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SECRET
SENIOR REVIEW GROUP
MEETING
Latin American-NSSM - 108
and Military Presence Study
August 17, 1971
Mr. Kissinger
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
has been to bei declassified
MEMORANDUM
NATIONAL SECURITY COUNCIL
SECRET
ACTION
August 17, 1971
MEMORANDUM FOR:
DR. KISSINGER
FROM:
ARNOLD NACHMANOFF
an
SUBJECT:
SRG Meeting on Latin America and
Caribbean - August 17, 1971
I suggest that you use the SRG meeting this afternoon to accomplish the
following:
LATIN AMERICA
1. Approve the recommendations in the Military Presence Study (pp. 11-12
of the Analytical Summary) and approve a $9.3 million grant MAP
materiel program for FY 1972 (either programmed or earmarked from
the Contingency Fund--whichever is feasible).
2. Note that the three economic issues raised in NSSM 108 (encouragement
of private investment, US position on IDB loans, and trade policy) have
been overtaken by events and pass these issues on to Pete Peterson for
further consideration following the expropriation policy decision.
3. Note that current realities make it impossible to implement much of the
Latin American policy approach adopted in 1969 (e.g., tariff preferences,
full IDB replenishment) and there is a danger that we are slipping into
a degree of disengagement which will adversely affect our interests.
Note that anti-US nationalism is inevitable no matter what we do, but
that our approach should be to contain or limit its effects. We cannot
do so either by empty rhetoric or total neglect. Therefore, you should
focus the discussion on what we can do now to maintain a degree of
influence in countries and on issues (e.g., Law of the Sea, Cuba,
Soviet presence) which are important to us.
-- In what areas can we realistically be responsive to the Latins?
What conditions should we set for our responsiveness? Should we
downplay Hemisphere approaches and emphasize bilateral relation-
ships on a differentiated basis--which would allow us to play the
Latins off against each other, rather than unify against us?
SECRET
by NARA on the recommendation 4/23/02 of the NSC
DECLASSIFIED/RELEASED
ON
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
- 2 -
4. Ask the IG to prepare scenarios for specific steps we can take over the
next few months. -e. go, policy statements; bilateral representations;
position at the IA-ECOSOC meeting in September; strategy for differen-
tiated bilateral approaches.
CARIBBEAN
1. Refer the bauxite issue to Peterson for further handling after expropria-
tion policy is set.
2. Seek agreement on the general proposition that our interests in the
Caribbean (geographic proximity, access to routes to the Panama Canal,
requirements for strategic materials and bases) are sufficiently import-
ant to warrant a special policy approach.
3. Suggest that a Working Group be established (perhaps under Peterson)
to see if we can find ways to give additional economic benefits to the
Caribbean countries (either trade or aid measures).
4. Approve a study of the need for increased ASW capability in the
Caribbean.
Concurrence: Col. Kennedy
noth
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.
MEMORANDUM
NATIONAL SECURITY COUNCIL
ACTION
SECRET
11 August 1971
MEMORANDUM FOR:
DR. KISSINGER
FROM:
ARNOLD NACHMANOFF
an
SUBJECT:
SRG Meeting on Latin America (NSSM 108 and
Military Presence Study)
The SRG is scheduled to meet at 4:00 p.m. on Friday, August 13, to consider
the Study prepared in response to NSSM 108 (tabbed) and the Military Presence
Study prepared in response to your memo of December 8, 1970 (tabbed).
NSSM 117 on the Caribbean is also on the agenda for consideration immediately
following the Latin American review. (Separate Briefing Book)
NSSM 108 and the request for the Military Presence Study were issued in
December, following the Chilean elections. They were given short deadlines,
ut a series of extensions were requested and granted. NSSM 108 was sub-
mitted on April 1, but has been bumped from the SRG agenda several times
for various reasons. In view of the amount of work that went into producing
these studies on a priority basis, there is some resentment in the bureaucracy
over the delay in their review.
An analytical summary of the NSSM 108 Study (which incorporated the Military
Presence Study recommendations) is tabbed. The Study includes a comprehen-
sive review of current developments and trends over the next 3-4 years, an
attempt to explicitly define our interests in the region, and an analysis of the
impact of current and prospective developments on those interests. The Study
then draws some policy implications and presents recommendations and, in
some areas, options for meeting the policy issues.
Except for some specific recommendations on how to improve our contact and
influence with the Latin American military, the Study contains an accumula-
tion of hortatory recommendations that we continue what we are doing or do
what we said we were going to do in the areas of trade and aid, proposals for
a series of further studies, and options on three economic and one military
issue. On pp. 21-30 of the Overview section (which I recommend you read)
the recommendations and options are listed under four broad issue headings:
DECLASSIFIED/RELEASED ON 4/23/02
by NARA on the recommendation of the NSC
SECRET
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
- 2 -
A. How to ameliorate anti-US nationalism or at least eliminate its
negative effects on US interests.
B. How to (1) contribute to greater economic progress, and (2) en-
courage more realistic expectations of such progress.
C. How to encourage a clearer perception of the mutuality of US
and Latin American interests.
D. How to limit or protect against the increasing Soviet diplomatic,
trade and military presence in the region.
Most of the recommendations are so general or innocuous that they do not
warrant discussion. The paper proposes four specific operational issues
for SRG consideration. These are:
-- Should we restore a programmed grant MAP materiel program in
FY 1972 for Latin America? (Discussion on pp. 13-15 of Analytical
Summary; pp. 597 of the Military Presence Section of paper.)
-- What attitude should the US Government adopt toward new US private
investment in Latin America? (Discussion on pp. 15-17 of Analytical
Summary; pp. 7-11 of Investment Section of paper)
-- What position should the US adopt on proposed loans in the IDB
(i. e., should we give up our veto, adopt a solely technical stance,
or continue to apply selectively political criteria)? ( Discussion
on pp. 17-19 of Analytical Summary; pp. 17-23 of Development
Assistance Section of paper. )
-- Should the US give some measure of discriminatory treatment in our
trade policy in favor of Latin America. (Discussion on pp. 19-20 of
the Analytical Summary; pp. 10-14 of Trade Section of paper.)
I believe the grant materiel issue can and should be decided by the SRG on the
basis of the Presidential directive to improve our contacts and influence with
the Latin American military. It may not be possible to program grant materiel
in FY 1972 because legislation has already gone to the Congress without such a
provision. However, a clear decision to take such funds out of the Contingency
Fund in FY 1972 would be satisfactory with the understanding that materiel
would be programmed in future years.
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- 3 -
The three economic issues are discussed in detailein the Analytical Summary.
Two of these issues-- the US attitude toward private investment, and the US
position in the IDB- are related to the Expropriation Study (NSSM 131) and
probably cannot be resolved in this meeting. Moreover, doctrinal decisions
would have little meaning in the areas of trade and foreign investment given
the strong views of Secretary Connally, Secretary Stans and others, and the
President's apparent intention to take a tougher line. There are very import-
ant foreign policy interests for Latin America in these areas, but I believe
that in the present environment these foreign policy interests probably can
only be protected on a case-by-case basis with strong leadership in the
bureaucracy. Therefore, I do not think it possible or useful to try to reach
a decision on these issues in the SRG.
Broad Policy Alternatives
The general assessment of our basic policy which the IG made as a result of
the Study is essentially a favorable one. The Study concludes that the basic
policy is valid as a continuing guide for the next 3-4 years, recognizing that
it is essentially "damage limiting. " The forces at work in the Hemisphere
are bound to result in some prejudice to our interests, but the IG concludes
that if the policy is adequately supported this prejudice will be less than it
ould otherwise beirld be and can be contained. The basic problem with this
sessment is that it reflects developments in the Hemisphere, but does not
reflect the impact of changed domestic, economic and political conditions, or
other international developments such as the worsening of our international
economie position. Changes in these conditions have become increasingly
Mining
apparent since the NSSM 108 Study was completed several months ago. It is
clear that these factors have and will continue to constrain us from effectively
implementing the central elements of the Latin American policy which the
President set forth and committed himself to. in 1969. The shifts in domestic
conditions and attitudes undoubtedly have contributed to his recent decision to
delay and modify tariff preferences legislation, to the Congressional refusal to
appropriate funds for the IDB replenishment, and to the intensified concern with
protection of economic interests which is SO evident in the Executive and Legis-
lative Branches.
The most useful thing the SRG can do is (a) to consider what our broad policy
alternatives are now in the light of our inability to implement the policy we have
set forth in our rhetoric, and (b) stimulate development of scenarios of what we
can do over the next few months. The
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Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
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- 4 -
Theabasic issue is whether the importance, in geo-political terms, of main-
taining a position and degree of influence in Latin America should be the
overriding consideration of our policy, or whether it should be subordinated
to the more immediate problems of protecting our special economic interests.
Our policy until now has been based on the and former concept, and the premise
that it is in our interest to maintain close constructive relationships with
the Western Hemisphere nations, both as a positive way to protect our interests
and as a means to prevent the growing intrusion of Soviet influence into a region
traditionally considered our backyard.
The broad policy options I see are to:
-- Continue to base our approach on the premise of the value of close and
constructive relationships, reiterating the rhetoric of our commitment
to Latin American development and the inter-American system. We
would continue to press the Congress for liberalized trade measures
and expanded multilateral aid, recognizing however that little progress
can be made in actual implementation.
-- Continue to base our approach on the premise of a special relationship,
but tone down the rhetoric and initiate a frank dialogue with the Latins,
explaining the constraints we are under and indicating the kinds of
reciprocal actions (e.g., with regard to US investment) which they
must take in order to make it possible for us to be responsive in some
measure to their development aspirations.
-- Abandon the concept that a close and constructive relationship with the
nations of the region is in our interest, and abandon the rhetoric of our
commitment to Latin American development. We would de-emphasize
our participation in the inter-American system, and essentially treat
Latin America as any other part of the developing world, using our
leverage bilaterally primarily to protect and advance our economic
interests.
The first option would be a continuation of what we are doing today, but with
much more emphasis on gestures and demonstrations of interest. It would be
most consistent with our public commitments, and would tend to reassure the
Latins that they have not been abandoned. To some extent, the President could
shift the onus for inaction to the Congress, though the credibility of his commit-
ments still would be questioned. The problem with this approach is that it is
probably not sustainable given the pressures for linking trade and aid policy to
the protection of our economic interests.
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.
Wlat does all
SECRET
- 5 -
in practice?
mem
The third option probably reflects most accurately the realities of domestic
economic and political life, and a philosophical mood which prevails in this
country. It would, however, be a complete reversal of past commitments,
a serious blow to our credibility with the Latins, and would undoubtedly con-
Puxing
tribute to the intensification of anti-US nationalism and accelerate trends
in Latin America toward neutrality and/or closer ties to the Soviet Union. In
the long run, it would probably result in our alienation in the region; and it
probably will not be effective in protecting our specific economic interests.
The middle option (in accordance with Kissinger's law) would probably be the
most realistic and effective way to adjust to current realities without abandon-
ing our broader political and security interests. If accompanied by the right
style and gestures, a clearer definition of what the US is prepared and not
prepared to do, and of what it expects of the Latins, might even be welcomed
by the Latin Americans since it would provide some guidelines for those ele-
ments which want to maintain a constructive relationship with the United States.
Although it would be seen by many as reneging on our commitments, this option
would in effect be more consistent with the "mature partnership" concept.
These broad policy options, of course, were not considered in the NSSM 108
tudy in terms of the changed domestic environment, and hence the agencies
cannot be expected to be prepared for a detailed discussion of pros and cons.
However, it would be useful for you to pose the issue to see if there is general
agreement on the need for an adjustment in our broad policy direction. It
would also be useful to see how the broad options--or at least those the SRG
considers realistic--play out in terms of specific actions or initiatives over
the next few months. Therefore, you might want to conclude the discussion
by asking the IG to prepare quickly some alternative scenarios, including
possible Presidential statements, initiatives at the IA-ECOSOC or other
appropriate meetings, and bilateral representations.
In summary, I suggest that you use the SRG meeting to:
-- Approve the Military Presence Study recommendations (pp 11-12 of the
Analytical Summary), and resolve the grant MAP materiel issue.
-- Briefly review the economic issues raised in NSSM 108, but not seek to
reach any decisions.
-- - Discuss the broad policy alternatives outlined above and request the IG
to quickly develop implementing scenarioss
Your Talking Points (tabbed) follow this format.
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 -
I am tabbing (Tab A)to this memo) for your background a section of a previous
version of this briefing memo, which offers some general comments on the
Paper and a proposal for giving more bureaucratic and political clout to our
Latin American foreign policy interests. The thrust of that suggestion, de-
veloped a couple of months ago, is to strengthen the implementation of our
policy. Events since then have convinced me that we must realistically con-
sider some adjustment of our broad policy, as suggested above. However,
the proposal for a National Advisory Council on Latin America would still
have some validity as a gesture of interest by the President, and as an in-
strument for making whatever little progress we can on implementing our
policy.
Attachments:
Tab A -- pp 4-10 of 17 June briefing memo
(previous version of this memo)
Briefing Book
CC: R. Kennedy
R. Hormats
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.
A
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 A
Excerpt from previous briefing memo (17 June)
SECRET
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The NSSM 108 Study is a serious and comprehensive effort at assessing
our interests, the prospects for those interests, and the alternatives for
US policy. Yet the conclusion does not provide any meaningful operational
choices for policy. It seems to me that there are three reasons for this:
1. The assessment of interests and the threat to interests was too
narrow and short-term.
2. The Study was written and staffed principally by ARA, and is,
therefore, somewhat defensive of current policy and reflects an
unwillingness to pursue some questions which challenge our
traditional approach.
3. Much of what needs to be done has already been determined; the
problem is that we have not been able to perform on the policy dir-
ections already adopted. Latin America is not so much a "policy"
problem as it is one of bureaucratic and political leadership.
I. The Assessment of Interests and Threat
The statement of interests in NSSM 108 (pp. 6-7 of Analytical Summary)
is a reasonable one, though the language of some of the interests is some-
what- convoluted and imprecise. In essence, the Study concludes that we
do
have no vital interests in the region e., nothing which threatens our
survival) and that all of our interests are best served by the evolution of
community of predominately independent, self-sustaining states well-
disposed to the US. In assessing the impact of developments and trends
on our interests, the Study concludes that the damage to our interests
over the past 18 months has not been serious, and that while the prospects
are for further prejudice to our interests, such prejudice will be limited
if we pursue the right policies. (pp. 8-9 of Analytical Summary;
pp. 17-21 of Overview)
This assessment is a fair one from the perspective of Latin America alone.
The very low possibility of a strategic threat from any Latin American
country (excluding Cuba) over the next 3-4 years, the possibility of popu-
list/nationalist regimes and experimentation with radicalism in some of
the smaller countries, growing independence from the US of most of the coun-
tries of the region, but their retention of essentially Western orientation,
add up to a tolerable situation. However, the Study does not really consider
where Latin America fits into our global foreign policy. The Study suggests
that we should reconsider the utility of our "special relationship" with Latin
America. However, that relationship is a fact; it cannot be abrogated uni-
laterally. It exists and because of it US relations with Latin America have
SECRET
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
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SECRET
- 5 -
global significance. The loss of US influence in Latin America and an
increase of Soviet influence in what is perceived throughout the world as
our backyard, will affect the global balance of power in political and
psychological terms, if not necessarily in strategic terms. The Rockefeller
Report recognized the significance of this point: "Beyond conven-
tional security and economic interests, the political and psychological value
of the special relationship cannot be overestimated. Failure to maintain
that special relationship would imply a failure of our capacity and responsi-
bility as a great power. 11 Moreover, this perception of US-Latin American
relations is one which affects our own citizenry. If Southeast Asia is the
most imminent test of the Nixon doctrine, Latin America may well be its
most serious test in time. The pressures for intervention should there
be two or three Chiles or Cubas in our backyard would undoubtedly be
high.
Another shortcoming of the NSSM 108 assessment is that it projects the
threat to our interests over a relatively short term (3-4 years); however,
if the trends were projected over a longer term, and there is no reason to
foresee a reversal, the picture is even bleaker and the threat greater.
The combination of growing frustration with the inadequate pace of economic
and social development and rising expectations which accompany rapid
urbanization and the spread of modern communications, will increase the
likelihood that more countries will turn to radical solutions and extreme
nationalism. The continuing inability or unwillingness of the US to expand
trade opportunities and increase its assistance for Latin America, com-
bined with a probable decline in foreign investment in the region, will mean
that we will not be able to help alleviate the frustration. The probability is
that points of conflict with Latin American nationalism will increase rather
than decrease; i.e., foreign investment disputes which will prejudice state-
to-state relations; the use of our leverage in international agencies; con-
flict over fisheries; and the protectionist trend in our trade policies. As
a result, the US will be increasingly vulnerable as a scapegoat for Latin
American frustrations and inability to progress. The decline in US influ-
ence may thus be more extensive and more rapid than the Study suggests.
Similarly, the vulnerability to Soviet influence will be higher (though the
Study and a recent NIE on Soviet Role in Latin America (Tabbed)) correctly
note that there is not a one-for-one correlation; i.e., nationalism can
work against the Soviets as well as for them, and they are not likely to
meet the Latins' aspirations either).
In sum, then, our interests in Latin America are more significant in terms
of our overall foreign policy than the Study suggests, and the threat to those
interests may be more serious over the longer term than the Study suggests.
Reproduced at the Richard Nixon Presidential Library DECLASSIFIED
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II. Some Questions Avoided
The Study correctly states that the policy adopted in 1969 is based on the
premise that US hegemony in Latin America is no longer possible nor de-
sirable, and that some decline in US influence is inevitable. The difficult
question the Study does not face directly or with any precision is what de-
gree of influence should the US seek to retain, in what countries, and in
what functional areas.
The Study recognizes that as US influence declines, other powers, includ-
ing Western Europe, Japan and some of the larger Latin American coun-
tries themselves will seek to fill the vacuum. A greater role for these
other countries may be the most effective way in which Soviet influence
can be preempted. However, we have traditionally resisted the intrusion
of extra-Hemispheric powers to prevent dilution of our political influence
and loss of our markets for trade and investment. (In recent years we
have encouraged the Europeans to provide more aid, however.) We have
also not encouraged the larger Latin American countries to play a greater
role vis-a-vis their neighbors for fear that expansionist ambitions would
destabilize or destroy the inter-American community. However, there is
already evidence that Brazil and Mexico, for example, see the US low
profile as an opportunity for expanding their influence with their neighbors.
The question of whether we should encourage the Western Europeans and
Japanese to play a greater role in the Hemisphere, i.e., to trade off
some loss of markets to help preempt Soviet influence, is avoided in the
NSSM 108 Study, which recommends that we conduct a further study of
this question. (You should support initiation of this study.)
The question of whether we should encourage or work with some of the
larger Latin American countries for the same purpose is also avoided.
The Study discusses the possibility of differential approaches (ARA did
this reluctantly under pressure), but its conclusion is a waffle; we should
maintain essentially a Most-Favored Nation approach to the Hemisphere
countries, but pragmatically differentiate among them (however, without
determining in advance the criteria for differentiation), The Study does not
really consider (a) whether in view of the environment we face, we should
not consider tolerating or perhaps encouraging a breakdown of the Hemis-
pheric community (e.g., OAS) to prevent Latin unification against the
United States, (b) to what extent should we try to use friendly Latin American
countries as proxies, to help develop blocs more consonant with our
interests.
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Another point to be noted is that NSSM 108 does not deal with several
important specific issues which are being dealt with elsewhere--i e.,
Cuba (NSSM 32 in suspense for the past year), Chile, and the Caribbean
(NSSM 117, which should be submitted shortly.)
III. Policy Approach Correct; Performance Poor
I concur in the Study's judgment that the basic policy approach adopted in
1969 is correct. The basic problem is not to develop new policy alterna-
tives, or to restate the old ones more explicitly (which is what the Study
attempts to do) but rather to give more clout to our Latin American policy
interests in the bureaucratic and political process. The approach adopted
in 1969 of trying to maintain US influence in light of the changing environ-
ment in the hemisphere was to (a) be responsive to Latin American aspi-
rations for development and national dignity by expanding trade opportuni-
ties, providing development assistance with fewer strings and a greater
role in decision-making for the Latins, and responding to their reasonable
requests for modern military equipment; (b) deal pragmatically with signifi-
cant political elements seeking to maintain constructive relations wherever
possible; and (c) avoid actions which exascerbate anti-US nationalism.
Our performance from any perspective has been less than good:
== In the trade area, nothing actually has been done for the Latin
Americans in our commodity policies; we have given greater
weight in the allocation of meat quotas, sugar quotas, textile
quotas, etc., to the protection of domestic interests and our
other foreign clients.
-- On general ized tariff preferences, which was perhaps the most
significant and historic initiative taken by the President in favor
of Latin America, we have yet to submit legislation and the outlook
on the Hill is dim. Meanwhile, the EEC is scheduled to implement
its scheme July 1, and Japan in October.
-- In the area of development aid, our program has been lethargic
and relatively directionless as AID awaits its replacement by the
new organizations proposed by the President.
