Created: 12/5/1958

OCR scan of the original document, errors are possible



The Batista Government is losing ground in its two-year-old campaign against therebels, now estimated at. Cuban Army, with0 troops in Oriente Province, has failed to contain the rebel drive.

rebels have successfully blockaded Santiago,and other cities in Oriente, causing severeprovisions and hindering government military operations.

transportation and communications are almost atand air transportation is disrupted.

areas are completely under rebel control exceptmilitary outposts alternately held byarmy.

rebels have demonstrated their control oy forcingof water supply to US Naval Base at Guantanamo.

activities have also increased inVillas and Pinar del Rio but have been limitedattacks on transportation and communicationsscattered acts of

One of the most serious results of increased rebel activity is the threat to Cuba's economy.

A. Rebels are interfering with important su^ar and coffee

harvests, especially in Oriente, and interdiction ofis hindering shipment of ail products in and fron Oriente.

capable of preventing shipment of largesugar crop, possibly as much

demands and operations against industries andOriente, including US interests, have forced manyand> curtail operations and some to close down.

P. Nicaro nickel temporarily curtailed mining operations

following evacuation of US employees late October and is discussing whether to close down entirely. Texaco has lost domestic markets because of transportation problems, is losing much money and may have to close down.

E. Cuban Army activities havo also adversely affected business and industry.

1'. Government expenditures to support the campaign are becoming

a drain on the economy, and unsettled conditions are naving

an adverse effect on business and tourism. C. The econorjc reversal is causing unrest among coroercial and

business circles which, because of relative praperlty in past,

had supported tneContinuing political and economic deterioration andare causing serious disaffection within

A. Some high officers are concerned over tho effects of prolonged

civil war on their own careers as well as on the country.


HE /srot pxcpP>h& Hc*aut /a,

Unrest in lower ranks has been highlighted by the arrest onovember of several junior officers lor "conspiracy" against the government. Unrest has resulted from Army refusals to engage in coubat against the Castro rebels and by numerous reports-of defections to the rebels by troops in Oriente Province..

Outlook: Under present conditions,prospect forpeaceful solution and'rebel activity will continue to B Castro's

campaign probably cannot overthrow government

tv-hjnrt, Cuban Army cannot suppress guerrilla movement. & But Cuban armed forces remain most important element for breaking political deadlock. roup within military likely to undertake coup if there is sharp increase in popular or labor opposition to the regime. 1. lan is believed already under consideration by

somo high Army officersolitical organization

known as the "Montecristi" group.

Original document.

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