PROGRESS REPORT ON NSC 5432/1 (LATIN AMERICA)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01731R003000030008-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 34
• Document Creation Date: December 15, 2016
• Document Release Date: April 23, 2004
• Sequence Number: 8
• Publication Date: February 3, 1955
• Content Type: REPORT

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NSC REVIEW
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DATE Feb. 3 =9!
coP.Y
OPERATIONS COORDINATING BOARD
Washington, D. Co
PROGRESS REPORT ON NSC 5432/1
LATIN AMERICA)
REFERENCE:
OCB FILE N0.54
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This document contains information affecting the national defense of the
United States, within the meaning of the esaionage laws, Title i8, Sec-
tions 793 and 794, U.S.C., the transmission or revelations of which in
any manner to an unauthorized person is prohibited by law.
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OPERATIONS COORDINATING BOARD
Washington 25, D. C.
February 23, 1955
SUBJECT: First Progress Report on NSC 5432/1 (Latin America)
The attached Operations Coordinating Board Progress Report
on NSC 5432/1, "United States Objectives and Courses of Action
with Respect to Latin America," dated January 19, 1955, was
noted by the National Security Council on February 17, 1.955,
Action. No. 1332.
This report was submitted to the NSC without revision of
paragraphs llg, Z, .h and i. (Ref: OCE Minutes, 1/19/55, Item 2),
the State Department having withdrawn that condition of concur-
rence in the report.
The previous draft of this report dated January 10, 1955
is obsolete and may be destroyed in accordance with the securit;T
regulations of your agency.
Elmer R. Staats
Executive Officer
Executive Officer OCE Memo to NSC,
on above subject, dated 2/3/55,
with attachment as listed.
OCU File No. 54 TOP SECRET
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OPERATIONS COORDINATING BOARD
Washington 25, D. C.
February 3, 1955
MEMORANDUM FOR: Mr. James S. Lay, Jr,
Executive Secretary
National Security Council
SUBJECT: Progress Report on NSC 5432/1 (Latin America)
(Policy Approved by the President, September 3, 1954)
There is attached the first progress report by the Opera-
tions Coordinating Board on NSC 5432/1, "United States Objectives
and Courses of Action with Respect to Latin America," covering
the period April 30, 1954 through December 1, 1954. On January
19, 1955, the Operations Coordinating Board concurred in the
report for transmittal to the National Security Council,
Elmer B. Staats
Executive Officer
Progress Report on NSC 5432/1
(Latin America), dated 1/19/55.
10726
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January 19, 1955
PROGRESS REPORT ON NSC 5432/1
UNITED STATES OBJECTIVES AND COURSES OF ACTIGN
i-VZTH RZ~PBCT TO LATIN 4,i ?,ICA
(Policy Approved by the President, eptember 3,' 1954)
(Period Covered: April 30 - December 1, 1954)
A, LaUOY OF A 1AJOR ACTIONS
1. A communist-dominated government in Guatemala was over..
thrown and a government favorable to the U.S. came into power.
The U.u. is supporting this new government with relatively sub-
stantiai military and economic assistance.
2, The U.S. demonstrated increased.support and use of the
OAS and is increasing its financial support of that organization.
Despite several incidents of friction in Central and South ArnE:rice,
the U.S, has been instrumental in averting any breach of the jeace,
3. Criticism of U.50' economic policy which reached a climax
prior to the Rio Economic Conference has somewhat subsided. Criti-
cism at the conclusion of the conference was less severe than
might have been anticipated due in part to the sympathetic but
firm attitude demonstrated by our Delegation and the assurances
given by the Delegation of our determination to help Latin Aru,rioa
solve its economic problems on a sound basis? Announcement of our
support of an Internitional Finance Corporation; liberalization of,
and announcement of, loans under our development loan policy, and
decisions not to impose additional duties on lead and zinc were
major factors in reducing Latin American criticism.
4. The U.S, responded promptly and effectively to urgent
appeals from Haiti and Honduras to meet major flood disasters in
those countries, and subsequently extended substantial economic all,
5. A decision to pay transportation, per diem and course
costs for military trainees from i:DA' countries in Latin America
resulted in a substantial increase in the number of such trainees
scheduled for attendance at Service schools in the U.S. and in
the Canal Zone.
