Alliance for Power: U.S. Aid to Bolivia Under Banzer
Katzin, Donna
In June 1972 John Connally, President Nixon's personal emissary to Latin America, relayed the administration's "warmest wishes" to Bolivian President Hugo Banzer Suarez, praising the dictator's...
...10 Total U.S...
...During his short term in office, Torres nationalized both the Matilde Mines (owned by U.S...
...U.S...
...The high level of military and economic aid which the United States has pumped into Bolivia since the 1971 coup only confirms this choice...
...8. Noticias, Vol...
...The United States thus * The Plan de Emergencia was a program to build schools, hospitals and to improve communications and street repairs, while developing trade, small business and industry.29 lifted the "invisible blockade" which had worked so effectively against both Torres and the neighboring Unidad Popular government in Chile...
...It faces both economic and political dangers...
...Air Force radio receiver...
...Bolivia's excessive sales of beef and coffee on foreign markets and speculation within the country have caused serious shortages, finally forcing the government to ban all exports of these products...
...Given the opposition to the regime and the divisions within it, U.S...
...National Foreign Trade Council reported that "the new military regime is dusting off the red carpet for foreign investors...
...Ibid., Vol...
...During FY 1973 more than half such grants for the entire continent went to Bolivia alone...
...The keystone of this policy was military support for a president who clearly lacked popular support and could not defend himself from a "hostile" population...
...policy adopted immediately after the military uprising bears further witness to North American backing for Banzer...
...The country's main creditors are USAID, the World Bank, the Inter- American Development Bank, and Gulf Oil...
...But opposition to Banzer is not limited to Bolivian workers and the left...
...Recently," he noted, "when the President of Bolivia requested assistance from the U.S...
...2.8...
...In June 1972 John Connally, President Nixon's personal emissary to Latin America, relayed the administration's "warmest wishes" to Bolivian President Hugo Banzer Suarez, praising the dictator's "great courage" and promising him full cooperation and aid in the future...
...policy orientation toward Bolivia which was adopted after the right-wing military seized power in August 1971...
...business community were anxious to multiply the returns on their capital in Bolivia while expanding the internal Latin American market for U.S...
...Gov't...
...During Senate hearings before the Appropriations Committee, Senator Proxmire noted that "the biggest beneficiary (of military aid) in South America is Bolivia...
...Banzer's advisers knew that Washington and the U.S...
...Government Printing Office, 1972), 928...
...1 5 One year later the new incentives began to produce results...
...Timothy W. Stanley, Executive Vice President of the International Economic Policy Association to the Senate Foreign Relations Committee on Foreign Assistance...
...2.2 3.5...
...Mounting dissatisfaction and dissention on the right threatens to tear apart the fragile coalition which has been the basis of the regime...
...GOVERNMENT IN POWER Pre-MNR MNR Period Barrientos [Siles] Ovando Torres Banzer YEARS 1949-52 1953-61 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974b 0.8 2.2 2.4 3.3 1.9 2.4 2.2 3.5 1.6 1.2 2.8 3.7 4.1 8.7 . ...30 Banzer's willingness to "compensate" U.S.-owned concerns for their previously nationalized properties set the tone for his future relations with Washington...
...Noticias, Vol.XXVII, No...
...30 (August 1, 1973), 3; and Vol...
...Connally's trip to La Paz confirmed a basic U.S...
...3.3 S...
...Since that time the United States has propped up Banzer with extensive military and economic aid in amounts far surpassing those logically dictated by the country's size, resources and population...
...1 1 Foreign Investment: The Economic Pay-Off...
...they should seek to foster a climate which will encourage the influx of the external capital and technological resources needed to discourage self-destructive economic nationalism...
...government-he suggested-should establish as a matter of policy that the priority in allocating limited government resources to assist Latin American development-over and above the minimum levels called for by U.S...
...But, unlike Ovando, his government increasingly favored labor organizations, and allowed the left more freedom than it had enjoyed since 1964...
...Approp- riations Committee, Foreign Assistance and Related Programs Appropriations, FY 1974, 93rd Congress, ist Session (Washington, D.C.: U.S...
