WEEKLY CONTRIBUTIONS LATIN AMERICA DIVISION, ORE, CIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000200050012-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 12, 2016
• Document Release Date: May 7, 2002
• Sequence Number: 12
• Publication Date: March 21, 1950
• Content Type: PERRPT

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Weekly Contributions
Latin r)a D vie on E0 CIA
21 ttrah 1950
of the items reported on this week, D/LA finds two of particu-
lar Interest.. that on the report of the OAS investigating committee
(p. 2) and that on the weal: Bolivian government's suppression of a
revolutionary attempt (p. Q.
GENERAL: The (u S inveetigi tion of the Caribbean situation may be
expected to curtail future hostile activities in that area (p. 2).
The planned pro-Comcauniat t:TAL meetin in Montevideo has, thus
far, poor prospects for au:cess (p. 2).. Both Peru and Colombia
appear to be delaying prooiedings on the Rays case (p. 2).
NORTHERN AREA: Should Ror1uras' President 4alvez leave the coun-
try temporarily, as is rxxected, his absence will have a somewhat
unsettling effect (p. 31. In Guatemala, anti-US agitation will
increase as the result of the acceptance by Colonel Arbenz of
leftist political suppctt (p. 3). In Guatemala, cabinet members
have resigned to force the president to make clear his political
position (p. 3).
CENIBAL AREA: In Brazi+, the cabinet shakeup expected within the
next two weeks is not Healy to affect stability or US interests
in that country (P. 4). Ecuador's government is subject to irr-
creasiag pressure from he International Monetary Fund to devalue
its currency (P. 4).
SOUTHERN AREA: Bolivia 'a weak government again has been threat-
ened with revolution (1. 4). Bolivia is not expected to press
its suggestion that a 'Miller Plan" for economic aid be formulated
in the US (p. 5). In4.rgentina, rumors of a large US loan have
created a delicate si-;bation (P. 5).
SPECIAL SUBJECTS
The Current Situatio?i in Chile . . . . . . . . . . . . . . 6
The Current Situatic r in Venezuela . . ? ? DOCLn Nfi N& ' * 9 LZ=,
N0 ,CHANGE IN CLASS. ^
DECLASSIFIED
NEXT REV'lli`.
~:"""
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(CIA Working Paper)
GENERAL: OAS Investigation of the Caribbean Situation
T1W far-reac g and comp a Factors con buting to
Caribbean unrest have now been brought formally to the attention
of the American Republics by the report and recommendations of the
OAS investigating committee, which has recently finished its study
of the situation in that area. Of the four countries involved in
the controversies which gave rise to the investigation (Cuba,
Dominican Republic, Quatemala, and Haiti), the first three were
found culpable.
If, as is expected, the committees recommendations will
receive approval and implementation by the Council of the GAS, they
will make a further contribution toward restoring tranquility to
the Caribbean. Although ill feeling still exists in the area --
the Dominican Republic, for example, has reportedly threatened to
break relations with Cuba -M- the Bork of the committee has already
alleviated tension. Me committee's frank report (which has been
made public) reeammanding further study of the complex factors
underlying Caribbean unrest and the strengthening of existing
inter-American machinery, should have a salutary effect on the
countries concerned and give added prestige to the CYLS and its
instrumentalities. These recommendations, if adequately carried
out, will probably curb future hostile activities on the part of
the Caribbean countries presently involved, particularly in con-
nection with revolutionary plots against their neighbors, (Substance
in CIA Wkly, 17 Mar 50. )
2. Pro-Communist CTAL Meeting in Montevideo
Despi o etaoles; the Communist backers of the Ttonte-
video Congress of South American Trade Unions appear to be deter-
mined to go through with their plans for the meeting.
A serious obstacle faced by the pro-Communist CTRL
organizers is opposition from the Uruguayan government, which is
said to have issued instructions to its missions abroad not to
grant visas to persons wishing to attend. Furthermore, the planned
Congress has so far evoked but slight interest among Latin American
trade unions.
Nevertheless, the meeting is now scheduled for 2'7-31 March,
and, while it is possible that some prominent Communists may not be
able to get to the meeting, it will still serve as a front for
Hemisphere-wide secret Communist meetings, and a forum for anti-US
propaganda.
