25X6A Approved For Nefease 1999.aalpieRSSIEEPP7S‘{090A000200040013-2 Wee Contributions Latin America Division, Bi OTA 28 Devember 1 Latin America Division considers the item on the Cuban-Dominican situation of particular importance because of its implications adverse to the U5 interest in Eanisphere solidarity, CURRENT DEVELOPHENTS GENERAL: The tense situation between Cuba and the Dominican Republic is now being considered by the Inter-American Peace Committees (p, 2), NORPHERN AREA: Jn Haiti, mn@G%GA to overthrow the present regime are ed te continue 2 In the British Virgin Islands a recent cemonst tion Dlustrates increasing dissati sfackion with economic restraints (p. 3). See also the report on the curvent situation in Guatemella (p, 9 CENTRAL AREA: See the report on the current situation in Brazil. (p, 5), - SOUTHERN AREA: Bolivia's recent ariny Shakeup may foreshadow subservienes of the government to army leadership {p. 4). SPECTAL SUBJECTS The Current Situation in Gragil ...... The Current Situation in Guatemala, .... a ee © @€ © 8 #8 @ P HH wR HM 9 ey ECP REMIEW DATE: AUTH: vate Mk IF sey SCVIEWER: _372044 Approved For Release 1999/09/02 : C1A-RDP79-010904000200040013-2 a Approved For Awlease 1999/09/02 : CIA-RDP79%94090A000200040013-2 bern Teokly Comtributious, D/LA 28 December 19:6 (STA forking Bee) 1, GENERAL: APC considers raze, Situation between Cuba and the can The Titorchne stan Peace Committee, provided for by the Havana Conference and organized duly 198 as a consultative body to assist in the settlement of disputes, is actively considering the differences between Cuba and the Dominicen Republic which have led to inereased tension in the Caribbean, [/IA believes that the ZAPO will, suggest that Cuba and the Dominican Republic settle their diffi- culties between themselves rather than resort to any other inter~ American mchinery, Trujillo's request for war powers has increased the LlJ-feeling between the two countries and will uake bilateral negotiations difficult at this tim, It should be noted, however, that the actual law recently passed by the Dominican "rubber-stamp" congress authorizes Trujille to declare war "on any country which knowingly protects ot tolerates concentrations of forces militarily organized, equipped and trained on ite territory for the purpose of invading the Republic,...° This is less drastis than frajllic's origins) wessage requesting war powers against any country permitting anti-Trujillo activities within its territory, @. HAITI: Political Tension Current political tension in Haiti is evidenced by President Eating 's recent revelation of a plot to assassinate a mwaber of ranking government officials, himself included, Three ex-arny efficers and several others suspected ef conspiring in this plot with Agtrel Roland, one~bime Haitian colonel now in exile in the Dominican Repudlic, have been arrested, The opposition is aware that the January 1950 elections have been rigged in favor of EstimSts supporters, thereby preparing the way for his retention of ths presidency after the expiration of the present term in 1952, In the belie? that they can only come to power by force, the political Routs® will probably continue their efforts to overthrow the Estims regime, D/LA estimates that these efforts will. not succeed unless accompanied by widespread populer Gisordera, in which case ara leaders would jettison sting in order 25X6A to retain. their own favered positions, Approved For Release (Q29/09/0guisfaief27 9-01090A000200040043-2 Approved For Awflease 1999/09/92. GIA-RDP79840904000200040013-2 eekly Contributions, D/IA 28 December 19:9 (CIA Worlcing Paper) 25X6A02 L, BRITISH VIRGIN ISLANDS: Unrest Results from Economic Problems t rece eliden Cy Islands is indicative of the difficulties arising from the exist- ence of separate political unite within a small and otherwise homogeneous area, Over one thousend British Virgin Islanders (alxost one fifth of the total population) demonstrated on 2h November against the immigration barriers of the US Virgin Islands, demanding either relaxation of these barrisrs or “annexation by the US, The demonstration followed the repatriation of a number of British Virgin Islanders who had been illegally residing in the US Virgins, The repatriation resulted from the complaints of US islanders that they were losing their jobs to these illegal immi~ grants, kmown as "wet backs", Remittances from "wet backs" consti-~- tuted an important source of incom: to many British Virgin Islanders, particularly after devaluation, While 08 security interests are not notably affected, the situation is iviustrative of the problems emanating fron the fact that the Antillcan area is divided into a number of political entities, Regulations promulgated by the metropolitan