270. National Intelligence Estimate1

NIE 92–56


The Problem

To estimate the character and future stability of the present government.


As shown in the recent elections, the moderate leftist Nationalist Revolutionary Movement (MNR) regime has successfully consolidated its position and achieved a degree of political stability unusual for Bolivia. However, Bolivia’s basic economic problems have been aggravated by the MNR’s tin nationalization and land reform policies. These policies led to decreased agricultural output and increased tin mining costs at a time when world tin prices were declining, and they accelerated the inflationary trend. Only US aid has prevented collapse of the regime. (Paras. 10–22, 32–37)
The only opposition party capable of even a limited challenge to the MNR is the right-of-center Bolivian Socialist Falange (FSB). The Communists are few in number, and the MNR has succeeded in reducing but not eliminating their influence. Although we do not believe that either the Communists or the FSB can develop sufficient strength to pose a serious challenge to the MNR during the next few years, we believe both the Communists and the rightist parties possess sufficient potential to exploit possible future economic deterioration or a split within the MNR. (Paras. 23–26, 44)
The strongest internal threat to political stability lies in the possibility of an open break between the moderate and left wings of [Page 557] the MNR. Since 1952 Juan Lechin, the influential leader of the left, has refrained from using his political power to unseat the Paz administration. For reasons of political expediency and party unity he will probably continue this policy toward the Siles government. We believe, however, that Lechin would not hesitate to move against President Siles if he felt that his power or freedom of political action were being seriously circumscribed either by design or by force of events. (Paras. 18–19, 42–43)
The stability and political orientation of the MNR will also be strongly influenced by its efforts to control inflation and by the external assistance it receives over the next few years. Withdrawal of US assistance would almost certainly lead to the adoption of more radical and nationalistic policies by the MNR, and would probably cause the repudiation of moderate MNR leadership and bring leftist MNR factions into power. We cannot at present estimate the political course of Bolivia after the emergence of such a regime. (Paras. 45–46)
In the event of an attempted overthrow of the government from the right, the civilian militia would support the regime and would almost certainly be joined by enough elements of the army and Carabineros to insure the survival of the government. The outcome of a conflict resulting from a left-moderate split within the MNR would be considerably more doubtful. For reasons of self-interest, if not of loyalty, the bulk of the army and the Carabineros would probably support the moderates against the large group of worker militia who would follow leftist leadership. Under present conditions, it is probable that the army and Carabineros combined could successfully defend the government against an attack by the militia alone, but any substantial defection from either army or Carabineros would make the outcome extremely doubtful. (Paras. 27–31)
Bolivia has shown increasing willingness to follow a pro-US foreign policy. It so far has manifested little interest in strengthening its negligible ties with the Soviet Bloc, despite several Bloc overtures. Should the Bolivian government feel that the country’s economic progress were being thwarted, either by deficient export earnings or inadequate US assistance, strong pressures would be generated within the MNR to develop and expand economic and other relations with the Bloc countries. (Paras. 48–49)