3. Peru and Colombia; Delays in the Haya Case
Requests for delays in t ya case. ma by both Peru-
vlans am Uolombians, Indicate that neither party is anxious to
press proceedings before the International Court of Justice and
may be willing to make some separate face-saving arrangement to
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(CIA Working Paper)
obviate the necebeity for a court decision. The present Colombian
adrd rd tration appears ]e ss eager to embarrass Peru, while Peru's
domestic situation has changed so that a failure to press Peruvian
claims would have a less dangerous effect on government stability.
If Haya were allowed to go to Colombia by private agreement, ten-
sion between the two countries would be eased and the only unfavor-
able effect would be the implied slight to the International Court
of Justice,
4. HONDURAS: President to Leave Counparar~i
m~a bri poi uncertainty that ensued when President
Calvet recently asked for and received congressional permission to
leave the country for medical treatment in the US is now dispelled.
Rumors circulated to the effect that ex-president Carlas would
return to power when Vice President Lozano submitted his "irrevo-
cable" resignation, The vice president, who is able but not
popular, has withdrawn his resignation, and Calves will probably
come to the US this suer. Although there is little organized
opposition to the. administration and the political situation is
relatively untroubled, it is estimated that the president's absence
will have a somewhat unsettling effect.
5. 0UATE'NALA: Anti-US A tation
n - agitation., which may become a threat to US
interests In the country, will be aggravated further by the recent
campaign alignment of Colonel Arbens with leftist political parties
and labor unions, by providing anti-US and pro-Communist agitators
with a measure of protection during the forthcoming presidential
campaign. (Substance in CIA Wkly, 17 Mar 50.)
~. Cabinet Resignations Test Arevalo's Political Sympathies
omes c crisis Is nvol resignation o all
but two of President Arevalo'a cabinet ministers who resigned "in
order to leave the president free to choose his collaborators during
the final year of his term". During the current presidential canr-
paign, extreme leftist administration parties are supporting the
candidacy of Colonel Arbenz, whereas the moderate Frente Popular
Libertador (1rPL) has rejected Arbenz on the grounds that it is
opposed to a military candidate. ArBvalo is known to be opposed,
in principle, to military leadership, but he has also depended.
strongly upon Arbenz for support. Because Arevalo's personal
sympathies, if known, could exert a powerful influence over the
electorate, D/LA estimates that this mass cabinet resignation may
be an attempt, by moderates and extreme leftists alike, to force
Arevalo into a position where he must display his political prefer-
ences in the current presidential campaign.
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9.
21 March 1950
BRAZIL: Cabinet Reshuffle Expected During Next Two Weeks
Several ca ins ministers are expected resign during
the next two weeks in order to become eligible for election in the
3 October general elections. (A cabinet minister must resign six
months prior to the election to be eligible as a presidential candi-
date and three months before the election to become an eligible
candidate for a state governorship or for the federal legislature.)
Although War Minister Canrobert appears to be the only cabinet
minister expected to become a presidential candidate (D/LA Wk]y,
29 Feb 50), those planning to become candidates for state governor-
ships or for the federal legislature also are expected to resign
during this period in order to permit President Dutra to appoint
a new cabinet to serve out the present term. This expected cabi-
net shakeup is not likely to affect in any way either the political
stability of Brazil or the US security interests in that country.
ECUADOR : Pressure for Devaluation Increases
Ecua is most recent foreign exchange legislation (D/IA
Wkly., 17 Jan 50) has caused the International Monetary Fund to put
mild pressure upon the government to revise its foreign exchange
system with a view to devaluation, Instead of moving toward the
abolition of multiple exchange rates (one of the Fund's basic
objectives), this recent legislation increases the number of
rates by applying multiple exchange rates to exports as well as
to imports -- an action which was taken without prior consulta-
tion with the Fund, The reason behind the government's failure
to consult with the Fund before adopting the new measures in Decem-
ber was its feeling that outright devaluation --- a course recom-
mended by the Fund last fall -- would be politically dangerous for
the administration, The Fund has indicated its disapproval of the
government's measure and of the manner in which it was taken. The
most extreme sanction available to the Fund is expulsion an
action which would most seriously impair Ecuador's international
credit position.
D/LA estimates that President Plaza will yield to Fund
pressure for devaluation and a uniform exchange rate to the fullest
extent consistent with the security of his domestic political posi-
tion. In view of the likelihood that Plaza will be able to offer
some measure of cooperation, and, in view of the now-almost-tradi-
tional Fund policy of leniency and compromise, D/LA further estimates
that no drastic action will be taken by the Fund against Ecuador.
