WEEKLY CONTRIBUTIONS 28-50 LATIN AMERICA DIVISION, ORE, CIA 11 JULY 1950

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200050028-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 16, 2016
• Document Release Date: August 31, 2004
• Sequence Number: 28
• Publication Date: July 11, 1950
• Content Type: PERRPT

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Vice. Contributions 2-50
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11 July 1950
DAA suggests particular attention this meek to the Subversive
section of the article on the current situation in Pamana71nEERE
out the possibilities of the use of Panamanian territory as a base
for sabotage attempts against the Canal (p. 6).
cum= DL
Di 11"
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GEW Ratification of the Rio treaty by one or more of the four as
yet non-ratifying countries may be speeded by international situation
(1). 2).
NORTHERN AREA: Recent action by Guatenala has confirmed that country-'a
alignment with other Latin American countries in support of the UN and
US position_ on Korea (p, 2).
SOUTHERN AREA: Prolonged labor unrest in Chile is a political problem
for the administration but shows no signs of being a najor Communist
effort (p. 3), Prospects are good for a quiet and well-controlled
election in Paraguay (p.
SPECIAL SUBJECTS
The Current Situation in Panama . ? ? ? fi
Present Capabilities of Latin American
Conmunists far Soviet-Directed Aggressive Action. .
State Dept. review completed
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Weekly Contributions, D/LA., 26-50 CONFIDENTIAL n. at13,y 1950
(CIA Working Paper)
GENERAL: Korean Crisis S. Further Ratifications of Rio Treat
71S? s area -74;zFariria a on
25X1 of the Rio treaty IERT stimulate similar action
in some or all of the four countries which have as yet failed to
ratify this mutual defense pact. Argentine adherence to this impor-
tant inter-American instrument rey be an additional reason for some
of them to fall in line.
Reports from Ecuador indicate that its foreign ministry
plans to present the Rio treaty to the legislature during the ses-
sion scheduled to convene 10 August,, The Peruvian government has
recently intimated that only the absence of a legislative body in
that country has prevented ratification of the treaty thus far.
Since elections have just been held for a new Peruvian congress,
that obstacle to ratification is now in the process of being re-
moved. Guatemala's unequivocal support of the US and. the UN in the
matter of Korea may mean that it will no longer hesitate to align
itself with the rest of the American states in defense of the Hemi-
sphere, Eolivia's bad record in ratifying inter-American treaties
and conventions, coupled with its disturbed political and economic
situation, has kept that country from acting on the Rio treaty up
to now. If the present regime can manage to remain in powers how-
ever, it mould seem likely that it would make the effort needed to
go through the ratifying process so as not to be left in splendid
isolation should the other three nations adhere to the treaty.
Unanimous ratification of the Rio treaty., the most impor-
tant single inter-American instrument and the legal basis for the
mutual defense of the Hemisphere, would be of considerable importance
in demonstrating the strength of inter-American solidarity during
this critical period.
2. GUATEMLA: US and UN Korea Action_Saed.
s o Tfiraligiiiiiiith the US and the UN
in the current Rieman crisis has been confirmed by Foreign Meister
Gonsglez Argvalo. The foreign minister has stated that the govern-
ment fully approves the strongly worded statement of solidarity
issued by the Guatemalan Anbassedor to the US on 28 June, and will
make public Guatemala's support of current UN action.
Eecause President Argvalo has already assured Assistant
Secretary-of State Miller personally of Guatemala's international
alignment -with the US, it is ueiikely that he will consider it
necessa7 to make a public statement to this effect. It is probable
that Arevale would regard each a statement as politically undesir-
able, since Guatemalan-US relations now comprise a highly contro-
versial domestic issue. However, in view of Guatemala's basic
social, political, and economic ties with the US and other Western
Hemisphere countries, it is believed that President Angvalo and
other Guatemalan officials are sincere in their statements of
solidarity with the US.
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11 July 1950
4.
