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DOCUMENT WITHDRAWAL RECORD - RICHARD NIXON PRESIDENTIAL LIBRARY
DOCUMENT
DOCUMENT
NUMBER
TYPE
SUBJECT/TITLE OR CORRESPONDENTS
DATE
RESTRICTION
1
Paper
Section from Paper on Latin America (2pp)
3/1971
B
MANDATORY REVIEW REQUEST NLN 04-H-05/1
Hr. 8/16/2016
SANITIZED
3.3(6)(5)(6)
2
Report
Report on Latin America (17pp)
4/29/1971
B
MANDATORY REVIEW REQUEST NLN 04-H-05/2
Hr.
1/11/2016
SANITIZED
3.3(b)(1)
FILE GROUP TITLE
Box
NSC Institutional Files, Meeting Files (1969-1974)
H-059
FOLDER TITLE
[03] SRG Meeting - - Latin America/Caribbean 8/17/1971 [3 of 3]
RESTRICTION CODES
A. Release would violate a Federal statute or Agency
E. Release would disclose trade secrets or confidential
Policy
commercial or financial information.
B. National security classified information.
F Release would disclose investigatory information
C. Pending or approved claim that release would violate
compiled for law enforcement purposes.
an individual's rights.
G. Withdrawn and return private and personal material.
D. Release would constitute a clearly unwarranted
H. Withdrawn and returned non-historical material.
invasion of privacy or a libel of a living person.
NATIONAL ARCHIVES AND RECORDS ADMINISTRATION
NA 14021 (4-85)
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
WITHDRAWAL SHEET (PRESIDENTIAL LIBRARIES)
FORM OF
DOCUMENT
CORRESPONDENTS OR TITLE
DATE
RESTRICTION
1 PAPER
SECTION FRom PAPER ON LATIN AMERICA (2pp.)
3/71
A
2 REPORT
REPORT ON LATIN AMERICA (17pp.)
4/29/71
A
FILE LOCATION
H FILES Box H-59 FOLDER 3
RESTRICTION CODES
(A) Closed by applicable Executive order governing access to national security information.
(B) Closed by statute or by the agency which originated the document.
(C) Closed in accordance with restrictions contained in the donor's deed of gift.
NATIONAL ARCHIVES AND RECORDS ADMINISTRATION
NA 14029 (1-98)
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
B. SECURITY
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
SECURITY/MILITARY
I. The U.S. Security Interest
1
II. Description of Potential Threats
3
Missile Attack from Latin America
4
Hostile Non-Strategic Military and
Naval Bases
4
Denial of Access to Resources,
the Canal and Facilities
5
Territorial Seas
6
Cuban and Chilean Support of
Insurgency
6
An Expanded Soviet Presence
7
Extremism, Insurgency,
Nationalism and Radicalism
9
Negative Political Developments
10
III. Policy Implications of Potential Threats
to the U.S. Security Interest
11
A. Preservation of Favorable
Majority
11
B. Denial of Area for Launch of
Strategic Attack
13
C. Maintenance of Confidence
in U.S. Leadership
14
D. Access to the Panama Canal
15
E. A Strong Inter-American
Security System
17
F. Transit on High Seas and in
the Air Space
18
G. Denial of Bases to Hostile
Powers
18
H. Access to Bauxite in Jamaica
and Petroleum in Venezuela
.....
19
I. Continued Access to Naval
and Air Facilities
20
IV. Policy Analysis
21
V. Recommendations
22
Attachments:
Tab A - List of Recommendations.
Tab B - The Future of Grant MAP Materiel -
Options Paper.
SECRET
DECLASSIFIED/RELEASED ON 4/23/02
by NARA on the recommendation of the NSC
under provisions of E.O. 12958 RS
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
SECURITY/MILITARY
I. The U. S. Security Interest
The U.S. security interest in Latin America today con-
sists of the following principal elements, in approximate
order of descending priority:
A. Preservation of a predominance (by the combination
of numbers and importance) of independent, self-sustaining
Latin American countries favorably disposed to the United
States.
B. Denial of Latin America as an area from which a
strategic attack could be launched against the United States.
C. Maintenance of the confidence of Latin America and
of the world in the effectiveness, maturity and responsibility
of our leadership as a great power in our relations with Latin
America, with due consideration for the "mature partnership"
concept.
D. Maintenance of access to the Panama Canal, including
under existing circumstances its protection and control by
the United States.
E. The existence of a strong inter-American system,
including an effective collective security function.
F. Unimpeded transit for United States forces on the
high seas and in international air space in the area.
G. Denial to hostile powers of bases in Latin America
that would enhance their non-strategic military capabilities.
H. Continued access to bauxite in Jamaica and petroleum
in Venezuela.
1/ ISA and JCS prefer "Protection and control of the
Panama Canal as essential to maintaining our access to
its use."
2/ The IG/ARA has concluded that bauxite from Jamaica
and petroleum from Venezuela are currently of major in-
terest to the United States. It believes, however, that
an estimate of the strategic requirements for these
materials from these countries, and perhaps for other
strategic materials, requires more detailed examination
than it has been able to undertake.
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 2 -
I. Continued access to certain naval and air bases and
facilities in the area.
The significance of our security interest in Latin
America derives from the following principal factors:
- Geographic proximity of much of the region.
- Our association with most of the Latin American
countries in a political and security system which
has generally served our broader interests.
- The existence of an inter-oceanic canal in Panama.
- Substantial economic interests.
- Latin American control of a limited number of stra-
tegic resources.
- The potential of one or more Latin American countries
(e.g., Brazil, Mexico and Argentina) for becoming
important powers.
- The cumulative effect these twenty-five countries can
have on world order and our world position.
- The fact that by virtue of the "special relationship,"
the U.S. is often regarded, both in Latin America and
elsewhere, as responsible to a substantial degree for
the course of events in the hemisphere.
In addition, there are varying degrees of significance
and concern among countries within the region that may have
relevance for our security interest. Brazil's size, potential,
current economic dynamism and sense of mission make it prob-
ably the most important country of the region. Mexico is of
particular significance because of its contiguity, its size,
its economic strength, and the wide range of common interests
it shares with us. Jamaica and Venezuela are of special im-
portance because of their bauxite and oil. Argentina and
Colombia may become "middle powers" over time. Panama is
important because it is the only practical location for an
inter-oceanic canal and because of the presence of the exist-
ing canal. The Caribbean countries and especially the Bahamas
have a special significance for the defense of the United
States by virtue of the submarine surveillance and ASW instal-
lations located there and the relationship of this area to
canal). other U.S. interests (e.g., bauxite, oil, and an inter-oceanic
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 3 -
The current Marxist regimes in Cuba and Chile lend a par-
ticular importance, in a negative sense, to those countries.
II. Description of Potential Threats
No Latin American country is now or for the foreseeable
future will be in itself a direct security threat to the
United States. The potential threats to the United States
security interest in Latin America over the next three to
four years consist of:
-- the Soviet capability to launch strategic weapons
against the United States from submarines operating
within the area and potentially from land bases in
the area.
-- the possible establishment of hostile non-strategic
military and naval bases in Latin America;
-- the possible denial to the United States of access
on reasonable terms and with reasonable security to
the Panama Canal;
-- the possible denial to the United States of access to
bauxite in Jamaica and petroleum in Venezuela;
-- the possible defense implications of the trend in
Latin America toward expanded claims in territorial
seas;
-- the possible denial to the United States of access
to certain naval bases and facilities in the area;
-- Cuban and possible Chilean efforts to aid insurgents;
-- an expanded Soviet presence;
-- continued manifestations of violent extremism, in-
surgency, anti-U.S. nationalism, and radicalism;
-- the indirect effect on the world power balance of the
undermining of our prestige, influence and self-
confidence that could come from a series of negative
political developments in the hemisphere;
-- a possible weakening of the inter-American security
system.
The characteristics and potential importance of each
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 4 -
threat are discussed in the sections that follow. Drawing
upon the Intelligence assessment portion of this study, we
have attempted to the degree possible to describe briefly
the "intentions" (or "likelihood") dimension of each threat
as well as its "capability" (or "potentiality") dimension.
In some instances, however, -- as in the case of the pos-
sibile longer-term establishment of Soviet bases in the
hemisphere -- we have considered it important to try to
predict the policy implications of the hypothetical threat
without attempting to estimate the likelihood that the
threat would in fact materialize. The National Intelligence
Estimate currently under preparation on the Soviet role in
Latin America should permit a more extensive assessment of
the short and longer-term threats that Soviet activities may
pose to the United States security interest.
1. Missile Attack from Latin America
The most direct threat to the security of the United
States from Latin America is the possibility of a strategic
nuclear attack launched from ballistic-missile submarines
operating in the waters of the area or from land bases in
Latin America. Although Soviet capability to attack the
United States from Latin America would not provide the USSR
with a decisive strategic advantage over the United States,
such a capability would significantly escalate the level and
complexity of the nuclear balance, introduce new control
uncertainties, and increase the cost of defense.
This threat would be aimed at the weakest part of our
defensive perimeter. Existing air defenses and planned anti-
ballistic missile defenses are oriented toward the east and
west coasts and toward the north; our weakest area is in the
south. Operating from patrol stations in adjacent Latin
American waters, a Soviet submarine is within missile range
of a significant portion of our deployed strategic force,
thereby increasing Soviet flexibility and further reducing
the already short warning time. If the Soviets could obtain
repair and replenishment facilities for their submarines in
the area, the on-station time of these submarines could be
considerably increased.
2. Hostile Non-Strategic Military and Naval Bases
Over the next three to four years we do not expect that
any Latin American country (except Cuba) will allow the
Soviets to establish an overt military base or other major
military presence. In the future, however, should the Allende
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 5 -
regime be receptive, the USSR might attempt to secure the
use of Chilean facilities for the maintenance and replenish-
ment of Soviet combatant ships and submarines. In the event
that, over the longer term, such facilities were established,
there would be serious security implications for the United
States, including:
-- Increased Soviet capability to interdict sea lines
of communications, particularly the strategic Panama Canal
and Cape Horn routes and the flow of strategic materials
from Latin America to the U.S.
-- Increased Soviet intelligence collecting capabilities
and expanded communications facilities for command and con-
trol.
-- Impairment of hemispheric security arrangements,
increased instability, and a possible arms race between
bordering countries.
-- Increased Soviet capability to support subversion di-
rected at existing governments.
-- Increased Soviet bargaining power vis-a-vis United
States security interests elsewhere in the world.
It should be noted that the overt establishment of
Soviet bases in one or more countries in the hemisphere
could well have the effect of alerting the other countries
to the danger, thereby strengthening the inter-American
security system and jeopardizing the entire Soviet position
in the hemisphere.
3. Denial of Access to Resources, the Canal and Facilities
The resources in question are bauxite in Jamaica and pos-
sibily petroleum from Venezuela. How critical these resources
are is a function of time and circumstance. An important new
factor in this regard are the events of the past months in the
Mediterranean and the Middle East which favor a shift to sources
of oil in the Western Hemisphere. At the present time, half of
our foreign oil imports come by tanker from Latin America, ac-
counting for fifteen percent of total U.S. consumption.
The Canal continues to be of major importance to our
defense. Our purpose is to retain an absolute right to defend
the present canal, which is vulnerable to many forms of attack,
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 6 -
and to defend any new Isthmian canal system for the fore-
seeable future.
Denial of access to certain key military facilities
would also constitute a threat to our security interest in
Latin America. The United States maintains extensive bases
and facilities for submarine detection, for ASW activities,
and for military-scientific purposes in the Caribbean basin.
Guantanamo Naval Base has been and remains an important naval
training facility and provides a useful ASW capability. The
base also plays an important role in helping to secure the
approaches to the Caribbean and to the Panama Canal. Main-
taining our presence there preempts possible Soviet utiliza-
tion of the facilities.
4. Territorial Seas
With regard to the territorial sea issue, the principal
threat stems from unilateral assertions, on the part of a
number of Latin American countries, of jurisdiction over
wide areas of the sea. These claims are based upon a desire
for greater control over the resources of the seas adjacent
to the coast. Actions in support of these territorial sea
claims complicate our relations with the countries of Latin
America. The absence of international agreement encourages
a polarization between the Latin American countries on the one
hand and the United States on the other. The resultant adver-
sary relationship has an erosive effect on the whole range of
our relations with Latin America.
We wish to record our concern over the implications of
this issue for our security interest. It could have serious
effects on the strategic mobility of U.S. naval and possibly
air forces in the area. Since the underlying juridical problem
will be the subject of a world conference on the law of the sea
to be held in 1973, we do not believe it is appropriate to
examine this question in greater depth in this paper.
5. Cuban and Chilean Support of Insurgency
While Cuba continues to supply training and other aid to
Latin American insurgent groups, Castro has recently empha-
sized selectivity in his support and appears to be stressing
the importance of self-sufficiency on the part of such groups.
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 7 -
There was no hard evidence, for example, of Cuba's monetary
or personnel support for the guerrilla effort in 1970 in
Bolivia, even though this effort borrowed heavily from
Cuban ideology, was strongly supported by the Havana media,
and might receive some direct Cuban support were it to start
up again and prosper. Cuba nonetheless appears to remain
the principal sponsor of such groups as the FAR in Guatemala
and the currently ineffective FSLN in Nicaragua. Cuba's un-
happy economic performance has doubtless made Castro less
adventurous abroad, and Cuba's recent closer linkage with
the Soviet Union may have produced counsel for caution from
Soviet advisors.
In Chile, the Allende Government is unlikely, in the
short run, to risk foreign retaliation and strong domestic
criticism by allowing Chile to become a base for large-scale
insurgent operations or by providing overt governmental sup-
port to subversive activities against neighboring countries.
There are indications, however, that Chilean support of in-
surgent groups in neighboring countries may increase. A
base in Chile from which "revolutionism" could be supported,
and possibly exported, would constitute a danger to its
neighbors and could provide a focal point for unifying in-
surgent movements. A strong Marxist government of an
influential continental country could serve as a model for
movements in other countries and could be a source of ideolog-
ical motivation, financing and other support. Over the long
range, this could impart new importance to leftist revolu-
tionary movements in Latin America and pose a significant
threat to U.S. security interests. On the other hand, de-
pending on the degree to which other Latin American countries
discerned a threat in these Chilean activities, Chilean
support of insurgency could exert a unifying effect within
Latin America against Chile.
6. An Expanded Soviet Presence
World increases in Soviet strategic power and the ability
to project that power have potentially important implications
for the security of the Western Hemisphere. The Soviets have
shown an increasing interest in the hemisphere, as indicated
by their expanded efforts to establish diplomatic and trade
missions and by an increase in their naval and air activities.
They can be expected to continue this expansion, not neglect-
ing promising opportunities for encouraging subversion if
they can do SO without endangering their more respectable
tactics.
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 8 -
Though Latin America will remain a relatively low priority
area for them, the Soviets will not hesitate to take advantage
of any Latin American receptivity for support of their world-
wide military operations. Soviet military activity outside
of Cuba can be expected to consist of "foot-in-the-door"
operations such as the establishment of various kinds of
civilian air and sea transport facilities (which could have
a potential military application for the Soviets) port and
airfield visits and military exercises designed to show the
flag and to demonstrate support for sympathetic regimes:
military aid and arms sales; collaboration in developing
scientific facilities to assist in space tracking, navigation,
and communications; and cooperation with friendly Latin
American countries in support of Antarctic operations.
In Cuba, the Soviets will probably continue probing and
testing U.S. firmness by increasing the frequency, size and
duration of their naval visits. They may also continue to
construct facilities at Cienfuegos. If they eventually de-
cide that the United States has been conditioned to accept
their presence, regular servicing of Soviet combatant ships
and submarines may result. The eventual development of
closer ties between Chile and the USSR could also lead to
repeated Soviet naval visits and ultimately regular support
of naval operations by Chilean facilities.
Soviet influence in Chile can be expected to grow. The
Allende Government has announced it will use Soviet credits
to build a fishing port, which would probably be located in
Valparaiso. There are also unconfirmed reports of plans for
the establishment of a Soviet commercial shipping arrangement
which would include providing Chile with merchant vessels and
a Soviet-manned merchant marine facility in Valparaiso. Com-
mercial air routes involving Chile, Peru, the Soviet Union,
and Eastern Europe are also under consideration. Close
relations with Communist nations could contribute to the
development of Chile as a base of support for intelligence,
subversive and insurgent activities which would constitute
a danger to its neighbors. As noted above, however, the
development of Chile in this direction could act as a stiffen-
ing element with regard to Chile's neighbors.
In spite of these developments, a pattern of aid and de-
pendence similar to what has emerged in Cuba is not likely,
at least in the near term. Allende has given no indication he
would welcome such a relationship with Moscow. It seems
likely that the Soviets are more interested in using Chile
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 9 -
as a cornerstone for the gradual, long-term expansion of
their interests in Latin America than in duplicating Cuba's
total dependence. Thus, they will resist, as will the
Allende regime, the development of relations between them
which might endanger either party's broader relationships
with such states as Peru, Argentina, and Brazil. This
posture would not rule out assignment of military attaches
to Chile and supply of certain equipment to the security
forces, possibly with some kind of technical mission.
In the short range, the Soviet activities discussed
here will probably not result in serious impairment of U.S.
interests in the hemisphere. Soviet ability successfully
to influence Latin American developments is likely to remain
much less than that of the U.S., which is itself highly
circumscribed.
7. Extremism, Insurgency, Nationalism and Radicalism
At present, despite the existence of rural insurgencies
in a few Latin American countries and increasing urban ter-
rorism in some, neither guerrilla movements nor urban terrorism
are likely to result in actual seizures of power by extremists.
In one or more countries, however, extremist tactics together
with specific rallying causes that might arise could erode
institutions to a point where increasing repression might
generate widespread disorder and eventual revolutionary crisis.
In general, the major thrust of multinational links among
insurgent groups has been in providing safe havens and some
funding, and also in facilitating transit for members of
neighboring groups. The effectiveness of cooperative efforts
across national boundaries by revolutionary groups will be
hampered by limited resources, internal dissension and the
reaction of security forces. Should disparate insurgent and
terrorist factions succeed in joining forces, however, the
problem of violent extremism could assume more serious propor-
tions in a few countries.
Another cause for concern is the fact that growing Latin
American nationalism, while containing positive features as
well, often expresses itself in anti-U.S. action and rhetoric.
This nationalism is demonstrating an increasing "radical"
dimension in various sectors in Latin American society as
evidenced by elements of the military, the business elite,
and the media. Nationalism of both the right and left wings
gains strength from the continued inability of Latin America
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 10 -
to achieve prosperity in the modern world. The increasingly
nationalist leadership of the larger and more developed
countries will be less influenced by the United States. Al-
though they will pay close attention to their relations with
the United States and will be concerned with developments
elsewhere, such as in Chile and Cuba, their main concerns
will be internal, and directed toward modernization and de-
velopment of their own societies.
This radical alternative to traditional Latin American
political, economic, and military relationships with the
United States could threaten our security interests. Hostile
actions by elements of the radical "Black Power" movement,
for example, could jeopardize important security installations
in the Caribbean, or Torrijos could interfere with normal opera-
tion of the Panama Canal.
In the light of the growing Soviet presence in Latin
America, the potential threats to U.S. interests posed by
violent extremism, insurgency, nationalism and radicalism
assume a new significance. Over the long term, the inter-
action of such forces could erode our position with an
accompanying decline in our influence. Such a process
could be exploited by powers hostile to the United States
with important repercussions on our security interests.
8. Negative Political Developments
A series of negative political developments in the hemi-
sphere would have an indirect effect on the world power balance
by undermining our prestige, influence and self-confidence.
Chile is an example of one such development. Although the
Allende regime has been reasonably circumspect to date in its
foreign relations and has thus far avoided a direct confronta-
tion with the United States, a serious deterioration in U.S.-
Chilean relations can be expected if present trends in Chile
continue. The impact of such a deterioration not only would be
felt within the inter-American community, but also could
adversely affect our interests outside the region.
This impact would be multiplied if the Chilean experience
were to be followed by other political developments in the
hemisphere that might have adverse implications for the United
States. Such potentially adverse developments could result,
for example, from controversy over territorial seas (as in the
case of Ecuador) or could be essentially internal in nature
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 11 -
(e.g., intemperate actions rooted in basic political or
economic insecurity, as in Bolivia, or moves toward authori-
tarian socialism). Aside from the adverse impact that a
series of such developments would have on our security in-
terests within Latin America itself, such a series might
well raise doubts concerning our capability and willingness
to defend our security interests in other parts of the world.
III. POLICY IMPLICATIONS OF POTENTIAL THREATS TO THE U.S.
SECURITY INTEREST
The cumulative importance of interrelated U.S. interests
in Latin America has been discussed earlier in the Interests
paper. These interests are in fact interrelated in a variety
of ways. For example, a single threat can challenge multiple
interests, or policies designed to counter a threat to a single
interest may support or weaken other interests.
We recognize that U.S. security interests can be effectively
served by policies and programs in sectors other than the
security/military area. Indeed, actions in such fields as
trade and development assistance, for example, can be more
instrumental in advancing security interests than programs
that are oriented directly toward the achievement of security/
military objectives. It is also true that security/military
policies in some instances contribute significantly to the
support of political, psychological or other non-security
interests.
We believe that the policy implications of potential
threats to U.S. security interests can be best examined, at
least in the first instance, by reviewing our interests and
the potential threats to them on a single-interest basis.
The process followed in reaching the conclusions below
was to determine, in relation to each interest, which of the
potential threats challenged that interest, and in what ways.
Certain policy conclusions emerged from this analysis; they
are stated for each interest. Some policy conclusions will
therefore be repeated, since they are applicable to more than
one interest.
A. Preservation of a Predominance (by the combination
of numbers or importance) of Independent, Self-Sustaining
Latin American Countries Favorably Disposed to the United
States.
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 12 -
Potential Threats to the Interest
This interest is threatened by the continued manifesta-
tions of violent extremism, insurgency, anti-U.S. nationalism,
and radicalism. The threatened countries must divert scarce
resources from economic and social development in order to
provide reasonable conditions of law and order. In some
cases, extremist tactics could provoke repression leading
to widespread disorder and eventual revolutionary crisis.
In any case, either because of genuine resentments, real
ideological antipathy, or the desire to find a scapegoat
for their own failures or excesses, these movements often
demonstrate a strongly anti-U.S. bias. Some governments,
under extremist pressure and in an effort to gain or hold
extremist support, may take anti-U.S. positions, and perhaps
positions more friendly to the Soviet Union.
Cuban and possible Chilean efforts to aid insurgents con-
stitute an additional threat. To the extent these efforts are
successful, this U.S. interest will be eroded, since the aims
of Cuban and presumably Chilean-supported insurgency are
antithetical to the maintenance of this interest. An expand-
ed interest. Soviet presence might pose similar challenges to this
Controversy arising over expanded territorial seas claims
could threaten the favorable disposition of Latin American
countries toward the United States.
Weakening of the inter-American system would loosen the
bonds of common interest among the American states and make
it more difficult to maintain a predominance of American
states favorably disposed to the U.S.
The simultaneous materialization of several of these
threats might also result in multiple negative political
developments that would shake Latin American confidence in
U.S. policies and cause Latin Americans to choose sides in
an adversary relationship with us or ultimately to become
hostile to us.
Policy Implications
-- The continued requirement to divert resources to the
maintenance of law and order indicates that some selective
economic, public safety, or military internal security as-
countries. sistance would be useful for some of the smaller, weaker
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SANITIZED COPY
SANITIZED
3.3(b)(5)(6)
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-- In order to maintain this interest in the face of
the pressures generated by hostile groups, we will need to
increase our contacts, and hopefully our influence, with key
influence groups in local societies.
-- A comprehensive exchange of information among hemi-
spheric governments about Cuban and Chilean efforts to aid
insurgents would serve to keep governments alert to the
dangers.
-- While its limitations are evident, the OAS remains an
important support for this interest. We defer further discus-
sion of this question to the inter-American system sector paper
in this study.
-- USIA and other non-military programs and activities can
play a major role in encouraging understanding of and support
for the U.S.
-- With regard to unilateral claims to expanded territorial
seas, the potential impact of this issue on this interest can be
expected to be taken into account in the formulation of the U.S.
position for the international conference on the law of the sea
to be held in 1973.
B. Denial of Latin America as an Area from which a Stra-
tegic Attack Could be Launched Against the United States.
Potential Threats to the Interest
This interest is threatened primarily by the Soviet
capability to launch strategic weapons against the United
States from submarines and potentially from land bases. The
submarine capability is real and growing; the land-based
capability is not now considered likely to materialize in
the next three to four years.
The United States has a number of highly important sub-
marine surveillance facilities located
in the Atlantic approaches to the Caribbean. The
physical security of these installations
would be jeopardized by
Violent extremism that might arise from the growth of "black-
power" radicalism or from the deep-rooted economic and social
problems of these areas. Their retention would be threatened
by the growth of the anti-U.S. nationalism that might arise
from these same sources.
DECLASSIFIED
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E.O. 13526, Section 3,5
By /MIH NARA, Date 5/19/2017
[p.1of2]
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The expansion of the Soviet presence complicates both
of these potential threats. An increase in Soviet military
activity, reflecting primarily their increased naval capa-
bility, would provide them opportunities to test U.S. resolve
and to demonstrate to the countries of the area their in-
creased power. Increased Soviet diplomatic, economic, and
cultural activities will provide them with opportunities for
exploiting the unsettled conditions of the area and for en-
couraging subversion when they can do so without risk to their
broader interests. Such exploitation and subversion could
result in support for, or at least acquiescence in, any Soviet
move to acquire land bases for strategic weapons.
Policy Implications
-- Except for the case of an attempted reintroduction
of missiles into Cuba, the prevention of the possibility of
a land-based missile attack could be best assured through
political rather than military measures directed toward the
base country.
-- Increased submarine surveillance and ASW capabilities
in the Caribbean may become necessary.
-- U.S. policy towards the Caribbean countries (and
especially
should take into ac-
count the importance of retention and security of our naval
facilities.
-- This interest can best be served by policies aimed
at ameliorating the basic economic and social problems that
manifest themselves in violence, extremism and radicalism.
Economic assistance and liberal trade measures should play
a useful role in this regard.
-- Public Safety assistance and/or military assistance
SANITIZED
for internal security purposes might play an important role
in assisting the host country to assure the physical security
of our important installations
3.3(b)(5),(6
-- Fullest possible exchange of information concerning
the nature and implications of Soviet activities is essential.
C. Maintenance of the Confidence of Latin America and
the World in the Effectiveness, Maturity, and Responsibility
of U.S. Leadership as a Great Power in our Relations with
Latin America.
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Potential Threat to the Interest
A series of negative political developments in the
hemisphere would challenge this interest. In preceding
pages we have cited examples of the sorts of events which
could constitute such a series. We believe it likely that,
over the next three to four years, there will be further
adverse developments of this character.
There are several additional possible threats to this
interest. They are the trend toward expanded claims in
territorial seas; continued manifestations of violent
extremism, insurgency, radicalism and particularly anti-U.S.
nationalism; and the various dimensions of an expanded Soviet
presence.
°Policy Implications
-- The nature and style of the U.S. response to these
threats is a far more significant determinant of Latin
American and world confidence in the U.S. than are the
threats themselves.
-- With regard to the territorial seas question, a pro-
posal that might engender Latin American confidence is that
we agree on a 12-mile limit for naval and maritime purposes
but negotiate a special convention permitting a much wider
limit for fishing.
-- The policy implications of the threat posed by ex-
tremism, insurgency, radicalism, and anti-U.S. nationalism
have been addressed in paragraph A, above. Latin American
and world confidence in the quality of U.S. leadership could
best be maintained by a sober and non-reactive stance on the
part of the U.S. in the face of such manifestations.
- As indicated in other sections of this portion of the
paper, the threat of an expanded Soviet presence in the near
term can best be met by such measures as increased exchanges
of information with host country governments, surveillance
of Soviet naval and other military activities, combined with
diplomatic and other programs designed to minimize the role
and influence of Soviet missions in host countries.
D. Maintenance of Access to and Protection and Control
of the Panama Canal.
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Potential Threats to the Interest
This interest is physically threatened by manifestations
of violent extremism, radicalism, and more importantly anti-
U.S. nationalism on the part of the Panamanians. Despite
precautions, the Canal is very vulnerable to the type of
damage that could be inflicted by mob action. Since this
threat is substantially amenable to control by the Panamanian
Government, it is not likely to materialize unless that Govern-
ment supports it --- perhaps in resentment over the progress of
treaty negotiations.
Panamanian tactics in the treaty negotiations might in-
clude staged anti-U.S. demonstrations and other hostile public
actions in an effort to embarrass the U.S. and enlist political
sympathy from other Latin American countries. They might even
include some ostentatious move toward the Soviet Union, taking
advantage of the increased Soviet presence in the area.
If Panama attained the capability, serious efforts to
enforce its claimed territorial seas could seriously complicate
our access to the Canal.
In wartime, this interest would be threatened by Soviet
submarine activity in the Caribbean or by the loss of our
surveillance and ASW bases in the area.
Policy Implications
-- The U.S. and Panama have sharply conflicting interests
in the Canal which promise to make the forthcoming treaty
negotiations difficult, at best. Until a satisfactory treaty
is negotiated, it may prove necessary to buy time through
limited economic and other concessions in order to cool
Panamanian emotions and to limit the anti-U.S. sympathy which
Panama might elicit from other countries.
-- NSDM 64 has termed U.S. protection and control of the
Canal to be non-negotiable in treaty discussions.
-- It is possible that U.S. information programs in other
Latin American countries explaining the U.S. treaty position
might help to gain their tacit support, or at least to prevent
the development of massive support for Panama.
-- In wartime, it will be necessary to defend the ap-
proaches to the Canal. This emphasizes the importance of the
retention of submarine surveillance and ASW capabilities in
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the Caribbean.
E. A Strong Inter-American Security System
Potential Threats to the Interest
The inter-American security system has for many years
facilitated regional cooperation on matters of importance
to the United States and has permitted a collective address
to issues affecting hemisphere security. Although Latin
Americans clearly count on the United States to continue to
provide protection against extra-hemispheric threats, their
declining concern for the potential security threat from
outside the hemisphere has doubtless contributed to a more
independent and relaxed attitude on the part of some toward
such collective measures as the isolation of Cuba and the
maintenance of machinery to keep watch over the inroads of
international communism.
The ability of the OAS effectively to employ its peace-
ful settlement mechanisms has been and will continue to be
contingent to an important degree upon the willingness of
both disputants to submit their problems to it. Under the
Rio Treaty, collective security mechanisms can be activated
at the request of only one party. In any case, failure to
utilize or call upon the established mechanisms and proce-
dures of the system in the face of a dispute or conflict
would have a clearly erosive effect on their efficacy.
The trends identified elsewhere in this paper which
potentially threaten U.S. security interests might also
threaten the utility of the OAS in serving our security in-
terests. For example, the application of U.S. measures gear-
ed to seizures of fishing boats on the high seas and to ex-
propriation without compensation could bring further accu-
sations against us in the OAS and polarize Latin American
opposition to such measures. The Allende regime in Chile
could well pursue actions within the OAS, particularly
with regard to Cuba, that could weaken the effectiveness of
the collective commitments of the system.
Policy Implications
We accept the conclusions of the inter-American system
sector paper in this study.
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F. Unimpeded Transit for United States Forces on the
High Seas and in the International Air Space in the Area
Potential Threats to the Interest
This interest is potentially threatened by expanded Latin
American territorial sea claims to a distance of up to 200
miles. In those instances where claims extend to the rights
of innocent passage and overflight, such claims could restrict
the movement of U.S. forces through these portions of the high
seas and perhaps in the superjacent air space as well.
Denial of access to the Panama Canal would seriously
threaten this interest. This possibility is discussed else-
where in this paper. The denial of the use of military bases
presently available to us for refueling and provisioning pur-
poses could seriously impede the movement of U.S. forces.
An atmosphere of rising nationalism and extremism with
anti-U.S. overtones could complicate attempts by the United
States to resolve territorial sea disputes and might well
contribute to unfriendly action against the Canal or other
facilities important to us. Such factors might also produce
restrictions on refueling and provisioning calls by U.S. naval
vessels.
Policy Implications
- This interest will be generally served by those policies
aimed at preserving a "favorable majority," by information
programs, and by the actions we would take to protect other
interests against the effects of anti-U.S. nationalism.
- The major policy consideration pertinent to this in-
terest is the effect that policies designed to support it will
have on our other interests. The interrelationship of these
interests and policies to support them is particularly signifi-
cant in connection with negotiations on territorial seas or
law of the sea issues.
G. Denial of Non-Strategic Bases to Hostile Powers
Potential Threats to the Interest
Anti-U.S. nationalism or radicalism might make a Latin
American country receptive to establishment of a Soviet mili-
tary or naval facility. Given their increased interest in
Latin America, the Soviets can be expected to give careful
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consideration to any future opportunities of this sort.
The establishment of such a facility outside of Cuba is
not foreseen over the next three to four years. Should it
occur in the longer term, several U.S. interests would be
adversely affected. It would increase Soviet capability to
interdict sea lines of communications, particularly the
strategic Panama Canal and Cape Horn routes, and the flow of
strategic materials from Latin America to the United States.
Such a base would increase Soviet intelligence collecting
capabilities, expand communications facilities for command
and control, and increase Soviet capability to support
subversion directed at existing governments. It could
increase Soviet bargaining power vis-a-vis United States
security interests elsewhere in the world. Finally, it
could threaten hemispheric security arrangements, increase
instability, and stimulate an arms race between bordering
countries.
On the other hand, the overt establishment of bases in
one or more countries in the hemisphere would raise Soviet
visibility to unprecedented heights and could have a solidify-
ing effect on the inter-American security system and thereby
seriously jeopardize the Soviet position in Latin America.
Policy Implications
- There is a lack of contingency planning within the
government concerning the actions we would be prepared to
take to help avoid the materialization of this threat.
- The same considerations supporting the first stated
interest (i.e., the preservation of a favorable majority)
will also support this interest.
H. Continued Access to Bauxite in Jamaica and Petroleum
in Venezuela
Potential Threats to the Interest
The degree of criticality of bauxite from Jamaica and
petroleum from Venezuela is a function of time and circum-
stance. The events of the past months in the Mediterranean
and the Middle East favor a shift to sources of oil in the
Western Hemisphere. At the present time, half of our foreign
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oil imports come by tanker from Latin America, accounting
for about thirteen per cent of total U.S. consumption!/ Vene-
zuelan shipments, including Venezuelan crude oil refined in
the Netherlands Antilles, represented approximately three-fourths
of these imports from Latin America.
A threat to our continued access to these resources
could result from the same manifestations of violent ex-
tremism, insurgency, anti-U.S. nationalism and radicalism
that endanger other interests. Outbreaks in the Caribbean
area are likely to have a strong anti-U.S. flavor. Although
Latin American self-interest in preserving the receipt of
dollar credits will operate in our favor and toward main-
tenance of a continued raw material flow, sabotage in
Venezuela or pressures generated by the growth of black
power radicalism in Jamaica could interrupt this flow.
In the event of extended hostilities with the Soviet
Union, a threat to these relatively secure sources of impor-
tant raw materials might be posed by Soviet naval activity
within the Caribbean Sea and the Gulf of Mexico.
Policy Implications
-- A technical study is required of the strategic re-
quirements for bauxite, oil and perhaps other strategic
resources obtained from Latin America. The degree of
criticality of each resource under varying peacetime and
wartime conditions must be appraised before the full policy
implications of the above threats can be adequately considered.
I. Continued Access to Naval and Air Facilities
Threats to the Interest
The United States currently uses or has access to certain
military bases, facilities, and transit rights for submarine
detection, ASW activities, military-scientific purposes in
the Caribbean basin, and air and sea movement through South
America.
The threat to the submarine surveillance facilities has
already been discussed in the consideration of Latin America's
potential as a base for strategic attack against the U.S.
Such facilities could be threatened by violent extremism,
anti-U.S. nationalism, and radical "Black Power" movements.
Guantanamo, which is important as a naval training facility,
ASW base, and a part of the security system protecting the
approaches to the Caribbean and the Panama Canal, is a target
for Cuban propaganda and potential sabotage.
1/ Provisional for 1970. Figure for 1969 was twelve per cent.
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Policy Implications
-- The discussion of the role of our surveillance facili-
ties in paragraph B above is pertinent here.
-- Our transit rights would best be secured by those
measures taken in support of preserving a "favorable majority,"
as described in paragraph A above.
IV. POLICY ANALYSIS
Our analysis of the policy implications of the various
factors affecting the U.S. security interest produces several
broad conclusions.
First, the trends identified in the 1969 analysis of the
environment are, in the main, those that characterize present
circumstances. These trends were then and remain the product,
above all, of the stresses and pressures generated by the drive
for economic and social progress and by a strong nationalism
often accompanied by an anti-American bias. The developments
that were either not fully apparent then or not perceived in
their current scope are the increased Soviet military activities
in Latin America (and particularly in the Caribbean), and the
installation and dynamism of a Marxist coalition in Chile that
poses serious question for the future of Chilean pluralism
and of U.S. interests in Chile.
Second, the broad policy outlines of 1969 remain, by and
large, appropriate today. The policy that grew from our 1969
analysis sought a "low profile" and a "more mature partnership."
It was believed that these concepts were those best designed
to accommodate the increasing strains in our relationship. Our
policy response in the field of security assistance was consonant
with the President's decision of October 15, 1969, that the
United States should continue to provide assistance and work
carefully with the Latin American military but in ways which
would reduce or lower our profile. Specific components of our
security assistance policy were continuation of the reduction
of grant MAP materiel assistance, a program of military credit
sales, a grant training program, and a substantial reduction
in the strength of our military missions. (The policy guide-
lines of October 1969 were modified in November 1970 when, as
a result of concern over developments in Chile, the President
decided that we should increase our efforts "to establish and
maintain close relations with military leaders in the hemisphere.")
Third, our security policies as they actually materialized
during the past eighteen months resulted in decreases in security
assistance beyond what had been contemplated. We continued to
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reduce our MAP materiel assistance, while military sales,
which were intended to compensate for the grant reductions,
remained beset with restrictive provisions. Even more important,
there were no credit sales in FY 70 because Congress did not
pass the necessary legislation. The small MAP materiel program
for FY 71 was suspended in connection with the restructuring
of MAP necessitated by the Cambodian emergency!/. Although
our policy called for continued MAP training, this too was
significantly reduced as a result of the restructuring. Mean-
while, we continued with our program of reductions in the
strength of our military missions, reductions not welcomed by
some of the Latin American governments. The overall effect
of the reductions in military mission personnel, the suspension
of grant materiel programs, and the lack of FMS credit probably
implied to some Latin American military establishments a U.S.
intention to disengage that was not contemplated in U.S. policy.
This combination of circumstances was an important factor in
the resort by some countries to foreign suppliers.
Fourth, the recommendations in the IG/ARA's "military
presence" study of January 12, 1971, which proposed certain
measures for carrying out the President's decision of last
November for increased efforts with Latin American military
leaders and which responded to the above described "shortfalls"
in the execution of our security assistance policies, remain
valid and should be approved. The recommendations of January 12
are attached to this paper at Tab A.
Fifth, in recognition of the fact that U.S. security
interests can be effectively served by policies and programs
in sectors other than the security/military area, the recommenda-
tions of this paper must be viewed in the light of the conclu-
sions and recommendations of the other sector papers in this
study.
V.
RECOMMENDATIONS
The following recommendations reflect both the broad con-
clusions in section IV and the policy implications of our analysis
in section III.
A. That the IG/ARA's recommendations to the SRG of Janu-
ary 12 be approved (see Tab A).
The first four of these recommendations, which concern
the role of U.S. military personnel in influencing host government
1/ The program was eventually restored in early January
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military, are directly responsive to the following policy impli-
cations of threatened interests discussed in section III:
-- the need to increase contact and influence with key
sectors of local societies to help maintain a "favor-
able majority";
-- the need for greater exchange of information concerning
Cuban, Chilean, and Soviet activities.
The January 12 study contains additional recommendations
which, while primarily designed to serve specific military ends,
could contribute in significant degree to the above needs.
These recommendations are those that concern training, visits
and exchange of information (recommendations 8, 9, and 11).
The remaining recommendations of the January 12 study,
which concern grant materiel assistance!/ the elimination of
legislative restrictions, a responsive FMS credit program, and
provision of naval vessels, relate to the need cited in sec-
tion III for selective military assistance for internal security
purposes.
B. That contingency planning be undertaken with regard
to the possible establishment of Soviet bases in
Latin America.
We foresee the need to formulate a clearly defined policy
toward the possible establishment of a Soviet military or naval
base in Latin America, and to develop implementing courses of
action that might be taken to help avoid the materialization
of such a threat. Although our previous discussion makes clear
that we do not consider such a threat likely to materialize
over the next three to four years, we believe that planning for
the contingency is prudent.
A possible scenario is described below. We offer this
tentative scenario in full recognition of the facts that the
content and timing of its initiation would be carefully reviewed
in the light of the circumstances in which the contingency
occurred and that the full running of the scenario would depend
on the nature of the base.
1/ Attached at Tab B are the principal options, with Pros
and Cons, that were considered by the IG/ARA in arriving
at this recommendation. These options are also discussed
in an IPMG memorandum of January 19 to Mr. Kissinger.
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The scenario might well start with diplomatic warnings to
the Soviet Union and the Latin American country involved that
the United States would view with concern the establishment
of a communist military base in the hemisphere. Diplomatic
approaches through the OAS designed to rally the support of
Latin American countries might similarly stress that such inter-
vention in the hemisphere is unacceptable. Should political
initiatives fail and a hostile base be established, the United
States would consider the possible application of economic
sanctions through the OAS against the Latin American country
which had permitted the establishment of such a base. Were
the use of force to be considered necessary, it should be applied
under the auspices of the OAS. Should OAS auspices not be
possible, some other multilateral arrangement (e.g., one in-
volving a group of like-minded Latin American countries) should
be sought. Only as a last resort should force be applied uni-
laterally.
C. That adequate funding be provided to permit selected
Public Safety programs.
We foresee a continuing significant role for AID's Public
Safety program in providing assistance to civilian security
forces in selected countries. This program is designed to
help participating countries meet short-term security threats,
such as terrorism and urban violence, riots, and rural violence
that may develop into guerrilla warfare. The program can help
build civil internal security mechanisms that can prevent the
development of threats to internal order without unnecessary
force or deal with them in their incipient stages so that
military force will not be required later to redress a full-
blown insurgency.
Public Safety programs can thus contribute to the maintenance
of internal stability, an important precondition for economic
and social progress and political viability. As stated in
"United States Policy on Internal Defense in Selected Foreign
Countries," issued by the Senior Interdepartmental Group May 23,
1968, and reconfirmed by NSDM 20 July 10, 1969, these programs
have a dual rationale, i.e., development as well as security.
This double purpose has been cited in the Under Secretaries
Committee's proposed response to NSDM 76, and we affirm its
validity.
In most countries where we have Public Safety programs,
particularly those where there are no military forces and in-
ternal defense functions are performed by a National Guard
(Panama, Costa Rica and Nicaragua), these programs provide a
useful means of contact and influence with a key sector of the
host government hierarchy. We recognize that from time to time
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our Public Safety programs can be accompanied by associated
political costs, particularly in countries with governments
that demonstrate authoritarian or repressive characteristics.
It is possible that such costs may increase in the event Public
Safety is removed from the developmental rubric and placed
within a security context, although they might be mitigated by
concurrent legislative affirmation of Public Safety's dual
rationale of development and security. We nonetheless believe
it serves our security interest, as well as our overall economic
and political interests, to continue these programs and to
provide adequate resources for them, when requested and when
appropriate.
D.
That the Department of Defense examine the possible
need for increased submarine surveillance and ASW
capability in the Caribbean.
E. That the IG/ARA assure that the importance of retaining
our military and naval facilities in the Caribbean,
and particularly in Barbados and the Bahamas, is re-
flected in the FY 73 CASP reviews now underway and
in CASP guidance to be prepared for FY 74.
F. That, while maintaining our support for the maintenance
of a twelve-mile limit for naval and maritime purposes,
we seriously consider an interim arrangement that would
alleviate tensions relating specifically to fisheries
jurisdiction pending the achievement of international
agreement on the Law of the Sea.±/
G. That the SRG commission a thoroughgoing technical study
of the strategic requirements for bauxite, oil and
possibly other resources of which Latin America is
an important source for the U.S.
1/ See also the Political-Psychological sector paper.
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H. That the Arms Control and Disarmament Agency, in co-
operation with the IG/ARA, conduct a study of the
feasibility of a possible arms limitation initiative. 1
Attachments:
Tab A - List of Recommendations (taken from the IG/ARA
study of January 12 on U.S. Military Presence
in Latin America).
Tab B - The Future of Grant MAP Materiel - Options Paper.
1/ Although not a matter constituting a current threat
to the U.S. security interest, the recent series of reported
purchases of French Mirage aircraft (Argentina, Brazil,
Colombia, and perhaps Venezuela) indicates a possibly
increasing arms race potential in Latin America and demon-
strates the kind of problem to which an arms control ini-
tiative might well relate. While recognizing the unimpressive
record of previous arms limitation initiatives in the
hemisphere, the IG/ARA has concurred in a suggestion from the
Arms Control and Disarmament Agency that the Agency, in
cooperation with the IG/ARA, conduct a study of the feasi-
bility and nature of a possible Latin American arms control
initiative and the role of possible U.S. support for such
an initiative.
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TAB A
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LIST OF RECOMMENDATIONS
(Taken from the IG/ARA study of January 12
on U.S. Military Presence in Latin America)
1. Utilization of Military Personnel.
That the Departments of State and Defense send to the field
definitive guidance removing any doubts about the permissibility,
propriety and desirability of utilizing mission personnel and
attaches for purposes of influencing host government military
leaders toward U.S. foreign policy objectives.
