PART 4 OF 10
Quito 19 March 1961
The lines are drawing tighter, which is just what we want. The leftists have conducted a signature campaign of their own to support Velasco over maintaining relations with Cuba. Two days ago they published a declaration accusing the Defense Front of aiding Peru by calling for a break in relations with Cuba. The announcement was followed by three pages of signatures including Araujo and other leftist political, educational and cultural figures.
Velasco himself, in a speech yesterday commemorating the deaths of his supporters which occurred a year ago, when he arrived in Quito to begin campaigning, insisted that Ecuador will never break with Cuba while he is President. He also emphasized that Ecuador is not communist, but he alluded to a subversive plot against him -- a reference no doubt to recent rumours of rightist plotting in the military. Araujo was a speaker at the same rally. If this keeps up we will isolate Velasco on the Cuban issue so that his main support will be from the extreme left.
On our side Gil Saudade, the Deputy Chief of Station, has had Juan Yepez del Pozo, Jr, National Coordinator of the Popular Revolutionary Liberal Party, issue a manifesto on his return from the Mexico City Peace Conference. The manifesto, which is just being put out today, condemns the Conservative and Social Christians for their current campaign against communism and Cuba while also criticizing strongly the Liberal Party and the communists. In his appeal to the Velasquista masses of poor people, Yepez calls for an integral revolution favouring the poor, but insists that it be effected within the law. The manifesto also denounces de facto regimes and totalitarianisms from both left and right. If this party can really get moving we will bring under control much of Velasco's leftist support, gradually bending it against the Cuban solution. Gil is now going to have Yepez establish an organization in Guayaquil.
Quito 27 March 1961
Velasco is showing signs of erratic behaviour, partly at least as a result of our propaganda. On 23 March he had the former Army commander under Ponce arrested for subversion, but two days later he was released by the Quito Mayor at the habeas corpus hearing. The government looked so ridiculous that Velasco had to fire his Minister of Government, who today resigned 'for reasons of health'. In announcing the appointment of his new minister, Velasco criticized what he called the tendentious notices appearing almost daily in the press. With his habitual reference to his 400,000 votes he accused the propagandists of trying to provoke disorder. Velasco's physician, Dr. Ovalle, ‡ is examining Velasco almost every week and he told me Velasco is feeling considerable strain over loss of popular support, which he attributes to the rightist campaign against Cuba and communism.
Atahualpa Basantes, my PCE penetration agent who went to Cuba after the Mexico City Peace Conference, is back. He returned via Mexico City where he was debriefed by an officer from the Miami station. In his first report, which I just got from Dr. Ovalle, Basantes strongly insinuates he knows he's working for the Agency, undoubtedly because of his meetings with officers in Mexico City. Noland wants to continue the Velasquista pretext for the time being, however, so I won't be meeting him personally yet. The agent can't stop praising the Cuban revolution -- I'm not sure what to do about this.
Quito 2 April 1961
Pleasant surprises for the station this week. Yesterday the University Sports League professional soccer team elected new officers and Noland was named as a Director. Manuel Naranjo, ‡ the Socialist Party Deputy whom Noland met and recruited thanks to the Sports League, was elected President of the club. This is a matter of some prestige for Noland, an American Embassy official, to become an officer of Quito's top soccer club. Partly, it reflects his ability to move in the right circles and partly, no doubt, it is because he brought in uniforms and equipment for the team via the diplomatic pouch and contributed generously from his representation allowance. More important, the Socialist Party has been holding its annual convention, the first since the party split last year into the moderate wing and the extreme-left Revolutionary Socialist Party. Naranjo was elected Secretary-General today which means we will have still more influence in keeping the party moderately oriented. Naranjo and his colleagues call themselves Marxists but they reject the concepts of class struggle and dictatorship of the proletariat. It's important that we have some influence in a group that will attract people of social-democratic persuasion.
Propaganda remains intense. The Catholic University Youth Organization has just held a convention which we helped to finance through Davila. The convention received considerable publicity, including a visit by a convention delegation to the Cardinal, and a closing declaration against communism and Cuba was issued.
Quito 4 April 1961
Velasco continues to struggle against the rightist campaign against communism and Cuba. He again lashed out against the National Defense Front, ‡ accusing the rightist political parties of using the Front to turn people against his government for economic as well as political reasons. He was answered later by the Deputy Director of the Conservative Party, who is also on the Executive Committee of the Defense Front, with accusations that Velasco is letting himself be carried away emotionally in his attacks on the Front. He also belittled Velasco's accusations that the Front is being manipulated like an opposition political party.
Velasco's nervousness is evident in a new purge in the Army leadership, and in the resignation today of his Minister of Defense. The new minister is from a clique of Guayaquil Velasquistas, and his appointment will intensify charges that the President is being manipulated by the coastal Velasquista oligarchy.
Quito 15 April 1961
The invasion against Cuba has started with the bombing of Cuban airfields by 'defectors'. A leftist rally was held against the bombing in Independence Plaza with Araujo as main speaker, but no attack has yet been made on the Embassy. Noland has arranged with Colonel Lugo ‡ and also with Captain Vargas ‡ to be sure we get good protection during the next few days. The invasion will give URJE and the others all the excuse they need for another round of window-breaking.
