Inside the Company: CIA Diary, by Philip Agee

"Science," the Greek word for knowledge, when appended to the word "political," creates what seems like an oxymoron. For who could claim to know politics? More complicated than any game, most people who play it become addicts and die without understanding what they were addicted to. The rest of us suffer under their malpractice as our "leaders." A truer case of the blind leading the blind could not be found. Plumb the depths of confusion here.

Re: Inside the Company: CIA Diary, by Philip Agee

Postby admin » Tue Jun 09, 2015 4:15 am

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.
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Re: Inside the Company: CIA Diary, by Philip Agee

Postby admin » Tue Jun 09, 2015 4:15 am

PART 5 OF 10

Quito 31 July 1961

Velasco and the Cubans seem to be on the verge of establishing a mutual-aid society. Yesterday an interview with the new Ambassador was published wherein the Ambassador claims that Cuba was the first country to back Ecuador in its demand for revision of the Rio Protocol, comparing the forceful imposition of the Protocol to the imposition by the US of the Platt Amendment and our retention of the Guantanamo naval base. Today the Foreign Ministry issued a statement emphasizing Ecuador's opposition to any form of collective or multilateral intervention in Cuba.

The Defense Front forces, however, haven't relaxed. At a pro- Cuba rally three nights ago Araujo's speech was interrupted by an unexplained power failure. Police troops and cavalry outside the theatre prevented another riot with counter-demonstrators. Similarly, when the new Cuban Ambassador presented his credentials at the Presidential Palace, an anti-Castro group sent by the Defense Front clashed with an URJE group that had come to the Palace to cheer the Ambassador. A riot followed and was finally broken up by the police with tear-gas.

The TSD support office in Panama sent tape-recorders, dial-recorders and actuators for setting up the telephone tap on the Cuban Embassy (cryptonym ECWHEAT). Last week the audio technician, Larry Martin, ‡ was here to train Rafael Bucheli ‡ to use the equipment, and Bucheli made the connections in the exchange aided by an assistant. Bucheli and the assistant are both active in the Quito model airplane club and I'm going to get a catalogue from headquarters so that they can select items that I can order through the pouch. Later we'll talk of salaries.

Quito 4 August 1961

Velasco's tactics of bullying the opposition have cost him another Minister of Government. In a recent open polemic between the Minister and the National Director of the Radical Liberal Party the Minister launched such severe personal insults that he was challenged to a duel by the Liberal leader. Yesterday the Minister resigned so that he could accept the challenge, since duelling in Ecuador is illegal. The Liberal leader, who is from Guayaquil, flew up to Quito yesterday for final preparations, but he was met at the airport by several hundred rioting Velasquistas, most of whom were plain-clothes policemen and employees of the government monopolies and customs. The Liberal leader barely escaped lynching while several international flights were disrupted because of the tear-gas used by police and the general chaos. The duel was later called off, however, because the seconds somehow arranged for satisfactory excuses by the ex-Minister and honour was satisfied.

During the riot at the Quito airport a touring Soviet goodwill delegation flew in unexpectedly. We've had reports from other WH stations on their tour but the exact date they would proceed to Quito was undecided, probably to avoid a hostile reception. Our National Defense Front agents will publish statements and demonstrate against the visit. They are staying at the Hotel Quito but we still have not received the bugged lamps back from our technical support base in Panama.

Quito 31 August 1961

Our propaganda and political-action campaign to keep the opposition to Velasco focused on Cuba and communism is being diverted because of the greater importance of last month's economic decrees on unification of the exchange rate and new taxes. Inflation has also become a major public issue. The government, however, is determined to retain the economic decrees in order to stimulate exports. Similarly, the new taxes are being justified as needed for the police, armed forces, education and public works. Nevertheless, the decrees have become the unifying issue for Velasco's opposition, and tomorrow the Chambers of Commerce of the entire country will call for repeal of the unification decree.

The Congress, which reconvened three weeks ago, is the centre of opposition political debate, and already the Velasquista tactics of intimidation by hostile mobs in the galleries have been renewed. During one session, when the acting Minister of Government was called to answer questions about police repression in Guayaquil, nothing could be heard over the screaming of the galleries. Orange and banana peelings and showers of spittle fell on the opposition Deputy who was trying to question the Minister. Nevertheless, the Deputy spoke for several hours against repression in Guayaquil, but he was vilified continuously by the galleries, finally being forced to seek shelter. Meanwhile, fights broke out on the Chamber floor between Deputies, ashtrays were hurled by opponents, and the Chamber's security forces refused to eject the rioters in the galleries.

Arosemena, as President of the Congress, continues as the leader of the opposition to Velasco. Although loyal Velasquistas have been elected to offices in both houses, the exact party balance is unclear because of uncertainty over defections of Velasquistas to Arosemena -- as in the case of Reinaldo Varea, ‡ who was reelected Vice-President of the Senate and has declared for Arosemena. Two weeks ago a delegation from the CTE was invited by Arosemena to a joint session of Congress with Arosemena presiding. Members of the delegation asked the Congress to nullify the July decrees on unification and new taxes, adding that if the decrees are not cancelled the CTE will call a general strike. This time Arosemena had the Velasquista mob ejected when they started shouting.

Quito 2 September 1961

Saudade is certainly moving his Popular Revolutionary Liberal Party (PLPR) along -- this time with help from the Bogota station. Since arriving in Quito Saudade has been corresponding with the Bogota station which supports a leftist wing of the Liberal Party called the Revolutionary Liberal Movement (MLR). Experience with the MLR in Colombia has been important for Saudade here because he hopes to achieve success with the PLPR comparable to the Bogota station's success with the MLR.

Some weeks ago Saudade had Juan Yepez del Pozo, Jr. of the PLPR invite the leader of the MLR, Alfonso Lopez Michelson, ‡ to visit Quito to exchange experiences and to promote PLPR organizational work. Saudade, of course, didn't reveal the CIA interest in the MLR but the Bogota station assured acceptance of the invitation. I wonder whether Lopez is witting and contact with him is direct or whether the Bogota station's access to him is through other MRL leaders.

Lopez arrived yesterday and will see Velasco and Arosemena and make a number of speeches. He will also visit Guayaquil. Saudade is picking up the tab, and good publicity is already coming out.

Quito 4 September 1961

Arosemena is cementing his political support from the CTE. Today the Senate under his prodding gave 50,000 sucres to the CTE for its national convention, scheduled for later this month in Ambato. The CTE responded with thanks from the Revolutionary Socialist sierra Labor Senator and invited Arosemena to address the convention's closing session; he accepted.

The CTE'S campaign against the decrees on unification and taxes continues, along with promotion of a general strike, the date of which still hasn't been set.

Our PCE penetration agents report joy in the party over Arosemena's cooperation with the CTE and the extreme left generally but leftist leaders are worried about his alcoholism and will be careful not to get burned by getting too closely associated with him.

In a few days we are going to bug the Czech Legation. For months Noland has had Otto Kladensky eliciting information from the Czechs on possible permanent locations for the Legation, and they finally signed a contract on a large house now nearing completion. On checking the building records, Noland discovered that the engineer in charge of construction is a friend of his from the University Sports League. Noland also knows the owner of the house, but after discussions with the engineer he decided not to speak to the owner for fear he would oppose risking his contract.

Equipment has arrived from headquarters for five or six installations, and the audio technicians are already here studying the building plans to determine how the rooms will be used. Their first priority is the code-room, followed by the Minister's office, and then studies and bedrooms.

Since the house is in one of Quito's nicest new areas, we have plenty of support bases available for use during the installation. The plan is for the two audio technicians to enter the house at night with the engineer who luckily speaks English. I will be in an observation post overlooking the house which is a back bedroom of the home of an Embassy USIS officer. Noland and Captain Vargas, ‡ Chief of Police Intelligence, and several of Vargas's strong-arm boys, will be in a support base in the apartment of Noland's administrative assistant who lives only two blocks from the target house. We will have walkie-talkie communications between the target house, my OP and the support base. If anything goes wrong, we will call on Vargas and his boys to step in and take over 'officially' while our audio technicians make a getaway. Vargas and his boys won't know why they're on standby unless they're needed.

Quito 20 September 1961

The first try for the audio operation against the Czech Legation failed. It was the technicians' fault and they were lucky not to have been caught. Bunglers! Everything went perfectly until about five o'clock in the morning when, as I was fighting to keep awake, I noticed the two technicians hurrying out of the house with their suitcases of equipment and running down the street to the getaway car. The engineer went running after them and they all drove away. I advised Noland by walkie-talkie and we went to the Embassy to rejoin the technicians.

Incredible story. They worked all night making three installations in the walls and were about to plaster over the transmitters when they were surprised by four Indian guards who had been asleep in another room all night. The engineer is known to the Indians, who were told by the owner not to let anyone enter the house, and he told them our frightened technicians were simply some electricians he brought to work. At five o'clock in the morning? While the engineer occupied the Indians, the technicians ripped the installations out of the walls and packed up.

The Czechs are visiting the house every day and are bound to notice the big holes left where the installations were ripped out. Noland gave the engineer some money to buy silence from the Indians but the engineer will have difficulty making explanations to the Czechs. He'll just have to play dumb and hope the Indians keep quiet.

It may be too late to try again because the Czechs will soon be moving in, so I suppose headquarters will ask for telephone tapping instead. We have technical problems on this operation too -- the tap on the Cuban Embassy still isn't working right. Headquarters wanted us to try a new type of equipment that actuates the tape-recorders from the sound on the telephone wires instead of from changes of voltage. The trouble is that the wires pick up a near-by radio station and all we're getting is reels and reels of music.

The only real casualty of this botched job will probably be my dog. Poor Lanita. I tested the dog tranquillizer on him last week just in case the Czechs suddenly put guard dogs at the house -- several years ago the station spent about five nights using this special powder mixed with hamburger meat, but they couldn't get the Czechs' dogs to sleep so they could make an entry. Now, however, only a few minutes after I gave Lanita the prescribed dose he began to fade away. Hours passed and he just went into a coma. The vet came the next day and took him away, saying his central nervous system was paralysed. He's still at the kennels and if he dies I will send a big bill to the TSD.

Quito 24 September, 1961

The CTE convention got underway in Ambato yesterday and it was almost like the Congress. Arosemena was one of the guests, and when the ceremonies began a group of Velasquistas who had infiltrated the theatre began shouting vivas to Velasco and abajos to Arosemena and communism. The CTE people started shouting vivas to Cuba and Arosemena and a vast fist-fight ensued. Pistols were fired into the air, stink-bombs were set off, and only when the police arrived and filled the theatre with tear-gas could the brawl be stopped. It continued in the street outside, however, while the inauguration ceremony began in the lingering stench of tear-gas combined with stink-bombs.

Velasco simply cannot learn to compromise; this episode can only be counter-productive.

Quito 25 September 1961

Now I know what happened to the agents in Cuba on the other end of the secret-writing channel. El Comercio this morning carries a front-page article on the arrest of Luis Toroella ‡ and the other AMBLOOD agents and a story about their plan to assassinate Castro. The article is a wire-service dispatch from Havana based on yesterday's Cuban government press release and the El Comercio article is naturally headlined with reference to the Quito- Havana secret-writing channel.

Apparently the agents told everything, but the story doesn't include the number of the Quito post-office box, which is under Colonel Paredes's true name. I sent a priority cable to the Miami station asking that they inform us if the box number was revealed, because Colonel Paredes will need to cover himself to protect the surveillance team. The agents undoubtedly were arrested several months ago, perhaps at the time of the Bay of Pigs invasion, but Miami should have told us so we could cancel the box and perhaps destroy the records of the name of the holder.

I hadn't known they were planning to assassinate Castro but the press report reveals a detailed plan using bazookas in an ambush near the Havana sports complex. The radio channel must have been used for this operation. No indication on how they were caught -- I hope it wasn't from my bad SW technique. No indication either of when they'll get the paredon [1] -- maybe already.

Quito 3 October 1961

The CTE set tomorrow as the day for the twenty-four-hour general strike against the July economic decrees. They claim 500 unions will participate and have been joined by the FEUE and by the Socialist Party of Manuel Naranjo. Velasco described the strike as a proclamation of revolution against his government, adding that if the new taxes are repealed there will be no money for 'teachers, police and military'.

For the past few days the government has been promoting a propaganda campaign against the strike. Large numbers of 'unions' which are really Velasquista political organizations have been publishing statements of boycott. But the only real unions boycotting the strike are the Catholic CEDOC and our own free trade-union movement including CROCLE, both of which are for annulment of the taxes but against strengthening the CTE.

Tonight Baquero de la Calle, our Minister of Labor, made a nationwide radio broadcast in which he called the strike a subversive political action having nothing to do with labour matters, to counter CTE insistence that the strike is purely for economic motives having nothing to do with politics. Both are wrong because the strike is both political and economic, but we're against it because of its extreme-left promotion.

No one doubts there will be violence when the strikers set up road-blocks to stop transportation. We've set up special communications with our police agents to get timely news on their reports from around the country. Tension is high.

Quito 4 October 1961

Velasco is truly incomprehensible. This morning most of the commercial activities in Quito and Guayaquil were normal and it was evident that the strike would be only partially successful. However, by noon the police cavalry and Army tanks had made such a show of force that everything closed, and as the afternoon went on the strike became total in both cities. If the government hadn't created such a climate of fear the strike would probably have been a failure. But there was considerable violence in the provinces, especially at Tulcan, on the Colombian border. Several have been killed and wounded there.

Quito 6 October 1961

The strike continues in Tulcan. Yesterday a Congressional Commission that included Manuel Naranjo went there along with the Minister of Government and other high police and security officials. The meeting of the Congressional Commission, the Minister's group, and the Tulcan strike commission turned into a political rally against Velasco and the government. The crowd, in fact, became so menacing that the Minister had to seek refuge in a government building under military protection.

Today a popular strike committee in the coastal province of Esmeraldas decided to follow the lead in Tulcan by extending the strike indefinitely.

Velasco continues the hard line. Four of the principal CTE leaders are being held since the day before the strike, and an arrest list of nineteen others has been published.

Quito 11 October 1961

Velasco ended the strikes in Tulcan and Esmeraldas by promising public works, and tomorrow he goes to Tulcan to listen to complaints. A few days ago in Guayaquil he again defended unification and the new taxes, but he had the Mayor accuse Arosemena of subverting public order from the Presidency of the Congress. The Congress is now in its thirty-day extraordinary period, but there is little sign that anything of significance will result -- probably more riots and clashes with Velasco. No one expects the lull of the past two days to continue.

Today the national golf tournament ended: I was awful but Noland and his wife played well. I'm skipping the celebrations at the club tonight because Janet is due to deliver any day. Her obstetrician is the Quito golf champion and will be leading the party tonight. I hope his early prediction of delivery on Columbus's Day will be slightly off because he won't be in condition tomorrow.

Quito 12 October 1961

He was right! I had to get Alberto out of the golf-club at five o'clock this morning. Miraculously everything was perfect -- a boy.

Quito 16 October 1961

The political security office of the Ministry of Government has invented a 'plot' as a pretext for arresting opposition leaders. It's so unlikely that it will probably make Velasco look worse than ever. For the past three days political-security agents have been arresting opposition leaders, including a leftist deputy who tried to question the Minister of Defense last August, and some of the rightist leaders of the National Defense Front. Luckily none of our agents is among the sixteen arrested although the security agents are looking for communists and conservatives alike.

The 'plot' was announced today by the Director-General of Security who runs the political security arm of the Ministry of Government -- an office we've purposely stayed far away from. Leaders of the 'plot', which was to break out tomorrow night, are from the extreme right and the extreme left. A sizeable quantity of arms was put on display, said to be of Iron Curtain origin and found in the homes of communists during raids. No thinking person could believe such a transparent fabrication, but Velasco obviously hopes it will rekindle the support he needs from the poor and uneducated if he decides to close the Congress by force.

In answer to the arrests and 'plot' the Liberals, Conservatives, Social Christians, democratic Socialists and the fascist ARNE all joined today in a coordinating bureau to fight assumption of dictatorial powers by Velasco.

Jorge Acosta, ‡ the Minister of the Treasury, returned from Washington today. He tried to make the trip sound successful by telling reporters of several loans that are 'pending' and' ready to be signed', but he wasn't able to bring immediate relief. Velasco must certainly be disappointed.

Almost unnoticed in this atmosphere of crisis was the resignation today of Jose Baquero de la Calle, our Minister of Labor. Velasco wanted to get him out, so he let him fire the Guayaquil Fire Chief for irregular use of funds, then cancelled Baquero's action, leaving the agent no choice but to resign. He has been an ineffective minister and not a particularly effective agent either, so Saudade isn't too sorry to see him fired. Now he'll try to ease him off the payroll.

Quito 17 October 1961

A shoot-out in the Congress last night has the whole country in an uproar, and rumours are beginning to circulate that there may be a military move against Velasco.

At a joint Congressional session last night the loyalist Velasquista mob packed the galleries and began hurling orange and banana peelings as well as the worst insults they could articulate. Loyalist Velasquista legislators joined the rioters in the galleries, and when Arosemena, who was presiding, ordered the galleries to be cleared the police refused to act. Stones began to fly from the galleries and opposition legislators sought shelter under their desks while others formed a protective shield around Arosemena.

By one o'clock this morning, after nearly four hours of rioting, shots also began to be fired from the galleries, some directed right at Arosemena's desk. He finally pulled out his own revolver, emptied it into the air, and left the chamber, claiming that over forty policemen were in the galleries in civilian dress with their service revolvers.

Today Velasco denied that he is seeking to install a dictatorship, while the loyalist Velasquista legislators are justifying last night's riots as necessary for the preservation of Ecuadorean democracy. Arosemena said today he will charge Velasco before the Supreme Court with trying to assassinate him. In Guayaquil today police with tear-gas, firing weapons into the air, broke up a FEUE manifestation against the government. This can't go on forever.

Quito 24 October 1961

Yesterday the Minister of Government resigned rather than face political interrogation by Congress over repression since the general strike three weeks ago. Velasco named Jorge Acosta as Acting Minister of Government, which is a break for the station, but Noland thinks the situation may be too desperate to hope for productive work with Acosta.

Today Velasco finally made his expected move for Conservative Party support. Noland has been insisting with Davila that he do all he can to sustain the Conservatives in making a break with Cuba their condition for supporting Velasco. Thus Velasco's offer today of the Ministry of Labor was rejected by the Conservatives, and Velasco's position continues to weaken. Acosta told Noland that Velasco is as stubborn as ever on breaking with Cuba, but he is going to do all he can to convince his uncle that the only hope of survival for the government is to break with Cuba and gain Conservative backing.

I haven't seen anything in writing on whether the Agency or State Department want to see Velasco survive or fall -- only that our policy is to force a break with Cuba. The obvious danger is that Velasco will fall because of his obstinacy and that a pliable Arosemena, strongly influenced by the CTE, FEUE and other undesirables, will end up in power. This makes Acosta's influence on Velasco for the break absolutely crucial.

Quito 27 October 1961

We weren't able to re-enter the Czech Legation before they moved in, so the audio operation is definitely lost.

A couple of nights ago someone fired shots through the huge front windows of the Legation, but a bomb placed in the garden at the same time failed to explode. The windows are very expensive and have to be imported from the US, so that will keep the Czechs off balance for a while -- what's left of the windows is all boarded up. We didn't instruct any agents to make this terrorist attack, but Noland thinks it was Captain Vargas, our Chief of Police Intelligence. Vargas's office is in charge of investigating the attack.

I've just taken over a new operation -- the Tulcan portion of the ECACTOR political-action project. Noland had been meeting irregularly with a leader of the Conservative Youth organization there, Enrique Molina, ‡ but guidance and funding were difficult because the agent could come to Quito only infrequently and Noland lacks the time to go there: two long days to drive to the Colombian border and back.

The drive between Quito and Tulcan is so spectacular that it's beyond adequate expression. There are green fertile valleys, snowcapped volcanoes, arid canyons eroded by snaking rivers, lakes smooth as glass, panoramic views from heights almost as from an airplane. All the way the cobble-stoned Pan-American highway winds around and up and down the mountains, passing through colourful Indian villages where every few kilometres the hats, ponchos, even the hair-styles change to distinguish one community from another.

I took money to Molina and told him to use it for the anticommunist front in Carchi province but he'll probably use it mainly for propaganda against Velasco. I also set up a communications channel for him to report intelligence on political unrest and we will try to alternate meetings; one month he'll come to Quito and the next I'll go there.

Quito 1 November 1961

New violence broke out yesterday in Cuenca when a FEUE manifestation against the government was severely repressed by police. The students had been joined by a large number of people and when the demonstrators attacked government buildings the Army was called in. Seven persons were wounded in the shooting.

Velasco announced that in spite of the violence he will make an official visit to Cuenca for its provincial independence celebrations the day after tomorrow. There is much speculation that more violence will occur because the people in the Cuenca area are so angry at Velasco's failure to alleviate the effects of declining prices of the area's products -- especially Panama hats. Hunger migrations from the province, a rare occurrence even in Ecuador, have been going on for some time, and representatives of the Quito government are increasingly unpopular in this strongly Conservative and Catholic region.

Reports from our police agents indicate that the rioting in Cuenca is continuing today.

Quito 3 November 1961

Military rule was imposed yesterday in the province of Azuay (of which Cuenca is the capital) as at least ten more people were wounded during a popular uprising. Velasco fired the provincial governor and other leading government officials and sent Jorge Acosta, Acting Minister of Government, to Cuenca for a firsthand inspection. Acosta's trip only caused further protest, which was followed by more arrests. Municipal authorities in Cuenca cancelled the independence celebrations scheduled for today and asked Velasco not to come.

But Velasco is in Cuenca right now, and many reports are coming from the radio and the police that serious new rioting and shooting is going on.

Quito 4 November 1961

In Cuenca yesterday at least two were killed and eight more wounded. On arrival Velasco headed a procession on foot from the airport into town -- a grave provocation against the local hostility reflected in funeral wreaths and black banners decorating the houses in sign of mourning. Along the way Velasco and his committee were jeered, taunted and finally attacked with stones and clubs. Shooting followed as the riot was suppressed, but Velasco insisted on presiding at the military parade. Afterwards, however, he was forced to give his speech in an indoor hall where he blamed the violence on opposition political leaders.

From Cuenca Velasco is motoring to several small towns for speeches and then to Guayaquil. In the Congress today the debate over events in Cuenca went on for eight hours. The CTE, FEUE and Revolutionary Socialists have condemned Velasco, along with the Conservative Party and the Social Christian Movement. A strange alliance for our political-action agents but momentum against Velasco dominates the scene.

Jorge Acosta, Acting Minister of Government, got Velasco's approval to expel another Cuban -- this time it's the Charge d' Affaires because the Ambassador is in Havana right now. After meeting today with the Cuban Charge, the Minister of Foreign Affairs announced that the Charge will be leaving. He gave vague reasons, suggesting an association between certain Ecuadorean political figures and the Cuban government, but he emphasized that the Charge's departure does not mean any change of policy towards Cuba. The Charge on the other hand said he is leaving for Cuba voluntarily. It's clear that the Foreign Minister was reluctant to follow Acosta's order to expel the Cuban -- and it's equally doubtful that this desperate move by Velasco to obtain support from the Conservative Party and other rightists will work. Acosta told Noland that Velasco still refuses to break completely with the Cubans, but he is also going to move against the Prensa Latina representative.

Velasco finally got some good news on economic aid. Two large loans have just been signed in Washington: one a 4.7 million dollar loan for development of African palm oil and sheep ranching and the other a 5 million dollar loan for middle-class housing. Good publicity but no early effects expected.

Quito 5 November 1961

Today Jorge Acosta announced that the Cuban Charge is being expelled as persona non grata. His clarification has been broadcast continually over the government radio network. The Cuban Embassy, however, insisted (in order to save face) that the Charge was never told that he is being expelled, while at the Foreign Ministry confirmation was made of expulsion rather than voluntary return to Cuba.

Quito 6 November 1961

If he goes, Velasco will not have gone quietly. More violence today, both in Quito and in Guayaquil, where eleven have been killed and at least fourteen wounded -- all students and workers. We've been sending one report after another to headquarters and the Guayaquil base is doing the same.

Congress went into session at noon and Arosemena accused Velasco of having violated the Constitution. A FEUE delegation visited the Congress to express support, and about three o'clock this afternoon the Congressional Palace was sealed off by Army troops and telephone communications were cut.

This morning the entire Cabinet resigned, and Velasco, who only arrived from Guayaquil at noon, spent most of the afternoon visiting military units. He also made a radio broadcast in which he accused Arosemena of proclaiming himself a dictator, adding that he was firing Arosemena as Vice-President.

I'll be spending the night here in the Embassy listening to the police and military radios and taking calls from agents in the street. The latest is that Arosemena and other legislators were allowed to leave the Congressional Palace just after midnight, and as they walked towards Arosemena's house a few blocks away they were arrested by Velasco's Director-General of Security. Arosemena and the others have been taken to jail, but several agents believe that it's a deliberately dangerous scheme on the part of Arosemena to force Velasco to unconstitutional action -- which could provoke the military to move against him.

In spite of the Cabinet resignations, Acosta continues to function as Minister of Government. This morning he expelled the Prensa Latina correspondent, a Cuban who had been expelled last year under Ponce but had slipped back into the country while Araujo was Minister of Government. We're sending situation reports to headquarters practically every hour.

Quito 7 November 1961

It's all over for Velasco but the succession isn't decided. About five o'clock this morning the engineers battalion in Quito rebelled on the grounds that Velasco had violated the Constitution in arresting Arosemena, but was attacked by loyalist Army units. A ceasefire occurred about 8 a.m. for removal of dead and wounded and later in the morning the Military High Command decided that both Velasco and Arosemena had violated the Constitution. They later named the President of the Supreme Court to take over as President of an interim government. Velasco has accepted this decision and the Supreme Court President has taken over the offices in the Presidential Palace.

Velasco visited several of the loyalist military units after leaving the Presidential Palace this afternoon and according to military intelligence reports he is at the home of friends but asking for asylum in a Latin American embassy. Acosta received asylum earlier today in the Venezuelan Embassy.

Arosemena is making a fight of his own to succeed to the Presidency. He and the other legislators were released from prison tonight and went immediately to the Legislative Palace where Arosemena convoked a joint session and was himself named President. The constitutional limit on Congress's extended session ends at midnight tonight, but the Congress is remaining in the Palace with Arosemena.

Tonight I sleep in the Embassy again -- just in case the Military Command decides to move in favour of either of our two Presidents. Let's hope they stick with the President of the Supreme Court, a rightist who would be favourably disposed to a break with Cuba and suppression of the extreme left in general.

Quito 3 November 1961

It's Arosemena! This morning the Legislative Palace was surrounded by Army paratroopers and tanks but just after noon Air Force fighters flew low over the Palace firing their guns into the air to intimidate the Army units. When it became clear that the Air Force was backing Arosemena and the Congress, the Supreme Court President resigned -- he had lasted as President only eighteen hours -- and the Army units were withdrawn from the Palace. The Military High Command recognized Arosemena later this afternoon.

During the hours before the outcome was known today, URJE and FEU E demonstrations in favour of Arosemena broke out in different parts of Quito and later expressions of support to Arosemena have poured in from all over the country, especially from the CTE organizations, FEUE and URJE.

While the Legislative Palace was still surrounded this morning Arosemena named a centrist Cabinet consisting of two Liberals, two Democratic Socialists, one Social Christian, one Conservative and three independents. One of the Socialists is Manuel Naranjo who was named Minister of the Treasury. This afternoon Arosemena has been meeting with supporters, including Araujo whom Arosemena described as 'that great fighter'. But when Araujo got up on a chair and tried to give a speech to the crowd milling about, he only got out 'Noble people of Quito', when he was shouted down with much ridicule. Arosemena's first act, even though he won't be inaugurated until tomorrow, was to convoke a special session of Congress for election of a new Vice-President and other business. Reinaldo Varea Donoso was presiding officer at the first session today.

Velasco hasn't given up -- quite. From the Mexican Embassy he issued a statement that he hasn't resigned and he again reminded everyone of the 400,000 votes he got last year. Four times elected and three times deposed: a winner on the stump but a loser in office. If he had only broken with Cuba he could have won Conservative and other right support and weathered the left campaign over economic issues.

Quito 9 November 1961

This morning before the inaugural ceremony the FEUE organized 'Operation Clean-up' which was a symbolic scrubbing down and sweeping up at the Presidential Palace to cleanse the place before Arosemena took over.

Arosemena and his new Cabinet then led a march of thousands from the Legislative Palace to the Presidential Palace at Independence Plaza. In his speech Arosemena described Velasco's regime as one that started with 400,000 in favour and ended with 4,000,000 against. In promising action instead of flowery speeches, he pledged that his government will be one of peace and harmony and that he will be President of all Ecuadoreans, not just the privileged few. But from our point of view the most important of his remarks was his pledge to continue diplomatic relations with Cuba.

In other ominous indications from the inaugural speeches the President of the CTE attacked 'yankee imperialism' while praising the Cuban revolution and calling for the formation of a Popular Revolutionary Front. (Formation of the Front has already been reported by our PCE penetration agents and will include the CTE, Revolutionary Socialists, PCE, URJE, Ecuadorean Federation of Indians, and a new student front called the Revolutionary University Student Movement.) The FEUE President also spoke, recounting the participation of the students in Velasco's overthrow. Although he's a moderate and was elected with support from the Guayaquil base student operation, opposition to Velasco has been growing too strongly in recent months for economic and other motives to permit Alberto Alarcon and his agents to keep the moderate FEUE leadership from supporting Arosemena.

Diplomatic relations with the Ecuadorean government are continuing as if Velasco had died or resigned -- which means there is no question of formal recognition of the new government. Everything's been legal and constitutional.

Quito 11 November 1961

The general political atmosphere is one of relief, optimism, satisfaction -- almost euphoria. After fourteen months of intimidation by Velasco, supporters of the traditional parties are happy to see Arosemena in power, at least for the moment.

Davila was elected President of the Chamber of Deputies for the Extraordinary Congressional Session. Reinaldo Varea was elected Vice-President of the Senate -- offering, in his acceptance speech, to die before violating the legal norms 'of this new and unmerited honour'. Congress then recessed for two days and on Monday they will reconvene to elect a new Vice-President. There's going to be plenty of tension over the week-end as deals are made to see who becomes number two to Arosemena. The importance of this election is very great because no one knows how long Arosemena can last with his frequent drinking bouts. Noland thinks Varea, one of the leading candidates, has a good chance. The Rector of Central University, a Liberal-leaning independent, is the main contender and is backed by the FEUE and extreme left.

Velasco was put on a Panagra flight to Panama this afternoon. Most of the country is peaceful again and the vandalism and looting of stores has disappeared. From the general strike on 4 October until now, at least thirty-two have died in five cities and many more were wounded, forty-five in Quito alone. It wasn't exactly a bloodless coup.

Quito 13 November 1961

Noland has pulled off a coup of his own. Over the week-end Varea called for a meeting at the Hotel Quito safe house. He wanted to know if Noland knew where he might get support for election as Vice-President, particularly whether Noland thought the Conservatives might support him. Noland said he thought so, but naturally had to be tactful in order not to reveal any relation with Davila or other rightist agents.

Later Noland met with Davila who asked for advice on whom the Conservatives should support for Vice-President. Noland was able to promote Varea discreetly, reasoning that if the Central University Rector were elected, the Vice-Rector, a Revolutionary Socialist, would take over the University. Davila pledged to throw the Conservative vote to Varea. Later Davila and Varea met for agreement, and Noland is convinced that neither knew of the other's meeting with him.

This morning a notice in El Comercio placed through Gustavo Salgado compromised the Rector pretty badly. It was an announcement of support attributed to the Ecuadorean Communist Party and URJE. Denial will come but too late because Congress reconve6ed at noon to elect the Vice-President.

The galleries were packed by the CTE and FEUE militants screaming for the Rector's election. Davila was the presiding officer and on the first ballot Varea got sixty-four votes -- the most of the four candidates but twelve short of the two-thirds needed. When the results of this vote were announced the galleries began to riot. Varea was elected on the next ballot and the FEUE and CTE people really broke loose, showering Davila with stones, spit and wads of paper. No police around as usual.

Varea, in his inaugural speech after Davila proclaimed him Vice-President, seemed a little too humble: 'You will see that I lack the capacity to be Vice-President of the Republic. I am full of defects, but against this is my life, which I have filled with modesty and sacrifice. You and I with the help of God can solve little by little the great problems that affect the Ecuadorean people.' Noland said he's going to raise Varea from seven hundred to one thousand dollars a month, and if he gets to be President we'll pay him even more.

Senator Humphrey arrived yesterday and we're reporting on possible demonstrations against him. He'll visit Arosemena and address the Congress, but yesterday he was right on target in remarks to newsmen: the US is ready to finance the development of poor countries but their governments have to effect agrarian, tax and administrative reforms. Otherwise the US will just be financing eventual bolshevization.

Quito 17 November 1961

Arosemena's government is not yet two weeks old but there are clear signs that he will have significant leftist participation in his regime. Appointments at the Minister and Sub-Secretary level like Manuel Naranjo, the new Minister of the Treasury, are certainly acceptable. But jobs on the middle level are increasingly falling into hands of Marxists and other leftists who are unfriendly to the US even though they may not be formally affiliated with the PCE or the Revolutionary Socialists. The objectionable appointments are mostly in education and the welfare and social-security systems, although the new governments of Guayaquil and Guayas Province are also taking on an unfortunate colouring.

Both in the station and at the Guayaquil base we have been preparing memoranda on the new faces in Arosemena's government for the Ambassador, the Consul-General and the State Department in Washington. The memoranda are based on our file information and also on queries to our PCE penetration agents on Party reaction to the appointments. First indications are that influence from the extreme left will be much greater under Arosemena than under Velasco.

Reaction from the State Department and from headquarters is moderately alarmist and headquarters has sent special requirements on continued close monitoring of Arosemena appointments. The worry is that this is only the beginning and that Ecuador will continue sliding to the left much as Brazil is moving that way already. On the Cuban question the Foreign Ministry announced today that the Cuban Charge expelled by Velasco can now remain -- in the confusion during Velasco's last days he had stayed on in Quito.

To counter these developments we are going to start a new round of propaganda and political-action operations through the ECACTOR agents such as Davila, Perez, the National Defense Front and propaganda agents such as Gustavo Salgado. Reinaldo Varea, the Vice-President, will also be extremely important because he is well-known as an anti-communist. He's a retired lieutenant-colonel in the Army and he studied at Fort Riley and Fort Leavenworth in the US. He was also Ecuadorean military attache in Washington and advisor to the Ecuadorean representative on the Inter-American Defense Board, Sub-Secretary of Defense and later Minister of Defense.

As an opening and somewhat indirect thrust, the Guayaquil base had the CROCLE labour organization publish a half-page statement in the newspapers yesterday on the danger of communism and the subservience of the CTE to the WFTU in Prague. It called for repression of communism, warned against opening diplomatic relations with the Soviet Union, and forecast the establishment of the Ecuadorean Confederation of Free Trade Union Organizations as a democratic alternative to the CTE.

Arosemena has started a shake-up in the internal security forces. Today an investigation was started to verify the lists of agents on the role of the National Security Directorate, the political security office responsible for Arosemena's arrest on the night of 6-7 November. It is expected that many of the agents listed simply do not exist and that their salaries were pocketed by top officers of the NSD.

The top echelons of the National Police are also being shaken up. Captain Jose Vargas, Chief of the Police Intelligence organization, will undoubtedly be purged because he is well known as the leader of a secret pro-Velasco organization within the police. We're hoping, however, that Lieutenant Luis Sandoval, ‡ the chief technician under Vargas and fairly apolitical, will not be moved.
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Re: Inside the Company: CIA Diary, by Philip Agee

Postby admin » Tue Jun 09, 2015 4:16 am

PART 6 OF 10

Quito 20 November 1961

The station programme for penetrating the PCE is suddenly in better shape than ever. The Pichincha PCE members have just elected a new Provincial Committee and not only was Basantes re-elected but Cardenas and Luis Vargas ‡ were elected too. This gives us three agents on the eight-member committee which is comparable to a national Central Committee because of the growing split between the coastal leadership under PCE Secretary-General Pedro Saad and the sierra leadership under Rafael Echeverria, chairman of the Pichincha Provincial Committee.

I've taken over another operation from Noland -- this time it's Colonel Oswaldo Lugo, ‡ our highest-level penetration of the National Police. The other night Noland introduced me to Lugo who advised that he has been appointed Chief of the National Police in the Southern Region with headquarters in Cuenca. He won't be leaving for a few weeks, and meanwhile he will introduce me to his stepson, Edgar Camacho, ‡ a university student who will serve as cutout for reports from Lugo's sub-agents in the CTE. Lugo expects to come to Quito at least once a month when we'll meet, but he'll send urgent reports through Camacho. A very friendly, intelligent and sharp officer.

Operations at the Guayaquil base got a jolt yesterday when their most important labour and political intelligence agent died suddenly. He was Emilio Estrada Icaza, ‡ director of one of Ecuador's largest banks, president of a fertilizer company, former Mayor of Guayaquil and well-known collector of pre-Hispanic artifacts. It was through Estrada that the base organized the successful campaign to oust Saad from the Senate and then formed the CROCLE labour organization.

Quito 19 December 1961

There has been a flurry of activity prior to the Christmas lull, with little of particularly happy significance to us. Three days ago Arosemena was the principal speaker at the Congress of the CTE-controlled Ecuadorean Indian Federation. He shared the platform with the CTE President, a Revolutionary Socialist; Carlos Rodriguez, the PCE organizer in charge of the Indian Federation; and Miguel Lechon, an Indian and PCE member who was elected President of the Federation. In his speech to the thousands of Indians trucked into Quito for the ceremony, Arosemena promised quick action to abolish the huasipungo.

The Indian Congress was followed yesterday by the Congress of coastal campesinos which is the CTE'S organization for rural workers on the coast. Arosemena was also the principal speaker at this Congress which, like the Indian Congress, was highly successful for the extreme left.

Student operations of the Guayaquil base under Alberto Alarcon have suffered another defeat. The National FEUE Congress recently ended in Guayaquil and the extreme left dominated. Guayaquil University, with the FEUE chapter run by URJE militants, will be the national seat for the coming year. Delegations from the universities of Cuenca and Portoviejo, which are controlled by Alarcon, walked out of the Congress when resolutions, supporting the Cuban revolution and condemning the Alliance for Progress, were passed. Protests against the take-over by the extreme left were also made through Davila and the Catholic University Youth Organization and through Wilson Almeida, editor of Voz Universitaria.

We also had a setback in student operations when a Revolutionary Socialist was elected President of the Quito FEUE chapter. After the voting the new officers issued a statement supporting Arosemena on the need for agrarian reform and on 'non-intervention' with regard to Cuba.

Now both the Quito and the Guayaquil FEUE chapters, as well as Loja, are in extremist hands. Meanwhile URJE continues to dominate the streets. A few days ago a group of Cuban exiles (several hundred have arrived to reside in Guayaquil) was attacked by URJE militants as they reported to a government office to register.

