WEEKLY CONTRIBUTIONS 40-50 LATIN AMERICA DIVISION, ORE. CIA 3 OCTOBER 1950

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200060001-3
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 12, 2016
• Document Release Date: March 15, 2002
• Sequence Number: 1
• Publication Date: October 3, 1950
• Content Type: PERRPT

ApprOved-Fo$4elease 2002/03/28 : C P79-010914000200060001-3
4-2/!674
ltriutweeCor4-9n.s
Lathi Anorica Division, CE, CIA
3 October 1950
curamir DEW-MOMENTS
NORTHERN AREA: The Cuban governnnnt Is anti?Communist campaign may bog
dawn (p; 2). The course of Cuban politics may be significantly affected
if Chibas, who is seriously ill, is incapacitated for political action
(p. 2).
CENIRAL AREA: In Colombia, no immediate threat to stability is expected
to result from a decree which names the Minister of Government, rather
than the Presidential Alternate, as successor to the presidency (p. 2).
SOUTHERN AREA: Argentina's economic outlook has improved (p. 3).
Argentina's new espionage and sabotage bill will strengthen Peron 's
political controls (p. 4),
SPECIAL SUBJECTS
The Current Situation in Peru 5
The Current Situation in Brazil . OOOO OOOOO ? ? ? . ? 8
DOCUMENT NO,
NO HANCE IN CLASS. 0
DECLASSIFIED
CL SS. CHANGED TO: TS S C
NEXT REVIEW DATE:
QIN:ATI/ 424
DATEM-L-' -4" LFIEVIEWER; 372044 ,
Approved For Release 2002/4itajeaRDP79-01090A000200060001-3
Approved ForWease 2002/03/28 : CIA-RDP79-010900200060001-3
SECRET
neekly Contributions, D/LA, 40-50 3 October 1950
(CIA Working Paper)
1. CUBA: Anti-ConnnunietCy Lose nomentum
1r-iie I vemon in The Korg'an sltugEion? Cuban interest
in local matters is likely to avershadau completely any concern over
international Communism and, as a result, the current governmental
anti-Communist campaign may bog down. Serious obstacles to the con-
tinuance of the campaign already exist. Recent government moves,
such as the seizure of Hay and the firing of Communists from their
jobs (D/LA Whelyn 29 Aug 50) probably will be found to be illegal.
Moreover, further anti-Communist moves without congressional author-
ization you'd be politically inexpedient and, even if authorization
is asked for by the administration, the multi-party congress will
not necessarily agree on vigorous anti-Communist measures because
members are preoccupied with party politics and are fully aware of
the political strength of Cuban Communists,
2, Political Leader's Health is Imoortant Political Factor
=67971:Fe=rub-757OTIETOTray*TesignikicaalialrEted
if Eddie Chibas, the most powerful critic opposing the Prfo admin-
istration and one of the strongest potential candidates for the
presidency in 1952, is incapacitated for political action by his
present serious illness. On balance, his activities have benefited
Cuba. It is true that the government's anti-Communist campaign has
been adversely affected and that Communists undoubtedly have bene-
fited by Chibas' charges that many of the so-called anti-Communist
measures are illegal and are a serious threat to freedom of speech
and other basic democratic rights. These charges have been quite
effective because of Frio 's frequently demonstrated policy of tryin? g
to throttle any opponent, non-Communist as well as Communist. Apart
from the possibly injurious effects of these charges, however,
Chibas" retirement from politics would certainly be a loss to Cuba's
proponents of civil government and of honest and efficient govern-
ment. Chibas is popularly regarded as that country's leading ex-
ponent of good government, and the public's belief in his usually
just criticism against the Frio government has been a major factor
in forcing the president to retain some capable and honest men in
his cabinet, to modify a number of government measures of question-
able worth, and to make perieftic efforts toward honest and efficient
government.
3, COLOMBIA: Decree Alterin Presidential Succession nill be no Threat
0 ua 113.
e Gomez ecreo of 26 September, which eliminates Liberal
Eduardo Santos as Presidential Alternate (comparable to US Vice Presi-
dent) and makes ninister of Government Domingo Sarasty the successor
should Gomez become incapacitated, will further antagonize Colombian
Liberals but is unlikely to provoke an immediate threat to the sta-
bility of the regime.