...No sooner had Bolivia complied with the devaluation and stabilization programs than the United States once again opened its cash boxes to Banzer...
...Broadcasts over this radio helped disorganize and demoralize the supporters of General Torres while strengthening the confidence and coordination of the Banzer forces.1 U.S...
...Senate, Appropriations Committee, Foreign Assistance and Related Programs Appropriations, FY 1973, 92nd Congress, 2nd Session (Washington, D.C.: U.S...
...Economic backing for the regime was not long in coming...
...During the past year these problems have become more evident...
...Development and Humanitarian Assistance" granted Bolivia for FY 1972 (Banzer's first year in government) swelled to $45.9 million as compared with $11.8 million for the previous year (during Torres' progressive government...
...Senate Foreign Relations Committee, Foreign Military Sales and Assistance Act, 93rd Congress, Ist Session (Washington, D.C.: U.S...
...Banzer's need to please was obvious in this compensation for the mine whose value was estimated at only $12 million...
...allocation for Bolivian Military Assistance Advisory Groups rose from $759,000 in FY 1972 to $969,000 during FY 1973...
...If the United States could put up with Ovando's brand of nationalism, it clearly could not accept Torres' since, objectively, this implied an opening towards socialism...
...Third, Banzer's contacts with the U.S...
...37 (September 19, 1973), 3. 19...
...D.C.: U.S...
...With this in mind, the United States and its allies acted...
...and, Marvine Howe, "Bolivian Civil Rights Widely Violated," New York Times, December 26, 1973...
...3. Ibid., 869-870...
...Bolivian enterpreneurs, for example, have become alarmed by unresolved economic crises, by the militancy of labor organizations and by what they perceive as government concessions to the workers...
...Government Printing Office, 1973), 321-325...
...Noticias, Vol...
...Foreign Trade Council announced that the Alliance for Progress planned to loan Bolivia $45 million for a roads project-one of the largest grants in Bolivia's history...
...The letter, dated April 14, 1972, stated: "The general rationale for these (military aid) programs is that although militarily the threat of external attack from outside the hemisphere or Cuba has diminished, the violent extremism remains a disruptive force to economic and social progress with active28 movements existing in Bolivia, Guatemala, and Uruguay and potential insurgencies in several other countries...
...Senate, Committee on Appropriations, Hearings Before the Committee on Appropriations, Foreign Assistance and Related Programs, Appropriations, FY 1973, 92nd Congress, 2nd Session (Washington...
...Overseas Loans and Grants . . . July 1, 1945 - June 30, 1970 (Washington, D.C.: USAID, 1971), 36...
...The U.S...
...2. U.S...
...Bolivian imports from the United States increased from 10.8 percent of total imports in 1970 to more than 30 percent by 1973...
...1.2...
...Embassy knew of the preparations for the coup quite early and warned its staff to stock up on food supplies two days prior to the take-over...
...9 In December the U.S...
...This policy clamped a freeze on prices and wages (which never caught up with the runaway prices), implemented more stringent governmental control of labor, and provided added incentives for private enterprise...
...18 (May 16, 1971), 1. 13...
...10 (March 8, 1972), 3; United Nations, Comision economica para America Latina, esludio economico de America Latina-1971 (New York: United Nations, 1972), 88-89...
...The resulting economic turmoil and the militant opposition of Bolivian workers forced Banzer to cancel his October 1973 trip to the United States...
...2.2 S...
...2 (June 6, 1973), 3; "Torturas y persecucion political en Bolivia," NADOC (Lima), No...
...This critically endangered the competitive position of Bolivian goods on the world market and discouraged foreign investment...
...1 7 Furthermore, with the dramatic increase in foreign aid and other debts,* inflation has skyrocketed and prices continued to soar...
...officials, the artificially high and rigid exchange rate of the Bolivian peso definitely discouraged international trade with the United States...
...priority, particularly in the 1970's...
...General Ovando, for example, nationalized Gulf Oil...
...but the stakes are high, and the price is rising...
...7. Los Tiempos (Cochabamba), March 23, 1972...
...Printing Office, 1973), 1341...