-- Our contribution for the expansion of the Inter-American Development
Bank's lending program has been sharply cut by the Congress, which
is reluctant to lose control of US funds by channeling them through the
multilateral agencies.
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-- Until recently, Congressional restrictions on military sales, and
the legacy of our own executive restrictions, have not enabled us
to be responsive to Latin requests for modern equipment. There
is still strong congressional pressure to impose our moral judg-
ments on what the Latin countries should or should not buy to meet
what they conceive to be their defense needs.
- Our approach toward nationalization of private investment has been
patient, and with the exception of IPC, settlements of nationalization
disputes have been or are being negotiated. However, we are in-
creasingly using our leverage, both in the Executive Branch and
the Congress, to secure better treatment for private US companies.
What all this adds up to from the Latin American perspective is a clear
demonstration that our interest in assisting development in Latin America,
or even our interest in constructive relations with the countries of Latin
America, is of far lower priority than the protection and promotion of
our domestic private interests. To the Latins, as the Brazilian Ambas-
sador mentioned to you the other day, our foreign policy toward Latin
America appears to be a "Junior Chamber of Commerce approach". We
appear to allow the tail of private interests to wag the dog of state-to-state
relations. The Latins fear that we have allowed mature partnership to
slip into disinterest and disengagement. Our poor performance in effect
gives the Latin Americans less and less reason to see why a constructive
relationship with us is in their interest, and more reason to increasingly
look to other sources and other solutions.
This is not to argue that the commercial and other interests which have
weighed so heavily in these decisions are not legitimate or important.
The problem is that they have been given disproportionate weight in the
bureaucratic and political decision-making process, while the Latin
American foreign policy interests have been pushed aside. The President's
policy statements on Latin America, ranging from the October 31, 1969,
speech to the most recent foreign policy message, give clear direction on
the approach he wishes to follow in Latin America. The issue, therefore,
is not how to restate doctrine, but how to provide greater weight to that
policy in the bureaucracy and at political levels.
The recommendation in the Rockefeller Report for a Secretary of State
for the Western Hemisphere was in part a gimmick to demonstrate our
interest and concern, but it was also a recognition of the fact that an
effective Latin American policy would require strong leadership in the
face of all the conflicting pressures. The President's modification of
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- 9 -
the Rockefeller proposal--for an Under Secretary for Western Hemisphere
Affairs--would have helped, but that bogged down in the Congress (and
State has yet to resubmit the legislation in this session.)
What to do
Since the passage of the Under Secretary legislation is unlikely, and bar-
ring significant personnel changes, I suggest another bureaucratic/political
solution. It is not ideal from a managerial point of view, but with the right
people it can make some difference. My proposal is that the President
appoint a National Advisory Council on Latin America, composed of a
small number of prestigious individuals, chaired by a high-level political
figure. The Council would not be another study commission, but rather
a permanent entity reporting directly to the President for the purpose of
advising and assisting him in formulation and implementation of Latin
American policy. The Council would have an Executive Director, who
would be linked to you, and could meet monthly to review significant Latin
American issues and weigh-in with its views at the Cabinet level or with
the President.
The advantages of a Council of this type would be:
It would be a demonstration of interest by the President. Although
it might be regarded as a gimmick in the US, I believe the Latins
would see it positively. (You will recall that there was a unani--
mously favorable response in Latin America to the President's
Under Secretary proposal. ) The President could announce the
formation of the Council on the occasion of the tenth anniversary
of the Alliance for Progress (this August) which the Latins consider
an important occasion.
It would be a counterweight in the Executive Branch to other pres-
sures and interests which now carry disproportionate weight in
relation to our Latin American interests.
-- It could help the President by lobbying with the Congress and public
opinion for measures of importance for our Latin American policy;
e.g., generalized tariff preferences, the IDB replenishment appro-
priation, more rational arms policy.
Creating an entity of this kind would of course have disadvantages by build-
ing another layer in the bureaucracy, and another source of pressure on
the President. It would undoubtedly be resented by State. There is some
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risk that it might get out of control, but with the right people this would
be manageable. My own candidate for the Chairman, naturally, is
Governor Rockefeller. In fact, it is difficult to think of another figure
who could do the job. Three or four representatives from business (e. g.,
someone like J. Irwin Miller) and academia could round out the Council.
This is obviously not something you would wish to discuss at the SRG
meeting. However, if the idea appeals to you, it seems to me that some
of the issues which have not been faced adequately in the NSSM 108 Study
could be held up and given to the Council rather than debated in the NSC
or returned to the bureaucracy for further staffing.
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LKING
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HAK TALKING POINTS FOR SRG MEETING
NSSM 108
TO OPEN THE MEETING
-- The NSSM 108 Study represents a Herculean effort to review and assess
our Latin American policies.
-- Some of the problems raised in the Study have been or are being con-
sidered in other contexts--the fisheries problem, expropriation, Chile,
for example--and I recognize that in some respects the Study has been
overtaken by events.
-- Before we discuss the assessment of interests and general policy alter-
natives, I think we can deal rather quickly with the four operational
issues surfaced by the Study.
TO DISCUSS THE OPERATIONAL ISSUES
1. Grant Materiel Assistance (pp. 13-15, Analytical Summary)
-- The question of whether we should try to program grant MAT materiel
for Latin America in FY 1972 and beyond, I gather, is the only unre-
solved issue to come out of the Military Presence Study which was
folded into NSSM 108
-- [To Irwin or Meyer} Is my understanding correct? If so, we can
approve the recommendations of the Military Presence Study, which
are summarized at Tab A of the Security Section of NSSM 108.
(Irwin may raise anquestion the number of MilGroup slots to be
authorized. If so, you may want to affirm that the President's desire
to expand US influence and contact with the military argues for 290
slots as opposed to a lower figure.)
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-- The issue with regard to MAP grant materiel for FY 1972 is whether
to (a) program a $9.3 million grant materiel program, (b) rely on
the Contingency Fund to meet unanticipated needs, or (c) earmark
$9.3 million of the Contingency Fund for Latin America.
-- Is there a consensus to seek a $9.3 million grant materiel program
for FY 1972 if this is feasible?
-- What are the problems?
(It will be pointed out that the President's FY 1972 budget has gone
to the Hill without a grant materiel program for Latin America on
the assumption that urgent Latin needs could be met from the $100
million worldwide Contingency Fund.)
-- -- What are the advantages of programming grant materiel for Latin
America over relying on the Contingency Fund?
-- Could we live with a decision that we would give priority to Latin
America in the Contingency Fund for FY 1972 (Option C), but try
for a Latin American grant materiel program for FY 1973?
(If there is a consensus that this is the only feasible alternative,
you may want to resolve this issue now; otherwise you can indicate
that you will take this one to the President, and note that he will
want to do what he can to maintain good relations with the military
in Latin America.)
2. Encouragement of US Investment (pp. 15-17 of Analytical Summary)
-- This issue seems to go to the heart of many of our current problems.
It is obviously related to the considerations we are consideringiin
the NSSM 131 review on expropriation.
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-- The options are whether to pursue a policy towards new foreign
investment in Latin America of (a) selective encouragement, (b)
neutrality, or (c) selective discouragement.
-- I gather the IG recommends that we should continue and publicly
affirm our current policy of selective encouragement of foreign
investment in Latin America.
To State
What would be the selectivity criteria? What kind of
public statement would be desirable?
-- What do the others think?
(Commerce and AID will proba bly suggest that we need to encourage
and support US investors to (a) protect our economic position in the
region and (b) contribute to economic development.)
-- Won't continued encouragement (i.e., investment guarantees) inevitably
embroil the US Government more deeply in sensitive private investment
disputes which cost us politically in our State-to-State relations?
Aren't we just creating more expropriation problems for ourselves
in the future?
(Irwin will be sympathetic with this line of reasoning; he will probably
favor a very restrictive approach, though not a totally neutral one.)
-- What we ultimately decide to do in NSSM 131 about expropriation
problems may have some bearing on what we should do about future
investment, and vice versa.
To Peterson I suggest that CIEP take a look at this issue after
expropriation policy is set. In the meantime, can we agree to continue
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the selective encouragement approach?
(There will probably be general agreement.)
3. Use of the US Veto in the IDB (pp. 17-19 of Analytical Summary)
-- This issue, it seems to me, has been overtaken by events. The man-
date for NSSM 131 makes Option B--vote strictly on technical and
developmental grounds and Option C--seek legislation to eliminate
the US veto on soft loans (Fund for Special Operations) unrealistic.
-- Is it agreed that eliminating the US veto is not a feasible option?
And that a strictly technical/developmental approach which would not
in some way take into account expropriation problems, would cause
difficulties with the Congress--which has already cut the IDB appro-
priation? If so, isn't something like Option A--continue to delay loans
to countries with which we have significant problems, but avoid formal
use of the veto to the extent possible the only feasible course for the
present?
(There will probably be general agreement on Option A, though State
and AID may argue for an approach based in large measure on technical
economic criteria. Treasury will probably find Option A agreeable,
provided it is consistent with the "presumption" option it tabled at the
NSSM 131 review.)
-General policy guidance on this issue will be provided by the President's
decision on the expropriation policy options. Beyond that, it seems
to me each case will have to be considered by whatever mechanism is
assigned to deal with expropriation problems.
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4. New Measures to Promote Latin American Exports (pp. 19-20 of Analytical
Summary)
-- I get the impression our plate is rather full of unfulfilled promises to
the Latins. We have a long way to go to catch up with existing Presi-
dential statements (on general tariff preferences, IDB replenishment,
Under Secretary for Western Hemisphere, debt burden study, reduc-
tion of non-tariff barriers).
-- Are the options presented really meaningful enough in operational terms
to be presented to the President?
-- Realistically, don't these trade issues have to be resolved on a
commodity-by-commodity basis? We have said that we will try to
give special attention to Latin America in our trade policies, but
where specifically can we do so in the present environment?
(State will probably push for a new statement of policy for internal
use vis-a-vis Treasury, Commerce, Agriculture on quotas and other
trade restrictions. Those agencies, in turn, will probably oppose
such a statement. We do not feel it would be particularly useful to
have a new statement, since protectionist attitudes, in both the
Legislative and Executive Branches will make it virtually impossible
to implement.)
TO CONSIDER BROAD POLICY OPTIONS
1. I don't think it would be useful to get into a long theological debate, but
we should consider our broad policy alternatives in terms of the assess-
ment of interests, threat, and policy implications provided in the
NSSM 108 Study.
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-- The Study presents a very comprehensive and methodical assessment
of current developments and trends in the region and their impact on
our interests. It concludes that forces operating within Latin America
have been far more responsible for events than were US policies and
actions, and while there probably has been an impairment of our inter-
ests, the damage has not been serious. Leaving aside the expropria-
tion question, is this judgment generally shared?
-- The Study projects trends for the next three to 4 years, suggests that
we have to accept some prejudice to our interests in Latin America,
but that this "can be contained within tolerable bounds against the
day when the consonance we see between our interests and the inter-
ests of the Latin Americans will become more apparent to them. "
Is there any reason to think that the factors leading to increased
radicalism and anti-US nationalism are likely to be reversed rather
than intensified? [Ask Irwin and Helms] If not, shouldn't we antici-
pate a sharp decline in US influence and an increase in vulnerability
to Soviet influence if we project these trends beyond three to four
years?
2. Perhaps because it has been overtaken by events since it was written,
thethe Study does not seem to take into account the change in domestic
economic and political conditions, as well as changes in our international
economic position since October 1969.
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-- Is there any reason to think, given these changed conditions, that the
US will be in a position to make significant trade concessions or in-
crease significantly its development assistance contributions to Latin
America in the near term? Isn't it also dubious that foreign invest-
ment flows to Latin America will increase over the next few years?
If so, what basis do we have for hoping that the Latin Americans will
see a consonance between their interests and ours?
-- Our Latin American policy has been based on the assumption that we
could best protect our long-term geopolitical interests in the region
by maintaining a close and constructive relationship, and that in order
to do so, we would have to be responsive to the Latin Americans' own
aspirations for accelerated development and greater national indepen-
dence. However, if changed conditions in the US severely constrain
our ability to be responsive in the areas of trade and aid, and we are
under increasing pressure to confront economic nationalism in the
region in order to protect our specific economic interests, shouldn't
we consider some modification of our present broad policy approach?
3. It seems to me that we have three broad policy options:
A. Continue to base our approach on the premise that close and constructive
relationships with the nations of Latin America are of overriding
importance to us. Under this approach we would reiterate our com-
mitments to Latin American development and the inter-American
system; continue to press Congress for trade preferences and the
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IDB replenishment, recognizing, however, that little progress can
be made in actual implementation.
B. Continue to base our approach on the overriding value of constructive
relationships, but tone down the rhetoric and initiatesa frank dialogue
with the Latins--either in inter-American forums or on bilateral
-explaining the constraints we are under and indicating the
kinds of reciprical actions (for example, with regard to US investment)
which they must take in order to make it possible for us to be respon-
sive in some measure to their development aspirations.
C. Abandon the concept that constructive relationships are our overriding
interest in the region, and eliminate the rhetoric of our commitment
to Latin American development. We would de-emphasize our partici-
pation in the inter-American system, essentially treat Latin America
as any other part of the developing world, and use our leverage bi-
laterally to protect and advance our specific economic interests.
-- Is there general agreement that these are our broad policy choices?
(You may want to call upon State and Treasury first for comment,
since they are likely to present the most divergent views. State
will probably lean towards the first option, emphasizing that it
would be most consistent with our commitments and tend to re-
assure the Latins they have not been abandoned. Treasury probably
would lean toward the third option, though it might consider it a
more extreme statement than its actual position. The middle
option obviously attempts to reconcile the maintenance of our geo-
political interests with domestic realities that now constrain us, and
will probably continue to constrain us in the next couple of years.
The agencies will probably be in general agreement that a reconcili-
ation along the lines of the middle option is probably the most
realistic course we can follow.)
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4. Is it generally agreed that we should take this kind of broad policy
choice to the President? If so, we should develop more detailed scenarios
as to what we would do over the next few months. For example, should
we have a Presidential or other high-level policy statement? What would
it say? What should be our position in the IA-ECOSOC meeting in
September? What should be our position in other inter-American meet-
ings? What kind of bilateral representations should we make? What
kind of new initiatives or legislative strategy might make sense?
-- We should keep in mind that we have to explain our approach to a
domestic audience as well as to the Latin Americans.
-- I suggest that the IG/ARA develop some alternative scenarios which
we can put to the President soon. Is there general agreement on this?
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SUMMARY
ANALYTICAL
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ANALYTICAL SUMMARY OF NSSM 108 --
U.S. Policy Toward Latin America
I. THE REQUIREMENT
NSSM 108 requested a review of overall U.S. policy and programs in
Latin America in light of recent developments in the Hemisphere.
(Though not specifically mentioned in the NSSM, the election of the
Popular Unity (UP) Government in Chile and growing Soviet presence
in the Hemisphere were among the developments referred to.) In
addition to assessing our interests and objectives in the region, the
NSSM directed that special consideration be given to:
-- ways of improving bilateral political relations;
00 the role of our trade and development assistance policies;
-- the role of our security assistance policies;
-- ways of strengthening the inter-American system;
-- ways of relating private investment to our political and
security interests.
An initial due date of January 20, 1971, was assigned and subsequently
extended in a series of steps until the study was submitted on April 1.
Though no explicit cutoff date is cited, the study does not reflect
events occurring later than early March.
II. ORGANIZATION AND METHOD
The study is divided into four sections:
-- Statement of Current Policy;
-- Assessment of the current situation and trends in the
Hemisphere;
-- A statement of U.S. interests in Latin America and Latin
American interests with regard to the U.S.;
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-- A series of six sector papers on functional topics (Political/
Psychological, Security/Military, Development Assistance,
Trade, Investment, and the Inter-American system).
The four divisions of the paper are tied together by an overview which
also summarizes the conclusions and recommendations of the study.
[I recommend that you read the first 20 pages of the overview more to
get a flavor of the study than to absorb its contents, since I have
summarized both the overview and the various divisions and papers
below. ]
In addition to the NSSM 108 study, we are reviewing simultaneously the
study on military presence in Latin America directed by the President
in December and completed in early January. By the time the Military
Presence Study had been completed, NSSM 108 was underway and,
since the larger study would necessarily cover some of the same ground
as the Military Presence Study, it was decided to fold the latter into
the NSSM 108 response. The conclusions and recommendations of the
Military Presence Study were, as it turned out, included bodily in the
NSSM 108 response supplemented by additional conclusions and recom-
mendations on subjects not already covered.
III. STAT EMENT OF CURRENT POLICY
The study states that two basic assumptions underlay the Administration's
current Latin American policy:
-- A fresh approach was needed.
-- A "special relationship" existed and ought to exist between the
U.S. and Latin America.
The study notes that the setting for policy choices included:
-- the stresses and strains to which the American republics
were being subjected by the process of change;
-- frustration with slow rate of progress;
-- growing spirit of nationalism;
-- as a result of all of the above, growing anti-Americanism.
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The study comments that, faced with the above conditions, the Admin-
istration considered the alternative policies of "activist involvement"
and "laissez-faire pragmatism. 11 Both the Rockefeller Report and
NSSM 15 recommended a policy approximating the latter alternative
which the President has called "a more mature partnership. 11
With respect to development, our policy was committed to:
-- maintaining the overall levels of assistance to the region;
-- placing increased reliance on multilateral channels for making
resource transfers;
-- responding to constructive initiatives from others, but
severely limiting our own initiatives;
-- lowering our profile and, where possible, reducing our visible
presence.
In the trade and investment areas our policy favored:
-- a liberal system of generalized tariff preferences for all
developing countries;
-- multilateral reductions in non-tariff barriers and other
measures to help Latin American countries expand their exports;
-- encouragement of U.S. investment in Latin America, but only
where it was desired and local political conditions did not
present unwarranted risks.
On the security side, our policy resolved to
-- continue to provide assistance and work carefully with the
Latin American military, but in ways which would lower our
profile;
-- area; continue to avoid becoming a party to arms escalation in the why
-- continue to encourage the allocation of resources to economic
and social development rather than to military expenditures;
-- be responsive to reasonable requests for equipment needed to
modernize obsolete inventories;
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-- continue military missions but at a much lower manning level;
-- continue public safety programs designed to serve develop-
mental as well as security interests.
With respect to the Organization of American States (OAS) we saw the
system as a useful mechanism for blunting the problems created by
overwhelming U.S. power in the Hemisphere. As a result, our policy:
-- declared a firm commitment to the inter-American system;
-- indicated that future U.S. assistance for development would be
placed increasingly on a multilateral basis within the inter-
American system.
IV. SITUATION AND TRENDS
With respect to the current situation in Latin America, NSSM 108
concludes that:
-- governments have survived disruptive effects of radicalism
without suffering serious threats to their stability;
Vewe?
-- in Cuba economic deterioration has increased Castro's
dependence on the USSR and further eroded his appeal in
Latin America;
-- the USSR has managed to expand its contacts and presence in
Latin America in a variety of ways including increased
diplomatic presence, expanded trade, and a growing naval
presence in the Caribbean area.
-- the election and consolidation of the Allende Government in
Chile has altered both power relationships and the entire
atmosphere in the Hemisphere, and offers the Soviet Union
opportunities for significant further expansion;
-- in the Caribbean area, the Central American War of 1969 set
back economic integration, while growing black nationalism
has caused a new restlessness;
-- economically, many Latin American nations have enjoyed
considerable prosperity for the last several years but
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generally favorable statistics mask sluggishness or reduced
growth in some countries, and many serious social problems
remain;
-- West Coast adherents of 200-mile territorial sea limits were
joined by Argentina, Brazil, and Uruguay.
The study comments that the forces operating within Latin America
have been far more responsible for events than were U.S. policies and
actions. U.S. assistance contributed to good economic performance
but other factors were more influential. Though we have continued
programs in the social sector, many Latins believe U.S. interest in
social progress has declined. Our policies towards private investment
have allayed some nationalistic fears of foreign domination but
sensitivity to investment and our policies remains high. In sum, the
Latin reaction to our policies has been ambivalent. On the one hand
their fears have been allayed by our lower profile and declining involve-
ment, but on the other, they are alarmed that we may be losing
interest in Latin America.
NSSM 108 identifies the following as key trends affecting U.S. interests
over the next three or four years:
-- violent extremism will remain a disruptive force but extremists
are unlikely to seize power in any country;
-- however, in one or more countries extremist tactics and other
factors could erode institutions to a point where revolutionary
crises may occur;
-- under extremist pressure some governments may take anti-
American positions and perhaps positions more friendly to the
USSR;
-- cooperation among insurgent groups will probably increase;
-- the military will continue to play an important political role;
-- the USSR will continue to press expansion of its presence in the
area, but with the object of reducing or displacing U.S. influence
rather than creating communist governments;
-- the inter-American system can perform some useful functions,
but will be hampered by definite limitations;
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-- overall economic conditions will be only fair;
-- awareness of the extent and difficulty of the area's social
problems will increase as will pressures for reform;
-- - new modalities of private investment will be increasingly
employed.