Operations with the National Police are in transition. Jose Vargas ‡was not only relieved of command of the Police Intelligence unit -- he is under arrest along with other members of his secret Velasquista police organization. Luckily Luis Sandoval was left untouched and will continue in the unit. I've been seeing him much more frequently since Vargas was removed and until we can evaluate the new Police Intelligence Chief, Major Pacifico de los Reyes, ‡ Sandoval will be our main Police Intelligence contact -- in effect he's a paid penetration agent. De los Reyes came to the station under a pretext related to some equipment we gave Vargas, but the visit was obviously to begin contact. Noland and I will alternate contact with him without telling him that I am meeting regularly with Sandoval.

Colonel Lugo has taken command in the Cuenca Zone. Regular communications with him will be through Edgar Camacho, his stepson, except on the trips he makes to Quito every month or so. He wants me to hold his salary and the salaries of his sub-agents for passing directly to him, so I imagine he'll come every month.

Progress continues on the formation of a national free labour confederation. On 16-17 December the existing free labour organizations led by CROCLE ‡ held a convention for naming the organizing committee for the Constituent Congress of the national confederation -- to be called the Ecuadorean Confederation of Free Trade Union Organizations ‡ (CEOSL). Enrique Amador, one of the Guayaquil base labour agents, was President of the convention and Adalberto Miranda Giron, ‡ the base agent elected last year as Labour Senator from the coast, was a principal speaker. The Constituent Congress was set for late April of next year.

Nevertheless, serious problems are growing behind the facade of progress among the free trade-union groups. Mainly it's a question of job security and bureaucratic vanity among the leaders of the different organizations. Competition among them to get the best jobs in CEOSL, when it's established, is creating jealousies and friction. In early November, IO Division's most important Western Hemisphere labour agent, Serafino Romualdi ‡ (AFL-CIO representative for Latin America), came to Guayaquil and tried to establish a little harmony. The convention just over was a result of his trip, but the various leaders are still fighting.

Now that Velasco is out, Gil Saudade's Popular Revolutionary Liberal Party is bound to decline if not disappear completely. He is going to move some of his agents from that party as fast as possible into the CEOSL organization, so that with salaried agents in place the organization will have some discipline and order. Otherwise it will be forever weak and no match for the CTE.

Our National Defense Front has issued another call for a break in relations with Cuba, but at the recent Conservative Party Convention it was decided to give general support to Arosemena while still insisting on a break with Cuba. (The photographs published on the Conservatives' meetings are embarrassing -- they keep a crucifix, about half life-size, on the front of the speakers' table, and it looks like a Jesuit retreat.) Davila was elected Sub-Director-General of the Party. All the other political parties of importance have also held conventions, and all are continuing general support to Arosemena.

The State Department, too, is going to gamble on Arosemena and, perhaps, on the anti-communist tradition in the military. A few days ago a new loan was announced: 8 million dollars for budget support from the US government -- forty years at no interest. It had originally been negotiated by Jorge Acosta as Minister of the Treasury under Velasco.

Congress recessed until next August with practically no legislation to show for its 112-day session that cost over ten million sucres. Incredibly, Congress took no action to repeal the decree on unification of the exchange rate that had unified the opposition to Velasco. Arosemena and the CTE also seem to have forgotten their big issue.

Quito 23 December 1961

The pace is slowing for the end-of-the-year celebrations and we've been taking advantage to make the rounds with whisky, cigarettes, golf-balls and other gifts. Noland is taking the new Administrative Assistant, Raymond Ladd, ‡ around to meet the Quito travel-agent and tourism crowd so that he can take over and expand the station travel-control operations. The new principal agent will be Patricio Ponce, ‡ an old friend of Noland and prominent bullfight figure, whom Ladd is going to set up in a cover office as soon as possible. In January I'll also turn the ECSTACY letter intercept over to Ladd.

We were fortunate to get Ladd for the administrative job, which is usually filled by a woman, because he can handle some operations too. During his previous assignment in San Jose, Costa Rica, he learned some operational techniques, and although he was refused the operations training (for lack of formal education) Noland wants to use him on non-sensitive matters. He works in perfectly because he's a champion golfer, poker addict and general hustler.

When I stop to think about the excitement and continual state of crisis over the past year, I realize that we've tried to attain only two goals and have failed at both. We haven't been able to bring about a break in diplomatic relations with Cuba, and we haven't been able to get the government to take action against the growing strength of local communist and related movements. With Velasco, we made no direct effort to overthrow his government. But by financing the Conservatives and Social Christians in the quasi-religious campaign against Cuba and communism, we helped them destroy Velasco's power base among the poor who had voted so overwhelmingly for him. By the time Velasco introduced the new taxes and unification of the exchange rate, our campaign, led by the rightists and assisted by inflation, had already turned popular opinion against him. It was an easy matter then for the CTE, URJE, FEUE and others with extreme-left inclinations to usurp the anti-Velasco banner using Arosemena as their anti-oligarchical symbol and as legitimate successor.

Our principal tasks in the coming months will be to renew the campaign against relations with Cuba through the National Defense Front and other operations while monitoring carefully the penetration by the extreme left of Arosemena's government -- and their preparations for armed action. Although both the second and third in succession to Arosemena are on our payroll, it would be difficult to argue that the present security situation is an improvement on the Velasco regime.

The fundamental reasons why there is any security problem at all remain the same: concentration of wealth and power in the hands of the very few with marginalization of the masses of the people. Such extreme injustice can only encourage people to resort to extreme solutions, but there is still no sign of the reforms that everyone talks about. I wonder about reforms. Certainly the attitudes of my friends -- whether blue-blood conservatives, new-rich liberals or concerned independents -- are not encouraging. Their contemptuous term for the poor who supported Velasco -- the chusma -- shows how much distance has still to be travelled.

My son is only ten weeks old but already he's beginning to show some personality and awareness. Proud father, yes I am -- he was baptized three weeks ago in the old church in Cotocollao in a beautiful white dress given by the families in the station.

I'm not sure what to do about Janet. We continue to grow apart for lack of common interests. She knows practically nothing of my work, and her lack of interest in politics and the language has turned her to bridge with other American wives who tend to complain over trivia. I must help her, but the strain of daily events leaves so little energy -- except for golf where I'm spending most of my free time. It's an unfair escape, I know, but it's also a relaxation.

Quito 2 January 1962

The Cuban Sub-Secretary of Foreign Relations, Carlos Olivares, is back in Ecuador -- this time drumming up support in advance of the OAS Foreign Ministers Conference scheduled for later this month in Punta del Este, Uruguay. At the Conference, the US government hopes to get some collective action going against Cuba -- at least a resolution that all countries still having diplomatic and commercial relations with Cuba move to break them. Yesterday Olivares met with Arosemena at a beach resort and Arosemena reaffirmed his policy of non-intervention towards Cuba. Today he said, Ecuador will be against any sanctions against Cuba at the Punta del Este Conference.

One reason why we're trying to isolate Cuba is that headquarters believe the Cubans are training thousands of Latin Americans in guerrilla warfare, sabotage and terrorism. Every station is required to report on travel to Cuba, or to Moscow or Prague, which are longer but also widely used routes to Cuba. Right now there are at least sixty-two Ecuadoreans in Havana invited for the celebrations of the third anniversary of the revolution. Some no doubt will be funnelled off to the training camps. Miguel Lechon, President of the Ecuadorean Federation of Indians, is in the group.

Quito 16 January 1962

Our new campaign is off to a bang -- literally. The national convention of URJE was to have opened in Cuenca two days ago but during the night before bombs exploded in the doorways of two Cuenca churches. There were no injuries from the bombs -- the anti-communist militants under Carlos Arizaga Vega were careful -- but large 'spontaneous' demonstrations against the bombings occurred on the day the convention was to start. Public authorities then banned the URJE convention in order to avoid bloodshed.

The Conservative Party under Davila's direction has called on Arosemena for a definitive political statement on Cuba and communism (the prelude to new Conservative pressure). He answered that Ecuadoreans should concentrate on national problems that are' above' the problem of Cuba. Davila is organizing a demonstration for the day after tomorrow in Quito in solidarity with the Cuenca one.

Yesterday the Popular Revolutionary Movement (formed by the PCE, URJE and other extreme leftist organizations when Arosemena took over) sent a delegation to visit the Minister of Government. They told him that the bombings in Cuenca were not their work and that they reject terrorism as a political instrument. Last night in Guayaquil Pedro Saad's home was bombed -- again no one injured.

The main theme of our propaganda in recent days has been the shooting last month in Havana when a group of Cubans tried to obtain asylum in the Ecuadorean Embassy by crash-driving an automobile on to the grounds. Cuban security forces opened fire to impede them and several bodies were carried away.

Gil Saudade keeps grinding away with his international organizations. This time it's the Ecuadorean affiliate of the World Assembly of Youth ‡ (WAY) -- called the National Youth Council. ‡ It groups together students, workers, sports organizations, rural and religious youth groups, Boy and Girl Scouts and the Junior Red Cross. Gil runs this operation through Juan Moeller ‡ who is President of the Ecuadorean Junior Red Cross and who just put in another leader of the Junior Red Cross as Secretary-General of the Youth Council. The main business in coming months will be to arrange for Ecuadorean participation in the WAY Congress scheduled for August and to pass headquarters' guidance to the Ecuadorean leader on which issues to support and which to oppose.

Quito 19 January 1962

The campaign is back in full swing in Quito. Yesterday's rally against Cuba and communism was enormous -- and considerably helped by the government. After days of promotional work by the ECACTOR-financed organizers; yesterday morning the Minister of Government, a Liberal, prohibited public political demonstrations throughout the country until further notice including the rally planned for yesterday afternoon. His decision was based on the recent wave of bombings and the tension caused by our renewed campaign.

The organizers sent the word around that the rally would take place in spite of the prohibition as a show of solidarity with the recent demonstrations in Cuenca and Guayaquil. The crowd gathered at a theatre on the edge of the downtown area, soon grew into thousands, and began to move towards the Independence Plaza. Police tried to stop it with tear-gas and cavalry but lost the pitched battle that followed in spite of wounding twelve people. The demonstrators also attacked an URJE counterdemonstration which quickly disappeared. Riobamba thanks to the efforts of a new agent of Noland's named Davalos. ‡ Through Renato Perez and Aurelio Davila, Noland is also getting money out for demonstrations in Loja and other provincial cities in days to come.

The Punta del Este Conference opens today but in spite of all the pressure we're bringing on the government through the right it appears that Ecuador will not support any joint move against Cuba.

Quito 31 January 1962

The Punta del Este Conference finally ended yesterday. All our efforts to get sanctions against Cuba failed, thanks to opposition from countries like Ecuador. Even on the resolution to expel Cuba from the OAS only fourteen countries voted in favour with Ecuador among the abstentions.

Today the Social Christian Movement formally ended its participation in the Arosemena government, and the Conservative Party is issuing a statement against the government's position at Punta del Este. The Foreign Minister, a prominent Social Christian, will either have to resign or quit the party.

Last night, the Czech Legation was bombed again and the huge new windows just installed because of the October attack were completely shattered. I drove by the Legation on my way to work this morning and the carpenters were already at work boarding up again. The bombers escaped through the heavy fog last night -- must have been the Social Christian squad.

Quito 28 February 1962

Most of the important political parties have held conventions this month to begin preparations for the local, provincial and Congressional elections scheduled in June. Where possible we have instructed agents to push for resolutions on the Cuban and local communist issues.

Once in the Independence Plaza the crowd frequently shouted against the government and Arosemena. Speakers attacked communism and Castro and called for a break in relations with Cuba while urging Ecuadorean support for a programme of sanctions against Cuba at the coming Punta del Este Conference.

Yesterday, when the Minister of Government announced the prohibition of demonstrations he denounced the right's 'battle plan' founded on the government's lack of definition on communism and Cuba. Today the Minister called for a pause in the fighting between Ecuadoreans over 'external problems', while the Cardinal issued another anti-communist pastoral letter accusing the communists of the bombings in the Cuenca churches.

The campaign is getting under way in Tulcan as well. Yesterday an anti-communist demonstration was held in spite of the prohibition and afterwards the demonstrators clashed with leftists in a counter-demonstration.

The Ambassador is also active making propaganda that nicely complements ours. Yesterday with considerable publicity he presented a cheque to Manuel Naranjo ‡ representing the second instalment of the 8 million dollar budget support loan announced just after Arosemena took over. Photographs of the Ambassador handing over the cheque were prominent in the newspapers this morning.

Quito 21 January 1962

In Guayaquil the base financed a demonstration yesterday. Thousands turned out after a bomb exploded in the morning at the entrance to one of the main churches -- again with no injuries. These bombings are mostly being done by a Social Christian squad in order to whip up emotions. One would think the people would realize this, but Renato Perez, Noland's principal Social Christian agent, says they can keep it up as long as is needed. Participating organizations in the Guayaquil demonstration were the Defense Front, our CROCLE labour organization, the Liberals, Conservatives, Social Christians and the fascist ARNE.

An anti-communist demonstration was also held yesterday in Manuel Naranjo was only partially successful at the Socialist Party convention where his party decided to join again with the Liberals in the National Democratic Front as a joint electoral vehicle. The statement on re-establishing the Front called for struggle against the totalitarian movements now operating in Ecuador -- but also affirmed the party's belief in Marxist philosophy as 'adapted to the Ecuadorean political and economic reality'. In a foreign policy statement issued two days after the convention closed, the principle of non-intervention in Cuba was sustained along with opposition to expulsion of Cuba from the o A s and to the economic blockade.

The Conservative Party has issued another statement insisting that Arosemena dismiss communists and pro-communists from the administration while alleging that a communist plot is underway for uprisings to occur soon throughout the country. The Conservatives in Azuay Province (Cuenca) have elected Carlos Arizaga Vega, ‡ one of our principal ECACTOR agents there, as a party director.

Araujo is also active trying to build an organization that will attract leftist Velasquista voters. His new People's Action Movement held an assembly today in preparation for the elections.

Our own campaign continues to consist of stimulating charges of communist leanings of appointees in the government. Debate has also continued over Ecuadorean failure to back resolutions against Cuba at Punta del Este, and Arosemena is being forced on the defensive. Through political action and propaganda operations we are trying to repeat what we did with Velasco: cut away political support on the Cuban and communist issues so that only the extreme left is left on his side. For his part Arosemena has been protesting frequently in public that communists will never become an influence in his government.

The Argentine break with Cuba a few weeks ago, which was the climax of increasing military pressure on President Frondizi, has already generated a spate of new rumours that the Ecuadorean military will bring similar pressure on Arosemena. The rumours are mostly rightist-inspired as suggestive propaganda targeted at the military, but they may well have an effect -- especially since less than three weeks after the break Argentina got 150 million dollars in new Alliance for Progress money. Now only Ecuador and five other Latin American countries still have relations with Cuba.

Quito 1 March 1962

In another effort to create military ill-feeling towards the left, the Social Christians infiltrated a FEUE march today in order to shout insults against the military that appeared to come from the marchers. The march was through the downtown area to the Independence Plaza where Arosemena spoke and the leaders of the march presented a petition for increased government support to the universities. The situation is indeed grave -- professors at Central University, for example, haven't been paid since last December.

The Social Christian plan worked perfectly. The march was headed by the President of the FEUE, the Rector and Vice-Rector of the University and the Ministers of Education and Government. At the Independence Plaza just before the speeches began, shouts were clearly heard of 'Death to the Army' and 'More universities and less Army'. An almost electric current is passing through the officer corps of the military services and new rumours, not ours this time, are beginning on possible military reactions.

Quito 3 March 1962

Reactions to the Social Christian infiltration of the FEUE march have been most satisfactory. Yesterday the Minister of Defense and the chiefs of all the services issued a statement in which they admitted breaking a long silence on the many activities going on that are designed to sow chaos in the armed forces and separate them from the Ecuadorean people and the government. These activities, according to the statement, are directed by international communism through campaigns in periodicals, magazines, radio, rumour, strikes, work stoppages, rural risings, militia training and, most recently, the FEUE demonstration of 1 March. Instead of a demonstration for greater economic resources, according to the statement, the march was perverted to make propaganda against the armed forces. The statement ended with an expression of the determination of the Minister and the service chiefs to take whatever measures are necessary to defend military institutions.

The military statement yesterday coincided nicely with a rally we financed through Aurelio Davila with participation of the Conservatives, Social Christians, ARNE, and Catholic youth, labour and women's organizations. The purpose of the rally was another demand for a break in relations with Cuba, and Davila was the principal speaker. He blamed the insults of 1 March against the military on communists and Castroites who seek to form their own militias. He accused Arosemena, moreover, of giving protection to the communist menace and, as President of the Chamber of Deputies, he sent a message of support to the Minister of Defense and the chiefs of the services.

Quito 16 March 1962

Fate's heavy hand has just fallen on our Vice-President, Reinaldo Varea. Yesterday the government announced that a million dollars' worth of military equipment purchased by a secret mission sent to the US last year by Velasco has turned out to be useless junk. The announcement came just a couple of days after one of Velasco's ex-ministers made a public call for Velasquistas to begin organizing for the June elections. Obviously the announcement was made to begin a campaign to discredit the Velasquista movement prior to the elections.

Varea is implicated because as Vice-President of the Senate he was chief of the purchasing mission. There is no accusation that any money was stolen, but to be swindled out of a million dollars by a US surplus parts company is sheer incompetence on someone's part. Photographs of the tanks and armoured personnel carriers are being published -- some without motors, others with no wheels, others simply rusted and falling apart.

Varea had told Noland that the case might come to the surface but he had hoped to keep it under cover. There's no telling how badly this will affect Varea's position as Arosemena's successor, but Noland is in a really black humour.

The PCE has just held one of its infrequent national congresses. Basantes and Cardenas attended as members of the Pichincha delegation. Divisions within the party over whether to resort to armed action soon or to continue working with the masses indefinitely are continuing to grow. Rafael Echeverria, the Quito PCE leader, is emerging as the most important leader of those favouring early armed action, although Pedro Saad was reelected Secretary-General and remains in firm control. Unfortunately neither of our agents was elected to the new Central Committee.

Quito 25 March 1962

For some days the anti-communist (Social Christian and Conservative) forces in Cuenca have been preparing for another mass demonstration against relations with Cuba and communist penetration of the government. Noland financed it through Carlos Arizaga who will use it to show solidarity with the important military command there. The affair was very successful. In spite of police denial of permission thousands turned out with posters and banners bearing the appropriate anti-communist, anti-Castro and anti-URJE themes. Demands were also made for the resignation of Arosemena and his leftist appointees, and expressions of solidarity with the military services against their extremist attackers were also prevalent. A petition with 2000 signatures was presented to the provincial governor, Arosemena's chief representative.

Colonel Lugo, National Police commander in Cuenca, advised that although he was unable to grant permission for the street march because of orders from Quito, he was able to avoid taking repressive measures. The march in fact had no police control and there was no disorder.

Quito 28 March 1962

The Cuenca military garrison under Colonel Aurelio Naranjo has suddenly sent a message to Arosemena giving him seventy-two hours to break relations with Cuba and fire the leftist Minister of Labor. The whole country is shaken by the revolt although the outcome is uncertain because so far no other military units have joined.

Arosemena spoke this afternoon with Vice-President Varea and with the press. He's taking a hard line promising severe punishment for those responsible for the rebellion. The traditional parties are ostensibly supporting Arosemena and the Constitution, but the Conservatives have issued a statement insisting on a break with Cuba and Czechoslovakia and a purge of communists in the government. The FEUE, CTE, URJE and other extreme leftists are of course backing Arosemena.

The key is the reaction of the Minister of Defense and the armed services commanders here in Quito. We're checking various agents who have access but haven't been able to get straight answers because apparently the military leaders are taking an ambiguous position.

This Cuenca revolt is clearly a result of the renewed agitation we have been promoting since January through the Conservatives and Social Christians. There was no way to tell exactly when action of this sort would occur but several sensational events of the past two days have probably had an influence. Yesterday news reached Quito of an uprising at the huge Tenguel Hacienda on the coast which is owned by a subsidiary of United Fruit and where communist agitation has been going on for some time. Eight hundred workers are striking over the company's contracting of land to tenant farmers, and the strike has touched off rumours of other risings in rural areas. At a Social Christian rally yesterday where Renato Perez was one of the speakers the Tenguel rising was attributed to the communist leadership of the workers. Also yesterday, in Cuenca, the provincial committee of the Conservative Party called on the National Committee to declare formal opposition to the Arosemena regime. Key figures in this move are Carlos Arizaga Vega in Cuenca and Aurelio Davila Cajas ‡ on the National Committee.

The other sensation is the overthrow of President Frondizi by the Argentine military. Although the Peronist victory in this month's elections is the immediate reason for the military move there, we will interpret the coup in our propaganda as related strongly to Frondizi's reluctance to break with Cuba and his general policy of accommodation with the extreme left.

Quito 29 March 1962

The crisis continues. Today the Cuenca garrison issued a public statement on the need to break relations with Cuba and Czechoslovakia and to purge the government of communists. The Minister of Defense, the Chief of Staff and the commander of the Army are all indirectly supporting the Cuenca commander by not sending troops to put down the rebellion. In response to today's statement by the Cuenca garrison, the Army commander publicly ordered the Cuenca commander to refrain from political statements, but he also sent an open statement to the Minister of Defense that the armed forces are in agreement on the need to break with Cuba.

Demonstrations have occurred today in most of the major cities: in Quito one in favour and one against Arosemena; in Guayaquil in favour of Arosemena; and in Cuenca against -- marchers there carried posters reading 'Christ the King, Si, Communism, No'.

Arosemena is trying to strike back but in the absence of cooperation from the military he's almost powerless. He had the entire Cabinet resign today, accepting the resignations of the Ministers of Government (for allowing the security situation to degenerate), Labour (as a gesture to the rightists who have focused on him as an extreme leftist), and Economy (for being one of the Conservative Party leaders of the campaign against communism and relations with Cuba).

Quito 30 March 1962

The stand-off between Arosemena and the Cuenca garrison has continued for a third day although Arosemena is grasping for an alternative to save face. He announced today that within ten or fifteen days a plebiscite will be held on relations with Cuba. The idea of a plebiscite has already been proposed by several groups including the Pichincha Chamber of Industries whose members are suffering the effects of all the tension and instability of recent months.

Arosemena may not have ten or fifteen days left for the plebiscite. This afternoon in Quito a massive demonstration calling for a break with Cuba was sponsored by the anti-communist forces including a four-hour march through the streets. At the Ministry of Defense the Chief of Staff, a well-known anti-communist, told the demonstrators that he and other military leaders share their views on Cuba. The demonstration also had pronounced anti-Arosemena overtones. Similar demonstrations have occurred today in Cuenca and Riobamba. In the press we are stimulating statements of solidarity with the movement to break with Cuba including one from the Popular Revolutionary Liberal Party ‡ which Gil Saudade had to wring out of Juan Yepez, Jr.

In spite of all the crisis other activities continue. Today Noland was honoured at a ceremony presided by Manuel Naranjo for his year as a Director of the University Sports League. He got a medal and a diploma of appreciation -- plenty of good publicity.

Quito 31 March 1962

A solution is emerging The Conservatives today formally ended their participation in Arosemena's government, and conversations between Arosemena and the National Democratic Front -- composed of the Liberals, Democratic Socialists and independents -- have begun. One of the Front's conditions for continuing to support Arosemena is a break with Cuba and Czechoslovakia. Meanwhile the Electoral Court quashed the plebiscite idea for constitutional reasons.

Conservative withdrawal from the government was highlighted by the publication today of an open letter from the Conservative ex-Minister of the Economy who resigned two days ago. In the letter the Cuenca rightist charged communists whom Arosemena has allowed to penetrate the government with thwarting the country's economic development.

The solution, interestingly, has resulted because Varea, the Vice-President, is unacceptable to the military high command because of his implication in the junk swindle. Otherwise Arosemena would probably have been deposed in favour of Varea for his resistance on the Cuban break. The Liberals and others in the Democratic Front expect to improve their electoral prospects from a position of dominance in the government. And the Conservatives and Social Christians will be able to campaign on the claim that they were responsible for the break with Cuba (if it takes place). Everyone is going to be satisfied except Arosemena and the extreme left -- although Arosemena will at least survive for now.

The Social Christian bomb squad finally slipped up last night. Just after midnight they bombed the home of the Cardinal (who was sleeping downtown at the Basilica) and a couple of hours later they bombed the Anti-Communist Front. By a stroke of bad luck the two bombers were caught and have admitted to police that they are members of the Anti-Communist Front itself. So far they haven't been traced to the Social Christian Movement which planned the bombings. These produced lots of noise but little damage, to provide a new pretext for demonstrations of solidarity with the Cardinal.

Quito 1 April 1962

The crisis is over and the Cubans are packing. Today the announcement was made that the National Democratic Front will enter the government with five Cabinet posts and that relations with Cuba will be broken. The new Minister of Government, Alfredo Albornoz, ‡ is an anti-communist independent known personally by Noland. (His son is a friend of Noland's and of mine -- he's President of the YMCA board on which I replaced Noland in January. The new minister is an important banker and owner of the Quito distributorship for Chevrolets and Buicks. Noland intends to begin a liaison arrangement with him as soon as possible.)

Today new anti-communist demonstrations and marches were held in Quito and down south in Loja celebrating the break with Cuba. The Conservatives and Social Christians are promoting still another massive demonstration in three days to show support for the Cardinal -- in spite of the admission by the bombers (which in the newspapers was relegated to a small, obscure notice).

Quito 2 April 1962

Success at last. Today the new Cabinet, in its first meeting with Arosemena, voted unanimously to break relations with Cuba, Czechoslovakia and Poland (which just recently sent a diplomatic official to Quito to open a Legation). After the meeting Arosemena lamented that the plebiscite was impossible while Liberal Party leaders claimed credit for the break.

Tomorrow the Foreign Ministry will give formal advice to each mission. Besides the Pole there are three Czechs and seven Cubans. The main problem for the Foreign Ministry is to find a country with an embassy in Havana that will take the asylees in the Ecuadorean Embassy -- almost two hundred of them. The extreme left has been trying to promote demonstrations against the decision but they've only been able to get out small crowds.

This afternoon we had a champagne victory celebration in the station, and headquarters has sent congratulations.

Quito 4 April 1962

The Social Christian and Conservative street demonstration today was said to be the largest in the history of Quito. Tens of thousands swarmed through the downtown streets to the Independence Plaza where the Cardinal, who was the last speaker, said that, following the teachings of Christ, he would forgive the terrorists who had tried to kill him. Aurelio Davila was one of the organizers of the demonstration, and he arranged for a Cuban flag to be presented to the Cardinal by a delegation of the exiles. (The main exile organization, the Revolutionary Student Directorate, is run by the Miami station and in some countries the local representatives are run directly by station officers. In our case, however, Noland prefers to keep them at a distance through Davila.)

Noland is already meeting with the new Minister of Government, Alfredo Albornoz, ‡ to pass information on communist plans that we get from our penetration agents. Today we got a sensational report from one of Jose Vargas's sub-agents to the effect that Jorge Ribadeneira, one of the principal leaders of URJE, has called his followers into immediate armed action in a rural area towards the coast. Communications with the sub-agent are very bad right now but Noland is trying to get more details. When Noland met with the Minister he learned that the Minister also has information on the guerrilla operation -- it's concentrated near Santo Domingo de los Colorados, a small town a couple of hours' drive towards the coast from Quito. Tonight the Ministry of Defense is sending a battalion of paratroopers to the area to engage the guerrillas. As a precaution the Minister has banned all public demonstrations until further notice, but he and the Minister of Defense hope to keep the guerrilla operation secret until the size of the group is known. That may be impossible, however, because other agents including Lt. Col. Paredes, ‡ the surveillance team chief, are beginning to report on the paratroopers' mobilization.

The thought of facing an effective guerrilla operation is one of our most persistent nightmares because of the ease with which communications and transport between coast and sierra could be cut. The difficult geography, moreover, is ideal for guerrilla operations in many areas, and if the imagination of the rural Indians and peasants could be captured -- admittedly not an easy task because of religion and other traditional influences -- the guerrillas would have a very large source of manpower for support and for new recruits. This is why we have been continually trying to induce government action against the various groups of the extreme left in order to preclude this very situation.

Quito 5 April 1962

Communications are impossible with Jose Vargas's agent in the guerrilla band and little news of substance is coming into the Ministry of Defense from the operations zone. I sent Lieutenant- Colonel Paredes down to Santo Domingo to see what he could pick up, but he hasn't been able to get close to the operations. Our best information from the Ministry of Defense is coming from Major Ed Breslin, ‡ the US Army Mission Intelligence Advisor. He has been in Quito only a short time but has already worked his way in with the Ecuadorean military intelligence people much more effectively than his predecessor. Both Noland and I have been working more closely with him on targeting for recruitments in the military intelligence services, and our relationship with him is excellent -- he trained the tank crews that landed at the Bay of Pigs last year. Breslin reports the guerrillas are offering no resistance and that several arrests have been made.

At the Guayaquil airport last night two events related to Cuba will give us good material for propaganda. First, an Ecuadorean returning from a three-month guerrilla training course in Cuba was arrested. He is Guillermo Layedra, a leader of the CTE in Riobamba, whose return was reported to the base by the Mexico City station which gets very detailed coverage of all travellers to and from Cuba via Mexico through the Mexican immigration service. Data on Layedra's travel was passed to Lieutenant- Colonel Pedro Velez Moran, ‡ one of the liaison agents of the base. Of propaganda interest are the books, pamphlets, phonograph records of revolutionary songs and, especially, a photograph of him in the Cuban militia uniform. Through Velez the base expects to get copies of his interrogation and will pass questions at headquarters' request.

The other case, also the work of Lieutenant-Colonel Velez, occurred during a refuelling stop of a Cuban airliner bound from Chile to Havana. It was carrying some seventy passengers most of whom were Peruvian students going to study on 'scholarships' in Cuba -- most likely they were really guerrilla trainees. The base asked Velez to get a copy of the passenger list, an unusual demand for a service stop, which the base will forward to the Lima station. During the stop, however, the pilot was seen to give an envelope to the Third Secretary of the Cuban Embassy in Quito (the Cubans haven't left yet) and a customs inspector demanded to see the envelope. The Cuban diplomat took out a .45 pistol and, after waving it menacingly at the customs inspector, he was arrested by the airport military detachment. Only about 10 a.m. this morning was he allowed to go free, but he was allowed to keep the envelope.

Quito 6 April 1962

The press carried its first stories of the Santo Domingo guerrilla operation this morning -- sensational accounts of 300 or more men under the command of Araujo. The Ministry of Defense, however, announced later that thirty guerrillas have been arrested along with a considerable quantity of arms; ammunition and military equipment. First reports from interrogations indicate that the guerrilla group numbers less than 100 and that Araujo isn't participating, but military operations continue.

Although the early interrogation reports also indicate that the guerrilla operation was precipitated by the Cuenca revolt and very poorly planned, we will try to make it appear serious and dangerous in our propaganda treatment. Most of those arrested are young URJE members -- followers of Jorge Ribadeneira who may well be expelled from the PCE if, as is likely, the Executive Committee under Saad had nothing to do with the operation. Reports from PCE agent penetrations coincide in the view that Ribadeneira was acting outside party control.
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Re: Inside the Company: CIA Diary, by Philip Agee

Postby admin » Tue Jun 09, 2015 4:17 am

PART 7 OF 10

Quito 10 April 1962

The Santo Domingo guerrilla affair is wiped up. Forty-six have been captured with only a brief exchange of fire. Only one casualty occurred -- a guerrilla wounded in the foot. All have been brought to Quito and we're getting copies of the interrogations through Major Breslin. In an effort to help Pacifico de los Reyes ‡ make a good impression in his new job as chief of the intelligence department of the National Police, I have been giving him information on many of those arrested, which he is passing as his own to the military interrogation team.

Propaganda treatment is only partly successful. The Minister of Defense has announced that the weapons seized are not of the type used by the Ecuadorean Army and must have been sent from outside the country -- although the truth is that the weapons are practically all conventional shotguns, hunting rifles and M-1's stolen from the Army. Interrogation reports released to the press allege (falsely) that the operation was very carefully planned and approved at the PCE Congress held last month.

Press comment, however, is tending to romanticize the operation. Participation of four or five girls, for example, is being ascribed to sentimental reasons. Those arrested, moreover, once they have been turned over to police and are allowed to see lawyers, are saying that they only went to Santo Domingo for training in the hope of defending the Arosemena government from overthrow by the Cuenca garrison. The FEUE has set up a commission of lawyers for the guerrillas' defence, and unfortunately the early public alarm is turning to amusement and even ridicule.

Of continuing importance will be two factors. First, the ease with which the guerrillas were rolled up has given the Ecuadorean military new confidence and may encourage future demands for government suppression of the extreme left. Second, the operation is bound to exacerbate the growing split on the extreme left, both inside and outside the PCE, between those favouring early armed action and those favouring continued long-term work with the masses. In both cases this pitiful adventure has been fortunate for us.

Quito 23 April 1962

Back in the cool thin sierra air after a brief holiday. The Pole, Czechs and Cubans have all left so we have no hostile diplomatic missions to worry about any more. The telephone tap on the Cubans was only of marginal value because they were careful, but I'm going to begin soon to monitor Araujo's telephone and perhaps one other if I can arrange for transcription. The technical problems with the sound-actuated equipment were never solved so we reverted to the old voltage-operated machines.

Although we tried to keep the Santo Domingo guerrilla operation in proper focus it hasn't been easy. The Rio station helped by preparing an article on the communist background of one of the girls in the operation, a Brazilian named Abigail Pereyra. The story was surfaced through the Rio correspondent of the hemisphere-wide feature service controlled by the Santiago, Chile, station -- Agencia Orbe Latinoamericano. ‡ The story revealed that her father is a Federal Deputy and the personal physician of Luis Carlos Prestes, long-time leader of the Communist Party of Brazil, while her mother is the Portuguese teacher at the Soviet Commercial Mission in Rio de Janeiro. Both parents are leaders of the Chinese-Brazilian Cultural Society, and her mother went to Cuba early this year to visit Abigail -- who was taking a guerrilla training course, according to the article. This may help keep her in jail for a while, but public opinion is favourable to early release.

Gil Saudade has established another of his front organizations for propaganda. The newest was formed a few days ago and is called the Committee for the Liberty of Peoples. ‡ Through this group Gil will publish documents of the European Assembly of Captive Nations ‡ and other Agency-controlled organizations dedicated to campaigns for human rights and civil liberties in communist countries. The agent through whom he established the Committee is Isabel Robalino Bollo ‡ whom he met through Velasco's former Minister of Labor, Jose Baquero de la Calle. Robalino is a leader of the Catholic Labor Center (CEDOC), and is Gil's principal agent for operations through this organization. She was named Secretary of the Committee which includes many prominent liberal intellectuals and politicians.

Quito 27 April 1962

The government has lifted the prohibition on public political demonstrations in effect since the turmoil over the break with Cuba, and the campaign for the June elections is picking up steam. Quite a number of our agents will be candidates but so far our main electoral operation is in Ambato where Jorge Gortaire, a retired Army colonel and Social Christian leader, is working to defeat the Revolutionary Socialist Mayor running for re-election.

Gortaire is also a leader of the Rotary Club and is President of the Ambato Anti-Communist Front which we finance through him. Because of his exceptional capability the Front is running a single list of candidates backed by the Conservatives, Liberals, Social Christians, independents and, of course, the fascist ARNE. Noland thinks Gortaire is one of the best agents he has -- after Renato Perez and Aurelio Davila.

Gil Saudade is about to see a giant step forward in his and the Guayaquil base labour operations. Tomorrow the constituent convention of the free trade-union confederation to be called CEOSL ‡ begins, and Gil is fairly certain that between the base agents in CROCLE and his Popular Revolutionary Liberal Party agents, we will come out in control. In recent months the PLPR agents have become increasingly active and Gil is counting on them to offset the divisive regionalism of the CROCLE agents.

Quito 1 May 1962

The CEOSL -- Ecuadorean Confederation of Free Trade Union Organizations - is formally established with several agents in control: Victor Contreras Zuniga ‡ is President, Matias Ulloa Coppiano ‡ is Secretary for External Relations, and Ricardo Vazquez Diaz ‡ is Secretary of Education. Publicity build-up has been considerable, including messages of solidarity from ORIT in Mexico City and ICFTU and International Trade Secretariats in Brussels. Leaders of other Agency-controlled labour confederations such as the Uruguayan Labor Confederation ‡ (CSU) were invited.

The main business of the first sessions was to seek affiliation with the ICFTU and ORIT which has just opened an important training-school in Mexico. Soon CEOSL will begin sending trainees to the OR IT school, which is run by the Mexico City station through Morris Paladino, ‡ the OR IT Assistant Secretary-General and the man through whom IO Division controls ORIT. (The new Secretary-General of ORIT, Arturo Jauregui, ‡ hasn't been directly recruited yet although he was here in March to promote the school.)

Gil Saudade will now have to coordinate closely with the Guayaquil base so that his agents, Ulloa and Vazquez, will work in harmony with the base's agent, Contreras. None is supposed to know of the others' contact with us.

Unfortunately the controversy between the Guayaquil base agents from CROCLE and the ECCALICO election operation of two years ago came to a head. Adalberto Miranda Giron, the Labor Senator from the Coast, was terminated by the base several months ago because certain of his inappropriate dealings with companies became known. At the CEOSL constituent convention he was denounced as a traitor to the working class, the beginning of a campaign to get him completely out of the trade-union movement.

Quito 3 May 1962

The 'junk swindle' has become Ecuador's scandal of the century and is being used increasingly by the left to ridicule the military. Today the Chief of Staff and the Commander of the Army issued a joint statement defending themselves from attacks by CTE leaders in May Day speeches and other recent attempts to connect them with the junk swindle. Final liquidation of the armed forces, they warned, is the purpose of the leftist campaign. Resentment is also growing in the military over recent leaflets and wall-painting labelling them 'junk dealers'.

A new crisis has developed in rural areas violently demonstrating the backwardness of this country. For the past two months the government has been trying to conduct an agriculture and livestock census to aid in economic planning. Numerous Indian uprisings have occurred because of rumours that the census is a communist scheme to take away the Indians' animals. On several occasions there were dead and wounded, as in Azuay Province, for example, where a teacher and his brother, who were taking the census, were chopped into pieces with machetes and only the arrival of police impeded the burning of what remained of their bodies.

Because priests serving rural areas are often responsible for the rumours, the government had to ask the Church hierarchy to instruct all priests and other religious to assist in the census wherever possible. In Azuay, nevertheless, the census has been suspended.

One has to wonder about the strength of religious feeling here. On Good Friday two weeks ago tens of thousands of Indians and other utterly poor people walked in procession behind images from noon till 6 p.m. -- despite heavy rain. The same occurred in Guayaquil and other cities.

