POLITICAL STABILITY IN CENTRAL AMERICA AND THE CARIBBEAN THROUGH 1958

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A010200030001-6
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 23, 2016
• Document Release Date: January 14, 2014
• Sequence Number: 1
• Publication Date: April 23, 1957
• Content Type: NIE

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NIE 80-57
' 23 April 1957
C 1FIDENTIAL
IN '7 c?
C-
N? 275
NATIONAL INTELLIGENCE ESTIMATE
? NUMBER 80-57
(Supersedes NIE 80-54)
POLITICAL STABILITY IN CENTRAL AMERICA
AND THE CARIBBEAN THROUGH 1958
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 23 April 1957. Concurring were the Special Assistant, In-
telligence, Department of State; the Assistant Chief of Staff,
Intelligence, Department of the Army; the Director of Naval
Intelligence; the Director of Intelligence, USAF; and the Dep-
uty Director for Intelligence, The Joint Staff. The Atomic
Energy Commission Representative to the IAC, and the Assist-
ant Director, Federal Bureau of Investigation, abstained, the
subject being outside of their jurisdiction.
D TO21S.EL,
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REVIEWER: ,.99.011
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ere-itEar"
CONFIDENTIAL
POLITICAL STABILITY IN CENTRAL AMERICA
AND THE CARIBBEAN THROUGH 1958
THE PROBLEM
To estimate probable developments in the Central American and Caribbean
republics through 1958 with particular reference to the prospects for political sta-
bility throughout the area.
CONCLUSIONS
1. For the period of this estimate, the mil-
itary, together with the landed gentry
and wealthy merchants, are likely to
dominate the internal politics of all the
Central American and Caribbean repub-
lics except Costa Rica. Reformist and
popular elements, whose influence has
been checked for the past few years, are
unlikely to upset the status quo. How-
ever, palace revolutions may occur.
(Para. 47)
2. The Communists, whose influence has
been declining over the past few years, do
not now constitute a serious threat to any
regime in the area. Communist capa-
bilities are unlikely to increase except in
Cuba, and possibly in El Salvador. How-
ever, non-Communist subversion involv-
ing exiled groups will continue to disturb
the stability of the area. (Paras. 36-37,
48,52)
Cuba, Haiti, the Dominican Republic, Guatemala,
El Salvador, Honduras, Nicaragua, Costa Rica,
and Panama. The foreign possessions in the
Caribbean are not included.
3. Inasmuch as we do not believe that
the Cuban government can fully restore
public order or check the emergence of
new civilian opposition elements, there is
only an even chance that the Batista re-
gime will survive the period of this esti-
mate. A military-dominated junta would
be the most probable successor. Haiti is
in serious political turmoil and faces near
economic collapse. So long as dissension
exists among the military, it is unlikely
that a clear-cut solution will emerge. It
is probable that Haiti will seek emergency
financial assistance from the United
States. Nothing is likely to endanger the
government of the Dominican Republic
so long as Generalissimo Trujillo remains
active. (Para. 49)
4. Castillo Armas will probably continue
his somewhat right-of-center course in
Guatemala. No opposition group is likely
to pose a serious threat to the stability of
his regime. The Somozas and related
families will probably continue to domi-
nate Nicaragua. The De la Guardia gov-
eSVIET LT " T 1
CONFinwn A I
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Lyva?I I Int.
ernment in Panama and the Lemus re-
gime in El Salvador, though less stable
than those in Nicaragua and Guatemala,
will probably survive the period of this
estimate. In Honduras, the present mili-
tary regime, with possible shake-ups in
the junta, is likely to continue in power
through 1958. (Para. 50)
5. In Costa Rica, because of a serious
split in the administration party, Figue-
res will probably be unable to determine
the outcome of the 1958 elections. It is
likely that free elections will be held in
Costa Rica, approximately on schedule.
We believe that the orientation of the
newly elected Costa Rican government
will be somewhat more conservative than
the present. one. (Para. 51)
6. Over the longer term, the pressures
for reform and change will continue to
build up throughout the area. The pres-
ent military leadership can provide no
more than a braking action against pres-
sures for change. The growing size and
importance of the educated prcifessional
and middle classes will increasingly
2
threaten the position of the traditional
ruling groups. The eventual emergence
of more broadly-based, reformist, na-
tionalist regimes, similar to that in Costa
Rica, is probable, although for the fore-
seeable future the great mass of the pop-
ulation will continue to have an inferior
economic, social, and political status.
This mass will be readily exploited by
demagogues. (Para. 53)
7. For the period of this estimate, we be-
lieve that the relations of the various
states in the area with the US are likely
to continue favorable. [The Panamanian
government will probably continue to
press its demands for full implementa-
tion by the US of the 1955 Canal Treaty
and its related agreements. Stimulated
by the Suez Canal situation, Panama will
also probably continue to agitate for fur-
ther economic benefits from Canal opera-
tions with the ultimate goal of operating
the Canal Company jointly with the US.
However, we do not believe that it will
force any of these demands to the point
of creating serious friction between the
US and Panama) (Para. 54)
DISCUSSION
THE POLITICAL SITUATION
Basic Conditions and Trends
8. The Caribbean and Central American re-
publics are generally the least advanced in
the Western Hemisphere. Economic under-
development, social immobility, and political
immaturity are their prevailing characteris-
tics. Although foreign-financed (mainly
US) sugar and banana producers and domes-
tic coffee growers are engaged in export agri-
culture, most of the areas's 22,500,000 inhabit-
ants are engaged in primitive, subsistence-,
type agriculture. Economic development is
retarded by lack of capital and of technical
skill, by the inadequacy of transportation and
power facilities and other basic services.2
9. In this economic environment, the vast
majority of the population is poverty stricken,
undernourished, illiterate, and socially and
politically inert. The generally dominant
social element is an elite consisting of upper
echelon military officers, the landed gentry,
and the wealthy merchants. This dominance
is most often reflected politically in a highly
a See Appendix II for Economic Conditions and
Trends.
at
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-84galiffger' 3
personalized dictatorship, responsive to the
will of the elite and characterized by a limited
sense of public responsibility.
