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INSIDE THE COMPANY: CIA DIARY

Part Three

Washington DC 8 February 1964

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

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

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

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

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

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

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

Washington DC 10 February 1964

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

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

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

Washington DC 12 February 1964

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

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

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

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

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

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

Miami 14 March 1964

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

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

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

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

Montevideo 15 March 1964

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

Montevideo 18 March 1964

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Montevideo 21 March 1964

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

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

The Communist Party of Uruguay (PCU)

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

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

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

The Uruguayan Workers Confederation (CTU)

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

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

The Federation of University Students of Uruguay (FEUU)

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

The Socialist Party of Uruguay (PSU)

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

The Uruguayan Revolutionary Movement (MRO)

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

Trotskyist and Anarchists

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

Argentine Exiles

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

Paraguayan Exiles

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

The Soviet Mission

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

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

The Cuban Mission

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

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

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 subminiaturized) into identical porcelain wall sockets of their own manufacture. The Minox photographs of the conference-room sockets were also needed so that the slightest details of painted edges and drops can be duplicated on the bugs being cast at headquarters. Installation will consist simply in removing the current sockets and replacing them with those cast by TSD. If successfully installed the stereo audio signal will be transmitted down the electric power line as far as the first of the large transformers usually located on utility poles.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 space-used basis and the articles are usually published as unsigned editorials of the newspapers themselves. O'Grady is in charge of this operation which he works through Brooks Read who deals directly with AVBUZZ-1. All told the station can count on two or three articles per day. Clips are mailed to headquarters and to other stations for replay.

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

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

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

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

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

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

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

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.

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

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

Montevideo 1 April 1964

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

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

Montevideo 3 April 1964

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

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

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

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

Montevideo 5 April 1964

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

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

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

Montevideo 18 April 1964

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

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

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

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

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

Montevideo 24 April 1964

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

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

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

Montevideo 2 May 1964

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

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

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

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

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

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

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

Montevideo 5 May 1964

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

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

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

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

Montevideo 10 May 1964

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

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

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

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

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

Montevideo 15 May 1964

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

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

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

Montevideo 20 May 1964

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

Montevideo 23 May 1964

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

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

Montevideo 24 May 1964

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

Montevideo 26 May 1964

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

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

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

Montevideo 28 May 1964

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

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

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

Montevideo 29 May 1964

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

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

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

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

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

Montevideo 6 June 1964

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

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

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

Montevideo 17 June 1964

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

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

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

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

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

Montevideo 28 June 1964

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

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

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

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

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

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 reinitiating 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.

Montevideo 21 August 1964

Through the AVBUZZ media operation we're getting editorials almost daily calling for Uruguayan compliance with the OAS resolution to break with Cuba. President Alessandri in Chile has done this already, instead of waiting until after the elections. Today Bolivia announced it is breaking in accordance with the resolution, leaving only Uruguay and Mexico still with ties to Cuba.

The NCG will surely buckle under such isolation, but getting decisions here is cumbersome. On important matters, the majority NCG members decide their position only after prior decisions within each of the Blanco factions represented on the NCG. Likewise the Colorado factions must decide. Eventually the NCG meets to formalize the positions taken by each faction earlier and a decision may emerge. In the case of Cuban relations the Foreign Minister has yet to present his report on the OAS Conference and related matters even with a month already passed since the Conference.

For additional propaganda, we have arranged for Juana Castro, ‡ Fidel's sister, to make a statement favouring the break during a stopover next week at the Montevideo airport. She defected in Mexico this June and is currently on a propaganda tour of South America organized by the Miami station and headquarters. We'll get wide coverage for her statement, and a few days later still another Miami station agent will arrive: Isabel Siero Perez, ‡ important in the International. Federation of Women Lawyers, ‡ another of the CA staff's international organizations. She'll describe the Havana horror show and emphasize the Soviets' use of Cuba as a base for penetration throughout the hemisphere.

Montevideo 31 August 1964

The Montevideo association of foreign diplomats recently held their monthly dinner and Janet and I went along with several others from the Embassy. By chance we began a conversation with two of the Soviet diplomats and later joined them for dinner. I wrote a memorandum for headquarters on the conversation -- one of the Soviets, Sergey Borisov, is a known KGB officer -- and Holman later asked me to keep up the contact and see if Borisov is interested. Russell Phipps, ‡ our Soviet operations officer, isn't the outgoing type and Holman is clearly not pleased with Phipps's failure to recruit any decent new access agents.

I'll go to the diplomatic association meeting next month but I'm not keen on getting deeply into Soviet operations. Just keeping the telephone transcripts analyzed and the files up to date is deadly dreary and requires far too much desk work. We shall see if Borisov is interested in continuing the contact -- he's the Consul and lives in the Soviet side of the AVERT house.

I decided to try another Cuban recruitment with the possibility that the spectre of a break in relations might help us. The target was Aldo Rodriguez Camps, the Cuban Charge d'Affaires in Montevideo, whose father-in-law is an exile living in Miami. Last year the Miami station sent the father-in-law, AMPIG-1, ‡ down to Montevideo to discover the political views on Castro and communism of the Charge and his wife. He felt from his conversation that neither seemed to be particularly ardent communists although they were clearly loyal to the Cuban revolution. At that time it was decided not to try for the recruitment or defection of either Aldo or Ester but to wait for a future date.

At my request the Miami station proposed to the father-in-law that he come back to Montevideo as soon as possible for a more direct approach to his daughter, who appeared to be the more susceptible of the two. If Ester had agreed to defect we would have made arrangements to evacuate her to Miami, but only after she had had a few days to work on Aldo. The key to Aldo, the Charge, is their two young children, to whom he is very attached and when confronted with their flight to Miami he just might have decided to come along.

Unfortunately, this recruitment failed. The father-in-law came as planned and made the initial meeting with his daughter but she cut him off at the beginning and refused any discussion of defection. After two days he went back to Miami, sad and broken, with no idea if he'll ever see his daughter and grandchildren again.

Montevideo 4 September 1964

The main Blanco and Colorado newspapers are carrying a torrent of AVBUZZ-sponsored articles and statements calling for the government to heed the OAS resolution. However, manoeuvring among the different Blanco and Colorado NCG members and their factions is causing the outlook on the break with Cuba to change almost daily. In the past three days there have been a meeting of the NCG Foreign Relations Commission that was scheduled but didn't convene for lack of quorum, new scheduling of debate by the full NCG for 10 September, and finally last night an NCG decision to consider the OAS resolution at a special meeting on 8 September. So far only two of the NCG members have indicated how they'll vote -- one for and one against -- and there is a good chance we'll lose. Nevertheless, relations with Brazil are again at crisis point, and the thesis that Uruguay must go along with the majority in order to assure protection against pressures from Argentina or Brazil is gaining ground.

If they don't break relations this week, I'll write the 'Perez Freeman Report' right away and we'll make it public either through Inspector Piriz or the AMHALF agents, Roosen or Goncalves. The Foreign Minister, who is against the break, is the first guy I'll burn as a Cuban agent -- he probably is anyway.

Returns from the elections in Chile today show Eduardo Frei an easy winner over Allende. Chalk up another victory for election operations. Allende won't be a threat again for another six years.

Montevideo 8 September 1964

A great victory. Forty-four days after the OAS resolution on Cuba the NCG has voted to comply. How the vote would go wasn't known for sure until the last minute when the N CG President changed his position and carried a Counsellor from his faction with him. Final vote: six in favour of breaking (five Blancos and one Colorado) and three against (one Blanco and two Colorados).

While the Councillors were debating several thousand pro- Cuban demonstrators gathered in Independence Plaza in front of Government House where the N CG was meeting. When the vote was announced a riot was on, and the crowd surged down the main street, 18 de Julio, breaking store fronts and clashing with the anti-riot Metropolitan Guard and the mounted Republican Guard. At least ten police were injured and twenty-six demonstrators arrested before the water cannons and tear-gas dispersed the mob. Somehow many of the demonstrators got back to the University buildings further down 18 de Julio, and right now the battle is continuing there with stones and firecrackers being hurled from the roof of the main University building.

I'm spending the night in the station just in case anything drastic happens that has to be reported to headquarters. Tomorrow we'll see if any of the Cubans can be picked off before they leave for home.

Montevideo 10 September 1964

Rioting continues, mostly centred at the University of the Republic buildings on 18 de Julio. Although some demonstrators abandoned the University during the early morning hours yesterday at the urging of Colonel Rodriguez, ‡ Chief of Police, and Adolfo Tejera, ‡ Minister of the Interior, new riots began yesterday morning at about ten o'clock and have continued since. The demonstrators' tactics include, besides the throwing of stones from the University buildings, lightning street riots at different places to throw the police off guard. Shop windows and cars parked at our Embassy have also been stoned.

During the early hours of this morning, several US businesses were attacked. A powerful bomb exploded outside the First National City Bank shattering the huge plate-glass windows and causing the hanging ceiling in the lobby to fall. Another bomb exploded at the Western Telegraph Company while an incendiary device started a fire at the Moore-McCormick Lines offices. General Electric's offices were also damaged.

The Cubans advised the Foreign Ministry that they'll be leaving on Saturday for Madrid. Last night with Roberto Musso, ‡ the chief of the AVENIN surveillance team, I tried to talk to the new code clerk by telephone. Musso, using the name of someone we already know is in contact with the code clerk, got him on the telephone and passed it to me. I said I was a friend of Roberto Hernandez, his predecessor, and would like to make a similar offer of assistance. He told me to kiss his ass and hung up, but I'll try again if I have time after I've done the same with the other three -- two of whom are new arrivals since the Hernandez episode.

The Cubans may have made, a serious mistake yesterday, in their haste to tie up loose ends before leaving. They sent the chauffeur, my agent, to send a telegram to Tucuman, Argentina with the message, 'Return for your cousin's wedding'. This can only be a code phrase and the urgency attached to sending the telegram led the chauffeur to conclude that someone is being called for a meeting before Saturday. I've passed the addressee and address by cable to the Buenos Aires station for follow-up and will watch carefully the air and riverboat passenger lists for this and other names of possible Cuban agents. We know nothing about the person this was addressed to, but he is probably involved in the guerrilla activity in the Tucuman area.

Montevideo 11 September 1964

Demonstrators continue to occupy the University and bombings have occurred at the OAS offices, the Coca-Cola plant, newspapers that promoted the break (El Dia, El Pais and El Plata), the homes of four councillors who voted for the break, and several of the neighbourhood clubs of the factions that favoured the break. At the University, which is still sealed off by police, minors were allowed to leave and the Red Cross entered with doctors to distribute blankets and examine the students, who were suffering from cold and hunger. Any who decide to leave, however, will have to be registered, identified and face possible arrest. Colonel Rodriguez's plan is to trap all the non-students among the 400 or so people occupying the University.

Not to be outdone by the students and political demonstrators, the municipal-transit system workers struck for three hours this afternoon and the workers of the autonomous agencies and decentralized services staged a huge demonstration at the Legislative Palace. Again the issue was budget benefits.

I've spoken to all but one of the Cubans and none has been willing to meet me. One of them last night invited me to the Embassy for coffee but I thought it prudent to decline in spite of the freezing wind howling through the telephone booth. When they leave tomorrow I'll be at the airport just in case -- as will Otero, ‡ Piriz ‡ and other police officers who can take charge if a last-minute defection occurs.

Montevideo 12 September 1964

This morning the demonstrators at the University surrendered and were allowed to leave after fingerprints, identification photographs and biographical data were taken. Forty-three nonstudents were arrested among the 400 who came out.

At the airport this afternoon several thousand demonstrators came together to bid the Cubans farewell. When the police began to force the demonstrators back to a highway some distance from the main terminal building another riot broke out followed by a pitched battle. The police won easily, using the cavalry effectively in the open areas around the terminal building, but many were injured on both sides.

All the Cubans left as scheduled. Only one remains behind: the Commercial Counsellor, who is being allowed to stay on for a couple of weeks to close a Cuban purchase of jerked beef.

Of all the Latin American and Caribbean countries only Mexico still has relations with Cuba. If Mexico refuses to break, as seems likely, the Mexican channel could be used for various operational ploys against Cuba -- it's even possible that the Mexican government was encouraged by the station there not to break with Cuba. Here we've done our job, but poor O'Grady will be working until the end of the year to send headquarters all the clips on Cuba we've managed to place in the media.

Efforts by the Miami station to get information out of Earle Perez Freeman through the Uruguayan diplomats, Roosen and Goncalves, have ended, as these agents are returning to Montevideo. Although Switzerland is taking charge of Uruguayan affairs in Havana the Uruguayan Charge is staying to close the Embassy and to transfer the eight remaining asylees, including Perez Freeman, to another Embassy. According to the Miami station Goncalves is too insecure and frivolous to consider incorporating into other operations so I've asked them to forward a contact plan for Roosen only. Just possibly he could develop a relationship with a Soviet officer here, but this will depend on a careful analysis of the possibility that he was known by the Cubans to be working with us.

No sooner do we get the Cubans out than the Chinese communists try to move in. Only yesterday the Foreign Minister told a reporter that the Chicoms have asked permission to set up a trade mission in Montevideo and that as far as he is concerned it would be all right. Holman gave O'Grady the responsibility for following this one up but as in the case of the Brazilians the details are mine because we'll use the police intelligence office to get more information.

Manuel Pio Correa, ‡ the new Brazilian Ambassador, arrives tomorrow. He is pointedly visiting Brazilian military units along the Uruguay-Brazil border on his way here. Holman will establish contact with him next week.

Montevideo 16 September 1964

In spite of the intensity of station operations against the Cubans and other matters like the Brazilians, and local communist gains in the trade-union field we have a serious morale problem that's getting worse as weeks go by. In most stations, I suppose, the day to day demands of work keep personal dissentions to a minimum because one doesn't have the time or energy to feud. But here the problem is with Holman and everyone in the station is affected.

The problem is that Holman expects all the station officers to give outstanding performances in their particular areas of responsibility but he's not willing to exert very much effort himself. Besides that he is a great player of favourites, and for better or worse he's chosen me as his favourite. He invites me to lunch several days each week and practically insists that I play golf on Saturday afternoons with his crowd out at the Cerro Club even though I've made it clear I'm not enthusiastic. When we're alone he speaks derisively of the other station officers, especially O'Grady, Phipps and Zeffer. O'Grady, in fact, has turned into a bundle of nerves under Holman's criticism, which he's sure is the cause of his increasingly frequent attacks of hives. Usually Holman's criticisms are about shortcomings in language or failure to make new recruitments but sometimes he even criticizes the wives.

His attitude would be understandable, perhaps, if his own work habits were more inspiring, but he avoids work as much as possible and requests from other stations like Rio or La Paz or Buenos Aires seem like personal insults to him. Just the other day when we were playing golf, Holman told me that in fact he was rather relieved when the recruitment of Hernandez, the Cuban code clerk, failed. He said he came to Montevideo for a relaxing last four years before retiring and only hoped to keep operations to a minimum and the Ambassador happy. If Hernandez had been recruited, headquarters would have bothered us constantly with advice and probably would have sent down' experts' to tell us how to run the operation.

Holman is not only determined to keep operations to a minimum. At night or on week-ends when priority cables are received or have to be sent Holman refuses to go to the station to take action. He either sends O'Grady in to bring the cable out to his house in Carrasco -- against all the rules of security -- or he has the communications officer bring it out to him. If another officer has to take action he simply calls that officer to his house.

I'm not sure what to do since I'm the only officer Holman thinks is doing a good job -- nothing to be proud of, it could even be the kiss of death. Warren Dean told me before leaving Quito that Holman isn't considered one of the more outstanding Chiefs of Station in the Division, but he's apparently protected by Ray Herbert, the Deputy Division Chief, who is Holman's best friend.

Montevideo 25 September 1964

Today the Congress approved the new budgets for the state-owned banks with provisions for a 30 per cent salary increase retroactive to January of this year plus improved fringe benefits. Political motivation prevailed at the last moment 'ven though the NCG had previously rejected such generous increases, which is not to say they aren't justified when inflation is taken into account. The main problem is that this increase of 30 per cent will set the standard for demands by all the other government employees which in turn will accelerate inflation with new budget deficits.

The new National Workers' Convention, heavily influenced by the PCU, is also intensifying its efforts to unify the government and private-sector workers through a series of rallies and marches in coming weeks, culminating in a mass meeting in early December to be called the Congress of the People with representation from the trade unions and other popular mass organizations. At the Congress of People they will formulate their own solutions to the problems afflicting this country -- not a bad idea what with the mess they're in.

Relations between Uruguay and Brazil are back at boiling-point. Police in Porto Alegre, the capital of the Brazilian state bordering Uruguay, have just discovered a new plot by Goulart and his supporters to foment a communist-oriented takeover. A written plan, supposedly found on a university student, included the formation of terrorist commando units. Earlier, another plot was discovered in Porto Alegre involving Army officers loyal to Goulart. Here in Montevideo, the 300 Brazilian exiles have formed an association to help those unable to get along financially. However, at the first meeting considerable discussion was devoted to ways in which the military government could be overthrown, and Brizola's wife, who is Goulart's sister, was elected to the association's governing board.

In tracking down the possibility that the Chinese communists will establish a trade mission here, we discovered that permission has in fact been granted, not to the Chinese but to the North Koreans. They have just arrived and are taking a house on the same street as the Soviet Legation. Holman asked Tejera, ‡ the Minister of the Interior, what could be done to keep them from staying permanently, but Tejera made no promises. Already head-quarters is asking for a programme to get them thrown out.

Two recent developments of note have occurred in our otherwise stagnated student operations. A new publication aimed at university and secondary students is now coming out: it's called Combate ‡ and is published by Alberto Roca. ‡ Also, at the Alfredo Vazquez Acevedo Institute, which is the secondary school associated with the University and as such the most important on that level, the student union supported by the station has just defeated the FEUU-oriented candidates for the fifth straight time. Sooner or later our work with this group, the Association of Preparatory Students, ‡ is bound to be reflected in the FEUU.

Montevideo 29 September 1964

Montevideo was alive with new rumours this morning that senior Blanco military officers are planning a coup against the government. Cause of the rumours is a dinner given last night by Juan Jose Gari, the long-time station agent in the Ruralist League and currently President of the State Mortgage Bank, in honour of Mario Aguerrondo, ‡ former Montevideo Police Chief, who was recently promoted from Colonel to General. Among the guests at the dinner were other Ruralista leaders and practically all of the top military commanders from the Minister of Defense down. Holman checked out the rum ours with Gari and with Adolfo Tejera, the Minister of the Interior, while I checked with Colonel Roberto Ramirez, Chief of the Metropolitan Guard, who was also there. The dinner was simply an expression of homage to Aguerrondo but the rumours, entirely unfounded, reveal just how nervous people are that a military takeover may occur, what with the increasing strength of the PCU-dominated unions and the government's incapacity to slow inflation. New strikes are being planned.

Holman thinks he has at last got agreement from the Minister of the Interior, Adolfo Tejera, for setting up a Public Safety mission for work with the police under AID. For some time Colonel Rodriguez, the Chief of Police, has wanted the programme but the delicate question of foreigners working openly with the police has caused Tejera to delay his decision. No wonder Tejera has now finally decided. He has just testified before the Budget Commission of the Chamber of Deputies that his ministry is too poor to buy paper, the police lack uniforms, arms, transport and communication, and the fire departments lack hoses, chemicals, trucks and other equipment.

It's not just a question of money and equipment for the police; they are also very poorly trained. Not only are bank robberies frequent, for example, but successful escapes often involve not only stolen cars but motor scooters, bicycles, trucks, buses -- even horses. In one recent robbery the getaway car wouldn't start so the robbers simply walked down the street to the beach and disappeared into the crowd. In August four thieves were caught robbing a house on the coast near Punta del Este but escaped to the nearby hills, and after a two-day gun battle they slipped through a .cordon of several hundred police. Their escape car, however, got stuck in the sand and they walked down the beach, robbed another house, were again discovered, but this time escaped in a rowing-boat. For six days the police chased them in cars, helicopters and on foot but they finally escaped completely -- carrying their loot on their backs as they rode their bicycles down the main highway into Montevideo.

The competence of the AVALANCHE service is similarly limited in its attempts to suppress terrorist activities. Undoubtedly some of the bombings at the time relations with Cuba were broken were the work of the terrorist group led by Raul Sendic. Last March Sendic returned from several months in hiding in Argentina after an arms theft from a shooting club in Colonia. He arrived in a light aircraft at a small airport near Montevideo, but when discovered he simply rushed past the police guard and escaped in a waiting truck. The following month 4000 sticks of dynamite were stolen from a quarry and a few days later enough caps and fuses to explode it disappeared from another site. All the police could report was that these thefts may have been the work of the Sendic band.

Building up the police is like labour operations -- we're still at the beginning with a long road ahead requiring training, equipment, money and lots of patience.

Montevideo 7 October 1964

This is the final day of the forty-eight-hour strike in the autonomous agencies and decentralized services. Only the electric company and the state banks have been operating although the banks have been stopping work for one hour each shift in solidarity with the others. Yesterday the striking government workers, CNT unions and FEUU held a demonstration at the Legislative Palace to demand salary increases equivalent to the 30 per cent won two weeks ago by the government bank workers.

Two days ago all the privately owned gasoline stations were closed indefinitely in an owner's strike against the government for a higher profit margin from the state-owned petroleum monopoly, ANCAP, which also has a large number of gasoline stations. As the ANCAP workers are participating in the forty-eight-hour government workers' strike, no stations were open yesterday or today. More strikes and demonstrations coming up: teachers, the ministries, postal workers and some unions in the private sector.

Montevideo 17 October 1964

Commissioner Otero and others have had a stroke of luck against the Sendic group of terrorists. Two leaders of the group, Jorge Manera, an engineer in the electric company, and Julio Marenales, a professor in the School of Fine Arts, were arrested in an unsuccessful bank robbery. They confessed that their purpose was to aid the sugar-cane workers of Bella Union and that the focal point for their activities is the School of Fine Arts. Police seized arms and are searching for two other members of the group. Otero's leads from these arrests are very important because this is the only active armed group. If he can get good information from the interrogations we may be able to target some recruitment operations against them. So far they've been completely underground.

