WEEKLY CONTRIBUTIONS (Sanitized) ORE, CIA 18 APRIL 1950

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200050016-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 15, 2016
• Document Release Date: September 5, 2002
• Sequence Number: 16
• Publication Date: April 18, 1950
• Content Type: SUMMARY

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. 01,
tow s
kly Contributions
OPX, CIA
April 1950
Of the developments reported this maks, that regarding the recant-
monoations of the CC.* Caribbean investigating committee (p. 2) is con
-
25X1 oidered by to be particularly important
DigIF.LOPOIATTS
The CtitiS has approved the recommendations of its Caribbean in-
Aistigating committee (p, 2), Results of the Inter' American Uoci,11 and
.:uonomic Council meeting should substant-Laliy favor US economic relations
li?r,h other American republics (p. 2).
dORTHKEN AREA: in Costa Rica, increased Comuunist activity -LI not ex-
pected to have serious effects (p, 3). Cuban Communists, during the
7,0ent sugar strike,. effectively demonstrated their ability to stir up
trouble (p. 4)1
\ Mexlco,s Lomnaroo
Toledano has increased the tempo of his anti-US propaganda campaign
(P. 4),
SOUTHERN AREA: The Bolivian government has announced a far-reaching
Communist plot (p. 9).
ailICIAL SUBJECTS
The Current Situation in Panama , , .
The Current Situation in El Salvador. 9
DOCUMENT NO.
NO CHANGE IN CLA
I .1 DECLASSIFIED
CLASS. CHANGED TO: TS S
NEXT REVIEW DATE:
AUTH: .H IJ.
DATE
REVIEWER:
State Dept. review completed
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1, GENERAL: CCS A ves Recommendations of Caribbean Investi tin
ommit
1ST-6watt approval by the Council of the OAS of its
investigating Committee's proposed resolutions regarding the Carib-
bean situation constitutes a further step toward restoring tran-
quility in that area. Moreover, the Council's adoption of these
resolutions without substantial change and practically without
dissent (Chile and Honduras abstained on one resolution) repre-
sents a gain for the United States and for those other American
republics that wanted the Committee's report upheld and its
recommendations carried out.
It is true that, during the course of the Council's
discussions, a clause was added to Resolution 2, reiterating the
Dominican government's culpability (already stressed by the com-
mittee in Resolution 1 dealing with the Haitian-Dominican case).
This amendment was suggested by Mexico as a compromise, following
strenuous, but unsuccessful, efforts by Cuba and Guatemala to
soften the sections of the committee's report dealing with their
own culpability. Certain clauses reaffirming the principle of
strict non-intervention were also inserted in two of the resolutions
to satisfy Mexico's traditional concern over this principle. In
addition, the Council passed four Brazilian proposals entrusting to
the Pan American Union the task of studying problems relating to
representative democracy, political refugees in the Caribbean, and
the improvement of the Habana Convention of 1928. The Mexican
amendments mentioned above, however, did not in any Ivey alter the
substance of the investigating committee's report, while the Bra-
zilian proposals simply suggested the 'machinery for carrying out
some of the committee's recommendations.
25X1e8timat Council's es that the Counc's prompt and decisive
action LI-11-1;11f the committee's recommendations, including the
threat to apply the sanctions envisaged in the Rio treaty, will
probably curb future hostile activities against one another by the
countries implicated in the current disputes. Even the most effec-
tive implementation of the resolutions adopted by the Council,
however, cannot be expected to solve the fundamental causes of
Caribbean unrest. On the other hand, this second invocation of
the Rio treaty has strengthened it against more serious tests that
might arise in the future, while the high degree of solidarity evi-
dent in the Council's voting has benefited US security interests.
2. Extraordina Session of the Inter-American Economic and
M.cia Counc
TS-Ma-s=sof the IntereAnerican Economic and Social
Council (IA-ECOSOC) in its recent extraordinary session constitute
a step forward in the slow over-all improvement in US economic
relations with the other American republics. The adoption of a
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resolution concerning a joint technical assistance program, to be
coordinated with sindlar UN projects, was probably the most im-
portant accomplishment of the meeting, Of considerable importance,
though, were the abandonment of the Economic Agroenent of Bogota
in favor of bilateral conventions and the decisions to scrap plans
for certain proposed inter-American institutions of dubious value
and to postpone further the long-proposed, much-postponed Buenos
Aires Economic Conference, These actions have eliminated from
the inter-American scene some of the stumbling blocks to the devel-
opment of better economic relations and have paved the way for
more feasible and concrete negotiations,
25X1 believes, however, that, while IA-ECOSOUts plan to
coordinate its technical assistance prograns with those of the UN
specialized agencies has a good chance of success, the carrying
out of such projects will be made difficult by the reluctance of
many Latin American governments to contribute their share of the
expenses involved. This reluctance will be aggravated should the
US Congress reduce appropriations for the Point 14 program, since
this win., of course, cut down Latin AnericaPs share.