10. Even though most of the republics have
a nominally broad franchise, in none of
them, save Costa Rica, has there consistently
been the articulate popular participation re-
quired to give reality to democratic processes.
Consequently politics have revolved around
persons or cliques rather than public issues.
The continued shifting of military support
has been the decisive political factor, and
rule by military "strong men" has been nor-
mal. In an environment of such political
immaturity, the constant struggle for power
has created a pattern of intrigue and con-
spiracy, often with international ramifica-
tions and implications, and of corresponding
suspicion and repression. The transfer of
real political power from one group to an-
other is usually accomplished by revolution
rather than by election, although such rev-
olutions are usually a matter of military pro-
nunciamiento with a minimum of public dis-
turbance and bloodshed.
11. In recent decades, however, a small but
growing urban middle class has been posing
a serious challenge to the old order. Busi-
ness and professional men, students, intellec-
tuals, and younger military officers have been
demanding social reform, an ever increasing
share of the wealth, and more effective polit-
ical democracy. This agitation against the
traditional order of society has had strong
nationalistic overtones, generally directed
against foreign enterprises. The reformist
groups have been encouraged and manipu-
lated by extremists. The Communists, supe-
rior as organizers and propagandizers, have
often been able to strongly influence, and at
times to assume leadership in, the reformist
groups.
12. Pressure for and resistance to change
have not been uniform throughout the area.
In Guatemala, the traditional order was
severely shaken by the revolution of 1944. In
Cuba, Costa Rica, and Panama, pressures for
change have been effective to a considerable
degree. Such pressures are more moderate in
El Salvador, and only recently have affected
Haiti, Honduras, and Nicaragua. They have
been effectively contained by a strongly en-
trenched authoritarian regime in the Domin-
ican Republic.
13. Since the fall of Arbenz in Guatemala in
1954, there appears to have been a partial re-
action against the reformers throughout the
area, and the more demagogic and extreme
elements are now either quiescent or under
control everywhere. At 'the same time, the
present leadership has found it at least con-
venient to maintain an association with the
concepts of economic and social progress and
to make moderate concessions to reformist
and nationalist sentiment.
14. Though social ferment has over the past
few years become a lesser factor in the in-
stability in the area, the political tensions
inherent when a dictatorial regime operates
within a constitutional framework continue
to work against stability. Although the
"strong men" have generally not flinched
from the adoption of any methods necessary
to assure their continuance in power, they
nevertheless remain sensitive to charges of
illegal action and strive to give a constitu-
tional aura to their rule. The patent frauds
usually committed, by the incumbents in the
election process provide the frustrated opposi-
tion with new grounds for attacking the ad-
ministration, thus exacerbating the instabil-
ity and tension of the area.
Non-Communist Subversion
15. The conspiratorial and revolutionary poli-
tics of the Caribbean normally extend across
national boundaries. For over a century it
has been customary for leading adherents of a
regime overthrown by revolution to take ref-
uge in a sympathetic neighboring country,
there to plot counterrevolution with the suf-
ferance, and perhaps the active support, of
the host government. Consequently the se-
curity of a given regime depends in part on
the existence of friendly governments in
neighboring countries. In these circum-
stances, one country may foment revolution
abroad in order to forestall revolution at
home., Thus a successful revolution in one
--443zegitiE
CONFIEVNTIM
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country is likely to lead to revolutionary at-
tempts in others.
16. The exiles are primarily interested in re-
turning to power and attempt to work closely
with the domestic underground opposition.
There are in some instances significant ideo-
logical differences between the exiled or sup-
pressed reformist forces and the entrenched
traditionalist forces which seek to minimize
changes. These differences are often de-
scribed as a struggle between the "democ-
racies" and the "dictatorships." However, in
many cases these terms are not precisely de-
scriptive and the struggle is merely one be-
tween the "ins" and the "outs," with only
a measure of ideological content.
17. In general, exile activity has tended to
decrease in the area over the past few years.
Although there are active exile groups in
most of the republics, no country now serves
as a key center of conspiracy. Rightist exile
activities from Venezuela and Nicaragua have
declined as a result of the backfiring of the
1955 attempt to overthrow Figueres in Costa
Rica and the death of Anastasio Somoza.
The fall of the Arbenz regime and the con-
solidation of Castillo Armas' position have
eliminated Guatemala as an important base,
both for the Communists and the "demo-
cratic" exiles. The Caribbean Legion, for-
merly an active filibustering organization
made up of exiles from various countries in
the area, is defunct.
18. Mexico and the United States have be-
come more important centers of plotting
against the entrenched regimes of the area.
The principal targets of these exile groups
are Cuba, Guatemala, and the Dominican
Republic, but only in the case of Cuba do
present exile activities constitute a serious
threat to the incumbent regimes.
The Political Situation in the
Island Republics
19. Cuba is ruled by a military "strong man,"
Fulgencio Batista, who returned to power in
the 1952 army coup. Until late 1955, though
the Batista regime was generally unpopular,
the army, the key to the stability of the
regime, remained loyal, and the opposition
was disorganized and ineffectual. During the
past 18 months, however, Batista's position
has been considerably weakened by the grow-
ing political and military unrest. In late
1955, intensified student disturbances and
demonstrations began to take place, and in
April 1956, Batista, confronted with a con-
spiracy within the military, was forced to
carry out an army purge. In the aftermath
of this purge, there occurred an organized
civilian assault on an army barradks, spo-
radic antiregime terrorist acts throughout
the country, and widespread rumors of re-
volt and invasion.