V. U.S. INTERESTS IN LATIN AMERICA AND LATIN AMERICAN
INTERESTS WITH REGARD TO THE U.S.
NSSM 108 concluded that while the U.S. has no vital interests in Latin
America, some of our interests could become vital in the future and
even now several could cumulate in various combinations to become
of vital interest. The study defined the following interests as very
important:
-- preservation of a predominance (by a combination of numbers
and importance) of independent, self-sustaining countries
favorably disposed to the United States;
-- denial of Latin America as an area from which strategic
attack could be launched against the United States.
The following interests were considered important:
-- 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;
-- continued access, protection and control of the Panama Canal;
the existence of a strong inter-American system including an
effective collective security function;
-- freedom of transit on the high seas and in international air space;
-- reasonably favorable trade and investment climates;
-- denial to hostile powers of bases in Latin America that would
enhance their strategic military capabilities;
-- continued access to bauxite in Jamaica and petroleum in
Venezuela;
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-- protection of U.S. citizens;
-- continued access to certain naval and air bases facilities in
the area.
Economic and social progress, freedom of communications media, and
maintenance of internal security are significant but are considered to
be means rather than ends.
Latin America's principal objectives with respect to the United States
are considered to be:
-- maintenance of the flow of U.S. capital and technology;
-- liberal trade policies respecting Latin American exports;
-- adequate economic assistance;
-- gaining control of key natural resources now controlled by
U.S. firms as a means of demonstrating and maintaining
independence;
-- maintenance of an effective inter-American system as a
shield against external aggression, and as a means of
restraining possible U.S. intervention.
The study engaged in a rather inconclusive consideration of the
consonance of U.S. and Latin American interests and the difference
between real and perceived interests in both cases. It was apparent,
however, that our interests in Latin America are primarily oriented
toward political and security matters while their interests in the U.S.
are concentrated in the trade, aid, and investment areas.
The study notes that in one sense all countries in the area are
equally important to us because bases for offensive strategic
weapons in any of them would complicate our defense, while subver-
sive activities and related anti-Americanism in any country could
contribute to the erosion of U.S. influence and leadership. At the
other extreme it notes that none of the countries is a great or even a
middle power on the world scene, and only Brazil has the potential to
become such a power. Within these parameters, the study concludes
that Brazil and Mexico are of particular importance to us because of
their size and economic potential (as well as contiguity in the case of
Mexico). It also notes the importance of Colombia, Argentina, and
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Venezuela for the same reasons. Venezuela, Panama, Jamaica, and
the Bahamas are regarded as significant because of natural resources
or key base facilities. In a negative sense the importance of Cuba
and Chile is underlined, and Peru is regarded as especially significant
as a potential offset to Chile. The study observes that 7 out of 11
countries mentioned are in or around the Caribbean.
VI. GENERAL POLICY CONCLUSIONS
On the basis of the assessment above, the NSSM 108 study reached the
following broad conclusions:
-- the basic policy direction was, is, and will continue to be sound
in its essentials;
-- it is attuned to current and projected realities;
-- some adjustments are required in order to correct misinter-
pretations of its meaning or to correct instances where its
execution has not gone far enough.
The study made the following observations with respect to our mature
partnership policy:
-- while the policy implies an overall reduction in our profile, it
does not require reduction in all respects in all countries;
-- the policy does not require a retreat from discreet and
profound
Heally
Atatement
selective leadership when required;
-- the recommendations put forward by the study represent a
somewhat more activist stance in some respects and a slight
raising of our profile, but they avoid paternalism and the
directive style that had contributed to our problems heretofor;
-- strong support for economic development and social progress
should be maintained;
-- we should continue strong support for military assistance;
-- more emphasis should be placed on style, information policy,
and traditional diplomacy.
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The
The study concludes that while the basic policy is valid as a continuing
guide for the next 3 or 4 years, we should recognize that it is "damage-
limiting. " Some prejudice to our interests is bound to occur, but if
the policy is adequately supported this prejudice will be less than it
otherwise would be and can be contained.
[The study does not project trends far enough. There is little reason
to believe that the conditions leading to increased experimentation with
radicalism and statism and growing anti-US nationalism are likely to
be reversed, rather than intensified over time. If so, the impairment to
our interests- and particularly Latin vulnerability to Soviet influence.
may be greater than the study concedes.]
[More importantly, the study does not take into account US domestic
economic and political developments, and our worsening international
economic position. These changing factors--which have become more
evident since the study was written--have severely constrained our
ability to implement the central elements of our Latin American policy-
e.g., trade preferences, expansion of IDB lending. These constraints
are likely to continue, and we will be unable to be responsive to Latin
aspirations for accelerated development. Growing pressures within
the Executive and Legislative Branches to protect our specific economic
interests--private investment, fishing boats, trade restrictions- will
force us to confront, rather than avoid exascerbating Latin nationalism.
Thus, the imperatives of our domestic realities are likely to lead us on
a course which will increasingly alienate us from Latin America, rather
than produce a recognition of the "consonance of our interests. "]
[Present policy, which cannot be implemented, therefore, does not seem
to be an adequate guide for the next 3-4 years. We should consider some
broad policy alternatives, which hopefully can reconcile with least damage
to our broad geopolitical interest in maintaining US influence in the region--
and limiting Soviet influence there--with the need to do more to protect
our specific economic interests.
]
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VII. ISSUES AND RECOMMENDATIONS
The study identifies four broad issues confronting U.S. policy and makes
the following recommendations. [These are non-controversial IG/ARA
conclusions and do not require detailed consideration by the SRG. The
four operational issues for which options were formulated are discussed
separately in Section VIII below. ]
1. How to ameliorate anti-U.S. nationalism or limit its impact on
U.S. interests
a. Political/Psychological
-- Continue to emphasize the "mature partnership" concept,
playing down U.S. predominance in the style and content of our
information programs and our diplomacy, and exercising
discreet leadership in the OAS.
-- Be as responsive as possible to Latin American trade needs,
avoid new legislative encumbrances on the flexibility of our
aid, and consider making an effort in Congress and the Hemi-
sphere to aehieve an interim arrangement on fisheries
jurisdiction.
⑉⑉ Continue our present policy of "pragmatic differentiation" in
our relations with Latin American countries, and continue
present policy vis-a-vis Chile.
b. Economic
⑉⑉ Continue the current policy of selective protection of U.S.
investment in Latin America.
-- Initiate a review of U.S. investment problems in Latin America
by representatives of the USG and the private sector.
I
⑉⑉ Continue the move to multilaterality in our development
assistance, but retain sufficient bilateral aid flexibility to meet
our political and foreign policy requirements in the region.
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c. Security/Military (See issue 3 below)
2. How to contribute to greater economic and social progress, and
encourage more realistic expectations of such progress
a. Political/Psychological
-- Continue to demonstrate a special interest in Latin American
progress through our aid and trade policies.
-- Stress positive aspects of progress already being achieved,
avoid contributing to inflated expectations by extravagant
promises.
b. Economic
-- Promptly submit generalized preference legislation to Congress,
and strongly support its early enactment. The study terms
this "fundamental to our hemispheric policy" and judges that
failure to submit legislation would "cause a sharp reaction and
reinforce anti-American sentiment in Latin America."
-- Make a strong effort to comply with the "standstill" commitment
to avoid new restrictions on Latin American exports, and
continue to give priority to assisting Latin American export
development.
-- Improve procedures for advance consultation on measures
which might adversely affect Latin American trade.
-- Maintain at least current levels of U.S. aid, secure Congres-
sional approval of our IDB replenishment pledge.
c. Security/Military (See also issue 3 below)
3. How to encourage a clearer perception of the mutuality of U.S. and
Latin American interests
a. Political/Pschological
-- Continue to emphasize positive aspects of U.S. role and presence
and our continuing concern for the Hemisphere. Explain the
contribution of U.S. technology and capital flows.
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-- Emphasize and improve our "style" in relations with Latin
America -- e. g., demonstrate our respect and emphasize the
personal touch in our relations.
-- Continue and expand our diplomatic and intelligence-exchange
programs, raising the security implications of Soviet, Cuban,
and other subversive activities.
b. Security/Military
[These are the conclusions of the Military Presence Study which
were incorporated into the NSSM 108 response. They are non-
controversial and require only a general blessing by the SRG.
Grant materiel assistance, the only controversial issue raised
by the Military Presence Study, is discussed in Section VIII
below, with options, pros and cons. ]
-- That the Departments of State and Defense send guidance to
the field removing any doubts about the propriety and desir-
ability of utilizing mission personnel and attaches for purposes
of influencing host government military leaders toward U.S.
foreign policy objectives.
-- That a new ceiling of 290 slots be established for Milgroup
assignments in the region. [In a January 19 memorandum to
you, the IPMG proposed two lower level options -- 270 or 236
slots -- which were rejected by the IG/ARA. State, in effect,
could not make up its mind. This is really a non-issue,
given the President's desire to increase our contact and
influence with the military.]
-- That small increases in several attache offices recommended
by the Ambassadors be approved.
-- That Department of Defense take concrete measures to
improve the quality of military group and attache personnel
assigned to the region.
-- That the Administration make concerted efforts to eliminate
from the Foreign Military Sales Act burdensome legislative
restrictions, and that the present $75 million regional ceiling
with respect to Latin America be eliminated or raised. [The
latter has already been accomplished. ]
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-- That FMS credit be accorded to the region at a level no less
than $70 million annually for FY 72 and subsequent years.
-- That training programs for Latin American military personnel
and the information program for foreign military trainees
continue at at least FY 72 level ($10 million).
-- That the Inter-American Geodetic Survey (IAGS) continue at
at least $2. 9 million per year.
-- That the United States be responsive to Latin American
requests for naval vessels, emphasizing sales of excess naval
vessels rather than ship loans.
-- That related military programs (conferences, ship visits,
liaison programs, and combined exercises) be continued and
supported.
-- That those activities of the Bureau of Educational and Cultural
Affairs, and USIS that provide maximum opportunities for
influencing the military be expanded as far as possible within
the context of their primary purposes and legal restraints.
4. How to limit or protect against the increasing Soviet diplomatic,
trade, and military presence in the region
a. Political/Psychological
-- Take a strong stand with Latin American governments against
increases in Soviet military presence that threaten our interests.
-- Continue to underline to Latin American governments the
hazards of the Soviet diplomatic and trade presence, but avoid
pressing our views on countries that appear unlikely to be
receptive to such views.
b. Security/Military
-- That DOD examine the possible need for increased submarine
surveillance and ASW capability in the Caribbean.
-- Undertake contingency planning concerning the possible
establishment of Soviet bases in Latin America.
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VIII. OPERATIONAL ISSUES, OPTIONS, PROS AND CONS
[The IG/ARA recommends that four issues be specifically addressed by the
SRG. The first one (on grant materiel assistance) probably can be resolved
by the SRG. The other three are economic issues, on which the choice of
realistic policy options is limited (e.g., issues on use of U.S. veto in the
IDB), or bureaucratic and other constraints are such that a doctrinal decision
would have little utility (e. g., issues on encouragement of U.S. investment and
new measures to maximize Latin American export earnings). Therefore, we
do not think it necessary for the SRG to reach decisions on the three economic
issues.
]
1. Grant Materiel Assistance
The IG/ARA endorsed a recommendation of the Military Presence Study
that we modify the present policy of phasing out grant materiel in order
to permit materiel programs for selected countries, concentrating on
This
high impact items. It calls for a $9.3 million program for FY 1972 and
recommends that the program continue in future years.
ually
daily
[The IG/ARA makes this recommendation despite the fact that the Presi-
dent's FY 72 budget does not contain programmed funds for materiel aid--
the budget assumes that urgent Latin American needs would be funded from
the $100 million worldwide contingency fund. Based on the President's direc-
tive to improve contact influence with the military, we recommend that an
effort be made to get a $9. 3 million program for FY 1972. Should this prove
impossible, we can rely on the contingency fund, but we should work for a
grant materiel program for FY 1973. The pros and cons of this and two
other options follow. ]
Option A. Permit grant materiel program for FY 1972
Pros:
-- demonstrating Provides leverage U.S. to concern increase for U.S. local influence security in problems. key countries, mall by Why than
-- Assists Latin American forces to carry out internal security and
untinging
civic action programs.
fund
-- Permits advance programming of military aid for countries of
Wlatifme
greatest need.
and
tith
-- Could, to some degree, discourage third country supplies.
regated
-- Consistent with the President's decision of October 15, 1969, to
"continue to provide assistance and work carefully with Latin
American military
"
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Cons:
-- Could arouse Congressional opposition and jeopardize accept-
ance of any liberalization of existing sales restrictions.
-- Could be seen as inconsistent with our desire to lower our
profile and encourage self-reliance and budgetary discipline.
-- Would be difficult to explain in cases where recipient nation
had recently purchased substantial amounts of hardware.
-- Could associate the U.S. more visibly with repressive or
otherwise unpopular regimes.
Option B.
No programmed grant materiel for Latin America, but
the President would draw upon a worldwide contingency
fund to meet unanticipated Latin American needs. [This
option is most consistent with recent budgetary decisions. ]
Pros:
-- Would provide greatest flexibility, subject to global priorities,
since no dollar ceiling would be involved.
-- Conforms with the President's intention to streamline and
integrate security-related programs.
Cons:
-- Important, though relatively small, Latin American require-
ments could tend to be overshadowed as in the past by
emergency requirements in more active or critical regions.
-- Would preclude enhancing our influence with the Latin American
military through continuous dialogue over grant materiel
programs.
Option C.
Earmark up to $9. 3 million of the President's contingency
fund for use as necessary in Latin America.
Pros:
-- Would enable the U.S. to respond to emergency needs on a
contingency basis.
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-- Would demonstrate U.S. concern for local security problems
in selected countries.
-- Would be less likely to draw Congressional criticism than
programmed assistance.
-- Could, to some degree, discourage third country military
supply.
Cons
-- Might reduce the Administration's flexibility in response to
worldwide needs.
-- Could draw Congressional criticism as an effort to circumvent
scrutiny of regular grant programs.
2.
Encouragement of U.S. Investment
The IG/ARA recommends that we continue our present policy of
selective encouragement of U.S. private investment in Latin America,
and that State draw up explicit selectivity criteria for U.S. imple-
menting agencies and U.S. representatives in international financial
institutions. Two other options considered but rejected are neutrality
and selective discouragement.
[This issue poses serious doctrinal questions: there may be merit
in a position (i.e., neutrality) which lowers the USG profile on
investment matters in order to avoid jeopardy to our overall interests.
Continued use of OPIC guarantees will lead the USG to a position of
claimant against other governments, requiring us to make private
investment disputes a matter of State to State relations. There will
probably be general agreement to maintain the current approach of
selective encouragement. However, this issue should be considered
by CIEP in light of the NSSM 131 (expropriation study) outcome. ]
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Option A.
Selective encouragement (current policy)
Pros:
-- Consistent with the President's statement that we should
encourage "new modes
of needed investment
without challenge to national pride and prerogative."
-- Explicit description of the policy and its criteria would influence
investors and host countries to consider an investment more
carefully than at present, forestalling potential embarrassment
and resentment in the future.
Cons:
-- Would ensure early USG involvement in investment disputes
which could lead to further political problems and outweigh the
"deterrent" effect of such involvement.
Option B.
Neutrality on all new investments, cessation of new
OPIC activities, continuation of present Ex-Im operations
Pros:
-- Recognizes that the primary burden of attracting investment
should fall on host countries.
-- Minimizes USG role as advocate and, subsequently, protector
of investment, thereby increasing our flexibility and reducing
the risks of encouraging investment on, in part, political
grounds.
Cons:
-- Eliminates one means of gaining greater control over important
materials.
-- Would require immediate and visible cessation of new OPIC
activity, with a probable negative effect on investment and
possible critical comment from Congress.
-- Would reduce USG influence on the modalities and nature of
new U.S. investment in Latin America.
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Option C.
Selective discouragement of new investments except those
which would serve current and longer-term U.S. interests.
Pros:
-- Would reduce potential disputes and lower our profile even more
than neutrality while retaining flexibility to accommodate special
situations.
Cons:
-- Would open us to the charge of actively injuring Latin American
development prospects and could undermine the environment for
existing investment in some countries.
3. Use of the U.S. Veto on Proposed Soft Loans in the IDB
The IG/ARA recommends that we continue current practice of delaying
loans to countries with which we have important policy differences and
avoiding formal use of the veto to the extent feasible. The issue is that
our veto exposes us to the risk of Latin America-U S. polarization in
cases (i.e., Peru or Chile) where legislative requirements, Congres-
sional pressure, or overriding national interest may require that we
oppose a loan. Though we have avoided confrontations to date, we
cannot indefinitely postpone loans short of using the veto.
The IG/ARA considered and rejected the alternative options of (1) voting
strictly on technical-and developmental grounds, or (2) working to
eliminate the U.S. veto:
[The alternatives to the current approach are unrealistic and infeasible
given attitudes in the Executive and Congress. The first alternative
would be consistent with the Peterson Task Force approach toward
foreign assistance, and probably best from the point of view of minimiz-
ing conflict with the Latins. However, it would be inconsistent with
current policies towards Chile and Peru. Given these constraints, our
view is that it would be best to continue on a case-by-case basis, recogniz-
ing that we are pursuing essentially holding actions with particular countries
which eventually will bring us to a point of choice between confrontations or
easing up on credit restrictions. We feel therefore that the only realistic
option is to continue present practice, though this too is an issue which will
depend on the outcome of the NSSM 131 decision. ]-
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Option A.
Continue present practice
Pros:
-- Permits continued differentiation in cases of important bilateral
policy issues.
-- Will not result in confrontations so long as the use of our veto
can be avoided.
Cons:
-- Perpetuates tensions in the IDB and exacerbates bilateral
political issues.
-- Cannot be continued indefinitely without use of veto.
-- Undermines the IDB's credibility and our commitment to
multilateralism.
Option B.
Vote strictly on technical and developmental grounds,
consistent with U.S. legislation
Pros:
-- Would largely avoid damage to IDB and U.S. credibility.
- - Would increase the credibility of U.S. actions based on
technical grounds.
Cons:
-- Unrealistic in light of Congressional concern that we might
be aiding countries with which we are at political odds.
-- Would prevent our demonstrating our displeasure at potential
borrowers with whom we are at odds.
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Option C.
Work to revise IDB Charter and U.S. legislation to
eliminate theU. S. veto on soft loans
Pros:
-- Would reduce oureexposure in the IDB.
-- Would enhance IDB's multilateral nature as well as our credit
bility as a strong supporter of the multilateral framework.
Cons:
-- Could imperil the survival of the IDB because of likely Congres-
sional reaction, and would jeopardize the IDB replenishment
legislation.
-- Would greatly reduce, if not eliminate, our ability to deny loans
in cases of important political differences, and would limit our
influence in the direction of greater technical acceptability.
4. New Measures to Maximize Latin American Export Earnings
The IG/ARA recommends that we develop new measures in the fields
of tariffs, non-tariff barriers, commodity policies, joint action in
international forums, and export development. The study describes,
without taking a position, four options distinguished by the degree and
nature of selectivity in treating Latin American exports.
[This issue is essentially an attempt to obtain a more explicit restate-
ment of the President's policy to give special consideration to Latin
Americanin our trade policies. It is difficult to see how another doctri-
nal statement can have very much utility. Our problem has been our
ina bility or unwillingness to give effect to this policy direction as each
trade policy question comes up. What we need to do is deliver on our
outstanding commitments on a case-by-case basis and not delude our-
selves by making more statements. In any event, Commerce, Agricul-
ture and Treasury probably will not be willing to be as forthcoming on
this question as State, and it is thus unlikely that a consensus could be
reached. We see no reason to try to bring this to a decision.
]
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Option A.
Develop measures (which could be transitional) favoring
all (or some) Latin American countries and discriminat-
ing where necessary against other countries. This would
have the advantage of providing quick and large benefits to
Latin America and giving substance to our "special rela-
tionship. 11 However, it would breach MFN principles and
could seriously prejudice trade relations with other coun-
tries. Nor is there evidence of domestic support for such
a policy. In addition, it would tend to increase Latin
American dependence on the U.S. and would run counter to
our long-term goal of a free international trading community.
Option B. Develop transitional measures providing special benefits
for all LDC's. This would bring some immediate tangible
benefit to Latin America, and would demonstrate our
commitment to developing nations. However, it could
lead to higher import levels (and thus domestic criticism)
and would produce hostile reaction from certain developed
country exporters. It could lead other developed countries
to restrict U. S. exports of certain products, and lead to
a spiral of retaliation.
Option C. Develop measures favoring all (or some) LDC's without
discrimination against other countries. This could en-
courage a beneficial multilateral liberalization of trade.
But there are few measures available to achieve this goal,
and the results for Latin America would be slow in coming
and diluted by the lack of preferential treatment.
Option D. Take no measures specifically designed to help Latin Ameri-
can or LDC exports, but continue to work for multilateral
trade liberalization on an MFN basis. This option would
encourage a general freeing of world trade over time but
would achieve little in the near term for Latin or LDC
exports without a substantial increase in import levels.