. COSTA RICA: Increasin Communist Activit
1% moon re urn o Nanue Moral the Communist Party
(Vanguardia Popular) leader who has been in exile ever since the
civil war of 1948, has been a signal for greatly increased Commu-
nist agitation in Costa Rica, The Communists, who have been
reorganizing in recent months -- with some success in the field
of labor -- appear now to feel that they are strong enough to test
the mate administration's intentions toward them. The current
government Ps policy toward Communism has not yet been made clear
because the legal status of the Vanguardia Popular, which was out-
lawed by the junta in July 1948, has not yet been interpreted under
the new constitution which vont into effect when President Ulate
took office last November, The animosities of the 1948 civil war,
in which the Communists were allied with the illegal usurpers of
the presidency, are far enough past that the Communists are now
able to gain increased influence, provided that they operate quietly.
It is quite possible, however, that, should the Communists agitate
effectively, and should adverse publicity be given to the expected
struggle between Nanuel Nora and Arnold() Ferret? for party leader-
ship, popular resentment against the Communists would again increase,
the Party would again be declared illeaal, and strong government
action would be taken against it, I Ibelieves that, even though 25X1
there may be some political disturbances in Costa Rica until the
legal statue of the Vanguardia Popular is clearly defined, the
government will not allow Communism to become a serious threat to
the political stability of Costa Rica or to US security interests
in that country in the next several months,
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4. CUM: Communists Stir Trouble in Su :r
e recent sugar $ e has provid
effectiveness of Cuban Communist labor a
viemrof recent Communist political gains
Despite the fact that the Communists contra
unions in Cuba's sugar mills, and that labor in the industry is
virtually controlled by the non-Communist Federaciiin Nacional de
Trabajadores Azucareros (PRA), the Communists were able to increase
greatly the seriousness of the month-long attempt by the sugar
workers to obtain extra wages. The result was that a few sugar
cane fields were burned, much cane was left on the ground and thus
ruined for sugar production, and the partial industrial slowdown
of about four maks was converted into a four-day national sugar
strike. It is true that the strike did not result in a severe
financial loss, and that it did not improve the Communist poeition
in Cuba. US security interests in Cuba are affected, however, by
the evidence which this strike affords of the continued Communist
ability to stir up trouble in Cuba 'a key sugar industry.
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11 April 1950
ustration of the
n noteworthy in
Wkly, 2g Mar 50),
oar a few local labor
5.
6. MEXICO: Intensified Anti-US
azzla
fective propaganda for his
intensified anti-U campaign in a recent speech by the outgoing
president of the Mexican Confederation of Chathers of Industry.
The speech, which criticised state intervention in private indus-
trial activities, drew censure from legislators, labor leaders, and
the semi-official press (because of divergence of opinion on Mexican
political principles). This censure, plus the fact that the incom-
ing Confederation president is an American businessman, made the
charges in LoMbardo's El Popular ? that the Mexican Confederation
is influenced by American "monopolists and imperialists" -- all the
more effective. It is quite possible that Lombardo's anti-US propa-
ganda will convince other groups, in which case any efforts by the
Mexican business community to eliminate state intervention would
encounter serious opposition. This propaganda could also be ex-
pected to work to the detriment of US investments in Mexico.
r ?
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BOLIV1Ar Communist Plot
Ni-BalliiiriOvernment announcement that it has discovered
e far-reaching Communist plot, centered in Bolivia5 appears to be a
new stage in that government vs current campaign to coMbat all oppo-
sition groups by connecting them with alleged Communist plots. Such
charges (possibly based on forged documents) represent an attempt
to control increasing labor unrest and at the same time to impress
the US with Boliviavs need for financial assistance. It is true
that many aspects of the Bolivian situation are propitious to Cow-
=mist activity s there is an unfavorable reaction to the govern-
mentvs recent economic decrees devaluing the currency, a general
strike is threatened, and the future prospects of the Bolivian tin
industry are unfavorable, Moreover, the Communist-led faction of
the PIR (Party of the Revolutionary Left) has attempted to form
a separate Communist party in Bolivia. While Bolivian Communism
does constitute a threat for the longer term, it is still so weak
that it is important only as it may add to the strength of the
already powerful forces opposed to the present Bolivian government.