Approved For Release 2002/03/28 : CIA-RDP79-01090A000200060001-3
2,
keid
Approved For Release 2002/03/28stc? CRET1A-RDP79-01090$40200060001-3
Meekly Contributicno? p/LA1 ho-50 3 October ln5C
(CIA Uorking 2aper)
ART.Thrinn: Increased Government Effort Toward Economic Peumm
Argentine economic practice aTiFingpirst-Feverai
months -- in contrast to previous temyorizing -- indicates signi-
ficant effort to rehabilitate the economy, -which has suffered
declining trade and production for over two years, It is true
that individnal steps taken tbna far fall considerably anort of
maximum effectivaness2 but auxtmlatively they repreeent a more
realistic attempt to meet specific problems, Sneeial eakmineeie
has been given to improving trade and financial relations with
other countrieen, but significant though limited, domestic reform'
have also been undertaken,
'Recent government efforts to improve its trade and
financial relations have been directed tomard meeting several prize'cipal complaints that are common in varying degrees to most of the
nations with which significant trade is carried on. The first
complaint, against high Argentine export prices, lost much of ita
force in late 1949 when Argentina initiated considerable price re-
ductions, which have enabled it to dispose of most of its exportable
eurplus. The second and now pararount col:plaint, against Argentine
reetrictions on comer:jai and financial payments, has been met with
lese concrete success? but some progress has been made in regard to
European untre',a ince tiio Lay negotiations with the *to ank to
cover comeercial arrears in the US, Financial arrears to France
were further reduced by proceeds from linseed sales; dollar arrears
to countries other than the US mere reduced by more than 3 million
dollars; and commercial arrears to the UK were reduced by payment
of t3,5 million for railway equipment. A new payments agreerent
with Laitzerland provides for payment of 16 million francs for
"general"?financial transfers (covers 50 percent of unpaid dividends)
and 16 million francs on capital acconnt. Similar negotiations
also includira- possible relaxation of Argentine restriction on
"nonessential" imports -- are under may with the UK, France, and
Delaium? Neu exchange regulations providing for transfers of cur-
rent (after 2G Auaust 1950) profits and interest at the rate of
5 percent per year on capital investrirant are a further partial step
In meeting the problem of financial transfers. A correlative com-
plaint against, inadequate guarantees for the protection of foreign
capital! arising from uncertainty concerning expropriation and past
instances of arbitrary treatment, has been countered only by verbal
assurance that foreign capital enjoys equal treatment with domestic
capital and by epocial measures designed to improve the situation of
US business interests,
The moot sii7nificlot steps toward dcF13.9t-2,x, economic reform
have been spacial measures to stjrulate -- through increased prices
and opecial credit facilities for the producer -- agricultural and
pastoral production, A number of smaller steps in the direction of
economic adjustment have been taken with some deerea of success, but
Approved For Release 2002/03/28 : CIA-RDP79-01090A000200060001-3
Approved FoNRilease 2002/03/28 : CIA-RDP79-0109V000200060001-3
SECRET
Weekly Contributions, 40-50 3 October 1950
(CIA Working Paper)
some of the severnmentfs atterTts to modify its complex economic
controls have been only "half-way" measures and have pointed up the
conflict between long- and short-term requirements. For example,
the government has been compelled to relax its anti-inflationary
controls on credit in order to stem the decline in production.
Similarly, the new exchange rates and regulations, nhich should
stimulate exchange earnings from exports and some new foreign in-
vestment, greatly increase the cost of imports and add an addi-
tional stimulus to inflation.
It is probable that the Argentine government will con-
tinue these steps toward economic reform at least for the next few
months. Their continuance, in addition to improved prospects for
the disposal of Argentine surpluses since the Korean outbreak, will
mean a more favorable outlook for the Argentine economy
5. 2ELE2ILESEandla2kt Bill
VrAPRAIRIVI,WEVal?
The newespionage and sabotage bill recently passed by
both houses of the Argentine congress and now awaiting Peronfs signa-
ture will impose additional restrictions an Argentine civil liberties
and may also complicate that countryfs foreign relations.
Two articles of the bill, intimidatory in nature, vaguely
phrased and comprehensive in scope, provide prison sentences for any
personl who, without authorization, disseminates "economic, political,
military, financial, or industrial information, which, without being
secret or confidential, is not intended for publication or diffusion
...? and for anyone who "through allrj means prevekes public alarm or
depresses the public spirit, thereby harming the nation".
