U. S. Policy in Latin America
5. U.S. Policy In Latin America GEOGRAPHICALLY, Latin America is as remote from the critical theaters of global strategy of the Pentagon and the Kremlin as it is possible to be on our tiny planet...
...One of the most discussed solutions of the problem is to give it a permanent status similar to that in the Foreign Service, with the same chances of promotion and the same security.* Economics and Politics: Economics in Latin America are permeated with politics...
...creation of an all-American common market...
...The next step should be its geographic extension, especially in the underdeveloped sections of such countries as Brazil, Mexico, Chile and perhaps Argentina...
...The need is urgent because there are still peoples who aspire to sustain their freedom but confront economic obstacles that are beyond their capabilities of surmounting alone...
...In general, the weak point of U.S...
...While supplementing the operations of the World Ba,nk and Eximbank, this form of economic aid would concentrate on projects which cannot be supported by these agencies and are not within the scope of the Intel-national Monetary Fund...
...It cannot be denied also that they have manifested sympathy with some local dictators for their anti-Communist policy and generosity toward American big businessmen...
...It may be more immediate in one region than in others, and this difference must be taken into account in the geographical distribution of funds...
...As long as such an interpretation is possible, foreign economic aid remains subordinated to the global strategy of this country, and its policy in Latin America is left without guidance...
...What do the people of the United States get, ultimately, from investment of national capital abroad...
...It can be argued, however, that the difference in the purpose of appropriations is more significant than material supplied...
...Similarly, when the United States offers to assist an allied government in strengthening the bridges on certain strategic routes, in order to make them passable for heavy tanks and artillery, this is a clear case of military aid in the guise of economic assistance...
...The latter can be transferred to backward areas mechanically by building factories, power stations, railroads and airports or by importing modern machinery, but these forms of transfer should not be considered technical assistance...
...The administration of Reciprocal Trade Agreements rests on the idea of compromise between the conflicting interests of various U. S. economic groups and, occasionally, of various geographic regions of the United States...
...Technical assistance—anything in the form of knowledge, technique or know-how...
...Certainly, exploitation of Brazilian oil reserves by a Dutch or a British corporation presents no advantage to the United States over their exploitation by an autonomous public agency...
...In a period of acute deflation, the outflow of capital as well as an export balance are beneficial for a country...
...dictatorship...
...Perhaps the number of regions should be increased and individual nations grouped in another way...
...The sensible goal of our foreign trade policy therefore is to narrow or close this gap by increasing imports, reducing exports or both...
...substantial expansion of the program...
...What are their needs...
...the effect of Europe's Common Market on the Americas...
...exports of merchandise currently run far above our imports, as the following figures sho w : Year Export Import Surplus of exports 1951 14.9 10.9 4.0 1952 15.1 10.8 4.2 1953 15.7 10.9 4.8 1954 15.0 10.3 4.7 1955 15.4 11.4 4.0 1956 18.9 12.6 6.3 1957 20.6 13.0 7.6 Total, 1951-1957 115.6 80.1 35.5 The cumulative value of U.S...
...The Final Report of the Committee points out that a reason for the distinction between economic aid and defense support may well be the feeling on the part of the Administration that something smacking of military aid is easier to sell to the Congress, and the feeling on the part of Congress that military aid is more easily sold to the public...
...Arrangements of this type may be particularly effective in the development of large river basins, isolated rural areas and continental transportation systems...
...The United States is, therefore, vitally interested in economic progress in Latin America, in the development of its agriculture and mining, cities and villages, highways and rivers, in political stability and the standard of living of its peoples...
...Indeed, it accelerated the downfall of the dictator...
...The two areas complement one another, one being located essentially in the moderate zone while the bulk of the other belongs to the tropical and subtropical zones...
...2. Doubled technical assistance...
...The Eximbank development loans are of a similar character...
...The essential feature of technical assistance is that it deals with the human factor of economic progress and strengthens it by improving health conditions and teaching people to use their hands and brains efficiently for everyday tasks...
...Technical assistance is in the national interest of the United States when and only when it not only promotes economic development but also encourages the growth of free institutions within the framework of a free society...
...The funds of an inter-American development bank cannot be provided by pooling the financial resources of Latin Amerioa—with Brazil lending money to Ecuador, Ecuador extending credit to Argentina and Argentina financing development projects in Mexico...
...The "and so forth" includes, among other things, the level of economic development of the respective country: Other conditions being equal, the demand of a country for U. S. products is likely to increase with the growth of its national income...
...Economic progress, industrialization, political stability, improvement of the educational system, better health conditions, higher standards of living and—last but not least—adjustment of the people's attitudes, economic practices and political institutions to the requirements of modern times, are essential not only for the wellbeing of our sister republics but for the sound progress of the whole hemisphere, from the Arctic to the Antarctic and from the Atlantic to the Pacific...
...policy in Latin America as a part of global cold war...
...second, it could underwrite in advance a fund for installment payments over several years...
...Latin American Requests: It would be unfair to accuse U. S. policy in Latin America of disregarding the desires of the local peoples...