Thus, it is extremely doubtful that such a plot, even if it does
exist9 represents any serious threat for the immediate future.
(Substance in CIA Wkiiy, 14 April 1950,)
cams ENTMAL
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Situation Demorandum 22-50
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X1
The Current Situation in Panama,
18 Aprii 1980 .
(Sumutql.--- The political situaticn is unstable and the economic
enuath continues to be unfavorable Panama's sral) Communist
group maintains its capabiliWy for agitation and for incre00-ng
itu influence through aliment with ultra-nationalist and
student groups who enz;age in subversive activity, The rational
police continue to be of practically no valuo ss a factor in
national defense and Gould not be countel on to support the
prosident tn the event of an attempted icoup,, The president con-
tinuos to ninintain 4 friendly attitude toward tho United StaLos.
-- US security interests may ba advers31y affected .
trouble resulting from the increasingly unstable political
eituationo)
rolitical
-----TEW-political situation has becore or unstable as the resu1',. of
a marke0 increase in oppositio to the prauidont. It is true that the
president and police chief Ramon se9m to have Pormulited a fairly
factory working agreement which Roman mey be :oluctTat to brea ar, long
s
as he it allowed con 'profitable ou7:oestrol ofi
of incore. Nevertheless, the presinsvWs position ia weakonod by the
activit of Liberal Party facticri aixldi sidont Hon:I-a-adore
rno presidentla position 5.s further wesked by a rift bweei
tic-soli and his brother, Harmodio? who J.:.3 no doubt t3acouraging stdAleat
opposition. Student groups and other ultra -nationalist and. Communist
elomente have begun to agitate strenuously against :ident Ariau'
pro-US policies and thus to prepare for a general political offonniwe
against him (see StOversive). In addition, the presidentls polit_cal
maneuvars,?and especially his feuds with government suployces, aro
alienating former supporters. The unfavorable vcononic situation, par-
ticularly unemploymont, further roaken s the president s position.
It is likely that Panama will remain politically unstable rewsrdleas
of who is in power. The preuont political temion could quits posuibly
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develop into armed conflict either as the result of action taken by the
president against polies chief RestOn, or as the result of an attempted
Coup by Arias' political opponents, should they obtain adequate pollee
support.
Eksonamio
Te economics situation continues to be unfavorable. The government
still leaks the financial resources for either the long-range economic;
development which Panama eo badly needs or for immediate action against
unemployeent, which must be alleviated soon if further deterioration 0k
the already. =stable political situation is to be prevented. Under bread
powers granted him before the asseMbly adjourned in February, the prod.-
dent has negotiated a loan for OS million offered by the Chiriqui Land
(United Fruit) Company. Part of this loan will be used to build high-
ways, the easiest way to provide jobs. The president also has tried to
make Panama eligible for early US aid in relieving unemployment by
having the assembly ratify two bills favorable to DS interests. US
Babesay Panama has been strongly advocating the early implementation of
road construotion and road maintenance agreements and other economic
projects which have popular approval (the majority were initiated under
former administrations) and which 'cannot be oonstrued by Arias' political
opponents as DS aid to a particular political group. To date, however,
few new jobs have been provided, and estimates that, in the absence 25X1
of substantial US expenditures in the area, the economic situation will
continue to be unfavorable. .
National Polioe is of praotically no value as a factor in
national defense, and is ?artisan in
domestic politics. The Secret Police force is also partisan.
Neither could be relied upon to support the presiden n event of an
attempted coup d'etat.
Subversive
l?anama's small Communist group maintains its capability for agita-
tion and fbr increasing its influenoe through alignment with ultra-
nationalist groups and student groups that engage In subversive activities.