It could lead to charges that the U.S. had reneged on its
commitments to take measures reflecting the special needs
of Latin America and the LDC's, as a whole.
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IX.
OTHER RECOMMENDATIONS
The study urges that further studies be undertaken in the following areas:
-- A review of "whether the concept of a special relationship, how-
ever modified to accommodate Latin sensitivities, is still
essential to United States interests and indeed whether it is
consistent with the concept of a mature partnership. "
-- Continuing review of Cuban policy in light of possible increasing
pressures among Latin American countries to reexamine OAS
policy toward Cuba.
-- A technical study of the strategic requirements for bauxite
(currently underway), oil, and possible other resources from
Latin America.
-- A review of U. S. arms supply policy and a study of the feasi-
bility of an arms limitation agreement for the region, including
the possible U.S. role therein.
-- Studies of the implications for U.S. interests of increased
Western European and Japanese trade investment and military
assistance and arms sales in Latin America.
[This is a central issue which the NSSM 108 Study avoided; it
should be addressed soon.
]
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BASIC
STUDY
D. Remo B ....
CONFIDENTIAL
30218
UNITED STATES INFORMATION AGENCY
WASHINGTON 20547
July 2, 1971
OFFICE OF
THE DIRECTOR
Differential
MEMORANDUM FOR: The Honorable
approanles
Henry A. Kissinger
The White House
A confluence of events is developing in the U.S. and Latin America
which, if allowed to continue unabated, could significantly impair our
interests in that area. NSSM 108 documents the steady expansion of
Soviet activity - - political, military, economic and cultural in the
hemisphere. At the same time, the Latins are daily witnessing what
they consider to be our lessening interest:
-- There has not been a Presidential address on Latin America
in nearly two years (since October 1969).
-- We have not submitted the generalized tariff preferences to
the Congress even though we have repeatedly given the Latins
assurances of our intention to do so.
-- The Sugar legislation which affects several Latin countries
has encountered rough sledding.
-- Our long-heralded policy decision to switch from bilateral
to multi-lateral assistance program has begun to sound
hollow in the wake of Congressional resistance to appropriate
funds for the Inter-American Development Bank and other
international financial organizations.
-- The coffee legislation involving 41 producing countries around
the world including 17 Latin American nations is bogged down
in the House.
The Latins are not terribly concerned about defense against a Soviet
threat. Rather they tend to think of their interests as deriving from
their aspirations for economic and social progress. This preoccupation
in turn affects their thinking on political and even security matters.
by NARA on the recommendation 4/73/02 of the NSC
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-2-
These issues may well come to a climax at the forthcoming Inter-
American Economic and Social Council (IA-ECOSOC) meeting scheduled
for Panama in mid-September. We feel a major effort is needed to
improve our position in the hemisphere and thereby offset the steadily.
increasing influence of the Soviet Union. Specifically we suggest:
A Presidential address re-affirming our policy of mature
partnership and reviewing the steps we and the Latins
have taken and will take to implement it.
- Submission of the tariff preference scheme to Congress.
Even if the legislation fails, we will be in a better position
psychologically for having seriously tried to make good
on our earlier commitments. For tactical reasons we
would suggest the submission be announced a few days
prior to the September meeting.
In order to prepare the groundwork for our position at the IA-ECOSOC
conference, we would plan to work closely with State to undertake a co-
ordinated press and audio-visual build-up in the weeks preceding the
meeting. Once the conference starts we would build on our momentum
with a major public affairs effort keyed to the themes included in the
agenda and stressing the advantages of an inter-American approach to
the problems.
In sum, we think the Administration has adopted the correct policy
toward the hemisphere and we have done our best to support it. But we
are deeply concerned that the policy has not been sufficiently implemented
to achieve the necessary impact on Latin attitudes, both public and official.
Frank Shakespeare
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SECRET
REVIEW
OF
U.S. POLICY TOWARD
LATIN AMERICA
RESPONSE TO NATIONAL SECURITY
STUDY MEMORANDUM 108
Prepared by National Security Council
Interdepartmental Group for
Inter-American Affairs
(NSC-IG/ARA)
MARCH, 1971
GROUP 3
Downgraded at 12-year intervals; not automatically declassified.
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CONTENTS -
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REVIEW OF
U.S. POLICY TOWARD LATIN AMERICA
TABLE OF CONTENTS
I. Table of Contents
II. Overview, Issues, and Major Recommendations
III. Summaries
IV. Current Policy and the Environment That
Shaped It
V. Situation and Trends
VI. U.S. Interests in Latin America and Latin
American Interests in the U.S.
VII. Sector Papers
A. Political-Psychological
B. Security/Military
C. Development Assistance
D. U.S.-Latin American Trade Relations
E. Investment
F. Inter-American System
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OVERVIEW, ISSUES, AND MAJOR RECOMMENDATIONS
I. Methodology
1
II. U.S. Interests and Their Consonance with
Latin American Interests
2
A. General
2
B. U.S. Interests in Relation to Latin America
2
C. Relative Importance of Countries and
Sub-Regions in Latin America
3
D. Latin American Interests in Relation to
the U.S.
4
E. Consonance of Interests
5
III. The Current and Prospective Environment for
U.S. Interests
5
A. Current Situation
5
B. The Effect of U.S. Policy
7
C. The Outlook
10
IV. Implications for Policy
17
A. General
17
B. The Increasing Challenge to U.S. Interests
18
C. Policy Conclusions
20
V. Major Recommendations by Issue
21
A. How to Ameliorate Anti-U.S. Nationalism
or at least Limit its Negative Effects
on U.S. Interests
22
B. How to 1) Contribute to Greater Economic
and Social Progress and
2) Encourage More Realistic
Expectations of Such Progress
23
C. How to Encourage a Clearer Perception
of the Mutuality of U.S. and Latin
American Interests
25
D. How to Limit or Protect Against the
Increasing Soviet Diplomatic, Trade
and Military Presence in the Region
26
VI. Further Studies to be Undertaken
27
VII. Options Recommended for Particular SRG Consider-
ation, by Issue
27
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OVERVIEW, ISSUES, AND MAJOR RECOMMENDATIONS
The accompanying documents constitute the response by
the IG/ARA to NSSM 108. In order to make its address to the
NSSM as comprehensive as possible, the IG/ARA was expanded to
include all interested Departments and agencies. The response,
therefore, has benefited from a broad range of contributions
and views.
I. Methodology
In undertaking the comprehensive review requested by the
NSSM, the IG/ARA followed a methodological sequence which
called for:
(a) a statement of current policy toward Latin America
and of the assumptions and analyses that had given rise to that
policy (Tab IV);
(b) an assessment, prepared by the Intelligence Community
in the first instance, of the current situation in the hemisphere,
the effect of current policy in bringing about the current
situation, and the trends over the next three to four years
which will have significant implications for policy (Tab V);
(c) a statement of U.S. interests in Latin America more
explicit and more carefully defined than that which was used
inferentially in the 1969 review of policy (Tab VI); and
(d) an analysis by operational sector - - political/psycho-
logical, security/military, development assistance, trade, in-
vestment and the inter-American system - - of the impact of current
and prospective developments in Latin America on our interests;
an examination of the policy implications of that inter-action;
an identification of the consequent issues for policy; the pre-
sentation of realistic alternative policies and courses of action
for meeting the issues; and, where appropriate, recommendations
for choice among the options (Tabs A through F).
With respect to certain policy issues, the IG/ARA limited
itself to a summary treatment either because they are being con-
sidered in detail in other NSC modes (e.g., Cuba, which is the
subject of NSSM 32, now before the NSC, and Chile of which the
SRG is specifically seized) or because their complexity requires
an examination in greater depth than this response to NSSM 108
permitted (e.g., the establishment of a definitive position on
what constitutes a "reasonable" response to "reasonable" requests
for arms).
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II. U.S. Interests and Their Consonance with Latin American
Interests
A. General
Because a definition and understanding of U.S. interests
are indispensable to a coherent address to policy, we have made
a special effort to identify those interests. We present them
below in full awareness that reasonable men differ widely in
their appreciations and ordering of interests and goals and that
the version of this controversial subject that we have arrived
at may deserve modification and refinement - a task which the
IG/ARA will undertake as part of its on-going work on the CASP
system.
B. U.S. Interests in Relation to Latin America
The U.S. has a number of major interests in Latin America,
which are listed below in rough order of priority. Some of
these major interests could become vital= interests in the
future; and a number of them, including one of the most important
ones, could cumulate now or in the future in various combinations
to be a vital interest.
1. Very Important
a. Preservation of a predominance (by the combi-
nation of numbers and importance) of independent,
self-sustaining Latin American countries favorably
disposed to the U.S.
b. Denial of Latin America as an area from which
a strategic attack could be launched against the U.S.
2. Important
C. Maintenance of the confidence of Latin America
and of the world in the effectiveness, maturity and
1/ A vital interest is understood to be one which directly
concerns a nation's ability to survive, or at least to sur-
vive in its existing essential character. A major interest
is at the next level; it is one which significantly affects
a nation's well-being.
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responsibility of our leadership as a great power
in our relations with Latin America, with due con-
sideration for the "mature partnership" concept.
d. Maintenance of access to the Panama Canal,
including, under existing circumstances, its pro-
tection and control by the U.S.=
e. The existence of a strong inter-American
system, including an effective collective security
function.
f. Unimpeded transit for U.S. forces on the high
seas and in international air space in the area.
g. Mutually beneficial economic interchange,
including reasonably favorable trade and investment
climates.
h. Denial to hostile powers of bases in Latin
America that would enhance their non-strategic mili-
tary capabilities.
i. Continued access to bauxite in Jamaica and
petroleum in Venezuela.
j. Protection of the large number of U.S. citizens
who live in, have economic ties in, or visit Latin
America.
k. Continued access to certain naval and air
bases and facilities in the area.
Economic and social progress, freedom of communications media,
and maintenance of an adequate measure of internal security in
Latin America are very significant, but are considered to be
means of advancing U.S. interests in Latin America rather than
interests in themselves.
C. Relative Importance of Countries and Sub-Regions in
Latin America
In a sense all countries of the region are of considerable
significance to the U.S. because (1) bases for offensive strategic
1/ ISA and JCS prefer "Protection and control of the Panama
Canal as essential to maintaining our access to ICS use.
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- 4 -
military weapons in any of them would complicate the defense
of the U.S., and (2) extremist political and economic solutions
and related strong anti-U.S. nationalism in any of them and the
U.S. reaction to these phenomena could contribute to erosion
of the U.S. position of influence and leadership in the world.
Certainly they are all significant when their populations, re-
sources, economies and political and strategic potential are
cumulated. And they are significant because they form part of
the inter-American system.
At the other extreme none of the countries is a great or
middle power on the present world scene and only Brazil has the
potential to become such a power in the middle-term future.
There are, however, degrees of significance which may be
usefully stated. Brazil is the most important country of the
region, because of its size, its potential, its current economic
dynamism, and its sense of mission. Mexico is large enough to
be a significant middle power over time, is self-confident, and
is of particular importance because it borders on the U.S.
Colombia and Argentina also have size and potential, and Venezuela
has the requisite economic resources. The remaining countries
of particular significance to the U.S. are other strategic resource
and base countries -- Panama, Jamaica and the Bahamas - and,
from a negative point of view, those countries which have adopted
left extremist regimes -- Cuba and Chile. Peru also is especially
important as a potential offset to Chile.
Seven of the eleven countries mentioned are in or around
the Caribbean. The Caribbean area has the additional special
importance of being on the access routes to the Panama Canal
and very close to the U.S.
D. Latin American Interests in Relation to the U.S.
In the belief that it was important in reassessing policy
toward Latin America to understand the degree to which the
interests of Latin America coincided or conflicted with our
own, we made a parallel effort to identify what we considered
to be Latin America's principal interests in its relations with
the U.S. They are:
1. To maintain the flow of U.S. capital and technology
and obtain liberal trade and aid treatment as a contribution
to economic and social progress.
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2. To develop offsets to the pervading U.S.
presence and to gain control of key natural resources
as means of demonstrating and maintaining independence.
3. To avoid, at the same time, dependence on
another power.
4. To maintain an effective inter-American
system, with U.S. participation.
5. And finally to maintain the U.S. security
umbrella against potential future extra-hemispheric
attempts at incursion.
E. Consonance of Interests
The foregoing lists array the objective interests of the
U.S. and Latin America with respect to each other. There is
nothing necessarily inconsonant between these objective
interests. Perceived interests, however, are different from
objective interests in both cases. The perceived interests of
the U.S. and Latin America are inconsonant. As will emerge
from subsequent parts of this overview, this inconsonance
derives from: (a) Latin American nationalism directed mainly
against the U.S., (b) different perceptions of the external
threat, (c) the different priorities or weights that each side
gives to its interests, and (d) inter-interest conflicts for
both.
III. The Current and Prospective Environment for U.S. Interests
A. Current Situation
In the period since the policy determinations of 1969, the
environment to which those determinations were addressed has con-
tinued essentially as forecast in studies prepared at that time.
Developments since 1969 that were either not fully apparent then
or not perceived in their current scope have been the increase in
Soviet military activities, especially in the Caribbean, and
the installation and dynamism of a Marxist coalition in Chile.
In the broadest sense, frustration and a sense of inadequacy
continue to characterize Latin America. The factors which lie at
the root of this frustration and sense of inadequacy -- the fail-
ure of Latin America to achieve its aspirations for economic and
social progress, its dependence upon the U.S., and the confusion
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and tensions created by rapid change itself and by the mass of
information and new concepts flowing over modern communications
media - all persist. As a consequence, reactive Latin American
nationalism, directed principally but not solely against the
U.S., continues. So do its corollaries, the readiness to experi-
ment with radicalism and relative indifference to the preserva-
tion or extension of free institutions. Accompanying these
tendencies is Latin America's current failure to think of the
Soviet Union as a significant threat.
As these strong and basic attitudes continued to shape events
since mid-1969, Latin American governments have survived the
disruptive effects of radicalism and terrorism without suffering
serious threats to their stability. The Central American war
in mid-1969 and growing black radicalism in the Caribbean have
weakened political stability in those areas. In Cuba, further
economic deterioration has increased Castro's dependence on the
USSR and further eroded his appeal in Latin America.
The USSR has managed to expand its contacts and its presence
in Latin America in several ways. The rapid movement toward
consolidation by the Allende regime in Chile since November
offers the Soviet Union opportunities for significant further
expansion.
Economically, many Latin American nations have been at
high points in their economic cycles, but overall statistics
mask sluggish or reduced growth in some, as well as uneven in-
come distribution, and many serious social problems remain.
Latin American leaders have viewed trade opportunities
in the U.S. market, as well as other markets, not only as
the best hope for substantial resource transfers but also
as the most economically effective and politically acceptable
vehicle for such transfers. Prompt introduction of a generalized
tariff preference system is considered essential, and the
President is regarded as committed to this objective. New
foreign investment has a major role to play in making it
possible for the Latin Americans to take advantage of such
new export market opportunities.
With respect to U.S. private investment, operating
conditions have worsened in the past two years as economic
nationalism has continued to grow, but confiscation has not
occurred to the extent that many feared. The need for develop-
ment assistance from the public sector has continued in order
to ease foreign exchange constraints not fully met by trade
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- 7 -
or private sector inflows and to act as a catalyst in
influencing the recipient countries to identify and pursue
developmental priorities.
The OAS is becoming more disparate and less cohesive
in its membership, particularly with the advent of radical
military regimes and the Marxist government of Chile, making
it more difficult for the United States to align support in
the political/security and economic fields. Yet the OAS
has continued to provide a forum for constructive dialogue
bridging differences. The number of Latin American countries
claiming 200-mile territorial sea limits has increased and
our response to Latin American seizures of U.S. fishing
boats in these waters has caused the ensuing dispute to be
introduced into the OAS.
B. The Effect of U.S. Policy
1. Political and Military
Forces operating within Latin America itself were
far more responsible for events in Latin America during
1969-70 than were general U.S. policy and specific U.S.
actions.
The Latin American view of changed U.S. policies
during 1969-70 is ambivalent. On the one hand, Latin
American governments approve of opportunities for an increased
role in hemispheric affairs; on the other, they are uneasy
over their capacity to meet their new responsibilities, and
are concerned that "low profile" really means that the
U.S. is losing interest. Those who approve regard themselves
as the rightful arbiters of developments in their own
continent. They are confident of their capacity to meet
new responsibilities and see the reduction of U.S. presence
as creating new opportunities for the exercise of their
own influence. On the other hand, some of those who are
disquieted by what appears to them as American disengagement
are fearful that the reduction of the U.S. presence has
created a vacuum which could tempt other powers, both
hemispheric and extra-hemispheric.
U.S. restrictions on sales of military equipment
have been regarded as paternalistic and have led to resentment
on the part of the Latin American military. At the same
time, nationalistic trends among the military have contributed
to their desire to be more independent of us, and their
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- 8 -
growing political role has led them to see their relationships
with the U.S. in broader terms than the provision of military
equipment. Nevertheless, the overall effect of these restric-
tions, combined with the reduction in military mission per-
sonnel, the suspension of grant materiel programs and the lack
of FMS credit have contributed to a diminution of our security
cooperation with the Latin American military, at least in the
larger South American countries. They have probably implied
to some Latin American military establishments a U.S. intention,
not contemplated in U.S. policy, to disengage.
Latin Americans are ambivalent, too, concerning the
U.S. position regarding the internal politics of Latin American
countries. Most welcome the non-intervention cast of our
decision to deal with countries as they are. But at the same
time they are concerned when this U.S. pragmatism is seen as
weakening support for their own particular ideological prefer-
ences.
The U.S. image in the OAS has remained favorable,
given our continuing style of "discreet leadership" and our
willingness to participate in constructive dialogue in the
economic organs of the Organization.
U.S. restraint with regard to the newly elected
Allende administration in Chile has generally met with Latin
American approval.
The USSR probably views any changes in U.S. policy
toward Latin America as largely rhetorical. In the Soviet view,
Washington continues to maintain a "neo-colonial" relationship
with its southern neighbors. Moscow probably hopes that
United States reverses both inside and outside the hemisphere
will cause the U.S. to retrench in its attempts to strengthen
its ties with Latin America. The USSR is pleased with manifesta-
tions of economic and political nationalism, accompanied by
anti-Americanism, which will continue to undermine U.S. influence
and open opportunities for an augmented Soviet position. Moscow
hopes the U.S., frustrated and alarmed by the problem of dealing
with instability, will become so identified with status quo
"reactionary" forces that it will come into increasing conflict
with forces for "progressive" change, with opportunities for
expanded Soviet guidance and support for the latter.
2. Economic and Social
Although U.S. economic relations, including direct
U.S. economic assistance, have been important, other factors
(some of which were affected by our assistance) were more
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influential, taken together, in Latin America's relatively
good economic performance. Some of these factors were a high
cyclical point in world market prices, better financial
policies, improved export promotion programs, increased private
investment and aid from multilateral sources. New U.S. efforts
to lower trade barriers and remove irritants, both bilaterally
and multilaterally, have been useful, but fell considerably
short of satisfying Latin American aspirations.
With regard to U.S. trade policies, the Latin Ameri-
cans have become increasingly impatient and critical at what
they perceive to be the potentially widening gap between our
commitments and our actions and increasingly worried by protec-
tionist sentiment in the Congress. For them, our attitude on
trade, despite the very substantial effort by the Administration
to respond to specific problems, is now one of the crucial
tests of our real intentions. This is particularly true with
respect to our commitment to prompt submission and strong
Administration support for early enactment of generalized prefer-
ence legislation.
Prudent U.S. policies toward private investment have
to some degree allayed Latin American nationalistic fears of
foreign domination, but sensitivity to our policies remains
high. The non-application by the U.S. of the Hickenlooper
Amendment in the IPC case in Peru contributed to maintaining
reasonably good U.S. - Peruvian relations, had a net bene-
ficial effect on U.S. relations in Latin America, and did not
stimulate a wave of similar expropriations throughout Latin
America, though it may have encouraged some countries in
imposing tougher curbs on U.S. firms.
In the Bolivian Gulf expropriation case, adept
company negotiations, supported by a helpful but low-key U.S.
Government approach at the diplomatic level, defused a poten-
tial issue in overall relations. Latin American anxieties
were also allayed by the President's statements that Latin
American governments must make their own decisions about
whether they wished private investments, and that the U.S.
would not encourage U.S. private investment where it was not
wanted or was faced with unwarranted risks.
Although U.S. assistance programs in the social
sector received continuing emphasis, many Latin Americans
believe that the U.S. interest in social progress has de-
clined. In spite of the good U.S. record in the last two
years of support for the social sector, Latin American
failure to achieve many aspirations in the social field, the
lesser amount of public attention given to Latin American
social issues by the U.S. compared with the 1960's, and the
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problem of defining social progress have contributed to Latin
American skepticism.
