Foreign Relations of the United States, 1958–1960, Volume V, Microfiche Supplement, American Republics

VE–13. National Intelligence Estimate¹

NIE 89–58

Washington, September 9, 1958

THE VENEZUELAN SITUATION AND PROSPECTS² THE PROBLEM

To analyze the political situation in Venezuela and to estimate the prospects for the establishment of a constitutional regime and the probable political character of such a regime.

CONCLUSIONS

1. Venezuela’s present political situation reflects the strains inherent in a transition, in one generation, from an oligarchic social order toward a democratic welfare state. Long-term dictatorships have been the rule in that country, except for a brief interval of democracy, 1941–1948. (Paras. 12–14)

2. In 1948 the elected Acción Democrática government was overthrown by a military coup because it attempted to subordinate the military to the civil power. The Pérez Jiménez dictatorship which followed it was overthrown in January 1958 when the armed forces withdrew their support in the face of a universal civilian demand enforced by a general strike. (Paras. 14–17)

3. The stated mission of the present ruling Junta is to bring about the establishment of a democratic constitutional government through elections now scheduled for November. The chief threat to the accomplishment of its mission is that of a military coup to prevent the return of Acción Democrática to power. (Paras.18, 34–35, 39–41)

4. All political parties in Venezuela are supporting the Junta, opposing military intervention in political affairs, and demanding effective democratic government with full civil rights. Their solidarity and the threat of a new general strike have hitherto deterred any effective coup attempt, although one nearly occurred in July. (Paras. 19, 27, 35)

5. “National unity” will be the watch-word of the Venezuelan political parties as long as there remains any real or supposed threat of a military coup. The major parties regard the possible restoration of military dictatorship as a more serious danger than that of Communist penetration and are unwilling to forego the contribution which the Communists can make to a united civilian resistance. In these circumstances, the Communists are ensured the opportunity to function freely as a legitimate party and are shielded from political attack. (Paras. 27, 40, 47)

6. The Communists probably represent no more than five percent of the Venezuelan electorate. They exert a disproportionate influence through their infiltration of key positions in organized labor, the press, the teaching profession, and student organizations. They have also achieved some success in their efforts to infiltrate the government and the major leftist parties. In national politics, however, their influence is not comparable to that of the major leftist, but non-communist, parties—Acción Democrática, COPEI, and URD—which together represent about 90 percent of the electorate. (Paras. 20–25, 30, 43)

7. Since the July crisis, the likelihood of a concerted effort on the part of the military to seize power appears to have receded, although there was an uncoordinated and abortive coup attempt on 7 September and the situation between military and civilian elements is now tense. The military are still apprehensive regarding the political trend, but are manifestly reluctant to take on a united and determined civilian resistance. On their part, the Junta and the parties fear a coup and will probably take care not to provoke one, although they will also continue their efforts to improve their position vis-a-vis the military. (Paras. 36–41)

8. The maintenance of “national unity” is precarious. It will require the nomination of a single presidential candidate agreed upon by the three major parties and also acceptable to the military. The selection of such a candidate will be a very difficult and delicate matter. (Paras. 42–45)

9. Any representative Venezuelan government will conform in general to the nationalistic programs of the three major parties (AD, COPEI, and URD). In particular, such a government will seek a greater share in the profits of the petroleum industry. (Paras. 19–24, 51)

In Venezuela strong popular feeling holds the United States accountable for undue intimacy with the detested Pérez Jiménez dictatorship and for a supposed general preference for dictatorships in the Caribbean area. Any foreseeable government, however, will desire to maintain friendly relations with the United States, though remaining highly sensitive to any apparent U.S. lack of regard for Venezuelan democracy and sovereignty. (Para. 54)

11. A democratic Venezuela will continue to side generally with the West against the Soviet Bloc, in the UN and elsewhere, but this support will not be dependable in situations in which Western imperialism in underdeveloped countries is alleged. (Para. 53)

DISCUSSION

ESSENTIAL BACKGROUND

12. Venezuela’s present political situation reflects the strains inherent in a transition, in one generation, from a tradition of dictatorship and an oligarchic social order toward a democratic welfare state. Until as recently as 1935 the country was ruled by a succession of long-term dictators. When the 27-year dictatorship of Juan Vicente Gómez ended with his natural death in 1935, the Army was the only organized body available to assume the direction of public affairs. Gómez’ immediate successors, Generals Lopez Contreras (1935–1941) and Medina Angarita (1941–1945), were not radical reformers, but they did desire to liberalize political and social institutions. This liberalization released forces demanding more radical political and social change.

