WEEKLY CONTRIBUTIONS LATIN AMERICA BRANCH, ORE, CIA 6 JULY 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200030001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 9, 2016
• Document Release Date: September 28, 1998
• Sequence Number: 1
• Publication Date: July 6, 1949
• Content Type: SUMMARY

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tET
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Itestributions
Latin- Arica-a'anch, Off, CIA
6 July 3.949
CUMENT DEVELOMENTS
NORTHERN DIVISION: Rumors of a new invasion attempt to be directed
against the Dominican Repriblic are found to lack credibility (p. 2).
SOUTHERN DIVISION: Dolivials government continues to refrain from charg-
ing Argentina with interference, probably because such charges would -slug-
rent Argentine aid to LINR revolutionaries (p. 2). The Argentine-UK trade
agreement is to the detriment of US export trade, and while it may he e)t-
pected to tenefit Argentina it also poses serious problems for that coun-
trY (P. 3).
SPECIAL SUBJECTS
The Current Situation in Guatemala
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Weekly Contributions/ B/LA 1, 6 July 1949
(GIA Working Paper)
DoiaNICAN REPUBLIC: Rumored New Invasion Attempt
fig-Ungassy Ciuda Trujillo reports that
the Dominican Foreign Minister has learned from a Dominican counter
espionage agent that revolutionary forces are assembling in exiles"
for a new invasion attempt on the Dominican Pepublic, According
to the reports 27 Americans are included in the force of 600 men
mho plan to invade the Dominican Republic from Haiti where initial
landines from Cute mill be concealed by internal disturbances.
p/LA estimates that it Is improbable: (a)
that as many as 27 Americans are involved in any revolutionary
expedition now mobilizing in Cuba; (b) that a force of such size
could be sucoessfully transshipped to Haiti for eventual opera-
tions against the eondnican Republic; (c) Viet the expedition,
even if shipping could be provided, could land :1'n !aiti and pro-
gress successfully overland to eiedad Trujillo. It is possible/
nowever, that? an attempt against the Trujillo reeime comparable
to the recently aborted aerial invasion in the Puerto nate areas
may be made.
2. BOLIVIA: The eeleeFement has maintained a cone ha tory attitude
con7e-c-farEirriTh the ' azon in-
cident" (a717a-WkIY, 7-jun 49) despite sharp critieist by the
press and even by cabinet menhers. 'Alen Bolivia felt that Arg-
entina was implicated in the Mn plot to seize the border town
of Villavin -- if only by its toleration of revolutionary acti-
vities on Areentine soil -- it made strong oral protests to whicei
the Argentine Government has not, as yet, replied. Although
Bolivia sent inveatieators to the area and recalled its ambassa-
dor from Buenos eires for coneultation? it appears likely that
the matter will be dropped, This complacent attitude towards
Argentina's alleged misdeeds has caused the :anister of Public
Works to resign in protest, and has caused the most important
daily in Bolivia to wage a press campaign against the eovern-
ment's policy. This opposition may not effect any chane in the
official attitude despite the fact that it is generally recognized
In Bolivia that the presence in Argentina of a laree group of
chronically subversive MNR exiles mill continue to represent a
danger to Bolivia's stability and a perturbinr factor in Bolivian-
Argentine relations. The government's restraint, in view of these
facts, is probably due to the elief that Bolivia mould stand to
gain little if anythine by lodgine charges a -ainst Areentina,
and that the adverse effects of such action, on the other hand,
could well result in increased Argentine aid to the MIR revolu-
tionaries,
coitmostolAis
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Weekly Contributions, B/LA
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Situation Memorandum 384L9
The Current Situation in Guatemala
6 July 1949
(Summary: The situation in regard to US security interests
is somewhat adverse. The government still refuses to adopt
repressive measures toward Communists and fellow-travellers
and to encourage early exploitation of petroleum resources
by US capital. President Ar4valo continues to assume in-
tensely nationalist attitudes and to encourage intra-
regional antagonisms, thereby impairing the US concept of
Hemisphere security based on unity of all the 21 American
Republics.
(President Arevalots leftist administration remains stable.
The econorry is essentially sound and such adverse trends as
have developed are unlikely to become serious. Economic
and labor policies create difficulties for US capital.
Chief of the Armed Forces Arena remains in complete control
of the military. In international affairs, the country's
anti-dictator, anti-imperialist policy remains unchanged.)
Political
There has been no substantial chanre in the current Geatema-ean poli-
tical situation in the last three months, and the leftist administration
of President Ar4valo remains stable. The trend away from the left con-
tinues as a definite factor in the country's political relationships.