Quito 12 May 1962

Some of our agents are running solid electoral campaigns but others have pulled out for lack of support. Both Jose Baquero de la Calle, ex-Minister of Labor under Velasco and running as an independent Velasquista, and Juan Yepez del Pozo, Sr., General-Secretary of the Ecuadorean affiliate of the International Commission of Jurists, ‡ and running for the Popular Revolutionary Liberal Party, ‡ declared for Mayor of Quito. When Baquero's candidacy was repudiated by the Conservative Party, he resigned, and when Yepez failed to attract significant Velasquista backing, he resigned. Oswaldo Chiriboga, ‡ long-time penetration of the Velasquista movement, also declared for Mayor but is pulling out. For all of these candidates station support was only nominal because their possibilities for success were obviously rather limited.

On the other hand the candidacies of Renato Perez for the Municipal Council, Aurelio Davila for the Chamber of Deputies and Carlos Arizaga Vega for Deputies are going very well. Alfredo Perez Guerrero, President of the ICJ ‡ affiliate and reform-minded Rector of Central University, is heading the Deputies list of the National Democratic Front (Liberals, Socialists and independents) and will win without our help. Other candidates of the Social Christian Movement and the Conservative Party are being financed indirectly through funds passed to Perez and Davila.

Quito 13 May 1962

Because Arosemena continues to resist firing extreme leftists in his government -- penetration in fact continues to grow -- Noland recommended, and headquarters approved, expansion of the political operations financed through the ECACTOR project. Not only will continued and increased pressure be exerted through the regular agents in Quito, Cuenca, Riobamba, Ambato and Tulcan, but we have made two new recruitments of important Social Christian leaders in Quito. I am in charge of both these new cases.

The first new operation is with Carlos Roggiero, ‡ a retired Army captain and one of the principal Social Christian representatives on the National Defense Front. Roggiero is chief of the Social Christian militant-action squads, including the secret bomb-squad, and I have started training him in the use of various incendiary, crowd dispersement and harassment devices that I requested from TSD in headquarters. Through him we will form perhaps ten squads, of five to ten men each, for disrupting meetings and small demonstrations and for general street control and intimidation of the Communist Youth, URJE and similar groups.

The other new operation is with Jose Maria Egas, ‡ a young lawyer and also a leading Social Christian representative on the National Defense Front. Egas is a fast-rising political figure and a really spellbinding orator. Through him I will form five squads composed of four to five men each for investigative work connected with our Subversive Control Watch List -- formerly known as the LYNX list. The surveillance team under Lt. Col. Paredes simply hasn't the time to do the whole job and is needed on other assignments. With the group under Egas's control we will have constant checking on residences and places of work so that if the situation continues to deteriorate and a moment of truth arrives, we will have up-to-date information for immediate arrests. If Egas's work warrants it, we may train him in headquarters and even extend the operation to physical surveillance.

In another effort to improve intelligence collection on the extreme left I have arranged to add another telephone tap through Rafael Bucheli ‡ and Alfonso Rodriguez. ‡ The new tap will be on the home telephone of Antonio Flores Benitez, a retired Army captain and somewhat mysterious associate of Quito PCE leader Rafael Echeverria Flores. We have several indications from PCE penetration agents Cardenas and Vargas that Flores is a key figure in what seems to be an organization being formed by Echeverria outside the PCE structure properly speaking. The chances are that Echeverria is developing a group that may be the nucleus for future guerrilla action and urban terrorism, but he hasn't yet taken any of our agents into it. I will tap Flores for a while to see if anything of interest develops -- Edgar Camacho will do the transcribing as Francine Jacome has only time for transcribing the Araujo line. The LP remains in Bucheli's home under the thin cover of an electronics workshop.

Raymond Ladd, ‡ our hustling administrative officer, has been very active in the basketball federation, teaching a course in officiating and helping to coach the local girls teams. Through this work he met Modesto Ponce, ‡ the Postmaster-General of Ecuador, who soon insisted that Ladd review in the Embassy all the mail we are already getting through the regular intercept. In order to avoid suspicion that we are already getting mail from Cuba and the Soviet Bloc, Ladd accepted Ponce's offer, and now we get the same correspondence twice. We may attempt certain new coverage through Ponce so Ladd has begun giving him money for the mail under the normal guise of payment for expenses.

Quito 21 May 1962

Arosemena struck back for his humiliation at the hands of the military when he was forced to break with Cuba. Last week he fired the Minister of Defense, sent the Army Commander to Paris as military attache and sent the Air Force Commander to Buenos Aires as military attache. Immediate protests came from the Social Christians, Conservatives and others over the removal of these staunchly anti-communist officers with new charges of communist penetration of the government.

Then Alfredo Albornoz, ‡ the Minister of Government appointed only seven week ago, resigned. Next, all the other National Democratic Front Ministers resigned. The issue is Arosemena's refusal to honour his promise of last month, when the Front came into the government, to dismiss two key leftist appointees: the Secretary-General of the Administration and the Governor of Guayas Province.

Noland is sorry to lose Albornoz because they were developing a worthwhile relationship both from the point of view of intelligence collection through Albornoz and from action by Albornoz on undesirables within the government. Arosemena is searching for new support, but the Front is holding out for the resignations.

But yesterday new ministers were named after Arosemena made another promise in secret to fire the Governor of Guayas Province. Today the resignation was announced. Although this is a step in the right direction, the Secretary-General of the Administration remains (he is like a chief of staff with Cabinet rank) along with many others of the same colouring. Among the new ministers is Juan Sevilla, ‡ a golfing companion of mine who was named Minister of Labor and Social Welfare. Gil Saudade will decide whether Sevilla could be of use in his labour operations.

Quito 4 June 1962

Traditional violence flared up in several cities during the final days before the elections which were held yesterday. The right was split, as were the centre and the Velasquistas -- with a profusion of candidates all over the country excepting the extreme left which didn't participate.

The Conservative Party won the most seats in the Chamber of Deputies (although not quite a majority), and victories in most of the municipal and provincial contests. Aurelio Davila, who managed the Conservative campaign in Quito, was elected Deputy for Pichincha. ReRato Perez was elected Quito Municipal Councillor from the Social Christian list. And Carlos Arizaga Vega was elected Conservative Party Deputy for Azuay Province.

The Velasquistas have had a disaster, winning only six deputies and two mayors' races -- one of which was in Ambato. Jorge Gortaire's candidate there, backed by the Anti-Communist Front, ‡ was second but Gortaire is being given overall credit for the defeat of the Revolutionary Socialist incumbent.

The elections are a clear indication of the effectiveness of the Conservatives' campaign against communist penetration in the government and are a severe defeat both for Arosemena and for the National Democratic Front. When Congress opens there can be little doubt that the Conservatives will exert new and stronger pressure for elimination of extreme-leftists in the government.

Reinaldo Varea has been taking a severe beating in the continuing controversy over the junk swindle. The case is colouring the whole political scene and unfortunately for us Varea isn't very effective in what is a very difficult defence. In a few days he'll go to Washington for treatment of stomach ulcers at Walter Reed Hospital -- Davila will be acting Vice-President.

Quito 15 June 1962

The International Monetary Fund has just announced another stabilization credit to Ecuador of five million dollars over the next twelve months for balance of payments relief. The announcement was optimistic and complimentary, noting that Ecuador since mid-1961 has stopped the decline in its foreign exchange reserves and obtained equilibrium in its balance of payments. The new standby, of course, is conditional on retention of last year's exchange-rate unification, that contributed to Velasco's overthrow.

Two programmes are getting under way this month as part of a new US country-team effort in staving off communist-inspired insurgency. One is the Civic Action programme of the Ecuadorean military services and the US military assistance mission -- in fact under way for a couple of years but now being expanded and institutionalized. The purpose of Civic Action is to demonstrate through community development by uniformed military units that the military is on the side of the people so that tendencies of poor people to accept communist propaganda and recruitment can be reversed. It's a programme to link the people, especially in rural areas, to the government through the military who contribute visibly and concretely to the people's welfare.

The Civic Action programme just announced as the first of its kind in Latin America calls for contributions in money and equipment by the US military-assistance mission worth 1.5 million dollars plus another 500,000 dollars from the AID mission. Projects will include road-construction, irrigation-canals, drinking-water systems and public-health facilities, first in Azuay Province to be followed by Guayaquil slums and by the Cayambe-Olmedo region north of Quito. Widespread publicity will be undertaken to propagandize these projects in other areas in order to generate interest and project proposals in these other regions.

In the station, we will work with Major Breslin, ‡ the intelligence advisor of the US military mission. He will use the mission personnel who visit and work at the projects as a type of scout -- keeping their eyes open and reporting indications of hostility, level of communist agit-prop activities and general programme effectiveness.

The other new programme is more closely related to regular station operations and is Washington's answer to the limitations of current labour programmes undertaken through A I D as well as through ORIT and CIA stations. The problem is related to the controversy over the ineffectiveness of ORIT but is larger -- it is essentially how to accelerate expansion of labour-organizing activities in Latin America in order to deny workers to labour unions dominated by the extreme left and to reverse communist and Castroite penetration. This new programme is the result of several years' study and planning and is to be channelled through the American Institute for Free Labor Development ‡ (AIFLD), founded last year in Washington for training in trade-unionism.

The reason a new institution was founded was that AID labour programmes are limited because of their direct dependence on the US government. They serve poorly for the dirty struggles that characterize labour organizing and jurisdictional battles. ORIT programmes are also limited because its affiliates are weak or nonexistent in some countries, although expansion is also under way through the establishment of a new ORIT school in Mexico. Control is difficult and past performance is poor. The CIA station programmes are limited by personnel problems, but more so by the limits on the amount of money that can be channelled covertly through the stations and through international organizations like ORIT and the ICFTU.

Business leaders are front men on the Board of Directors so that large sums of AID money can be channelled to AIFLD and so that the institute will appear to have the collaboration of US businesses operating in Latin America. Nevertheless, legally, AIFLD is a non-profit, private corporation and financing will also be obtained from foundations, businesses and the AFL-CIO.

The AIFLD is headed by Serafino Romualdi, IO Division's longtime agent who moved in as Executive Director and resigned as the AFL-CIO's Inter-American Representative. Among the Directors are people of the stature of George Meany, ‡ J. Peter Grace ‡ and Joseph Beirne, ‡ President of the Communications Workers of America ‡ (CWA) which is the largest Western Hemisphere affiliate of the Post, Telegraph and Telephone Workers International ‡ (PTTI). AIFLD, in fact, is modelled on the CWA training school of Front Royal, Virginia where Latin American leaders of PTTI affiliates are being trained. Day to day control of AIFLD by IO Division, however, will be through Romualdi and William Doherty, ‡ former Inter-American Representative of the PTTI and now AIFLD Social Projects Director. Prominent Latin American liberals such as Jose Figueres, ‡ former President of Costa Rica and also a longtime Agency collaborator, will serve on the Board from time to time.

The main purpose of AIFLD will be to organize anti-communist labour unions in Latin America. However, the ostensible purpose, since union organizing is rather sensitive for AID to finance, even indirectly, will be 'adult education' and social projects such as workers' housing, credit unions and cooperatives. First priority is to establish in all Latin American countries training institutes which will take over and expand the courses already being given in many countries by AID. Although these training institutes will nominally and administratively be controlled by AIFLD in Washington, it is planned that as many as possible will be headed by salaried CIA agents with operational control exercised by the stations. In most cases, it is hoped, these AIFLD agents will be US citizens with some background in trade-unionism although, as in the case of ORIT, foreign nationals may have to be used. The training programmes of the local institutes in Latin America will prepare union organizers who, after the courses are over, will spend the next nine months doing nothing but organizing new unions with their salaries and all expenses paid by the local institute. Publicity relating to AIFLD will concentrate on the social projects and 'adult education' aspects, keeping the organizing programme discreetly in the background.

This month, in addition to training in Latin American countries, AIFLD is beginning a programme of advanced training courses to be given in Washington. Spotting and assessment of potential agents for labour operations will be a continuing function of the Agency-controlled staff members both in the training courses in Latin America and in the Washington courses. Agents already working in labour operations can be enrolled in the courses to promote their technical capabilities and their prestige.

In Ecuador, the AIFLD representative from the US who is now setting up the training institute -- the first course begins in three weeks -- is not an agent but was sent anyway in order to avoid delays. However, Gil Saudade arranged for Ricardo Vazquez Diaz, ‡ the Education Secretary of CEOSL, to be the Ecuadorean in charge of the local AIFLD training programmes. Carlos Vallejo Baez, ‡ who is connected with the Popular Revolutionary Liberal Party, ‡ will also be on the teaching staff. Eventually Saudade will either recruit this first AIFLD representative or headquarters will arrange for a cleared agent to be sent.

These two new programmes, military Civic Action and the AIFLD, are without doubt being expanded faster here than in most other Latin American countries. Recently I read the report by a special inter-departmental team of experts from Washington called the Strategic Analysis Targeting Team (SATT), which in months past secretly visited all the Latin American countries. Their purpose was to review all US government programmes in each country and to determine the gravity of the threat of urban terrorism and guerrilla warfare. We prepared a secret annex for the SATT Report, and among their recommendations were expansion of the Subversive Control Watch List programme and updating of contingency planning in order to continue our operations from a third country -- in case we lose our Embassy offices. Ecuador, in fact, shared with Bolivia and Guatemala the SATT Report's category as the most likely places for early armed insurgency. Emphasis on immediate expansion of Civic Action and labour programmes is probably a result of the SATT Report.

Quito 21 July 1962

A breakthrough in Guayaquil student operations. The anticommunist forces led by Alberto Alarcon have just won the FEUE ‡ elections. They replace extreme-leftist officers who are members of URJE. Less than two weeks ago, Alarcon was here in Quito for a golf tournament sponsored by Ambassador Bernbaum, and he and Noland made final preparations for the FEUE elections.

Gil Saudade has launched another new operation -- an organization of business and professional people to promote economic and social reform. Civic organizations of this sort have been established by other stations and have been effective for propaganda and as funding mechanisms for elections and other political-action operations. Our group is called the Center for Economic and Social Reform Studies ‡ (CERES) and is headed by two agents, Mario Cabeza de Vaca ‡ and Jaime Ponce Yepez. ‡ Cabeza de Vaca formerly was the cutout to PCE penetration agent Mario Cardenas but they had a personality clash of sorts so John Bacon shifted Cardenas to Miguel Burbano de Lara ‡ who was already handling another PCE penetration agent, Luis Vargas. ‡ Bacon then turned Cabeza de Vaca over to Saudade to front in the CERES organization. Jaime Ponce is the Quito Shell Oil dealer and already a friend of mine and Noland's. Noland recruited him to work in CERES and then turned him over to Saudade. The Bogota station is helping by sending a delegation from its reform group called Center of Studies and Social Action ‡ (CEAS). They are here now.

Quito 2 August 1962

Arosemena's back from a state visit to Washington. During his main business meeting with Kennedy he was feeling no pain and proved he could name all the US Presidents in order from Washington on. He also claimed he couldn't remember the Ecuadorean Presidents, there have been so many, for the last half-century. Kennedy apparently was amused, but the State Department reports on the trip are sombre.

Thanks to Arosemena the last of the Santo Domingo guerrillas have been released. In recent months they've trickled out slowly with little publicity, and unless Davila and others can create an issue during the Congressional session opening in a week, the cases will just sink away into the bureaucratic swampland. Several of the guerrillas have already gone to Cuba for additional training.

The telephone tap on Antonio Flores Benitez is producing better information right now than any of our PCE penetration agents. Flores has ten or fifteen persons who call and say very little, only code-phrases for arranging meetings, obviously using code-names. Using the ECJACK surveillance team under Lt. Col. Paredes I've been trying to identify Flores's contacts but the work is very slow, especially because Flores simply cannot be followed -- partly it's the size and low proficiency of the team, but, mainly Flores is watching constantly and taking diversionary measures.

Even so, I have identified Rafael Echeverria, Principal PCE leader in Quito, as one of the clandestine contacts, along with a non-commissioned officer in the Ministry of Defense Communications Section, the chief of the archives section of the Presidency and the deputy chief of Arosemena's personal bodyguard. Analysis of the transcripts has been most helpful because even though Flores is careful when he speaks by telephone, his wife is very garrulous when he's out of the house. Several important identifications have been made from her carelessness.

My impression at this point is that Flores, who is not a PCE member, is in charge of the intelligence collection branch of an organization Echeverria is continuing to form outside the established PCE structure. If he is doing as well in the guerrilla and terrorism branch we will have to act soon to suppress the organization before armed operations begin.

In order to speed up transcriptions we have brought in another transcriber. He is Rodrigo Rivadeneira, ‡ one of the brothers who run the clandestine printing press. Rodrigo is one of Ecuador's best basketball players and was on a scholarship in the US obtained for him by Noland. He returned to Ecuador in June and because of family financial problems he will probably have to give up the scholarship. Francine Jacome will be unable to work for a few months so Rodrigo will take over the Araujo line which, while interesting, is not producing as much as the Flores line.

Two police agents have been transferred to new assignments. Pacifico de los Reyes, ‡ Chief of Police Intelligence, left yesterday for the FBI course at Quantico, Virginia. We got the scholarship for him through the AID Public Safety office and he will be gone until the end of the year. Before he left he asked me if I would like to keep up contact with the Police Intelligence unit while he is away. He selected Luis Sandoval, ‡ chief technician of the Police Intelligence unit, with whom I have been meeting since last year but without de los Reyes's knowledge. He introduced Sandoval to me three days ago and somehow we both kept a straight face. Before leaving, de los Reyes was promoted from captain to major. With the Office of Training in headquarters I am arranging special intelligence training for him to follow the FBI course.

Colonel Oswaldo Lugo, our oldest and most important penetration agent of the National Police, has been reassigned from the Cuenca district to the job as Chief of the Fourth District with headquarters in Guayaquil. This new job puts him in command of all the National Police units on the coast and will be an important addition to the Guayaquil base operations. In a few days I will make a quick trip to Guayaquil to introduce Lugo to the Base Chief.

Guerrilla training in Cuba is on headquarters' highest priority list for Latin America and instructions have been sent to all stations asking that efforts be made to place agents in the groups sent for training. We haven't been able to get an agent sent for training yet, but I've been meeting lately with the new Director of Immigration, Pablo Maldonado, ‡ who has expressed interest in helping impede travel to Cuba by administrative procedures where prior knowledge of the travel is available. Maldonado, whom I met through mutual friends, is also willing to arrange close searches of Ecuadoreans who return from Cuba. I have begun passing on information which comes from the Mexican and Spanish liaison services using the immigration documents of travellers to and from Cuba through the two main travel points: Mexico City and Madrid.

Quito 10 August 1962

Congress opened a new session today and acknowledged that agrarian reform is one of the first items on its order of business. In the Senate the National Democratic Front is in control while in the Chamber of Deputies the Conservative Party has a slight edge when backed by the leftist Concentration of Popular Forces' two or three deputies.

The Conservatives are out to get Varea's ‡ resignation and Noland has no way either to stop it or to salvage Varea. Once Varea is thrown out over the junk swindle the Conservatives will try to get Arosemena thrown out or force his resignation for physical incapacity. Unfortunately Varea has to go first because ousting Arosemena with Varea as Vice-President will be almost impossible.

Varea continues as President of the Senate and Carlos Arizaga Vega, ‡ our ECACTOR political-action agent from Cuenca, was elected Vice-President of the Chamber of Deputies. He has quickly replaced Davila as leader of the rightist bloc -- Davila is concentrating on organizational work and wasn't a candidate in the Chamber of Deputies.

Quito 29 August 1962

After four days of political crisis, including the resignations of all Cabinet ministers, Arosemena finally had to dismiss his leftist Secretary-General. Without doubt this is a significant victory for the Conservatives and Social Christians, although certain Liberals and Socialists are also aligned in the campaign since last year against the key administration leftist.

The only other Cabinet resignation accepted was that of Manuel Naranjo, ‡ Minister of the Treasury and Noland's agent leading the democratic Socialist Party. His resignation comes as a result of increasing opposition from businessmen to his austerity policies although he is widely and favourably recognized for his personal honesty and the beginnings of tax-reform.

The situation worsens for another of Noland's agents. Two nights ago the Chamber of Deputies voted to impeach Varea for his participation in the junk swindle -- still the supreme issue in current Ecuadorean politics. He's not being charged with stealing any of the money, just with negligence and ineptitude. The Minister of Defense at the time of the swindle is being prosecuted by the Chamber along with the Vice-President. Carlos Arizaga Vega is leading the attack.

Araujo has arrived back in Guayaquil after a trip to China that started late last month. At the airport five rolls of training film on street-fighting techniques were confiscated as well as propaganda. In China he was received by the Vice-Premier -- we're going to try and discover if he got other assistance too.

Quito 3 September 1962

Labour operations proceed with their usual mixed accomplishments. The CROCLE leadership within the CEOSL has insisted in attacking Adalberto Miranda, the Labor Senator from the coast, because of his dealings with the Guayaquil Telephone Company. Now they are accusing him of being involved with efforts by the United Fruit subsidiary to fire certain employees who are members of the subsidiary's trade union which recently affiliated with CROCLE and CEOSL. The same Guayaquil CROCLE leaders tried to get Miranda disqualified from the Senate but that move failed too. This campaign against Miranda is justified in some ways, according to the base, but undesirable right now because of its divisive nature. Soon the base plans to terminate the CROCLE agents who also insist on retaining the regional identity of CROCLE in opposition to our efforts to replace it with coastal provincial federations. When that happens, Gil Saudade will move his Quito agents into full control of CEOSL; he is now preparing for that development.

Meanwhile the AIFLD programme is continuing to progress with close coordination with CEOSL through Ricardo Vazquez Diaz. Next month Vazquez will conduct a seminar for labour leaders from which four will be selected for the three-month AIFLD course starting in October in Washington.

Two weeks ago a PTTI delegation was here to discuss organization and a low-cost housing programme with their Ecuadorean affiliate, FENETEL, ‡ which is one of the most important unions in CEOSL. The PTTI is training FENETEL leaders at their school in Front Royal, Virginia, and the visit was also used to create publicity for the AIFLD seminar programme. Included in the delegation was the new PTTI Inter-American Representative and a Cuban who is leader of the Cuban telephone workers' union in exile. This PTTI organization is without doubt the most effective of the International Trade Secretariats currently working in Ecuador under direction of IO Division.

One has to wonder how the Ecuadorean working class can even stay alive to organize. Two weeks ago the President of the National Planning Board, in a general economic report to the Chamber of Deputies, revealed that the worker in 1961 received an average monthly income of only 162 sucres -- about seven dollars.

Quito 10 September 1962

Noland has turned over another branch of the ECACTOR political-action project to me. From now on I'll be handling the Ambato operation with Jorge Gortaire.

Two weeks ago I went with Noland down to Ambato to meet Gortaire and to plan a bugging operation that we think may reveal information on Chinese support to Araujo, if any. Previously, the manager of the Villa Hilda Hotel in Ambato, a Czech emigre, reported to Gortaire that Araujo had made reservations for one of the cottages. This will be Araujo's first trip to visit his Ambato followers since returning from Communist China and Gortaire suggested that we bug the cottage -- which he will monitor when Araujo goes there at the end of the month.

Last week-end I returned with the equipment and spent a couple of days with Gortaire. He had taken the cottage which Araujo will use and we installed a microphone, transmitter and power supply behind the woodwork of the closet door. It works perfectly and Gortaire can monitor at ease from his house, which is only two blocks from the Villa Hilda. The only problem was that Gortaire forgot to lock the door and, when I was standing on a table in the closet making the installation, a couple of maids burst in on us. They were clearly puzzled by my strange activity, but Gortaire believes they simply could not imagine what I was really doing. He will stop by to see the manager from time to time to find out if the maids mentioned seeing me on the table.
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Re: Inside the Company: CIA Diary, by Philip Agee

Postby admin » Tue Jun 09, 2015 4:18 am

PART 8 OF 10

Quito 3 October 1962

Arosemena has survived another attempt at impeachment for incapacity, largely because the Conservatives fell apart on the issue, and because Varea is so discredited.

Through my work with Pablo Maldonado, ‡ Director of Immigration, on attempting to stop or delay Ecuadoreans from travelling to Cuba and to carefully review their baggage on return, I have met the Sub-Secretary of Government, Manual Cordova Galarza, ‡ who is Maldonado's immediate superior.

Cordova expressed willingness to cooperate in trying to cut off travel to Cuba, and he said Jaime del Hierro, ‡ the Minister of Government, is also anxious to see effective controls established. He added that any time I wish, I can call on him or on the Minister to propose new ideas.

Noland isn't anxious to get involved with Cordova or del Hierro because, according to him, Arosemena won't allow them to take really, effective action. He said they are probably just trying to appear to be cooperative since serving as Minister and Sub-Secretary of public security in this government is beyond redemption. In his view they're like the other Liberals serving Arosemena: disgraceful opportunists. For the time being I'll continue with Maldonado and avoid contacts with Cordova and del Hierro.

Today Cordova went to Cuenca to investigate a macabre incident that occurred in an Indian village about twenty kilometres outside Cuenca. A medical team of the Andean Mission, an organization supported by UN agencies and dedicated to teaching social progress and self-help to rural Indians in several countries, was making the rounds of villages when they encountered strange hostility just outside a community they had already visited several times. They stopped the jeep and the doctor and social-worker proceeded on foot leaving the nurse and chauffeur in the vehicle. In the village the doctor and the social-worker found the Indians assembled in the church for a religious service, but when they entered the church they were greeted with extreme hostility by the Indians who began to jostle them about. When they did not return for some time the nurse also left the jeep and entered the village, but at the church she too was menaced as she joined the others. By now the Indians were whipped into a rage by several of their leaders who thought the Andean Mission people were communists. As matters grew worse the Mission team fled to the sacristy for safety but were followed by the Indians who surrounded them and would not let them leave. The elderly priest, who had been in the parish thirty-eight years, appeared and the team begged him to confirm to the Indians that they were not communists, but were simply there to help them. The priest refused to intervene even as the team knelt before him begging protection, and he simply blessed them and disappeared. The team was then severely beaten -- the nurse left for unconscious while the doctor and the social-worker were dragged to the street.

The nurse escaped, returned to the jeep and obtained a police patrol from Cuenca. When they returned to the village the doctor and social-worker had been killed with stones, clubs and machetes while a local schoolteacher who tried to intervene had also been attacked. The Indians, in fact, were about to burn him, thinking he was dead, when the nurse and police arrived.

Preliminary investigation revealed that the priest had earlier instructed the Indians to resist the agriculture and livestock census because it was a communist plot, and that the priest also spread the story that the Andean Mission team were communists. My friends tell me that the priest will probably be sent to a religious retirement house as punishment.

Arosemena rewarded Manuel Naranjo ‡ by naming him Ecuadorean permanent delegate to the UN General Assembly. He has gone to New York and Noland has arranged for contact to be established with him by officers from the Agency's New York office. We expect that the CIA will try to use him for special operations at the UN.

Quito 7 October 1962

Brazilian elections are being held today as the climax of one of WH Division's largest-ever political-action operations. For most of the year the Rio de Janeiro station and its many bases in consulates throughout the country have been engaged in a multimillion dollar campaign to finance the election of anti-communist candidates in the federal, state and municipal offices being contested. Hopefully these candidates will become a counter-force to the leftward trend of the Goulart government -- increasingly penetrated by the communists and the extreme left in general.


Noland's transfer back to Washington, expected by him for many months, is now official. After five years here he is being replaced in December by Warren L. Dean, ‡ currently Deputy Chief of Station in Mexico City. No one here knows anything about the new chief except that he's a former FBI man who wants Noland to arrange for immediate release of his dogs, that are coming on the same flight from Mexico City.

Quito 15 October 1962

The Santo Domingo guerrilla adventure has reached a conclusion as far as the PCE is concerned. At a Central Committee Plenum just ended Jorge Ribadeneira was expelled from the party for his 'divisionist' work in URJE and for leading PCE and JCE members into the guerrilla operation. The expulsion was in agreement with a resolution of the Pichincha Provincial Committee following their investigation in August. Ribadeneira was an alternate member of the Central Committee and a full member of the Pichincha Provincial Committee under Rafael Echeverria. Our PCE agents report that the struggle will now turn to URJE where the Ribadeneira forces are struggling with the forces controlled by the PCE and Pedro Saad. One can only wonder what the Central Committee would think of Echeverria's parallel activities outside the PCE as reports continue to reveal preparations by his group for armed action and terrorism. This comes through the ECWHEAT telephone tap on Antonio Flores.

I continue working with my two Quito Social Christian leaders, Carlos Roggiero and Jose Maria Egas, in their respective fields of militant action and subversive watch-control. Egas has been under rather intense cultivation by the chief of the Embassy political section (ostensibly my boss) who doesn't know he is my agent. Egas has just left on a State Department leader grant to observe the US electoral campaign. He'll spend most of his time in California but after the elections he'll return to Washington where headquarters will give him a month of intense training in clandestine operations, mainly surveillance and investigations.

Velasco is again beginning to haunt the political scene and the spectre of his return for the 1964 elections looms not far over the horizon. Through the Agenda Orbe Latinoamericano ‡ news service we arranged to have Velasco interviewed recently in Buenos Aires, and he affirmed his plans to return in January 1964 for the campaign. Publication of the interview here has caused just the ripple we want so that the ECACTOR agents will begin plotting to keep him from returning or from being a candidate.

Noland has a new Velasquista agent who began calling on him at the Embassy some weeks ago to offer tidbits on organizational work of Velasquista leaders in Quito. The new agent is Medadro Toro ‡ and he has Noland extremely nervous because of his reputation as a gunman. He was one of the four people arrested for firing at Arosemena during the shoot-out in the Congress in October last year, and he was jailed from then until February when the Supreme Court threw out the case. He was back in jail in April for insulting Arosemena and in May he was a Velasquista candidate for Deputy in the June elections. He lost and is obviously looking for some way to keep body and soul together. So far his information has helped resolve persistent rumours of Velasco's imminent return and Noland, although personally fearing this man, thinks he has long-range potential. What bothers Noland are Toro's beady eyes looking through him, but he'll either have to begin discreet meetings outside the Embassy very soon or forget the whole thing. Politically Toro is dynamite.

Gil Saudade is trying to salvage his Popular Revolutionary Liberal Party ‡ (PLPR), although several of the agents are now firmly entrenched in the CEOSL labour organization. After the fall of Velasco the struggle resumed in the PLPR between our agents and a group of extreme-leftists who were close to Araujo, coming to a head last week with the expulsion of Araujo's friends. Now Gil will try to get his agents active again in the organization, again to attract the Velasquista left away from Araujo, so that the PLPR will have some influence if Velasco returns for the 1964 election campaign.

Quito 6 November 1962

At long last Reinaldo Varea's impeachment proceedings, which have dominated the political scene since August, have ended. Today he was acquitted by the Senate although Velasco's Minister of Defense at the time of the junk swindle lost his right to hold public office for two years. Varea may have survived as Vice- President but his political usefulness is practically wiped out. The only hope is for him to work very hard to rebuild his reputation so that when Arosemena's next drunken scandal occurs Varea might not be such an obstruction to ousting Arosemena for physical incapacity. Even so, there is little or no indication that Varea could ever overcome the Conservative and Social Christian opposition to him -- he is, after all, a Velasquista.

Quito 8 November 1962

Congress's final session last night kept tradition intact. In addition to a fistfight involving Davila, the national Budget was adopted. Discussion of the Budget only began yesterday and was, of course, shallow and precipitate. There is a general agreement that it will be very difficult to finance in spite of new tax measures.

The 1962 Congressional session, as in 1961 and 1960, ended with no agrarian, tax or administrative reform. The session was controlled by the Conservatives and Social Christians who sought to use the Congress as a political forum, with the junk scandal as the issue, to attack both the Arosemena administration and the Velasquista movement. Significant legislation was never seriously considered.

Quito 20 December 1962

Another crisis -- the worst yet -- broke today. President Allesandri of Chile stopped in Guayaquil this afternoon for an official visit to Arosemena after a trip to see Kennedy. At the airport Arosemena was so drunk he had to be held up by aides on both sides and later at the banquet he had to call on a guest to make the welcome toast.

News of this disgrace has spread around the country like a flash and already Carlos Arizaga Vega is moving to gather signatures for convoking a special session of Congress to throw Arosemena out. This time Arosemena may well have to resign.


The new Chief of Station arrived with his wife and dogs and next week the Nolands leave. Today Jim was given a medal by the Quito Municipal Council in recognition of his work with youth and sports groups in Quito. Renato Perez, Acting Council President, presided at the ceremony. Tomorrow at the golf-club the Nolands will be honoured at a huge party, and the following day Janet and I have invited about a hundred friends to a farewell lawn party for the Nolands at our house.

Quito 28 December 1962

The Nolands left and the new Chief of Station, Warren Dean, ‡ hasn't wasted any time letting us know how he works. The other day, even while Noland was still here, Ray Ladd and I went off to spend the afternoon with a crowd of friends, mostly from the tourism business, at a bar and lounge of questionable respectability called the Mirador (it overlooks the whole city). The next day Dean gave us a verbal dressing down in a staff meeting and left no doubts he wanted to know where everyone is at all times. Afterwards Noland gave me another of his friendly advice sessions, warning me that my wilder habits may not sit well with Dean and that I'd better be a little more discreet. Frankly I think this new chief is pulling the old military shakedown technique -- a mild intimidation to establish authority. Surely, with the extra hours worked at night and on week-ends, an afternoon taken off now and then is justified.

This new chief is a big man, about six feet four inches and somewhat overweight. He's obviously having difficulty with the altitude even though he has come from Mexico City -- each afternoon after lunch he sits behind his desk fighting to keep his eyes open. So far the main changes he has indicated are increased action against the extreme left in collection of information through technical operations and new agent recruitments. He also wants me to increase my work with Major Pacifico de los Reyes, the former Chief of Police Intelligence who has just returned from training at the FBI Academy in Virginia and at headquarters, where he was given several weeks training in clandestine intelligence operations. He's just been appointed Chief of Criminal Investigations for Pichincha but will continue to oversee the intelligence department.

Jose Maria Egas, the young Social Christian leader, is also back from his State Department trip and from our special training programme. Dean also wants me to intensify the use of this agent because headquarters is getting frantic that serious insurgency may be imminent. Programmes like the Subversive Control Watch List are getting increased emphasis and Egas's teams are crucial for this effort. From now on I'll pay him the equivalent of 200 dollars a month, which is very high by Ecuadorean standards but consistent with Dean's instructions.

Quito 12 January 1963

In Guayaquil last week a national convention of URJE voted to expel Jorge Ribadeneira and nine other URJE leaders, most of whom were involved in the Santo Domingo guerrilla operation. The expulsions reflect PC E control of the convention and the specific charge against those expelled was misuse of 40,000 dollars that Ribadeneira and his group were given by the Cubans for guerrilla operations around Quevedo rather than Santo Domingo.

The best report on the convention was from a new agent of the Guayaquil base who is one of the URJE leaders expelled. Although the agent, Enrique Medina, ‡ will no longer be reporting on URJE the base will try to ensure that he participates in the organization that these former URJE leaders will now form.

From now on the URJE ceases to be the main danger for insurgency from our point of view. The most important leaders have been thrown out and now that the PCE is back in control the emphasis will be on organization and work with the masses rather than armed action, not to eliminate, of course, selective agitation through bombings and street action. Our main concern now will be to monitor any new organization set up by Ribadeneira and the others who were expelled, together with improving our penetrations of the Araujo and the Echeverria groups in Quito. In a few days the base will bring out an appropriate story in the Guayaquil press on the URJE convention and we'll give it replay here in Quito. This will be a blow to URJE and to those expelled, since normally they try to keep these internal disputes quiet. Ribadeneira couldn't have been more effective for our purposes if he had been our agent.

My year as a director of the YMCA is ending, but now I am going to organize a YMCA basketball team. Dean has approved the use of station funds for players' salaries so we will be able to attract some of the best in Quito. We'll also buy uniforms and bring in shoes from the US by diplomatic pouch. The station administrative assistant, Ray Ladd, will coach the team. The advantage to the station is to continue widening our range of contacts and potential agents through the YMCA, which was only established here a couple of years ago.

Quito 16 January 1963

Reorganization of CEOSL is moving ahead although termination of the old CROCLE agents by the Guayaquil base required a visit in November by Serafino Romualdi, Executive Director of AIFLD and the long-time AFL-CIO representative for Latin America. The struggle between the old CROCLE ‡ and COG ‡ agents, who favoured retention of their unions' autonomy within CEOSL, and our new agents, who insisted (at our instruction) that CROCLE and COG disappear in favour of a new Guayas provincial federation, finally led to the expulsion a few days ago of the CROCLE and COG leaders from CEOSL. Those expelled included Victor Contreras ‡ who only last April became CEOSL's first President. Matias Ulloa Coppiano is now Acting Secretary-General of CEOs L and Ricardo Vazquez Diaz is Acting Secretary of Organization. Both are agents of Gil Saudade who originally recruited them through his Popular Revolutionary Liberal Party.

Ricardo Vazquez Diaz has been very effective in expanding the AIFLD education programme along with Carlos Vallejo Baez. ‡ In recent months, courses have been held in Guayaquil and Cuenca as well as Quito. Other courses are being planned for provincial towns in order to strengthen the CEOSL organizations there.

Quito 18 January 1963

Student election operations through Alberto Alarcon have again been successful in Quito. In December the elections for officers of the Quito FEUE chapter were so close that both sides claimed fraud and the voting was annulled. Today another vote was held and Alarcon's candidate, a moderate, won. The national FEUE seat is now in Cuenca where anti-communist forces are also in control.

The Guayaquil base has made several PCE documents public, by having Colonel Lugo, Commander of the National Police in the coastal provinces, add them to a three-ton haul of propaganda he captured last October. In a few days these documents will come to light in the report emerging from a Senate commission's investigation of the propaganda. Included is the PCE Central Committee resolution expelling Ribadeneira. Dean is determined to create as much fear propaganda as possible as part of a new campaign for government action against the extreme left.

Quito 30 January 1963

Our new station officer under Public Safety cover has arrived and Dean put me in charge of handling his contact with the station. His name is John Burke ‡ and he's the most eager beaver I've ever met. Seems to think he'll be crawling in the attic of the Presidential Palace next week to bug Arosemena's bedroom. His problem is that he broke his leg training, and while it mended for the past year and a half he took every training course offered by the Technical Services Division, for lack of anything else to do. In recent months he has sent to the station masses of audio, photo and other technical equipment including about 200 pounds of car keys -- one for every Ford, General Motors and Chrysler model built since 1925. Dean finally blew up over this equipment and fired off a cable telling headquarters not to send one more piece of technical gear unless he specifically asks for it. Poor Burke. He's not off to a very good start, and Dean has told me to make him stick exclusively to the AID police work until further notice. His first AID project, it seems, will be to take a canoe trip down in the Amazon jungles to survey rural law enforcement capabilities there - not exactly clandestine operations but it could get interesting if he runs into any Auca head-shrinkers.