2. MILGP Manning Level.
That the freeze on further implementation of the MILGP study
be lifted and that a new level of not to exceed 290 U.S. military
spaces for the region be approved, leaving the detailed break-
down of each MILGP to be worked out among the Ambassadors,
USCINCSO and Washington. In deciding upon the new levels for
individual posts, the IG/ARA will oppose any increases that
are not demonstrably contributive to the objective of increasing
U.S. influence.
3. Size of Attache Offices.
That the Departments of State and Defense take action as
feasible to provide for the small increases in several attache
offices recommended by the Ambassadors.
4. Quality of Military Personnel.
That the Department of Defense take concrete measures to
improve the quality of MILGP and attache personnel. These
measures should include actions to improve overall military
qualifications, language proficiency, knowledge of the area,
the attractiveness of career and promotion patterns (to include
possible establishment of foreign service career fields),
military and civilian education levels, and personal qualities
such as degree of empathy and political sensitivity.
That the Department of Defense report to the SRG by
March 15, 1971 the actions taken and to be taken.
5. Grant Materiel Assistance.
That the present policy of phasing out grant materiel
programming activity in Latin America be modified to permit
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materiel programs for selected countries. In determining the
selection of countries and the size of country programs the
IG/ARA will take into careful consideration all relevant
factors including the security need, the local budgetary
implications, and the political impact.
That the programs stress high-impact items in order to
achieve the maximum influence.
That, accordingly, sufficient funds be reprogrammed for
FY-72 in order to provide a program on the order of that
funded in FY-70 ($9.3 million exclusive of supply operations).
That funds be programmed for subsequent years at levels
not below that for FY-72, with possible small increases to be
determined through normal interagency procedures.
6. Legislative Restrictions.
That the Administration make concerted efforts to eliminate
from the Foreign Military Sales Act such burdensome legislative
restrictions on our military sales program as the "Conte"
Amendment (precluding credit funds for "sophisticated weapons
systems") "Pelly" Amendment (reference to preclusion of sales
and credit following fishing boat seizure), and "Reuss"
Amendment (reference to sales to military dictators).
That in the upcoming security assistance legislation, the
present $75 million regional ceiling on military materiel to
Latin America be eliminated or raised in order to permit
flexible response to materiel requests.
7. FMS Credit Requirements.
That Latin American requirements for FMS credit be accorded
a sufficiently high priority in relation to other regions to
support a dependable and responsive program of military credit
sales particularly for those countries in which such sales can
significantly affect our ability to retain influence with the
host country military (not less than $70 million annually for
FY-72 and subsequent planning years).
8. Training Program for Latin American Officers.
That training programs for Latin American military personnel
in U.S. military schools and the Information Program for Foreign
Military Trainees be maintained at at least the FY-72 level
($10 million).
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9. IAGS.
That the IAGS continue to be supported and adequately funded
to permit continuation of mapping and school operations (not
below $2.9 million per year as compared with $4.2 million in
FY-71).
10. Naval Vessels.
That the United States be responsive to Latin American
requests for naval vessels, particularly for those countries
in which such response can significantly affect our ability to
retain influence with the host country military; and that sales
of excess naval vessels rather than loans be emphasized to the
extent such vessels are available.
11. Related Military Programs.
That the following related military programs be continued
and supported:
-- Inter-American Chiefs of Military Service Conferences
and Latin American VIP visits.
-- Latin American Liaison Personnel Program (currently
being expanded).
--- Combined exercises.
establishments. -- Visits of U.S. officials to Latin American defense
12. Related Non-Military Programs.
That within the context of the primary purposes and legal
restraints of CU, USIS, and development assistance programs,
those activities that provide maximum opportunities for
influencing the military be expanded. A report of actions
taken or to be taken should be submitted by the IG/ARA to
the SRG by March 15, 1971.
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TAB B
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The Future of Grant MAP Material
Options Paper
The United States provides military equipment to Latin
America through cash and credit sales and grant aid. The
President's FY 1972 budget contains funds to meet anticipated
Latin American credit sales requirements. At issue, how-
ever, is the future of grant materiel assistance.
In accordance with U.S. policy worldwide, there has
been a shift from grant MAP to credit and cash sales over
the past few years. The Senior Interdepartmental Group
decided in 1968 that grant materiel assistance should be
phased out in 1970 with any exceptions for future years to
be determined through the CASP procedures of the IG/ARA.
For FY 1971, the IG/ARA recommended exceptions for 11 coun-
tries, totalling $6.2 million; it recommended $4.0 million
for 9 countries in FY 1972.
The President's FY 1972 budget does not contain pro-
grammed funds for materiel aid, the assumption being that
any urgent Latin American requirements would be funded from
a worldwide contingency fund.
The IG/ARA, nonetheless, recommends resumption of grant
materiel assistance to be programmed for selected countries
as a means of enhancing U.S. foreign policy objectives in
the region. This recommendation was originally contained
in the IG/ARA study of January 12, 1971, on military pres-
ence and programs in Latin America, prepared in response to
an NSC directive of December 8, 1970. In this present policy
review, the IG/ARA reaffirms its earlier recommendation.
Since the recommendation represents a modification of
the 1968 SIG decision and a departure from provisions of the
1972 budget decisions and since it could have Congressional
implications, the SRG may wish to have before it the IG/ARA
approved position and the two principal alternative options
considered and rejected by the IG/ARA.
Option 1 (as approved by the IG/ARA January 12, 1971)
Modify the present policy of phasing out grant ma-
teriel to permit materiel programs for selected countries
at approximately the level funded in FY 70 ($9.3 million
exclusive of supply operations). In determining the selec-
tion of countries and the size of country programs, the
IG/ARA, as part of the normal CASP procedure, would take into
careful consideration all relevant factors including the
security need, the local budgetary implications, and the
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political impact. High-impact items would be stressed in
order to achieve maximum influence.
Pros:
1. By demonstrating U.S. concern for local security
problems in selected countries, provides leverage to in-
crease U.S. influence with key civilian and military leaders.
2. Helps selected countries maintain the internal se-
curity necessary for orderly political, economic and social
development.
3. Permits advance programming of military assistance
funds for those Latin American countries with greatest need.
4. Increases the ability of the armed forces in se-
lected countries to perform effective civic action programs.
5. Might to some degree discourage third country sup-
ply of military hardware and assistance. (NB: Given the
modest size of the recommended program, its leverage in dis-
couraging significant third country military purchases or
aid is limited.)
6. Would be consistent with the portion of the Presi-
dent's decision of October 15, 1969, that refers to his de-
sire that the United States "continue to provide assistance
and work carefully with Latin American military
"
Cons:
1. Some segments of Congress may oppose the continu-
ation of a grant aid program whose major purpose might be
seen as increasing our influence with Latin American mili-
tary leaders or establishments. This attitude could jeopar-
dize Congressional acceptance of any liberalization of exist-
ing sales restrictions and the $75 million ceiling in the
FMS Act, actions which could be more effective than a small
grant program in achieving the objective of influence.
2. Resumption of a MAP materiel program might be viewed
as a) inconsistent with the last portion of the President's
decision of October 15, 1969, that he wanted the United
States to continue to provide assistance and work carefully
with the Latin American military "but in ways which would
reduce or lower our profile,' and b) a step backward in our
attempt to encourage self-reliance and budgetary discipline
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in meeting security needs. (NB: It should be noted, however,
that the $9.3 million recommendation represents a signifi-
cantly "lower profile" relative to prior fiscal years -- FY 66-
69.)
3. In cases where the recipient nation had recently
purchased or was known to be considering the purchase of
substantial amounts of military equipment, particularly
if in the "sophisticated" or "prestige" category, it would
be difficult to explain even a modest program to some seg-
ments of Congress. (NB: This would be one of the sorts of
factors that would figure in the IG/ARA's scrutiny of each
request.)
4. We might be criticized for resuming a program that
was suspended last year with relatively little complaint
from some of the former recipients.
5. To the degree that the recipient Latin American
government is repressive or otherwise unpopular, any overt
U.S. assistance can be politically costly in that such as-
sistance is readily misinterpreted, sincerely or otherwise
and in the United States as well as in Latin America, as U.S.
endorsement of the local regime. Grant MAP materiel can be
a particularly visible kind of assistance in these circum-
stances.
(This "con" applies to all three options but is reduced
in significance to the extent that the assistance that is
provided responds to emergency needs broadly recognized as
legitimate by general opinion in the host country.)
Option 2.
There should be no programmed grant materiel for Latin
America. To meet unanticipated Latin American needs, how-
ever, the President would draw upon a worldwide Contingency
Fund. (In the context of his budgetary decisions for FY 72,
the President has already decided to request a $100 million
worldwide Contingency Fund for all purposes -- security, eco-
nomic and humanitarian assistance -- from which urgent Latin
American requirements could be funded.)
Pros:
1. A large all-purpose Contingency Fund would provide the
greatest possible flexibility for meeting Latin American needs.
Such a fund would also be fully consistent with the proposal
to present a single security assistance bill.
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2. A single Contingency Fund conforms with the Presi-
dent's intention to streamline and integrate all security-
related aid programs.
Cons:
1. Latin American requirements, while small, are none-
theless important. They would tend, as in the past, to be
overshadowed or preempted by emergency requirements for
large sums of money in more active or higher priority areas
of the globe.
2. The wielding of influence with the Latin American
military would be enhanced by a continuous dialogue over
grant military programs. The provision of grant materiel
assistance on a contingency basis would preclude this sort
of dialogue.
Option 3.
Earmark up to $9.3 million of the President's Conting-
ency Fund for use as necessary in Latin America. Allocations
against this amount on a contingency basis would be approved
for specific countries by the IG/ARA.
Pros:
1. Enables us to respond to emergency needs of selected
countries on a contingency basis.
2. Would demonstrate U.S. concern for local security
problems in selected countries during an emergency, thus
providing a degree of leverage for increasing U.S. influence
with military and civilian leaders in Latin America.
3. Since no money would be programmed in advance for
any specific country, this option may not draw as sharp
Congressional criticism as might a resumption of materiel
programming.
4. Might to some degree discourage third country sup-
ply of military hardware and assistance. (See NB under
Option 1.)
Cons:
1. By earmarking a portion of the Contingency Fund,
would reduce the Administration's flexibility in drawing
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upon the Fund's full resources in response to world-wide
needs.
2. Might draw Congressional criticism on the grounds
that this procedure circumvented the Congressional scrutiny
usually directed to regular grant programs.
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C. DEVELOPMENT
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DEVELOPMENT ASSISTANCE
I.
U.S. Interests in Development
Assistance
1
II. The Assumptions Underlying Current
Policy
1
III. The Need For and Roles of External
Assistance
4
IV. The Bilateral Assistance Role
5
1. The Developmental Contribution
5
2.
Political Aspects
6
3.
The Political Costs of
Bilateral Assistance
7
4. The Organization of
Bilateral Assistance
9
V.
The Multilateral Framework
11
1. The World Bank Group
11
2.
The Inter-American
Development Bank
12
3.
Inter-American Committee for
the Alliance for Progress
(CIAP)
14
4.
The OAS as an Assistance
Channel
17
VI. Issues and Options
17
Bilateral Political Issues
in the IDB
17
VII. Summary and Conclusions
20
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DEVELOPMENT ASSISTANCE
Experience over the past 18 months confirms the validity
and continued relevance of the major assumptions underlying
U.S. development assistance policies in the hemisphere,
although some adjustments based on recent events are in
order. Our assessment endorses the policy of a lowered
bilateral assistance presence and involvement, and a greater
reliance on multilateral lending institutions for transferring
an increasing share of development resources.
I. U.S. Interests in Development Assistance
The section on U.S. interests in Latin America notes that
moderation of the frustrations which are a primary source of
anti-United States nationalism and experimentation with
extremism in Latin America will require our continued deep
concern for the rate of progress in social and economic
development. Effective programs to facilitate an adequate
rate of progress will also be needed. Among our interests
directly affected, and quite apart from humanitarian concerns,
is the preservation of a predominance of independent, self-
sustaining Latin American countries favorably disposed to
the U.S.
The section on U.S. interests also concludes that the
primary objective interest of the Latin American countries
lies in achieving a reasonable rate of economic and social
progress, although they also desire to avoid dependence on any
outside power.
The confluence of these U.S. and Latin American interests
marks development assistance as a field of considerable
sensitivity and foreign policy importance for the U.S.
II. The Assumptions Underlying Current Policy
The controlling assumption underlying current U.S.
development assistance policy is that an economically
advancing hemisphere politically well-disposed to the U.S.
is strongly in our national interest. A cardinal premise is
that U.S. helpfulness on development matters is a necessary,
but not sufficient, condition to the attainment of that goal.
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Continuity of the U.S. commitment to Latin American
development is considered central to our bilateral political
and economic relationships with almost all of the hemisphere's
countries. A positive developmental stance by the U.S. in
trade, assistance and commercial policies is believed to
offer the best hope that healthy hemispheric relationships
can be maintained over time. This stance does not, however,
assure unflagging progress, or that stable governments well-
disposed to the U.S. will predominate at any given time.
Among the major assumptions which called for adjustments
in U.S. assistance policies for the 1970's were:
1. Although Latin American development efforts were
relatively and in some instances dramatically successful,
progress in many countries in the 1960's was not adequate
to keep pace with population growth, heightened expectations
and mounting internal political pressures.
Great hopes, fed on the unrealistic targets of the Alliance
for Progress, were frustrated, as major problems of housing,
education and health facilities, large scale unemployment, and
income maldistribution persisted. The benefits of such growth
and change as occurred were not widely shared or perceived by
the ordinary citizen. His discontent was increasing. Pressures
on some governments and political structures threatened to
overwhelm domestic saving and investment potential, and
nullify the effect of improved technological, management and
political capabilities. As Latin American politics focused
more intensely on development -- on rapid and basic change
political and ideological fissures among economic and class
groups appeared. Frequently, these conflicts were expressed
in extremist political forms. Traditional political molds were
broken in the face of dramatic shifts in the outlook, role,
class origin and methods of those who govern. Cleavages over
paths to development, allocational priorities and strategies,
and the possible sacrifices of democratic forms, intensified by
the irrationalities of populist political mobilization and the
reformer's zeal, promised to keep the hemisphere in political
turmoil for many years ahead. They posed this key question for
the 1970's: Can these heightened tensions be channeled
constructively into development progress by the frail political,
technological, and economic structures of much of the hemisphere;
or will they prove unmanageable, and lead to continuing disruptive
conflict and aggravated problems of failure?
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2. It was also apparent that already manifest nationalism
would intensify and, because of the dimensions and visibility
of U.S. investment, trade and presence in Latin America, the
U.S. would be a prime xenophobic target; blame for inadequate
progress would increasingly find expression in anti-"gringoism".
At the same time in some countries, there had been an
encouraging capacitation in the management of key elements
of public sector development policy. In almost all countries
considerable familiarity with the rules under which assistance
programs operated had developed. One consequence was the
increasing embarrassment to the U.S. from those bilateral
assistance requirements, with little or no developmental
rationale, such as "additionality" and other procurement rules,
which Latin Americans recognized and complained about as being
costly to them. In addition, there was a greater ability in
the hemisphere, or at least a desire, to evaluate advice
intelligently, and to reject externally designed priorities
not fully consistent with domestic perceptions of national
political and economic imperatives. This composite of increased
nationalism, confidence, assertiveness, and in some countries
competence, led us to conclude that a muted, less directive U.S.
assistance presence and involvement in Latin America was needed
and would be welcomed. We did not assume, however, that a
reduced U.S. presence would necessarily yield short-run political
benefits or be immediately perceived by Latin America as
necessarily consonant with their interests. There was a danger
that the implementation of this policy would be seen in Latin
America as reflecting a reduced U.S. commitment to hemispheric
development.
3. We assumed that by reducing the bilateral U.S.
assistance involvement, we could significantly reduce the
risks of nationalistic attacks, and thus encourage improved
bilateral relations. Essentially, if adequate and needed
assistance resource flows were to continue, strengthened
multilateral mechanisms were needed to work out priorities,
channel assistance, and see to it that resources were
effectively utilized.
We attached a positive and important value to growing
desires of Latin Americans to assume more responsibility for
the development of their countries. Encouraging and
facilitating Latin American psychological independence of the
U.S. through assistance policies and operations designed to
elicit and support their initiatives and decisions was viewed
as essential to healthy U.S.-Latin American relations and to
development.
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III. The Need for and Roles of External Assistance
While the major countries of the hemisphere possess
considerable potential for achieving progress, they are
burdened with a staggering legacy of problems which place
their future development attainments in serious question.
These problems are deeply rooted in social and political
factors which transcend economic growth trends and economic
causes. For the less endowed smaller countries of the
Caribbean, Andean area, Central America, and for Uruguay
and Paraguay, the obstacles are even more formidable. In
all countries, oversized problems seriously strain undersized
political, managerial, technological and economic resources.
Despite instances of impressive growth -- which most often
is closely associated with fortuitious strengths in world
markets for Latin American export commodities -- gains have
not been adequately distributed. Bringing the benefits of
progress to the common man remains almost as difficult a goal
today as a decade ago. Yet, demands for change and political
pressures for progress are far more strident.
The most severe challenges to development stem from the
region's high population growth rates and the rapid internal
migration from rural to urban areas. In many countries, the
problem is dramatically posed by the large and growing pools
of underemployed and unemployed persons in the cities. While
sustained high growth and investment rates in Brazil, Colombia,
Mexico and Argentina may effectively absorb much of this surplus
labor, the ability of these countries to sustain needed growth
and investment is in doubt. In other countries, the problems
of too many people and too little work are even more ominous
(e.g. Jamaica, Peru, El Salvador, Uruguay).
In addition, population increases have tended to absorb
impressive gains registered in many countries over the last
decade in the development of health, sanitary, education and
power facilities. Major investment and organizational efforts
have been made, but tangible benefits to most people are not
evident. Urban centers cannot meet or keep abreast of the
overwhelming requirements for educational, housing, power, water
and other facilities. In rural areas, little headway has been
made in ameliorating the lot of the campesino. Mal-
distribution of land remains the rule. Archaic marketing,
food processing and distribution systems still characterize
the agricultural sector, assuring high prices to consumers
and reduced incomes to producers.
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There are several interrelated roles to be served
by future external assistance. They will vary in
importance and relevance from one country to the next,
and over time. First, external assistance will be
important as a form of capital transfer. External
constraints will continue to limit growth capabilities.
Second, external assistance can assist countries to focus
intelligently on their priorities, and to shape their
resource allocation policies more effectively. While
politically improvident for the U.S. to do so forcefully,
multilateral institutions should increasingly condition
and shape their lending policies to these ends. We should
so encourage the Inter-American Development Bank (IDB).
Third, solutions to the problems of underdevelopment require
breakthroughs in technology, management and investment systems.
The costs of conventional approaches to mass education, for
example, are simply out of reach. New technologies, management
systems and conceptions of educational purposes are required.
Similarly, the problem of mass unemployment will require new
approaches, new technologies and improved educational systems.
Although very difficult to achieve, simultaneous progress will
be required in the agricultural sector to stem the tide of
migration to the cities. A major challenge to the U.S. will
be to apply effectively its superior technology, research
capabilities, and management systems to these problems.
IV. The Bilateral Assistance Role
1. The Developmental Contribution
With growing reliance upon multilateral lending, A.I.D.
has concentrated on innovative agricultural, education, and
health sector financing - fields in which bilateral
1/
We do not herein treat the conjectural question of
appropriate future levels of external resource transfer.
Needs will depend upon growth targets. There will be trade-
offs between assistance flows and trade benefits. Also,
there are potentially important trade-offs between private
sector flows and assistance. In this case, it is unlikely,
though, that reduced private investment flows will be offset
by increased assistance. As a general proposition, it is
safe to assume that conditions which impede inflows of private
capital will reflect national policies and circumstances not
inviting to concessional lending.
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assistance programs have traditionally pioneered. Our technical
assistance activities provide a parallel focus on agricultural
and educational research and institution building, although
these activities still include programs which arguably reflect
higher U.S. than country priorities (e.g., public safety and
AIFLD programs).
We conclude that bilateral programs should continue to
evolve in this direction - - as we understand, do the planners
for the A.I.D. reorganization. We envisage carefully integrated
bilateral technical assistance and lending programs primarily
in the urban, agricultural, and education sectors playing an im-
portant innovative role, with emphasis upon improvements in tech-
nology, management systems, human infrastructure, and research.
New lending approaches, once proven, would as in the past tend to be
adopted by the multilateral institutions. Innovation will require
program flexibility, and the careful integration of the various
assistance tools which are available (lending, technical
assistance grants, training, P.L. 480, housing and investment
guarantees).
2. Political Aspects
Bilateral assistance has served a multiplicity of U.S. long-
run political interests and has been central to our bilateral
relationships in this hemisphere. While abscrptive capacity and
related developmental considerations generally dominated in A.I.D.
programming, assistance transfers were shaped frequently by
political purposes. Where assistance was clearly "political"
(lacking a clear developmental justification), Supporting
Assistance was normally employed. Typical recent "politico-
developmental" situations are as follows:
- Guatemala, where a deteriorating internal security situation
is closely linked to acute economic problems, and the
country was prepared to mount well-conceived development
1/ The trend towards increased reliance upon multilateral
lending is reflected in the following. A.I.D. lending, as a
percentage of total IBRD, IDB, and A.I.D. loan commitments to
the hemisphere, was: FY 1965 - 47.3%; FY 1966 - 40.6%; FY 1969 -
18%; FY 1970 - 16.9%; FY 1971 - 15.7%.
2/
Denominating "short-run," or clearly political aid as
"security assistance," as is currently contemplated for the
future, may be politically constraining. This characterization
of assistance could be politically embarrassing for recipient
countries. One solution would be to label such aid as "con-
tingency assistance."
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programs, but essential external assistance was not avail-
able in a timely or appropriate form through multilateral
institutions.
Panama, where U.S. bilateral assistance, serving important
Panamanian developmental goals, is an integral element
in an over-all U.S. effort to secure important U.S. ob-
jectives. While developmental criteria govern the pro-
gramming of assistance (as in Guatemala), political concerns
strongly influence our willingness to be forthcoming.
-- Jamaica and Colombia, where friendly well-disposed govern-
ments perceive an important development assistance need
unlikely to be met by other donors.
-- Regional situations, such as the need to buttress our
greatly circumscribed negotiating position on trade within
the IA-ECOSOC with regional offers of expanded U.S. as-
sistance for export development.
Presidential initiatives in this hemisphere have been frequent
and most often have been in the form of assistance offers (e.g.,
science and technology and export development).
We believe continued flexibility should be retained for
shaping assistance programs to meet these long-run politico-
developmental needs.
3. The Political Costs of Bilateral Assistance
While the direct political gains to the U.S. of bilateral
assistance programs were often substantial, SO too were the costs --
particularly the costs of our over-involvement. Directive or
paternalistic activist initiatives by U.S. officials carried the
political liabilities of resentment and abrasion, particularly
where our prescriptions did not fully coincide with the policies
of the host countries. These resentments were fueled by the
excessive rigidities of U.S. assistance procedures. We believed
that our involvement was perceived as most conspicuous in the
numbers of direct hire U.S. Government officials present. The
greater the number, we reasoned, the greater the risk of resentment.
The costs were significant, and the policies adopted to date
for minimizing them, realistic. For example, the elimination of
additionality requirements has removed one major persistent source
of irritation. This points strongly to the need for assuring that
the proposed new assistance legislation is not encumbered by
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restrictions unrelated to development purposes (such as Conte-Long
and additionalityL/) and politically abrasive, but ineffective,
limitations such as the Hickenlooper Amendment.
Another major source of abrasion has been reduced by our
increased attention in programming to assure sensitivity to country
priorities, and the avoidance of projects which are inherently
difficult and controversial to implement, negotiate or monitor.
Viewed in the context of the over-all U.S. commercial and
cultural presence, and the greater importance which Latin America
attaches to U.S. trade policies, our "lowered profile" bilateral
assistance effort, at current levels is a relatively marginal
facet of U.S. presence. In most countries, the volume of bilateral
programs are over-shadowed by multilateral lending activities.
Development assistance issues as seen from Latin America reside
largely in U.S. policies towards the multilateral lending in-
stitutions. The risks that bilateral assistance programs will
become the focus of anti-Americanism are thus greatly reduced.
Indeed, there are indications that with the reduced over-all U.S.
profile, the reduction of the U.S. bilateral assistance presence
is causing some apprehension in Latin America (intensified by growing
concern over trade matters) that our current policies reflect a
1/ The elimination of additionality and the liberalization of
procurement away from tying to U.S. sources, as well as the
increased reliance upon multilateral lending, may carry adverse
balance of payments consequences. This will bear careful
watching.
2/ This assessment reaffirms the NSDM 76 decision, paragraph
6 (d), that: "We should propose that the Hickenlooper-type
amendment in the new foreign assistance legislation (a) avoid
any mandatory time limit for application of sanctions, and (b)
require only that the President 'take into account' expropri-
ations in determining country eligibility for U.S. assistance."
3/ This assessment makes no precise recommendations about
future bilateral assistance levels. Current levels seem to
fit current policy assumptions, and the ability of Latin
America to absorb the sector-oriented and institution-building
lending upon which A.I.D. concentrates.
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diminishing U.S. interest- Our continued willingness to be help-
ful multilaterally, and where appropriate bilaterally, and inten-
sified efforts to communicate the rationale of our new policies to
the hemisphere should relieve these apprehensions.
With new assistance legislation, major reductions in overseas
personnel can be achieved. It is our assessment that under
current low profile policies, the question of overseas staff
size is no longer a "political" issue, but instead is a management
concern. Small cadres of overseas personnel will, we foresee, be
required for the effective planning, coordination, implementation
and monitoring of capital and technical assistance activities-
4. The Organization of Bilateral Assistance
Our assessment indicates the desirability of retaining a
regional orientation in assistance programming and implementation.
There are persuasive reasons for allocating resources and shaping
country programs (currently assured, in part, in the regional CASP
process) within a regional context37. There is the need (a) to
align closely our bilateral programs with the several prominent
international lending institutions, (b) to harmonize bilateral
assistance with political guidance as to the sensitivities,
1/ The President's FY 1972 budget request to the Congress
eliminates the separate line item, Alliance for Progress ap-
propriation request. A world-wide appropriation is requested,
without special reference to Latin America. This change has
been noted by a number of Latin American countries, and may
be interpreted by them as evidence that the U.S. no longer
subscribes to the Alliance for Progress, and is diminishing
its support to the region. CIAP deliberations may be influenced
by this change.
2/ We note the strong effort which has been made to instill
a strong sense of the "mature partnership" in overseas personnel.
NSDM 76 (paragraph 5c) takes a partial step in this direction,
providing that: "A Western Hemisphere Subcommittee should be
established chaired by the new Under Secretary for Western
Hemisphere Affairs, inter alia, to recommend guidelines for
the appropriate share of resources of the U.S. development
institutions that would go to Latin America. "
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peculiarities and political trends in specific countries and in
the region as a whole, and (c) to be flexibly responsive to re-
gional and country needs (e.g., export development programs,
Presidential initiatives, etc.). In short, programming U.S.
assistance in a regional context would avoid the dilution, if not
submergence, of important regional and country considerations,
and the divorce of assistance activities from integrated over-all
policy implementation for the hemisphere -- the possible conse-
quences of worldwide programming!/.
As currently conceived, the proposed organization of IDI
and IDC- involves the creation of regional divisions. The degree
to which policy planning and program functions will be regionalized,
however, has not been determined. We believe it essential to
assure close links between assistance and over-all U.S. hemispheric
policies, and to tailor assistance programs to country-specific
and unique regional assistance requirements. For example, in
the planning of the new development assistance entities, which
are to be governed by mixed public-private boards of directors,
care will be required that the President's flexibility in mounting
new assistance initiatives is not diminished. In brief, the re-
organization should carefully accommodate our special relationship
with, and interest in, Latin America.
Many functions currently assigned to or coordinated by A.I.D.
will be assigned to separate entities upon reorganization. These
1/ In current planning for the proposed International Develop-
ment Institute (IDI), considerable emphasis is placed upon
worldwide research into development questions. Much of this,
in our view, is needed. Nonetheless, experience in this
region indicates the greater need for technical assistance
and research geared to the often unique problems of individual
countries.
2/ IDC - The proposed International Development Corporation
will conduct capital loan assistance activities. Present
planning for the A.I.D. reorganization contemplates that
"The main criterion for use of Corporation (IDC) resources
should be their effectiveness in promoting development. There
should be no attempt to relate Bank loans to short-term
foreign policy considerations." NSDM 76, paragraph 5a.
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functions -- loan financing, technical assistance, research,
training, food commodities, housing and investment guarantees --
comprise a set of specialized assistance tools, which, in different
mixes, are often simultaneously addressed to discrete developmental
problems. It is often the skill in combining these tools in an
integrated context, in different mixes appropriate to varying
country situations, upon which effective assistance is built.
Accordingly, there is a clear need for strong coordinating mechan-
isms to assure that U.S. inputs are flexibly combined and balanced-
Although CIAP, IDB, IMF and IBRD will furnish guidance in setting
assistance priorities, neither they nor our growing reliance on
country initiatives and strategies will assure this integration
of U.S. assistance tools.
Vigorous Administration support in Congress of increased
reliance on multilateral entities and the proposed reorganization
of our assistance effort will be essential. Long delays in the
reorganization can be expected to erode the effectiveness of
overseas operations, and to intensify Latin American apprehensions
about the future course of U.S. assistance policy. We urge that
careful attention be given to this matter.
V.
The Multilateral Framework
1.
The World Bank Group
Corresponding to an increase in worldwide operations, the
World Bank has markedly increased its lending commitments to
Latin America in the recent past:
Lending Commitments to Latin America
FY 1968
FY 1969
FY 1970
FY 1971 (est.)
FY 1972 (est.)
$398.7
$498.9
$748.9
$747
$750
39%
26%
31%
27%
24%
1/ The recently created Council on International Economic
Policy is charged with focusing on the full range of inter-
national economic policy issues. It will consider the
international economic aspects of essentially foreign policy
issues such as foreign aid. The Council may provide the
integrating focus for assistance through the Operations Group
established to coordinate its activities.
2/ By amount and as a percentage of worldwide commitments.
In $ millions.
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Annual IBRD lending in Latin America already is approaching
the level of worldwide bilateral lending contemplated by the
new IDC. The Bank's anticipated policy permitting program lending,
its increased use of sector analysis and its greater activity in
the fields of education, health and population, will more strongly
establish its central place in Latin American development. We
should continue to encourage the Bank to adopt program lending
and to emphasize its sectoral approach
Unlike the IDB, the Latin Americans do not perceive U.S.
financial support for the World Bank as support for Latin America
in any direct sense, and few direct political benefits accrue to
the U.S. from World Bank activity in the hemisphere. Moreover,
there are very limited opportunities for the U.S. to influence
IBRD lending programs in the direction of U.S. political interests.
2. The Inter-American Development Bank
The substantial U.S. pledge to the IDB replenishment in 1970
importantly contributed to Latin America's continuing confidence
in the U.S. commitment to hemispheric development. U.S. support
to the Bank is the critical symbol of U.S. forthcomingness on
development assistance in the multilateral framework. Accordingly,
prompt Congressional actions on the proposed replenishment at the
pledged levels should be sought. The Bank is now a major source
of development lending and is seen in the hemisphere as being
especially sympathetic to Latin American developmental aspirations.
Its lending commitments have increased markedly over the past few
years.
IDB Lending Commitments
($ Millions)
FY 1968
FY 1969
FY 1970
FY 1971 (est.)
FY 1972 (est.)
$431
$631
$681
$750
$825
1/ The Export-Import Bank and Commerce suggest: "The IBRD
management should be strongly urged by the United States to
engage in program and sectoral lending, especially in sectors
of the social welfare type, reducing correspondingly its emphasis
on project loans, particularly those which might be financed
by the Ex-Im Bank with a resulting increase in U.S. procurement
of equipment and services.' This point is being considered by
an NAC Subcommittee.
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The centrality of the Bank to over-all U.S. assistance re-
lationships makes our policies towards this institution particularly
important. At the same time, our status as the dominant donor,
and the potential or actual use of the U.S. veto power over soft
lending (FSO) operations, pose delicate problems. U.S. actions
to delay or deny lending on political or on development policy
grounds seriously risk polarization of Latin American members
and the U.S. Such actions can damage both the credibility of the
Bank as an independent multilateral institution and U.S. intentions
to strengthen the regional framework through a lowered presence.
(a) Political Aspects
When the Bank entertains lending to countries at political
odds with the U.S. (e.g., Chile and Peru), serious dilemmas arise.
During the past eighteen months, it has been possible to delay,
but not deny, loans to Peru through careful management of the
issue within the Bank, while avoiding confrontations. We believe
that where U.S. policies call for delaying Bank lending, this can
be achieved for substantial periods through non-overt means,
short of the use of the veto. Non-overt actions need not involve
major risks of confrontation or exposure, although they generate
some tensions and thus put the credibility of U.S. multilateral
policies in some jeopardy. The possibility of Congressional
pressures to retaliate in the IDB against politically "misbehaving"
countries is, instead, the major danger. Should these pressures
become irresistible, or U.S. legislation (Hickenlooper Amendment)
so require, or should we determine that the denial of lending to
a country is essential for overriding policy reasons, troublesome
"polarizing" consequences will likely stem from our use of the veto.
(b) Operational Issues
On the operational level, the Bank has weaknesses. The
Bank's bias is toward the interests of the borrowing countries.
The Latin Americans are less critical than we of loan proposals,
and they resist making over-all development performance a condition
of borrowing. We have at times had to state our disagreement with
some of its lending policies and practices to the Bank management.
Significant steps have been taken recently to overcome some
of these weaknesses. An effort is underway to win Latin American
acceptance of a broadening of the Bank's membership to include
other developed countries. In addition to providing additional
resources, this effort if successful will help to mute the differ-
ences arising from our dominant donor status. With the appointment
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of a full-time, technically-oriented U.S. Executive Director, we
have encouraged a broad, long-range program, both in the Board
and with management, aimed at improving technical and man-
agerial aspects of Bank operation. The beginnings of change are
already evident. Major organizational aspects of the Bank are
scheduled for review, and consultant studies on ways to improve
effectiveness have been commissioned. There is evidence of a
more positive attitude in the Board towards conforming loan
operations to CIAP recommendations. To the extent improvements
are made, there should be fewer situations where the U.S. faces
an uncomfortable choice between a high profile position of opposing
a loan, or accepting it, despite unsatisfactory technical or
assistance policy aspects.
The outlook for improved management and technical performance
in the Bank is encouraging, particularly with the recent change
in the Bank presidency. Because of the substantial resources
being made available to the Bank, the importance to the U.S. and
Latin America that the application of those resources be develop-
mentally sound, and the probable sharper Congressional scrutiny
of the Bank, intensified U.S. encouragement of the Bank toward
improved performance is necessary. Having met its mature partner-
ship responsibilities by reposing confidence in and allocating
substantial resources to the Bank, the U.S. can reasonably insist
that its management, and the other member countries, meet their
responsibilities as well. This course of action would immediately
take the form of early discussions with the new President and his
senior staff by the U.S. Governor and the U.S. Executive Director
about the full range of U.S. concerns with the Bank. Many of the
topics to be covered have already been raised, while others will
require further analysis before being broached.
3. Inter-American Committee for the Alliance of Progress (CIAP)
In President Nixon's policy speech of October 31, 1969, he
said:
"I propose that a multilateral inter-American agency
be given an increasing share of responsibility for
development assistance decisions. CIAP -- the Inter-
American Committee for the Alliance for Progress --
could be given this function. Or an entirely new
agency could be created Whatever the form, the
1/ When discussed in the 1970 IA-ECOSOC meetings, this possi-
bility was strongly rejected by the Latin American countries.
Many were concerned that this language implied the creation of
a strong OEEC-type "super national" entity in Latin America.
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objective would be to evolve an effective multilat-
eral framework for bilateral assistance, to provide
the agency with an expert international staff, and
over time, to give it major operational and decision-
making responsibilities."
Although important assumptions upon which the President's
proposal rested are not wholly supported by subsequent experience,
our attitude and policies toward CIAP merit continued support,
in essentially unchanged form. We note, however, that few if any
countries are now or will in the foreseeable future be prepared
to cede authority to CIAP to make resource allocations. We
should pursue this goal gradually, with expectations tempered
by an awareness of the Latin American reluctance. The inter-
national lending organizations are also unwilling to share their
decisional authority with CIAP. Nevertheless, CIAP is valued
by the donee countries and international lending institutions.
The Latin American countries generally view CIAP as a useful
forum for exposing their external assistance requirements to
the international lenders. The IBRD and IMF have used the forum
to air performance and technical issues, and in the case of the
IBRD, occasionally to challenge IDB lending programs it views
as inconsistent with appropriate country lending strategies.
For the U.S., a strengthened CIAP serves several purposes.
CIAP has on several recent occasions overcome its caution and
taken the lead in negotiating difficult performance conditions
with Latin American countries, obviating the necessity of a direct
U.S. negotiation or a refusal to approve financing on grounds of
inadequate performance. CIAP country reviews offer a useful
device, and should be used where necessary, for avoiding confronta-
tions on over-all IDB lending strategies, particularly since the
IDB increasingly follows recommendations developed in this forum.
Our continued support of CIAP is also of symbolic political
value in communicating an intention to mold our assistance policies
in close harmony with Latin Americal/. Finally, CIAP provides a
1/ In this regard the recent successful CIAP review of U.S.
policies was especially helpful. So too were U.S. offers of
unilateral contributions to CIAP, in 1970, of $3 million and
$5 million respectively for strengthening CIAP staff capa-
bilities and for undertaking regional and national capital
market studies under CIAP auspices.
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potentially useful forum for the discussion of regional issues
(e.g., external debt private investment issues, economic trends,
etc.), and thereby provides a safety valve for Latin American
concerns.
CIAP is currently experiencing an "identity crisis" in
respect to its future role. Changing circumstances in the hemi-
sphere, a keener appreciation of the dimensions of the develop-
mental problems ahead, and, to some extent, uncertainties about
the future course of U.S. policies, have precipitated a reexamina-
tion by CIAP of its future role. By and large, we view this
reexamination as a healthy reflection of an institutional awareness
of the need for change.
There are indications that the somewhat metaphysical question,
"Is the Alliance for Progress dead?, will figure prominently
in CIAP's deliberations. The recent elimination in the President's
FY 1972 budget request of the line item Alliance for Progress
request, may fuel this debate. The psychological importance of
rhetoric and symbolism in the Latin American setting cannot
be underestimated. The U.S. response and role in such deliber-
ations requires care. We continue to attach importance to CIAP
as a key instrument for giving expression and concrete identity
to the multilateral framework. We would strongly reiterate that
the U.S. continues to support the goals and objectives of the
Alliance, and that, in our view, the U.S. commitment is best
reflected, consistent with the underlying philosophy of the Alliance
partnership, in our increasing support of multilateral regional
institutions, and, in particular, in our support of CIAP.
1/ In response to the President's October 31, 1969 commitment
to develop a positive approach to the external debt service
problem in Latin America, U.S. initiatives at the February 1970
IA-ECOSOC meeting resulted in agreement that CIAP encourage
the international financial institutions to undertake a com-
prehensive study of the issue. The World Bank and the IMF
are now well into this study. The World Bank has issued an
interim report on Latin American external debt but does not
intend to make specific recommendations until similar surveys
for other geographic areas are complete. The IMF is concen-
trating on assessment of past debt situations within Latin
America and has recently issued the first two of a series of
country analyses.
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4. The OAS as an Assistance Channel
This subject is treated in the Inter-American System
paper.
VI. Issues and Options
Bilateral Political Issues in the IDB
The IDB is the prominent symbol in Latin America of the U.S.
commitment to multilateral assistance. In Latin American eyes
the Bank's credibility and political viability turn heavily
upon its Latin American character, and its insulation from U.S.
political differences with individual borrower countries. Because
of the size of the U.S. financial contribution, the U.S. holds
a veto power over the Bank's soft lending (FSO) operations.
Through careful management of the issues, the U.S. has thus far
avoided confrontations in respect to potential lending to countries
with which we are at odds on important political issues (e.g., Peru
and Chile). The Bank's continued viability and the credibility of
the U.S. commitment to multilateral assistance require that such
confrontations be avoided in the future.
The dangers for future disruptive confrontations in the Bank
include:
uncompensated expropriations may require U.S. use of
its veto power pursuant to the Hickenlooper Amendment;
-- through its appropriations power over Bank replenishments,
Congress may insist that the U.S. use its veto to punish
borrower countries in conflict with the U.S. on major
short or long-run political issues;
-- the Executive Branch may itself decide that overriding
long-term political differences between the U.S. and a
prospective IDB borrower are so basic as to preclude
availability of U.S.-furnished IDB resources for that
country (e.g., hostile, Marxist Chile).
A source of manageable but continuing tensions in the IDB lies in
the U.S. tactic of delaying certain loans through non-overt means
(e.g., finding technical objections). While we can delay these
loans, we cannot indefinitely postpone them short of using the
veto.
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The questions at issue turn on the degree to which we should
insulate U.S. tactics or voting within the IDB from long- and
short-run bilateral political concerns.
Option 1.
Divorce U.S. tactics and voting within the IDB (except for
legislative imperatives such as Hickenlooper) from bilateral
political concerns (e.g., short-term such as Ecuador and tuna
boats, or long-term such as loans to Marxist countries). Base
U.S. tactics and voting strictly on technical and developmental
grounds. We would not seek to eliminate U.S. veto power in the
FSO.
Pros
1. Is consistent with the mature partnership policy
of strengthening independent multilateral assistance mechanisms.
2. Would largely avoid major political confrontations
destructive to the credibility of the Bank and U.S. assistance
policies.
3. Would increase the credibility of U.S. objections
to loans on technical or policy grounds.
4. For most prospective IDB lending to countries with
which we are at political odds, this approach would yield the same
results as U.S. objections on political grounds. These countries
will tend to manifest poor economic policies which pose serious
technical obstacles to IDB lending.
Cons
1. Is unrealistic in light of likely Congressional
concerns that U.S. resources will be made available through the
IDB to countries with which we are at political odds.
2. Would eliminate our opportunity to demonstrate dis-
pleasure in cases where we are at long-run political odds with a
borrower country.
Option 2.
Maintain current policy of avoiding formal use of the veto,
except when legislative requirements or the need to avert punitive
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Congressional action so require, or where strong and overriding
policy considerations dictate (e.g., a very hostile Marxist
Chile). We would continue to exercise influence at the staff
and board levels to delay or deny loans to countries at odds with
the U.S. on important political issues.
Pros-
1. While the veto would be used only sparingly, this
policy permits continued differentiation in assistance policies
towards Latin American countries where there are major bilateral
policy questions at issue (e.g., Peru expropriation).
2. So long as the use of the veto can be avoided, it
need not result in political confrontations injurious to the Bank
or overall U.S.-Latin American relations.
3. Would reduce the probability of Congressional dis-
pleasure with a Bank apparently unresponsive to U.S. political
concerns.
Cons-
1. Would perpetuate tensions in the Bank regarding U.S.
tactics in delaying Board consideration of pending loans to
countries with which the U.S. is in conflict.
2. Is not fully consistent with our efforts to
strengthen the Bank.
3. There are limits to how long any single loan
proposal can be delayed. Furthermore, delaying tactics tend
to exacerbate bilateral political differences, while undermining
the Bank's credibility as an independent institution and the
credibility of the U.S. commitment to multilateralism.
Option 3.
In addition to efforts already underway to widen Bank
membership to other donor countries, commence efforts to revise
the Bank Charter (and amend relevant U.S. legislation) so as to
eliminate the U.S. veto in the FSO. A choice between Options 1
and 2 would have to be made in any case, as elimination of the
veto does not imply a politically neutral voting posture by
the U.S.
Pros-
1. Would reduce U.S. political exposure in the Bank.
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2. Would strongly enhance the "multilateral" nature
of the Bank.
3. Would yield immediate political benefits for us
in Latin America by strongly reaffirming U.S. confidence in
the multilateral framework.
Cons-
1. Would greatly limit our capacity to influence
individual loans and lending policies in the direction of
greater technical acceptability.
2. Would greatly reduce, if not eliminate, our ability
to deny loans to countries with which we have basic long-run
policy differences.
3. Primarily because of the predictable negative
Congressional reaction to the loss of U.S. control over
technical matters or important political issues, could imperil
the survival of the institution.
4. If elimination of the veto were proposed in the
near future, this would jeopardize the proposed replenishment
in Congress, as well as the acceptability of the larger
multilateral approach.
VII. Summary and Conclusions
1. Current Policy
The major assumptions underlying current U.S. development
assistance policies, i.e., increasing reliance upon multilateral
assistance channels and a reduced bilateral profile, remain
valid and relevant. A continued firm U.S. commitment to Latin
American social and economic progress supports many important
U.S. interests.
2. Need for Assistance
Although developmental progress fundamentally depends on
the efforts of the developing countries themselves, there
is a continuing need for external assistance. Foreign
exchange constraints will continue to limit economic growth
and for the foreseeable future, they will not be fully offset
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by trade benefits or private sector inflows. Moreover, external
assistance plays an important catalytic role in influencing
recipient countries to identify and pursue developmental
priorities. Finally, the inability of countries to meet
increasing popular expectations in respect to problems of
employment, health, housing and education is the root cause
of much of the hemisphere's political turbulence. External
assistance also offers urgently needed technology, research,
and management capabilities to assist in addressing these
enormous problems more effectively.
3. Bilateral Assistance Effort
We support the continued evolution of U.S. bilateral
programs within a multilateral framework, emphasizing innovative
efforts in the urban, agricultural and educational sectors.
Recent appropriation levels are essentially appropriate for
these programs under current policy assumptions. Bilateral
assistance programs are an important aspect of overall U.S.
policies in the hemisphere, although overshadowed by other
facets of the U.S. presence and the far larger volume of
assistance flows through multilateral channels. Efforts
should be intensified to allay current Latin American
apprehensions that recent changes in U.S. policies - notably
the announced reorganization of bilateral assistance -
forecast a diminished U.S. commitment to development.