We've decided to hook up the AVENGEFUL lines again on the Soviets and the PCU. I'll also put a line on Prensa Latina and another on the Czech Embassy which has taken over the Cubans' affairs. If the transcribers can manage I'll also put a tap on the telephone of Sara Youchak, a young activist in the FIDEL political front who has all the marks of being a Cuban intelligence agent.

Still no sign of who was behind the theft of the tapes from AVOIDANCE'S car. He'll now take over the courier duties again so that we can stop using the Embassy employee. Colonel Ramirez, Chief of the Metropolitan Guard, is really happy about AVENGEFUL. A few days ago his men, acting on data from telephone taps, intercepted a truck containing 600 transistor radios that had been off-loaded from a light aircraft running contraband from Argentina. The 300,000 pesos that the haul is worth will be divided among Ramirez and his men.

Meanwhile the government announced that they simply had no money to start paying September salaries -- even the police and the Army, always the first to be paid -- have received nothing for September. Nevertheless, the NCG has just approved the 30 per cent increase for employees of the state-owned telephone, electricity and petroleum monopolies.

Montevideo 25 October 1964

Perez Freeman has been killed trying to escape from the Uruguayan Embassy in Havana! The story was carried in wire-service reports this morning and said that he had been trying to hold the Uruguayan Charge, who is still trying to arrange for another Embassy to take over the asylees, as hostage. The Miami station is attempting to check the story but no confirmation so far. If only the Mexico City station had handled his defection correctly in January we would have all his information and he'd be basking in the Miami sun.

Montevideo 31 October 1964

On the Perez Freeman case the Foreign Ministry received what is being called the longest cable in its history -- some 1300 groups in code from the Embassy in Havana. The communications office of the Foreign Ministry, however, was unable to decode it for 'technical' reasons -- meaning, probably, that too much effort was involved -- so the Foreign Minister called the Embassy by telephone to get the story the Charge had put in the cable.

Perez Freeman, according to the Charge, was the leader of a group of four asylees who took the Charge hostage and escaped from the Embassy in the Charge's car. Cuban security forces gave chase and when the escaping group arrived at a roadblock Perez Freeman jumped out of the car and was shot running away. The others were taken to the fortress where executions are normally held. I've asked the Miami station to try to verify the Charge's version.

Hernan Siles Suazo, the former Bolivian President, was caught plotting and was deported by President Paz Estenssoro. He's arrived back in Montevideo and we're supposed to report any signs that he may be returning to Bolivia. Paz Estenssoro is in serious trouble right now, and the La Paz station wants to head off any complications from Siles. Holman continues to meet with Jose Arce, the Bolivian Ambassador, to pass tidbits from police intelligence. Yesterday Arce gave a press conference to assure everyone that the rebellion now underway against Paz Estenssoro is communist-inspired and doomed to failure. He emphasized that Paz has the full support of the Bolivian people and that current problems have been blown all out of proportion -- adding that the minority groups opposing Paz are so few in number that they could all be driven off together in a single bus. So far ex- President Siles hasn't moved from Montevideo but Otero has posted a special 'security' guard for Siles in order to watch him more closely.

Montevideo 6 November 1964

In Bolivia President Paz has been overthrown by the military and allowed to go to Lima in exile. Ambassador Arce has resigned and has announced that he plans to continue living in Montevideo for a while. Meanwhile ex-President Siles has started to pack and will be leaving for Bolivia within a few days. Holman's not very happy, though, because rumours are strong that Paz Estenssoro is coming to live in Montevideo -- meaning exile-watching will continue, only with new targets.

Late tonight the Budget was finally passed by the Chamber of Deputies, ten minutes before the final constitutional deadline and after forty hours of continuous debate. Passage was made possible by a last-minute political pact between the Blancos, who lack a majority in the Chamber, and the Ruralistas, Christian Democrats and a splinter faction of the Colorados. Opinion is unanimous, .even among Blancos, that the Budget is unworkable because of its enormous deficit and that not even the devaluation of the peso included in the Budget exercise -- the third devaluation since the Blancos took over in 1959 -- will allow for printing enough new money to cover the deficit.

I've seen my Soviet friends at several recent diplomatic receptions and have become acquainted with a couple of Romanians and Czechs as well. Headquarters has reacted favourably and asked that I develop the relationship further with the Soviet Consul, Borisov. Tomorrow night I go to the Soviet Embassy as the Ambassador's representative for their celebration of the October Revolution. Phipps tells me to expect plenty of vodka, caviar and singing.

Montevideo 28 November 1964

Relations between Uruguay and Brazil are heating up again although Goulart's importance is diminishing fast because he has heart trouble and recently underwent an operation. Brizola is the centre of controversy now because of recent declarations against the Brazilian government that were published both here and in Brazil. Manuel Pio Correa, ‡ the Brazilian Ambassador, has filed another official protest against Brizola's conduct. Perhaps more important are the recent arrivals of two former high officials in Goulart's government, Max de Costa Santos, formerly a Deputy, and Almino Alfonso, former Minister of Labor. Both are far-left and Pio has protested against their arrival here, claiming they entered Uruguay illegally and cannot obtain asylum because they had already been granted asylum in other countries following the military coup. The Minister of the Interior, Adolfo Tejera, ‡ is studying the case and Holman is urging him to throw them out.

In Brazil, the federal government has been forced to take over the state of Goias, throwing out the state government because of what is being described as communist subversion there. Yesterday the Brazilian Foreign Minister blamed the intervention in Goias (the military government's worst crisis yet) on the activities of exiles in Montevideo. Today President Castelo Branco told the Brazilian Congress that he had ordered the takeover in Goias in order to forestall a plot led by Brizola from Montevideo. New protests from Pio Correa are certain.

Outright military intervention in Uruguay by Brazil is getting closer. We've had several alarming reports lately through the communications intelligence channel based on monitoring of the military traffic in southern Brazil. According to these reports the Brazilian Army is ready at any time to implement a plan to invade Uruguay and take over Montevideo in a matter of hours.

Montevideo 2 December 1964

I have been trying in recent weeks to follow up some of the mass of leads on probable agents and operations of the Cubans. Most of these leads have come from telephone tapping, surveillance, letter intercepts and monitoring of communications channels. Several of these cases have interesting aspects.

I continue to receive the mail addressed to the Cuban intelligence support agent, Jorge Castillo, through the postman AVBUSY-1. In May the Cubans changed the cryptographic system of their network in Latin America (the ZRKNICK agents), probably as a result of the near-recruitment of Hernandez here and of the defection of the Cuban intelligence officer, AMMUG-1, ‡ in Canada. Since then the National Security Agency has been unable to decrypt the messages which continue, nevertheless, to be sent to agents operating in several parts of Latin America. Although I haven't intercepted any mail that would appear to be sent by the Cuban agent believed to be working in Lima or La Paz, I have received some very suspicious letters mailed from a provincial Uruguayan town.

Telephone tapping and suveillance of Sara Youchak, a frequent overt contact of one of the Cuban intelligence officers before the break in relations, revealed that she travels frequently to Buenos Aires, where she sees her cousin, whom the Buenos Aires station has connected with guerrilla activities in northern Argentina and with communist student organizing. Moreover, Sara has a first cousin (whom she has never seen) who is a State Department Foreign Service officer. Soon I'll ask headquarters to check with State Department security people to see if we might use the cousin to place an agent next to Sara.

Through monitoring of airline reservation communications the National Security Agency has discovered that the manager of the Montevideo office of the Scandinavian Airlines System, Danilo Trelles, is in charge of assigning pre-paid tickets for passengers from many Latin American countries on the SAS flights that start several times each week in Santiago, Chile, and arrive after a number of stops in Prague. The pre-paid tickets are usually requested by the Prague office of Cuban a Airlines and are intended for Latin Americans travelling to Cuba. Because the pre-paid tickets are sent as 'no-name', Trelles can assign them and assure that the identity of the traveller is protected. What we are trying to discover is how Trelles is advised of the identities of the travellers. The answer may be through the Czech or Soviet embassies which Trelles's assistant, Flora Papo, often visits. Papo in fact takes care of the details of this travel-support operation and the A VENIN surveillance team has turned up interesting vulnerability data on her.

AVENGEFUL telephone tapping on the Montevideo office of Prensa Latina, the Cuban wire service, seems to reveal what I suspected -- that PL is serving as a support mechanism for Cuban intelligence operations now that the Embassy is gone. The monthly subsidy for the office is about five thousand dollars, which is wired to the Montevideo branch of the Bank of London and Montreal from the Bank of Canada. The tap also revealed that the total of all the salaries, rent, services of Press Wireless and other expenses amount to only about half the subsidy. Headquarters is currently processing clearance for an Assistant Manager of the Bank of London and Montreal whom I already know rather well and whom I'll recruit for access to cheques on the PL account. It would be interesting to discover the recipients of the unaccounted half of the subsidy, but right now I can still only suspect that it is used for intelligence operations.

We have a new case officer for operations against the Communist Party of Uruguay and related organizations. He's Bob Riefe ‡ who was the chief instructor in communism for the headquarters' portion of the JOT course five years' ago. Riefe has a Ph.D. and has spent his entire career in training, but he was able to wangle an assignment in the DDP as part of the Office of Training's 'cross-fertilization' programme. A couple of years ago he was to have been assigned to a WH station but a heart-attack delayed him. Hopefully I can convince Riefe to take back the former Cuban Embassy chauffeur, AVBARON-1, whom I've been unsuccessfully trying to push back into PCU work since the Cubans left.

Riefe's predecessor, Paul Burns, is returning to headquarters rather discouraged after four years here without getting a really high-level penetration of the PCU. In recent months he has spent most of his time struggling with the AVPEARL audio penetration of the PCU conference room. The bugged porcelain electrical sockets arrived from headquarters some months ago but when AYCAVE-1, the PCU penetration agent assigned to make the installation, got his next guard duty he found that the paint flecks were not quite exact. Back in the station the paint was corrected by Frank Sherno, ‡ a TSD technician who is setting up a regional support shop in the Buenos Aires station to service Uruguay and Chile as well as Argentina. (This new shop will give us much faster service than the Panama station regional support base for technical operations.)

At last a listening post has also been found -- it's a tiny apartment in a building behind the PCU headquarters but located where the carrier-current transmitters in the sockets can be picked up. Then AVCAVE-1 got guard duty again, Sherno came over from Buenos Aires again, and during the course of guard duty the agent was able to replace the original sockets with our bugged ones for testing. Sherno in the LP had transmitters to test the switches (one frequency to turn them on and another frequency to turn them off) and a receiver to test the RF and audio quality. Then AVCAvV-1 removed our sockets and replaced the original ones since there was no way to. get a message from Sherno back to him if they hadn't worked properly.

The testing operation was very risky, both for AVCAVE-1 and for Sherno in the LP. Guard duty at PCU headquarters is always in pairs and for AVCAVE-1 to slip loose from his colleague and install the bugged sockets was difficult even though it only involved the use of a screwdriver. Getting Sherno in and out of the LP with the transmitters and receivers was also dangerous because almost all the people around the PCU headquarters are party members and suspicious of strangers. Somehow both AVCAVE-1 and Sherno came out undiscovered, and now Riefe will proceed with finding a permanent LP-keeper and with the final installation by AVCAVE-1. According to Sherno the signal is excellent.

Montevideo 4 December 1964

Pio Correa, ‡ the Brazilian Ambassador, is making a loud noise over the two former Goulart government leaders, Max da Costa Santos and Almino Alfonso. Adolfo Tejera, the Minister of the Interior, recommended to the NCG ten days ago that they be expelled because they had indeed entered Uruguay illegally. A week later the Foreign Minister announced that they can remain in Uruguay because their documentation is, after all, in order -- according to a Ministry of the Interior investigation. Furious, Pio Correa has filed another protest note asking for their expulsion and Brizola's internment -- complaining also that Brizola has several light aircraft at his disposal for courier flights to and from Brazil.

The NCG has passed this latest protest back to the Ministers of the Interior and Foreign Relations with an instruction to the latter that the Brazilian government be asked for an explanation of the recent repeated violations of the border by Brazilian military vehicles. Three aircraft belonging to Brizola were also grounded. Commissioner Otero's ‡ Intelligence and Liaison Department of the Montevideo Police, however, have arrested one of Colonel Camara Sena's ‡ spies -- a Navy sergeant who came posing as a student but was caught surveilling one of the exiles. He was charged with spying but set free when the Brazilian Embassy intervened.

According to Holman, Pio Correa is going to keep protesting until Brizola either leaves Uruguay or is interned and until a favourable resolution of the Alfonso and Santos cases. Otherwise we can expect Brazilian military intervention.

Montevideo 18 December 1964

A new victory for the station at Georgetown, British Guiana, in its efforts to throw out the leftist-nationalist Prime Minister and professed Marxist, Cheddi Jagan. In elections a few days ago lagan's Indian-based party lost parliamentary control to a coalition of the black-based party and a splinter group. The new Prime Minister, Forbes Burnham, is considered to be a moderate and his ascension to power finally removes the fear that lagan would turn British Guiana into another Cuba. The victory is largely due to CIA operations over the past five years to strengthen the anti-Jagan trade unions, principally through the Public Service International ‡ which provided the cover for financing public employees strikes. lagan is protesting fraud -- earlier this year he expelled Gene Meakins, ‡ one of our main labour agents in the operation, but it was no use.

Montevideo 25 December 1964

Christmas in Uruguay is like the 4th of July at home. It's hot and everybody goes to the beach -- and it's almost completely secular with the official designation 'Family Day'. (Holy Week is similarly changed to 'Tourism Week' and most of the country goes goes on vacation.) How different from Ecuador where the Church is so powerful.

I stopped over at O'Grady's house this morning for a little Christmas cheer but ended up commiserating with him over the latest Holman outburst. A few days ago O'Grady and his wife gave a little cocktail party and buffet as a welcome for the new cp operations officer, Bob Riefe. Holman didn't hold his drinks very well that night and soon began to lash out at O'Grady and then at Riefe and Riefe's wife. It was all pretty unpleasant and now O'Grady's hives are back out in full bloom, in spite of the fact that we all know now that Holman is coming out the real loser.

Apparently certain powers in headquarters are not entirely pleased with the station's performance, particularly in the area of Soviet operations, and Holman is to be transferred in about six months to Guatemala. His replacement as Chief of Station will be a man named John Horton, ‡ who came to WH Division from the Far East Division along with so many others after the Bay of Pigs invasion. Holman has-only just got official notification but he heard the change was coming, some time ago from his protector Ray Herbert, the Deputy Division Chief. Although Herbert was able to salvage the situation somewhat by arranging Holman's reassignment to Guatemala, Holman's bitterness keeps growing. Russ Phipps, the Soviet operation officer, is now almost up to O'Grady's level on Holman's list of persons to blame, but Riefe was attacked because he's obviously part of the new crew being assembled by Horton. Clearly Holman resents being edged aside by newcomers from FE Division because his days in Latin America go back to World War II.

What O'Grady and Phipps, and Alexander Zeffer too, are worried about is that Holman's search for scapegoats will seriously damage their careers and chances for future promotions and assignments. A couple of months ago I chanced across the combination to Holman's safe-cabinet and out of curiosity began to read some of the 'Secret-Informal Eyes Only' letters that he exchanges more or less weekly with Des FitzGerald, ‡ the Division Chief. I was so shocked at the knives he was putting into everyone but me that I gave the combination to O'Grady. Now he's reading the letters -- which only makes his hives worse -- and I think he's passed the combination on to Zeffer and Phipps. The dangerous part is that Holman is not so damning in the official fitness reports on the other officers, but that he cuts them so badly in these letters that they aren't supposed to see. Reading these letters, in fact, is highly dangerous, but all these officers are competent and certainly harder workers than Holman. I wonder if we can hold together for these next six months without rebellion.

Montevideo 15 January 1965

Some decisions on Brazilian affairs indicate the Blancos are persisting in efforts to elude Brazilian pressures. The NCG voted not to give political asylum to Almino Alfonso and Max da Costa Santos on the grounds that they had come to Uruguay after having received asylum in other countries. However, they were given ninety-day tourist visas which isn't going to please Pio Correa. No decision on Brizola was needed because he promised the Minister of the Interior that he'll be leaving Uruguay no later than 23 January. On the other hand Brizola will be allowed to return to Uruguay in which case he can request political asylum again.

Two important new exiles are now here. One, a former Brazilian Air Force officer and one of its most highly decorated men, escaped from a military prison in Porto Alegre and made it across the border. The other is a former deputy who was in exile in Bolivia until ex-President Paz was overthrown, but came here recently for fear the new rightist regime in Bolivia would expel him to Brazil. Both are important supporters of Brizola.

In a personal complaint to the NCG President, Pio Correa tried to get action started on the fourteen recent requests he has made regarding the exiles. This prompted several notes from the Uruguayan Foreign Ministry but resistance continues. The Brazilian press, meanwhile, probably at the government's instigation, has started a campaign to raise the tension by speculating that relations are about to be broken and that commercial pressures are being exerted on Uruguay. For their part the Uruguayan and Brazilian Foreign Ministers have denied that relations are about to be broken, while in the NCG a Colorado Councillor called for the Foreign Minister's resignation for his inept handling of Brazilian problems.

These Brazilian affairs are a nuisance for me because I have constantly to be checking rumours and requesting special reports from the police on the exiles for Holman or O'Grady to use with Pio Correa, Fontoura and Camara Sena. Who could believe a handful of exiles here could be a threat to the Brazilian military government? Even so, headquarters keeps insisting that we help the Rio station in their operations to support the military.

If the military in Brazil weren't so strongly anti-communist our support for them would be embarrassing. In recent weeks the Brazilians have had an internal crisis going over the question of whether the Navy or the Air Force is to operate the aircraft of their only aircraft-carrier -- a decrepit cow discarded by the British. Two ministers of the Air Force have recently resigned over decisions by the President to have the Navy fly the airplanes, but he changed his mind again and yesterday the Minister of the Navy resigned. Now, it seems, the Brazilian carrier strike force will have Air Force pilots.

To make matters with Brazil worse, a few days ago the commercial offices of the Brazilian Embassy were bombed, although little damage was done because the bomb was poorly placed. However, written on a wall nearby was the name 'Tupamaros' which appeared at several other recent bombings. Commissioner Otero, Chief of Police Intelligence, is trying to find out who these people are. He thinks they may be the Sendic group. Raul Sendic, the revolutionary socialist leader, who had been arrested on a contraband charge in an Argentine town near the border, was recently released, and may have returned to Montevideo.

Inability to curb these bombings illustrates the difference between good penetrations of the CP and related groups and bad ones. In Ecuador a group like this would have been wiped up by now. Nevertheless, Riefe doesn't take the bombings very seriously and seems intent on concentrating on the strictly-reformist PCU.

Montevideo 4 February 1965

At Headquarter's instruction I'm continuing to develop the relationship with Sergey Borisov, the Soviet Consul and KGB officer.

Last Sunday Janet and I went with Borisov and his wife Nina to the beach. First they came out to our house in Carrasco and then Borisov drove us out to a beach near Solymar. His driving is very odd and made me nervous -- practically like a beginner. Not so his chess, of course, where he beat me easily. Phipps tells me that Borisov knows I'm a CIA officer without any doubt, so I wonder sometimes why I bother meeting him. Headquarters says that's just the reason to keep the relationship going -- on the chance that Borisov could be disaffected and trying to 'build a bridge.'

Holman has asked me to take over complete responsibility for the satellite missions, which include Czechs, Romanians, Bulgarians, Poles and Yugoslavs. For East European countries we have no elaborate operational procedure such as we do for the Soviets. Headquarters apparently has such high-level penetrations in those countries that the painstaking work of spotting and placing access agents next to them simply isn't justified. Successes in the case of the satellites have come from CIA officers in direct contact with them. As a start, however, I'm going to bring the files up to date on the personnel of each mission and next week I'll try to get the Foreign Ministry protocol files through AVDANDY-1 for that purpose. Then I'll start a photographic album and get reports from headquarters on the new arrivals. Right now I'm not even sure who they all are, because Phipps has been concentrating on the Soviets and ignoring the Eastern Europeans.

Last week I made my first visit to the AVENGEFUL telephone-tapping LP at the Montevideo Police Headquarters. I took along a visiting TSD technician who wanted to see how the equipment is being maintained -- in the operational files I couldn't find the last time it was visited by a station officer, probably some years ago. The room is located right over the office of the Deputy Police Chief on the same floor as Commissioner Otero's Intelligence and Liaison Department. However, there is a locked steel door between I and E and the LP -- in fact the normal way to enter the LP section of the floor is by an elevator from the underground garage for which a special key is necessary. Off the same hallway as the LP are several rooms that I was told are used by the Chief and Deputy Chief as rest quarters.

DeoAnda ‡ and Torres, ‡ the technicians and LP operators, do an excellent job in keeping up the equipment but they have an uncomfortable situation with the heat. Those tube-operated Revere recorders give off so much heat that the room is stifling in the summer. I promised to get them an air-conditioner that they'll install either in a small high window to the inside hallway, or else they'll have to make another opening. The LP has no windows to the street and only the one small window to the hallway -- good security but no ventilation.

Montevideo 7 February 1965

Investigation of Prensa Latina (the Cuban wire service) has got more interesting. Because of procedural agreements I had to postpone recruitment of my friend at the Bank of London and Montreal until the, intelligence chief of his country's service spoke to him and to his superior, the bank manager -- whom I also know from the Cerro Golf Club. This cumbersome process completed, I started reviewing the Prensa Latina account. As cheques are not returned to the account holder in Uruguay, it was easy to discover that practically all the money is paid out in cash. Legitimate expenses still total only about half of the monthly subsidy, so the rest of the money is clearly going into 'other activities'. The next step is to check the financial reports filed with government offices to see if we have a case for shutting down Prensa Latina for falsifying financial reports or similar irregular procedures inconsistent with the subsidy.