Quito 18 April 1961
The invasion really got going today but reports are conflicting and headquarters hasn't said anything yet. There have been anti- US riots all day in Quito and Guayaquil and the Army was called out to protect the Embassy, USOM and the bi-national cultural centre. Araujo is leading the mobs here in Quito.
Davila tried to get a demonstration going in support of the invasion but they were outnumbered this time and had to be protected by police. Sentiment in general is running against the invasion even though many of those against it understand perfectly what would happen here if there was a communist revolution. They just hate US intervention more than they hate communism.
The main Jesuit church in downtown Quito, a relic of colonial architecture, was stoned tonight during the URJE riot, and later tonight a bomb exploded in our Embassy garden. Things could be much worse however.
Quito 19 April 1961
Things are indeed much worse. This morning we received a propaganda guidance cable -- it was sent to all WH stations -- with instructions on how to treat the Bay of Pigs invasion. The cable said we should describe the invasion as a mission to re-supply insurgents in the Escambray mountains, not to take and hold any territory. As such the mission has been a success. Noland says this means the whole thing has failed and that heads are going to roll in headquarters. I've never seen him so glum.
The Defense Front got together a sizeable demonstration of support for the invasion, which included speeches against Castro and communism. There was also a march through downtown Quito with the burning of a Russian flag and chants against Fidel, URJE and the stoning of the Jesuit church.
I don't know what to think about the invasion. It's like losing a game you never even considered losing. I'm also worried about the AMBLOOD agents in Cuba. Press reports indicate that thousands have been arrested, many simply on suspicion of not supporting Castro. We have exchanged only five or six letters with secret writing, and they weren't very revealing. Toroella ‡ has large sums of money, weapons and a yacht but apparently he communicates with Miami by radio as well as by the SW via Quito. I wonder if he is all right.
Quito 24 April 1961
Mostly through the efforts of Davila the anti-communist reaction to the Bay of Pigs failure has driven the leftists off the streets. There was another pro-Castro demonstration three days ago but then the government banned all outdoor demonstrations for a week in order to let tempers cool. On the 21st the formation of the Ecuadorean Brigade for the struggle against Castro was announced with a call for inscriptions and the claim that among those already signed up are military officers, students, workers, nurses, priests and white-collar workers. The same day an indoor rally supporting the invasion was held at the Catholic University.
By coincidence the traditional Novena to the Sorrowful Mother going on right now is serving as a pretext to evade the ban on outdoor demonstrations. The sermons have focused on the imminent danger of communism, which is penetrating the country by passing itself off as Velasquismo. This can't please the President because this is one of the most heavily attended religious occasions, and is held at the Jesuit church that was attacked during the URJE demonstration against the invasion. Yesterday the novena service ended with a street procession that included thousands of people who turned it into a political rally against communism and URJE. Today a one-and-a-half-page notice was published in the newspaper condemning the attack against the Jesuit church. Araujo and URJE have denied the attack and the chances are high that the Conservative Party Youth or a Social Christian squad actually did it.
Through all the commotion Gil Saudade has been working on an international organization. Last month the Secretary-General and the Administrative Secretary of the International Commission of Jurists ‡ (ICJ) arrived in Quito in order to lay the groundwork for an Ecuadorean affiliate of the iCJ. Saudade managed to arrange for them to meet Juan Yepez del Pozo, Sr., the sociologist and leader of the Bolivarian Society who is chief advisor to the Popular Revolutionary Liberal Party. ‡ The visit by the ICJ officials was part of a tour of Latin America to form affiliates where they don't already exist and to generate publicity for the ICJ'S work.
***
Today the Ecuadorean affiliate of the ICJ was formally established, and Velasco was named Honorary President. The Rector of Central University, a Liberal-leaning independent, is President of the provisional Executive Board, which also includes the President of the Ecuadorean Supreme Court. Other distinguished lawyers and legal associations are also taking part, including Carlos Vallejo Baez, ‡ who with Yepez runs the learned magazine Ensayos to which Saudade gives financial assistance. Vallejo is also active in the PLPR, and Yepez was named Secretary-General of the ICJ affiliate.
Gil is also working with the Inter-American Federation of Working Newspapermen ‡ (IFWN), which was founded in Lima last year with the American Newspaper Guild ‡ as cover. This organization is more like a trade union, as opposed to the Inter- American Press Society which is mostly composed of publishers. The IFWN serves to promote freedom of the press and as a mechanism for anti-communist propaganda; Its annual conference has just taken place in Quito, with statements against Cuba and the rightist dictatorships in the hemisphere. They also called for economic, social and political reforms. US journalists in attendance were used to spot and assess possible new media agents for different stations, while Saudade worked through the host organization, the Ecuadorean National Union of Journalists. ‡
Quito 30 April 1961
USOM has made its contribution towards countering the Bay of Pigs humiliation. They delivered a check for half a million dollars to our Minister of Labor and Social Welfare, Baquero de la Calle, ‡ for colonization and integration of the campesino. Present at the well-publicized ceremony was Jorge Acosta, ‡ who is head of the National Colonization Institute. Acosta has a strange relationship with the station. Most of us know him fairly well and he's closer than being just a 'contact'. Since we don't pay him he's not really a controlled agent, but he tells us as much as he can. The problem he has is that Velasco seems bent on losing all his support except the extreme left rather than break with Cuba. Not even Acosta can overcome that stubbornness.