...As we have mentioned, the Point Four administration has been successful in selecting its personnel for work in foreign countries, with foreign people, under strange and often difficult conditions...
...The United States can neither exclude Latin American countries with dictatorial governments from commodity agreements nor award preferential tariffs to countries with democratic regimes...
...The trend in the world economy is toward formation of two economic blocs, both stretching from pole to pole and facing each other across the Atlantic...
...In matters affecting U. S. trade with this region, no decision should be taken without proper consultation with the Latin America governments...
...instructing farmers and supplying them with agricultural implements...
...strengthening of the internal economies in Latin American countries...
...As the preceding chapter has shown, the technical assistance program has been highly successful in certain Latin American countries but has not been applied on a large scale in other areas...
...The accusation that the United States is allying itself with reactionary forces is more serious...
...The hotter the cold war becomes, the more exacting becomes the military aspect of its foreign policy and the deeper the difference between the objectives of this policy in the Old World and Latin America...
...It should not withdraw its technical assistance from a country because of the change in its political regime, but it can give more generous economic aid to democratic countries as a means of strengthening them not only economically but also politically...
...The National Planning Association has made a number of constructive recommendations for development of technical cooperation in I.atin America...
...3...
...Promotion of Exports: Economic aid and technical assistance are often justified as a means for opening new outlets abroad for U.S...
...Dictatorial regimes are formidable roadblocks to progress in Latin America...
...Such independence may be secured by a provision that its president must be appointed by the World Bank and selected from the ranks of experts with international reputations who are not citizens of any American country...
...Economic Aid: Economic aid in the form of blank checks to the governments of Latin American countries would not contribute much to the economic development of the continent and, in the long run, may prove harmful...
...All economic aid loans and emergency grants have been accorded in response to requests of the local governments...
...Fallacies of U. S. Policy: The weaknesses of U.S...
...The pattern of development in that area will be determined by its peoples, their governments and their intellectuals...
...The lending agency must carefully appraise each project...
...Military assistance—anything from jet planes to shoe laces delivered directly to military forces...
...The problem can be solved either by worldwide commodity agreements or by regional—multilateral or bilateral—agreements...
...We must continue helping to build the productive capacities of free nations through public loans and guarantees of private investment...
...an increase in public loans, which would presumably include creation of an Inter-American Development Bank...
...Since there is no indication that the United States will reverse its balance of trade in the decades to come, its chance to recover the current surplus of exports over imports is very doubtful...
...Indeed, the whole program of mutual security is presented as a vigilant defense, and such a defense is unavoidably controlled by the moves of the ruthless and shrewd enemy...
...The accusation of colonial conspiracy by Point Four personnel is a lie as shameless as the accusation that milk distributed by the United States to school children in poverty-stricken villages in the Andes is poisonous...
...The essential principle is coordination of all forms of foreign aid, on a broader scale than small independent republics...
...This plan is old indeed, almost 70 years old...
...Technical assistance: The Subcommittee on Technical Assistance of the Senate Committee on Foreign Relations has found appropriate words in stressing the role of technical assistance in economic and social progress : "The determining factor is not economic development itself, but the whole complex of political and social institutions in which economic development takes place and the social and political changes which occur as a consequence of economic development...
...Its concessions must be based on the notion that the financial institute...
...There must be no ambiguity in the ideological attitude of the United States on the issue of democracy vs...
...The wisdom of this policy can be questioned...
...Stimulation of the export of goods through public loans is, indeed, the objective of the Export-Import Bank, and there would be no objection to continuation of its operations...
...Except for such a situation, it has no reason to prefer any particular form of enterprises in respective economic sectors in foreign countries...
...The hard fact of life is that the United States and Latin America find themselves in the same living space and must develop their regional economy within these limits...
...up a small fraction—perhaps, one-tenth of one per cent—of their income to support economic progress, peace and prosperity in the Western Hemisphere, a part of which is the United States itself...
...False Accusations: The fact that the objectives of the United States in Latin America have not been firmly established, has deprived its policy in this area of internal consistency and made it an easy target for false accusations...
...Friendship, mutual confidence and affection cannot be bought by loans and grants but will grow out of our understanding, sympathy and respect for the other party...
...Perhaps new points will be added in the course of preparation of the conference but, from the point of view of the United States, the problems raised can be conveniently classified under the headings of trade and aid policy...
...Latin America's share in total foreign aid appropriations seems humiliatingly low because of the misleading classification of these appropriations...
...Subsequent inter-American conferences have returned, time and again, to this idea...
...Perhaps the United States would prefer, for psychological and political reasons, to carry out certain projects on the basis of direct cooperation with the host nation (as under the Point Four program), while at the same time supporting the inter-American agency...
...But this should be a question of personal opinion rather than a matter of foreign policy...
...If our analysis of the present phase of economic development of Latin America is correct, if the peculiarity and greatest weakness of the local economy lies in its uneven, lopsided development, then financial and technical aid are most urgently needed in the same economic sectors and the same areas, and the success of a project depends on integration of all aspects of developmental efforts...