Montevideo 11 February 1965

At last the NCG voted to intern Brizola -- an accomplishment that has taken every ounce of Pio Correa's ‡ considerable energy and persistence. Typically, however, the NCG decided to let Brizola pick the town where he wants to live -- any except Montevideo and no closer than 300 kilometres to the Brazilian border. Now we can begin to relax about these messy Brazilian operations.

Pio Correa has done an excellent job bringing the Uruguayans into line over the exiles, which made possible the Foreign Minister's pleasant visit. Brizola, incidentally, has chosen the beach resort of Atlantida as the town where he'll be interned. Otero will continue the logs by 'security guards' from police intelligence -- it's only 35 kilometres from Montevideo where Brizola could still be fairly active -- and right at the limit on proximity to Brazil: 301 kilometres.

Final approval for the AID Public Safety Mission was obtained by Holman from Tejera, the Minister of the Interior, and last month the first Chief of Public Safety arrived. For the time being we will refrain from putting one of our officers under Public Safety cover, and I'll continue to handle the police intelligence operation. After the Mission gets established through straight police assistance (vehicles, arms, communications equipment, training) we'll bring down an officer to work full-time with Otero's intelligence department. About the best I can do part-time is to keep AVENGEFUL going and increase Otero's subsidy for intelligence expenses.

These Montevideo police are getting the Public Safety assistance none too soon. In another bank robbery just three days ago the policeman on guard got excited and fatally shot one of the customers -- mistaking the customer for one of the robbers. Seeing this, the robbers, a man and a woman, rushed out of the bank leaving the money behind. They walked for several blocks and hailed a taxi which took them to the other side of the city. Since they had no money to pay the fare, the robber gave his pistol to the taxi driver in payment. The driver, however, heard of the robbery on the radio and turned the pistol over to the police. On checking the weapon the police discovered that it was the service revolver of one of their own policemen. He was arrested at home and admitted forcing his wife to go along with him on the robbery. The last time that particular bank had been robbed was in 1963 by two women (or men?) dressed as nuns who were never caught.

New strikes: Montevideo buses and trolleys for payment of subsidies and salaries; port workers for last year's Christmas bonus; city employees for retroactive fringe benefits. Inflation during 1964 was almost 45 per cent and last month reached the 3 per cent per month rate. The Blancos are trying to put through another devaluation, while the peso is unsteady and has now slipped to 30.

Montevideo 25 February 1965

I got an important hit on the postal intercept operation against Jorge Castillo, the Cuban intelligence support agent used as an accommodation address for Agent 101 in Lima or La Paz. The letter-carrier, AVBUSY-1, offered me a large brown manila envelope the other day but it was addressed not to Castillo but to Raul Trajtenberg who lives in the same huge apartment building as Castillo. I took the envelope because it was sent from Havana and the words Edificio Panamericano in the address were underlined just as they were to have been underlined in correspondence to Castillo.

I arranged with AVBUSY-1 to keep the envelope for several days in case headquarters wanted to send down a secret-writing technician to test the contents. Inside were Cuban press releases and clippings from Havana newspapers. Headquarters answered my cable by sending a technician immediately from Panama (the Buenos Aires regional support technician is a specialist in audio and photo rather than SW techniques) and he was going to try to 'lift' secret writing from the contents. However, we couldn't find a letter press fast enough so I had to return the envelope to AVBUSY-1without the test.

On checking station files on Trajtenberg I found a letter that he had written from Havana two years ago that was intercepted through the AVIDITY operation. Strangely, the handwriting on the manila envelope was exactly the same as that of the Trajtenberg letter written from Havana -- meaning, probably, that Trajtenberg addressed the envelope to himself and, along with other self-addressed envelopes, gave it to a Cuban intelligence officer for later use. Trajtenberg's mail will also be given to me regularly by AVBUSY-1 although Trajtenberg is leaving soon to study at the University of Paris. So far other Trajtenberg intercepts reveal that his father (he lives with his parents) is manipulating large sums of money in a numbered Swiss bank account. The Berne station advised that the Swiss security service will provide data from numbered accounts but insist on all the details and reasons -- which headquarters doesn't want to give right now because of the sensitivity of other cases in this same Cuban network.

Montevideo 18 March 1965

Washington Beltran, the new NCG President, has had plenty of labour unrest in spite of the recent carnival distractions: railway workers striking for the 1964 retroactive pay increases, the interprovincial buses stopped again for back salaries and subsidies, the Montevideo bus and trolley employees also striking for salaries and subsidies, and public-health clinics and hospitals struck by employees demanding their January salaries. Today there is no public transportation in Montevideo except taxis, and the Sub-Secretary of the Treasury just announced that government receipts amount to only half the daily cost of the central administration.

We've been trying to find a little relief from the gloomy atmosphere of dissention in the station. Holman's letters to Fitz- Gerald are getting even worse if that's possible and each time O'Grady reads the file his hives start up again. Bob Riefe, the CP officer, has a way of reading the news of each day's mismanagement by the Uruguayan government with loud rhetorical questioning broken by equally loud and contemptuous guffaws and cackles. His approval of the strikes and other agitation by his target group are shared by all of us, though perhaps for different reasons, as we watch political partisanship prevail over the reforms (land, fiscal) and austerity needed to stop the country's slide. Russ Phipps, who sits on the other side of me from Riefe, pores over his surveillance reports, telephone transcripts and observation post logs, muttering from time to time that's it not the PCU but the Soviets who deserve the honour of putting this country straight.

***

Riefe and Phipps always catch me in the middle because I'm supposed to be building up the police intelligence department and developing political contacts. When things get bad I usually call over beyond Riefe to Alex Zeffer but his morale is so low he can rarely summon more than an agonizing oath. Then I have to call on O'Grady for support because he works with military intelligence, such as it is, and is the most terrorized of all by Holman. The five of us then discuss solutions. Usually Holman is selected to save Uruguay -- one plan is to send Phipps over to the KGB Chief to request that they defect Holman, with our help if they want it, but if they turn him down, as is likely, well, there's always AVALANCHE.

Officers from the Inspector-General's staff were just here on a routine inspection. This was the time to get the word back to headquarters about Holman's incompetence, but I don't think anyone opened his mouth.

Montevideo 31 March 1965

The AVPEARL audio penetration of the PCU headquarters conference room is another step closer. AVCAVE-1, again on guard duty, permanently installed the two electrical sockets and final tests by Frank Sherno in the LP were successful. Now the problem is to find a good LP-keeper who can monitor the installation and record the meetings. Ideally this person could also transcribe, but chances are that transcribing will have to be done at first by AVENGEFUL-5, ‡ transcriber of the PCU telephone tap, who already knows the names and voices.

Montevideo 6 April 1965

The general strike today is very effective: Otero's office estimates that 90 per cent of organized labour is participating. No government offices are open, there are no taxis or buses, no restaurants, no newspapers. The theme is protest against government economic policies and marches have been loud and impressive although no violence is reported. Speakers have called for radical solutions to the country's problems -- solutions that will attack the privileged classes, where the problems begin.

The strike is also being used to promote coming CNT programmes, including the preparatory meeting for the Congress of the People that was postponed from last December and the annual protest march of the sugar-cane workers from Artigas in the far north to Montevideo. Recent statistics support the protests: the OAS reported this month that inflation in Uruguay during 1962-4 was 59.7 per cent -- higher than Chile (36.6), Argentina (24.4) and even Brazil (58.4).

The government is getting uneasy about the CNT's successes of late. Adolfo Tejera, the Minister of the Interior, made a radio speech last night on the rights and duties of citizens in the context of today's general strike.

Holman keeps insisting that I develop more political contacts but I'm keeping the activity to a minimum. Even if we reached a level of effectiveness in political action similar to what we had in Ecuador, we would simply have better weapons to use against the PCU, CNT and others of the extreme left. What's needed here is intensification of land use, both for increasing export production and creating more jobs, but this can never happen without land reform. If we were to have a political-action programme to promote land reform, as well as action against the extreme left, some justification might be found in the balance. But these Uruguayan politicians are interested in other things than land reform.

Montevideo 14 April 1965

The government has taken a first step towards suppressing agitation organized by the extreme left. Last week the NCG designated an emergency commission with special executive powers to deal with the drought, now some months old, which is seriously endangering livestock. The commission includes the Ministers of Defense and Interior and similar commissions have been established in each department under the local police chief with representatives of the Ministry of Defense, a regional agronomist and a veterinarian. The same day the NCG also decreed special powers for the Minister of the Interior to limit public gatherings to twenty-four hours. This second decree, which the Minister later admitted. is to be used against the march of the sugar-cane workers, was enacted in a manner designed to confuse it with the special drought measures and with the hope that it might pass without much comment.

The CNT immediately denounced the measure as directed against the sugar-workers' march, which prompted the Minister's admission; and the Colorado minority NCG Councillors unsuccessfully tried to rescind it. Because these decrees allow for restriction of civil liberties they were presented to the Legislature for approval. The Blancos, however, knowing that the Colorados and others would rescind the decree aimed at the marchers, have prevented a quorum from being constituted each day by simply staying away.

In passing the decrees the NCG clarified that they were not adopting emergency security measures as defined in the Constitution (equivalent to a state of siege) and Tejera has given assurances that his special powers will be used with reason. However, in a public statement two days ago he accused the marchers of taking along women and children as hostages, of not having proper health and educational facilities for children, and of allowing promiscuity dangerous to collective morals. Clearly we have a confrontation building up, aided by press reports coming from the Ministry of the Interior that the march will be broken up before it reaches Montevideo. Right now the marchers are in San Jose, only a few days away, where police are registering them by taking biographical data, fingerprints and photographs for Otero's intelligence files. If Tejera gives orders for the march to be broken up not too many people will notice because this is tourism week and most of the country is on vacation. From our viewpoint he ought to do just that because the sugar-cane workers are led by Raul Sendic, now a fugitive and believed to be the organizer of most of the terrorist bombings in the past year.

Montevideo 25 April 1965

The march of the sugar-cane workers arrived in Montevideo yesterday -- almost unnoticed and with no danger of intervention by the government. Something much bigger has suddenly attracted everyone's attention: one of Uruguay's major banks has failed and been taken over by the Bank of the Republic. The sensation is causing mild panic and fear that other banks may go under, which might not be a bad thing. In this small country there are about fifty private banks even though the government banks do about 65 per cent of commercial business. The peso has slipped to 39.

Montevideo 27 April 1965

Inspector Piriz was assigned to handle investigations into fraud and other crimes related to the bank failure. So far eleven of the officers and directors have been jailed. Today, however, two more private banks were taken over by the Bank of the Republic, and for fear of a run on banks in general a holiday was decreed for all private banks. The holiday doesn't make much difference, though, because all the private banks have been closed since the first failure six days ago, when the unions struck to demand job security for employees of the bank that failed. Almost unnoticed today was the NCG'S lifting of the emergency drought decree of 8 April although the special decree on limiting public gatherings was retained.

Montevideo 28 April 1965

I don't quite understand this invasion of the Dominican Republic. Bosch was elected in 1962 thanks to the peasant vote organized by Sacha Volman. ‡ Volman earlier set up the Institute of Political Education ‡ in Costa Rica (cryptonym ZREAGER) where we sent young liberal political hopefuls for training. Bosch is from the same cut as Munoz Marin, Betancourt and Haya de la Torre. He stands for the reforms that will allow for redistribution of income and integration. Rightist opposition to his land reform and nationalistic economic policies brought on his overthrow by the military in 1963 after only seven months in power. This was another chance for him to turn the balance towards marginalized peasants and to channel income from industry, mostly sugar, into education and social projects.

Now, just as the Constitutionalists have the upper hand to restore Bosch to power, we send in the Marines to keep him out. Nobody's going to believe Johnson's story of another Cuba-style revolution in the making. There has to be more to the problem than this -- for some reason people in Washington just don't want Bosch back in. Uruguayans don't understand either. People here think Bosch stands for the kind of liberal reform that brought social integration to Uruguay. Already the street demonstrations against the US have started. Very depressing. AVBUZZ-1 is going to look silly trying to place propaganda -- headquarters says we must justify the invasion because of a danger to American and other foreigners' lives and a takeover of the Constitutionalist movement by communists.

Montevideo 4 May 1965

Headquarters has sent about fifty operations officers to the Dominican Republic to set up outposts in rural areas for reporting on popular support for the Caamano forces. The officers were sent with communications assistants and equipment for radioing reports straight back to the US. All WH stations were notified to put certain officers on stand-by for immediate travel, but Holman is not going to let me go -- probably because he would have to work a little harder. I would like to go and see for myself. Surely the Constitutionalist movement hadn't fallen into the hands of the communists. And this Johnson Doctrine! 'Revolutions that seek to create a communist government cease to be an internal matter and require hemisphere action.' Bullshit. They just don't want Bosch back in and the 'they' is probably US sugar interests.

We've had more protest demonstrations against the invasion, some violent. Targets of the attacks: US Embassy, OAS, US businesses. Today four demonstrators were wounded by gunfire when police broke up a street march following a meeting at the University. The private banks are still closed -- fifteen days now -- and there's no telling when government employees' salaries for April will begin being paid. Today both the Minister of Defense and the Minister of the Interior publicly denied the rumours of an impending coup.

Montevideo 7 May 1965

Ambassador Harriman came to explain the Dominican invasion and to propose Uruguayan participation in the multilateral peacekeeping force He spoke to President Beltran yesterday and afterwards held a press conference in which he blamed those fifty-eight trained communists for having taken over the Bosch movement, thereby creating the need for intervention. He admitted, though, that Caamano, the leader of the Bosch movement, isn't one of the fifty-eight. Then he said the US government is not going to permit the establishment of another communist government in the hemisphere.

I can easily imagine the station in Santo Domingo in a panic compiling that list of fifty-eight trained communists from their Subversive Control Watch List. There were probably more than fifty-eight, but Caamano and the Bosch people were in control, not trained communists. The movement was put down not because it was communist but because it was nationalist. The Uruguayans weren't convinced by Harriman -- after he left, the NCG voted not to participate in the peacekeeping force approved yesterday by the OAS. 'Fifty-eight trained communists' is our new station password and the answer is 'Ten thousand marines'.

Montevideo 12 May 1965

Protest'. demonstrations and attacks against US businesses over the Dominican invasion continue. The CNT, FEUU and other communist-influenced organizations are most active in the demonstrations, but opposition to the invasion is a popular issue going all the way up to the NCG. All America Cables and IBM are among the businesses bombed.

The CNT is also leading protests against economic policies, and new revelations of corruption in the banking sector are coming up almost daily. Although the Congress passed a special law assuring jobs for the employees of banks that have failed, tension continues, with three more banks taken over by the Bank of the Republic yesterday. The bank workers' union voted to return to work but today the government announced that the banks won't open until 17 May. The reason is that they can't open until a shipment of 500 million new pesos arrives from London.

Coup rumours continue and yesterday Tejera told the NCG that he believes the 8 April decree limiting public gatherings is unconstitutional. He complained that the only law relating to public meetings dates from 1897, but he promised the NCG a new constitutional decree on the subject for next week. Port workers struck yesterday and judicial branch employees began partial work stoppages for payment of April salaries.

Montevideo 20 May 1965

Financial corruption in Uruguay seems to have no end. Yesterday the NCG fired the entire board of directors of the Bank of the Republic. Nineteen officers and directors of banks taken over have been imprisoned and investigations are continuing. After being closed for twenty-six days the private banks have reopened but the falling peso -- it's down to 41 -- suggests more scandal to come.

On the labour front, strike action for payment of April salaries has been started by government employees in the judiciary, public schools, port, petroleum monopoly, fishing enterprise, postal system, communications and University. Other strikes are being planned or threatened.

Coup rumours are so strong that the Ministry of Defense yesterday issued a denial. The latest rum ours relate to speculation in the Brazilian press that Brazilian and Argentine military leaders are watching the increasing strikes and banking scandals in Uruguay closely, and that perhaps Uruguay is becoming a bad risk because of its opposition to intervention in the Dominican Republic and its tolerance of exile activities. Meanwhile the NCG is considering Pio Correa's latest protest on the exiles' meetings, finances and infiltration from Uruguay back to Brazil.

The PCU has in recent months been planning to host an international pro-Cuba conference to be called The Continental Congress of Solidarity with Cuba -- now scheduled for 18-20 June. Headquarters is anxious to prevent the conference so Holman proposed to Tejera that it be prohibited because it might reflect badly on Uruguay in the US (where emergency loans are going to be sought for financial relief), and in Latin America. Tejera immediately saw the connection with Brazilian problems, and promised to take up the matter with the NCG.

Montevideo 29 May 1965

Suddenly we've had a flurry of security moves sparked by controversy over the activities of one of O'Grady's people, Juan Carlos Quagliotti, ‡ and others of his group. Last night extraordinary police control was established in Montevideo and the interior departments, with special patrols, check points and security guards at radio stations, the telephone company, waterworks, railroad stations, bridges and crossroads. This morning Tejera said publicly that these measures were taken to help the electric company promote voluntary rationing of power, because of low generating capacity as a result of the drought last summer. The Minister of Defense also denied any special reasons for the police measures, but rumours are stronger than ever of a military move against the government.

According to Commissioner Otero of police intelligence, what really happened is that Quagliotti was arrested after Otero's investigation revealed that he had arranged for the printing and distribution of a distorted version of an article written in 1919 by President Beltran's father, on justification of military intervention in politics. The judge who heard the case refused to take jurisdiction, however, and Quagliotti was released pending action by military courts. Quagliotti's release caused a wave of ill-feeling in the police, while resentment also broke out in certain military circles against the police for having made the investigation and arrest.

So far the Quagliotti case hasn't been connected with the special security measures and for the time being O'Grady is going to avoid meeting him. Similarly when Otero asked me several days ago what I knew about Quagliotti I said nothing. Headquarters is very concerned that a breach is opening up between police and military leaders, but we've reported that the storm will probably pass. According to the Chief of Police, Colonel Ventura Rodriguez, the crisis is being resolved.

At an NCG meeting yesterday before imposition of the special security measures, Tejera asked for permission to ban the Continental Congress of Solidarity with Cuba. Using a report we had prepared on the Congress as his own, the Minister said the purpose of the Congress was to raise the question of relations with Cuba once more and to promote foreign ideologies that are incompatible with Uruguayan institutions. He said he wishes to avoid the pernicious proselytism by trained communist elements who promote infiltration by dangerous extremists, adding that Uruguay already has enough problems without this Congress. The NCG postponed a decision but chances are good that they'll prohibit the Congress in order to avoid jeopardizing their already difficult prospects for refinancing the Bank of the Republic, which is bankrupt, owing some 18 million dollars to New York banks. The President of the Bank has resigned, and the bank has been taken over by the NCG. The peso is now down to 52, and the scandals are moving into wool-exporting companies.

Montevideo 2 June 1965

Last night the NCG discussed the Quagliotti case with speeches from Tejera and the Minister of Defense. Tejera admitted that the special security measures of last week -- which are still in force -- were a result of Quagliotti's agitation in military circles and of dissention over whether he will be prosecuted or not. Today Quagliotti appeared before a military court which refused to take jurisdiction because he hadn't actually entered any military installation. It seems the crisis has passed for the time being thanks to Quagliotti's friends among the senior military officers, but resentment continues in the police over the failure to prosecute in both civil and military courts.

Tejera's request to the NCG to ban the pro-Cuban Congress went through. They voted to prohibit it on the principle of nonintervention. Headquarters will be pleased.

Montevideo 4 June 1965

Only a few more weeks until Holman is transferred. What none of us can imagine is why he is going to Guatemala, where one of the most serious insurgency threats exists. Surely if he is bad enough to be transferred from Montevideo after only two years, he's bad enough not to be sent as Chief of Station where armed action is under way.

About the only success he can claim is getting the Public Safety programme going. After the first AID officers arrived, Holman gave a couple of dinners to introduce them to the Minister of the Interior and senior police officers. As the station officer in charge of police liaison I had to go to Holman's house for these dinners, and soon he'll be giving more parties to introduce the new Chief of Station and say farewell. Strange man this Holman. Surely he can sense his isolation at the station but he never mentions it. He just keeps on denigrating the other officers.

Holman has asked me to take over another operation. This one is an an effort, not yet off the ground, to make a technical installation against the Embassy of the United Arab Republic on the street behind our Embassy and 'on the floor above the AI D offices. Phipps had been handling this operation without enthusiasm, but headquarters is getting anxious because if successful it will enable an important UAR cryptographic circuit to be read. As part of planning they asked for a floor plan of the Embassy, which I got through the AVENIN electric company agent, and soon a Division D officer will be coming to survey the place. As my office is in the back of our Embassy I can almost look out into the windows of the UAR Embassy.

I still can't believe the reasons for the Dominican invasion that we're trying to promote through AVBUZZ-1. Holman says it all goes back to the Agency's assassination of Trujillo. He was Chief of the Caribbean branch in headquarters at the time and was deeply involved in planning the assassination, which was done by Cuban exiles from Miami using weapons we sent through the diplomatic, pouch. The weapons were passed to the assassins through a US citizen who was an agent of the Santo Domingo station and owner of a supermarket. He had to be evacuated though, after the assassination, because the investigation brought him under suspicion.

Why is it that the invasion seems so unjustifiable to me? It can't be that I'm against intervention as such, because everything I do is in one way or another intervention in the affairs of other countries. Partly, I suppose, it's the immense scale of this invasion that shocks. Ob the other hand, full-scale military invasion is the logical final step when all the other tools of counter-insurgency fail. The Santo Domingo station just didn't or couldn't keep the lid on. But what's really disturbing is that we've intervened on the wrong side. I just don't believe 'fifty-eight trained communists' can take over a movement of thousands that includes experienced political leaders. That's a pretext. The real reason must be opposition to Bosch by US business with investments in the Dominican Republic. Surely these investments could have produced even while the land reform and other programmes moved ahead.

