OCI DRAFT Trends is Latin America affecting US security

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01443R000100040006-2
• Release Decision: RIFPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 9, 2016
• Document Release Date: August 5, 1998
• Sequence Number: 6
• Content Type: REPORT

A,pp~ ved For Release x'0/68/30 : CLA-RDP80R01443R000100040q
o .X DRAFT
n Latin America affecting US security
United States security interests in Latin America are
being affected by the sharp rise in economic nationalism,
which is already threatening the availability of strategic
materials; by a drift toward regionalism, as opposed to the
concept of hemispheric solidarity; and by a wider acceptance
of neutralist policies. Current Communist strategy seeks to
exploit and further these trends.
I. Economic nationalism
Political leaders throughout most of Latin America are
increasingly exploiting the appeal of economic nationalism as.
a panacea for all national problems. Currently, Presidents
Peron of Argentina, Paz of Bolivia, Arbenz of Guatemala, and
to a lesser degree Ibanez of Chile are using this political
technique. Last June, for instance, Peron in One of his
familiar speeches designed to distract public attention,
boasted of Argentina's progress toward economic Independence
and predicted that his country would be self-sufficient in
fuel, iron, and steel by 1958. In Guatemala, thee, pro-Commun-
lst Arbenz administration has harassed large US corporations,
placed almost prohibitive restrictions on future investment
of foreign capital, and restricted some America# imports in
violation of the existing trade agreement. $eale officials
close to Arbenz have clearly intimated that tho r goal is the
expropriation of all large foreign holdings in; Guatemala.
Approved For Release 2000/
P80RO1443R0001000400
06-2
 Approved For Release 2000%6$/30 -g,IA-
only the armed armed forces prevent similar nationalistic
leaders from coming to power in Peru and Venezuela. In Panama,
moreover, even the firmly pro-US President Remon, who took
office in a strong political position last October, has been
exploiting the latent Panamanian nationalism and Yankeephobia
in an effort to have the 1936 Canal Zone Treaty revised to
Panama's advantage.
This new leadership reflects the steady shift in politi-
cal power away from the landed aristocracy to organized labor
and the urban middle class. The accompanying accelerated
economic transformation is characterized by migration to the
cities, development of commerce, and a rapid growth in
ovulation.
this transformation have come new economic problems
and social unrest, and lower-and middle-claaass pressure for a
wider distribution of the national income in funding political
expression in new economic policies. Latin Americans are
convinced that they have been held to a colonial, economic
status by an unfair trade relationship with the great indus-
trial powers, that the latter rig prices against tbea by im-
posing price ceilings on imported materials while;;:.doing
o control the export prices of manufactured,, 'cods.
In particular they feel that their present r04, &s more
suppliers of raw materials In exchange for aaanufacturhd go
leaves then helplessly dependent on the capricious demands
of the big industrial nations. This sentiment found concrete
expression in the first policy statement of the new , Chilean
Foreign Minister last December when he said that Chile sold
nproved For Release 20t00/08/30 : CIA-R P80 014438000100040006-2
raw as or a as aow the war and. had to pay
 Approved For Release
RDP80ROl 443R0001000400
high prices after the war for imported manufactured goods.
Be complained of the greater consideration shown by the United
States after the war to Europe, an contrasted with Latin
America, and intimated that countries in the same position
an Chile ought to unite to assure more equitable price rela-
tionships between raw materials and manufactured goods.
To attain more stable and less dependent economies,
various governments are sponsoring ambitious industrializa-
tion programs, like Porou's highly-publicized Five Year Plans.
The first Plan (1947-51) pushed light industry at the expense
of agriculture; the second in attempting to develop heavy
industry.
Protective to
and exchange controls have been
employed to prevent foreign competition. Sentiment is also
growing for the expropriation or nationalization of foreign-
owned enterprises and for stricter control over the nature
of foreign investment in the country. In Chile at presen
President Ibanez seems personally opposed to nationalization
of the large US-owned copper enterprises, but two of his
cabinet ministers and certain other supporters agree with the
active campaign for nationalization now being waged by the
Communists. In Venezuela, on the other baud, almost all
important leaders are wary of expropriating the oil industry
and frequently allude to Mexico's 1938 experience in "killing
goose that laid the golden egg." They emphatically want
greater industrialization, however, and will try to drives
harder and harder bargains with foreign investorso
Approved For Release 209j/3Q ICIA-RDP80R01443R000100040c 06-2
 Approved For Release 200
/30 ~t1A-RD -
impact of any such expropriation drive on American
economic interests is indicated by the fact that US direct'
Investments in Latin America at the end of 1850 totalled 4.6
billion dollars compared to 3.5 billion in the rest of t
world except Canada. - trade with Latin America totalled 7
billion dollars in 1951, of which 3.6 billion was US exports.