...Likewise, it would be harmful to put at the disposal of the bank funds which would induce it to give loans for economically unsound or doubtful projects...
...The central issue in the contest between the democratic and dictatorial forms of government is the liberation of the continent from these ideas...
...The Communists decry it as a policy of colonial expansion designed to grab the natural resources of the region...
...Its conciliatory role in the Guatemalan revolution that ended the Arbenz regime cannot be described as a conspiracy against democracy in that country.True, the United States has given arms to some Latin American countries which asked for military aid...
...In many underdeveloped countries, this means land reform...
...Even when we welcome respite from the Soviet policy of threat and violence we must take careful stock of what still remains of it...
...These notions, brought to Latin America by its former colonial masters, proved stronger than the armies routed by Bolivar and San Martin...
...Each agreement presents certain advantages to and requires some concessions from both parties...
...Would it not have confirmed the Communist charges of the arrogance of Yankee imperialists...
...It can achieve its purpose only if it is absolutely independent and is insulated against political pressures...
...mutual security program...
...Equally absurd is the insinuation that U.S...
...The same reasoning should be applied to public projects of regional development...
...products and capital...
...More specifically, the more emphasis is put on regional development, the closer should be the coordination between financial and technical assistance...
...Seven years after Truman's inaugural address, the new President of the United States presented another philosophy of foreign policy in his Message to the Congress on the Mutual Security Program: "The need for a mutual security program is urgent because there are still nations eager to strive with us for peace and freedom but, without our help, lack the means of doing so...
...From the military point of view, the friendship and cooperation of the nations of Latin America is essential to the defense of the whole hemisphere...
...It appeared in discussions during the first International Conference of American States held in Washington in 1889-90...
...Subordination of our foreign aid policy to the search of new outlets is contrary to this goal...
...Invited to defend their cause at open hearings, the representatives of Latin American nations would have an opportunity to become familiar with the procedures followed by this country in solving problems of foreign trade and would learn the reasons which may compel it to make decisions contrary to their desires...
...There must be no "ifs" in decisions on foreign aid...
...The support of these trends in Latin American nations must be considered the goal and guide line of the United States policy in this area...
...Moreover, it serves the national interests of neither the United States nor the recipient country to increase the number of holders of law and liberal arts degrees in an economy which may be already surfeited with frustrated intellectuals and needs plumbers and mechanics...
...An arrangement can be worked out under which the United States would not be directly involved in each loan negotiation and yet would get sufficient moral and political credit for its participation in the drive of Latin American countries for economic revival...
...They accept the U. S. technical assistance for developing civil aviation or arranging public services, but not for establishing elementary schools and rudimentary sanitation in remote villages...
...The global military policy (military aid to foreign countries) appears here as one of the four cornerstones of foreign policy, the other three being non-military: support of the United Nations, foreign economic aid and international technical assistance program (Point Four...
...It is ridiculous to speak of Yankee imperialism and colonialism in Latin America in view of the example of Puerto Rico, which is, economically and politically, one of the brightest spots in the area...
...In view of the special interest of the United States in Latin America, programs for this area must be integrated independently of the global U. S. strategy...
...Promotion of U. S. Investments: President Eisenhower's message on the mutual security program urged: "We must continue to stimulate expansion of trade and investment in the free world...
...to promote the U. S. exports, to protect and build up U. S. investments, to befriend and support pro-big-business governments or any particular economic doctrine...
...It can put particular emphasis on projects which strengthen inter-American ties, and contribute to the triumph of progressive, dynamic forces over those of reaction and stagnation...
...Indeed, its policy seems to be directed by considerations which fail to inspire confidence in its sincerity —such as global strategy in cold war, promotion of export goods and capital, and the sympathy of the United States Government for certain slogans and disapproval of others...
...The plain truth, however, is that this area plays no part in U. S. global strategy and consequently has little importance in its military program...
...The two areas, together with Canada, form a tightly knit geographic and economic region...
...If the Government can give such guarantees to a concern building a factory abroad, why should it not guarantee the profits of all private concerns within the United States...
...Despite the progressive diversification of production and trade of Latin American countries, this tie is bound to become even stronger as time goes on, with progress in transportation and communication, and it will be further strengthened by the increasing economic cooperation of Europe and Africa...
...Otherwise social stresses within the countrv may be increased, and Communist propaganda may find a greater receptivity as a result of technical assistance than it did before technical assistance was undertaken...
...Some foreign investments are gratifying...
...It will overcome features of its colonial heritage which have become an obstacle to its economic and social progress, but will not renounce other aspects of its cultural tradition...
...Latin America's historical background is different from that of the United States and Canada and will remain different...
...The question is whether and to what extent the United States will foot the bill and how the new institution will administer the funds...
...The question of the relationship between the two types of operations is not clear at the present phase of the discussion...
...The "Summary Presentation" of the program published jointly by the Department of State, Department of Defense and International Cooperation Administration fills this gap by explaining the importance of Latin America to the United States...