Montevideo 17 June 1965

We almost just lost one of our principal police liaison officers, Carlos Martin, ‡ the Deputy Chief of the Montevideo Police. Martin is an Army colonel, as is the Chief, but he is also a chartered accountant and has been supervising the police investigations that have uncovered so much corruption since April. He resigned two days ago because a judge denied his request to interrogate one of the convicted officers of the first bank to fail about lists of payments to high government officials by that bank. The lists are purposely cryptic notes that Martin wants clarified to aid the investigation. Martin's resignation in protest against political suppression of the investigations provoked such a row that the N CG agreed to take up the matter of the lists, and today Martin withdrew his resignation. So far there have been thirty-one convictions.

Montevideo 24 June 1965

The NCG now has the lists of political bribes paid by the first bank that failed in April. Names include an important Blanco Senator, the Vice-President of the State Mortgage Bank, a Blanco leader who has just been nominated as Uruguay's new Ambassador to the UN, two high officers of the Ministry of the Treasury, the person in charge of investigating one of the banks that failed, and a person known only by the initials J.J.G. This last person can only be Juan Jose Gari, our Ruralista political contact from the Nardone days and now the President of the State Mortgage Bank.

Meanwhile the Bank of the Republic debt has been determined at 358 million dollars, with 38 million dollars currently due. Gold from the Bank of the Republic, perhaps as much as half the Bank's holdings will have to be sent to the US as collateral for refinancing. Such an emotional and humiliating requirement is sure to cost the Blancos heavily.

In an important policy decision on the labour front, the BIancos decided to apply sanctions against the central administration employees for a strike on 17 June. Justification for the sanctions is that strikes by government employees are illegal, although until now the government had been reluctant to invoke illegality because of inflation and the obvious political consequences. The decision was answered by another strike of central administration employees -- this one began yesterday and will end tonight. The issues again are employees' benefits, agreed upon last year but still unpaid, payment of salaries on, time, and now the sanctions. The strike is complete, with even the .Montevideo airport and the government communications system closed. Other strikes continue in the judiciary, University and the huge Clinics Hospital. The peso is down to 69 and one of the Colorado Councillors has called for the resignation of the Minister of the Treasury.

Montevideo 7 July 1965

The Movement of the Revolutionary Left (MIR) in Peru has finally gone into action and seems to have had several initial successes against Peruvian police. Three days ago the Peruvian government declared a state of siege and the military services have been called in to supplement police operations. Hundreds of leftists are being arrested all over the country but the guerrilla operation seems to be located mostly in the eastern slopes of the Andes towards the Brazilian border. Undoubtedly the Lima station's notebook of intelligence from Enrique Amaya Quintana, ‡ the MIR walk-in in Guayaquil two years ago, is now in the hands of Peruvian military liaison officers.

The Continental Congress for Solidarity with Cuba was shifted to Santiago, Chile, after we got the Uruguayans to ban it. Now the Santiago station has gotten the Chilean government to ban it and they'll have to try still another country. More likely it will be quietly forgotten.

Montevideo 16 July 1965

Holman is gone. No one from the station went to see him off at the airport except John Horton, the new Chief of Station. Already the atmosphere in the station has changed beyond recognition. O'Grady's hives are much better although he got the bad news that he is going to be transferred so that a new Deputy Chief with better Spanish can come. Horton speaks almost no Spanish and has already told me he wants me to work closely with him on the high-level liaison contacts like the Minister and the Chief of Police. I suppose this means interpreting for him until he can get along, but anything is better than Holman. Horton is such a contrast: very approachable, good sense of humour, very anglophile from his years as Chief of Station in Hong Kong. He's even running a car pool with his chauffeur and office vehicle, picking us all up in the morning so that wives can get around easier.

Montevideo 23 July 1965

Financing for the new government employees' benefits was passed by the Senate last night after days of increasing strike activity in the postal system, University administration, central administration, judicial system and public-health system. Even the Ministry of the Treasury tax collectors were on strike. The financing measure calls for putting out 1.7 billion new pesos, much less than the request of the Blanco NCG Councillors, which prompted senators of the NCG President's faction to vote against the bill. This faction had wanted five billion in new currency -- almost double what is now in circulation. Payments are progressing for June salaries and many of the government employees on strike are now going back to work. The FEUU, however, is organizing lightning street demonstrations as a protest against government refusal to deliver some 100 million pesos overdue to the University. The next battle begins in a few days when the Chamber of Deputies starts work on the budget review, in which the government employees' unions will attempt to include salary increases for next year. Inflation during January-June this year was 26.3 per cent, which is one of the reasons why the government backed down on its threat to impose sanctions.

Horton is anxious to build, up the capabilities of the police intelligence department -- making it a kind of Special Branch for political work along the lines of British police practice. He wants me to spend more time training Otero, Chief of Intelligence and Liaison, and to give him more money for furniture, filing cabinets and office supplies. As soon as possible Horton wants Otero put in for the International Police Academy and for additional training by headquarters at the conclusion of the Academy course. Before leaving Washington Horton obtained AID approval for a CIA officer to be placed under Public Safety cover, and after we get approval from the Chief of Police and get the officer down here we will have him working full-time with Intelligence and Liaison.

Physical surveillance and travel control are the kinds of operations that we plan to emphasize from the beginning. Expansion of AVENGEFUL will come later, perhaps, along with recruitment operations against targets of the extreme left, but these changes will follow Otero's training in Washington. In travel control we will start by trying to set up the often-delayed passport photography and watch-list operation at the Montevideo airport.

The AID Public Safety programme is moving along well. Vehicles, communications, riot-control equipment and training are the main points of emphasis. Until our Public Safety cover officer arrives, however, we plan to keep the police intelligence work strictly in our office. It's going to be a long and difficult job and I won't have time to do it adequately because of other work. Somehow we have to make them start thinking seriously on basic things like security and decent filing systems.

Headquarters is sending down a disguise technician in order to train the station operations officers in its use. The technician is Joan Humphries, ‡ the wife of the audio technician at the Mexico City station. Equipment will include wigs, hair colouring, special shoes and clothing, special glasses, moustaches, warts, moles and sets of false documentation.

Montevideo 15 August 1965

We have a new Soviet operations officer to replace Russ Phipps who has been transferred back to headquarters. The new officer is Dick Conolly, ‡ a West Point graduate with previous duty in Cairo and Tokyo. Because Conolly can't handle Spanish yet, Horton asked me to help him on an operation that Phipps got going during his final weeks here. The operation is another chauffeur recruitment -- this time it's AVAILABLE-1, ‡ the chauffeur of the Soviet Commercial Office. Although the agent has Soviet citizenship, he is considered a local employee by the Soviet mission, because he was raised in Uruguay and is the son of Russian emigres.

Phipps used one of the AVBANDY surveillance-team members for the recruitment. This agent, AVBANDY-4, ‡ is the father of the team chief, an Army major. He had some visiting cards printed, identifying himself as Dr. Nikolich, a Buenos Aires import-export consultant. He approached the chauffeur as if interested in assistance in his efforts to promote imports to Argentina and Uruguay from the Soviet Union. In return for inside information on the Soviet Commercial Office in Montevideo Dr. Nikolich would pay the chauffeur a commission on all deals. Phipps's interest, however, was to use the chauffeur as an access agent to the Soviets working in the Commercial Office -- two are known intelligence officers and one is suspect.

As the recruitment was made just as Phipps was leaving, AVBANDY-4 turned the chauffeur over to me as a Canadian business colleague working in Montevideo, claiming, as Dr. Nikolich, that he would return occasionally from Buenos Aires and if possible would see him. Phipps also got a new safe apartment site, a miserable basement room in a building on Avenida Rivera a couple of blocks from the Montevideo zoo. The room has only a small skylight and is extremely cold. Nevertheless, the chauffeur and I are meeting one night each week. His information on the five commercial officers and their families plus the secretary, all of whom live in the seven-storey building housing the Commercial Office, is not earth-shaking but it's better than anything we've had until now from the other access agents.

The Tupamaros terrorist group continues to be active, recently bombing the Bayer Company offices and leaving behind a protest note against US intervention in Vietnam. Riefe still doesn't think they're important enough to justify a targeting and recruitment programme, so I have begun to encourage Otero, Chief of Police Intelligence, to concentrate on them. There's no doubt now that this is the group led since 1962 by Raul Sendic, the far-left leader of sugar-cane workers who broke away from the Socialist Party.

Montevideo 20 August 1965

The CNT-sponsored Congress of the People, postponed several times since originally scheduled last year, has at last begun and shows signs of considerable success. The PCU is playing the dominant role, of course, but quite a lot of non-communist participation has been attracted. Practically all the significant organizations in fields of labour, students, government workers and pensioners are participating along with consumer cooperatives, neighbourhood groups, provincial organizations and the leftist press. Meetings continue in the University and at other sites where participants are drafting solutions to the country's problems along leftist-nationalist lines. Given the obvious failure of the traditional parties and Congress, this Congress of the People is attracting much attention and will undoubtedly provide the PCU and similar groups with new recruits as well as a propaganda platform.

It is too successful to ignore so we have generated editorial comment through AVBUZZ-1 exposing the Congress as an example of classic communist united front tactics. In fact the Congress isn't the same as a united front political mechanism, but our fear is that it might turn into one and be used as such in next year's elections. Through AVBUZZ-1 we also printed a black handbill signed by the Congress and calling on the Uruguayan people to launch an insurrectional strike with immediate occupation of their places of work. Thousands of the leaflets were distributed today, provoking angry denials from the Congress organizers. More editorial comment and articles against the Congress will follow in this campaign to dissuade non-communists from participating.

One of the campaigns of the Congress of the People is for resistance to the stabilization programmes imposed by the International Monetary Fund, because these measures hurt the low-and middle-income groups harder than the rich. Right now a high-level group of Uruguayan political leaders is in New York trying to get new loans in order to refinance the bankrupt Bank of the Republic (Uruguay's central bank). The New York bankers, however, are insisting on new financial reforms that will meet IMF approval as a condition to granting the new loans -- which may be as high as 150-200 million dollars.

At the NCG meeting last night, as the whole country awaited news from the refinancing mission in New York, it was revealed that two days ago an urgent confidential message from the mission arrived in Montevideo in the Uruguayan diplomatic pouch. No one can explain why, but the pouch, which for most countries is the government's most closely guarded system of communications, wasn't retrieved at the airport. It got sent back to New York on the next flight, and the NCG must wait until it's found and sent again before they can make their decisions.

The Blancos continue to fight among themselves over how to finance government employees. Yesterday the Acting Minister of the Treasury advised the NCG that salaries for this month simply cannot be paid without new resources, and he insisted on greater currency emission. Right now the deficit for this year is set at 6.3 billion pesos, and coins of five and ten centavos are disappearing because they're worth more as melted metal than as money.

Montevideo 27 August 1965

One of Holman's last requests to the Minister of the Interior, Adolfo Tejera, was to find a way to expel the North Korean trade mission that has been here for almost a year. I have followed up with queries to the police on the Koreans but without adequate reply. As an enticement to cooperate I've taken the unusual step of obtaining support from the Miami station, and perhaps others, in order to follow the movements of an aircraft that loaded up in Miami with transistor radios and television sets for smuggling into Uruguay. Information on this contraband ring was obtained by the police through the AVENGEFUL telephone-tapping operation, but Colonel Ramirez, Chief of the Metropolitan Guard, asked me if the aircraft's movements in Miami could be watched. Ramirez and his colleagues were anxious to snare this shipment because under the law they get the value of all contraband they seize. The Miami station advised when it left, as did Panama, Lima and Santiago where technical stops were made. A few nights ago the aircraft made a secret landing on an interior airfield, unloaded arid took off again. The Metropolitan Guard, however, intercepted the two truckloads of television sets and transistor radios -- initial value is set at 10 million pesos. Still no action on the Koreans but we will remind the police chief on our next visit; he doesn't often get such valuable help as we have just given him.

Uruguayan Air Force Base No 1 has just been the scene of the delivery of the first of eight new aircraft as part of our military aid programme. Ambassador Hoyt made the presentation to the Uruguayan delegation composed of the Minister of Defense, Commanding General of the Air Force, Chief of Staff and other dignitaries. In his speech the Ambassador recalled that that day was the fourth anniversary of the signing of the Charter of Punta del Este beginning the Alliance for Progress. He cited President Johnson's declaration that the Alliance for Progress constitutes a change not only in the history of the free world but also in the long history of liberty. After the Dominican invasion one has to wonder. The photographs in the press yesterday show the Ambassador, the Minister and the others -- they practically block from view the little four-seat Cessna that was the object of the ceremony.

Montevideo 10 September 1965

Strike activity is in full swing again after more than a month of relative calm. The financing mission is back from New York. They got only 55 million dollars, enough to pay the 38 million dollars already overdue, but gold will have to be shipped as collateral. New credit will be needed soon, however, in order to prevent the Bank of the Republic from defaulting again, and conditions imposed by the 1M F will surely include cutbacks on internal spending such as salaries to government employees and subsidies. There is much pessimism, with general agreement that even harder times lie ahead. The peso is down to 68.

Internal struggle among the Blancos has paralysed the naming of the new board of directors of the Bank of the Republic. So much so that yesterday the Minister and Sub-Secretary of the Treasury resigned -- only to withdraw their irrevocable resignations today. At issue is which Blanco factions will get seats on the board of directors. Rationing of electricity continues although the drought earlier this year has now turned to serious flooding and hundreds of families have had to be evacuated along the Uruguay river. We're also in the midst of a rabies epidemic - a disease believed to have been eradicated from Uruguay several years ago. In the past year some 4000 people have been bitten by dogs in Montevideo even though 10,000 stray dogs were picked up. Malaise everywhere.

New rumblings from Brazil and Argentina on possible intervention in Uruguay have provoked sharp reaction. During Brazilian Army Week the Minister of War made a public statement widely publicized here which praised the historic mission of the Brazilian Army: 'defense of democratic institutions, not only within our frontiers but also in whatever part of America we believe menaced by international communism'. A few days later the Argentine Army Commander, General Juan Carlos Ongania, said on returning from a trip to Brazil that the Argentine and Brazilian armies have jointly agreed to combat communism in South America, particularly of that of Cuban origin. Although he did not mention Uruguay by name his statement comes at a time of continuing public comment in Argentina and Brazil over economic and social problems in Uruguay. Ongania later denied the press version of his speech, but here the original version sticks. Protests by Uruguayan military officers have caused cancellation of an invitation to the Brazilian military commander of the border zone, while the Uruguayan Navy has withdrawn from joint exercises with US and Argentine units. A conference to have been given in Montevideo by an Argentine military leader was also boycotted by Uruguayan officers. The Foreign Ministry, moreover, has issued a statement in the name of the NCG rejecting any tutelary role in Uruguay by foreign-armed forces.

I can't seem to avoid getting sucked further into Soviet operations. Besides Borisov (whom I continue to see occasionally) and Semenov (a First Secretary whose intelligence affiliation, if any, is unknown) and the Commercial Office chauffeur, we have a new lead involving the new KGB chief, Khalturin. Through AVENGEFUL we learned that Khalturin was searching for an apartment -- any Soviet who lives outside the community compounds is surely an intelligence officer because all the rest must live under controlled circumstances. The apartment Khalturin wanted is owned by Carlos Salguero, ‡ the head of Latin American sales for the Philip Morris Co. and a naturalized American of Colombian origin. Salguero lives in a large mansion in Carrasco where he moved with his family just before I took over his previous house. Salguero's apartment, which is an investment property, is located in a modern building overlooking the beach in Pocitos. Conolly asked me to speak to Salguero about the possibility of obtaining access to his apartment before Khalturin moved in.

Khalturin took the apartment, and at a 'recruitment luncheon' at the golf-club, Salguero agreed to give us access prior to Khalturin's moving in. I turned Salguero over to Conolly, the Soviet operations officer, who will organize the audio installation with Frank Sheroo, the technician stationed in Buenos Aires.

One reason for this audio operation is that Khalturin seems to be having a love-affair with Nina Borisova, the wife of my friend the Consul -- also a KGB officer. Borisova works in the Embassy, possibly with classified documents, and might have interesting discussions with Khalturin if he takes her to the apartment. So far Khalturin's wife hasn't arrived although he has said on the telephone that he expects her soon. There is also a chance that Khalturin might use the apartment for entertainment of prospective agents or even for agent meetings.

Montevideo 23 September 1965

Strikes intensifying: municipal workers, state banks, autonomous agencies and decentralized services. Yesterday the Blanco NCG Councillors and Directors of state enterprises decided to use police to eject employees of the state banks which have been paralysed by work to rule for the past ten days. Any employees who fail to respond to calls to work will be dismissed -- harsh measures by Uruguayan standards. Today work to rule continues but the Bank of the Republic and the State Mortgage Bank closed in lock-outs, while workers in the private banks are stopping for thirty minutes in the morning and thirty in the afternoon in solidarity with the state bank employees.

Blanco NCG Councillors and Directors of state enterprises meeting today decided to grant only 25 per cent increases for workers in all the autonomous agencies and decentralized services and without negotiations. Unions, however, persist in demanding 48 per cent increases for 1966, citing the government's own statistics for January-August inflation: 33.8 per cent. Blanco leaders are determined to hold the line, however, because of the critical need for IMF backing. This will require suppressing the bank workers, who also opened the floodgates for overall government salary increases at this time last year.

There are no signs of relenting on the union side. The peso is now down to 74. The Minister and Sub-Secretary of the Treasury resigned again, this time accepted by the NCG.

The 20 September resolution by the House of Representatives in Washington is causing an outrage here and in other parts of Latin America. The resolution attributes to the US or any other American state the right to unilateral military intervention in other American states if necessary to keep communism out of the Western Hemisphere. Here the resolution is viewed as an encouragement to the interventionist-minded in Brazil and Argentina. If this resolution is meant to be a show of support for the Dominican invasion, as it seems to be, I can only wonder how so many US political leaders could have been convinced that fifty-eight trained communists took over the Bosch movement.

Montevideo 27 September 1965

We've had a visit from John Hart, the new Deputy Chief of WH Division for Cuban Affairs. He's a former Chief of Station in Bangkok and in Rabat and is an old friend of Horton's. As the officer in' charge of operations against the Cubans I spent a lot of time with him briefing him on our operations and listening to his plea for more work against the Cubans.

Hart said that the Agency has practically no agent sources reporting from inside Cuba (although technical coverage through electronic collection and aerial surveillance is adequate) and he is pushing recruitment of agents by mail. The system is to monitor mail from Cuba very closely in order to watch for signs of discontent. If records at headquarters and the JMWAVE station in Miami do not rule out the disaffected writer as a prospective agent, the station concerned or another WH station can write back a letter on an innocuous subject to the Cuban, with instructions to save the letter. If the Cuban replies to the given accommodation address, a second letter will be written instructing him how to develop secret writing contained on the first letter. The developed message will be a recruitment proposal and, if answered, secret-writing carbon sheets can be sent to the Cuban and regular correspondence established. Here in Montevideo we would use the AVIDITY intercept operation to monitor mail for possible agents.

Although I nodded politely and tried to show enthusiasm for this search for needles in a haystack, I thought to myself that this man must be mad to think we have time for such games. I can scarcely make a quick scan of letters from Cuba, much less begin a recruitment campaign with all that implies.

Hart's other pet project is to find Che Guevara. Guevara disappeared about six months ago and although there were signs of him in Africa nobody knows where he is right now. Hart thinks he may be in a hospital in the Soviet Union with a mental breakdown caused by spoilage of asthma medicine kept unrefrigerated. He asked us to watch passenger lists closely and promised to send a photograph now being prepared of how Guevara would look without his beard -- an artist's conception because no photos of a beardless Guevara have been found. Hart also asked that we continue the campaign already underway to generate unfavourable press speculation over Guevara's disappearance, in the hope that he'll reappear to end it. Other stations are doing the same.

Hart's visit came at an opportune time for me because he liked the work I'm doing against the Cubans and in six months I'm going to be looking for a job in headquarters, if indeed I don't resign from the Agency. Right now I'm not sure exactly what I'll do but I told Horton that I plan to return to headquarters in March when my two years here are finished.

There are two problems, I suppose, and each seems to reinforce the other. At home the situation is worse than ever: no common interests except the children, no conversation, increasing resentment at being trapped in loneliness. I told Janet that I'm leaving when we get back to Washington -- she seems not to believe me -- and in fact would have insisted that she return some time ago but for being separated from the children which is a prospect I can't accept. This is a hellish situation and no good for anyone.

The other problem is even worse. The Dominican invasion started me thinking about what we are really doing here in Latin America. On the one hand the spread of the Cuban revolution has been stopped and the counter-insurgency programmes are successful in most places. Communist subversion at least is being controlled. But the other side, the positive side of reforming the injustices that make communism attractive, just isn't making progress. Here the problem is a small number of landholders who produce for export and whose interests clash with those of most of the rest of the country. Until Uruguay has a land reform there can be no fair distribution of either the benefits or the burdens of the country's production. There will be no encouragement to the landholders to produce and export legally. Even if export prices were to rise dramatically the benefits would mostly go to the same handful of people who have the land -- the same handful who are suffering the least during these hard times. For certain the landholders will resist, here as in other countries, but somehow the Alliance for Progress will have to stimulate land reform if other reforms are to be successful.

The more I think about the Dominican invasion the more I wonder whether the politicians in Washington really want to see reforms in Latin America. Maybe participation by the communists wouldn't be such a bad thing because that way they could be controlled better. But to think that fifty-eight trained communists participating in a popular movement for liberal reform can take control is to show so little confidence in reform itself. The worst of this is that the more we work to build up the security forces like the police and military, particularly the intelligence services, the less urgency, it seems, attaches to the reforms. What's the benefit in eliminating subversion if the injustices continue? 1don't think the Alliance for Progress is working, and I think I may not have chosen the right career after all.

I'll need to keep working when I separate from Janet after we return to Washington because she'll need money for the children and she probably won't want to work. The object would be to find another job without a period of seriously reduced income or none at all. I told Hart I'd like to work in Cuban affairs when I get back. Maybe Riefe's kind of cynicism is the best way to stay with the Agency and assuage one's conscience.