C. The Outlook
1. Political and Military
The political imperative of economic and social pro-
gress, and nationalism and its accompaniment, a desire for inde-
pendence of the U.S., will remain extremely important factors in
the political, security and economic spheres, both bilaterally
and multilaterally. The increasingly nationalist but reasonably
responsible leadership of the larger and more developed countries,
often including their military establishments in important
political roles, will be less influenced by the U.S. This will
not necessarily mean that in every case such countries will be
anti-U.S. It does mean that, although they will pay close atten-
tion to their relations with the U.S. and will be concerned with
developments elsewhere, such as in Chile and Cuba, their main
concerns will be internal and directed toward modernization and
development of their own societies.
The governments of even these larger countries will
not have an easy time of it. Their attempts to combine economic
growth with stability will be increasingly vulnerable to a
number of factors, including popular demands, social pressures,
economic fluctuations, impatient dissident elements and sub-
version supported by the Soviet Union, Cuba or homegrown radical
extremists. They will resort to continued authoritarian and
centralizing methods. Many of our erstwhile friends, including
elements of the military, the media, business elites, and techno-
crats, will at times sound ultranationalist and stridently
anti-U.S. Our relations with these governments will be increas-
ingly prickly. Aside from the merits of specific issues between
the U.S. and Latin American countries, there will continue to be
a tendency for the Latins to use the U.S. as a scapegoat when
convenient to relieve internal pressures or to cover failures.
All these problems will be magnified many times over
for the smaller countries in the area, far less equipped with
the institutions to deal with the modernization process which
they too want to see take place. Occasional explosions can be
expected as nationalism, combined with latent frustrations,
pushes situations to the boiling point. Even here, however,
revolutionary outcomes are by no means certain: governments,
as in the recent past, will be able to deal with their problems,
by repression in some cases, and under reasonably free conditions
in others, but without necessarily resorting to solutions flavored
with ultranationalism.
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Particularly in the Caribbean area, historically the
part of Latin America of greatest sensitivity to us, outbreaks
in small countries are likely to have a strong anti-U.S. flavor.
What they do will often make no rational sense, and will have
to be seen as the accumulation of years of smoldering grievances.
The continuing British withdrawal from the area and its proximity
to the U.S. will make unrest here of increasing sensitivity to
the U.S.
In Panama, Torrijos' latent hostility and impatience
for early successful canal talks with the U.S., reinforced by
growing economic problems, may result in his making some osten-
tatious move toward the Soviet Bloc if negotiations are long
delayed or become deadlocked. He may also threaten to unleash
students and others in anti-U.S. demonstrations.
The Latin American nations claiming 200-mile terri-
torial sea limits can be expected to assert their claims with
increasing vigor and to seek more support from other LDC's in
preparation for the UN Law of the Sea Conference beginning in
1973.
Nationalism will also be manifest in regional efforts.
The view that this hemisphere's nations share basically identical
interests within the inter-American system can be expected to
face continued erosion as the Latin Americans increasingly empha-
size their own underdevelopment, cultural similarities, and
common desire to assert their independence of the U.S. as being
more meaningful to their present situation. Chile will exert
a negative influence on the inter-American system.
Violent extremism will be a disruptive threat through-
out the region, but will be unlikely to result in actual seizures
of power by extremists; cooperation by Latin American insurgent
and terrorist groups across national boundaries has not been
extensive, but will probably increase in the next few years.
In one or more countries 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. Some governments,
under extremist pressure and in an effort to gain or hold ex-
tremist support, may take anti-U.S. positions, and perhaps
positions more friendly to the Soviet Union.
Though the potential for rivalry between Cuba and Chile
exists, a "brotherly" axis between the two seems likely. Possible
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future Cuban-Chilean cooperation in the export of revolution
is likely to be circumspect. If at least moderately success-
ful, Chile's experiment would make the peaceful route to
independent Marxism more respectable to other Latin Americans;
the reverse would also be true.
Castro's well developed military-security apparatus
is almost certain to assure him continued control. Moreover,
any Castro successors would be still more subservient to
Moscow. No early improvement in the Cuban economy is in
prospect.
Continuing Castro overtures to selected Latin
American governments, the decline of Cuban material support
for violent revolution, the general Latin American trend
toward demonstrating independence of the U.S., and their
sentimental identification with Cuba as another Latin
American country, will probably further reduce antagonism
against him among governments which have already begun to
waver on the Cuban issue. Their attitudes are not likely
to be affected by Soviet-Cuban military ties, highlighted
by Cienfuegos, since many Latin Americans regard such
ties as primarily a problem for the U.S.
Some governments will move to reestablish ties
with Cuba, diplomatic or otherwise, which will in turn
increase pressures to reexamine hemispheric policy toward
Cuba. If a key country -- like Venezuela -- should reconsider
its policy, sentiment for lifting OAS sanctions and restoring
bilateral relations with Cuba would snowball.
The Soviet Union will continue to expand its
presence in Latin America. Though Latin America will remain
a relatively low priority area for the Soviets and their
ability successfully to influence Latin American develop-
ments is likely to remain much less than that of the U.S.,
(which is itself highly circumscribed), they will continue
to engage in a broad range of activities, not neglecting
promising opportunities for encouraging subversion if they
can do so without endangering their more respectable
tactics.
Some Latin American governments might sound out the
USSR for various types of military equipment, particularly
if the U.S. were completely closed out as a source of such
equipment.
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Any substantial expansion of the Soviet military
presence would probably take place only if a regime receptive
to Soviet influence were in power. The Soviets will not
hesitate to take advantage of any Latin American receptivity
for support of their worldwide 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.
Specifically in Chile, the Soviets could provide some
military equipment, along with technical missions, if the
Allende regime asks. A military base or other major overt
Soviet military presence would, however, be considerably
less probable because. of Soviet and Chilean awareness of
the likely adverse reaction of Chile's neighbors, as well as
some internal Chilean constraints. In the future, should
the Allende regime be receptive, however, the USSR might
attempt to secure the use of facilities for the maintenance
and replenishment of Soviet combatant ships and submarines.
U.S. presence and influence in Chile, regardless
of the domestic course of events, are certain to decline, and
if present trends continue, a serious deterioration in
relations can be expected. Chile will develop new relation-
ships with other major powers, the most important for the
U.S. being those with the Soviet Union. A complete substitu-
tion of Soviet influence and presence for that of the U.S.
is not likely, however, because Allende and many of his
"Chilean nationalist" supporters will seek to avoid becoming
wedded to the Soviet Union. In turn the Soviets, though
they will be ready to provide significant assistance over
the long term to prevent the economic collapse of Allende,
are more interested in using Chile as a cornerstone for the
gradual long-term expansion of their interests in Latin
America than in duplicating Cuba's total dependency.
To maintain his leftist credentials and to accommodate
internal pressures, Allende is likely to facilitate some
activities of insurgent movements against the governments of
neighboring countries. This support is likely to be limited
in scope, however, since Allende is unlikely to risk pro-
voking his neighbors. Nevertheless, Allende probably will
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- 14 -
be unable to prevent more extreme members of his coalition
from utilizing his regime's powers and resources in efforts
to provide more significant aid.
The military can be expected to continue to play
important political roles. Their role of influencing or
making decisions is likely to be effective over time only
if they have broad civilian support or at least tacit approval.
To the extent that popular demands are not met, they
will feel pressed to move to one or a combination of
alternatives, including increased populism, increased
repressiveness, a return to traditional politics, or develop-
ment of a one-party system. Polarization of political
forces, coupled with economic difficulties in a number of
countries and anti-U.S. nationalism, could provide oppor-
tunities for development of a wider Soviet presence. Resulting
radical nationalist regimes might be open to Soviet arms
offers, sowing seeds of internal discord and fanning the
flames of inter-American tensions. In the face of these
problems, particularly in the presence of a Marxist regime
in Chile, closer ties are likely among military leaders
in southern South America.
The Latin American military will proceed with arms
modernization programs whether the United States likes it
or not. If the United States makes these modern arms
available, or at least refrains from attempting to prevent
them from obtaining these arms from other sources, strains
over this issue between the U.S. and, particularly, the
larger South American countries, will be lessened. In most
cases, specific U.S. policies regarding arms, missions,
etc., will do less to determine military attitudes in major
countries than overall relations between the United States
and host governments, or than the military perception of
threats, e.g., from neighbors, insurgency, or the changing
Soviet presence. However, relations between the U.S. and
the Latin American military will provide an important channel
of access to them, especially during crisis periods.
At the same time closer relations by the military
with leading Western European arms suppliers can be expected,
possibly resulting in the establishment of at least a few
European military missions (perhaps repeating patterns
which go back to the past century) and withdrawal of U.S.
missions.
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The inter-American system, including the recently
restructured OAS, can perform a number of useful functions
in hemispheric relationships despite the limiting factors
inherent in multilateral organizations. The basic limita-
tion is, of course, that it can only undertake what its
members choose to delegate to it, its policy organs being
representative, deliberative bodies, comprehending often
widely divergent points of view. Moreover, Latin American
devotion to the principle of non-intervention and Latin
American misgivings over preponderant U.S. power combine to
explain the reluctance of most members to see the OAS play
a more significant "political" role in the Hemisphere or
to strengthen its relatively ineffective permanent military-
security machinery. Nevertheless, the inter-American
system plays a significant role in collective security and
peacekeeping; a useful but limited role in the peaceful
settlement of disputes; and ---- of particular relevance
to the Latin Americans -- an increasingly important role
in developmental assistance, including developmental lending
and technical assistance.
The inter-American system faces important challenges
in the years ahead, with a greater diversity in the character
of its membership and with increased Latin American assertive-
ness toward the U.S. These challenges will test its strength
and utility, particularly as a forum for dialogue and a
mechanism for airing and bridging differences.
The rapid expansion and technological advances in
communications in Latin America will both widen and deepen
the composition of the opinion leader groups in each country,
with a commensurate effect on policymakers. Latin governments
will be under increasing pressure to respond to demands
from elements of society heretofore largely excluded from
influence because of a lack of awareness.
2. Economic and Social
Latin American economic conditions for the next three
to four years are expected to be only fair overall. Con-
tributing factors which are likely to keep the growth
rate lower than in 1969-70 include: (a) political and
institutional instability and growing nationalism, resulting
in a slower rate of growth of new private foreign and
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domestic investment, (b) declines in export prices of key
commodities reinforced by limitations on capacity and
competing domestic demands for manufactured products,
(c) greater outflows of funds for debt repayment and profit
remittances, (d) slowness in developing a competitive
manufacturing sector, and (e) continuing pressure of popula-
tion on resources. Imposition of new trade restrictions
by the U.S. would slow growth still more.
Trade will continue to be central to our relations
with the rest of the hemisphere. The Latin American
perception of trade as a key factor in our relations will
continue to give it high political significance. The
chances for improvement in our political relationship with
the Latin American countries will be affected to an important
degree by the extent of progress in the trade field.
Patterns of trade are likely to continue to shift
toward Western Europe, Japan and Communist countries and
away from the U.S., but this movement is likely to be
slow. Trade between countries of the region is also likely
to increase slowly. For the period of this study, there
is no real present alternative to Latin America's existing
direction of trade, in which the U.S. is the single largest
partner and Western Europe and Japan divide up a portion
about equal to the U.S. share.
Investment is likely to continue to flow to the
larger and more dynamic economies in the area, provided
that political conditions remain reasonably stable. Almost
everywhere, however, economic nationalism is going to be
an increasing problem for U.S. and other foreign investors.
The emphasis of the Latin Americans will be on a greater share
of control and profits, particularly in the extractive
industries, and they will insist that the investments be in
fields and on terms which will be of primary benefit to
their modernization process, although there will be marked
differences in the policies followed by individual countries.
Investment in manufacturing which offers the transfer of
modern technology will be more welcome than bank or
public utility investments.
Alternatives to traditional patterns of direct
foreign investment will be increasingly employed. Take-
overs of majority control and creeping nationalizations,
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by legal or ostensibly legal means, will become more common,
but outright expropriations are not expected to be widespread.
Individual actions could, however, cause serious problems.
In some cases, such as Chile, local governments may go through
an ultranationalist phase of complete rejection of foreign -
especially U.S. -- private investments; however, restraint
on the part of the investors and governments affected may keep
the door open for modified forms of foreign - though in the
case of Chile, probably not U.S. - participation after na-
tionalist passions have run their course.
Latin Americans will look increasingly to Western
Europe, Japan and Communist countries, and to some extent to
multilateral lending agencies, in an attempt to diversify
their sources of investment. Those sources will be responsive,
and new forms of mixed public-private international consortium
arrangements will be used increasingly. The agencies and
countries concerned, however, have other commitments and will
drive hard bargains. The U.S. as a source of public and private
investment will remain very important. U.S. investors can be
expected to show increasing flexibility necessary to adapt to
changing circumstances.
Awareness of the extent and difficulty of the area's
social problems will probably rise, thus increasing the pres-
sures for political, juridical and economic reform. The radical
Peruvian and Chilean efforts will be watched closely and will
have at least an initial, although not necessarily longer-term,
attractiveness to many in Latin America, influencing even rela-
tively conservative governments to pay more attention to social
issues.
As U.S. assistance funds are increasingly channeled
through multilateral assistance agencies, U.S. decisions re-
garding international agency lending will be more difficult
than heretofore in cases where countries have struck at private
U.S. interests and/or where politically radical regimes have
assumed power.
IV. Implications for Policy
A. General
It is evident that the conditions in Latin America
which produced in 1969 the policy decisions guiding us today
have continued to exist and will persist, quite possibly in
an accentuated form, in the next three to four years. The de-
cisions taken in 1969 to move from a posture of "uneasy hegemony"
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to one of "mature partnership" and "low profile" were intended
to safeguard our interests by adjusting to and trying to influ-
ence, rather than resisting, the strong forces at work in
Latin America. Implicit in the decisions were two judgments:
first, that efforts to resist would be fruitless and, worse
than fruitless, destructive of our interests over time; and,
second, that many past policies designed to adapt to the forces
and, in adapting, to guide them into safer channels, had in
practice proven ineffective and indeed hurtful to our interests.
The historic change in policy in the fall of 1969
was made in full consciousness of the risks that it entailed.
It was recognized that some of the Latin American nations,
sensing new impulses to experiment with political models of an
extreme character, might adopt courses that ran counter to
our interests. It was also recognized that the new policy
would be difficult to carry out, requiring as it did the shedding
by both sides of deeply ingrained attitudes and habits. None-
theless, the careful study of optional policies led to the
conclusion that the alternatives carried even greater risks.
The experience of the past eighteen months has shown
that some of the risks accepted in the 1969 policy have become
realities. In the net, there probably has been an impairment
of our interests. In the judgment of the IG/APA, however,
such prejudice as we have suffered was almost certainly inevit-
able as a product of the basic forces operating in Latin America.
In any case, the damage to our interests has not been serious.
B.
The Increasing Challenge to U.S. Interests
The projected evolution of the situation in Latin
America strongly indicates that matters are going to get worse
before we begin to attain the hoped-for awareness of consonance
between our interests and the interests of Latin America. In
the meantime, U.S. interests in Latin America will be increasingly
challenged over the next several years by four forces of major
importance at work in the hemisphere. These forces are:
1. Anti-U.S. nationalism (which in part reflects
a sense of inadequacy and frustration provoked by the
degree of U.S. dominance) ;
2. Dissatisfaction over failure to achieve economic
and social progress aspirations (which contributes to
experimentation with left extremism, a transfer of blame
to the U.S., and an exacerbation of anti-U.S. nationalism) ;
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3. Different perceptions of interest by Latin
America and the U.S. (to a considerable extent because
of 1 and 2 above) ; and
4. An increasing Soviet diplomatic, trade and mili-
tary presence.
The major issues before us in our relations with
Latin America grow out of these four general forces. These
forces and the interaction between them contribute to and may,
in turn, be accentuated by a number of difficult specific prob-
lems which are currently with us in our relations with Latin
America or which are on the horizon. Among the most important
of these problems are:
1. The difficulty of convincing the Latin Americans
that a loosening of our embrace does not imply a lessening
of our interest.
2. The interpretation and content to be given to
our special relationship with Latin America.
3. Dealing with the problem of a Marxist-led Chile,
and with its effects in the rest of the hemisphere.
4. The difficulty of reconciling our own internal
political pressures arising from protecticnism with Latin
America's strong and emotionally held interest in more
liberal trade treatment.
5. The territorial seas problem.
6. Latin American attitudes toward foreign invest-
ment.
7. A nationalist and volatile Panamanian govern-
ment.
8. Changing attitudes within the OAS, and a possible
erosion of Latin American support for the OAS sanctions
against Cuba.
9. Continued and perhaps increased terrorism and
subversion.
10. Possible future limitations on U.S. access to
bases in Latin America.
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11. Increasing Latin American efforts to modernize
military equipment inventories.
12. Possible less secure access to bauxite in
Jamaica and petroleum in Venezuela.
The forces and problems listed above will interact
differently in our relations with each of the countries of the
area over the next three to four years.
The process of experimentation with extremism and
turning away from the U.S. has probably only begun in the hemi-
sphere and will probably intensify before it runs its course.
The U.S. cannot stop or reverse the process but it can to some
degree affect it, perhaps as much by what it does not do as by
what it does.
C.
Policy Conclusions
It was in this context that the IG/ARA addressed the
central question: Has our current policy been, is it now, and,
above all, will it be in the future effective in safeguarding
our interests in the face of these pressures, problems, and
trends?
The IG/ARA has examined sector-by-sector the effects
on our interests of developments since 1969, of the current
situation and of estimated trends over the next three to four
years. It has also considered, in the course of the sector-by-
sector analysis, broad policy alternatives, which are in their
net a "softer" (or essentially passive) line or a "harder" (or
"activist") line. On the basis of its study, the IG/ARA responds
to the central question in this way:
-- The basic policy direction established in 1969 was,
is and will continue to be sound in its essentials. It
is attuned to the realities, current and projected, of
our relations with Latin America. It gives greater prom-
ise than the gross alternatives do of meeting and con-
taining the increased challenges to our interests that
we will inevitably confront.
-- Some sub-policies that are incorporated in the
basic policy should be adjusted in order either to correct
misinterpretations of the meaning of our basic posture
or to correct "shortfalls" that have occurred in the
execution of policy.
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Adjustments, refinements and fuller implementation
are thus all that are needed now. The IG/ARA has agreed on a
number of actions or recommendations in this regard. The most
important of these are summarized by issue in Section V below.
Section VI identifies seven studies or reviews which the IG/ARA
believes should be undertaken. Other possible actions, with
IG/ARA recommendations or options regarding those actions, are
separated out by issue in Section VII for special consideration
by the Senior Review Group.
It should be understood that while the mature partner-
ship policy implies an overall reduction in our profile in
Latin America, it does not require a reduction of that profile
in all respects in all countries. Neither does it require a
retreat from discreet and selective leadership when the pro-
tection or advancement of U.S. interests requires the exercise
of such leadership. The recommendations put forward in the fol-
lowing sections in fact probably represent a somewhat more
activist stance in some respects and a slight raising of our
profile. But we believe they avoid the paternalism and directive
style we have sometimes demonstrated in the past and which have
contributed to our problems. What we wish to continue is the
right level and kind of involvement for the circumstances of
the present and future -- in the light of our interests, the
anticipated environment, and the likely consequences of our
proposed actions. In this connection, while we believe our
strong support for economic development and social progress
and our military assistance should be maintained, more emphasis
than in the past should be placed on style, information policy
in its broadest sense, and "traditional diplomacy."
In endorsing the basic policy decided upon in 1969
as a continuing guide for the next three to four years, the
IG/ARA specifically recognizes that policy as damage-limiting.
The basic policy accepts the prospect of some prejudice to our
interests in Latin America in the coming years. If the policy
is supported, however, by the actions recommended in this re-
sponse to NSSM 108, the IG/ARA believes that this prejudice
will be less than it otherwise would be and that it can be
contained within tolerable bounds against the day when the
consonance we see between our interests and the interests of
the Latin Americans will become more apparent to them.
V.
Major Recommendations by Issue
[The recommendations in this section and the options in
Section VII have been listed by the "issue" to which they pri-
marily relate. In a number of instances this has required a
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somewhat arbitrary judgment between several issues almost equally
served by a particular action recommendation. In certain in-
stances, e.g., trade actions and the "military presence" recom-
mendations, such multiple purposes have been cross-referenced
accordingly.]
A.
How to ameliorate anti-U.S. nationalism or at least
limit its negative effects on U.S. interests
1. Political-psychological
a. Continue to use information programs to pro-
mote the acceptance of the mature partnership approach.
Continue to play down, as part of this approach, the
predominant U.S. role in Latin America through both
our operational style and the content of our infor-
mation output.
b. Respond, to the fullest degree possible, to
Latin American trade needs. (See recommendations in
V. B.2. and options in VII. B.1.) As a matter of
style on trade issues, seek maximum credit for posi-
tive actions on our part, explain carefully and con-
sult in advance on all trade matters which might
adversely affect Latin American exports, and seek
a frank and friendly exchange of views regarding
Latin American actions which would limit their
ability to expand exports or which would damage our
trade interests.