20. Fidel Castro, youthful leader of a self-
styled reformist, anti-Batista revolutionary
group, has become the regime's chief antago-
nist. From exile in Mexico he apparently
directed domestic underground opposition to
Batista, and in September 1956, he signed an
agreement with an anti-Batista student or-
ganization to collaborate in overthrowing the
present regime. On 2 December 1956, Castro,
with approximately 80 men and a small ves-
sel, landed in eastern Cuba, and today he
maintains a guerrilla force of 50 to 300 men,
which the Cuban government has thus far
been unable to dislodge from the eastern
mountains. There is no reliable evidence to
indicate the extent of Castro's following.
There is evidence that Castro is at least in
part financed from the outside, principally
from exile centers in New York and Miami,
and that there has been some informal liai-
son between Castro and former President
Prio Socorras, whom Batista ousted in 1952.
21. Ex-President Prio has a considerable po-
tential for increased subversive operations.
We believe that he has large sums of money
and materiel at his disposal and has recruited
Cuban exiles for revolutionary purposes. On
13 March 1957, Cuban insurrectionists, ap-
parently including followers of Prio and pos-
sibly Castro, staged a spectacular but unsuc-
cessful assault on the Presidential palace in
an attempt to kill Batista.
22. The failure of the regime to crush Cas-
tro's guerrilla operations, the intensification
of antigovernment acts and ruthless counter-
-slipewsm,
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terrorist activities, the repeated suspensions
of constitutional guarantees, and finally, the
shifting of the revolutionary activity to the
capital itself, have placed the regime in real
jeopardy. Some responsible elements, in-
cluding some wealthy businessmen and pro-
fessionals, are apparently sympathetic to the
insurrectionists. Furthermore, there are re-
ports of disaffection within the armed forces,
particularly among the lower echelon person-
nel of the army. However, at the moment
Batista appears still to have the loyalty of
the leaders of both the military and the
police. He is also favored by Cuba's current
economic prosperity and by an absence of
alternate political leadership with wide popu-
lar support.
23. Haiti is in serious political turmoil ag-
gravated by a severely depressed economic
situation. Although the overthrow of Presi-
dent Magloire at the end of his term (Decem-
ber 1956) was in accordance with customary
Haitian political processes, the recurrent gen-
eral strikes whereby competing candidates for
the succession have prevented the orderly se-
lection of a successor have resulted in an
unusually prolonged political crisis. This sit-
uation is ominously reminiscent of the period
1908-1915, which produced a state of virtual
anarchy.
24. Haitian presidents normally attempt to
perpetuate themselves in power beyond their
term, but are usually compelled to vacate by
military juntas responsive to the demands of
the predominantly mulatto elite, acting to
forestall dangerous agitation of the over-
whelming black majority. In such cases, an
orderly succession has been fairly promptly
arranged by tacit agreement among the mili-
tary and the elite, with a decent regard for
constitutional appearances. President Mag-
loire came to power in this manner in 1950,
and was displaced in the same way. The
normal process for selecting his successor has
broken down, however, because of the deter-
mination of rival candidates to block the se-
lection of each successive leading contender.
At the moment, the military hold a tenuous
balance of power position. They have al-
ready proved susceptible to the pressure of
the general strike, and they may not feel
capable of imposing a political solution.
Moreover, there are indications of increasing
dissension among the military themselves.
25. Haiti's political instability is aggravated
by severely depressed economic conditions.
The deeply eroded and relatively unproduc-
tive land is overpopulated and food is in
chronic short supply. Exploitable forest,
subsoil, and water resources are scant; indus-
trial development is negligible. Per capita
real income is the lowest among the Carib-
bean republics. This basic situation is fur-
ther prejudiced by chronic maladministra-
tion. In addition, since 1954 Haiti has suf-
fered from a disastrous hurricane and pro-
longed drought: agricultural production has
fallen and earnings from the primary export
crops ? coffee, sugar, and sisal ? have been
reduced. Earnings from tourism have de-
clined as a result of the disturbed political
situation; domestic industry and commercial
activity have stagnated. Government ex-
penditures, bloated by overambitious devel-
opment plans and widespread graft, have
been maintained at a high level by foreign
and domestic borrowing in recent 'years, and
the National Bank is virtually insolvent.
26. The Dominican Republic is ruled by the
most durable "strong man" of the area, Gen-
eralissimo Dr. Rafael Leonidas Trujillo. He
secured command of the Dominican armed
forces shortly after the withdrawal of the
US military occupation in 1924 and has been
in dictatorial control of the country ever
since. The Dominican Republic is a one
party state and is administered, in substan-
tial effect, as the private estate of the Trujillo
family. It has long been a target for in-
effectual subversive activities and has itself
fomented subversive activities in the area,
most recently against Cuba. Presidential
elections are scheduled for May 1957, with
Hector Trujillo, younger brother of the Gen-
eralissimo and the incumbent president, the
only candidate.
The Situation in Central America
27. In Guatemala, Castillo Armas, who came
to power through the overthrow of the Arbenz
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regime in June 1954, has pledged adherence
to the liberal principles of the 1944 revolu-
tion. However, he has been subjected to
strong conservative forces. Beset by pres-
sures from the right and left, he has at-
tempted to pursue a middle-of-the-road policy.
A single government party dominates the
country's political organization and elections
have been controlled. Although the right of
free expression has generally been observed,
the government has not hesitated to use re-
strictive measures, including martial law,
during periods of uneasiness. Urban labor
has been permitted to reorganize in selected
enterprises, but its leadership has been care-
fully screened and a central labor confedera-
tion has been discouraged. Castillo has cor-
rected the worst abuses of the Arbenz land
reform policy, and has continued a moderate
land distribution program of his own. High-
way construction and port development with
US funds have been pushed vigorously.