...exports, this is not an immediate, automatic reaction...
...Our aim should be to help the free people of the world, through their own efforts, to produce more food, more clothing, more materials for housing and more mechanical power to lighten their burdens...
...4. Liberalization of the lending policies of international finance organizations...
...I recommend that we continue to encourage by technical assistance the programs initiated by the Latin American nations to make better use of their own resources...
...It would be pointless to start operations with a fund which could be exhausted by two or three large allocations...
...If this story is true, Per?n's stooges overplayed their hand...
...when inflationary pressure prevails, they are undesirable...
...internal politics...
...Government may feel its obligation to defend the interests of its citizens if they are subjected to discriminatory treatment or threatened with arbitrary expropriation of their property...
...The U. S. Goal: Thus, the goal of the United States in Latin America is not to extend the cold war...
...Similarly, inflow of investment to a certain industry may be welcome to a receiving country, while inflow to other economic fields may be harmful...
...In its new departures in foreign policy, we see that the Soviet Union continues in its familiar pattern of ceaseless probing for opportunities to exploit political and economic weaknesses...
...If, on the other hand, a government decides to reserve exploration of oilfields to itself or relies on public regional development programs, these are manifestations of its anti-American tendencies, perhaps of pro-Communist orientation...
...The attitude of the U. S. Government has therefore been that there is no need for a special inter-American development bank...
...Partly because of the violence of the inter-party feud in some Latin American countries, they avoid association with the opposition...
...For example, a local government may be concerned about the projects A, B and C, appraising their urgency in that order...
...Military aid, for example, may include military training of the natives—a transfer of technical know-how...
...Half of the remainder is underwritten by Brazil and Argentina and the rest is distributed among eighteen member nations...
...The attitude of the United States Government toward commodity agreements has been negative, and1 it can be anticipated that it will try to limit the scope and duration of suoh arrangements...
...Later, he listed seven points for the immediate attention of Washington and Latin American countries: Need of private capital in underdeveloped areas...
...The Latin American nations have not shared this attitude, and a cleavage in opinions on this subject has appeared in all inter-American conferences since 1950...
...It may leave the impression that each policy decision in the field of foreign aid and even each single project must be approached from the angle of the national interest of the United States...
...Were it included, it would have occupied a place above the United Kingdom and Germany, which proves clearly enough the fallacy of the export argument...
...Whatever the final judgment of history about the nature of this clash, it appears to us as the defense of freedom and civilization against hostile forces...
...The need is urgent because there are still forces hostile to freedom that compel the free world to maintain adequate and coordinated military power to deter aggression...
...The contract with the U.S...
...In view of the overwhelming importance of this issue, the United States has felt compelled to subordinate its foreign policy to global strategic requirements...
...Others denounce the United States for supporting reactionary forces in Latin American countries and arming local dictators...
...He offered four points of discussion at a Latin American summit conference : 1. Intensified investments in backward areas...
...The evidence is provided by the actual share of Latin America in total U. S. outlays under the various mutual security programs (in millions of dollars) : Appropriations for Mutual Security, 1957 World Latin America The whole program 4,861 96 Military assistance and defense support...
...It has nothing in common with the U.S...
...If the economic development of country X is in the national interest of the United States, the,n economic assistance can be justified on these grounds, without straining the case to cast it into a military mold...
...It can request foreign loans only for clearly described projects which it cannot carry out with its own financial resources...
...another for Venezuela, Colombia, Ecuador, Peru, Bolivia and Paraguay...
...Both arguments interpret the U.S...
...Latin America is conspicuous by its absence from this chart...
...But implementation and administration must be determined by the needs and interests of receiving countries, without any reference to special interests of the United States...
...This relationship may become irrelevant i,n the remote future, but it will remain of decisive importance for many decades to come...
...This consideration should have determined the U. S. attitude toward them...
...In other words, *The surplus in export of merchandise and invisible export (transportation cost, profits from foreign investment and so on) was partly balanced by foreign aid, special conditions in export of agricultural surplus commodities, and accumulation of holdings of U.S...
...For purely psychological reasons, however, the governments of the more progressive nations are reluctant to let U. S. technicians work in provinces which they themselves have neglected...
...policy in Latin America stem from lack of clarity about its ultimate objectives...
...A loan which will be repaid by the receiving government in local currency in 40 years must be financed by the giving country in precisely the same way as a grant...
...The relation of this proposal to the program of mutual security is not very clear...
...capital in foreign countries is neither hidden aggression nor a blessing for the receiving nations...
...The close association of the two Americas, so different as they are, will enrich both of them culturally...
...but economic and social progress in this part of the world depends on elimination of dictatorial regimes and their replacement by democratically elected responsible governments...
...For some reason the United States may decline to help the local government in projects A and B, but be willing to support project C. Its contribution will be politely accepted by the government, but may provoke more resentment than gratitude in the people...
...Fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas...
...And, in cooperation with other nations, we should foster capital investment in areas needing development...