I. Background

Bolivia, despite substantial undeveloped natural wealth, is a desperately poor country. Formidable geographical obstacles and lack [Page 558] of transportation facilities have hampered national growth. The population of about three and a half million, consisting mainly of illiterate Indians and mestizos, is clustered mostly on the high Andean tableland, while the more fertile but less accessible lowlands to the east are largely undeveloped. Most of the population is rural and exists on a subsistence agricultural economy. Mining, principally tin, provides the great bulk of government revenues and foreign exchange.
Bolivia’s modern political problems are rooted in its traditional economic and social structure. The nation has long been divided into two almost independently operating economic systems: one based upon world markets and dependent upon the tin mining enterprises; the other based upon local markets and inefficient farming by large landholders. In both systems, the workers were largely immobilized by rigid social and “racial” stratification. Political control was exercised by the major mining interests and the large landholders, and was guaranteed by the army.
This pattern was initially shaken by the Chaco War with Paraguay (1932–1935). With the increased mobility and the contact between classes occasioned by the war, new values and aspirations were created as well as consciousness of a common nationality. The defeat of the army and the loss of prestige suffered by the ruling hierarchy contributed further to popular unrest. At the same time, the literate “middle class”3 became a susceptible target for Marxist propaganda, which helped articulate the general discontent. In the period following the Chaco War various political groups and movements of nationalist character, employing Marxist formulations, emerged to express the need for socio-economic change. The most effective of these groups was the Nationalist Revolutionary Movement (MNR). In the elections of 1951, the MNR, with strong urban middle class support, won a substantial plurality of the vote of the narrowly restricted electorate for its presidential candidate Victor Paz Estenssoro.4 However, his inauguration was forestalled by the incumbent government, which turned over its power to a military junta.
In April 1952 this junta was overthrown by a revolution organized by the MNR, and supported by the police and armed workers, who completely routed the army. Paz was recalled from exile in Argentina to assume the presidency. The MNR’s middle class leaders were at first unable to contain the momentum generated by the volatile popular forces released by the revolution. The armed mineworkers organization promptly moved into the vacuum created by the removal of the army. The MNR program called for eventual nationalization of the large mining companies but the pressure of the armed mineworkers forced MNR leaders to take more immediate and extreme action. Although leftist groups demanded expropriation without compensation, the MNR leaders acknowledged the obligation to compensate and have subsequently made some payments pending final agreement on terms with the companies. The regime also at first attempted to deal with the revolutionary agitation developing in rural areas by promising to enforce existing laws curbing the exploitation of the peasants by the large estate owners. However, when the peasants began seizing the lands, the MNR leaders agreed to sanction more radical actions than their original program called for, and in August 1953, they decreed widespread expropriation of large land holdings.
Such radical measures as these temporarily placated the extremist popular groups within the MNR. These measures enabled the MNR leadership to gain a considerable measure of cooperation from these groups and gave it an opportunity to shift toward a more moderate position. Timely US economic aid in November 1953 implied an endorsement of the MNR, and provided the means for achieving a new equilibrium of forces. Moreover, the offer of US assistance to cover emergency food shortages and to support long-range plans of economic diversification supplied the moderate leadership within MNR with leverage against both the left and the right of the party, and gave it a chance to stabilize the party organization.
The militancy of labor was gradually diminished. Some extremists and Communists were displaced from key positions in the Bolivian Workers Confederation (COB); others were persuaded to renounce their Communist allegiance and join the MNR. At the same time, the MNR’s political control of the country was strengthened as radical elements in government posts were reduced. In a further move to strengthen their position and to reduce the political appeal of the left, the MNR policy makers launched an ambitious economic program.
The attempt of some MNR leaders to orient MNR policy further toward the right and to circumscribe the influence of labor and the peasantry upon the party and the government was successfully [Page 560] fought off by Juan Lechin5 and his followers at the MNR party convention in January 1956. Foreign Minister Walter Guevara Arce,6 the proponent of rightward orientation of the MNR, was censured by the party and he resigned his cabinet post. Lechin demonstrated at the convention his very considerable strength, but has pushed his advantage no further; he and the MNR left have continued to support the moderate program formulated for the 1956 elections.
The political control exercised by the MNR together with the appeal of its program was reflected in the MNR’s overwhelming victory in the June 1956 elections. In elections which were relatively free from fraud and coercion, the MNR won 84.5 percent of the vote and substantial victory margins in each of the nation’s nine departments. The government party was thus assured of all 18 Senate seats and 63 of the 68 seats in the Chamber of Deputies. Vice President Hernan Siles Zuazo7 was elected President.