This compares with 6 billion dollars total trade with Europe,
of which 4 billion was US exports.
This growing economic nationalism already threatens the
flow of a number of key strategic raw materials to Western
defense. Latin America, a major source of many such
commodities, accounts for about 80% of the entire free
world's production of petroleum, nearly 30% of its tungsten,
and 18% of its tin. For the U6, Latin American production
is particularly important, supplying over 30 strategic
mineral, fiber and chemical products. For example, about 71
of US copper imports come from Latin America--Chile alon
supplying about 58% during the first 10 months of 1952.
About 81% of US bauxite imports--almost one-half of the total
equireaents--comes from the Dutch possession of Surinam,
where there have been rumblings of political discontent
during the past year
and the plants' means of protection
against sabotage are most inadequate.
The recent nationalization of tin in Bolivia did not
deny United States access to Bolivian tin, but did result
least temporarily, in a decline in exports, and indications
that future output may drop. The orbit has been able to
Approved For Release 7n(1Z1B1l't4G RDP80R01443R000100040a06-2
 acquire more copper, on a clandestine basis, as a result of
12 mouth period ending 2 May 1952 are estimated at 15,00 0
metric tons,
United States imports any be affected by the change
Chile's nationalization of marketing. Known and probable
diversions of Chilean copper to the Soviet Orbit during the
psis from exploitation of raw materials for export to
vation of these raw materials for domestic industrial-
zation programs. The availability of Brazil'* oil and
manganese, for example, is seriously affected by such consid-
eraations.
11. moons lie m
Directly related to economic nationalism is the trend
Most serious, largely because it is based upon Yankeephobia,
is Porou's effort to substitute Argentina for United States
leadership. The of fectiveness of his anti-US propaganda in-
creased in 1952, but he has recently indicated an interest in
improving relations with Washington. Argentine comment on
toward regionalism an opposed to hemispheric solidar
t Eisenhower has been generally favorable, and direct
;acke against the United States have been reduced. Basic
Peronista objectives, however, probably have not been altered.
Perou's recent diploma-tic overture to Ambassador: Nufor
appears to be similar to those of 1950 and 1951 which preceded
requests for special favors,
Approved For Release 20002P80R01443R000100040a
06-2
 Approved For Relea
southern Bouth America Peron is attempting to set up
an independent regional economic bloc; Chile and Bolivia have
already responded favorably to his proposals for pooling
resources and setting up a customs union. Peron, through his
labor attaches, Is also urging Latin American labor to
abandon GRIT, the hemispheric affiliate of the non-Communist
roational Confederation of Free Trade Unions, and join
ATLAS, the Argentine-sponsored Latin American labor movement
Another example of regionalism is found in the Caribbean
area, where Guatemala and Costa Rica have in the past used
the Caribbean Legion--an irregular military group of political
exiles and professional revolutionaries of many nationalities
--as, a clandestine instrument of their "anti-dictatorbssip'r
foreign policy. The Legion is not considered a threat to any
Caribbean government, but in recent months certain other
Caribbean nations have been using the Legion's existence as
a pretext for trying to organize a rightist alliance for their
own purposes.
Because of their common economic problems vie-a-vim t
United States, all the countries to the south have shown
some tendency to form a single 'Latin American bloc in order
to promote individual national interests. This tendency has
been strengthened by their awareness of the increased power
they can wield in the United Nations by casting their 20
General Assembly votes on bloc. In the Seventh General
Assembly, for example, 15 Latin American countries approved
the Uruguayan-Bolivian resolution affirming the sovereign
dMAROWSROOT804:80HYP
 Igg
Approved For Release 20 ,; ? P8OR01443R000100040
abstained. In committee meetings they succ
frustrated
United States attempts to define clearly the obligation of the
country to provide compensation to the foreign
stockholders. All but Haiti, which abstained, voted for an
Argentine resolution calling for "parity"' between raw material
prices and those of manufactured goods.