...Ultimately, it is underwritten by the taxpayers, and the latter are entitled to know how their money is spent and what their country gets for it...
...dictators may be benevolent rulers or tyrants...
...The same principle applies to the problem of stabilizing prices of certain Latin American products on the U. S. market...
...training sanitation employes and providing cities with potable water, are parts of the same program, although the outlays may be segregated for administrative and budgetary reasons...
...exports has exceeded that of imports by $35.5 billion in the past seven years...
...This general tendency is illustrated by the following comparison of the value of our exports to Latin America and Canada in 1957: Latin America Canada 193.7 Population (in million) 16.6 Exports from the United States 4,487 Total (millions of dollars) 3,879 23 Per inhabitant (dollars) 234 In this general form, the argument shows only that the United States need not fear that economic development and indusrialization of Latin America will reduce its market abroad...
...Nevertheless, although rising prosperity and industrialization in a country may increase U.S...
...The main source of vacillation and apparent contradictions in our policy toward the South is the fact that this policy is considered a part of our global strategy, which it is not...
...Surely, the United States was not to blame for Rojas Pinilla in Colombia, Perez Jimenez in Venezuela, Somoza in Nicaragua, Trujillo in the Dominican Republic, Per?n in Argentina, or Batista in Cuba...
...It can be argued that the armies of Latin American republics, equipped with U.S...
...It should be recognized that the role of technical assistance in the progress of a country is not simply the transfer of better technology...
...It can be argued that the policy of maintaining armies in Latin American republics is fundamentally wrong and they might be advised to disarm under a mutual security pact enforced by the Organization of American States...
...As far as the exploitation of oilfields and mines is concerned, the U.S...
...Latin America will profit from the North American genius for organization (superior technology being only one manifestation of this genius), while the United States will profit from the artistic spirit of its Southern neighbors...
...Policy In Latin America GEOGRAPHICALLY, Latin America is as remote from the critical theaters of global strategy of the Pentagon and the Kremlin as it is possible to be on our tiny planet in the atom age...
...Recall the outline of programs "for peace and freedom" in President Truman's inaugural address in January 1949: "First, we will continue to give unfaltering support to the United Nations and related agencies and we will continue to search for ways to strengthen their authority and increase their effectiveness...
...This observation is correct but does not go far enough...
...The particular objective of United States policy in Latin America could be clearly outlined against the background of points two and four of this program...
...Those who dislike expansion of the economic responsibilities of the Government in this country are inclined to dislike similar projects abroad...
...It is obvious that a new bank which can become a football in local politics would bring more harm than good to Latin America...
...In my opinion, both accusations are false...
...One can imagine what the impact of this concession on public opinion in Argentina and other Latin American countries would have been if it had been ratified...
...After World War II, the World Bank and International Monetary Fund appeared on the scene...
...Democratic governments may be strong or weak, competent or ignorant, honest or venal...
...The proper form of aid in this situation has been developed by the World Bapk...
...But recruiting such workers and replacing them has become increasingly difficult...
...It must be a world-wide effort for achievement of peace, plenty and freedom...
...The attitude of U.S...
...foreign policy is not concealed by the reservation : "Needless to say, we do not intend to permit specific Soviet moves to control our activities...
...merchandise abroad exceed by far the ability or willingness of the United Stales to import...
...Thus the lending agency assumes the right and obligation to check the progress of the program in the same way as a private bank controls the use of its loans by debtors...
...With all these considerations in mind, it is difficult to understand why the promotion of private investment abroad appears on the "must" list of our mutual security program...
...It must be established on the basis of careful study of the financial needs and absorptive capacity of Latin America, taking into account the experience of the World Bank in this area...
...In view of these circumstances, the people of the United States were asked to make sacrifices for military, technical and economic assistance to other nations, with a strong emphasis on the military aspect of the mutual security program : "The Soviet maneuver . includes offer of bilateral trade arrangements which may involve provisions of arms and capital goods as well as technical assistance...
...The United States could be called upon to cooperate with the local government in developing and executing such plans, supplying technicians, certain materials and equipment, while the local government would provide the labor force, the bulk of the technical and supervisory personnel, and locally available materials, also assuming the responsibility for high-level control over the whole project...
...Would it not be preferable to let this capital work in domestic industries where it would strengthen competition among private concerns, contribute to the rise of productivity and counteract inflationary pressures which cause a continuous rise of prices...
...This does not invalidate the argument (hat outlets for U.S...
...On the other hand, the United States cannot and must not try to mold the development of Latin American nations in accordance with the interests and ideas of its businessmen...
...Thus, the defense of foreign aid as a means for increasing exports gets a strange twist: The United States is invited to spend public money in order to export more and more, although each increment in export represents an additional loss...
...It is difficult to understand this reasoning...
...As a general rule, our Embassies are inclined to cultivate friendly relations with circles close to the government and the ruling party...
...Once the United States has recognized its interest in the current evolution of Latin America, it must accept certain responsibilities for accelerating and facilitating this development...
...The United States could oppose a national monopoly of oil exploitation in a foreign country only if it were interested in the penetration of its private capital into this field...
