369. Memorandum for the 40 Committee, Washington, June 15, 1970.1 2

[Page 1]

15 JUN 1970

MEMORANDUM FOR: The 40 Committee
SUBJECT: Status Report--[text not declassified] Support to the People’s National Congress Party of Guyana

1. Summary

Prime Minister Forbes Burnham of Guyana, who had previously received covert assistance [text not declassified] early in 1969 requested that the U.S. Government provide $10,000 a month for two years to support his efforts to build his party, the People’s National Congress (PNC), into an effective, permanently-organized political organization capable of serving as a bulwark against the possibility of Cheddi Jagan’s accession to power in Guyana.

The 303 Committee on 17 June 1969 approved a subsidy to the PNC of $5,000 per month for two years with the understanding that at the end of the first year the subsidy would be reviewed and could be terminated if the PNC had not made satisfactory progress toward establishing a permanent party mechanism. This stipulation and the amount of $5,000 per month had been recommended by the then Ambassador Delmar Carlson [text not declassified] The above-mentioned conditions under which the subsidy was being made available were explained to Burnham [text not declassified] who emphasized high level U.S. Government concern that [Page 2] he refrain from engaging in schemes to raise funds for the party which could, if exposed, subject him to public embarrassment and erode his political capital. Flour mill sales were mentioned as an area of special concern.

This report describes the progress that has been made during the first year and contains a recommendation that the subsidy be continued at the same $5,000-a-month level for the second year.

2. Status of Activities

A monthly subsidy of $5,000 was paid to Burnham, beginning 1 July 1969, [text not declassified] Burnham has used these funds to build the PNC into a permanently established and well-organized political party that will be able to participate effectively in the next national elections. The importance of the PNC’s ability to affect a turnout of every possible pro-Burnham vote is underscored by population and voting trends which, if continued, would enable the Jagan forces to win an honest election.

Burnham has made steady progress in strengthening the organization and financing of his party. Almost $60,000 was raised at a successful party congress held in April, and the PNC is making a concerted effort to prepare for a series of [Page 3] municipal elections to be held beginning 22 June. In addition to specific actions in connection with the elections, a general reorganization of the party is being carried out to build an increased awareness of party responsibilities and encourage a greater effort from rank and file members.

An analysis of internal party documents concerning the PNC’s campaign performance to date provides meaningful insights into its capabilities. In an election briefing on 1 May, Burnham gave a pep talk to 135 local party representatives and outlined the organizational strategy to be used. The choice of leaders for the various election areas was ratified, party activists from non-election areas were nominated, telephones in each election area were installed for quick and easy communication with party headquarters, and a propaganda and research committee was established to provide materials and assistance to the various groups tailored to their local needs. Special emphasis was given to involving youthful members in these activities. Specific provision was made for assigning PNC parliamentarians to various districts for electioneering.

The internal reorganization calls for a renewal of the party membership lists and mandatory collection of party dues. In fact, a concerted effort is underway to improve the dues [Page 4] collection process and, to enforce these new procedures, new coded membership cards recording both financial contributions and participation in meetings will be issued. In addition, intra-party elections to select working level leaders will be held in July and new party regulations established to maintain ward-level records. The internal reorganization also included new procedures for the handling of the budget account and for the planned training of the various categories of party members. Monthly working level progress reports to the PNC leaders now call for a detailed description of actions taken, problems encountered, and assistance needed. These reports enable tighter party control over both the PNC membership and the programs undertaken.

The fact that the PNC has not encountered major disorders and confusion in preparation for the local elections is in marked contrast to the 1968 performance. Campaign activities have proceeded smoothly and, by Guyanese standards, are the mark of a professional, well-honed political machine. This improved performance is due to a number of factors including the experience gained in the 1968 elections, [text not declassified] [Page 5] It is doubted seriously that this momentum could have been maintained without the covert subsidy which permitted the PNC to continue its system of files and records, and hire a permanent staff of organizers, secretaries and clerical help.

Although the PNC is unquestionably a stronger political structure in comparison to its opposition, its ability to make major inroads into the East Indian community is still hampered by the overwhelming acceptance by the East Indians of Jagan as their leader, mainly for racial reasons. There are, nevertheless, signs that some East Indians have become disillusioned with Jagan, or conversely, at least resigned to acceptance of the Burnham government. One positive sign is a separate East Indian municipal election ticket being run by the PNC in one area for the purpose of taking away votes from Jagan’s People’s Progressive Party (PPP).

Burnham has also made significant progress in raising funds for the PNC without incurring unacceptable political risks, but he did not withdraw the Greenland Investment Company (GLICO) from involvement in the flour business. However, the expansion of GLICO into the flour distribution business has not caused the political problems that might have eroded Burnham’s political capital or caused his government embarrassment. All parties now accept this arrangement. The profit margin for American businessmen [Page 6] who own and operate the flour mill is reliably reported to be satisfactory to them. Further, they enjoy the benefits of a five-year tax holiday which began in 1969. The consumer has benefited in that he is now able to purchase flour at a slightly reduced price than he did prior to the involvement of GLICO. The GLICO operation, which has not become a public political issue since its inception, has provided from its flour sales a total of $40,000 to the PNC during the last six months of 1969.

A detailed PNC financial statement for calendar year 1969 shows that the covert subsidy, which commenced 1 July 1969, represents approximately 60 percent of the party’s budget for this six-month period. An itemized list of PNC expenses shows that the total amount of funds received, $105,486, was spent on a variety of activities directly related to party programs and activities. The largest single expenditure (34 percent) was for salaries of party workers.

Although Burnham clearly understood from the outset that the subsidy was subject to review at the end of the first year, he is counting on continued financial assistance for the additional year. He has requested that the sum be increased to $10,000 for the first six months of the second year and $5,000 for the last six months, making an annual total of $90,000. Burnham explained that the requested increase would be used to meet PNC expenses connected with a series of municipal elections scheduled [Page 7] to be held from June through November 1970. While it is important for the PNC to make a strong showing in these local elections, Ambassador Spencer King [text not declassified] that the $5,000 per month level is adequate to meet the election expenses. Their recommendation was based on the knowledge that Burnham has made good progress toward bringing the PNC closer to financial self-sufficiency, that there are reliable reports that the PNC campaign is moving along smoothly, and that heavy expenditures above and beyond the party’s current subsidized budget level are not expected.

3. Conclusions

The basic objectives of the covert subsidy to the PNC during the past year have been met. The PNC is stronger, better organized, better financed and more effective than it was one year ago. However, the specter of Jagan still looms large and the East Indian electorate is burgeoning. Therefore, greater efforts by the PNC are called for in the future. A continuation of the subsidy for a second year would measurably assist Burnham in this task and would serve the further objective of keeping open another channel for communication with this head of government. Ambassador King [text not declassified] have recommended $5,000 per month as an adequate amount for this purpose. [text not declassified] further recommended that the July and August payments be made in advance in order to assist the PNC during the principal urban [Page 8] elections. Assistant Secretary Charles Meyer concurs in these recommendations.

4. Recommendation

It is recommended that the Committee note the progress that has been made toward establishing a permanent PNC party mechanism and approve a continuation of the subsidy to the PNC in the amount of $5,000 per month for the second year.

  1. Source: National Security Council, NSC Intelligence Files, Country Files, Guyana, 23 May 1969–6 February 1973. Secret; Eyes Only. A handwritten note at the bottom stated, “Continuation approved by the 40 Committee on 27 June 1970.”
  2. Because covert assistance had helped Prime Minister Burnham to strengthen and organize his political party, the objectives of the aid had been met. It was recommended that the covert support be continued.