The Special Relationship: Reagan and the Caribbean Basin
ROBERT ARMSTRONG-Are the Reagan Administration's actions in Central America a model for the rest of the Third World? Or are they a sui generis reaction to the problems of the Caribbean...
...In return, the administration would create ideal investment conditions...
...This fits a historical pattern: whenever the army has withdrawn to the barracks, there has tended to be a corresponding increase in the U.S...
...FEINBERG-Diplomatically, the administration has found the situation to be manageable...
...I believe that in a few countries which are relatively stable and have adequate infrastructure and communications, we may soon witness the kind of investments that could be amortized within, say, three to five years...
...Some of its spokesmen have even talked of "freeing the cap- tive territories"-rollback in the Socialist Bloc itself, though that is out of the question as serious policy...
...The rightist government in Guatemala is anxious to safeguard its sovereignty and has even been reluctant to support the United States on Contadora...
...Very little investment has taken place, apparently because the corporations understand that there is a latent situation of conflict throughout the region...
...All the Central American countries have seen a major effort by Washington and embassy officials to influence and approve virtually all important government decisions...
...Washington has tremendous influence over these small states...
...Indeed, some members of the administration are afraid that the opening may move too far to the Left...
...presence as a means of maintaining stability and control...
...With that goes a process of what some call "neo-imperialism," to influence the process of decision-making in the target countries...
...There has been a tremendous increase in the U.S...
...This is because all current hemispheric policy revolves around Central America...
...Second, the military presence through advisers and maneuvers, especially in Honduras, hardly needs to be described here...
...MARC EDELMAN-For many years, U.S...
...ambassadors play the proconsular role they do in Central America...
...The administration also managed to stop its smaller Central American allies, with the partial exception of Guatemala, from accepting the draft Contadora treaty as it stood...
...When Barletta, the new Panamanian president, was at the World Bank, he didn't balk at carrying out the wishes of the Reagan Administration...
...The problems of the hemisphere, including the debt crisis, are different from those the administration faces elsewhere in the Third World, and I sense that a long-range response is beginning to take shape...
...The CBI also envisions no funds to government, whereas the Jackson Plan allocates something like two-thirds of its $8.8 billion to local governments...
...The Lusinchi government in Venezuela is a traditional conservative regime, both in regard to international finance and in its view of the Sandinistas...
...But its actions in Central America and the Caribbean suggest that here at least it is determined to prevail and put the necessary economic resources behind its political intentions...
...The Reagan Administration forgets that the first multinational was the United Fruit Company, the epitome of an imperialist company, which gave rise to the concept of the banana republic...
...This has come not only from the Left-where the revolutionary groups define their fight as a second war of national independence-but also from the Right...
...In the last few years there has also been a decline in the power of the region vis-a-vis Washington...
...There is nothing new in its obsession with the Caribbean Basin, which is historically where the United States practised its military interventions through the early part of this century...
...It seems unlikely that the Reagan Administration will propose another Jackson Plan for the Caribbean, but something will probably be done through the foreign aid bill, in addition to the CBI...
...I agree Central America and the Caribbean is a special case, but it does need to be placed in this broader context of how the United States seeks to resolve crises in the Third World...
...The political rationale alone will not sustain such a large-scale program...
...The CBI is undermining the influence of the Western European powers and Canada in the Caribbean...
...As for Latin America, security planners are concerned that U.S...
...GEORGE BLACK-The program that Jorge has outlined has no parallel in any other part of the Third World...
...Or are they a sui generis reaction to the problems of the Caribbean Basin...
...market, and huge investments from the TNCs...
...presence-the hordes of gringos that Jorge Sol was talking about...
...mainland economy...
...This may be either in terms of the CBI or of military aid...
...But the CBI idea of creating a wave of investment and generalized prosperity as a result within two to three years does not seem to be on the horizon...
...Its limits of tolerance are very narrow...
...That leads to widespread anxiety that weak underlying economic conditions always carry the danger of political instability...
...If you travel in the rest of the world, you will find no other place where U.S...
...The larger countries of the region-Mexico or Venezuela or Colombia-are not susceptible to this kind of control...
...The CBI does not contemplate regional integration but sees all the countries of the Basin as the fingers on a hand: all of them have to converge to the arm-the United States...
...The CBI responds very ideologically to Reaganomics...
...SOL-The CBI philosophy is complemented by the Jackson Plan, which aims at turning Central AmeriJANUARY/FEBRUARY 1985 I 17Four More AmYears Four More Years Chronic economic decline ca into a kind of nominally independent Puerto Rico...
...The Right in El Salvador finds it intolerable for the U.S...
...That is filled with a substantially increased U.S...
...it goes back to the annexation of California in 1848, when Americans moving to the West Coast discovered the strategic importance of Central America as the narrowest passage between the Atlantic and Pacific Oceans...