C. Consider further the making of a major effort
in Latin America and with the U.S. Congress to obtain
an interim arrangement that would alleviate tensions
relating to fisheries jurisdiction pending achieve-
ment of an international agreement on the Law of the
Sea. (This issue is under separate study.)
d. In cases where disasters, internal disorder,
or disputes between OAS members create a need for
emergency action, utilize or work through the OAS
to the fullest possible extent (e.g., OAS peaceful
settlement machinery, emergency evacuation umbrella,
disaster relief coordination). Continue our style
of discreet leadership in the OAS. Be prepared to
accept greater diversity there.
e. Avoid the encumbrance of new assistance legis-
lation by potentially abrasive or inflexible limitations
unrelated to development assistance purposes.
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f. Maintain our present policy of pragmatic
differentiation on a case-by-case basis in our re-
lations with the countries and sub-regional groupings
of Latin America, rather than adopt a more rigid
policy of automatically applying a single yardstick
(e.g., favoring the large countries over the small,
democracies over the authoritarian regimes, etc.).
g. Continue our present policy toward Chile.
2. Economic
a. Continue the current policy of selective pro-
tection of U.S. investment in Latin America.
b. Initiate a review, by a commission consisting
of representatives of the U.S. Government and the pri-
vate sector, of U.S. investment problems in Latin
America.
C. Continue the move to multilaterality in
assistance but retain a bilateral assistance capability
with sufficient programming flexibility 1) to respond
to regional and national needs and sensitivities, 2)
to demonstrate innovative responsiveness to the basic
issues of development, 3) to permit contingency actions
for short-term political reasons as contemplated in
the new proposed Security Assistance legislation,
and 4) to allow for appropriate consideration in
assistance allocations for long-term bilateral and
overall regional foreign policy objectives.
3. Security/Military
See paragraph C.2. of this section for the IG/ARA's
recommendations regarding the military presence study
it submitted to the SRG on January 12. While the
actions proposed in that study should significantly
contribute to an increased perception of mutuality
of interests, and are assigned accordingly against
Issue C, their contribution to improved understanding
of U.S. objectives and motives should also serve to
ameliorate anti-U.S. sentiment in some key sectors
in most countries (although perhaps at some cost in
other sectors).
B. How to 1) contribute to greater economic and social
progress, and 2) encourage more realistic expectations of such
progress
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1.
Political-psychological
a. Continue to demonstrate a special interest
in Latin American economic and social progress through
maximum feasible trade action and development assis-
tance levels; through support of regional structures
such as CIAP, IDB, Caribbean Development Bank, etc.;
and through careful attention in the reorganization
of bilateral assistance to the retention of flexi-
bility in programming and to the reflection of special
regional needs.
b. As part of the effort to increase Latin American
self-confidence, stress the positive features of the
progress actually being achieved. At the same time,
avoid contributing to unrealistic expectations. As
for our own programs, do not promise more than can
be achieved.
2. Economic
a. Promptly submit generalized preference legis-
lation to Congress, and make a strong effort for its
early enactment.
b. Make a strong effort to comply with the "stand-
still" commitment concerning the avoidance of new
restrictions on Latin American exports.
C. Improve procedures for advance consultation
on actions which might adversely affect Latin American
trade (e.g., by allowing adequate time to consult
before decisions are made).
d. Maintain at least present levels of U.S.
development assistance.
e. In assistance policy, emphasize innovative
efforts to solve employment and urban problems, to-
gether with efforts in education, agriculture and popu-
lation. In addition, continue to give priority to
assisting Latin American export development.
f. Secure Congressional approval of the proposed
Inter-American Development Bank replenishments at
pledged levels.
g. Continue efforts to encourage improved manage-
ment and lending policies of the IDB.
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h. Encourage the continued liberalization of
program lending rules by the IBRD and support recent
efforts to lend within the context of broader sectoral
strategies. (The current NAC review of IBRD/Ex-Im
Bank relationships may have implications for these
questions.)
i. Maintain our present emphasis on multilateral
technical assistance programs through the OAS, and
consider increasing our contributions to these assis-
tance programs contingent upon improved Secretariat
capability.
3. Security/Military
Provide adequate funding to permit selected Public
Safety programs (which have a dual rationale of de-
velopment and security).
C.
How to encourage a clearer perception of the mutuality
of U.S. and Latin American interests
1. Political-psychological
a. Continue to provide information, in a manner
consistent with our overall partnership style, con-
cerning the positive aspects of the U.S. role and
presence in Latin America.
b. Emphasize style in our attempt to indicate
that we care even though we are now less assertive
in our leadership. Stress this interest in speeches
and other information output, without over-commitment.
Stress the personal touch in our actions wherever
possible. Be punctilious about high-level attendance
at meetings. Program more high-level visits. Utilize
a working group of the IG/ARA to develop plans for
accomplishing this objective of improved style in
our overall relations with Latin America.
C. Explain the contribution of U.S. technology
and of U.S. capital flows, both public and private.
Within the context of the decision made on policy
toward U.S. private investment (See Section VII),
emphasize by means of a statement by the Secretary
of State the positive contribution of private invest-
ment to the development process.
d. Encourage increased discussion of the role of
private investment in forums such as CIAP, OECD, DAC
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and the IDB/OAS-sponsored panel on private investment
in Latin America.
e. Continue to raise in our diplomatic and intelli-
gence-exchange programs the security implications of
Soviet and Cuban military and para-military activities
so that Latin America will have a clearer perception
of the threat from those sources. Consult with the
Latin Americans more frequently on these problems.
f. Expand information exchange with host countries
concerning subversive activities in general.
g. Follow a mixed pattern of "collegial" and "bi-
polar" relationships within and outside the inter-American
system, but discourage any attempts to build up rival
Latin American organizations at the expense of the OAS.
2. Security/Military
Execute, following SRG approval, the recommenda-
tions in the IG/ARA's review of the U.S. military
presence in Latin America submitted to the SRG on
January 12, 1971. These recommendations, which are
summarized on pages 22-23 of the Security/Military
sector paper and are primarily designed to improve
contacts and influence with the Latin American military,
can significantly contribute to a "clearer perception
of the mutuality of U.S. and Latin American interests"
by some key sectors. (See Section VII for options
regarding the provision of grant MAP materiel.)
D. How to limit or protect against the increasing Soviet
diplomatic, trade and military presence in the region
1. Political-Psychological
a. Take a strong stand privately or publicly as
appropriate with Latin American governments (other
than Cuba) against increases in Soviet military presence
that threaten our interests.
b. With regard to the increasing Soviet diplo-
matic and economic presence (as distinguished from
military presence), continue to utilize our diplomatic,
information, and intelligence-exchange programs to
point out where appropriate the hazard of that pres-
ence. At the same time, avoid pressing our views on
the Latin American countries when we have reason to
believe that they will not be receptive to such views.
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2. Security/Military
a. Examine the possible need for increased sub-
marine surveillance and anti-submarine warfare capa-
bility in the Caribbean.
b. Undertake contingency planning with regard
to possible establishment of Soviet bases in Latin
America.
VI. Further Studies to be Undertaken
A. A review of the "special relationship" issue. (See
pp. 25-26 of the Political/Psychological sector paper.)
B. Continuing review of Cuban policy in the light of
probably increasing pressures among Latin American countries
to reexamine OAS policy toward Cuba.
C. Further studies of U.S. strategic requirements for
bauxite (currently underway), oil and possibly other materials
imported from Latin America.
D. A review of the question of what constitutes a "reason-
able" response to "reasonable" requests for arms, and a study
of the feasibility of an arms limitation agreement in Latin
America and the possible role of the U.S. in this regard.
E. Studies of the implications for U.S. interests of
1) a greater Western European and Japanese presence in Latin
America (cultural contacts, trade, investment, etc.), and 2)
increased arms purchases and military assistance from Western
Europe.
VII. Options Recommended for Particular SRG Consideration, by
Issue
A.
How to ameliorate anti-U.S. nationalism or at least
its negative effects on U.S. interests
1. Economic
a. In view of the complex considerations relating
to U.S. Government encouragement of private U.S. in-
vestment in Latin America, the following options are
offered:
See Investment sector paper, pp. 7-11, for full discussion
of options.
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Option 1. Selective encouragement:
The U.S. Government would continue its present
policy of selective encouragement of U.S. private
investment in Latin America; the State Department
would include selectivity criteria explicitly in
its advice to U.S. implementing agencies and to
U.S. representatives in international financial
institutions. (This is the preferred IG/ARA
option.)
Option 2. Selective discouragement:
The U.S. Government would endeavor to dis-
courage new U.S. investments except those which
would clearly serve current and longer-term U.S.
interests. Such a policy would specifically
discourage investments that might present po-
tential problems for U.S. relations with the
host country.
Option 3. Neutrality:
The U.S. Government would neither encourage
nor discourage any or all new U.S. investments.
OPIC would not engage in new activities. Ex-Im
would continue its present operations.
b. The dominant donor status of the U.S. in the
IDB, reflected most directly in the U.S. veto power in
the Bank's FSO soft-lending operations, exposes the
U.S. increasingly to the risk of Latin American-U.S.
polarization. If successful, current efforts to broaden
Bank membership to include European countries could
reduce those risks. In the light of the discussion
in the Development Assistance sector paper (pages 17-20,
22-23), the following options are offered concerning
the U.S. position on proposed loans in the IDB.
Option 1:
Determine the U.S. position on proposed loans
solely on the basis of technical and development
policy considerations (except where legislation
requires otherwise).
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Option 2:
Continue current practice, i.e., delaying
loans to countries with which there are important
long-run policy differences and avoiding formal
use of the veto to the maximum extent feasible.
(This is the preferred IG/ARA option.)
Option 3:
Seek a legislative change which would eliminate
the U.S. veto on FSO loans.
B.
How to 1) contribute to greater economic and social
progress, and 2) encourage more realistic expectations of such
progress
1.
Economic
With regard to possible new actions to maximize
Latin American export earnings, the following options
are presented. They are elaborated in more detail
beginning on page 10 of the Trade sector paper.
Option 1:
Develop measures (which could be transitional)
favoring all (or some) Latin American countries
and discriminating (where necessary) against other
countries.
Option 2:
Develop transitional measures which would
provide special benefits for all LDCs, perhaps
including measures discriminating against other
exporter countries.
Option 3:
Develop measures favoring all (or some) LDCs
without discrimination against other countries.
Option 4:
Take no measures specifically designed to
give special treatment to Latin America or LDCs
generally but continue to work for multilateral
liberalization of trade on an MFN basis.
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C.
How to encourage a clearer perception of the mutuality
of U.S. and Latin American interests
In its "military presence" study submitted to the SRG
January 12, cited in Section V of this Overview, the IG/ARA
presented the following options regarding the provision
of grant MAP materiel. Discussion of these options, with
pros and cons for each, will be found in the I/ Tab B attach-
ment to the Security/Military sector paper.
Option 1:
Modify the present policy of phasing out grant
materiel to permit materiel programs for selected
countries at approximately the level funded in
FY 70 ($9.3 million exclusive of supply operations).
(This is the recommended IG/ARA option.)
Option 2:
There should be no programmed grant materiel
for Latin America. To meet unanticipated Latin
American needs, however, the President would draw
upon a worldwide Contingency Fund.
Option 3:
Earmark up to $9.3 million of the President's
Contingency Fund for use as necessary in Latin
America.
1/ The only other IG/ARA recommendation in the January 12
study which represented a choice between competing options was
the recommendation that, in lifting the freeze on further
implementation of the Milgroup study, a new level of not to
exceed 290 U.S. military spaces for the region be approved.
In a memorandum of January 19 to Mr. Kissinger, from which the
Defense Department and JCS dissented, the Interdepartmental
Political-Military Group proposed the two other options that
were considered and rejected by the IG/ARA, i.e., Milgroup
levels of 270 or 236.
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SUMMARIES ≡
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SUMMARIES
Current Policy and the Environment
That Shaped It
1
Situation and Trends
5
U.S. Interests in Latin America
and Latin American Interests
in the U.S.
7
Political-Psychological
11
Security/Military
15
Development Assistance
19
U.S. -Latin American Trade
Relations
23
Investment
27
The Inter-American System
29
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DECLASSIFIED/RELEASED ON 4/23/02
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under provisions of E.O. 12958 RS
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CURRENT POLICY AND THE ENVIRONMENT THAT SHAPED IT
SUMMARY
I. The Core Assumptions
Two basic assumptions underlay the Nixon Administration's
address to our Latin American policy. The first was that a
fresh approach was needed; the second was that a "special
relationship" existed--and ought to exist--between the United
States and the other American republics.
II. The Setting for Policy Choice
The analyses which formed the basis for the President's
policy speech of October 31, 1969, emphasized the severe stresses
and strains to which the American republics were being subjected
by the process of change. It was also clear that our new policy
guidelines would have to take into consideration Latin American
frustration with the slow rate of progress toward the ambitious
goals of the Alliance for Progress and a growing spirit of
nationalism, both of which contained elements of anti-American
sentiment.
III. U.S. National Interests
The Rockefeller Report and the response to NSSM 15 were
basic elements in the extensive policy review undertaken by
the Administration. While both reports stressed our interest
in the "special relationship", the response to NSSM 15 was more
explicit in its presentation of U.S. interests in Latin America,
identifying security, economic, political, and developmental
interests.
IV. Policy Responses to the Perceived Environment
Political-Psychological
Over the past several years the political environment has
been characterized by three major trends: 1) growing Latin
American nationalism; 2) increasing social unrest and political
and economic instability; and 3) increased radicalization in
political life and greater political managerialism on the part
of the Latin American military. These trends challenged our
previous policy, developed during the 60's, of active and overt
promotion of political democracy. Faced with these trends the
response to NSSM 15 posed activist "involvement" and laissez-faire
"pragmatism" as gross political options. The Rockefeller Report
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essentially recommended the latter stance, pointing out that
political evolution takes time, and that our long-term
interests would be best seryed by maintaining at least
minimal diplomatic relations with other governments. The
NSC meeting of October 15, 1969, and subsequent official
pronouncements affirmed the "circumspect pragmatism" option.
In an elaboration of our new policy style toward Latin
America, the President on October 31, 1969 stated that we
would hope to achieve "a more mature partnership in which
all voices are heard and none is predominant." The new
policy style was soon exemplified in regional and international
forums.
Development
Development was another area of challenge. While the
Alliance had made substantial and lasting contributions in
Latin America, it clearly had been oversold. The Consensus of
Vina del Mar was the single most eloquent recital of the
factors which had to be considered in formulating a new policy
stance. It reflected concern over the widening economic,
scientific and technological gap between the developing and
the developed nations. To meet this concern and to help assure
adequate resource flows, strengthened multilateral assistance
channels appeared needed. We believe that multilateral lending
could be increased without significant sacrifice of developmental
effectiveness or of our capability for fostering U.S. interests.
Greater reliance on a multilateral approach would facilitate
a disengagement of the U.S. from involvement in Latin American
domestic affairs and would reduce, both here and abroad, the
political exposure of the U.S. in assistance allocations. A
major objective of revised programs would be a more effective
sharing of responsibilities in development assistance matters.
Trade and Investment
It was clear that changes would also be required in trade
ano investment policies. We would press for a liberal system
of generalized tariff preferences for all developing countries,
and otherwise work to help Latin American countries expand their
exports. U.S. investment in Latin America would be encouraged,
but only where it was desired and local political conditions did
not present unwarranted risks.
Security
It was assumed that the principal threats to the security
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of the hemisphere involved internal subversion and instability
rather than the possibility of external attack. The general
thrust of the new Administration's approach was contained
in the President's decision at the NSC meeting on 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 lower our profile. Two basic precepts from the mid-
sixties -- that the United States should avoid becoming a party
to arms escalation in Latin America and that the United States
should encourage the allocation of resources to economic and
social development rather than to military expenditures --
were incorporated into the Administration's security policies.
Nevertheless, it was judged that we should be responsive to
reasonable requests for equipment needed to modernize obsolete
inventories. Military missions would be continued but at a
much lower manning level. Public safety programs designed to
serve the developmental as well as the security interests of
the United States in the developing countries were another
dimension of this policy.
The Inter-American System
While recognizing inadequacies in the inter-American system
and its principal instrument, the OAS, we saw the system as a
useful mechanism for blunting the problem produced by asymmetrical
power relationships in the hemisphere. We believed that Latin
American nations valued the protective shield provided by the
Rio Treaty.
The new Administration declared "a firm commitment to
the inter-American system," and indicated that future U.S.
assistance for hemisphere development would be placed
increasingly on a multilateral basis within that system.
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SITUATION AND TRENDS
SUMMARY
I.
The Current Situation
Since mid-1969, Latin American governments have survived
the disruptive effects of radicalism and terrorism without
suffering serious threats to their stability. The Central
American war in mid-1969 and growing black radicalism in the
Caribbean have weakened political. stability in those areas.
In Cuba, further economic deterioration has increased Castro's
dependence on the USSR and further eroded his appeal in Latin
America.
The USSR has managed to expand its contacts and its pre-
sence in Latin America in several ways. The rapid movement
toward consolidation by the Allende regime in Chile since
November offers the Soviet Union opportunities for significant
further expansion.
Economically, many Latin American nations have been at
high points in their economic cycles, but overall statistics
mask sluggish or reduced growth in some, and many serious
sooial problems remain. The number of Latin American coun-
tries claiming 200-mile territorial sea limits has increased.
II. The Effect of U.S. Policies
Forces operating within Latin America itself were far
more responsible for events in Latin America than were U.S.
policies and actions. The Latin Americans view the new U.S.
policies with ambivalence and the USSR probably sees any changes
as largely rhetorical.
Direct U.S. assistance contributed importantly to the
area's overall relatively good economic performance during
the period, but other factors were more influential in their
sum. Although U.S. assistance programs in the social sector
received continuing emphasis, many Latin Americans believe
that U.S. interest in social progress has declined. Prudent
U.S. policies toward private investment have to some degree
allayed Latin American nationalistic fears of foreign domina-
tion, but sensitivity to our policies remains high.
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III. Trends
Nationalism and a desire for more independence of the
U.S. will remain extremely important in Latin America over
the next three to four years. Violent extremism will remain
a disruptive force, but is unlikely to result in actual seizures
of power by extremists. However, in one or more countries
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. Some governments, under ex-
tremist 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. Cooperation by Latin Ameri-
can insurgent and terrorist groups across national boundaries
will probably increase. The Latin American military can be
expected to continue playing important political roles.
The USSR will continue to stress expansion of its pre-
sence in the area, and will not neglect promising opportunities
when nationalism and extremism increase susceptibility to
Soviet influence. U.S. presence and influence in Chile are
sure to decline.
The inter-American system can perform useful functions
when the Latins perceive a common or clear danger or advan-
tage to themselves, but it will be hampered by definite limi-
tations.
Overall economic conditions are expected to be only fair.
Alternatives to traditional patterns of private investment
will be increasingly employed. Awareness of the extent and
difficulty of the area's social problems will probably rise,
thus increasing pressures for reform. Continued expansion
and advances in communications will both widen and deepen the
composition of opinion leader groups.
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UNITED STATES INTERESTS IN LATIN AMERICA AND
LATIN AMERICAN INTERESTS IN THE UNITED STATES
SUMMARY
I. United States Interests in Latin America
The United States has major objective interests in
Latin America which are listed below in rough order of
priority. Some of these major interests could become vital
interests in the future; and a number of them, including one of
the most important ones, could cumulate now or in the future in
various combinations to be a vital interest.
A. Very Important
1. Preservation of a predominance (by the combination
of numbers and importance) of independent, self-sustaining
Latin American countries favorably disposed to the United
States.
2. Denial of Latin America as an area from which a
strategic attack could be launched against the United States.
B. Important
3. 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.
4. Maintenance of access to the Panama Canal, including,
under existing circumstances, its protection and control
by the United States.
5. The existence of a strong inter-American system,
including an effective collective security function.
6. Unimpeded transit for United States forces on
the high seas and in international air space in the area.
1/ A vital interest is understood to be one which directly
concerns a nation's ability to survive, or at least to survive
in its existing essential character. A major interest is at the
next level; it is one which significantly affects a nation's well-
being.
2/ ISA and JCS prefer "Protection and control of the Panama
Canal as essential to maintaining our access to its use."
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7. Mutually beneficial economic interchange, including
reasonably favorable trade and investment climates.
8. Denial to hostile powers of bases in Latin America
that would enhance their non-strategic military capabilities.
9. Continued access to bauxite in Jamaica and pe-
troleum in Venezuela.
10. Protection of the large number of U.S. citizens
who live in, have economic ties with, or visit Latin America.
11. Continued access to certain naval and air bases
and facilities in the area.
Economic and social progress, freedom of communications
media, and maintenance of internal security in Latin America are
very significant, but are considered to be means of advancing
United States interests in Latin America rather than interests
in themselves.
II. Latin American Interests in the United States
Latin America's principal objective interests in its rela-
tions with the United States are:
1. Maintenance of the flow of United States capital
and technology and obtention of liberal trade and aid treat-
ment as a contribution to economic and social progress.
2. Development of offsets to the pervading United
States presence and the gaining of control of key natural
resources as means of demonstrating and maintaining inde-
pendence.
3. At the same time, avoidance of dependence on an-
other power.