With respect to the reorganization of the U.S. assistance
effort, we recommend that:
O Flexibility in programming be retained SO as to
(a) allow an integrated focus, at both country and regional
levels, of the various assistance tools at the disposal of
the U.S.; and (b) to assure conformity of bilateral assistance
programs to overall U.S. bilateral and regional policies. The
extent to which the structure of the new assistance entities
should be "regionalized," and the manner in which special
regional needs will be reflected organizationally, require
intensive examination in the current reorganization planning
process.
O New assistance legislation be unencumbered by
potentially abrasive limitations unrelated to development
assistance purposes. For example, the time limit for
Presidential actions under Hickenlooper should be removed.
Restrictive procurement rules such as additionality should
be avoided. /In this regard, we note the possibility that
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the further liberalization of procurement rules, such
as the worldwide untying of bilateral assistance, as well
as the shift to multilateral channels, may carry some
adverse balance of payments consequences.
O Timely Congressional passage of the proposed
reorganization be recognized as important to the
effectiveness of overseas operations. It will, as well,
allay current Latin American apprehensions about the future
course of U.S. assistance policies. Prompt and favorable
Congressional action, and Congressional acceptance of the
emphasis on multilateralism, probably will require vigorous
Administration effort.
Given the lower profile already achieved, the
number of U.S. assistance personnel stationed in Latin
America is no longer an essentially "political" issue.
Rather, while substantial reductions in overseas personnel
can be achieved through reorganization, this issue should
be treated in planning for the new assistance entities as a
management question, related to the effective design,
implementation, coordination, and monitoring of assistance
programs.
4. Multilateral Assistance Effort
The IBRD is a constructive, major source of development
financing in the hemisphere. Few direct political benefits
accrue to the United States for its support of Bank lending to
the hemisphere, but our political exposure in the Bank is
correspondingly limited.
We should encourage the adoption by the IBRD of program
lending and support recent efforts to lend within the context
of broader sectoral strategies.
U.S. support to the IDB is the paramount symbol of our
commitment to Latin America's development in the multilateral
framework. Administration efforts to secure Congressional
approval of the proposed replenishment at pledged levels are
essential. Continuation of U.S. efforts to encourage improved
Bank management and lending policies is recommended, although
attempts to influence IDB policies and loans for technical (as
well as political) reasons contain risks of U.S. political
exposure.
The dominant donor status of the United States in the IDB,
reflected most directly in the U.S. veto position in the Bank's
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FSO soft lending operations, exposes the U.S. increasingly
to the risk of Latin American-U.S. polarization on a variety
of issues. If successful, current efforts to widen Bank
membership to include European countries could reduce those
risks. The outcome of these efforts is yet uncertain. Other
options for the future are: to limit the U.S. position on
proposed lending to technical and development policy considera-
tions (except where legislation otherwise requires) ; to
continue the current practice of delaying loans to countries
with which there are important long-run policy differences
and avoid formal use of the veto to the maximum extent
feasible; to alter legislation and eliminate the U.S. veto.
The latter option carries serious Congressional risks, both
for the pending replenishment and for the longer term. Of
itself, it will not solve the polarization problem.
5. CIAP
CIAP is currently in transition; this transition will
be difficult. Continued U.S. support for CIAP serves a
number of important U.S. purposes and is essential if this
entity is to evolve towards an increasingly important role.
In any event, Latin American countries are unlikely to accept
a resource allocation function for CIAP in the foreseeable
future.
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LIMITED OFFICIAL USE
U.S.-LATIN AMERICAN TRADE RELATIONS
I. Problem: The Gap
1
II. Interests and Goals
4
III. Conclusion
7
IV. Program of Action
8
Options
10
Style
15
Annex A - Presidential Trade Commitments to
Latin America and Their Current
Status
Annex B - Article 37 of the OAS Charter
Annex C - Trade Issues Expected to Affect
Latin America in 1971
Annex D - The President's Legal Authority
to Discriminate Among Suppliers
in Trade Matters
Annex E - The Pros and Cons of Political
Selectivity Through Trade Policy
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U.S.-LATIN AMERICAN TRADE RELATIONS
I. Problem: The Gap
Trade policy has become central to our hemispheric
relations.
Latin American leaders, feeling rising pressures for
economic growth and social reform, look on the President's
pledges to assist Latin American exports by increasing
access to our own and other developed countries' markets
as their best hope for substantial resource transfers.
Aware of leveling or declining trends in bilateral develop-
ment assistance, irritated by the conditions attached to
that assistance, and doubtful about the net value of foreign
private investment, they have fixed on trade as the most
economically effective and politically acceptable vehicle
for gaining external resources, and as a potential scape-
goat for, and diversion from possible domestic failures.
They are increasingly impatient and critical at the poten-
tially widening gap between our commitments and our actions.
(For a summary of Presidential commitments and their current
status, see Annex A.) While pressing for a firmer political
commitment, they count heavily on our prompt and positive
action in the trade field. Hemispheric interest in trade
discussions, previously limited to lower level OAS forums,
will be heightened by the fact that trade (Article 37 of
the Charter) has been made the major agenda item of the
General Assembly (the supreme political organ of the OAS)
which will meet in San José, Costa Rica, on April 14, 1971,
with the Secretary of State attending. (The text of Article
37 appears in Annex B.) In short, our attitude on trade has
become for the Latin Americans one of the crucial tests of
our real intentions; trade questions accordingly have become
central to our hemispheric policy.
In part the gap reflects a basic difference in the
perception of facts and interests.
--Latin America's trade problem is basically struc-
tural: overdependence on traditional commodity exports;
inefficient, overprotected industries; a lack of export
consciousness and know-how; internal policies inconsistent
with export development. The Latin Americans, however,
tend to view external barriers as the principal impediment.
The area's trade welfare is closely linked to progress and
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prosperity in the developed world, particularly in the
United States. The Latin Americans, however, searching
for greater insulation against trade fluctuations, seek
to exact reductions in external barriers which they be-
lieve keep them dependent on raw material exports, with-
out adequately recognizing that only they can create the
exports for which they seek increased access. Their
unrealistic expectations can never be fully or even
nearly satisfied.
--The scope for U.S. trade action is limited:
roughly 50% of our imports from Latin America are
presently duty free; duties on the remainder are rela-
tively low (average incidence 8%) ; and the largest part
of this (about 60%) is subject to quantitative restraint
programs from which the Latin Americans derive price
advantages (sugar, oil). However, duties on certain im-
portant exports (rum, tobacco, some fruits and vegetables)
remain high and some of their most promising new export
industries face quantitative restraints (e.g. textiles,
meat) or are threatened with new limits (e.g. shoes).
Our ability to take significant trade actions to
further regional foreign policy objectives is seriously
constrained by a) domestic, and b) global foreign policy
considerations:
a) At the same time the Administration was pledging
an "action for progress" hemispheric policy, domestic
protectionist sentiments showed new vigor. For the Latin
Americans the most serious threats were the Mills Bill
(which inter alia would have imposed new restrictions on
wool and man-made textiles and shoe imports), and the
Poage and Melcher/Mansfield Bills (which could have
adversely affected imports of agricultural and livestock
products, respectively). 1/ None of these bills was
enacted, but the threat posed by active Congressional con-
sideration seriously detracted from the Administration's
policy and caused the Latin Americans to doubt seriously
that the Administration could fulfill its commitments.
An expanding trade policy with Latin America implies
1/ In addition, new restraints on some cotton textile
imports, continued voluntary restraints on fresh beef,
marketing orders on tomatoes, and pressures to repeal
TSUS 806.30 and 807 rankled.
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willingness to accept more imports, face up to protec-
tionist pressures, and provide more realistically for
domestic interests through adjustment assistance rather
than trade restrictions. Even with strong Administra-
tion leadership, however, it is not certain we can count
on the necessary Congressional and public support for an
expanding trade policy.
b) Although current Latin American policy assumes
that there has been and ought to be a special relation-
ship with Latin America, our overall trade policy (except
for transitional measures such as generalized preferences)
is based on non-discriminatory treatment of all our trading
partners and elimination of discriminatory arrangements by
others. This overall trade policy is basic to our global
foreign policy and trade interests. It also benefits the
Latin Americans because all of them (except for former
British dependencies in the Caribbean) are excluded from
the preferential arrangements that many other LDC's enjoy,
and need our strong support in pressing others to eliminate
discriminatory arrangements. There are some means by which
Latin American interests can be favored without directly
discriminating against other countries (e.g. allocating
assistance for export development, including products of
principal Latin American interest in generalized prefer-
ences), and we have used these. However, in setting tariffs
and allocating quotas we have been unable (except to a minor
degree in earlier years) to favor Latin America because it
would: (1) prejudice our relations with other countries;
(2) undermine our efforts to eliminate discrimination
against ourselves and Latin America by third countries;
and (3) undermine established principles of international
trade. Because the United States and Latin Americans need
expanding access to world, not just regional, markets, it
is particularly important that we avoid actions that would
encourage discriminatory trade blocs.
We recognize that trade development is a slow, long-
term process. Therefore, the style of our trade relations
is also important. Trade concessions appear to the Latin
Americans to be more important than they are; what we appear
to be doing may be almost as important as what we do. Never-
theless, the inescapable fact is that style can only supple-
ment and enhance positive action, it. can not replace it;
there has to be an underlying basis from which style can
operate. We also must consider carefully the consistency
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between short-term measures and long-term goals; the two
are not always compatible.
II. Interests and Goals
There appears to be a distinct lack of consonance--
or even a conflict--between the U.S. and Latin American
perception of interests and goals, as well as several inter-
interest conflicts, which gives rise to our foreign policy
problem.
As perceived by the Latin Americans, four fundamental
interests or goals are affected by their trade relationship
with us:
1. More rapid economic and social progress. This
basic drive is frustrated by the intransigence of economic
problems since no achievable rate of growth would fully
satisfy continually rising expectations. It is also frus-
trated by Latin Americans' continuing sense of inadequacy
in the face of U.S. economic and technological power and by
their fear of the adverse effects restrictive U.S. actions
can have on their exports and economies.
2. National identity and independence particularly
from the U.S. This basic and growing interest has particular
significance to trade because of the conflict with the desire
to protect and exploit the national economy and its natural
resources. This conflict gives rise to an ambivalence and
questioning of foreign investment, and in turn results in an
increased focus by Latin America on trade and trade conces-
sions.
3. Substantial trade, with improved access to U.S.
markets.
4. Maintenance of an effective inter-American system.
Latin Americans view the OAS mechanism as a more effective
means to confront the United States than individual efforts.
From the U.S. standpoint, there also are four funda-
mental interests or goals affected by our trade relations
with Latin America:
1. Preservation of independent and self-sustaining
countries favorably disposed to the United States.
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2. Maintenance of Latin American confidence in the
United States as an effective, mature and responsible power
in world affairs.
3. Economic and social progress. While no realistic
rate of U.S. resource transfer would enable Latin America
to satisfy rising aspirations, continuing economic and social
progress will support our other interests in the area. Be-
cause of the key role of expanding trade in this process
we believe it is particularly important that they perceive
the real conditions underlying export growth.
4. Our substantial economic interests in trade and
investment. Latin America is the largest LDC market for U.S.
exports, accounting for 14% of our total foreign sales. 1/
It also is an important source (15%) for U.S. imports. It
is and will probably continue to be a major producer, and
our principal source of certain basic commodities and indus-
trial raw materials (particularly bauxite and oil). (We
were not able to assess accurately its fundamental longer-
range strategic importance as a U.S. supplier. However,
we believe this is of such importance in assessing our
interests that a comprehensive study should be undertaken
soon.) Expanding trade also can assist the private sector
in Latin America, since much of the foreign trade sector
remains in private hands, as well as provide support for
market-oriented policies and programs.
Latin America, as a region, has a serious problem in
its declining share of world trade and U.S. imports, which
has led to a serious and growing deficiency in its ability
to finance imports to sustain an adequate rate of growth.
LDC's as a group have the same problem, but Latin American
export performance has fallen behind the LDC average.
Latin America depends on exports for more than three-fourths
of its foreign exchange requirements. Few Latin American
economies are diversified enough to stabilize when trade
falls off; as a group the contribution of exports to GNP is
over 10%. Even more important, the area's growth potential
is largely defined by its ability to import capital goods
and finance overseas borrowings; exchange bottlenecks
stemming from declining or stagnating export volumes and/or
Percent figures on this page and page 6 are 5-year
averages (1965-69) for trade between the United States
and the 22 Latin American members of the OAS.
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prices can stymie development to a greater extent than
indicated by export shares of GNP, per se. For the Latin
Americans, the United States, which buys 34% of their
exports and supplies 40% of their imports, will continue
to be an essential market.
Over the long term it is best for the United States
to recognize and support Latin American desires to provide
higher living standards and increased welfare for their
nationals. Expanding trade is an essential step toward
this. Because of the marked difference in size and resil-
iency between the U.S. and Latin American economies and
in the role trade plays, we could absorb substantially
increased imports from Latin America with only marginal
effects on our overall domestic economy (but with differ-
ential and possibly serious effects on certain industries).
On the other hand, we have the capacity to do substantial
harm to Latin American economies by restricting the region's
exports. Because the United States has consistently main-
tained a major share in Latin American imports, we also
can expect to benefit to some extent from an increased
Latin American ability to import.
Many Latin Americans are increasingly seeking export-
led growth, and some have been quite successful. As a group,
however, they have given insufficient attention to develop-
ing comprehensive export strategies supported by consistent
internal economic policies, and in some instances basic
inconsistencies (e.g. between trade and investment regimes)
exist. Although the basic decisions and actions must be
made by the Latin Americans, the United States can assist
in implementing these.
Rising economic nationalism and defense of their
vulnerable trade position--stemming in part from what the
Latin Americans perceive as external strangulation--are
likely to lead to increasingly serious confrontations with
DC's on trade, investment and related matters. Throughout
the developing world, governments are seeking tighter con-
trols over and higher income from the exploitation of their
resources. The results include not only expropriations,
divestments and increased taxation on foreign investors but,
currently, joint efforts by LDC producers of some products
(notably oil) to dictate prices. These measures have an
impact on a country's trade prospects that it may not fully
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appreciate. 1/ They also have an adverse effect on public
and Congresssional attitudes in the U.S. that makes it
more difficult for us to make trade concessions benefiting
that country's exports. Another implication of Latin
America's economic nationalism and tactics to defend its
trade position is a possibly increasing conflict of inter-
est between U.S. direct investors and U.S. groups promoting
protectionism.
Both Latin America and the United States will benefit
by having a forum (which could be the Special Committee or
other existing regional and international organizations)
for consultation and negotiation in evolving a more mature
partnership. Such discussions should involve a frank ex-
change of views by both sides, not just an airing of Latin
American grievances. Even if it should not be possible to
move ahead with new programs, the opportunity for an exchange
of views on sensitive trade issues is preferable to airing
Latin American frustrations either unilaterally or through
CECLA or some other group in which the United States is not
represented.
III. Conclusion
1. Trade is central in our hemispheric political
relationship. Trade per se represents an important U.S.
economic interest in our relations with Latin America. But
the Latin American perception of trade as a touchstone
factor in our relations brings to it a highly important
political significance.
2. The chances for improvement in our hemispheric
political relationship will be importantly affected for
better or for worse by the extent of progress in the trade
field, and by the atmosphere surrounding our activities.
3. Expanding trade is in our mutual long-term interest.
However, trade concessions will produce short-term repercus-
sions with domestic political costs. These costs must be
weighed carefully against those which an unresponsive trade
policy would inflict on our hemispheric foreign policy.
As a prime example, recent Venezuelan regulations regard-
ing taxes and prices to be paid by foreign oil companies
will, unless loosely applied, weaken the basis for pos-
sible U.S. preferences for Western Hemisphere oil, by dis-
couraging the new investment needed for an expansion of
capacity.
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IV. Program of Action
If we are to stem the widening gap between commitments
and action, as our respective interests dictate, our most
urgent task is to fulfill promptly our existing commitments.
1. Prompt submission and strong Administration sup-
port for early enactment of generalized preference legis-
lation. The Latin Americans consider prompt implementation
of a liberal system of generalized preferences, as pledged
by the President, absolutely basic to the Administrations's
whole policy of "action for progress." Other LDC's (as well
as the developed countries with which we have been discus-
sing this question) also consider generalized preferences
essential as we begin the Second Development Decade, but the
fact that our position on preferences has been closely re-
lated to Latin American developments--: and product coverage
has been expanded to take particular account of Latin Ameri-
can interests--makes it fundamental to our hemispheric policy.
It may be felt that early passage of the Administra-
tions's preference proposal may not be possible, or may
result in such distortions as to be counterproductive to
our foreign policy. However, the Latin Americans (and
others) will view failure to submit legislation as failure
to fulfill our fundamental trade commitment. Such a step
would cause a sharp reaction and reinforce anti-American
sentiment in Latin America. It could also reinvigorate
pressures for a preferential trading arrangement confined
largely to Latin America, which the President said would be
considered if generalized preferences fail. 1/ It is im-
portant, therefore, that the Administration submit its
legislative proposal early this year. It will be consider-
ably easier to explain Congressional inaction than Adminis-
tration reluctance to submit legislation.
2. Strong Administration effort to comply with the
spirit of the "standstill" commitment not to impose new
restrictions on Latin American exports. While preference
1/ Most Latin Americans have strongly supported generalized
rather than alternative preferential arrangements. We
expect they would support alternative arrangements if
generalized preferences should fail, but the decision
would be difficult since nations actively engaged in
increasing their economic independence of the United
States can readily see that one such arrangement (regional
preferences) would have an opposite effect.
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legislation is essential to move ahead, it is equally
important that we not slide back. The "standstill" commit-
ment reiterated at Caracas is well hedged in legal terms,
but the inference generally drawn by the Latin Americans
is that we will avoid any new restrictions. This is vital
to the Latin Americans and will largely determine their
confidence in our actions and policies. To resist restric-
tive measures will require determined Administration leader-
ship.
3. The President, in his October 31, 1969 speech,
pledged assistance to Latin American export development,
and various subsequent proposals have elaborated on this.
Although the Latin Americans have been slow in developing
new programs, ongoing projects have continued or expanded
and some new projects are under way. We expect further
requests for financial and technical assistance in the
coming months. It will be essential, therefore, to ensure
adequate funds for this purpose in future years under the
reorganized development assistance program.
4. The Latin Americans welcomed the President's pledge
to consult in advance on actions that might adversely affect
their trade, and procedures for this have been established--
and used--in 1970. Their improvement (e.g. by allowing
adequate time to consult before certain decisions are made)
would strengthen hemispheric relations.
*
*
*
*
*
In addition to fulfilling existing commitments we
believe that the critical importance of trade to our hemi-
spheric policy and our interests requires us to develop
new actions to maximize Latin American export earnings. A
"more mature partnership" policy implies a U.S. "responsi-
bility" to provide-- to the extent feasible--increased export
opportunities for the Latin Americans in industrialized
country markets. It also implies a Latin American "responsi-
bility"- to the extent feasible--to pursue more rational
policies (nationally and regionally) designed to complement
these actions. The United States cannot require the Latin
Americans to adopt such policies; indeed such action would
be inconsistent with a "more mature partnership." However,
we should seek to formulate and implement policies SO as
to elicit from the Latin Americans the desired "responsible"
approach to their trade problems.
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Options
There are essentially five areas for trade action:
tariffs, non-tariff barriers, commodity policies, joint
action in international forums, and export development,
each with numerous possibilities for different measures.
Rather than attempt to catalog and discuss these, the
options that follow describe four possible approaches to
a hemispheric trade relationship, citing as examples
measures that could be considered once the approach was
determined. (A list of important issues on which U.S. deci-
sions affecting Latin American trade are expected to be
made in 1971 appears as Annex C.)
The principal issue in determining a hemispheric trade
policy is the degree and nature of the selectivity (or
discrimination) in treating imports from Latin America.
The options that follow are distinguished by varying de-
grees of selectivity. (A discussion of the President's
present legal authority to discriminate among suppliers
in trade matters appears as Annex D.)
Option 1. We would develop measures (which could be
transitional) favoring all (or some) Latin Americans and
discriminating (where necessary) against other countries;
for example: preferred treatment in allocating market shares
under quantitative restraint programs (e.g. meat, textiles,
sugar) ; top priority in allocating funds for export develop-
ment assistance; strong U.S. support for Latin American inter-
ests in international trade forums; tariff reductions only
for Latin America on such products as rum, fruits and
vegetables, canned beef; exemption from new U.S. trade
restrictions.
Pro: (a) Quicker and larger short-term benefits to Latin
American exports to U.S. markets (although probably
not to other DC markets). Indirectly, U.S. exports
to Latin America would be stimulated by the region's
increased purchasing power.
(b) Our "special relationship" with Latin America
would be given real substance. We would maximize our
demonstration of awareness and commitment to Latin
America, and might accordingly attenuate nationalistic
pressures adverse to U.S. interests. This policy would
appeal to those in the United States who strongly back
hemispheric unity and give priority to Latin America
over other areas.
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(c) To the extent increasing imports from Latin
America simply displace imports from other countries
(e.g. under quantitative restraint programs) total
U.S. imports would not increase; where U.S. barriers
actually decrease (e.g. tariff cuts) total U.S.
imports would be expected to increase somewhat.
Con:
(a) In some cases this would breach MFN principles
and seriously prejudice our relations with other
countries.
(b) It could reduce the willingness of other developed
countries to help Latin America and encourage tighter,
discriminatory trade blocs perhaps restricting Latin
American exports to growing third-country markets.
(c) It would increase Latin American economic de-
pendence on the United States (which they may not want)
and amplify pressures for further concessions.
(d) It could suggest to influential elements in Latin
America that the way to get largest concessions from
the United States is to combine maximum demands with
the pressure of nationalistic moves against U.S.
interests. This point of view might spread to other
developing areas.
(e) The Administration has no assurance of domestic
support for existing trade commitments to Latin America.
There would be strong opposition domestically to the
granting of additional non-reciprocal concessions.
Even those favorable to helping Latin America might
question the timing of this policy. Breaching the non-
discrimination principle could tempt Congress to impose
new discriminatory strings on trade policy.
(f) It would conflict with our long-term goal of a
free international trading community responding to
market forces, and would probably have an adverse long-
term effect on the U.S. economy. The short-term
balance of payments effect would be negative.
Option 2. We would develop transitional measures which
would provide special benefits for all LDC's; for example:
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implement and administer quantitative restraint programs
so as to reduce to the extent possible their adverse impact
on LDC exports; strong U.S. support (bilaterally and in
international trade forums) for LDC interests in reducing
trade barriers in other DC's; consideration of additional
products of principal interest to LDC's for inclusion under
a generalized preference system, after Congressional
enactment of preference legislation.
Pro: (a) Depending on overall import levels, this policy
could bring fewer immediate benefits to Latin America
than Option 1 but would be expected to bring greater
long-term benefits as world trade expands.
(b) This option would reflect the spirit of our UN
commitments that LDC's have special trade needs re-
quiring the adaptation of traditional policies to
changing circumstances. The quintessence of develop-
ment is change and policies that inhibit change (e.g.
quota allocations based on historical market shares)
repudiate this.
(c) Latin Americans would probably benefit because
of their generally strong competitive position among
LDC's without the visible ties to the United States
implicit in Option 1.
(d) We would demonstrate our awareness of and commit-
ment to developing nations as we enter the Second Devel-
opment Decade. We could exert increased pressures on
other "burden." DC's to join in sharing more of the development
Con:
(a) Depending on the degree of displacement of imports
from DC's this could lead to higher import levels than
Option 1 and thus increase domestic opposition.
(b) Preferential treatment of LDC's in quantitative
restraint programs would produce adverse reactions
from certain DC suppliers (e.g. Australia for meat and
sugar). It also would establish a principle which other
DC's could apply to their imports of such LDC products
as cotton, vegetable oilseeds and oils, citrus, with
serious repercussions on U.S. exports. Under these
circumstances the United States would be required by
Section 252 of the Trade Expansion Act to retaliate.
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Option 3. We would develop measures favoring all
(or some) LDC's without discrimination against other
countries; for example: multilateral efforts to reduce
tariffs and NTB's on products supplied principally by LDC's
(e.g. processed agricultural products, fruits and vegetables)
without requiring full reciprocity from the LDC's; expanded
assistance for LDC export development. (This approach would,
in effect, continue present trade policy based on GATT prin-
ciples.)
Pro:
(a) This would encourage a multilateral freeing of
trade over time.
Con:
(a) Available measures are extremely limited because
of (1) U.S. domestic pressures against import liberali-
zation, (2) a reluctance of other DC's to liberalize
their restrictions, and (3) the relatively small number
of LDC products that would benefit from MFN-type liber-
alization.
(b) Results would be slow in coming because of the
need for multilateral negotiations.
(c) Since there would be no preferential treatment,
overall import levels would probably have to rise sub-
stantially to benefit Latin American exports.
(d) Latin Americans would be increasingly disappointed
that we were not responding rapidly to their trade
demands. A lack of U.S.-inspired momentum would make
it increasingly difficult to maintain the institutions
(i.e. Special Committee) of the Administration's current
policy.
Option 4. We would take no measures specifically
designed to give special treatment to Latin America or LDC's
generally, but would continue to work for multilateral
liberalization of trade on an MFN basis; for example: a new
round of GATT tariff negotiations; concerted efforts to reduce
NTB's on a global basis.
Pro: (a) This would encourage a multilateral freeing of
trade over time with long-term economic benefits for all.
Con:
(a) Since this is a long-term program and not possible
immediately, it would not alleviate the present problem.
The Latin Americans (and other LDC's) would feel the
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DC's had reneged on commitments to take measures
reflecting their special needs and were continuing
to act only for themselves.
(b) Unless import levels greatly increased, most
LDC's would derive few short-run export benefits.
(c) This policy could alienate even responsible
elements in Latin America and give extremists a
platform to demand anti-U.S. actions. The form and
strength of a Latin American reaction would depend
on several incalculable factors. At a minimum there
would be disappointment and reawakened cynicism re-
garding U.S. policies that would adversely affect our
hemispheric objectives. Latin Americans would look
elsewhere for assistance, creating new opportunities
for unfriendly nations.
(d) The United States has led developed countries
in the effort to provide LDC's better trade expansion
opportunities. If it were to abandon these, the global
collapse. effort to improve the LDC's trade position could easily
(e) Long-term U.S. interests in the economic and
social development of Latin America would be impeded
through decreased economic growth and greater social
and political instability.
A corollary issue in all of the preceding options is
whether, within the selectivity limits imposed by the options
per se, we should seek to favor politically "friendly" coun-
tries or subregional groups and/or punish others. Although
there are limited areas where such selectivity can play a
role (e.g. product selection, export development assistance),
trade is generally an unwieldy instrument for bestowing re-
wards or punishment in pursuit of short-term foreign policy
objectives. Trade policy is best based on long-term economic
considerations because tampering with market forces can ad-
versely affect our interests both as an importer and exporter.
We can and do enjoy beneficial trade relations with countries
of all political stripes. Finally, criteria for distinguish-
ing between friends and foes are arbitrary, and decisions
would be even more difficult by the frequency and suddenness
of changes. On the other hand, such selectivity would probably
make it easier to obtain domestic support for liberal trade
measures. (Annex E discusses this question in greater detail.)
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Style
The new style in the Administration's Latin American
policy has been an important element in establishing an
improved atmosphere in regional councils. Style will con-
tinue to be important as our policy evolves. Where signifi-
cant actions are taken we should capitalize on opportunities
to obtain credit (e.g. when generalized preference legisla-
tion is about to be submitted to Congress, the President or
Secretary could call in Latin American Ambassadors to an-
nounce the plan). Where we are unable to act we should try
to soften the blow (e.g. if it is decided not to submit
preference legislation soon, the President or Secretary could
explain why to the Latin American Ambassadors). Other
important aspects of style include our receptivity to Latin
American requests for advance consultation, consultations
with embassies here and in the field prior to revealing our
positions, staffing of delegations, etc.
Consonant with the new style and with the program of
action adopted we also should seek a frank and friendly
exchange of views regarding Latin American actions which
affect their ability to expand exports. The Latin Americans
should be encouraged to discuss with us any measures they
may take which affect our interests. On appropriate occa-
sions, such as the introduction of preference legislation,
we should point out that our ability to obtain Congressional
approval may be importantly affected by their treatment of
our interests.
Annex A - Presidential Trade Commitments to Latin America
and Their Current Status.
Annex B - Article 37 of the OAS Charter.
Annex C - Trade Issues Expected to Affect Latin America in
1971.
Annex D - The President's Legal Authority to Discriminate
Among Suppliers in Trade Matters.
Annex E - The Pros and Cons of Political Selectivity Through
Trade Policy.
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Annex A
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Presidential Trade Commitments to Latin America
and Their Current Status
"To help other Western Hemisphere nations to increase
their export earnings and thus contribute to balanced develop-
ment and economic growth, I have committed the United States
to a program which would help these countries improve their
access to the expanding markets of the industrialized world. "
*
*
*
*
*
1. Trade Preferences
WE WILL PRESS FOR A LIBERAL AND GENERALIZED TARIFF
PREFERENCE SYSTEM FOR ALL DEVELOPING COUNTRIES.
IF IT IS NOT POSSIBLE TO WORK OUT A SATISFACTORY
ARRANGEMENT FOR GENERALIZED PREFERENCES, OUR GOAL IS TO HAVE
SPECIAL TRADE PREFERENCES FOR LATIN AMERICA.
The United States has proposed a liberal system for
tariff preferences in its markets and has pressed other
developed countries to liberalize their proposals. These
proposals were endorsed as a "mutually acceptable system of
preferences" by UNCTAD in October, and the developed countries
have expressed their intention to seek implementation in 1971.
Since agreement has been reached on a system of generalized
preferences, the statement regarding special preferences for
Latin America has not become operative. In fact, most Latin
American nations have supported generalized rather than special
preferences. Through the SCCN we have made our generalized
preference scheme more responsive to the Latin Americans by
adding 79 products of particular interest to them.
1/ Report to the Congress, "U.S. Foreign Policy for the
1970's: A New Strategy for Peace,' February 18, 1970.
Address to the Inter-American Press Association,
October 31, 1969.
Remarks on the Rockefeller Report, November 10, 1969.
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2. Export Development Assistance
--WE WILL SUPPORT INCREASED TECHNICAL AND FINANCIAL
ASSISTANCE TO PROMOTE LATIN AMERICAN TRADE EXPANSION.
The United States has made various offers to the Latin
Americans, including the President's announcement that an
estimated $15 million would be allocated for export develop-
ment programs in the FY-1971 budget, an offer of technical
assistance from the Export-Import Bank, and Secretary Stans'
offers of Commerce Department assistance to the six countries
he visited in 1970. Anticipated FY-1971 AID programming for
export development presently amounts to $10-15 million in
loans and $3.7 million in grants, and several of Secretary
Stans' projects are being implemented. However, there have
been no Latin American requests for Export-Import Bank assist-
ance to date.
In preparation for the fall SCCN meetings an inter-agency
task force was established to prepare a comprehensive program
for export development assistance in Latin America. This
program was presented to the Latin Americans in October and
is presently under study by their governments. A number of
Latin American governments are likely to express interest in
this area, and we expect to enter discussions of specific
project proposals bilaterally or at SCCN meetings in 1971.
We also anticipate that some ongoing AID export assistance
projects will be expanded. We have agreed to provide up to
$675,000 to the Inter-American Export Promotion Center in
FY-1971 and have reiterated this Administration's interest
in expanding our effort in this field.
3. Trade Consultations
--WE WILL SUPPORT THE ESTABLISHMENT WITHIN THE INTER-
AMERICAN SYSTEM OF REGULAR PROCEDURES FOR ADVANCE CONSULTATION
ON ALL TRADE MATTERS.
Regular procedures for trade consultations (in advance
and ex post facto) under SCCN auspices were established at
Caracas in February, 1970, and have been successfully used. In
particular they provided a forum for a unified Latin American
1/ Address to the Inter-American Press Association, October 31,
1969.
Ibid.
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expression of strong concern over the restrictive features
of the Mills Bill. Consultations have also been held on
revision of the Sugar Act, and on possible restrictions on
imports of footwear.
4. Non-Tariff Barriers
--WE WILL LEAD A VIGOROUS EFFORT TO REDUCE THE
NON-TARIFF BARRIERS TO TRADE MAINTAINED BY NEARLY ALL
INDUSTRIALIZED COUNTRIES AGAINST PRODUCTS OF PARTICULAR
INTEREST TO LATIN AMERICA AND TO OTHER DEVELOPING COUNTRIES.
Although discussions on non-tariff barriers continue in
the GATT, little progress has been made in reducing or elimi-
nating non-tariff barriers of interest to LDC's. Ambassador
Gilbert's GATT statement last spring urging other developed
countries to join with us in this effort evoked no strong
response from other GATT members, and the Latin Americans
have preferred to direct their pressures for reductions at
the United States through the SCCN rather than through inter-
national trade forums. In the future we hope to use the
SCCN to concert U.S. and Latin American pressures for multi-
lateral action through international forums.
If a multilateral effort to reduce non-tariff barriers
affecting LDC exports is to succeed, the United States will
need to reinvigorate its efforts (perhaps through the OECD
as well as GATT) and support these with specific proposals
that would involve reductions in its non-tariff barriers.
Action on many U.S. non-tariff barriers, however, will re-
quire legislation. Consequently, Congressional support is
essential to any such effort.
5. Standstill
THE PRESIDENT AUTHORIZED REITERATION OF THE GATT
"STANDSTILL COMMITMENT" (STATING WE WILL REFRAIN FROM RAISING
TRADE BARRIERS TO LDC EXPORTS EXCEPT FOR COMPELLING REASONS)
SPECIFICALLY TO THE LATIN AMERICANS.
Address to the Inter-American Press Association, October 31,
1969.
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We have continued to comply with the standstill commit-
ment. However, had the Mills Bill, the Poage Bill, and/or
the Melcher/Mansfield Bills, which were all active in the
last Congress, been passed, we would have been hard pressed
to justify compliance with the spirit of the standstill.
This will also be the case should these bills become active
issues in the new Congress.
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*
*
In summary, the Administration has made a very sub-
stantial effort to respond to specific Latin American trade
problems. Nevertheless, this effort has not yet succeeded
in eliminating the gap between objectives and achievements
primarily for two reasons: (a) at the same time the Adminis-
tration committed itself to "improve access to the expanding
markets of the industrialized world," the Congress was ac-
tively considering three legislative measures (the Mills,
Poage, and Melcher/Mansfield Bills) that could have signifi-
cantly reduced Latin American access to the U.S. market; and
(b) the U.S. Government has not yet supported its program
of action for progress with reductions in trade barriers on
products of general interest to the Latin Americans.
Although the 91st Congress finally adjourned without
enacting the bills feared by the Latin Americans, the pro-
tectionist support which these measures elicited succeeded
in alarming the Latin Americans with respect to U.S. trade
policy, and in casting grave doubts on the willingness and
ability of the U.S. Government to pursue the President's
program. This uncertainty has been compounded by the absence
of action reducing U.S. trade barriers within the Administra-
tion's control (on fresh and frozen beef, for example). If
action for progress is to encompass trade, then action in
the trade field--akin to AID untying and IDB replenishment
in development assistance--will be essential in 1971. Prompt
submission of and strong Administration support for general-
ized preference legislation will be critical in this regard.
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Annex B
Article 37
of the Charter of the Organization of American States
as Amended by the Protocol of Buenos Aires in 1967
The Member States, recognizing the close interdependence
between foreign trade and economic and social development,
should make individual and united efforts to bring about the
following:
a) Reduction or elimination, by importing countries, of
tariff and non-tariff barriers that affect the exports
of the Members of the Organization, except when such
barriers are applied in order to diversify the economic
structure, to speed up the development of the less-
developed Member States, or to intensify their process
of economic integration, or when they are related to
national security or to the needs for economic balance;
b) Maintenance of continuity in their economic and social
development by means of:
i.
Improved conditions for trade in basic commodities
through international agreements, where appropriate;
orderly marketing procedures that avoid the dis-
ruption of markets; and other measures designed to
promote the expansion of markets, and to obtain
dependable incomes for producers, adequate and
dependable supplies for consumers, and stable
prices that are both remunerative to producers
and fair to consumers;
ii.
Improved international financial cooperation and
the adoption of other means for lessening the
adverse impact of sharp fluctuations in export
earnings experienced by the countries exporting
basic commodities; and
iii.
Diversification of exports and expansion of export
opportunities for manufactured and semimanufactured
products from the developing countries by promoting
and strengthening national and multinational institu-
tions and arrangements established for these purposes.
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Annex C
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Trade Issues Expected to Affect
Latin America in 1971
1. The Administration's position on submission of and
support for generalized preferences legislation.
2. The Administration's position on measures that would
restrict the Latin Americans' present access to the U.S.
market --- Latin Americans are deeply concerned at numerous
lègislative proposals that would limit our imports of wool
and man-made textiles, shoes, fruits and vegetables, metals
and minerals, as well as impose extremely rigorous health and
sanitary requirements upon their products.
3. The Administration's position on the treatment of
Latin America under new sugar legislation -- The sugar act will
be renewed this year and most of the 23 hemispheric suppliers
have requested increased quotas. Even if the act should be
extended in its present form, the share of the market avail-
able to Latin America is expected to decrease because of
increased Philippine production. In addition, domestic pro-
ducers are requesting changes that would increase their
allotments and further reduce the foreign share. Latin
American sugar exports to the United States are important to
so many Latin American countries that the Latin Americans
held a meeting in Brazil to formulate a joint position to
be presented to us. This position was presented to the
Secretary of State on February 23, 1971.
4. The Administration's position on the level of meat
imports in 1971 -- Fresh and frozen beef is a new and promis-
ing export for 7 Central American and Caribbean suppliers;
Mexico is a traditional supplier of this product. We could
probably not negotiate new voluntary restraint agreements
if the share of traditional suppliers (Australia, New Zealand,
Canada and Ireland) were cut back in the Latin Americans'
favor. Therefore, to increase imports from Latin America
significantly we would have to increase the overall level of
imports, and by an appreciable amount.
5. Imposition of restraints on cotton textile imports --
The confidential guidelines for administration of the Long-
Term Arrangement on Cotton Textiles specify that restraints
should be imposed upon any country's imports that exceed a
value of $50,000 in any category. Latin American supplier
countries have complained that our practice with regard to
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the LTA has been unduly restrictive and has harmed their
efforts at export diversification.
6. Administration efforts on further extension of
the legislation implementing the International Coffee
Agreement in the face of opposition from important elements
of the industry and the Congress -- Present legislation was
passed for only a short period (until July 1, 1971) and the
House Ways and Means Committee has stated that it would not
consider further renewal until our long-standing dispute
with Brazil over soluble coffee is resolved.
7. The Administration position on hemispheric prefer-
ences for petroleum imports -- Venezuela and other potential
Latin American oil exporters are anxious to receive the
same treatment accorded Canada and Mexico, who are accorded
favorable access as "overland" suppliers. A declaration of
"hemispheric preferences" would have to be based on evidence
that suppliers in the Western Hemisphere are a secure and
stable source capable of meeting our growing oil import
requirements.
8. The Administration position on strategic stockpile
disposals -- Latin American producers of tin, antimony, quartz
and other stockpile materials argue that our disposals of
these commodities depress world prices and thus harm their
trade.
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Annex D
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The President's Legal Authority to Discriminate
Among Suppliers in Trade Matters
The President's legal authority to discriminate in
trade matters is limited both by the terms of relevant
domestic legislation and by international agreements con-
taining most-favored-nation treatment obligations.
U.S. foreign trade legislation is generally struc-
tured with a view to its application on a non-discriminatory
basis as among free-world countries. A principal exception
is the Laurel-Langley Agreement which accords preferential
treatment to certain imports from the Philippines until 1974.
There is also some legislation and some administrative action,
which by perpetuating past patterns of trade, tend to favor
traditional suppliers.
In addition, certain laws require or permit discrimi-
nation against countries under specific conditions as a
punitive measure (e.g. Sec. 252 of Trade Expansion Act,
Sec. 408 of the Sugar Act).
The President has no comparable authority for discrimi-
nating in favor of certain countries. The only exception
worth noting is his authority under the Sugar Act to allo-
cate any part of a deficit to a particular country (or
countries) when he determines this is in the national
interest. This provision was included with the Dominican
Republic in mind, however, and has not been used to benefit
any other country. The Meat Import Act permits the Presi-
dent to take account of "special factors" in establishing
country quotas, but its first requirement is that quotas
be allocated on the basis of shares in a representative
period. National security criteria govern any measures
taken under the petroleum import program which may, in
practice, favor certain suppliers as opposed to others.
Use of discretionary authority to discriminate among
countries in trade matters requires considerable caution,
because of the overriding importance of maintaining the
integrity of the MFN principle; to weaken this would set an
unfortunate precedent for other countries to follow in their
trade relations. Difficulties also arise in making arbitrary
decisions distinguishing "friends" from "foes."
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Annex E
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The Pros and Cons of Political Selectivity
Through Trade Policy
The following arguments can be made for and against
a selective trade policy, favoring those Latin American
countries whose policies and actions are generally con-
sistent with our own and/or punishing others.
Pros
1. Our "friends" would receive quicker and larger
short-term benefits (e.g. opportunities for increased access
to the U.S. market; development assistance funds).
2. We would weaken CECLA in its present form.
3. It would probably be easier to obtain domestic
support for liberal trade measures.
4. It could give us additional leverage in opposing
actions inimical to U.S. interests.
5. Certain trade policy measures (e.g. assistance for
export development) can only be effective where the recip-
ient is willing to cooperate.
Cons
1. Without breaching seriously the non-discrimination
principle, there is limited scope for selective measures.
2. Criteria for distinguishing between "friends" and
"foes" are arbitrary, and decisions would be most difficult
particularly in light of fast and frequent changes.
3. We would repudiate current policy which calls for
greater acceptance of Latin American decisions, and re-
invigorate paternalism.
4. We could undermine support for Latin American unity
and cooperation.
5. We would encourage controlled economic relation-
ships which would most likely be disadvantageous in the
long run to both the Latin Americans and ourselves (a la
Commonwealth preferences).
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3
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E. INVESTMENT
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INVESTMENT
I. U.S. Foreign Investment Policy and
Its Underlying Assumptions
1
II. Recent Developments Affecting U.S.
Investment Policy
3
III. U.S. Interests and Goals in Investment
in Latin America
4
IV. Policies for the Future
6
A. Encouragement of Investment
7
1. Neutrality
7
2. Selective Discouragement
8
3. Selective Encouragement
9
B. Protection of Investment
11
1. Traditional Protection
12
2. Selective Active Protection
13
Annex A - Description of Agency
Responsibilities and
Practices Relative to
Investment
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INVESTMENT
I. U.S. Foreign Investment Policy and Its Underlying
Assumptions
U.S. policy regarding foreign investment by its citi-
zens in Latin America has increasingly emphasized the impor-
tance of a compatible relationship between that investment
and the changing, at times turbulent, Latin American en-
vironment. We have pursued policies of encouraging and
protecting U.S. investment with an ever greater attention
to its bearing on overall U.S. foreign policy interests.
The President stated the broad outlines of current
policy in his October 31, 1969 address:
"We will not encourage U.S. private investment where
it is not wanted, or where local political conditions
face it with unwarranted risks. But my own strong
belief is that properly motivated private enterprise
has a vital role to play in social as well as eco-
nomic development
In line with this belief, we
are examining ways to modify our direct investment
controls in order to help meet the investment require-
ments of developing nations in Latin America and
elsewhere.
"
Three major assumptions underlay our investment
policies:
Latin America's need for foreign investment. As
President Nixon said:
"For a developing country, constructive foreign in-
vestment has the special advantage of being a prime
vehicle for the transfer of technology. And certainly,
from no other source is SO much investment capital
available.
"
Obstacles to foreign investment in Latin America
will persist and increase. These are founded primarily
in economic nationalism -- expressed most often as a desire
to control and channel foreign investment into economically
and socially useful channels, not to exclude it. As the
President has said:
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"In practical terms, we shall confront increased
pressures
against foreign investments. Foreign
investments are the most exposed targets of frustra-
tion, irrational politics, misguided nationalism.
Their potential for mutual benefits will only be
realized through mutual perception and tact.
"As we all have seen, however, just as a capital-
exporting nation cannot expect another country to
accept investors against its will, so must a capital-
importing country expect a serious impairment of its
ability to attract investment funds when it acts
against existing investments in a way which runs
counter to commonly accepted norms of international
law and behavior. And unfortunately, and perhaps
unfairly, such acts by one nation affect investor
confidence in the entire region.
Both investors and Latin Americans need to be
flexible and adaptive:
"The nations of this hemisphere must work out arrange-
ments which can attract the needed technical and fi-
nancial resources of foreign investment. For their
part, investors must recognize the national sensi-
tivities and political needs of the 1970's. There
is no more delicate task than finding new modes which
permit the flow of needed investment capital without
a challenge to national pride and prerogative
Private investment must play a central role in the
development process, to whatever extent desired by
the developing nations themselves." "
In addition, current U.S. foreign investment policy
was developed in full recognition of our long-standing policy
on expropriation, and experience with it in Latin America.
1/ The United States recognizes that each country
has the sovereign right to expropriate private prop-
erty within its territory for a public purpose pro-
vided that reasonable provision is made for the
payment of prompt, adequate and effective compensa-
tion.
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II. Recent Developments Affecting U.S. Investment Policy
The investment climate in Latin America, as it has
developed in the past two years, cannot be easily described.
Both positive and negative trends are observable. As an
over-simplification, it can be said that the climate has
worsened and that economic nationalism continues to grow,
but that confiscation of foreign private investment has
not occurred to the extent that many feared a short time
ago. Important developments and trends include the fol-
lowing:
Restrictions on foreign investment have increased
in the Andean countries, Argentina and Chile. In Brazil,
Central America and Mexico conditions have remained stable
or improved. In the Caribbean, the picture is mixed, with
improvements in the Dominican Republic counterbalanced by
economic and black nationalism in the English-speaking
areas. Almost everywhere, however, the potential for
greater difficulties is present; economic nationalism is
pervasive. In historical terms, the present situation
may be one stage of a cycle, to be followed by a more
moderate trend. But this hoped-for trend is not yet evi-
dent, and present indications point to more restrictive
policies and growing problems.
