OUTLINING EVENTS AFECTING SECURITY OF PBSUCCESS (W/ATTACHMENTS)

Created: 4/22/1954

OCR scan of the original document, errors are possible

Outlining Erentfl Affecting Security of PBSUCCESS

Oningle engine Ceasna aircraft, piloted by Walteroata Rlcan, carrying aa paeaengers Jorge Delgado, Panamanian Coimnercial Attache acredited to Nicaraguars. Thelma Hand, landed at San Julian military airport near Ouane, Cuba. Although Delgado claimed diplomatic iiwunlty, his effects and those of his companions were examined byof the Cuban Servicio de Inteligencia Kilitar. The examination reveled documents pertaining to tbe political aituation in Costa Rica and Guatemalan, anti-government, anti-conmuniat propaganda Including ooples of the CEUACE bulletin. Undor questioning by Cuban officials, Delgado claimed that ho waa asaociated. Intelligencelose friend of President Remon of Panama and Somoxa of Nicaragua. He further stated that his work was being accomplished through closebetween tbe governments of the United States, Panama and Nicaragua, that ho had previously delivered to Washington documents proving that President Arbens of Guatemala0 monthly from Russia, and. sponsored revolution would take place in Guatemala within sixty dayn.

The Delgado party was permitted to leave Cuba, en route to Miami on tne sane day.

It is known that Delgado was serving at the time asfor RUFUS and that tho documents he carried weredelivery to were to be forwarded by

was then in tbe United States.

The extent to which Delgado's allegations were believed or dig geminated has not been determined.

The first contacttaff employee of CIA with anythe Guatemalan anti-Communist revolutionary proup occurredwhen acover to

establish contact and maintain naiaon with the .iccctTTedthat group,were to work through

the principal agent, RUFUS, and, to our knowlodge, thesefaithfully carried out. There ie no record

having met members of RUFL'S1 staffecision wasNovember3 to go beyond the principal agent becauseparamilitaryof the newly conceived PBSUCCESS. ember of RUFUS' staff.

Delgado was unfavorahtv Vnown to Headquartersarning had been sent through^, UFUS. Delgado was present when tho first black flight arrived on LU January at Managua. He also

assisted with the establishment of certain training campsicaragua. There were oeveral meetings between jaud Delgado in3 endk, until almost the very day lt was learned that Delgado had aold out to the Guatemalan Govern-montum reported to

There waa no revelation ofbeen uncovered

until the release of the White Paper which named him as an American organiserlot to overthrow tbe government, and attempted to tie the affair to. Government (and later, instead. indivldnale) by reason of his former Army commission. The White Paper led us to tha conclusion tbat the Guatemalans had in part confused PBSUCCESS with Idigoras Kueater, and probably with the activities of Luis Arenas. Delgado left the acene end presumably had ne direct contact with PBSUCCESS elements. We do not know if he had other sources around RUFUS and therefore cannot be certain that be ceased to operate, he waa reported in mid-April to be in Guatemala.

The information available to Delgado was sufficient to afford the Guatemalans of the identity of many of the leading PBSUCCESS (indigenous) personalities and to make it possible to attempt CE penetration by bribe or pressure on families. It was apparently sufficient to lead them to think that tho Americans were behind it.

Among additional information not included In thoand to which Delgado presumably bad access, wereof five PBSUCCESS cables which are known tofromroom (to which Delgado had

a key; in Managua, and were returned several weeks latergear from the apartment bouse

owned

Priordeparture he waa not in subsequent

contact with Kaul Sierra (Sequeda, Secaira) who was RUFUS1 principal representative in the Managua area, and in whose headquarters Jjeft copies of his own planning papers.

J has reported that it was during this period that Sierraaily operational log. Presumably this loginformation on all activities of the RUFUS' group in Nicaragua. Sierra, accordingolygraph report ia, "according to the polygraph, Secaira is an enemy agent". There can be no doubt that Sierra had access to documentary evidence regarding the RUFUS group, but not. involvement up to the tine of bis isolationpril. lie waa also reported by ESSENCE to be an agent of the Ouatemalan governnent.

Sierra vaa perhaps the best informed man on CALLIGHUS' operations in Nicaragua. It is pertinent to note that ROFOS does not accept tbe polygraph evideneo since he has suggested that Sierra be repolygraphed and that CALLIGERIS personally conduct the interrogation*

was

ffleAray, was arrest ea at the tiae of tTS release of the White Paper aad eeverely interrogated. Polygraphconcludos that he is not disloyal or an enemy agent. There is no indication, however, that the questioning was addressed to what he mav have revealed when under nuateaalan Interrogation olygrapheneral questioning did not reveal what was later uncovered on He is now being used by RUFUS in Hondurashis release. He aay well be under surveillance, and in this regardedium for identity of other individuals possibly leading to development of penetration.