II. Present Political Situation

The Regime and Its Supporters

Despite severe economic difficulties, the MNR regime has achieved an unusually high degree of stability for Bolivia through the maintenance of party unity, the popular appeal of its revolutionary policies, the extension of the party apparatus in labor, peasant, and business organizations, and the continuing support received from the US. It has successfully consolidated its position of leadership and has struck a balance between its own interests and those of labor and rural groups, chiefly at the expense of the old propertied groups. Mining, urban, and rural labor have political representation and considerable influence in the government, but MNR middle class groups, both business and professional, form the bureaucracy and hold most of the top governmental posts. The old oligarchy is [Page 561] either in exile or stripped of power, and the army has been purged and offset by party, peasant, and worker militias, as well as by the police. The State, through the nationalization of the mines, has taken over the role of the powerful mining interests and now controls the exportable wealth of the nation. It has also, as a result of agrarian reform, largely eliminated the large landholders.
The party organization parallels the government structure at all levels, interlocks with it, and also extends into the social and institutional groups supporting the regime. Its political control is exercised through a party organization staffed by some thousands of party militants arrayed in an elaborate hierarchy, headed by the policy-making National Political Committee (CPN). The 19-man committee includes ex-officio the President of Bolivia, the Vice President, and two members of the cabinet. Eleven other professional people, three labor leaders, and one businessman are also members of the CPN. Nine members of the committee are moderates, eight are leftists, and the political affiliation of the remaining two cannot be determined.
The MNR exerts far reaching control over the national economy. It exercises direct influence in staffing the important semiautonomous economic agencies such as the Bolivian Mining Corporation, the Petroleum Corporation (YPFB), the state banks, and special planning commissions. Local businessmen have found it advisable either to join the MNR or hire MNR members to represent their interests before the government and the labor organizations. There is also an interlocking between labor and the MNR. Three members of the COB including Lechin are also members of the CPN.
The MNR has become an increasingly effective party because it developed a powerful organizational structure and because it was able to secure widespread popular support, a large part of which depends upon the backing of organized labor and of the civilian militia. The 1956 party platform, in particular, reveals that the most important factional differences within the MNR, which have appeared from time to time since 1952, have so far been resolved by the political requirement of party unity. The “moderate” sector of the party, which now exercises leadership, is headed by Siles and Paz. The “leftist” faction of the MNR, led by Lechin and by Vice President Nuflo Chavez,8 has differed from the moderates more in theoretical orientation and inclination than on specific party policy. [Page 562] These differences reside largely in the greater reliance of the leftists upon Marxist doctrine, their non-Communist rather than an anti-Communist attitude, their distrust of US aid and ultimate objectives, and their desire to accelerate popular reforms and to strengthen the civilian militia.
The relative strength of political factions in the government reflects in general the political alignments in the MNR party organization. The executive branch, traditionally the stronger of the two branches of government, is headed by a moderate president, who presides over a cabinet of predominantly moderate orientation. However, the Vice President is leftist. In the legislative branch, the moderates comprise at least half of the membership of the Senate, while in the lower house 45 of the 63 MNR deputies are responsive to labor and peasant interests, or are acceptable to Lechin. In view of this composition of the government one of the principal problems which faces Siles is control of the first elected legislature. So far, Lechin, who exercises considerable influence over the legislature, has demonstrated a general willingness to accept the moderate policies of the regime.
Middle class support of the MNR consists of the bureaucracy, unionized white collar workers, and some members of business and the professions. MNR has effectively infiltrated opposition business groups through party “delegates,” and in all urban centers, middle class members of the MNR hold positions of control either through business privileges or political appointments. However, the slim urban majorities gained by the MNR in the June elections indicate that the party is far from enjoying undivided middle class support.
Labor support for the MNR is effectively provided by the COB whose membership, comprising all rural, industrial, and white collar unions, is estimated at 240,000. The 60,000-man Mineworkers Federation, led by Lechin, is the most powerful COB affiliate, and the most articulate exponent and defender of the left wing point of view within the MNR. Even further to the left are the Railroad Workers Confederation, led by pro-Communist elements, and the teachers union, in which Communist influence is significant. Left wing influence has been partially balanced by the factory worker and some white collar federations, which have been consistently dominated by moderate elements within the MNR.
Although Bolivia’s peasant population (estimated at 2,500,000) provides the MNR’s principal electoral base, the 7,000 peasant organizations are not as tightly organized as the miners and urban workers, and the MNR has, therefore, been less successful in establishing control over them. Development of articulate support among the peasantry is handicapped by language barriers and by the [Page 563] traditional peasant isolation from national politics. However, MNR counterinfiltration has considerably curbed Communist strength among peasant groups.