The IPC case was not followed by a wave of similar
expropriations in Peru or elsewhere. A somewhat similar
precipitous seizure of Bolivian Gulf properties in 1969
appears moving toward settlement. Nationalistic acts and
pressures against foreign investment are currently very
severe in Chile and Guyana, less so in Venezuela and Peru.
Issues now center more on the means and terms of compensa-
tion than on outright and arbitrary seizures without com-
pensation, although the terms of compensation, with signif-
icant exceptions, appear to the American investor as grossly
inadequate.
The rapid development and signature of the Andean
private foreign investment code demonstrates the strength
of the anti-foreign investment feeling, even in such moderate
regimes as Colombia. The code will, if ratified and imple-
mented, inhibit the investment climate in the signatory
countries of Colombia, Ecuador, Peru, Bolivia and Chile.
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Although it continues to prefer majority U.S. owner-
ship and control, U.S. business has shown increasing sophis-
tication in accepting the need for flexibility, including
flexibility on the part of the U.S. Government in cases of
expropriation. Business has, however, been adamant against
the U.S. Government's endorsing any specific mode or modes
of business operations abroad to the exclusion of others.
In sum, U.S. companies operating in a difficult period
have continued in many areas to enjoy prosperity and to
make a contribution to the development effort. Some have
worked themselves out of difficult confrontations, and a
substantial number have accepted foreign minority equity
participation. In general, the larger U.S. companies have
been strong reeds in the winds of change.
III. U.S. Interests and Goals in Investment in Latin America
U.S. interests and goals relating to investment by its
citizens in Latin America may be characterized as major.:
While investment can bring economic benefits to both the United
States and the hemisphere, it also can importantly affect other
U.S. foreign policy interests. Its economic benefits are
apparent. Investment encourages trade through the export
of U.S. equipment and spares for industry once established,
and indirectly through its general contribution to economic
1/ Investment data for 1970 is not yet available. Data
for the period ending in 1969 offers perspective on this
analysis. U.S. private investment has continued to flow
to Latin America in recent years. The net increase
amounted to $2.4 billion during the period 1966-69. The
book value at the end of 1969 was $13.8 billion. The
bulk of the increase in U.S. investment during 1969 took
place in Mexico, Panama and Brazil, with a concentration
on manufacturing. A net reduction of $116 million occurred
in Chile.
Income on Latin American investments by U.S. business
averaged about $1.2 billion per year during the period
1965-1969.
2/ See also paper on U.S. Interests in Latin America.
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growth. It assures the U.S. of a supply of required raw
and strategic materials including, most particularly,
petroleum. And, of course, to the extent that foreign
investment profits the U.S. investor, it has brought further
benefits to the U.S. economy.1/
The development process in Latin America has generated
a growing requirement for capital and technology, much
greater than our own and others' abilities to provide public
funds to fulfill. Private investment from all sources,
including the U.S., is a major contributor to this process --
both quantitatively (capital flows) and qualitatively
(management know-how and technology). A continued sub-
stantial flow is essential to the development process.
The political advantages of U.S. investment are, on
the other hand, less apparent. U.S. presence in Latin
America, based in considerable part on its investment (and
its trade) presence has been a factor in the growth of eco-
nomic nationalism and of demands for reducing the impact of
the United States on the national life of the country. These
demands represent the pains of progress and not necessarily
the penalties of error. But they nonetheless present prob-
lems both to existing investment and to the flow of new
investment. When problems develop to a serious point, they
may jeopardize larger U.S. interests in the host country.
Through the years, private investment contributed
greatly to the U.S. presence in Latin America and to its
economic growth, and thus was central to the general hegemony
which we wielded over the area. As we have moved from a
hegemonous relationship, our investment presence, which by
nature is long-term and not easily removed, has to some extent,
even unintentionally, continued to follow the spirit of an
earlier day and has thus become at times an irritant.
On balance, a longer-term perspective on foreign
investment will best serve our interests. Latin American
nations have a need for investment which they continue to
Of course, not all U.S. investments succeed. Poor
investment decisions, poor planning, inefficient manage-
ment, burdensome conditions, quick profit motivation --
these are found abroad as well as at home.
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recognize, even if many do not publicly acknowledge it.
We clearly have an economic interest in private investment
and perhaps longer-term political interests as well. How-
ever, there may have to be significant changes in the form
and relative magnitude of the U.S. business presence in
Latin America if serious political costs are to be avoided.
The days of political hegemony are gone, but our influence
continues, in substantial part through private investment.
Our troubles with investment in Latin America will continue,
but withdrawal is not a solution. Continued discussion of
the subject in a variety of forums is essential.
A number of international forums, both official and
unofficial, provide opportunities for discussion of country
policies toward investment as well as other investment
issues, and we should make increasing use of these. The
CIAP country reviews, OECD, DAC, and the OAS-IDB sponsored
mixed public-private Round Table on Private Investment in
Latin America provide current examples of such opportunities.
In addition, such other periodic discussions as bilateral
reviews of country policies by the IBRD and IMF should be
increasingly utilized.
IV. Policies for the Future
There are a variety of constraints on U.S. investment
in Latin America. Some, such as growing economic nationalism,
are particularly troublesome. It is the task of the U.S.
Government to select, in light of these constraints, poli-
cies regarding the encouragement and protection of U.S. in-
vestment which further the U.S. interest, without unduly
jeopardizing other important U.S. interests in the hemi-
sphere. These policies must accommodate both short- and
long-term concerns. On the one hand, we seek to maintain
the security of existing investments, and on the other, to
maintain productive relationships with nations which in-
creasingly will make decisions about foreign private invest-
ment with careful attention to their own perceived national
interests, and which will tend to reject certain types of
foreign investment in its traditional forms.
In examining realistic investment policy options avail-
able to the United States, we must recognize the limits of
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U.S. Government influence. Most private foreign invest-
ment decisions are made independent of U.S. Government
input or counsel. We should not overemphasize the impact
of Governmental action on those decisions.
A. Encouragement of Investment
We have identified three policy approaches the United
States might pursue in encouraging investment in Latin
America (rejecting policies of automatic, indiscriminate
encouragement or discouragement): neutrality, selective
discouragement, or selective encouragement.
1. Neutrality -- the U.S. Government neither
encourages nor discourages any or all investments. Under
this policy, OPIC would not engage in new activities. EXIM
would continue its present operations.
There are several arguments to be made in
favor of this approach:
It recognizes that the primary burden of
attracting development capital should be on the developing
countries. The United States should not obscure this point
by offsetting poor attitudes and policies of LDC's through
bilateral encouragement activities.
Investment decisions are made by investors
in any case, and not by the U.S. Government. Extensive host
government approvals are required and the effect of our
policies and representations may be minimal. Furthermore,
our ability successfully to carry out a policy based in
part on politically-oriented criteria is subject to question.
To follow a neutral policy in encouragement
would leave the U.S. Government with a freer hand than other-
wise in protection problems. That is, not having encouraged
the investment, the investor would be precluded from claim-
ing greater protection than the U.S. Government might wish,
all things considered, to provide.
On the other hand, the drawbacks of adopting
a policy of neutrality are not insignificant:
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The policy lacks a number of the political
and economic advantages to the U.S. of the selective en-
couragement policy and the U.S. would lose one means of gain-
ing a greater degree of control over important materials.
Its adoption would require the immediate
and highly visible cessation of new activity by OPIC and
would leave that agency nothing but a caretaker role for
presently outstanding guaranties. This would have early
and negative consequences on investment unrelated to eco-
nomic merits or to broader economic or political considera-
tions. Pressure would increase on Eximbank and IFI's for
assistance to investments perhaps not meeting those agencies'
criteria but which could have qualified for OPIC assistance.
At least temporary reductions of U.S. direct
private investment flow to some Latin American countries would
result, although in the longer run substantial amounts of invest-
ment might continue to flow. Further, absent U.S. Govern-
ment encouragement of their investment, the rate of return
initially required by investors might be greater. U.S.
influence on investment modes, terms and targets would be
reduced.
2. Selective Discouragement -- discouraging new
U.S. investments in Latin America except those which would
serve current and longer term U.S. interests. Arguments in
favor of this approach include those in support of a policy
of neutrality. In addition, the policy would ease potential
investment disputes even more than would one of neutrality,
since it would serve to minimize the making of investments
with potential problems for the United States. It would
support efforts to reduce U.S. presence abroad, but could
still accommodate exceptional situations (the acquisition
of raw or strategic materials, a clear host country policy
favoring foreign investment, and a favorable climate for it).
On the other hand, the policy has clear dis-
advantages, including all those applicable to that of neutral-
ity. Most significantly, in pursuing it, the U.S. Government
would become liable to charges of actively injuring the
development prospects of a country by acting to prevent an
1/ Congress might well view this as in contravention
of OPIC's present legislative mandate.
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investment which was acceptable to the country. Adoption
of such a policy could be harmful to the environment af-
fecting existing investment in some countries.
3. Selective Encouragement -- This, in practice,
is present U.S. policy stemming from the President's state-
ment that we will not encourage investment where it is not
wanted or where local political conditions face it with un-
warranted risks. The policy was gradually adopted by AID in-
vestment guaranty programs, is followed by OPIC under its
legislative mandate, and is followed by State in its advice
to all implementing agencies. It is viewed by State as
the policy which is followed de facto by other agencies
which tend to ascribe the reasons for their decisions to
"technical" factors. Selective encouragement succeeded a
period of virtual across-the-board encouragement, and was
strengthened by our low profile policy.
The policy of selective encouragement turns
on a presumption that encouragement is desirable, but
should be withheld where conditions warrant. Investment is
encouraged only when an examination of the facts of each
case shows it to be desirable. A number of factors would
be considered, such as development impact, competitive
efficiency, industry concentration, assessment of political
risk, markets to be served, nature of the deal (with
special consideration for investment modes such as joint
ventures, management contracts, preagreed divestment, etc.),
country and regional differences, particularly with respect
to receptivity to foreign investment, and the willingness
to consider international arbitration procedures for settle-
ment of disputes. In addition, investments bearing on
U.S. national security interests and our interest in develop-
ment in the country would receive close attention.
The policy has a number of advantages:
It recognizes that it is not in the U.S.
interest to encourage investment which is not likely to
prosper, which might excessively increase U.S. exposure,
which might not sufficiently contribute to the development
needs of the host country, or which might otherwise conflict
with important U.S. political considerations.
It recognizes the vitality and importance of
the U.S. investment guaranty program.
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It facilitates implementation of the policy,
set forth by President Nixon, of encouraging the development
of "new modes
of needed investment
without a chal-
lenge to national pride and prerogative." The policy is
particularly receptive to experimentation with new invest-
ment modes involving participation by local and third
country investors and host governments. Examples of new
modes include joint ventures, varying forms of management
contracts, forms of local capital participation (including
host government capital), licensing agreements, or joint
financing with companies of other developed countries.
Such arrangements should seek to strike a balance between
a private investor's interest in controlling decisions that
affect his investment and the host country's interest in
assuring that the form of investment is consistent with its
political and economic theories.
OPIC-guaranteed, or Eximbank financed,
investors are more likely to seek early U.S. Government
involvement in an investment dispute than are investors
who had little if any previous contact with the U.S. Govern-
ment.1/ The cost of earlier involvement will be offset in
some cases by host country awareness that active U.S. Govern-
ment involvement is likely. This can induce caution on the
host country's part, and the known preference of the U.S.
Government for negotiated solutions increases the pressure
on both investor and host government for accommodation.
Early U.S. Government involvement, during which active pre-
ventive protection steps can be taken, is clearly preferable
to post-confiscation "recuperative" or punitive steps. At
the same time, such a policy would have one disadvantage.
Official U.S. involvement may make it more difficult to avoid
U.S. Government entanglement in an investment dispute that
could lead to a serious problem.
On balance, the present policy of selective
encouragement best serves U.S. interests and should be
continued. However, we believe that the explicit adoption
of the policy would be beneficial. The State Department
should publicly reaffirm its support of this policy, and
include selectivity criteria explicitly in its advice to
lending agencies and international financial institutions.
Awareness of the policy and the criteria will influence
1/ U.S. encouragement of investment suggests to the
investor and the host country that in addition to
minimal traditional actions the U.S. would seek in
some stronger way to protect that investment.
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investors and host countries to consider an investment more
carefully than at present, and forestall the embarrassment
and resentment that will result from unsatisfied expecta-
tions that the U.S. will support an investment.
In this connection, we believe it would be useful for
the President or the Secretary of State to restate the U.S.
Government's belief in the positive contribution which
private investment can make to development; our intention
to encourage such investment on a selective basis in
accordance with development criteria and the receptivity
and wishes of the Latin nations themselves; and finally,
to state that we will not abandon our belief in the rules
of law and reason in dealing with investment problems.
B. Protection of Investment
We have identified two realistic policy options
in the area of protecting U.S. private investment in Latin
America. Extreme approaches, such as indiscriminate active
protection, or no protection at all, have been rejected.
The options extend to traditional protection only, and to
our present policy of selective active protection.
In selecting a policy of either traditional
protection or selective active protection, certain
considerations are relevant:
o The U.S. Government should not become involved
in every difference that arises between a host government
and a U.S. businessman. In some cases the dispute will be
resolved through administrative or judicial channels. In
others, where exhaustion of local legal remedies would be
futile, the dispute may be resolved by negotiations directly
between the company and the host government. As long as both
parties appear to be seriously interested in negotiating a
solution to the dispute, such as a revision of ownership and
control arrangements, in a mutually acceptable manner, U.S.
Government involvement in the dispute should be kept to a
minimum.
O Unresolved major disputes may threaten other U.S.
interests, and involve the U.S. in an adversary relationship
with the host country. Our protective efforts should be
private, if possible, to avoid unnecessary confrontations
and vulnerability to charges of coercion and violations of
the OAS charter. Only in a few cases will public action be
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called for--principally as a deterrent to other expropriations.
O Investment disputes are not usually clear cut
events, but rather are a complex web of actions and reactions
over an extended period of time. U.S. Government intervention
is more likely to be effective if initiated during the
period of incipient dispute--though it risks replacing the
U.S. for the investor as a prime target of the host government.
On the other hand, if the U.S. avoids early intervention,
and the dispute is unresolved and of major importance,
protective action may be called for--or may be forced by
considerations such as Congressional pressure or the Hicken-
looper Amendment. At that point protective efforts may in
large part consist of after-the-fact retaliation, which has
seldom proved effective. Careful judgment in the field early
in an incipient dispute about its direction and seriousness,
and early consideration and decision on a course of action,
are required.
O The atmosphere surrounding future disputes may
be conditioned by U.S. policy pronouncements on encouragement
and protection. Policy changes should be carefully communi-
cated, so as not needlessly to increase the risk of disputes
over existing investment, and to avoid misconceptions by in-
vestors and host countries as to likely U.S. action in future
disputes.
O Consideration of the turn-off or phase-down of
U.S. development assistance efforts may be appropriate
in protecting a private investment.1/ development terms
private investment and public assistance are complementary.
If a dispute serves to inhibit new investment, the
effectiveness of continued public assistance may be
correspondingly reduced. Any action by the U.S. to cut
off or reduce development assistance may, of course, have
severe political implications.
Against these considerations, the merits of the two
policy options may be examined.
1. Traditional Protection. The term refers to
the traditional and effective steps taken by the U.S.
Government, such as informal mediation and espousal of
1 See the paper on development assistance for
a discussion of the relationship of political con-
siderations to U.S. development assistance efforts.
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meritorious claims. Traditional protection of investment
implies some protection for property interests; it goes
beyond efforts to protect life and liberty, which are
made on behalf of all U.S. citizens abroad. It involves at
least an investigation of the facts and use of good
offices. These efforts incur no political cost, since they
have long been assimilated into the comity of nations and
are expected and accepted by all governments. Beyond this
minimum, traditional protection may include the possibility
of presentation and espousal of claims in meritorious cases.
A policy of traditional protection only might undercut
the effectiveness of U.S. Government efforts to selectively
encourage investment, since U.S. investors would understand
they could not look to their government for special support
in case of need.
2. Selective Active Protection. The current
policy, it involves at least traditional protection in all
cases plus additional protective efforts for investments on
a selective basis. These efforts may extend to non-overt
or, in extreme cases, open economic sanctions, but not the
use of force.
In pursuing protective efforts, our action should be
unambiguous, and of sufficient duration to insure impact
and credibility; movement from one level of effort to
another should be based on a careful reassessment of U.S.
interests and the realities of the situation. In many cases,
of course, the U.S. Government will decide to limit itself
to minimal protection actions.
The following range of protective efforts, listed in
roughly ascending order of severity, is available to the
U.S.:
O Informal representations and mediation
(stating our assessment of the situation and our active
interest in a satisfactory resolution);
O Formal representations and similar measures,
making clear that these are expressions of continuing U.S.
Government active interest and protective efforts;
O Non-overt and overt economic pressures (e.g.,
slowdown of aid program, delays in discussing other issues of
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interest, delays in consideration of or voting against
proposed IFI assistance projects, turning off Ex-Im long-
term credits). Such pressures, of course, have most
impact when applied over a considerable period of time.
O
Seeking support from third countries,
speeches by prominent officials, "inspired" press
articles, etc.
O
Formal economic sanctions (only in cases
involving very important U.S. interests).
In the event that all protective efforts fail, residual
rights arising from U.S. Government direct financial
interests, such as subrogation from insurance or loan
defaults because of host government acts, would of course
be energetically pursued.
In determining what if any courses of active protec-
tion to follow in a particular situation, a case-by-case
analysis is needed, including consideration of:
0 The investor--his conduct, relations with
the host government, his behavior in the dispute in
question, and whether the U.S. Government encouraged his
investment.
The country--its conduct and attitude towards
foreign investment generally, its relations with the U.S.
Government, the importance of the investment to the local
economy, U.S. national security and other interests in
the country or region, the product of investment (e.g.,
minerals) and the country's adherence to the rule of law.
O The dispute--its bearing on other U.S. interests
in the country and other U.S. investments, its implications
1/ It should be emphasized that there is no necessary
correlation between selective protection and invest-
ments which enjoyed selective encouragement. All
investment, present and future, encouraged or not, is
eligible for consideration for selective protection.
Similarly, no investment is guaranteed in advance to
be eligible for more than traditional protection.
Each case would be decided on its merits.
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vis-a-vis other countries and industries, and the extent
to which it involves discrimination against U.S. (as
opposed to domestic or other foreign) investment, and
the legal position of the investor.
The policy of selective active protection affords
the maximum feasible protection for existing and future
U.S. investment, and the maximum developmental benefits
for Latin American nations. It should be affirmed and
maintained. Flexibility in acting to protect U.S.
investment is vital, since the success of our efforts
depends heavily on maintaining uncertainty in the minds
both of investors and host governments whether protection
measures beyond traditional ones will be utilized. Flexi-
bility is at the core of the policy.
Accordingly, in its protective efforts, the U.S.
Government should not be forced to apply sanctions--
to use the Hickenlooper Amendment regardless of overriding
considerations. Nor, however, should it be deprived of
the power to employ equivalent measures. The continued
deferral of action under the Hickenlooper Amendment in
the IPC case contributed to maintaining reasonably good
U.S. -Peruvian relations, had a net beneficial effect on
U.S. relations in Latin America, and did not stimulate a
wave of similar expropriations throughout the hemisphere--
though it may have encouraged some countries in imposing
tougher curbs on U.S. firms.
Admittedly, this policy of protection is not devoid
of political risks. Drastic sanctions will in fact rarely
be employed but must be available if U.S. credibility is
to be maintained. Such measures always incur a heavy
political cost, which may in some instances be wholly
excessive. Use or threats of drastic sanctions can have
very negative or beneficial consequences on investments
other than the one in dispute. There can be no certainty
in advance on this point.
Efficient implementation of a policy of selective
active protection will not, of course, put an end to
investment disputes. We must continue to seek ways to
minimize the likelihood of disputes arising, and, as
well, methods for amicably and efficiently resolving
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them. The task is a major one, and requires thoughtful
consideration. Accordingly, we recommend that the
President or Secretary of State establish a commission
composed of U.S. business, legal and financial authorities
and government representatives.
The Commission (a temporary body) should be requested
to perform the following assignments, and to report its
findings and recommendations within 6-9 months:
o To examine the range of existing investment
disputes, including the role of the U.S. Government, and
to seek new approaches which would promote adequate
settlements without damage to U.S. relations with the
host country.
To examine the status of existing investment
throughout Latin America and to consider possible actions in
future investment disputes (for example, new types of
investment agreements or contracts, establishing at the
outset the mechanism for resolving disputes, and the
development of investment "codes").
In addition, the Commission could address the larger
issue of the present role of the U.S. Government in
encouragement of new private investment and recommend
whether and how this role should be modified.
1/ We believe the International Centre for the Settle-
ment of Investment Disputes (ICSID), administered by
the IBRD, may in the future be of assistance in
settling investment problems. Guyana, Jamaica, and
Trinidad are members. Prospects for wider acceptance
would be enhanced if an international investment
insurance agency (IIIA) were established, and some
Latin American countries joined it. We should, in
accordance with NSDM 76, provide strong leadership
toward establishment of IIIA. We recognize, however,
the continuing Latin American resistance to it.
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ANNEX A
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Description of Agency Responsibilities and Practices
Relative to Investment
1. State and U.S. Embassies Abroad. Embassies
maintain continual contact with resident American and
local businessmen, with visiting businessmen, and with
government officials concerned with economic and
investment matters. These contacts involve matters
affecting investment opportunities and incipient or
actual protection problems. Embassies are in this sense
an early warning system, and although foreign policy inputs
are made by State in Washington at all stages, specialized
investment problems are handled operationally by the agency
most directly involved. In important cases, the Ambassador
normally becomes deeply involved, as an official U.S.
representative and as a mediator. The Embassy role has
not changed greatly in the past two years and might be
described as one of ad hoc selective encouragement and
selective protection.
2. Commerce. Commerce has a major role in promoting
and counseling the U.S. business community on factors affecting
investment in the region. Through its publications, through
continual contact with business groups and through other
informational services, it provides assistance which influences
investment and marketing decisions. The Commerce role is of
long standing and has not appreciably changed over the years.
In addition, Commerce can exercise a restraining influence on
the flow of private capital to the region through controls
exercised by the Office of Foreign Direct Investment. Because
of the special treatment extended to less developed nations,
these controls have not had a demonstrable adverse impact on
the region's development.
3. A.I.D. A.I.D. has had a pervasive role in influencing
both U.S. and Latin private investment. Recently, however,
the major operational programs designed to directly encourage
U.S. foreign investment, such as the Investment Guarantee and
Investment Survey Programs, were lodged in OPIC. A.I.D. is now
concentrating more on the promotion of private enterprise
and investment by Latin Americans.
4. OPIC. As recently as 3 years ago the principal OPIC
function of guaranting investment was encouraged broadly to
maximize U.S. private foreign investment, which was then
viewed almost uncritically as beneficial to economic
development. In response to needs to reduce risk and to
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promote development, OPIC has adopted a policy of selec-
tive use of investment guaranties. This policy now rests
partly on criteria embodied in OPIC's statute, which
reflects the development-oriented policy previously
applied by A.I.D.
5. Eximbank. Eximbank engages in short and medium
term insurance, guarantees and long term credit trans-
actions.
6. Treasury. Treasury's interests in private foreign
investment are an outgrowth of (a) its responsibilities
for the international monetary system and satisfactory
financial relationships between countries in support of
world trade and investment and growth, (b) its central role
in the formulation and implementation of U.S.G. policy with
respect to the IFI's, and (c) its concern with the strength
of the dollar and our balance of payments. These interests
lead to Treasury support for relatively free flows of inter-
national capital and a satisfactory investment climate for
private investment.
7. International Financial Institutions (IFIs). IFIs
have a major and increasing role in investment considerations.
IFIs finance development, influence the volume and source
of imports into LDCs and influence LDC government policies
towards private foreign investment. U.S. Government support
of IFIs seeks to promote lending policies and practices
consistent with U.S. aims for LDC development, and attempts
to achieve a balance between protecting their independent
international character on the one hand and insuring on the
other hand that they have access to sufficient public and
private funds.
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F. .INTER-AMERICAN
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THE INTER-AMERICAN SYSTEM
I. Underlying Considerations and Assumptions
1
II. Recent Developments and Trends Affecting
U.S. Policy Formulation
6
A.
Review of Developments and
Trends
6
B.
Recapitulation and Balance
Sheet
19
III. Direction for U.S. Policy
22
Style of U.S. Participation
23
Character and Patterns of OAS Participation
23
Collective Security
25
Peaceful Settlement of Disputes
27
Political Action and Human Rights
27
Emergencies and Disasters
28
Terrorism and Kidnapping
29
Article 19
29
Economic and Social
30
Education, Science and Technology
30
Technical Assistance
31
OAS Structure
32
Internal Management
32
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THE INTER-AMERICAN SYSTEM
I. Underlying Considerations and Assumptions
The basic considerations and assumptions underlying
U.S. policy formulation in 1969 with respect to the Inter-
American System (including NSSM-15) were the following:
1. The unique historical relationship among the
American Republics has provided, both as an intangible and
a practical force, the fundament of the Inter-American
System. In his October 31, 1969 speech President Nixon
spoke of this relationship as "our partnership in the
Americas.' "
2. U.S. participation in the Inter-American System,
including the OAS in particular as well as the IDB, serves
U.S. interests in the following ways:
a. It provides a mechanism for helping maintain
close relations and a sense of solidarity with and
among the countries of the Hemisphere, reflected both
in dealing with Hemispheric problems and in Latin
American attitudes toward U.S. actions in fulfillment
of its worldwide responsibilities.
b. It provides a forum for the U.S. to deal with
other countries of the Hemisphere in matters of multi-
lateral concern and for maintaining a dialogue covering
different points of view both between the U.S. and the
other members and among the latter.
C. It provides a multilateral mechanism for
protecting the Hemisphere from external aggression
and subversion, including a general commitment (through
decisions taken under the Rio Treaty) to oppose the
spread of international Communism; and it has as a
result enabled the U.S. to secure Latin American co-
operation in such actions as the isolation of Cuba.
d. It inhibits aggression within the Hemisphere.
e. It promotes the peaceful settlement of dis-
putes.
f. In thus providing multilateral collective
security and peacekeeping machinery, it spares the
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U.S. from assuming these roles unilaterally and from
the resentments unilateral action would engender; and
it provides a preferred alternative to action by the
UN, which would be likely to bring with it a cold war
dimension and other extraneous issues and influences.
g. It provides a multilateral avenue for develop-
mental assistance including technical assistance, and
for reviewing self-help measures by recipient countries,
thus reducing the political and psychological frictions
that often arise in bilateral assistance, as well as
requiring a proportionate Latin American contribution
to the financing of assistance programs.
h. Beyond the foregoing specific reasons for U.S.
participation in the Inter-American System, it would
be unthinkable for the U.S. to withdraw from it, as it
represents a comprehensive regional organization for
which there is no alternative and as withdrawal would
represent a shattering reversal of U.S. policy and
efforts built up over more than 80 years of history.
President Nixon emphasized our "firm commitment to the
Inter-American System
as exemplified by the OAS."
i. There is a further implicit assumption that
the U.S. will not abandon the OAS as a regional organi-
zation in favor of a smaller association, bound together
by military ties or by some other limited common denomi-
nator but progressively deprived of its character and
authority as a regional organization.
3. While recognizing the advantages of U.S. participa-
tion in the Inter-American System, we also recognize there
are certain liabilities and certain inherent restraints on
U.S. freedom of action, including:
a. In accepting the principles of non-intervention
and of collective action in the fields of peace and
security, the U.S. has placed a voluntary restraint on
its freedom to take unilateral action in these fields,
e.g. under the Monroe Doctrine.
b. To the degree that U.S. developmental assis-
tance is extended through the IDB and the OAS, the U.S.
vided. has limited its ability to manage the assistance pro-
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C. Despite its two-thirds contribution to the
OAS, the U.S. has accepted the fact that it has only
one vote.
d. The U.S. must be prepared to be confronted
in the OAS by concerted Latin American demands, espe-
cially in the fields of trade and assistance.
4. While committed to common purposes and high ideals,
including a devotion to democratic principles, the Inter-
American System has always comprehended states whose practice
of these ideals has varied widely. The advent of radical,
nationalist, authoritarian military regimes, claiming a new
ideology for achieving long-term economic reform and social
change, indicates that a greater pragmatism may have to evolve
in inter-American relationships. This would mean that coun-
tries espousing different political ideals would work together
in the Inter-American System to achieve similar economic and
social goals, cooperating also in peacekeeping and collective
security. (However, this would not mean that the U.S. would
have to obscure its preference for democratic process or
diminish cies.) its efforts to buttress the Latin American democra-
5. Like all multilateral organizations, the OAS can
at best be imperfect and can be no more than what its members
want it to be. It cannot replace other relationships, and it
cannot assume the role of a super state in making decisions
which its members do not choose to delegate to it. Hence,
a recognition of imperfection does not necessarily mean that
a better answer is available. Additionally, because of its
multilateral character, alterations in OAS machinery or in
its application that may seem desirable to us are in many
instances not within our reach. It must also be recognized
that the policy organs of the OAS are representative, delibera-
view. tive bodies, comprehending often widely divergent points of
6. The Latin American members value the OAS as a forum
in which they can work together and bring their individual
and collective influence to bear on the U.S., on the basis of
sovereign equality.
7. The Latin American countries value the Rio Treaty's
protective shield (provided principally by the U.S.) against
external aggression, as an obvious improvement over the self-
appointed U.S. role under the Monroe Doctrine. They also
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value the restraint on the exercise of preponderant U.S.
power and the acceptance by the U.S. of the principle of
non-intervention.
8. The U.S. has nevertheless reserved for itself the
responsibility for taking action, unilaterally if necessary,
if its vital security interests are at stake and if the other
American states do not join in collective action, including
circumstances where they do not rise to their collective
commitment against outside communist penetration. However,
this residual responsibility must be exercised with great
restraint in the light of our obligations under international
law and in view of Latin American sensitivity to unilateral
U.S. action and intervention.
9. The Latin American countries also value the role of
the Inter-American System in inhibiting aggression within
the Hemisphere and promoting the peaceful settlement of dis-
putes between American states. This has contributed to the
fact that, despite internal instability and revolutions,
subversive movements, and occasional minor border distur-
bances, this hemisphere has during recent decades been singu-
larly free of major armed conflicts between states.
10. OAS contractual collective security arrangements
(principally under the Rio Treaty) to deal with extra-conti-
nental or intra-continental aggression or threats of aggres-
sion are generally adequate. However, OAS formal machinery
for the peaceful settlement of disputes is simply one of
several options open to disputants and is limited in large
measure by their willingness to bring their disputes to the
OAS.
11. The collective restraint on U.S. power inherent in
the Inter-American System is nevertheless insufficient to
allay the fear that we may still attempt to use the OAS as
a tool of U.S. policy. This, together with Latin American
devotion to the principle of non-intervention, explains the
reluctance of most members to see the OAS play a more sig-
nificant "political" role in the Hemisphere or to strengthen
the ineffectual military-security machinery of the OAS, ex-
cept in those cases where an immediate crisis situation de-
mands action on an ad hoc basis.
12. While the Inter-American System is theoretically
committed to the principle of representative democracy,
this commitment cannot be translated into effective action
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or machinery because of resistance to the idea of inter-
vention in internal affairs. In addition, only a minority
of present members can be considered to meet these theoreti-
cal commitments. Moreover, some of the new radical, authori-
tarian military regimes seriously question the ability of
traditional forms of representative government to answer
their countries' requirements for economic and social reform.
(A modest OAS role in the field of human rights is, however,
more generally accepted.)
13. The Inter-American System has assumed increasing
relevance for the Latin American countries with its expanding
role--through the OAS and the IDB and under the Alliance for
Progress--in the fields of economic and social development
and in the new fields of education, science and technology.
14. The U.S. is committed to multilateral cooperation
in the economic and social fields within the Inter-American
System and to the new structure and principles embodied in
the recent reforms to the OAS Charter- a commitment expressed
in unilateral and multilateral declarations (IDB Statutes,
Act of Bogota, Charter of Punta del Este, etc.) and in our
signature and ratification of the OAS Charter amendments.
15. A similar, new U.S. commitment applies to multi-
lateral cooperation in the fields of education, science and
technology and to the new Charter structure and principles
pertaining thereto--also expressed in unilateral and multi-
lateral declarations and in signing and ratifying the Charter
amendments.
16. Our general commitment was re-emphasized by Presi-
dent Nixon when he stated our "firm commitment to U.S. assis-
tance for Hemispheric development" and our belief that "this
can best be achieved on a multilateral basis within the
Inter-American System."
17. In determining the style of our participation in
the Inter-American System, we recognize Latin American sensi-
tivity to U.S. political, military and economic power, while
at the same time recognizing that the Latin Americans expect
a degree of U.S. leadership commensurate with our responsi-
bilities.
18. U.S. policy governing our bilateral relations with
Cuba sets two conditions: (1) Cuba must cease its policy
of intervention and subversion and (2) it must terminate its
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military ties with the Soviet Union. The U.S. supports OAS
policy of isolating Cuba, including especially:
a. The 1962 exclusion of the Castro Government
from participation in the Inter-American System on the
grounds that (1) Marxism-Leninism is incompatible with
the Inter-American System and (2) alignment with, and
especially military assistance from, the Communist powers
break the solidarity and collective security of the
Inter-American System under the OAS Charter and Rio
Treaty.
b. The 1964 decision ("binding" under the Rio
Treaty) that, because of Cuba's acts of aggression and
intervention, member countries should have no diplomatic
or consular relations, trade or shipping with Cuba
until the OAS decides by two-thirds vote that Cuba has
ceased to be a threat to the peace and security of the
Hemisphere.
C. The 1967 resolution, based on further Cuban
acts of aggression and intervention, which supplemented
existing sanctions by recommending (1) steps to dis-
courage non-member trade, credits, shipping and/or
support for Cuba and (2) cooperative security measures.
The U.S. maintains that, in view of Cuba's continuing inter-
ventionism and continuing alignment with the Soviet Union,
no change in existing isolation policy is justified.
II. Recent Developments and Trends Affecting U.S. Policy
Formulation
The considerations and assumptions discussed in Section
I have been affected by a number of developments and trends
since March 1969, which in turn have a significant bearing
on the direction for U.S. policy discussed in Section III.
A. Review of Developments and Trends
Style of U.S. Participation
We have continued to follow a style of "discreet leader-
ship" in the OAS, described in NSSM-15 and in Section B below.
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Character and Patterns of OAS Participation
The composite of OAS membership has undergone a modest
but significant alteration in the intervening period.
Following Trinidad-Tobago and Barbados, who were already
members, Jamaica was admitted to the OAS in 1969. (It was
tacitly agreed that Jamaica would not have to break its
limited consular relations with Cuba because of the large
number of Jamaicans living there.) Although small, these
three English-speaking countries with their Commonwealth
traditions and ties have given a new dimension to OAS member-
ship and have made it a little less of a club of original
members sharing certain common historical traditions. In
the next few years additional Caribbean states may emerge
and ask to join the Organization, e.g. Belize, the Bahamas,
Surinam, and eventually Guyana which is unable to join at
the present time because of its territorial dispute with
Venezuela. Canada seems to be edging somewhat closer, having
already increased its participation in OAS specialized organi-
zations as well as in Caribbean subregional organizations.
Bolivia joined the ranks of radical military regimes.
Now yet another new--and disturbing--dimension is pro-
vided by Chile under a Marxist government, which has shown
an interest in continuing its OAS membership and has SO far
avoided those actions and alignments that resulted in Cuba's
exclusion in 1962. (It has also avoided actions that brought
about OAS sanctions against Cuba in 1964.) The general atti-
tude of other Latin American members is that Marxist Chile's
presence is a fact of life that OAS members will have to
learn to live with, in preference to a confrontation that
would drive Chile further toward communism and alignment
with Moscow or Castro. U.S. restraint in this regard has won
the praise of the Latin Americans. Allende has publicly stated
that Chile will not withdraw from the OAS, but will work within
it to "restructure" the organization. Thus, despite protesta-
tions of a desire for friendly relations with the U.S. in the
OAS, the Allende government can be expected to move sooner or
later to seek to weaken U.S. influence in the OAS and to reduce
the effectiveness of the Organization as one that has been
generally cooperative with U.S. objectives. In effect this
would mean intensifying the policies of the predecessor Chilean
government. Allende's present decision to keep Chile in the
OAS seems to be in line with this purpose. (See separate NSC
study on Chilean participation in the OAS.)
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While the great majority still support Cuba's exclu-
sion from the Inter-American System, a few members have
indicated some sympathy with Cuba's reintegration. Secre-
tary General Galo Plaza has privately expressed the belief
that this would strengthen the OAS by polarizing issues and
by making it a "more meaningful and less sterile" forum.
Cuban reintegration is not an immediate problem, however.
(The question of Cuba and the OAS is the subject of a sepa-
rate NSC study.)
These changes, and particularly Chile's turn toward
Marxism, result in an OAS with less identity of purpose than
previously, but an OAS that will represent a forum for dis-
cussion among countries of more widely diverging views.
Another, more subtle change in the inter-relationship
of OAS members revolves around the question of size and
economic importance. For instance, the Executive Committees
of the two technical councils (the Economic and Social Council
and the Council for Education, Science and Culture) provide
in effect for the permanent membership of the four largest
countries (United States, Brazil, Mexico and Argentina), while
the others are represented by rotation within subgroups.
Brazil for one has used heavy pressure tactics to assert
its "big power" role, e.g. when it maneuvered a new election
to return a Brazilian member to the Inter-American Juridical
Committee; attempted to pressure acceptance of a broad con-
vention on terrorism and kidnapping; and, together with Argen-
tina, led a six-country walkout from the recent OAS General
Assembly when this failed. Considerable resentment was
aroused by these Brazilian pressure tactics, and the unprece-
dented walkout was strongly criticized by other members as a
failure to respect the OAS principles of sovereign equality
and majority decision. The U.S., on the other hand, enhanced
its image by siding with the more moderate (and more democrat-
ic) group advocating a restrictive convention, while at the
same time attempting (unsuccessfully) to build bridges between
the two groups.
The principle of sovereign and equal representation in
most of the representative bodies of the OAS is jealously
adhered to by the smaller countries. At times they have been
able to exercise a disproportionate power through bloc voting,
particularly in elections, where there is a growing tendency
for the Central Americans and the Caribbeans to concert. The
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larger Latin American countries are not happy with this
development.
The so-called "bi-polar" relationship between the U.S.
and the Latin American countries in the economic organs of
the OAS is beginning to change slightly as Mexico and Argen-
tina commence modest programs of assistance to their lesser
developed neighbors.
Collective Security
The collective security role of the OAS under the Rio
Treaty has been affected both positively and negatively by
recent developments.
On the one hand, the effectiveness of Rio Treaty peace-
making machinery and the dedication of the great majority of
member states to supporting the principle of non-aggression
were reconfirmed during the El Salvador-Honduras war of July
1969, the first actual war between American states since 1941
(Peru-Ecuador). Acting with commendable speed, the OAS,
operating under the Rio Treaty, was able to bring about a
cease-fire and, under threat of partial economic sanctions,
a withdrawal of Salvadoran troops from Honduran soil, super-
vising this and other activities arising from the conflict
through a seven-country committee assisted by military and
civilian observers. In 1970 the Committee succeeded in
establishing a modified DMZ under the supervision of OAS
military observers. (A valid criticism can be made, with
benefit of hindsight, that the OAS actions before the war
were insufficiently vigorous, given the fact that the Rio
Treaty can be resorted to when there is a threat of aggres-
sion. However, Honduras withdrew its early request for in-
voking the Rio Treaty and, in any event, OAS intelligence and
foresight can be no better than those of its members.)
On the other hand, Chile's unilateral action in re-
establishing diplomatic and commercial relations with Cuba
in violation of its collective obligation under the "binding"
1964 (Rio Treaty) decision has led to expressions of deep
concern among certain countries that Chile's and possibly
other defections will weaken the authority and integrity of
the OAS and the Rio Treaty. Some express a preference for
lifting or modifying OAS sanctions so as to avoid a situation
of defiance of OAS obligations. The demand for such action
has receded for the moment, however, at least partly as a
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result of U.S. efforts to convince other members that Cuban
interventionism is continuing and that a change in OAS
sanctions is therefore not justified.
Despite the fact that Chile in recent years has at-
tempted to promote the thesis of UN pre-eminence in matters
of collective defense and peacekeeping, it is interesting
to note that Chile voted in support of all OAS actions in
the Honduras-Salvador affair and even co-sponsored the 12-
country draft resolution to impose partial economic sanctions
when it appeared that Salvador would not withdraw its troops
from Honduran soil without conditions.
The U.S. image vis-a-vis the principle of non-interven-
tion has undergone some change, mostly to our advantage.
Bitter memories of U.S. unilateral intervention in the Domini-
can Republic (before taking the matter to the OAS) are begin-
ning to recede. Moreover, our active participation as a co-
equal member of the Committee of Seven (although the main
supplier of transport and communications) in the Honduras-
Salvador affair has redounded to our credit. (Latin Ameri-
can initiative, supported by the U.S., provided the major
impetus in the initial, crisis phase, while quiet U.S.
persistence and hard work within the collegial framework
became a necessary factor in the subsequent, drawn-out phases
of the post-war period.) In fact, U.S. participation in the
Committee of Seven as well as the election of the U.S. to the
five-country Inter-American Committee on Peaceful Settlement
show that the Latin American members still consider our partici-
pation in this sort of activity essential.
There has been no change in the negative attitude of
most OAS members toward any strengthening of the permanent
military and security bodies of the OAS--an attitude grounded
in a fear of possible interventionism by the OAS itself and
of possible U.S. dominance of or use of OAS military/security
machinery. Thus there is no change in the general Latin
American opposition to the idea of a permanent Inter-American
Peace Force (IAPF), nor in the majority Latin American opposi-
tion to the integration of the Inter-American Defense Board
(IADB) into the Charter structure of the OAS. In fact, our
modest proposal of an IADB role in handling the purely organi-
zational aspect of the OAS military observer operation in
Honduras/Salvador did not prosper. None of this, however,
signifies that the OAS will not call for military measures
if and when clearly warranted under the Rio Treaty.
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There is likewise little or no disposition to strengthen
the Special Consultative Committee on Security (SCCS), which
now meets only once a year and not very productively. The
Rockefeller recommendation for a higher-level Western Hemi-
sphere Security Council to replace the SCCS received no sup-
port in Latin America (except from President Somoza) and in
fact was generally criticized in the Latin American press.
Nor have we seen any change in the generally negative
Latin American attitude toward OAS involvement in the ques-
tion of arms limitation, although the question has not arisen
in the intervening period.
Peaceful Settlement of Disputes
The new role of the Permanent Council (under the amended
Charter) in the field of peaceful settlement, assisted by the
five-country Inter-American Committee on Peaceful Settlement
(IACPS) as a subordinate body, is as yet untried. (The U.S.
did ask for IACPS good offices when Ecuador accused us of
economic coercion in the tuna boat/military sales dispute
(see below), but we suspended our request when it appeared
that an even-handed Foreign Ministers' resolution was pos-
sible.) However, judging by the predecessor Inter-American
Peace Committee, there is a useful role to be played, although
confined largely to good offices in suggesting procedures for
settlement and limited by the need for advance consent by
both parties.
In participating in drafting the IACPS Statutes, we
were unsuccessful in winning support for language that would
have permitted the Committee to investigate the facts at the
request of only one party and to take cognizance of disputes
between member and non-member states (e.g. Venezuela-Guyana).
The new arrangement still represents a modest strengthening
of peaceful settlement procedures by adding an alternative
role for the Permanent Council as well as a role in "re-
establishing harmony" even when formal good offices are re-
jected.
The "might-have-beens" of the Honduras/Salvador experi-
ence remind us that Rio Treaty machinery, if invoked when
conflict is only a threat, can also serve an essentially
peace keeping function, without requiring the formal consent
of both parties.
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Political Action and Human Rights
Another sign of new pragmatism in relations between
American states is the fact that OAS Resolution 26 of 1965
(calling for consultations with respect to recognition of
de facto governments, including consideration of such factors
as future elections and respect for human rights) was not
resorted to by any member state following the extra-constitu-
tional presidential changes in Argentina and Bolivia in 1970.
The U.S., for one, considered that such consultations were
not called for since in its view a question of recognition
did not arise. In interpreting these extra-constitutional
changes as not presenting the question of recognition, we
and other member states seem to be moving toward a modified
practice de-emphasizing the importance of recognition in
situations not involving the overthrow of constitutional
governments. In the case of the U.S., the State Department
supported the Cranston Resolution, expressing the sense of
the U.S. Senate that recognition and exchange of diplomatic
representatives does not imply that the U.S. necessarily
approves the form, ideology or policy of a foreign govern-
ment.)
On the other hand, the Inter-American Commission on
Human Rights continued to play a useful role, especially in
Honduras and El Salvador both prior to and following the war,
when it looked into the treatment of minorities and assisted
in the release of internees.
The Inter-American Convention on Human Rights emerged
from the San Jose Conference in November 1969, but the U.S.,
in common with several other countries, was unable to sign
without further consultations within the U.S. Government over
possible juridical impediments for us.
Despite the reluctance of some member countries, the OAS
during the period under review showed that it was not neces-
sarily inhibited from involvement in new political/security
fields. For example, the Permanent Council in 1970 unanimously
adopted a resolution which implicitly supported President
Nixon's peace initiatives in Indo-China and the Middle East,
even though some delegations initially had doubts about the
Council's competence. (See below for OAS involvement in
terrorism/kidnapping.)