Onh Ocana and Arenas talked to State Department officials in Washington but were not promised aid. After seeing Senator McCarthy, one or both talked to Teres Oil and some unidentified shipping people to whom one or both promised (in the event) special oil and dooldng concessions. Arenas also approached Ambassador DeHoya, and having advised DeMoya that he had backing to overthrow tbe government, was offered arms and aid by DeHoya. Ke refused this saying bis backers were furnishing then with plenty of both, it was clearly evident at an encounterUBARK Staff Officer with DeMoya that the latter had been convinced by the Arenas meeting that. Government was behind Arenas. It is probable that the Arenas-Oc ana activities were known in part to the Guatemalans, who, heretofore could. implication. Arenas is now working for RUFUS, and may without any reservations be stated torime and sustained target of surveillance by tho Arbenz people.

Thie^establiBbmeat came under hoavy surveillance, which according to SECURITI resembled the activitiesatin Anorican intelligence outfit. While the foregoing inference le subjective and cannot be advanced as evidence, it is at least known that tho FBI was not responsible for the surveillance.

The Safe House was immediately closed. The significance of this event is that unknown agents were active in the LINCOLN area and had the possibility of identifying and following some LINCOLN personnel.

Two trainees at Scran ton hare behavedashion such as to raise doubts aa to their motivation and possibly loyalty. One in particular is known to have been in the past connected with the Costa Rican Communist Party. Field reports on thie are not yet closed out.

In early April Lt. DTIlcaraguan immigrant officer, took asylum in the Ouatemala Embassy in Nicaragua. By this the Guatemalans may have widened their knowledge of tho current operational situation in Nicaragua. Whether DUARTE wasof para-military and communication training areas is not known. In fact the extent of his knowledge is not known. However, be may have knowledge of arrangements for tho black flights, cargo contents, nationality of crews and that Americans were coming into Nicaragua. communications people for SHERWOOD. This la at beat highly speculative. We do not know that be could or could not have substantial evidence. implication.

Onarch, Enrique IfjRENZANO was stopped Just prior to his take-off from the Ouatemala City airport destinationolice search of hia baggage turned up several letters to RUFUS. On the afternoon ofuatemalan newspaper mode mention of the Episode.

CADICK ondvised that he ia convinced that Idlgoras FUENTES can and will make some move designed to counteract RUFUS if dropped unceremoniously, ^digoras FUENTES in all probability has boon able to require reasonable but not necessarily conclusive information as to the operation. It Is probable, however, that he would not find it to his advantage to. complicity.

An important question is whether RUFUS ie aware ofbacking of PBSUCCESS. We may assume he believesto believe it. Two specific instances, however,of note. First, when RUFUSrip to theend of January, ho carried withotter from

to be delivered to LINCOLN. The lotter was addressed as follows:ass to Director. Second, some weeksackage of photographic material was passed to RUFUS byopy of the pouch manifest was left with material. Tne document contained on its face the statement "Via Diplomatic Courier". In thc absence of inforaatlon to the contrary we must assume that RUFUS has maintained secrecy despite the fact that allegations as. backing would increase his prestige. The question of the likelihood of revolations or allegations by RUFUS is not likely to be raisod except in the event that the operation works to his personal disadvantage by reason of some action takon by SWCAK?.

While It le LINCODJ'b expressed opinion that theIs Misleading in giving as lt did tbe initialAmbassador Willauer, by virtue of his officialto President Oalvex of Honduras and his ataff thesupport of tbe United States Government in PBSOCCESSare not able categorically.to satisfy ourselves that theAmbassador Willauer*s'activities may not hove done Justexample, lt vas reportedpril by the Ambassadorreferred openlyiscussion relating to

pfouxfcSS to the Ambassador; it waa the Ambassador'athat Calvex now knows, although he cannot proveAmbassador ie supporting the operation. Anothercould. involvement in the minds ofla the statement by tha Colonel who met the Apriland who at tbat time said ln effect tbat tben the future, be notified of ETAs. It must bethat this probable situation did not occur as aSkillet Initiating unwise improvisations for on Aprilthat he had watched tbe Ambassador

go oulHuvuti Sab'fW CIA at tha request ofmost reoent word received April IS

Tegucigalpa, is that tbe Aabasa*'inr hanireocontact and -that

he is not to consult tbe Ambassador furtber on this matter. (We infer generalo have no reason to believe this Information, if correct, is in Ouatemalan hands.

On Aprilmbassador Willauer for the first time advised headquarters that prior to his arrival that according to Honduran sources, Guatemala is generally aware of our plans and that (query) had. Government backing to the extent that lt was understood by everyone.

on Aprileported that to its best

knowieage omy Known persons witting of flight arrival. The following morning the landing of an unmarked piano was reported by CAA to tho Ambassador. We may infer that mere than tho known or tho trusted persons aro aware of an unmarked plane's arrival.

