It's as direct a form of cultural domination that you can find, and in this case it caused some harm. Real news is as objective as possible. There may be biases in it, but they are not deliberately introduced. Propaganda is deliberately slanted towards one point of view. Negative events are ignored, positive ones are played up, and opinions are presented as facts.
Small countries are right to be wary of propaganda, because it is a form of political manipulation.
It's as if foreign agents were going among their people whispering things in their ears. News, on the other hand, is only feared by dictators. Only governments that are afraid of letting their people know the truth are afraid of genuine news programs. It is also doing a service to America. If the USIA broadcasts come to be seen as propaganda rather than truth, then its listeners will not trust them.