This act, declared by the administration to be necessary
for the maintenance of national security, is principally a refinement
and extension of existing political controls, The bill is probably
aimed primarily at renters of the opposition, Communists, Argentine
civil servants, and private statistical services. If strictly en-
forcerii, however, it could engender serious difficulties even for
members of foreign missions. At the very minimum, it constitutes a
threat to restrain foreign correspondents who are hostile to the
administration. It may serve to provoke new foreign press attacks
on Argentina and possibly to discourage new capital investrent.
Approved For Release 2002/03/28 : CIA-RDP79-01090A000200060001-3
c4114;;;;61wimmilla%
Approved For h(ease 2002/03W13iA-RDP79-01090400200060001-3
Weekly Contributions, Dna., 40-50 3 October 1950
(Cu Working Paper)
Situation Memorandum 59-50
IbLrggraatalasttgliza
(Pummarr The stability of the Peruvian government has improved.
The economic situation is slightly more favorable. Capabilities
of the armed forces remain limited. Although the subversive
potential of the Apristas has increased slightly, they are un-
able -- independently -- to make a major move; Communist activi-
ties. continue to present no danger to the stability of the
administration. Perugs relations eith other countries are, in
general, amicable.
-- The situation as to US interests has shown further
improvement as a result of the increased stability of the govern-
ment, ratification of the Rio treaty, favorable proapects for
issuance of a petroleum law intended to encourage foreign capital,
and Perugia supeort of UN action regarding Korea.)
politioal
The stability of the Peruvian government has improved following the
closely controlled general elections of 2 July, *ilia established OdrA
as president and marked a transition from military to semi-constitutional
government. It is true that unrest continues in Arequipa, where the army
suppressed a mid-June revolt. Further, some tension arose in several
departments where independent congressional slates were rejected on tech-
nicalities by government-controlled electoral boards and in several others
where the congressional election results were annulled in whole or in part.
Nevertheless, the half-military half-civilian eabinA has been well received
throughout most of the country, and President Odri6 appears, in general,
to have the support or acquiescence of the people and of the armed forces.
All effective political opposition has virtually ceased. Because of the
alleged involvement in the Arequipa revolt of the Unid6 Revolucionaria
(largest legal opposition party), this eroup has been as completely deprived
of freedom of action es the outlawed Apristas and Communists. Further,
the opposit'on has received almost no representation in the new congress.
The small percentage of dissident Com-unists or fellow travelers in
the congress have but slight influence.
DAA estimetes the ?dela governments chances of retaining its present
stability during coming months are excellent.
goonomic
?emus economic situation is slightly more favorable and, in general,
economic prospects for the next quarter appear somewhat -ore promising.
It is true that shortages of irrigation water have impaired (slightly in
some cases and considerably in others) prospects for three major crepe,
sugar, cotton. and rice. Nevertheless, these unfavorable develo-menta have
been more than offset by favorable factors. Prices of lead, copeer, and
zinc, which are important exports and sourcee of revenue for the government
and the nation, have recently increased. With the exception of one month
since October 194 the value of e of its
port
ims,AMPfetie Otilef/9425NWit - ?
A2?pp I tfl I: I I !. ixports
Approved For ISeease 2002/030fiE91A-RDP79-0109614,60200060001-3
-2
Weekly Contributions, D/LA, 40..50
(CIA Working Paper)
Situation Memorandum 59-50
3 October 1950
in value. Prospects are favorable for prompt passage of petroleum legis-
lation, which is intended to encourage the inveetment of foreign capital
and coniegeamtly inorease production in Peru's petroleum industry.
In messages to congress, the government has announced the following
long-range economic plans: 1) stimulation of production for domestic con-
sumption and export, 2) gradual elimination of the remaining restrictions
on imports, 3) continued service of the external debt, and 4) suspension
of subsidies on domestic and imported foodstuffs and compensation for the
possible resulting rise in the cost of livdng with mandatory wage increases.
Although certain phases of this program may c7meeiveblr create new economic
problems or intensify existing ones, in general, it apyears sound. Further,
although it is too early to predict the amount of oprmaitIon that may
develop, in view of the government's control over congress the chances that
these plans will 112) implemented seem fairly good.
Militerv
? Capabilities of the Peruvian armed forces remain limited although the
air force has been reorganized more closely along US lines and the army
is now at full strength. The morale of the army remains low, but the in-
cidence of subversive plots has apparently declined. The armed forces as
a whole are believed loyal to ?dries (See Political section.)