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6. New Iviilitary Assistance Agreements with Honduras and hcar tFua
are being implemented and the military grant program for Colombia wa
budget. Larger increases which had been proposed were reduced when
it became apparent that the Latin American governments could nct
match in Fiscal Year 1956 increased contributions from the Unit:ad
States.
The United States has supported increased utilization of the
OAS for technical cooperation and obtained funds to increase our
contribution to the OAS Technical Cooperation Program from rl r-il.lio .
to X1.5 million.
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Para. Sc. Prior Consultation with Latin American Governments
The United States Delegation to the sessions of the UN General
Assembly continues to consult with Latin American delegates on issues
before the United Nations. Argentina and Uruguay have urged cowul-
tation concerning disposal of u.S. agricultural surpluses because,
of the effect such disposal has on their major export commodities.
The U.S. has agreed to consultations but not to the extent these ex-
porting countries desire.
Consultation with Latin American Governments on the Guatemala
situation is discussed under Paragreph 5 a.
Para.. 5d. Consideration of Latin American Problems at Highest Goverr=-
ment Levels
A Sub-Cabinet Committee was created for the purpose of studying
our economic relations with Latin America and recommending the position
which the U.S. should take with respect to the agenda and proposals
likely to be considered at the Rio Economic Conference. The Assistant
Secretary of State for Inter-American Affairs visited the heads of all
governments in South America and Mexico for the purpose of explaining
and gaining acceptance for the policies which had been developed by
this Committee. While the U.S. Delegation found it necessary to ab-
stain on a number of the resolutions adopted by the Rio Economic
Conference,, abstention was explained in terms which were syrpathetica iy
received and understood by other delegations. The composition of the
United States Delegation to the Rio Economic Conference included morE
ranking government officials than have attended previous conferences
of this nature. It was headed by the Secretary of the Treasury :;.nd
included the Under Secretary of State and a number of other officials
of sub-cabinet rank.
Our relations with the Latin American countries continued to
be generally favorable although there was increasing criticism of
United States economic policy which reached a climax just prior to
the Rio Economic Conference. Developments in relations with individtt.l
countries worthy of comment included the following:
(1) Relations with Argentina continued favorable
during the period, but our Ambassador reports that it
is becoming increasingly necessary for the United States
to reciprocate Argentine cooperation by meeting some of
Argentina's economic desires or offering tangible assis-
tance, e.g., a military assistance progran. The Export-
Import Bank has sent a survey mission to Argentina to
look into projects proposed by Argentina and has approved
in principal a credit for a steel mill blast furnace. But
other actions by the U.S,. have so far been adverse to
Argentina's desires, i.e ? a quota has been imposed on the
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importation of oats and a quota on tung oil and tung nuts
was avoided only by the voluntary agreement of Argentina
and Paraguay to limit shipments to the U. S..
(2) During the period November 8 - 17, we reviewed
with a Cuban Delegation our economic relations with Cuba...
We were unable to accede to certain of Cuba's requests be-
cause they would require Congressional action, e.g., an
increase in Cuba's sugar quota and tariff reductions on
Cuban products. We made no commitments on other requests
to purchase Cuban minerals for the stockpile and include
Cuba in the offshore procurement program.. Further dis-
cussions are to be held an the rice agreement and a pos-
sible double taxation treaty. Cuba agreed to seek early
solutions to several pending U.S. problems pending in
Cuba, e.g., GATT violations, debts owed by Cuba to private
U.S. citizens. The Cubans were afforded a sympathetic hear-
ing, however, and the discussions ended in an atmosphere
of cordiality.
(3) The President of El Salvador received through
Ambassador in tJashington a personal letter from the Presi-
dent on November 10 commending him for his role in bringing
a peaceful settlement among Guatemalan leaders after the
collapse of the communist-controlled Guatemalan Government.
This exchange of letters between the two Presidents made a
highly favorable impression in El Salvador.
(4) There was a marked improvement in our relations
with Guatemala as a result of the change in Government in
that country. Arrangements were made to permit Guatemala
to purchase military equipment in the United States; credit
terms are being granted on individual cases. A grant mili-
tary assistance program is being considered. An economic
program of over 36 million was offered which includes funds
to implement an agreement looking toward the completion of
the Inter-American Highway in Guatemala.