Montevideo 1 October 1965

The bugging of Khalturiri's apartment was successful -- transmitters inside the bed and inside a sofa. The batteries will last for six months or more because the transmitters have radio-operated switches. Now Conolly must find a listening post close enough for operating the switches and for recording. Then an L p operator and a transcriber. These audio operations are messy.

Montevideo 3 October 1965

Strikes by the government employees, particularly the bank workers, continue and there are strong rumours circulating that the government is going to declare a state of siege in order to break the strikes. So far the only government action has been lock-outs at the banks and threats to impose economic sanctions against any employees engaging in new strikes. However, the unions of the autonomous agencies and decentralized services, which just completed a two-day walk-out, have announced a three-day walk-out for 13-15 October.

Colonel Ventura Rodriguez, ‡ Chief of the Montevideo Police and the country's top security official, had gone to Miami for the US police chiefs' convention, but he was recalled suddenly. Although the reasons for his recall were not related to the current strikes, his return created new rumours. Nevertheless, he told us that the decision on a state of siege hasn't yet been made. Headquarters is getting nervous and has asked for continuous reporting on the situation.

In Peru the state of siege was finally lifted. The MIR guerrilla movement is defeated and only mopping up remains. A recent visitor who went through Lima told me that the station there opened an outpost in the mountain village where the Peruvian military command had been set up. During the crucial months of July-September the outpost served for intelligence collection on successes and failures of the military campaign and for passing intelligence to the Peruvian military obtained from Lima station sources. During the roll-up of the MIR urban organization, the main penetration agent, Enrique Amaya Quintana, ‡ was arrested and during police interrogation he revealed his work for us. Eventually the station got him released and now he's been resettled in Mexico with, I'm sure, a generous retirement bonus.

Suppression of the MIR will be regarded as a classic case of counter-insurgency effectiveness when good intelligence is collected during the crucial period of organization and training prior to commencement of guerrilla operations. Given their large numbers and training in Cuba, suppression would have been difficult and lengthy without a penetration agent like Amaya.

Montevideo 7 October 1965

This afternoon the NCG voted to enact a state of siege (six Blancos in favour, three Colorados opposed) which in Uruguayan law is called 'prompt security measures'. Adolfo Tejera, the Minister of the Interior, made the proposal which he justified on the need to end labour unrest. The decree prohibits all strikes and all meetings for the promotion of strikes and related propaganda. Enforcement of the state of siege was given to the Ministers of I the Interior and Defense.

This had in fact been decided secretly yesterday, because the whole country is on strike, in the government banks, judiciary and other key areas -- the main issues being salaries, inflation, sanctions, fringe benefits. The police and Army have been paid their September salaries in preparation for action. Colonel Ventura Rodriguez, who had gone to the US police chiefs' convention in Miami, has been recalled, and Commissioner Otero and Inspector Piriz have been to tell me that the police have been some days at the ready. Headquarters wants daily reports on strikes and violence while the siege is on.

Nobody was surprised -- yesterday's 'secret' decision by the Blancos was in this morning's newspapers -- but the CNT went ahead with its plans for a street rally and march this afternoon from the Legislative Palace to Independence Plaza. At the moment of the NCG voting the demonstrators were massed in the Plaza in front of the NCG offices, but as soon as the vote was taken police moved in to break up the demonstration. So far tonight thirty-four workers have been arrested, all from the electric company, except two who are leaders of the bank employees' union.

Montevideo 8 October 1965

Arrests have risen to over one hundred but practically all the important union leaders are in hiding. This afternoon sit-down strikes in the government banks continued but ejections and arrests followed. Lightning street demonstrations against the state of siege have been occurring in different parts of the city.

As required by the Constitution the decree imposing the state of siege was sent to the Legislature for approval. The Blancos, however, knowing that the Colorados and splinter groups will try to repeal it, are staying away in order to prevent a quorum.

The CNT has called a general strike for 13 October and the autonomous agencies and decentralized services will begin that day a three-day walk-out. The government is in trouble.

Montevideo 15 October 1965

The police are no match for the well-organized unions. The general strike was a big success with over 200,000 government workers and most of the private organized workers out. Newspapers, public transport, wool, textiles, public health, schools, practically every activity stopped. Today is the last of the three-day strike in the autonomous agencies and decentralized services. Lightning street demonstrations have been frequent with much pro-strike wall-painting and hand bill distribution.

Police have made several hundred more arrests but the important leaders are still free. The PCU radio outlet, Radio Nacional, was closed for seventy-two hours for broadcasting strike news while an entire issue of Epoca, a leftist daily newspaper, was confiscated yesterday. In protest, however, the press association and press unions struck again and no newspapers appeared today. Tejera ‡ has publicly blamed the communist leadership of the government employees' unions for the state of unrest, and Blanco leaders are hardening. The directors of the four government banks announced the firing of eighteen employees for strike leadership, while the autonomous agencies and decentralized services have announced sanctions of wage discounts equalling two days for the first day of the current strike, three days for yesterday and five days for today. Dismissals will follow if strikes continue. Final arrangements are being made for the arbitrary 25 per cent salary increases although the unions are still insisting on 48 per cent and inflation for this year is now up to 50 per cent.

The PCU, according to our agents, plans to continue the street demonstrations and other agitation in order to force the government to back down on the firings and sanctions. Two of our agents, AVCAVE-1 and AVOIDANCE-9, are on the highly secret PCU 'self-defence' squads engaged in the lightning demonstrations and propaganda distribution. Their reporting has been excellent but they've been unable to get to know the hiding-places of certain of the union leaders which, if we knew, we would inform the police for arrests.

The police, in fact, may have given the communists and others a convenient victim for their campaign against the government. The story is out today of the torture of a young waterworks engineer, Julio Arizaga, who was arrested several days ago. Today he went berserk in his cell at AVALANCHE headquarters and had to be taken to the military hospital. There he attacked his guard and managed to wound the guard with the guard's own weapon. He was subdued, however, and his conduct is being attributed to torture by the police. I'll check with Commissioner Otero on this because usually the police don't engage in torture of political prisoners.

Arizaga is a member of the pro-Chinese Movement of the Revolutionary Left (MIR) and former member of the PCU. He is also a former leader of the FEUU, but he has never been very active in union activity. In recent months Riefe has been guiding AVCAVE-1 as close to the MIR as possible while retaining good standing in the PCU. However, because the MIR favours rural action, including guerrillas, over trade-union organizing, AVCAVE-1 may be instructed to leave the PCU altogether and join the MIR. Meanwhile he is reporting good intelligence from former PCU colleagues like Arizaga who have joined the MIR, as well as information on the PCU.

Montevideo 19 October 1965

Yesterday the NCG (Colorados abstaining) adopted an economic stabilization programme that will enable the government to obtain an IMF stand-by credit which in turn will open the door to new private and official loans. Most observers agree that the state of siege was enacted not only to break the strikes but also to preclude violent opposition to these new economic measures that will be unpopular with the unions.

Latest problem: the Ministry of the Treasury has assigned one million pesos to the Ministry of the Interior for expenses relating to the stage of siege, but there's a severe shortage of banknotes. The British firm that prints Uruguayan money is holding up delivery because the Bank of the Republic can't pay for it -- arrears amount to £100,000.

Montevideo 22 October 1965

Commissioner Otero was vague about the torture of Julio Arizaga, the MIR activist and waterworks engineer, which was his way of confirming the story. On Monday Arizaga was taken before a judge for a hearing on the shooting of his guard, and his condition was so bad and the torture so evident that the judge ordered him to be freed. The police refused and he was returned to the military hospital where he is still incommunicado.

I asked Inspector Antonio Piriz about the case and he said Inspector Juan Jose Braga, ‡ Sub-Director of Investigations, was the officer who ordered and supervised the torture. The purpose was to obtain information on the MIR and on the Tupamaros, whose identity and organizational structure are still unknown. He explained that the torture room is on the same corridor as the AVENGEFUL listening post in the isolated section above the offices of the Chief and the Deputy Chief of Police. I noticed the other rooms down the hall when I visited the LP, but I was told that those rooms are only used by Colonel Rodriguez and Colonel Martin during rest periods. Usually, according to Antonio, the subject of the interrogation is hooded and tied to a bed with the picana ( a hand-cranked electric generator is attached to his genitals. Since Tom Flores's ‡ counter-terrorist operations with police ended, and General Aguerrondo ‡ was replaced as Chief of Police, torture of political prisoners has been rare. However, the picana was still used on criminals (which is why thieves and robbers so often been rare. However, the picana was still used on criminals (which is why thieves and robbers so often wound themselves before surrender -- so that their first days under arrest will be in hospitals), and perhaps torture of Arizaga was an exception because of Braga's frustration over the inability to stop the Tupamaro bombings.

Montevideo 28 October 1965

Until today the Blanco leadership was firm in resisting union demands on salary increases and sanctions, but the union leaders began cultivating support from Colorado legislators on the sanctions issue. Today the Blancos, fearing political gains by the Colorados, announced that only half the sanctions will be discounted from October salaries with the other half coming in November. They also let it be known that pay and benefits increases beyond 25 per cent may be possible but not until next June.

The security situation has eased so strikingly that it is difficult to imagine we're still in a state of siege. Practically all those arrested during the early days have been released, and the CNT even held a mass rally on the no-sanctions issue without interference from police. The only strike still in effect is the municipal workers' walk-out and today the Army began collecting garbage that's been piling up in the streets for the past week.

The only reason the state of siege hasn't been lifted is that Arizaga's condition is still too bad -- if he were released the torture would be obvious. Blanco leaders are thus being forced to retain the state of siege in order to protect the Chief of Police, Ventura Rodriguez and the Minister of the Interior, Adolfo Tejera. The Arizaga case, in fact, is causing serious friction between the two, and the Colorados have seized it as a political issue. Tejera is conducting an in-house 'investigation'.

Through the Public Safety mission I've put in Commissioner Otero, Chief of Police Intelligence, for an International Police Academy course beginning in January in Washington. After about twelve weeks at the Academy, Otero will be given special training in intelligence operations by headquarters. I've asked that the Office of Training concentrate on physical surveillance and on penetration operations against communist parties -- targeting, spotting, recruitments, agent-handling. Maybe with enough training for officers like Otero the police will be able to recruit agents and pay for information instead of having to resort to torture.

God knows he needs this training. He's been bogged down in the Cukurs case since March (the kidnapping of an ex-Nazi that went awry) for the sake of publicity and a little travel. Cukurs was finally cremated and a few days ago Otero turned his ashes over to his son together with a dental bridge. The son and the Cukurs family dentist, however, told reporters that the dead man never wore a bridge so now Otero's looking for another body.

Montevideo 4 November 1965

Today the state of siege was lifted -- Arizaga's condition improved enough for him to be released. The Colorados continue to attack the government over torture but Tejera claims the Ministry is continuing the investigation. Nothing will come of it, of course, because the Chief of Police won't allow it. If pushed he can summon support from the Army command and the Blancos don't want to lose power to the military over a sordid case of torture. Neither do the Colorados so there's no danger to the torturers.

Throughout the state of siege the Blanco senators and deputies, by staying away from sessions called to consider the emergency decree, were able to prevent a quorum and a Colorado vote to lift the siege. On the negotiations, however, the Colorados are forcing the Blancos into a more compromising position. Yesterday the Colorado-dominated Senate passed an amnesty bill annulling all firings and sanctions against workers engaged in strikes. Similar action is expected in Deputies.

Montevideo 10 November 1965

Negotiations have broken down, strikes are again under way and the state of siege may be reinstated. Although municipal workers throughout the country struck again, and the Montevideo transport system is striking for October salaries, the main attack now is back with the central administration unions. They rejected the proposed salary increases for next July and are striking for forty-eight hours today and tomorrow, seventy-two hours next week and an indefinite period the week after. Negotiations between the government and the unions of the autonomous agencies and decentralized services continue but without progress. The Chamber of Deputies passed the amnesty bill today, in spite of the strikes, and it now goes to the NCG, where anything less than a veto would indicate complete collapse of the dominant Blanco faction. The amnesty bill must have constitutional incongruities if strikes by government employees are illegal; but everything here seems so incongruous that an unconstitutional law would only be normal.

The Colorados are also taking up the Arizaga case in the Chamber of Deputies -- certain of them want to make political gain by feigning shock and surprise -- but a Deputies investigation stands no more chance of making headway in AVALANCHE than the Minister's investigation.

Montevideo 16 November 1965

Otero and the police in general have pulled off another stunning bungle. Secretary of State Rusk is here on an official visit and this morning he laid a wreath at the monument to Jose Artigas, the father of Uruguayan independence, in Independence Plaza. For a week I've been insisting with Otero, who is in charge of security preparations, that all precautions be taken to avoid any incidents related to Rusk's visit. This morning Otero and about 300 other policemen were forming a cordon around the wreath-laying site when suddenly a young man slipped through the cordon and ran all the way up to Rusk, expelling an enormous wad of spittle in the Secretary's face. Otero was standing right next to Rusk in a stupor, but he recovered and with other police carried off the attacker while Rusk wiped his face dry and laid the wreath. Tonight Colonel Rodriguez ‡ and other government officials formally called on the Embassy to apologize. The attacker, a member of the PCU youth organization, is in the hospital where he was taken after a police beating and is reported to be in a coma.

Montevideo 19 November 1965

Several days ago an important student conference began here under sponsorship of the FEUU and the Prague-based International Union of Students. The conference is called the Seminar on Latin American Social and Economic Integration and has drawn about sixty student delegations from all over the hemisphere. Through AVBUZZ-1 we have put out adverse editorial comment in the Montevideo press, exposing the Seminar as organized, financed and directed by the Soviets through the IUS front and through PCU control of the FEUU. We also arranged for handbills on the same theme to be distributed, as well as a humorous facsimile of an Uruguayan 100-peso note labelled as the roubles with which the Soviets are financing the Seminar. We have also ordered from TSD copies of official letterhead stationery of the Seminar with the signature of the Seminar's Secretary for Foreign Affairs, Daniel Waksman, reproduced at various levels in order to coincide with whatever length of letter we decide to attribute to Waksman. If it comes soon we will have a black letter to add to the other propaganda against the Seminar. Waksman is a leader of the FEUU.

The breakthrough with the Bank of the Republic union failed and new strikes are spreading in protest against the NCG'S veto of the amnesty bill. The central administration has been joined by government banks, the Clinics Hospital, primary and secondary schools, the University and the judicial system. Today and tomorrow the civil aviation workers are closing the airports. Other strikes to follow.

Only a week remains until the constitutional deadline for increasing government employees' salaries because elections are scheduled for 27 November 1966. As no increases can be granted during the year before elections, the coming week is sure to be agitated.

Montevideo 27 November 1965

The past week stands as another large question-mark for Uruguayan democracy. Beginning with the civil aviation strike on 19-20 November and ending with the passage by Congress of the bill for salary increases last night, not a day has passed without an important strike by government employees. Schools, banks, the University, the postal and telecommunications systems, printers, port workers, the central administration and others struck with increasing intensity until the entire country was paralysed on 25 November by a CNT-organized general strike. The port of Montevideo was closed, the airports closed again, and no newspapers appeared on 25 or 26 November. Street marches and other demonstrations by thousands of workers were almost daily occurrences, usually ending at the Legislative Palace for speeches demanding benefits to offset inflation. Yesterday, the final day for salary increases for a year, the demonstrations culminated.

With the magic hour at midnight, the NCG convened at 7 p.m. while all the Blanco ministers were called to Government House and told to wait in an office adjacent to the NCG meeting-room. At 7:20 the seventy-two-page document consisting of 195 articles arrived at the NCG from the Chamber of Deputies. (The bill contains many provisions on government finances in addition to salary increases.) After a swift review it was approved. The Colorado Councillors were forced to vote for it without even having seen the text, and the Blanco ministers who also had not seen it (except the Treasury Minister) were also required to approve and sign it. At 8:55 the Minister of the Treasury arrived with the document back at the Chamber of Deputies where it was debated until finally approved at 11:34. Waiting just outside the Deputies' Chamber was the elderly President of the Senate who rushed the document over to the Senate, arriving at seventeen minutes before midnight. Although several Senators took the floor, there was no time even to read the document and at one minute to midnight the Senate voted approval.

The bill provides for significant salary increases for government employees, although not all that was demanded, together with new taxes on agricultural and livestock activities, wool exporters and the banking system. Even so the opposition has already denounced the bill as very inflationary. Today almost all the strikers have returned to work -- the waterworks being the notable exception. Conflicts, however, haven't ended because the sanctions issue persists. Since the NCG veto of the amnesty bill, the Blanco legislators have prevented a quorum, and the Blanco NCG Counsellors are calling for new sanctions for the most recent strikes. Peace between the government and its workers is still remote.

Montevideo 3 December 1965

For the Khalturin audio operation an apartment just above and to the side of the Salguero apartment was obtained for a listening post. My secretary was glad to move in for the time being, but the problem of an LP keeper hasn't been solved. According to the AVENGEFUL telephone tap on the Soviet Embassy Khalturin regularly spends Saturday afternoons at the apartment. His liaison with Borisova continues, but now his wife has arrived -- although she is not happy and has hinted she may soon return to the Soviet Union.

Until a full-time LP keeper can be obtained this operation will be only marginal, although Conolly, the Soviet operations officer, goes to the LP on Saturdays and sometimes on Sundays to switch on the transmitters and, if Khalturin is there, to record what is said. Last Saturday I went with him after lunch. The transmitters for the switches are housed in grey Samsonite suitcases of the two-suit size. After opening them flat and setting up the antenna, taking care that it points in the direction of Khalturin's apartment, the operator pushes the transmitter button for five seconds. If the switch doesn't work the process is repeated until it does, though not too often because the transmitter can overheat. Included in the suitcase is a lead apron so that operators can avoid unwanted sterilization. Maybe Khalturin would like an apron, too, but Conolly didn't take my point. Another grey Samsonite suitcase contains the receiver-recorder and is similarly opened flat with special antenna raised. These technical operations are boring -- no decent production from this one yet.

Montevideo 6 December 1965

The Blancos on the NCG insist the sanctions remain and be increased with any new strike activity. Discounts from salary payments are to be made at the rate of four days per month until all sanctions are collected which in some cases now total eighteen days. Partial work stoppages have already started in the autonomous agencies and decentralized services and in the Ministry of the Treasury the union called for the Minister's resignation. The income tax collection office of the same Ministry paid him a similar compliment in declaring him persona non grata. The central administration employees joined the others in announcing new strikes and staged a march to the Ministry of the Treasury demanding a dialogue with the Minister on sanctions. Police broke up the march with considerable force.

The state of siege is going back into effect tomorrow. I've had calls both from Antonio Piriz and from Alejandro Otero advising that police tonight will start rounding up as many important labour leaders as possible. They are hoping that they will catch a number of important leaders by starting tonight instead of waiting until the NCG votes to reinstate the state of siege tomorrow.

According to the same police agents the Blanco leaders want to arrest the government union leaders before word gets around of the new stage of siege -- wishful thinking the way secrets are spread in this country. Nevertheless the Minister of the Treasury announced tonight that the latest plan by central administration employees for easing the sanctions had been rejected by the NCG -- while he inferred that negotiations will continue tomorrow. Odds are good that the union leaders have already gone back into hiding.

Montevideo 7 December 1965

As expected, practically all the government workers union leaders learned of the new state of siege and evaded police arrest. This morning, just as the street march by the central administration employees reached Independence Plaza in front of Government House, the Blanco NCG Councillors voted to reimpose the state of siege. Adolfo Tejera, Minister of the Interior, made the request on the grounds of preventing subversion of the national economy by organized labour. The decree was passed to the Legislature but again the Blancos are staying away from the meetings in order to prevent a quorum.

The police, especially Otero's department, looked pretty bad, although the demonstration outside the NCG offices this morning was broken up without violence. Only fifteen arrests have been made in spite of their early start, and already the PCU 'self-defence' squads are back in action distributing propaganda and generally defying the state of siege. In order to help Otero and the police to save face, Horton agreed that I should pass to Otero the name and address of one of the leaders of the 'self-defence' squads, Oscar Bonaudi, for preventive detention. As there are only three squads, AVCAVE-1 being on one and AVOIDANCE-9 being on another, the arrest of Bonaudi will cause a spy scare, and probably make the PCU decide to curb the squads' propaganda activities for a while. Riefe doesn't want Bonaudi arrested because he's afraid his agents will be jeopardized, but Horton wants to help the police, particularly Otero, to improve their image.

Montevideo 10 December 1965

Big news! Alberto Heber, the Blanco NCG Councillor who will take over as NCG President in March, today proposed that Uruguay break diplomatic relations with the Soviet Union because of Soviet interference in Uruguayan labour troubles. We don't have direct access to Heber but can check with Colonel Rodriguez. I have no means of seeing the Soviet chauffeur until next week to discover their reaction, but Conolly is concentrating on the AVENGEFUL tapes. Headquarters is delighted and confirms that we should support the break in any way we can. Already Lee Smith, ‡ the new covert-action operations officer, who recently, replaced Alex Zeffer, is preparing a black letter linking the Soviet cultural attache with leftist student activities. Lee is using the stationery with the letterhead of the Seminar on Latin American Social and Economic Integration that the TSD prepared for us last month.

My police are looking better than ever. Yesterday the newspaper printers' union had just voted not to strike when police broke into the union hall and arrested over 100 people. These were later released, however, but another vote was taken, this time the strike was on, and today and tomorrow Montevideo has no newspapers.

Montevideo 11 December 1965

We have worked all day preparing a report for NCG Councillor Alberto Heber that will justify both a break in diplomatic relations with the Soviets and the outlawing of the PCU. We began the project last night when John Cassidy, ‡ who replaced O'Grady as Deputy Chief of Station, got an urgent call from one of his contacts in the Uruguayan military intelligence service. They had been asked by Heber earlier yesterday for a report on the Soviets, but since they had nothing, they called on the station for assistance.