In fact Burke will have plenty to keep him busy in the straight police work. Under the Public Safety programme this year AID is giving about one million dollars' worth of weapons and equipment to the police: 2000 rifles with a million rounds of ammunition, 500 .38 calibre revolvers with half a million rounds, about 6000 tear-gas grenades, 150 anti-riot shot-guns with 15,000 shells, almost 2000 gas-masks, 44 mobile radio units and 19 base radio stations, plus laboratory and investigations equipment. In addition to training the national police here in Ecuador, the Public Safety office is also sending about seventy of them to the Inter- American Police Academy ‡ at Fort Davis in the Panama Canal Zone. This Academy was founded by our Panama station last year and is intended to be a major counter-insurgency facility similar in many ways to the training programmes for Latin American military officers under the military aid programmes.

Quito 15 February 1963

Dean is getting more determined each day to avoid a surprise insurgency situation. He wants to increase coverage of two groups in particular and he wants me to do most of the work. The two groups, not surprisingly, are those led by Araujo and Echeverria.

We've had a breakthrough in coverage of the Araujo group through the recent recruitment of one of his close collaborators, a Velasquista political hack named Jaime Jaramillo Romero. ‡ Jaramillo was arrested last month with Araujo and two of the expelled PLPR leaders while recruiting in the provinces. Soon after, he was a 'walk in' to the Embassy political section, and after being informed by the State Department officer who spoke with him we decided to make a discreet contact with him using the non-official cover operations officer of the Guayaquil base. I arranged for this officer, Julian Zambianco, ‡ to come to Quito and with automobiles rented through a support agent, Jose Molestina, ‡ Zambianco called on Jaramillo at his home. A meeting followed in Zambianco's car, which I recorded in another car from which I was providing a security watch for Zambianco. Earlier I had rigged the Zambianco car with a radio transmitter to monitor their conversation. Jaramillo's information looks good -- including information about an imminent trip by Araujo to Cuba for more money. As Dean is a great believer in the polygraph I have requested that an interrogator come as soon as possible to test Jaramillo. If he's clean I'll turn him over to a new cutout so that we won't have to call Zambianco to Quito for each contact. Telephone coverage continues on Araujo but it hasn't produced good information.

On the other hand telephone coverage of Antonio Flores Benitez -- one of Echeverria's principal lieutenants -- is still providing excellent information. Flores is obviously getting very good intelligence from his agents in the Ministry of Defense, the Presidential Palace and the police. Our problem is inadequate coverage of Echeverria's plans and of his organization for terrorism and guerrilla warfare, although we are getting some information from Mario Cardenas, one of our PCE penetration agents who is close to Echeverria. On Dean's instruction I am studying three new operations for increasing coverage of Echeverria.

First, we will try to install an audio penetration of the Libreria Nueva Cultura, the PCE bookstore in Quito run by Jose Maria Roura, the number two PCE leader in Quito and Echeverria's closest associate. The two of them often meet at the bookstore, which is a rendezvous for PCE leaders in general and consists of a street-front room on the ground floor of an old colonial house in downtown Quito. On checking records for the owner of the house I discovered that it belongs to a golfing companion of mine, Ernesto Davalos. ‡ Davalos has agreed to give me access and security cover during the audio-installation which we will make from the room above the bookstore on a Sunday when it is closed. For a listening post (LP) I hope to obtain an office in a modern, multi-storey building across the street from the bookstore, where we could also photograph visitors and monitor the telephone.

Second, we will try to bug Echeverria's apartment. He lives in a fairly new building in downtown Quito but access for the installation will be difficult. On the floor beneath his apartment is the Club de Lojanos (the regional club of people from Loja), from which we might be able to drill upwards to install the microphone and transmitter. This installation would be very slow and difficult, especially if we have to do it while Echeverria or his wife are at home, but Cardenas believes Echeverria has important meetings at home and probably discusses all his activities with his wife, who is a Czech. I am also checking on whether I can get an apartment across the street from Echeverria's that would serve as listening and observation post for this operation.

The third new operation is another technical installation, this time against Antonio Flores Benitez. He has recently moved into a modern multi-storey apartment-building where we might be able to monitor both his telephone and an audio-installation from the same LP. Although there seems to be little chance for access to his apartment or to those around it for the installation, an apartment above and just to the side of his is coming free in a few weeks. I may take that apartment in order to begin monitoring the telephone from there (rather than from the LP in Rafael Bucheli's house) and see later whether the audio technicians can drill to the side and down or whether we will have to make the bugging by surreptitious entry. Already we know that Flores meets many of his contacts in his apartment, and he discusses most of his activities with his wife -- who gossips about them by telephone when he's not at home.

On the government side Dean also wants me to intensify my work with Pablo Maldonado, ‡ the Director of Immigration, and to work into a liaison relationship with Manuel Cordova, the Sub-Secretary of Government and with Jaime del Hierro, ‡ the Minister of Government. Although I have avoided until now regular contact with Cordova and del Hierro (on Noland's instruction last year) picking up with them now should not be difficult. The reason, Dean said, is to discover and to monitor their willingness to take action on information we give to them. Once we determine willingness on the high level, we'll be able to determine more accurately what information will bring action when passed through police agents such as Pacifico de los Reyes and Oswaldo Lugo.

With all this technical coverage I'll need some new agents for transcribing, photographic work and courier duties -- but if they work we'll not be surprised by either Araujo or Echeverria. The team for processing the telephone taps will be Edgar Camacho and Francine Jacome with Francine as courier. Rodrigo Rivadeneira can switch to transcribing the new audio penetration and Francine, will serve as courier for receipt of his material as well. I'll have Francine come by my house each morning at eight to leave transcripts and pick up any instructions for the others.

One other effort coming up that could be important: I've given money to Jorge Gortaire so that he can buy a used Land Rover to make a trip to military garrisons in the southern sierra and on the coast. The purpose of this trip is for Gortaire to sound out military leaders on all the rumours going around about a move against Arosemena while at the same time weighing the predisposition of the military leaders to such an action, even if the rumours aren't true.

Quito 1 March 1963

This morning's newspapers give prominent coverage to Mr. McCone's testimony to the Senate yesterday in Washington on training for guerrilla warfare in Cuba. The Director mentioned Ecuador as one of the countries from which the largest number of trainees has been recruited, and he explained how the Cuban Embassy in Mexico City tries to conceal travel to Cuba by Issuing the visa on a slip of paper with no stamp in the passport. His report follows another headquarters' report, issued last month by the State Department, that between 1000 and 1500 Latin American youths were given guerrilla training in Cuba during 1962.

In commenting on the press reports this morning Dean told me that one of his operations in Mexico City was the airport travel-control team. There the passports of travellers to Cuba are stamped by the Mexican immigration inspectors with 'arrived from Cuba' or 'Departed for Cuba' to make sure the travel is reflected in the passports. The station there also photographs all the travellers' passports and with large press-type cameras photographs are taken as they embark or deplane. Results of the Mexico City travel-control operation are combined with other data on travel, mostly from the other important routes to Cuba via Madrid or Prague, for machine processing. In order to intensify operations with Pablo Maldonado, Dean wants me to pass him copies of the monthly machine runs on Ecuadoreans travelling to Cuba. In addition, Mexico City is cabling the names and onward travel data to stations throughout the hemisphere so that the travellers can be detained or thoroughly searched when they arrive home. I'll also pass this type of information to Maldonado and use it as an entree to Cordova and del Hierro.

I tried to get Dean to reveal why he wants me to work with the Minister and Sub-Secretary, because usually a Chief of Station handles the high-level liaison contacts. He says he wants me to get the experience now because it will help me later. He's bitter about Winston Scott, ‡ the Chief of Station in Mexico City. Scott has very close relations with both the President, Adolfo Lopez Mateos, ‡ and the Minister of Government, Gustavo Diaz Ordaz. ‡ When Scott left the country from time to time or went on home leave he made arrangements for communications to be kept open with the President and the Minister but would never let Dean make personal contact even though he was Acting COS when Scott was away.

Guayaquil 31 March 1963

The best part of being a CIA officer is that you never get bored for long. On Friday, two days ago, I flew down from Quito to recruit someone I've known for about a year and whom the Base Chief, Ralph Seehafer, ‡ wants to use as a cutout to one of his PCE penetration agents. The recruitment went fine and tomorrow I'll introduce the new agent, Alfredo Villacres, ‡ to Seehafer.

I came down on a Friday so that I could spend the week-end out of the altitude, but mostly because Alfredo and I usually spend Saturday nights making the rounds of Guayaquil's sleazy dives. Last night was typical and we left the last stop about eight o'clock this morning with Alfredo roaring down the unpaved, pot-holed streets of a suburban shanty town, firing his .45 into the air while his dilapidated, windowless old jeep station wagon practically shook apart.

This afternoon he called me at the hotel to advise that we had barely escaped involvement in a new Arosemena scandal. It seems that a few minutes after we left the 'Cuatro y Media' last night (it had been an early stop and we left about 1 a.m.) Arosemena and his party arrived. The story is all over town now of how Arosemena and his friends began to taunt the waiters -- all are homosexuals there -- finally ordering one of them to put a lampshade on his head. Arosemena took out the pistol he always carries and instead of shooting off the lampshade he shot the waiter in the head. No one is certain whether the waiter died or is in the hospital, but the blame is going to be taken by Arosemena's private secretary, Galo Ledesma (known to all as 'Veneno' (poison) Ledesma). Ledesma apparently left today for Panama where he's going to wait to see what happens here. Alfredo said that if we had' been there when Arosemena and his group arrived we would have had to stay since it's a small, one-room place and Arosemena always invites everyone to join his group. I can see the Ambassador's face if that had happened and my name was included in the story: good-bye Ecuador.

Guayaquil 2 April 1963

I was to have returned to Quito on the first flight this morning but a very interesting situation suddenly developed yesterday: After introducing Villacres to the Base Chief over lunch, Seehafer and I returned to the Consulate and had a visit from the chief of the USIS office. He told us that a young man had come into the Consulate this morning asking to speak to someone about 'information' and was eventually directed to him. The person said he was a Peruvian and that he had information on the revolutionary movement in Peru and on Cuban involvement. The us Is chief said the Peruvian was so nervous and distracted that he is probably a mental case, but Seehafer asked me to see him if I had nothing better to do. We arranged for the us Is chief to give him my hotel-room number (the Peruvian was to return to the Consulate in the afternoon), where he would call in the evening.

The Peruvian came around to the hotel and we talked for two or three hours. I took copious notes because I know none of the names on the Peruvian scene and sent off a cable this morning to Lima and headquarters. The Peruvian is Enrique Amaya Quintana ‡ and is a middle-level militant of the Movement of the Revolutionary Left (MIR). He has just finished a three months' training course in Cuba along with several hundred other MIR members. They are all reinfiltrating to Peru right now, overland from Colombia and Ecuador.

The important aspect of this future agent, if he's telling the truth, is that he was selected out of the MIR group to receive special training in communications. He showed me a notebook full of accommodation addresses throughout Latin America to which secret correspondence will be sent. Moreover, he also showed me a dictionary that serves as the key to a code system that he will use in secret writing and radio communications with Havana.

This afternoon we got cables back from both headquarters and Lima confirming Amaya's status in the MIR and warning us not to let this one slip away. The MIR is the most important potential guerrilla organization in Peru with hundreds of people trained in Cuba and with advanced plans for armed insurgency.

Lima sent a list of questions for Amaya which I'll go over with him tonight. He really is a case of nerves and won't like working with a tape-recorder but I'm going to insist we record everything so that we don't have to depend on my notes. This way I can get more out of him too. It's not going to be easy getting him to stay with us -- what he wants is financial assistance to get his wife and child out of Peru and to resettle in some other country. He says he became disillusioned during the training in Cuba, but my guess is that he's lost his nerve now that he's almost on the battlefield.

Quito 5 April 1963

This MIR case has people jumping all around headquarters it seems. Not just the Peruvian and Ecuadorean desks -- the Cuban branch and even the Soviet Russia Division are also getting into the act. As a cutout and handling officer I brought in Julian Zambianco, ‡ and yesterday Wade Thomas ‡ arrived from headquarters to take close charge of the case -- he's a specialist in CP penetration operations. Meanwhile I had sessions each day with Amaya on the tape-recorder, summarizing the results in cables to Lima and headquarters. The guy is definitely coming clean -- everything seems to check out -- and yesterday I finally got him to agree to spending at least a short period back in Peru with his former friends. From the sound of the cables from Lima, Amaya is going to be their first important MIR penetration. My participation ended today when I came back to Quito.

Quito 12 April 1963

A report is just in from Mario Cardenas, one of our best PCE penetration agents and a close but not intimate associate of Echeverria. Cardenas reported that Jose Maria Roura, Echeverria's principal lieutenant in Quito, has left for Communist China where he expects to get payments started that will enable the Echeverria group finally to begin armed action. Echeverria has told Cardenas to stand by for travel to Colombia at a moment's notice, so that he can receive money and documents that Roura, who is very well-known, should not bring into the country himself.

We discussed in the station whether to advise Jaime del Hierro, the Minister of Government, or Manuel Cordova, the Sub- Secretary, but for better security we decided to post a special watch on Roura's return through Juan Sevilla, ‡ the Minister of the Treasury. Sevilla, who has been a golfing companion of mine for over a year, jumped at the chance, just as I thought he would, and he assigned his personal secretary, Carlos Rendon Chiribaga, ‡ to watch for Roura's return at the Quito airport. Now we can only hope that Roura comes straight back to Quito with no stop in Colombia so that we're not forced to protect Cardenas. If by chance we learn that Roura will arrive in Guayaquil, Sevilla can send his secretary there to await Roura. Meanwhile I'm moving along with the audio operation against Roura's bookstore and in a couple of days Larry Martin, ‡ the audio technician from the Panama station support unit, will arrive to make the installation.

Besides Roura's trip we are also monitoring for Araujo's return. He is in Cuba right now and perhaps he too will bring back money, although the chances are slim that either he or Roura will be so careless as to bring back money on their persons. So that we can get timely information after his return I've had Zambianco come up from Guayaquil again to turn over Jaime Jaramillo ‡ to a new cutout, Jorge Andino, ‡ who is a hotel owner and Ecuador's best polo player. Andino is another acquaintance from about the time I arrived and he too was quite willing to help. He'll receive the reports at the hotel but pass them to me at another business he owns a couple of blocks away. One of the mysteries we're trying to solve right now is whether there is any close relationship between Araujo's group and Echeverria's group, because Echeverria has given several indications that he is in contact with the Cubans.

Medardo Toro, ‡ the Velasquista gunman whom Noland picked up in a developmental status last year, is now reporting on a regular basis. Dean told me to get him into the groove so I brought Zambianco into the case in an arrangement similar to the one we used with Jaime Jaramillo two months ago. Until I get a good cutout for Toro we'll have to keep it going with Zambianco, but this way it's very secure. Mainly we want to keep abreast of Velasco's plans to return for next year's elections. Too bad Toro is so far from Araujo's group.

Quito 14 April 1963

Each day, it seems, a new wave of rumours spreads around the country signalling the imminent outbreak of guerrilla warfare and terrorism. Partly the rumours reflect our continuing propaganda campaign to focus attention on communism in order to provoke a serious crackdown by the government. But partly the tension is based on real cases such as captures of propaganda by Colonel Lugo's police in Guayaquil and the recent near-death of a terrorist when a bomb exploded during a training session. Our worry is that the Ecuadorean police and military wouldn't be able to cope with a determined guerrilla movement.

A recent incident underlines our doubts. Two nights ago a Navy logistics ship was returning from the Galapagos Islands with a group of university students who had been in the islands on an excursion. A coastal Navy patrol was lurking in the darkness just off-shore in wait for an expected incursion by a contraband vessel. The coastal patrol mistook the logistics ship for the contraband vessel and a two-hour gun battle between the two Navy ships followed. The coastal patrol finally called by radio to Guayaquil for help and the Navy communications centre called off the battle. What was worse was that their firing was so bad that no serious hits were made during the two-hour battle and only one sailor was wounded. After arriving in Guayaquil the students spread the story, which was published in Guayaquil today, but the Navy isn't talking.

When Dean heard this story this morning he told me to get moving faster on the new technical operations -- he said headquarters will get all over us if we get surprised by Araujo, Echeverria or others, what with the guerrilla movements already under way in Peru, Venezuela and Guatemala, and Brazil steadily going down the drain under Goulart. Here the only encouraging sign of late has been increasing willingness by the Minister of Government and Sub-Secretary to increase general travel-control efforts and to allow police action such as Colonel Lugo's recent operations. However, del Hierro and Cordova are clearly being restrained by Arosemena from really effective action.

Quito 19 April 1963

Another important trip to wonder about -- this time it's Antonio Flores Benitez, one of Echeverria's lieutenants, who left today for Cuba. What we can't figure out is why Echeverria would send Flores to Cuba when Araujo is there and Roura is in China. Roura's trip to China, according to Cardenas, was made without the authorization of the PCE Executive Committee in Guayaquil and if Pedro Saad finds out there will be serious trouble for Roura, a member of the PCE Central Committee, and possibly for Echeverria. No doubt now that Echeverria is moving ahead fast with his organization outside the party.

Flores was very careful not to mention his trip by telephone, but his wife let it slip out a couple of days ago. We're monitoring the telephone now from the apartment above and to the side of Flores's. Rodrigo Rivadeneira ‡ moved into the apartment with his brother Ramiro ‡ and his mother, and between him and Ramiro the transcriptions are kept right up to date. The connection was easy because the building is completely wired for telephones and Rafael Bucheli ‡ and an assistant simply made the connections in the main terminal box in the basement of the building. While Flores is away we'll try to get going on the audio operation although the audio technician isn't enthusiastic about drilling through reinforced concrete at such a difficult angle.

I also decided to use Rodrigo Rivadeneira in the listening and observation post for the technical operation against the PCE bookstore. On Sunday Larry Martin and I made the installation from the room above with Ernesto Davalos ‡ giving us security and cover. Davalos was very nervous because his caretaker is a communist and spends most of the time in the bookstore. Although I assured him that we would be very quiet, Martin decided to make the installation behind the baseboards and underneath several of the floorboards. The noise when we ripped them up was so screeching, what with their centuries-old spikes, that Davalos almost had a coronary. The same thing happened when we hammered the boards back into place but luckily the caretaker showed no signs of suspicion -- at least according to Davalos. The audio quality is good (Echeverria is running the bookstore while Roura is in China) although street noise at times drowns the conversations.

Rivadeneira rented the office across the street as an LP and he sits in a false closet I had built by Fred Parker, ‡ a US citizen support agent who has a furniture factory in Quito. Parker built the closet so that it could be carried in by pieces, and Rivadeneira sits in it looking through a masked side, listening, recording, snapping pictures of visitors to the bookstore, and keeping a log.

I had good luck also in getting just the right apartment across the street from and slightly above Echeverria's apartment. This observation and listening post (OP-LP) has just been rented through Luis Sandoval, the chief technician of police intelligence, who accepted my offer to work with us full-time for the foreseeable future. Sandoval is resigning from the police and will open a cover commercial photography studio in the OP-LP. I've given him enough equipment to start -- more is coming later -- and he will do the developing and printing of the photographs taken by Rivadeneira at the bookstore. As soon as we have a chance, we'll get Larry Martin back and try for the audio installation against Echeverria's apartment -- probably by drilling up from the Loja Club that occupies the entire floor underneath Echeverria's place.
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Re: Inside the Company: CIA Diary, by Philip Agee

Postby admin » Tue Jun 09, 2015 4:19 am

PART 9 OF 10

Quito 24 April 1963

A sensational case that may be our first real breakthrough has just developed, but it looks as though interference from Arosemena may hamper follow-up. A few days ago, the Guayaquil base received information from one of its penetration agents that a Cuban woman was training URJE members there. The base passed the information to Colonel Lugo who managed to arrest her. Her name is July da Cordova Reyes, at least that's what her documentation says, and we may well have here the first case of the Cubans sending out training missions to work in Latin American countries where they don't have diplomatic missions -- certainly it's the first case of its kind in Ecuador.

Colonel Lugo, however, reported that after her arrest he was ordered not to conduct an extensive interrogation. I took up the matter with Jaime del Hierro, the Minister of Government, in order to emphasize the great importance of this case for discovering the extent of Cuban involvement, especially whether there are other Cubans here besides the woman and all the details about when she arrived, whom she trained, where and whom she has trained before, her intelligence service in Cuba, communications, and much more. We are prepared, I told the Minister, to bring down an expert from Washington who could assist in the interrogation but who would not be recognizable as an American. All I got from the Minister was evasion, and we've concluded that Arosemena gave the order not to exploit the case. Two days ago the Governor of Guayas ordered her expulsion from the country: we're trying to salvage the case but right now we're not hopeful.

The extreme left has been forced into the dubious position of supporting the very government that broke with Cuba. Arosemena certainly isn't fooling the extreme left, or anyone else for that matter, on how hard he must fight for political support. Two days ago he cancelled a provision of last November's Budget Law prohibiting any government salaries higher than the President's. The purpose of the law was to limit the very high salaries and benefits being received by the heads of certain autonomous government agencies and by other officials who hold more than one government job. Some, for example, were making the equivalent of 1000 dollars per month -- twice as much as Arosemena. Obviously he cancelled the law in order to glue on a little more firmly his Liberal Party supporters and others who had been hurt by the salary limitation bill. Disgusting for a desperately poor banana republic where over half the population receives less than 100 dollars per year.

Quito 1 May 1963

Some success on the da Cordova case. On 27 April she was deported to Mexico but was refused entry and returned to Guayaquil. Colonel Lugo can't proceed with interrogation until he gets the go-ahead from the ministry, so I'll bring up the case again with del Hierro or Manuel Cordova. Warren Dean is happy -- he told me very confidentially that Gustavo Diaz Ordaz, the Mexican Minister of Government, is really in the Chief of Station's pocket and that's where I ought to try and get del Hierro. The way to do it, according to Dean, is to provide money for a high government official's mistress-keeping: the caso chico rent, food, clothing, entertainment. In Mexico, he said, the Chief of Station got an automobile for the Minister of Government's girlfriend. The Mexican President, with whom the COS also works closely, found out about the car and demanded one for his girlfriend too. That must be an interesting station.


Gil Saudade has made some progress in labour operations. Last month a provincial trade-union federation for Guayas (FETLIG) ‡ was established as the CEOSL affiliate there, replacing CROCLE. This was a long-sought after development and perhaps will now end the dissension that has wracked CEOSL for so long. The AIFLD courses, largely the work of our agents, Ricardo Vazquez Diaz and Carlos Vallejo Baez, continue to expand. Vazquez was recently confirmed as permanent CEOSL Organization Secretary and Matias Ulloa Coppiano was confirmed as permanent Secretary-General. They had been acting in these jobs since the expulsions in January of the old CROCLE agents.

Today only the CTE and the Catholic CEDOC were in the streets to celebrate Labour Day. Instead of a parade, which would have turned out very few people, the CEOSL group were invited by our Ambassador to a reception at his residence which was highlighted with entertainment by Matias Ulloa. ‡

Quito 11 May 1963

Today a sensational new case has solved at least some of the recent bombings and kept the city in a commotion all day. It started just after midnight this morning when four terrorists (two from URJE) hailed a taxi, overpowered and drugged the driver, tied him up and placed him in the trunk. The terrorists then drove around town passing various embassies where they intended to throw the bombs they were carrying -- along with a quantity of weapons and ammunition. Because of recently increased police protection at the embassies, however, they decided against the bombings. Just after dawn the driver regained consciousness and after slipping out of his ropes managed to open the trunk of the taxi. The terrorists saw him escaping but he got away and went for the police.

Major Pacifico de los Reyes took charge of the case. The terrorists panicked and drove to the edge of town where they tried to escape on foot up the volcano that rises on one side of Quito. The manhunt during the day caused widespread alarm and exaggerated fears in Quito but eventually the terrorists were captured. They have already confessed to various recent bombings and armed robberies, through which they were raising funds to finance guerrilla operations. Most sensational of all, however, is that their leader is Jorge Ribadeneira of Santo Domingo guerrilla fame and another member is Claudio Adiego Francia, the Argentine who was arrested in 1961 for training URJE members.

We didn't know about this new Rivadeneira group, and I've told de los Reyes to try to determine if there is any connection between them and the Echeverria group.

Quito 17 May 1963

Major de los Reyes has arrested Francia but Ribadeneira is still in hiding. He has also arrested Echeverria and Carlos Rodriguez, Echeverria's chief lieutenant for Indian affairs, but they protested their innocence and he had to let them go. Propaganda play on the case is sensational, with photographs of the weapons and ammunition spread all across the newspapers. Dean wants to press ahead with propaganda exploitation of every possible case: Layedra, da Cordova, this one -- also the current trips of Araujo, Roura and Flores. Somehow Arosemena has got to be forced into taking repressive action.

It's too soon to be sure but perhaps a change of policy is already under way. Today Pablo Maldonado's Immigration Service denied passports to ten young Ecuadoreans who have scholarships to 'study' in Cuba. I've given Maldonado this type of information before but this is the first time he has taken strong action and it may work. The students asked for passports saying they were only going to Mexico (where they would arrange visas and onward travel). The protests have already started and we shall see how long del Hierro, Maldonado's superior, takes to weaken.

Quito 19 May 1963

Roura's hooked! Juan Sevilla, ‡ Minister of the Treasury, called me this morning to advise that Roura arrived at the airport and was discovered to be carrying 25,000 dollars in cash. Carlos Rendon, Sevilla's personal secretary, was at the airport and made the body search, and right now Roura is being held incommunicado by the police with the money impounded. I suggested to Sevilla that he add to the sensation of the case by starting a story that Roura was also carrying false documents, compromising papers and other similar material. This is going to be a big one.


Jorge Gortaire ‡ was back here in Quito a couple of days ago. He has finished his trip to the military garrisons in the south and on the coast -- making several long delays through breakdowns. He's going to write up a complete report back in Ambato, but he said there is very considerable disgust with Arosemena in the military commands. If it weren't for Reinaldo Varea, in fact, there would be nothing to keep the military leaders, once they got organized, from forcing Arosemena's resignation. For now they see nothing to do because they still favour constitutional succession. Varea is still the fly in the ointment, because the junk swindle led to so much ridicule of the military. All the officers with whom Gortaire spoke seriously are concerned about communist infiltration in the government and preparations for armed action, but something more serious will have to happen before they begin to move against Arosemena. So we must keep up the pressure, exploiting every case to the maximum through propaganda media and political-action agents. On Varea, Dean is considering whether or not to ask him to resign, with encouragement in the form of a generous termination bonus, but he hasn't decided.

Quito 21 May 1963

The Roura case is headlines -- supersensational! Everyone in the country is talking about it. Jaime del Hierro has taken charge and is keeping up the suggestions about 'compromising documents'. He told the press that Roura's documents are more important than the money and relate to recent reports from the US that Che Guevara is leading guerrilla-warfare planning for several South American countries including Ecuador. The documents are also said to include a 'secret plan' for guerrilla warfare and terrorism in Ecuador.

Last night del Hierro asked me if I could get someone in Washington to determine whether the bills are counterfeit because the Central Bank experts here believe they're real. I suppose he and his friends. want to keep the money, so I cabled headquarters to see what can be done.

Del Hierro's action puzzles me somewhat because of his sudden enthusiasm. Perhaps Sevilla is pushing him hard because he was responsible for the arrest, yet del Hierro still refuses to give the go-ahead on interrogation of the Cuban, July da Cordova Reyes.

Quito 23 May 1963

Del Hierro is getting worried because the press and others keep urging him for the compromising Roura documents. There aren't any, of course, and now Roura's lawyers are beginning to move. Nevertheless both del Hierro and Sevilla are keeping the publicity going by calling the Roura case an example of the importation of foreign ideology to enslave the country. Del Hierro is also citing the case of the ten students who were refused passports as another example of falsification of documents for travel to Cuba for guerrilla-warfare training. Yesterday Sevilla's secretary, who made the airport arrest, said in a press statement that the Roura documents include instructions on how to organize a Marxist revolution, how to intensify hatred between classes, and how to organize campesinos and salaried agricultural workers.

Yesterday del Hierro ordered the arrest in Guayaquil of the local correspondent of the New China News Agency, whose press carnet was in Roura's pocket when he arrived. The correspondent only returned from Europe a few days ago, and his trip must have been related to Roura's.

Roura's defence began yesterday with publication of a statement that shows he is worried about repercussions from Sa ad and the PCE leadership in Guayaquil. He defended having the money, saying that he had been invited to London by Gouzi Shudian (International Bookstore of Peking) and that his trip was sudden and without authorization of the PCE. Because of recent confiscations by the government of material purchased for sale in his bookstore, Roura said, he had obtained 25,000 dollars for a printing shop to reproduce the materials provided by Gouzi Shudian. From London he went to Peking, he said, and he denounced the confiscation of his notes on visits to communes and other sites.

No doubt Roura will end up in terrible trouble with the PCE -- possibly even expulsion like Ribadeneira. More important, his arrest will drive the wedge deeper between the Saad and the Echeverria groups. What a ridiculous cover story.

Quito 24 May 1963

Roura has had a bad day all around. He made his formal declaration to the court alleging that he discussed the new printing facility in Peking with one Chan Kung Wen. The money, however, was given to him, so he said, in Berne on his return by someone named Po I Fo. We're checking these unlikely names with headquarters -- Roura's imagination knows no bounds.

Roura's lawyer also had a session before the Council of State (the highest body for appeal against government violation of personal liberties) which refused Roura's plea for liberty and took under advisement Roura's charges against Sevilla and del Hierro for violating the Constitution. Now he'll have to stand trial on the basis of the 'documents' and the money. We'll have plenty of time to fabricate appropriate documents for del Hierro to use against Roura but first we're working on something else.

John Bacon, the Station Reports Officer, and I suggested to Dean that we prepare an incriminating document to be used against Antonio Flores Benitez -- to be planted on Flores when he arrives at the airport. There's a chance, of course, that he'll come overland from Colombia or that he'll arrive in Guayaquil, but Dean likes the plan and asked us to go ahead. The document will appear to be Flores's and Echeverria's own report to the Cubans on the status of their organization and on their plans for armed action. We are describing what we know about the organization, filling in with imagination where necessary, on the basis of the information from the ECWHEAT telephone tap and reports from Cardenas and Vargas, our two best penetrations of the Echeverria group. We are emphasizing (for propaganda afterwards) Flores's penetration agents in the Ministry of Defense, Army communications, the presidential bodyguard and the presidential archives. We are also planning to mention relations with Araujo's group and Gonzalo Sono Mogro, who seems to be training a separate organization in explosives and weapons.

Quito 26 May 1963

It has been a busy week-end. Bacon and I finished the 'Flores Report' yesterday and he took it out to Mike Burbano ‡ to put in final form, correct Spanish and proper commie jargon. He knows this usage best because he's the cutout for Cardenas and Vargas. No question but that we've got a really sensational and damaging document.

Bacon included in the report a general analysis of the Ecuadorean political scene with appropriate contempt for the Saad PCE leadership for its 'reformist' tendencies. He infers that the Echeverria group has already received funds from Cuba and that this report is the justification for new funds. The date for commencing an all-out terrorism campaign will be late July (since we already have a report that the CTE plans to announce a general strike for that date). Bombing targets and guerrilla attacks will be set for the homes of police and military officers as well as key installations such as the water-works and the telephone and electric companies.

Burbano passed it back and I typed it this morning -- it filled five sheets of flimsy blue copy paper. Then Dean came to the office and we agreed that Juan Sevilla, the Minister of the Treasury, would be better for getting it planted than Jaime del Hierro, the Minister of Government. I went to see Sevilla; he agreed immediately and said he'll use Carlos Rendon, the same secretary and customs inspector who nailed Roura. When I got back to the Embassy Dean was acting like a little boy. He had gone over to the 'Favorita' to buy a tube of toothpaste and had spent three hours squeezing out the paste and cleaning the tube. Then he crumpled the papers, ground them a little with his shoe, folded them to fit into the tube and pronounced the report genuine beyond doubt. I took the tube, now with the report neatly stuffed inside, back over to Sevilla and tomorrow he will give it to Rendon who will plant it if possible. Rendon won't move from the airport until Flores arrives, and if he comes via Colombia or Guayaquil, we'll figure out some other way to get the document out. One way or another this one should really provoke a reaction.

Quito 29 May 1963

Yesterday still another sensation broke when Araujo arrived back from his trip to Cuba. Too bad we didn't have a document prepared for him but he did just what we wanted. Sevilla's customs people, whom I had advised through Sevilla of Araujo's imminent return, tried a body search but Araujo provoked such a scandal that he was taken to the central immigration offices for the search. He only had forty-one dollars, however, and was later released -- but his screams at the airport that revolution will occur very soon in Ecuador were prominently carried in this morning's newspapers.

Other propaganda is coming out nicely. The Council of State meeting on the Roura case was in the headlines, featuring Sevilla's very effective condemnation of communism and Cuba in defence of his action against Roura. The case of Guillermo Layedra, who blew his hand off training URJE members to make bombs, is in the courts, and Jorge Ribadeneira's latest caper is still causing sensation. Still, we haven't been able to get an interrogation of the Cuban woman.

Quito 31 May 1963

First try at the Echeverria bugging was a near disaster. The audio technicians, Larry Martin ‡ and an assistant, came back from Panama during the week and I worked out an elaborate plan for security and cover. Gil Saudade brought up from Loja one of his agents who works in Catholic student activities there, Cristobal Mogrovejo, ‡ who is the only agent we have who could easily rent the Loja Club which occupies the floor underneath Echeverria's apartment. I brought up Julian Zambianco from Guayaquil to be team leader and to direct Mogrovejo as the shield for cover. Luis Sandoval and I were in the OP-LP across the street observing and communicating with Zambianco via walkie-talkie. I also arranged for two getaway vehicles through Pepe Molestina. ‡

Mogrovejo earlier this week arranged to rent the entire club for this afternoon, a Friday, and to have an option to rent it for the rest of the week-end if his 'business conversations' with the foreigners required additional meetings. From observation we knew which room Echeverria uses as a study and we selected the proper spot beneath from which to drill up.

The team entered the club about ten o'clock this morning and Martin and his assistant began quietly drilling, slowly and by hand in order not to arouse Echeverria or his wife who were coming and going. About four o'clock this afternoon the club manager burst in with about a dozen flower-hatted ladies to whom, he said, he wanted to show the club. Mogrovejo protested that he had been promised absolute privacy but because of the insistence of the club manager and the ladies, Zambianco had to intervene to keep them from proceeding to the room where the drilling was going on. The incident produced enough suspicion in the club manager and enough panic in Mogrovejo to warrant calling the operation off for now. I radioed to Zambianco to have the technicians fill in their holes with plaster and to paint over. This only took a few moments and shortly the team had evacuated the building.

For the time being we'll let this one cool off while I try to discover another way to get access to the Loja Club. Mogrovejo was a bad choice. We won't forget it because Echeverria, according to Cardenas, has given several indications that he has some kind of communications with Cuba -- possibly, one would suppose, with a secret writing and radio link. A photo technician from Panama was recently here and he said that TSD has large lenses that could be used to 'see through' the curtains Echeverria sometimes draws in front of the table where he works so that readable photographs of documents on the table might be obtainable. This would be one way to read his communications.

Quito 2 June 1963

Flores is hooked and we've got another big case! Juan Sevilla and I were playing golf together this morning when a caddy came running out to call him to the telephone. We rushed into the clubhouse and sure enough it was Carlos Rendon, his personal secretary, calling to say that Flores had arrived and that the plant had worked perfectly. Sevilla rushed straight to the airport and I went home to wait. Late in the afternoon he telephoned and when I went to his house he explained that Rendon had seen Flores arrive and had put the toothpaste tube up his sleeve. He let it fall out carefully while he was reviewing Flores's luggage, 'found it' and began to examine it, finally opening it and' discovering' the concealed report.

Arriving with Flores was another well-known communist, Hugo Noboa, who was discovered to be carrying 1,400 dollars in cash in a secret pocket. This money, propaganda material, and phonograph records of revolutionary songs were confiscated along with the Flores report, and both Flores and Noboa were taken under arrest to the political security offices for questioning.

Now to get the publicity going.

Quito 3 June 1963

We're going to have to fight for this one. Only a small notice appeared in the press today on the Flores and Noboa arrests, and the only reference to the 'Flores Report' was an allegation that microfilm had been found in his suitcase. Flores, according to this notice, is protesting that if any microfilm was found it was planted either in San Juan, Puerto Rico, where he was in transit, or here in Quito.

I checked with Juan Sevilla and he told me that he thinks Arosemena is going to try to quash the whole case including the false document. This is why, according to Sevilla, Flores is still in custody of the political security office instead of the police investigations department under Major Pacifico de los Reyes. He added that the key figure is Jaime del Hierro, the Minister of Government and added that if I know del Hierro, I should confirm the importance of Flores and the document. (Neither Sevilla nor del Hierro knows that I am in a working relationship with the other.)

For most of the afternoon I've tried to get either del Hierro or Manuel Cordova, the Sub-Secretary of Government, by telephone. It's not like them to avoid me like this, and Dean is about to blow up because the report hasn't been surfaced.

Quito 4 June 1963

There's no doubt now that Arosemena has tried to cover up the case and protect Flores, but we're prying it loose almost by the hour. Sevilla threatened to resign if the case were suppressed and the rumours of a new Cabinet crisis were so strong yesterday and today that the Secretary-General of the Administration made a public denial of the crisis.

Del Hierro finally called me back today, and when we met at Cordova's house he gave me the 'Flores Report' asking that I check it for authenticity because it is so grave. I couldn't simply give it a moment's look and pronounce it genuine so I took it back to the station. When I told Dean of this he went into a fury, stamped up and down and said I'd better get that report surfaced or else. He's really disgusted with del Hierro, whom he thinks is trying to delay making it public in order to protect the Liberal Party from embarrassment; the document, after all, is pretty damaging to the government, even though it is primarily aimed at exposing the Echeverria group.

A positive sign is that Flores has been passed from the political security office to the police, which places him directly under del Hierro. In his declaration Flores only said that he had been in Europe on a forty-five-day trip as a journalist (he writes for the leftist weekly La Manana) with no mention of travel to Cuba.

Quito 5 June 1963

Dean's fit of temper shows no signs of diminishing. This morning he demanded Jaime del Hierro's private telephone number at the ministry, which I gave him. He called del Hierro and told him angrily that of course the document is authentic and that every Ecuadorean should read it. Dean was careful to record this call on his dictaphone just in case del Hierro complains to the Ambassador.

Then I proposed to Dean that I give a copy of the document to Jorge Rivadeneira Araujo, the brother of Rodrigo Rivadeneira -- the transcriber of the Flores telephone tap. Jorge has long participated in the clandestine printing operation, along with his brothers, and is a writer for El Comercio, Quito's leading daily. We don't usually place propaganda through Jorge, but Dean agreed since it is the fastest way to put pressure on del Hierro to release the original document. Later I took a copy to Rodrigo which he is passing to Jorge who will show it to his editors at the newspaper. This may destroy my relationship with del Hierro and Cordova but Dean doesn't care -- he doesn't think Arosemena and the Liberals can last much longer anyway.