CHILE: Continued Labor Unrest Presents Political Problem
Prolondbei
the country's economy, presents a vexatious political problem to
the administration. there is no evidence, however, that it repre-
sents a centrally directed Communist movenent. A? government's
policy of intervention (under the Defense of Democracy law) for
the purpose of settling strikes mes successful in the Chuquicamata
copper strike but has thus far failed in the case of the nitrate
and sympathy strikers. Negotiations reached an impasse when the
nitrate union refused to meet with the government mediator until
the four union leaders, expelled by the government on the grounds
that they were Communists, were reinstated.
Wu estimates that the government will eventually win this
contest; the government may, however, rather than press for imme-
diate settlement, allow the present situation to drag along and,
by claiming Communist participation in these strikes and pointing
to the deleterious effect of the strikes on the weakened national
economy, take advantage of the situation to secure reinstatement of
the Special Powers Act (invoked in August 26449 for six menthe to
all= the gesident emergency powers in connection with the Defense
of Denocraay law to protect the Chilean economy).
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Weekly Contributions, D/LA, 281-50 11 July 1950
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5. PARAGUAY: Ferthcoming Elections
.ons aggilgrfer 16 July in Paraguay are expected
to be quiet and to bring about no major change in the government.
Candidates appearing on the ballot Till be those of the parr in
paaer (Democratic Colorado); candidates of other parties will not
be allowed to run. The election will make Dr. Federico Chaves
legal president, and will name the members of the House of Repro-
sentatives. It is expected that Chavee will retain eubstantially
the cabinet he now has.
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Situation Ibmorandum /43-50
The Current Situation in Panama
11 Jay 1950
-- Opposition to President Arias still weakens his
pos. , but not to the extent of threatening his continu-
ance in office:). The economic situatien rAmAinn rinf-errtyptAllo
sovert tommunist
attempts to sapotage Panama Canal Installations from the
Republic of Panama must be considered a distinct possibilitys
the overt activities of Pamamanian Communism also still
threaten US security interests. President Arias has con-
tinued to maintain a friendly attitude toward the US.
-- US security interests are threatened by the
incapability or the police force to prevent Soviet agents
from filtering into Panama or to suppress covert Communist
activities in Panama.)
Political
".1.----Waition to President Arias still weakens his position but not to
the extent of threatening his continuance in office. Many of Arias'
political maneuvers antagonize influential groups, including political
opponents, erstwhile supporters, and the clergy* all of Whom mage a sore
or less constant propaganda offensive against him. These characteris-
tics of his administration will probably continue, and opposition may
increase unless progress is rade towards the solution of unemployment
prdblems before the national assembly meeting in October. Nevertheless,
the opposition is not likely to 1324307 sufficiently strong in the near
future to cause Police Chief &masa to withdraw his support of Arias.
This working alliance between the president and Raman upon which the
stability of the administration rests, has peeved satisfactory to both
=n and, in addition, navy Panananians dread the political turmoil that
mould result if this alliance mere broken, Therefore it is believed
that the salience will continue, and that the Arias Aninistration will
remain in office at least during the next few months,
25X1 The sident's action in outlawing ecumenist activities
temporarily strengthened his position by decreasing Connunis
activities against the administration and by partially appeasing the
clergy* whose opposition had been increasingly reflected in the attitude
of the masses. In addition, the government's action probably forced some
anti-Arias elements to reconsider the relative advantages and disadvan-
tages of continuing their semi-cooperation with the Communists, which in
the past has tended to strengthen the Communist position. It is thought
that the serious international situation will strengthen public support
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Situation Memorandum 43-50
,July `.1.5H)
of tbe presidentva anti-Communist activities, which had originally been
recognized as a purely political maneuver, howeverv, the president le
strength in Panama will depend upon other factors than his action agaimi;
the .Jommunists,
Economic
economic situation reasins unfavorable. The president continues
Ids efforts to maks Panara eligible for early DS aid and foreign invest-
ment,sm and to this end issued a decree law in June vihich gives special
pe,z;tion and encouragement to domestic and foreign capital investment
No tangible assistance, however, has thus far been received in solving
the unemployment problem created by the reduction in the number of Pena-
raarkians employed in the Canal Zor
and in the absence of substantial US expenditures in the area or of the
orpplctvment of more Panamanians in the Zone, the economic situation will
continue unfavorable
The overt activities of Panamanian Communism also still threaten. US
security interests because of their propaganda potentialities, It is
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Sitaation Men:menden /43-50
11 July 1950
tree that overt Cammunist activities have decreased greatly as a result
of the cabinet decree of 29 April the subsequeut
governmental action toward preventing Communists from holding public
office., and police raids against various Communist organizations. The
preeident will no doubt continue to act against the Communists and will
have little difficulty in suppressing overt activities in coming months,
The Commaniets are still, however, pursuing one of their important ob-
jectives in Panama ? creating ill will against the US -- and it will
be difficult to suppress all Communist propaganda without zenning the
risn of committing the political error of suppressing the anti-US prop-
gana of ultra -nationalists who frequently sound like ?ceramists, Duriea
the period of seni-wara Ulla problem may be especially acute. Anti-US
propaganda in Panama may be quite strong at times during coming nonths?