This regionalist tendency is also gaining strength
within the Organization of American States (OAS) largely be-
cause of Latin Americas awareness of the improved bargaining
position given it by United States defense needs. At the
1951 meeting of American Foreign Ministers, the Latin American
nations asked assistance for their general economic develop-
ment in return for agreeing to the output of strategic
materials.
III. Neutralism
Owing to their geographic isolation from the East-West
struggle, many Latin Americans tend to neutralism, a position
which finds i0 leading proponent in Peron. Argentina,
though attacking the United States much more strongly than it
does the USSR, is urging the general adoption of a "third
position," of complete aloofness from what it claims are
purely American-Soviet differences. Latin America, it argues,
has nothing to gain and such to lose from involvement in
eat conflicts.
Approved For Role- pP80R01443R000100040 06-2
 Approved For Release 2000
06-2
The growing reluctance of Latin American nations to make
commitments that would bind them in the event of a new world
war became apparent when the United States requested nine of
them to conclude bilateral military assistance agreements.
Only with Cuba, Peru, and perhaps Chile can the results be
termed successful. Mexico suspended negotiations, partly
because of the mid-1982 presidential election, but also because
of Mexico's reluctance to become involved in commitments which
night send its troops outside national boundaries; an under-
lying belief that Mexico's geographic position would assure
US aid regardless of a bilateral agreement; and Mexican dis-
satisfaction with US offers of anti-aircraft equipment rather
than for improving Mexico's own military industry. The
Dominican Republic in still negotiating; Brazil and Uruguay
have thus far failed to ratify the agreements they signed
almost ssa year ago. Colombia is at present not meeting sl
its commitments under the pact with the United States to train
troops in coastal defense; Ecuador has indicated disssatisfac-r
tion with the pact it signed last year because this provides
only antiaircraft artillery, whereas the army desires infantry
supplies.
Latin America gave its prompt approval, both within the
UN and the Organization of American States, when the United
States intervened in Korea, but the enthusiasm soon waned.
Colombia sent troops, but the plans of other countries to do
so were first delayed and then dropped. The Latin American
Approved For Release 20 80R01443R0001000409
06-2
 Approved For Release 2 A 8ORO1443R000100040g06-2
nations have also aeon little need to implement their 1951
pledge. to increase the output of strategic materials. While
they admit the necessity and advantage of some cooperation
in an all-out war, there is a growing belief that the present
crisis is not so urgent an the United States insists, that
it does not warrant sacrificing their men, depleting their
resources, and suspending Industrialization programs.
Approved For Release MMMM ',"IMJK-RDP80RO1443R000100040a06-2
 IT. Communism
Current communist strategy nooks to exploit and hasten
the. trends toward economic nationalism, a purely Latin Ameri-
can regionalism, and neutralism. This strategy is advanced
viet and Satellite diplomatic missions as wail an by
fodnt
the national Communisti parties, labor organizations,
eu
Lu strategic industries and vital installations,
obably be. brought under control by natio
the Communists are nowhere a,
eugh to {dominate government policy.* Even in Cuba
Popular Socialist Party, one of the largest Communist parties
h over 60,000 known electoral
est.
ormer price regime and in even a lessor
Batista government. Its future
tegy may be affected' b ; the current struggle between Batista
and opposition claeate eadrd by the deposed president; but
n ehnuid ,the' latter -4triumph, Communist Influence
y
. increase.
poobably not appreciabl
ties to the National Anse bly In-Ports are Communists, but in
the foreseeable future ul teats power will remain with the
ficials from metropolitan prance,
Approved For Release ,ZUUUI%WOtf P80R01443R000100040
The local Communists are capable of some serious iht
nod foreign agents probably represent a Ore
06-2
 // -
Approved For Release 20U .. . _ - DP80RO1443ROOQ100040q
Coanunist-proposed measures, however,, have been openly
by the Guateea lan Government and have been plagi-
arised by Argentina.' The. "dissident" Communists, who have
gained considerable
;cep in Argentina, have ready access
to Peron, and advise hie on key policies such as the ant
There,
doubt of their loyalty to international coaaeaaku
era, accepts then as good Peronistas.
The Soviet and satellite diplcattic a
who is easily influenced and isolated by his
coder to obtain strategic materials,
thereby playing on the widespread desire of Latin American
and the drive for eednomic self-suf:
irected their activities toward the promotion of
to reduce their dependence on the United States.
At present there are Orbit missions In **ca, Ecuador, Bra-
y, and Argentina; trade propaganda is given fur-
culation by traveling commercial rep
g firms, and local Communist cultural tr
ale societies.