Quito 6 June 1963

Our ploy against del Hierro worked liked a charm. This morning about ten o'clock Cordova called me from the Embassy receptionist's desk and when I went down he took me out back to del Hierro who was waiting in his car. He said he urgently needed back the Flores document because the press had somehow got a copy and he would have to release the original later today. I rushed up for the document, returned it to del Hierro and told Dean who whooped for joy. Then I called Rodrigo Rivadeneira to alert his brother Jorge that the Ministry of Government would release the document later today. It may not be printed in today's evening newspapers but already the whole town is buzzing about it.

Today the Council of State formally rejected Roura's case against del Hierro and Sevilla, which wasn't unexpected. Roura will be on ice for a long time and now Flores's chances of getting off are nil. Tomorrow, Sevilla's formal statement to the Council of State will be published in the newspapers -- a full page which we're paying for and which includes PCE data like membership figures and recruitment priorities that I passed to Sevilla for documentation.

Both Mario Cardenas and Luis Vargas report that Echeverria has been crushed psychologically by this blow. He fears that with the Roura arrest and now Flores he'll surely be reprimanded by the Saad leadership, possibly even expelled from the PCE. He has now gone into hiding and the agents are trying to find out where.

Quito 7 June 1963

Finally it's in print and the sensation is immense. Everything's included: description of Saad and the PCE Guayaquil leadership as 'old bureaucrats full of bourgeois vices, faithful to the Moscow line and acting as a brake on revolution'. Also: 'We (the Echeverria group) are faithful to the experiences of the Cuban revolution and the necessity to prepare for armed insurrection'. Araujo is described as having a good number of trained and armed teams and the Ribadeneira group is cited as possibly useful for 'our' purposes. All the different critical government offices where Flores has his contacts are mentioned -- including the Presidential Palace -- and the date for commencing operations (urban terrorism and rural guerrillas) is given as late July to coincide with 'our' urging of the CTE to call a general strike for that time.

As if this document weren't enough in itself, by sheer coincidence the CTE yesterday announced a general strike for late July. Our agents had reported that this announcement would come some time and we had included it in the Flores document. This announcement was carried in the press today, alongside the Flores document, as proof that the latter is genuine. Moreover, Sevilla's statement to the Council of State also came out this morning.

Quito 15 June 1963

Several pieces of good news. First, I've just received my second promotion since coming to Quito, to GS-11 which is about equivalent to captain in the military service. The other is that I'm being transferred to Montevideo, Uruguay, at the end of the year -- this I learned informally in a letter from Noland the other day. I had asked to be transferred to Guayaquil as Base Chief if the job became vacant, but the Montevideo assignment is good news because we'll be near the seashore again. These mountains are getting oppressive lately, and besides, Noland says Montevideo is a great place to live with good operations going.

Meetings between Zambianco and Medardo Toro, ‡ the Velasquista gunman, have been fruitful but Dean is getting nervous about collecting timely intelligence on Velasco's plans to return for next year's elections. Through Zambianco I have worked out a plan to send Toro to Buenos Aires under cover of medical treatment for a back injury that has needed special attention for some years. Toro will take the treatment in Montevideo but will contact Velasco in Buenos Aires and stay as close to him as possible. Our hope is that Velasco will take Toro into his confidence as a kind of secretary and general handyman -- this shouldn't be difficult as Toro was at Velasco's side with two sub-machine-guns draped over his shoulders up to the moment Velasco left the Presidential Palace. I've notified the Buenos Aires station, set up a contact plan for an officer of that station, and requested that Toro be placed on the list for the polygraph the next time the interrogators come around. Hopefully Toro will have his affairs arranged so that he can leave by the end of the month.

Over the week-end I'm going to Guayaquil and to the beach for a day -- then to Manta and Portoviejo, the two principal towns of Manabi province just north of Guayas. In Portoviejo I'll introduce Julian Zambianco to Jorge Gortaire's brother, Frederico Gortaire, ‡ an Army lieutenant-colonel and commander of the Army units in the province. Because of the extreme poverty in Manabi province, even by Ecuadorean standards, communist activities there have prospered in recent years. Zambianco has been working several operations in the province including support of a well-known anti-communist priest, and he'll be able to handle contact with Gortaire on his frequent trips there. Contact arrangements were made by Jorge Gortaire when he was in the province last month, so getting this new operation going will be easy. The purpose is to be able to pass information on communist activities in Manabi to Lieutenant-Colonel Gortaire who, according to his brother, will not hesitate to take strong and prompt action unfettered by the political restraints often imposed on Colonel Lugo in Guayaquil.

Warren Dean is leaving shortly for six or eight weeks' home leave. Too bad about Gil Saudade. Normally when a Chief of Station leaves the Deputy simply takes over as Acting COS. But with all the tension and instability right now Dean asked for a temporary replacement from headquarters. It'll be Dave McLean, ‡ a Special Assistant to Colonel King, ‡ the Division Chief who, surprisingly, managed to survive the head-rolling exercise after the Cuban invasion. While at headquarters Dean is going to push for one or two more slots for case officers under Embassy cover.

Quito 22 June 1963

The struggle is growing within the government among the factions favouring different lines of action in the face of the growing tension and fear of imminent insurgency. Juan Sevilla, the Minister of the Treasury, is the leader of the hard-liners while Jaime del Hierro, Minister of Government, is somewhere in between, trying to manoeuvre so that the Liberals can stay in the government and retain their emoluments. Arosemena leads the doves, who refuse to see the danger, and the leftists, who would like to see the power of the traditional parties broken. Thus the cooperation we're getting from del Hierro in the security field is mixed.

Today, for example, the government finally announced a programme that I've been pushing since last year to restrict travel to Cuba. From now on travel to Cuba by Ecuadoreans is formally banned and all passports will be stamped 'Not Valid for Travel to Cuba'. This programme is the work of Pablo Maldonado who told me only recently that such a drastic measure would still be very difficult to get approved. On the other hand del Hierro still evades all my requests for access to the Cuban woman who was training in Guayaquil -- now she's been sent to Tulcan which is practically isolated and a place from which she could 'escape' and disappear across the border in Colombia.

In Guayaquil two days ago, an anti-communist television commentator narrowly escaped when a bomb demolished his car. Yesterday Colonel Lugo's police raided a bomb factory and storage facility at the isolated house of Antonio Chang, a militant of an URJE faction, following a lead provided by a base agent. Chang's wife, two sons, a Spanish bomb technician and a helper were all arrested and have made sensational declarations, including the fact that they were trained by a Cuban. (The Cuban hasn't lived in Cuba since the 1940s but this item was hidden in small print in the propaganda coverage.)

Meanwhile we're trying to keep media coverage going on all the cases, old as well as new, and stations in countries nearby are helping. As each case breaks we advise Caracas, Bogota, Lima, Rio de Janeiro, Santiago and others, mailing immediately the clips of what's been published. These stations generate editorial comment on the communist danger in Ecuador and send clips back to us which we use to generate still more comment based on the Ecuadorean image abroad.

Dean has made one last effort before going on home leave to salvage a little mileage from Reinaldo Varea, our discredited Vice-President. He told Varea to get going on speeches related to all the recent cases revealing communist plans for action and the bombings. Yesterday Varea began with a speech at the national convention of the Chamber of Industries, denouncing communism as a cancer seeking to destroy the national life. Hopes for his succeeding Arosemena are ever so slim but three days ago the Supreme Court began hearing charges against three persons in the junk swindle and Varea, happily, wasn't one of them.

Quito 25 June 1963

Yet another sensation broke today: this one without our help. The case began this morning when one of the revolutionary paratrooper group led by Lenin Torres, still under arrest since they were discovered last year trying to help the guerrillas they had arrested to escape, themselves escaped and joined with three others in order to hijack one of the Area Airlines DC-4's that fly between here and Guayaquil. The plan was to fly over Quito distributing fly-sheets from the aircraft telling people to mass at the Presidential Palace and demand the release of Torres and the other paratroopers still being held. Also while the aircraft was circling URJE members would have carried out a series of intimidation bombings and would have demanded the release of Flores, Noboa and Roura as well as the paratroopers. They would have landed, taken aboard the released prisoners and flown to Cuba.

The paratrooper who escaped had been outside the prison under guard on an urgent family matter, but the guard, who was overpowered, tied and gagged, and left behind, got loose and reported the planned hijacking which he had overheard. Pacifico de los Reyes, ‡ Chief of Criminal Investigations in Quito, placed some of his men in maintenance uniforms at the airport and when the four hijackers arrived they were immediately taken into custody. Seized with them were arms, bombs, tear-gas canisters, walkie-talkies, and TNT -- as well as the fly-sheets. After their arrest they implicated Araujo and Ribadeneira in the plan, although this may well be a little provocation by de los Reyes. The whole episode, in fact, may have been staged or at least well-penetrated.

The story is headlines in the afternoon papers and has sent another shock-wave across the country as it's the first political hijacking here.

Quito 27 June 1963

Today is a bigger day for propaganda than most but it illustrates how our campaign to arouse concern over the communist problem has been going. The front page of El Comercio carries four articles related to it. The headlines report a press conference yesterday by Reinaldo Varea ‡ in which he condemned communism for threatening the country with organized subversion, including acts of terrorism and massacre. He also pointed to Cuba, supported by Russia and China, as the focal point for communist terror in America, adding that when the Congress convenes in August a special law against terrorism should be passed, possibly to include the outlawing of communism. A second article reports a press conference by Jaime del Hierro, in which he promised to exterminate every centre of communist terrorism in the country. A third article describes follow-up raids of Colonel Lugo's police in Guayaquil and the discovery of another bomb factory from which 150 bombs were seized -- it also reports a strategy meeting held two days ago between Colonel Lugo, Manuel Cordova, the Commanding General of the National Police and the Governor of Guayas province. A fourth article describes the latest revelations in the frustrated airliner hijacking. Not to be forgotten, of course, is the junk swindle, and a fifth front-page article relates the latest development in this case. Aside from the front page, the lead editorial expresses alarm over the recent terrorist cases and still another editorial wishes success to some Cuban exiles who recently landed a raiding party in Cuba.

Quito 28 June 1963

Police in Guayaquil under Colonel Lugo seized some 300 more bombs in raids yesterday, and arrests of terrorists there now number nineteen.

Also yesterday, Juan Sevilla, ‡ Minister of the Treasury, was honoured at a banquet given by the Chambers of Industry and Commerce and the Textile Association. In condemning communism Sevilla said: 'The country is suffering a grave moral crisis. It is discouraging to walk through government offices and see how moral values have deteriorated. It is indispensable that we reestablish moral values. ' He was given a parchment in appreciation of his 'clear democratic position in defence of free enterprise and of our country's Western ideology'.

Media exploitation of the airliner hijacking continues as does the Roura case. Today it was announced that the money taken from Roura will be examined by experts to see if it is counterfeit. This is a delaying formality because I've already told Jaime del Hierro that the Treasury Department in Washington has refused to certify that the US currency is counterfeit.

Quito 5 July 1963

The chain of recent cases, particularly the Roura and Flores cases, has produced one of the results we wanted. At a special meeting of the PCE Central Committee the whole Pichincha Provincial Committee under Echeverria was dismissed, with Roura expelled from the party and Echeverria suspended. Already Jaime Galarza, one of Echeverria's lieutenants, has published an article suggesting that Pedro Saad, PCE Secretary-General, was behind the revelations in the Flores document and Roura's arrest, because such information could only come from highly placed party members.

The momentum of the last three months' campaign is having other effects. Most of our political-action agents, particularly the rightists in the ECACTOR project, are reporting improving disposition to a military rather than a Congressional move against Arosemena, what with the alarm and gravity of the current situation. At the Ambassador's reception yesterday, moreover, the politicians talked considerably of their surprise that communist preparations have progressed so far. Moreover, everyone seemed to be apprehensive over the spectre of Velasco's return and the probability that he'll win again next year. Some members of Congress are anxious to begin proceedings against Arosemena, but many realize the odds favour Arosemena and his patronage over a weak and divided Congress.

Quito 8 July 1963

Rafael Echeverria is still hiding and has seen our agents only rarely. In order to get closer monitoring of his activities, and possibly to discover his hiding-place, I've arranged to turn over the Land Rover bought for Jorge Gortaire's trip to Luis Vargas, a PCE penetration agent. I gave the car to Jose Molestina, ‡ a support agent and used-car dealer, to place on sale, and at the same time John Bacon sent Vargas around to make an offer. Molestina doesn't know Vargas, much less as a communist, and when he told me of the offer I told him to take it. Now Vargas will probably be asked by Echeverria (who has no private transportation) to drive him around for his meetings.

Media exploitation continues on the recent cases as well as on efforts to salvage Varea. The Guayaquil base placed an editorial in El Universo, the main daily there, praising Varea for his recent anti-communist speeches. We replayed the editorial here in El Comercio. We've also used the CEOSL to condemn communist plans for terrorism.

Operations at the Georgetown station (British Guiana) have just brought a big victory against the Marxist Prime Minister, Cheddi Jagan. Jagan has led that colony down a leftist-nationalist path since coming to power in the 1950s on the strength of Indian (Asian) predominance over blacks there. The Georgetown station operations for several years have concentrated on building up the local anti-Jagan trade-union movement, mainly through the Public Service International ‡ (PSI) which is the International Trade Secretariat for public employees. Cover is through the American Federation of State, County and Municipal Employees, ‡ the US affiliate of the PSI.

Last year through the PSI the Georgetown station financed an anti-Jagan campaign over the Budget that included riots and a general strike and precipitated British intervention to restore order. This past April, with station financing and direction, another crippling strike began, this one led by the Guiana civil servants union which is the local PSI affiliate, and it has taken until just now to force Jagan again to capitulate. Visitors here who have also been to the Georgetown station say eventually the Agency hopes to move the leader of the black community into power even though blacks are outnumbered by Jagan and the Indians.

Quito 11 July 1963

Arosemena's out and a four-man military junta is in.

It began last night at a banquet Arosemena gave for the President of the Grace Lines -- W. R. Grace and Co. has large investments in Ecuador -- to which high-ranking Ecuadorean military men were invited because the Grace Lines President is a retired US Navy admiral. During the toasts Arosemena made favourable commentary about US business operating in Latin America but he insulted our Ambassador by derisive reference to US diplomatic representatives. In his drunkenness Arosemena also demonstrated incredible vulgarity and finally left the banquet and his guests.

This morning the chiefs of the military services decided at a meeting at the Ministry of Defense to replace Arosemena with a junta and about noon the Presidential Palace was surrounded by tanks and troops. I went down to the Hotel Majestic just in front of the Palace where Jorge Andino, ‡ a support agent and owner of the hotel, arranged a room where I could watch the action. I also monitored the military intelligence radio and reported by telephone and walkie-talkie back to the station where frequent progress reports on the coup were being fired off to headquarters and to Panama (for the military commands there who receive all Agency intelligence reporting in Latin America).

Several hours of tension passed as Arosemena, known to be armed, refused to receive a delegation from the new junta. He remained in the presidential living quarters while the junta members arrived and went to work in the presidential offices. Eventually Arosemena was disarmed by an aide and taken to the airport where he was placed on a military aircraft for Panama -- the same place that Velasco was sent to less than two years ago.

As the coup was taking place a leftist protest demonstration was repressed by the military with three killed and seventeen wounded but these figures will probably be much higher if an accurate count is ever made. Also during the coup Reinaldo Varea tried in vain to convene the Congress in order to secure his succession to the Presidency, but it's no use -- he's finished.

The junta is composed of the officers who commanded the Army, Air Force and Navy plus a colonel who was Secretary of the National Defense Council. The Navy captain is the junta chief but Colonel Marcos Gandara ‡ of the Defense Council is said unanimously to be the brains and main influence. No question that these men are anti-communist and will finally take the kind of action we want to disrupt the extreme left before they get their serious armed operations underway.
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Re: Inside the Company: CIA Diary, by Philip Agee

Postby admin » Tue Jun 09, 2015 4:19 am

PART 10 OF 10

Quito 13 July 1963

No problem for the junta in consolidating power. Loyal messages were received from military units throughout the country, civil liberties have been suspended, and communist and other extreme leftists are being rounded up and put in jail, more than a hundred in Guayaquil alone. Communism is outlawed (the junta's first act), censorship has been imposed, there is a curfew from 9 p.m. to 6 a.m., and next year's elections are cancelled.

It will take some days for formal US recognition of the junta but we've already started passing data from the Subversive Control Watch List to Major de los Reyes here in Quito and to Colonel Lugo in Guayaquil which they are using with military colleagues in the arrests campaign. For the time being we'll keep working with these police agents, and after US recognition of the junta and Dean's return, decisions will be made on new contacts in the government. The most likely liaison contacts are the Minister of Defense, Colonel Aurelio Naranjo, who was chief of the Cuenca garrison and leader of the movement that forced Arosemena to break with Cuba; the Minister of Government, Colonel Luis Mora Bowen; ‡ and the junta leader, Colonel Marcos Gandara.

Besides outlawing communism the junta is looking favourably at the reforms that the civilians were never able to establish. In their first statement the junta said its purpose is to re-establish moral values because the country had reached the brink of dissolution and anarchy. Their rule will be limited to the time necessary to halt the wave of terrorism and subversion and to resolve the country's most urgent problems. They have also declared that their government will not be oligarchic and will have policies designed to stimulate economic and social development in order to raise the standard of living -- not just through development, however, but also through the redistribution of income. Among its highest priorities are agrarian, tax and public administrative reforms.

In a press conference Colonel Gandara said that reforms will be imposed by decree and that after repressing the extreme left the junta will call for a constituent assembly, a new Constitution and elections. However, he added, the junta might stay in power for two years to accomplish these plans -- which immediately caused a cry of outrage from politicians in all quarters. Today, rather sheepishly, the junta issued a statement saying that they will 'not be in power for a long time'.

In justifying their takeover the junta said that Arosemena had spotted the national honour with his frequent drunkenness and his sympathy for communism. Arosemena, for his part, is saying in Panama, as Velasco did, that he still hasn't resigned. Varea is also in Panama now, but he had a happy departure. At the Quito airport where he was taken under arrest yesterday he was given an envelope from the junta containing a month's pay.

Quito 31 July 1963

The first three weeks of junta rule have been rather mild as military dictatorships go, in fact after all the crisis and tension in recent months one can even note a feeling of euphoria. Today the junta was recognized by the US but all along we've kept busy getting information to Major de los Reyes and Colonel Lugo. Goes to show how important station operations can be at a time when conventional diplomatic contacts are suspended. Even so, the most important communist leaders from our viewpoint, Echeverria, for example, have eluded all efforts to catch them. Very possibly some have even left the country.

At least for the time being the junta has considerable political support from Conservatives, Social Christians and others - not formally as parties but as individuals. How long this will last is unknown because the junta is obviously determined to end the power struggle between Velasco and Ponce and the instability such caudillismo brings. Moreover, by stressing that they intend to wipe out special privilege and the rule of oligarchies while pledging projects in community development, housing, public-health and education, the junta is attracting considerable popular support.

From our standpoint the junta definitely seems to be a favourable, if transitory, solution to the instability and danger of insurgency that were blocking development. By imposing the reforms this country needs and by taking firm action to repress the extreme left, the junta will restore confidence, reverse the flight of capital and stimulate economic development.

Quito 15 August 1963

Dean is back from home leave and is moving fast to get established with the junta. Already he is regularly meeting Colonel Gandara, the most powerful junta member, Colonel Aurelio Naranjo, the Minister of Defense and Colonel Luis Mora Bowen, the Minister of Government. With Gandara he is using as bait the weekly Latin American and world intelligence summaries (cryptonym PBBAND) that are received from headquarters each Friday, translated over the week-end and passed to Gandara on Monday. Already Gandara has given approval in principle to a joint telephone- tapping operation in which we will provide the equipment and the transcribers and he will arrange the connections in the telephone exchanges and provide cover for the LP. Tentatively they have agreed to set up the LP at the Military Academy. What Dean wants is a telephone-tapping operation to rival the one in Mexico City where, he said, the station can monitor thirty lines simultaneously. After this operation gets going we'll save Rafael Bucheli for monitoring sensitive political lines without the knowledge of the junta.

Gil Saudade has been transferred to Curitiba, Brazil (a one-man base in the Consulate) and his replacement, Loren Walsh ‡ doesn't speak Spanish. Walsh, who transferred to WH from the Far East Division after a tour in Karachi, had to cut short his Spanish course in order to take the interdepartmental course in counter-insurgency that is required now for every officer going out as Chief or Deputy Chief of Station. What this means to me is that I've got to take over most of Saudade's operations: Wilson Almeida ‡ and Voz Universitaria; the CEOSL labour operation with Matias Ulloa Coppiano, Ricardo Vazquez Diaz and Carlos Vallejo Baez; and the media operation built around Antonio Ulloa Coppiano, the Quito correspondent of Agencia Orbe Latinoamericano. Most of these agents are also leaders of the Popular Revolutionary Liberal Party and Antonio Ulloa runs the PLPR radio-station that we bought through him and Juan Yepez del Pozo, Jr. as a media outlet. This development is more than a little aggravating because the new deputy won't be able to take over any of these operations as none of the agents speaks good English. Dean said relief will come soon because he got three new Embassy slots; two will be filled in coming months and one early next year. All I can do with these new agents is hold their hands until somebody with time can really work with them.

Right now there are about 125 political prisoners in Quito, including not only communists but Velasquistas and members of the Concentration of Popular Forces. The junta policy is to allow them to go into exile, although some will be able to stay in Ecuador depending on their political antecedents -- judgement of which, in most cases, is based on information we're passing to Colonel Luis Mora Bowen, the Minister of Government. Processing these prisoners, and others in Guayaquil and elsewhere is going to take a long time because of interrogations and follow-up. Although Dean is working closely with the Minister of Government in processing the prisoners, he hopes to use these cases to start a new unit in the Ministry of Defense that will be solely dedicated to anti-communist intelligence collection - basically this is what we had previously set up in the police. In fact the Ministry of Defense will be better because politics sooner or later will come back into the Ministry of Government and the police, while the military unit should be able to remain aloof from normal politics, concentrating on the extreme left.

First on the junta's programme of reforms are the universities and the national cultural foundation called the Casa de la Cultura, both of which have long traditions as centres of leftist and communist agitation and recruitment. Several station and base operations are focused on giving encouragement to the junta for university reform including agents controlled through Alberto Alarcon in Guayaquil and the student publication Voz Universitaria published by Wilson Almeida. According to Gandara the first university reform decree will be issued in a few days with the important provision that student participation in university administration will be greatly reduced.

Quito 30 August 1963

Labour operations always seem to be in turmoil but now and then they produce a redeeming flash of brilliance. Ricardo Vazquez Diaz, one of the labour agents I took over from Gil Saudade, told me the other day that his mistress is the official shorthand transcriber of all the important meetings of the Cabinet and the junta and that she has been giving him copies so that he can be well-informed for his CEOSL work. He gave me samples and after Dean saw them he told me to start paying her a salary through Vazquez. From now on we'll be getting copies of the record of these meetings even before the participants. In the Embassy we'll make them available just to the Ambassador and the Minister Counsellor, and in Washington short summaries will be given limited distribution with the entire Spanish text available on special request. The Ambassador, according to Dean, is most interested in seeing how the junta and Cabinet members react to their meetings with him and in using these reports to plan his meetings with them. Eventually we'll try to recruit Vazquez's mistress, ECSIGH-1, ‡ directly, but for the moment I'll have to work this very carefully in order not to jeopardize the CEOSL operation. Vazquez claims he's told no one of the reports, which I believe, because, if he told anyone, it would be one of the other CEOSL agents who probably would have mentioned it to me. These reports are jewels of political intelligence -- just the sort of intelligence that covert action operations should produce.

(There has been a change, incidentally, in terminology: the operations that used to be called PP operations -- labour, youth and students, media, paramilitary, political action -- are now called covert action, or CA, operations. In headquarters this change in terminology was made at the same time the old PP staff was merged with International Organizations Division to form what is now called the Covert Action Staff.)

In labour operations themselves we've had serious problems with the new government, partly as a result of the junta's arbitrariness -- the right to strike, for example, is suspended. In this respect the junta tends to treat the CEOSL trade-union movement much in the same fashion as it treats the CTE. This general trend is aggravated by the Minister of Economy, Enrique Amador Marquez, ‡ who is one of the former labour agents of the Guayaquil base terminated last year for regionalism. Amador is doing all he can to promote decisions favourable to his old CROCLE and COG friends and detrimental to CEOSL.

Right now the most serious case involves the junta's attempts to reorganize the railways which are one of the many inefficient government autonomous agencies that together spend about 65 per cent of public revenues. The lieutenant-colonel appointed to run the railways is favouring the CEDOC (Catholic) railway union which is backed by COG and CROCLE against the other railway union which is part of CEOSL and is an affiliate of the International Transport Workers Federation ‡ (ITF) in London.

I arranged for Jack Otero, ‡ the Assistant Inter-American Representative of the ITF and one of our contract labour agents, to come to Quito from Rio de Janeiro to help defend the CEOSL railway union. He is here now but instead of following my instructions to approach the matter with restraint he started threatening an ITF boycott of Ecuadorean products. The spectre of boatloads of rotten Ecuadorean bananas sitting in ports around the world provoked counter-threats from the junta and we've had to cut Otero's visit short. The ITF railway union may have to suffer for a while but we're going to get action now from Washington, probably from someone like Andrew McClellan ‡ who replaced Serafino Romualdi as the AFL-CIO Inter-American Representative when Romualdi set up the AIFLD. What the junta needs is a little education on the difference between the free trade-union movement and the CTE, but. this may not be easy with Amador working behind the scenes for CEOSL'S rivals.

The Minister of Government is very cooperative in following our advice over the matter of the political prisoners. We have a special interrogation team here now from the US Army Special Forces unit in the Canal Zone: they're from the counter-guerrilla school there and are helping process the interrogation reports and prepare follow-up leads. The results aren't especially startling but they are providing excellent file information. As a result the prisoners are being released in a very slow trickle and most are choosing exile in Chile. Araujo is one of the big fish that was able to hide, but, a few days ago he and six others got asylum in the Bolivian Embassy. Chances are he'll be there a long time before the junta gives him a safe conduct.

University reform continues. Already the universities in Loja and Guayaquil have been taken over and Central University here in Quito is due next. What this means is the firing of communists and other extreme leftists in the university administrations and faculties. The same process is under way in the primary and secondary schools and is in charge of the military governors of each province.

Reforms in the government administration are also widening. Already the Ministry of Foreign Affairs and the Ministry of Economy are being reorganized. So far the junta's not doing so badly -- tomorrow Teodoro Moscoso, the Coordinator of the Alliance for Progress, arrives to negotiate new aid agreements.

Quito 8 September 1963

These labour operations are so messy they're forcing me to put practically all my other operations on ice for lack of time. No wonder Saudade had so few agents: they talk on and on so that one agent-meeting can fill up most of an afternoon or morning.

Our call for help from McClellan backfired. He sent a telegram to the junta threatening AFL-CIO efforts to stop Alliance for Progress funds and appeals to the OAS and UN if the junta doesn't stop its repression of trade unions. Three days ago the Secretary-General of the Administration denounced McClellan's telegram and showed newsmen documents from CROCLE and COG backing the junta and the colonel in charge of the railways. Now the junta is going to suspend the railway workers' right to organize completely. Somehow we have to reverse this trend and we asked for a visit from some other high-level labour figure from Washington, hopefully William Doherty, ‡ the former PTTI Latin American Representative and now with the AIFLD. Doherty is considered to be one of our more effective labour agents and Dean thinks he might be able to change the junta's attitude towards our organizations.

Not long ago the CA staff sent two operations officers to the Panama station to assist in labour operations throughout the hemisphere much as the Technical Services Division officers in Panama cover the area. They came for a short visit to Quito, more for orientation than anything else, but they're going to get ORIT to send someone to see the junta about these problems. Recently, according to Bill Brown ‡ who is one of the labour officers, the Secretary-General of ORIT, Arturo Jauregui, ‡ was fully recruited so that now he can be guided more effectively. Before, our control of ORIT in Mexico City was exercised through Morris Paladino, ‡ the Assistant Secretary-General and the principal AFL-CIO representative on the staff. Possibly we will get Jauregui himself to intervene.

We've also had two polygraph operators here for the past week testing agents. I decided finally to meet Atahualpa Basantes, ‡ one of our PCE penetration agents who has been reporting since 1960 but who had never been met directly by a station officer, using the polygraph as the excuse.

The interview with Basantes was interesting because it showed how useful the LCFLUTTER is for things other than determining honesty in reporting and use of funds. In the case of Basantes, which· is not unusual according to the operator, the polygraph brought out a flood of remarks about his motivation and his feeling towards us and his comrades in the party. He's certainly a confused man, drawn to us by money yet still convinced that capitalism is destructive to his country. Why does he work for us? Partly the money, but he rationalizes that the PCE leadership is rotten. From now on I'll try to see him at least once a month. His reporting has fallen off during the last six months, mostly because Dr Ovalle ‡ is such a poor agent handler, so I'm now looking for a new cutout. Instead of a raise in pay, which could be insecure, I've agreed to pay the premium on a new life-insurance policy for Basantes -- it's expensive because he's in his late forties and his health is poor, but it'll be one more control factor.

The polygraph operator who worked with me on the Basantes case is Les Fannin. ‡ Fannin was arrested in Singapore in 1960 while he was testing a local liaison collaborator whom the station was trying to recruit as a penetration agent of the Singapore police. The Agency offered the Singapore Prime Minister some three million dollars as a ransom for Fannin and Secretary of State Rusk even wrote a letter of apology in the hope of getting Fannin out. Nevertheless, he spent months in the Singapore jail before being released. He told me the Agency analysis of the case suggested that the British MI-6, which controlled the Singapore service at the time because Singapore was still a British colony, had been aware of the attempted recruitment from the beginning. In a strong reaction to this violation of the long-standing agreement that the CIA refrains from recruitments in British areas except when prior permission is granted, MI-6, according to Fannin, arranged for the Singapore security official to play along, and then at the moment of the polygraph they had Fannin arrested.

One of Saudade's agents whom he sent to Cuba has just been arrested on his return to Guayaquil and nobody seems to know what to do about him. The agent is Cristobal Mogrovejo, ‡ the same Loja agent whom we used to front for the near-disaster audio installation in the Loja Club beneath Rafael Echeverria's apartment. Dean is taking a hard line on Mogrovejo because the agent was told not to return to Ecuador when he was met by officers from the Miami (ex-Havana) station after leaving Cuba. We had sent that instruction precisely to protect Mogrovejo, but since he refused to comply, Dean isn't anxious to spring him loose. He was arrested because he had Cuban propaganda material in his baggage (incredibly stupid) on his arrival. Already the arrest is causing wide comment in Loja where Mogrovejo is President of the University of Loja law-student association and well known as a staunch Catholic.

For the time being the audio operations against Echeverria's apartment and Flores's apartment are suspended. Sooner or later Flores will go into exile and Echeverria is still hiding. The audio-photo operation at the PCE bookstore is also suspended since the junta closed the bookstore right after the coup. Now we'll have to take out the audio equipment with more pounding and squealing of spikes.

Quito 20 September 1963

This has been a month of constant movement of people: agents, visitors and new station personnel. The first of the new station operations officers has arrived -- he's Morton (Pete) Palmer ‡ and his cover is in the Embassy economic section. Unquestionably he'll be an excellent addition to the station and I'm already beginning to unload some of the covert action operations on him.

Dean appointed me to look after another visitor: Ted Shannon, ‡ the former Chief of Station in Panama and now Chief of the section of the CI staff in headquarters responsible for CIA officers under AID Public Safety cover. Shannon was the founder of the Inter-American Police Academy ‡ in Panama (which, incidentally, will be moving next year to Washington with a new name: the International Police Academy ‡) and he was rather upset that we haven't been fully using our Public Safety cover officer, John Burke. ‡ Dean explained to Shannon his fears about Burke's getting into trouble through his over-eagerness, but after Shannon left Dean told me to start thinking about what operations we can give to Burke. Dean is worried about criticism in headquarters that he's not using his people, but in fact there's lots of work Burke can do. The first thing will be to integrate him with the Special Forces interrogation team working on the political prisoners.

Reinaldo Varea ‡ returned to Ecuador yesterday but his troubles are far from over. Immediately after the coup the junta cancelled the impeachment case against Varea but announced that he would have to stand trial if he ever returned. His return means that his trial begins again, and he has also agreed to refrain from political activity. From Panama he had gone to Houston where a headquarters' officer gave him termination pay, but if Dean needs to see him he can establish contact through Qtto Kladensky. ‡

Manuel Naranjo was replaced as Ecuador's UN Ambassador and has also returned. Headquarters was highly impressed with his work for us at the UN, and Dean feels the same -- in fact he's going to nominate Naranjo, who is now back at work in the Socialist Party, for Career Agent status which would mean considerable income, fringe benefits, job tenure and retirement pay.

Juan Sevilla, ‡ Arosemena's Minister of the Treasury, is the only one of our political-action assets in the old government to get a new job with the junta. Probably because of his firm action during the months before the junta took over, he's been named by the junta as Ecuador's new Ambassador to West Germany. We're forwarding the file to the Bonn station and making contact arrangements in case they want to use him in Germany. A few weeks ago I gave Sevilla money for Carlos Rendon, ‡ his private secretary, who caught Roura and made the plant on Flores. Apparently Rendon has been threatened and is going to leave the country for a few months.

Lieutenant-Colonel Federico Gortaire was reassigned from Army commander in Manabi province to Military Governor of Chimborazo Province. For the time being we'll communicate with him through Jorge Gortaire in order to save time, but Dean wants to have one of the new officers begin going directly to Riobamba to see Colonel Gortaire as soon as possible.

Dean still refuses to intercede with the Minister of Government, Colonel Luis Mora Bowen, on behalf of Cristobal Mogrovejo. Mogrovejo told the police that he went to Cuba on our behalf, and his mother even came to see the Ambassador but Dean is playing real dumb. I think he ought to help the poor guy out of that stinking, miserable jail.

The country's honeymoon with the junta is fading fairly fast. The traditional political parties are getting worried that the junta may stay in power longer than they've admitted, and their massive promotions of military officers haven't been very popular. Especially since among the first to be promoted were the junta members themselves: now they are one colonel, one admiral and two generals.

Quito 15 October 1963

Labour operations are still unsettled because of the junta's arbitrary actions. Since last month, a new national traffic law has been in preparation but the junta refuses to consult the national drivers' federation (taxi, truck and bus drivers), which will be the organization most affected by the law. Everyone understands the need to stop the general traffic chaos and the carnage that so frequently occurs on the roads, especially when overcrowded buses roll off the mountainside because of their poor mechanical condition: traditionally, the driver, if he's alive and can move, flies from the scene as fast as he can go. But the drivers' federation is our top priority to woo away from the CTE and eventually into the CEOSL. So we called Jack Otero ‡ back from Rio de Janeiro to see if he could intercede with the junta on the traffic law question, even though the drivers' federation isn't affiliated with the ITF. Something may come from the effort, perhaps not with the junta but with the drivers' federation.

Even the AIFLD operation is beset with problems. The country programme chief here isn't an agent and so we can't guide him (except through Washington) so that his programme harmonizes nicely with ours. Doherty finally came to help straighten out the AIFLD programme for us, but this isn't the end of it. He's going to arrange to have Emilio Garza, ‡ the AIFLD man in Bogota who is a recruited and controlled agent, come here for as long as is needed to make sure the AIFLD programme is run the way Dean wants it run. Mostly it's a question of personnel assignments through which we want to favour our agents. Sooner or later all the AIFLD programmes will be run closely by the stations -- until now the expansion has been so fast that in many cases non-agents have been sent as AIFLD chiefs and can only be controlled through cumbersome arrangements of the kind we've had here.

Political prisoners are being released to go into exile as their cases are reviewed. There are still well over one hundred of them -- Flores and Roura are both going to Chile in exile. Araujo finally got a safe conduct and left for Bolivia a week ago. Echeverria is still in hiding, rejecting the bait we set with the Vargas ‡ Land Rover. Cardenas, Vargas, Basantes ‡ and our other penetration agents have somehow managed to avoid arrest.

For a few days last week our Popular Revolutionary Liberal Party agents were also taken as political prisoners. They held a meeting in violation of the government's prohibition of all political meetings without prior permission, and among those arrested were Juan Yepez del Pozo, Jr., Carlos Vallejo Baez ‡ and Antonio Ulloa Coppiano. ‡ They were only held for a couple of days and later Vallejo and Ulloa admitted to me that they staged the whole thing for publicity. Pete Palmer ‡ is going to take over these agents so that next time they will discuss this sort of caper with us first -- otherwise they can't expect us to bail them out if the junta is slow in letting them go.

Another new station officer arrived: Jim Wall, ‡ an old friend who went through the training programme with me at Camp Peary. Wall has just finished two years under non-official cover in Santiago, Chile, as a university student. He's going to take over some of my operations too -- probably the ECACTOR political-action agents His cover will be in the Embassy economic section, along with Palmer.

The polygraph operators are now in Buenos Aires and Dean wants to be sure that Medardo Toro ‡ is 'fluttered'. Our impression is that the Buenos Aires station isn't taking this case very seriously -- undoubtedly they have plenty of Argentine problems to worry about. In order to see why production from the operation is not better, Dean asked me to go to Buenos Aires to interpret for the polygraph examination of Toro. I'll also go to Montevideo because Toro is taking the treatment for his back there and has made contact on behalf of Velasco with an officer of the Cuban Embassy in Montevideo.

Moscoso's visit brought good news for the Ecuadoreans -- ten million dollars in new loans from the Inter-American Development Bank have been announced this month.

Quito 7 November 1963

It was a strange trip, disappointing on the Toro case but very encouraging for my coming assignment in Montevideo. In Buenos Aires the station considers the Toro case something less than marginal, just as we had suspected. About all we can hope for is to have an officer from the station meet Toro occasionally to receive his reports and pay his salary. In Montevideo it's worse -- the Chief of Station there, Ned Holman, ‡ doesn't want anything to do with Velasco. Holman was Noland's predecessor as Chief of Station in Quito so he's had plenty of chance to get soured by Velasco. Even so, the case is interesting because Velasco is opening a channel to the Cubans through Toro who has already met Ricardo Gutierrez two or three times. Gutierrez is carried by the Montevideo station as the Chief of the Cuban intelligence operation which the station believes is targeted in large part towards Argentina and the guerrilla operations now going on there. It will be interesting to see whether Velasco gets money from the Cubans -- it wouldn't be too unlikely, if he were to become a candidate again for President, because he refused to break with Cuba and has often spoken highly of Castro.

In Buenos Aires, besides interpreting on the Toro case I interpreted on two other cases: one was a labour leader who is one of the station's best penetrations of the Peronist movement and the other was an Argentine Naval intelligence officer and his wife who are working together as a penetration of the Naval intelligence service.

Quito 10 November 1963

On 31 October, the national drivers' federation was required by the government to undergo 'fiscal analysis', which means they're going to bring under control the one organization that can stop the country completely. It'll be a long time before this union can be brought into the ITF. In fact it's not really a union because many of its members are owners of taxis, trucks and buses and even gasoline stations. Its orientation, then, is middle class rather than working class but for our long-range planning it's the most important of the organized trade groups to be brought under greater influence and control.

