Part 6: Inside The Company...CIA Diary 2/8/1964- 8/21/1964

By Philip Agee

Part 3

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  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 sit down 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 Peronist's 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. 

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: 

PRIORITY A 
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. 

PRIORITY B 
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. 

PRIORITY C 
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 sub miniaturized) 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 OP 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 counterintelligence 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. 

SOVIET ACCESS AGENTS 
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 spaceused 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. 

SUPPORT AGENTS 
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.

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.[Police Chief must have gone to the FBI school of setting people up. DC] 

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 nonintervention 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 CSU 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. ‡ 

Montevideo 15 July 1964 
The coup rumours have subsided since the general strike last month but several strikes have continued. Headquarters sent down a strange dispatch that Holman believes is a prelude to getting back into political-action operations. According to him the dispatch, although signed as usual by the Division Chief, was actually written by Ray Herbert ‡ who is Deputy Division Chief and an old colleague of Holman's from their days in the FBI. In rather ambiguous terms this dispatch instructs us to expand our contacts in the political field to obtain intelligence about political stability, government policy concerning activities of  the extreme left, and possible solutions to current problems such as constitutional reform. Holman believes that Herbert deliberately did not mentioned political action operations (as opposed to political-intelligence collection) but that the message to prepare for renewal of these operations was clearly implied. 

For preliminary organization Holman has given me the responsibility for reporting progress and for developing new political contacts. He will increase somewhat his meetings with Mrs. Nardone and with Gari and soon will introduce me to yet another Ruralista leader, Wilson Elso, ‡ who is a Federal Deputy. We will not make contact with the other principal Ruralista leader, Senator Juan Maria Bordaberry, because he is already in regular contact with Ambassador Coerr, and Holman wants no problems with him. The importance of the Ruralistas is that they have already announced support for constitutional reform in order to return Uruguay to a strong one-man presidency. The other parties are openly opposed to such reform. 

*** 

In addition to the Ruralistas, Holman asked me to arrange with one of the legitimate political section officers to begin meeting some of the more liberal leaders of the Colorado Party, mainly of the List 15 and the List 99. These two factions will be in the thick of the elections coming up in 1966, and they also constitute an attractive potential for access agents in the Soviet operations programme. 

For purposes of political reporting Holman will also have his new contact with Adolfo Tejera, ‡ the Minister of the Interior with Colonel Ventura Rodriguez, the Chief of Police, and with Colonel Carvajal, Chief of Military Intelligence. For the time being he will refrain from re-initiating contact with Colonel Mario Aguerrondo ‡ who was Rodriguez's predecessor as Chief of Police and a close station liaison collaborator, because Aguerrondo is usually at the centre of rumours of a move by Blanco military officers against the government. Also O'Grady will meet more regularly with Juan Carlos Quagliotti, ‡ the wealthy rancher and lawyer who is active in promoting interventionist sympathies among military leaders. 

In discussing expansion of political contacts Holman said we have to be very careful to avoid giving the Ambassador any reason to suspect that we're getting back into political-action operations. When the time comes, he said, the decision  will be made in Washington and the Ambassador will be informed through department channels. 

This is bad news. All the work with political leaders in Quito only emphasized how venal and ineffectual they were and in Uruguay the politicians seem to be even more so. I couldn't be less enthusiastic. I don't want to cultivate senators and deputies—not even for the Director. 

Montevideo 20 July 1964 
Another purchase of Chilean currency at the Montevideo branch of the First National City Bank for shipping by pouch to the Santiago station. This time the Finance Officer who is in charge of the purchasing operations in Lima and Rio came to Montevideo to assist in the pick-up from Hennessy ‡ and to count the escudos afterwards. This one was also worth over 100,000 dollars and, according to the Finance Officer, is only a drop in the bucket. He says we are spending money in the Chilean election practically like we did in Brazil two years ago. 

We've had serious trouble in the AVENGEFUL/AVALANCHE telephone tapping operation. AVOIDANCE, ‡ the courier who takes the tapes around to the transcribers, reported to Paul Burns, his case officer, that a briefcase full of tapes was taken from the trunk of his car while he was on his rounds making pick-ups and deliveries. AVOIDANCE has no idea whether the tapes were taken by a common thief or by the enemy. Although he claims he has been very careful to watch for surveillance (negative), the chances are that the tapes will be listened to, even if only stolen by a thief, in order to determine saleability. 

After a discussion with Holman and Burns, I advised Commissioner Otero and Colonel Ramirez, Chief of the Metropolitan Guard, that we had lost some tapes and believe all the lines except the Cuban Embassy should be disconnected. Ramirez agreed that the Cuban line should be retained because of our coming OAS meeting and the possibility of a break in relations with Cuba. He is also going to keep several of the contraband lines in operation for cover, although there is no way of denying the targets of the lost tapes. 

For the time being AVOIDANCE will be eliminated from the operation although he will go through the motions of a daily routine very similar to normal while continuing to watch for surveillance. The tapes of the Cuban line will be sent over to the station with the daily police intelligence couriers and we will give them to Tomas Zafiriadis ‡ who is an Uruguayan employee of the Embassy Commercial Section. He will serve as courier between the station and his wife (AVENGEFUL-3) ‡ who transcribes the Cuban Embassy line. His wife's sister (AVENGEFUL-5), ‡ the transcriber of the PCU Headquarters line, will also help on the Cuban Embassy line since her line is being disconnected. Using an Embassy employee like this is-against the rules but Holman is willing to risk the Ambassador's wrath to keep the Cuban Embassy line going. 