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Emergencies and Disasters
The OAS role, through the Emergency Aid Fund, in
disaster situations became more firmly established in the
period under review, especially with the useful work done
in earthquake relief in Peru and Ecuador.
During the 1970 mutiny in Trinidad-Tobago, when the
Caribbean Ready Force of the U.S. Navy was deployed in case
of possible evacuation of U.S. citizens, OAS Secretary
General Galo Plaza privately suggested that the OAS might
play a role in such cases by providing an "umbrella" for
member country evacuation efforts, thus making such an opera-
tion far more palatable than unilateral U.S. action. He
also foresaw a possible OAS coordinating role in disaster
relief work. These ideas were taken up by Secretary of State
Rogers in his speech in the OAS General Assembly in June
1970, when he suggested an OAS role in assessing requirements
and coordinating assistance in disaster situations and in
providing leadership in emergency evacuations of foreign
nationals.
The OAS Secretariat continued to maintain a small techni-
cal assistance mission in Haiti (financed by a special U.S.
contribution) --the real purpose being largely political,
i.e. as a "foot-in-the-door" operation to maintain a degree
of contact for contingency purposes.
Terrorism and Kidnapping
In 1970 and 1971 the OAS Permanent Council, the General
Assembly and the Inter-American Juridical Committee (at
Argentine, Uruguayan and Brazilian initiative) addressed
themselves to the agonizing problem of terrorism and kid-
napping. The upshot was the recent (January-February 1971)
Special OASGA session, at which a majority of thirteen coun-
tries (including the U.S.) signed a Convention on Terrorism,
confined largely to terrorist crimes against foreign officials
as they relate to extradition and asylum. Of the remainder,
six (led by Brazil and Argentina) walked out on the grounds
the convention was inadequate in not including other acts of
domestic terrorism, and three (Chile, Peru and Bolivia) had
no intention of supporting any convention. The split between
the majority and the six was partly due to the great reluc-
tance of members of the former to include definitions that
might be interpreted to cover acts of opposition or despera-
tion against repressive regimes--some (such as Venezuela and
the Dominican Republic) remembering their own recent past.
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Despite our own preference for a restricted convention along
the lines of that adopted, the U.S. tried, unsuccessfully,
to bridge the difference between these two groups.
Over the last several months the U.S. has been in touch
with a number of Western, non-member governments, some of
whom have shown an interest in a universal convention along
the restricted lines of the OAS convention. (The latter is
open to signature by non-member states.)
Article 19
An unfortunate confrontation occurred in the OAS when
Ecuador called for a Meeting of Foreign Ministers in January
1971 (concurrently with the recent OASGA) to take up Ecuador's
charges of coercive action by the U.S., in violation of
Article 19 of the OAS Charter, in suspending military sales
to Ecuador because of the latter's seizure, fining and licens-
ing of U.S. tuna boats fishing between 12 and 200 nautical
miles of the Ecuadorean coast. Peru and Chile strongly sup-
ported Ecuador's accusation. It was apparent that, although
the majority of members felt uncomfortable over having this is-
sue aired in the OAS and were pleased to be able to vote for a
bland, even-handed resolution (worked out behind the scenes
by the U.S. and Ecuador), basic sympathies were more with
Ecuador than with the U.S. over this matter. These sympathies
would doubtless grow if the U.S. took additional measures
against Ecuador, and the latter presumably would not hesitate
to level further charges against us.
Peru in 1969 was apparently preparing to make a similar
accusation before the OAS of U.S. violation of Article 19
had we decided to invoke the Hickenlooper Amendment over the
expropriation of IPC.
Economic and Social
In the economic area new OAS machinery has been created
and new relationships have evolved during the intervening
period which, on the whole, cast the U.S. in a more favorable
light, although not without anticipated problems.
IA-ECOSOC created the Special Committee for Consultation
and Negotiation (SCCN), which has held several meetings on
trade matters. In these the U.S. has been willing to discuss
problems of protectionism and U.S. pending legislation, in
addition to negotiating with the Latin American countries
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specific items for purposes of tariff and non-tariff con-
cessions and discussing shipping problems. However, the
range of concessions now possible for the U.S. in this
area makes further sessions on the matter of tariff bar-
riers unpromising, but the Latin Americans may continue
to press in this area (further details in the section on
Trade).
The U.S. has for the first time agreed to CIAP review
of U.S. economic policies and trends; this will be an an-
nual affair along with reviews of other country members.
Latin American reaction to the first review in 1970 was
very favorable, due in large measure to the substantial
effort on the part of the high U.S. officials participating
and, on the part of CIAP, to a determination that the re-
view should not become a confrontation over politically
explosive topics. However, the continued commitment of such
high level U.S. officials may be difficult in the future
and CIAP may not continue to avoid sensitive areas in the
review.
The Latin American "caucus", CECLA (Special Committee
for Latin American Coordination), has become a recognized
vehicle for coordinating Latin American positions in IA-
ECOSOC (as well as UNCTAD) --accepted by the U.S., for
example, when it received the "Consensus of Vina del Mar"
elaborated by the Latin American countries meeting in CECLA.
Education, Science and Technology
The new Council for Education, Science and Culture
(CIECC) came into being formally with the entry into force
of the OAS Charter amendments on February 27, 1970.
The operations of the CIECC and the OAS Secretariat in
the science and education fields in the past two years can
best be characterized as a "shake down" period not only for
the substance of these programs but also as a test of the
capabilities of the organization in carrying them out. Like
many international programs, however, this one set unrealis-
tically high targets at its outset, i.e., $25 million per
year.
On the fiscal side, we have seen improvement in the
last eighteen months, including increased and timely contri-
butions from the principal Latin American donors (Brazil,
Argentina, Mexico). Nevertheless, overall contributions are
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still below pledge levels for the operational fiscal year.
It is now estimated by the Secretariat that for this year's
budget some $13.8 million will be available, a far more
realistic level than originally targeted.
On the operational side, the education program has been
plagued by an apparent inability on the part of the Secre-
tariat to initiate approved programs. Progress on the science
and technology side, however, has been better. We are pleased
at the recent election of high calibre members to the re-
spective committees on science and education, including a
prominent U.S. member on each.
Like the U.S., the large Latin American donors are
increasingly insistent that expenditures bring equivalent
results. There is general agreement that the programs,
having now been operational for two years, should be evaluated
and scrutinized in terms of the original goals, and mechanisms
to do this are being developed. The member states (including
the U.S.) have been increasing their pressure on the Secre-
tariat to improve its performance of program execution.
(See Technical Assistance below.)
Technical Assistance
Out of a total proposed OAS outlay of $91 million for
FY 1972, the following is for technical assistance, handled
both by the OAS Specialized Organizations (mainly the Pan
American Health Organization and the Inter-American Institute
for Agricultural Sciences) and by the OAS General Secretariat;
amounts funded by the U.S. (State and AID appropriations) are
also shown:
OAS Technial Assistance
(Millions of dollars)
Total
Total US
State
AID
Specialized Organizations
35
21 (60%)
21
-
PAHO
(30)
IAIAS
( 5)
General Secretariat
31
21 (66%)
4
17
TOTAL Technical Assistance
66
42
25
17
In addition to State, other agencies such as AID, HEW
(PHS) and Agriculture have long cooperated closely with these
Specialized Organizations, and have occasionally provided
unilateral grants.
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The technical assistance programs handled by the
General Secretariat operate under the guidance of the two
technical councils, IA-ECOSOC and CIECC. Each U.S. Admin-
istration since 1950 has taken the lead within the OAS in
proposing strengthened OAS technical assistance programs,
most recently through President Nixon's message to the
Caracas IA-ECOSOC meeting in early 1970.
In so doing, we have been responsive to Latin American
demands that, while continuing its traditional role in the
fields of peace and security, the OAS should give increas-
ing attention to economic, social, educational and scientific
development. The Latin American members have continued to
request technical assistance offered by the OAS and to pay
their share (one-third) of the costs. The Secretariat is
now seeking to relate OAS services more closely to national
needs through a country-oriented programming procedure.
In view of the large sums involved and of some critical
comments from within the U.S. Government, we conducted a
survey in early 1970 through our missions in each country
to help determine the effectiveness of approximately 100
OAS field projects under the Secretariat's program. While
this first study did not develop sufficient information to
make judgments on the programming process or on priorities
between programs, it showed that the general impression of
U.S. missions in the field was that the majority of OAS
technical assistance activities were useful and deserved
support; some needed modification to make them more effec-
tive and relevant to country priorities; and only a few
warranted termination.
Although we have always been concerned about manage-
ment problems in the OAS Secretariat, U.S. policy favoring
increased technical assistance projects has until recently
been insufficiently sensitive to the need for a corresponding
build-up in the capacity of the organization to manage pro-
grams effectively. In fuller recognition that any increase
in programs must be accompaied by an increase in the manage-
ment capacity of the Organization, we have, in concert
with other members, supported a recent series of actions to
improve internal operations. Thus, a number of recommenda-
tions by a Group of Experts in 1968 led to a complete re-
organization of the Secretariat and its operational proce-
dures. Today, our concern is being increasingly shared by
other members as steep budget growth (27% proposed for FY 1972)
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causes them to insist on getting the most for their money.
To improve and verify program effectiveness, a start has
been made by the Secretariat toward installing better
program/budget processes and a sound evaluation system.
The April 1971 regular General Assembly session will con-
sider a U.S. proposal, for which we will seek co-sponsor-
ship by concerned Latin American members, for an OAS
external inspection service modeled after that of the U.S.
OAS Structure
The amendments to the OAS Charter discussed in NSSM-15
entered into force on February 27, 1970, but the new struc-
ture is still going through a shake-down period. The new
"supreme organ" of the OAS, the General Assembly, held its
first meeting in June-July of the same year. However, it
is too early to judge how much of an improvement regular
annual sessions of the OASGA will represent over the pre-
vious system. It does provide a forum for the Foreign
Ministers to meet on a regular basis, provided there con-
tinues to be significant subject matter to attract their
participation.
The OAS is adjusting to the new system of three hier-
archically co-equal councils, but questions remain with
respect to coordinating activities among these councils
and particularly with respect to the possibility of a cen-
tral role for the Permanent Council, which in our view
would be highly desirable. A few countries (led by Chile
both under the previous regime and the present Marxist
regime) continue to resist efforts to strengthen the Perma-
nent Council and particularly its political attributes.
Internal Management
Since mid-1969 the OAS Secretariat has continued to
emerge from the aftermath of several years of administra-
tive disarray. It has suffered no new crises (financial,
administrative or otherwise). Secretary General Galo Plaza,
who is pledged to improve management, was confirmed in of-
fice by the General Assembly in 1970 for an additional five
years.
The three-council structure resulting from Charter
reforms makes it somewhat more difficult for the Secretariat
to exercise centralized administrative authority over its
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1300 employees, and tends to project the divergent inter-
ests of these councils into the respective staff groups
concerned with them. Plaza, however, is determined to
maintain a centralized Secretariat.
B. Recapitulation and Balance Sheet
Looking back over the developments and trends since
1969 reviewed above, we see certain of them as signifi-
cant advances, others as setbacks or signals of problems
ahead, and a number as combinations of these factors. A
"balance sheet" of major developments and trends includes
the following:
1. Our continuing style of "discreet leadership" has
served us well and contributed toward a favorable image.
2. The greater disparity in OAS membership and in
the attitudes of certain members, particularly the radical
military regimes and even more particularly the new Chilean
Marxist regime, results in an OAS with less cohesion and
identity of purpose and will make it more difficult for
the U.S. to align support, especially in the political/
security and economic fields. On the other hand, the
continuing participation of these countries in the regional
organization will provide the opportunity for dialogue with
the U.S. and other members that could hopefully contribute
toward a reduction in differences with them and a restraint
on extreme positions.
3. While Chile indicates an interest in maintaining
such a dialogue, it may also gradually intensify efforts to
weaken our position in the OAS. On the other hand, a Marxist
Chile will probably have less influence on other members
than its predecessor. (Chile has so far avoided those align-
ments and actions that brought about OAS exclusion and
sanctions in Cuba's case.)
4. The emergence of a "big power" sense of responsi-
bility on the part of Brazil, Argentina and Mexico means a
greater sharing with the U.S. of a "watch dog" and leader-
ship role with respect to OAS policies and management, but
this is jeopardized by Brazil's heavy pressure tactics and
modified to some extent by the authoritarian image of Brazil
and Argentina.
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5. The effectiveness of the Rio Treaty in peace-
keeping was enhanced by the Honduras/Salvador experience,
but Chile's violation of Rio Treaty obligations in re-
establishing relations with Cuba represents a threat to
the Treaty's authority and integrity.
6. The growing misgivings among member states over
the maintenance of OAS sanctions against Cuba, although
recently somewhat abated, will inevitably confront us
with the problem of either trying to maintain sanctions
intact at the risk of further violations or of agreeing
to some modification in order to retain support. Con-
tinued exclusion of Cuba from the OAS, however, is not an
immediate issue.
7. The U.S. image with respect to the principle of
non-intervention has improved, and memories of the Dominican
experience have receded.
8. While strengthened OAS permanent military/security
machinery would be desirable in our view, there remains
little or no Latin American support for this.
9. There has been a modest improvement in OAS peace-
ful settlement machinery, but it remains limited.
10. A more pragmatic attitude toward recognition of
de facto regimes has evolved, presenting us again with the
need to project a clear distinction between pragmatism (or
non-interference) and condonement.
11. There are signs the OAS might play a more signifi-
cant role in emergency situations, but the aspect of inter-
ventionism must be overcome.
12. The Convention on Terrorism is a step forward, but
wider acceptance by OAS members remains a problem, as well
as more universal acceptance.
13. The unprecedented walk-out of six countries (led
by Brazil and Argentina) from the OASGA session on terrorism
and kidnapping was an unfortunate incident, but not an ir-
reparable cleavage among members. (The OAS has survived
even deeper differences in the past, e.g. over Cuban isola-
tion and the Dominican Republic.)
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14. Ecuador's accusation of U.S. coercive action in
violation of Article 19 could well set a precedent for
future accusations in the OAS should the U.S. again choose
to impose legislative restrictions geared to fishing boat
seizures and expropriations. This could only feed the
fires of economic nationalism and lead to an increasingly
uncomfortable position and image for the U.S. The desire
to avoid the prospects of such reactions in the OAS and of
growing sympathy among other Latin American countries could
prevent us from taking unwise actions, but could also keep
us from actions we might consider justified. (We must also
bear in mind that confrontations of this kind in the OAS
could strengthen support or at least sympathy for extreme
claims over maritime jurisdiction and could jeopardize our
economic and military assistance programs.)
15. IA-ECOSOC, CIAP and SCCN continue to provide use-
ful forums for dialogue on trade and development, but the
Latin Americans are increasingly unafraid of confronting the
U.S. in these forums.
16. If disputes and differences are to be aired and
if the U.S. is to be subjected to accusations and criticisms
such as in 14 and 15 above, it is better at least that this
should occur in the OAS where we have greater influence and
where there is a tradition of accommodation, than in the UN
where cold war and third world factors would operate against
us.
17. The increased U.S. concentration on technical
assistance on a multilateral basis through the Inter-American
System (i.e. economic, social, educational, scientific and
technical) has many advantages in reducing bilateral frictions,
in promoting collective Latin American involvement, and in
enhancing the image and value of the OAS for its Latin Ameri-
can members. Continuation of this trend, however, must be
contingent on the increasing capacity of the OAS to handle
such programs.
18. The revised OAS Charter structure is now in effect,
with prospects for cenerally beneficial results although it
is still in a shake-down period.
19. The OAS General Secretariat emerged from a period
of administrative disarray into one of stronger leadership
and better management.
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III. Direction for U.S. Policy
The direction U.S. policy should take must, of course,
be guided by the basic U.S. interests and other basic con-
siderations outlined in Section I, but it must be adjusted
in the light of the intervening developments and trends
outlined in Section II. Thus, in addition to our continuing
interest in maximizing the advantages and minimizing the dis-
advantages of the Inter-American System, we must think in
terms of consolidating and building on the ground gained in
the intervening period and of regaining the ground lost to
the extent possible.
On the whole, our conclusion is that the advantages far
outweigh the disadvantages and that the ground gained out-
weighs the ground lost--although further problems can be
foreseen. There is certainly room for strengthening the
organization, but at this juncture we do not see the oppor-
tunity for a bold new initiative in this direction. It is
a question more of modest improvements in a variety of activ-
ities.
In considering the question of strengthening the OAS,
we must of course define what we mean by this. Do we mean
changes that would make the OAS more pliable to U.S. domi-
nation? Or do we mean strengthening the OAS as a genuinely
multilateral organization in which the U.S. participates as
one of many and which thus provides a mechanism for expres-
sing and reconciling insofar as possible a diversity of
interests? Our answer is the latter. This does not in any
way mean that the U.S. in its participation should abandon
its national interests to the dictates of a multinational
body. It does mean, however, that our national interests
are better served by influencing and persuading than by
dominating. To try to mold the OAS to our own dictates
would weaken rather than strengthen it and would thus reduce
its value to us.
We occasionally will have to weigh the question of
pressing for decisions important to us in the face of sub-
stantial reluctance, against the potential longer range
weakening of the organization and of the support for it
among other members.
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Style of U.S. Participation
Recognizing Latin American sensitivity to U.S. politi-
cal, military and economic power, while at the same time
recognizing that the Latin Americans expect a degree of U.S.
leadership commensurate with our responsibilities, we should
continue a style of "discreet leadership" in the OAS. This
means avoiding an appearance of U.S. preponderance in favor
of constructive participation as a fellow member. This also
means for the most part playing our roles behind the scenes
as much as possible, encouraging the Latin Americans to take
the initiative, suggesting "initiatives" to them, taking our
own initiatives jointly, and consulting quietly on all prob-
lems of importance to us. Nevertheless, this does not pre-
clude a more direct U.S. leadership role when it best serves
our interests.
Character and Patterns of OAS Participation
As we have already done in the past, we should continue
to encourage the OAS membership of other American states,
including new independent nations as they emerge, provided
they are willing to assume the obligations of membership.
This is consistent with the status of the OAS as a genuine
regional organization. Moreover, as far as new small Carib-
bean states are concerned, it is desirable to include them
in the protective umbrella of the OAS and to give them access
to OAS and IDB developmental assistance. (If, however, in-
dependent "mini-states" should emerge among the small islands
of the eastern and southern Caribbean, full membership would
presumably be out of the question, but some sort of associa-
tion with the OAS could be studied.)
We must also learn to live with the fact that the OAS
is becoming more diverse in its membership, including radi-
cal, nationalist military regimes and now including a Marxist
Chilean regime that may eventually create difficulties for us
in the OAS itself. We should endeavor to maintain a healthy
dialogue in the OAS with these and other governments, in
hopes that such dialogue can air and defuse differences and
reduce pressures.
In our relationships in the Inter-American System we
should continue to follow a "mixed pattern". In other
words, as supplements for our bilateral relationships, we
continue to see important and useful roles for "collegial"
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or genuinely multilateral relationships within the Inter-
American System and for "bi-polar" relationships (i.e. U.S.
vis-a-vis Latin America as a whole) both within the Inter-
American System and outside of it--for example the inter-
play between CECLA, the U.S. and IA-ECOSOC. If, however,
there should be any serious effort on the part of Chile or
others to build up CECLA or some other organization at the
expense of the OAS, we should quietly influence others to
resist it.
Given the present realities of disparity in size and
development among the Latin American countries, there is
yet another relationship we should continue to cultivate,
namely a relationship of close consultation with the larger
Latin American countries because of their special responsi-
bilities and contributions to the Inter-American System.
However, it would be best to pursue this relationship on a
quiet, informal basis. We must always be careful not to
violate the sensibilities of the smaller nations, nor to
give an appearance of aligning ourselves with authoritarian
Latin American powers.
Chile. While we should attempt to live with
Marxist Chile's presence in the OAS (an attitude shared by
most other members), we must remain alert to intensified
Chilean efforts to weaken the OAS and U.S. influence in it,
i.e. by building on the standard policy of the predecessor
Chilean Government. On the other hand, we may well find
that Marxist Chile has even less success at influencing
other members in this direction than its predecessor, be-
cause of suspicion of its motives.
We must also be alert to any developments in Chile that
would meet the 1962 criteria for excluding Cuba from the
Inter-American System--namely, the establishment of Marxism-
Leninism and of military alignment with the Communist powers,
particularly the receipt of military assistance from them.
Even in such an eventuality, however, some Latin American
members might be reluctant to act unless Chile's actions
were more clearly hostile, e.g. by embarking on Cuban-style
interventionism and subversion (grounds for the 1964 OAS
sanctions against Cuba) or by permitting a Soviet military
base in Chile. We should, of course, be alert to Chilean
moves of this sort, although the possibility seems somewhat
remote at this time in view of the expected strong reactions
of the American states, including the likelihood of OAS
exclusion and sanctions. (See separate NSC Study on Chile's
participation in the OAS.)
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Collective Security
As indicated in Section II, we believe there is little
need to strengthen the collective security mechanism of the
OAS under the Rio Treaty, and it has generally been used
effectively. We and other members should be more alert,
however, to the possible use of the Rio Treaty before a
threatened conflict becomes an actual conflict.
Despite the lack of interest on the part of most Latin
American members in strengthening the relatively ineffectual
military/security bodies of the Inter-American System, we
should continue to seek ways of making the Special Consulta-
tive Committee on Security a more useful body. The best
prospect will be to encourage, through the U.S. member,
more active reporting on such matters as Cuban subversion,
expanded Soviet activities, etc. (As mentioned in Section
II, our soundings with our Embassies and the very negative
Latin American reactions indicated there was no prospect of
launching the Rockefeller recommendation for a high-level
Western Hemisphere Security Council to replace the SCCS.
The recommendation was not clear, but if it meant a Council
on a par with the other three OAS Councils, this would have
had even less prospect as it would have meant a further
Charter amendment.)
We still believe, as we did in 1965, in the utility of
a permanent Inter-American Peace Force, based on earmarked
military units with a skeleton staff. However, we recognize
that even the limited Latin American support for the idea
that existed then has fallen away and that any effort by the
U.S. to revive the idea at the present time would be counter-
productive. The best that can be expected is some sort of
ad hoc collective force to meet a particular situation when
it arises.
We should continue to be guided by the present, widely
accepted principle--consistent with the OAS Charter and the
Rio Treaty and in harmony with the UN Charter--that the OAS
is the competent body to act at least in the first instance
in maintaining the peace and security of the Hemisphere.
We should continue to resist any Chilean or other efforts
to promote UN pre-eminence in these fields. We feel the
American states are better able to handle these problems and
that UN involvement might bring with it a cold war dimension
and other extraneous issues.
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We should remain alert to any sign of Latin American
receptivity to a possible OAS role in regional arms re-
straint, although previous reactions have been negative.
Inter-American Defense Board. In one respect,
the analysis and options in the field of collective secur-
ity presented in NSSM-15 require reappraisal: namely, the
rather negative assessment of the utility of the IADB and
the suggested option of "exploring with other members the
acceptability of bringing the Advisory Defense Committee
into being on a 'stand-by' basis and of establishing a
small permanent military staff in the OAS General Secre-
tariat to provide necessary backstopping, thus permitting
the termination of the ineffectual Inter-American Defense
Board." A reappraisal is called for, particularly in the
light of the current NSC Review of the U.S. military pres-
ence in Latin America, which stresses the value of contact
between U.S. and Latin American officers.
Our current conclusion is that there is a similar
value inherent in the IADB in giving U.S. military repre-
sentatives an opportunity to know, and possibly influence
the thinking of, a significant group of Latin American
military. Many have been or shortly will become some of
the most important leaders of their respective countries.
Therefore, whatever the degree of utility of the IADB
in hemisphere defense planning, the continuance of this
organization would be in the U.S. interest. It is also in
our interest that our military representatives be well pre-
pared and well qualified for effective participation both
in this inter-American forum and its dependency, the Inter-
American Defense College.
In addition to the foregoing considerations favoring
the continuation of the IADB, there appears to be no dis-
position among Latin American members of the OAS to tamper
with the existing status of the IADB or to bring the Advisory
Defense Committee into being.
Cuba. We must weigh carefully the possible weaken-
ing of the integrity and authority of the OAS under the Rio
Treaty through any further defections (after Chile) from
the "binding" OAS diplomatic and economic sanctions imposed
against Cuba in 1964. The possibility of further unilateral
defections seems to have receded for the moment, as have
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the growing concern on the part of other members and the
growing advocacy by some of a review and possible modifi-
cation of OAS sanctions policy. This could again change,
however.
Therefore we must be prepared when necessary to argue
again that change is not justified because of continuing
Cuban interventionism. Since we estimate that about half
the OAS members might be receptive to some modification
and that an OAS meeting on the subject would therefore open
a Pandora's Box, we should endeavor to discourage any such
meeting. However, we should constantly re-assess our ability
to stave this issue off if demands should become insistent,
and we should then assess whether OAS sanctions policy can
survive intact or whether some adjustment might be necessary
to retain support for it.
We must also be prepared as necessary to advocate the
continued exclusion of Cuba from the OAS, although there is
little demand for changing this aspect of OAS isolation
policy. (The question of Cuba and the OAS is the subject
of a separate NSC study.)
Peaceful Settlement of Disputes
The Permanent Council's new good offices role in the
peaceful settlement of disputes, assisted by its subordinate
Inter-American Committee on Peaceful Settlement, is as yet
untried, but we should encourage a resort to this machinery
whenever appropriate and use our membership on the Committee
to ensure insofar as possible its development as an effective
instrument.
Given the fact that the Permanent Council and the IACPS
can exercise good offices only with the consent of both
parties, we should bear in mind other alternatives such as
informal intermediaries and investigating committees under
an MFM or the Rio Treaty.
Political Action and Human Rights
We see no opportunity to strengthen the very limited
mechanisms available to the OAS in encouraging democratic
process, in view of Latin American sensitivities to anything
resembling intervention in their internal affairs. In point
of fact, the mild moral suasion implicit in consultations
under Resolution 26 with respect to recognition now seems
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largely a dead letter. In view of our own more pragmatic
approach to dealing with varied types of governments and
in moving toward a modified recognition policy, it would
now seem best to let Resolution 26 lapse at least with
respect to situations not involving the overthrow of a
constitutional government. It could be left "on the shelf",
however, for possible marginal use if a situation demanded.
The remaining instrumentality, namely the provision
by the OAS Secretary General of technical assistance mis-
sions on election procedures and/or electoral observers,
when requested by the country concerned, can still be used
to good purpose.
We should continue to encourage and support effective
use of the Inter-American Commission on Human Rights wherever
useful and feasible. However, the prospect of our signing
and ratifying the Inter-American Convention on Human Rights
must be studied and discussed further within the U.S. Govern-
ment in the light of certain legal problems for the U.S.
Emergencies and Disasters
It would be useful to continue to encourage Secretary
General Galo Plaza to develop his ideas of a coordinating
role for the OAS in disaster situations, including the pro-
vision of an OAS "umbrella" in the event of a need to evac-
uate foreigners, building on the Secretary General's present
authority under the Emergency Fund. While the Fund itself
is to help finance emergency relief, the coordinating role
in disasters would not involve large expenditures but would
be predicated on developing a real capacity and expertise.
With respect to evacuation, it would, of course, be a
great advantage to the U.S. if we could provide transport
and other assistance for evacuation purposes in response to
a general appeal to member countries from the OAS, with
whatever degree of coordination the OAS is capable of pro-
viding. We would thus avoid the great disadvantages of uni-
lateral action (Dominican Republic style) with the inevitable
Latin American accusations and fears of interventionism. It
would, of course, be highly desirable if other OAS countries
in a position to do SO could also participate, at least on
a token basis.
Even with an OAS umbrella of this sort, Latin American
fears of the U.S. using the OAS as a cover would not be
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entirely put to rest. Several member countries, therefore,
might be expected to object if a proposal were made in ad-
vance of an actual evacuation situation. In the light of
past experience, the best chance of gaining acceptance of
such a system would be when the next emergency evacuation
situation arises. Meanwhile, we can encourage further
preparatory work by the Secretariat General, which has, in
point of fact, engaged a former U.S. Foreign Service Officer
to prepare a contingency study for OAS action in emergency
situations.
No further opportunity has presented itself to culti-
vate acceptance by other members of an OAS stabilizing role
in situations of internal chaos (e.g., potentially, Haiti).
While this, too, is worth encouraging, we recognize that
our efforts must be quiet and cautious in the light of Latin
American sensitivities to the aspect of interventionism.
Subject to periodic reassessment, we should continue
our special financial contribution to support the small OAS
technical assistance mission in Haiti, justified largely for
political reasons in order to maintain a "foot in the door"
for contingency purposes.
Terrorism and Kidnapping
In order to heal the breach over the Convention on
Terrorism and to move forward with what we consider a viable
and useful instrument, we and other key signatories must
quietly attempt to persuade as many as possible of the non-
signatory member states that accession is in their interest.
This is particularly true of the six who advocated a stronger
convention, as the present convention at least addresses one
of the serious problems some of them confront--namely, crimes
against foreign officials for purposes of extortion against
the host government.
We should also pursue the conversations we have initiated
with friendly Western countries over the possibility of even
wider accession to this convention or of a parallel course
to achieve a more universal instrument. We should in due
course ask key signatory countries to make similar approaches.
Article 19
Drawing on our recent experience with Ecuador, we must
recognize that any future applications of the various
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provisions of U.S. laws relating to fishing boat seizures,
expropriation, etc., might well bring similar accusations
from other countries (e.g. Peru, Chile, Bolivia) of U.S.
economic coercion in violation of Article 19 of the OAS
Charter. While most member countries would presumably
prefer to avoid a condemnation of the U.S., we would prob-
ably find little sympathy for our position if lines had to
be drawn. We would wish to mitigate such a situation by
calling for negotiations, but we would probably do best to
try to avoid placing ourselves in such a position when and
if our laws permit.
Economic and Social
Recommendations for the future U.S. position in the
Special Committee on Consultation and Negotiation (SCCN)
of IA-ECOSOC are outlined in the Section on Trade. Beyond
specific trade considerations, we should bear in mind that
the Latin Americans now place considerable importance on
the SCCN as a forum of the Inter-American System. Any
indication of U.S. reluctance to continue participating in
this forum would be construed by them as an indication of
U.S. retrenchment.
We should continue insofar as possible the high level
of U.S. participation in the CIAP review of U.S. economic
policies affecting Latin America, as part of our effort to
enhance the growing role of that body. However, the U.S.
should be prepared, as the review process continues, for the
likelihood of increasingly critical comments about U.S.
economic policies. Under these circumstances, the U.S.
should attempt to insure that CIAP comments on the U.S. re-
view are accurate both factually and as reflections of Latin
American reactions to our policies.
Education, Science and Technology
U.S. support for the programs of the new OAS Council
for Education, Science and Culture (CIECC) is consistent
with President Nixon's policy of promoting multilateral
assistance through the Inter-American System.
The U.S. should continue to support the CIECC educa-
tional, scientific and technological programs in particular
and to encourage efforts to analyze and more sharply define
the goals and strategies of those programs. If this pro-
duces sufficient improvements and if Latin American
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contributions to the programs increase, the U.S. should
be prepared to support higher budget levels.
We should try to promote the idea of CIAP-style
"country reviews" by CEPCIECC (the Permanent Executive
Committee of CIECC), although the outlook for Latin Ameri-
can acceptance of this idea is not bright at the present
time.
Technical Assistance
Greater U.S. emphasis on the technical assistance
programs of the OAS (both under the Secretariat and the
Specialized Organizations) is entirely consistent with
President Nixon's principle that U.S. assistance for
Hemispheric development "can best be achieved on a multi-
lateral basis within the inter-American system". (The IDB
does provide a limited amount of technical assistance
closely integrated with its lending activity, but its
functions would be greatly changed if we attempted to have
it expand such activities so as to substitute for U.S. or
OAS technical assistance programs.)
If U.S. contributions to OAS technical assistance pro-
grams under the General Secretariat are to be increased,
the capacity of the General Secretariat to manage larger
programs must be further strengthened. As stated under
Section II, the Secretariat has undertaken major changes
designed to improve its program-budgeting and management
procedures, SO as to make the technical assistance activ-
ities more responsive to expressed country development
priorities; and to institute an evaluation system capable
of providing its management and the technical councils with
the means for determining greater future effectiveness. We
must continue, in concert with other members, to encourage
and where feasible assist the Secretariat in these efforts.
In the April 1971 General Assembly we will, with Latin
American co-sponsorship, urge acceptance of our proposal
for an OAS external inspection service. Such steps can,
through selective programming and concentration of efforts,
result in strengthened OAS technical assistance operations
that will better serve the interests of the member countries
and will stand up to increasing Congressional scrutiny.
We must also explore the question of funding, whether
at present or increased levels, following the prospective
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reorganization of AID. It seems logical that these volun-
tary contributions to the OAS should be appropriated in
the same manner as other voluntary contributions to inter-
national organizations (e.g. to the UNDP) and be placed
under the general responsibility of the State Department.
OAS Structure
The OAS Charter having just undergone fundamental
amendments for the first time since it was adopted in 1948,
it is impractical to think in terms of encouraging further
changes in the Charter structure for the near future. There
would be no disposition among member states to embark so
soon on another operation of this kind. There is, however,
room to improve and strengthen the structure of the OAS
within the present Charter framework, and this we should
pursue.
We should endeavor, in concert with other key members,
to assure that the General Assembly in its annual sessions
will be in fact as well as in form the "supreme organ" of
the OAS, worthy of maximum participation by Foreign Minis-
ters.
It is also in our interest that the role of the Perma-
nent Council be strengthened through decisions of the General
Assembly and of the Council itself, and through practice,
so that it can assume a logical, central coordinating role
within the OAS, including broad supervision of the General
Secretariat. We should resist efforts to deny a political
function for the Permanent Council.
Internal Management
We should continue to support strong leadership by the
Secretary General over a centralized OAS General Secretariat.
We should also continue concerted, overall attention to
strengthen the OAS in the administrative, fiscal and manage-
ment areas.
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PRESENCE STUDY
MILITARY
DEPARTMENT OF STATE
Washington, D.C. 20520
January 12, 1971
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MEMORANDUM FOR MR. HENRY A. KISSINGER
THE WHITE HOUSE
Subject: U.S. Military Presence in Latin
America
Enclosed is a study of the U.S. military presence
in Latin America, in response to your memorandum of
December 8. As requested, the study reviews BALPA and
OPRED decisions affecting U.S. military missions; as-
sesses the effectiveness of U.S. military missions,
attache staffs, and other programs in establishing
contacts with important military leaders and influencing
them favorably toward U.S. foreign policy objectives;
and makes a series of related action recommendations
designed to increase such influence. A list of these
recommendations, which carry unanimous IG/ARA endorsement,
is appended to this memorandum.
The IG/ARA affirms the study's conclusion that
U.S. military missions, attache staffs, training, and
other programs currently conducted or administered by
U.S. military services are effective means of serving
the purposes of contact and influence. Beyond their
purely security or military value, such activities and
programs are significant contributors to better under-
standing of U.S. objectives and motives, and thus con-
stitute potentially useful vehicles for influencing Latin
American military leaders.
With regard to the specific question of personnel
strength of military missions, the study presents the
results of Embassy and USCINCSO reassessments of the
reduction schedule approved by the NSC Under Secretaries
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of origin.
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Committee on March 6, 1970. Based upon its review of
these reassessments and in the light of current policy
guidance, the IG/ARA recommends that the freeze on fur-
ther implementation of the Under Secretaries Committee's
schedule be lifted, and that a new level of not to exceed
290 for the region be approved. This new proposed level
compares with a USC target of 236 for July 1971, a cur-
rent "frozen" level of 345 as of January 1, 1971, and a
base of 458 in June 1970.
In connection with this recommendation the IG/ARA
wishes to stress the following two major attendant con-
clusions:
First, the quality of U.S. military personnel is
fully as important as their numbers.
Second, the effectiveness of U.S. military missions
is importantly conditioned by our ability to be forth-
coming in other areas of interest to the host government
military.
The study accordingly makes specific recommendations
designed to improve the quality of mission and attache
personnel, and proposes additional steps to strengthen
the potential role of other programs in influencing
Latin American military leaders. Among those steps
recommended in the appended list, the IG/ARA wishes to
direct the Senior Review Group's particular attention
to the proposals for removing or raising the $75 million
regional ceiling for military sales, grants, and credits,
and maintaining rather than phasing out grant MAP materiel
programs for selected countries.
At the same time, while urging that the recommended
actions be taken, the IG/ARA believes that the following
considerations should be kept in mind by the Senior Review
Group in its examination of these proposed measures. In
the first place, programs cannot be directly equated
with influence. A distinction must be made between exer-
tion of effort and the effect of the effort. The access
and contact with host government military leaders pro-
vided by the programs and activities discussed in the
study are not easily translated into concrete examples
of influence effectively brought to bear on specific sub-
stantive issues. As emphasized in the responses to NSSMs
15 and 68, the Latin American military can be expected
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to act in keeping with its perception of its national
interest, whatever the degree of influence exerted by
U.S. military personnel or the leverage provided by pro-
grams they administer. U.S. influence will almost cer-
tainly depend more on the broader relations of the U.S.
with Latin American countries (e.g., responsiveness on
sugar quotas, meat quotas, and generalized trade prefer-
ences), than on programs specifically directed at
influencing the military.
In the second place, there are possible political
costs for the U.S. in visible association with Latin
American military establishments. The potential of such
costs is more important in some countries than in others.
It is obviously of greater concern where military regimes
are characterized by repressive or dictatorial measures
than where the military role is more benign. In those
sectors of Latin American society that view their own
military authorities with disfavor, actions on our part
that might identify us with local military establishments
could provoke unfavorable reaction and uneasiness. Atti-
tudes similarly critical of U.S. "support" of the Latin
American military are found in articulate sectors of U.S.
opinion. Implementation of the recommendations presented
in this study might have the cumulative effect of raising
the visibility of our association with the Latin American
military and therefore of sharpening these resentments
and attitudes.
While these recommended actions might raise questions
both in the U.S. and abroad concerning our "profile," and
might seem inconsistent with the President's October 1969
guidance that he wanted the U.S. to continue to provide
assistance and work carefully with the Latin American
military "but in ways which would reduce or lower our
profile," the IG/ARA considers that these possible ad-
verse consequences can be averted or held to an accept-
able minimum by the careful selection and execution of
these and other programs, both military and non-military.
(The range and mix of U.S. programs that will bear upon
this question will be addressed by the IG/ARA in its
response to NSSM 108.)
Thus, we conclude that the measures proposed in
this study can make a positive contribution now toward
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assuring that U.S. foreign policy objectives in Latin
America are fostered.
Charles 1.Myu
Charles A. Meyer
Chairman, Interdepartmental
Group for Inter-American Affairs
Enclosures:
1. List of recommendations.
2. Study.
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RECOMMENDATIONS
1. Utilization of Military Personnel.
That the Departments of State and Defense send to the field
definitive guidance removing any doubts about the permissibility,
propriety and desirability of utilizing mission personnel and
attaches for purposes of influencing host government military
leaders toward U.S. foreign policy objectives.
2. MILGP Manning Level.
That the freeze on further implementation of the MILGP study
be lifted and that a new level of not to exceed 290 U.S. military
spaces for the region be approved, leaving the detailed break-
down of each MILGP to be worked out among the Ambassadors,
USCINCSO and Washington. In deciding upon the new levels for
individual posts, the IG/ARA will oppose any increases that
are not demonstrably contributive to the objective of increasing
U.S. influence.
3. Size of Attache Offices.
That the Departments of State and Defense take action as
feasible to provide for the small increases in several attache
offices recommended by the Ambassadors.
4. Quality of Military Personnel.
That the Department of Defense take concrete measures to
improve the quality of MILGP and attache personnel. These
measures should include actions to improve overall military
qualifications, language proficiency, knowledge of the area,
the attractiveness of career and promotion patterns (to include
possible establishment of foreign service career fields),
military and civilian education levels, and personal qualities
such as degree of empathy and political sensitivity.
That the Department of Defense report to the SRG by
March 15, 1971 the actions taken and to be taken.
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5. Grant Materiel Assistance.
That the present policy of phasing out grant materiel
programming activity in Latin America be modified to permit
materiel programs for selected countries. In determining the
selection of countries and the size of country programs the
IG/ARA will take into careful consideration all relevant
factors including the security need, the local budgetary
implications, and the political impact.
That the prògrams stress high-impact items in order to
achieve the maximum influence.
That, accordingly, sufficient funds be reprogrammed for
FY-72 in order to provide a program on the order of that
funded in FY-70 ($9.3 million exclusive of supply operations).
That funds be programmed for subsequent years at levels
not below that for FY-72, with possible small increases to be
determined through normal interagency procedures.
6. Legislative Restrictions.
That the Administration make concerted efforts to eliminate
from the Foreign Military Sales Act such burdensome legislative
restrictions on our military sales program as the "Conte"
Amendment (precluding credit funds for "sophisticated weapons
systems"), "Pelly" Amendment (reference to preclusion of sales
and credit following fishing boat seizure), and "Reuss"
Amendment (reference to sales to military dictators).
That in the upcoming security assistance legislation, the
present $75 million regional ceiling on military materiel to
Latin America be eliminated or raised in order to permit
flexible response to materiel requests.
7. FMS Credit Requirements.
That Latin American requirements for FMS credit be accorded
a sufficiently high priority in relation to other regions to
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support a dependable and responsive program of military credit
sales particularly for those countries in which such sales can
significantly affect our ability to retain influence with the
host country military (not less than $70 million annually for
FY-72 - and subsequent planning years).
8. Training Program for Latin American Officers.
That training programs for Latin American military personnel
in U.S. military schools and the Information Program for Foreign
Military Trainees be maintained at at least the FY-72 level
($10 million).
9. IAGS.
That the IAGS continue to be supported and adequately funded
to permit continuation of mapping and school operations (not
below $2.9 million per year as compared with $4.2 million in
FY-71).
10. Naval Vessels.
That the United States be responsive to Latin American
requests for naval vessels, particularly for those countries
in which such response can significantly affect our ability to
retain influence with the host country military; and that sales
of excess naval vessels rather than loans be emphasized to the
extent such vessels are available.
11. Related Military Programs.
That the following related military programs be continued
and supported:
-- Inter-American Chiefs of Military Service Conferences
and Latin American VIP visits.
-- Latin American Liaison Personnel Program (currently
being expanded).
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-- Combined exercises.
-- Visits of U.S. officials to Latin American defense
establishments.
12. Related Non-Military Programs.
That within the context of the primary purposes and legal
restraints of CU, USIS, and development assistance programs,
those activities that provide maximum opportunities for
influencing the, military be expanded. A report of actions
taken or to be taken should be submitted by the IG/ARA to
the SRG by March 15, 1971.
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NSC INTERAGENCY GROUP
FOR
INTER-AMERICAN AFFAIRS
REVIEW OF U.S. MILITARY PRESENCE IN LATIN AMERICA
I. INTRODUCTION
This study responds to a decision by the NSC Senior Review
Group on December 1, 1970, that a review of the U.S. military
presence in Latin America should be undertaken in light of
the current policy to increase efforts to establish and
maintain close relations with military leaders in Latin America.
In accordance with guidelines set forth in National Security
Council memorandum, December 8, 1970, the study:
--- Reviews the OPRED program decisions concerning U.S.
military missions in Latin America in the light of current
policy guidance, and recommends ways in which the U.S. military
presence can be used to expand U.S. contact and influence with
current and potential military leaders.
- Assesses the effectiveness of U.S. military missions,
Attache staffs and other programs in advancing these objectives
of contact and influence.
- Presents recommendations concerning the personnel
strength and composition of such units; the training and
alternatives. functions of personnel assigned to such units; and program
The study took into account the considerations underlying both
the OPRED program and the analysis of security assistance to
Latin America included in the NSC Under Secretaries Committee
Study of October 28, 1970.
Because of the importance of the military in almost all of the
countries throughout the region, the study does not attempt to
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single out any one country or group of countries as being of
key importance to U.S. foreign policy objectives. Although the
larger countries normally play a more important role in our
broader relations, the smaller countries are essential members
of the inter-American system and are collectively important in
any consideration of U.S. foreign policy interests in the hemisphere.
II. BACKGROUND AND PRESENT STATUS OF U.S. MILITARY PRESENCE
AND PROGRAMS
The U.S. military presence and programs in Latin America consist
of:
The physical presence of U.S. military personnel in: 1)
Military Missions, 2) Defense Attache Offices, and 3) Inter-
American Geodetic Survey (IAGS).
Assistance programs, including MAP (both materiel and
training), FMS (both cash and credit), and distribution of
excess military equipment (MIMEX/SIMEX).
Other related programs conducted or administered by U.S.
military services or agencies in Latin America.
A. U.S. Military Missions, Attache Offices and IAGS
1. Military Missions:
The U.S. Military Advisory service in Latin America
originated under Public Law 247, 69th Congress, in 1926. The
President was authorized to enter into bilateral agreements with
Latin American countries for the purpose of providing military
advisory service. European missions were displaced during
World War II, and by the early 1950s U.S. military missions
were assigned to every country in Latin America except Mexico.
The missions continue today under varying bilateral arrange-
ments, except in Cuba, Haiti, and Peru (where at the request
MAAG). of the Peruvian Government, the MILGP was replaced by a small
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These early service missions in Latin America
antedate the military assistance program. They were originally
training and advisory units contracted and paid for by the host
government, typically one mission for each of the host country's
major services. They were intended to serve the needs of the
countries to which accredited in a manner determined by the
host country.
With the advent of MAP, however, the missions
acquired MAAG type functions with responsibilities in support
of U.S. objectives. In 1965, the missions were reorganized
into Military Groups (MILGP), with a central joint command
organization responsible for coordination and for MAP and with
the advisory responsibilities accomplished by Service sections.
This reorganization was a unilateral U.S. administrative change
that met with resistance in some countries that preferred the
direct mission-to-host service relationships.