Bill Doherty ‡ arranged for Emilio Garza, ‡ the Bogota AIFLD agent, to come to help us smooth out the problems between our CEOSL agents and the AIFLD operation. The agent was an excellent choice and I've already recommended that he be transferred to Ecuador when his assignment in Bogota ends. He's the most effective of the career labour agents that I've worked with.

For the past six weeks there have been regular terrorist bombings, mostly against government buildings. They started in Quito -- five occurred in one week in mid-October -- but now they've spread to Guayaquil. None of our agents seems to know what group is behind the bombings and Dean's getting jittery. It's embarrassing because the bombings make the junta look inept in spite of all the arrests and forced exiles.

The day after tomorrow I'm going to try to recruit Jose Maria Roura who's been rotting away in the Garcia Moreno prison since May. He's being allowed to leave the country and will fly to Guayaquil, then to Lima, La Paz, and eventually to Chile.

Colonel Lugo has been in Quito for the past few weeks and he told me that the police interrogators report that Roura is very depressed, even disillusioned, about his political past. He is also extremely concerned about his family which is completely destitute and living on the charity of friends. This information coincides with what we've learned from the interrogation reports received through other sources and from information on Roura's family obtained through the PCE penetration agents. Lugo suggested to me that Roura may be ripe for a recruitment approach but he doesn't think it should be made in the prison.

After discussing the possibilities, Dean asked me take the same Guayaquil-Lima flight as Roura and to try my luck on the plane. We've arranged for ECBLISS-1 ‡ the Braniff manager in Guayaquil, who is an American and a base support agent, to have me seated next to Roura. Headquarters' approval just came in and the Lima station is going to get the police to allow Roura to stay over for a few days if he wants because he only has about two hours between arrival from Guayaquil and departure for La Paz. For our purposes any possible follow-up after the flight should be in Lima rather than La Paz. When I talk to him I'll invite him to stay in Lima at my expense. After all these months in one of the world's gloomiest prisons he might just accept. In any case it's worth the risk of a scene on the plane -- Roura is known to be extremely volatile -- because we need a penetration of the exile community in Santiago and Roura would be an excellent source when he eventually returns here.

Quito 13 November 1962

It didn't go perfectly, but it wasn't a disaster either. I took the noon flight to Guayaquil and to my surprise Roura was on the same flight under police guard. Colonel Lugo had told me that Roura was going on the morning flight and the last thing I wanted was to be seen in Quito by Roura or in any connection with him at all. Arrangements by the base with the Braniff manager were perfect -- he was waiting for me at the airport at three o'clock this morning and gave me the seat right next to Roura who would be released from his police guard when he boarded the aircraft.

When I walked on the plane I was shocked to see that there were only about ten passengers in the whole cabin. The stewardess conducted me to the seat next to Roura, who was already there, and my planned introduction and cover story began to crumble. I had wanted to begin the conversation as some anonymous traveller striking up a conversation with another anonymous traveller. And I wanted the seat next to Roura in case the flight were crowded -- so that someone else wouldn't be sitting in that seat. But now it was too obvious.

A seemingly endless silence followed after I sat down next to Roura. I tried desperately to think of some new excuse to ease into a conversation -- somebody had to say something because I was clearly there for a purpose. Suddenly the stewardess returned and suggested that I might like to move to where I could sleep since row after row was vacant. Time for recovery and a new plan. I went forward to a different seat, maybe ten rows ahead and began to get depressed.

We rolled down the runway and into the air. As the minutes began to go by, five, ten, twenty; I felt more and more glued to my seat. I was going into a freeze and beginning to think up excuses, like bad security, to offer later for not having talked to Roura. But somehow I had to break the ice and I finally stood up and began walking back to Roura's seat, in mild shock as when walking into a cold sea.

I introduced myself, using an alias and Roura agreed nonchalantly as I asked if I could speak with him. I sat down and went into my new introductory routine, relaxing a bit as I went on. I was an American journalist who had spent the past few weeks in Ecuador studying the problems of illiteracy, disease and poverty for a series of articles. At the airport before the flight, I learned to my happy surprise that he was going to be on the same flight and I wondered if he would mind discussing Ecuadorean problems with me from the point of view of a communist revolutionary. I added that I knew of his arrest earlier in the year and I expressed wonderment that such arbitrary and unfair proceedings could occur.

Over coffee we passed the flight discussing Ecuador. Roura spoke openly and relaxedly and we seemed to be developing a little empathy. About twenty minutes before we were to land in Lima I shifted the conversation to Roura's personal situation. He told me that he was taking a connecting flight to La Paz and after a few days would proceed to Santiago. He was bewildered over what to do about his family and was expecting hard times in exile.

Now I had to make my proposal, ever so gently, but clear enough for Roura to understand. I said I would be seeing friends in Lima who are in the same profession, more or less, as I am. They too would probably like to speak with him and I was certain that they would offer him a fee for an interview since they represent a large enterprise. He was interested, but said he had permission from the Peruvians only to remain in the airport until the connecting flight. I said my friends could probably arrange permission for him to remain a few days and that he should ask the immigration authorities if he could spend at least the day in Lima and proceed to La Paz on a later flight perhaps tonight or tomorrow. Who knows, I said, whether some kind of permanent financial support might be arranged for him in Santiago and for his family in Quito. Perhaps, even, he could arrange for the family to go to Santiago to live with him. I sensed he was taking the bait and was beginning to understand.

When the 'fasten seat belt' light came on I took out a piece of paper with my alias typed on it and the number of a post-office box in Washington. I said I would be staying in Lima at the Crillon Hotel and if he was able to stay for a few days he could call me at the hotel and we would continue talking. If not, he could always reach me through the post-office box. He didn't say he would ask the airport authorities for permission to stay, but he didn't say no either. I thought he was deciding to stay. As a final touch, something I hoped would convince him I was knowledgeable, in fact I now hoped he realized I was CIA, I bade farewell pointedly calling him 'Pepito', which is the name his PCE comrades call him. I returned to my other seat for the landing.

At the terminal building I walked down the steps and headed for the entrance where I was met by the Lima station officer who is in charge of liaison with immigration authorities. He had arranged for permission to be granted if asked by Roura, and indeed offered if Roura didn't ask -- without, of course, creating suspicion that we were trying to recruit Roura. From just inside the terminal building we watched the Braniff aircraft because Roura had delayed inside. Eventually he appeared, descended the steps, but suddenly turned and rushed back up the steps and into the aircraft. At that moment about ten uniformed police who had been striding swiftly, practically rushing, towards the aircraft arrived at the steps. The leader boarded the aircraft and a long delay followed. The Lima station officer went to see his airport police and immigration contacts to find out what happened, and I went to the station offices in the Embassy to await news from the airport. If Roura stayed, I would check into the Crillon and wait for his call. If he proceeded to La Paz I would take the noon Avianca flight back to Quito.

When I reached the Embassy they gave me the bad news. Roura had been frightened by the police when they rushed towards him and thought something terrible might happen. In the aircraft he refused to descend to the terminal until the flight continued. Then he was extremely nervous in the terminal and interested only inbeing sure he didn't miss the flight to La Paz which he took as planned.

The Lima Chief of Station; Bob Davis, ‡ apologized for the over-enthusiasm of their liaison service -- the police approaching the aircraft were only trying to give him a warm welcome in preparation' for immigration's offer of permission to stay for a few days. The Lima station botched the operation -- I am convinced that Roura would have stayed -- and now we can only wait for a telegram or letter to the post-box. On the other hand Dean is thinking of a follow-up visit to Roura once he gets to Santiago.

At the Lima station I asked how the penetration operation of the MIR is progressing -- the one I had started in Guayaquil with the recruitment of Enrique Amaya Quintana. The Deputy Chief of Station, Clark Simmons, ‡ is one of my former instructors at Camp Peary and is in charge of the case. He told me that Amaya's information is pure gold. He has pinpointed about ten base-camps and caching sites plus identification of much of the urban infrastructure with full details of each phase of their training and planning. The Lima station has a notebook with maps, names and addresses, photographs and everything else of importance on the MIR which the station considers to be the most important insurgency threat in Peru. The notebook is in Spanish and is constantly updated so that just at the right moment it can be turned over to the Peruvian military.

At the Lima station I sent a cable on the Roura recruitment to headquarters with information copies to Quito and La Paz. Dean had already seen the cable when I got back this afternoon and he's elated even though we can't be sure yet that Roura has accepted. Tomorrow I'll get Bolivian and Chilean visas for quick departure when Roura sends a telegram to the Washington post-box.

Quito 17 November 1963

It didn't take long to resolve the Roura recruitment. This morning we had a cable from the La Paz station with the special RYBAT sensitivity indicator, reporting that Roura was in a secret meeting with two of the leading Bolivian communists. At the meeting he told them of my attempt to recruit him and he said if he ever sees me again he'll kill me. One of the two Bolivians is an agent of the La Paz station, it would seem, although possibly the source is an audio operation. I won't need the visas now, but Dean still thinks Roura may change his mind in six months or a year or two. At least he knows we're interested and he has the post-box number.

I only have about three more weeks before leaving and as I turn over operations to the three new officers I am also terminating a number of the marginal cases -- with provision, of course, for picking them up again if needed.

Among those I've terminated is Dr Philip Ovalle, Velasco's personal physician and the cutout to Atahualpa Basantes, the PC E penetration agent. Ovalle is getting senile and is probably the main reason why Basantes's reporting has been in such a slide. Before termination I was able to get the Ambassador to have Ovalle placed back on the list of approved physicians for visas (the consular section had thrown him off because he sent some people with syphilis to the US), or otherwise he might have been difficult. The chances of Velasco's coming back are now so slight that there's no reason to waste time seeing Ovalle for information on the Velasquistas. I recruited a new cutout for Basantes who I think can get the agent's reporting jacked up. He's Gonzalo Fernandez, ‡ a former Ecuadorean Air Force colonel who was military attache in London until he was forced to retire for political reasons. As Basantes is also a former military officer the chances are that they will work well together.

I also terminated the letter intercepts which I had taken back when the administrative assistant left a couple of months ago. The agents were pretty rattled at first but after I explained that we just don't have time for opening, reading, photography, closing, plus the two meetings for pick-up and return -- they seemed to accept it. They liked the termination bonus and we made arrangements for meetings every two or three months to pay for propaganda they've burned. Not too bad at a couple of hundred dollars a ton. These postal intercepts are a waste of time, in my opinion, and only the headquarters desks that are ready to take anything, like the Cuban branch, will waste effort poring over letters and testing for SW.

Tampa 10 December 1963

On the flight home I compared the existing situation in Ecuador with what I met when I first arrived there. Noland practically wouldn't recognize the place with all the growth. In the Quito station we now have eight officers, including Gabe Lowe ‡ who will arrive in the spring to fill the last new slot, as opposed to five when I arrived, plus two additional secretaries, several new working wives and an additional communications officer. In Guayaquil we still have only two officers inside the Consulate but have added one officer outside. Now Dean plans to add even more officers under non-official cover, particularly in Guayaquil. The station budget has also risen dramatically -- from about 500,000 dollars in 1960, to almost 800,000 dollars now.

Operations are better now, too. The counter-insurgency programme has improved, helped along by all the arrests, the exiling and the general repression undertaken by the junta. We have some new operations under way -- particularly the new telephone tapping and military intelligence unit that Dean is setting up. Many of these activities are carried out in cooperation with the junta which, in turn, we have managed to penetrate through police and military officers and the junta's chief stenographer whom we have on our payroll. It looks as if operations in the student field are going to improve, and in our labour operations, both CEOSL and the AIFLD are well established in spite of all the problems they have had to face. The best of our PCE penetration agents have survived and we have added several more, including those of the Guayaquil base.

So far as the general political situation is concerned the position is even more favourable. When I arrived in Ecuador, Araujo was Minister of Government and for two and a half years the traditional parties made a mess of things, thus encouraging the people to look for extremist solutions. All politicians, Velasco and his followers, the Conservatives, the Social Christians, the Liberals and the Socialists, had struggled for narrow sectarian interests, sometimes under the leadership of our agents and close liaison contacts. But they failed to establish through the democratic process the reforms to which they all paid at least lip-service. Now, at last, these reforms can be imposed by decree and it seems certain that the order imposed by the junta will speed economic growth. Land reform is still the greatest need. In a report published earlier this year, the UN Food and Agricultural Organization noted that some 800,000 Ecuadorean families (over three million people) live in precarious poverty while 1000 rich families (900 landowners and 100 in business and commerce) enjoy inordinate wealth.



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Re: Inside the Company: CIA Diary, by Philip Agee

Postby admin » Tue Jun 09, 2015 4:23 am


Part Three

Washington DC 8 February 1964

One can't help being impressed on a first visit to the new headquarters building out in Virginia. It's a twenty- or thirty-minute drive up the Potomac river from Washington -- very beautiful parkway along the cliffs with the headquarters exit marked 'Bureau of Public Roads' as if to fool someone. The building itself is enormous, about seven storeys with a somewhat 'H' shape, surrounded by high fence and woods -- extremely complicated to orient oneself on the inside. I read that it was built for ten thousand employees and from the numbers of cars in the vast parking lots it seems that number may already have been passed.

I spent two days with the Ecuadorean desk officer filling in the items that never get into formal reporting and catching up somewhat on the changes in the headquarters' bureaucracy. The most important change is the recent establishment of a new Deputy Directorate, the DDS & T (for Science and Technology), which was formed by merging the old Office of Scientific Intelligence and Office of Research and Reports, both of the DDI, with several other offices. This new unit has taken over all the processing of information and setting of requirements on progress around the world in the different key fields of science and technology with special emphasis, not surprisingly, on Soviet weapons-related developments. It is also responsible for developing new technical collection systems. The Deputy Directorate for Coordination has been eliminated.

The other major change is in the DDP [1] where the old International Organizations Division and the Psychological and Paramilitary Staff merged and adopted the new name: Covert Action Staff. Headquarters' coordination and guidance for all CA operations (formerly known as PP operations) now centres in this staff.

The people in the new CA staff, perhaps because many are veterans of the traditional friction between IO Division and the geographical area divisions over activities of IOD agents in the field, have developed a new terminology that provokes no little humour in headquarters' halls. Instead of calling their agents agents anymore, they now insist in their memoranda and other documents on calling them 'covert associates'. Problems relating to agent control -- the old IOD wound that would never heal -- seem now to have diminished simply by not calling CA operatives agents anymore.

Another change in the DDP that will take effect shortly is the merging of the Soviet Russia Division with the Eastern Europe Division -- except that Greece will pass to the Near East Division. Now all the communist countries in Europe will be in the same area division which will be called Soviet Bloc Division. The communications indicator for action by SB Division is also changing: from REDWOOD to REDTOP.

Also, there is a completely new DDP division called the Domestic Operations Division (DOD) which is responsible for CIA intelligence collection within the US (on foreign targets, of course). DOD engages mostly in recruiting Americans for operations, e.g. recruitment of scientists and scholars for work at international conferences. DOD has a 'station' in downtown Washington DC and offices in several other cities.

In WH Division the big news is that Colonel J. C. King ‡ is finally on his way out as Division Chief. His power has gradually been chipped away since the Bay of Pigs invasion by separating Cuban affairs from regular Division decision-making and by surrounding King with various advisers such as Dave McLean, ‡ who was Acting Chief of Station in Quito when the junta took over, and Bill Hood, ‡ who has had the newly created job of Chief of Operations for the past year. King is being replaced as Division Chief by one of the senior officers who were brought into the Division after the Bay of Pigs from the Far East Division. He is Desmond Fitz- Gerald, ‡ Deputy Chief of WH Division for Cuban Affairs -- also a newly created job after the Cuban invasion. The regular Deputy Division Chief, Ray Herbert, ‡ continues to handle personnel assignments and matters not related directly to operations against Cuba.

Washington DC 10 February 1964

I spent a night out at Jim Noland's house. They live in McLean not far from headquarters -- everyone seems to have moved out that way. After return to headquarters Noland was assigned as Chief of the Brazil Branch in WH Division -- a key job, with Brazil's continuing slide to the left under Goulart. Noland made several trips to Brazil last year and from what he says Brazil is the most serious problem for us in Latin America -- more serious in fact than Cuba since the missile crisis.

Operations in Brazil haven't been helped by a Brazilian parliamentary investigation into the massive 1962 electoral operation, that began last May and is still continuing in the courts. The investigation revealed that one of the Rio station's main political-action operations, the Brazilian Institute for Democratic Action (IBAD) and a related organization called Popular Democratic Action (ADET), ‡ spent during the 1962 electoral campaign at least the equivalent of some twelve million dollars financing anticommunist candidates, and possibly as much as twenty million. Funds of foreign origin were provided in eight of the eleven state gubernatorial races, for fifteen candidates for federal senators, 250 candidates for federal deputies and about 600 candidates for state legislatures. Results of the elections were mixed, with station-supported candidates elected governors in Silo Paulo and Rio Grande, both key states, but a leftist supporter of Goulart was elected governor in the critical north-east state of Pernambuco. In the Chamber of Deputies the balance among the three main parties stayed about the same which in some ways was seen as a victory.

The parliamentary investigating commission was controlled somewhat -- five of its nine members were themselves recipients of IBAD and ADEP funds -- but only the refusal of the First National City Bank, ‡ the Bank of Boston ‡ and the Royal Bank of Canada ‡ to reveal the foreign source of funds deposited for IBAD and ADEP kept the lid from blowing off. At the end of August last year President Goulart decreed the closing of both ADEP and IBAD, and the parliamentary report issued in November concluded that IBAD and ADEP had illegally tried to influence the 1962 elections.

Washington DC 12 February 1964

For the past few days I've been shuttling between the Uruguayan desk and the Cuban branch getting briefed on operational priorities against the Cubans, as my primary responsibility in Montevideo will be Cuban operations. Only five Latin American countries still have diplomatic relations with Cuba, and in Montevideo operations against the Cubans are the highest priority on the Station Related Missions Directive -- the only station in the hemisphere where operations against a Soviet Embassy are in second place on the priorities list. The reason is that communist strength in Uruguay is growing considerably, particularly in the trade-union field, and is undoubtedly assisted by the Cuban Embassy there. Moreover, there have been strong indications that current guerrilla and terrorist activities in the north of Argentina are being supported from the Cuban Embassy in Montevideo.

Right now there are two main objectives for Cuban operations in Montevideo. First, in order to promote a break in relations, we are using all appropriate operations to support the Venezuelan case against Cuba for intervention and aggression based on the arms cache discovery on the Venezuelan coast last November. The arms have since been traced to a Belgian manufacturer who claimed to have sold them to Cuba. The purpose of the Venezuelan case is eventually to get a motion through the OAS calling on all Latin American countries with diplomatic relations with Cuba to break them. The hope is that such a motion, coming from Venezuela and not the US, would have sufficient momentum to get adopted by the OAS, particularly if enough propaganda of non-US-origin can be generated over the coming months. For the sake of discretion I haven't asked, but the whole campaign built around the arms cache has looked to me like a Caracas station operation from the beginning. I suspect the arms were planted by the station, perhaps as a joint operation with the local service, and then 'discovered'.

While our overall objective in Uruguay is to effect a break in diplomatic relations with Cuba, we must meanwhile penetrate their Cuban mission in Montevideo either technically or by recruiting an agent, in order to obtain better intelligence about their activities. We already have a number of valuable operations going against the Cuban Embassy, but so far we haven't been able to penetrate it technically or to recruit any of its officers.

Not that the station hasn't tried. Last year several cold recruitment approaches were made and there was the unsolicited defection of Rolando Santana. ‡ Unfortunately, in the case of Santana, he had been in Montevideo only a short while and had not had access to sensitive information because he wasn't an intelligence officer. The case served nevertheless for propaganda operations.

On another occasion we very nearly recruited the officer believed to be the Chief of Cuban Intelligence in Montevideo. This officer, Earle Perez Freeman, ‡ had spurned a cold street approach for recruitment last December in Montevideo just before he was due to return to Cuba after some three years in Uruguay. In Mexico, where he was awaiting a flight to Havana, he suddenly appeared in the US Embassy and in discussions with station officers agreed to take asylum in the US. The officer in charge was Bob Shaw, ‡ one of my former instructors at ISOLATION, and headquarters' halls are still reverberating over his carelessness. After making all the arrangements to evacuate Perez in a military aircraft from the Mexico City airport, Shaw took Perez in a car to the airport. On the way to the airport Perez panicked, jumped out of Shaw's car and disappeared in a crowd. No one yet can understand how Shaw failed to follow the first rule in cases like these: to place Perez in the back seat with other officers by the doors on either side. Had he changed his mind before leaving Mexico City conversations in a controlled situation could perhaps have convinced him to come. At least a sudden panic and loss of contact would have been avoided. Perez returned to Havana and there has been no sign that his short contact with the Mexico City station became known to the Cubans, but opinion is unanimous in headquarters that the Mexico City station did a remarkably inept job on the case -- not even an initial debriefing on Cuban operations in Montevideo.

On agent recruitment priorities in Montevideo the Cuban branch is most interested in the code clerk whom the station has identified as Roberto Hernandez. According to Division D officers in charge of Cuban communications matters, the Soviets are supplying the Cubans with cryptographic materials that are used for their diplomatic and intelligence traffic -- impossible to break and read. If I could get the code clerk recruited, they said, arrangements could be made to have a headquarters technician copy the materials ('one-time' pads) for safe return to the code-room. Traffic afterwards, and perhaps traffic before -- now stored by the National Security Agency for eventual breakthrough -- could be read.

Miami 14 March 1964

We divided our home leave between Janet's parents' home in Michigan and mine here in Florida. Two weeks ago another son was born, right on the day calculated by the doctor many months ago. Such joy -- again everything went perfectly. When the new baby is able to travel in a few weeks, Janet and the children will fly to Montevideo, but I'm going now because the officer I'm replacing is in a rush to leave.

On my way down to Montevideo I've stopped off here and spent most of today discussing ways the JMWAVE (Miami) station can help our programme against the Cubans in Montevideo. Charlie McKay, ‡ the JMWAVE officer who met me at the airport, suggested we spend the day discussing matters at the beach instead of at the station offices at Homestead Air Force Base so we relaxed in the sun until he finally brought me back to the airport. He was just the right person for these discussions because he was assigned to the Montevideo station in the early 1960s and is familiar with the operations there.

Miami CIA operations are vast but mainly, it seems, concerned with refugee debriefings, storage and retrieval of information, and paramilitary infiltration-exfiltration operations into Cuba. They have both case officers and Cuban exile agents who can assist hemisphere stations on temporary assignments for recruitments, transcribing of audio operations and many other tasks. Just recently the Montevideo station proposed that JMWAVE attempt to locate a woman who could be dangled before the Cuban code clerk, who is exceptionally active in amorous adventures. According to McKay they have just come up with the candidate -- a stunning Cuban beauty who has done this sort of work before. Next week he will forward biographical data and an operational history on her, together with the photograph he showed me, to the Montevideo station.

The main Miami operation related to Uruguay, however, is the AMHALF project involving three Uruguayan diplomats assigned in Havana. They are the Charge d' Affaires, Zuleik Ayala Cabeda, ‡ and two diplomats: German Roosen, ‡ the Second Secretary, and Hamlet Goncalves, ‡ the First Secretary. No one of them is supposed to know that the others are working for the CIA but the Miami station suspects they have been talking to each other. Their tasks in Havana include arranging for asylum for certain Cubans, loading and unloading dead drops used by other agents, currency purchase and visual observation of certain port and military movements. Communications to the agents from Miami are through the One-Way-Voice-Link (radio) but every week or two at least one of them goes to Nassau or Miami on other tasks unrelated to the CIA, such as bringing out hard currency and jewels left behind by Cuban exiles. Such contraband serves as cover for their CIA work but adds to the sensitivity of this operation -- already extreme because of the implications of using diplomats against the country to which they're accredited. The Department of State would have no easy time making excuses to the Uruguayan government if this operation were to blow.

Montevideo 15 March 1964

This is a marvellous city -- no wonder it's considered one of the plums of WH Division. Gerry O'Grady, ‡ the Deputy Chief of Station, met me at the airport and took me to the Hotel Lancaster in the Plaza de la Libertad where I stayed when I came last year. We then went over to his apartment, a large seventh-floor spread above the Rambla overlooking Pocitos beach, where we passed the afternoon exchanging experiences. O'Grady came in January but his family won't be down until after the children finish school in June. He's another of the transfers from the Far East Division -- previous assignments in Taipei and Bangkok. Very friendly guy.

Montevideo 18 March 1964

Moving from the next-to-the smallest country in South America to the smallest is nevertheless taking several giant steps forward in national development, for contrast, not similarity, is most evident. Indeed Uruguay is the exception to most of the generalities about Latin America, with its surface appearance of an integrated society organized around a modern, benevolent welfare state. Here there is no marginalized Indian mass bogged down in terrible poverty, no natural geographic contradictions between coastal plantations and sierra farming, no continuum of crises and political instabilities, no illiterate masses, no militarism, no inordinate birth-rate. In Uruguay I immediately perceive many of the benefits that I hope will derive from the junta's reform programme in Ecuador.

Everything seems to be in favour of prosperity in Uruguay. The per capita income is one of the highest in Latin America at about 700 dollars. Ninety per cent of the population is literate with over ten daily newspapers published in Montevideo alone. The country is heavily urban (85 per cent) with over half the 2.6 million population residing in Montevideo. Health care and diet are satisfactory while social-security and retirement programmes are advanced by any standards. Population density is only about one third of the Latin American average and population growth is the lowest -- only 1.3 per cent. Most important, Uruguay's remarkable geography allows for 88 per cent land utilization, most of which is dedicated to livestock grazing. Here we have a model of political stability, almost no military intervention in politics in this century, and well-earned distinction as the 'Switzerland of America'.

Uruguay's happy situation dates from the election in 1903 of Jose Batlle y Ordonez, certainly one of the greatest and most effective of Western liberal reformers, who put an end to the violent urban-rural struggle that plagued Uruguay, as in much of Latin America, during the nineteenth century. To Batlle, Uruguayans owe social legislation that was as advanced as any of its time; eight-hour day; mandatory days of rest with pay each week; workers' accident compensation; minimum wage; retirement and social security benefits; free, secular, state-supported education. In order to set the pace in workers' benefits and to check concentration of economic power in the hands of private foreign and national interests, Batlle established government monopolies in utilities; finance and certain commercial and industrial activities. And in the political order Batlle established the principle of co-participation wherein the minority Blanco Party (also known as the National Party) could share power with Batlle's own Colorado Party through a collegiate executive that would include members of both parties. Through this mechanism patronage would be shared, fringe parties excluded and bloody struggles for political control ended. It is to Batlle, then, that Uruguayans attribute their political stability, their social integration, and an incomes redistribution policy effected through subsidies, the social welfare system, and the government commercial, financial and utility monopolies.

However, since about 1954 the standard of living in Uruguay has been falling, the GDP has failed to grow, productivity and per capita income have fallen, and industrial growth has fallen below the very low population growth rate. Investment is only about 11 per cent of GDP, an indication, perhaps, of Uruguayans' resistance to lowering their accustomed levels of consumption. Nevertheless, declining standards of living of the middle and lower classes have produced constant agitation and turmoil reflected in the frequent, widespread and crippling strikes that have come to dominate national life.

What has happened in this most utopic of modern democracies? The economic problem since the mid-1950s has been how to offset the decline of world prices for Uruguay's principal exports: beef, hides and wool. Because export earnings have fallen -- they're below the levels of thirty years ago -- Uruguay's imports have been squeezed severely with rising prices of manufactured and intermediate goods used in the substitution industries established during the Depression and the 1945-55 prosperity. Result: inflation, balance-of-payments deficits, economic stagnation, rising unemployment (now 12 per cent), currency devaluation.

In part Uruguay's problems are inevitable because recent prosperity was based on the unusual seller's market during World War II and the Korean War. However, the problems have been aggravated by certain government policies, particularly the creation of new jobs in the government and its enterprises in order to alleviate unemployment and to generate political support. Because of the 'three-two system' for distribution of government jobs (three to majority party appointees and two to minority appointees) established during the 1930s, one could fairly say that both parties are at fault for the current top-heavy administration. Indeed government employees grew from 58,000 in 1938 to 170,000 in 1955 to about 200,000 now. Because of attractive retirement and fringe benefits the belief prevails that everyone has a right to a government job -- although salaries trail so far behind inflation that most government employees need more than one job to survive. But the overall result has been deficit financing for a public administration often criticized for ineptitude, slow action, interminable paper-work, high absenteeism, poor management, low technical preparation and general corruption.

Uruguay's system of paying for its state-employment welfare system is to retain a portion of export earnings through the use of multiple currency-exchange rates. Thus the exporter is paid in pesos by the central bank at a rate inferior to the free market value of his products with the retention being used by the bank for government operations. This system of retentions is at once a means for income redistribution and the equivalent of an export tax damaging to the competitiveness of the country's products in international markets. Retentions also serve as a disincentive to the primary producing sector, the cattle and sheep ranchers, who resist taxation to support the Montevideo government bureaucracy and the welfare system. The result in recent years has frequently been for ranchers to withhold wool and cattle from the market or to sell their products contraband -- usually across the unguarded border to southern Brazil.

The contradiction between rural and urban interests, aggravated by decline in export earnings, resulted in Uruguay's falling productivity and declining standard of living. In 1958, after almost 100 years in opposition, the Blanco Party won the national elections in coalition with a rural pressure group known as the Federal League for Ruralist Action or Ruralistas. This coalition instituted programmes to favour exports of ranching products but with little success at first. In 1959 major international credit was needed for balance-of-payments relief, and at the insistence of the International Monetary Fund fiscal reforms were adopted in the hope of stabilizing inflation, balancing trade and stimulating exports. The peso was devalued, retentions on exports lightened, import controls established and consumer and other subsidies curtailed. The recovery programme failed, however, partly because industrial import prices continued to rise while inflation and other ills have also continued. The peso, which was devalued from 1.5 to 6.5 per dollar in 1959, has continued to fall and is now down to about 18 per dollar. The cost-of-living increase, a not extreme 15 per cent in 1962, went up by 33·5 per cent in 1963. In spite of continued economic decline, however, the Blancos were able to retain control of the executive in the 1962 elections, largely because of new government jobs created before the elections.

Perhaps more fundamental than the disincentives to ranchers and other contradictions in the income redistribution policies is the dilution of Uruguayan political power. The collegiate executive, conceived as a power-sharing arrangement between the two major parties and as a safeguard against usurpation of excessive authority, consists of nine members, six from the majority party and three from the minority party. In practice, however, the National Council of Government has many of the appearances of a third legislative chamber because of the factionalism in the major parties promoted by the electoral system. The current NCG, for example, consists of three members from one Blanco faction, two from another and one from a third faction. The Colorado minority members are similarly divided: two from one faction and one from another. Thus five separate factions are represented on the executive, each with its own programme and political organization. Ability of the executive to lead and to make decisions is considerably limited and conditioned by fluctuating alignments of the factions, often across party lines, on different issues.

The Legislature is similarly atomized and moreover self-serving. A special law allows each senator and deputy to import free of duty a new foreign automobile each year which at inflated Uruguayan prices means an automatic double or triple increase in value. Legislation in 1961 similarly favoured politicians, providing for privileged retirement benefits for political officeholders, special government loans for legislators and exceptionally generous arrangements for financing legislators' homes.

What are some of the solutions to this country's problems when already they have so much going in their favour? Some degree of austerity is necessary, but reforms are also needed in the government enterprises, the ranches, and, most of all, in the executive.

The twenty-eight government enterprises, commonly known as the autonomous agencies and decentralized services, are noted for inefficiency, corruption and waste. For such a small country the scope of their operations is vast: railways, airlines, trucking, bus lines, petroleum refining and distribution, cement production, alcohol production and importation, meat packing, insurance, mortgage and commercial banking, maritime shipping, administration of the port of Montevideo, electricity, telephones and telegraphs, water and sewerage services. Improved management and elimination of waste and corruption in the Central Administration -- the various ministries as opposed to the autonomous agencies and decentralized services -- is without doubt equally important.

In the ranching sector two major problems must be solved: concentration of land and income, and low capital and technology. On land concentration, some 5 per cent of the units hold about 60 per cent of the land while about 75 per cent of the units hold less than 10 per cent of the land -- the latifundia-minifundia problem escaped Batlle's attention. Over 40 per cent of the land, moreover, is exploited through some form of precarious tenure with the corresponding disincentive to capitalize. Clearly the large landholdings must be redistributed in order to intensify land use both for production and employment.

As for the executive, commentary has started on constitutional reform such as a return to the one-man presidency or perhaps retention of the collegiate system but with all members elected from the same party.

No one seems to know just how Uruguay will solve these problems but all agree that the country is in an economic, political and moral crisis.

Montevideo 21 March 1964

The Montevideo station is about medium-sized as WH stations go. Besides the Chief of Station, Ned Holman, ‡ and O'Grady, we have four operations officers (one each for Soviet operations, communist party and related groups, covert-action operations and Cuban operations), a station administrative assistant, two communications officers and three secretaries -- all under cover in the Embassy political section. On the outside under non-official cover we have two US citizen contract agents who serve as case officers for certain FI and CA operations.

Uruguay's advanced state of development, as compared with Ecuador, is clearly reflected in the station's analysis of the operational environment which is much more sophisticated and hostile than in poor and backward surroundings. Although there are similarities in the stations' targets the differences are mostly the greater capability of the enemy here.

The Communist Party of Uruguay (PCU)

In contrast to the divided, weak and faction-ridden Communist Party of Ecuador, the PCU is a well organized and disciplined party with influence far beyond its vote-getting ability. Thanks in part to the electoral system (the ley de lemas) the PCU has only minimal participation in the national legislature: three seats of a total of 130. The party's strength is growing, however, largely because of the deteriorating economic situation. Whereas in the 1958 elections the PCU received 27,000 votes (2.6 per cent), in 1962 they received 41,000 (3.5 per cent). Station estimates of PCU are also rising: from an estimated 3000 members in 1962 to about 6000 at the present -- still less than the PCU claim of membership in excess of 10,000.

The PCU's political activities are largely channelled through its political front: the Leftist Liberation Front, better known as FIDEL (for Frente Izquierda de Liberacion). Besides the PCU, FIDEL includes the Uruguayan Revolutionary Movement (MRO) and several small leftist splinter groups. Ariel Collazo, the principal leader of the MRO, holds a seat in the Chamber of Deputies which, with the three PCU seats, brings FIDEL congressional representation to four.

Uruguay's exceptionally permissive political atmosphere allows free reign for the PCU's activities in labour and student organizations as well as in the political front. The party's newspaper, El Popular, is published daily and sold throughout Montevideo -- a fairly effective propaganda vehicle for the PCU's campaigns against' North American imperialism' and the corruption of the traditional Uruguayan bourgeois parties. While many communist parties are increasingly rocked with splits along the Soviet- Chinese model, the PCU is only minimally troubled and maintains unwavering support for the Soviets. Support for the Cuban revolution and opposition to any break in relations with Cuba are principal PCU policies.

The Uruguayan Workers Confederation (CTU)

Throughout its forty-odd years of existence the PCU has been active in the Uruguayan labour movement, peaking in 1947 when the party controlled the General Union of Workers which represented about 60 per cent of organized labour. Following the death of Stalin, however, ideological division led to a decline in PCU trade-union influence while the rival Uruguayan Labor Confederation ‡ (CSU), backed by the Montevideo station, became the predominant organization. The CSU affiliated with ORIT ‡ and the ICFTU, ‡ but began to decline when the Uruguayan Socialist Party withdrew support and the PCU renewed its organizational efforts. In the early 1960s under PCU leadership the CTU was formed, and it has now become by far the largest and most important Uruguayan trade-union organization. Besides PCU leadership in the CTU, left-wing socialists are also influential.

Major policies of the CTU are support for the Cuban revolution and opposition to government economic policies, particularly the reform measures adopted at the insistence of the International Monetary Fund (devaluation, austerity) that hurt the lower-middle and low income groups. While only a small percentage of the workers are communists (most workingmen vote for the traditional parties), the PCU and other extreme-left influence in the CTU allows for mobilization of up to several hundred thousand workers, perhaps half the entire labour force, what with the prevalence of legitimate grievances. Action may range from sitdown or slowdown strikes of an hour or two, to all-out prolonged strikes paralysing important sectors of the economy. As should be expected, the CTU is an affiliate of the Prague-based World Federation of Trade Unions.

The Federation of University Students of Uruguay (FEUU)

The situation in the national student union is similar to the labour movement: communists are a small minority of the student population but control the federation. There are two institutions of higher learning in Uruguay, the University of the Republic with an enrollment of about 14,000 and the National Technical School (Universidad de Trabajo) with about 18,000, both in Montevideo. FEUU activities, however, are concentrated at the University of the Republic but extend into the secondary system. A PCU member is Secretary-General of FEUU, and, when a cause is presented, large numbers of students can be mobilized for militant street action and student strikes. Campaigns of the FEUU include support for the Cuban revolution and CTU demands, and attacks against' North American imperialism'.

The Socialist Party of Uruguay (PSU)

Although the pro-Castro PSU is waning as a political force in Uruguay -- in the 1962 elections they were shut out of national office for the first time in many years -- it retains some influence among intellectuals, writers and trade unionists. A considerable part of the Socialists' problem is internal dissention over peaceful versus violent political action. A portion of PSU militants under Raul Sendic, the leader of the sugar workers from Bella Union in northern Uruguay, have broken away and formed a small, activist revolutionary organization. They continue to be weak, however, and Sendic is a fugitive believed to be hiding in Argentina.

The Uruguayan Revolutionary Movement (MRO)

Although the MRO participates in FIDEL with the PCU, it retains its independence and a much more militant political posture than the PCU. Because it is dedicated to armed insurrection it is considered dangerous, but it is thought to have no more than a few hundred members which considerably limits its influence.

Trotskyist and Anarchists

The Revolutionary Workers Party (POR) under Luis Naguil is the Trotskyist group aligned with the Posadas faction of the Fourth International. They number less than one hundred and their influence is marginal. A similarly small number of anarchists led by the Gatti brothers, Mauricio and Gerardo, operate in Montevideo, but they too merit only occasional station coverage.

Argentine Exiles

Uruguay, with its benevolent and permissive political climate, is a traditional refuge for political exiles from other countries, especially Argentina and Paraguay. Since the overthrow of Peron in 1955 Montevideo has been a safe haven for Peronists whose activities in Argentina suffer from periods of severe repression. The Buenos Aires station is considered rather weak in penetration operations against the Peronists particularly those on the extreme left. The Montevideo station, therefore, has undertaken several successful operations against Peronist targets in Uruguay through which Cuban support to Peronists has been discovered. One operation, an audio penetration of the apartment of Julio Gallego Soto, an exiled Peronist journalist, revealed a clandestine relationship between Gallego and the former chief of Cuban intelligence in Montevideo, Earle Perez Freeman -- the would-be defector in Mexico City. Our station, in fact, has made the most important analysis of the complicated arrangement of groups within Peronism -- those of CIA interest are termed 'Left-Wing Peronists and Argentine Terrorists' -- but current signs are that the Argentine government is to allow Peronists to return, and much Argentine revolutionary activity will soon begin moving back to Buenos Aires.