(5) From September 1953 to August 1951, representatives
of the United States and Panama were engaged in a full-scale
review of problems in United States-Panama relations. Based
on these negotiations, a new treaty with Panama has been
drafted and is to be signed in January. In the course of
these negotiations, representatives of Panama have been re-
ceived by both the President and the Secretary of State.
(6) Our relations with Venezuela had deteriorated be--
cause of our support of Costa Rica and our action in grant-
ing Betancourt, ex-President of Venezuela, a visa to the
U. S. The Assistant Secretary of State for inter-American
Affairs reviewed our relations with Venezuela's President
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in October and particularly our attitude with respect to
Costa Rica. At that time the President of Venezuela was
advised of the plans of the Department of the Army to
award him the Legion of Merit. The discussions and the
award had the desired effect because U.b. relations with
Venezuela promptly took a turn for the better.
A Delegation of United States officials - including the Assista_-
Secretary of estate for Inter-American Affairs, the United States
Representative to the Inter-American Economic and Social Council,
Senator Bourke Hickenlooper, representing the Senate Committee ca
Foreign Relations, and Representative Clifford B. I:clntire, repre-
senting the House Committee on Agriculture, participated in the
inauguration of the Cochabamba-Santa Cruz Highway in Bolivia which
was financed in part by the Export-Import Bank and built by a
United States firm.
The Joint Mexico-United States Defense Commission visited Con-
tinental Air Defense Command at Colorado Springs for extensive
briefing and demonstrations on common air defense problems and pro-
cedures,
The Secretary of Defense has accepted an invitation of the Pres: .-
dent of Colombia to visit that country in January of 1955.
The President of Haiti has accepted an official invitation to
visit the U,S. in January, 1955.
Para. 5 e. Refraining froji Unilateral Action
As noted under 5 above, the United States sought a solution
of the Guatemalan problem through the Organization of American Stater
The United States has also resisted efforts of local factions to
seek United States approval of proposed solutions of the indecisive
Presidential elections in Honduras in which none of the three presi-
dential candidates received the required majority to be elected.
Para. 5 f. Support of U.S. as Criterion for Aid
The outstanding example of taking account of the willingness
and ability of a Latin American country to cooperate with the U.b.
in determining the extent of U.S, assistance is Guatemala. The
extent of assistance to the new Guatemalan Government is outlined
under 5 d. above and is in sharp contrast to the extremely limited
assistance given the previous government. This criterion continues
to be applied in Bolivia where it has met with a good degree of
success.
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Para. h. Assistance to Countries Resisti & Pressure from Neighbors
The United States has assisted Costa Rica in resisting pressures
from. the neighboring country of Nicaragua, as well as from Venezuela
and the Dominican Republic. Because of outspoken denunciation of
Venezuela, tLe Dominican Republic and Nicaragua, by the Prosidetit of
Costa Rica, the latter has gained the animosity of the Presidents of
those countries, which has resulted in encouragermont by them: to
dissident elements in Costa Rica to remove him from office. The Unit-:d
States continues to urge a peaceful solution to the dispute and enccurr-
age its submission to the CAS if necessary.
Para. 6. Increased Agtion A ai,_irxst Communist Penetration
The United States has continued to provide information on com-
munist activities to the Latin American governments with a view to
encouraging action to control such activity. Information supplied
on a communist-sponsored Latin American Woments Conference held in
the latter part of August in Rio de Janeiro was instrument .l in ex-
posing the Conference as communist-inspired and discouraging atten-
dance with the result that it im s a failure.
Siu.'.ilar action was taken with respect to a Youth Festival that
was to be hold in Guatemala and cor.,unist meetings scheduled from
Santiago, Chile, and Vienna. Information on communist meetings and
conferences is being made available to Latin American governments
on a continuing basis.
As a result of discussions with the Latin American governments
on the control of communist travel, Cuba has adopted new passport
and visa regulations and Colombia is tightening up on its regulations:
Chile has also taken a decision to prevent travel of its nationals
to communist-sponsored meetings. The Department of Justice is con-
sidering what action the United States can tame to carry out its
obligation to exchange information on United States communists using
tourist cards for international travel. Although these actions con-
stitute some pleasure of success, communists and communist sympathizers
continue to travel within and outside the Hemisphere with relative
freedom.