At their high point in 1968, the missions totaled
791 personnel. Since 1968, however, Mission personnel strength
has been substantially reduced. The initial reduction from the
1968 manning level resulted from BALPA and Program Budget Decision
412. As a result of these actions the total strength of the
missions was reduced to 505 personnel. Subsequently, in July 1969,
the President directed a 10% cut in U.S. personnel overseas
(OPRED) by 1 July 1970. This OPRED reduction further lowered
MILGP personnel authorizations to a total of 458.
During the course of OPRED, it became apparent that
a detailed review of our military missions in Latin America was
in order. An interagency study on the Military Missions was
undertaken in late 1969 to determine the functions the missions
should perform and the manning appropriate to perform the
functions. While concluding that the Missions should be
continued, the study recommended a further reduction of personnel
to a level of approximately 236. The study was approved by the
NSC Under Secretaries Committee on 6 March 1970, and implementa-
tion was begun. The Secretary of Defense directed on 10 December
1970 that the reduction program be suspended and proposed that
mission personnel strength requirements be reexamined.
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It is estimated that personnel strength will level
off between 300 and 325 under this hold on further reductions.
A detailed presentation of MILGP strengths by country at each
of these stages and as of 1 January 1971 is shown at Tab A.
2. Attache Offices:
The U.S. maintains defense attache offices in each
Embassy in Latin America, except Panama, Trinidad, Barbados and
Guyana. At their high point in early 1968, the attache offices
in Latin America totaled 153 U.S. military personnel. Since
1968, however, reductions directed under BALPA and resulting
from budgetary constraints have lowered total attache office
strength to 105 (Tab B).
The Defense Attache System in Latin America has
provided a traditional and continuous means for establishing
contact with and, in many cases, influencing important military
leaders toward U.S. policy objectives.
The basis for attache contacts stems first from
diplomatic accreditation and secondly from traditional military-
to-military relationships. Separation of representational and
intelligence aspects of attache duty is virtually impossible.
The former is the historic mission which provides attaches
access to the host country's military staffs and activities
which in turn allows a freedom of travel that occasionally may
not be available to members of other U.S. activities. Thus,
it is the representational aspect of attache responsibilities
that furthers his intelligence role and provides it legitimacy.
3. Inter-American Geodetic Survey (IAGS):
The Inter-American Geodetic Survey (IAGS), a major
subordinate unit of U.S. Army, Southern Command, was established
in 1946 to:
-- Carry out a long-range mapping and charting
program to meet defense needs from the Mexican border to the tip
of Tierra del Fuego.
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-- Coordinate, promote and encourage cartographic
studies in Latin American countries as requested by the Pan
American Institute of Geography and History.
As a cooperative effort, IAGS assists Latin American
countries in conducting their own mapping operations. It works
with the local mapping agencies by providing technical knowledge
and special equipment. It also trains Latin Americans in the
art of mapping and actually does specialized work for which the
local agency is not trained or equipped. -
In 1952, the LAGS Cartographic School was established
in the Canal Zone to provide formal training for Latin American
employees of the collaborating agencies in each country, with all
instruction presented in Spanish. Courses offered include photo-
grammetry, cartography, stereotriangulation, and aerial photo-
graphy control. To date, over 2400 Latin Americans have been
trained at the school.
From a high level of 634 personnel in 1967, stringent
budget restrictions have led to a reduced IAGS strength of 314
personnel as of 1 December 1970. Although originally scheduled
to phase out in FY 1972, DOD has recommended retention of IAGS in
an operational status in FY 72 (155 personnel), and probably
beyond, to allow it to continue somewhat reduced but meaningful
operations, including retention of the Cartographic School
(Tab C).
B. Military Assistance Program:
In the early period of the Military Assistance Program,
Latin American military forces were seen as potential contributors
to defense of the hemisphere against external aggression. Program
emphasis, therefore, focused on the provision of military
resources to enhance Latin American capabilities in countering
an external threat.
By the 1960s, with the development of strategic missile
capabilities, the external threat to Latin America was viewed as
diminished. Concurrently, however, there was a growing concern
over the possibilities of subversion and guerrilla warfare. This
concern is today reflected in the objectives of the Military
Assistance Program for Latin America:
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- To help maintain military and paramilitary forces
capable of providing, with police forces, internal security
necessary for orderly political, social and economic development;
and
- To improve the capabilities of the Latin American
armed forces in the field of civic action.
U.S. military assistance programs in support of Latin
American internal security have provided more assistance than
had previously been made available for external defense.
Between FY 1962 and FY 1969, $477.9 million grant military
assistance, including both materiel and training, was provided
for internal security purposes. The high point was reached in
FY 1966, when grants reached a total of $80.6 million.
In recent years, however, U.S. military assistance in
Latin America has undergone a substantial reduction. This
reduction has been occasioned by a combination of factors:
different articulation of policies and priorities within the
Executive Branch; the generally increased capabilities of
Latin American military forces to meet the threat; and
Congressional limitations on funds and restrictions on their
uses.
In FY 1968, grant materiel assistance was terminated
for the four larger countries (Argentina, Brazil, Chile and Peru),
because of a substantial reduction in MAP funds for Latin America.
In June 1968 the Senior Interdepartmental Group adopted the
concept of phasing out grant MAP materiel after FY-70. The
SIG recognized, however, that there would be a need for some
grant materiel assistance beyond FY-70. Exceptions would be
made to assist countries that were unable to maintain a capability
for internal security. Thus, $7.0 million was approved in FY 1970
and $6.2 million in FY 1971-for grant materiel assistance, largely
follow-on spare parts, for eleven countries. This compared with
an annual average of $40 million in FY 1965-1969. Grant military
training was maintained at an approximate level of $9-10 million
for FY 1971.
The decision in July 1970 to provide military assistance
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to Cambodia led to a restructuring of the worldwide FY 1971
Military Assistance Program. The result for Latin America
was elimination of the grant materiel program and the
reduction of grant training from a planned $8.6 million to
$6.7 million, although the original program level was restored
in the recent supplemental appropriation.
As originally planned, an expanded foreign military
credit sales program was to help meet the continuing military
materiel requirements of Latin American countries when grant
materiel assistance was phased out. To meet this requirement,
$48 million in credit was planned for FY 1970 and $40 million
in FY 1971. Credit sales had previously averaged about $27
million in the years FY 1965 through FY 1969.
MIMEX and SIMEX are the systems through which DOD
assets no longer needed to meet current operational and mobili-
zation requirements are identified, matched with MAP eligible
foreign countries' requirements and furnished as non-
reimbursable assistance. MIMEX addresses major items of
equipment and SIMEX addresses secondary items such as spare
parts. MIMEX shipments authorized to Latin American countries
as of 17 November 1970 totaled approximately $11 million with
SIMEX requisitions filled as of 30 September 1970 approximately
$75 thousand.
C. Other Programs
Apart from the contacts and continuing relationships
that result from U.S. military presence and the Military
Assistance Program in Latin American countries, other active
programs are being conducted which are designed to augment
and enhance these contacts and relationships with military
leaders. These include: -
1. Inter-American Chiefs of Military Service
Conferences. During the past decade, each of the three U.S.
Service Chiefs has participated in inter-American conferences
of chiefs of the respective military services. These conferences
are usually held on an annual basis with a different country
acting as host.
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2. Combined Exercises. The United States supports
and participates in a modest program of combined exercises
with various Latin American countries. These exercises
provide operational training and an opportunity for
professional contact among the respective Services. For
example:
a. UNITAS. U.S. naval units have participated
annually with Latin American navies in a combined exercise
emphasizing ASW and other standard naval techniques which
includes the circummavigation of South America and port
visits. The most recent exercise completed in December 1970
involved the navies of 8 countries.
b. SPRINGBOARD. An annual training exercise for
naval units operating from San Juan, Puerto Rico. Latin
American navies are invited to participate.
C. HALCON VISTA. A combined United States-
Latin American surveillance and intercept exercise conducted
in the Caribbean. The next exercise is scheduled in May 1971.
d. AGUILA I. The first (22-25 September 1970)
of a planned series of small scale, combined surveillance-
intercept exercises conducted in Central America under the
auspices of CONDECA.
e. Other. The last significant combined ground
exercise was conducted in Peru in 1964. It involved one U.S.
infantry company and token U.S. air and naval forces along
with forces of 6 Latin American countries,
3.
Ship Loans to Latin America. In the early
1950s, Congress enacted the first legislation authorizing the
loan of combatant naval vessels to selected friendly navies in
order to bolster their defensive capabilities against possible
threats of communist bloc aggression led by the Soviet Union.
Under the subsequent Acts of 1958 and 1965, the United States
has lent 14 destroyers and 6 submarines to 5 South American
countries (Tab D). Fourteen of these ships will be subject to
loan extensions during the period 1971-1973.
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4. Latin American VIP Visits. To maintain high-level
inter-American military contacts, the Chiefs of the U.S. Services
each annually invite several Latin American top-level military
personages to visit their Service Headquarters, various military
installations and civilian activities in the United States.
5. Visits by Senior U.S. Military Officials. A
means of maintaining contact is visits by senior U.S. military
officials to their Latin American colleagues. In the past,
most of these visits have been made by USÇINCSO. For various
reasons it has not been practical to schedule frequent visits
by other senior officers.
6. Latin American Military Liaison Personnel Program.
This is a DOD approved program presently being expanded which
would increase the number of Latin American military personnel
performing liaison, instructional and advisory duties with
selected U.S. military organizations.
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III. EFFECTIVENESS OF U.S. MILITARY PRESENCE AND PROGRAMS
A. General:
Rising nationalism, indigenous violence, growing
Soviet presence in Latin America and the emergence of a
Marxist government in a major South American country are
creating mounting problems for the U.S. in the area. Against
a background of uneven economic performance, rapid urban
growth and the political emergence of new social forces and
structures, these factors combine to create conditions for
the emergence of possibly disruptive contingencies.
An essential element in U.S. relationships with the
hemisphere is the role played by the Latin American military.
Each of the Latin American Armed Forces constitutes an integral
part of its own society. The military is a part of the internal
power structure with a traditional political role beyond that
ascribed to the U.S. military. The Latin American military
considers its intervention in government, when it deems inter-
vention necessary, as consonant with a traditional and legiti-
mate role. It is, of course, the element in the power structure
which commands the greatest physical force.
Since the mid-1960s, the political activities of the
Latin American military in many countries, always important
to the domestic and foreign policies of their countries, have
expanded and have by and large become increasingly varied and
sophisticated. Present indications are that this trend will
continue with the military playing, in many countries, an
important if not decisive role in the internal and, occasionally,
the foreign policies of their countries. Thus derives the
importance, in terms of our future relations with the Latin
American countries, of establishing contacts with important
local military leaders and the ability to influence them in
consonance with U.S. foreign policy objectives.
We would not claim that a change in political outlook
or a vote for the U.S. in the OAS will necessarily result from
exposure to U.S. training, from participation in a conference
or a combined exercise, from professional contact with a U.S.
Milgroup advisor, from close friendship with a U.S. attache,
or from the provision of U.S. military equipment. The access
and contact with host government military leaders produced by
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such programs and activities are not easily translated into
concrete examples of influence effectively brought to bear
on specific substantive issues. As stated in the Inter-
agency Study on Military Missions approved in March 1970, the
responses to NSSMs 15 and 68 concluded that the missions
themselves have little influence on such matters and that
the Latin American military generally will act as they
perceive their own interest. As the NSSM 68 study emphasized,
Latin American military leaders "will consider national
interests first. 11
In addition, there is a degree of political cost for the U.S.
in associating with Latin American military leaders, regimes,
and institutions. As pointed out in the response to NSSM 68,
the visible association of the U.S. with Latin American
military establishments will be resented by those groups that
view their own military establishments with disfavor. There
are attitudes in articulate sectors of U.S. opinion that are
similarly critical of U.S. "support" of the Latin American
military. Visible increases in U S. association could have
a cumulative effect of fortifying these resentments and
attitudes.
At the same time, we are convinced that the programs and
activities reviewed in this study produce identifiable positive
effects in terms of creating favorable attitudes toward the
United States. These attitudes in turn encourage an under-
standing of U.S. objectives and policies. Given the increa-
singly important role of military leaders and establishments
in Latin American. political society, we believe that this
understanding will play an increasingly significant role in
our effort to assure that overall U.S. national interests in
Latin America are enhanced. Despite the difficulty of
empirically proving these effects, and despite the associated
political costs, we believe that on balance these US military
programs have been useful in the past and that they can be
more useful in the future.
B. Military Mission Assessment
This assessment of the effectiveness of military
missions in establishing contact with and influencing Latin
American military leaders draws on sources of information
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which include: 1) the 6 March 1970 Study on Military Missions
in Latin America, 2) the reactions of the Latin American
military/governments to current reductions as available in
reports, and 3) the responses submitted by the CTs and USCINCSO
on issues raised in the present evaluation.
1. Study on Military Missions in Latin America
This study, approved by the NSC Under Secretaries
Committee on 6 March 1970, was prepared by a Defense/State
working group to determine the continuing need for military
missions in Latin America; their functions; if required, and
the manning appropriate to perform these functions. Each U.S.
Ambassador in the countries where missions are located and
USCINCSO provided comments and recommendations on the subject.
Reflecting the unanimous views of the Ambassadors and USCINCSO,
the study concluded that the military missions should be conti-
nued in Latin America because:
-- A number of countries attach importance to
their military relationships with the U.S.
- - The missions are a form of military cooperation
that is part of this relationship and to withdraw them completely
would cause problems in our broader relations.
-- In countries facing an active or potential
internal threat, the missions are an important element in our
efforts to assist the local forces to improve their internal
security capabilities.
There were two principal advantages cited
by most Ambassadors for retaining the missions:
-- In those countries where the military play
an important political rołe, the Ambassadors stressed the
"access" and "contact" afforded by the missions as important
ingredients in our broader political relationships. While
access and contact with the host state military are not
easily translated into concrete examples of effective influence,
the main result seems to be the friendly ambience that the
missions have developed with the politically powerful military
establishments.
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-- In countries facing active or potential
internal security problems, the Ambassadors pointed up the
importance of the advisory role of the missions in improving
the internal security capabilities of the local forces as
well as the advantages afforded by access and contact with
the host military. Due in part to the advisory efforts of the
missions and the provision of equipment through MAP, the Latin
American forces today are much better prepared to deal with
the problem of insurgency, though a number of the countries
will continue to need some advisory help. Other cited advan-
tages of our military presence in Latin America were: the
intelligence gained by the missions, a potentially restrain-
ing effect on Latin American arms expenditures, and a deter-
rent to third country influence.
On the other hand, there were several disadvantages
identified by some Ambassadors:
- - The first was the "visibility" of the
missions and their identification with the host state military
on the domestic political scene. None of the Ambassadors saw
this as a substantial problem at this time, but several noted
it as a potential cost The mission presence was believed
relatively inconspicuous with a total of 458 personnel at
that time. While the missions have been targets of verbal
attack by students and other anti-regime elements, they have
gone largely unnoticed by the vast majority of the public.
The latter tend to judge the United States by the nature of
its broader relations with the regimes in power.
The second disadvantage was the tendency
in some circumstances to increase expectations for arms and
equipment that the United States has been unwilling or unable
to make available. In several smaller countries, our Ambas-
sadors saw the Missions as exerting a moderating influence.
In some larger countries, however, the Ambassadors saw a
serious dilemma posed for the missions by our current restric-
tive policy, largely legislatively imposed, on selling arms
to Latin America. The nature of the advisory role requires
that the missions engage in discussions concerning the replace-
ment of old or worn-out equipment. The effect in some countries
has led to equipment expectations that the U.S. Government
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14
would or could not meet. This problem will continue unless
the United States Government adopts an arms policy that is
more responsive to Latin American needs and desires.
-- The third disadvantage mentioned by a 'few
Ambassadors was the difficulty on occasion of insuring that
the mission representatives and other U.S. representatives
speak with one voice on policy matters. (Standard guidance
provides that missions coordinate with the Embassy before
providing advice on force levels, equipment requirements, or
other matters that might affect broader U.S. interests or
policies. It is also a key responsibility of the Ambassador
to assure that the missions are fully informed of U.S. interests,
objectives, and programs in the country. In-country policy
coordination and the ultimate structural relationship between
the MILGPs and our diplomatic missions is being addressed in
the broader IPMG study of the military role and functions of
our overseas missions.)
The majority of our Ambassadors believed that a substantial
reduction in Mission personnel was feasible and desirable
in the context of OPRED and a reduced profile. For example,
in the larger countries, where the primary function of the
Mission would be to maintain a form of military cooperation
with the host countries, the number of mission personnel
could be relatively small. In the other countries, the numbers
of advisors could be reduced as the individual countries
developed their own capabilities and the function became one
of cooperation.
The study group concluded that substantial reductions in the
strength of the MILGP's could and should be made. In arriv-
ing at this conclusion they took into consideration, inter
alia:
-- The recommendations of the Ambassadors.
-- The recommendations of the Commander-in-Chief
USSOUTHCOM.
-- The desire of the President to reduce the number of
American officials abroad.
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-- The decision of the President in the NSC meeting
October 15, 1969, that the U.S. should continue to provide
assistance and work carefully with the Latin American
military but in ways which would reduce or lower our profile.
-- The reduction of MAP Grant Materiel from a high of $70
million in FY-66 to $7.0 in FY-70.
-- The disproportionate amount of effort being expended
by members of the missions on administrative matters.
Reductions in personnel were to be accomplished by:
-- Reducing the administrative burden on the missions --
transfer of common mission administrative functions to the
Embassy, the reduction of MAP administrative requirements,
and the centralization of other mission administrative require-
ments at higher headquarters, thus reducing the requirement
for many administrative personnel.
---- Eliminating some lower-level advisory positions recogniz-
ing that the host military had developed the capabilities of
their own personnel to perform these functions.
-- Elimination of mission aircraft thereby eliminating
the requirement for air crews (except Brazil and Bolivia).
In order to assist the Country Teams in the reduction and
reorganization of the military missions, USSOUTHCOM sent a
Management Engineering Team (MET) to each country to study
the duties to be performed and recommend an appropriate
manning level to perform these duties. Subsequent to the
receipt of the MET's recommendations each Ambassador was
asked to review the MET's recommendations, in view of the
time that had elapsed since the USSOUTHCOM survey was conducted,
and submit his concurrence and/or recommendations. With
minor exceptions, the Ambassadors concurred in the MET's
recommendations which varied only slightly from the recommenda-
tions of the DOD study group.
While the Ambassadors' views as to the desirable size
of the missions varied, one-half of them recommended either
no reductions from OPRED or reductions that ranged up to 30
per cent. The other Ambassadors saw the possibility of
reductions at a higher level, but the maximum reduction
recommended was 46 per cent.
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The reductions called for in the Military Mission
Study were initiated on 1 July 1970. From a strength of
458 on that date, mission manning had reached a reduced level
of 345 by 1 January 1971 toward the Study=directed level of
236 personnel by 1 July 1971.
a. Reaction by Latin American Military Leaders/
Governments to Mission Study Directed Reductions.
Consultations were initiated by the Embassies with
each of the host governments to reduce the size of the Missions.
Most of the government leaders were amenable to the planned
reductions in their countries when it was explained that these
were part of a world-wide effort on our part to use our manpower
resources as judiciously as possible.
After a visit in November 1970 to nine countries
in Latin America, however, the Chairman, IADB (Lt. Gen. Eugene
LeBailly), reported that all the senior officials with whom
he met, including seven Presidents, in responding to questions
on the size and visibility of the Military Missions, stated
that there was no domestic problem with U.S. military visibility
and that they desired the Missions substantially as they were.
2. Current Views of Country Teams.
Each Ambassador was requested by message, 11
December 1970, to provide the Country Team's views on
several issues related to this study. The specific issues
with a summary of the Ambassador's comments follow (see Tab F
for summary by country).
a. Effectiveness of United States military missions,
attache staffs, and other programs conducted or administered
by United States military services in establishing contacts
with important military leaders and influencing them favorably
toward United States foreign policy objectives (the Ambassadors'
assessment of the strength and organization of their attache
staffs and other programs is reflected in succeeding paragraphs).
The Ambassadors were unanimous in their opinion
that the military missions are very effective in establishing
such contacts. Opinions on the effectiveness of the military
in influencing local military leaders toward United States
foreign policy objectives varied from not utilized in this
role (Colombia) to very effective (Argentina, Dominican
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Republic). The preponderance of responses reported that the
military, as a general rule, had not been utilized in this
role, but that by working closely with the Ambassadors on
specific issues they could be made effective. Several
Ambassadors considered that some clarifying instructions would be
necessary from Washington to increase the effectiveness of the
military in fostering policy objectives that are not strictly
military
There was a strong consensus among the Ambassadors
that the quality of the advisors was, as a general rule, much
more important than the quantity in achieving U.S. policy
objectives. There was also a strong consensus that Mission
influence was being reduced by declining MAP resources and
restrictions on the sale of equipment. In addition, Ambas-
sadors in Argentina and Brazil reported that the military in
their countries are extremely sensitive to criticism of their
governments by officials of the USG
b. Recommended personnel strength and composition
of military missions.
The majority of the Ambassadors believe that
the considerations which led to the reduction in MILGP
strength (Study on U.S. Military Missions in Latin America)
are still valid and opted for a continuation of some reduc-
tions below the OPRED level of 458; however, the majority
recommended levels above the MILGP Study base. Five Ambas-
sadors (Bolivia, Ecuador, Guatemala, Nicaragua and Paraguay)
felt that reductions should be halted and a strength substan-
tially higher than the Military Mission Study should be
maintained. The Ambassadors in Argentina, Brazil, Chile,
El Salvador and Peru recommended small increases ranging
from one to four. In two countries the Ambassadors recommended
a reduction below the Military Mission Study levels (Colombia
and Dominican Republic).
The total number of Military Mission personnel
recommended (284) exceeded the number suggested in the Military
Mission Study by 48. Of this number, 27 were for Bolivia and
Ecuador. The Ambassadors who recommended increases in person-
nel above the Military Mission Study levels anticipate no
problem in obtaining host government agreement to these increases.
C. Qualifications and training of military person-
nel.
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The Ambassadors were unanimous in their recommenda-
tions that both attaches and military advisors must be more
carefully selected. A number of them recommended that MILGP
commanders and senior attaches should be graduates of a War College,
that junior officers should be graduates of a Staff College,
and that maximum utilization be made of officers who have
completed the Army Foreign Area Specialist Training Program.
Other suggested qualifications included:
- Technical qualification in the assigned
military speciality.
- Language facility.
- Aptitude for intelligence work.
- Broad gauge understanding of the political-
military interrelationship; political
sensitivity.
- Previous experience in the Hemisphere.
In conjunction with these qualifications, it was
also recommended that DOD upgrade this type of duty to enable
outstanding officers who specialize in this field to advance
to general/flag rank.
3. Current Views of the Unified Commander (USCINCSO)
"MILGPs and MAAGs are the most effective means
available to establish contacts with important military leaders
and with potential future leaders. The ability of MILGP
personnel to influence these leaders favorably toward U.S.
foreign policy objectives is related to several factors, among
which are: MILGP personnel selection and training; the direc-
tion and supervision of the -U.S. Ambassador; degree of accept-
ance of U.S. foreign policy objectives by host government; and
host country feelings towards us because of seemingly arbitrary
suspension or reductions of MAP and/or FMS. Professional
contact provided by our military-to-military representation
is not available on such a scale to any other U.S. government
agency in-country. During periods of strained official relations,
the military channel often has been open when others were closed.
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"The need for highly-qualified personnel within
the MILGPs is unquestionable. It is also important to keep
in mind that MILGPs exist only if they serve the interests of
the host country, and they must have advisory and assistance
programs of a scope adequate to sustain their presence."
(Recommended manning levels at Tab A.)
"The quality of MILGP personnel could be improved
by better selection and training procedures coupled with making
such assignments an advantage for promotion and higher level
assignment opportunities Special training in political-
military affairs, area orientation, host country background,
etc., is just as important for MILGP personnel as for other
U.S. country team members. Although orientation and planner/
programmer training is valuable, more training in depth, such
as the Army FAST Program offers, is highly desirable. Repeti-
tive tours should be scheduled for those individuals whose
demonstrated abilities would further U.S. interests. Language
capability is a vital assignment factor, but existing capability
should not be the sole basis for assignment since extended
language training can be provided those not already language
qualified. Professional competence, advisor experience,
demonstrated ability to work in difficult situations with
foreign national and personal diplomacy should all be
considered prior to selection. Promotion opportunity is a
key factor. Although the MILGPs are jointly manned, there is
a wide disparity in the percentage of eligible officers selected
for promotion when compared to individual service selection
rates. This adverse promotion record is not unknown to the
able and mature officers we would like to attract to MILGP
duty. Many of the best available officers will not request
such duty until they are convinced that an overall coordinated
improvement in personnel selection and training will enhance
their career progression."
USCINCSO endorsed the NSC decision to increase
efforts to establish and maintain close relations with
military leaders in this hemisphere. He stated: "This
restoration of a long standing and successful aspect of U.S.
policy may provide a basis for halting the severe erosion
of our military influence in Latin America. In the past few
years, as the U.S. military presence and materiel aid in Latin
America have been progressively scaled down, we have seen a
distinct and generally proportionate loss of influence over
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military leaders throughout Latin America. I have been told
by top level military leaders in almost every Latin American
country, that while they appreciate the assistance and support
which we have provided in the past, our present policies
appear to be leading in the direction of deliberate alienation
of the Latin American military from the U.S."
C. Military Assistance Program Assessment
1. Program Value and Effectiveness
The Military Assistance Program has for 18 years
served the national interest in Latin America promoting both
the security and foreign policy of the United States.
An important aspect of our Military Assistance
Program over the years has been its contribution to the
development of a large reservoir of good will among a highly
important political elite, the military officer corps. This
has in turn assisted in the development of constructive
relations with the majority of the Latin American governments.
The basic goal of the program, though shifting
in emphasis from external to internal defense, has remained
constant throughout the period: strengthened defense
capabilities of nations whose security is important to the
United States. While progress toward achieving this goal
in Latin America has been generally successful, the degree
of success has varied within the region. Materiel, training,
and advisory assistance have effectively contributed to the
development of security forces which, to date, have been able
to defeat or contain insurgencies. Some of the smaller countries,
however, may require assistance on a contingency basis to
maintain their forces.
Experience has indicated military assistance/
training to be one of the most productive forms of military
assistance investments in fostering attitudes that lead to
better mutual understanding and cooperation among the students
and participants in orientation visits.
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Military assistance training serves two purposes:
it increases the efficiency of the Latin armed forces by
transmitting needed military skills, and it can strongly
influence recipient military personnel toward attitudes
favorable to the United States.
These two purposes are in a sense competitive.
We can achieve the maximum practical effect on armed forces
capabilities by emphasizing high-volume, low-cost training
of lower-ranking military personnel in the Canal Zone. On
the other hand, we can more effectively further our influence
with the Latin military by devoting resources to the military
education and orientation of selected higher-ranking personnel
and in the Information Program for Foreign Military Trainees,
which augments formal training by providing a balanced impres-
sion of life in the United States.
With the restoration of funds for FY-71 by the
supplemental appropriation and the approval of the FY-72
program, adequate resources are being devoted to this program
to accommodate both these purposes.
With policy emphasis now focused on fostering
increased self-reliance and self-help measures among recipients
of military assistance, Foreign Military Sales (FMS) has become
a major element of the program as a substitute for grant
material assistance. Such a shift from recipient to purchasing
nation status has already resulted in assumption of full
responsibility for their own materiel defense needs by the
larger Latin American countries. Thus, Foreign Military Sales
and the provision by the U.S. Government of credit or credit
guarantees necessary to facilitate sales to countries which
deşire assistance are and will be an important adjunct in
maintaining constructive relations with Latin American
military leaders. Such assistance will also help in maintain-
ing U.S. military equipment as the standard within the region,
thus enhancing continued U.S. military leadership.
Recently, our relations with the larger Latin
American military countries have been particularly strained
by U.S. opposition to the purchases of military jet aircraft
and other "sophisticated weapons 11 Yet national defense,
including the maintenance of some conventional military power
as an attribute of sovereignty, remains an understandable
concern of the major Latin American countries.
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Regardless of the closeness of our relations
with Latin American friends, U.S. objectives and programs
are not necessarily Latin American objectives and programs.
We cannot program their military organizations or their
doctrines and missions, as they perceive them, into patterns
of our own design.
Having conditioned the larger countries, in
particular, to the need for self-sufficiency and their accept-
ance of Foreign Military Sales (albeit reluctantly) as a
substitute for grant materiel assistance, our response to
their needs as they perceive them will bear directly on the
future of constructive relations with them. From FY 1967 to
FY 1969, even before the FY71 termination of U.S. grant
materiel programs to Latin America, European credit sales
totaled $193.1 million, more than double the total U.S.
credit sales of $85.8 million for the same period. Although
this trend to third country suppliers certainly cannot be
attributed solely to our unwillingness or inability to meet
their military equipment requirements, these reasons have played
a sizeable role in creating a feeling of anger and disillusion-
ment among many military leaders and a view that the U.S. interest
in Latin America is waning.
For a number of years, the Military Assistance
Program ceiling for Latin America imposed by Congress has
remained at $75 million, including grant assistance (materiel)
and FMS (including cash sales and credit). Retention of the
ceiling at this constant level has, in effect, further
limited our flexibility in responding to assistance requests.
This has resulted because of inflation and also because of
the rapidly diminishing availability of used U.S. military
equipment that was formerly in plentiful supply at a much
lower cost than new equipment. This problem has been further
compounded by the low milítary assistance priorities for
Latin America established within the U.S. Government which
have resulted in sharply curtailed programs in favor of other
regional requirements, and by difficulties in determining the
application of the Conte Amendments.
To a large degree, the continuation of an effective
U.S. military-presence in Latin America is tied to a responsive
U.S. security assistance policy. Should the Latin Americans,
because of diminishing U.S. assistance, be forced to turn to
third country sources for their equipment, it is likely that
military missions from the predominant source country would
replace U.S. missions.
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A longer term prospect is the possibility that
Soviet military equipment may eventually be introduced within
the region. With knowledge of the dissatisfaction of the
Latin American military over restrictive U.S. military
assistance and sales policies, and a desire to exploit the
growing Latin American nationalistic proclivity to reduce
its dependence on the U.S., the Soviets may well offer for
sale modern weapons at a supportable cost. While the long
Latin American tradition of using Western military equipment
would have some weight, a tempting offer of more modern equip-
ment as replacements at low cost may eventually be impossible
to resist. This would be particularly true if the political
climate evolves over time in a manner that makes less objection-
able an involvement with a "socialist" nation. The Soviets
followed a similar pattern in the Middle East with much success.
And while the circumstances are different, the desires of the
military in both regions are the same - modern and effective
armed forces.
The effectiveness of the Military Assistance
Program, therefore, in contributing to constructive relations
with the military leaders in Latin America will, for the most
part, depend on:
--- A continuing grant training program of
sufficient size to meet the hard core training requirements
of the recipients, to provide CONUS training and orientation
and to support the Information Program for Foreign Military
Trainees.
-- A more responsive Foreign Military Sales
Program to meet Latin American requirements with firm
priorities for the Western Hemisphere region and less rigid
interpretation of the Conte Amendment as to what constitute
"sophisticated weapons systems" today.
--- A means for meeting urgent requirements
for grant materiel assistance, particularly for smaller
countries that may not be capable of military self-sufficiency.
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2. Current Views of Country Teams.
Five Ambassadors (Bolivia, Dominican Republic,
Honduras, Paraguay and Uruguay) recommended the reinstate-
ment of small MAP grant materiel programs. They based their
recommendations primarily on a political rationale -- improved
relations between the host government and the United States.
There was a broad consensus among the Ambassadors
that United States military training (in Panama and particu-
larly in the CONUS) is a very effective vehicle in favorably
impressing local military leaders. They favored a contin-
uation, and in some cases an expansion, of the MAP grant
training program.
The Ambassadors in the larger countries, in
particular, stressed the adverse impact of the severe
restrictions and reductions in the foreign military sales
program on our relations and highly favored an expansion of
the program. Several emphasized that the effectiveness of
the Military Missions is reduced with MAP CONUS training
sharply cut, unavailability of FMS credit, the future of
MIMEX/SIMEX questionable, and numerous subjective non-legis-
lative obstacles placed on equipment purchases.
3. Unified Commander' Views
"Grant materiel, MAP training and FMS have been
major assets in furtherance of U.S. policies. Latin American
military leaders almost uniformly want to associate their
equipment and training with ours. Rapport and contact with
host country leaders in such matters provides a principal
basis for the presence of USMILGPS. Unfortunately, the
precipitous elimination of the grant materiel program and
the reduction in grant training, coupled with erratic
implementation of FMS programs, have resulted in feelings
of frustration and impatience towards MAP and FMS by some
Latin American military leaders. A turn toward Europe is
increasing. To be effective in favorably influencing the
host country military toward U.S. foreign policy objectives,
the MAP and FMS programs must be more responsive to host needs.
The presence of U.S. military hardware in Latin American
inventories is a most effective lever in maintaining U.S.
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presence and influence in these countries, and the growing
extent of materiel and training from third countries tends
to diminish this influence. We must provide amounts of
grant materiel to those countries too poor to participate
to any great extent in the FMS program. This assistance
should be programmed in advance to aid host planning. Our
MAP also should include a contingency fund to enable us to
react rapidly to bona fide emergencies. We must increase
program stability; the changes which are constantly being
made to our military programs in Latin America, and the
uncertainties which they engender, seriously hamper the
host military in its efforts to train and equip forces. 11
D. Attache Staffs
1. Program Value and Effectiveness
While there has been a diminution in the overall
effectiveness of the attache system in Latin America because
of reductions in strength during the previous two years,
several programs are underway to broaden the bases for con-
tacts and to make deeper inroads into areas of inter-personal
relationships. Major emphasis is being placed on cultivation
of social as well as official contacts.
Official contacts are cultivated at frequent
office meetings and during visits to installations. Social
contacts are directed at personal exchanges ranging from
personal at-home visits to larger social gatherings. Through
these methods, close and influential relations are being
developed at all military levels. Attaches have entree to
Chiefs of Staff of the various services as well as senior
staff officials, senior military commanders and individuals
of intermediate rank. These friendly and cooperative
associations provide an environment favorable to influencing
host country military leaders.
The training of attaches is considered adequate.
All are trained in language, intelligence and contact exploita-
tion and are selected on the basis of maturity, judgment, ability
and professional competence. Continuing efforts are being made
to increase the quality of attaches and a number of steps have
been taken to improve selection procedures.
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2. Current Views of Country Teams
Most Ambassadors agreed that the attache staffs
were very effective in establishing contacts with important
military leaders. Opinions on the effectiveness of the
attaches in influencing local military leaders towards
United States foreign policy objectives varied from not
used in this role (Colombia), and difficult to assess since
used in this role very little (El Salvador), to very effec-
tive (Argentina, Dominican Republic). While there was little
indication that attaches had been significantly utilized in
this role, many reports stated that on specific issues they
could be effective. Some Ambassadors considered that clarify-
ing instructions would be necessary from Washington to increase
the effectiveness of the military in fostering policy objectives
that are not strictly military.
With minor exceptions, the Ambassadors reported
they were satisfied with the strength and organization of
their attache offices. A total of 10 additional personnel
were requested (Argentina -1; Ecuador -1; El Salvador -1;
Paraguay - 1, Peru -3; and Panama -3 with establishment of
a Defense Attache Office). (The forthcoming IPMG Review of
Military Representation in U.S. Missions Abroad will address
the overall question of the Attache Program.)
3. Current Views of Unified Commander
Personnel reductions have reduced significantly
attache contact and reporting capabilities. The attache is
expected to maintain meaningful contacts with host country
military leaders, plan and execute an extensive collection
program and travel to significant strategic areas. These
tasks, coupled with heavy administrative requirements,
require adequately manned attache offices which complement
MILGP presence.
E. Inter-American Geodetic Survey (IAGS)
1. Program Value and Effectiveness.
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After 24 years of cooperative assistance to
Latin American countries in expanding national geodetic
networks and accumulating aerial photography and other
mapping data, 19 percent of the total area, and a higher
percentage within several countries, has been covered with
precise topographic mapping.
For the Latin American countries, topographic
maps are an important tool for economic development. New
roads, hydroelectric plants, irrigation projects and
agricultural reforms represent only a few of the projects
that depend on accurate mapping. Thus, in filling a defense
need for accurate mapping, IAGS has also contributed to the
welfare of all participating countries.
2. Current Views of Country Teams
Recent reports from U.S. diplomatic posts as
well as from Latin American government officials reflect
the importance the Latin Americans attach to the IAGS
operation and its contribution to their progress. These
reports also indicate that IAGS has been effective in
establishing contacts with important military, as well as
civilian, leaders and in influencing them favorably toward
the United States.
3. Current Views of Unified Commander
"The IAGS program has been extremely effective
in favorably influencing Latin American countries. The
program reaches scientific and economic groups not touched
by other U.S. programs. When recent reductions in the IAGS
program were pending, all countries registered strong
objections, stating that IAGS activities were needed for
the development of their countries.
"IAGS mission objectives should be expanded to
include all nation-building aspects that have been specifi-
cally requested by highest Latin American authorities.
Necessary resources should be provided to accomplish urgently
required aerial photography in Latin America. This is one of
the largest and most immediate needs identified in the national
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mapping programs. IAGS resources should be increased SO
that collaborating governments can be supported with vehicles,
technical equipment and specialists, plus fixed and rotary
wing aircraft (when not available through normal channels)
to a level that meaningfully supports growing national map
production needs. IAGS mission must be expanded to take
into account the importance of other satellite applications
and consequent training requirements. Because IAGS has
ready access to the highest national government levels,
and is firmly entrenched in the Latin American scientific
and technical communities, it should be officially recognized
as the prime coordinator and single point of contact for all
cartographic and related activities. 11
F. Other Programs
1. Program Value and Effectiveness.
a. Inter-American Chiefs of Military Service
Conferences.
These conferences, which are usually held
annually with a different host, have led to a better climate
of understanding of United States hemispheric goals and have
helped inspire a mutual confidence and respect. They promote
a cooperative spirit among inter-American military leaders
and serve as a basis for continuing personal contact.
b. Combined Exercises
The U.S. has supported and participated in a
modest series of combined exercises with Latin American
military forces. Present review procedures as set forth in
NSAM 316 provide adequate opportunity for assuring that
political considerations are given appropriate attention.
Annual combined exercises, as well as the pre-exercise plan-
ning conferences, have provided unique opportunities for
increased professional contacts with a large number of
military leaders. Not only have these exercises enhanced
the operational competence of the participants, but they
have also fostered a cooperative military relationship and
close identification with the United States.
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C. Latin American VIP Visits.
A large reservoir of friendship and mutual
understanding has resulted from visits to the United States
by selected leaders and potential leaders as guests of the
Chiefs of U.S. Military Services. Not only have these visits
assisted in the maintenance of friendly contacts with impor-
tant leaders, but they have also permitted the guests to gain
a greater understanding of the United States under favorable
conditions.
d. Visits by Senior U.S. Military Officials.
Visits by senior U.S. military officials to
their Latin American colleagues are an effective means of
maintaining contact. In practice, various internal situations
within Latin American countries and the competing demands on
senior officers have limited these visits, with the result
that most of them have been made by USCINCSO.
Just as visits by Latin American military
officials to the United States have built up a large reser-
voir of friendship and mutual understanding, visits by our
senior officers to Latin America serve to improve their
understanding of the area and to establish friendly and useful
contacts with important leaders. Such visits would be viewed
by the Latin American military as concrete examples of U.S.
interest in Latin America. At the same time, these visits
have high visibility and can have adverse political effects
to the degree that they may appear to associate the United
States with internal political situations. On balance, we
believe that a carefully planned and coordinated program
of visits serves to advance U.S. interests.
e. Latin American Liaison Personnel Program.
Based on experience to date regarding the
effectiveness of this program in developing in the partici-
pants a spirit of cooperation and identity with the United
States, DOD has approved an increase in the number of Latin
American military personnel performing liaison, instructional
and advisory_duties with selected U.S. military organizations
from a current level of 50 to approximately 130. Details of
the expanded program are being developed and when completed
will be coordinated with the State Department.
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f. CU International Exchange Programs Relating
to Military Contacts.
Exchange programs administered by the State
Department's Bureau of Education and Cultural Affairs (CU),
while focused on other than "military targets" in the past,
may offer the opportunity for new and imaginative ways to
influence the military in Latin America. At present, a
study is underway, in response to a 13 November 1970 request
of the President, to examine current U.S. exchange programs
as a basis for increasing the exchange in professional fields
of individuals with strong leadership potential. The possi-
bility of a greater role for CU programs focused on the
military is being assessed in this study and specific recom-
mendations will be included.
g. AID Programs for Influencing Latin American
Military Leaders.
Two phenomena common to many Latin American
countries are bringing AID Mission Directors and technical
advisors into closer and potentially more influential rela-
tions with local military leaders than ever before. First,
given the changing role of the military in Latin America,
an increasing number of traditionally civilian ministries
and departments of government are now headed or staffed by
military personnel. Indeed, in some instances the military
have taken power for the avowed purpose of far-reaching reform
in economic and social structure, with corresponding changes
in developmental objectives and mechanisms. Second, the
military in many Latin countries, whether holding political
power or not, increasingly encourage and lend important
support to programsof social and economic reform, and have
themselves initiated significant civic action projects.
AID personnel are often uniquely equipped to provide assis-
tance and advice to the military in connection with these
new interests.
h. USIS Programs for Influencing Latin American
Military Leaders.
USIS posts have a wide variety of program
techniques for carrying out the NSC policy of influencing
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current and prospective military leaders in Latin America.
Budget and personnel cut-backs during the past two years
have eroded their potential somewhat, but ample resources
remain to enable posts to play an important role in mission-
wide efforts.
Typical program activities which now are
being undertaken by USIS, either independently or in direct
support of efforts by other mission elements to extend U.S.
presence among the military, range from War College seminars
and book presentations to leader grants for military officers
serving in civilian posts for travel to the United States.
At this time, little information is available
on the media habits of the Latin American military. Before
a large-scale program is undertaken, it is indispensable for
the Agency to have these data at its disposal. To meet this
data requirement, USIS has assisted DIA in preparing a question-
naire for a planned survey on the media habits of Latin American
military officers. This survey should be initiated as soon as
possible to aid the Agency in formulating effective programs.
i. Value and Effectiveness of Ship Loans to Latin
America.
The loan of combatant vessels to Latin American
countries has served to promote our naval relationships with
these countries while enhancing their defense capabilities.
These loans have also served the purpose of permitting the
recipient countries to meet their requirements without spend-
ing large sums on naval vessel procurement at the expense of
other essential needs.
Recently, however, Brazil, Chile and Peru
have contracted for ship purchases in Europe. Several of
these countries have also recently requested the purchase
of combatant vessels stricken from the U.S. naval register.
In view of this demonstrated desire by the
Latin American navies to purchase combatant vessels, it may
be advantageous for the U.S. to be more responsive to these
purchase requests rather than attempt to initiate additional
loans under any future ship loan legislation.
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2. Current Views of Country Teams
In response to questions concerning the effective-
ness of these other programs, the Ambassadors treated the
subject in a general manner. The responses mentioned the
positive effect of visits to the United States by Senior
Latin American Military leaders, increased utilization of
the CU leader grant program, expanded USIS Book and Visual
Aid Programs and English language training.
3. Current Views of Unified Commander
"Exchange of visits by senior military leaders
is one of the most effective and least expensive ways of
influencing senior leaders. Visits to CONUS and the Canal
Zone by senior military leaders offer opportunities for
personal associations that are extremely important and
effective. Exposure to diversity of U.S. culture, and to
the interlocking roles of its military and civilian sectors,
aids in shaping attitudes favorable to U.S. policies. Visits
by U.S. senior officers have helped to offset impressions of
U.S. disinterest created by decrease in MAP, curtailment of
FMS and reduced CONUS training quotas. Visits and exchanges
can exploit sound policies of cooperation, but are not
substitutes for them.
"An increase in visits by high level DOD
civil and military representatives would emphasize U.S.
interest and provide better mutual understanding. The
basis for U.S. efforts to affect senior leaders, however,
should begin in their earlier service careers. I therefore
strongly endorse programs designed to identify and reach
potential military leaders. The Latin American military
liaison personnel program is an example of what can be done.
For maximum benefits, these exchange activities should be
broadened to include the research and development, production,
and logistic areas which are extremely important to developing
capabilities of the larger Latin American military establish-
ments. Appropriate arrangements for a program of R&D data
exchange should accompany."
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IV. CONCLUSIONS
The conclusions that follow represent the unanimous view of the
NSC Interagency Group for Latin American Affairs.
1. Effectiveness of Military Missions and Attache Staffs
in establishing contacts with important military leaders and
influencing them favorably toward United States foreign policy
objectives.
The Military Missions and Attache Staffs are effective
in establishing such contacts with important military leaders.
All Ambassadors and USCINCSO are unanimous in this view. On
the other hand, the effectiveness of U.S. military representa-
tives in influencing local military leaders towards U.S. foreign
policy objectives is not easily measured with concrete examples,
although there are identifiable positive effects in terms of
favorable attitudes towards the United States that result from
their close relationships with these leaders. The Ambassadors'
views on the degree of influence U.S. military representatives
exert range from "very effective" to "not utilized in this
role." Most Ambassadors believe, however, that our military
representatives, working closely with them on specific issues,
can be effective in this role. Present policy emphasis should
be placed on maintaining constructive but unobtrusive relations
with Latin American military forces and governments.
2. Personnel Strength and Composition of Military Missions.
While the basic considerations that led to the recent
reductions. of the Military Missions remain valid, the responses
of the Ambassadors and USCINCSO indicate the need for some
adjustment in the authorized strength levels of several Missions
in order to enable them to improve contacts with military leaders.