SOversivI
APRA --.the most numerous group opposing the Odra government -- has
been forced virtuely to suspend its underground activities because of lack
of funds and the increased vigilance of the police. /t has been further
weakened to a slight degree by the secession of a small dissident group,
which the government reportedly organized and financed. At this time APRA
is too weak to make an independent major move. Nevertheless, there have
been recent indications that it may hare overcome its former unwillingness
to cooperate with other disaffected political elements, and that its sub-
versive potential has, therefore, increased slightly.
? Communist activities continue to present no danger to the stability
of the administration. Although the publicity Communists received in
connection with the Stockholm Peace Appeal and their efforts on the labor
front may hive resulted in a slight extension of their influence, their
position is not expected to improve greatly during the coming months.
Internatiopal
Peru is, in general, on friendly terms tdth other nations. It is true
that relations with Colombia remain somewhat strained because of the con-
tinuing Hays case whieb is now being tried at the Hague Ceurt of Inter-
national Justice. Furthermore, the recent reopening of Penes boundary
dispute with Ecuador during the meeting of the guarantor nations of the
1942 afo Protocol may cause further difficulty with that nation, whose
alleged anti-Peruvian demonstrations have recently caused come.Atp,tbe
Peruvian ftlypifigtettrataeleasE0204giNiailizqfingePaRataCaMMtlitliiith
Approved FoSIR?lease 2002/03a1M1A-RDP79-0109V000200060001-3
- 3
Weekly Contributions, DAA, 40-50
(CIA Working Paper)
Situation Memorandum 59-50
3 October 1950
Uruguay, which had been suspended since October 1948, were resumed in
July. Commeroial relations with the US have improved slightly as a result
of the Peruvian government os plan to liquidate large US commercial debts.
Peru has anproved decisions taken by the UN Security Council on Korea
and has placed arms, trade, financial, and communications embargoec on
North Korea. It will continue to support the US in all phases of the
East-Nest struggle. Ties with Argentina and Spin remain extremely close;
Peru is playing a leading part in a movement in the UN General Assembly
to modify the 1946 resolution on Spain. Peru's continuing interest in the
expansion of its trade is indicated by its receht signing of a trade agree-
ment with Yugoslavia.
Approved For Release 2002/03/28 : CIA-RDP79-01090A00020006000.1-3
7.
Approved For hellease 2002/03Wa-RDP79-010960/00200060001-3
Weekly Contribetione, D/LA, 40-50 3 October 2950
(CIL Working Paper) .
Situation Memorandum 60,...50
212.Sitr.darattiLitarea2,
(3Jmnumx -- The 3 October electione dominate the political
seene. Ex-dictator Vargas may emerge from the close race as
the suecessful presidential candidate. Brazil's economic ape
financial situation continues to improve. The armed farces
remain loyal to the government and are capable of maintaining
order during the election period. Increased Communist
activity has resulted in only scattered local gains. _
-- The anti-US sentiment in Brazil has been checked
somewhat during recent weeks, and relations with other
countries remain good.)
zaiajw,
The 3 October presidential election dominates the entire political
scene in Brazil. Confusion and tension concerning the outcome continue
unabated but the eleetionwill be relatively orderly. Indications are
3
that Getulio Vargas will emerge the successful candidate by a narrow mar-
gin, barring last-rinute chicaneeyby the Dutra follcwees. Vargas' party
is expected to make a sizeable gain in the congressional elections, but it
is en111,aly that -- even with alliances -- it could actually control the
Chamber of Deputies. Gains in the Senate will be negligible.
The presidential campaign has been almost devoid of issues, drawing
its popular interest, as is traditional in Brazil, from the personalities
of the candidates. Consequently it in difficult to determine at this
tine the extent or direction of Vargas" possible opposition to US interests.
Machado could be expected to carry an the Dutra tradition of friendly and
generally favorable consideration of US interests, but the ex-dictator's
campaign equivocations have made it clear that he is still essentially a
demagogue and opportunist. Thus far/ he has committed himself only to
promote the social welfare and economic development of each locality in
which he has spcken. In international matters, he ba a adopted a "center
position", apparently similar to Per6n's third position. Vargas is thus
free to consider in the light of future developments, such important
matter? as cooperation with the UN in regard to Koreaa the development
of Brazil's natural resources, and his stand on the entrance of additional
foreign capital into Brazil's industries and mining and petroleum fields.
It is almost certain that Vargas would not take a position openly hostile
to the US, but he could and might reverse Brazil's pest inclinetion to be
cooperative with the US, particularly in economic matters.