Guatemalan differences with the United Fruit
Company have been at least temporarily re-
solved. The program to extend educational
facilities has been hampered by lack of funds.
28. In early 1956, conservative landholding,
business, and military elements became in-
creasingly dissatisfied with Castillo's toler-
ance of the non-Communist leftist opposition.
Reacting to conservative pressure, the gov-
ernment, in June 1956, acted harshly to sup-
press student demonstrations spearheaded by
a leftist minority, and subsequently it tempo-
rarily curtailed sharply the freedom of the
press. By the year's end, however, Castillo
had begun a campaign to correct the impres-
sion that his regime had shifted its orienta-
tion from a middle course. He recently re-
iterated a public warning to landholders
against exploiting their, labor and introduced
minimum wage legislation designed to pro-
tect the rural worker.
29. The armed forces, the key to stability,
support the regime. Existing and potential
domestic opposition to the Castillo regime lies
with labor, the peasantry, student groups,
and certain ambitious politicians and mili-
tary leaders who seek more rapid advance-
ment than afforded by Castillo. None of
these elements has so far displayed a capacity
for offering a serious challenge to the secu-
rity of the Castillo government. Rumors of
conspiracy by exiles collaborating with op-
position elements inside the country to over-
throw the Castillo government have persisted
since 1954. A potentially dangerous concen-
tration of exiles is located in Mexico, but the
Mexican government is making some effort
to limit their activities. Various non-Com-
munist and Communist exile groups are also
active in Costa Rica and El Salvador, but
these are small in number and torn by fac-
tional strife.
30. In Nicaragua, long-time dictator Anastasio
Somoza was assassinated in September 1956
by a young oppositionist. There followed a
rash of arrests, trials, and convictions inside
Nicaragua and charges of an international
conspiracy involving Nicaraguan exiles.
Meanwhile Luis Somoza succeeded his father
as President, and on 3 February 1957, was
elected President for a six-year term. Al-
though Luis Somoza, unlike his father, is not
the typical "strong man," the top civilian
and military posts remain in the firm grip of
the Somoza family and its allies.
31. There are a number of potential, though
not immediate, sources of instability in Nica-
ragua. Luis Somoza apparently desires to be
a progressive President, but the influential
families who gained their position under his
father are committed to the status quo. Also,
Luis must reckon with his highly unpredict-
able and emotional brother, Anastasio ("Ta-
chito") Somoza, Jr., who continues as head
of the National Guard and the Air Force.
There is active political opposition inside Nica-
ragua, but it is not currently capable of suc-
cessfully challenging the entrenched Somoza
forces. Anti-Somoza exile groups are active in
Costa Rica, El Salvador, and Mexico, but these
forces are too weak to constitute a serious
threat to the Nicaraguan government.
32. Honduras is now ruled by a three-man mil-
itary junta, which took over the government
after the overthrow of the Lozano regime in
October 1956. The junta was accepted by
most political factions as the best available
solution to Honduras' political problems for
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the short run. It is a caretaker government
committed to holding free elections and to the
restoration of constitutional government. De-
spite its initial successes, the junta has been
subjected to a variety of increasing political
pressures. The Liberals, who have the best
organized political machine and who appar-
ently possess the largest political following,
desire a speedy return to constitutional rule,
while some other political factions and mili-
tary elements have shown little interest in
moving decisively in this direction. Also there
is factionalism between the younger and older
army officers, and a lack of unity within the
junta. An apparent reflection of the govern-
ment's domestic political insecurity is its cur-
rent stirring up of an old boundary dispute
with Nicaragua.
33. The Panama government is headed by Er-
nesto de la Guardia, who was elected in May
1956 as a compromise candidate of the Na-
tional Patriotic Coalition, the loosely knit po-
litical group organized by the late President
Remon. He appears acceptable to the Na-
tional Guard, Panama's only armed force.
De la Guardia, a relatively honest and well-
intentioned man, is caught up in the rivalries
of internal party factions and the special po-
litical problem of the still unsolved 1955 mur-
der of former President Remon. The admin-
istration has announced a program of na-
tional reform and development but has made
little progress to date, due to financial diffi-
culties and the resistance of entrenched
interests.
34. Costa Rica, in contrast to its neighbors,
has a long tradition of relatively orderly demo-
cratic government. The government is headed
by Jose Figueres, a somewhat erratic reform-
ist leader, whose popularity has diminished to
some extent since its peak in early 1955. The
President faces uncompromising opposition
from the wealthy landholders and business
interests to whom his fiscal and paternalistic
economic policies are anathema. The immi-
nence of presidential and legislative elections
scheduled for February 1958 is the chief un-
settling factor in the present situation.
Figueres has become less outspoken against
those Caribbean and Central American lead-
ers whom he regards as dictators, particularly
since the death of Somoza of Nicaragua.
35. In El Salvador, Lt. Colonel Jose Maria Le-
mus, who was hand-picked by his predecessor,
President Osorio, assumed power in Septem-
ber 1956. He inherited what is virtually a one-
party government which depends upon mili-
tary support for survival. Lemus is trying
to increase his support within the army. At
the same time, he is attempting to cater to
popular elements by creating a more demo-
cratic political climate and promoting moder-
ate social reform and economic development.
These latter policies are opposed by the landed
and business interests, who fear his social and
economic reform plans, and by the army,
which resists the diversion of budget funds
from military use to public projects.