...Its military aid to Latin American countries, whether under democratic or dictatorial regime, has not gone beyond this general principle...
...The United States interest in economic and social progress in a region must be firmly established in advance...
...economic aid in Latin America and the volume of U.S...
...But this much is certain: United States economic aid to Latin America, whether direct or through an inter-American body, must be oriented toward large-scale projects of unquestionable and lasting value for the people of the respective countries and must have no other purpose...
...These feelings, however, must be expressed in deeds...
...The Final Report of the Senate Committee dramatizes this argument by a chart which argues: "The More Developed the Country The Better Customer It Is...
...More than in any other field of public finance, the best policy in this case is that of honesty and frankness: The people must know what each appropriation means...
...Third, we will strengthen freedom-loving nations against the dangers of aggression...
...Actually, the United States has given away domestic products worth $115.6 billion for foreign products worth $80.1 billion.* But, apart from other items in the balance of payments, a surplus of exports over imports results in the accumulation of holdings abroad, which is favorable only for a nation that plans—at some later time—to take the profits from its foreign investments in the form of imports...
...But it will make a grave mistake if it does not heed the point of view of Latin American nations...
...foreign trade is not the lack of outlets abroad but the continuous excess of exports over imports...
...Economic assistance;—anything in the form of capital equipment or investments...
...Its scope should be extended, and the suggestion of President Kubitschek that the United States double its appropriations for this form of foreign aid in Latin America seems rather conservative...
...This country is not properly concerned with public or private ownership of industries in Great Britain, Germany, France and Japan and is not in the least interested in the ways in which Brazil, Mexico or Chile solve this problem...
...This has been a very annoying point of disagreement, since the United States could be portrayed as denying financial aid to Latin American countries...
...What is frequently represented as a change in the United States attitude toward Latin American nations has been the result of the reorientation of our general foreign policy...
...emphasis on large-scale projecU and regional planning...
...After an agreement with the host government about the financing of the project, it would open credit for defraying a part of expenses during a year or two, with the understanding that further credit would be accorded if the project proceeds in accordance with the established plan...
...To invest public funds in railroads, highways, agriculture or health in a country in the hope that this operation will bring returns in the form of increased future exports is a very dubious speculation...
...President Eisenhower's message contained a special paragraph concerning Latin America: "We propose to strengthen further the friendly relationships which exist with our sister republics in the South...
...In this respect, there is a great similarity between our Point Four program and the Community Development movement in India...
...After the Korean War, foreign economic aid and technical assistance were submerged under the concern about national security through military alliances and the armaments race...
...the concession produced such an outburst of protest that it could not be ratified...
...Should it launch a crusade for democracy...
...Expansion of technical assistance activities along these lines would, of course, require additional appropriations—perhaps more than the suggested doubling of expenditures under present program...
...Both possibilities should be explored...
...United States economic policy in Latin America must take the political climate in that area into account...
...World affairs, however, have taken another turn...
...On the other hand, the United States cannot be completely neutral concerning an issue which directly affects the vital interests of the whole Western Hemisphere...
...others are bound to provoke resentment in the receiving country...
...It should be coordinated with support of developmental projects and fit into the general plan of cultural, social and economic progress in the area...
...exports to that region in the more or less remote future, there would remain the crucial question of whether we need to take special measures for increasing our exports...
...This postulate is not limited to foreign economic aid and technical assistance, but also includes certain adjustments in our foreign trade policy as far as it affects the interests of Latin American nations...
...Technical assistance in agriculture may result in sharp inoreases in crop-yields, but it will fail of its purpose (indeed, it may be positively harmful) unless it is accompanied by measures designed to bring about a fair distribution of the increases between landlords and tenants...
...No practical steps have been taken in this direction...
...Many people there consider politics as the most profitable business, and wealth as the title to political power...
...This difficulty could be overcome within the framework of regional projects in which technical assistance and economic aid are integrated in the general plan...
...2...
...The United States cannot expect that each million dollars it invests in economic aid in a country will increase its future exports to that country by $100,000 or even by ten cents a year...
...A regional center might be established, for example, for Mexico, Central America and the Caribbeans...
...capital may strengthen our ties with friendly countries, while under other conditions it is more likely to cause friction...
...Perhaps the country receiving our aid will substitute domestic products for those currently imported from the United States, or make purchases in West Germany or Italy...
...The first two lines of policy must be rejected because they would imply active intereference of the United States in the internal affairs of Latin American countries...
...In public discussion of these requests, the idea of an inter-American development bank gained particular attention as the main issue of the forthcoming summit conference, and when the U. S. Under-Secretary of State for Economic Affairs announced the willingness of this country to consider this plan, some Latin American diplomats welcomed this —fairly weak—promise as realization of an old dream of the sister-republics...
...Public guarantees of private investm?hts abroad is another matter...
...Or should it observe strict neutrality between the clashing forces...