...I almost see it as an attempt to parcel out a new industrial reserve labor army, on the assumption that some Asian countries are beginning to present problems for the multinationals...
...The banks would be down Reagan's throat in a moment...
...Don't you think, Jorge, that the ability to attract investment is the key to how much gets implemented...
...brought in economic tools in the broadest sense, but with a political purpose...
...global strategy relied on a tier of middle-level regional powers, the classic one being Iran...
...it urges an exportoriented model along the lines of Taiwan or South Korea...
...Of course there has been a reaction to this in each country...
...MacFarlane has talked about "globalizing the Kissinger Plan" with massive increases in aid to the Third World combining economic and security assistance...
...I wonder what the inherent economic potential is for the multinational investor...
...SOL-Is U.S...
...Mexico may continue to supply some oil to Nicaragua at preferential rates, but like Venezuela, it has economic problems of its own at home and is not likely to risk antagonizing the United States...
...National pride is also at stake to an unusual degree in the Caribbean Basin...
...One or two small caveats: there are hints that successful aspects of the Central America policy may be extended elsewhere, if not on an integrated scale...
...RICARDO STEIN-While rollback may well be the underlying ideological premise of Reagan's whole foreign policy, Central America is a case apart from the rest of the Third World...
...When the Jackson Plan and CBI were first discussed, there were suggestions that they should be like the Lome Convention, in which all the former metropolitan powers of Europe joined together to aid the former colonies of Africa and the Caribbean, through a multilateral program of liberalized trade and foreign assistance...
...They have a common philosophy, which is to have Central America and the Caribbean developed by the multinationals and turned into an extension of the U.S...
...It has been either hostile or indifferent to the process of democratization of the Southern Cone...
...SOL-The CBI is designed to create a paradise for the multinationals, although they did not initiate the program...
...The United States is riding high economically, and the bottom has been knocked out of the Latin American economies...
...If Congress approves the plan, we would see increased pressures for intervention in Central America, because CADO would work with local governments at every level: the organization of elections, legal systems, educational, health and agricultural programs, a massive expansion of Peace Corps activities, 10,000 scholarships a year to bring students to the United States...
...But the CBI has been in effect for more than a year, and most economists in Central America believe that it is not working...
...We have often said that this administration is the first since World War II to go beyond containment and contemplate the idea of rollback...
...economy...
...That strategic concern pushes the administration to the right in the way it views internal political developments in the rest of Latin America...
...They also sensed a slippage within the group and a negative trend within each country away from confronting the United States...
...feelings and JANUARY/FEBRUARY 1985 Kissinger in Managua: A pragmatic personality -1 19Four Mor e Years Four More Years history...
...The Mexicans, for all their nice public positions, are none too enthusiastic about the Sandinistas in private...
...The administration is concerned to have governments throughout the continent that will not oppose its Central America policy, and that tends to make it hostile to even moderately social democratic currents in the hemisphere...
...Henry M. "Scoop" Jackson, to whom the Kissinger Commission report is dedicated...
...But the Jackson Plan is very pragmatic...
...With the exception of Mexico, the Contadora nations are fundamentally hostile to the Sandinistas...
...FEINBERG-These are also very small countries, so it is a question of leverage as well as geographical proximity...
...JORGE SOL-Let's look first at what the administration has done in its first four years...
...RICHARD FEINBERG-The overall view of the administration is that the Caribbean Basin has been in chronic economic decline for at least five yearsin some countries for ten...
...At the same time, in the short term, there is the perception of a general move to the Right in the region, which leads the administration to see a window of opportunity...
...What is perhaps novel is the more integrated approach it takes to the whole region...
...Even the relationship with the rest of the continent is different-the United States has never deployed troops south of Panama...
...The attitude of the Reagan Administration was, "Nothing doing: this has to be an American plan...
...This does not mean that some investment won't come...
...So I don't think there will be a CBI or a Jackson Plan for any other part of the developing world, at least not in the same form...
...Central to the plan is the creation of CADO-the Central American Development Organization-a supranational body which would clearly be dominated by the United States...
...For instance, its chairman would be the administrator of AID, ex officio...
...ALLAN NAIRN-Clearly the CBI and the Kissinger/Jackson Plan arose as a specific political response to the crisis in Central America...
...Is this by coincidence or by design...
...To talk about either Panama or Colombia providing significant aid is just silly...
...The "loss" of Cuba continues to be an open wound...
...The psychological effect of that has been devastating...
...impulse to police the world and build rapid deployment forces...
...policy in the Caribbean Basin a model for other regions...
...Of course not all multinationals are like that-there are also the modern industrial ones, but we have had experience of those too during the first two decades of the Central American Common Market...
...It shows that the power elites of all these countries have very similar interests and would have no objection to integrating their countries fully into the U.S...
...They were called in by the administration to help out...
...Jorge is right, increasingly we're talking about client states...