The Inter-American Conference is definitely off. Velasco publicly accepted a proposal made jointly by the Presidents of Colombia, Venezuela and Panama that it be postponed indefinitely. We weren't surprised because now security would really be a problem. The rum ours have never ended that one country or another was proposing postponement because of security hazards, and recent discoveries here of contraband arms shipments from the US haven't helped to allay the fears.
The day before Velasco announced the postponement he called for national unity and the easing of partisan political passions. But the same day the Quito Chamber of Commerce denounced the failure of the government to publish the weekly statistical bulletin of the Central Bank. It hasn't come out for five consecutive weeks and the Chamber insists the government is making a deliberate effort to hide the worsening economic situation. The government is indeed considering a number of possible emergency economic decrees but has announced ahead of time that none of them involve new taxes.
Quito 5 May 1961
Pressure on Velasco from the National Defense Front and from the Cardinal has been helped by Velasco himself. On 30 April the Cardinal was expelled from the prestigious National Defense Board which is composed of eminent citizens and is responsible for advising on how secret defence funds are to be spent. Since the announcement of Velasco's action many Catholic groups have made well-publicized visits of solidarity to the Cardinal, including one today from the Defense Front. The visits have usually included speeches on the inhumanities of communism and the imminent danger of a communist takeover in Ecuador. Velasco's action in expelling the Cardinal is clearly retaliation for the Cardinal's criticism of the government on the communist issue, and sympathy for the Cardinal especially among the poor and illiterate can only further erode Velasco's power base.
Quito 7 May 1961
We have just had a remarkable breakthrough. One of our most valuable PCE penetration agents, Luis Vargas, ‡ recently reported on what he thought was the beginning of serious guerrilla operations here. Vargas was not in the group currently being trained but his close and frequent association with the leaders of the group gave significant intelligence. Rafael Echeverria Flores, the number one PCE leader in the sierra, and Jorge Ribadeneira Altamirano, also a PCE leader in Quito and a principal leader of URJE, were the leaders, and the training was being conducted by a foreign specialist whose nationality was unknown to the agent.
Vargas the agent got the word in time to the station and Noland advised Captain Jose Vargas, the Chief of the Police Intelligence. This morning Lieutenant Sandoval ‡ laid a trap and during the course of the morning twenty members of URJE were arrested on the mountain that rises above Quito. Ribadeneira and Echeverria are among those arrested. The foreigner conducting the training is a Bolivian and we're getting traces on him from the La Paz station for police intelligence. Too bad he isn't Cuban, but the propaganda dividend is going to be considerable anyway.
Quito 9 May 1961
The guerrilla arrests are headlines this morning! Yesterday the Sub-Secretary of Government gave a press conference in which he distributed the police report written by the intelligence unit. At Noland's suggestion the police report described those arrested as only one small group among many other groups that have been receiving guerrilla training for some time at secret sites around the country. The press stories very effectively sensationalize the police report, which described the training as including explosives, guerrilla warfare, street fighting and terrorism.
The foreigner is Juan Alberto Enriquez Roncal, a thirty-two-year-old Bolivian who came to Ecuador last month and had been training URJE members in Guayaquil before coming to Quito. He has admitted everything to the police including giving training sessions in Ribadeneira's law office.
Velasco issued a statement today that he will severely repress any terrorists, but he has released all those arrested except Ribadeneira, Echeverria and Enriquez. In Guayaquil the leader of the previous trainees was arrested, but the release of the others is sure to provoke a negative public reaction, since last night a power plant in Guayaquil was bombed.
Quito 13 May 1961
Basantes, another PCE penetration agent and a retired Army major, reported that the PCE leadership in Guayaquil (Pedro Saad and company) is furious with Ribadeneira and Echeverria. They think Enriquez may be a CIA agent provocateur and that Echeverria and Ribadeneira fell into the trap.
However, the guerrilla trainer admitted today that he is really an Argentine, aged thirty-six, named Claudio Adiego Francia. He told police intelligence that he had no money and was giving the guerrilla training so that he could continue travelling. Cuba is his destination but he said he has no invitation. He described his long background in Argentine revolutionary activities, and then changed his story, now claiming he wasn't really giving training but only recounting to the URJE and PCE people his experiences in Argentina.
This new twist is keeping the story in the newspapers and the case has been a help to our signature campaign for mercy for the Bay of Pigs prisoners. The campaign has been promoted by stations all over Latin America. In Quito the ECACTOR political-action agents have circulated the petition: today the telegram to Castro pleading mercy was published, followed by two pages of the more than 7000 signatures obtained.
Student operations of the Guayaquil base have had a series of successes in recent months culminating two days ago with the disaffiliation of the FEUE from the Prague-based International Union of Students.