Paraguayan Exiles

To an even greater extent than the Argentine extremists, the Communist Party of Paraguay (PCP) is forced to operate almost entirely outside its own country. Based mainly in Buenos Aires, Montevideo and Sao Paulo, the PCP is largely ineffectual with only about 500 of its three to four thousand members living in Paraguay. Harassment and prison for PCP activists under the Stroessner government is most effective. Nevertheless, the PCP has formed a political front, the United Front for National Liberation (FULNA), which includes some non-communist participation -- mainly from the left wing of the Paraguayan Liberal Party and from the Febrerista movement, neither of which is allowed to operate in Paraguay. FULNA headquarters is in Montevideo.

The Soviet Mission

The Soviet Mission in Montevideo consists of the Legation, the Commercial Office and the Tass representative. About twenty officers are assigned to the Legation of whom only eight are on the diplomatic list of the Uruguayan Foreign Ministry with the rest listed as administrative and support officials. Of the twenty officers in the Embassy, twelve are known or suspected to be intelligence officers: six known and two suspect KGB (state security), and two known and two suspect GRU (military intelligence). The Commercial Office, located in a separate building that is also used for Soviet Mission housing, consists of five officers of whom two are known and one is suspect KGB. The Tass representative is known KGB. Thus of twenty-six Soviets in Montevideo sixteen are known or suspected intelligence officers, about the average for Soviet missions in Latin America.

Targets for Soviet intelligence operations in Uruguay, other than the US Embassy and the CIA station, are fairly obvious although station operations have failed to turn up hard evidence except in rare circumstances. Thought to be high on the Soviet priority list are support to the PCU and CTU, penetration of the Uruguayan government and the leftist factions of traditional political parties through their 'agents of influence' programmes, propaganda publishing and distribution throughout Latin America through the firm Ediciones Pueblos Unidos among others, cultural penetration through various organizations including the Soviet-Uruguayan Friendship Society, travel support through the Montevideo office of Scandinavian Airlines System, and support for 'illegal' intelligence officers sent out under false nationalities and identities.

The Cuban Mission

Like the Soviets, the Cubans have an Embassy and separate Commercial Office, but Prensa Latina, the Cuban wire service, is operated by Uruguayans and Argentines. The Embassy is headed by a Charge d'Affaires with four diplomats, all either known or suspected intelligence officers. The Commercial Office is operated by a Commercial Counsellor and his wife, both of whom are thought to be intelligence officers. Contrary to Agency operations against the Soviets, however, there is no known framework for classifying Cuban intelligence operations, and practically nothing is known about the organizational structure of Cuban intelligence.

Nevertheless, the Montevideo station has collected valuable information on Cuban involvement with Argentine revolutionaries, and strong indications exist that the Cubans are providing support from their Montevideo Embassy to current guerrilla operations in northern Argentina. Other Cuban activities relate to the PCU, CTU, FEUU, artists, intellectuals, writers and leftist leaders of the traditional parties.
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Re: Inside the Company: CIA Diary, by Philip Agee

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Other Communist Diplomatic Missions

Czechoslovakia, Poland, Bulgaria, Hungary, Romania and Yugoslavia also have diplomatic missions in Montevideo. The Czechs are considered the most important from a counter-intelligence viewpoint, but station personnel limitations preclude meaningful operations against any of these other communist missions.

There is also an East German trade mission. Because of the higher priorities, we don't cover their activities closely and the Chief of Station is trying through the Minister of the Interior to have them expelled.

As I read the files and briefing materials on Uruguay it becomes clear that the operational climate here, with the Soviet, Cuban and Czech intelligence services, and a sophisticated local political opposition in the PCU and related organizations, is rather less relaxed than in Ecuador. Care will have to be taken in operational security, especially in agent meetings and communications. Nevertheless, as Uruguayans are generally well disposed to the US, and because the station has a close relationship with the police and other security forces, the operational climate is generally favourable.

Montevideo 22 March 1964

Until about a year ago the Montevideo station had the typical anti-communist political operations found at other hemisphere stations, the most important of which were effected through Benito Nardone, ‡ leader of the Federal League for Ruralist Action, and President of Uruguay in 1960-61. Other operations were designed to take control of the streets away from communists and other leftists, and our squads, often with the participation of off-duty policemen, would break up their meetings and generally terrorize them. Torture of communists and other extreme leftists was used in interrogations by our liaison agents in the police. An outstanding success among these operations was the expulsion, in January 1961, just before Nardone's term as NCG President ended, of the Cuban Ambassador, Mario Garcia Inchaustegui, together with a Soviet Embassy First Secretary, for supposedly meddling in Uruguayan affairs. The station's goal, of course, had been a break in diplomatic relations but resistance was too strong among other members of the NCG.

These operations had been expanded, much as the ECACTOR operations in Ecuador, under Tom Flores ‡ who arrived in 1960 as Chief of Station. However, when Ambassador Wymberly Coerr arrived in 1962, he insisted that Flores put an end to political intervention with Nardone and to the militant action operations which had caused several deaths and given the communists convenient victims for their propaganda campaigns against the 'fascist' Blanco government. Flores resisted, and in 1963 Ambassador Coerr arranged to have him transferred and the objectionable operations ended. Holman was sent to replace Flores, but he has maintained a discreet communication with Nardone, only for intelligence collection and without political-action implications. At this moment Nardone is in the terminal stages of cancer and for all practical purposes operations with him have ended.

The rest of the station operational programme, however, covers all areas. First the Related Missions Directive:


Collect and report intelligence on the strength and intentions of communist and other political organizations hostile to the US, including their international sources of support and guidance.

Objective 1: Establish operations designed to effect agent and/or technical penetrations of the Cuban, Soviet and other communist missions in Uruguay.

Objective 2: Effect agent and/or technical penetrations at the highest possible level of the Communist Party of Uruguay, the Communist Youth of Uruguay, the Leftist Liberation Front (FIDEL), the Uruguayan Workers' Confederation, the Socialist Party of Uruguay (revolutionary branch), the Federation of University Students of Uruguay, the Uruguayan Revolutionary Movement (MRO) and related organizations.

Objective 3: Effect agent and/or technical penetrations of the Argentine terrorist and leftist Peronist organizations operating in Uruguay, the Communist Party of Paraguay, the Paraguayan United Front for National Liberation (FULNA) and other similar third-country organizations operating in Uruguay.


Maintain liaison relations with the Uruguayan security services, principally the Military Intelligence Service and the Montevideo Police Department.

Objective 1: Through liaison services maintain intelligence collection capabilities to supplement station unilateral operations and to collect information on Uruguayan government policies as related to US government policies and to the communist movement in Uruguay.

Objective 2: Maintain an intelligence exchange programme with liaison services in order to provide information on communist and related political movements in Uruguay to the Uruguayan government, including when possible information from unilateral sources.

Objective 3: Engage in joint operations with Uruguayan security services in order to supplement station unilateral operations and to improve the intelligence collection capabilities of the services.

Objective 4: Through training, guidance and financial support attempt to improve the overall capabilities of the Uruguayan security services for collection of intelligence on the communist movement in Uruguay.


Through covert-action operations: (1) disseminate information and opinion designed to counteract anti-US or pro-communist propaganda; (2) neutralize communist or extreme-leftist influence in principal mass organizations or assist in establishing and maintaining alternative organizations under non-communist leadership.

Objective 1: Place appropriate propaganda through the most effective local media, including press, radio and television.

Objective 2: Support democratic leaders of labour, student and youth organizations, particularly in areas where communist influence is strongest (the Federation of University Students of Uruguay, the Uruguayan Workers' Confederation) and where democratic leaders may be encouraged to combat communist subversion.

Foreign Intelligence and Counter-Intelligence Operations (FI-CI)

AVCAVE. Of the four agent penetrations of the Communist Party of Uruguay, AVCAVE-1 ‡ is the most important, classified as 'middle-level' while the others are' low-level'. The station's very limited success in running agents into the PCU in comparison with other countries, Ecuador, for example, is due in large part to the higher standard of living and welfare system: Uruguayan communists simply are not as destitute and harassed as their colleagues in poorer countries and thus are less susceptible to recruitment on mercenary terms. Of equal if not greater importance are the higher level of political sophistication in Uruguay, superior party leadership, minimal internal party dissension and the growth the party has experienced in recent years -- there may even be a flicker of revolutionary hope given the mess the traditional parties are making of the country.

Not that the station hasn't tried to get a 'high-level' agent. Periodic letter recruitment campaigns and approaches by 'cold pitch' in the streets have been undertaken regularly but without success. AVCAVE-1's access derives from his membership of one of Montevideo's district committees and his close relation with an incipient pro-Chinese faction. His position enables the station to anticipate some PCU policies but he is far from the power locus of the Secretariat. Of some interest, however, is AVCAVE-1's guard duty at PCU headquarters.

AVPEARL. For many months Paul Burns,; the case officer in charge of operations against the PCU, has been studying ways to bug the conference room at PCU headquarters where meetings of the Secretariat and other sensitive conversations are held. Through AVOIDANCE-9, ‡ one of the low-level penetration agents who is occasionally posted to guard duty at PCU headquarters, the station has obtained clay impressions of the keys to the conference room from which duplicate keys have been made. However, the twenty-four-hour guard service at PCU headquarters renders an audio installation in the conference room almost impossible by surreptitious entry.

AVOIDANCE-9 has also photographed the electrical installations in the conference room, which the guards check on their rounds of the building, and the station pouched to Washington identical electrical sockets of the bulbous, protruding type used in Uruguay. The Technical Services Division in headquarters is casting bugs (microphone, carrier-current transmitter and switches all subminiaturized) into identical porcelain wall sockets of their own manufacture. The Minox photographs of the conference-room sockets were also needed so that the slightest details of painted edges and drops can be duplicated on the bugs being cast at headquarters. Installation will consist simply in removing the current sockets and replacing them with those cast by TSD. If successfully installed the stereo audio signal will be transmitted down the electric power line as far as the first of the large transformers usually located on utility poles.

A study of the power lines has also been made in order to determine which apartments and houses are between the target building and the first transformer. One of these locations will have to be acquired as Listening Post because radio frequency (RF) signals cannot pass through the transformer. Several agents already tested in support operations are being considered for manning the LP. AVOIDANCE-9, however, has been kept as unaware as possible of the true nature of this operation because he is extremely mercenary, and there is some concern that he might use his knowledge of the installation, if he made it, to blackmail the station later. Thus AVCAVE-1, ‡ whose loyalty is of a higher type, was instructed to volunteer for guard duty and he too is now spending one or two nights per month in a position to make the AVPEARL installation. At this moment the station is awaiting the devices from headquarters for testing before installation.

AVBASK. The station's only penetration of the Uruguayan Revolutionary Movement (MRO) is Anibal Mercader, ‡ a young bank employee developed and recruited by Michael Berger, ‡ the officer whom I am replacing. The agent's information is generally low-to-middle-level because he is some distance from the MRO leadership. He is well motivated, however, and there is some hope that he could rise within this relatively small organization. Nevertheless, as the MRO is terrorist-oriented there may be a problem over how far the agent should go, even if willing, in carrying out really damaging activities for his organization. The agent, moreover, is torn between emigrating to the US (where his banking talents could provide a decent income) and remaining in Uruguay where he faces only turmoil and strain.

AVBUTTE. This is the support and administrative project for all matters to do with a US citizen who is working under contract as an operations officer. His name is Ralph Hatry ‡ and he is involved in FI operations. His cover is that of Montevideo representative for Thomas H. Miner and Associates, ‡ a Chicago-based public relations and marketing firm. Hatry, who is about sixty years old, has a long history of work with US intelligence, including an assignment in the Far East under cover of an American oil company. The immediate background to his assignment to Montevideo was a difficult contract negotiating period, in which Gerry O'Grady, the Deputy Chief of Station, was involved, and which revealed Hatry to be a very difficult person but with important sponsor. The Assistant DDP, Thomas Karamessines, ‡ gave instructions to find Hatry a job somewhere and his file was circulated, eventually landing on the Uruguayan desk.

Hatry came to Montevideo last year and has been causing problems continuously, for the most part related to his personal finances and his efforts to increase fringe benefits. Holman, the Chief of Station, is trying to keep as much distance as possible between Hatry and himself -- the opposite of Hatry's efforts. Because Berger is the junior officer in the station he was assigned to incorporate Hatry into his operations and to handle his needs in the station, and as is often the case with officers under nonofficial cover, the time involved in solving his problems inside the station practically wipes out the advantage of having him in the field. Nevertheless, Hatry is handling four operations: a letter intercept, an exiled Paraguayan leader, several penetration agents of the Paraguayan Communist Party and FULNA, and an observation post at the Cuban Embassy.

AVBALM. The contact in this operation is Epifanio Mendez Fleitas, the exiled leader of the Paraguayan Colorado Party. Although the Colorado Party provides the political base for the Stroessner dictatorship, Mendez Fleitas' past efforts to promote reform and to unite Colorados against Stroessner have earned him a position of leadership in the exile community. He is chiefly dedicated to writing and to keeping together his Popular Colorado Movement (MOPOCO) which he formed several years ago. We keep this operation going in Montevideo in order to assist the Asuncion station and headquarters in following plotting by Paraguayan exiles against General Stroessner.

AVCASK. This operation is also targeted against Paraguayan exiles, specifically the Communist Party of Paraguay (PCP) and FULNA, The principal agent, AVCASK-1, ‡ is active in a leftist group within the Paraguayan Liberal Party, and he reports on leftist trends within the party while serving as cutout and agent-handler for two lesser agents, AYCASK-2 ‡ and AYCASK-3. ‡ AVCASK-2 is also a Liberal Party member but he works in FULNA and reports to AVCASK-1 on FULNA and PCP work in FULNA. AVCASK-3 is a PCP member who is currently moving into a paramilitary wing that is preparing for armed action against the Stroessner government. Only AVCASK-1, of these three agents, knows that CIA is the sponsor of the operation and he uses his own Liberal Party work as cover for the instructions and salaries he pays the other two. Yearly cost of this project is about five thousand dollars. Hatry meets with AVCASK-1 and reports back to Michael Berger.

AVIDITY. The station letter intercept provides correspondence from the Soviet bloc, Cuba, Communist China and certain other countries according to local addressee. The principal agent is AVANDANA, ‡ an elderly man of many years' service going back to Europe during World War II. He receives the letters, which come from AVIDITY-9 ‡ and AVIDITY-16, ‡ both of whom are employees of Montevideo's central post office. AVANDANA meets one of the sub-agents each day, receiving and returning the correspondence. Payment is made on the basis of the numbers of letters accepted.

The letters are processed by AVANDANA at his home, where he has photo equipment and a flat-bed steam table. He writes summaries of the letters of interest which he passes with microfilm to Hatry who passes them to Berger. This operation costs about 10,000 dollars per year.

AVBLINKER. When the station decided to set up an observation post in front of the Cuban Embassy it was decided to man the OP with AVENGEFUL-7, ‡ who is the wife of AVANDANA, his assistant in the AVIDITY letter intercept, and an occasional transcriber for the AVENGEFUL telephone-tapping operation. The OP is in a large house across the street from the Embassy in the elegant Carrasco section of Montevideo. The station pays the rent for AVBLINKER-1 and 2, an American couple who live in the OP house (the husband is employed by an Uruguayan subsidiary of an American company) and AVENGEFUL-7 spends each day in an upstairs front-room taking photographs of persons entering and leaving, and maintaining a log with times of entry and exit and other comment that she reconciles with the photographs which are processed by AVANDANA. AVENGEFUL-7's work with US intelligence also goes back to World War II days when she worked behind enemy lines in Europe.

In addition to the logs and photographs, AVENGEFUL-7 also serves as a radio base for the AVENIN surveillance team which works most of the time on Cuban targets. From the 0p she signals by radio when the subject to be followed leaves the Embassy -- with different signals if by foot, by car, or by one street or another. The team waits in vehicles four or five blocks away and picks up the subject. The logs and photographs are passed to Hatry who also passes back instructions on surveillance targets.

AVENIN. The station has two surveillance teams, the oldest and most effective being the AVENIN team directed by Roberto Musso. ‡ The team consists of seven surveillance agents, one agent in the state-owned electric company, and one agent in the telegraph company who provides copies of encoded telegrams sent and received by the Soviet bloc missions through commercial wire facilities. Most of the surveillance agents, like Musso, are employees of the Montevideo municipal government, and communications and instructions are passed by Paul Burns, the case officer in charge, at a safe office site a block from the municipal palace.

The team is well trained and considered to be one of the best unilateral surveillance teams in WH Division. Vehicles include two sedans and a Volkswagen van equipped with a periscope photography rig with a 360-degree viewing capability for taking pictures and observations through the roof vent. Concealed radio equipment is also used for communication between the vehicles, between the vehicles and the OP at the Cuban Embassy, and between the vehicles and the people on foot. These carry small battery-operated transmitter-receivers under their clothing and can communicate with each other as well as with the vehicles. They are also trained and equipped for clandestine street photography using 35-mm automatic Robot cameras wrapped to form innocuous packages.

The AVENIN team was formed in the mid-1950s with the original nucleus of agents coming from part-time police investigators. Until last year, when a new, separate team was formed, the AVENIN team was almost constantly assigned to follow Soviet intelligence officers or related targets. Their most sensational discovery was a series of clandestine meetings between an official of the Uruguayan Foreign Ministry and a Soviet KGB officer in which all the clandestine paraphernalia of signals and dead drops had been used. Photographs and other evidence passed by the station to Uruguayan authorities led to expulsion of the Soviet officer and considerable propaganda benefit. Last year, however, the AVENIN team was taken off Soviet targets and assigned to the Cubans, partly because of increasing importance of the Cubans and partly because the team was considered to be fairly well blown to the Soviets.

The AVENIN agent in the electric company is valuable because he has access to lists of persons who are registered for electric service at any address in Montevideo. Not only are the lists helpful in identifying the apartments or offices where surveillance subjects are followed, but the lists are also used to check building security of potential safe sites. The same agent also provides on request the architect's plans for any building served by the electric company and these plans are used for planning audio installations or surreptitious entries for other purposes. The same agent, moreover, can be called upon to make routine electrical inspection visits, ostensibly for the electric company, which gives him access to practically any office, apartment or house in Montevideo for inside casings.

AVENGEFUL. The station telephone-tapping operation is effected through the AVALANCHE liaison service (the Montevideo Police Department) with a history dating back to World War II when the FBI was in charge of counter-intelligence in South America. This is currently the most important joint operation underway between the station and an Uruguayan service. Connections are made in telephone company exchanges by company engineers at the request of the police department. A thirty-pair cable runs from the main downtown exchange to police headquarters where, on the top floor, the listening post is located.

The chief technician, Jacobo de Anda, ‡ and the assistant technician and courier, Juan Torres, ‡ man the LP, which has tables with actuators and tape-recorders for each of the thirty pairs. Torres arranges for lines to be connected by the telephone company engineers and he delivers the tapes each day to another courier, AVOIDANCE, ‡ who takes them around to the transcribers who work either at home or in safe site offices. This courier also picks up the transcriptions and old tapes from the transcribers and passes them to Torres who sends them to the station each day with yet another courier who works for the Intelligence Department of the police. The police department thus arranges for connections and operates the LP.

The courier AVOIDANCE is a station agent known only to Torres among the police department personnel involved. Each of the transcribers is unknown to the police department but copies of all the transcriptions, except in special cases, are provided by the station to the police intelligence department. Each operations officer in the station who receives telephone coverage of targets of interest to him is responsible for handling the transcribers of his lines: thus the Soviet operations officer, Russell Phipps, ‡ is in charge of the two elderly Russian emigres who transcribe (in English) the Soviet lines; the CP officer, Paul Burns, ‡ is in charge of the transcriber of the PCU line; and the Cuban operations officer is in charge of the transcribers of the Cuban lines. Most of the transcribers are kept apart from one another as well as from the police department.

The station, which provides technical equipment and financing for the operation, deals directly with the Chief of the Guardia Metropolitana, who is the police department official in overall charge of the telephone-tapping operation. He is usually an Army colonel or lieutenant-colonel detailed to run the Guardia Metropolitana, the paramilitary shock force of the police. Currently he is Colonel Roberto Ramirez. ‡ Usually he assigns lines to be tapped as part of his operations against contraband operations which also provides cover for the station lines which are political in nature. Torres and de Anda work under the supervision of the Chief of the Guardia Metropolitana although approval in principle for the operation comes from the Minister of the Interior (internal security) and the Chief of the Montevideo Police Department. The station encourages the use of telephone tapping against contraband activities not only because it's good cover but also because police contraband operations are lucrative to them and such operations tend to offset fears of political scandal depending upon who happens to be Minister of the Interior at any particular time.

Only seven lines are being monitored right now. They include three lines on Soviet targets (one on the Embassy, one on the Consulate and another that alternates between a second Embassy telephone and the Soviet Commercial Office), two on Cuban targets (one on the Embassy and one on the Commercial Office), one on a revolutionary Argentine with close associations with the Cubans, and one line assigned to the headquarters of the Communist Party of Uruguay.

Security is a serious problem with the AVENGEFUL operation because so many people know of it: former ministers and their subordinates, former police chiefs and their subordinates, current officers in the Guardia Metropolitana and the Criminal Investigations and Intelligence Departments. Copies of the transcriptions prepared for the police intelligence department are considered very insecure because of the poor physical security of the department despite continuous station efforts to encourage tightening. Regular denunciations of telephone tapping by the police appear in the PCU newspaper, El Popular, but without the detail that might require shutting down the operation.

Telephone tapping in Montevideo, then, is very shaky with many possibilities for serious scandal.

AVBARON. The station's only agent penetration of the Cuban mission is a local employee who began working for the station as a low-level penetration of the PCU. He is Warner, ‡ the Cuban Embassy chauffeur, whose mother works at the Embassy as a cook. About two months ago the Cubans fired their chauffeur and the station instructed this agent to try, through his mother, to get hired by the Cubans as their new chauffeur. Paul Burns, the station officer in charge, arranged for a crash course in driving lessons and suddenly this agent became a very important addition to the operational programme against the Cubans. Through his mother's pleading he was hired, and in spite of an accident the first day he was out with the Embassy car, he has gained steadily in their confidence. Although he does not have access to documents or sensitive information on Cuban support to revolutionaries, he is reporting valuable personality data on Cuban officials as well as intelligence on security and other procedures designed to protect the Embassy and the Commercial Department. Meetings are held directly between the station officer and the agent, usually in a safe apartment site or an automobile.

ECFLUTE. The only potential double-agent case against the Cuban intelligence service here is Medardo Toro, ‡ the Ecuadorean sent to Buenos Aires by the Quito station to report on exiled former President Velasco. Although Toro claims to have established a channel from Velasco to the Cuban government through Ricardo Gutierrez Torrens, a Cuban diplomat believed to be their chief of intelligence in Montevideo, and the Quito station and headquarters as well are extremely interested in monitoring the channel for signs of possible Cuban support to Velasco, Ned Holman, the Montevideo Chief of Station, continues to avoid handling the case in Montevideo. His reasoning is that we already have more than enough work to do and he is afraid to open the door to still more coverage of exiles. For the time being Toro's meetings with Gutierrez will be monitored through reports sent by pouch from Buenos Aires.

AVBUSY/ZRKNICK. The most important counter-intelligence case against the Cubans in Montevideo consists of the monitoring of the mail of a known Cuban intelligence support agent. The case started in 1962 when encoded radio messages began from Havana to a Cuban agent believed to be located either in Lima or La Paz. The National Security Agency is able to decrypt the messages which contain interesting information but fail to reveal the identity of the agent who receives them. In one of the messages Havana control gave the name and address of an accommodation address in Montevideo to which the agent should write if necessary, including a special signal on the envelope to indicate operational correspondence. The addressee in Montevideo is Jorge Castillo, a bank employee active in the FIDEL political front, and the signal is the underlining of Edificio Panamerica no where Castillo lives. Operational correspondence is expected to be written in secret writing.

In order to monitor this communications channel, should it be activated, the station has recruited the letter carrier who serves Castillo. Because the letter carrier, AVBUSY-1, ‡ cannot be told of the special signal on the envelope (since it came from a sensitive decrypting process) the station officer has to review all the mail sent to Castillo -- a very time-consuming process. So far no operational correspondence has been intercepted, but headquarters correspondence indicates that successful identification has been made of Cuban agents in similar ZRKNICK cases. (ZKRNICK is the cryptonym used for the entire communications monitoring operation against Cuban agents in Latin America.)

AVBLIMP. The Soviet Embassy here is a large mansion surrounded by a garden and high walls. In order to monitor the comings and goings of Soviet personnel, especially the intelligence officers, the station operates an observation post in a high-rise apartment building about a block away and in front of the Embassy. The OP operators are a married couple who live in the o P as their apartment and divide the work: keeping a log of entries and exits of Soviet personnel, photographing visitors and the Soviets themselves from time to time, photographing the licence plates of cars used by visitors, signalling the AVBANDY surveillance team by radio in the same manner as the OP signals the AVENIN team at the Cuban Embassy. The AVBLIMP op also serves for special observation of the superior-inferior relationships among Soviet personnel, which requires long training sessions with the Soviet operations officer. Such relationships are vital for identifying the hierarchy within the KGB and GRU offices. The apartment is owned by a station support agent who ostensibly rents it to the OP couple as their living-quarters.

AVBANDY. The new (1963) surveillance team formed to operate against the Soviets and Soviet-related targets consists of a team chief who is an Army major and five other agents. The team has two sedans and communications equipment similar to that used by the AVENIN team, with coordination when appropriate with the AVBLIMP observation post. The team chief, AVBANDY-1, originally came to the attention of the station through the liaison operations with the Uruguayan military intelligence service, and after a period of development he was recruited to lead the new team without the knowledge of his Army chiefs. The team is currently undergoing intensive training by Eziquiel Ramirez, ‡ a training officer from headquarters who specializes in training surveillance teams. His period with the AVBANDY team will total about eight weeks by the time he is finished next month.

AVERT. For some years the station has owned, through AVERT-1, a support agent, the house that is joined by a common wall to the Soviet Consulate. The Consulate and the AVERT house are the opposite sides of the same three-storey building that is divided down the middle. The building is situated next to the Soviet Embassy property and backs up to the Embassy backyard garden. In the Consulate, in addition to offices, two Soviet families are housed, including the Consul who is a known KGB officer. The AVERT house has been vacant for several years and has been used operationally only for occasional visits by technicians with their sophisticated equipment for capturing radiations from Soviet communications equipment in the Embassy. When successful such electronic operations can enable encoded communications to be read but we haven't been successful so far in Montevideo.

Recently there has been considerable indecision about what to do with the AVERT property: whether to use it as an additional OP, since it allows for observation of the garden where Soviet officers are known to have discussions; whether to use it to bug the Consulate offices and living-quarters; whether to sell it; or whether to retain it for some unknown future use. For the time being it is being retained for possible future use although the station strongly suspects that the Soviets are aware that it is under our control. They have, in fact, probably bugged our side as a routine matter of protection.


The weakest aspect of Soviet operations in Montevideo is the access agent programme -- Uruguayans or others who can develop personal relationships with Soviet officials in order to report personality information, and, if appropriate, to recruit or induce defection. Although three or four station agents are in contact with Soviet officers their relationships are weak and their reporting scanty.

AVDANDY. Part of the station programme against the Cubans, Soviets and other communist diplomatic missions in Montevideo is keeping up-to-date photographs and biographical data on all their personnel. Although the observation posts against the

Cubans and Soviets provide good photographs, their use is limited because of the necessity to protect the OP's. The Uruguayan Foreign Ministry, on the other hand, obtains identification photographs on all foreign personnel assigned to diplomatic missions in order to issue the identity card that each is supposed to carry. AVDANDY-1, ‡ is a medium-level official of the Foreign Ministry who gives copies of all these photographs to the Chief of Station as well as tidbits of information. Although efforts have been made to obtain passports of communist diplomatic personnel for a period long enough to photograph them, this agent has been reluctant to take the added risk of lending the passports when they are sent with the application. Nevertheless his willingness to turn over the Foreign Ministry Protocol Office files for copying in the station is a valuable, if routine, support function.

ZRBEACH. One of the activities of the CIA in support of the National Security Agency's code-cracking task is to maintain teams of radio monitors in certain US embassies. Often but not only where Soviet diplomatic missions exist, CIA stations include a contingent of monitors who scan frequencies with sophisticated equipment and record radio communications which are passed to NSA for processing. The programme is called ZRBEACH. Such a team has been operating for some years in the Montevideo station. The monitors also place mobile stations as close as possible to target-encrypting machines for capturing radiations - as in the use of the AVERT house next to the Soviet Embassy here. ZRBEACH teams work under the direction of Division D of the DDP although locally they are supervised by the Chief of Station.

When Ned Holman arrived in Montevideo he recommended that the ZRBEACH team be withdrawn for lack of production. Gradually their activities were curtailed and in recent weeks they have been packing equipment. Several have already departed for other stations and soon Fred Morehouse, ‡ the ZRBEACH team chief, will leave for his new assignment in Caracas.

AVBALSA. Liaison with the Uruguayan military intelligence service is in charge of Gerry O'Grady, the Deputy Chief of Station, who meets regularly with Lieutenant-Colonel Zipitria, ‡ the deputy chief of the service. Holman also occasionally meets Zipitria and when necessary Colonel Carvajal, ‡ the military intelligence service chief. For some years the Montevideo station has tried to build up the capabilities of his liaison service through training, equipment donation and funding but with very little success. Even now, their main collection activity is clipping from the local leftist press. The main problem with this service is the Uruguayan military tradition of keeping aloof from politics, as is shown by Carvajal's reluctance to engage the service in operations against the PCU and other extreme-left political groups. On the other hand the Deputy Chief, Zipitria, is a rabid anti-communist whose ideas border on fascist-style repression and who is constantly held in check by Carvajal. For the time being the station is using the Deputy Chief as a source of intelligence on government policy towards the extreme left and on rumblings within the military against the civilian government. Hopefully Zipitria will some day be chief of the service.

AVALANCHE. The main public security force in Uruguay is the Montevideo Police Department - cryptonym AVALANCHE -- with which liaison relations date to just before World War II when the FBI was monitoring the considerable pro-Nazi tendencies in Uruguay and Argentina. In the late 1940s, when the CIA station was opened, a number of joint operations were taken over from the FBI including the telephone-tapping project. Although police departments exist in the interior departments of Uruguay, the technical superiority and other capabilities of the Montevideo police almost always produce decisions by Ministers of the Interior that important cases be handled by AVALANCHE even when outside Montevideo.

As in Ecuador, the Minister of the Interior is in charge of the police, and station liaison with civilian security forces begins with the Minister, currently a Blanco politician named Felipe Gil ‡ whom Holman meets regularly. Holman also meets regularly, or whenever necessary, Colonel Ventura Rodriguez, ‡ Chief of the Montevideo Police; Carlos Martin, ‡ Deputy Chief; Inspector Guillermo Copello, ‡ Chief of Investigations; Inspector Juan Jose Braga, ‡ Deputy Chief of Investigations; Commissioner Alejandro Otero, ‡ Chief of the Intelligence and Liaison Department; Colonel Roberto Ramirez, ‡ Chief of the Guardia Metropolitana (the anti-riot shock force); Lieutenant-Colonel Mario Barbe, ‡ Chief of the Guardia Republicana (the paramilitary police cavalry); and others. Of these the most important are the Minister, Chief of Police, Chief of Intelligence and Liaison and Chief of the Guardia Metropolitana, who supervises the telephone-tapping operation.

As in Argentina, the political sensitivity of an AID Public Safety Mission for improving police capabilities has precluded such a Mission in Uruguay and restricted police assistance to what overall demands on station manpower allow. But whereas in Argentina a non-official cover operations. officer has for some years been ostensibly contracted by the Argentine Federal Police ‡ to run telephone-tapping and other joint operations, in Uruguay these tasks have been handled by station officers under official cover in the Embassy. Until January all the tasks relating to AVALANCHE were handled by the Deputy Chief of Station, but Holman took over these duties when Wiley Gilstrap, ‡ the Deputy, was transferred to become Chief of Station in San Salvador and replaced by O'Grady, whose Spanish is very limited. The station long-range plans continue to be the establishment of an AID Public Safety Mission that would include a CIA officer in order to release station officers in the Embassy for other tasks. However, such a development will have to wait until a strong Minister of the Interior who will fight for the Public Safety Mission appears on the scene. On the other hand Uruguayan police officers are being sent by the station for training at the Police Academy, which has changed its name to the International Police Academy and is moving from Panama to Washington.

Of the activities undertaken by the police on behalf of the station, the most important is the AVENGEFUL telephone-tapping operation. Other activities are designed to supplement the station unilateral collection programme and to keep the police from discovering these operations. Apart from telephone tapping these other activities are effected through the Department of Intelligence and Liaison.

Travel Control. Each day the station receives from the police the passenger lists of all arrivals and departures at the Montevideo airport and the port where nightly passenger boats shuttle to Buenos Aires. These are accompanied by a special daily list of important people compiled by I & E personnel, including those travelling on diplomatic passports, important political figures, communists and leftists and leaders of the Peronist movement. On request we can also obtain the lists of travellers who enter or leave at Colonia, another important transit point between Montevideo and Buenos Aires. Daily guest lists from the hotels and lodgings in Montevideo are also available. The main weakness in travel control is at the Carrasco airport, which is the main airport for Montevideo but is in the Department of Canelones just outside the Department of Montevideo, and there is considerable rivalry between the Montevideo and the Canelones police. More important, however, is the lucrative contraband movement at the airport which jealous customs officials protect by hampering any improvement of police control. Thus station efforts to set up a watch list and a document photography operation at the airport have been unsuccessful.

Name Checks. As a service to the Embassy visa office, information is requested constantly from the police department, usually on Uruguayans who apply for US visas. Data from the intelligence and criminal investigations files is then passed by the station to the visa office for use in determining whether visas should be granted or denied.

Biographical Data and Photographs. Uruguay has a national voter registration that is effectively an identification card system. From the AVALANCHE service we obtain full name, date and place of birth, parents' names, address, place of work, etc., and identification photos of practically any Uruguayan or permanent resident alien. This material is valuable for surveillance operations of the AVENIN and AVBANDY teams, for the Subversive Control Watch List and for a variety of other purposes.

Licence Plate Data. A further help to station analysis of visitors to the Soviet and Cuban embassies are the names and addresses of owners of cars whose licence plate numbers are photographed or copied at the observation posts. The police make this information available without knowing the real reason. The same data is also used to supplement reporting by the two surveillance teams.

Reporting. The Intelligence and Liaison Department of the Montevideo Police Department is the government's (and the station's) principal source of information on strikes and street demonstrations. This type of information has been increasing in importance during the past few years as the PCU-dominated labour unions have stepped up their campaigns of strikes and demonstrations in protest against government economic policies. When strikes and demonstrations occur, information is telephoned to the station from I & E as the events progress. It includes numbers of people involved, degree of violence, locations, government orders for repression, and estimates of effectiveness, all of which is processed for inclusion in station reporting to headquarters, the Southern and Atlantic military commands, etc. At the end of each month I & E also prepares a round-up report on strikes and civil disturbances of which the station receives a copy.

While contact between the various officers in the police department and the station is no secret to the Chief of Police -- they are described as 'official' liaison -- the station also maintains a discreet contact with a former I & E chief who was promoted out of the job and now is the fourth- or fifth-ranking officer in Investigations. This officer, Inspector Antonio Piriz Castagnet, ‡ is paid a salary as the station penetration of the police department, and he is highly cooperative in performing tasks unknown to his superiors. The station thus calls on this agent for more sensitive tasks where station interest is not to be known by the police chief or others. Piriz also provides valuable information on government plans with respect to strikes and civil disorder, personnel movements within the police and possible shifts in policy.

The overall cost of the AVALANCHE project, apart from AVENGEFUL telephone tapping, is about 25,000 dollars per year.

SMOTH. The British Intelligence Service (MI-6), known in the CIA by the cryptonym SMOTH, has long been active in the River Plate area in keeping with British economic and political interests here. The station receives regularly copies of SMOTH reports via headquarters but they are of very marginal quality. Because of budget cutbacks the British are soon closing their one-man office in Montevideo but before returning to England the SMOTH officer will introduce Holman to the Buenos Aires Station Commander who will be in charge of MI-6 interests in Montevideo. Basically a courtesy arrangement between colleagues of like mind, the SMOTH liaison is of little importance to the Montevideo operational programme.

ODENVY. The FBI (cryptonym ODENVY) has an office in the Embassy in Rio de Janeiro (Legal Attache cover) whose chief is in charge of looking after FBI interests in Uruguay and Argentina. Occasionally the FBI chief comes to Montevideo for visits to the police department and he usually makes a courtesy call on the Montevideo Chief of Station. Soon, however, the FBI will be opening an office in the Embassy in Buenos Aires which will take over FBI interests in Uruguay.

Covert Action (CA) Operations

AVCHIP. Apart from Ralph Hatry the other non-official cover contract officer is a young ex-Marine who is ostensibly the Montevideo representative for several US export firms. The cover of this officer, Brooks Read, ‡ has held up well during the three or four years that he has been in Montevideo, mainly because he has socialized mostly with the British crowd he met as a leader of the English-speaking theatre group in Montevideo. Although he originally worked in the station FI programme, during the past year he was transferred to the CA side as cutout and intermediate case officer for media and student operations. Although time-consuming, handling Read's affairs inside the station is a joy for O'Grady, the inside officer in charge, by comparison with the plethora of problems constantly caused by Hatry.

AVBUZZ. Because of the large number of morning and afternoon newspapers in Montevideo, press media operations are centralized in AVBUZZ-1, ‡ who is responsible for placing propaganda in various dailies. As each newspaper of the non-communist press is either owned by or responds to one of the main political factions of the principal political parties, articles can be placed more easily in some newspapers than in others depending upon content and slant. AVBUZZ-1 has access to all the liberal press but he uses most frequently the two dailies of the Union Blanca Democratica faction of the Blanco Party (El Pais and El Plata), the morning newspaper of the Colorado Party List 14 (El Dia), and the morning newspaper of the Union Colorada y Batllista (La Manana) to a lesser extent. AVBUZZ-1 pays editors on newspapers on a space-used basis and the articles are usually published as unsigned editorials of the newspapers themselves. O'Grady is in charge of this operation which he works through Brooks Read who deals directly with AVBUZZ-1. All told the station can count on two or three articles per day. Clips are mailed to headquarters and to other stations for replay.

AVBUZZ-1 also writes occasional fly-sheets at station direction, usually, on anti-communist themes, and he operates a small distribution team to get them on the streets after they are secretly printed in a friendly print shop. Television and radio are also used by AVBUZZ-1, although much less than newspapers because they carry less political comment.