4. Maintenance of an effective inter-American system,
with United States participation.
5. Maintenance of the United States security umbrella
against potential future extra-hemispheric attempts at in-
cursion.
III. Consonance or Conflict Between Interests
There is no necessary inconsonance between United States
and Latin American objective interests in relations with each
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other. However, perceived interests are different from
objective interests in both cases, and are inconsonant.
This inconsonance derives from: (a) Latin American national-
ism directed mainly against the United States, (b) different
perceptions of the external threat, (c) the different priori-
ties or weights that each side gives to its interests, and
(d) inter-interest conflicts for both.
IV. The Special Relationship
A special relationship exists between the United States
and Latin America in the generally accepted sense of United
States special responsibilities in Latin America, and in the
degree of mutuality of objective, although not perceived,
interests. This special relationship is based on factors
which make Latin America different, for the United States,
from other developing areas. Those factors are geographic
proximity, a degree of common heritage, tradition, the level
of our economic interests in Latin America, and regional
institutions and accords.
V. Policy Implications
However, United States interests in Latin America are
as important to us as they are primarily because of the
existence of a hostile superpower -- the USSR. Our current
intelligence assessment is that Latin America will remain a
relatively low priority area for the USSR, but that the USSR
will continue to engage in a broad range of activities and not
neglect promising opportunities there. Those opportunities
have arisen in the past, and will arise in the future, primarily
for three political-psychological reasons: (a) Latin America's
reactive nationalism directed against the United States; (b)
Latin America's experimentation with left extremism; and (c) --
mainly because of the effect of the first two reasons and the
Soviet Union's own low profile thus far -- Latin America's
current failure to think of the USSR as a significant threat
to it.
Latin America's reactive nationalism directed against the
United States and experimentation with extremism are the
products, in turn, of Latin America's frustration and sense of
inadequacy deriving from (a) its failure to achieve its
aspirations for economic and social progress, (b) its depen-
dence upon the United States, and (c) the confusion and
uncertainty produced by rapid change itself and by the mass of
information and welter of new concepts and value signals
flowing to it over modern communications media.
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POLITICAL - PSYCHOLOGICAL
SUMMARY
I. Implications of Key Developments
The political-psychological sector paper assesses the
implications of thirteen key developments which have occurred
since mid-1969 for the eleven major U.S. interests in Latin
America; assesses the adequacy of certain U.S. policies and
programs in the light of this analysis; and makes policy
recommendations when this seems indicated. The major conclu-
sions of this assessment can be summarized as follows:
1. Preservation of predominance of independent, self-
sustaining, favorably-disposed nations. The events of the
past 18 months do not constitute a serious threat to this
interest. Such a predominance exists today and will probably
continue to exist during the next 3-4 years. Nonetheless,
there are trends -- developments in Chile, the continued ex-
pansion of the Soviet presence, intensification of violent
extremism and anti-U.S. nationalism, growing Latin American
concern about protectionist trends in the U.S., and conflict
over national investment policies and the extent of the terri-
torial sea -- which are potentially detrimental to this inter-
est.
2. Denial of Latin America as an area from which a
strategic attack could be launched against the U.S. The events
of the past 18 months have not significantly increased the
likelihood that the USSR will acquire bases in this hemisphere
from which it could launch nuclear attack against the U.S.
There are no indications that the USSR is seeking to acquire
land bases for such purposes but we note its recent testing of
the possibility of acquiring facilities in Cuba for its nuclear-
armed submarines.
3. Maintenance of confidence in U.S. leadership. The
events of the past 18 months have not seriously damaged confi-
dence in U.S. leadership. However, there are a number of
developments (e.g., increasing commitment of Chile to a policy
of open opposition to the U.S., increasing erosion of Latin
American support for our Cuba policy) which may occur in the
years immediately ahead which would severely test U.S. leader-
ship.
4. Access to the Panama Canal. None of the events of the
past 18 months appear to have placed access to the Panama Canal
in jeopardy. So far as the future is concerned, nationalism
in Panama itself, where Torrijos may react violently if he is
not satisfied with progress in the talks, could strain our
defense and operation of the canal.
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5. Preservation and strengthening of the inter-American
system. The events of the past 18 months have not caused any
significant weakening of the inter-American system. However,
there is a potential for future trouble, notably developments
in Chile and the territorial sea issue, which will require care-
ful attention.
6. Freedom of the seas and international air space. The
assertion by some Latin American nations of a 200-mile terri-
torial sea poses a potentially serious threat to this interest.
7. Economic interchange. This interest appears threatened
mainly by two developments, the deteriorating climate for American
investment in several countries and the persistence of protec-
tionist tendencies in the U.S.
8. Denial of non-strategic bases. Except for Cuba and
possibly Chile, there is no present or foreseeable threat over
the next three or four years to this interest.
II. Adequacy of U.S. Policy and Recommendations
The Administration's broad general policy of transforming
the character of the special relationship from one of "uneasy
hegemony" to one of "mature partnership" serves our interests
well and should be continued. The "special relationship" should
be made the subject of a special study.
The sector paper's conclusions on the adequacy of subsidiary
current policies and its policy recommendations can be summarized
as follows:
1. Internal political developments and bilateral political
relations. Our present policy of differentiating in our bilateral
relations with the countries and sub-regional groupings of Latin
America pragmatically on a case-by-case basis in accordance with
a mix of considerations such as- size, proximity, attitude toward
the U.S., etc., gives our diplomacy a desirable flexibility and
should not be changed in favor of what would be a more rigid
policy of differentiating automatically on the basis of arbitrary
principles.
2. Chile. The present cool, correct public stance toward
Chile and our present Chile policy have given Chile no basis for
hostility toward us and have won the approval of the other Latin
American countries. These should be continued so long as Chile
does not embark on a policy of deliberate hostility toward the
U.S. or its neighbors.
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3. Cuba. Our present policy of isolating Cuba has been
a factor in limiting Cuba's ability to export its revolution
and should be continued unless final action on NSSM 32 results
in another decision. However, in view of the probable increase
of pressures among other Latin American countries to reexamine
OAS policy toward Cuba, we should keep our own policy under
continuing review.
3. The Soviet presence. Although our present policy has
not succeeded in blocking the expansion of the official Soviet
presence in Latin America, it is probable that more vigorous
efforts would not only fail but would also be counter-
productive. We should continue our efforts to emphasize
the security considerations posed by the Soviet presence in
our relations with host governments.
5. Western European and Japanese presence. There are
political and economic assistance advantages in a greater Western
European and Japanese presence in Latin America. However, the
paper concludes that the implications of increased Western
European and Japanese trade, investment, military assistance,
and arms sales are sufficiently complex to merit separate study.
6. The Territorial Sea. We should make a major effort in
Latin America and with the U.S. Congress to obtain agreement
on an interim arrangement that would alleviate tensions
relating specifically to fisheries jurisdiction pending the
achievement of international agreement on the Law of the Sea.
7. Information. Our efforts to promote understanding and
acceptance of our new policies should be continued. However,
we need to determine how effective these efforts have been. The
major image survey USIA is carrying out should help us do this.
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SECURITY/MILITARY
SUMMARY
I.
Introduction
Nine of the eleven U.S. interests in Latin America identified
in this study have direct security implications. The Security/
Military sector paper discusses the potential threats to these
interests, analyzes the policy implications of these threats,
and proposes a series of recommendations. The recommendations
are put forward in full 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.
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.
II. Implications of Potential Threats
The potential threats to our security interests in Latin
America consist principally of the Soviet capability to launch
strategic weapons against the United States from the area; the
possible establishment of hostile non-strategic military and
naval bases; the possible defense implications of the trend
toward expanded claims in territorial seas; the possible denial
of access to certain resources, to the Panama Canal, and 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; and a possible
series of negative political developments.
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 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, there would be serious security implications
for the United States should such facilities be established
over the longer term. We have considered it important to try
to predict the policy implications of this possible threat with-
out attempting to estimate the likelihood that the threat will
in fact materialize.
Denial of access to the Panama Canal and to certain key
military facilities (especially in the Caribbean) which we main-
tain for submarine detection, for ASW activities, and for
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military-scientific purposes, would also constitute a threat
to our security interest in Latin America.
Latin American territorial sea claims complicate our re-
lations with some of these countries and could have serious
effects on the strategic mobility of U.S. naval and possibly
air forces in the area.
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 Sovietshave
shown an increasing interest in the hemisphere. Though Latin
America will remain a relatively low priority area for them,
they will not hesitate to take advantage of any Latin American
receptivity for support of their worldwide military operations.
Their influence in Chile can be expected to grow, although 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. In the short range, Soviet activities will probably
not result in serious impairment of U.S. interests in the
hemisphere.
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 have important
repercussions on our security interests.
Aside from the adverse impact it would have on our security
interests within Latin America itself, a series of negative
political developments in the hemisphere might well raise doubts
concerning our capability and willingness to defend our security
interests in other parts of the world.
III. Conclusions
The trends identified in the 1969 analysis of the environ-
ment are, in the main, those that characterize present circum-
stances. 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.
The broad policy outlines of 1969 remain, by and large,
appropriate today. Our security policies as they actually
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materialized during the past eighteen months, however, resulted
in decreases or "shortfalls" in the execution of security as-
sistance beyond what had been contemplated.
The recommendations to the Senior Review Group contained
in the IG/ARA's "military presence" study of January 12, 1971,
remain valid and should be approved. They primarily concern:
the role of the U.S. military in influencing host government
military leaders, training and information exchange, visits,
combined exercises, continued grant materiel assistance, the
elimination of legislative restrictions, a responsive FMS credit
program, and provision of naval vessels. In addition to remedying
the "shortfall" problem, they are responsive to the President's
decision of November 1970 that we should increase our efforts
"to establish and maintain close relations with military leaders
in the hemisphere."
IV. Recommendations
-- That the IG/ARA's "military presence" recommendations
to the SRG of January 12 be approved.
-- That contingency planning be undertaken with regard to
the possible establishment of Soviet bases in Latin America.
-- That adequate funding be provided to permit selected
Public Safety programs.
-- That the Department of Defense examine the possible need
for increased submarine surveillance and ASW capability in the
Caribbean.
-- That the IG/ARA assure that the importance of retaining
our military and naval facilities in the Caribbean, and particu-
larly in Barbados and the Bahamas, is reflected in the FY 73
CASP reviews now underway and in CASP guidance to be prepared
for FY 74.
-- 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.
-- That the SRG commission a 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.
-- That the Arms Control and Disarmament Agency, in cooper-
ation with the IG/ARA, conduct a study of the feasibility of a
possible arms limitation initiative.
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DEVELOPMENT ASSISTANCE
SUMMARY
I. 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.
II. 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
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.
III. 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.
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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 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./
0 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.
IV. 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.
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We should encourage the adoption by the IBRD of program
lending and support recent efforts to lend within the context
of broader sectoral stragegies.
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
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 considerations (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.
V. 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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U.S. -LATIN AMERICAN TRADE RELATIONS
SUMMARY
I. The Problem
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 trends in bilateral development assistance, irritated
by the conditions attached to that assistance, and doubtful
about the net value of private foreign investment, they have
fixed on trade as the most economically effective and
politically acceptable vehicle for obtaining external resources.
Latin Americans recognize that their trade welfare is
closely linked to progress and prosperity in the developed
world (particularly in the U.S.), and are seeking greater
protection for their vulnerable trade position through
reductions in external trade barriers and increased control
of their resources. They are increasingly impatient with
and critical of the potentially widening gap between our
commitments and our performance. They count heavily on our
prompt and positive action (both bilaterally and through
multilateral forums) in the trade field, which for the Latin
Americans has become one of the crucial tests of our
intentions.
We, on our part, see Latin American trade as representing
important economic interests to the United States: Latin
America is the largest LDC market for United States exports
and an important source of United States imports. We believe
Latin America's most fundamental problems in this field are
basically structural: overdependence on traditional commodity
exports; inefficient, overprotected industries; a lack of
export consciousness and know-how; and internal policies
inconsistent with export development. The scope for United
States action in the trade field is limited by domestic
protectionist sentiments and our global foreign trade
policies, as well as by the degree to which tariff barriers
to Latin American exports have already been reduced or
eliminated.
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Nevertheless, we have to recognize that the Latin Americans
view trade problems in an altogether different light, and that
our duties on certain important Latin American 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).
II. Conclusions
1. Trade is central to our hemispheric relationship.
Trade per se represents an important U.S. economic interest,
but the Latin American perception of trade as a key factor in
our relations gives it a highly important political significance
as well.
2. The chances for improvement in our hemispheric politi-
cal relationship will be importantly affected by the extent of
progress in the trade field, and by the atmosphere surrounding
our trade activities.
3. Expanded trade is in the long-term interest of both
the U.S. and Latin America. However, U.S. trade concessions will
produce short-term repercussions in the U.S. with domestic po-
litical costs. These costs must be weighed against those
costs, both short and long-term, which an unresponsive trade
policy would inflict on our hemispheric foreign policy.
III. Program of Action
If we are to prevent a widening gap between commitments and
action, our most urgent task is to fulfill our existing commit-
ments, particularly prompt submission and strong Administration
support for early enactment of generalized preference legisla-
tion and avoidance of new measures restricting imports from
Latin America.
The criticality of trade to our hemispheric policy and
interests also makes it important that we develop new ways to
increase Latin American export earnings. The sector paper
suggests possible new actions and offers options differing
with respect to potential beneficiaries. It considers the
conflicting domestic and global foreign policy considerations
which bear on policy decisions in this area. It emphasizes
the importance of "style" in our trade relations.
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Briefly, the options for trade policy include:
1) Development of trade measures favoring all (or
some) Latin Americans and discriminating (where necessary)
against other countries (e.g. preferred treatment for Latin
America in allocating market shares under our quantitative
restraint programs--such as sugar) ;
2) Development of transitional trade measures providing
special benefits for all LDC's (e.g. implementation and
administration of our quantitative restraint programs so as
to reduce to the extent possible their adverse impact on
LDC exports) ;
3) Development of trade measures favoring LDC's but
without discrimination against other countries (e.g. multi-
lateral efforts to reduce tariff and non-tariff barriers on
products supplied principally by LDC's without requiring full
reciprocity from LDC's) ; and
4) Continued multilateral liberalization of trade on
an MFN basis without measures specifically designed to give
special treatment to Latin America or other LDC's (e.g. a
new round of GATT tariff negotiations).
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INVESTMENT
SUMMARY
I. Recent Developments
Trends in U.S. private foreign investment in Latin America
reflect substantial problems as well as opportunities. The
investment climate has worsened in recent years. Economic
nationalism, expressed most often as a desire to control and
channel foreign investment into economically and socially use-
ful channels, continues to grow, although confiscation of
foreign investment has not occurred to the extent that many
feared. In the face of a pervading nationalistic spirit, there
is a potential for greater difficulties in almost all countries.
II. U.S. Interests in Investment
The U.S. has a clear economic interest in private invest-
ment, and perhaps longer-term political interests as well.
Latin America has a need for investment which it continues to
recognize even if it does not acknowledge it publicly. The
U.S. investment presence in Latin America, however, has not
always been a positive factor and has resulted in Latin American
demands for a reduced U.S. impact on the national life. Our
troubles with investment in Latin America will continue, but
withdrawal is not a solution. On balance, a longer-term per-
spective on foreign investment will best serve our interests.
III. Encouragement and Protection of Investment
In recent years, the U.S. has increasingly pursued a policy
of selective encouragement of U.S. private foreign investment --
encouraging investment only after a careful examination of the
facts. This policy appears to have reduced the potential for
confrontations with foreign governments over investment disputes.
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 investors and host countries to consider an investment
more carefully than at present, and forestall the embarrassment
and resentment that will result from unsatisfied expectations
that the U.S. will support an investment.
It is current U.S. policy to act in protection of U.S.
investments in Latin America on a selective basis -- beyond
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the minimal traditional protection which all investments receive.
This policy has yielded relatively satisfactory results in
the past two years. It would be of value to have this policy
explicitly affirmed.
IV. Recommendations
1. That a public high-level statement be made restating
the U.S. view on the importance and role of private foreign
investment in the development process, and underscoring our
intention to encourage investment in accordance with development
criteria and the receptivity of the Latin American nations
themselves.
2. That increased discussion of private investment be
encouraged in forums such as CIAP, OECD, DAC, and the IDB OAS-
sponsored panel of Private Foreign Investment in Latin America.
3. That a mixed U.S. Government-private commission be
established to examine investment issues in Latin America.
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THE INTER-AMERICAN SYSTEM
SUMMARY
I. Developments and Trends since 1969
The OAS has become more disparate and less cohesive in its
membership, particularly with the advent of radical military re-
gimes and the Chilean Marxist regime, making it more difficult
for the U.S. to align support in the political/security and eco-
nomic fields. Nevertheless, the OAS provides an opportunity for
constructive dialogue bridging differences. Chile indicates an
interest in maintaining such a dialogue, but it may also inten-
sify efforts to weaken our position in the OAS. Brazil, Argen-
tina and Mexico are showing a greater "big power" sense of re-
sponsibility in the OAS, but this is jeopardized by Brazil's
heavy pressure tactics.
The effectiveness of the Rio Treaty in peacekeeping was en-
hanced by the Honduras/El Salvador experience, but the Treaty's
authority was weakened by Chile's violation in reestablishing
relations with Cuba. Growing misgivings among members over
maintaining OAS sanctions against Cuba, although recently some-
what abated, confront us with the question whether these can be
kept intact without some modification. Continued Cuban exclu-
sion from the OAS, however, is not an immediate issue.
While Rio Treaty collective security mechanisms have proven
generally adequate, there is little or no Latin American support
for strengthening the permanent OAS military/security machinery.
There has, however, been a modest improvement in OAS peaceful
settlement machinery. A more significant OAS role in emergen-
cies is possible. The recently signed Convention on Terrorism
is a step forward, but wider acceptance is needed.
Ecuador's accusation of U.S. coercive action in violation
of Article 19 could well set a precedent for further accusations
in the OAS should the U.S. again impose legislative restrictions
geared to fishing boat seizures or expropriations. The U.S.
image would suffer.
IA-ECOSOC, CIAP and the Special Committee for Consultation
and Negotiation (SCCN) have provided useful forums for dialogue
on trade and development, but the Latin Americans are increas-
ingly unafraid of confronting the U.S. in these discussions.
The U.S. has given greater emphasis to multilateral technical
assistance through the OAS, with the advantages of reducing bi-
lateral frictions, promoting Latin American collective involve-
ment and enhancing the OAS value for them, but OAS capacity to
handle these programs needs strengthening.
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The revised Charter structure is now in effect. The OAS
Secretariat is under stronger leadership and better management.
Despite the uncomfortable Article 19 accusations, the U.S.
image in the OAS has remained favorable, with our continuing
style of "discreet leadership"; with memories of the Dominican
intervention receding; and with our willingness to discuss
issues in the SCCN, CIAP, IA-ECOSOC and other organs.
II. Direction for U.S. Policy
1. Think in terms of participating in rather than domi-
nating the OAS, recognizing that our interests are better served
by influencing and persuading; continue a style of "discreet
leadership".
2. Encourage OAS membership for other American states
willing to assume the obligations of membership.
3. Attempt to live with a greater diversity in OAS member-
ship, including the radical military regimes and the Chilean
Marxist regime, and endeavor to maintain a healthy dialogue in
hopes of airing and defusing differences.
4. Follow a mixed pattern of "collegial" and "bi-polar"
relationships within and outside the inter-American system,
but discourage any attempts to build up rival Latin American
organizations at the expense of the OAS.
5. Consult closely but discreetly with the larger members,
without offending the others or giving an appearance of align-
ment with the authoritarian Latin American powers.
6. Remain alert to Chilean efforts to weaken the OAS and
U.S. influence in it, as well as to any developments in Chile
that might meet the OAS criteria for exclusion and sanctions.
7. Encourage continued effective use of the Rio Treaty in
dealing with problems of collective security, including conflicts
and threats of conflicts.
8. Attempt to make the Special Consultative Committee on
Security more useful, but abandon the idea of a Western Hemis-
phere Security Council for want of Latin American support.
9. Abandon for the present any idea of a permanent Inter-
American Peace Force for lack of support, while keeping in mind
ad hoc collective forces when and if needed.
10. Retain the Inter-American Defense Board, particularly
for its value in military contacts.
11. Continue as necessary to persuade members that sanctions
against Cuba should be maintained since Cuban interventionism
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continues, and discourage the idea of an CAS meeting to review
sanctions (as it might encourage demands for change) ; but con-
stantly reassess whether OAS sanctions policy can survive without
some modifications and weigh the problem of the integrity of the
Rio Treaty in the face of possible further violations.
12. Encourage the effective use of OAS peaceful settlement
machinery.
13. Allow OAS Resolution 26 on recognition to lapse with
respect to situations not involving the overthrow of constitu-
tional governments.
14. Support effective use of the Human Rights Commission
and study the prospect of signing the Human Rights Convention.
15. Encourage an OAS role in providing an umbrella in
emergency evacuations and in coordinating disaster relief.