Communist Subversion
36. Communist influence and prestige in Cen-
tral America and the Caribbean area has been
generally declining over the past few years,
particularly as a result of the Guatemalan
anti-Communist revolution of June 1954. It
is estimated that there are now around 14,000
Communist Party members in the area, about
90 percent of whom are in Cuba.3 In no other
country are there estimated to be more than
a few hundred. In most of the countries there
is an indeterminate number of Communist
sympathizers whose size fluctuates with the
size and effectiveness of the Communist Par-
ties. There has been a decline in Communist
strength in Guatemala from the well-docu-
mented estimate of 2,000 Communists and
2,000 Communist sympathizers of 1954 to some
300 Communists and 1,500 sympathizers. Ex-
ceptions to the otherwise general decline in
Communist numerical strength are Honduras
and El Salvador, where moderate increases in
Party membership appear to have occurred.
37. The Communists do not now constitute a
serious threat to the stability of any regime
in the area. Communist Parties are illegal in
The present total is some 21,000 below the esti-
mate made in 1954. Most of this decline is at-
tributable to more reliable information on Com-
munist strength in Cuba.
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every country, and all governments have tak-
en a public position against Communism.
However, only Guatemala has demonstrated
real concern over the Communist menace; the
other governments have tended to view their
non-Communist opponents as more immediate
threats and therefore more dangerous. As a
result, the Communists have been able to
carry on their activities through a variety of
front organizations. By this means they ex-
ert an influence out of proportion to their lim-
ited numerical strength. This is the chief
potential- danger from Communism in the
area.
38. Except in Guatemala, where there has
been a sharp across-the-board decline, there
have been no radical alterations in the pat-
tern of Communist operations over the past
three years. Urban and plantation labor are
the key sectors to which the Communists are
directing their attention. Their success in
this respect has been most marked in Cuba,
Costa Rica, Honduras, and most recently in
El Salvador. They also wield influence in the
educational systems, perhaps most significant-
ly in Cuba and Panama. Control of student,
youth, and women's groups is a prime target,
most importantly in Cuba. Some Commu-
nist sentiment persists among students in
Guatemala. Communist infiltration of gov-
ernment is not quantitatively significant any-
where, though Communists and pro-Commu-
nist intellectuals apparently continue to hold
official or advisory positions in Cuba and
Panama. The Communists have not pene-
trated the armed forces to any significant
extent.
39. Communist strategy over the long-term
is to attempt to create a united opposition
front and within that framework to discredit
the group in power. They identify themselves
where possible with progressive and national-
istic movements and attempt to convert non-
Communist demand for social, economic, and
political reform to Communist purposes.
They attempt to discredit anti-Communist
governments and to transform popular dis-
satisfactions into antagonism toward the US.
Except in the case of Guatemala, the Commu.
nists in the area have generally eschewed
deep involvement in the subversive activities
of non-Communist exiles.
40. The Communists of the area maintain
their international contacts through the Com-
munist-controlled Latin American Confedera-
tion of Labor (CTAL) and World Federation
of Trade Unions (WFTU) , and other front
organizations. Over the past several years,
there has been a notable increase in travel by
local Communists and selected sympathizers
to Soviet Bloc countries and to Communist-
sponsored international conferences. Affilia-
tions of local Communist Parties with front
organizations are most fully developed in
Costa Rica and Cuba.
International Relations
41. Intraregional. In the relations of the
states of the area to each other, there are two
major factors, the most important of which
is the disruptive force of various personal
rivalries, national antagonisms, and area con-
troversies stirred up for domestic reasons.
For example, there was a long-standing feud
between the Figueres government in Costa
Rica and Somoza in Nicaragua. There has
been personal feuding between Dictators
Batista of Cuba and Trujillo of the Domini-
can Republic, and more recently, the border
conflict between Nicaragua and Honduras
has been revived.
42. The other major factor is the Organization
of Central American States (ODECA) , created
in 1951 in response to the historical ideal of
Central American union, and which has some
potential as a stabilizing .force in the area.
It has made limited progress toward the es-
tablishment of closer economic ties and toward
greater technical and administrative cooper-
ation among the Central American republics.
ODECA has also assisted in the promotion of
peace in the area. It helped patch up differ-
ences between Nicaragua and Costa Rica and
between El Salvador and Nicaragua following
Somoza's assassination. ODECA, which re-
gards British Honduras (Belize) as essentially
a Central American problem, has recently
gone on record officially in support of Guate-
mala's long-standing claims to the area.
ODECA's capabilities are, however, limited.
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For example, it has been unable to resolve the
boundary dispute between Honduras and
Nicaragua.
43. With the US. All the governments of the
area recognize that, in view of the strategic
importance of the Caribbean to the United
States and of the overwhelming preponder-
ance of US economic and military power in
the area, they must accommodate their poli-
cies to US security interests, if only as a mat-
ter of practical expediency. However, popular
suspicions of US motives make it necessary _
f or these governments to avoid the appearance
of subservience to the US, and somewhat limit
their ability to cooperate with the US. More-
over, in return for their cooperation, the gov-
ernments of the area expect from the United
States, protection, toleration of their peculiar
domestic political processes, and help in solv-
ing their economic problems. They strongly
support the Organization of American States
and the United Nations, in part as a means
of obtaining a voice in international affairs
out of proportion to their meager strength,
but also as a means of invoking general Latin
American support on issues of mutual concern.
44. All the Caribbean and Central American
republics have ratified the Rio Treaty and all
are disposed to cooperate with the US in Hemi-
sphere defense. The US maintains a naval
base in Cuba and a guided missile tracking
station in the Dominican Republic.4 In the
OAS and UN, all consistently support the
United States on basic issues with the Soviet
Bloc. On certain other issues involving "colo-
nialism" and underdeveloped areas, their rec-
ord has been variable. In general they are
strongly opposed to colonialism and feel that
the United States has discriminated against
them in matters of financial assistance and
trade.