This morning all the station officers met to discuss the problems of trying to write the Heber report. After we decided to write it on a crash basis, Conolly chose the names of four Russians to be in charge of their labour operations, and then went through his files to find concrete information to give weight to this fantasy report. Similarly Riefe selected certain key CNT and government union leaders as the Uruguayan counterparts of the Soviets, together with appropriate true background information that could be sprinkled into the report, such as trips by PCU leaders to Prague and Moscow in recent months. Cassidy, Conolly, Riefe and I then wrote the final version which Cassidy and I translated into Spanish. Tonight Cassidy took it out to AYBUZZ-1 for correction and improvement of the Spanish, and tomorrow he'll turn it over to the military intelligence service (cryptonym AVBALSA). For a one-day job the twenty-page report is not bad. Certainly it includes enough information that can be confirmed to make the entire report appear plausible.

We prepared this report with media operations in mind, apart from justifying the break with the Soviets and outlawing the PCU. Heber has already said publicly that he has strong evidence to support the break, though without the details which he hasn't yet got, but if the break is not made we can publish the report anyway and attribute it to Heber -- he is unlikely to deny it. In that case it will cause a sensation and prepare the way for the later decisions we want, and also provide material for putting to the media by other stations, such as Buenos Aires and Rio de Janeiro. According to Heber, the Blanco NCG Councillors will meet tomorrow (Sunday) to decide on the break, and formal NCG action will follow on Monday or Tuesday. The Minister of Defense, meanwhile, has suggested outlawing the PCU and closing propaganda outlets such as El Popular.

The black letter connecting the Soviet cultural attache with the Seminar on Social and Economic Integration will be put out in El Plata, the afternoon daily belonging to the Blanco faction led by the N CG President. The letter is a statement of appreciation for technical advice, and refers to instructions relating to the Seminar and brought by a colleague who recently returned to Montevideo. Thanks are also given for 'other assistance'. Although the letter is vague, Soviet financing and control of the Seminar is easily inferred. The forged signature is that of Daniel Waksman, the Seminar Secretary for Foreign Relations.

Tension on the labour front is higher than ever with mass arrests of workers (over 200 arrested at the Bank of the Republic and over 200 more at a tyre company), and a call by the CNT for another general strike on 14 December. Lightning street demonstrations against the government continue and several residences of government leaders and political clubs of the traditional parties have been bombed. Our estimate is that if the new general strike is not called off, the Blancos will break relations with the Soviets, to be followed by strong measures against the PCU and leftist labour leaders.

Montevideo 12 December 1965

This morning before Cassidy turned over the Heber report to military intelligence, Horton decided first to show it to Colonel Ventura Rodriguez, the Chief of Police, as the top military officer in public security. We took it over to Rodriguez's office, where we sat around the conference table with Rodriguez and Colonel Roberto Ramirez, Chief of the Guardia Metropolitana, who was listening to a soccer game on his little transistor radio.

As Rodriguez read the report, I began to hear a strange low sound which, as it gradually became louder, I recognized as the moan of a human voice. I thought it might be a street vendor trying to sell something, until Rodriguez told Ramirez to turn up the radio. The moaning grew in intensity, turning into screams, while several more times Rodriguez told Ramirez to turn up the soccer game. By then I knew we were listening to someone being tortured in the rooms next to the AVENGEFUL listening post above Rodriguez's office. Rodriguez at last finished reading the report, told us he thought it would be effective and Horton and I headed back for the Embassy.

On the way back Horton agreed that we had been listening to a torture session and I explained to him the location of the torture room with relation to the AVENGEFUL LP and Rodriguez's office. I wondered out loud if the victim could be Bonaudi, whose name I had given to Otero for preventive detention. Tomorrow I'll ask Otero, and if it was Bonaudi I'm not sure what I'll do. I don't know what to do about these police anyway -- they're so crude and ineffectual. I ought to have known not to give any names to the police after the Arizaga case last month, without a full discussion, with the Chief if necessary, of what action the police would take.

Hearing that voice, whoever it was, made me feel terrified and helpless. All I wanted to do was to get away from the voice and away from the police headquarters. Why didn't Horton or I say anything to Rodriguez? We just sat there embarrassed and shocked. I'm going to be hearing that voice for a long time.

Back at the Embassy the Ambassador told Horton that the NCG President had just this morning asked him if he had any information that might be used to justify breaking relations with the Soviets. Horton showed him the Heber report and the Ambassador suggested he should give it to Washington Beltran, the NCG President. The Ambassador took the original out to Beltran's house while a copy went to the military intelligence service, with the warning that if it were passed to Heber he should be advised that Beltran already has a copy.

Giving the report to the Ambassador for Beltran has certain advantages but Heber may be reluctant to use it now. Too bad, because Heber is the councillor who convinced the others to reinstate the state of siege, the one who suggested the break, and will moreover be the NCG President in less than three months' time.

Montevideo 13 December 1965

The impasse is broken and the break with the Soviets is off for the time being. Last night the government and bank unions reached agreement that the firings of previous months would be cancelled and that sanctions against strikers will be spread out over many months as painlessly as possible. The agreement was followed last night by the release of all the bank workers who had been arrested late last week. Early this morning similar agreements were reached with central administration unions. Communist and other militant leaders of the CNT had no choice, as the government unions accepted these solutions, but to cancel the general strike scheduled for tomorrow.

With the general strike broken and agreements with unions being made, the government has dropped the threat of breaking relations with the Soviets. The report prepared for Heber will not be brought out by the government for the time being - we can do so later. The state of siege will continue until firm agreements with all the government unions are reached. The leftist daily Epoca is still closed for inflammatory propaganda, and almost 300 are still under arrest.

Somewhat anti-climatic but useful, our black-letter operation against the FEUU and the Soviet cultural attache caused a sensation when it was published by El Plata this afternoon. Banner headlines announce' Documents for the Break with Russia' and similar treatment will be given in tomorrow morning's papers. Denials from Daniel Waksman, the FEUU leader to whom the letter is attributed, were immediate, but they will be given scant coverage except in the extreme-leftist press. AVBUZZ-1 has arranged for Alberto Roca, publisher of the station-financed student newspaper Combate, to take responsibility for the black letter in order to relieve El Plata of liability.

Through AVBUZZ-1 we'll place new propaganda, in the form of editorial comment, using the unions' 'capitulation' to avoid the break with the Soviets as proof of Soviet influence over the unions (although in fact the government conceded quite a lot more than the unions).

Montevideo 14 December 1965

More unexpected developments. Adolfo Tejera, the Minister of the Interior, tried to manoeuvre Colonel Rodriguez, the Chief of Police, into a position where the Chief would be forced to resign. The ploy backfired, forcing the Minister to offer his resignation, as yet unaccepted, to the NCG. It's all so complicated and bizarre that not even after explanations by Otero and Piriz am I completely sure of what happened.

The episode began not long after midnight when Otero called to advise me that the Ministry of the Interior had just announced that certain union leaders were in the Soviet Embassy and that the Embassy was surrounded by police to prevent their escape. Otero said the report about union leaders having taken refuge in the Embassy is false, although police had indeed been ordered to surround the Embassy. We arranged to meet this morning for clarification.

This morning the sensational story of the union leaders' refuge in the Soviet Embassy is carried in the press. According to the Director-General of the Ministry of the Interior, who released the story to the press just before Otero's call last night, police had followed certain union leaders who are on their arrest list after a negotiating session between them and the Minister. The police reported that the union leaders had entered the Soviet Embassy which was then surrounded by police.

This morning Otero told me that police had not followed the union leaders after their meeting with the Minister, but that the Director-General of the Ministry had followed them. The Director-General lost them in the general vicinity of the Soviet Embassy and later, probably in consultation with the Minister, decided to order police to surround the Embassy and attribute the report of their being there to the police. The Director-General gave the order to the precinct involved rather than through the police headquarters, in order to have the Embassy surrounded before the story was checked. The purpose of the manoeuvre was to make the police look ridiculous, because Colonel Rodriguez has protested within his Blanco faction that the Minister has been negotiating directly with union leaders who are on the police arrest list.

Later today the police department issued a statement, authorized by Rodriguez, denying that the police gave any report to the Ministry of the Interior about persons seeking refuge in the Soviet Embassy, and also denying that police had followed union leaders after a meeting with the Minister. Also later today the police arrested one of the union leaders in question even though the Minister ordered that he be left alone, and only the intervention of two NCG Councillors obtained his release.

Otero told me the screams Horton and I heard were indeed Bonaudi's. Braga, ‡ the Deputy Chief of Investigations, ordered the torture, which lasted for three days during which Bonaudi refused to answer any questions. Otero said Braga and others were surprised at Bonaudi's resistance. That's the last name I pass to the police as long as Braga remains.

Montevideo 16 December 1965

The Blancos have accepted the resignations of both the Minister and the Chief of Police. The Ministry of the Interior now passes to the Blanco faction led by Alberto Heber, who is due to become NCG President in March. The new Minister is Nicolas Storace, ‡ and the new Police Chief is Rogelio Ubach, ‡ another Army colonel who is currently Uruguayan military attache in Asuncion, Paraguay.

For some time yesterday it seemed as if the solidarity with Rodriguez expressed by senior military officers would result in only Tejera's dismissal, but first reports on Ubach from the Embassy military attache office are favourable. Horton and I will call on him officially after he takes over, probably next week. Station files also reflect favourable information on Storace from a previous period as Minister of the Interior in the early 1960s. Next week we will also call on Storace, and in the meantime perhaps the police department will come out of the paralysis of the past three days and get on with enforcing the state of siege.

Besides Rodriguez, the rest of the military officers who form the police hierarchy have also resigned or will resign shortly -- meaning we will have a new Chief of the Guardia Metropolitana as police supervisor for AVENGEFUL telephone tapping. There are no indications that problems will arise over continuing this operation.

We have had a short visit from the new Deputy Chief of WH Division, Jake Esterline. ‡ He has replaced Ray Herbert who is retiring. He told me that I won't be able to return to Washington in three months as I had planned because my replacement will be delayed some six months. A disappointment as the situation at home is difficult, but I agreed to stay on as long as necessary.

Horton gave a buffet supper for Esterline and all the station personnel. During a heated conversation on why Holman was sent to a trouble-spot like Guatemala, Esterline admitted that he had tried to change Holman's assignment because news of Holman's incompetence in Montevideo had gradually gotten back to headquarters. However, Des FitzGerald who took over as DDP from Helms, was reluctant to change the assignment because agreement had already been obtained from the State Department. Esterline added, however, that he and the new Chief of WH Division, Bill Broe, ‡ are making sure that Holman's criticism of station officers is offset by special memoranda for the personnel files.

I would have liked to talk to Esterline about matters of principle related to counter-insurgency -- such as how we can justify our operations to support the police and beat down the PCU, FEUU and other leftists when this only serves to strengthen this miserable, corrupt and ineffectual Uruguayan government. If we in the CIA, and the other US programmes as well, seek to strengthen this and other similarly clique-serving governments only because they are anti-communists, then we're reduced to promoting one type of injustice in order to avoid another.

I didn't mention this to Jake for the same reason, I suppose, that none of us in the station discusses the problem really seriously, although cynicism and ridicule of the Blancos, Colorados, police, Army and others whom we support is stronger than ever in the station halls -- ample proof that we all see the dilemma. But serious questioning of principles could imply ideological weakening and a whole train of problems with polygraphs, security clearance, career, personal security. For all of us the discussions remain at the level of irony.

Montevideo 24 December 1965

Yesterday the state of siege was lifted by the NCG while the Bank of the Republic began delivering 500 million pesos to the various government offices for payment of Christmas bonuses. Today seven of the bankers imprisoned for the frauds discovered in April were released -- not exactly harsh punishment considering all the savings lost.

Media promotion of the break with the Soviets continues through AVBUZZ-1 in the form of announcements by real and fictitious organizations backing the break. One typical announcement was made a few days ago by the National Feminist Movement for the Defense of Liberty ‡ which tied the break in relations with 'the great work of national recuperation'.

The break is off for the foreseeable future, nevertheless, as Storace, the new Minister of the Interior, told Horton and me on our first visit. He is anxious to keep AVENGEFUL going and has so instructed the new Chief of Police. Storace is the government's chief negotiator with the unions. In order to keep up closely with the new Immigration Director, Luis Vargas Garmendia, ‡ who is developing a new plan relating to communist diplomatic missions in Montevideo. Horton asked me to be in charge of working with Vargas whom we met at our second meeting with Storace.

Horton and I have also called on the new Chief of Police, Rogelio Ubach, ‡ who presented us to Lieutenant-Colonel Amaury Prantl, ‡ the new Chief of the Metropolitan Guard and supervisor of the AVENGEFUL listening post. Ubach wants to continue and expand the AID Public Safety programme which is just now completing its first year. Emphasis is still on communications systems but special attention is now being given to the Metropolitan Guard, the anti-riot shock troops, for whom tear-gas, ammunition, helmets and gas-masks have been provided. In addition to training by Public Safety AID officers in Montevideo, ten police officers have been sent to the International Police Academy in Washington. Cost so far: about 300,000 dollars.

Another important weapons robbery occurred the other night -- possibly the work of the Tupamaros. They got away with eighty-six revolvers, forty-seven shotguns, five rifles and ammunition, all taken from a Montevideo gun shop. Commissioner Otero leaves in three weeks for Washington. Headquarters decided to train him at the International Police Services School, ‡ which is a headquarters training facility under commercial cover, instead of at the AID-administered International Police Academy. AID cover for the training, however, is retained.

Montevideo 3 January 1966

Principal labour unrest since the general strike was broken last month has been in the Montevideo transport system. That dispute was solved but inflation is worse than ever which guarantees more labour trouble. According to government figures the cost of living went up 16.6 per cent in December alone, while inflation for all of 1965 was 85.5 per cent -- twice the rate for 1964. The School of Economics of the University of the Republic, however, puts 1965 inflation at 99.6 per cent. No wonder the U I put the Uruguayan social and economic crisis among the ten most important news stories of the year.

The main reason for the jump in inflation in November and December was the economic reforms adopted in October, particularly the freeing of the peso for imports which caused it to go from the old official rate of 24 up to about 60. These reforms were necessary for the Bank of the Republic to obtain refinancing, and cleared the way for the interim credit of 48 million dollars signed on 1 December. But more reforms will be needed for the IMF stamp of approval because another 50 million dollars' credit will be needed this year. Without IMF backing, credit can't be obtained except under shady or usurious conditions. Already the Minister of the Treasury has made another trip to Washington for meetings with the IMF. Trouble is that while the IMF-imposed reforms are supposed to stimulate exports, the immediate impact of stabilization falls on the lower middle class and the poor who can least cope.

For the Blancos this means trouble in this year's elections. Because of opposition by rural producers, mainly the sheep and wool ranchers, the new taxes created in November are inadequate to cover the salary and benefits increases for government employees. This means still more deficit and more inflation, and although rural producers were the most favoured by the October measures, contraband exports to Brazil are expected to continue.

Salvation for the Blancos may be in constitutional reform, the movement for which continued to grow all last year. The Ruralistas are still leading the reform movement (today Juan Jose Gari ‡ resigned as President of the State Mortgage Bank in protest over failure of his allied Blanco faction to declare for reform) but the movement is growing both in Blanco and Colorado circles. Chief among reforms would be the return to a one-man executive in order to facilitate decision-making. The ominous sign in the reform movement, however, is the predominance therein of rural producers. A Colorado newspaper in a recent editorial against return to the one-man presidency pointed out that practically all of the 200 families that own 75-80 per cent of Uruguay's rural lands are in favour of a one-man executive. It seems that if better decision-making is attained, land reform will only get further away. Happily for me, Horton agreed that I could drop the political-contact work altogether.

Stations all over the hemisphere are engaged in a propaganda campaign against the Tri-Continental Conference that opened yesterday in Havana. It's a meeting of over 500 delegates from seventy-seven countries -- some delegates represent governments and some represent extreme-left political organizations. Themes of the Conference are not surprising: anti-imperialism; anti-colonialism; anti-neo-colonialism; solidarity with the struggles in Vietnam, Dominican Republic and Rhodesia; promotion of solidarity on the economic, social and cultural levels. It is a major event of the communist bloc and is supposed to last until 12 January.

For some months headquarters has been preparing the propaganda campaign and asked long ago for stations to try to place agents in the delegations. We had no agent in a position to go to the Conference, but AVBUZZ-1 is turning out plenty of material for the media. Our themes are two: exposure of the Conference as an instrument of Soviet subversion controlled by the KGB, and frank admission that the danger posed by the Conference calls for political, diplomatic and military counter-measures.

Since the purpose of the Conference is to create unity among the different dis-united revolutionary organizations, propaganda operations are also being directed at these organizations -- mainly capitalizing on resistance to dominance by the Soviet line and Soviet-lining parties. The more we can promote independence and splits among revolutionary organizations the weaker they'll be, easier to penetrate, easier to defeat.

Luis Vargas, ‡ the Director of Immigration, has agreed to review the case of the North Koreans who came temporarily and have been here for almost a year-and-a-half. For months we thought Tejera might take action, but nothing ever happened. Hopefully Vargas and Storace, ‡ the Minister of the Interior, will now be willing to ask them to leave.

Montevideo 7 January 1966

The Soviets at the Tri-Continental Conference have given our propaganda operations perfect ammunition in a speech yesterday by S. P. Rashidov, Chief of the Soviet delegation who is a member of the Presidium and Vice-Prime Minister. Rashidov affirmed the resolution of the Soviet Union to give maximum support in money, arms and munitions to insurrectional movements organized to promote social revolution. He said that right now the Soviets are backing liberation movements in Guatemala, Peru, the Dominican Republic, Puerto Rico, Guyana and Venezuela.

The speech is carried by the wire services and headquarters wants prominent display in local newspapers. In countries maintaining diplomatic relations with the Soviet Union we are to make sure appropriate government officials get copies or resumes of the Rashidov speech, and editorial comment is to be produced calling for re-examination of relations with the Soviets in the light of the Rashidov admissions.

Khalturin's wife has decided to return to the Soviet Union because she can't stand the summer heat here. Although Dick Conolly, ‡ the Soviet operations officer, has been able to monitor the audio installation in Khalturin's apartment only sporadically, he has come up with several meetings and occasional visits to the apartment by Nina Borisova. Because of transcribing difficulties the tapes are being pouched to headquarters and so far I've heard of no startling information. Khalturin, meanwhile, has begun to show interest in the wife of Carlos Salguero, ‡ the owner of his apartment, and Conolly is working closely with them as access agents to Khalturin.

After thinking over how I might use my acquaintance with Borisov, the Soviet Consul and husband of Borisova, to exploit the triangle, I proposed to Conolly and Horton that I tell Borisov of his wife's infidelity more or less 'as one man to another'. The purpose would be to place Borisov in the difficult position of either not reporting something important that I tell him -- dishonesty in reporting might be-a first step to defection -- or reporting that a CIA officer has told him that his wife is sleeping with his chief. Although sexual behaviour is fairly relaxed among Soviets, the fact that the CIA is monitoring a liaison within the KGB office might make reporting difficult for Khalturin as well as Borisov. Possibly, if an honest report went to Moscow, either Borisov or Khalturin or both might be recalled with the attendant disruption and possible reluctance of either to return under a cloud. At Horton's instruction I made the proposal in writing to headquarters -- both he and Conolly think it's a good idea.

Montevideo 13 January 1966

Otero left today for training at the International Police Services School in Washington. Horton and I went to police headquarters to bid farewell and we took advantage of the meeting with Colonel Ubach, ‡ the Chief of Police, to propose bringing down one of our officers to work full-time with police intelligence, using the AID Public Safety mission as cover. Ubach isn't terribly quick mentally, but he agreed, as he does to everything else we propose. Now we'll get approval from Storace, the Minister of the Interior, and advise headquarters to select someone. Once this matter is settled we'll begin working on the Minister, the Chief, and others in order to take the intelligence department out of the Investigations Division, preferably on an equal bureaucratic level as Investigations or at least with some autonomy. If approved we'll try to manoeuvre Inspector Piriz in as Intelligence Chief because he's much more experienced, mature and capable than Otero who suffers from impatience and is disliked by colleagues. Piriz, moreover, has already been on the payroll for some years and his loyalty and spirit of cooperation are excellent. While Otero is away I'll work closely with his deputy, Sub-Commissioner Pablo Fontana. ‡

Montevideo 20 January 1966

AVBUZZ-1 has been pounding away at the Tri-Continental Conference, which ended a few days ago, but he may have overplayed his hand a little. He arranged for a statement to be published in the name of an organization he calls the Plenary of Democratic Civic Organizations of Uruguay. The statement was perfect because it tied the Tri-Continental with the Congress of the People, the CNT and the waves of strikes during late last year. The problem was his vivid imagination in naming signatory organizations to demonstrate mass backing: the National Feminist Movement for the Defense of Liberty, ‡ the Uruguayan Committee for Free Determination of Peoples, ‡ the Sentinels of Liberty, ‡ the Association of Friends of Venezuela, ‡ the Uruguayan Committee for the Liberation of Cuba, ‡ the Anti-Totalitarian Youth Movement, ‡ the Labor Committee for Democratic Action, ‡ the National Board for the Defense of Sovereignty and Continental Solidarity, ‡ the Anti-Totalitarian Board of Solidarity with the People of Vietnam, ‡ the Alliance for Anti-Totalitarian Education, ‡ the Anti-Communist Liberation Movement, ‡ the Free Africa Organization of Colored People, ‡ the Student Movement for Democratic Action, ‡ the Movement for Integral University Action. ‡

Vargas, the Director of Immigration, is very excited about promoting action against communist bloc diplomatic and commercial missions in Montevideo. He showed me the Heber report of last month, without telling me how he got it -- probably from Heber himself, and asked if I would use it and any other information we have in order to justify the expulsion of key Soviets instead of a break in diplomatic relations. He and Storace (and presumably Heber) now want us to prepare a report naming whichever Soviets we want as those responsible for meddling in Uruguayan labour and student organizations. At the appropriate moment the report will be used for declaring those Soviets persona non grata. Conolly, Riefe, Cassidy and I have already started on this new report. We will have to work fast to take advantage of the resentment caused by the Rashidov speech and the Tri- Continental and of Heber's clear intention to use expulsions and the threat of expulsions as a tool against: the unions. Vargas is also going to begin action against the non-diplomatic personnel of communist missions, especially those who are here as officials of the commercial missions, which would include Soviets, Czechs, East Germans and the North Koreans. He's going to start with the North Koreans. He has discovered several ways in which he is going to prepare expulsions of Soviet bloc diplomatic and commercial officers. These expulsions will be mainly on technicalities he has found in the 1947 immigration law that forbids entry to persons who advocate the violent overthrow of the government, on irregularities in the issue of visas, and on interpretations of the status of Soviet bloc commercial officers. Little by little he hopes to cut down the official communist representation here by expelling the Koreans, East Germans and certain Czechs and Soviets -- none of whom have diplomatic status -- and by the persona non grata procedure where diplomatic officials are concerned.