/t is true that the fbrmerly atm-nationalist President Arias is main-
taining a pro-US policy aad is apparently willing to implement his
announced anti-Communist policy. Recently, for examp;e? he ordered the
'police to prevent Communist activities in till Chiriqui province where
there has been agitation against the Chiriqui Land (United Fruit) Company.
ge".;FIDENTIA1.70
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Situation Memorandum 22-50
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Nevertheloss,pin coming months the Arias administration may be tn a weak
position vis a via the Ceramists and ultra-nationalists, particularly if
the acute unemployment situation continues and Arias domestic policies
remain unpopular. Communist-infleenced groups, with ultra-nationalist
aid, hate already launched a strong propaganda offensive in order to
create ill-will toward the US, to discredit the administration'e pro-US
policy of recent months, and thus to prepare for a general political
effenstve against Arias. The anti-US offensive now underway -- and which
is very' likely to be appealing to many Panamanians unless a counter-
offensiVe is particularly effective -- could make US-Panamanian relations
very difficult for some time to cone.
Panamanian Communist leaders are currently preparing a strenuous
campaign to retain their present dominant influence over Canal Zone '
Local 7130 which was forced by Governor Newcomer to withdraw from the
Communiat-dominated United Public Workers of America (UPI. It is
likely that Local 71R will continue tc be an important propaganda outlet
for the Panamanian Communists and that the West Indian nearoos of the
Zone mill remain receptive to Panamanian Commist influence unless the
US labor organizers who are about to go to Panama wage an exceptionally
effective propaganda campaign against the Communists. On other
hand, if the Communist influence over Canal Zone workers is ever broken.,
Communist strength in Panama will be seriously jeopardised.
Rumors of subversive activities by Liberal Party elements indicate
the possibility that the strong-arm Ennci, the pie f.e [Norm, ig beinT
100e'recrualized, 441m1 Llit44 the National Police and/Or- tliet-IWCWE Police have
been increased by the addition of personnel paid b,1 the Liberals. The
president is also reportedly trying to increase his influence in the
Secret Pnlice and has armed his awn supporters.
International
this president continuos to maintain a friendly attftudo teward the
United States which has resulted in the settlement of long-standing
US-Panamanian issues in an easy, practical manner. However, relations
between the two countries are booming more difficult because of the
possibility that any US cooperation with. Arias will be ctnstrued by his
political opponents as US interference in the internal affairs of Panama.
It is estimated that the acute unemployment situaticn will force Arias
to maintain a friendly attitude toward the US in the immediate future,
in order, that he nay further his efforts to obtain US economic alod? but
that as donectic.oPPositien to his administration increases, Arias may
be expected to modify this attitude for personal political reasons.
'CONFIDENTIAL
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Situation Memorandum 23-50
go
lg April 1950
The Current Situation in El Salvador
(5unma7 -- The political situation remains stable. Whicr
Osorio will probably win the presidential election, and his
supporters will dominate the constituent assembly, The
economic situation continues to be extremely favorable,
Communists have nade no effective gains. The army will be
strengthened during the coming year. Fear of leftist
strength in Guatemala has favored closer relations with
Honduras and Nicaragua.
-- Current trends offer no threat to US security
interests during coming months.)
Political
The political situation remains stable. In order to minimize the
possibility of conflict, votes cast in the election of 27 March (for
president and delegates to a constituent assembly) are being counted
and publicized with considerable delay. Early returns indicate, how-
ever, that Major Oscar Osorio -- who has been the dominant political
figure since the revolution of December 1948 and who has had the
support of the government in his political campaign -- has been
elected president. His only opponent, Colonel Menendez -- who is
supported by an ill-assorted hodge-podge of anti-Osorio groups, rather
than by a cohesive party with a unified program? has, nevertheless,
received a heavy vote. Osorio 's supporters *ill also dominate the
constituent assembly- which will establish the fundamental law under
which Osorio will assume office and officiate as president.
It is to be expected that the present government's middle-of-the-
road program, generally acceptable to the army and to the coffee capital-
ists, will be continued after Osorio 'a inauguration. Opposition by dis-
contented labor groups, liberal students, Conmunists, and exiled leftists
will continue, but there is no indication that it will become effectively
organized within the next six months.
Economic
The economic situation continues to be very favorable. Coffee
sales have lifted gold and exchange reserves to a record high of $48.7
million. Preliminary figures indicate that 1949 was El Salvadores
greatest foreign trade year, with the value of exports rising to a
record $64.9 nillion,.and the favorable export balance to $15.2 million,
the largest in that country's history. A $12 million loan agreement
with the International Bank was consummated in December to help finance
the temps River electrification program, and the government is preparing
to float a bond issue to finance the colon costs. Contracts and projects
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ineidentel to the Lenpa program are now being considered, and construe-
tion work at the dam site may initiated shortly.