...Its share in all forms of foreign aid is just 2 per cent, and this is a source of resentment in Latin that this area is no part in global strategy of the United States and conse-America: The United States spends billions of dollars on foreign aid but only 2 per cent of these funds go to Latin America...
...The United States should therefore establish machinery which will permit it to contribute most efficiently to the drive of Latin American nations toward economic improvement, paying attention not only to their needs but also to their feelings...
...technical assistance...
...Injection of these issues into our policy in Latin America does not strengthen the prestige of this country among governments and intellectuals in these nations...
...If our observation is correct that poverty in certain parts of Latin America is due primarily to human factors rather than scarcity of natural resources and lack of capital, technical assistance is the proper answer to the most urgent problems in this area...
...Neither encouragement nor discouragement of the outflow of U. S. capital should be an objective of our foreign policv in any part of the world—least of all in Latin America...
...I was told that Per?n intended to use this contract to pave the way for another, much bigger concession, which he would have given later to an Argentine concern controlled by himself and his family...
...Furthermore, if there were a strong correlation between U.S...
...Prices and Tariffs: The principle that the United States is interested in the economic progress of Latin America implies that it should give due consideration to the vital interests of its neighbors in the South in fixing duties and quotas for coffee, sugar, tin, copper, lead, zinc and some other articles...
...The limit of its operations may be in the order of magnitude of $250-300 million a year, which would require a subscribed capital of $1-$1.5 billion...
...The conclusion to be drawn from these observations should be that technical assistance must be a part of a broader program of economic aid...
...It must not use economic aid for molding the economy of other countries according to its own interests but it can use it as a means for helping the democratic nations of Latin America on the road to freedom and independence they have chosen for themselves...
...Second, we will continue our programs for world economic recovery...
...weapons, would be unable to defend themselves in the event of an attack by the Soviets, and that the respective governments are more likely to use their tanks and airplanes in clashes with sister republics and in internal struggles for power...
...The essential point is to reconcile the desire of Latin American countries to get assistance through an inter-American lending agency and the lukewarm attitude of the United States toward such an agency...
...3. Stabilization of prices for basic Latin American products on the U. S. market...
...oil corporation...
...This makes the objectives of United States policy in Latin America radically different from those in Europe, Africa or Asia—an immense arena in which the West meets and clashes with the East...
...Our survey of technical assistance in Latin America shows clearly enough that this assistance contributes to the well-being of the peoples concerned and strengthens their independence...
...a third for Chile, Argentina and Uruguay...
...corporations abroad...
...Essential are the character and organization of the new inter-American center...
...Actually, however, Latin America has no part in this clash of great powers...
...Should it support local dictators in recompense for their firm stand against Communism and their benevolence toward big business...
...From the purely financial point of view, there is little difference for the United States between loans and grants, direct and indirect aid, economic and technical assistance: The people of the United States are asked to give * The United Stales currently contributes 70 per cent of the funds to the technical coop?ration programs of the Organization of American Slates...
...And, generally, why and to what extent is the United States interested in promoting the outflow of capital— and occasionally the flight of capital—from this country to the happy lands where there is no profits tax and payment of other taxes is left to the discretion of capitalists...
...The Senate Committee on Foreign Relations, in its Final Report on Technical Assistance, 1957, suggested a threefold classification of related programs: "1...
...To sum up, investment of U.S...
...The United States cannot be expected to determine its trade policy by other considerations than its own interest, but its interest demands consideration for the needs of Latin America...
...What, then, does Latin America mean to the United States in the long run...
...More recently, Juscelino Kubitschek, President of Brazil, has assumed the role of spokesman for Latin America in formulating its aspirations...
...There is no evidence, however, that the United States has maintained dictators in power against the wishes of the people...
...The distinction between loans and grants is more important to the receiving than to the giving country...
...The United States could offer financial aid to developmental plans of Latin America in the same way as the World Bank, with two modifications: First, it could participate in certain long-range projects on the basis of a clearly defined cooperation agreement with the host government...
...Of course, the United States must export, in order to cover the imports of currently needed raw materials and tropical products...
...Anglo-Saxon America relies on Latin America for tropical produce, and Latin America finds outlets in Anglo-Saxon America for its fruits and minerals...
...The meaning of the principles established here as guidelines of U.S...
...This is, however, a controversial issue...
...The new institution may act as an intermediary between Latin American republics and the United States, or another lending government...
...Indeed, the per capita export from the United States to different countries depends on many factors: the structure of their economies, their need for articles exported by the United States, competitive position of these articles on the world market and so forth...
...Global Strategy: Whether or not the philosophy of mutual security which epitomizes our global strategy is sound in Europe and Asia, it is a matter of record that it does not apply to Latin America...
...But the admonition to help other countries in order to increase our exports is incongruous...
...representatives in Latin America on such problems as public or private ownership of industrial plants and public or private exploitation of mineral resources can be described as an attempt to export to Latin America slogans which have been rejected by our allies in Europe and are an apple of discord in U.S...
...representatives in Latin America believe that a country's pro-United States attitude must be expressed by the abstention of its government from intervention in economic affairs, its reliance on private initiative, and its hospitality toward foreign investments...