45. US relations with Panama constitute a
special problem because of US control of the
Canal Zone in the heart of the republic and
because of the importance to the Panamanian
economy of dollar earnings from the Zone
(over 20 percent of national income). In these
special circumstances, Panamanian govern-
'See map on US military facilities in the area.
ments have felt it necessary to strike a nice
balance between popular sensitivity regarding
national sovereignty and a real necessity to
maintain cooperative relations with the United
States. A 1955 Treaty revision helped alle-
viate Panamanian resentment over wage dis-
crimination against Panamanians employed
by the US in the Zone, over the commercial
competition from the Zone, and over allegedly
insufficient payments from the United States
for use of the Canal Zone. However, delays
in US implementation of certain provisions of
the 1955 Treaty are causing dissatisfaction.
Moreover, Panamanian public and official
pressure for increased advantages and addi-
tional adjustments in the Treaty continues,
and the Panamanians are attempting to ex-
ploit the Suez crisis to their own advantage.
46. With the Soviet Bloc. Since the fall of
the Arbenz regime in Guatemala in 1954, none
of the republics has had diplomatic relations
with any Bloc country except Poland, whose
charge d'affaires in Mexico is accredited to sev-
eral of these countries. None has trade agree-
ments with the Bloc. However, Soviet Bloc
purchases of Cuban sugar stocks since Decem-
ber 1954 (about 1,050,000 tons valued at about
$100,000,000) have been welcomed by the Cu-
bans, and other countries of the area have
demonstrated some interest in finding new
markets for their export crops in the Bloc. "
PROBABLE DEVELOPMENTS
47. For the period of this estimate, the mili-
tary, together with the landed gentry and
wealthy merchants, are likely to dominate
the internal politics of all the countries of
the area except Costa Rica. Reformist and
popular elements, their influence checked for
the past few years, are unlikely to be able
to upset the status quo. However, palace
revolutions may occur. Moreover, scheduled
or promised elections in Cuba, Haiti, Costa
Rica, and Honduras, may adversely affect
stability in these countries during the elec-
toral period.
48. During the period of this estimate, inter-
governmental rivalries will probably be re-
duced. Relations between Costa Rica and
Nicaragua are likely to improve, and both
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Trujillo of the Dominican Republic and Perez
Jimenez of Venezuela, after their recent fail-
ures, are likely to adopt a more cautious atti-
tude towards involvement in the affairs of
their neighbors. The boundary dispute be-
tween Nicaragua and Honduras will probably
continue unresolved, but it is not likely to
lead to extensive armed conflict between the
disputants. However, non-Communist sub-
version involving exiled groups will continue
to disturb the stability of the area, particu-
larly in Cuba. Mexico and the US will con-
tinue to be the principal havens for exiles.
49. With respect to the island republics, it
is unlikely that the Cuban government can
fully restore public order or check the emerg-
ence of new civilian opposition elements.
There is only an even chance that the Ba-
tista regime will survive the period of this
estimate. If he falls, a military-dominated
junta will probably take over. In Haiti an
orderly election is unlikely. It is too early
to predict the outcome of the existing politi-
cal impasse. So long as dissension exists
among the military, it is unlikely that a
clear-cut solution will emerge since any group
or candidate will require substantial military
support to remain in office. Any Haitian
government will be faced with the threat-
ened economic collapse, and accordingly, will
probably seek emergency financial assistance
from the United States. Nothing is likely
to endanger the Dominican regime so long
as Generalissimo Trujillo remains active.
50. In Central America, Castillo ,Armas will
probably continue his somewhat right-of-cen-
ter course in Guatemala. Although there
will almost certainly be occasional rumblings
from the press, students, union leaders, and
exile groups, none of them, singly or collec-
tively, are likely to be able to pose a serious
threat to the stability of the Castillo regime.
The latter will continue to agitate for annex-
ation of British Honduras, but will almost
certainly not take precipitate action. The
Somozas and related families will probably
continue their domination of Nicaragua. The
De la Guardia government in Panama and
the Lemus regime in El Salvador, though less
10
stable than those in Nicaragua and Guate-
mala, will probably survive the period of this
estimate. In Honduras, it is likely that the
present regime, with possible shake-ups in
the junta, will continue in power through
1958.
51. In Costa Rica, because of a serious split
in the administration party, Figueres will
probably be unable to determine the outcome
of the 1958 elections. It is likely that free
elections will be held in Costa Rica, approxi-
mately on schedule. We believe that the
orientation of the newly elected Costa Rican
government will be somewhat more conserva-
tive than the present one.
52. Communist capabilities are unlikely to
increase except in Cuba, and possibly in El
Salvador. In Cuba, the sizable and well or-
ganized Communist Party may. be able to
take advantage of weakened governmental
discipline and public disorder. Though con-
tacts between the local Communists and in-
ternational Communism may increase as a
result of intensified Soviet-sponsored efforts
to extend influence in the area, formal ties
and commercial interchange with the Soviet
Bloc are likely to remain limited.
53. Over the longer term, the pressures for
reform and change will continue to build up
thoughout the area. The present military
leadership can provide no more than a brak-
ing action against pressures for change. The
growing size and importance of the educated
professional and middle classes will increas-
ingly threaten the position of the traditional
ruling groups. The eventual emergence of
mpre broadly-based, reformist, nationalist
regimes, similar to that in Costa Rica, is prob-
able, although for the foreseeable future the
great mass of the population will continue
to have an inferior economic, social, and po-
litical status. This mass will be readily
exploited by demagogues.
54. For the period of this estimate, we believe
that the relations of the various states in the
area with the US are likely to continue fa-
vorable. The Panamanian government will
probably continue to press its demands for
full implementation by the US of the 1955
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Canal Treaty and its related- agreements.'