At the same time, we recognize that the requirement is not one of
numbers alone. Even more important are the qualifications of
military personnel assigned to the Missions and the existence of
associated advisory, assistance, and cooperative programs of a
scope sufficient to justify the presence of the Missions. In
any case, the net increase is modest and could be accommodated
within a ceiling of 290 military spaces. (Tab A)
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3. Personnel Strength and Composition of Attache
Staffs.
Accommodation of the Ambassadors' recommendations
for 10 increases in Attache spaces would improve U.S. ability
to maintain effective contact with host government military
leaders.
4. Training and Qualifications of Military Personnel
Assigned to U.S. Military Missions and Attache Staffs
As strongly emphasized by the Ambassadors and
USCINCSO, high quality of military personnel is essential to
the success of their mission. To this end, military advisors
and attaches must be carefully selected and given preparatory
training to ensure the language proficiency, empathy, political
sensitivity, and technical military competence required to
maintain good relations. Officer career fields could be
established within the Services for foreign service specialists,
including the opportunity for advancement to higher rank and
responsibility.
5. Security Assistance Program
U.S. ability to provide for the reasonable materiel
and training requirements of the Latin American military forces,
either through grants or FMS, is a major means of maintaining
U.S. influence with the Latin American military. The effective-
ness of these programs in contributing to constructive relations
with military leaders in Latin America will, for the most part,
depend on:
-- Foreign Military Sales (FMS). With policy
emphasis now focused on shifting from grant materiel to sales,
FMS has become a major substitute for grant materiel assistance.
Recently, relations with a number of Latin American military
forces have been strained by U.S. inability or unwillingness to
respond to their requests to purchase military equipment. This
situation has resulted from the unavailability of FMS credit,
either because of lack of appropriations or low regional priority;
from our inability to grant competitive terms of credit when it
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is available; from dollar ceilings on materiel provided to
Latin America; and from legislative restrictions on the sale
of certain types of equipment. This inability has contributed
to a significant turn by the military of these countries to
third country sources. A more responsive FMS program, with
adequate credit on competitive terms, is of paramount importance
in maintaining constructive relations with Latin American military
leaders. We must take a more realistic view than we have in the
past regarding Latin materiel requirements as they see them.
The present $75 million ceiling on military materiel to Latin
America is a serious inhibiting factor affecting U.S. ability
to be responsive to these requirements.
-- Grant Training. We believe it necessary to have
a program of sufficient size a) to meet the training requirements
of the recipients, using the Canal Zone schools for high-volume,
low-level training; b) to enable us to bring the maximum number
of students permitted by current legislation to the United States
for advanced professional training; c) to continue orientation
tours of the United States by senior Latin American military
student groups; and d) to continue the Information Program for
Foreign Military Trainees. The funding level approved for FY-72
adequately supports these programs.
- Grant Materiel. We believe that the current
policy of phasing out grant materiel programming activity in
Latin America requires modification in order to permit materiel
programs for those selected smaller, poorer countries which have
not demonstrated the ability to maintain adequate security
capabilities without such assistance. These programs would
emphasize the provision of visible, impact type materiel (e.g.,
helicopters) in order to achieve the maximum possible influence.
Provision of such assistance would require action to reprogram
funds for FY-72 and to program funds for subsequent years, with
allocations to be made through the IG/ARA.
6. Inter-American Geodetic Survey (IAGS).
The IAGS has demonstrated its success and effective-
ness in establishing contacts with important military and
civilian leaders in Latin America.
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7. Effectiveness of Other Programs.
a. Inter-American Chiefs of Military Service
Conferences and Latin American VIP Visits.
These programs have proved useful in encouraging
favorable attitudes towards the United States, in promoting a
cooperative spirit among inter-American military leaders, and in
serving as a basis for personal contact.
b. Combined Exercises.
Combined exercises are an effective means of
contributing to contact with senior Latin American military
leaders and to creating a spirit of cooperation and identity
with the United States. The recent Soviet presence in the
hemisphere makes them all the more important.
c. Provision of Ships to Latin America.
Ship loans and sales of excess vessels to
Latin American navies have been effective in promoting co-
operative relationships and in enhancing their defense
capabilities. The low priority accorded Latin American
requirements has limited the impact of this program.
d. Visits of U.S. Officials to Latin American
Defense Establishments.
Visits of high-level U.S. military and other
officials to their Latin American counterparts are an effective
means for establishing contacts and demonstrating U.S. interest.
These visits require careful planning and coordination in order
to minimize the possibility of adverse effects within the host
country.
e.
Latin American Liaison Personnel Program.
This program, which permits Latin American
military personnel to perform liaison, instructional and advisory
duties with selected U.S. military organizations, has been very
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successful in establishing contact with junior level military
leaders and in creating favorable attitudes toward the
United States. Efforts are now under way to expand the program.
f. Relationship of Development Programs to Influencing
Latin American Military Leaders.
Given the expanding involvement of military leaders
and military institutions with such traditionally civilian
concerns as economic and social development, increasing
opportunities to influence military leaders through U.S.
development assistance activities are in prospect. These
opportunities include such techniques and programs as training
in the United States for military personnel in non-military
fields; provision of training materials; AID public safety
programs, particularly those that may involve the military;
and support of small-scale civic action projects. Such
initiatives have already been taken by some USAID missions.
g. USIS Programs for Influencing Latin American
Military Leaders.
USIS posts have a wide variety of program techniques
for influencing current and prospective military leaders in
Latin America. Typical program activities that can be expanded
in order to achieve our purposes include leader grants for
military officers for travel to the United States, for War
College seminars, and for book presentations. We need to
know more about media habits of the Latin American military as
a basis for formulating and implementing additional programs.
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MANNING
C
GP'S
Pre-Balpa/
Strengths
Presently
OSD
USCINCSO
Embassy
USCINCSO
OPRED
as of
Assigned
Study
MET
Recomm
Recomm
Country
I Jan 68
30 Jun 70
1 Jan 71
6 Mar 70
Jul 70
16 Dec 70**
25 Dec 70**
Argentina
65
33
28
19
19
23 (+4)
25 (+6)
Bolivia
51
40
25
22
22
38 (+16)
25 (+4)
Brazil
|
116
59
50
24
26
26 (+2)
32 (+8)
Chile
49
32
21
12
13
13 (+1)
I4 (+2)
Colombia
62
48
30
24
20
20 (-4)
20 (-4)
Costa Rice
11
4
4
2
4
4 (+2)
2.4. (+2)
Dom Reo.
59
33
25
14
12
12 (-2)
12 (-2)
Ecuador
69
39
27
15
21
26 (+11)
25 (+10)
El Salvador
25
15
11
8
8
9 (+1)
10 (+2)
Guatemala
30
26
26
19
19
25 (+6)
20 (+1)
Honduras
21
14
11
8
3
8
10 (+2)
desreg 8
23
15
13
8
8
13 (+5)
10 (+2)
Fanana
5
5
5
7
7
7
3 (+1)
Paraguay
25
17
12
10
12
15 (+5)
12 (+2)
reru
70
7
7
7
7
8 (+1)
10 (+3)
Urugua)
28
20
14
10
10
10
15 (+5)
Venezuele
82
51
35
27
27
27
35 (+9)
TOTALS
791
458
345*
236
243
284 (+48)
269 (+53)
*Presently assigned strength will level off between 300 and 325 by February 1971. This continued reduction results
from personnel having received reassignment orders prior to SecDef decision to suspend further MILGP reductions.
**Increases and decreases are in relation to levels recommended in OSD study approved by the Under Secretaries
Committee March 6, 1970.
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V. RECOMMENDATIONS
1. Utilization of Military Personnel.
That the Departments of State and Defense send to the field
definitive guidance removing any doubts about the permissibility,
propriety and desirability of utilizing mission personnel and
attaches for purposes of influencing host government military
leaders toward U.S. foreign policy objectives.
2. MILGP Manning Level.
That the freeze on further implementation of the MILGP study
be lifted and that a new level of not to exceed 290 U.S. military
spaces for the region be approved, leaving the detailed break-
down of each MILGP to be worked out among the Ambassadors,
USCINCSO and Washington. In deciding upon the new levels for
individual posts, the IG/ARA will oppose any increases that
are not demonstrably contributive to the objective of increasing
U.S. influence.
3. Size of Attache Offices.
That the Departments of State and Defense take action as
feasible to provide for the small increases in several attache
offices recommended by the Ambassadors.
4. Quality of Military Personnel.
That the Department of Defense take concrete measures to
improve the quality of MILGP and attache personnel. These
measures should include actions to improve overall military
qualifications, language proficiency, knowledge of the area,
the attractiveness of career and promotion patterns (to include
possible establishment of foreign service career fields),
military and civilian education levels, and personal qualities
such as degree of empathy and political sensitivity.
That the Department of Defense report to the SRG by
March 15, 1971 the actions taken and to be taken.
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5.
Grant Materiel Assistance.
That the present policy of phasing out grant materiel
programming activity in Latin America be modified to permit
materiel programs for selected countries. In determining the
selection of countries and the size of country programs the
IG/ARA will take into careful consideration all relevant
factors including the security need, the local budgetary
implications, and the political impact.
That the programs stress high-impact items in order to
achieve the maximum influence.
That, accordingly, sufficient funds be reprogrammed for
FY-72 in order to provide a program on the order of that
funded in FY-70 ($9.3 million exclusive of supply operations).
That funds be programmed for subsequent years at levels
not below that for FY-72, with possible small increases to be
determined through normal interagency procedures.
6. Legislative Restrictions.
That the Administration make concerted efforts to eliminate
from the Foreign Military Sales Act such burdensome legislative
restrictions on our military sales program as the "Conte"
Amendment (precluding credit funds for "sophisticated weapons
systems"), "Pelly" Amendment (reference to preclusion of sales
and credit following fishing boat seizure), and "Reuss"
Amendment (reference to sales to military dictators).
That in the upcoming security assistance legislation, the
present $75 million regional ceiling on military materiel to
Latin America be eliminated or raised in order to permit
flexible response to materiel requests.
7. FMS Credit Requirements.
That Latin American requirements for FMS credit be accorded
a sufficiently high priority in relation to other regions to
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support a dependable and responsive program of military credit
sales particularly for those countries in which such sales can
significantly affect our ability to retain influence with the
host country military (not less than $70 million annually for
FY-72 - and subsequent planning years).
8. Training Program for Latin American Officers.
That training programs for Latin American military personnel
in U.S. military schools and the Information Program for Foreign
Military Trainees be maintained at at least the FY-72 level
($10 million).
9. IAGS.
That the IAGS continue to be supported and adequately funded
to permit continuation of mapping and school operations (not
below $2.9 million per year as compared with $4.2 million in
FY-71).
10. Naval Vessels.
That the United States be responsive to Latin American
requests for naval vessels, particularly for those countries
in which such response can significantly affect our ability to
retain influence with the host country military; and that sales
of excess naval vessels rather than loans be emphasized to the
extent such vessels are available.
11. Related Military Programs.
That the following related military programs be continued
and supported:
-- Inter-American Chiefs of Military Service Conferences
and Latin American VIP visits.
-- Latin American Liaison Personnel Program (currently
being expanded).
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41
-- Combined exercises.
-- Visits of U.S. officials to Latin American defense
establishments.
12. Related Non-Military Programs.
That within the context of the primary purposes and legal
restraints of CU, USIS, and development assistance programs,
those activities that provide maximum opportunities for
influencing the military be expanded. A report of actions
taken or to be taken should be submitted by the IG/ARA to
the SRG by March 15, 1971.
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
ATTACHE STRENGTHS
I
PRE-BALPA
OPRED
ACTUAL
EMBASSY
COUNTRY
1 JAN 68
AUTHORIZED
1 DEC 70
RECOMM
ARGENTINA
15
9
9
10 (+1)
BOLIVIA
6
5
5
5
BRAZIL
14
11
10
11
CHILE
13
7
8
7
COLOMBIA
8
5
4
5
COSTA RICA
3
2
2
2
DOM REP
17
7
7
7
ECUADOR
5
3
3
4 (+1)
EL SALVADOR
3
2
2
3 (+1)
GUATEMALA
7
2
2
2
HAITI
3
3
3
3
HONDURAS
3
7
5
7
JAMAICA
4
3
3
3
MEXICO
17
11
11
11
NICARAGUA
3
2
2
2
PANAMA
0
Not Auth
0
3 (+3)
PARAGUAY
3
-
3
3
3
PERU
10
6
5
9 (+3)
URUGUAY
6
5
5
5
VENEZUELA
13
12
9
12
I
TOTALS
153
105
98
114
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
IAGS IN-COUNTRY STRENGTHS
Pre-BALPA (Actual)
FY 71 (Actual)
FY 72 (Planned)
Mil
US
FN
Mil
US
FN
Mil
US
FN
Bolivia
4
7
18
4
5
11
1
4
3
Brazil
6
11
28
3
8
14
1
6
4
Chile
3
5
10
3
5
7
-
3
3
3
11
7
3
4
2
-
3
2
Colombia
Costa Rica
1
1
3
-
1
2
-
1
1
3
3
5
-
1
1
-
1
1
Dom. Rep.
Ecuador
4
6
10
3
6
6
---
3
2
1
1
-
1
-
-
enty
E1 Salvador
-
-
Guatemala
3
5
5
1
1
1
-
-
-
1
2
-
Honduras
4
10
-
1
3
us
1
2
2
-
-
Mexico
-
-
-
-
Nicaragua
4
4
2
2
2
1
-
WHITE
or
Panama
3
0
3
1
1
1
-
1
-
Paraguay
4
6
9
5
4
9.
1
4
3
2
7
10
4
3
Peru
4
10
21
-
Ve zuela
4
6
16
4
5
6
***
3
3
School
1
30
19
1
13
12
-
7
4
One - Zone
14
132
15
33
80
18
6
56
15
Total
64
242
181
62
146
106
9
102
44
487 *
3.14
155
* Add Aviation Element in Canal Zone Mil 147
SECRET
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SECRET
TAB D
LISTING OF COMBATANT SHIPS ON LOAN TO LATIN AMERICA
Country
Ship
Date Loaned
Present Expiration Date
Argentina
DD Heerman
8/61
8/71
DD Stembel
8/61
8/71
DD Dortch
8/61
8/71
SS Lamprey
7/60
7/75
SS Macabi
8/60
8/75
Brazil
DD Guest
6/59
6/74
DD Bennett
12/59
12/74
DD Hailey
7/61
7/71
DD Cushing
7/61
7/71
DD Hancock
7/67
7/72
DD Irwin
12/67
5/73
SS Sand Lance
9/63
9/73
SS Plaice
9/63
9/73
Chile
DD Wadleigh
7/62
7/72
DD Rooks
7/62
7/72
SS Spot
1/62
1/72
SS Springer
1/61
1/71
Colombia
DD Hale
1/6.1
1/71
Peru
DD Isherwood
10/61
10/66
DD Benham
12/60
12/70(in process of being
extended)
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
TAB E
SECRET
LATIN AMERICA MAP
Training 6
4
Materiel
Training & Materiel
66
67
68
69
70
71
72
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
($ Thousands)
No Materiel Program
for - FY 72
SECRET
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SECRET
I. Effectiveness in Establishing Contacts and Influencing
II. Recommended Personnel Strength
III. Qualifications, Training, and Functions of
IV. PROGRAMS
Local Military Leaders.
and Composition.
Military Personnel
Civilian
.ntry
a. MILGPs
b. Attache Staff
C.
Other
Programs
a. MILGP
b. Attache Staff
a. MILGP
b. Attache Staff
b. MAP Training
C. FMS
d. AID
e. CU (Cultural)
f.
USIA
g. Other
h. Country Team
a. MAP Grant
No recommendation
Restore level
Increase
Wind up AID-Send
Add ass't
Expand cultural
-
Increase ef-
Argentina
MILGP, DAO, USSOUTHCOM programs effective. Panama/CONUS
Delay reduc-
Stipulated by Argentine Military Service
Military on ob-
tion one year
Naval Attache
and sociological
forts to work
training effective, favorably impresses trainees with US
servation and
programs
with military
institutions, training, and family life. No problem new
Retain 23
training tours
military role.
N/A
N/A
N/A
Small CU and USIA program marginal influence
Barbados
No military representation in Embassy.
N/A
N/A
N/A
N/A
N/A
Brazil
Declining due to:
Excellent
Prime task
Prepared to
Not reported
No recommendation
Increase group
Increase
Contributes economic
Technical background, language capability.
Leader grant-
Target military
reduced MAP; restricted
contacts
review compo-
Knowledge of Brazil and US interest & policies.
orientation
and social develop-
military per-
articles in pro-
Ambassador
visits
ment
forming as
fessional maga-
FMS and credit; US criti-
& Embassy
sition in light
civilians
zines-books to
cism Brazilian Military;
of change in
Service academic
and development own
policy.
seminars
training capability.
Need revised instructions to pursue foreign policy ob-
jectives.
MILGP, DAO very effective. Need new terms of reference for
Recommend 38
No change.
Senior Off, War College grads. Junior respective
Reinstate program
No comment
Leader grant
Continue IAGS
Increase
Bolivia
efforts
military role.
DATT Col
Staff College. Language and Area knowledge.
Utilize FAST grads.
MIL, DAO effective to some degree.
Recommend 13
Fluent Spanish, previous exposure to international
No recommendation
Continue
Continue
LIMITED
Increase
Chile
efforts
political affairs, adaptable to foreign culture
Career inducement.
Colombia
MILGP, DAO effective military role and internal security.
Working knowledge Spanish, use FAST student.
No recommendation
Continue
Increase
Resume sponsorship
Assist Military Movies.
US Instructor in Col
Current ef-
CONUS training military result in positive effect. Loss
Recommend 20
No change
Do not believe military should do Foreign Service
of cultural attrac-
Books to Academies Eng-
Mil schools-Invite
forts satis-
military sales and aid resulting deterioration of rela-
tions
lish Language training
Col Off to instruct
factory
work.
tions.
US staff schools
Costa Rica
MILGP influence is technical mil.not pol. To foster other than mil.
No change 4
No recommendation
Political influence can best be accomplished through Country Team.
relations appears violation of purpose and counterproductive.
Recommend 14
No change
Highly motivated, language proficient, especially
Reinstate program
Continue
Dom. Rep.
MILGP, DAO highly effective. Quality personnel and moti-
Refocus programs emphasis on military by civilian members embassy.
selected for DAO and MILGP duty.
vation most important maintaining good relations.
MILGP has good contacts with Ecuadorean military used
Recommend 26
Add Ass't
High quality, language proficiency, knowledge
No recommendation
Continue
Increase
NONE RECOMMENDED
Ecuador
effectively by Embassy. Effectiveness reduces as MAP and
Attache
L.A. and broad general background.
FMS cut out. As third country equipment arrives effec-
tiveness MILGP drops further.
El Salvador
MILGP, DAO excellent contacts with military but effec-
Recommend 9
Reinstate NCO
Technically competent, empathy for locals and
No recommendation
Reinstate to
Use funds all programs to offer US training in non-military subjects for promising
tiveness difficult to assess as used little in role.
(Add Admin
Specialist
language facility.
previous level
young officers. (public administration, public health, socio-economic development
Effectiveness depends on competence, empathy toward
NCO)
and English language)
locals, and language facility of individuals.
MILGP, DAO successful developing contacts. Discussions
Qualified in Military Specialities, ability to detect
N/A
Increase Leader Grant
Provide materials
No change
19
No recommendation
No recom-
No Recommenda-
Youth Committee
to schools
Guatemala
mostly technical military matters. Country Team believes
personal and political sensitivities of local mili-
mendation
tions
role can be expanded.
tary, War & Staff College Grads, Fluent in Spanish.
N/A
N/A
N/A
Increasing
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
contacts
ana
No Military
Embassy has
good contacts
with military
leaders.
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
None
N/A
Very limited
No recommendation N/A
Haiti
Very limited
Reinstate program
No comment
No comment
No Change 8
No
recommendation Spanish Proficiency of 3 in written and oral.
Educational scholar
Continuously
Limited
Honduras
MILGP, DAO effective in contacts, limited to data to tech-
Utilize FAST and MAOP officers
ships to military
clarify US
nical military matters. Other limitation due to Hondurans
policy
feel US let them down over El Salvador conflict. Training
most effective way to influence.
N/A
No Change
N/A
No recommendations
N/A
N/A
N/A
N/A
NONE REPORTED
Jamaica
N/A
Close and good
rapport all
levels of mili-
tary.
Most effective
Major influence
N/A
Do not replace
Attache training in foreign
N/A
Continue
N/A
Embassy
N/A
youth
Mexico
N/A
departing Ass't
policy objectives and attend
training US
committee
(Mexican military not a major political
schools, US
Army Attache
FSI
more time to
force)
visits, US
military
instructor
Mexican
schools.
No recommendation Present training adequate Spanish proficiency
No Recommendation
No Recommendation
No Recommen-
Wider distribution
US instructor for
Pol sects in-
MILGP, DAO very effective influencing local military
No Change 8
dation
films and publications
Mil Academy
crease efforts
Nicaragua
Reassign A/D
mandatory.
leaders and have excellent rapport with Guardia Nacional.
No Recommendation
No Recommen
Educational Grant
English language
Increase public
Minimum
Estab. DAO-1 Off- Spanish proficiency, Country area knowledge poli-
No Recommendation
Panama
MILGP effectiveness varies with part.
N/A
N/A
No Change 7
1 EM US Civ (3) tical, social, economic, psychological and
dation
Scholarship US Civi-
training
safety
Contact
Pol.obj. and issues excellent in mil.
historical.
lian Schooling
but minimal in domestic matters.
Convert W.O. to Carefully selected and trained for duties.
Reinstate program
No Recommendation
No Recommen-
Leader Grant for
Movies and books
IAGS No restora-
Increase ef-
MILGP and DAO have excellent contacts are effective on
Recommend 15
dation
military
to military
tion of personnel
forts with
Paraguay
(13 Off-2 EM)
Com 0 (Ass't Army
but continue fund
younger of-
specific issues. IAGS also helpful.
Attache) Upgrade
ficers,
DATT to Col
Recommend 8
Add 3 (1 Ass None reported
No Recommendation
No Recommendation
No Recommen-
Leadership exchange
Increase rep-
dation
resentation
MILGP, DAO, IAGS have high level contacts influence marginal
Army ass' Na-
program
(Add Admin
funds
Peru
due to political differences US and Peru.
Off)
val Attache-1 NCO)
N/A
N/A
N/A
N/A
N/A
Increase contacts US military
Trinidad
N/A
N/A
training exercises, etc. Ac-
Tobago
N/A
Embassy has
N/A
credit attaches from Venezuela
military
contacts.
Reinstate program
Continue
No Recommen-
NO RECOMMENDATION
Increase
No Change 10
No Change
Carefully selected adaptable to Uruguayan way
dation
efforts
Uruguay
Maintains effective interplay with military leaders. US
of life, fluent Spanish, 2 wks with State Desk
training particularly effective. Elimination of MAP and
Officer. Previous Area experience
uncertainty FMS reduces effectiveness.
No Recommendation
Continue
Continue
No Change
Select personnel with political sensitivity. ap-
Increase visits by LA senior military officers to maneuvers, firepower demonstrations
Recommend 27
MILGP and DAO can be effective however will be limited by
titude for intelligence work, military interrela-
etc. CU leader grants, reinforce USIS book and Visual Aids Increase civilian contects
nezuela
tionship and Spanish language facility improve
with military leaders New instructions from Wash. on aims Backup through resou
declining MAP, training, FMS credits, and constraints on
career inducement.
Removal constraints, i.e., "Political" and intelligence on US military.
discussing political and intelligence matters.
SECRET
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SECRET
NSSM.108
NSC-IPMG Supplementary Comment on NSC-IG/ARA Study on
U.S. Military Presence in Latin America
The IPMG is in basic agreement with the conclusions and
recommendations of the IG/ARA Study except as noted belowl.
The IPMG particularly endorses the findings of the IG/ARA
Study as they relate to the "emphasis on the need for quali-
tative improvement of our Latin American MILGROUPS and the
conclusion that the application of U.S. military influence
is in part a derivative of the character and dimension of
U.S. programs in Latin America.
The IPMG considers that the IG/ARA Study does not
provide the NSC options on two basic issues that are identified
in the ARA/IG Study. These are (a) the level and mix of our
future Military Assistance Programs to Latin America, to
include grant materiel aid and (b) the appropriate personnel
ceiling for the MILGROUPS. In addition we consider that the
relevance of NSSM 108 and any decisions that may be generated
therefrom on the ARA/IG paper should be emphasized to the NSC.
IPMG comments on these points follow.
I OSD/ISA does not concur in the recommendations contained
herein for the following reasons:
"a. The NSC Study directive provided the IG/ARA the
option of making specific recommendations on issues where
there was unanimity of view. The study recommendations
reflect the unanimous view of the IG/ARA and are supported
by OSD/ISA. We feel that they are responsive to the study
directive, that they provide the basis for adequate con-
sideration by the SRG, and that the opposing considerations
in the IPMG draft should more properly be accommodated in
the State position at the SRG meeting.
"b. The IG/ARA memorandum forwarding the study to
Mr. Kissinger addresses the relevance of NSSM 108 and
states that the range and mix of U.S. programs that will
bear upon the questions that might be raised by the study
recommendations will be addressed by the IG/ARA in its
response to NSSM 108. Considering the timing of the two
of the conclusions of NSSM 108."
by NARA DECLASSIFIED/RELEASED ON
on the recommendation of the NSC
studies, we believe that the actions resulting from the
recommendations of this study can be kept in the context
under provisions of E.O. 12958
The JCS does not concur with the submission of the IPMG
paper on the grounds that the IG/ARA Study reflects the
position of the JCS.
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
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SECRET
2
I. Future Military Assistance Program to Latin America
The IG/ARA Study recommends:
"That the present policy of phasing out grant materiel
programming activity in Latin America be modified to permit
materiel programs for selected countries. In determining
the selection of countries and the size of country programs
the IG/ARA will take into careful consideration all relevant
factors including the security need, the local budgetary
implications, and the political impact.
"That the programs stress high-impact items in order to
achieve the maximum influence.
"That, accordingly, sufficient funds be reprogrammed for
FY 72 in order to provide a program on the order of that
funded in FY 70 ($9.3 million exclusive of supply operations).
"That funds be programmed for subsequent years at levels
not below that for FY 72, with possible small increases to be
determined through normal interagency procedures.'
In 1968, the SIG decided:
"That the planning assumption for Latin America should
be the phase out of grant military assistance for materiel
after FY 70. We recognize that there will be cases in which
this perspective goal cannot be achieved and there will be a
need for some grant materiel assistance beyond FY 70 in those
countries whose self-help efforts may fall short of providing
for essential internal security requirements
what the
exceptions will be and the amount required to fund them should
be determined through the CASP procedures in the interdepart-
mental groups for Latin America."
For FY 1971, the IG/ARA recommended exceptions for 11
countries, totaling $5.6 million in materiel assistance. These
funds were reallocated and grant materiel terminated during
the Cambodian emergency restructuring exercise. The 1972
budget does not contain specific country allocations for
grant materiel for Latin America.
The IPMG recommended options on this point are as follows:
Option 1 - To meet unanticipated Latin American problems,
the President should rely on a worldwide contingency fund. In
the context of his budgetary decisions, the President has
already decided to request a $100 million worldwide contingency
fund for all purposes - security, development, and humanitarian
assistance.
Reproduced at the Richard Nixon SECRET Presidential Library DECLASSIFIED
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SECRET
3
Pros:
1. If the President decides to present a single Security
Assistance Bill, a large all-purpose contingency fund will
provide the necessary flexibility for meeting Latin American
problems and needs.
2. A single contingency fund conforms with the President's
decision to streamline and integrate all security-related aid
programs.
Cons:
1. Latin American requirements, while small, are nonethe-
less important. They would tend, as in the past, to be
overshadowed by emergency requirements for large sums of money
in more active areas of the globe.
2. The wielding of influence with the Latin American
military would be enhanced by a continuous dialogue over
grant military programs. Being able to provide grant materiel
assistance on a contingency basis would not contribute to
increasing our influence.
Option 2 - Designate an annual grant MAP materiel level
for Latin America of $9.3 million. Allocations against $9.3
million would be approved for specific countries by the IG/ARA
as part of the normal CASP procedure. It is recognized that
only a limited amount of assistance could be provided with
this modest amount, however, the IG/ARA believes it would
serve the purpose of increasing our influence with the Latin
American military if handled on a selective basis.
Pros:
1. This action in conjunction with foreign military
sales and grant training assistance would reduce the likeli-
hood of the Soviets moving in to provide military hardware
and assistance.
2. Assists in maintaining the internal security necessary
for orderly political, economic, and social development in-
selected countries.
3. Permits programming of limited foreign aid funds for
those Latin American countries with greatest need.
4. By demonstrating U.S. concern and appreciation of
local security problems in selected countries, provides
leverage to increase U.S. influence with civilian and military
leaders in selected Latin American countries.
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
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SECRET
4
5. Increases the ability of the armed forces in selected
countries to perform effective civic action programs.
Cons:
1. The chances of precluding a determined Soviet military
aid effort are marginal given the modest size of the grant
assistance program contemplated.
2. Sudden reinstatement of a grant materiel program in
contravention of our announced policy of cutting off such
assistance for the purpose of increasing U.S. influence with
the Latin American military will draw Congressional fire.
This is especially true in light of other actions we are now
contemplating, such as a Presidential waiver of the $75 million
ceiling in military sales and assistance to Latin America, a
looser interpretation of the Conte and Reuss amendments, etc.
Severe criticism by Congress could jeopardize our entire new
security assistance program. Foreign Military Sales credit is
of more value than grant assistance and should not be
jeopardized in Congress by a reinstitution of grant assistance.
3. Since most purchases from outside suppliers are for
sophisticated, expensive weaponry not envisioned in the modest
grant program proposed, purchases from Europe would not be
significantly affected.
4. Programs should be designed to reduce, not increase,
reliance on the U.S. Resumption of a MAP materiel program
would be a step backward in view of the President's declared
policy friends. of increasing self-reliance among our allies and
5. Some countries which have been under discussion for
this grant assistance have purchased or have considered pur-
chasing rather sophisticated weapons systems from European
suppliers. It would be difficult to justify even a modest
program to Congress if the recipient nation falls in such a
category.
6. Grant programs were terminated because most Latin
American countries requiring military equipment could purchase
the equipment required on a cash or credit basis. There is no
evidence for a shift in this position.
7. Influence results as much or more from personal
contact than modest grant programs. There is no evidence that
grant aid will increase our influence beyond that already
provided by the presence of the MILGROUPS and the increased
credit and training programs.
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
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SECRET
5
Option 3 - Earmark up to $9.3 million of the President's
Contingency Fund for use as necessary in Latin America.
Allocations against this amount would be approved for specific
countries by the IG/ARA as part of the normal CASP procedure.
Pros:
1. This action, in conjunction with foreign military
sales and grant training assistance would reduce the likeli-
hood of the Soviets moving in to provide military hardware
and assistance.
2. Enables us to respond to emergency needs of selected
countries on a contingency basis, thus enabling them to main-
tain the internal security necessary for orderly political,
economic and social development.
3. Demonstrates U.S. concern and appreciation of local
security problems in selected countries. It thus provides
some leverage for increasing U.S. influence with military
and civilian leaders in Latin America.
4. Since no money would be programmed in advance for
any specific country, this option would not draw Congressional
criticism in the way a resumption of funding for materiel
might.
Cons:
1. The chances of precluding a determined Soviet mili-
tary aid effort with this amount of funding on a contingency
basis are marginal.
2. Since these funds would only be used on a contingency
basis, they would not contribute to a continuous dialogue with
the Latin American military and thus would enable us to
achieve only a limited amount of influence.
3. Reduces worldwide flexibility in drawing on the
contingency fund.
4. In subsequent years, might draw Congressional fire as
an attempt to avoid Congressional scrutiny by not providing
a regular program for Latin America.
NOTE: Some of pros and cons to Option #2 also apply to
Option #3.
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
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SECRET
6
II. Military Mission Manning Level
The IPMG considers that the arguments in favor of a
change in the present manning goal of 236 to a new level of
290 have yet to be fully justified. We therefore propose
the following options for NSC consideration:
Option 1 - Continue the present program to phase down
MILGROUP personnel to a level of 236 by the end of FY 1971.
Pros:
1. In response to a decision to shift to credit sales,
U.S. military assistance programs in Latin America have
declined to $16 million this year from a high of $80.6 million
in 1960. Budgetary and legislative limitations were also
factors in the decline. Barring an expansion of U.S.
military aid, or vastly expanded sales, it is difficult to
justify a personnel level beyond 236 which is consonant with
the current reduced level of military assistance to Latin
America and reached after considerable State-Defense study.
An increase in manning would not be consistent with the policy
of shifting Latin American countries from grant aid to sales.
2. There is no persuasive evidence of a relationship
between increased numbers of personnel and effectiveness in
achieving politico-military policy goals in Latin America
and no evidence that the positions added will be concentrated
in the politico-military influence-building area. There is,
however, considerable evidence that qualitative improvement
of existing MILGROUP resources is necessary if they are to
perform a military/diplomatic function and is of much greater
consequence than quantitative expansion.
3. The broader compass of the policy review called for
by NSSM 108 should not be prejudged now by a decision to
increase manning levels. If actions on programs are generated
by the NSSM 108 study and justify an increase in MILGROUP
levels this is a consideration that should be made subsequent
and not prior to Presidential decision on NSSM 108.
Cons:
1. The original decision to establish a ceiling of 236
was in part arbitrary, creating imbalances and distortions,
and in some cases unexpected hardships within the missions,
thereby squandering talents which would be better employed
with the addition of more personnel to some staffs.
2. The 236 level was excessively low for most of the
missions, as evidenced by the almost unanimous country team
recommendation for increases.
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7
3. Both the country team and CINCSO, when presented with
the options of implementing the original 236 man level or
increasing, favored an increase to a 284 or 289 level in order
to assure achievement of the new policy objectives.
4. The advent of a Marxist regime in Chile argues for
prudence in preparing for the possibility of subversion and
insurgency by strengthening, or at 'least not weakening, contact
with military groups.
5. Although the IG recognized that the effectiveness of
the missions will be conditioned significantly by the
availability of MAP, FMS or other programs, the functions of
the missions are to advise and to maintain contact. The size
of the missions was not determined by the requirements to
administer programs.
Option 2 - Increase the Military Missions' ceiling for
Latin America to 270, the level which represents a combina-
tion of the minimum recommendation of CINCSO and the country
teams for each post. It eliminates as unessential in
achieving the desired objective of increased influence
administrative personnel recommended in the country team/
CINCSO submissions.
Pros:
1. A modest increase over previously planned levels
permits the strengthening of our military missions in general
conformity to field recommendations while retaining the spirit
of the still valid original goal of fostering a lower U.S.
profile and encouraging Latin American self-reliance.
2. It eliminates administrative or technical personnel
recommended in the country team/CINCSO submissions (roughly
20 out of 53) as unessential in achieving the objective of
expanded politico-military influence.
Cons:
1. An increase of this size does not allow sufficient
flexibility to permit the field to fill the positions that
they seem to feel should be filled in order to permit CINCSO
and the country team to operate with confidence under the new
guidelines of establishing increased contact with the Latin
American military and fostering U.S. policy objectives.
2. By not granting the full increase of the requests
from the field, we run the risk of sacrificing the best
performance of which the field, in its own judgment, is
capable.
SECRET
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8
3. The IG/ARA recommended ceiling of 290 (see Option 3)
provides that only spaces that are "demonstrably contributive
to the objectives of increasing U.S. influence" will be
approved. It can be argued, therefore, that the means exist
in Option 3 to eliminate country team or CINCSO proposed
personnel augmentation that do not meet the IG/ARA criterion.
Option 3 - Lift the freeze on further implementation of
the MILGROUP Study and approve 'a new level of not to exceed
290 U.S. military spaces for the region, leaving the detailed
breakdown of each MILGROUP to be worked out among the
Ambassadors, USCINCSO, and Washington. In deciding upon the
new level for individual posts, the IG/ARA will oppose any
increases that are not demonstrably contributive to the
objectives of increasing U.S. influence.
Pros:
1. This level fully meets the recommendations from the
field, and would permit some adjustment and compromise for
individual countries between the CINCSO and country team
recommendations.
2. By granting a reprieve from the previously rigid
ceiling of 236 we give the field an enlarged resource base
to achieve the newly mandated objectives of increased contact
with the Latin American military.
3. The Secretary of Defense ordered the strength of the
Military Missions to be frozen at 345. This option does not
recommend a gross increase, but merely a smaller reduction
than was originally envisaged.
Cons:
1. The magnitude of the dispensation (54) may convey
the impression to the field that the lid is off on the low
profile and may stimulate further requests for raising the
ceiling.
2. Since there is still no persuasive evidence that
increased numbers will lead to improved contact and influence
(in the absence of improved quality and expanded assistance
programs) the sole result of fixing the new ceiling at 290 may
be to give the impression of decisive action while in fact
diverting attention from meaningful reform and new initiatives
in the area of improved selection and promotion of officers,
consolidation and reorganization of the Military Missions and
attache staffs, and more substantive military aid programs.
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9
3. Approximately forty percent of the recommended added
positions seem to be administrative or technical, therefore
not related to the goal of improved contact and influence.
4. The recommended increase is largely confined to the
Military Missions, which are primarily technical in function
and specialize in assistance (although they enjoy excellent
access to the host country military) while only 10 increased
spaces are recommended for the attache staffs, which are more
directly concerned with politico-military policy objectives.
III. The Relevance of NSSM 108 to the ARA/IG Study
The recommendations of the ARA/IG on military aid and
MILGROUP manning levels relate to the broad compass review of
U.S. policy toward Latin America called for in NSSM 108.
The IPMG does not consider that decision on the ARA/IG
recommendations cited above need be deferred subject to
review of NSSM 108 and Presidential decision that may follow
such a review. However the IPMG does recommend that any
decision on military aid and MILGROUP manning levels be
considered tentative and open to reassessment following
completion and decision on NSSM 108.
The IPMG also notes that the ARA/IG, in its considera-
tion of related non-military programs, recommends "that within
the context of the primary purposes and legal restraints of
CU, USIS, and development assistance programs, those
activities that provide maximum opportunities for influencing
the military be expanded. A report of actions taken or to
be taken should be submitted by the IG/ARA to the SRG by
March 25, 1971."
In view of the above, the IPMG invites the attention of
the SRG to the fact that any proposed expansion of CU programs
in Latin America will relate directly to an on-going CU study
requested by the NSC to examine current worldwide U.S. exchange
programs. Additionally, the Agency for International Develop-
ment recommends that the SRG take special note of the fact
that if decisions are made in connection with the objective
of establishing and maintaining close relations with U.S.
military representatives and military leaders in Latin
America such decisions will also have the effect of
prejudging, if not predetermining, policies in other
important areas, as well as setting certain basic directions
for the review of overall United States policy and programs
in Latin America called for in NSSM 108. For instance, there
are broad policy implications signified by the ARA/IG
recommendations regarding (a) the concept of a "total
resource approach" to coordinated military and economic
assistance planning inherent in the President's new Security
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10
Assistance and Economic Development Programs and country
decisions on how it will use its own resources; (b) the
references to FMS without a discussion of terms and the
effect of increasing debt in a region where the payout of
foreign exchange to the developed world in debt repayments
now exceeds the input of development resources; and (c) the
position that the U.S. might propose to take in the OAS or
other international forums on a multilateral approach to
regional arms control. In specific terms, the reference to
expanding development assistance program activities that
"provide maximum opportunities for influencing the military"
will directly affect economic technical assistance programming
in the short term, and in the long term the new Development
Technical Institute and the Development Corporation not yet
in being (whose non-political characteristics were set down
in the President's message/the Peterson Report).
In view of the foregoing, the IPMG recommends that
A.I.D. be invited to present its views when the SRG addresses
the recommendations contained in the ARA/IG study and that
any decision on this and similar recommendations of the
ARA/IG be made in light of decisions on NSSM 108 and other
on-going relevant studies.
SECRET
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DEPARTMENT OF STATE
7100541
Date:
Washington, D.C. 20520
January 13, 1971
SECRET
MEMORANDUM FOR MR. HENRY A. KISSINGER
THE WHITE HOUSE
Subject: U.S. Military Presence in Latin
America
Enclosed is my memorandum of January 12 trans-
mitting a study of the U.S. military presence in Latin
America in response to your memorandum of December 8.
This study has been conducted, as requested in your
memorandum, by the NSC Interdepartmental Group for
Inter-American Affairs.
At the request of the Chairman of the NSC Inter-
departmental Political-Military Group, I am forwarding
to him a copy of this study for consideration and
comment by that Group, since a number of the issues
bear on matters which are also of interest to it. I
have been informed by the IPMG Chairman that they
will make every effort to forward their comments to
you by close of business January 15, 1971.
Chales Manyer
Charles A. Meyer
Chairman, Interdepartmental
Group for Inter-American Affairs
Enclosures:
1. Memorandum dated
January 12, 1971.
2. List of recommendations.
3. Study.
DECLASSIFIED/RELEASED ON 4/23/02
by NARA on the recommendation of RS the NSC
under provisions of E.O. 12958
SECRET
Group 4
Downgraded at 3-year intervals.
Declassified 12 years after date
of origin.
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P-
LATIN AMERICA
NTT FITONI T
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C03235329
EO 13526 3.3(b)(1)>25Yrs
0
Nachmanoff
SECRET
RECEIVED. NSC
Controlled Dissem
MAY 7 10 47 AM '71
NATIONAL
INTELLIGENCE
ESTIMATE
file
The Soviet Role in Latin America
SECRET
NIE 80/90-71
29 April 1971
No
13
DECLASSIFIED
E.O. 13526, Section 3,5
NLN04-A-05/8911 per sec 3.3/6.1 Hr. 1/11/2016 6
By NARA, Date 5/19/2017
1 of 25
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THIS ESTIMATE IS SUBMITTED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE AND CONCURRED IN BY THE UNITED STATES
INTELLIGENCE BOARD.
The following intelligence organizations participated in the preparation of
the estimate:
The Central Intelligence Agency and the intelligence organizations of the Depart-
ments of State and Defense, and the NSA.
Concurring:
The Deputy Director of Central Intelligence
The Director of Intelligence and Research, Department of State
The Director, Defense Intelligence Agency
The Director, National Security Agency
Abstaining:
The Assistant General Manager, Atomic Energy Commission, and the Assistant
to the Director, Federal Bureau of Investigation, the subject being outside of
their jurisdiction.
WARNING
This material contains information affecting the National Defense of the United States
within the meaning of the espionage laws, Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner to an unauthorized person is prohibited.
GROUP
Excluded from automatic
owngrading and
declassification
SECRET
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C03235329
105
90
75
60
45
Rio
30
30
Grande
Latin America
GUL
OF
MEXICO
MEXICO
Havana
CUBA
2
Cientues
a
Mexico City,
DOMINICAN
JAMAICA HAITI
REPUBLIC
NORTH
>Puerto Rico
DR. HOND.
Port-au
Santo
Kingston
Prince
Domingo
Belmopan
CARIBBEAN
SEA
ATLANTIC
GUATEMALA
HONDUIDAS
15
15
o
Guatemala City
legucigelpa
San Salvador
NICARACOA
OCEAN
EI. SALVADO
Managua
5
Caracas
Port-of-Spain
COSTA
Panama
03
o
RICADO
TRINIDAD & TOBAGO
San José
VENEZUELA
PANAMA
Orinoco
GUYANA
Rio
SURINAM
Bogota
Georgetown
FRENCH GUIANA
Paramaribo
o
Cayenne
COLOMBIA
Quito
0
0
GALÁPAGOS IS.
2)
Amazon
ECUADOR
Manaus
Belém
B
R
A
Z
I
L
Recife
Fran
Cisco
PERU
Lima
Rio
Salvador
15
La Paz
Brasília
BOLIVIA
PACIFIC
São Paulo
Antofagasta
Rio de Janeiro
OCEAN
Asunción
EASTER 1.
Parana
Pôrto Alegre
30
30
Rii
Valparaiso
Santiag
T
Rosario
URUGUAY
7
Ruenos Aires
Montevideo
Er)
SOUTH
ATLANTIC
R
45
45
OCEAN
A
FALKLAND IS.
BOWNDARY HEPREEENTATION is
NOT NECRESARILY AUTHORITATIVE
90
75
60
45
105
334 4-71
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NIE 80/90-71
THE SOVIET ROLE IN
LATIN AMERICA
SECRET
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CONTENTS
Page
THE ESTIMATE
1
I. THE CHANGING ENVIRONMENT IN LATIN AMERICA
1
II. MOSCOW'S PERCEPTION OF ITS OPPORTUNITIES IN LATIN
AMERICA
4
III. THE INSTRUMENTS OF SOVIET POLICY IN LATIN AMERICA
7
A. Diplomatic Relations
7
B. Covert and Subversive Efforts
8
Covert Activity
8
Relations With Communist Partics
8
Insurgency and Terrorism
9
C. Economic Relations
10
Trade and Aid
10
Air and Sea Communications
11
D. Cultural, Educational, and Propaganda Matters
11
E. Military Activities
12
IV OUTLOOK
13
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THE SOVIET ROLE IN
LATIN AMERICA
THE ESTIMATE
roles played by both Washington and Moscow
1. Over the past few years, the political
in the area. The preponderant position of the
US is eroding, and at an accelerating pace,
environment in Latin America has altered
for complex reasons rooted in economic de-
dramatically, and the pace of change is clearly
velopments, social pressures, and history. Con-
accelerating. Radical approaches to problems
versely, the Soviet Union and other countries
are gaining ever wider support. In several
as well are more and more looked to by
countries, leaders of a new stripe have taken
nationalistic elements as a balance to American
over and have begun to make far-reaching
preponderance, often for purely opportunistic
changes. Nationalism is a powerful motive
reasons.
force in this process. The Soviets are well
3. Nationalism is a strong and growing force
aware of these developments, and their in-
in Latin America, and it is increasingly taking
terest and their activities have grown. This
on an anti-American coloration. This is so be-
paper examines recent trends in the area (ex-
cause the US is the dominant external force,
cluding Cuba) and their implications for the
and the Latins have bitter memories of polit-
position of the US and the future role of the
ical and economic pressures going back many
USSR, in the main for the next five years
decades. Local leaders, eager to stress their in-
or so, but sometimes for longer periods. Its
dependence, frequently complain about US
main conclusions are contained in paragraphs
hegemony and paternalistic interference. US
34-41.
firms are the ones most affected by schemes
of nationalization. The Latins occasionally
I. THE CHANGING ENVIRONMENT
take actions which they recognize as affronts
IN LATIN AMERICA
to the US, such as the capture by Ecuador of
US tuna-boats operating within the 200 mile
2. The process of change in Latin America
territorial limit that it claims. Several govern-
is mainly in response to forces operating there,
ments are actively seeking to diversify their
rather than to US or Soviet actions. Yet the
purchases of arms, sources of aid, and trading
process has important implications for the
partners.