I am encouraging Vargas to bring the approval authority for all visas to diplomats and others representing communist countries under his control. According to the current regulations he is supposed to have power of approval over all visas except diplomatic ones, but in recent years the Director of Immigration's office hasn't exercised this function. In order to obtain control of diplomatic visas, Vargas will prepare an instruction which Storace will get approved by the NCG. All this will take time but at least we're beginning to move. Our purpose is to get prior advice on visa requests and to give Vargas information about persons for whom the visas are requested. We will be able to delay the visas and to, get visas refused where desirable -- all of which will help to cut back the size of the communist missions, the numbers of intelligence officers in them, and the damage. they can do.

In Havana yesterday it was announced that a new organization is being formed to coordinate revolutionary activities in Latin America. It will be a 'solidarity' organization to channel assistance to liberation movements, and in the announcement Castro was quoted as praising the leadership of the revolutionary movement in Uruguay. Ambassador Hoyt asked us to prepare a report on these latest developments as well as on the Rashidov speech and other matters related to the Tri-Continental. He plans to give this material to the Foreign Minister because he says the NCG is going to take some kind of action.

Montevideo 29 January 1966

Our use of the Rashidov speech and the Tri-Continental propaganda has produced a surprising show of strength by the Uruguayan government. Today the Foreign Minister called in Soviet Ambassador Kolosovsky and asked for an explanation of Soviet participation in the Conference, since Conference speeches and documents are flagrant violations of the principles of self-determination and non-intervention as expressed in the UN Charter. The Foreign Minister pointedly asked Kolosovsky if Rashidov, as Chief of the Soviet delegation, had been speaking on his own account or as a representative of the Soviet government. Kolosovsky answered that he will request clarification from Moscow. These exchanges have been reported in the media, especially Kolosovsky's failure to respond. Cables have gone to other WH stations for replay.

Other diplomatic moves include a statement by Venezuela that it will examine its diplomatic relations with countries represented at the Conference. In the OAS, Peru presented a resolution condemning the Conference, and ORIT headquarters in Mexico, together with member organizations in various countries, have sent telegrams to the OAS backing the Peruvian resolution. The US representative in the OAS, speaking for the Peruvian resolution, said that the Alliance for Progress will make Latin America a lost cause for communism -- he can't have spent much time in Latin America lately.

Manuel Pio Correa, ‡ the Brazilian Ambassador sent by the military government to suppress exile plotting, returned permanently to Brazil last week. He has been rewarded for his work here by appointment as Secretary-General of the Brazilian Foreign Ministry -- the number two post, equivalent to Under-Secretary. After he got back, a spokesman for the Brazilian Foreign Ministry commented that when Pio Correa made his final call at the Foreign Ministry here to bid farewell, he failed to deliver another protest note over the exiles.

Before leaving Montevideo Pio Correa told Horton that if things in Uruguay don't improve, sooner or later Brazil will intervene -- perhaps not militarily but in whatever way is necessary to prevent its weak neighbour from falling victim to communist subversion. Well, at least we won't have to send troops as we did ~with the Dominican Republic -- the Brazilians will take care of those fifty-eight trained Uruguayan communists when the time comes.

Montevideo 2 February 1966

Expulsion of the North Koreans was approved yesterday by Storace ‡ and will be ordered by Vargas in a matter of hours. Vargas's investigation revealed that former Interior Minister Tejera had ordered them to detail their commercial activities in August last year, but the Koreans refused and Tejera asked in November for a report from the Bank of the Republic which was never made. Vargas's new query to the Bank of the Republic brought a reply that the North Koreans' only transaction since they arrived in 1964 was a small purchase of hides about a year ago. As their tourist visas expired long ago and they are making no commercial transactions, expulsion will provoke little opposition. What the North Koreans were doing all this time is a mystery; most likely intelligence support for the Soviets.

The Blanco NCG Councillors are keeping up the heat against the Soviets over the Tri-Continental and Rashidov's speech. In a well-publicized meeting yesterday they received from the Foreign Minister a group of documents on the Tri-Continental, including those we prepared for the Ambassador. A copy of Rashidov's speech was one of the documents and we are trying to get a recording of the speech to pass to the Foreign Minister through the Ambassador -- hopefully the Miami station monitored the speech if it was broadcast: Although no decisions were reached, the meeting served to stimulate new speculation about a possible break in relations. This week-end the Argentine Foreign Minister will be in Punta del Este, and we are also creating press speculation that he and the Uruguayan Foreign Minister will be discussing the significance of Soviet diplomatic presence in the River Plate in the light of the Tri-Continental.

Today we helped to increase the tension even more by getting the military intelligence service to inspect a shipment of some thirty crates that recently arrived in the port from the Soviet Union. Through the AVENGEFUL telephone tap we learned about the crates and when the Army opened them today the Soviets protested loudly. They contained only tractors and parts but the incident contributed nicely to the current propaganda campaign.

Other propaganda on the Soviets and the Tri-Continental consists largely of press replay of significant articles published elsewhere -- right now, in fact, stations all over the hemisphere are putting out a coordinated campaign to demonstrate that the channel for communist subversion begins in Moscow with the KGB and flows out through the Cubans and organizations like the Tri-Continental to the local organizations. Central to this campaign is a Le Monde article of 20 January on formation of the Latin American solidarity organization. Cleverer, perhaps, is the publication of a 'secret' document through agents of the Caracas station in the Accion Democratica Party. The document, supposedly obtained at the Tri-Continental, purports to detail the formation of a Latin American solidarity organization and is being put out by various stations. Here we decided to use A. Fernandez Chavez, ‡ one of our media agents and also the representative of ANSA, the Italian press service. In Fernandez's version the programme of the solidarity organization is said to have been elaborated at a series of meetings in Montevideo, Rivera (on the Brazilian border) and Porto Alegre (capital of the Brazilian state bordering Uruguay). Officers of the Uruguayan-Soviet Cultural Institute were said to have participated.

Montevideo 4 February 1966

The NCG President has raised suddenly the spectre of a move against the Soviet mission again. Today he told newsmen at Government House that the Minister of the Interior, Storace, is preparing a new report on infiltration by communist diplomats in Uruguayan labour and student organizations. He also said that from what his own sources tell him, and from what Storace told him orally, there can be no doubt of illegal intervention by communist diplomats. He added that Storace's report will be presented to the NCG next week and will lead to an announcement of great moment.

The 'Storace report' is the one we wrote for Storace and Vargas two weeks ago to justify the expulsion of eight Soviet and two Czech diplomats. This report is already in Storace's hands and if all goes well we should have some sensational expulsions next week. The Soviets were selected very carefully in order to produce the desired effects. Both Khalturin, the KGB chief, and Borisov, the Consul and a KGB officer, were left off the expulsion list, so that we can continue to monitor the liaison between Khalturin and Borisova. We included on the list, however, Khalturin's most effective and hard-working subordinates, including the cultural attache whom we made trouble for in the spurious Waksman letter last year, so that Khalturin will have to take on an even greater work load. Reports from Salgueros ‡ and from the AVBLIMP observation post reveal that Khalturin is working extremely long hours and appears to be under severe strain. By forcing still more work on him we might trigger some kind of breakdown. We also included the Embassy zavhoz (administrative officer) because his departure will cause irritating problems in the Soviet mission's housekeeping function. I added the two Czechs in order to demonstrate KGB use of satellite diplomats for their own operations and in order to get rid of the most active Czech intelligence officers.

Closely related to the new move against the Soviets was the decision by the NCG yesterday to instruct the Uruguayan mission at the OAS to support the Peruvian motion condemning the Tri-Continental and Soviet participation in it. The motion has passed the OAS and will be sent now to the UN Security Council. The Soviets know what's coming, because AVAILABLE-1 my Soviet chauffeur, told me the whole mission is waiting under great tension to see how many and who are sent home.

Montevideo 11 February 1966

The North Koreans are out but the Soviet expulsion is postponed. Vargas couldn't get the Koreans to go to his office to be advised, so he sent police to bring them in by force. The three officials and their families left today. Expulsion of the Soviets is postponed for the time being because Washington Beltran, the outgoing NCG President, wants Alberto Heber, who comes in as NCG President on 1 March, to make the expulsion. Storace's presentation of our report to the NCG is also postponed but Vargas assured me that action will be taken sooner or later. At the moment he is going to proceed with progressive harassment and expulsion -- if politically acceptable -- of the East German trade mission, the Czech commercial office and the Soviet commercial office. Because officials of these offices haven't got diplomatic status, Vargas can assert control without interference from the Foreign Ministry. He is also proceeding on the new decree granting the Ministry of the Interior and the Immigration Department equal voice with the Foreign Ministry for approval of all visas, diplomatic included, for communist country nationals.

Too bad about the expulsions because today Soviet Ambassador Kolosovsky replied to the Foreign Minister on the Rashidov speech. He said Rashidov was speaking at the Tri-Continental in the name of certain Soviet social organizations and not in the name of the Soviet government. Appropriate media coverage is following in order to ridicule Kolosovsky's answer and to applaud the North Korean expulsion.

Montevideo 17 February 1966

Station labour operations continue to be centred on the Uruguayan Institute of Trade Union Education, ‡ which is the Montevideo office of the AIFLD. Jack Goodwyn, ‡ Director of the Institute, is working closely with Lee Smith, ‡ the station covert-action officer, in order to develop a pool of anti-CNT labour leaders through the training programmes of the Institute. The most effective programme, of course, is the one in which trainees are paid a generous salary by the Institute for nine months after completion of the training course, during which time they work exclusively in union-organizing under Goodwyn's direction. It is this organizational work that is the real purpose of the AIFLD, so that eventually our trade unions can take national leadership away from the CNT. Goodwyn's job, in addition to the training programme, is to watch carefully for prospective agents who can be recruited by Smith under arrangements that will protect Goodwyn.

The goals will take a long time to reach and progress often seems very slow. Nevertheless Goodwyn has already achieved several notable successes in the social projects field, which are showcase public-relations projects such as housing and consumer cooperatives. Using a four-million-dollar housing loan offer from the AFL-CIO, to be guaranteed by AID, Goodwyn has brought together a small number of unions to form the Labor Unity Committee for Housing. Some of these same unions have also formed what they call the Permanent Confederation, which is the embryo of a future national labour centre that will affiliate with ORIT and the ICFTU. ‡ Another housing project, also for about four million dollars, is being negotiated with the National Association of Public Functionaries - one of the two large unions of central administration employees. Goodwyn has also formed a consumer cooperative for sugar workers in Bella Union -- the same region where the important revolutionary socialist leader, Raul Sendic, gets his support.

Station propaganda operations are now high-lighting the recent imprisonment by the Soviets of dissident writers Yuli Daniel and Andrei Sinyavsky as well as the Tri-Continental. Today the NCG discussed the Daniel and Sinyavsky cases and instructed the Foreign Minister to make a formal protest in UNESCO. NCG Councillors also harshly criticized Kolosovsky's reply that Rashidov was not speaking at the Tri-Continental for the Soviet government.

Montevideo 25 February 1966

My little technical operation against the codes of the UAR Embassy is beginning to monopolize my time. For over a week two Division D technical officers, Donald Schroeder ‡ and Alvin Benefield, ‡ have been here planning the installation, and I've had to take them from shop to shop buying special glues, masking-tape and other hard-to-find items. Schroeder was here late last year for a short visit and at his request I sent the electric company inspector who is part of the AVENIN surveillance team into the Embassy for an inside casing. After his visit there was no doubt where the code-room is located -- right over the office of Frank Stuart, ‡ the Director of AID.

Some time ago Stuart received an instruction from AID headquarters in Washington to lend whatever cooperation is necessary to the station -- although he doesn't seem to know exactly what is to happen. He's just nervous that some heavy instrument will come crashing down on his desk through the modern, hanging, acoustic-tile ceiling of the AID offices. I have arranged with him to get the keys to AID and for him to send away his watchman when we make the entry a few nights from now.

The installation will consist of two special contact microphones (' contact' meaning it is made to pick up direct vibrations instead of air vibrations, as in the case of a normal voice microphone) connected to small FM transmitters powered by batteries. Schroeder and Benefield will install the equipment right against the ceiling, as close as possible to the spot where the UAR code clerk has his desk. From my Embassy office which is across the street from the UAR Embassy and the AID offices, we will monitor the transmitter in order to record vibrations from the machine.

The UAR uses a portable Swiss-built encrypting machine which is like a combination typewriter and adding machine. Inside it has a number of discs that are specially set every two or three months. The code clerk, in order to encrypt a secret message, writes the message into the machine in clear text in five letter groups. Each time he completes five letters he pulls a crank which sets the inner discs whirling. When they stop the jumbled letters that appear represent the encrypted group. When the whole message is encoded the resulting five letter groups are sent via commercial telegraph facilities to Cairo.

The National Security Agency cannot break this code system mathematically but they can do so if sensitive recordings can be obtained of the vibrations of the encrypting machine when the discs clack to a stop. The recordings are processed through an oscilloscope and other machines which reveal the disc settings. Knowing the settings, NSA can put the encoded messages, which are intercepted through the commercial companies, into their own identical machines with identical settings, and the clear text message comes out. Although the Swiss manufacturer when selling the machine emphasizes the need to use it inside a sound-proof room on a table isolated by foam rubber, we hope this particular code .clerk is careless. If we can discover the settings on this machine in Montevideo, NSA will be able to read the encrypted UAR messages on the entire circuit to which their Montevideo Embassy pertains. This circuit includes London and Moscow, which is why we have been pressured to get the operation going here. If successful, we will record vibrations from the machine every time the settings are changed in future. By reading these secret UAR messages, policymakers in Washington will be able to anticipate UAR diplomatic and military moves, and also to obtain an accurate reaction to US initiatives.

In another day or two Schroeder and Benefield will have all their equipment ready. Our plan is to drive up Paraguay Street about 9 p.m. and enter normally through the front door of the AID offices, using Stuart's key. After checking security and closing blinds, I'll park the car just down Paraguay Street from AID for emergency getaway. While Schroeder and Benefield make the installation, I'll go up to my office in our Embassy and watch over the UAR Embassy and the AID office from my window. Horton also plans to be in the station when we make the installation. We'll have handie-talkies for communication between Schroeder and Benefield and Horton and me in the station. Very little risk in this one but plenty of advantage.

Montevideo 1 March 1966

The technical installation under the UAR code-room took most of the night -- Horton told Schroeder and Benefield that no matter what happens that equipment must not come loose and fall on to Stuart's desk. So they took their time and made it safe. Already we have recordings of the machine and after playing them through the oscilloscope of our communications room, Schroeder and Benefield are certain they will work. We pouched the tapes to headquarters for passage to NSA, who will advise on whether they can be used.

The sensitivity of the microphones is remarkable. Every time a toilet flushes, or the elevator goes up or down, even the structural creaks -- every sound in this twelve-storey building is picked up.

Montevideo 7 March 1966

Alberto Heber took over as President of the NCG and was greeted by the CNT with a call for another general strike for 16 March, in protest against continuing inflation and unemployment. The Montevideo transport strike is now three weeks old. Storace continues as chief government negotiator with the unions, and, with elections only nine months away, labour peace must be bought even at the price of still more concessions.

So today he settled the Montevideo transport strike. He also put to rest the sanctions issue. The unions of the autonomous agencies and decentralized services accepted his formula whereby all sanctions discounted for last year's strikes will be repaid to the workers and all other sanctions cancelled.

The CNT then announced that the general strike called for 16 March is postponed until 31 March. Our PCU penetration agents believe this was part of the bargain with Storace over sanctions and that the strike will probably not be held at all.

Montevideo 12 March 1966

Luis Vargas, the Director of Immigration, has a new plan for reducing the numbers of commercial officers from the communist countries. These officers are more vulnerable than their colleagues with diplomatic status (although cover in the commercial departments is frequently used for intelligence officers) because Uruguayan law does not recognize 'official' status for foreigners not having diplomatic passports. As almost all the Soviet, Czech and other communist trade officers carry service or special passports, which for them is between ordinary and diplomatic status, Vargas is going to apply the law which requires that foreigners who have completed the temporary residence period for purposes of commerce must solicit permanent residence in order to remain in Uruguay. As the request for permanent residence includes a statement of intention to become an Uruguayan citizen, Vargas is certain, as am I, that those officers affected will have to be transferred. By long delays of approval of visa requests for replacements, the numbers of officers in the commercial missions can be considerably reduced without outright expulsion. The first communist mission to feel this new procedure will be the East Germans whose four-man trade mission is functioning just like an embassy. Our Ambassador, in fact, is often embarrassed at diplomatic functions when the chief of the East German mission is present, and some time ago he asked us to see what could be done to get them thrown out.

Although I've also been trying to keep up pressure on Vargas and Storace for the expulsion operation against the Soviet officers, they have both said they want to hold this move in reserve to use when the unions start trouble again. Meanwhile, Vargas is proceeding with the special decree giving him and Storace approval power for all visas, including diplomatic, for nationals of the communist countries. The Foreign Ministry is opposed to giving the Interior Ministry a veto power on diplomatic visas, but Storace and Vargas, as men in Heber's confidence, are going to win.

Headquarters tell us that NSA is able to determine the code-machine settings with the tapes. We're going to leave the installation in place and when the settings are changed we will be advised and I will make some recordings in my office to be forwarded by pouch. At last I'll have these two Division D friends off my back. Benefield now goes to Africa for an operation against a newly-established Communist Chinese mission and Schroeder goes to Mexico City where he has been working for some time on an operation against the French code system.

Montevideo 20 March 1966

Work with the police continues but with little real progress. Storace approved bringing down one of our officers under Public Safety cover and headquarters finally located an officer for the assignment: Bill Cantrell, ‡ formerly with the Secret Service then in the Far East Division after coming with the Agency. Unfortunately Cantrell will not arrive until September because he has to study Spanish, so I suppose I'll be working with police intelligence until I leave -- with luck at the end of August.

Our efforts to convince Colonel Ubach to establish an intelligence division on a par with, or apart from, the ordinary Criminal Investigations Division haven't been successful. Horton, however, is determined to turn police intelligence into a British-style 'special branch' like the one he dealt with in Hong Kong. I'm not sure whether he thinks this is needed because it will work better or because it's the British way -- he seems even more anglophile than before: country walks, bird-watching, tennis, tea-time and quantities of well-worn tweeds that he wears in the hottest weather.

Establishing an autonomous 'special branch' under Inspector Piriz wouldn't be possible just now in any case because Piriz is still working on fraud cases and the other financial crimes that have continued since the first bank failures in April of last year. Heber on taking over as NCG President established a special Treasury Pblice under Storace with representation from the Bank of the Republic, the Ministry of the Treasury and the Montevideo Police Department. Piriz is the senior police officer in this new unit and it would be difficult to pry him away because his work on these cases has been excellent. As he is rather isolated from police headquarters his value as an intelligence source has come down, but I'm continuing his salary, in fact I've given him several rises to keep up with inflation, because of his long-range potential.

Frank Sherno, the regional technical officer stationed in Buenos Aires, sent us a portable Recordak document-copying machine which I hope to set up at the Montevideo airport as part of an improved travel-control operation. With this machine we can photograph all the passports from communist countries and that of anyone else on our watch list. Recently I've begun to work on this with Jaureguiza, ‡ another Police Commissioner who is in charge of general travel control and the Montevideo non-domiciled population. Jaureguiza has agreed to obtain a convenient room at the Montevideo airport near the immigration counters to install the machine. When this is settled Sherno will come to set it up and train the operators. Hopefully we can get this done before Otero gets back from his training in Washington because he'll want to control it and his abrasive personality would hinder getting it started. By now he has finished the police training course at the International Police Services School and is undergoing special intelligence training by headquarters' OTR officers.

No wonder this passport photography has taken so long. Yesterday the Metropolitan Guard seized a large quantity of contraband at the airport and customs officers were revealed to be running a lucrative trade. Smuggling in fact is the reason why I've been delayed so often, because Piriz tells me the airport police are also in the business. Any tighter controls out there threaten their livelihood.

Montevideo 30 March 1966

Headquarters thinks the operation against the UAR codes is so important that they asked that we buy or take a long lease on the apartment above the UAR Embassy. The reasoning is that in a couple of years we will be moving into the new Embassy now under construction on the Rambla and AID will also probably move at that time. As this operation could go on for many years, headquarters wants to be assured of access to the building and close proximity for a listening post. Bad news. Now I'll have to find someone to buy the apartment from the elderly couple living there, then someone to live in it as LP keeper. The apartment is enormous, as there is only one per floor in this building, so I'll need a family with some ostensible affluence.

Rio de Janeiro 6 April 1966

Even from travel posters it's impossible to imagine the beauty of this city -- mountains right in the middle of town, sparkling bays, wide, sandy beaches. The combination is simply spectacular.

All the case officers in charge of Cuban operations at the South American stations are here for a conference. The purpose is to stimulate new interest in recruiting agents who can go to Cuba to live, in recruitment operations against Cuban government officials who travel abroad, and in operations to penetrate Cuban intelligence activities in our countries of assignment. Tom Flores, ‡ former Chief of Station in Montevideo, is now in charge of all Cuban affairs in headquarters and is running the conference -- he held another one last week in Mexico City for Cuban operations officers in Central America, the Caribbean and Mexico.