This final victory began with the change in FEUE election procedures at Portoviejo last December, followed by election victories at the University of Cuenca in March and the Central University in Quito last month. In both instances the forces led by Alberto Alarcon defeated the candidates for FEUE offices put up by the Velasquistas and the extreme left. Our only defeat was at the University of Loja where the leftist candidate won. The picture is confused in Guayaquil because the FEUE has split between a Velasquista group that supports the Mayor and an extremeleftist group led by members of URJE.
The vote today by the National FEUE Council in Quito will have to be ratified by the FEUE Congress later this year, but in the meantime relations between the FEUE and the Agency-controlled COSEC ‡ in Leyden can be cemented.
Quito 15 May 1961
Ambato is the site of the most recent action. Yesterday in Ambato a Cuban photographic exhibit was inaugurated under sponsorship of the Ambato chapter of the Cuban Friendship Society. The ceremony was held in the Municipal Palace approval for which had been granted by the Ambato Mayor, a Revolutionary Socialist. The Mayor in his speech went so far as to call the Quito Cardinal a traitor, and the Cuban Ambassador gave a fiery speech against the US.
Following the speeches an unexplained electrical failure prevented the showing of a film on Cuba and later a group of about twenty men invaded the Palace and destroyed most of the photographs and mountings. The police arrived after the damage was done and the group left quickly, firing their revolvers into the air as they went. No arrests were made.
Jorge Gortaire, ‡ a retired Army colonel and leader of the Social Christian Movement in Ambato, was the organizer of the raid. Noland has been financing him from the ECACTOR project since last year to help build up a militant action organization and to promote a political campaign against the Mayor. Careful planning of the attack, especially through coordination with the police, was the reason it was so successful. Even so, the Mayor is getting more photographs down from Quito so that the exhibit can stay open.
Quito 22 May 1961
In Guayaquil the police recently arrested, at base request, three Chinese communists who arrived some days ago. They had been given courtesy visas by the Ecuadorean Ambassador in Havana and supposedly were here representing the Chinese Youth Federation. The base tried to arrange for them to be held for a long period, so that recruitment possibilities could be studied, but the order for their expulsion had already been issued.
The police are carrying out the base request to sensationalize the case. The official report charges them with propaganda and subversion, claiming they had a powerful radio transmitter in their hotel room, with which they were in communication with Cuba and other communist countries in the evenings after ten o'clock. Preposterous charges, but there's so much fear and tension in the atmosphere right now that most people will believe it.
The same day the Chinese communists were deported, a sensational plot to assassinate Velasco surfaced. The attempted assassination was reported by a Guayaquil radio station (falsely, for which the radio station was ordered to be closed) but on checking sources the trail led straight to the Cuban Consul. The Consul refused to testify in the investigation and has been expelled by the Ecuadorean' government. His departure has given us another propaganda peg for demonstrating Cuban intervention in Ecuador, even though he was simply a victim of provocation because he had reported the plot to security authorities in Guayaquil. It appears to us that the provocation was rigged by Velasco or his lieutenants in order to appease the Defense Front and other anti-communists.
Here in Quito the National Defense Front has been more strident than ever in its propaganda created through public meetings, press conferences and published statements. The Front is criticizing Velasco for his policy towards Cuba, demanding the firing of the Ecuadorean Ambassador to Cuba over the presentation of a portrait of Castro 'in the name of the Ecuadorean people', demanding that Velasco suppress communism, and demanding the expulsion of the Cuban Ambassador for his anti- US speech in Ambato. The Front continues to insist that Velasco define himself on communism even though he recently insisted in a speech that while he is President Ecuador will not become communist. The Conservative Party has also joined the campaign for expulsion of the Cuban Ambassador.
In Cuenca, Carlos Arizaga Vega, ‡ a leader of the ECACTOR operation there, circulated a petition and sent it to Velasco demanding the firing of the Ambassador to Cuba over the portrait presentation. Velasco, for his part, has dismissed the military commander of the Cuenca zone who is a well-known anti-communist -- provoking renewed criticism there.
In Ambato, the Mayor was severely denounced by Municipal Councillors for his remarks about the Cardinal and for having granted use of the Municipal Palace for the Cuban photographic exhibit. But at the closing of the exhibit yesterday the Mayor, Araujo, CTE and PCE speakers all repeated the anti-clerical themes. They began a march in the street afterwards, but were met by a Catholic counter-manifestation organized by Gortaire and armed with rocks, clubs and firearms. A pitched battle followed and, although shots were fired, no one seems to have been wounded. The much larger counter-demonstration easily overwhelmed the leftists and at one point Araujo was in danger of being lynched. If the police hadn't intervened something serious might have happened.
Somehow amidst all these crises labour operations continue to move, although not without some serious problems. CROCLE, our coastal organization, has served consistently for anti-Cuban and anti-communist propaganda, but our agents in it are not as effective in trade-union activities as we would like. They are constantly feuding among themselves and failing to get out and organize. However, they won't be terminated until Gil Saudade is able to move some of his agents from the PLPR ‡ into the leadership of the national free labour confederation now in its embryonic stage. Miranda, ‡ our Coastal Labour Senator, is also ineffective and he is feuding with the CROCLE agents. Finally, Jose Baquero, our Minister of Labor, is determined to promote the small and ineffective Catholic labour group, CEDOC, instead of our budding. secular organizations. His effectiveness is also limited because as Minister he is responsible for the public-health service, the social-security system, protection of minors, the fire departments and cooperatives as well as labour matters.