13. In 1945 the Medina government was overthrown by a group of younger officers impatient to succeed their elders, acting in combination with Acción Democrática (AD), a civilian group advocating more rapid and extensive social and political reforms. Under the leadership of Rómulo Betancourt (AD), the ensuing provisional government initiated sweeping constitutional and electoral changes. In the subsequent presidential election (in 1947), the AD candidate, Rómulo Gallegos, was credited with 75 percent of the apparently free popular vote.

14. The social democratic program of Acción Democrática was generally comparable to that of the British Labor Party—but, against the Venezuelan background, that seemed radical indeed to conservative business and landholding interests which denounced AD as communistic. On the other hand, the Communists, tolerated by AD as a matter of democratic principle and as allies against conservative reaction, regarded AD as their principal rival for popular support and for the control of mass organizations. Acción Democrática withstood these antagonisms, but was undone when, emboldened by its popular mandate, it undertook to subordinate the military to the civil power. Foreseeing the loss of its special privileges, concerned by the radical tendencies of AD, and supported by the civilian elements which shared this concern, the same military group which had brought Acción Democrática to power proceeded to overthrow the Gallegos government, in November 1948.

15. The military junta which took power in 1948 had no program other than to destroy Acción Democrática and to ensure its own continuing control of the country. Although initially welcomed by the social elements and political parties opposed to Acción Democrática, it was unable to secure any substantial and enduring civilian political support. Seeking to legitimize its rule, the Junta, in 1952, held an election for a constituent assembly, expecting that pro government candidates would be returned by a people grateful for its beneficent administration. When it became apparent that, instead, the assembly would be controlled by parties demanding a return to democratic government, a news blackout was imposed, the election returns were falsified, and Col. Marcos Pérez Jiménez assumed the presidency “by decision of the armed forces.” Although Pérez Jiménez subsequently went through the form of a “constitutional” election by his hand-picked assembly, his regime was a scarcely veiled military dictatorship under which all political parties were eventually suppressed or stultified.

16. Constantly increasing petroleum income enabled the Pérez Jiménez regime to undertake spectacular programs of public works and of industrial and agricultural development, but these resulted in no substantial improvement in the living conditions of the masses of the people. All elements of society were antagonized by the ostentatious benefits conferred upon the favored few, and by the ruthless police state methods of the regime. In 1957 the approaching expiration of Pérez Jiménez’ “constitutional” term stimulated opposition activity. On May Day the Archbishop of Caracas ventured to denounce the pretense that Venezuela was a workers’ paradise. The suppressed political parties began to concert their activities through a clandestine Junta Patriótica. Even within the military establishment conspiracy against the regime began to develop. In December Pérez Jiménez re-elected himself to a second five year term by means of a yes or no plebiscite, but this totalitarian proceeding made his opponents only the more determined to be rid of him before inauguration day.

17. The regime itself precipitated the revolution by arresting the commander of the Army, Brigadier General Hugo Fuentes, the second-ranking Air Force officer, Colonel Jesús Maria Castro León, and other officers for conspiring against the government. A disorganized coup-attempt by their supporters was easily suppressed. Despite this victory of the regime, respectable civilian professional groups were stimulated to demand a restoration of democratic liberties. In consequence, there were recurring crises between the regime and its military supporters. The climactic manifestation of popular hostility was a general strike organized by the Junta Patriótica. On the night of 22 January, the second day of the strike, the military told the dictator that he must go.