BOLIVIA : Government Discovers LM-PIR Plot
Fersisten plo tins by the rightist National Revolutionary
Movement (MNR) and other groups, including active army officers,
continues to threaten the survival of the present government, The
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INR, PIR,,
government has announced the discovery of a plot by the N
and retired army officers to stage a coup during a threatened
general strike. A general strike has been considered a possi-
bility for some time because of frequent reports that the MN ate. and
PIR have been attempting to incite mine and factory workers against
the government and because of the general discontent throughout the
country (D/LA wkly, 28 Feb 50). Despite the possibility that the
L1NR may ultimately gain sufficient support either from the army or
from the PIR to stage a successful revolution, D/IA estimates that,
for the present at least, the government of Bolivia may maintain
its very precarious tenure.
10. "Miller Plan" Pro osed for Latin America
The ivsan government rece-nTly proposed that the US
formulate a "Miller Plan" as a Latin-American counterpart to ERP.
This suggestion, which was prompted by the desire for financial aid
to check further deterioration in Bolivia's difficult economic situ-
ation, reflects the general belief by Bolivian leaders that the needs
of Latin America, as well as those of Europe., justify a plan for US
economic aid (D/LA Ilkly, 2g Feb 50). It is not expected, however,
that the Bolivians will press this proposal further at this time.
U. ARGENTINA: Rumors of a US Loan
Zunting rumors in Argentine business circles of an
impending large US loan (600 million) to Argentina coincident with
the visit to Washington by Senor Ramon Cereijo, President of the
National Economic Council, has created a delicate situation regard-
ing future US-Argentine relations. Despite continued official
denials of any interest in a US loan and despite the government's
failure thus far adequately to meet US suggestions for improvement.,
Argentine optimism concerning prospects for improved US-Argentine
relations has increased and been widely publicized, especially as
regards Asst. Secretary Killer's visit to Argentina (D/LA Wkly,
29 Feb 50) and the visit to Washington by Sr. Cereijo, It is true
that, should the results of discussions with the US not be satis-
factory, and if the economic situation does not improve., Argentina
is prepared to launch a vigorous anti-US campaign, the groundwork
for which already has been laid by the congressional "anti-
Argentine activities" committee (D/LA Wkly, 17 Jan 50). As the
situation now stands, however, the Peron administration continues
to make overtures directed toward the accomplishment of improved
economic relations with the US,
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(CIA Working Paper)
Situation Memorandum 15-50
The Current Situation in Chile
21 March 1950
The recent realignment of political parties in the
cabnedoes not seriously affect the basic stability of the
government. The economic situation continues to be the most
pressing problem facing the government. The armed forces
remained loyal to the government during the recent strikes
and are expected to support the new cabinet. The Communists
appear temporarily to have abandoned their technique of exploit-
ing favorable opportunities to create trouble. Chile's inter-
national relations zemain cordial in general.
-- Recent changes have not significantly affected US
security interests.)
Political
3Ra realignment of political parties in the new coalition cabinet
(D/LA V kly, 7 Mar 50) does not seriously affect the basic stability of
the Chilean government, but will probably alter government policy and
reduce the power and prestige of the President. The new coalition appears
to enjoy wide popular support, especially from the politically inportant
white-collar unions that exerted great pressure to effect the cabinet
changes. In Congress, hover, the balance of power is so delicate that
the coalition will be forced to rely on the support of opposition groups
to enact the legislation it desires. It appears likely that the now
coalition will continue the former government's industrialization pro-
gram and will try to implement a broader social plan that will appeal
to the white collar workers and at the same time will be acceptable to
certain opposition groups in Congress. The ooaliticW a success in this
program will depend on its ability to work out an economic program. that
will be feasible as well as politically acceptable. According to present
indications, the chances for this are very poor. Should the new coalition
fail to meet the exigencies of the present situation, further political
and labor disturbances would be certain to arise. The President, however,
is likely to retain his post but may at least temporarily have to adopt
a more leftist orientation and abandon his formerly successful technique
of political extemporization in the face of crises.