On two recent occasions the International Organizations Division in headquarters has sent in agents to help us. In March William Sinclair, ‡ the Inter-American Representative of the Public Service International ‡ (PSI), and William H. McCabe, ‡ also a PSI representative, came to assist in planning for a congress of municipal employees that a few weeks later launched a new National Federation of Municipal Employees. Also, an exploratory visit was made by an international representative of the International Federation of Plantation, Agricultural and Allied Workers ‡ (IFPAAW) for possible assistance in organizing Ecuadorean rural coastal workers.
Quito 28 May 1961
The Cubans have made a timely manoeuvre. Yesterday Carlos Olivares, the Cuban Sub-Secretary of Foreign Relations and their most important trouble-shooter, arrived in Guayaquil. He is on a 'goodwill' tour trying to bolster Cuban relations with South American countries, capitalizing, of course, on the Bay of Pigs invasion. Today he saw Velasco, but we haven't been able to get a report on their private meeting.
Olivares's visit coincides with new reports on the considerable publicity given in Cuba to recent speeches by the Ecuadorean Ambassador at Cuban universities. According to Cuban press releases the Ambassador has attacked the US, alleging that Ecuador, like Cuba, has been the victim of the 'arbitrary, unjust and rapacious American imperialism'. The reports have provoked new outrage against Velasco on his Cuban policy.
Today Velasco gave another speech and made no attempt to hide the damage our campaign is doing. He condemned persons unnamed for trying to divide the country between communists and anti-communists, and he repeated that while he is President, Ecuador will never become communist.
Our campaign through Salgado, Davila, Perez, Arizaga, Gortaire and other agents goes on. John Bacon is also continuing to publish the 'alert' notices every two or three days, and other propaganda themes include concern over the Bay of Pigs prisoners and the recent guerrilla arrests in Quito.
In Ambato, Gortaire has managed to launch an Anti-Communist Front that includes Liberals as well as the Conservatives, the fascist ARNE and others. This is the first instance of significant Liberal Party participation in anti-communist fronts and clearly reflects the prestige and organizing ability of Gortaire.
Quito 29 May 1961
If our propaganda and political-action campaign doesn't force Velasco to take the right action, the worsening economic situation will. Today the President of the Monetary Board, appointed by Velasco himself, resigned in protest against the damage to the economy that uncertainty over Cuba and communism is causing.
Since the return in early March to policies of monetary stability, inflation has failed to slow down while Velasco has created a considerable number of new indirect taxes that are very unpopular. While Velasco and his lieutenants continue their theme of 'forty years of Velasquismo' most of the people have been struggling against their declining purchasing power. One indication of how bad the situation is getting is the decline in free-market value of the sucre: from about eighteen per dollar six months ago to over twenty-two right now.
The President of the Monetary Board, in resigning, attributed the worsening economic situation to lack of confidence based on Velasco's tolerance towards communism internally and his ambiguity towards Cuba. He insisted that Velasco must take action instead of making philosophical statements, and he pinpointed the following specific problems: the activities of the Ecuadorean Ambassador to Cuba; the agitation emanating from the Cuban Embassy in Quito and the Cuban Consulate in Guayaquil; the Cuban Ambassador's speech in Ambato; and the lack of clear definition by Velasco on communism.
Velasco is really embarrassed by this resignation which Noland says is bound to have some effect. The resignation statement couldn't have been better if we had written it ourselves. Exactly what we want.
Quito 30 May 1961
Finally Velasco is taking action. Several of the Velasquista penetration agents have reported that Velasco asked Olivares to withdraw the Cuban Ambassador. There is not going to be a persona non grata note -- simply a quiet exit. This is a significant start and it shows Velasco is facing reality: he just can't continue ignoring the pressure of the Social Christians, Conservatives, Catholic Church and all the other anti-communists -- and us. As soon as we learn of the Cuban Ambassador's travel plans we'll pass word for a hostile farewell committee.
On the negative side a judge today released Echeverria and Ribadeneira for lack of evidence. He's the best friend of the extreme left in the court system and was the last hope for those two. Earlier the habeas corpus proceeding had failed them and the CTE campaign for their release hasn't been very effective. The judge ordered documents from the police on the original sources of the police information, including names of their informants. As the station is the only source, this effectively killed the legal case.
Quito 3 June 1961
Velasco made a very important speech tonight. At a political rally he tried to make the political definition that the Defense Front and the rightist political parties have been demanding. He announced a doctrine of liberalism which for him means cooperation rather than conflict between classes. He denounced communism, praised representative democracy, and described his own course as between the extremes of left and right. He also said that communism should be attacked not by police repression but through the elimination of misery, hunger, sickness and ignorance. He showed the effect of our campaign, charging the anticommunists with trying to take away the bases of his support by dividing the 400,000 Ecuadoreans who voted for him on the pretext of anti-communism.