Humors of revolution, which were rife during the United Fruit strike,
have diminished considerably, and the public is now speculating in terns
of who will win the 1950 presidential election. The three government
parties (the PAR, the PAH, and the FPL) continue to support Arevalo and
are considering selection of a single presidential candidate. Colonel
Arena, still in firm control of the army and increasingly populer, is
the most powerful of the potential candidates, yet it is uncertain that
he would be acceptable to all members of the present coalition.
Economic
With sales of remaining coffee stecks continuing steady at good
prices, with foreign exchange reserve) still adequate for current needs,
and with the government planning econemy measures and import controls to
control those adverse trends which do exist, the Guatenalan economic out-
look for the immediate future is satasfactory. By reducing the annual
budget to M1,5004000 (about ;)/4.00.00,C0O loss than last year's original
figure and about l0, 000,000 under lest year's final figure) the government
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Situation Memorandum 3g-149
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6 July .,
hopes to forestall a budgetary deficit. As an economy measure (thoigh
in part for political purposes) diplomatic missions have been eithdrawn
from Venezuela, Peru, Del:ter-1as, Denmark, lgium, and Holland.
Guatemalan economic and labor policies continue to trouble -US cepi-
tal. Coinciding with the expiration of their contract 'with the Inter-
national Railways of Central America, the railway workers' union deranded
revisions in the new agreement, including pay raises, which have Ica -to
protracted negotiations and compulsory arbitration of the dispute be. a
government labor court. A Ministry of Econogy riling has recently. :;.'e-
quired the US-awned npresa El;ctrica to pay approximately $200,00i in
back taxes. Pan American Aar nes has been notified that at the eyeira-
tion of its contract in 1950 the government will claim, free of pa Lent,
all non-flight property. The airline, however, claims the original eon-
tract which provided for such a transfer was modified in 1934 to give the
government the option to buy only. Pan American is also resisting gov-
ernment pressure to replace certain US technical and administrative per-
sonnel with Guatemalans. The government is also attempting to l'erce. the
Eeso Standard Oil Company to replace three of its US employees.
The _manner in which Guatemala's petroleum resources (as yet untepped)
are to be developed is an economic problem that may become a major issue
underlying future political developments. There is a possibility ti- at
serious conflict may arise between Colonel Arena, whose sympathies ere
known to lie with certain major US oil companies which have alrf?at- com-
pleted exploratory work in Guatemala, and nationalists in the administra-
tion who have recently become interested in a plan of Andrew J. Higeins
whereby the oil will be exploited by a company backed jointly by Guate-
malan and US capital. The oil companies favored by Arena (which are pre-
paring to withdraw entirely from Guatemala) have recently been informed
that Colonel Arena has promised to engineer the removal of Arevalo is
petroleum adviser, Angel Hurtado de 1.;endoza, the man whom the companies
regard as the major cause of their difficulties in obtaining reasoneble
exploitation contracts. Yet if Arena attempts to fulfill such a premise,
he may expect strong opposition and possible retaliation from nationalists
who would plebably accuse him of being an agent for dollar imperialism.
The possibility of such a charge is not to be discounted in view of a
recent statement by Arena, in a private letter, that one oil company had
offered a "donation" of "not less than 252000" for charity, public bene-
fit, or "any purpose which I might suggest".
The Higgins plan for oil exploitation, which is being enthusiastically
welcomed by the ? Ministry of 13conorny and Labor, may gain popular support
for the administration and thus weaken Arena's position. To the advan-
tage of the administration, it represents a positive approach in contrast
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Situation ramorandm 58-45
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6 July 1949
to the stubborn negative policy of attempting to rcirce 'US conparties into
acceptance of en extremely nationalistic and Ienvorkable Petroleum Law.
It does, in filet, obviate the necessity of coming to an agreement with
the established oil companies the policy advocated by Arena and here-
tofor the only arrangement which had been considered. 'Moreover, the
Higgins plan allays fear of US imperialism by perndtting nominal Guatemal-
an partibipatiori and control (53. percent of the stock will be held by the
Guatemalan Government, and 3 of the 5 directors will be Guatemalans); yet
it cannot be oriticized as anti-US sinoe it admits .US oapital and partial
control.
B/LA estimates that there is possibly an aleundance of petroleum in
Guatemala, but that there will be further delay in formulating the policy
under which oil is to be exploited. Since such Guatemalan oil as may
exist will probably be made available to the US in event Of an Esst-Viest
war, early exploitation of these resources Amid favor US security inter-
ests.
