BOLIVIAN GOVERNMENT FACES CRISIS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91T01172R000200330014-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: December 14, 2016
• Document Release Date: May 27, 2003
• Sequence Number: 14
• Publication Date: September 2, 1953
• Content Type: REPORT

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OCI No. 8451 CENTRAL INTELLIGENCE AGENCY
Copy No. OFFICE OF CURRENT INTELLIGENCE
2 September 1953
The Nationalist Revolutionary Movement (MNR) in Bolivia
is facing its most severe test since it gained power through
the April 1952 revolution. An economic crisis has arisen
from domestic inflation and from the very low world price
for tin, which must pay for three fourths of Bolivia's im-
ports. At the same time, the government's political sta-
bility is threatened both by increased communist influence,
now concentrated on the new agrarian reform program, and by
possible MNR defections to support a. rightist coup.
Following the signature in June and July of compensation
agreements with the three Bolivian mining companies national-
ized last October, Bolivia began negotiations with the United
States for a one-year tin contract at world prices. Though
the United States normally takes about half of Bolivia's tin,
the indicated earnings from this contract will not resolve
the financial crisis. World tin prices have dropped from the
1951 high of $2.01 a pound to $0.79. "This, plus some. decline
in production, indicates that Bolivia faces a. deficit in this
year's foreign exchange budget of about $15,000,000, or 14,7
percent of its total foreign expenditures.
The exchange deficit creates a dilemma in that supplies
to keep the mines operating as well as over half of Bolivia's
food requirements must be imported, and the country does not
have sufficient foreign funds for both. Fewer mining supplies
imported this year would mean lower production and hence less
foreign exchange earnings for next year's food imports.
American officials in La Paz therefore believe that famine
is an almost inevitable consequence of current economic trends.
Moreover, food production in 1953 is_likely to be further re-
duced by the new agrarian reform program.
This program, as announced in preliminary form by Presi-
dent Paz on 2 August, is not confiscatory in that, while
decreeing higher wages for agricultural labor, it includes
some protection for the rights of landowners. Further pro-
visions still under study reportedly aim at depriving large
landholders of acreage not in actual use.
f-Do Ument xo- B.-104
Wass.
State Dept. review completed
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A much more extreme set of measures, featuring out-
right expropriation of land and control of the program by
agrarian syndicates, has been urged by the confederation of
trade unions, the powerful Bolivian Labor Central (COB), and
it is possible that a number of the existing syndicates may
decide to follow the COB's,plan rather than the government's.
Various Indians, their expectations raised to impossible
heights by Communist agitators, have already seized and
murdered landowners, mostly in the rich Cochabamba Valley,
285 miles southeast of the capital.
Communist influence seems on the rise in Bolivia, regular
party membership having risen from about 100 when the party
was formally organized in May 1950 to an estimated 2000 last
July. In addition to a larger number of sympathizers, there
is also a. Trotskyite party of about the same size and report-
edly growing. The increase in Communist influence in recent
months has been particularly marked in the COB and the
agrarian syndicates, where Stalinists and Trotskyites are
now cooperating to push extremist measures such as enlarging
the COB's armed militia. Communists are. also suspected of
having brought about the recent rejection of eight scholar-
ships offered under the Point IV program to bring Bolivian
labor leaders to the United States.
In an apparent effort to gain control over important
peasant leaders and to undercut Communist influence in the
syndicates, the government organized a National Confederation
of Rural Labor in late July. Since the August decree, however,
further disturbances have occurred, and a few local officials
in a region near Lake Titicaca have been kidnapped by members
of some of the-agrarian syndicates. Most of the Indians are
armed and reportedly control virtually all territory outside
of the departmental capitals, rendering local authorities
powerless.
Meanwhile, this agrarian unrest has accentuated the cleav-
age within the MNR itself, since its right wing includes vari-
ous large landowners Some rightist members of the party col-
laborated with the Socialist Falange's abortive coup last
January, and there have been persistent reports in recent weeks
of new Falange plans to overthrow the Paz government.
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