...Union Oil Venture in Bolivian Jungle is First Under New Hydrocarbons Law," Business Latin America, April 5, 1973, 112...
...As that decade began, progressive forces in Latin America forced U.S...
...Proxmire then questioned the witness, Secretary of Defense Melvin Laird, "Does that mean that the United States is supporting incumbent regimes in Latin America against purely domestic attack, or even the mere threat of domestic insurgency...
...Department of Agriculture extended Bolivia a sales agreement worth $9.9 million (under Public Law 480) for the purchase of wheat and flour, tobacco and tobacco products...
...Senate, Committee on Foreign Relations, Foreign Military sales and Assistance Act, 93rd Congress, Ist Session (Washington, D.C.: U.S...
...XXIX, No...
...Foreign Affairs Committee, U.S...
...On October 31, 1972, U.S...
...Meanwhile, the current political crisis and pressure from the armed forces have influenced Banzer's decision to postpone his promised 1974 national elections until 1975, when a more "satisfactory political climate is obtained," 1 9 and the Bolivian right wing is in better shape to withstand the challenge...
...Steel, Phillips Brothers Ore Corporation, and Englehard Minerals and Chemicals Corporation) and the properties of the Dallas-based International Metals Processing Company...
...8 By the middle of 1972, however, Washington seriously questioned Bolivia's economic stability...
...Only six days after Banzer took power, the United States offered a $2.5 million loan for cotton agriculture-directly favoring the Santa Cruz bourgeoisie who had mastermined the coup...
...XXIX, No.48 (December 19,1973),1...
...Furthermore, in the eyes of U.S...
...But Bolivia's strategic location in the heart of South America made it a top U.S...
...Printing Office, 1972), 1046...
...Senate...
...Emphasis added...
...He agreed to repay the International Metals Processing Company $1.5 million for their former holdings and, in December 1971, promised $13.5 milllion to the owners of the nationalized Matilde Mine...
...But Washington continues to gamble by paying an increasing price for backing General Banzer...
...Military Aid: The Coup and After...
...51 (December 27, 1972),2...
...participation in the coup which toppled Torres is unquestionable...
...XXIX, No...
...U.S...
...A.I.D...
...imperialism into a corner...
...XXIX, No...
...By November 1971, the United States had extended a total of $20 million in credits to the Banzer dictatorship in addition to a direct grant of $2 million for the country's "Plan de Emergencia...
...XXVII, No.48 (December 8, 1971),3...
...government...
...Ambassador Siracusa handed Banzer a check for $24 million...
...1.5 1.5 FOOD FOR PEACE MILITARY ASSISTANCE LOANS GRANTS IME&TPa TOTAL .05 11.3 144.6 155.9 26.4 7.9 24.2 32.1 3.6 18.5 17.2 35.7 16.1 42.7 15.8 58.5 13.9 -6.0 8.4 2.4 21.8 5.7 27.5 10.9 3.4 14.3 4.5 3.3 7.8 3.9 3.6 1.5 5.2 5.1 2.9 8.0 15.4 -1.5 2.1 0.6 0.0 3.7 3.7 50.0 3.3 53.3 11.7 3.4 15.1 20.0 3.4 23.4 3.2 7.1 6.7 8.9 8.8...
...1 3 In addition to these measures, the Bolivian government decreed two new laws to encourage private enterprise...
...Ibid., Vol...
...1 4 The 1972 Hydrocarbons Law further opened Bolivian petroleum resources to foreign investments, prompting Business Latin America to remark: "Bolivia wants and needs foreign investment, and is prepared to go the required lengths to get it...
...From the start, the Banzer regime understood that its own survival was closely linked to the needs and desires of the U.S...
...The Investment Law guaranteed private investors liberal tax exemptions, state lands, and the right to invest foreign capital directly in domestic enterprises...
...Senate,committee on Aooropriations, Hearings Before the Committee on Appropriations, Foreign Assistance and Related Programs, Ap- propriations, FY 1974, 93rd Congress, 1st Session (Washington, D.C.: U.S...
...Noticias...
...4. Ibid., 1046...