...What advantage has this impressive trade balance brought to the nation...
...Since Latin American countries are represented in both institutions, their operations in Latin America are somewhat similar to those which would be carried out by an inter-Amerioan Bank...
...all technical assistance projects have been either initiated or actively supported by these governments...
...Substantially, the bulk of funds must come from the United States...
...But, from the point of view of national interest, the United States gains nothing either from outflow of capital or its investment in this particular industry...
...Latin American influence in the United Nations and in their international dealings, in support of peace, freedom and international justice, is a powerful force for world stability and peace...
...4,131 35 Development assistance 572 27 Technical assistance 158 34 Latin America's share is approximately 5 per cent of the development assistance program, about 22 per cent of the technical assistance and less than 1 per cent of military assistance and defense support...
...Promotion of Economic Slogans: Many U.S...
...Its solidarity with the forces of democracy and progress in Latin America must be clearly expressed, and not only in words but in deeds and, first of all, in the orientation of its economic policy...
...The author is in agreement with most of its suggestions but would supplement them in three directions: integration of technical assistance and economic aid...
...Now, the voices of Latin American nations should be added to those to which the Administration is supposed to listen...
...The President further elaborated as follows : "We should make available to peace-loving peoples the benefits of our store of technical knowledge in order to help them to realize their aspirations for a better life...
...Under certain conditions, large-scale investment of U.S...
...and a fourth for Brazil...
...the only economic justification of a temporary surplus of export is that it will permit the country to import more in the future than it exports...
...Coordination is essential not only for regional development projects of the TVA type but also for large-scale resettlement and rehabilitation plans, and most of all for broad regional programs such as those vaguely envisaged in Brazil, Chile and Mexico...
...There is nothing .. . to warrant a slackening of our efforts to strengthen the common defense of the free world...
...The new program differs from the original four points by greater precision and addition of the questions of a common market in Europe and the Western Hemisphere...
...If the United States decides to support economic development in Latin America, it will have to clarify its attitude to two problems: first, the comparative advantages of loans and grants ; second, the merits and disadvantages of aid to the host country through bilateral agreements and through a special inter-American agency...
...The recent Buenos Aires Economic Conference failed to answer these questions...
...To expand the program, the work of Point Four personnel must be made more attractive for those who fit exacting requirements...
...The scope of operations of the new development bank cannot be estimated at the present phase of the discussion...
...Training teachers and building schools, agricultural extension services and irrigation projects...
...Thus, the U.S...
...developing health centers and establishing hospitals...
...economic aid to Bolivia and Guatemala or technical assistance to those countries plus Colombia, Ecuador, Peru and Chile tends to subjugate these countries to monopolistic U. S. capital...
...Taking stock of the economic, social and political trends in Latin America, the United States must realize their significance for its own future and that of the Hemisphere...
...What do they expect from the United States...
...There is no point, however, in using this method for projects which can be handled by local organizations with limited economic aid from the United States or the World Bank, such as the Cauca Valley development project or expansion of the nationalized petroleum industry in Argentina, Brazil and Mexico...
...The controlling factor will be the difficulty in recruiting the necessary personnel...
...The last type of arrangement is most suitable for large-scale regional projects...
...Economic planning in this area has not reached the level on which each local government can ask an international agency to underwrite its developmental budget...
...policy in this part of the world is left hanging in midair, without an adequate ideological foundation...
...As long as Latin American countries feel that as independent nations they must maintain armed forces, the United States cannot deny them weapons...
...The Report expresses the conviction that "both Congress and the public are wiser and more mature than this sort of semantics implies...
...In plain words, this meant that the Government would support the export of goods and capital through public loans and guarantees...
...Similarlv, technical assistance in education may result in sharp increases in literacy, but again it will be less than fully effective if the school system is not adapted to meeting the country's needs...
...During our stay in Buenos Aires, I had occasion to read a 120-page con cession contract awarded by the Per?n Government to a U.S...
...I therefore do not believe that the United Slates is responsible for the existence of dictatorships in Latin America, but it can be accused of lack of clarity and consistency in its attitude toward political trends in this area...
...Certain parts of all these countries are on about the same level of education, health, agricultural technique and standard of living as the backward areas in Colombia, Ecuador, Peru and Bolivia...
...And yet, our Latin American neighbors complain that what the United States does in Latin America is not always in accord with its most insistent desires and requests...
...With Soviet leaders openly proclaiming their world aim, it would be folly for us and our friends to relax our collective efforts toward stability and security...
...corporation gave full protection to the concessionaire while providing prac tically none for Argentina and—according to this story—was designed to provoke criticism within the country and to permit Per?n's group to appear on the scene with an offer to exploit the oilfields on more favorable condi tions for the nation than those asked by the Yankees...
...Likewise, it is interested in maintaining the economic unity of the Western Hemisphere in view of the fact that U. S. mineral resources will be partly depleted or close to exhaustion in the not very remote future...
Vol. 41 • November 1958 • No. 43