MAJOR ELEMENTS IN THE EXISTING POLITICAL SITUATION

18. The Junta del Gobierno. Venezuela is now ruled by a Junta composed of three military and two civilian members and dominated by its president, Rear Admiral Wolfgang Larrazábal.³ The Junta exercises the functions of the presidency; there is, in addition, a cabinet composed of men selected primarily for their technical competence, rather than as party representatives. The stated mission of the Junta is to bring about the re-establishment of democratic constitutional government through elections now scheduled for November.⁴ The chief threat to the accomplishment of its mission is that of a military coup to prevent the return of Acción Democrática to power. In military and some civilian circles, Larrazábal is strongly suspected of unduly favoring that party, as well as of unwise leniency toward the Communists.

19. The Political Parties: General. All Venezuelan parties are of recent origin: the Communist party was organized clandestinely in 1931; the oldest non-Communist parties date only from the election of 1941. The programs of the three major parties (AD, COPEI, and URD)⁵ are strikingly similar, being distinguishable only by minor differences of emphasis. They are socialistic and nationalistic, favoring social welfare measures, varying degrees of government direction of the economy, and greater Venezuelan control of basic industries. The minor parties of the right-center show strong traits of mid-19th century liberalism. All parties are supporting the Junta, opposing military intervention in political affairs, and demanding effective democratic government with full civil rights.

20. Inasmuch as there has been no free election in Venezuela since 1948, the relative strength of the various parties is difficult to estimate. Some 40 percent of the electorate has come of age since that date. Chiefly on the basis of the consensus among their political rivals, we estimate that AD represents at least half of the electorate and COPEI about a quarter. The remaining popular support is divided among URD, the Communists, the relatively conservative Integratión Republicana, and six minute political groups, probably in that order, with URD far in the lead of the others.

21. Acción Democrática, headed by Rómulo Betancourt, is conceded to be the largest party in Venezuela and claims to be the majority party. It probably is the majority party in the chief urban centers, but not in the smaller towns and the countryside. It seeks membership at all levels of society, but relies on its strong labor support for the bulk of its votes. The party is roughly comparable to the social democratic parties of Western Europe. It advocates industrialization and agrarian reform, a broadening of the economic base to lessen the nation’s dependence on petroleum revenues, and a larger share for Venezuela in the profits of the petroleum industry. While recognizing the importance of foreign private capital in Venezuela’s economic development, it proposes to regulate such investment more closely in the national interest and favors gradual Venezuelan private or governmental acquisition of majority control or ownership of Venezuela’s natural resources and basic industries.⁶ In world affairs, Acción Democrática sides with the West as against the Soviet Bloc. At the same time, it bitterly resents the supposed role of the United States in support of the Pérez Jiménez dictatorship and other dictatorships in the area, is strongly anti-imperialist in sentiment, and advocates greater Latin American unity in dealing with the United States.

22. There is in Acción Democrática a younger element impatient of the older (Betancourt) leadership and disposed to proceed more impetuously toward the realization of party objectives. The difference is one of tactics rather than of purpose. The younger element, conscious of the party’s popular strength, would forego efforts to reach agreement with other parties regarding a joint presidential candidate and would present a party candidate, at the risk of provoking a military coup. Indeed, they would welcome a showdown with the military rather than avoid it. Past experience has taught Betancourt and his generation greater discretion. At the recent party convention, the Betancourt group demonstrated its continued control of the party machinery. Therefore the party, as such, will probably continue to maneuver with circumspection. In frustration and impatience, the younger element may tend increasingly to take its lead from the more aggressive Communists.

23. Partido Social Cristiano Copei. COPEI, led by Rafael Caldera, resembles the Christian social democratic parties of Western Europe. It appeals to practicing Catholics in all walks of life. Originally the predominant influence in the party was that of rural conservatives in western Venezuela, but since 1949 the reformist segment in the Caracas area has gained control. The Church’s increasing emphasis on social action to improve the status of the workers may enable Caldera to hold COPEI’s rural Catholic support while increasing the party’s attraction for urban elements. COPEI’s program is much the same as Acción Democrática’s, the essential difference being that between COPEI’s Catholic approach and AD’s secularism.