Economic
Cole's unfavorable economic situation remains the most pressing
problem facing the government. At the turn of the year economic gains
were small compared with the over-all economic decline, and prospects
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Situation Z!Iemorandina 15-50
for noticeable improvements in 1950 appeared dim. The significerAco of
a small favorable trade balance was overshadowed by the considerable drop
in volume and value of exports. The slight gain derived frora the 2
cents per pound increase in the price of copper over that proraiL ng in
mid-1949 was threatened by the possibility that the US might reimpose the
2 cents per pound import excise tax on copper. Plans for expansion of
agricultural output at lower cost to the consumers have been jeopardized
by serious drought conditions which may necessitate considerable foreign
exchange outlays to m ke up expected deficits in food supplies. Infla-
tion has bad a disturbing effect on labor-management relations a well
as on the population in general. The recent cabinet changes, which caused
a realignment of political groups in congress, have reduced the chances
for Imminent legislative implementation of either the economic program
agreed on in December or any comparable long-range plan. Although the
general situation may be alleviated somewhat by the small benefits that
will be derived from the new industries - chiefly steel and petroleum -~>
as well as from projected bilateral agreements designed to conserve dollar
exchange, the basic problems w- unfavorable exchange position, deficit
spending, continued inflation, and the unfavorable position of copper? -??
are not likely to be resolved immediately.
Milita
The armed forces remained loyal to the government during the recent
wave of strikes and aided not only in preserving order but also in operating certain public utilities. The retention of General Barrios as
Minister of Defense in the new cabinet is likely to satisfy the prestige
of the military and assure their continued support. The remiinl of
Admiral Bolger as Minister of Interior appears to be a political move
directed against the President rather than against the armed .fez'ceps,,
Subversive
T a ommunists did not participate to any great extent in the recent
wave of strikes and appear to have abandoned -w at least temporarily --
their technique of exploiting favorable opportunities to create 1;rouble.
Instead, they now appear to be courting minority groups in Congress as
well as certain parties in the new coalition in an effort to effect the
repeal of repressive legislation, such as the Defense of Democracy Iiw.
While some of the parties in the cabinet are rather friendly to the Covr-
munists, it does not appear that the total gain in Communist influence
will be sufficient to make any radical change in the political situation.
International
TUtile international relations remain cordial in geniral,
most noteworthy is the continuing display of great friendship for
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Situation Memorandum 15-50
Argentina. The now coalition government is expected tc continue this
trend and to be at the same time pro-US and anti-USSR, especially in the
UTd where Chile has played a leading role. A significant fta.ator locally,
and in US-Chilean relations as well, Is the forthcoming visit of Presi-
dent Gonzalez Videla to the US. Although the unsettled political situa-
tion in his country makes the timing of the visit somewhat inopportune
for any campaign to gain tangible evidences of US friendship, the visit
will nevertheless serve to renew traditional ties between the US and
Chile and may help Gonzalez Videla to regain some of his waning prestige.
g.
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Situation Memorandum I6-&0
The Current Situation in Veaezue7.a
(Summary ?? The military junta's control appears to be firmly
established. The prospect of severe reductions in oil production,
while creating an uneasy economic situation, contains no imminent
threat to political stability. Communism has suffered minor set-
backs, and has made no significant advances. The work of the US
army mission is beginning to bear fruit. Venezuela has no major
problems in its international relations.
-- Most unfavorable to ITS interests is the prospect of
sharply curtailed oil production, -which may deprive the US of a
large part of one of its most important foreign markets.)
Political
The political situation continues calm, and the military junta appears
to be more firmly established than at any time since the coup of November
1948. Reports concerning a rift within the triumvirate have declined. Al-
though the threat of revolutionary activities by Accion Democratica exiles
cannot be altogether discounted, such threat is no longer immanent.
Progress towards the reestablishment of some semblance of a consti-
tutional regime will undoubtedly be slow, although the first steps in that
direction have been taken. Municipal councils have been named (D/1,A kly,
10 Jan 50); a first draft of the new electoral law is under discussion by
the electoral commission. No date has been set for elections, which will
probably not be held before late 1950
Prospects for continued stability are good. The present petroleum
crisis (see "Economic" below) will probably not have political repercussions
of such magnitude as to endanger the government's stability.