The Opposition

The only opposition party capable of offering even a limited challenge to the MNR is the right-of-center Bolivian Socialist Falange (FSB). During the 1952–1955 period, the FSB along with other rightist parties was suppressed. It operated from exile and was dedicated to the armed overthrow of the MNR regime. Recently it was granted amnesty, legalized, and permitted to participate in the June 1956 elections. It was, however, allowed only a short time to organize and campaign. Though it won only 14 percent of the total vote and only five out of 68 seats in the Chamber of Deputies, it polled upwards of 40 percent of the votes in the main urban centers. FSB leadership is drawn mainly from middle class business and agricultural interests together with some discontented officers and ex-officers of the army. Its program calls for a de-emphasis of state intervention in the economy, reduction of labor’s political influence, and re-establishment of the army as the main defense arm of the nation. We believe that the FSB would not hesitate to use force to seize power and to attempt the elimination of the MNR as a political force in the country.
The extreme right, which represents the old oligarchy of large-scale business interests, large landholders, and former high army officers, is organized in the small Republican Socialist Union Party (PURS). While many PURS members took advantage of the political amnesty granted by the MNR in early 1956, the party itself refused to participate in the June elections and many potential PURS votes probably were cast for the FSB. The PURS objective is to overthrow the MNR by subversion and violence and restore the pre-revolutionary order. Although it is well financed and organized, its capabilities are negligible because of its small following.
The Communists in Bolivia are split into two principal factions. Together they polled only 1.5 percent of the vote in the 1956 elections and have no representation in Congress. The orthodox Communist Party (PCB) has roughly 2,000 members, drawn mostly from middle class intellectual elements, particularly in the school system. The Revolutionary Workers Party (POR), a Trotskyite group with about 1,500 members, is strongest among urban white collar unions. The two parties present a common anti-US front on foreign policy, but the PCB follows a policy of conditional support for the MNR while the POR maintains an uncompromising opposition. The legal and subversive capabilities of both parties have been declining [Page 564] over the past few years and are now very limited.9
MNR’s attitude toward the Communists has undergone considerable change since the 1952 revolution. Initially, it accepted Communist support in its struggle for power, but once in power, and especially since the receipt of US aid after 1953, it has adopted an increasingly anti-Communist position. It has periodically harassed party newspapers and meetings. It has reduced but not eliminated Communist influence in the government and among agrarian elements. Among the trade unions Communist influence is now appreciable only in the Railroad Workers Confederation, the teachers’ unions, and in certain other white collar unions. The MNR has not been able to diminish significantly the residual strength the Communists enjoy in the more articulate sectors of Bolivian society, particularly in the educational system.