As ESSENCE report of Aprildvised of several people who wore unreliable, and of at least one who was possibly an enemy agent. Preaumably these people were in the ESSENCE organisation. On Aprilhe police moved rapidly against the implementation ofrogram" and broke it op and forced fiJtrtce. Kaemara into hiding. This indicates that the Guatemalans still enjoy penetrations although the possibility that this waa a

normal police patrol cannot, on the basin of firsteliminated. In any case it is evidence of theirrepress. The; have also shown ability to make mostingress of printed propaganda. Their ability ingiveood opportunity to collecton RUFUS1 operation, and as longre operating in tbe area, they have the opportunityabducting and obtaining from then proof of Even now it is possible that ESSENCE'S trail ^cannot be dismissed since ESSENCE

are believed to have met on numerous occasions in thepartment which Is now ESSENCE'S refuge pending his exfiltratlon.

CONGIDSION

The foregoing report is baaed on material, largely cable traffic, available st Headquarters. Day to day cable traffic can be misleading as to conclusion. Altogether this information and possibly our total knowledge are insufficient by desirable standards to permit the drawingonclusion of the sort required if clear security is the first prerequisite to the continuation of tbe operation.

From the information avaisble, ve may conclude that we do not.now know any case of documentary evidence. Government implication to be in enemy hands. essor degree can we say we do not believe the enemy has evidence of American Implication. It is highly probable that the enemy and Soviet Russia have information which leads them to conclude that the Americans, and probably. Government, le involved. If thia is the case, we may assume that most professionalare under way to acquire proof of this. We have been, are now and will continue to be vulnerable to being caught in the act as long as we have our people in the areas in which the Cuatamalans can opemte. Nor will withdrawal of such people at this time write off the damage that may have been done, nor will it cov er up traces that can be discovered by future Guatemalan penetrations. The conclusion that we do not know of real evidence in the hands of the Guatemalan government does not lead us to conclude that their possession of it is unlikely. Finally, we must ask ourselves where we might expect to be now bad PBSUCCESS been an enemy operation against us and we in possession of the opportunities the Guatemalans have enjoyed for the last months.

Given the known susceptibility of Latin Americans to bribery as abundantly practiced by Arbenz, we cannot be certain that our best efforts, including the use of the polygraph, have eliminated all past or can prevent future penetrations- iscouraging factor ia this.is Arbens apparent unwillingness to doubt his own people. (Unfortunately this attitude which is almost essential to leadership, has been the downfall of many attempted revolutions.)

While we can honestly state that to the best of our knowledge the TS.S? Government ia not specifically compromised, we have to face the lass simple question which relates to the pattern ofin tba enemies' hands today, and the pattern that will unfold as the operation proceeds. We cannot but conclude that the total of this does or will equip the enemy with the msakinEa^redible case against the Americans who are in many peoples minds synonymous with. Governnent. actor In this is, or will be, what the Latin American countriea desire to belisre.umber of countries are now satisfied that we are behind the effort, but some of these countries are and will be pleased rather than alarmed by that. Mexico and the Argentine* on the other hand, were apparently satisfied at Caracas that we were to some degree behind it, and they will be more convinced after the operation goes forward.

The pattern is probably even now convincing to those who want to believe in ournd the effect of this on Latin.ill depend on how far those countriea desire to press the matter and to propagandise their own people. Those areas of the world which are affected by International Communism will believe in our complicity. Other areas will be confused, and still others will accept our compile iy, and take cheer from it. With the sure exception of Mexico and The Argentine, and possibly of Chief, Uruguay and Bolivia, the Latin American countries will probably notevolution in Quatemala as worth displeasing.

Tho conclusions herein as to enemy knowledge and evidence-bis hands, are at best speculative. Theyareful appreciation by LINCOLN where information and knowledgeind that often alters the emphasis of conclusions reached on fragmentaryis available. It is recommended that LINCOLN in addition,tudy of recruitment history of people used In the field in order to assure they connot be traced to this or otheragencies.

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Part Two

Enemy Intentions

Our estimate at Headquarters of enemy intentions is restricted to speculation by reason of our having no penetrations from whichtudjshould be made.

It is further complicated by our inability clearly to define theiddles as Arbenz1 day to dayhe feels tho pressurewhether the Soviets are givingthe degree of the coalescence of the army's attitude, and by the attitude of the possibly armed civil cadres.

Given reasonable assurance of their own strength, the enemy nay be expected to move vigortously at the moment he feels tha movement against him to be imminent. He will have at least two weeks warning. The resultant repressive move could give him whatever evidence he may lackood case at OAS.

If, on the other hand, he cannot depend on his strength, he may be expected to try to decamp, either in flight or byhange of government, that would confuse the situation generally and improve his position at OAS.