24. Unión Republicana Democrática (URD), led by Jovito Villalba, represents primarily urban middle class elements: intellectuals, professional men, and industrialists. Its main area of popular support is in eastern Venezuela. The party program is similar to that of Acción Democrática, but, like COPEI, it favors less government ownership of basic industries. In the abortive election of 1952, from which Acción Democrática was excluded, URD apparently attracted a heavy proportion of the AD vote, but it probably could not hold that support in competition with Acción Democrática itself.

25. Partido Comunista Venezolano (PCV). The Venezuelan Communist Party was organized clandestinely in 1931, emerged as a legitimate political party in 1945, was driven underground by Pérez Jiménez, and has now reemerged under the leadership of Gustavo Machado Morales. The party is numerically weak in comparison with the three major parties of the left (AD, COPEI, and URD), but it exerts considerable influence through its infiltration of key positions in organized labor, the press, the teaching profession, and student organizations. It has also achieved some success in its efforts to infiltrate the government and the major leftist parties. Its most immediate and pressing objectives are to preserve its present freedom of action and to prepare a firm base from which to influence future governments. The PCV’s public efforts are directed primarily toward achieving respectability and acceptance as the most patriotic and democratic of Venezuelan parties. Its stated program is a composite of those of Acción Democrática, COPEI, and URD, but more stridently nationalistic and anti-imperialist. It is most vociferous in its support of the concept of “national unity”—which is, in effect, the concept of a popular front against military reaction. However, the party remains fundamentally hostile toward Acción Democrática, which it recognizes as its most effective rival for popular and labor leadership.

26. Integración Republicana (IR), formed in 1958, appeals to those independent liberals who are repelled by the radicalism of AD and URD and the supposed clericalism of COPEI. Its own program is a slightly moderated version of the programs of those parties, but its leaders are of a more conservative type. It has attracted some men of national stature, chiefly businessmen, lawyers, and intellectuals.

The Junta Patriótica. Having functioned successfully as the clandestine coordinating committee of the four parties conspiring to overthrow the Pérez Jiménez dictatorship (AD, COPEI, URD, and PCV), the Junta Patriótica has come into the open and has enlarged its membership to include representatives of all social groups, including labor, students, the Church, and the business community. The Junta’s concern is to preserve that spirit of “national unity” among civilian elements which is deemed essential to prevent a recurrence of military dictatorship.⁷ Its sanction is its capability to renew the general strike which brought down Pérez Jiménez, a capability which it demonstrated anew during the Castro León crisis in July and again in September.

28. Organized Labor. Labor unions are an important political force in Venezuela, although less than ten percent of the labor force is organized. The principal unions are concentrated in the chief urban areas and the oilfields. AD, COPEI, URD, and the Communists have all been active in labor leadership; most unions are affiliated with one or another of those parties. Conversely, the parties are highly sensitive to labor sentiment.

29. The Pérez Jiménez regime took severe repressive action against most AD, COPEI, and URD labor unions. In contrast, its attitude toward certain Communist unions was relatively lenient: they were even allowed to maintain open contact with the CTAL and WFTU, Communist international labor federations, throughout the period of the dictatorship. The Pérez Jiménez regime also employed “former” Communist leaders in the government-sponsored unions with which it sought to replace those which had been suppressed. The explanation given was that these Communists were useful informants. It is also notable that the regime feared Acción Democrática more than it did Communism and was willing to use Communist hostility toward AD for its own ends. Many AD labor leaders in exile gained further experience working against Communism for ORIT.⁸

30. The favor of the Pérez Jiménez dictatorship temporarily improved the Communists’ relative position in Venezuelan labor leadership. Since the fall of the dictatorship, they have been able to exploit this advantage. However, it was the surviving AD-sympathetic unions which took the lead in organizing labor resistance to the dictatorship, and, with the return of AD and COPEI labor leaders from exile and prison, these unions have regained the leading position in the labor movement. At the recent national convention of the reorganized Federation of Petroleum Workers relative party strength is estimated to have been as follows: AD, 60 percent; PCV, 27 percent; URD, 7 percent; COPEI, 6 percent.