AVBLOOM. Student operations have had very limited success in recent years in spite of generous promotion of non-communist leaders for FEUU offices. Recently the station recommended, and headquarters agreed, that student operations be refocused to concentrate on the secondary level rather than at the University -- on the theory that anti-communist indoctrination at a lower level may bring better results later when the students go on to the University. Brooks Read works with several teams of anti-communist student leaders whom he finances for work in organization and propaganda. O'Grady is also the station officer in charge of student operations.

AVCHARM. Labour operations for some years have been designed to strengthen the Uruguayan Labor Confederation ‡ (CSU), which is affiliated with the ORIT-ICFTU ‡ structure, but we have been unsuccessful in reversing its decline in recent years. A crucial decision on whether to continue support to the CSU must soon be made. If the CSU is to be salvaged the station will have to replace the present ineffectual leaders, not a pleasant prospect because of their predictable resistance, and begin again practically from the beginning. The fact is that the CSU is largely discredited, and organized labour is overwhelmingly aligned either inside, or in cooperation with, the CTU and the extreme left. Apart from the CSU, station labour operations are targeted at selected unions that can be assisted and influenced, perhaps eventually controlled, through the International Trade Secretariats that operate in Latin America, such as the International Transport Workers Federation. ‡

The most important new activity in labour operations is the establishment last November of the Montevideo office of the American Institute for Free Labor Development. ‡ This office is called the Uruguayan Institute of Trade Union Education ‡ and its director, Jack Goodwyn, ‡ is a US citizen contract agent and the Montevideo AIFLD representative. Alexander Zeffer, ‡ the station officer in charge of labour operations, meets Goodwyn under discreet conditions for planning, reporting and other matters. In addition to training locally at the AIFLD institute, Uruguayans are also sent to the ORIT school in Mexico and to the AIFLD school in Washington.

AVALON. This agent, A. Fernandez Chavez, ‡ has for many years been used for placing propaganda material and as a source of intelligence on political matters. At times when AVBUZZ-1 cannot place things the station wants in the papers, Fernandez may be successful because of his very wide range of friends in political and press circles. He is the Montevideo correspondent of ANSA, the Italian wire service, and of the Santiago station-controlled feature news service Agencia Orbe Latinoamericano. ‡ Although he occasionally meets Holman, his usual station contact is Paul Burns, the CP officer.

AVID. Although the political-action operations formerly effected through Benito Nardone have largely ended, Holman continues to see Nardone, Nardone's wife Olga Clerici de Nardone, ‡ who is very active in the Ruralist movement, and Juan Jose Gari, ‡ Nardone's chief political lieutenant. Gari has the major political plum assigned to the Ruralists in the current Blanco government -- he's President of the State Mortage Bank. Should a policy change occur and the station return to political and militant action, one place we would start is with Mrs Nardone and Gari -- even if Nardone himself fails to survive his struggle with cancer.

AVIATOR. Holman recently turned over to O'Grady the responsibility for keeping up the developmental contact with Juan Carlos Quagliotti, ‡ a very wealthy right-wing lawyer and rancher. This man is the leader of a group of similarly well-to- do Uruguayans concerned with the decline in governmental effectiveness and in the gains made by the extreme left in recent years. He is active in trying to persuade military leaders to intervene in political affairs, and would clearly favour a strong military government, or military-dominated government, over the current weak and divided executive. Although the station does not finance or encourage him, an attempt .is made to monitor his activities for collecting intelligence on tendencies in military circles to seek unconventional solutions to Uruguayan difficulties. Should the need arise for station operations designed to promote military intervention, Quagliotti would be an obvious person through whom to operate.


As in other stations we have a fairly large number of support agents who own and rent vehicles or property for use in station operations. These agents, mainly social acquaintances of station officers, are usually given whisky or other expensive and hard-to-get items that can be brought in with diplomatic free-entry, rather than salaries. Tito Banks, ‡ a wool dealer of British extraction, is one of the more effective of these agents.

As in Ecuador, the station in Montevideo is getting no small mileage from a relatively small number of officers. The station budget is a little over one million dollars per year. Major improvement is needed in the access agent programme against the Soviets, direct recruitment against the Cubans, higher-level penetrations of the PCU, improvement in the capabilities of police intelligence, and greater effectiveness in labour and student operations.

Next week I begin to take over all the operations targeted against the Cubans, not all of which are being handled at present by the officer I am replacing, Michael Berger. This officer has had difficulty in learning Spanish and on the whole has been able to work only with English-speaking agents. He's being married to an Uruguayan girl next week-end and afterwards will depart for a honeymoon, home leave and reassignment to the Dominican Republic.

The operations I'm taking over are the following: the AVCASK operations against the Paraguayans; the AVIDITY letter intercept; Ralph Hatry and his problems (unfortunately); the telephone-tap transcriber AVENGEFUL-9; AVANDANA; the chauffeur at the Cuban Embassy; the observation post at the Cuban Embassy; the AVENIN surveillance team; the AVBASK penetration of the MRO; the Foreign Ministry protocol official who provides photographs and other data on communist diplomats; and the postman who delivers letters to the ZRKNICK Cuban intelligence support agent. I'm also temporarily (I hope) taking over Holman's contacts with Inspector Antonio Piriz, ‡ our main penetration of the Montevideo Police Department, and with Commissioner Alejandro Otero, ‡ the Chief of the Intelligence and Liaison Department.
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Re: Inside the Company: CIA Diary, by Philip Agee

Postby admin » Tue Jun 09, 2015 4:25 am


Montevideo 26 March 1964

The ruling Blanco Party is in a deepening crisis right now that illustrates both the complexity and the fragmentation of Uruguayan politics -- and the effect these conditions have on our operations.

In January the Chief of Police of Canelones, the interior department that borders on Montevideo, was involved in a bizarre bank robbery in which the two robbers were gunned down by police just as they were leaving the bank. Press reporting revealed that there was a third member of the gang who had been working for the Canelones Police Chief and had previously advised which bank was to be robbed, the day and time of the robbery and the hideouts to be used by the robbers afterwards. The Police Chief provided weapons for the robbers that had been altered so that they would not fire. In the fusillade of bullets fired by the police ambush, a policeman and a passer-by were wounded, but the Police Chief defended such exaggerated firepower, on the grounds that the robbers had first fired several shots at the police. The most ironic note for the murdered robbers was that the Montevideo press had carried several articles during the week before the robbery that unusual police movements in Canelones at that time were due to a tip-off on a probable robbery. Had the robbers read the newspapers they would have known they were betrayed.

An uproar followed this irregular police procedure, producing an investigation in the Ministry of the Interior and a movement to fire the Police Chief and prosecute him for not having prevented the robbery. Lines are now drawn in the Blanco Party between those supporting the Police Chief, who comes from one Blanco faction, and those supporting Felipe Gil, ‡ the Minister of the Interior, who comes from another Blanco faction and who is leading the movement against the Police Chief. Supporters of the Chief, in fact, are charging that the Chief had kept the Minister fully informed on the case and that the Minister is to blame for any unethical procedures.

Benito Nardone ‡ died yesterday but almost until the end he was making radio broadcasts in support of the Canelones Police Chief. According to reports from Juan Jose Gari ‡ there is no quick solution in sight, and so the Blancos continue to weaken -- a process that reaches right up to the Blanco NCG majority. The Colorados aren't sitting idly by. The day after I arrived they got a Colorado elected President of the Chamber of Deputies by taking advantage of Blanco splits. Meanwhile Holman's chief project with the Minister, establishment of an AID Public Safety Mission in the police, continues in abeyance pending a decision by Gil.

Montevideo 1 April 1964

It's all over for Goulart in Brazil much faster and easier than most expected. He gave the military and the opposition political leaders the final pretext they needed: a speech to the Army Sergeants' Association implying that he backed the non-commissioned officers against the officer corps. Coming right after acts of insubordination by low-ranking sailors and marines, the speech couldn't have been better timed for our purposes. The Rio station advised that Goulart is probably coming to Uruguay which means Holman's fears about new exile problems were real. US recognition of the new military government is practically immediate, not very discreet but indicative, I suppose, of the euphoria in Washington now that two and a half years of operations to prevent Brazil's slide to the left under Goulart have suddenly bloomed.

Our campaign against him took much the same line as the ones against communist infiltration in the Velasco and Arosemena governments two and three years ago in Ecuador. According to Holman the Rio station and its larger bases were financing the mass urban demonstrations against the Goulart government, proving the old themes of God, country, family and liberty to be effective as ever. Goulart's fall is without doubt largely due to the careful planning and consistent propaganda campaigns dating at least back to the 1962 election operation. Holman's worry is a new flood of exiles to add to the Paraguayans and Argentines we already have to cover.

Montevideo 3 April 1964

My first Cuban recruitment looks successful. A trade mission arrived from Brazil and will be here until sometime next week. An agent of the Rio station had reported that Raul Alonzo Olive, a member of the mission and perhaps the most important because he's a high-level official in the sugar industry, seemed to be disaffected with the revolution. In order to protect the Rio agent against provocation and because of the confusion in Brazil this past week, the Rio station suggested that a recruitment approach be made here or in Madrid which is their last stop before return to Havana.

The AVENIN surveillance team followed him after arrival and at the first chance when he was alone they delivered a note from me asking for a meeting. The note was worded so that he would know it came from the CIA. After reading it he followed the instructions to walk along a certain street where I picked him up and took him to a safe place to talk. Headquarters had sent a list of questions for him, mostly dealing with this year's sugar harvest, efforts to mechanize cane cutting, and anyone else he might know was dissatisfied. We spoke for about two hours because he had to rejoin his delegation, but we'll meet again several times before he leaves for Madrid. Contact instructions just arrived from the Madrid station.

He said sugar production from this year's harvest should be about five million tons and he rambled on at length about the problems with the cane-cutting machines, mostly caused when used on sloping or inclined surfaces. What was surprising was that he knows so many government leaders well even though he wasn't particularly active in the struggle against Batista.

I recorded the meeting, which he didn't particularly like, and reported by cable the essentials of what he said. He thinks he will be in Madrid for most of next week, or perhaps longer, so communications training can be done there. Strange he agreed so readily to return to Cuba and for his salary to be kept safe for him by the CIA, but he seemed honest enough. In Madrid he'll get the polygraph, which should help to resolve his bona fides.

Montevideo 5 April 1964

Goulart arrived here yesterday and was greeted with a surprising amount of enthusiasm. The military takeover, in fact, has been rather badly received here in Uruguay because Goulart was popularly elected and a strong Brazilian military government may mean difficulties for Uruguay over exiles. Already officials of Goulart's government are beginning to arrive, and the Rio station is sending one cable after another asking that we speed up reporting arrivals. Our only source for this information is Commissioner Otero, ‡ whose Intelligence and Liaison Department is in charge of processing the exiles. It's clear that the Rio station is going an out to support the military government, and the key to snuffing out any counter-coup or insurgency is in either capturing or forcing into exile Leonel Brizola, Goulart's far-left brother-in-law who is the Federal Deputy for Guanabara (Rio de Janeiro) and is now in hiding.

Headquarters has begun to generate hemisphere-wide propaganda in support of the new Brazilian government and to discredit Goulart. For example, Arturo Jauregui, ‡ Secretary-General of ORIT, has sent a telegram pledging ORIT ‡ support for the new Brazilian government. This may provoke a negative reaction in places like Venezuela because the CIA's policy before was to have ORIT oppose military takeovers of freely elected governments -- not very realistic in view of the way events are moving.

Through AVBUZZ we're currently promoting opinion favourable to the Venezuelan case against Cuba in the OAS based on the arms cache discovered last year. One of our placements was a half-page paid advertisement in the Colorado daily La Manana that came out yesterday. It was ostensibly written and signed by Hada Rosete, ‡ the representative here of the Cuban Revolutionary Council ‡ and one of the propaganda agents of the AVBUZZ project. In fact it was written by O'Grady and Brooks Read and based on information from headquarters and from station files. The statement relates the arms cache to overall Soviet and Cuban penetration of the hemisphere, including allegations attributed to Rolando Santana, ‡ last year's Cuban defector here. Current insurgent movements in Venezuela, Honduras, Peru, Colombia, Argentina, Panama and Bolivia are described as being directed from Soviet and Cuban embassies in Mexico City, Buenos Aires and Montevideo, not to exclude the Chinese communists who were also mentioned.

Montevideo 18 April 1964

Holman returned from a Chiefs of Station conference with the grudging acknowledgement that we'll have to devote more attention to the Brazilian exiles. The decision was made, apparently by President Johnson himself, that an all-out effort must be made not only to prevent a counter-coup and insurgency in the short run in Brazil, but also to build up their security forces as fast and as effectively as possible for the long run. Never again can Brazil be permitted to slide off to the left where the communists and others become a threat to take things over or at least become a strong influence on them.

Here in Montevideo this policy means that we will have to assist the Rio station by increasing collection of information about the exiles. This will have to be through police intelligence for the time being and will be my responsibility since Holman, as I suspected, wants me to continue to work with Otero, Piriz, de Anda, Torres and others while he maintains the high-level contacts with the Minister of the Interior, Felipe Gil, and the Chief of Police, Colonel Ventura Rodriguez. ‡ As a start I have gotten Otero to place his officers at the residences of Goulart and three or four of the most important exiles, according to the Rio station's criteria, and these officers will keep logs of visitors while posing as personal security officers for the exiles. We'll forward highlights of the reports to Rio by cable along with information on new arrivals with full copies following by pouch.

The political currents here are running against the new military government in Brazil and making favourable editorial comment very difficult to generate. The Brazilian government, nevertheless, has begun to pressure the Uruguayans in different ways so that Goulart and his supporters in exile here will be forbidden to engage in political activities.

Promoting sentiment in favour of a break in relations with Cuba is almost as difficult here as promoting favourable comment towards Brazil. Not that Uruguayans are fond of communism or well-disposed towards the Cuban revolution. The corner stone of Uruguayan foreign policy is strict non-intervention because of the country's vulnerability to pressures from its two giant neighbours. Since sanctions or collective action against Cuba can easily be interpreted as intervention in Cuba's internal affairs, the station programme to promote a break in relations runs counter to Uruguayan traditional policies.

Even so, we are keeping up media coverage of Cuban themes in the hope that Venezuelan attempts to convoke an OAS Foreign Ministers conference over the arms cache will result not only in the conference but in a resolution for all OAS countries to break with Cuba. A few days ago the former Venezuelan Foreign Minister under Betancourt, Marcos Falcon Briseno, was here trying to drum up support for the conference but he couldn't convince the Uruguayans to join actively in the campaign.

Montevideo 24 April 1964

We've just had a visit from the new WH Division Chief, Desmond FitzGerald, ‡ who is making the rounds of field stations. Holman gave a buffet for all the station personnel and wives, and in the office each of us had a short session with FitzGerald to describe our operations. He was pleased with the Cuban recruitment but suspects he may have been a provocation because of his high estimate of the sugar harvest. Instead of five million tons, according to FitzGerald, production this year will probably be less than four million. He also encouraged me to concentrate on making an acceptable recruitment approach to the Cuban code clerk here. When we told him that one of our station offices has a common wall with an uncontrolled apartment in the building next door, he ordered that a large sign be immediately placed on the wall reading: 'This Room is Bugged!' Rank has its privileges in the CIA too.

FitzGerald was very insistent that the Montevideo station devote attention to supporting the new Brazilian military government through intelligence collection and propaganda operations. Holman has given O'Grady the overall responsibility for Brazilian problems, and the Rio station is going to help by sending down one of its liaison contacts as military attache in the Brazilian Embassy. He is Colonel Camara Sena, ‡ and he is due to arrive any day. O'Grady will be meeting with him and will assist him in developing operations to penetrate the exile community.

In spite of Goulart's popularity here, the NCG voted yesterday to recognize the Brazilian government which should serve to ease tensions. Also, Goulart has been declared a political asylee rather than a refugee which is a looser status that would have allowed him more freedom for political activities.

Montevideo 2 May 1964

Headquarters has approved my plan for recruitment of Roberto Hernandez, the Cuban code clerk, and we shall see if luck prevails. I'm using Ezequiel Ramirez, ‡ the training officer from headquarters who's just finished training the AVBANDY surveillance team, to make the initial contact. He can pass for a Spaniard or Latin American and will be less dangerous for Hernandez (if he accepts) until we can establish a clandestine meeting arrangement. Today Ramirez begins working with the AVENIN surveillance team to follow Hernandez from the Embassy to wherever in town the first approach can be made.

It's very hard to tell what the chances are, although reporting from Warner, ‡the Cuban Embassy chauffeur, has been excellent in providing insight into Hernandez's personality. He not only is having problems with his wife, who has just had a baby, but he seems to be more than casually involved with Mirta, his Uruguayan girlfriend. Because of Mirta I rejected the girl offered by the Miami station and will concentrate on interesting Hernandez in eventual resettlement, possibly in Buenos Aires. In addition to his duties as code clerk he is the Embassy technical officer with proficiency in photography. Perhaps resettlement could include setting him up with a commercial photography shop. For the moment, however, we will offer him, per headquarters instructions, thirty thousand dollars for a straight debriefing on what he knows of Cuban intelligence operations; fifty thousand dollars for the debriefing and provision and replacement of the code pads; and three thousand dollars for each month he will work for us while continuing to work in the Embassy. I have a safe apartment all ready to use if Hernandez agrees and will take over from Ramirez as quickly as possible.

The other day I cornered Holman and proposed that I could do more with the police work and Cuban operations if I weren't bogged down with the Paraguayans, the letter intercept and Ralph Hatry. It was a dirty move because I suggested that Alex Zeffer, ‡ the labour officer, could probably take over these operations. Holman agreed and then told Zeffer who hasn't spoken to me since. He knows all about Hatry's problems and of the drudgery involved in the letter intercept.

I'll continue to go occasionally at night to AVANDANA's ‡ house in order to discuss problems of the Cuban Embassy observation post with his wife. I wouldn't want to miss that experience -- the house is a low bungalow set far back off the street in a sparsely populated section on the edge of town and surrounded by thick woods, almost jungle. The house is protected by a high chain-link fence and perhaps a half-dozen fiercely barking dogs. Such isolation in this addamsesque setting is convenient in that AVANDANA is almost completely deaf and operational discussions are necessarily but insecurely loud when not screaming. Each time I have visited the home I have gone with Hatry, and the picture of these two ageing men yelling furtively over their spy work is an interesting study in contradiction.

Another operation that I took over has resolved itself. Anibal Mercader, ‡ the MRO penetration, decided to seek employment in the US. He was hired by a Miami bank and is leaving shortly -- I arranged to keep his MRO membership off the station memorandum on his visa application.

I don't envy Alex Zeffer for his labour operations. He is going to have to start again, practically from scratch, because the decision was finally made to withdraw support from the Uruguayan Labor Confederation ‡ (CSU). Last month the CSU held a congress and the leadership was unable to overcome the personality conflicts that have resulted in continuing withdrawals of member unions and refusals of others to pay dues. The real problem is leadership and when Andrew McClellan, ‡ the AFL-CIO Inter-American Representative, and Bill Doherty, ‡ the AIFLD social projects chief arrived last week they advised CSU leaders that subsidies channelled through the ICFTU, ORIT and the ITS are to be discontinued.

The situation is rather awkward because the CSU has just formed a workers' housing cooperative and expected to receive AIFLD funds for construction. These funds will also be withheld from the Cs u and may be channelled through another noncommunist union organization. Next week Serafino Romualdi, ‡ AIFLD Executive Director, will be here for more conversations on how to promote the AIFLD programme while letting the CSU die. One thing is certain: it will take several years before a new crop of labour leaders can be trained through the AIFLD programme and, from them recruitments made of new agents who can set up another national confederation to affiliate with ORIT and the ICFTU.

Montevideo 5 May 1964

None of us can quite believe what is happening. Just as planned, Ramirez, and the surveillance team followed Hernandez downtown, and at the right moment he walked up to Hernandez in the street and told him the US government is interested in helping him. Hernandez agreed to talk but only had about fifteen minutes before he had to get back to the Embassy. He was a pale bundle of nerves but he agreed in principle to the debriefing and to providing the pads. Another meeting is set for tomorrow afternoon.

I sent a cable advising headquarters of the meeting and suggesting that they send down the Division D technician right away so that he can work on the pads on a moment's notice. If this recruitment works, as it seems to be working, we'll have the first important penetration of Cuban operations in this region.

More anti-Cuban propaganda. Representatives of the Revolutionary Student Directorate in Exile ‡ (DRE), an organization financed and controlled by the Miami station, arrived today. They're on a tour of South America hammering away at the Cuban economic disaster. We don't have a permanent representative of the DRE in Montevideo so arrangements were made by Hada Rosete ‡ and AVBUZZ-1. Also through AVBUZZ-1 we're generating propaganda on the trial in Cuba of Marcos Rodriguez, a leader of the Revolutionary Student Directorate in the struggle against Batista. Rodriguez is accused of having betrayed 26 of July members to the Batista police, and our false line is that he was really a communist and was instructed to betray to 26 of July people by the Cuban Communist Party. Purpose: exacerbate differences between the old-line communists and the 26 of July people. We're also playing up the Anibal Escalante purge. Both cases are causing serious divisions in Cuba where, according to AVBUZZ-1, 'the repression is comparable to that under Hitler, Mussolini and Stalin as the revolution devours its own'.

The internal crisis in the Blanco Party over the Canelones police case continues to grow. What is at stake, besides the reputations of the principals, is the division of spoils among the Blanco factions -- a very delicate balance negotiated with difficulty and easily upset by internal struggle. Rumours abound of an impending Cabinet crisis.

Montevideo 10 May 1964

All is not well on the Hernandez recruitment. He made the second meeting with Ramirez, but refused to talk about Cuban operations until he actually saw the money. He doesn't trust us an inch. Zeke set up a third meeting and I went with fifteen thousand dollars -- practically all the cash we have right now in the station. Holman was nervous about me taking out all that money, but if we're going to get Hernandez to talk we have to at least show him the money and maybe even give him a little. O'Grady also came along for extra security, but Hernandez didn't show.

My plan was to give Hernandez up to one thousand dollars if he would begin talking and then try to convince him to let me keep everything for him in an Agency account until we finally arrange for him to 'disappear'. Otherwise he might be discovered with large sums of money he can't explain. For four nights now I've been waiting for him and if he doesn't show up tonight I'll get Zeke back into action with the surveillance team.

Yesterday the Division D technician arrived. He says he only needs the code pads for a few hours in order to open, photograph and reseal them. That's going to be a neat trick: the pads have adhesive sealers on all four edges so it's only possible to see the top page. But if we get them copied we'll be able to read all their traffic for as long as the pads last.

For me the most important thing is the debriefing on their intelligence operations. Hernandez told Zeke that he knows absolutely everything they're doing here and I believe him. Tonight he's got to show.

Leonel Brizola, leader of the far-left in the Goulart government and Goulart's brother-in-law, arrived here in exile and the Brazilian government has asked that both he and Goulart be interned. If interned they will have to live in an interior city without freedom of movement around the country which would make control much easier. As the most dangerous political leader in the old government, Brizola's leaving Brazil is a favourable development. He had been in hiding since the fall of Goulart. The Rio station wants close coverage of him.

Montevideo 15 May 1964

Something is definitely going wrong on the Hernandez recruitment. From the observation post at the Cuban Embassy I know Hernandez practically hasn't left the Embassy since the second meeting with Zeke Ramirez. For four days the surveillance team and Zeke have been waiting for the signal from the OP in order to intercept Hernandez again for another try. According to the telephone tap on the Embassy Hernandez isn't taking many calls either, and the chauffeur reported today that Hernandez hasn't spoken to him lately. I can't give him special instructions because I don't want him to suspect we have a recruitment going on. Nothing to do but just be patient and keep on trying.

Another nuisance assignment. The Santiago station has a really big operation going to keep Salvador Allende from being elected President. He was almost elected at the last elections in 1958, and this time nobody's taking any chances. The trouble is that the Office of Finance in headquarters couldn't get enough Chilean escudos from the New York banks so they had to set up regional purchasing offices in Lima and Rio. But even these offices can't satisfy the requirements so we have been asked to help.

The purchasing agent for currency in this area is the First National City Bank, ‡ but the Buenos Aires station usually handles currency matters because they have a 'Class A' finance office empowered to purchase currency. As a 'Class B' station we are restricted to emergencies for exchanging dollars for local currency. Nevertheless, headquarters sent down a cheque drawn on an account in the New York City Bank office which I took over to Jack Hennessy, ‡ who is the senior US citizen officer at the Montevideo Citibank. He is cleared by headquarters for currency purchases and had already been informed by Citibank in New York to expect the cheque. I gave him the cheque and he sent his buyers over to Santiago for discreet purchase. In a couple of days they were back -- according to Hennessy they usually bring the money back in suitcases paying bribes to customs officials not to inspect -- and Paul Burns and I went down to see Hennessy for the pick-up. When we got back to the station we had to spend the rest of the day counting it -- over one hundred thousand dollars' worth. Now we'll send it to the Santiago station in the diplomatic pouch. They must be spending millions if they have to resort to this system and New York, Lima and Rio de Janeiro together can't meet the demand.

Montevideo 20 May 1964

The Hernandez recruitment has failed -- for the time being anyway. Today he finally left the Embassy and with the surveillance team Zeke Ramirez caught him downtown. Hernandez refused to speak to Ramirez or even to acknowledge him. The key to the operation now is whether Hernandez told anyone in the Embassy of his first conversations with Ramirez and all the signs are negative. Today, in fact, Hernandez turned pale when Zeke approached him. If he had reported the recruitment he wouldn't be so panicky because his position in the Embassy would be firm. Undoubtedly his fright derives from failure to report the first conversations with Zeke -- meaning that his initial acceptance was genuine. Ramirez will return to Washington tomorrow and we'll let Hernandez get back into his old habits before approaching him again. According to his first conversations with Ramirez, Hernandez's political and cultural orientation is towards Argentina or Brazil rather than the US. Perhaps we will enlist help from the Buenos Aires or Rio stations with a security service penetration agent who could make the next approach in the name of the Brazilian or Argentine government.

Montevideo 23 May 1964

Hernandez has panicked but we'll probably get him after all. This morning I had an emergency call from the Cuban Embassy chauffeur and when we met he reported that when he arrived this morning at the Embassy everything was in an uproar. Hernandez left the Embassy -- he lives there with his family -- sometime during last night leaving behind his wedding-ring and a note for his wife. The Cubans believed he has defected and that he's with us, either in hiding here or on his way to the US. From the worry and gloom at the Embassy the chances are that he took the code pads with him.

I told the chauffeur to stick around the Embassy all day, if possible -- he doesn't usually work on Saturday afternoons -- and to offer to work tomorrow. Then I got the Cuban Embassy observation post going -- we usually close down on week-ends -- and with Holman, O'Grady and Burns we tried to decide what to do. What we can't figure out is where Hernandez is and why he hasn't come to the Embassy. We arranged for the front door to be left open so that Hernandez can walk right in instead of waiting after ringing the bell, and tonight (in case he's waiting for darkness) we'll have a station officer sitting in the light just inside the front door. Somehow we have to give Hernandez the confidence to walk on in. Sooner or later he's got to appear.

Montevideo 24 May 1964

Hernandez is out of his mind. The chauffeur called for another emergency meeting and reported that Hernandez arrived back at the Embassy sometime after daybreak. He's being kept upstairs under custody. Several times yesterday and today the Charge went over to the Soviet Embassy, probably because the Soviets are having to handle the Cuban's encoded communications with Havana about Hernandez. What possibly could have possessed Hernandez to change his mind again?

Montevideo 26 May 1964

According to the chauffeur, Hernandez is going to be taken back to Cuba under special custody -- Ricardo Gutierrez and Eduardo Hernandez, both intelligence officers, will be the escorts. They leave Friday on a Swissair flight to Geneva where they transfer to a flight to Prague.

The chauffeur also learned from Hernandez that when he disappeared from the Embassy last Saturday he went to see his friend Ruben Pazos and they drove together to the Brazilian border. Hernandez had the code pads with him and planned to defect to the Brazilian Consul in Rivera, but the Consul was out of town for the week-end. After waiting a while Hernandez changed his mind again and decided to take his chances with revolutionary justice -- he told AVBARON-1, the chauffeur, that he'll probably have to do about five years on a correctional farm. I wonder.

We've decided to make the case public for propaganda purposes and also to try to spring Hernandez loose on the trip home. The decision to publish came after the Minister of the Interior, Felipe Gil, refused to get the Foreign Ministry or the NCG involved -- Holman told him that Hernandez had been caught trying to defect to us and asked for official efforts to save him. The most the Minister would agree to was a police interview at the airport, in which Hernandez will be separated, by force, if necessary, from his escorts. Through AVBUZZ-1, meanwhile, we'll expose the case as a sensational kidnapping within the Cuban Embassy of a defector trying to flee from communist tyranny.

Montevideo 28 May 1964

The story of Hernandez's kidnapping is splashed all over the newspapers and is provoking just the reaction we wanted. AVBUZZ-1 sent several reporters to the Embassy seeking an interview with Hernandez and they were turned away, adding to speculation that perhaps only Hernandez's corpse will eventually appear.

I've alerted each of the stations where Hernandez's flight will stop on the way to Geneva. So far the stations in Rio de Janeiro, Madrid and Berne are going to take action. Rio and Madrid will arrange for police liaison services to speak with Hernandez and the Geneva base will arrange for uniformed Swiss police to be in evidence while Hernandez is in transit, although forcing an interview is too sensitive for the Swiss.

We hope Hernandez won't get that far. Through the Chief of Police, Colonel Ventura Rodriguez, we have the interview arranged at the airport tomorrow before the flight leaves. Inspector Antonio Piriz ‡ and Commissioner Alejandro Otero ‡ will both be there, and Hernandez will be separated for a private interview in which our police agents will try to convince him to stay rather than face punishment on return. I'll also be at the airport to speak with him if he shows signs of agreeing to political asylum in Uruguay.

Montevideo 29 May 1964

More propaganda but Hernandez couldn't be convinced. At the airport, Gutierrez, one of the escorts, tried to resist having Hernandez separated for the police interview. During the scuffle he pulled out a pistol and was forcibly disarmed. Hernandez, however, insisted that he was returning of his own will and eventually he and his wife and child boarded the flight with the two escorts. So far no news from stations along the way.

This morning before his departure the Cubans recovered somewhat from the adverse propaganda by inviting the press to the Embassy for an interview with Hernandez. Hernandez said he was returning to Cuba because he feared reprisals against his wife and son from certain persons (unidentified) who were trying to get him to betray his country. For the past twenty days, he admitted, certain persons whose nationality he couldn't place were accosting him in the street. They had first offered him five thousand dollars and later as high as fifty thousand. Even with this interview, however, press coverage makes it clear that Hernandez is being returned as a security risk, especially in view of the escorts.

The recruitment may have failed but we have certainly damaged the Cubans' operational capabilities here. The only officers they have left now are the Commercial Counsellor and his wife, and the Charge who we don't believe is engaged in intelligence work. Suddenly they're cut from five to two officers and must use Soviet Embassy communications facilities until they can get a new code clerk. The propaganda, moreover, may have improved the climate here for a break in relations if the Venezuelan case in the OAS prospers. If we didn't get the pads and debriefing, at least we got good media play and disruption.

Perhaps indirectly related to the Hernandez case -- we won't know for some time -- are two very favourable recent developments relating to Cuban intelligence defections. In Canada, a Cuban intelligence officer, Vladimir Rodriguez, ‡ defected a few weeks ago and is beginning to give the first details of the General Intelligence Directorate (DGI) which is housed within the Ministry of the Interior. Headquarters is keeping us up to date on the highlights of debriefings, which must be similar to the first KGB defector because nothing was known until now -- not even the existence of the DGI.

More closely related to Cuban operations in Uruguay is another attempt to defect by Earle Perez Freeman, ‡ their former intelligence chief in Montevideo, who had defected and then changed his mind in Mexico this past January. Perez has just obtained asylum in the Uruguayan Embassy in Havana where three of the four diplomats (the AMHALF agents) are working for the Miami station. One of these, the Charge d'Affaires, is being replaced, but through the other two, German Roosent and Hamlet Goncalves, ‡ the Miami station will try for a debriefing on Cuban operations in Montevideo. Over the week-end I'll compile a list of questions based on what we already know and forward it to Miami for use with the AMHALF agents.

Montevideo 6 June 1964

The struggle within the Blanco Party has reached a new crisis just as labour unrest also approaches a peak. Beginning on 21 May the Cabinet ministers began to resign, one by one, with the Minister of Defense resigning on 30 May and Felipe Gil, the Minister of the Interior, today. From initial concern over the Canelones police case, the Blancos have turned to fighting over assignment of government jobs, and rumours are getting stronger by the day that Blanco military officers are organizing a coup against the Blanco political leadership. So far the rumours are unfounded but we're sending regular negative reports to headquarters based mostly on reports from Gari and Colonel Ventura Rodriguez who are closely connected with the military officers said to be involved in the planning. Holman is hoping to get a new Minister of the Interior who will be strong enough to push through the Public Safety Mission for the police.

As the government grinds to a halt the unions of the autonomous agencies and decentralized services are getting more militant. Two days ago they struck for twenty-four hours for a 45 per cent increase in the budget for the government enterprises, and a twenty-four-hour general strike is already being organized by these unions and the CTU in protest against inflation.

Hernandez returned to Cuba although police agents of the Rio station had another scuffle with Gutierrez when they separated him for an interview alone with Hernandez. Cuban sugar production for this year's harvest was announced (much lower than my Cuban sugar official, Alonzo, ‡ told me) so FitzGerald was probably right. Now I'll have to terminate the safe apartment I used with him. No indication from Madrid yet on results of the polygraph. Miami station reported that getting information' from Perez in Havana may be more complicated than expected because they want to keep Goncalves and Roosen from working together on the case. For the time being they'll use only Roosen, and he only comes out to Miami or Nassau about once a month.

Montevideo 17 June 1964

The Blancos finally solved their crisis. New ministers were announced and other jobs were realigned among the different disputing factions. The new Minister of the Interior is Adolfo Tejera ‡ whom the Montevideo Police Chief, Rodriguez, describes favourably. Through the Chief, Holman will make an early contact with the new Minister using the AVENGEFUL telephone-tapping operation as the excuse and following with the AID Public Safety programme later.

Today practically all economic activity is stopped thanks to a twenty-four-hour general strike, organized by the CTU and the unions of the government autonomous agencies and decentralized services, on account of inflation and other economic ills that adversely affect the workers. Last night, as the strike was about to start, Colonel Rodriguez, ‡ Montevideo Police Chief and the government's top security official, issued a statement denouncing the wave of rumours of a military takeover as completely unfounded.

How different from Ecuador where a general strike is enough to bring down the government. Here traffic circulates freely and almost everyone, it seems, goes to the beach even if it's too cold to swim. Holman, in commenting on the Sunday-like atmosphere, said that Uruguayans are nothing more than water-watchers -- content to sip their mate quietly and watch the waves roll in.

The Brazilian government is keeping up the pressure for action against political activities by Goulart, Brizola and other exiles. Although they have begun to allow some of the asylees in the Uruguayan Embassy to come out, which has temporarily relieved tension, they have also sent a Deputy here for a press conference to try to stimulate action for control of the exiles. But the Deputy's remarks were counter-productive because in addition to accusing supporters of Goulart and Brizola of conspiring against the military government through student, labour and governmental organizations in Brazil, he also said that Uruguay is infiltrated by communists and as such is a danger for the rest of the continent. The Uruguayan Foreign Minister answered later by acknowledging that the Communist Party is legal in Uruguay, but he added that the country is hardly dominated by them.

Brazilian pressures may create negative reactions in the short run but sooner or later the Uruguayans will have to take a similar hard line on communism because the country's just too small to resist Brazil's pressure. As an answer, I suppose, to Holman's resistance on covering the exiles, the Rio station has decided to send two more of its agents to the Brazilian Embassy here -- in addition to the military attache, Colonel Camara Sena. ‡ One is a high-level penetration of the Brazilian Foreign Ministry, Manuel Pio Correa, ‡ who is coming as Ambassador, and the other is Lyle Fontoura, ‡ a protege of Pio, who will be a new First Secretary. Until last month Pio was Brazil's Ambassador to Mexico where, according to the background forwarded by the Rio station, he was very effective in operational tasks for the Mexico City station. However, because Mexico hadn't recognized the new military government, Pio was recalled, and the Rio station arranged to have him reassigned to Montevideo which at the moment is the Brazilian government's diplomatic hot spot. When they arrive Holman will handle the contact with Pio while O'Grady works with Fontoura. One way or another the Rio station is determined to generate operations against the exiles, and Pio apparently is the persistent type who will keep up pressure on the Uruguayan government.

Montevideo 28 June 1964

The Miami station is having trouble getting information out of Earle Perez Freeman, the Cuban intelligence officer who is in asylum in the Uruguayan Embassy in Havana. After several attempts at elicitation by German Roosen, one of the Uruguayan diplomats working for the Miami station, Perez accused him of working for the CIA and demanded that the CIA arrange to get him out of Cuba. He told Roosen that he will not reveal anything of Cuban operations in Uruguay until he is safely out of Cuba.

One of Roosen's problems is that he is unable to pressure Perez very effectively without instructions from the Foreign Ministry here. He denied, of course, Perez's accusation of his connections with us, but is reluctant to proceed without some instructions from his government. Holman agreed that I propose to Inspector Piriz that he go to Miami to provide official guidance to Roosen -- but without Roosen knowing that Piriz is in contact with us. When I spoke to Piriz he liked the idea but cautioned that Colonel Rodriguez, the Chief of Police, should authorize his trip and coordinate with the Foreign Ministry.

Holman proposed to Rodriguez that he send one of his best officers to Miami to work with Uruguayan diplomats who are in contact with Perez in the Embassy, but without revealing either our contacts with Piriz or Roosen. As expected Rodriguez accepted the idea, obtained Foreign Ministry endorsement, and nominated Piriz. In a few days now, Piriz will go to Miami to give official guidance both to Roosen and to Goncalves, the other Uruguayan diplomat in Havana working for the Miami station (Ayala Cabeda had previously been transferred from Havana and was no longer used by the Agency). The Miami officer in charge will be meeting Roosen, Goncalves and Piriz separately, all of which seems cumbersome and inefficient, but we must protect the contact we have with each from being known by the others. In any case Roosen and Goncalves will have official encouragement for pressure against the Cuban intelligence officer. We've got to get information from him before any break in relations removes the diplomat-agents from Havana.

The campaign for isolating Cuba is another step closer to success. The OAS announced that sufficient votes have been obtained for a Conference of Foreign Ministers to consider the arms cache case and the Venezuelan motion that all OAS members still having relations with Cuba break them. Still no sign, however, that Uruguay will support the motion or break even if the motion is passed.

Propaganda against Cuba continues through the AVBUZZ media project. Among the many current placements are those of the canned propaganda operation, Editors Press Service, ‡ which is based in New York and turns out quantities of articles against the Castro government and communism in general, much of which is written by Cuban exiles like Guillermo Martinez Marquez. ‡
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