...The payment was to be financed by a loan from the Bank of America, First National City Bank, the Swiss Bank Corporation and the Overseas Private Investment Corporation (OPIC...
...But the realignment of the governing coalition under General Juan Jose Torres and the creation of the Popular Assembly seriously threatened U.S...
...In sum, the direct Grant Military Assistance to Bolivia during Fiscal Years 1973 and 1974 is slightly more than three times the amount the United States has given any other Latin American country...
...military support of Banzer's shaky domain is so blatant, in fact, that even the Pentagon's masters of double- talk cannot hide its true purpose...
...1.6...
...XXIX, No...
...goods.* In response to this pressure, Banzer immediately took the required steps...
...3 Total U.S...
...6 Economic Props for the Bolivian Bourgeoisie...
...Washington also risks further sharpening the people's political consciousness-already heightened by Vietnam, Chile and Watergate--as it increases aid to a military dictatorship publically denounced for its states of siege, severe repression and torture...
...ECONOMIC AND MILITARY ASSISTANCE TO BOLIVIA (1949-1974) (IN MILLIONS OF DOLLARS) ECONOMIC ASSISTANCE U.S...
...Finally, the exaggerated foreign loans, grants, investments and trade, coupled with Bolivia's diminishing production and a rapid increase in spending, left the country without a deficit of 134 million pesos by August 1972, nearly three times that of the previous year...
...The following year, the Pentagon's spokesman to the committee, General Seignious, requested $4.8 million...
...6. U.S...
...investors and policy makers are questioning whether the Banzer government can provide the base they seek for political security and profitable economic development...
...2.4 S...
...Andres Selich, murdered by Bolivian political police last spring...
...Ibid., Vol...
...Government to . .. ward off an insurgency threat, it was determined that we could, in effect, at relatively nominal cost, help her improve her mobility and com- munications capability to ward off this insurgency...
...Secretary LAIRD: No, it does not...
...interests...
...Noticias, Vol...
...and, U.S...
...Resistance from the workers has steadily mounted since the first strikes and demonstrations following the 1972 devaluation...
...Senate, Committee on Foreign Relations, Foreign Economic Assistance, 1973, 93rd Congress, 1st Session (Washington, D.C.: U.S...
...During the same Senate hearings, Proxmire read a letter from General Seignious to Senator Ellender into the record...
...House of Representatives...
...ment Printing Office, 1973), 1341...
...Alliance for Power: The Price is Rising...
...1. 0.8 S...
...Bolivia's relations with the United States since the 1952 revolution (see "Bolivia: The War Goes On" in this issue), and its relationship to Brazil (See "Bolivia: Brazil's Geopolitical Prisoner" in this issue) made it the logical choice...
...Gov't...
...Strikes have continued, particularly by the COMIBOL tin miners, and in September 1973 workers reconstituted the Central Obrera Boliviana (COB) in an open challenge to the regime which had banned the organization in August 1971 and still refuses to recognize it.18 *According to Noticias (September 12, 1973), Bolivia's foreign debt jumped 15.2 percent in 1972 alone, reaching $680.8 million...
...278 (November 29, 1972...
...LOANS GRANTS TOTAL...
...Consequently, the United States joined the International Monetary Fund and the World Bank in pressuring Bolivia to devalue its currency by 67 percent vis-a-vis the dollar, and to implement a strict economic stabilization program...
...2 0 Nonetheless, the United States continues to defend its uneasy alliance for power in the center of South America...
...Furthermore, the Andean Pact nations had just drafted some important limitations to foreign investments into their basic charter...
...At the same time, such "aid" helps prepare the ground for both local and foreign private investments...
...Gov't...
...North American businessmen and government officials had grown particularly critical of the course of events in Bolivia since the death of General Rene Barrientos, a close friend of Lyndon Johnson...
...Not only was Cuba flourishing, but Bolivia, Peru and Chile definitely advanced to the left, Panama and Ecuador were swaying, and even Argentina and Uruguay were unsteady allies...
...2.4 S...
...Bolivia's military appropriation skyrocketed from $1.7 million in 1971 to $3.3 million in 1972...
...Donna Katzin FOOTNOTES 1. Washington Post, August 28 and 29, 1971...