This speech, coming on the heels of the Cuban Ambassador's expulsion, will tend to soften the campaign. Our goal is a complete break in relations with Cuba, not just an expulsion. Economics will probably help us. The sucre is now down to twenty-three per dollar from eighteen six months ago, and a controversy is raging over inflation, especially the prices of medicines which are among the highest in Latin America.
Quito 7 June 1961
Velasco's 'anti-communist' speech has been very well received and even the Conservative Party has issued a statement of guarded approval. What most people are watching, however, are his actions and we have some distance to cover before relaxing. The day after Velasco's speech, the Minister of Defense made it clear that Velasco now considers his position defined as anti-communist -- a clear attempt to stop erosion of support from the station-backed anti-communist campaign.
The Liberal Party has rather suddenly taken a strong stance against the President, partly no doubt because of a recent attack by a Velasquista mob on their paper El Comercio. At the annual celebration of the Party's founding it was said that the past thirty years of Velasquismo have pulled down the county in a cataleptic state and, of course, that only the Liberal Party can save it. The Liberal's complaints are mostly founded on the worsening economic situation: the sucre has now fallen to twenty-five.
Some relief has become available, however, largely because of Velasco's anti-communist actions of the past two or three weeks. Today in Washington the International Monetary Fund announced a ten-million-dollar stand-by loan for a stabilization programme in Ecuador. In the announcement the IMF also said that the Central Bank, which requested the loan, is going to adopt a policy of credit restriction and other measures to end the flight of capital, recognizing also that measures have already been taken to slow the fall in foreign-exchange reserves.
The IMF announcement was embarrassing to the government here, which didn't want publicity. The Minister of Economy even declined to comment on the announcement, saying that questions should be directed to the IMF in Washington.
Quito 12 June 1961
This past week, since Velasco made his 'anti-communist' speech, has been the first fairly calm period since I arrived. In the hectic pace as we've passed from crisis to crisis I almost haven't noticed how far my Spanish has come along. Noland is especially pleased with my progress on the language and also with the way I have been developing friends among the Ecuadoreans, impossible, of course, without the language. Mostly I've been spending time meeting people at the golf-club while learning to play.
Janet has a mental block on the language and it's growing as a source of friction between us. Among other things this limits her friends to those who speak English and it also hinders her running servants and shopping. Politics, unfortunately, are not interesting to her either. But these are small complaints and common, I'm told, at overseas posts. And they certainly pale before the big news: in October our first child is due, something we didn't exactly plan but we were both happily surprised.
The work routine at the station is arduous -- nights, week-ends, whenever things are happening. After reading the newspapers each morning we begin writing and distributing papers: pouched dispatches on operations, intelligence reports, cables for urgent matters. Noland insists that each day we all read the cable chronological file so that we're up to date on all the incoming and outgoing traffic. The pouched material, both out and in, is circulated so that each officer will know exactly what the others are doing, their successes and their problems. Each of us also looks over the flight passenger lists each day, and Noland insists that we also read the State Department cables and pouched material handled by the Embassy staff. With all this reading, I'm pressed to get out for agent meetings, although I am only meeting directly about five. The worst is writing intelligence reports because the special usage and format must be followed.
The propaganda and political-action campaign against Araujo, Cuba and communism in general has clearly been the major station programme since I arrived six months ago. The ECACTOR project has accounted for much of this activity. It costs about 50,000 dollars a year and in a place like Quito a thousand dollars a week buys a lot. The feelings I have is that we aren't running the country but we are certainly helping to shape events in the direction and form we want. The other main station activity, the PCE penetration programme, has consistently provided good information. There's no question that Echeverria and his group here in the sierra are doing all they can to prepare for armed guerrilla operations. We have to keep the pressure on Velasco to break with Cuba and clamp down on the extreme left.
Quito 15 June 1961
Velasco apparently thinks his 'anti-communist' definition had ended the campaign. In a speech the other day he repeated his old theme that Ecuador will never become communist under him, but he insisted that he will not break relations with Cuba without a diplomatic cause.
On the other hand Jorge Ribadeneira, the URJE leader arrested on the guerrilla training exercise, has been sent to an isolated Amazon jungle outpost to do his military service. His absence will be a severe blow to the URJE leadership in Quito and also to the PCE.
Through Gustavo Salgado we are trying to relate the guerrilla arrests last month to exile reports on guerrilla training in Cuba. The JMWAVE station in Miami recently released an article on guerrilla training in Havana of groups of ten to fifteen who have been arriving from various Latin American countries. The article was passed to Salgado who added the URJE training episode of last month and arranged for publication on two consecutive days. Somehow we have to retain the sense of urgency in the propaganda campaign on communism and Cuba.
Today the Foreign Ministry announced that the Ecuadorean Ambassador to Cuba is retiring from the post 'at the convenience of the Foreign Service'. Velasco is certainly making an attempt to placate the rightists, but the fact is that he has no other choice now.