There may wellelation between the enemy's current or expected intelligence and his intentions*

While because of lack of adequate sourceave not been able toull SCI appreciation of events following tbe issuance of the WWhlteind my mind turning frequently toypothesis which is visionary, not built on established facts, but which is reasonable in light of known Communist tactics, end for that reason meritsew moments reflection.

We can be fairly sure now that the White Paper was put togetherery few days, perhaps asimeours. There is some reason to believe that the Guata feared an imminent attack and struck out defensively with the White Paper. ery few days, however, they began to pull back. Our propaganda in this connection immanently successful, convinced many people that the Papers were forged and Arbens hadup. or one, do not knew why they pulled back. We have good reason to believe that they had much more information than they made point of. an say with complete conviction having been at Caracas, that they could have done much more damage to us there than they attempted. Thoy could haveong step toward the isolation of the United States. Why didn't they do this? Could it be that they are playing for bigger stakes?

These questions lead me to wonder whether the falling back from the White Paper may haveeversal of decision. eversal of decision perhaps brought by Soviet advisors who moved in upon the frightened Guatemalan Whito Paper and saw in the situation bigger and better game.

Such' gaae could come in several varieties. One would be to let the operation runoint while demonstrable evidentiary and "once and for all" proof of ODTQKE complicity/parentage could bo obtained. Another could be to enable Guatemala to find itselfosition of proven encirclement from which to strike out against ita neighbors. This wouldold blow for domination of Central America. Even if it failed tne blood of the "people" would have been spilled allegedly in an attempt to prevent tho reduction of Guatemalatate of vassalage to the economic imperialism of the united States. That for world propaganda and Latin American emotions wouldoscow victory. And if it succeeded to an extent that the united States would have to intervene in the traditional sense, that too wouldoscow victory.

Whether anyone finds tho above hypothesis noteworthy or not, wo still will have to find tho nnawcr as to why somebody iaUCCESS run, because the number of known penetrations have in all probability obtained enough information to permit the use of this informationair certainty of frightening ODYOKE into calling off theifote again) that is the objective of the other side.

If be is confident of his strength, and even if he is insecure, his leaders would not hesitate to suffer bloody strife if it would soon this year orears from now to prosper the advance of Communis* into an area which once ined would have gone far toward the essential Moscow alternative toIsolation of the united States.

In this paper, it ia indicated that ve are unable to clearly define the enemy, and yet by Implication the enemy is understood to be Mb scow(International) Co-minium. elieve thart ood deal of confusion of thinking about PBSOC^SS vill arise if ve do not^define the enemy as theflinrjaQnl BX Ouitnimla.ool of International conrnuniam. Now then, it ia poeaible to further analyze some of the question raised In the

The eneap(Arbens Govt) villreditable case against tho DS as the operation roaches its concluding (if the operation is successful) the enemy will be In no position to use tbe case, end the caseybe destroyed.

Nov then, in Latin America, there will be all shades of opinion in the various countries, but official action by any of them can come to nought since the new government in Guatemala will not be supported by the presence of OS railitaay foroos, nnd the local(naw) government vill keep up continuing exposur^ee of post Communist control of the government to keep opinion from crystal lzlng against the OS.

The alarm of some governmenti will probablyood thlnfr in that they will hive an increasred respect for OS poverT#vbich,as in this case,*is not exactly spelled out andind of vague threat In case the government

sufficiently dispenses "heo bringlandestine effort against them. In addition the impCTlolism thomo has been used to the noint where it is pretty ragged and 'he-e is little additional harme done by furtlier nropfgs'nda claiming "clandestine imperial!Ism is upon us".

Restating the questinn in the next to lastis Arbenz letting PBrTJCCESS run? The questionbe stop it? Did the white papr ?top it? If he revealed all he knew-san blew ell his penetrations and sources, would he have stonred it? Ko^lndeed.he would not. He vou'd probably have found himself In nn evenposition without neny vn'uaMe sources of information.

In the last aiwlynis , ArbenzhaveTupon force' to counter

tho forcers being trulled togetherSUCCESS.ymirhe my feel that he oan' uao an attempt against his governmenteans of getting rzld of loea loyal arary por-onnel, ond of tightening his grip upon thebefore the co-ing elections, and that ho world ratherhowdown now than latter.

If it is true that he haa rteveral pood penetrations into PBSUCCESS, then he ray feel fully confident of bolng able to suppress thewith the failruehe Somoza attempt ao clearly *efore him this looks easy.

WtttHl RegBrd'ng the point of frightening the U" out of the operation! Why should he think that he could frighTen the US out of it? The white paper did not do it. If Arbenz lo not aure that the US government lapossibly only OS citizens, would that make him want to blame the US now?

is easier to answer thepe questions fairly firmly if we conceive of Arbenz as the enemy rather thanof course, we should not forget that it la tbe international cocmwist tie-in that we arotrying to break up.

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