31. Student and Youth Groups. Through active participation in the overthrow of Pérez Jiménez, youth and student groups have gained a significant voice in national politics and have thereby been greatly stimulated and emboldened. The four leftist parties have long-established youth movements, but the more effective organizations are those of university and high school students, which cut across party lines. Acción Democrática has apparently developed the strongest influence among the 7,000 students at the Central University in Caracas, with the PCV second and COPEI third. However, the executive council of the University’s student federation is composed of five Communists, three AD adherents, and one COPEI member. Outside of Caracas, the COPEI youth are the most active. In general, youth groups tend to be more extreme than the parties to which they adhere and little subject to party control.

32. The Catholic Church. The Church has risen in popular esteem through its recent emphasis on social action to improve the lot of the working people and through the role of the Archbishop in events, preceding the overthrow of Pérez Jiménez. In general, however, Venezuelans are indifferent to religion and highly sensitive to clericalism in politics, a charge which COPEI seeks to avoid. The Church’s direct influence is therefore limited, but it is at present the most outspoken anti-Communist voice in Venezuela.

THE ARMED FORCES

33. The Venezuelan armed forces consist of the Army (14,500 men, mostly conscripts); the National Guard, a professional constabulary (6,000 men); the Navy (4,100) and the Air Force (2,000). The Navy has three destroyers and six coastal destroyers operational; the Air Force, 125 aircraft in operational units.

34. Leading military officers have shown increasing concern regarding the upsurge of Communist activity following the fall of Pérez Jiménez and the soft attitude of the Junta toward Communism (in consonance with the principle of “national unity”). Although this Communist activity is serious enough, it is likely that the military are actually more concerned about the resurgence of Acción Democrática. Despite the fundamental antagonism between AD and the PCV, the distinction is probably dim in the eyes of the military, who are most immediately concerned to avoid the subordination which Acción Democrática attempted to impose on them in 1948.

This issue came to a crisis on 9 July, when Brigadier General Castro León,⁹ then Minister of Defense, privately demanded of the Junta that it expel both Acción Democrática and Communist party members from the administration. After eleven days filled with rumors and excitement, he repeated this demand to the cabinet. He was thereupon dismissed by the Junta, but refused to vacate his office. Instead, he solicited the support of COPEI and URD for a military coup. They reported this approach to the Junta Patriótica, which immediately invoked a general strike. In the face of this situation, an all-night meeting of representative officers refused to support Castro León in a coup and he was forced to submit to the Junic del Gobierno, which sent him out of the country. At the same time the Junta refused popular demands for a wholesale purge of the armed forces which probably would have provoked a military coup.

36. With the departure of Castro León, Col. Jesús Manuel Pérez Morales (Army), Chairman of the Joint Chiefs of Staff, became the putative leader of the armed forces. He is esteemed an abler man than Castro León, and therefore potentially more dangerous to the regime. At the same time, he apparently headed a “wait and see” school among the military and was at least contingently loyal to the government. On 24 August Pérez Morales was summarily removed from office. This move by the Junta to gain control of the armed forces might have precipitated a coup, but had no such effect. Pérez Morales himself has publicly adopted a cooperative attitude, describing his relief as routine.

37. Castro León and Pérez Morales have been replaced, respectively, by Brigadier General Josue Lopez Henriquez and Colonel Régulo Pacheco Vivas. Neither of them appears to be a threat to the government. However, many officers remaining in service may well feel disgruntled and insecure. In addition, an impressive number of outstanding officers are now in exile with strong motivations against the Junta. A potential leader of the latter group is Lt. Col. Martin Parada, former Chief of Staff of the Air Force.

38. Because, from 1935 to 1958, every Venezuelan government existed only at the sufferance of the military, it is commonly supposed that the armed forces still have the power to make and break governments at will. This supposition, however, is doubtful in present circumstances. The rank-and-file of the Army are ill-trained and unreliable conscripts who might well refuse to impose the will of their officers on a civil population united in its resistance. In any case, an allout battle between the armed forces and the Junta Patriótica would be a sanguinary affair, not to be lightly undertaken. It is notable that the armed forces declined to fight to save Pérez Jiménez in January or to support Castro León in July, though the Army and Air Force officers were probably preponderantly sympathetic with the latter, and that nothing happened when Pérez Morales was relieved.