...U.S...
...22 (June6, 1973), 2-3...
...Govern...
...3.3 0.8 4.0 4.2 0.5 aInternational proposed Military Education and Training Program Sources: U.S...
...9. El Diario (La Paz), October 31, 1972...
...The U.S...
...Have we used military assistance in such a way that we are deciding who should rule Latin American countries...
...Thus, the United States saw the strategic need of a foothold in the South American continent, especially to the west of the Andes, providing economic, political and military access to these nations...
...3.1 0.6...
...support of the Banzer regime has necessitated more than military investments...
...While the cost of living rose 31.9 percent from October 1972 to March 1973, the salaries of low-level wage earners increased by only 13 percent-an amount insufficient to meet the spiraling costs of essential commodities...
...His close association with U.S...
...1 2 Finally, by early 1973, Banzer had agreed to compensate Gulf Oil for the 1970 nationalization to the tune of $100 million...
...Lundin quickly lent them a U.S...
...This aid policy is consistent with the so-called "New Policy Orientation for Latin America," recommended in June 1973 by Dr...
...and, U.S...
...On March 9, 1973 Union Oil of California became the first foreign firm to invest in Bolivian petroleum since the nationalization of Gulf.1 6 They have since signed a second contract with Bolivia for the exploration and exploitation of its petroleum...
...national security con- siderations-will go to countries where such assistance can work effectively in partnership with private enterprise and capital...
...Senator PROXMIRE: Why, then, are we providing this kind of assistance...
...Most recently, a series of cabinet changes by General Banzer failed to re-cement the original ruling coalition of the military, MNR and FSB...
...The U.S...
...In November 1973, the MNR officially withdrew from the governing Frente Popular Nacionalista, and early this year its leader, Victor Paz Estenssoro, was exiled to Paraguay...
...Government Printing Office, 1973), 98...
...7 *On December 8, 1971 the U.S...
...Business Latin America, January 20, 1972...
...The country suffered from a high rate of inflation which fostered popular discontent...
...The proposed allocation for FY 1974 nearly doubles this amount to $10 million, including $4 million in Foreign Military Credit Sales...
...aid, loans and credits so far have succeeded in propping up the weak regime...
...Printing Office, 1973), 98...
...Secretary LAIRD: As far as South America is concerned, the major portion of the aid goes to one particular country and, of course, that is Bolivia...
...military--which dated back to his training days at Fort Bragg, North Carolina-clearly served him well...
...XXVII, No...
...2 U.S...
...Secondly, U.S.-trained Rangers maintained a high level of activity in La Paz throughout the pre-coup period...
...5. Ibid., 1057...
...4 Within this total, training programs for the military are increasing significant...
...1.9 S...
...Security Assistance" to Bolivia continues to demonstrate Washington's concern for this strategic area...
...The military leaders who followed Barrientos to office saw nationalistic policies as a means of rallying support behind the military institution...
...This increase represents more than half the total rise in allocations for military training in all of Latin America for that year.5 For FY 1974 an additional "Military Education and Training Program" has been proposed, budgeted at $454,000...
...Central Obrera Boliviana, "La Central Obrera Boliviana, Ante La Asamblea Sindical Mundial," (Santiago de Chile: np, April 10-15,1973),6...
...Teams of Bolivian government representatives rushed to the United States in an attempt to convince North American entrepreneurs to invest in Bolivian concerns...
...U.S...
...On September 15, 1971, the U.S...
...First of all, the United States runs the risk of investing in a regime artificially supported by foreign aid which may fall as a result of economic problems and internal political opposition...
...Air Force Major Robert J. Lundin proved particularly useful when the golpistas' internal communications had broken down...
...XXVIII, No...
...Within his own ranks, Banzer has put down several attempted coups from the right, including the one by Col...
...Economic grants, credits and loans have been used to squelch the growing pressure from the workers while attempting to patch up serious splits in the bourgeoisie...
...It has risen dramatically from $2.8 million in Fiscal Year (FY) 1971, to $5.5 million in FY 1972 and $5.7 million in FY 1973...
Vol. 8 • February 1974 • No. 2