Quito 16 June 1961
It was recently announced that Vice-President Arosemena will leave on 18 June for a trip to the Soviet Union, Czechoslovakia and Poland. We've known about this trip for some time. The invitation is from the Supreme Soviet and the group will include several legislators as well as Arosemena. Formally this is a 'private' trip with no diplomatic or commercial purposes, but Arosemena is well known for his leftist ideas -- he is also an alcoholic -- and some mischief will come from the trip for sure.
Velasco is against the trip because Adlai Stevenson arrives the day Arosemena leaves, and Velasco is desperate for economic assistance. Stevenson is touring Latin America promoting the Alliance for Progress and trying to pick up the pieces from the Bay of Pigs fiasco, and Velasco is going to give him a list of requirements. He doesn't want Arosemena's trip to jeopardize his requests for aid to Stevenson, especially after expelling the Cuban Ambassador and firing his own anti-US Ambassador to Cuba to prepare a favourable atmosphere. So Arosemena's trip has sparked a sharp public exchange between him and Velasco. The Foreign Minister announced today that the Cabinet unanimously resolved that Arosemena's trip at this time is 'inconvenient' with emphasis that the trip is on Arosemena's own account with no official standing. Arosemena for his part defended the trip by denouncing unnamed Velasquista government leaders as money-crazed. Dr. Ovalle reports that Velasco is furious.
Quito 20 June 1961
Arosemena left as planned and today Ambassador Stevenson also leaves. Velasco presented Ecuador's development needs in a seventeen-page memorandum that lists initial requirements totalling about 200 million dollars. Stevenson also met with moderate leaders of the Quito FEUE chapter and with leaders of the free trade-union movement. I had a short chat with him in the Embassy yesterday. In a few days an Ecuadorean delegation headed by the Minister of Development will leave for Washington to press for new loans. Arosemena's trip doesn't seem to have damaged Velasco's requests to Stevenson, but the split between the two won't be mended easily.
Today Velasco changed his Minister of Government again. He named a former Defense Minister under Ponce in what is an obvious move to make adequate security arrangements before the Congress reconvenes in August.
Quito 29 June 1961
Noland has decided to move ahead on coverage of the Cubans here by putting a telephone tap on the Embassy. He asked me to take charge of this new operation, and a few days ago he introduced me to Rafael Bucheli, ‡ the engineer in charge of all the Quito telephone exchanges. Bucheli is an old friend of Noland because his brother (cryptonym ECSAW) was our principal political-action agent in the Ponce government until he was killed in an automobile accident. Bucheli is going to make connections in the exchange where his office is located and which serves both his home and the Cuban Embassy. Noland also introduced me to Alfonso Rodriguez, ‡ the engineer in charge of all the telephone lines system outside the exchanges. Noland met Rodriguez through his work on the University Sports League soccer team where Rodriguez is also active. He recruited Rodriguez who suggested that Bucheli might also help, not knowing yet that Bucheli had also agreed.
The two engineers, Noland and I began planning the operation but Noland is going to let me handle it alone. The first thing I must do is get headquarters approval for the operation and some equipment from the Panama station where the TSD has just set up a regional support base. The Panama station is located at Fort Amador in the Canal Zone where they have various support staffs who are able to save several days travel time to most of the WH stations. Then Rodriguez will run a special line to Bucheli's house where we'll set up the LP. I'll ask Francine Jacome, who was writing the cover letters for the AMBLOOD SW messages, to do the transcribing.
Quito 7 July 1961
Good news from Velasco for a change. Today he appointed Jorge Acosta Velasco ‡ as Minister of the Treasury. Until now Acosta has been Director of the Colonization Institute and the Vice- President of the National Planning Board, somewhat removed from his uncle, the President. He has been keeping Noland informed on Velasco's obstinacy over breaking with Cuba, but now he'll be able to work on the problem from within the Cabinet.
Ambassador Bernbaum is also trying to soften up Velasco on the Cuban problem. Thanks to his insistence a five million dollar development loan for housing has just been approved, and he also arranged an invitation for Velasco to visit Kennedy, which will be announced in a few days, probably to take place in October.
Davila and the Conservatives continue to squeeze. Today the Party forbade any of its members to accept jobs in the Velasco administration.
Quito 11 July 1961
The Cardinal issued an anti-Cuban pastoral yesterday which may have overshot the mark. It's inflammatory, alarmist, almost hysterical in its warning against Cuba and communism. He urges all Ecuadorean Catholics to take action against communism but he doesn't say what action. The statement is so emotional it may be counter-productive, but Noland has faith that the Davila crowd, who at our instigation urged the Cardinal to produce it, know what they are about.
Today we distributed an unattributed fly-sheet through the ECJOB team. This severely attacked the Cardinal for these statements. The Catholic organizations are at once, as expected, beginning their protests.
Quito 15 July 1961
The political situation has taken a new turn that promises to obscure the Cuban and communist issues. Opposition to the government has suddenly united behind Vice-President Arosemena, thanks largely to Velasco himself.