...In terms of the Reagan Administration's ideas for reshaping the region in its second term, let's look at two main programs: the Caribbean Basin Initiative (CBI) and the Kissinger Commission report, or "Jackson Plan...
...FEINBERG-Politically, the administration is also managing the situation pretty well...
...They *named for the late Sen...
...is surpassed only by that of Haiti...
...In terms of automatic alignment with the United States, El Salvador's voting record in the U.N...
...SOL-There are important nuances between the CBI and the Jackson Plan...
...That contrast has made the countries of the Caribbean somewhat jealous...
...The engines of growth under the CBI would be unlimited duty-free access to the U.S...
...The reason why the Contadora nations were so eager for an agreement in the last few months was that they wanted to squeeze it in before the Reagan re-election...
...But that reliance on regional policemen has become less feasible, and that is one explanation for the current U.S...
...Why can't the Caribbean have its own Jackson Plan...
...On the economic level, the Jackson Plan moves from very ideological origins to a very pragmatic approach to the region, which is by no means disconnected from events in the rest of the world...
...In contrast to the CBI, the Kissinger Commission says that the import substitution model has worked before in Central America and it can work again...
...ARMSTRONG-Do you want to comment on Marc's notion of securing the southern flank...
...The great majority of Central Americans remained outside that process of multinational-stimulated growth...
...Together they have protested that they only get the CBI...
...presence and influence in all spheres...
...ROBERT MATTHEWS-The key actors in Contadora are less likely than even the Europeans to do anything that affects the economic balance in Central America...
...The democratization of the Southern Cone is taking place independent of the Reagan Administration...
...Since the middle of the nineteenth century, many generations of Americans have grown up believing that there are special economic and strategic interests in the region...
...It uses the term "Caribbean Basin," which until recently was not even widespread among geographers, very aggressively, and its programs, both for the Caribbean islands and the Central American mainland, seem to be shaped by the sense of the Basin as a national security theater...
...Venezuela has not supplied Nicaragua with oil since 1981...
...If the United States is challenged in this special region, its credibility suffers worldwide...
...This might happen in Jamaica and Barbados, or Costa Rica and Panama-precisely the countries least exposed to revolution...
...Because the traditional investment programs that have attracted the TNCs--say, the later stages of Operation Bootstrap in Puerto Rico--offered specific tax advantages that can't be easily produced in other countries...
...Over and above the surge of nationalism this would trigger, both the CBI and the Jackson Plan share the same basic mistake, which is to entrust the development of the region to the multinationals...
...My impression is that this economic plan requires a new political schema, and that the concept of "democratization" involves a withdrawal from political life by the military, which leaves a vacuum...
...In other parts of the Third World, Angola and Mozambique and even areas of greater strategic significance like the Persian Gulf, the administration has shown a certain flexibility...
...In that sense it reflects the personality of Kissinger...
...ambassador to make all the key decisions...
...I would say definitely not, because of the special relationship the U.S...
...We indeed saw prosperity, in the sense of increased productivity and a growing GNP, but it remained in the hands of a tiny elite and a small middle class...
...You hear some talk of the trade portion of the CBI as a Third World model-perhaps for the ASEAN states...
...In the wake of economic dependency would come a whole series of mechanisms to shape the re- gion in the image desired by Washington, all of which will take an appropriation of $8.8 billion for a five to seven year period...
...We have seen problems in the Honduran Army and problems in the Liberaci6n government in Costa Rica in response to the role that the United States is demanding of them...
...They feel they have a period in which they can work with friendly governments, both in Central America and in the islands, to head off the economic decline before it generates further political instability...
...That is now called into question, and it sets off a tremor of fear about other Third World hot-spots...
...Aid doesn't 18 REPORT ON THE AMERICAS 1 18 REPORT ON THE AMERICAS0 0 E play much of a role in the CBI, except at the beginning, when an initial allocation of $350 million was approved by Congress...
...The National Endowment for Democracy has a worldwide mandate, and it points to Central America as the model...
...Third, all kinds of economic pressures are being exerted, both in connection with bilateral aid programs and multilateral lending agencies like the World Bank, the IMF and the Inter-American Development Bank...
...After Cuba, Nicaragua and Grenada, they see it as too risky...
...It suggests that the Reagan Administration does have very special intentions in the Caribbean Basin...
...hegemony in much of the world has rested on having a secure strategic rearguard to the south...
...That strategy will involve a substantial amount of direct U.S...
...In Mexico and Brazil, for example, you can sense a reluctance to cross Washington on Central America, a fear that Reagan may use the debt weapon against them-a linkage which I think, incidentally, they overestimate...
...This eventually led to the construction of the Panama Canal...
...management at a continental level, and the administration may well see its current role in Central America as a pilot study...
...has with the region...
...As far as Central America is concerned, the special relationship is embedded in U.S...
...Washington deserves no credit for the process, but it has taken it into account in formulating its Latin American policies...
Vol. 19 • January 1985 • No. 1