39. On 7 September there was an abortive coup attempt led by officers exiled in July and supported by elements of the Military Police. The attempt was broken up by the Army; the armed forces in general remained loyal to the government. Subsequently, however, there was a mob attack on the Military Police barracks which resulted in civilian casualties. The ominous aspect of this affair is that Betancourt and Villalba were proved unable to control the mob, once it had been aroused. The general strike provoked by this coup attempt was maintained until the government undertook to take drastic action (such as it did not take in July) to prevent the recurrence of such attempts. Implementation of this undertaking in the existing tense situation could lead to an allout conflict between military and civilian elements, although the Junta will certainly seek to avoid that result.

POLITICAL PROBLEMS AND PROSPECTS

40. The Communist Problem. Since the July crisis, Admiral Larrazábal and the leaders of the major parties have all taken occasion to declare their lack of sympathy with Communism, but they have also supported the right of the Communists to participate in Venezuelan politics as a legitimate political party. It is unlikely that they regard Communist activities as a serious danger in comparison with the possible restoration of a military dictatorship. Admiral Larrazábal, in particular, has expressed a remarkable confidence in the patriotism of Venezuelan Communists, though perhaps only for domestic political effect. It is unlikely that the leaders of the major parties have any such illusions, but they regard the threat of a military coup as the real and immediate danger and, so long as that threat remains, they will be unwilling to forego the potential contribution of the effective Communist organization to a united civilian resistance. Consequently, there is no early prospect of effective action to limit Communist activity in Venezuela, at least not until a democratic constitutional government has been securely installed in office. On the other hand, the major parties will continue to compete with the Communists for influence in labor and student organizations and for popular political support.

41. The Possibility of an Early Military Coup. Since the Castro León crisis, the likelihood of a concerted effort on the part of the military to seize power has apparently receded, although the situation between military and civilian elements is now especially tense as a result of the abortive coup attempt on 7 September. The present situation is a stand-off. A substantial number of military officers remain disgusted with the Junta and apprehensive regarding the political trend, but are manifestly reluctant to take on a united and determined civilian resistance. The Junta and the parties, on their part, fear a coup and will probably take care not to provoke one, although they will continue their efforts to improve their position vis-a-vis the military.
If there should be a break in “national unity”, perhaps in consequence of the forthcoming election—specifically, if the military could obtain the political support of COPEI or URD—the disaffected officers would probably attempt to seize power and establish a more acceptable regime. Even without such political support, they might act in desperation if they were to conclude that a civil government dominated by Acción Democrática was otherwise inevitable.

42. The November Election. Great uncertainty still surrounds the manner in which the forthcoming presidential election will be conducted. The maintenance of “national unity” will require the nomination of a single candidate agreed upon by the three major parties (as was done in Colombia). Discretion would require that this candidate also be acceptable to the military. Manifestly, the selection of such a candidate will be a matter of great difficulty and delicacy.

43. It is probable that no candidate could win a free election without the acceptance and support of Acción Democrática. However, AD is also aware that no AD leader would be acceptable to the military or even to the other political parties. AD’s objective, then, is probably to employ its electoral strength to secure the nomination of a sympathetic candidate not so obviously identified with it as to provoke a military coup or to antagonize the other parties. AD’s preference for this role is Admiral Larrazábal, who is receptive to being drafted as a unity candidate, but he too is strongly distrusted by the military elements most likely to attempt a coup, as well as by some civilians.