Subvereive
The liberal-leftist tendencies of the ArtSvalo government, which pe
mita Communists to operate and obtain employment in the country on a
basis of equality with others, continue to affect adversely US security
interests.
International leftist conventiens (the World Peace Congress in Paris;
the WFTU meeting in Milan; the Continontal Peace Congress in Mexico City)
continue to draw Guatemalan repreeentatives and observers, The govern-
ment's tolerance of Communism vas evidenced on May Day, as President AA:-
valo and other officials reviewed a demonstration by 15,000 workers, in
which Ware used conventional Communist propaganda there? attacking the
North Atlantic* Pact, the nimperialistn atonic bomb, and other Soviet ana-
themas,. The goverrupent also continues to give employment to persona of
Columnist sympathies* Jose Leon Depetre, a former Spanish Republican
diplomat and suspected Communiat, has been made head of the new Instittrte
of Diploraatic and Consular Training; Manuel Eduardo Hubner, a Chilean
Communist suspeot, has been designated "Prese Attach(in to the Embassy at
Santiago; Virginia ?rave Lateliar, also a Chilean Communist follower,
is employed in the Ministry of palmation; Jos; B. Zamora, a Salvadoran
admirer of the Communists, is employed in President Artivalo Is press of-
fice. Other cases ndght be cited.
In the labor movement, where Communist sympathizers have been most
successful in influencing policy, sane resistance to international Com-
munist leadership is apparent. Although Victor Memel Gutierrez pro-
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Situation Memorandud 38-0
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6 July 1949
Connbnist Seeretery General of theeContederacitel do Traba adores de Gua-
_temalae_ returi* frad the world Peace neress we segges n at'
G6ibithalan wotkers should openly 00meit themselvettaa either pro-Soviet or
pro-imperialist, neither he nor ether labOr leaders have yet been willing
to do so. Moreover, plans for a dondelidation Of let)* unions into a
single organization have been opposeibrCertain 'unions unwilling to are
filiate irith the pro-Communist CTAL arillOTU? to which the CTO nowbolongs.
miletary
Ire-the flead of military affairee,ColOnal Arena (Chief of the Armed
Forces) remains in complete control of thdearmy. Arena is said to be
considering removing Colonel Francisco Coaenza as Chief of the Air Force,
because he has allowed Air Force disciplines maintenance, and morale to
reach et low level. While it is known that. morale has become very low
(pilots called for duty reputedly have nothing to do but to play poker
or sleep), Arena maybe more concerned with political maneuvering, Co-
senza is believed to be a follower of Colonel arbens, Minister of Defense,
whereae Arena s supposed choice Lieutenant Ricardo Salvador Herrera
(though an unreliable drunkard) comae from an important family and may be
expected to support openly Arena for president.
International
40.11010MIMM.M.P....61.1~0.1?1.1
Guatemala's foreign policy remains unohangede its guiding principles,
reiterated by Foreige Minister !linos Many in a recent press interview,
include (1) opposition to the dictatorships Of Central America, the Carib-
bean, and Spain; (2) the defense and preservation of democrecy in the
face of attempts by anti-democratic regimes to destroy it; and (3) opposi-
tion to colonialism it the Americas, President Are'valo has indicated that
Guatemala would align itself on the side of the US in the event of an East
West war.
By
way of implementing this policy, Quatenala has recently (1) per-
mittedthe Caribbean Legion to use Guatemala as a base of operations in
its campaign against Trujillo and Somoza; and has continued its policy of
non-recognition of the governments of Nicaragua, the Dominican Republic,
Venezuela, Pert, and Spain; (2) given refuge and epployment to exiles
from the dictator countries, such as Professor Edelberto Torres of Nicara-
gua (recently named director of a new coeducational school); and (3)
continued diplomatic maneuvers designed to obtain international considera-
tion of the Belize claim. Guatemala's recent attempts to force recogni-
tion of Puerto Paco as a ncolony n whose status should be investigated in
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Situation Memorandum 38-149
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aocordance -with Resolution XYXIII cr' the 3ogoti Conference is viewied by
13/LA as an attempt to provoke the U! into supporting Guatemala's BeL'Ae
alaim, rather than an indication of fun6-Arionta1 opposition to the fact
that the US has colonial possessions.
Although many aspects of President Ar4valo's foreign policy pro-
bably not taken seriously by responsible statesmen in the other 11:7er;oan
lepublics, it is true that they do -,end to encourage nationalism and an
anti-US policy among already hostil, voups. It this extent they con-
flict with the US concept of Hemisplero securitr baled on unity of a:.1
the 21 AneTiCan
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