued These dif_ iculties
will probably be ag,,ravatod by the present drought. Indications point to a
corn crop (the loading pro-,tier oxport) i nsuff iciont for export, furt':er re-
duction of other crops and uncertainty concerning the level of livestock
production.
This prospective decline in foreign exchange earning capacity coincides
with the need -?or large purchases abroad of aCriculural, transport and in-
dustrial oqu:ipnent, frith substantial arrears abroad and fifth an already Beale
foreign exehzango position, .'etron_clinont therefore appears inevi tablc as an
influx of foreign capital, tho only means of averting i c, casino t, be e:. >ectedl
at this time.
Trade relations t7ith the Ulu have boor, strained; discussions will begin
shortly to determine a neu moat price and to sot trade goals for the second
year of the 11,1-Argentine aQroerient. Sparii;ah-~u?gcr~ ,_a.e trade's has readied an
impasse because, of Spain's default on its cor1nit:1.: nts ar+Yi A?lrgont? a' a ad-
verse economic situation. Optimism for expansion of ,;-Argentine trade as
a result of the mark of the Joint Argon tinne-L'j Jomnittee for Commercial
Studies has boon expressed in both official and privato circles in Argentina,
but the government has neither published tho text of the report nor dis-
closed plans for its inpionontation, other than tho establi.shnont of a perma-
nent Ua-Argentine trade connittee in Buenos Alires. Eeant7?lile7 Peron publicly
disavows any intention of obtaining a foreign loan although discreet feelers
have been nut out for a possible loan from the Similar feelers Iwo
been reported. in the ease of the UK.
T.ta "
The Arm a;>oarod for the most part to be satisfied and loyal although
influential officers are probably sensitive to ioron'a latest concessions
to labor and the reappearance of Sonora Peron in labor circles. ; .enevml of
the USA' mission agrc :,:lent for a one-year period coincided with increased
utilization of the UU: Army mission by the Argentine Army. The ri.litary's
efficiency, morale (recently stipulated by a signifieaW,; number of pro-
motions),, and quality of manpotior remained exceptionally high by Latin
American ata lards.
$ubyersivo
The Por6n government hoe continued its vigorous ?nti-Conritu3lst can-
paign to restrict Communist labor aetivi ti es and to appeal to nati onr2iat
sentiment. Communists, for oxsrr!,le, are being purged from the govornmart-
dominated labor federation; four important Oomuunict-front organizations
tiro raided; the trio leading Communist publ ications mere closed dow.nl. The
Co.-z--mists trill endeavor to exploit he administration's difficulties and
its repressive measures but police action should p)rove.f any ;protracted 'on-
muni; t-inapirod disturbances during coning non_ths.
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?ee':ly Contribationc, VIA
_(CIA :'apor)
Situation ::ersorandma 10-50
-3
?l o1. uaryy 1950
do
orral relation: Frith the US continue ~:ocxi despite Via irroconc-i'Lability
of the Covci nijont's enti-dctiocratic noazure:i and doapi to anti-USS propaganda
on the doucst?es front. Unfavort Au prooa reactions in he floriloDhcro, particu-
larly in the ,o A?orarzcs Host recent represoive uee urr;.-9 and . ?;;e?n inc~
press attzie a on the 'X continue to eonplicato- S-ArCon,i_ a relations. Lloo -,
over, it iicati,?ns point, to a vitriolic anti-UC propagnrxla. ca_ripaign if the
econc>xli.c situation deteriorates further and if US ocononic collaboration
door not naterialize to t e dofiraito odvantago of Argen:;ina. Chile Argontine
relations nerd improved by an exchange of lottorn of r3utual friondahip by
the prosidente of tho trio countries. Argontina joined the UK and Chile in
a ronc al of their agro z ont to refrain from naval displays in the Antarctic
south of Lwtitu do 60 during tic coning season.
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