44. The principal parties are now engaged in complex negotiations regarding the selection of a joint candidate for the presidency. COPEI, URD, and IR have combined to propose Dr. Martin Vegas, a distinguished physician and IR militant. COPEI has publicly threatened that, if AD refuses to support Vegas, it will nominate Caldera as a party candidate, which would mark the end of “national unity” AD has countered by offering three alternative proposals: (1) the joint selection of one of three persons¹⁰ as a single candidate; (2) the joint selection one of the three to run against Vegas, so that the electorate may make the choice; (3) that the executive power be vested in a council composed Larrazábal, Betancourt, Caldera, Villalba, and a representative of the business community, the presidency to rotate among them annually. If the other parties will not accept any of these alternatives, AD threatens to nominate its own party candidate. The other parties have rejected AD’s alternatives and called on it to reconsider Vegas as a unity candidate. It is likely that AD will continue to maneuver to secure the eventual joint nomination of Larrazábal as the only available “compromise” candidate. The outcome cannot be predicted. “National unity” could well break down.

45. Even if a coalition presidential candidate can be agreed upon, the conduct of a competitive congressional campaign and the subsequent selection of a coalition cabinet will subject “national unity” to great strain.

46. The Longer Term. Assuming that the electoral problem is resolved and that a civil government composed of a generally accepted president and a coalition cabinet is duly installed in early 1959, that government will continue to be under the constant threat of a military coup. That danger will exist as long as the military establishment remains independent of the civil government. It will be most acute in the event of a breakdown of “national unity” or of a government attempt to gain firm control of the military establishment.

47. A securely established constitutional government might take action to control Communist activities, although it would be unlikely to outlaw the party without serious provocation. As long as the threat of a coup remains, however, no effective anti-Communist action by the government is likely. The Communists will make the most of the opportunity afforded them to increase their political influence through the penetration of organized labor, youth groups, political parties, and the government. The eventual development of a situation like that in Guatemala in 1954 is possible. However, we believe it unlikely in Venezuela on account of the greater political experience of the leftist party leaders and their view of the Communists as rivals.

THE ECONOMIC SITUATION AND PROSPECTS

48. Venezuelan national production, the highest per capita in Latin America, has increased steadily and rapidly in the postwar period. This growth reflects a continuous high rate of investment: over 20 percent of GNP in 1957. Over the years, the petroleum industry has contributed about one-third of this investment and government resources (derived largely from the petroleum industry) another third. The world demand for Venezuelan petroleum has ensured the country against the foreign exchange shortages, unmanageable budget deficits, and problems of inflation which have beset other Latin American countries.

49. Despite these favorable circumstances, the Venezuelan government faces serious financial problems inherited from the improvident Pérez Jiménez regime. Although that regime expanded over half its budget on spectacular public works, notably highways, it also squandered public funds on unproductive projects, ostentatious high living, and the enrichment of favored personages. Its favorite industrial projects, a steel mill and a petrochemicals industry were unsuited to the present stage of Venezuelan economic development.¹¹ Pérez Jiménez’ rate of expenditure exceeded even Venezuela’s handsome income. He left unpaid accounts amounting to over a billion dollars and unfinished projects that will require further large expenditures before they can go into operation.

50. The present administration is paying off the arrears of its predecessor in part from current revenue, in part from treasury reserves (which have been drawn down to an unprecedentedly low level), in part from internal and foreign private loans. It cannot radically curtail expenditures to fear of increasing the unemployment which has already become a problem. Its plans call for further retrenchment in some areas, but increased expenditures on more worthy projects, such as education.

51. The financial predicament of the present government will intensify political demands for a greater share of petroleum profits. No party proposes nationalization of the oil industry—the dependence of Venezuelan exports on the distributive facilities of the existing companies is a strong deterrent—but both Acción Democrática and COPEI have declared that they will seek a larger share of the profits for Venezuela. No representative Venezuelan government could follow any other course.

INTERNATIONAL RELATIONS

52. With the fall of Pérez Jiménez, Venezuela moved from the camp of the dictatorships into that of the democracies. In consequence, friendly relations have been reestablished with Argentina, Uruguay, Chile, and Costa Rica, while relations with the Dominican Republic, Nicaragua, and Cuba have cooled. Within the Latin American community, a democratic Venezuela can be expected to work against dictatorships in the Caribbean area, to seek common market agreements, and to advocate united action in dealing with the United States.