particularly if the unemployment situation remains acute, In. addition,
the Comemnists may be expected to make effective propaganda use out of
the advantage that will be afforded them if US action in Korea drags
out for several months without substantial success
The influence of Canal zone Local 713, an important propaganda out-
let of the Panamanian Communists among laborers in the Zone, is being
noticeably cut down by the strenuous organizing campaign which is being
made by CIO labor organizers in the Zone, Even though this C10 campaign
is now slowing doen and Is beginning to reveal certain wealelesses, it
Is estimated that the Panamanian Communists mill have decreasing infla
ence over laborers in the Zone during coming months,
International
Arias, and e)eeeaJontay the fanamantan aovernmeeta has
continued to maintain a araenaly attitude toward the "JS,, and this has
eecently been reflected in strong statements of support in the Korean
eituation, There is a eeseaality of a ehange in this attitude, however?
if Arias is unable to ma ae or at least to claim -- progress toward
solving unenpleyment in Pandea, such proerese as vould reeult from any
tecreaae ia Canal personnel or any other form of increase in revenue for
Perinea, leaking such a developnent, the unemployment ?ituateon will con-
Ulnae to be bad, and there will be little Aries can do about it, except
blano the US,
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11 July nf.50
Present Capabilitios of Latin American Communists
for Soviet-Directed A77rossive Action
Latin. America, Soviet-directed Cornunist aggressive action could
affect US security interosLc by interfering for short periods 7ith the
produczion and shipmont of critical and strategic matorials through work
stcppa_es and through sabotage.
the basis of work stoppages which have occurred in the past,
Coniunsts are boliev4 capable, largely throuigth Commusist-influencod am:1
Com-Itont-doninated labor unions, of tieing up temporarily shipments from
ono or rore iioortant Latin American ports; of interfering with trans-
portatton to and frorithe interior; and of instigating strfl2cos, slow-downs
or other hindrances in the production of critical or strategic materials.
This applies particularly to manganese in Brazil, copper and iodine in
Chile, molasses and sugar in Cuba, load and mercury in tioxieo, and tin
and antimony in Bolivia, In a period of however, or other national
omergoncy, it is oatinated that the ,:over=ents concerned uould limit
the duration of such work stoppages, if not prevent them entirely.
nabotage, other than indirectly by slow-downs and stri',..7es, is probable
fn Cube, Venezuela, Chile, Brazil, Loxico, and Colombia, an: possibly
olsewhero, although this cannot be ,IToctod to tie up any major industry
in Latrn America for more than short periods. The Venezuelan oil installa-
tions constitute the most remunerative and i-nortant target for Soviot-
diroctr,d sabotar:e in Latin Amorical being particularly vulnerable to ,:anage
by s:Uled saboteurs. Production could be considerably curtailed until
the cr3tical power and pun:An,: stations wore repaired, There in also
roalor. to bolievo that, vithout assistance, Panama could not prevent the
'Ise of its terrtory vs a Lrise of Communist sabotwge oporations a,.;ainst
the P,,rarv Canal0
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