governments have inhibited norml commercial activity within the area ap a whole, and social and economic difficulties of the European colonial territories have been aggravated as a result, Even the effectivenoss of the Caribbean Commission, an international organization created to deal with such problems, is limited by the necessity of working within the framework of policies established by the four metropolitan governments involved, The conception of an area~wide approach to economic problems pertains particularly to the British territories; it has no partioular support in the relatively prosperous Dutch islands, or in the French Caribbean territories where the Commnists have inspired fear of US domination, It can be anticipated that, while most of the people of the British West Indies will remain politically loyal to the Crown, thore will be increasing dissatis- faction with economic ~estraints, Approved For Release 02: CIA-RDP79-01090A000200040013-2 Approved For Refease 1999/09/92, .CIA-RDP791¥4090A000200040013-2 Weekly Contributions, D/IA 28 December 19¢ {CIA Working Paper) 5. BOLIVIA: A shake the Sooitment of Brigadier General Quiroga as arny commander in chief, although it appears to have averted the threat of a military coup for the present, has probably weakened the position of the civilian government, which faces municipal slec~ tions this week, Continuous army plotting (see CIA Wkly, Nov 49) had developed into a struggle between Quiroga and the army commander in chief; Quiroga ultimately demanded that both the commander in chief and his chief of staff resign, The government's accession to such a significant demand by Quiroga, D/IA estimates, increases the likelihood of future army pressure on civilian government and may foreshadow the complete subservience of the government to arny leadership -—— or, if this is denied, its eventual replacement by a military group, Approved For Release 1999/09/02 : CIA-RDP79-01090A000200040013-2 e Approved For Riéase 1999/09/02 : C1A-RDP79.0%6904000200040013-2 Weekly Contributions, D/IA 28 Decenber 1949 (CIA Working Paper) Situation Memorandum 75-19 The Current Situation in Brazil (Summary ~~ The government continues to be stable despite growing political disunity, A solution to Brazil's ta jor economic problem ~~ external debt position -—- is in sight, The armed forces remain loyal to the Dutra administration, Communists continues to be aggressive but are not a threat to the regime, Brazil continues its close cooperation with the US in international affairs, “~~ Recent developments in Brazil have not adversely affected US security interests, ) Political e date for Brazil's presidential election has now been set for 3 October 1950, In the meantime, the two m jor parties, the Partido Social Democratico (PSD) and the Unido Democratica Nacional (UDN), seem further from reaching agreement on a presidential candidate than they have ever been. President Dutra's continuing efforts to effect & compromise solution have caused open division in his ow party (the PSD) between his adherents and the pro-Vargas faction (see D/LA Wkly, 29 Nov 49). At the came time, his proposals have failed to gain aecept= ance by the UDN, where a growing partisan movement favors that party's unsuccessful candidate of 1945, Brigadeiro Eduardo Gomes, Only a "non- partisan" military candidate such as War Minister Canrobert (see D/IA ‘Wely, 18 Oct 49) would now ssem to have a-chance of holding together the. participants in the Inter~Party Accord, All this division and indecision is a boon to opposition candidate Adhemar de Barros of Sdo Paulo (who, in fact, privately takes credit for the appearance of posters in his capital favoring Brigadeiro Gomes), At the moment, Barros' chances for the presidency seem good, There has not yet been any public confirmation of the electoral agreement he claims to have mide with Vargas (see D/IA Wily, 29 Nov 49), although the two have recently conferred, Despite growing political disunity in the admin= istration, the support of the army continues to guarantee stability. Economic azil's mi jor economic or financial problem, its external debt position, is closer to a solution now than it has been for the past two years, With the aid of a drawing of US$22.5 million from the Inter- national Monetary Fund (see D/IA Wkly, 29 Nov 49), the increased dollar receipts from its coffee sales (see D/IA Wkly, 4 Oct 49), and continued adherence to its strict import~export and foreign exchange regulations, Brazil should be able to pay off most of its comercial dollar backlog Within the next two months and to relax som of its controls on imports Approved For Release 1999/09/Q2 . -RDP79-01090A000200040013-2 Approved For Refease 1999/09/02 ; C1A-RDP79-¥7090A000200040013-2 Weekly Contributions, D/IA ~2= 28 Decenber 1919 (CIA Working Paper) Situation Memorandum 75-49 from thes US by the sscond half of 1950, Brazil's external debt posi-~ tion will also be improved by the recently signed agreement with Italy for tha unblocking of Italian assets in Brazil, Provisions of this agreement require that a large part of the unblocked assetea be invested in a new colonization company to be established in Brazil, During the past three months Brazil also concluded a bilateral trade treaty with Portugal to stimulate trads with that country, and established a 2);- month credit agreement with Spain for purchases of Brazilian cotton, The pressure on the Brazilian government for a devaluation of the cruseiro has subsided, although uneasiness is still evident in some Brazilian trade circles --- particularly among cocoa, textile, and lumber interests. Inflation remains as a problem for the Brazilian government, but the rate of increase in the cost of living has Slackened, and the prices of some food items have actually been reduced during recent mnths, No complete solution to the problem of inflation appears to be in sight, however, Although Brazilian Foreign Office officials have appeared sympa- thetic to the US request that shi ts of manganese to the US be increased (see D/LA Wily, 11 Oct 49), the anticipated increase has not materialized, and only about 6,000 tons were exported to the US during Kovember, Industrial activity remins brisk with little or no unemployment _ reported, Some US firme are currently expanding in Brazil and others are making plans to expand in the near future, During the coming montha, prospects for continued improvement of the general economic situation are excellent, Mili eae Brazilian arny is believed to be somsvhat below strength, as is norm] prior to the annual induction of conscripts which will begin after the first of the year, Only one class, however, that of 1931, is to be called up in 1950, The Brazilian armed forces continue to favor US equipment and training, A decree-law promulgated recently sets up a War College to present courses paralleling those offered in the US National War College and Armed Forces Staff College. US Army, Navy, and Air Force officers have assisted in organizing the new school, There is reason to believe that the Brazilian government was actively negotiating in September for the purchase of 50,000 ~ 100,000 military rifles from Belgium, although it is not know if the deal was closed, Military morale continues high and the loyalty of the Brazilian armed forces to the present government may be expected to continue, Approved For Release 1999/09/02 ; I 79-010904000200040013-2 Approved For Refease 1999/09/02... GlA-RDP79-0990A000200040013-2 Yeakly Contributions, D/IA -3- 28 December 194° (CIA Working Paper) Situation Memorandum 75-l9 . Subversive ~————pazilian Commaniats have continued in their course of provoking violence where possible (see D/LA Wkly, 4 Oct 49), although not on such a highly organized scale as was evident several months ago, Only sporadic attempts to hold "peace" meetings have been reported recently, aud revived activity in the "petroleum defense" campaign (see D/IA Widly, $ Nov 49), has not yet gained great impetus. No reports have been received concerning the national convention on "Defense of Petroleum and the National Economy" which was scheduled to be held in Rio 9-12 December. Communist capabilities for stimulating hostility of Brazilian | liberals toward the government (indicated in D/IA Wkly, Oct 49) wre demonstrated in Rio last month. An open-air political meeting spon- sored by a Communist-front group, but presided over by well-known nor-Comunists, ended in a clash between police and demonstrators in which a woman Commmnist was killed, All witnesses agreed that the meeting had been conducted in a legal and orderly manner, and each side accused the other of starting the shooting without provocation, Opposition mambers in the Chamber of Deputies placed the blame on the police and pointed out that any political gathering would be at the mercy of the Commmists if their mere presence at a meeting was cause for police intervention, Under fire from the Chamber and the press, the Minister of Justice promised a thorough investigation and announced a new set of instructions for policing public meetings, It is doubtful, however, if these will prevent further trouble of the same sort, Despite their capabilities for disturbing public order and aggravating the ill~ feeling of the non-Communist opposition towards the administration, Brasilian Commnists are still in no position to threaten the national security and are not expected to make any gains in this direction in the near future. International “tS security interests continue to be favored by