Military and Para-Military Forces

The army, the bulwark of previous governments, was shattered by the 1952 revolution, but the MNR has rebuilt it to a considerable extent. Its present strength is about 11,000, including 6,000 one-year conscripts who receive little more than basic training. Its usable equipment consists largely of light infantry weapons, including machine guns and mortars, and a heterogeneous array of obsolescent light artillery. About one-third of the army is stationed in or near La Paz. These units contain the bulk of the better trained troops. The air force has 681 men, 57 of them pilots, and 43 aircraft, mostly trainers. Active support of the MNR within the armed forces is largely confined to the top officers who owe their appointments to the regime; the remaining personnel probably have no strong political leanings but are inclined toward the moderate section of the party. The armed forces want to see their own strength increased, MNR’s political control over them reduced, and the function of the para-military forces limited.
The National Corps of Police and Carabineros is a military-type organization of 5,000 to 6,000. In contrast to the army, the Carabineros supported the 1952 MNR revolution and have maintained their structure and organization intact. The training and morale of the approximately 500-man officers corps are good by Bolivian standards, and the Carabineros’ support of the MNR is probably firmer than that of the army. However, their capabilities are limited by the lack of formal training of the enlisted men, and [Page 565] lack of mobility, and their armament consists almost entirely of small arms. There is also a group known as Political Control, numbering about 600 which is closely associated with the Carabineros. This group was formerly a part of the Carabineros’ organization but now appears to be directly responsible to the Minister of Government (Interior). Its primary function is to serve as political police and to control and harass opponents of the regime.
There is an armed civilian militia consisting of: (a) a security force of 1,500 composed of MNR units directly responsible to the party’s National Political Committee, (b) a worker militia of about 10,000 organized on both union and federation levels, and (c) the Rural Police forces. The security force is the best organized and disciplined of the three. During the presidency of Paz, it was believed to be personally loyal to him; we do not know to what extent this loyalty has been transferred to Siles. The worker militia is theoretically organized into a hierarchical structure with a unified top command, but discipline in actual practice is extremely poor and primary loyalties are to local unions. In addition, the training and equipment of the worker militia are poor. The Rural Police forces are poorly trained and relatively few of them are armed. Though theoretically under the control of the Minister of Rural Affairs, in actual practice the local units display considerable autonomy.
The MNR originally assisted in the organization of the civilian militias in order to bring the armed portion of the populace under its control and to provide a counterweight to the army. Since mid-1955 the government has taken some steps to curb the civilian militia, while at the same time gradually increasing the size of the Carabineros and rebuilding the regular army. However, the objections of the left wing of the MNR have forced the government to proceed cautiously and slowly. In any event the MNR is determined not to allow the army to re-emerge as an independent force.
In the event of an attempted overthrow of the government from the right, the civilian militia would support the regime and would almost certainly be joined by enough elements of the army and Carabineros to insure the survival of the government. The outcome of a conflict resulting from a left-moderate split within the MNR is considerably more doubtful. For reasons of self-interest, if not of loyalty, the bulk of the army and the Carabineros would probably support the moderates against the large group of worker militia who would follow leftist leadership. Under present conditions, it is probable that the army and Carabineros combined could successfully defend the government against an attack by the militia alone, but any substantial defection from either army or Carabineros would make the outcome extremely doubtful.
[Page 566]