Fersc=la
Brazil's economic and financial situation has continued to improve
over the past three months and there is no indication that the trend will
be reversed lathe near future. The steady rise in coffee and cocoa
Approved For Release 2003413,11FAM11779-01090A000200060063
Approved For Release 2002/03TietIA-RDP79-01090)40200060001-3
- 2 .
Weekly Contributions, D/LAu 05O 3 October 1950
(CIA Working Paper
Ituation Memorandum 60-50
prices together with continued stringent export and import controls have
made it possible to eliminnte virtually all commercial dollar arrears and
to accumelnte a sizeable dollnr surplus over and above the remaining commer-
cial debt, Brazil will continue to enjoy a generally favorable balance of
trade and an improving balance of payments situation over the next few
months: unless its new and vaguely formulated strategic stockpiling program
is implemented more energetically than is presently indicated,
The government continues to feel its way toward better use of resources
through the creation of working parties and coordinating groups like the
new committees on economic mobilization. US technical aid u and cotton pro'
duction No real attack has been made, however, on the only other currently
serious economic prcblern, that of inflation. Strikes have boon few u and
employment continues fairly high and stendy. Recent decrees limiting the
number of new banks and establishing maximum interest rates on new deposita
will have the effect of setting some outside limits on credit expansionu
but will not materially affect the present degree of inflation.,
Short-term prospects for a substantial increase in manganese production
with resulting increased exports to the US have not improved. Long-range
US interests have been favored, however by continued and accelerated explora-
tion of the AmapA deposits by a Brazilian company in which a US firm has a
49% interest. US interests have also been favored by an order prohibiting
shipments of quartz crystals to Czocho3lovakis. CD/LA Wkly, 22 Aug 50)
=Uri
There have been no significant changes reported in the strength,' morales
efficiency or loyalty of the armed forces during the past few months All
military regions have received instructions for dealing with possible poli
cc]. riots during the October elections and in each area the army is considered
capable of naintaining order.
211111=122
The out/awed Communist Party has increased its activity in recent months
but only scattered local gains have resulted. The Communist press has in-
creased its attacks against all presidential candidates indiscriminately and,
Presto:8, in a' recent manifesto r asked his followers to abstain entirely from
voting for president and vice-president. Attempts to gain influence by elect-
ing state and federal deputies under the banners of other parties have suffered
severe set-becks in several states where electoral courts have cancelled
many such candidacies, including those of the Communists' only incumbevt
federal deputies r Pcmar and Arruda Camara. Thus the Communists stand to
lose netionally though local gains may be expected,' particelarly in Rio
Grande do Sul and. the Northeast. Minor continuinp sot-backs have been
Approved For Release 200202KWILITA-RDP79-01090A000200060V1-3
Approved FoNfelease 2002
Weekly Contributions, D/IA
(CIA Working Paper)
Situation Vemorandum 60-50
40-50
- 3
-RDP79-010*000200060001-3
3 October 1950
suffered through police control of demonstrations and confiscation of propa-
ganda. Implementation of Prestos violent "national liberation" manifesto
of August 1 has been limited, thus farl to renewed hut largely ineffective
propaganda against aid to Korea and the fixing of local quotas for signatures
on 'Ipeace" petitions, During coming months Communists are not expected to
make any significant improvement in their povition. A certain amount of
election-time disturbance, probably including some bloodshed, can be expected
but local security forces are considered capable of keeping it localizeit
IltartudeisMie
Previously growing anti-US sentiment was checked semewhat by Brazilian
sympathy with UN action following the outbreak of hostilities in Korea and
by the strong stand of the US State Department against the final "Gillette
Report". The sudden attack on President Dutra by the Per6a press also served
to draw attention from differences with the US 1 but a certain amount of
resentment remains Brazil was among the last to offer material aid to the
Korean campaign, but as the position of the UN armed forces became increas-
ingly serious, President Dutra requested Congressional authorization -- not
yet granted -- for a contribution of U42.7 million in supplies and stated
that Brazil would consider "further sacrifices" if conditions should require
it. neanwhile Brazil can be expected to continue her policy of prior con-
sultation with the US on important international questions.
Relations with other countries remain good as is indicated by Brazil's
election to the UN Security Council and her steadily expanding network of
commercial and cultural agreements. Trade agreements have been completed
with the UK$ Italy and Argentina and discussions of closer rapprochement
with 'Western Germany and Egypt are under way.
Approved For Release 204tiperelMRDP79-01090A0002000699,01-3