Brazil's inter~ national policies and practices, Brazil continues its general policy of prior consultation and close cooperation with the US in the inter~ national field. The desire of Braail for the maintenance of good relations with the US is evidenced by its recent action in regard to a new shipping decree which would require that all southbound cargo . charges be paid in cruseiros instead of dollars --~ a proposal cppased by some US officials ani ali US maritime interests affected. In spite of the Foreign Minister's expressed belief that the decree is really a miter of domstic jurisdiction and one that will protect and further vital Brazilian interests, he has agreed to consult with U5 officials and to give them a hearing before any final action is taken, Another Approved For Release 1999/09/02... CJAcRDP79-01090A000200040043-2 Approved For edlease 1 9989/09/02 --CIA-RDP7SN1 090A000200040013-2 Weekly Contributions, D/LA ~k- 28 December 1940 (CIA Working Paper) Situation Memorandum 75-19 example of Brazil's close cooperation was its informing US Embassy officials in Rio that Brazil was not actively considering recognition of Commmist China but was watching developments and was anxious to be — kept informed of US policy regarding China, Fortunately for US-Brazil relations, the sensational publicity given to US Congressional hearings on the coffee prices, which appeared to place the onus of trouble on Brazil, was ended before there was any serious threat to the good rela~ tions existing between the two countries, The Foreign Minister has advised the US that Brazil will oppose establishment of a high commissioner under the UN to handle refugee problems when IRO is terminated, as it was his belief that it would be both illegal and too costly. Brazil can be expected to continue its efforts to cut costs in the operation of the UN and its specialized agencies, During the past three months, economic agreements were con~ cluded with Spain, Portugal, and Italy, (See Economic section,) There has been no change in Brazil's relations with its neighbors, (See D/IA Wkly, 4 Oct 9.) Approved For Release 1999/09/02sR@aRERDP79-01090A00020004004 3-2 oreo Economic Approved For Nelease 1999/09/02 .1A-RDP79°84090A000200040013-2 Weekly Contributicns, D/LA. | 28 December 1919 (CIA Working Paper) Situation Menorandum TERLO The Current Situation in Guatemala az eater ae TP aE PERS ES Hef el ces a ITS (S —~ Although the army remains a potential threat cr) stability of the Arévalo government, the possibility of an army revolt in the coming months has decreased, In domestic political affairs, the government continues a cautious, moderate course, The national economy remains stable, Oonditions remain unfevorable for the expansion of Commmist influence. No change in the basic objectives of Guatemalan foreign policy is apparent, Relations with the Caribbean "dictatorships" remain unfriendly, : == A favorable development, from the standpoint of US security interests, is the increased stability of the Arevalo government, in conjmetion with its concilia~ tory attitude toward US business interests and possible minimization of its aid to Caritbean revolutionaries, ) Political — @ political situation je characterized by an easing of tension, The government has not, in general, deviated from the cautious course on which it embarked soon after the assassination of Col, Arana in . duly. Since the removal of Mufios Meany as Foreign Minister, no other prominent ieftists have left the governmnt, However, foreign service appointwents have been given te a number of persone allegedly involved ‘in the Arana assassination plot and to leftists unpopular in Guatemala, Removal of these individuals from the local scene has possibly aided in reducing domestic political tensions. A moderate course is also being taken by the three Arevalista political parties (the PAR, PRN, and the FPL), as.has been indicated by their rejection of Jorge Garofa Granados as a coalition presiden- tial candidate, Garcia Granados, one of the principal authors of the libsral 19:5 constitution ard a prominent leftist politician and diplomat, has not abandoned his candidacy, and a new party, the Partido del Puebic, has been formed to support hin, D/LA estimtee that there will be no great change in the political situation in coming months, econony of Guatemala, largely dependent upon the production and sale of coffee, remains basically sound and shows no signs of adverse change in the near future. Despite flocd damage, the coffee crop is expected to equal that of last year, Coffee income should Approved For Release 1999/09/02, GlasRDP79-01 0900002000401 3-2 les Approved For Ritéase 1999/09/02, C1A-RDP79-04%690A000200040013-2 Weekly Contributions, D/LA ~2~ 28 Decenber 1949 (CYA Working Parez) 