Accelerated
s to obtain s
Ives
egic materials
were foreshadowed at the Moscow Economic Conference in April
1982, at which over $0 Latin American delegates were present.
49499~nj--
Approved For Release 2000/08/30 : CIA-RDP80R01443R000100040006-2
 Approved For Release 2000/08/30 :
000100040006-2
$ubs*queatly there was created the 8Ocitl and Economic Control
Coaaiaaiou for Latin America, with headquarters in Prague,
Which seeks to establish i*teraatiOasi 00""10 and culturs
On I February 1953
tins's new sarbssesdar to the Soviet Union reportedly
discussed trade negotiations between the two countries in a
45 minute meeti
alin.
5iatilsr'developments in the rest of Latin America
the conclusion of a Polish-Brazcilia trade pact, negotiatio
gentine trade agre -ut, and intensified e
for
vak
by
tine
, Hungarian, Rumanian, and Csech slo.
tabiish diplomatic and commercial
relations with Chile. Most of these trade promotion efforts
have
but they have lade Latin Americans more aware of
the potential profits in East-West trade,
Current international Communist policy apparently a
for Latin American C iste to cooperate with non-Communis
political groups to promote nationalism, even at the sacr
'ice of Communist identity. sad leadership. Communist support
Approved For Release 2000/08/30 : CIA-RDP80R01443R000100040g06-2
 Approved For Releajj- r FA RDP80R01443R000100040
I Ur &tL_
06-2
nalism and support of non -Communist, nationalistic,
now to Latin Anerica but it may be siguiti-
had
ary General of the Mexican Communist Party, who
d its none to the Guatemalan Labor Party after a visit
that in December the Guatemalan C bmmsunissst Party offtcia
$iailarly, In Argentina, the Communist party euppor,
returned from Moscow.
Ly
en regime, and in Mexico, Vicente Lombardo Toledo no,
leader recently announced his
administration of Ruiz Cortines.
Who
pparently anticipate an intensification of eco-
a and for the leftist revolution in
via last April.
Latin American C unistse evidently want
an those which net the stage for Perouist
sition to provide leadership or to suggest positive programs
of actions through alliances with, or infiltration of, the
Be
major
a1 parties, even though their can parties are
ad subject to repression.
veness of Communist of forts to exploit
tionalist sentiment has already been demonstrated in Brazil
where the Coaaunist-sponsored postwar campaign to prevent
The contacts resulting from this tactic were usefu
foreign exploitation of petroleum has achieved
support.
Approved For Release 2000MM8 30J FI 0R01443R000100040c
06-2
 Approved For Release
ul
"Upwll
=RDP80RO1443R000100040006-2
(fort to prevent the dispatch of
troops to Korea, despite the special urg
the Unitdd
Organized labor has probably been the group most recep-
ivs
spaganda for the nationalization of for-
?ign-owned enterprises. Since 1950, the pro-communist Latin
`ederation of Labor (CTA
anti-imperialist fronts" in al
concentrate on common labor objectives instead
cal goals. Though denouncing Peronian, it has praised
cored ATLAS, and reputedly plans to invite
objectives of Its new labor competitor,
res ofboth ATLAS and the anti-Communist GRIT to
sass this year. With the support of the World
of
stion sf Trade Unions, the Latin American Confederation
;ored regional trade union conferences and
has probably Increased its potential effectiveness. It has
s rer, been successful in promoting unity with non-
ups or in preventing the substantial drop in
mbe
salting in part from the increased aut
Communist pressures of many of the governments.
Communist propaganda presents Latin America as a
area which is obliged to make excessive economic,
ud military sacrifices to supper,
Approved For Release 20
P80ROl443R000100040 06-2
empted,to form
 been organized to advance this propaganda, and through then
the Communists have effectively broadened their contact
Me
ity
child wel
The inadequate attention Latin Amerl
quontly give to civil rights
public health and education
blamed on
the governments' collaboration with, or domination by, the
United states..
Indirectly aided by
delegates have be
last
e Conference in October 1952. An even larger Latin
ce, possibly reaching 200, was pros,
the Vienna Pose* Conference in December. These deleg
often
the opportunity to attend training courses in
Europe and to mite or lecture on #lr retur
a broad popular pro-communist
y'e
xamplo, some 90
gates representing 12 Latin American nations attended the
pportunity
Approved For Relea
9130 : CIA-RDP80R01443R0001000400
hey could be
hould
06-2