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4. The spread of nationalism creates both
6. Latin American intellectuals, socially-
opportunities and problems for the Soviets.
minded military officers, and clerics are in-
It provides the USSR with an opening for
creasingly persuaded that drastic changes in
policies and actions designed to speed the
the established order are necessary. The US is
erosion of US influence and to increase its
scen as the center of capitalism and as the
own. The Soviets have something to offer
advocate of free enterprise, and thus as an
to those who seek a counterweight to the
opponent of such change. Consequently, the
US and a diversification of purchasing and
US and what it stands for are on the defen-
trading patterns. At the same time, the con-
sive. The local oligarchs, moreover, have been
ccrn of Latin Americans to run their own
traditionally associated in the public mind
affairs places a constraint on the expansion
with US businessmen and diplomats. US aid
of Soviet influence. The military-populist gov-
is increasingly regarded as politically moti-
ernment in Pcru, for instance, is certainly out
vated and self-serving; the Alliance for
to assert its independence of the US, and it
Progress is widely considered a failure.
has sometimes done so abruptly and abra-
7 The Soviets, claiming to be the exemplars
sively, but it remains wary of the Soviets and
of socialism and supporters of the working
is of no mind to become the client of any
man, stand to gain from this growing anti-
power. The Mexican Government's belief that
capitalist, anti-US sentiment. Marxism has long
the USSR was involved with the Revolutionary
had a considerable following among Latin
Action Movement (MAR) was sufficient to
American intellectuals, especially at the uni-
gct five Sovict diplomats expelled from the
versities. Unfamiliarity with the Soviet Union
country.
makes it easier for Moscow to appear as a
5. To a grcater or lesser degree, all Latin
counterbalance to US influence in the region.
American countries suffer from deep-seated
To many Latin Americans, US concepts ap-
economic and social problems which resist
pear familiar and shopworn, in contrast to
those of the Soviets. Latins share little history
solution. Increasing social unrest and unful-
with Russia but, as they see it, rather too
filled popular expectations have contributed
much with the Colossus of the North.
to political instability and the growing radi-
calization of Latin American institutions. In-
8. In many ways, Latin American govern-
come is unevenly distributed, and in most of
ments are casting off US influences because
the countries small ruling classes still possess
they feel capable of directing more of their
most of the money, land, and material goods.
own affairs. In a sense they are right. More
Unemployment and underemployment, high
than most countries in the Third World, the
advanced nations in Latin America have the
birth rates, overcrowded and rapidly growing
skills and resources needed to modernize
cities-all contribute to social and political
their societies and some prospects for devel-
tensions and to impatience with present in-
oping new markets and sources of capital.
stitutions. None of these conditions is entirely
Among the important constraints have been
new, but modern means of communication
the lack of institutions to suit societics grow-
and a growing political awareness have com-
ing more mature, a reluctance to invest at
bined to raise the level of expectations of the
home for the long term, and their own leth-
increasing numbers of underprivileged, and to
argy and willingness to rely on the US and
reveal the gap bctween what is and what
others to do things for them. The political,
could be.
social, and economic reforms now being ap-
2
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plied in many Latin American countries are
11. The new regime in Chile, a leftist coali-
designed to tackle these problems. Out of this
tion of Communists, Socialists, non-Marxist
process is gradually developing a sense of
Radicals, and some splinter parties, poses par-
confidence and identity.
ticularly delicate problems for the US and
9. Most of the military coups in the past
provides new opportunities to the Soviets.
few years have been engineered not by mili-
President Allende's victory was a vindication
tary figures of a conservative bent as in carlier
of the vía pacífica that Moscow has been
times, but by officers of a reformist bent, who
publicly advocating in Latin America for
more than in the past are from the middle and
years. The Chilean Communist Party, easily
lower classes. In general, the new military
the best organized and strongest in South
strongmen, whether of the left or right, are
America, plays a major role in the ruling
convinced that civilian politicians have shown
coalition. Allende, however, is an outspoken
themselves to be incapable of adjusting to a
nationalist and would certainly not consider
changing world, and fecl an obligation to stay
himself a disciple of Moscow. His Socialist
in office for some time to direct the restruc-
Party is on the whole far more militant than
turing of their countries. All are nationalists
the Communist Party and has frequently com-
and statists, even the devoutly anti-Commu-
peted with it. From time to time, Allende
nist, such as the military rulers of Brazil. Most
himself has been at odds with the Commu-
are out to demonstrate their independence of
nist leadership. Nevertheless, he sees many ad-
the US. Some, as in Peru, share the anti-
vantages in dealing with the USSR, and be-
capitalist and anti-US attitudes described
lieves he can avoid Castro's dependence on
above.
Moscow. His electoral victory has given new
hope to Communists elsewhere in Latin
10. The military regime in Peru is some-
America. If he makes some progress towards
thing new in Latin America. The rulers of
alleviating Chile's massive social and eco-
Peru are far removed from the old fashioned
nomic problems, this would further bolster
caudillos, whose strength and appeal were
the cause of Marxist parties in Latin America
personal rather than institutional. More na-
and prospects for popular fronts.
tionalistic, better trained, and with a program
of action, the new breed is out to make funda-
12. Outside Cuba and Chile, the Commu-
mental social and economic changes and to
nist Parties in Latin America do not exert
reduce the inequalities in Peruvian society.
much political influence, nor are they the
Confronting powerful local and foreign busi-
most vigorous or effective exponents of social
ness interests and secking a counterweight to
change. Many of their leaders are in their
members of the American Revolutionary Popu-
seventies; they are prooccupied, in most cases,
lar Alliance in popular organizations, they have
not with fomenting revolution but with avoid-
enlisted the services of local Communists to
ing confrontations and seeking respect, ac-
rally labor and other groups in support of
ceptance, or legality. Youthful, left-wing
government programs. The goals of the mili-
romantics in Latin America, fascinated by Che
tary-populists are probably shared by junior
Guevara and other guerrilla heroes, tend to
officers in many other countries who tend to
be better cducated, more widely traveled, and
regard the Soviets and the orthodox Commu-
closer to the lower and middle classes than
nist Parties as "old hat" Far left Marxist groups
their elders. Officers such as these are likely
like the Leftist Revolutionary Movement
to exercise political power in other Latin
(MIR) in Chile and terrorist organizations
American countries over the next decade.
such as the Tupamaros in Uruguay are con-
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temptuous of the more staid Soviet-sponsored
distrust strangers and imported idcas, and
groups. Their acts of violence reflect badly
usually seck to improve their lot by support-
on the Soviets and their local clients, who are
ing a local demagogue or caudillo.
often tarred with the same brush.
15. Nevertheless, most Latin American
13. The established order is itself in con-
statesmen are moving towards some expansion
siderable disarray For example, internal divi-
of their countries' relationship with the So-
sions and conflicts of goals are clearly visible
viets. This is chiefly out of a desire to have
in the Roman Catholic Church. In much of
a counterbalance to the US influence in the
Latin America, strong elements of the Church
region and to mollify left-wing elements in
are actively secking to improve the lot of the
their own countries. Another motive is the
poor and oppressed. Some pricsts, for example
desire to take advantage of the Soviet presence
in Argentina, Brazil, and Colombia, have gone
to bargain with the US, on such matters as
so far as to coopcrate with terrorist organiza-
trade and investment.
tions; these churchmen are often more militant
than the local Communists. Many of the new
II. MOSCOW'S PERCEPTION OF ITS
breed share short-term goals with the Com-
OPPORTUNITIES IN LATIN AMERICA
munists-e.g., to organize rural workers in Bra-
16. Traditionally, Moscow regarded Latin
zil or to support Allende's reforms in Chile—
America as being, in broad but fundamental
and they rail against the capitalist system and
ways, of a piece with other parts of the under-
the oppressive nature of current regimes.
developed world, and subject to roughly the
Nevertheless, the traditional mistrust of com-
same patterns and tempos of change. This view
munism is strong in the Church and in most
had a doctrinal foundation, but it also rested
Church-affiliated groups. The hierarchies in
on the qualities which these various arcas
many countries remain concerned about pre-
shared-conomic backwardness, political in-
serving their prerogatives in religion, educa-
stability, and, until quite recently, their loca-
tion, and culture. The Church will resist such
tion beyond the reach of Soviet military power.
threats as it perceives to its institutional inter-
ests, though its effectiveness may be limited
Within this broad scheme of things, Latin
by internal divisions.
America long resided ncar the outer edges
of the USSR's political consciousness, and for
14. Antipathy to the Soviets is still perva-
several reasons. In addition to the lack of
sive in Latin America. While important ele-
historical tics and cultural affinity, the USSR
ments traditionally sympathetic to the US-
had never developed any economic interests
business and professional elites, publishers,
there. From the standpoint of geography and
the military, and the Church-now often as-
security, the area was on the periphery of
sociate themselves with ultra-nationalist and
Soviet concern, as the Middle East and Asia
anti-US forces, such elements remain by and
were not. Most important, the Sovicts viewed
large antagonistic to the USSR. So do most
Latin America as securely bound to the US
other Latin Americans with a stake in the
politically and economically, and calculated
prevailing system. The peasants, who are con-
that the US had the means to keep it so for
servative and largely ignorant of the outside
some time to come.
world, are particularly hostile to outsiders and
17 The USSR expended little effort during
foreign idcology-as Che discovered in Bo-
the 1920s and 1930s to develop bases of in-
livia. Moreover, most poor city dwellers retain
fluence in Latin America. The Soviets provided
some aspects of the peasant outlook; they too
some support to local Communist partics,
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which for the most part were faction-ridden
the containment of Castroism to Cuba proved
and encrvated. Moscow's experience with them
this calculation overly optimistic. In the years
gave it small cause to feel confident of either
immediately thereafter, Moscow's problem was
their revolutionary commitment or their or-
to recover from the consequences of this mis-
ganizational skills. With a few exceptions, they
calculation and to find a sounder balance
were of little use to the Russians and were
between opportunity and risk. A related aim
generally repaid with contempt or indifference.
was to keep its alliance with Cuba from com-
Soviet diplomatic representation, though ex-
promising its relations with the rest of Latin
tended somewhat during and after World War
America.
II, was thin and sporadic until recently.
The Soviet effort to establish a foothold in
20. The USSR's Latin American policy
Guatemala in the early 1950s failed.
seems no longer encumbered by the confu-
sion and disarray which set in after the Cuban
18. After 1955, Stalin's successors launched
crisis. The failure of guerrilla efforts in Bolivia
a more active policy toward the Third World.
and Peru and the victory of the popular front
The Soviet approach to Latin America em-
in Chile have helped confirm the general cor-
bodied many of the features of its approach
rectness of the vía pacífica and taken some
in other areas: whereas previously Moscow
of the wind out of the sails of the Maoists
had relied almost exclusively on clandestine
and Castroists. For these reasons and because
and conspiratorial methods, the accent now
of his increased economic dependence on the
was on developing overt ties-diplomatic,
USSR, Castro's capacity to complicate Soviet
economic, and cultural. In Latin America,
relations with left-wing forces and with Latin
however, one element vital to Soviet policy
American governments has for now been re-
clscwhere in the Third World was missing:
duced; he has become more selective in his
military aid. This was due both to a lack of
support of violent revolution and has muted
receptivity on the part of the Latins and to
his criticism of the pro-Moscow Communist
some respect for US sensitivities on the part of
parties. These circumstances may cause Mos-
the Russians. Latin America, thus, still rep-
COW to hope that it can help to hasten the
resented a special case, and, while the So-
decline of the US position and that with time
viets were gradually improving their image
many Latin American governments will look
and extending their presence, their vistas re-
increasingly to the USSR.
mained narrow until the advent of Castro.
21. The Soviet perception of Latin America,
19. With Castro's profession of Marxism-
as of the rest of the world, is shaped in part
Leninism and his alignment with the Soviet
by ideological preconceptions. But these
Bloc, the USSR gained a presence in Latin
are for the most part ambiguous enough to
America which it might have been a long time
permit the USSR considerable flexibility in
acquiring by other means, though at a pace
advancing the practical aims of the Soviet
and in a way not of its own choosing. Moscow
state. Ideologically, the USSR is committed
evidently decided, after some hesitation in
to the spread of revolution and to the eventual
accepting Castro's self-declared affiliation,
establishment of additional Soviet-style re-
that it had been handed an easy opportunity
gimes. In the case of Latin America, the pat-
both to open a political bridgehead into
tern of change is promising in the USSR's view,
Latin America at large and to make an im-
seeming in some respects to confirm its
portant strategic gain over the US. The out-
belief that history is going its way. But the
come of the Cuban missile crisis in 1962 and
situation is still sufficiently variegated and
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obscure as to warrant some uncertainty about
ment. But the number of Soviets with area
future developments. Moreover, the USSR
knowledge has grown and many of them are
might not welcome more client regimes be-
accumulating experience on the spot. Soviet
cause of the political and economic obliga-
representatives in Latin America and policy-
tions it might have to assume and the danger
makers in Moscow can, in addition, draw on
of arousing strong counteractions in the US
an expanding body of work on the area being
and among other Latin American countries.
done in Soviet academic establishments,
which, if still far from being objective, seems
22. The experience of recent years has
to be moving closer to an appreciation of
shown the Russians that it is not an easy
Latin American realities. Thus, the USSR's
matter to harness nationalism in the under-
assessment of its position and possibilitics in
developed world to their purposes, and that
the area is coming to rest on a somewhat more
influence lost by the US is not automatically
solid base of expertise and working knowledge.
influence gained by the USSR. This is re-
flected in Moscow's approach to the military-
24. In its dealings with Latin America, Mos-
populist regime in Pcru and Allende's popular
cow still pays considerable attention to de-
unity government in Chile. At first, the Soviets
velopments in Washington. Moscow surely
vicwed the military takcover in Peru as an
recognizes that many influential Americans
old-style barracks revolution; soon they came
have become critical of the nature and scope
to realize that the regime is bent on a basic
of US commitments abroad. The Soviets are
restructuring of Peruvian society, involving
conscious of the fact that there is much dis-
a diminution of the US presence. Nonctheless,
satisfaction in the US with foreign aid pro-
the Soviets turned down some of Velasco's re-
grams, that protectionist sentiment is growing,
quests for economic assistance and stalled on
and that the US Congress is increasingly op-
others. They are probably still unsure of where
posed to military aid and to the sale of cer-
Peru is heading and reluctant at this time to
tain types of arms which the Latin American
get involved economically on a large scale.
military insist on buying. The Soviets prob-
They were, of course, pleased with Allende's
ably believe that the US is so identified with
election, but realize that they would not be
forces of the status quo that the US is be-
doing either themselves or Allende a favor by
coming increasingly out of tune with the "pro-
greeting him too warmly at this stage.
gressive" trends in Latin America.
Although state-to-state relations are increas-
ing and a member of the Central Committee
25. Moscow undoubtedly sees opportunities
has been appointed Ambassador to Santiago,
for itself in all these trends, and over time will
the Soviets have scen no need to assume eco-
move to take advantage of them. Certain con-
nomic or military obligations to Chile. Mos-
siderations would argue for caution, however.
cow is anxious at this stage not to ring alarm
The costs entailed in providing aid would put
bells within Chile, the rest of Latin America,
some limits on Soviet readiness to provide
and the US.
substitute assistance. Any precipitous move
23. The Russians are still relatively new to
to expand Soviet military involvement in
the scene in Latin America and still carry
Latin America would risk a serious worsening
around a heavy load of ideological baggage.
of the general climate of Sovict-American re-
Differences in national character and tempera-
lations. Nonetheless, there are many things
ment between them and the Latins no doubt
the Russians can do in Latin America with-
also impair their perception of the environ-
out abandoning their low profile, gradualist
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approach (e.g., modest sales of arms and more
US is unable to cope effectively with the
political contact with the elites)
currents running against it. The improvement
26. The Soviets are extending the geo-
of their own image in the area and the ex-
graphical range of their naval operations as
perience they have gained in their dealings
a means of enhancing their international in-
with the Third World probably give them
fluence and prestige. They also have an in-
some confidence that they can exploit current
terest in improving their overall operational
trends. The shifting political climate may lead
capabilities, with respect, for example, to sub-
them to conclude that their earlier expecta-
marine, antisubmarine, and intelligence-gath-
tions and objectives were too modest.
ering operations. The establishment of a pres-
ence in the Caribbean supports these aims,
III. THE INSTRUMENTS OF SOVIET
while contributing to a reduction of US pres-
POLICY IN LATIN AMERICA
tige, and gives symbolic reinforcement to their
A. Diplomatic Relations
commitment to Castro.
29. The USSR has been able to expand its
27 Moscow probably sees its present naval
diplomatic relations in the last decade to in-
activities in the Caribbean as laying the foun-
clude all of the major Latin American coun-
dation for the eventual development of a
tries and many of the smaller ones. The
broader military presence in Latin America
embassy staffs, while still small in comparison
at large. It probably discerns obstacles to the
with other Soviet missions in the Third World,
establishment of a broader presence because
are growing in numbers and expertise. Most
of competing claims on its present military
Soviet diplomats are acting in a more sophis-
resources (e.g., in the Mediterrancan), the
ticated fashion than previously and are trying
great distances involved, and the need for
to establish a rapport with Latin American
additional port facilities. Nonetheless, the So-
governments by appearing more understand-
viets probably believe that within the next
ing of their needs and aspirations. Yet the
few years they can make their naval presence
Soviets often find it difficult to overcome
in the Caribbean continuous, perhaps estab-
the latent suspicions of Latin Americans who
lish a presence elsewhere around South
are aware of earlier examples of Russian
America, and persuade a few Latin nations
meddling in the internal affairs of other Third
to accept Soviet arms, equipment, technicians.
World countries; such incidents as the recent
and possibly some help in constructing naval
Soviet embarrassment in Mexico tend to keep
facilities. They would hope in this way to
such suspicions alive. In order to dispel them,
add to their political weight in the area gen-
the USSR is attempting through its propa-
erally while placing some constraints on US
ganda and otherwise to project an image of
military options there.
the Sovict Union as a distant but powerful
friend of the Latin American people.
28. There is no doubt much that is tenta-
a. In January 1960, the USSR had diplo-
tive in Moscow's thinking about the area as
matic relations with only three Latin Ameri-
a whole, as well as about its separate parts,
can countries (Argentina, Mexico, and
and much that is provisional in its approach.
Uruguay). Now it has relations with 13:
But the Soviets recognize that anti-US feeling
Cuba, Mexico, Costa Rica, and all the
is on the rise in Latin America, and their
countries of South America except Paraguay.
public statements indicate a belief that the
This dramatic change has resulted partly
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from the efforts of Latin American govern-
ica, Soviet intelligence officers meet openly,
ments to underline their independence of
and where required clandestinely, with the
the US, and partly from the growing con-
Latin Americans they deem influential: stu-
viction that a Soviet diplomatic mission
dent leadcrs, trade union figures, government
no longer threatens the stability of local
officials, or members of the oligarchy. In the
institutions. Thus, Latin American govern-
gray area between diplomacy and subversion,
ments have come to believe that the ad-
this expansion of personal relationships is used
vantages of diplomatic relations, such as
to increase Soviet influence locally as well as
the potential for trade and aid, outwcigh
to further a variety of anti-US purposes and
the disadvantages. The odds are good that,
to promote such current objectives as the
in the next several years, the Sovicts will
recognition of Cuba.
have a mission in all but a few Latin Amcri-
can countries.
Covert Activity
a. The line separating overt and covert
b. Soviet diplomats in Latin America be-
Soviet activities in Latin America is blurred.
have much like other diplomats. Increas-
In keeping with the pattern elsewhere in
ingly proficient in Spanish or Portuguese,
the Third World, about half the 351 Soviets
they work with influential groups and in-
assigned to missions there are known or
stitutions and cultivate individuals in im-
suspected intelligence officers. Almost all
portant positions. By and large, their be-
the intelligence officers spend much of
havior has been quite "correct" and their
their time performing the work of foreign
profile fairly low. They tend to be more
service officers, including the cultivation of
knowledgeable about Latin Amcrican habits
influential people. The Soviets find this
and intcrests than they used to be, and give
activity handy for spotting and evaluating
a far better impression than the diplomats
potential agents. In Pcru, they are develop-
of earlier cras.
ing a range of contacts among influential
Peruvians outside the government
B. Covert and Subversive Efforts
30. Despite Moscow's emphasis on expand-
ing overt ties with Latin American countries,
it continues to conduct a variety of covert
b. Moscow is also trying to establish a
activities, judging these countries to be vul-
network of illegals in Latin America, i.e.,
ncrable to such tactics and inefficient in cop-
Sovict intelligence officers documented as
ing with them. The USSR funds most Com-
Latins. Many of these are targeted against
munist parties and encourages or acquiesces
the US rather than against Latin America.
in the insurgent tactics espoused or employed
The notoriously poor record-keeping of
by a few of them (e.g., in Haiti and Guate-
Latin Americans makes it relatively easy
to document a Soviet as a Latin American.
mala). But it faces a dilemma: aid to the
Although illegals communicate directly with
weak and often ossified local Communist
Moscow, the presence of large Soviet mis-
leaderships does not win the hearts and minds
sions helps to provide them with support.
of the militant or idcalistic youth in univer-
sities and elsewhere who seek more immediate
Relations With Communist Parties
and drastic change than the Communist parties
c. To Moscow, the orthodox Latin Amer-
offer. Wherever Soviet diplomatic and trade
ican Communist parties are essentially in-
missions have bcen established in Latin Amer-
struments of Soviet policy. With rare ex-
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ceptions, e.g., divisions in the Venezuelan
Latin America. Moscow worries about
and Mexican parties over the invasion of
groups like the Tupamaros being to the
Czechoslovakia, the Latin parties have sup-
left of the orthodox Communist Parties and
ported the Soviet line more consistently
fears that these outfits may give the left
than have the West European Communist
such a bad odor that all leftist organizations
Parties. This loyalty is in many cases the
will be repressed.
expression of a half-century commitment
to the Soviet way of doing things. More-
f. At the moment, the Guatemalan Com-
over, Moscow has traditionally subsidized
munist Party seems to be the only one
the Latin American parties, in an amount
actively engaged in violence. Its terrorist
currently estimated at $7 million a year.
arm has directed the assassinations of
Moscow provides training in the USSR for
dozens of security officials in recent months,
promising young Communists and trips for
and has pursued this violent course for
the veteran party lcaders and functionaries.
several years, though the Cuban-sponsored
The willingness of most of the Latin Amer-
guerrilla group has been generally more
ican parties to follow Moscow's direction
active. The party maintains good relations
closely derives in part from their small size,
with Moscow, and in its policy pronounce-
their limited political prospects, and their
ment emphasizes traditional organizational
strong need for outside support.
methods. The Haitian Communist Party, a
minuscule group in exile, is the only party
d. Most pro-Soviet Latin American par-
in this hemisphere that is encouraged to
ties are occupied primarily with political
violence by both Moscow and Havana. The
tactics. They would like to emulate the
Colombian Communist Party has a guerrilla
Communist Party of Chile and attain a
arm, which has been dormant for the last
share of power through the electoral process.
three years.
All, however, have developed clandestine
cadres, even such legal parties as those of
g. Even tenuous, indirect connections be-
Colombia, Venezuela, and Uruguay Some
tween the USSR and extremist organiza-
of these cadres were trained in guerrilla
tions can cause problems for the Soviets.
warfare in Cuba. A few parties, including
In March 1971, 5 Soviet diplomats, all of
those of Colombia and Argentina, have ad-
them KGB officers, were expelled from
mitted publicly that violence may be re-
Mexico after the police interrogated 19
quired in their own countries to achieve
members of the MAR, a group formed in the
and hold power.
mid-1960s by Mexican students attending
Insurgency and Terrorism
Patrice Lumumba Friendship University in
Moscow. After leaving Lumumba, they were
e. Soviet policy towards the use of vio-
given guerrilla training by North Korea.
lence varies from country to country. On the
Historically, the Mexicans have been toler-
whole, Moscow is leery of associating itself
with any kind of terrorism in Latin America
ant of covert Soviet activities operating out
at this time. The Soviets traditionally have
of the 58-man Russian Embassy in Mexico
not condoned high-level political assassina-
City, since these were directed at the US
tion, kidnappings, or bombings; they look
and Central America rather than Mexico.
upon indiscriminate terrorism as counter-
The explusions will make more of a splash
productive and are concerned for the safety
in the rest of Latin America than would
of their own buildings and diplomats in
similar incidents in Argentina or Uruguay,
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where Soviet diplomats are frequently de-
look upon Moscow as a potential source of
clared personae non gratae. Already the
financing for ambitious development proj-
Costa Ricans are having second thoughts
ects.
about permitting the Soviets to open an
b. Total Latin American trade with the
embassy in San José.
USSR in 1969, except for Cuba, was only
$136 million, less than one percent of Latin
C. Economic Relations
America's world trade. Incomplete data for
31. Soviet spokesmen have often talked
1970 suggest that the figure probably did
about the desirability of expanding trade with
not exceed the 1969 level and may have de-
Latin America, but the results have generally
clined slightly.1 It is difficult to discern a
been disappointing to both Latins and Rus-
trend in this trade, for it fluctuates sharply
sians. The USSR buys relatively small amounts
from year to year.
of Latin America's agricultural commodities,
C. Latin American countrics in general
and has given little indication that it is pre-
pared to absorb much larger quantities overall.
continue to enjoy a favorable balance of
Morcover, Latin American businessmen have
trade with the Soviets. Although willing ex-
generally bcen reluctant to purchase Soviet
porters, Latins have been reluctant to im-
manufactured goods when US. or European
port Soviet manufactured goods. Latin busi-
goods were available instcad. The USSR has
nessmen are put off by the price, quality,
extended far fewer credits to Latin America
and specifications or design of many Soviet
than to other areas in the Third World. The
products and remain skeptical about servic-
Latin suspicion of Soviet products and tech-
ing and the availability of spare parts for ma-
nical advisors plus problems with servicing
chinery and equipment. Castro, who has had
and spare parts make it very difficult for the
no little experience with the Russians, has
Soviets to advance much in this field. Where
advised Allende to kecp his credit good
they can, the Soviets try to exploit economic
with West European suppliers. Moscow has
relations to obtain political entree or leverage.
made it clear that its level of purchases
Coffee purchases in Costa Rica and Colombia
from Latin America will depend to a con-
have been used for these purposes.
siderable extent on Latin American willing-
ness to increase imports of Soviet manu-
Trade and Aid
factured goods and to correct unfavorable
trade balances.
a. Economic relations between Latin
America and the USSR continue to present
d. Soviet economic assistance to Latin
an appearance of greater involvement than
America, except for Cuba, has been insig-
is actually the case. Nevertheless, Soviet and
nificant. This is especially true when it is
Latin efforts to expand economic ties have
measured against Latin America's require-
borne some fruit, though trade levels are
ments for development financing and against
still very low. Nine Latin American coun-
inflows from international financial institu-
tries have formal commercial relations with
tions and the US. Since 1954, Soviet credits
the Soviets, in some cases simply as a way
have amounted to $277 million, a mere 4 per-
to demonstrate their economic independence
cent of the $7 billion Moscow extended to
of the US. A few Latin countries hope to
underdeveloped countrics. Latin American
find a large export market in the USSR
for surplus agricultural commodities and
¹For a country by country breakdown of Soviet
trade with Latin America, including Cuba, sce Table I.
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governments have only drawn on 13 percent
g. The problems of this operation brought
of these credits, mainly because of consumer
home to Moscow some of the geographic
resistance to the purchase of Soviet equip-
constraints on its potential for quick re-
ment. Soviet credits are currently most ap-
sponse to situations in Latin America. Since
pealing to the new regimes in Peru, Bolivia,
then, the Soviets have stepped up their
and Chile. Of $66 million worth of new Rus-
efforts to establish more air routes to Latin
sian credits to Latin America in 1970, all
America and to find some customers for
but $10 million went to Peru and Bolivia.
Soviet civilian aircraft. Negotiations are
Following Allende's election, the Chilean
under way for a new Moscow-Havana-
Government entcred into negotiations with
Lima-Santiago air route, but Brazil turned
Moscow about using some idle Soviet credits
down the request for a Moscow-Dakar-Rio-
for constructing a fishing port at Valparaiso.²
Santiago route.
e. Moscow occasionally uses its economic
h. The Peruvians have discussed the pur-
activity for very specific political goals. For
chase of $48 million worth of Soviet passen-
example, the Soviets bought coffee owned
ger aircraft and cargo plancs, and the So-
personally by President Figueres of Costa
viets have offered to train Peruvian airline
Rica. The purchase preceded discussions
personnel and to maintain hangars in Lima.
about opening a Soviet mission in San José.
The Peruvian airline is losing money, how-
Soviet purchases of surplus Ecuadorian
ever, and may just be doing a bit of com-
bananas strengthened the Soviet political
parison shopping. The Chilcan Government
position there, and Moscow's willingness to
airline showed some interest in purchasing
buy Colombian coffee has opened doors to
Soviet aircraft, but decided to buy more
them in conservative circles in Bogota.
Boeing 707s instead, if financing can be
arranged. Chileans realize that it is casier
Air and Sea Communications
to maintain a unified air fleet, to get US
f. The Peruvian earthquake in May 1970
spare parts, and to have the planes over-
provided Moscow with a golden opportunity
hauled in the US. Uruguay has chimed in
to demonstrate its ability to help Latin
with some inquiries to Moscow about pur-
Americans. The Cubans beat them to the
chasing fishing boats and civilian aircraft.
punch by a month and ran a very effective
Over the next five years, one or another
operation; the US was also quick to show
airline may experiment with Soviet aircraft,
its concern. Moscow then hastily organized
but we doubt that this will catch on
a mammoth airlift of supplies but lost one
throughout the continent.
large transport plane en route and failed to
arrange adequate stopovers and servicing.
D. Cultural, Educational, and
After meeting only one-third of its prom-
Propaganda Matters
ised deliveries, Moscow cancelled the air-
32. There are fewer obstacles to the ad-
lift and ended up sending the remaining
vance of Soviet cultural, educational, and
relief supplies by sea. Although the Soviets
propaganda activities in the area. Russian per-
muffed it logistically, they still succeeded
formers, athletes, and scientists are welcomed
in making a favorable impression.
wherever they are permitted to travel; the
USSR's anti-US propaganda flourishes in those
2 For a further breakdown of credits and drawings
since 1954, including those extended to Cuba, see
countries with relatively open societies and
Table II.
little censorship. An education in the USSR
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is less appealing to most Latin Americans than
home more dedicated to communism. Most
one in the US or Western Europe, but there
students, however, end up either uncom-
are young Communists and rejects from other
mitted or disappointed with the Soviets.
schools to fill out a Latin American contingent
c. Moscow uses its broadcasting and press
at places like Lumumba University in Moscow.
facilities to disseminate a growing amount
By and large, Soviet cultural activities have
of increasingly sophisticated propaganda in
enhanced the USSR's reputation as a great
a variety of languages (currently 80 hours
and civilized power but thus far appear to
a week of radio broadcasts exclusive of
have had only marginal effect in promoting
programs beamed at Cuba). They are also
Soviet political influence.
placing press items, films, and canned radio
a. The USSR now has cultural agree-
and television programs with local outlets
ments with most Latin American countries
on an increasing scale, and apparently to
and is showing some sophistication in im-
some effect. The most effective tcchnique
plementing them. The circus and soccer
seems to be to seize on stories or situations
teams are popular everywhere; Soviet mu-
that put the US in a bad light, e.g., linking
sicians, ballet dancers, films, books, and pho-
the US with the privileged classes and with
tographic exhibits are welcomed by most
unpopular business practices. Soviet propa-
cosmopolitan audiences, despite expensive
ganda is most widespread in Chile, Peru,
tickets and inefficient booking arrange-
and Uruguay, because each of these coun-
tries tolerates a wide variety of Commu-
ments in several cities. The traditional re-
nist-oriented newspapers, magazines, news
spect of the Latin American elite for in-
broadcasts, and friendship associations. So-
tellectual and cultural attainment has pro-
viet competition with Cuban propaganda
vided Moscow with many good oppor-
has been reduced since Havana began to
tunities to make friends and appear less
cut down its revolution-mongering in 1968.
crude. It is doubtful, however, that their
efforts have greatly bolstered Soviet po-
E. Military Activities
litical influence.
33. The huge distances involved and US
b. As in other parts of the Third World,
sensitivity to military operations in its back-
the Soviets have made a major effort to
yard have heretofore limited the Soviet mili-
attract impressionable students to the USSR.
tary presence in Latin America. Moreover,
Some 1,640 Latin Americans are studying
until recently, no Latin American govern-
there now, and an additional 780 are in East-
ments outside Cuba would have bcen willing
ern Europe. The largest contingents at pres-
to permit Soviet port calls by naval vessels
or to contemplate purchasing Russian mili-
ent are from Ecuador, Chile, and Colombia;
tary equipment. In the last few years, how-
over the years, most have come from the
ever, the Soviet military presence in the Carib-
first two plus Bolivia and Mexico. The poor
bean has expanded significantly. Soviet ships
caliber of many of the students and the
have put in at several islands, and the fa-
difficulty they have in finding jobs upon
cilities of Cienfuegos in Cuba have provided
their return have severely limited the ef-
some services for Soviet naval combatants,
fectiveness of the Soviet programs. Those
including nuclear-powered submarines. In
who were already well on the way to be-
South America, the Soviets have found at
coming true believers have generally come
least one country willing to flirt with an offer
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of Migs (Ecuador) and two willing to permit
Canadian transport aircraft; West German
Acroflot to pass through on a regular basis
submarines and fighters; and Italian jet
(Peru and Chile). But the Soviets face stiff
trainers.
competition in the arms market (in recent
years, Western Europe has supplied over half
c. Ecuador, however, has become the first
of the arms purchased by Latin American
non-Communist country in this hemisphere
countries) and are inbibited by the orientation
since Guatemala in the early 1950s to con-
of most Latin American military leaders
sider an arms deal with Moscow. President
towards the US.
Velasco has already demonstrated his will-
ingness to forego all US military assistance
a. Soviet military activities in Latin
but remains nervous about the recent up-
America have largely centered on the Carib-
grading of Peru's arsenal. His government
bean. During the last 18 months, the Soviets
has become the main window shopper for
have increased the frequency and duration
arms in Europe and has already purchased
of their naval visits to the region. This serves
some equipment from France, the UK, and
to establish some sort of continuous naval
West Germany. Now Ecuadorian officials
presence in an area of great sensitivity to
have shown interest in Soviet offers to sell
the US and, indirectly, to support Soviet
jet fighter-bombers and other aircraft.
diplomacy. In addition to reconnaissance
Ecuadorians are exceptionally difficult to
flights and naval visits to Cuba and exer-
do business with and are concerned about
cises in nearby waters, a few Soviet naval
what Soviet training personnel might do in
vessels and some Soviet research ships have
Quito. Though Migs are cheaper and easier
put in at several Caribbean ports. The area
to service than Mirages, the Ecuadorians
provides particularly attractive conditions
seem to be leaning towards West European
for oceanographic and other scientific ob-
suppliers.
scrvations. The local citizens appear leery
of these visits, but Moscow will probably
IV. OUTLOOK
continue to probe in the Caribbean.
34. The next several years will probably see
b. The Soviets have only begun to interest
many more changes in Latin America. The
Latin American countries outside of Cuba
predominant trend is likely to be a further
in military assistance or procurement pro-
growth of nationalism manifested in a variety
grams. Since the US has become less will-
of ways. The US will almost certainly bear
ing to give or sell certain kinds of arms to
the brunt of both spontaneous and deliberate
antiforcign acts, and more US-owned enter-
Latin American governments, Moscow's
prises will be nationalized. US political inflü-
prospects in this field are improving. Never-
ence will probably sag further.
theless, Latin governments are much more
likely to turn to West European arms dealers
35. The Soviets will continue to encourage
than to the USSR. In the past four years,
these trends. They are likely to judge, for
arms suppliers in Western Europe and
some years ahead at least, that they can best do
this just by maintaining their low profile, keep-
Canada have sold approximately $1.1 bil-
ing out of mischief, and taking advantage of
lion worth of military equipment to coun-
favorable trends not necessarily of their own
tries in Latin America: British destroyers
making. Consequently, they will probably
and other naval equipment; French Mirage
continue to favor popular front tactics. The
fighters, tanks, and Alouctte helicopters;
Soviets will try to develop influence in non-
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C03235329
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Communist parties, the government bureauc-
tured exports of underdeveloped countries.
racy, the military and security services, and
New trade connections with Japan and West-
other important sectors of Latin American
ern Europe may lead to deals involving the
society. They will do what they can to manipu-
investment of capital in Latin enterprises, on
II
late and reinforce the anti-US aspects of Latin
terms more favorable to the Latin American
American nationalism and to use their grow-
countries than in the past.
ing presence and their advance as a great
power to further reduce US influence in the
38. The Soviet approach will be conditioned
area. Their aim would be to see installed in
by considerations of realpolitik. In these
Latin America governments hostile to the US
terms, the Russians will probably judge that
and friendly to them.
they have more to gain in the long term by
developing positions of influence in the more
36. The Soviets are also likely to see numer-
politically significant and more economically
ous chances to become more actively involved
advanced countries, such as Argentina and
in forcing the pace of change, and they will
Brazil, than in, say, Bolivia or Haiti. But ex-
certainly continue to develop Communist
pediency based on local conditions will affect
cadres for the long pull. It is improbable that
these perspectives. In countries run by leftist
the particular circumstances which produced
regimes, the Soviets will seek to take ad-
Castro's alignment with Moscow will recur
vantage of the reformist atmosphere to make
elsewhere, but there may be other such wind-
themselves useful and to improve their image
falls in Latin America which the Soviets will
as constructive and helpful. Over the longer
attempt to exploit. At some point, Castro may
term, the Soviets may find opportunities in
revive his efforts to goad the USSR into adopt-
countries where the governments are currently
ing a more adventurous policy. Competition
less responsive to the demands and frustrations
with the Chinese for influence in leftist move-
of the bulk of the population. Though different
ments will continue to be a factor in Soviet be-
Tin many ways, both Argentina and Colombia
havior, though not a major one. For all these
have ineffectual governments, hampered by
reasons, the Soviets course is not likely to re-
weak or decaying political institutions. Both
main entirely fixed but will to some dogree be
regimes are faced with strong pressures for
responsive to developing opportunities and
reform from populist movements and other
pressures. The Soviets will, of course, have to
groups. In several other countries, such as
be careful to avoid overplaying their hand. An
Brazil and Paraguay, the presence of hard-line,
aggressive policy would risk offending Latin
authoritarian military regimes inhibits the de-
American sensitivities, tarnishing the image of
velopment of moderate political groupings and
respectability that the Russians are trying to
tends to polarize society between forces of the
convey, and arousing a strong US response.
extreme right and left. Unless these regimes
37 Much of Latin America will continue to
pay more attention to some of their nations'
scek alternatives to dependence on either the
fundamental social and economic incqualities,
US or the USSR. In their search for customers
it will become increasingly difficult for them
for their products or sources of military hard-
to hold onto power, except through armed
ware and capital, Latin governments are likely
repression, or to yield it to political moderates.
to look increasingly to Western Europe and
It will be some time, however, before such
Japan. Both Japan and the European Eco-
pressures are likely to become irresistible.
nomic Community are about to implement
39. The Soviets will continue to watch
preferential tariff policies for the manufac-
events in Chile very closely. If Allende man-
14
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C03235329
SECRET
ages to stay in office, continues to cooperate
ever, that the USSR would attempt, in the face
with the Communists, and shows some pros-
of certain US resistance, to obtain the kind of
pects of succeeding, Moscow will probably be
arrangements it now has in Egypt, for instance.
more fortheoming with support. The Soviets
Such an action would, besides being provoca-
have urged Allendc to proceed cautiously and
tive to the US and offensive to Latin Ameri-
have given the impression that they are not
can attitudes, probably be considered un-
committed to come to his rescue should he
necessary for Soviet political and military pur-
get into economic trouble. Nonctheless, if his
poses. At the same time, the Sovicts may find
regime falters for economic reasons, Moscow
it feasible to obtain shore facilitics-in addi-
would probably help to bail him out. Chile is
tion to those they now have in Cuba-for
more richly endowed and has a stronger and
refueling, reprovisioning, and minor repairs.
more balanced economy than Cuba, and, in
The USSR might be able to negotiate with
the near future at least, the USSR would
Chile and perhaps one or two other countries
almost certainly not have to assume the kind
for the use of maintenance facilities for its
of burden it has been carrying in Cuba for
naval vessels. Latin countries will be receptive
a decade. Most Chileans, in any event, would
to such exercises as port and airfield visits to
be reluctant to see their country become a
show the flag and cooperation on scientific
Soviet client. If Allende and the Communist
matters. Moscow may also find customers for
Party should split, Moscow would probably
its arms, and some governments willing to
try to avoid taking sides. The exclusion of the
grant overflight and landing rights.
Communists from the coalition would be an
embarrassment to the Soviets, but this would
41. The overall expansion of the Soviet
not necessarily cause an estrangement between
presence in Latin America over the next sev-
them and Allende. They might, in the end,
eral years will cause problems for the US. The
decide that the preservation of the Allende
Soviets are likely to increase their influence
in more Latin American countries. The US
government was more important to them than
the Communist Party's immediate advantage.
hegemony will continue to crode, though the
beneficiaries will in many cases be non-Com-
40. The Soviets will almost certainly con-
munist countries-Japan and Western Europe.
tinue to expand their capabilities for military
The US, however, has since World War II
operations in the Third World. Geographical
been Latin America's major trading partner,
factors, limitations on economic and military
main source of foreign private capital, pre-
resources, and domestic and international po-
eminent disburser of foreign aid, paramount
litical considerations will have a bearing on
supplier and trainer of technological and man-
how far and how fast the Soviets proceed. In
agerial talent, and major forcign source for
the case of Latin America, the Soviets will
military training and materiel. All of this will
probably continue trying to expand their naval
not change in a few years time. The US will
operational capabilities. They may also seek to
almost certainly remain the predominant for-
acquire additional shore facilities, attempting
eign power in the area and the one whose
to test the limits of US tolerance at various
policies and presence are the most important
stages of this process. We do not believc, how-
to the region.
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15
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C03235329
16
TABLE I
LATIN AMERICA'S TRADE WITH THE USSR
Exports to USSR as Share of Total
Imports from USSR as Share of Total
Value of Trade
Exports
Imports
With USSR, 1969
Country
1965
1966
1967
1968
1969
1965
1966
1967
1968
1969
Exports
Imports
Percent
Million
US Dollars
Argentina.
4.8
6.7
1.6
2.1
1.2
1.7
0.6
0.4
0.2
0.4
25.6
6.8
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Brazil
2.1
1.8
2.1
1.5
2.1
2.6
1.9
0.7
0.6
0.5
48.8
12.1
Chile.
0
0
Negl.
Negl.
Negl.
0.
0
Negl.
Negl.
Negl.
0.1
0.2
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Colombia
0.1
0.4
0.2
0.5
0.6.
0.1
0.1
0.4
0.3
0.4
4.2
2.6
Costa Rica
0
0
0
0
2.6
0
0
0
0
0
5.2
0
Ecuador
0
0
0.1
5.8
7.6
0
0
0
Negl.
0.1
13.9
0.2
Mexico
Negl.
0.8
0.8
0.6
0.4
Negl.
0.1
0.1
0.2
Negl.
5.6
0.9
Peru.
0
0
0
0
0
0
0
Negl.
Negl.
0.2
0
1.4
Surinam.
0
0
0
0
5.5
0.2
0.1
0
Negl.
0
6.7
0
Uruguay.
1.6
4.8
2.5
1.1
0.5
0.3
0.6
0.2
0.6
0.5
1.0
0.1
Total.
1.0
1.4
0.6
0.7
0.9
0.6
0.4
0.2
0.2
0.2
111.1
25.1
Cuba.
47
46
52
44
36
49
56
58
61
54
233.0
658.0
Total for the countries listed. A few other Latin American countries trade with the USSR, but the amounts are very negligible.
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
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C03235329
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TABLE II
SOVIET ECONOMIC ASSISTANCE TO LATIN AMERICA
1954-1970
Million US Dollars
Credit Extensions
1954-
Total
Country
1965
1966
1967
1968
1969
1970
Total
Drawings
Argentina.
44.3
0
0
0
0
0
44.3
34.3
Bolivia
0
0
0
0
0
27 5
27.5
0
Brazil
0
90.0
0
0
0
0
90.0
1.0
Chile.
0
0
54.8
0
0
0
54.8
0
Colombia
0
0
0
2.5
0
0
2.5
2.5
Costa Rica.
0
0
o
0
0
10.0
10.0
0
Peru.
0
0
0
0
0
28.3
28.3
0
Uruguay
0
0
0
0
20.0
0
20.0
0
Total.
44.3
90.0
54 8
2.5
20.0
65.8
277.4
37.8
Cuban Drawings
1954-1965
1966
1967
1968
1969
1970
Total
Development Aid
118
17
27
65
87
50
364
Balance of Payments Credits
709
271
233
367
396
259
2,235
Sugar Subsidy Payments.
280
138
214
150
86
150
1,018
...
Total
1,107
426
474
582
569
459
3,617
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17
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