1m 3 Situation Memorandum 76-149 be higher this year, due to increased prices, and should help to correct the adverse trade balance, It is true that a large number of Guatemalan producers, who sell their coffee on contract, will not benefit fram the recent sharp rise in coffee prices, However, coffee produced on govern~ went~operated farms, which is sold at auction, should bring in larger — revenues, which should aid the government in extricating itself from current financial difficulties, Proceeds from a 15 percent incrsses in coffee export taxes, and other possible tax increases, may help the government balance its budget, if this appears possible, it is unlikely that Guatemala will ask for a rehabilitation loan from the International Bank, which would be politically undesirable in an election year, Guatemlan government officials have continved their rather con- ciliatory attitude toward US business interests, However, with the complete withdrawal of US petroleun interests, the possibility of the early exploitation of Guatemalan of1 reserves has vanished, 15 : TT though the loyalty of the army to the Arévalo government remains qusstionable, the possibility that Major Pax Tejada (the new Chief of the Armed Forces) will lead a revolt or attempt to disarm or disband civilian leftists now appears slight, Major Faz, who revealed such plane soon after his appointment, has displayed inexperience and a . Jack of confidence in his own resources, Moreover, disastrous floods in October permitted the government te ddclare a national emergency, followed by the suspension of constitutional guarantees, in the course of which a nuxber of oppositionists (including some former army offi~ cers) were arrested and deported, While the sympathies of the arny were indicated by the acquittal, in a milita court, of 21 officers aocused of participation in the revolt of 12-19 July, the strength of anti~arny elements in the government is show by the subsequent sen- tencing of thess men to prison terms, - Subversive - a. the existing leftist political parties seoking a compromise candidate, and with the government itself following a more cantious and moderate policy, conditions are unfavorable at this time for the expan~ Sion of Communist political influence, In the field of labor, there has been little changa in Communist influence, In governmental affairs, it is true that the strongly pro~Commmist Carlos Manuel Pellecer was recently given an appointment in the Guatemalan legation in Paris, which may indicate that the new Foreign Minister, Gonzdlez Arévalo, is not immune to leftist pressure within the government. Fellecer, who would have been in a strategic position to aid Buropsan Communists had he not been deported to Belgium by the French government, is, by US standards, a dangerous troublemaker, However, in view of other recent Approved For Release 1999/09/02 : CIA-RDP79-01090A000200040013-2 Sir 10, “yo 4 [ Approved For Rtfease IaSeitS aaebes ono rioeOnoaepOnAoE Weekly Contributions, D/IA ~3~ 28 Deceuber 1949 (CIA Working Paper) Situation Memorendum 76-4,9 foreign service appointments, his appointment may have been due to a desire, on the part of the administration, to remove him from the local political scene and to ease domestic tension, This ia suggested by the determination with which the governsent ignored French protests prior to Pellecer's departure.. Commnists and pro~Communists my be expected to become more active as they attempt to coordinate and consolidate their activities in the 1950 political campaign, but D/IA considers any significant expansion of Communist influence in Guatemala unlikely at the present time. International aa ts foreign policy remains basically unchanged, Its fundamental principles continue to include opposition to "dictator~ ships", cooperation and friendship with "democracies", opposition to "colonialism, and a fundamental alignment with the 0. Current emphasis is being placed upon the betterment of relations with the 0 and the denial of official involvement in plots to overthrow the govern~ ments of other circum-Caribbean countries, The continued presence in Guatemala of Caribbean Legion members and the known antipathy of Arévalo's administration to Trujillo and Somza have been manifest in numerous rumors, accusations, and implications. In recent months, however, there has been no concrete evidence that foreign revolutionists within Guatemala have been aided by thea Guate~ milan government in their plots against Honduras, Nicaragua, or the Dominican Republic, D/IA considere it doubtful that the Guatemalan government will, in coming months, give material aid to such revolie tionists, or that it will greatly encourage their activities, Approved For Release 1999/39/02 : CIA-RDP79-01090A000200040013-2