There is an increasing awareness by the Latin American govern-
ments of the threat that communism poses to their security and the
security of the Free World. Argentina and Chile have stepped up
their efforts to control communist activity. Bolivia continues to
take an increasiigly strong stand against communism; and in Brazil,
although communism has made gains, and the Communist Party claims
to have held its first Party Congress since 1929, indications are
that the new government will deal more strongly with communism Than
the previous Vargas Government. In Iiexico, where the government has
tended to side with the communist controlled Arbenz Government in
Guatemala, there is evidence of a new awareness of the dangers of
communism.
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Para. Colonialism
No ::action was taken by the United States, during the period,
on this course of action. The British Government conferred rith
British Honduras officials on incre~:uecj self-government, decided
to continue its control over affairs of British Guiana, and pro-
ceeded with plans to federate its other territories in the Ca:ribbein.
The Dutch Government also proceeded with federation pl.n for its
territories.
Fa. y_ - Developmen of I~esy>onsi'oJ.e erg;:;nine Lebor a4ove:Pr~_s
Para, 1.
The U.S. increased the number of State Department labor officers
in Latin America from 5 full-time _nd 1 part-time employees on Play
let to 6 full-timea.~nd 6 part-time employees on December 1st. The
number of FOA labor personnel assigned to the region remained at 6
throughout the period. The U.S. also urged the Government of Guate-
mala to establish conditions for the development of free labor unions;
and expanded programs for training of Latin American labor leaders in
Puerto Rico and the U.;3.
r ,., Control of Sni ,ms:n~ :, Stra.te1ic N .tcricc.ls
The Soviet bloc has shown interest in obtaining from Latin .erica n
countries certain stratc icc list goods ands other important raw materie.:-:i
e.g., copper; sulfur, lead, antimony and mica. Despite efforts by the
Bloc to obtain strategic materials, the foreign trade of the Latin
American countries in strategic items has continued to be almost
entirely confined to the free world. During the period of this
report, all countries of Latin America (except Argentina to which
the Battle Act sanctions do not apply because Argentina is receiving
no aid) reiterated earlier assurances of cooperation in the control
of strategic material exports to the Soviet bloc.-. Chile and reru
are participating in a limited application of the IC/DV system as
of November 30, 1954, and informal arrangements with copper-producing
firms in Mexico remain in effect. No approach has been made to other
countries for the adoption of IG.IDV systems. Latin American coopera-
tion in the Transit Authorization Certificate scheme is being con-
sidered.
In regard to trade in general between the Latin A;.aerican Rep3iblie =
and the Soviet bloc, the Soviet Union and its satellites have been
playing on Latin American concern over the future stability of markets
in the U.S. and criticism of U. S. economic policies. Since the
end of the Korean war, the Soviet Union and its satellites have been
carrying out a so-called trade offensive in Latin America for both
economic and propaganda purposes. The total value of Latin American-
Soviet bloc trade is quantitatively small, amounting to about one-
half of one percent of all Latin American trade in 1953. Neverthe-
less, the Soviet bloc has been making significant efforts to augment
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the importance of this trade in selected countries, especially in
Argentina and Uruguay, which have exportable surpluses of agri-
cultural products. Increased Soviet bloc interest is shown most
clearly bu the USSR and most prominently in the Argentina-TJaSR
trade agreement of 1953 which was renewed in kugust, 1954.
Czechoslovakia and Poland are the principal trading partners for
the Soviet bloc although other satellites have become increasingly
active.
Thh.o communists attempt to maximize the propaganda value of
their trade efforts to show how the communist world tries to
promote trade and assist in economic development as compared with
alleged U.S. efforts to restrict trade. These trade activities
also provide a cover for subversive activities and an excuse for
requesting establishment or strengthening of diplomatic relations.
No Latin American country has re-established diplomatic relatioris
with bloc countries because of these efforts. While the Latin
American countries occasionally arse the threat of possible in-
creased trade with the Soviet bloc as a bargaining point; e.g.,
the rumor that Chile, during the copper negotiations, would sell
to the Soviet bloc, Latin American countries have concentrated
their main efforts on increasing trade with the free World and
urging, particularly in connection with the Rio Economic Confer--3nce,
more liberal United States trade practices and policies.
Pars ecret material sill sign this form and indicate period of custc