53. In world affairs, Venezuela will continue to side generally with the West against the Soviet Bloc, in the UN and elsewhere, but this support will not be dependable in situations in which Western imperialism in underdeveloped countries is alleged. Venezuela is unlikely to resume diplomatic relations with the Soviet Bloc in the near future, nor is there likely to be any significant increase in Venezuelan trade with the Bloc. Venezuelan exports compete with those of the Bloc.

54. In Venezuela, strong popular feeling, manifested in the Nixon incident, holds the U.S. accountable for undue intimacy with the detested Pérez Jiménez dictatorship and for a supposed general preference for dictatorships in the Caribbean area. There is also a general resentment of U.S. restrictions on the importation of Venezuelan oil, which have a direct effect upon Venezuela’s oil-based economy. The government, however, and any likely successor government, will desire to maintain friendly relations with the United States, because of the close economic ties between the two countries and in order to facilitate readjustment of the division of petroleum profits. Even so, Venezuelans will remain highly sensitive to any apparent U.S. lack of regard for Venezuelan democracy and sovereignty.

55. If the present regime in Venezuela or an elected successor should be overthrown by a military coup, the event would be widely interpreted, in Venezuela and throughout Latin America, as the result of U.S. connivance and as confirmation of the supposed U.S. preference for dictatorships in the area.¹²

1. Source: Department of State, INR–NIE Files. Secret. According to a note on the cover sheet, this estimate was submitted by the Director of Central Intelligence. The Central Intelligence Agency and the intelligence organizations of the Department of State, the Army, the Navy, the Air Force, and the Joint Chiefs of Staff participated in its preparation. The members of the Intelligence Advisory Committee concurred in the estimate on September 9, 1958, with the exception of the Atomic Energy Commission representative and the Assistant Director of the Federal Bureau of Investigation, who abstained because the subject was outside their jurisdiction.
2. The title of this estimate, when used separately from the text, is classified. For Official Use Only. [Footnote is in the source text.]
3. Larrazábal, 47, is of an outstanding naval family. In 1945, when the Medina government was over thrown by the Army and Acción Democrática, he was arrested, but he was Commandant of the Naval Forces by the end of the AD regime. The succeeding military Junta thought it expedient to send him away, to be naval attache in Washington. In the last months of the Péréz Jiménez regime he was president of the Circulo Militar (Armed Forces Club), an assignment which antagonized him by disappointing his naval ambitions, but which he used to establish contacts with officers of all the services. He assumed the presidency of the Junta on the basis of military seniority. [Footnote is in the source text.]
4. These elections may be postponed, for administrative or political reasons. [Footnote is in the source text.]
5. Acción Democrática, Partido Social Cristiano Copel, and Unión Republicana Democrática. [Footnote is in the source text.]
6. U.S. private investment in Venezuela is estimated at more than three billion dollars, of which two-thirds is in the petroleum industry. [Footnote is in the source text.]
7. In this the Junta has before it the example of the Liberal and Conservative parties of neighboring Colombia which, despite a long history of often bloody mutual antagonism were able to combine to put an end to military dictatorship and to re-establish democratic constitutional processes. [Footnote is in the source text.]
8. Organisacion Regional Interamericana de Trabajadores, the anti-Communist competitor of the Communist CTAL in Latin America. [Footnote is in the source text.]
9. Castro León, 5C, comes of a family of poor farmers and has been described as “rank happy.” He conspired against the Betancourt (AD) regime in 1946 and was a stalwart supporter of Pérez Jiménez in the internal politics of the military Junta of 1948–1952. Nevertheless, he was a leader of the abortive military conspiracy against Pérez Jiménez in late 1957. [Footnote is in the source text.]
10. Rafael Pizani, Minister of Education; José Antonio Mayobre, Minister of Finance; and Carlos Morales, a former Minister of Foreign Affairs. [Footnote is in the source text.]
11. Because of limited internal demand for their products, these industries would have to export to prosper, because of a lack of skilled manpower and high costs of production, they could not compete in external markets without the support of substantial government subsidies. [Footnote is in the source text.]
12. An accompanying map of Venezuela is not printed.