III. Economic Situation

MNR’s efforts to achieve domestic political stability have been complicated by Bolivia’s serious short-range economic difficulties and the many obstacles to longer-range economic growth. The former have been intensified by inflationary policies. The latter is hampered by formidable obstacles to communication; low levels of technology, literacy, health, and living conditions; lack of investment capital; and the tendency of the Indian population to cling to traditional ways. The population is growing at the rate of 2.5 percent annually. Three-quarters are engaged in agriculture, which is mostly on a subsistence level, and the small amount of commercial agriculture is inadequate to meet the needs of the half million urban population and the quarter million in mining areas. Thus Bolivia has to import a large part of its food. Industrial development, aside from mining, is limited to a few simple processing and fabricating industries; it is retarded by the smallness of the local market, high transportation costs, and the inadequacy of domestic raw materials and fuels. Thus such demand as exists for manufactured goods must also be satisfied from abroad. Under these conditions, Bolivia’s economy is largely dependent upon mineral exports, mostly tin, antimony, and tungsten, with tin exports supplying in recent years about 70 percent of Bolivia’s foreign exchange.
Chiefly because of the decline in tin output and rise in production costs at a time when post-Korean world tin prices were declining, Bolivia’s export receipts dropped from $124.7 million in 1951 to $78.5 million in 1955. The MNR’s nationalization of the tin corporations aggravated Bolivia’s economic difficulties. The tin nationalization and land expropriation were politically inspired measures; their economic effect was to reduce the output of minerals and foodstuffs by reason of government inefficiency and maladministration and the lack of labor discipline. Tin output was also adversely affected by the declining content of the ore.
The erratic course of Bolivian agricultural production and the failure to close the gap between output and requirements have been due partly to expansion of subsistence farming at the expense of commercial agriculture, partly to the decision of the government to sell US food grants at prices which discouraged local farmers, and partly to illegal re-exports. Moreover, internal demand for foodstuffs continued to increase because of the growth of population and apparent increase in per capita consumption.
Thus Bolivia has had a continuous deficit in its balance of payments since 1952 and its foreign exchange holdings have been exhausted. At the same time inflation has accelerated. Despite the high costs of tin production, the government has been obliged to [Page 567] continue this costly operation in order to pay for vital foodstuffs and other essential imports, while making up the price-cost differential by printing bolivianos. The continuing shortage of all types of consumer goods, including foodstuffs, and the MNR regime’s inability to resist pressure for higher wages and prices also have contributed to the inflationary spiral. In two years, 1954–1955, the cost of living more than tripled and the total money supply increased from 16.6 billion bolivianos to 56.1 billion.
Emergency US aid beginning in November 1953 has enabled the MNR regime to meet its immediate foodstuff deficit and at least temporarily stave off collapse of the government. It also helped launch development projects designed to gradually reduce Bolivia’s dependence on foreign aid, and helped create a favorable climate for foreign private investment. Of the $20 million US grant aid sent to Bolivia in 1955, the continuing foodstuff deficit absorbed two-thirds. Counterpart funds arising from this aid and an additional $6 million in US development aid provided financing for development projects. Since 1955, US private investment, especially in the petroleum industry has been emerging from the planning stage and promises to play a significant role in Bolivia’s economic development. In most respects, however, Bolivia’s economic problems—coping with inflation and developing agriculture, petroleum, and mineral resources other than tin—still await solution.
Agricultural development is the most essential element in MNR’s long-range program of diversifying the economy and lessening Bolivia’s dependence upon mineral exports. However, the farm population is slow in reorienting itself towards direct participation in the money economy. MNR attempts to reduce Bolivia’s dependence upon agricultural imports by guaranteed prices for domestically produced foodstuffs have thus far failed. The guaranteed prices were originally set too low to provide an incentive to domestic producers, and this program has been further vitiated by the rapid inflation.
The government has undertaken on a fairly large scale expansion of agricultural activities in the Santa Cruz district where the social problems of older settled centers are not a limiting factor. The main problem is to settle farmers in this promising virgin area by both immigration and internal migration. A limited number of Okinawan and Japanese settlers have already come into the Santa Cruz district, and the MNR is welcoming additional immigrants. Internal migration is somewhat impeded by the difficulties inherent in adapting people from the high altitudes to the tropics. However, the government is proceeding on the long-range assumption that migration will be stimulated by the growing scarcity of subsistence land in the settled highland regions, coupled with favorable facilities for land acquisition in the southeast. The groundwork for making [Page 568] the Santa Cruz area accessible to main food consuming centers has been laid with the completion of the Cochabamba–Santa Cruz highway. The region still requires the development of a network of secondary roads to serve as feeders to the main highway.
A more immediately promising prospect is the young and expanding petroleum industry, largely operated by the government petroleum corporation (YPFB). This industry has been relatively free of social and political pressures, and has recently welcomed foreign private capital both in exploration and exploitation. Output has risen gradually since 1952 to 7,360 barrels daily at the end of 1955. Proven reserves are now estimated at 50 million barrels, and estimated reserves are vastly greater. Since 1954, Bolivia has been virtually self-sufficient in petroleum products, and it is now exporting about $6 million worth of petroleum annually to neighboring countries. Foreign private capital, principally the Gulf Oil Corporation, is currently planning to expand Bolivia’s export capacity by a stepped-up exploration and drilling program and by financing construction of a ten-inch pipeline to the Pacific Coast.