Stimulated by the Suez Canal situation,
Panama will also probably continue to agi-
tate for further economic benefits from Canal
operations with the ultimate goal of operat-
The US Congress has not yet passed legislation
to implement certain provisions of the Treaty
and its related agreements, including the estab-
lishment of a single basic wage scale and US con-
struction of a bridge over the Canal at Balboa.
11
ing the Canal Company jointly with the US.
In order to gain increased leverage for its
position and to embarrass the US, it will
probably continue to air its grievances and
might even threaten to contest before the
UN the issue of sovereignty, in the Zone.
However, we do not believe that it will force
any of these demands to the point of creat-
ing serious friction between the US and
Panama.
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APPENDIX I
ARMED FORCES CAPABILITIES
1. The armed forces of the Caribbean and
Central American republics are generally
designed to defend their respective govern-
ments against internal subversion, filibuster-
ing expeditions from abroad, and armed
intervention by antagonistic regimes in the
Caribbean and Central America. Defense
against any more formidable aggression is
beyond their capabilities, and in Caribbean
opinion, sure to be provided by the US in
its own interest. At present, the armed forces
of Cuba,' the Dominican Republic, El Salva-
dor, Guatemala, Honduras, and Nicaragua
are capable of maintaining internal security
and defending against raids from neighbors.
Panama's National Guard, its only military
force, is capable of maintaining internal order
but unable to defend its government against
expeditions from abroad. The armed forces
of Costa Rica and Haiti are capable only of
suppressing minor civil disturbances.
2. The ground forces of the republics (see
Table 1) consist of army and police units,
which are generally dispersed in small groups,
except for concentrations at the capital cities.
They vary in strength from the 21,000-man,
well organized army of Cuba to the 1,900-man
Civil Guard of Costa Rica, a provincial type,
poorly trained, police organization. Their
combat effectiveness is generally low by US
standards and, with the exception of the Do-
minican Republic, seriously limited by their
arms and equipment, a heterogeneous collec-
tion of European and US types, much of
which is obsolete and poorly maintained.
However, with the aid of US guidance and
materiel, the capabilities of some of the area's
'The Cuban army's capability for maintaining in-
ternal security is currently being challenged by
a small group of rebels operating in the eastern
mountains of Cuba.
ground forces, particularly those of Cuba,
Guatemala, Honduras, and Nicaragua, are
likely to increase.
3. Air forces (see Table 2) are maintained
by all the Caribbean republics except Pan-
ama, but only the Dominican Republic and
Cuba have air forces with appreciable
strength in personnel and aircraft, aug-
mented by a well developed airfield system.
The others are minor auxiliary units with few
qualified pilots and generally obsolete equip-
ment. However, the successes achieved by
the small air forces of Guatemala and Costa
Rica in 1954 and 1955 have intensified Carib-
bean interest in air capabilities as evidenced
by Honduras' recent purchase of World War
II US airplanes and El Salvador's apparent
interest in acquiring additional aircraft.
4. The only navies of any significance in the
area are those of Cuba and the Dominican
Republic (see Table 3). Both are capable
of coastal patrol, of defense against raids,
and to a small degree, of engaging in anti-
submarine warfare. However, their over-all
combat capabilities are slight.
5. In general, the Caribbean and Central
American republics are receptive to closer
military cooperation with the US. The US
maintains army missions- in all the repub-
lics except the Dominican Republic and Haiti,
air force missions in all but Costa Rica, the
Dominican Republic, and Panama, and navy
missions in Cuba, the Dominican Republic,
and Haiti. In addition, all the republics ex-
cept Costa Rica, El Salvador, and Panama
have entered into bilateral military assistance
agreements with the US under which they
have agreed to contribute various units to
Hemisphere defense.
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TABLE 1? ARMED FORCES PERSONNEL STRENGTHS
Ground
Air 2
Naval
Costa Rica
1,900
72
(11) 3
none
Cuba
28,650
1,084
(85)
6,172 5
Dominican Republic
12,000
1,714 4
(98)
3,4866
El Salvador
6,300
136
(23)
162
Guatemala
9,000
244
(45)
none
Haiti
4,900
131
(10)
296
Honduras
4,500
136
(23)
negligible
Nicaragua
4,000
242
(44)
negligible
Panama
2,500
none
none
Includes army ground forces, national guard, and police units.
Numbers of rated pilots in parentheses.
'National airlines pilots who fly in case of emergency.
Includes about 800 security troops which are part of air unit, and 120 cadets.
'Cuba maintains a naval air arm with an additional estimated 268 personnel, 23
of whom are pilots.
? Includes 756 marines.
TABLE 2? MILITARY AIRCRAFT
Total
Fighters
Light Trainers
Bombers Transports Miscellaneous
Costa Rica
4
3
0
0
1
Cuba
7S
,
25
20
11
17
Dominican Republic
159
88
0
7
64
El Salvador
14
0
1
2
11
Guatemala
43
14
0
8
21
Haiti
17
4
0
6
7
Honduras
40
17
0
7
16
Nicaragua
64
28
2
6
28
Panama
0
TABLE 3? COMBATANT NAVAL VESSELS
Sub- Small?
Escort Patrol marine Sub.
Destroyers Vessels Escorts Escorts Chasers Chasers
(DD) (DE) (PF) (PCE) (PC) (SC)
Cuba 3 2
Dominican Republic 2 '7 3 2
Haiti 4
13
T
PriNcInFATINL
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jjatiab
APPENDIX II
ECONOMIC CONDITIONS AND TRENDS
1. The nine Caribbean republics vary widely
in rate of economic growth and capacity for
development. The area's generally low eco-
nomic capability is indicated by the low level
of per capita national income, which ranges
from $340 in Cuba to $80 in Haiti, and is gen-
erally about $200.1 With the exception of
Panama which depends substantially on
commercial activities linked to the Panama
Canal, their economies are based primarily
upon agriculture, which provides nearly all
their food requirements and the bulk of their
exports. Except in the production of export
crops, agricultural methods are technologi-
cally backward. The industrial plant, geared
to limited national markets, is in general
small and poorly equipped, and industrial
output is confined largely to processed food-
stuffs and nondurable consumers' goods.