No change in the favorable economic situation is foreseen for the
coming month&
U1112E.
recent months, Communists have gained =weary influence on
the political scene, though on balance they continue to be an insignia-
leant political feotor. Deprived of the opportunity of establishing
their ceniCammunistefront party, they have been forced to choose be-
tween collaboration with Nhjor Osorio or Colonel Menendez both anti-
Communists. Having failed to gain influence in the Partido Revolue
oionario de DhificaciOn Demooratica (PRUD) *Lich declared for Osorio,
the Commentate have sought adveneement through the Parted* Actoiiin
Renovadore (PAR) of Colonel Menendez, which had invited the support of
all opposition groups including Comneniets? thus giving them momentary
influence, There is no evidence, however, that a Menendez victory
would greater benefit them, and of' Course. his probable defeat will
thwart their immediate plans. In labor affairs, the Communists have
made little progress since they sucdeeded in forcing ont the moderate
loaders of the RallwayWorkerat Union r?lekly, 11 Oct 49). The
threat of a railroad strike in Deccanr was ended by by
the government, which temporarieyearrested labor leaders and imposed a
small fins an the SaltadorRaileeys Compeer. Although the ?Ammoniate:
continue to provide the only =oleos? around which a vilified labor move-
ment Mgt& develop, moderates within the labor movement have opposed
them in their attempte to gain power. Possiber as a result, Communist
extremists, under Marco Telio Payee, have recently organized a new group,
the Frente OW? de Cbreros Salvadorenos ('Uee), although the Conite de
Reorganizaci6n ?brae (CRO) remains their moat effeetive instrument,
. .
The pater of the governmental junta, and of Major ?aerie, in fol-
lowing a middle...of-the-road policy has hindered Communist efforts to
develop a unified opposition in labor natters. It is possible, howevet?
that the new and oonservatives (Oho are worried by the strong showing
of the anti-Ceorio groupie in the present election) will seek to force
Osorio to undertake a more repressive policy toward labor after he
becomes president. In this event, though organized labor influence in
national affairs will decrease, Communist labor leadership nay-neke
progress in its efforts to obtain the support of labor.
-----Thi-xdlitary situation is stable, with the army united behind Major
Osorio (probable president-elect) and Major Edlanos (military member of
the governing junta). There is little evidence of support within the army
for Major Vellalta, exiled militaz7 leader with leftist affiliations.
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Situation Memorandum 23-50
Increased appropriations will permit the strengthening of the armed
farces. Under the 1950 budget, the military (army, national guard, and
national police) will get $4,400,000, or 14,2 percent of the total
budget, compared to the 13.2 percent they received last year. The
rational guard and the treasury police will be strengthened by 300 and
100 men respectively, in order to prevent illegal immigration and smug-
gling from Guatemala and (to a lesser extent) from Honduras. The
national (traffic) police will be increased by 100 men. $320,000 is
earmarked for the purchase of arms and ammunition (largely US) and
$80,000 for the establishment of a coast guard. In addition, the
Ministry of Public Works has been granted $260,000 for the construction
of garrison projects and $400000 for the construction of a military
hospital.
25X1 'believes that the strengthened military program reflects the
government v8 concern over the possibility of increased strength in the
field of organized labor, and the possible infiltration of leftist
agitators and organizers from Guatemala.
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International
There has been no fundamental change in El Salvadorts foreign
policy and international relations. Fear of Guatemalan leftists, and
the recent football dispute with Guatemala, have favored closer rela-
tions with Honduras and Nicaragua. During the football controversy,
the government is reported to have "borrowed" bombs from Honduras
against the eventuality of attack by Guatemala, and a military mission
from Nicaragua was entertained, with manifestations of good will. Like-
wise, fear of Guatemala delayed, but did not finally prevent, Salvadoran
approval of the recent CMS resolutions concerhing Caribbean unrest.
Relations with the US continue good. The government has requested con-
tinuation of the IIAA health and sanitation program and the inauguration
of an educational program. It also hopes to obtain the maximum amount
or arms available under the Mutual Defence Assistance Pact of 1949.
After considerable delay, the government has finally recognized its
obligations as a member of the UN Korean Commission to the extent of
deciding to appoint two army officers as observers. The presence of
these observers (Who have not as yet been selected) 1111 help maintain
a quorum on the Commission,
mng foresees no change in El Salvadores international relations in
co months.
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