IV. Probable Domestic Developments

Bolivia’s future political stability will depend greatly on the extent to which the government succeeds in solving the nation’s economic problems. In the immediate future the government is not likely to solve the problem in the mining industry, despite the reorganization of the Bolivian Mining Corporation. Though encouraging progress has been made in the petroleum industry, it will take many years before this industry can make a major contribution to the economy’s viability. However, while expansion of agricultural activity is not likely in the near future to be sufficiently large to enable the country to dispense altogether with continued food receipts from the US, a more appropriate domestic price policy would tend to reduce the need for such assistance.
We believe that the Siles regime will make some economic progress. This belief is based on the probability that the economic maladjustments resulting from the revolutionary upheaval have about run their course, on the promise of sizable foreign investment, on the impact of technical advice and assistance, and on the fact that the MNR appears more aware of the dangers of rapid inflation and more inclined to consider corrective measures.
The continuance of the MNR regime as a successful going concern will largely depend upon the leadership and activities of a few key men. The acknowledged leader of MNR is outgoing President Paz, but his appointment as Ambassador to Great Britain removes him from the local political scene, at least temporarily. President Siles, though respected as the leader of the “moderate” [Page 569] faction, lacks Paz’ economic and political skills and his personal popularity. Whether he will have a serious problem coping with an uncooperative “leftist” faction and/or a recalcitrant Congress will depend not only upon his own tact and skill, but also upon the actions of Vice President Chavez and COB head Lechin, both of whom are Marxist in thinking.
Although we believe that for reasons of political expediency and party unity Lechin will probably refrain from using his political power to unseat the Siles administration, he represents a latent threat to MNR stability and to continued dominance of its moderate faction. Lechin’s political strength derives primarily from his direct control of the Mineworkers Federation and its militia. As Executive Secretary of the COB he exerts considerable influence over the other component unions of the Confederation. He is a member of the CPN and enjoys the personal support of many highly placed MNR members. Finally, as President of the Senate he may have acquired a new potential for exercising political influence. If Lechin felt that his power or freedom of political action were being seriously circumscribed either by design or by force of events, we believe that he would not hesitate to move against Siles.
We believe that neither the Communist parties to the left nor the FSB and PURS parties to the right are likely to develop sufficient strength to pose a serious challenge to the MNR during the next few years. However, we believe that both the Communists and the rightist parties possess sufficient potential to exploit the opportunities provided by a sustained deterioration of economic conditions, a failure in the longer-run to show economic improvement, or an open break between the leftist and moderate wings of the MNR.
Both the stability and the political orientation of the MNR regime will be strongly influenced by its efforts to control inflation and by the level of US assistance it receives over the next few years. If US aid remains adequate to meet Bolivian food import requirements and to contribute some financial support and technical assistance for economic development and stabilization programs, the government will probably continue its present policies and be able to maintain internal stability. Although the MNR could probably survive a significant reduction in US assistance for some time, accelerated inflation, economic stagnation, and increasing political instability would probably result. A total withdrawal of US assistance would almost certainly lead to adoption of more radical and nationalistic policies by the MNR, and would probably cause the repudiation of moderate MNR leadership and bring leftist MNR factions into power.
We cannot at present estimate the political course of Bolivia after the emergence of such a regime. The factors which would most directly condition the stability and the character of this or any successor government would be the political orientation and capability of the army and Carabineros, the cohesiveness of the left wing groups and their militias, the capabilities of the groups presently in opposition for uniting to provide leadership and political appeal, and the attitude of the US.