Three days ago Velasco appointed a new Minister of the Economy who is a paving contractor with large government contracts. He is also associated with the Guayaquil financial interests surrounding Velasco and his appointment immediately rekindled the criticisms that Velasco is dominated by the Guayaquil clique. Yesterday the government announced the unification of the exchange rate which will mean that importers of machinery, raw materials, medicines and other basic materials will have to pay about 20 per cent more in sucres for each dollar of foreign exchange purchased through the Central Bank for their imports. The unification measure is practically the same as an official devaluation of the sucre and will cause prices to rise immediately, because no compensatory measures such as tax adjustments or tariff exemptions were included. The economic sector most affected will be sierra agriculture but prices generally will rise throughout the country.
The unification decree has come just as a series of new indirect taxes has been announced on carbonated beverages, beer, official paper, unearned income, highway travel and other articles. These taxes will also cause prices to rise or buying power to drop and they violate Velasco's own recent statements that taxes are already too high.
In Washington the International Monetary Fund has issued a statement supporting the measure on unification, which is not surprising because everyone knows unification was a condition for the ten-million-dollar standby announced last month. In Ecuador, however, almost every significant political organization, and other groups such as the FEUE and the CTE have announced opposition to both unification and the new indirect taxes.
Announcement of the new economic decrees couldn't have been made at a worse time for Velasco, because the other event yesterday was Arosemena's return from his trip to Moscow. His supporters, including leaders of the extreme left, had been promoting a big reception for him for over a week. At the Quito airport several thousand turned out with Araujo as one of the leaders. Posters were prominent with slogans such as 'Cuba si, Yankees no', 'Down with Imperialism' and 'We Want Relations with Russia'.
Velasco is going to have to struggle hard to keep his balance. Just possibly he will break with Cuba in order to gain rightist support, but we aren't taking bets.
Quito 23 July 1961
Arosemena has become undisputed leader of the opposition to Velasco. Although the Conservatives and Social Christians continue their opposition on the Cuban and communist issue, the new economic decrees have given the FEUE, CTE, URJE, the PCE and the Revolutionary Socialists the perfect pretext to line up behind Arosemena. Even the reactionary Radical Liberal Party and the moderate Socialist Party under our agent Manuel Naranjo have joined the extreme left in supporting Arosemena as the opposition leader.
Velasco is rattled by Arosemena's sudden popularity. During the reception for him at Guayaquil the local tank units were placed on alert to create fear and (unsuccessfully) to cut down attendance. While trying to defend the economic measures on the grounds that the government needs more income for public works, Velasco has bitterly attacked Arosemena for dividing the Velasquista Movement. As Arosemena and some of his supporters are still calling themselves Velasquistas even though they have turned against Velasco, the President has told them to leave the Movement and form another group with a different name.
Guayaquil student operations have just had a setback. Elections were held a week ago for FEUE officers at the University of Guayaquil -- possibly the most important FEUE chapter because of the high level of militancy of the students there. Our forces, financed from the ECLOSE project and led by Alberto Alarcon, lost to the extreme left. A leader of URJE was elected FEUE President. The election came at a bad time just as the extreme left was making noisy support for Arosemena against Velasco on the economic issues.
Quito 27 July 1961
Gil Saudade, our Deputy Chief of Station, decided to risk the future of his ECLURE party, the Popular Revolutionary Liberal Party (PLPR), on Velasco's longevity in the Presidency. His hope is still to attract the Velasquista left away from Araujo even if this means open and direct support for Velasco. When the party's first national convention opened in Quito a couple of days ago, Velasco was named Honorary President.
Preparations for the convention have been underway for several months and have included public statements on major issues. In late June, for example, the PLPR published a statement supporting Velasco on his Cuba policy (a conscious manoeuvre by Saudade) but strongly denouncing 'the twenty families that have been exploiting Ecuador since before Independence and that seek to conserve their privileges by keeping the country under the landlords and bosses'. The statement also affirmed that the real enemies of the Ecuadorean people are the Conservative Party, the Social Christian Movement, the Radical Liberal 'Party and the Socialist Party -- all of whom represent the rich oligarchies who oppress the poor masses of the country.
Two weeks later the PLPR published another statement sharply criticizing the most recent pastoral letters of the Cardinal, whom our agents accused of being just one more oligarch using the communist scare for his own purposes. Right now Gil has on the payroll the party's National Director, Juan Yepez del Pozo, Jr; the National Coordinator, Antonio Ulloa Coppiano; ‡ the Legal Counsel, Carlos Vallejo Baez; ‡ and the mastermind behind the operation, Juan Yepez del Pozo, Sr. who holds no office.
Saudade is very pleased with the PLPR convention which ended last night with Velasco as the principal speaker. The final session got ample publicity and was overflowing with people. Although the party had to support Velasco on his Cuban policy for tactical purposes, Saudade was careful to have Juan Yepez, Jr, in his opening speech describe the PLPR as opposed to the extremes of left or right, adding that the party could never approve of the despotism of Soviet Marxism.
Gil has also picked up two new agents from the convention, both of whom he plans to guide into the free labour movement to ensure station control beyond the CROCLE operation of the Guayaquil base. One of the new agents is Matias Ulloa Coppiano, ‡ brother of Antonio Ulloa who is PLPR National Coordinator. Matias is a leader of a collective transportation cooperative. The other new agent is Ricardo Vazquez Diaz, ‡ a leader of the Guayaquil PLPR delegation, who was one of the secretaries of the convention.