2. Aspirations for economic improvement
have stimulated, particularly during the past
few years, numerous governmental develop-
ment programs in the field of transportation,
power generation, and agriculture. The im-
plementation of such programs has been fur-
thered by US monetary aid and technical
assistance, and by 'IBRb, IMF, and UN as-
sistance. As a result, the production of
foodstuffs and raw materials for local con-
sumption has on the whole kept pace with
population growth, and most countries have
also made limited progress in expanding the
industrial sectors of their economies through
increased production of consumers' goods and
construction materials.
US Private Investment
3. US investments account for the only sig-
nificant foreign private capital in the area,
and they consist chiefly of plantations and
'See Table 4.
14
public utilities (transportation, telecommu-
nications, and electric power) ?2 Lack of con-
fidence in political stability and the narrow
limitations of the local market have been fac-
tors in retarding the inflow of private capital
in the area. Since the Korean War, US oil
firms, in response to official encouragement
by the governments of the area, have stepped
up exploration in the area. If sufficient re-
sources are discovered, large capital invest-
ments will almost certainly follow.
4. The largest single US interest in the area
is the United Fruit Company, parent of some
60 subsidiaries and operating in all the re-
publics of the area except Haiti, and in cer-
tain other Latin American countries. It has
large investments in banana, sugar, and
abaca plantations, in railways, ports and
ships, and in extensive telecommunications
facilities. In Guatemala, Honduras, Costa
Rica, and Panama, the Company is the larg-
est private employer and largest single
source of tax revenue. The American and
Foreign Power Company is the second largest
foreign enterprise in the area. It is particu-
larly important in Cuba, Panama, Guate-
mala, and Costa Rica.
5. The dissatisfaction of the area with its
"colonial" economic status finds expression in
antagonism toward the large US corpora-
tions, particularly toward those which enjoy
special privileges granted in former times.
While the Communists exploit this dissatis-
faction for their own purposes, the sentiment
is nevertheless real and general. Various
pressures have been brought to compel such
interests to relinquish their special privileges
and to pay higher wages and taxes. Follow-
ing the expropriation of part of its assets in
Guatemala under the Arbenz regime, the
See Table 5.
prwr
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United Fruit Company recognized its extreme
vulnerability to demands of political reform
groups and renegotiated its concessions
throughout the area. By this action, the
Company has tempered local criticism and
at the same time made itself even more im-
portant to the local economy. The American
and Foreign Power Company has been rela-
tively successful in adjusting to nationalist
antagonism in Cuba and Panama, but it is
still faced with strong anti-Company public
and official pressure in Costa Rica and Guate-
mala. US-owned companies operating in the
Dominican Republic have also experienced
government pressures but this is a matter of
private extortion by Generalissimo Trujillo
rather than of public policy. The Domini-
can Republic is the only country in the area
in which US investments have decreased sub-
stantially in recent years.
Trade
6. Inasmuch as the area's requirements for
capital goods and a very large portion of con-
sumers' goods must be procured from abroad,
foreign trade is vital to the national econo-
CONFIDENTIAL
15
mies, and they are particularly vulnerable to
fluctuations in the terms of trade. Close
ties of local currencies to the US dollar and
geographic proximity afford the countries
easy access to US markets for both imports
and exports. The United States is the prin-
cipal trader with each of the nine countries,
the principal exports of which are coffee,
sugar, and bananas.3
7. After an interval of postwar readjustment,
the trading position of the Caribbean coun-
tries has improved. A sustained rise in
prices for export commodities has improved
their terms of trade and stimulated economic
growth. Coffee prices have retained the
gains which have occurred since World War
II, with Central American premium grades
attracting strong demand from Europe as
well as the United States. Sugar prices have
fluctuated at improved levels in the postwar
period, and are currently abnormally high.
Banana prices have remained relatively stable
near their postwar highs. Cotton prices,
which only affect Nicaragua significantly,
have recently declined.
See Table 6.
CONFIDENTIAL
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TABLE 4? NATIONAL INCOME PER CAPITA, in
US dollars (estimated 1957)
Country
$/Capita
Costa Rica
$200
Cuba
340
Dominican Republic
150
El Salvador
200
Guatemala
160
Haiti
80
Honduras ?
180
Nicaragua
160
Panama
250
TABLE 5 ? US DIRECT INVESTMENTS IN CARIB-
BEAN AREA, 1955 (Million Dollars)
Agri-
Public
Country
Total
culture
Utilities
Costa Rica
61
44
11
Cuba
'723
276
305
Dominican Republic
134
102
5
El Salvador
24
n a
17
Guatemala
103
20
73
Haiti
18
9
3
Honduras
101
80
12
Nicaragua
19
n a
n a
Panama
479
52
154
Total
1,662
583
580
TABLE 6 .= SELECTED COMMODITIES AS
PERCENT OF TOTAL EXPORTS
1955 Figures
Country
Sugar
Coffee Bananas Cotton
Costa Rica
?
47
39
Cuba
80
?
?
Dominican Republic
44
30
?
El Salvador
?
86
?
Guatemala
73
23
?
Haiti
5
67
?
Honduras
?
15
52
?
Nicaragua
41
?
42
Panama
?
?
76
?
CONDER
FI AL
Declassified and Approved For Release @50-Yr 2014/01/15: CIA-RDP79R01012A010200030001-6
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