V. Trends in Foreign Relations

Since 1952, Bolivia’s traditional concern for securing an outlet to the sea has been subordinated to the more urgent requirements for development of friendly relations with all neighbors in order to permit the consolidation and strengthening of the MNR revolution at home. This foreign policy reorientation has been accompanied by a small but developing network of economic ties. With neighboring Chile, Peru, Paraguay, and Brazil, the MNR regime has succeeded in strengthening both political cooperation and economic relations. However, Bolivia’s ties with Argentina have been weakened by US replacement of Argentina as the chief supplier of Bolivia’s food imports, by the emergence of a new government in Argentina basically unsympathetic to the MNR, and by the counterrevolutionary activities of rightist Bolivian exiles operating from northern Argentina.
The Bolivian government’s policy toward the US is primarily determined by its desire for US economic support. The MNR’s initial attitude toward the US was unfriendly since the political and economic climate of the revolution encouraged an “anti-imperialist” and anti-US line. With increasing realization of its own lack of capabilities to meet its long-range economic objectives, let alone immediate food requirements, the MNR regime, hoping for US assistance, began to reverse its stand. Since November 1953, when the US first granted emergency aid and development assistance, the MNR has shown greater willingness to follow a course advised by the US, including a recognition of the role of private capital in developing national resources. Since 1954, MNR officials have sought to convince the people that Bolivia’s interests will best be served by cooperating with the US. In the UN and OAS, Bolivia, like the rest of Latin America, often diverges from the US position on economic, colonial, and racial questions, but the MNR regime has generally followed the US lead on important political issues. A major reduction in US aid would almost certainly strain US-Bolivian diplomatic relations and adversely affect Bolivia’s political cooperation with the US.
Except for diplomatic and commercial ties with Czechoslovakia, Bolivia maintains only sporadic contacts with the Soviet Bloc. So far it has manifested little interest in strengthening its negligible economic ties with the Soviet Bloc, despite several overtures from that direction. Should the Bolivian government feel that the country’s economic progress were being thwarted, either by deficient export earnings or inadequate US assistance, strong pressures would be generated within the MNR to develop and expand economic and other relations with the Bloc countries.10
  1. Source: Department of State, INRNIE Files. Secret. National Intelligence Estimates (NIEs) were high-level interdepartmental reports presenting authoritative appraisals of vital foreign policy problems. NIEs were drafted by officers from those agencies represented on the Intelligence Advisory Committee (IAC), discussed and revised by interdepartmental working groups coordinated by the Office of National Estimates of the Central Intelligence Agency (CIA), approved by the IAC, and circulated under the aegis of the CIA to the President, appropriate officers of Cabinet rank, and the National Security Council. The Department of State provided all political and some economic sections of the NIEs.
  2. A note on the cover sheet reads as follows: “Concurred in by the Intelligence Advisory Committee on 11 September 1956. Concurring were the Special Assistant, Intelligence, Department of State; the Assistant Chief of Staff, Intelligence, Department of the Army; the Director of Naval Intelligence; the Director of Intelligence, The Joint Staff. The Atomic Energy Commission Representative to the IAC, and the Assistant Director, Federal Bureau of Investigation, abstained, the subject being outside of their jurisdiction.”
  3. The term “middle class” is used in this estimate to describe the bureaucracy, white collar workers, and the middle levels of business and the professions. It should be noted that in Bolivia this group differs markedly from groups described as middle class in the United States. The size of this group is relatively much smaller in Bolivia, its level of income is considerably lower, and it does not share a common framework of political and social beliefs to anything like the same degree as the corresponding groups in the US. [Footnote in the source text.]
  4. Paz was formerly Vice President of the Chamber of Deputies (1940–1941), Minister of Economy (1941), member of Government Junta (1943–1944), Minister of Finance (1945–1946), in exile in Argentina (1946–1952), President (1952–1956). He is presently Ambassador-designate to Great Britain. [Footnote in the source text.]
  5. Lechin has been Bolivia’s leading labor leader since 1952. Under arrest or in exile between 1949 and 1951, he returned after the 1952 revolution to become Minister of Mines and Petroleum until 1954. He is the Executive Secretary of the Bolivian Workers Confederation (COB), a member of MNR’s policy-making National Political Committee (CPN), President of the Senate, and acknowledged leader of MNR’s left wing. He has frequently expressed Marxist beliefs, but charges that he is pro-Communist have not been documented. See also paragraph 43. [Footnote in the source text.]
  6. Guevara was in exile in Argentina (1946–1949), Senator (1951), CPN member (1952–January 1956). [Footnote in the source text.]
  7. President Siles has been a top MNR leader since 1941. He was in exile, under arrest, or clandestinely directing MNR forces in Bolivia between 1946 and 1951. He helped plan the 1952 revolution and took charge of the provisional government until after the arrival of Paz from exile in Argentina. He was Vice President from 1952 to 1956. Formerly he displayed an anti-US attitude but over the past few years he seems to have become increasingly convinced that Bolivia must maintain friendly relations with the US. [Footnote in the source text.]
  8. Vice President Chavez, long time MNR party militant, was in prison and in exile for participation in revolutionary activities between 1949 and 1952. He was Minister of Rural Affairs between 1952 and 1956. He has Marxist tendencies, but he is believed to be non-Communist. His international sympathies are unknown. [Footnote in the source text.]
  9. A group of “ex-Communists” including Edwin Moller, long a Trotskyite and now editor of the COB paper “Rebelion,” joined the MNR in 1954. In the 1956 elections, Moller and five others of this group won seats in the lower house. Moller represents the MNR’s extreme left and reportedly still maintains contact with the Trotskyites. [Footnote in the source text.]
  10. A map showing the location of strategic mineral resources is appended to this estimate, but is not printed.