Economic
The economic situation has become less favorable primarily because
of the threatqned restriction of oil imports by the US. Passage of re-
strictive legislation now before the US-Congress might cause a reduction
of exports to the US by as much as 250,000 barrels a day. Two steps have
been taken to avert US restrictions: 1) the companies have agreed to re-
duce production by 100,000 barrels a day; 2) a mission of Venezuelan
business Hers now in the US is attempting to gain support of US exporters
to convince Congress of the danger to the US export market of contemplated
restrictions.
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Situation ! emorandum 16R ,o
The principal effects of a reduction in petroleum prodr etion would
be increasing unemployment, reduced government revenues (approximately 60%
of which are derived from the petroleum industry), and curtail-ant of pur-
chases from the US. Nevertheless, Venezuela's strong currency and h .:
absence of external debt would partially offset the impact of reduced oil
production. Although a continued petroleum crisis would probably necessi-
tate exchange controls and re-employment projects, it is not likely that
,ffio stability of the government would be seriously endangered'',.
Negotiations between the oil workers' unions and the companies for
revision of the labor contracts ended when the companies reposed to revise
wage scales upwards. The possibility is not great that an oil workers'
strike will be attempted. The fact that the Communist federation, the
Comite Sindical Unitario de Trabajadores Petroleros (Cosutrapet), repre-
sented only its own affiliated unions in the negotiations may be construed
as a setback to the Communist campaign for syndical unity (1)/L.A Wkly, 31 Jan 50).
the strike of iron workers in the Iron Mines Company of Venezuela
(a Bethlehem subsidiary) was ended when the junta decreed 17 February that
the workers must return to their jobs by 22 February, and that both parties
must submit to arbitration by a board of three, representing union, company,
and government. The workers will probably gain their strike objective, a
contract.
Subversive
Communism in Venezuela has made no marked advances, and, has sustained
a number of minor setbacks during the past three months. The Communist-A1)
coalition "Fran t+e Damocra tica" , which is trying to gain control of cultural
groups, failed to get candidates elected as officers of the A.sociacion de
9seritores Venezolanos. Slight indications of firmer government policy are
seen in the absence of Communist representation on the municipal. councils
and in the denial of permission to the - Institato Cultural Vene ,o1ano-
Sovietic:o to establish branches outside the Federal District., Although
the present petroleum crisis creates a climate favorable to C ommunist
propaganda, there is no evidence of a diminution of the government's ability
to deal with any labor disturbances which might result from Communist
agitation .
y iii taEy
1h e Venezuelan army continues to be loyal to the goverunsnt.. Factional
cleavages are ill-defined and submerged. The position of the junta has
been strengthened by the circumstances attending the arrest in December of
Lt. Col. Roberto Casanova (DA A Ikly, 13 Dec 49).
.601 1` 10.
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Situation 1 emorandum 16-50
w3-
21 March 19'0
The increasing influence of the US array mission has been Liemonetrated
in the following ways. 1) The missions's program for recruit, training,
limited last year to the Caracas area, is now being carried out throughout
'ffie country. 2) The present airborne train._ng program for 122 men and
7 officers is nearing completion with the (Laparture (23 January) of the
remaining 40 enlisted men to attend the basic airborne course at Ft. Bennings.
This program has particular value for defense against internal disorders
and sabotage. 3) The office of the Inspector ]enaral of the Armed F rces
will probably be abolished and a G-3 section or the General Staff set up
as recommended by the US mission.
Four Do Havilland jet "Vampire" fighters ordered from Great Britain
have arrived, and have been received with enthusiasm by the airs force.,
The government is believed to be considering ada..tional purchases of 22
of these planes, which are easy to operate and ct?nsiderably lees expensive
than their US counterpart.
International
The status of Venezuela's international re]..~tions continues favor-
able. In the council of the Organization of Amex: can States, Venezuela
supported the invocation of the Rio Treaty in the disput between Haiti and
the Dominican Republic. Venezuela's prompt recogiition of the Arias regime
in Panama, motivated partially by the hope that Arias would suppress the
activities of AD exiles, was rewarded by the cease lion of AD broadcasts
from Radio Balboa. No decision has as yet been r%ched regarding ratifi-
cation of the charter of the OAS. Venezuela recognized the United States
of Indonesia and the Republic of South Korea 3 91arcY_, and Vietnam, Laos,
and Cambodia 10 Tlaroh In matters pertain:` ng to the East-West struggle,
Venezuela will continue to support the US.
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