In his introductory remarks, Flores lamented that the Agency still has practically no living agents reporting from within Cuba. Technical coverage from electronics and communications intercept ships like the USS Oxford, and from satellites and aerial reconnaissance, is good but not enough. Not surprisingly he carried on with the old theme of recruitment by secret writing through the mails. Then we had a full day on the structure and function of the Cuban intelligence service -- more of the same information sent almost two years ago after the defection in Canada. Very boring.

Yesterday and today each of us has had a turn at describing our local operations against the Cubans -- mine are still bogged down in following up the interminable leads on the counterintelligence cases and in trying to get the government to take action against the Montevideo Prensa Latina office.

It was interesting, though, to hear of operations in Quito and Caracas. Fred Morehouse, ‡ the former chief of the ZRBEACH communications monitoring team in Montevideo was transferred to Caracas and there he managed to locate and identify two people who were operating clandestine radio communications circuits with Cuba. It wasn't said whether either of them was recruited, but in any case both circuits were neutralized.

Representing the Quito station is none other than old boss Warren Dean -- the conference is for operations officers, but Dean wanted a few days' vacation in Rio. He explained that Rafael Echeverria went to Cuba after the military junta took over in 1963 and there he had an operation for a brain tumour. After recovery he was trained as a Cuban intelligence agent and he returned to Quito and was unmolested by the junta. Through Mario Cardenas, the Quito PCE penetration agent, Echeverria was discovered to have a secret-writing system for sending messages to Cuba and a radio signal plan for receiving them. The Office of Communications installed a transmitter in the radio Echeverria used to receive short-wave messages from Cuba, so that the station could record the messages in the apartment across the street where I had placed Luis Sandoval under commercial photography cover before Arosemena was overthrown. The station also copied Echeverria's cryptographic pads and thus was able to monitor his communications with the Cuban service in Havana. The Quito station's best new recruitment is Jorge Arellano Gallegos, ‡ a PCE leader from years back on whom vulnerability data for recruitment has been collected for a long time.

We'll have another day or two here before the conference ends. Nobody is very excited except Cuban operations officers from headquarters such as Flores -- the rest of us are increasingly absent at the beaches. When we finish I'll take a week off for fishing in the Caribbean with my father -- then back to Montevideo to wait for my replacement. I am still uncertain about resigning when I return to Washington. I'll definitely separate from Janet but I'll have to find another job before resigning from the CIA.

Montevideo 18 April 1966

The movement for constitutional reform has picked up surprising strength in recent months. The Ruralistas still are the most important group pushing for a strong, one-man executive but important Blancos and Colorados are joining the campaign. Some people, however, believe the problem of decision-making can be solved by retention of the collegiate executive but with all members from the same party. A one-man executive, many fear, would inevitably degenerate into some variety of dictatorship, as so much of Uruguayan and Latin American history suggests.

The PCU, through its political front, FIDEL, is conducting its own reform campaign -- not for the one-man presidency because they know they'll be the first group suppressed when it degenerates. Their signature campaign is for a constitutional reform that would retain the weak executive, but provide for land reform and the nationalization of banking, foreign commerce, and the important industries still in private hands. They have no chance of winning, of course, but land reform is still the most important need in Uruguay. In the last census it was revealed that of the total rural population of 390,000 only about 3000 -- less than 1 per cent -- own some 70 per cent of the lands. If the rich ranchers pushing the Ruralista reform are successful, land reform will be as far away as ever under a one-man executive.

The Blancos' main problem is still inflation (13.6 per cent in January-March) and the ever-worsening economy. More IMF-dictated stabilization measures are coming up soon which will be unpopular and hurt the Blancos' electoral chances.

I have just finished one of the more disagreeable operations of my short career as a spy. Several months ago headquarters replied to one of my reports on the Yugoslav mission here -- I had sent up to date information on all the mission personnel from the Foreign Ministry files -- by proposing a recruitment. One of the attaches in the Yugoslav Embassy is an old personal acquaintance of DMHAMMER-1, a high-level defector of some years ago. The defector, now in his sixties, was the equivalent to the chief of administration in the Yugoslav Foreign Ministry and had provided excellent intelligence. In recent years he has been shuttled around the world making recruitment approaches to former colleagues -- not all of them unsuccessful. Soon headquarters is going to retire him to pasture, but it was desired that he come to Montevideo for one last recruitment approach because the attache is the code clerk.

Horton agreed and the headquarters' officer in charge came down to plan the approach with me. The AVENIN surveillance team established our target's daily routine, which involved a walk of several blocks from his apartment to the Embassy. He makes this walk in the morning, to home and back at lunchtime, and then again in the evening. The headquarters' officer brought the defector, a tall, handsome man with flowing white mane, over from Buenos Aires for the 'chance' street encounter which would be on Boulevard Espana just a few blocks towards the beach from the Soviet Embassy.

As good fortune would have it, our target appeared right on time and the encounter, although lasting only about fifteen minutes, was very warm and animated. Our defector told the target that he was visiting Montevideo and Buenos Aires on a business trip from Paris where he now lives, and he invited the target to dinner the same day or the next. The attache accepted the invitation for the following day, and we thought we might have a hit. We decided to use the same security precautions as on the first day, i.e. the headquarters officer and I on counter-surveillance in the street with Tito Musso, ‡ the AVENIN team chief, near by in an escape vehicle.

The defector went to the elegant Aguila Restaurant the following night as agreed, but the attache failed to appear. Although we suspected that the target had decided not to see our friend again -- since the defector's unsuccessful recruitments are undoubtedly known to the Yugoslav service -- we decided to arrange anther street encounter just in case. This time the target simply told our defector that he understood and wanted nothing of the plan. He refused to speak more and continued on his way.

It was sad, almost pitiful, to see this very distinguished man lurking in the streets before pouncing on our target. The headquarters officer told me they have nothing more for him to do, and at his age he can scarcely learn another job, but they'll have to terminate his salary soon. He's now a US citizen and will get some social security, but his last years are going to be difficult. No wonder most defectors either become alcoholics or suffer mental illness or both. Once they've been milked for all they're worth to us they're thrown away like old rags.

Montevideo 25 April 1966

The Director of Immigration, Luis Vargas, has landed a blow on the East German commercial mission. He gave them the choice of requesting permanent residence or leaving with thirty days to decide. After a violent verbal encounter with the chief of the mission, Von Saher, he threw him out of his office and was about to start deportation proceedings when suddenly Von Saher and another officer of the mission, Spinder, returned to East Germany. The other two East Germans, Kuhne and Vogler, have surprisingly requested permanent residence. They are still on their temporary permission, however, and as soon as that expires in a few months Vargas will deny the request for permanent residence.

One of my former agents has suddenly made much publicity in the newspapers. It's Anibal Mercader, ‡ formerly AVBASK-1, who worked for us as a penetration agent of the Uruguayan Revolutionary Movement (MRO). Only a month or two after I arrived in Montevideo Mercader moved to Miami where he was employed in a bank. Now, two years later, he has disappeared with 240,000 dollars and is believed to be hiding in Buenos Aires with his wife, children and the money. This is a novel way to raise funds for the revolution, but maybe he was on the MRO'S side all along. The FBI can figure this one out -- we don't know him.

Montevideo 12 May 1966

The PCU signature campaign on constitutional reform has been achieving considerable success -- largely because the Party has drawn the CNT into the campaign. Through AVBUZZ-1, we have been trying to expose PCU use of organized labour for political ends. Yesterday his Plenary of Democratic Civic Organizations issued a 'press statement' in which the leftist labour movement in Uruguay is denounced as an agent of international communism and the foreign conspiracy that has thrown itself into the political field in a confrontation, as equals, with the traditional democratic political parties over the constitutional reform issue. Because communists have been allowed to dominate the labour movement, the statement concludes, they have become a power among the powers of the state in a situation of 'total subversion'. I suppose AVBUZZ-1 knows his audience but sometimes he's embarrassing.

Commissioner Otero is back from the training course and is more enthusiastic than I've ever seen him. Reports from headquarters on his performance are very favourable. I was just able to get the airport photography operation started before he returned, but Otero is going to take care of the developing and printing work. As soon as possible Frank Sherno ‡ will come back and will rearrange the police intelligence darkroom and order new equipment. I'm not sure how soon that will be because Sherno is spending almost all his time these days in Santiago, Chile where he and Larry Martin ‡ are honeycombing a new building of the Soviet Mission with listening devices.

At the airport Sherno spent four days training the police officers who work with the immigration inspectors. Normally it takes a couple of hours to learn how to use this machine, but these men are special. I also arranged for a police courier to take the exposed film to Otero's office, and for the negatives and our prints to be sent over with the daily couriers from police headquarters. Such efficiency has its price, of course, and I've started monthly' expense' payments to the airport crew calculated on the numbers of passports and other travel documents photographed. It's as close to piecework incentive as I can get without calling it that, but without it the Recordak would just sit out there collecting dust. I also set up a travel watch list -- simple at first to get them used to it -- consisting of general categories of documents to photograph like the Soviets and satellites. Finally, I gave each of them a personal copy of the beardless Che Guevara photograph and asked that they imprint that face as deeply in their heads as possible. That won't be very deep, I'm afraid -- these guys wouldn't recognize Che if he walked through with beard, beret, fatigues and automatic rifle.

The new police radio communications network is beginning to operate. Gradually the Public Safety mission technicians will expand it to the interior departments. The other day I got the frequencies from the Public Safety chief and we're getting our own receivers so that we can monitor the police frequencies.

Next week I'll give Otero a generous salary increase. While he was away I hooked Fontana, ‡ his deputy, on the payroll but he doesn't want Otero to know -- nor do I. From now on these people have got to concentrate on penetrating the Tupamaros, who seem to be the only organization following the 'armed struggle' line right now. This would be like the Echeverria group in Quito, much more dangerous than the Soviet-line PCU, though nobody else in the station agrees with me on this. Otero, however, agrees to concentrate on the Tupamaros and somehow I've got to get him started on agent recruitments for intelligence so that the police won't have to resort to torture.

Montevideo 19 May 1966

Headquarters turned down the suggestion that I speak to Borisov about the relationship between his wife and his chief. The affair goes on, however, and several times Horton has written nasty cables asking for reconsideration. The matter came to a head this week with the visit of the Chief of the Soviet Bloc Division, Dave Murphy, ‡ and his deputy, Pete Bagley. ‡ They're making the rounds of stations where there are Soviet missions. Between Conolly, the Soviet operations officer here, and Bagley the bad blood goes back many years and naturally there was a terrible scene of tempers. Although there were threats to get Conolly transferred back to headquarters, he's probably safe because Murphy and Bagley are already looking for a new Soviet operations officer for the Buenos Aires station. They were over there before coming here, and when they asked the Soviet operations officer to take them on a drive by the Soviet Embassy he couldn't find it. That was enough for his transfer.

Murphy wouldn't relent on the Borisov proposal. He's afraid Borisov would get violent and doesn't think a quick escape-route to avoid a fight is possible. I suppose he should know -- he had beer thrown in his face a few years ago by a Soviet he was trying to recruit, and he still hasn't lived down the scandal.

Montevideo 9 June 1966

Vargas has turned his attention to the Czech commercial mission and the Soviet Tass correspondent who is a KGB officer. When he called in the Czech commercial officers, the Consul, Franktisek Ludwig, came instead -- insisting that the commercial officers belong to the Embassy mission and are subject to the Foreign Ministry rather than the Ministry of the Interior. Vargas would have none of it and told Ludwig that he would send the police for the commercial officers just as he had with the North Koreans if they refuse to appear. Ludwig protested, another violent argument followed, and afterwards Vargas began expulsion proceedings against Ludwig in the Foreign Ministry. Ludwig, however, returned quickly to Czechoslovakia before being ordered out. Perhaps he will return, perhaps not, but he was one of the two Czechs I put on the list for expulsion with the Soviets. I know him well from the diplomatic association. The commercial officers finally came to Vargas's office and requested permanent residence -- to be denied by Vargas in due course.

Vargas insists that the Soviet diplomatic officers will be expelled as planned, but Heber wants to proceed slowly and save the Soviet expulsions for use against the unions. Meanwhile Vargas has required the Tass representative to seek permanent residence, but has allowed him a delay for decision.

We doubt if the Tass correspondent will seek permanent residence because he has been here for over five years and should be transferring home shortly. Even so, Vargas will deny the request if it is made.

Jack Goodwyn ‡ has arranged for one of his AIFLD people to be named as the Uruguayan representative at the conference this month of the International Labor Organization in Geneva. The prestige appointment was made by the government, and Goodwyn's man is going as representative of the Uruguayan Labor Confederation ‡ (CSU). The PCU and other leftists are squealing because the CSU is completely defunct and the CNT in any case represents 90-95 per cent of organized labour. The appointment is indicative of how the government increasingly sees the advantage of cooperation and even promotion of the AIFLD and related trade-union programmes. Private industry is similarly well disposed.

In Washington the Agency has arranged with Joseph Beirne, ‡ President of the Communications Workers of America ‡ (CWA), to have the CWA's training school at Front Royal, Virginia turned over to the AIFLD. This school has been used for years as the main centre of the Post, Telegraph and Telephone, Workers' International ‡ (PTTI) for training labour leaders from other countries. Now the school will be the home for the AIFLD courses which until now have been held in Washington. Not a bad arrangement: seventy-six acres on the Shenandoah River where the isolation and control will allow for really close assessment of the students for future use in Agency labour operations. Also this year the AIFLD is starting a year-long university-level course in 'labour economics' which will be given at Loyola University in New Orleans. AIFLD hasn't been exactly cheap: this year its cumulative cost will pass the 15 million dollar mark with almost 90 per cent paid by the US government through AID and the rest from US labour organizations and US business. Since 1962 the annual AIFLD budget has grown from 640,000 dollars to almost 5 million dollars while the ORIT budget has remained at about 325,000 dollars per year. Millions more have been channelled through A I FL D in the form of loans for its housing programmes and other social projects.

Montevideo 24 June 1966

Vargas and Storace finally got the new procedure for issuing visas to nationals of communist countries approved by Heber and sent by the Foreign Ministry to all consular posts. The new procedure requires prior approval of all visas requested by citizens of communist countries. Approval procedure requires the Immigration Department and the Ministry of the Interior to check traces on the applicants with appropriate security offices -- police and military intelligence -- and none can be approved by the Foreign Ministry without prior approval in Immigration and Interior.

This is a very considerable victory because it opens the door to denials, delays and manoeuvres that will harass and disrupt the Soviet and other communist missions here. In addition we will have plenty of time to get reports on visa applicants from headquarters and other stations, and we can influence decisions by preparing false reports. In order to protect himself Vargas asked me to channel our reports through military intelligence where he will initiate requests - he knows we are in regular contact with Colonel Zipitria. ‡

Montevideo 30 June 1966

I brought over Fred Houser ‡ from the Buenos Aires station to serve as purchasing agent for the UAR code-room operation. As luck would have it the elderly couple had been thinking for some time of selling, and after a little negotiation we agreed on the equivalent of 35,000 dollars. The apartment is owned by a dummy corporation called Diner, S.A., and Houser simply purchased all the bearer shares of this company and the apartment was ours. I've got the shares locked up in my safe where they'll probably stay until the UAR gets another Embassy. Houser was perfect for the task because he has both US and Argentine citizenship and easily passed as an Argentine in the purchasing operation. Now we are going to move in Derek Jones ‡ and his family for cover. Jones is an old friend of Cassidy's ‡ and has British as well as Uruguayan citizenship. As soon as they move in and our access is assured, Schroeder and Benefield will return to make a permanent installation of the microphone -- possibly in the AID offices with a wire to the apartment but more probably directly from the apartment.

Montevideo 3 July 1966

Yesterday the President of the Bank of the Republic and his re-financing team returned 'from the US with a bundle of new sweets: postponement until December 1967 of payments totalling 47 million dollars that had been due to private New York banks before the end of this year; a new credit line of 22 million dollars from New York banks; a US government stabilization loan of 7.5 million dollars; a 3-million-dollar loan for fertilizer from AID; a 1.5-million-dollar loan from the Inter-American Development Bank for economic development studies.

Thanks to the latest stabilization measures adopted, as a result of pressure from the IMF, in May, inflation in June was 14 per cent for a total cost-of-living increase during January-June of 36.3 per cent. As expected, the unions are making ever-more-ominous threats of new strikes while the Blancos are offering only the minimal increases provided for in the budget exercise of last year. Storace continues to be the government's chief negotiator but chances for averting another round of crippling strikes are very slight without substantial new benefits for the workers.

The PCU Congress is going to be held about the middle of next month and we have started a major propaganda campaign against it. The Party Congress, held only every few years, is the PCU's big event this year and they've invited a fraternal delegation from the Communist Party of the Soviet Union. Through Vargas I am trying to have the visas denied, but if this is impossible, as it now appears, we will hammer away at Soviet participation in the Congress as interference in Uruguayan politics.

Montevideo 14 July 1966

Dominant factions of both the Colorados and the Blancos are now committed to a constitutional reform to return the country to the one-man presidency, although significant opposition continues in certain circles of both parties. Proponents of reform in the two parties are meeting regularly in order to agree on one constitutional reform project that will be approved in the Legislature and presented to the country by referendum. By agreeing on a joint reform pact the traditional parties will ensure that their version of reform will be the only one with a chance for adoption. Thus if voters reject the joint Colorado-Blanco project, which is unlikely, Uruguay will remain with the current collegiate system. The effect is to completely eliminate any possibility that the PCU reform project might be adopted, and the CNT has already denounced the Blanco-Colorado pact establishing a strong executive.

Meanwhile strikes are beginning again. The government employees' unions are asking for new benefits in the form of' loans' -- in order to circumvent the constitutional prohibition of government salary increases before elections.

Montevideo 27 July 1966

Storace was able to get a postponement of a government employees strike set for 21 July and of another strike in the Montevideo transport system that would have occurred today. Nevertheless municipal workers continue one-hour sitdowns per shift and tension is increasing over the 'loans' and how the government can finance them.

In a secret meeting our proposals to deny visas to the Soviet fraternal delegation to the PCU Congress next month were discussed by Storace and the Blanco NCG Councillors. It was decided, rightly I think, not to deny the visas but to use Soviet participation in the Congress as justification for action against the Soviet mission afterwards. Additionally, the government right now is studying a Soviet credit offer of 20 million dollars for purchase of Soviet machinery which can be repaid in nontraditional Uruguayan exports.

Don Schroeder and Al Benefield are back to improve the technical operation against the UAR code-room. By chance their trip has coincided with another change of the settings on the machine. From behind a screen they had built in our new apartment in the room above, and across a light well from the code-room, they were able to watch the code clerk making the new settings and to photograph him in the act. They don't even need the recordings now. The code clerk doesn't draw curtains or lower the blind. He couldn't make it much easier for us.

Montevideo 10 August 1966

At last my replacement is here and I'll be able to leave by the end of the month. He is Juan Noriega, ‡ a former Navy pilot, who recently finished his first tour at the Managua station where he was responsible for training the bodyguards for the President and the Somoza family.

Noriega got here just in time to see Uruguayan democracy hit another new low. All last week President Heber was out on his own protest strike -- not against inflation but against his fellow Blanco NCG Councillors who were blocking certain of his military assignments. Several key assignments of strong military leaders by Heber, including the designation in June of General Aguerrondo ‡ as Commander of the First Military Zone (Montevideo), had provoked rumours and speculation that Heber is planning a coup against his own government if the one-man executive is not adopted. We have no substantive reports to support this view, but Heber is definitely advancing strong, anticommunist officers into important positions. The NCG functioned without him until today, when he ended his strike and went on television to explain his actions.

Montevideo 24 August 1966

I've turned over all my operations to Noriega and in a few days will be flying home. In two and a half years our station budget has gone up to almost a million and a half dollars while several new additions have been made to the station case officer complement. In a couple of weeks Bill Cantrell ‡ arrives to work full-time with Otero's police intelligence department. Also due to arrive shortly is another non-official cover officer for operations against the PCU and related revolutionary organizations. This officer has been long-delayed in arriving -- his cover was arranged by Holman with Alex Perry, ‡ one of Holman's golfing companions, who is General Manager of the Uruguayan Portland Cement Co. ‡ a subsidiary of Lone Star Cement Corporation. ‡ Approval from Lone Star headquarters was obtained last year also but many delays followed in finding the officer to fill the slot. Still another non-official cover officer is programmed for Soviet operations.

What sharp contrast I feel on leaving compared to the excitement, optimism and confidence of that Sunday of arrival, watching the Pocitos crowd from O'Grady's apartment. While here, I've had another promotion and good fitness reports, but my sense of identification with the work and people of the CIA has certainly faded.

Holman's attitude and my deteriorating domestic situation have caused some hardening, perhaps even embitterment, but the more I see of this government the more urgent become the questions of whether and why we support such things.

Consider the new buses and trolleys for the Montevideo municipal transport system. When I went to the port to receive my car a few weeks after I arrived, I noticed a very large number of bright new blue and red vehicles parked ready to leave the port for service in the city's very crowded and over-taxed transport system. There were 124 of the buses and trolleys ordered in 1960 by Nardone, then NCG President, from Italy at a cost of several million dollars. They arrived at the end of 1963 but the Colorado-controlled municipal government was unable to pay the exorbitant unloading and customs costs levied by the Blanco-controlled port authority and customs administration. Because the Blancos resisted the political gain that would accrue to the Colorados when the buses and trolleys were put into service, even though they had been purchased by a Blanco administration, they sat in the port for seventeen months until the first group of four buses was released in May 1965. During that time they were sitting out of doors, deteriorating from the salt air and frequently stripped of parts and trimmings by vandals. Because of slow payment by the Blanco national government of the Montevideo transport subsidy with which the customs and unloading charges would be paid, together with other red tape and slow paper-work, 104 of these units are still rusting in the port right now. Such subordination of the public interest to partisan political goals is not at all inconsistent with the rest of Colorado-Blanco governing in recent years. Uruguay, the model for enlightened democratic reforms, is the model of corruption and incapacity.

_______________

Notes:

1. See Chart 6.

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