Montevideo 25 July 1964 
News is in that the OAS passed the motion that all members should break diplomatic and commercial relations with Cuba and that except for humanitarian purposes there should be no air or maritime traffic. It took four years to get this motion passed—not only CIA operations but all our Latin American foreign policy has been pointing to this goal. The countries that still have relations, Chile, Mexico and Uruguay, voted against the motion, while Bolivia abstained. Whether Uruguay or any other of these countries honour the motion or not is another matter but headquarters' propaganda guidance is certain to call for an all-out campaign to force compliance with the motion. 

Perhaps with the vote to break relations the AMHALF agents in the Uruguayan Embassy in Havana, Roosen and Goncalves will be able to get information out of Perez Freeman. Even with the assistance of Inspector Piriz in Miami, the Uruguayan diplomats still were unable to exert enough pressure to force Perez to begin talking about Cuban operations in Montevideo. We need the information to support the campaign for a break by Uruguay with Cuba through Perez's revelations of Cuban intervention here. We could alternatively write our own document based on a little fact and a lot of imagination and attribute it to Perez, whose presence in the Embassy is public knowledge. Such a document could backfire, however, if Perez had actually been sent by the Cubans to seek asylum—this suspicion grows as he continues to refuse to talk—because after the document was surfaced Perez could escape from the Embassy and issue a public denial through the Cuban authorities. For the time being Inspector Piriz will return and we will hold up the false document project until we see how our media campaign progresses without it. 

Station labour operations limp along with Jack Goodwyn ‡ and the AIFLD ‡ in the lead. This week we had a visit from Joaquin (Jack) Otero, ‡ the representative of the International Transport Workers' Federation ‡ (ITF) who worked with me in Quito last year. Otero is now the chief ITF representative for all of Latin America and the Caribbean, and he came to assist in a boycott against meat exports by non-union packing plants. The hope is that his assistance will help strengthen the democratic unions involved. 

Agency-sponsored trade-union education programmes through ORIT are being expanded. Through the ICFTU International Solidarity Fund, headquarters is pumping in almost 200,000 dollars to establish an ORIT training school in Cuernavaca. Until now the ORIT courses have been limited by the space made available in Mexico City by the Mexican Workers' Confederation ‡ which is the most important ORIT affiliate after the AFL-CIO. Opening of the Cuernavaca school is still a year or two away but already the ORIT courses have become an effective combination with the AIFLD programme in Washington. 

As if we don't have enough problems with Argentines, Paraguayans and Brazilians now we have Bolivians to worry about. A week or so ago the new Bolivian Ambassador, Jose Antonio Arce, ‡ arrived and the La Paz station asked that we keep up their relationship with him. He has been in and out of various government jobs since the Bolivian revolution, most recently as Minister of the Interior when he worked. closely with the La Paz station. Holman will be seeing him from time to time, probably no more than is absolutely necessary, so that when he returns to La Paz this important supporter of President Paz Estenssoro can be picked up again for Bolivian operations. 

Arce's main job here will be to watch the supporters of former Bolivian President Hernan Siles Suazo, and Siles himself if he settles in exile in Montevideo as is expected. Siles aspires to succeed current President Victor Paz Estenssoro in keeping with their custom, since the revolution of 1952, of alternating in the presidency. Paz, however, against the tradition, was re-elected in May and must now contend with Siles's plots against him. The La Paz station is anxious to prevent Siles from returning to the presidency !n Bolivia because of his recent leftward trends, and his friendly relationship with the Soviets when he was Bolivian Ambassador in Montevideo during 1960-62. As an initial move to support the La Paz station I have asked Commissioner Otero, Chief of Police Intelligence, to make discreet inquiries about Siles' plans among his political friends and to watch for signs that he will be settling here. 

Montevideo 11 August 1964 
Uruguayan compliance with the OAS resolution on Cuba looks very doubtful. The Foreign Minister on his return from Washington announced that the NCG will now have to decide whether the OAS resolution should be passed to the UN Security Council for approval before it can be considered binding. This is only a delaying manoeuvre to avoid a difficult decision but the most damaging developments are that Mexico has announced that it will ignore the resolution and Bolivia is undecided. Unless Uruguay can be made to seem isolated in its refusal to break, the chances are not good. Moreover, although we have intensified our propaganda output on the Cuban issue through ABBUZZ-1 considerably, it's no match for the campaign being waged by the extreme left against breaking relations, which has been carefully combined with the campaign against the government on economic issues. 

Today the National Workers' Convention (CNT), formed only a week ago as a loosely knit coordinating organization of the CTU and the government workers, is leading another general strike. Again most of the country's economic activity has stopped: transport, bars, restaurants, port, construction, wool, textiles, service stations, schools and many others. The strike was called to show support for continued relations with Cuba, admittedly a political purpose, but not unprecedented in Uruguay. 

Apart from the strike today, the formation of the CNT is a very significant step forward by the communist-influenced trade-union movement, because, for the first time, government workers in the Central Administration (the ministries and executive) and the autonomous agencies and decentralized services are working in the same organization as the private-sector unions of the CTU. With continuing inflation and currency devaluation (the peso is down to almost 23 per dollar now) the CNT will have plenty of legitimate issues for agitation in coming months. Besides the Cuban issue the CNT campaign is currently targeted on pay rises, fringe benefits and subsidies to be included in the budget now being drawn up for next year.

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Montevideo 21 August 1964
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