16. Discreetly encourage acceptance of an OAS role in sit-
uations of internal chaos, while continuing to support the po-
litically justified OAS Technical Assistance Mission in Haiti.
17. Encourage non-signatory OAS members to accede to the
Convention on Terrorism, and discuss more universal acceptance
with friendly Western countries.
18. Attempt to avoid subjecting ourselves to further accu-
sations in the OAS of violating Article 19 for applying U.S.
legislative provisions relating to fishing boat seizures or
expropriations.
19. Continue participating in SCCN discussions on trade;
continue the high-level of U.S. participation in CIAP reviews
of the U.S.
20. Support the new OAS programs in education, science and
technology; agree to higher levels if OAS management improves;
promote the idea of CIAP-style country reviews in these fields.
21. Continue our present emphasis on multilateral technical
assistance through the OAS; encourage further strengthening of
the Secretariat's program and management procedures; consider
increasing our contributions to these programs contingent on the
Secretariat's improved capacity.
22. Endeavor to strengthen the new OAS Charter structure,
including the General Assembly and Permanent Council.
23. Support strong leadership of a centralized General
Secretariat as well as strengthened management.
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IV SETTING
AND POLICY
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CURRENT POLICY AND THE ENVIRONMENT
THAT SHAPED IT
I. The Core Assumptions
1
II. The Setting for Policy Choice
2
III. U.S. National Interests
3
IV. Policy Responses to the Perceived
Environment
5
Political-Psychological
The Environment
5
Policy Response
6
Development, Trade and Investment
The Environment
8
Policy Response
12
Security
The Environment
16
Policy Response
19
The Inter-American System
The Environment
23
Policy Response
25
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DECLASSIFIED/RELEASED ON 4/23/02
by NARA on the recommendation of the NSC
under provisions of E.O. 12958
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CURRENT POLICY AND THE ENVIRONMENT THAT SHAPED IT
I. The Core Assumptions
Two bedrock assumptions underlay the Nixon adminis-
tration's address to the question of the kind of stance it
would adopt toward Latin America.
The first was the conviction that the concepts and
policies of the past were no longer adequate to meet the
ferment and tensions present in the developing American
societies. A fresh approach was believed necessary.
The second was that a "special relationship" existed --
and ought to exist -- between the U.S. and the other Ameri-
can republics, a special relationship that gave a particular
cast to all our normal concerns in the hemisphere.
A Fresh Approach
In remarks at the Pan American Day meeting of the OAS
Council on April 14, 1969, the President had stated that
the problems of the hemisphere required "a new policy,"
"new programs" and "new approaches" in place of "the usual
slogans and the words and the gestures of the past." Two
months earlier, in National Security Study Memorandum 15,
he had requested the preparation for the National Security
Council of a thoroughgoing review and analysis of U.S.
policy toward Latin America.
In announcing Governor Rockefeller's mission to Latin
America on February 17, 1969, the President had said he
wanted him to "listen" and to "consult" concerning the de-
velopment of common goals and joint programs "to strengthen
Western Hemisphere unity and accelerate the pace of economic
and social development." He asked Governor Rockefeller to
recommend how the U.S. could "improve its policies and in-
crease the effectiveness of its cooperation and support of
common objectives." The Report subsequently presented to
the President in August 1969 contained the following state-
ment:
"We have concluded that the national interest
requires the United States to revive its special
relationship with the nations of the hemisphere,
and that this relationship should be reinvigorated
with a new commitment, new forms and new style."
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The Special Relationship
The assumption of a special relationship, emphasized
in the response to NSSM 15 and in the Rockefeller Report
and affirmed at the NSC meeting of July 9, 1969, was derived
from an amalgam of factors. Principal among these were
geographic relationships (some more apparent than real),
ties of tradition and association, a common psychological
acceptance of the idea of community, and a shared histori-
cal desire to establish the Western Hemisphere as a politi-
cal entity distinct from Western Europe. This relationship
had become formalized in a web of treaties and organizational
commitments comprising "the inter-American system."
Our persistent verbalization of the concept of community
and our reiteration that we valued this special relationship
had become self-fulfilling. A widespread belief that special
bonds indeed existed had become a political and psychological
"fact" of considerable significance in the world arena. We
were regarded in Latin America and elsewhere as responsible
to a substantial degree for the course of events in the
hemisphere, whether we wanted to assume that responsibility
or not. Any "failure" in the hemisphere would therefore
tend to downgrade our appearance and prestige in the world
at large.
II. The Setting for Policy Choice
The analyses and estimates that formed the basis for
the President's policy speech of October 31, 1969, produced
abundant evidence of the need for policy revision and re-
direction. This evidence indicated that the developing
societies of the Americas were either undergoing far-reaching
change or being subjected to great pressures to begin such
change. The process of change -- and the demands for it --
were producing severe stresses and tensions. These strains
were aggravated by the disparity between aroused expectations
and tangible results, a disparity to which the overselling
of the Alliance for Progress had contributed. These strains
and pressures were being articulated and politicized more
and more broadly by virtue of the spread of communications
technology to groups and areas previously relatively inac-
cessible to such influences.
It was clear that this ferment was directly affecting
relations between many Latin American countries and the U.S.
Aspiring to or inspired by the goals of the Alliance but
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frustrated by the slow rate of advance toward those ambi-
tious ends, important sectors of opinion in the hemisphere
were directing their resentments in significant part toward
us. This animus was the result, not only of the predominant
position we occupied in the hemisphere, but also of our
important role in the common effort to bring about economic
and social development, an effort whose efficacy was under
challenge.
It was also clear that our new policy guidelines would
have to accommodate or adjust to a growing spirit of na-
tionalism increasingly evident in a number of hemisphere
societies. In its positive form this nationalism repre-
sented an affirmation of national identity, a unity in con-
fronting the great problems of modernization, and a determi-
nation to find indigenous solutions to local national
problems. In its negative form, it demonstrated an un-
critical hostility to external and especially U.S. influences,
exploiting such influences as scapegoats for the failure
rapidly to achieve economic and social goals.
III. U.S. National Interests
The Administration's review of our policy posture was
painstaking and extensive. U.S. national interests formed
the base for that review, although in the Rockefeller Report
they had not been given explicit exposition and in the response
to NSSM 15 they were not ranked in order of relative importance
or with regard to global as contrasted with regional concerns.
The Rockefeller Report argued that the unhappy state of
our hemisphere relations seriously threatened our moral and
spiritual strength in the world, the credibility of our
leadership, our social and economic future, and indeed our
national security. More implicitly than explicitly, the
Report indicated that major U.S. objectives in Latin America
were the prevention of a mainland Castro, the preservation
of a market for U.S. exports and a source of industrial raw
materials, an increasing flow of two-way trade in industrial
products, a reversal of the trend toward anti-American atti-
tudes, and the improvement of the quality of life in the
hemisphere.
The Report saw these objectives threatened by the "seeds
of nihilism and anarchy" that were "spreading throughout the
hemisphere." In the face of this challenge, the Report rec-
ommended a variety of actions designed to maintain and fortify
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the special relationship. Failure to maintain such a rela-
tionship "would imply a failure of our capacity and respon-
sibility as a great power.' The Report argued that "if we
cannot maintain a constructive relationship in the Western
Hemisphere, we will hardly be able to achieve a successful
order elsewhere in the world." The goal of this relation-
ship was to be "the creation of a community of self-reliant
independent nations linked in a mutually beneficial regional
system.
"
While similarly stressing our interest in the "special
relationship," the response to NSSM 15 was far more explicit
than the Rockefeller Report in its presentation of U.S.
interests. It identified the following interests:
-- Security:
1) Denial of use of Latin American territory, particu-
larly in the Caribbean, to launch an attack against the U.S.
by hostile forces.
2) Maintenance of lines of communication to Latin
America and access to Latin American strategic materials.
3) Use of Latin American land, sea and air space for
U.S. defense and scientific activities, particularly in the
Caribbean and along the eastern half of South America.
4) Continued assurance of freedom of access in both
peace and war to the Panama Canal.
-- Economic:
1) Preservation of Latin America's role as an important
trading partner and location of sizeable U.S. investments.1
2) Assurance of a continued source of important raw
materials.
¹In 1969 Latin America accounted for nearly 13% of U.S.
merchandise exports and 20% ($14 billion) of total U.S.
foreign investment. The U.S. balance of payments with
Latin America was favorable to the U.S. by about $200
million.
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-- Political:
1) Political or "diplomatic" support and cooperation,
especially in international forums and on "East-West" issues,
of the Latin American voting bloc of 23 votes.
2) Preservation of an inter-American institutional
framework.
3) Protection of U.S. citizens, either resident or
tourists.
-- Developmental:
1) Support for economic and social development. This
interest was derived both from a humanitarian concern in
the face of the growing rich-poor gap, and from enlightened
self-interest related to the achievement of a satisfactory
world order.
IV. Policy Responses to the Perceived Environment
This, then, was the general setting of broad assumptions
and presumed interests against which the Administration
would attempt to project policy choices articulating the
"special relationship." What were the specific environmen-
tal elements to which it was believed these choices would
have to respond, and what were the broad choices that were
made?
Political-Psychological
The Environment:
The political environment was seen as characterized
by three major trends over the next several years: 1) grow-
ing nationalism and Latin American efforts to assert greater
"independence" of the U.S.; 2) increasing social unrest and
economic and political instability; and 3) increased radi-
calization if not authoritarianism in political life, and
greater political managerialism on the part of military
regimes and institutions.
These trends challenged the posture implicit in our
previous policy of active promotion of democracy. During
the 60's the U.S. had tried upon occasion to use various
policy tools, such as the withholding of diplomatic
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recognition and economic and military aid, to promote polit-
ical democracy. There was little empirical evidence that
we had thereby significantly discouraged the resort to au-
thoritarian solutions, and there were countervailing indica-
tions that such actions fortified nationalist pride and
intensified anti-American sentiments. These trends thus
suggested we had erred in the direction of zealousness and
officiousness, and had overestimated our capacity for in-
fluencing the evolution of socio-political institutions
of others. They argued for a quiet disengagement from
certain aspects of the Alliance for Progress, particularly
its Title IX programs, that were considered by many Latin
Americans to be presumptuous or even interventionist.
Policy Response:
The response to NSSM 15 posed activist "involvement"
and laissez-faire "pragmatism" as gross options in the
political arena. The Rockefeller Report essentially recom-
mended the latter stance, recognizing that there would from
time to time be political societies we do not like, that
political evolution takes time, and that our long-term
interests would be best served by maintaining at least
minimal diplomatic relations with other governments while
trying to find ways to assist the peoples of these coun-
tries. The Report observed: "Diplomatic relations are
merely judgment.' practical conveniences and not measures of moral
The NSC meeting of October 15, 1969 affirmed the
of a more nearly automatic recognition policy, These de-
"circumspect pragmatism" option, as well as the corollary
cisions were given public expression in the President's
speech a week later, when he stated that on the diplomatic
level we must deal realistically with governments in the
inter-American system as they are. At the same time, we
have a preference for democratic procedures and we hope
that each government will help its people to move forward
toward a better, a fuller, and a freer life.
The United States demonstrated this pragmatic ap-
proach in 1970 by joining with all other OAS members in
interpreting extra-constitutional changes of government
in Argentina and Bolivia as not raising a question of
recognition, and therefore not requiring resort to the
Resolution 26 procedure of prior consultations. Normal
diplomatic relations were also maintained with the
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military-controlled government in Brazil, despite allega-
tions of repressive acts, and with Peru despite continued
inability to resolve the IPC case and our application of
"non-overt economic pressure." Toward Chile, following
the election of a Marxist-led government headed by Salvador
Allende, the U.S. adopted a correct but cool posture avoid-
ing any action which Allende might turn to his own advan-
tage by playing upon Latin American fears and resentments
against the U.S. The President in his televised meeting
with representatives of the networks on January 4, 1971
stated that the U.S. would maintain activities in Chile
such as people-to-people and Peace Corps programs as long
as Chile's foreign policies were not antagonistic to our
interests.
Nevertheless, in a reference to Cuba the President
has also stressed that we cannot have a peaceful community
of nations if one nation sponsors armed subversion in
another's territory. "The 'export' of revolution is an
intervention which our system cannot condone, and a nation
which seeks to practice it can hardly expect to share in
the benefits of the community."
As for the broader aspects of policy style in the
face of nationalism and increasing desire by Latin American
nations for more elbowroom in their relationships with us,
the President's speech announced that we would hope to
achieve "a more mature partnership in which all voices are
heard and none is predominant," and that this partnership
"should be one in which the U.S. lectures less and listens
more, and in which clear, consistent procedures are estab-
lished to ensure that the shaping of Latin America's future
reflects the will of the Latin American nations.' The
general policy guideline would be "respect for national
identity and dignity in a partnership in which rights and
responsibilities are shared." "
This principle was further elaborated three and a half
months later when', in his Foreign Policy Report to the
Congress, in February 1970, the President in effect re-
defined the special relationship his Administration would
seek:
The goal of such a relationship today should
be to create a community of independent, self-
reliant states linked together in a vital and
useful association.
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The President said the U.S. should contribute to this
relationship, not dominate it. Responsibility would have
to be shared for progress to be real. Our basic role would
be "to persuade and supplement, not to prescribe."
This new policy style was soon exemplified in such
forums as the IA-ECOSOC, the SCCN (Special Committee for
Consultation and Negotiation), and the first CIAP review
of U.S. economic and financial programs affecting the
hemisphere. Here indeed the U.S. "listened" to Latin
American concerns, and sought to encourage a more mature
working relationship.
Development, Trade and Investment
The Environment
The response to NSSM 15 specifically affirmed --
and the Rockefeller Report implied -- that the Alliance
for Progress as a strategy for development had been oversold.
The U.S. had formally met its Alliance Charter commitments
with respect to public assistance, and private investment
also reached target levels. Nevertheless, capital trans-
fers failed to reach Latin American expectations, and their
impact on development had been reduced by U.S. statutory
and policy constraints.
The Alliance did make substantial and lasting contri-
butions to institutional reform, economic stabilization,
physical capital and developmental leadership capacities
in Latin America. Latin American performance fell short
of more optimistic U.S. hopes in such fields as fiscal
administration, agrarian reform and investment in the
social sectors, but showed promising results in such areas
as inflation control, tax policies and development planning.
Modest per capita growth levels continued to depend
partially on sustained flows of U.S. and other foreign public
and private capital, although such external assistance amounted
to only about 10% of total investment in Latin America. In
any case, even good rates of economic growth and social
progress could not be expected to achieve for many decades
the near-utopia that many had unrealistically come to expect
was just around the Alliance corner.
With the multilateral aspects of the Alliance slow to
mature, Latin Americans viewed it in essentially bilateral
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terms. They increasingly questioned what they considered
the "directive" nature of our assistance. In addition,
there was the increasing embarrassment and political lia-
bility to the United States of those assistance requirements,
such as additionality and other procurement rules, which
Latin Americans vocally recognized as being costly to them
while having little or no justifiable developmental rationale.
Economic aid had been our major policy tool in the hemisphere,
but changes were clearly needed in the manner of extending
assistance in order to adjust to the political climate pro-
jected for the years ahead.
The Consensus of Vina del Mar was the single most
eloquent recital of the factors the new Administration would
be compelled to consider in formulating its policy stance
on these matters. Latin American concern regarding the real
extent of U.S. interest in and commitment to hemisphere de-
velopment was the stimulus for this compendium of views
prepared at a meeting of the Special Latin American Co-
ordination Committee (CECLA) in Chile in May 1969. The
meeting was in response to a Brazilian initiative which
interpreted the President's Pan American Day remarks April 14
as a request for a united Latin American position on U.S.
policies regarding trade and development assistance. The Con-
sensus was subsequently presented to President Nixon in June.
The Consensus reflected concern over the widening
economic, scientific and technological gap between the de-
veloping world and the developed nations. Specifically, it
called for 1) freer access to the markets of the United States
and other developed countries, 2) easier terms and fewer re-
strictions on the use of foreign loans and credits, and
increased access to the world's capital markets, 3) an in-
crease in technical and financial cooperation for social
development, 4) a broad program of scientific and techno-
logical cooperation, and 5) support for the development of
the region's merchant marine and port facilities.
At the Sixth Meeting of the IA-ECOSOC in Trinidad in
June the U.S. delegation was met by a united CECLA front
which pressed for a favorable response to each of the Con-
sensus demands. The conference adjourned on the agreed
condition that a special IA-ECOSOC meeting would be held for
the purpose of "preparing the bases and proposing suitable
instruments of action
of a new policy to strengthen
hemispheric cooperation.
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The Trinidad Declaration, in a clear expression of
restiveness with the substance and style of U.S. relation-
ships with Latin America, warned that any review of inter-
American policy cooperation must be based upon the under-
standing that 1) Latin American development be conceived
and determined by the Latin American nations themselves,
and that 2) it is the responsibility of these nations to
create those internal domestic conditions and determine
those national and regional objectives that will make such
development possible. Finally, the Declaration stated that
external assistance plays a complementary role which should
evolve within a framework of respect for the particular
political, economic, and cultural characteristics of each
Latin American nation.
- - Development
This composite of increased nationalism and growing
discomfort with their heavy dependency on the U.S. in the
face of increasing developmental needs, encouraged the con-
clusion that a muted, less tutorial U.S. presence and in-
volvement in developmental matters would be welcome and
timely. To meet this concern and to help assure adequate
resource flows, what appeared to be needed were strengthened
multilateral assistance frameworks for identifying alloca-
tive priorities, for channeling assistance, and for assuring
that assistance resources were effectively utilized. While
recognizing that this new emphasis on multilateralism would
be a significant departure from the past, we believed it
would be well received.
Despite the apparent but remediable weaknesses in IDB
performance and the hesitancy of the IBRD to move into
program and sectoral lending (areas in which AID had increas-
ingly concentrated its lending activities), it was believed
that multilateral lending could be further increased relative
to bilateral lending without significant sacrifice to devel-
opmental effectiveness or to our capability for fostering
U.S. interests. In this connection it was significantly
noted that in 1969 AID loans represented only about one-sixth
of total IDB, IBRD, and AID lending to the hemisphere, whereas
in 1963 AID provided approximately one-half of these funds.
These assumptions redirected our attention to a possibly
greater role for CIAP and the related OAS development
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assistance activities. It was assumed that U.S. support
for an increased OAS technical assistance role would be
welcome as a further evidence of our commitment to Latin
American development and a further step in buttressing
this multilateral framework. It was believed that CIAP
could be strengthened in ways that would improve its
ability to set assistance priorities and perform coordi-
nation and review functions with evolution toward an
eventual role of allocating resources available from the
U.S. and international lending agencies.
It was anticipated that action to implement these
assumptions would facilitate a disengagement of the U.S.
from involvement in Latin American domestic affairs, would
reduce the political exposure of the U.S. in assistance
allocations, and would to some degree insulate these
allocations from domestic U.S. political pressures.
Finally, it was predicted that such a shift would be
welcomed by and supported in the U.S. Congress, where the
U.S. foreign assistance effort was under continuing criti-
cism and in any event about to be subject, as a result of
the Javits amendment, to reexamination prompted by the
Peterson Task Force.
-- Trade
With regard to U.S.-Latin American trade relations, it
was equally clear that U.S. policy would require change if
it were to be viewed as responsive to the "realities" of
Latin America's need to expand its capacity to export, par-
ticularly to the U.S. Latin American countries continued
to denounce the U.S. for a number of real or alleged
failures to live up to "the spirit" of our various commit-
ments in the trade field to aid their development efforts,
including: 1) failure to adhere to a standstill on new
trade restrictions; 2) concessional sales of agricultural
commodities together with continued protectionism in a high
degree for meat, dairy products, fruits and vegetables;
3) failure to reduce tariffs and other barriers on goods
processed in Latin America; 4) imposing "voluntary" or other
quotas on LDC products, notably cotton textiles and oil,
which deny them a "fair" share of the market; 5) lack of
"meaningful" consultation in stockpile disposals; 6) develop-
ment of synthetic products which compete with Latin American
goods; 7) "mercantilism"; and 8) in general, "excessive"
influence on or control over the ingredients of trade
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expansion (capital, research, insurance, credit, transpor-
tation, etc.).
At the same time, we were convinced -- and Latin
Americans sometimes acknowledged --- that export expansion
was at least equally dependent upon their own policies and
efforts. In many cases, what was needed was a fundamental
reorganization of Latin American monetary, fiscal and
foreign exchange policies toward export expansion and diver-
sification. Better efforts would be needed to attract
adequate investment, both domestic and foreign, in facili-
ties for producing and transporting goods to be traded, and
increased attention would have to be given to accelerating
economic integration.
- Investment
As for foreign investment, it was clear from the Con-
sensus that Latin Americans were highly critical of previous
and existing arrangements and would insist on new -- but not
necessarily uniform - rules of the game. The NSSM 15 study
predicted that nationalism might become so strong a force
that investment could take place only on Latin American
terms. Both the NSSM 15 study and the Rockefeller Report
noted the love-hate theme in Latin American attitudes toward
foreign and particularly U.S. investment, contrasting a
recognition of need for foreign capital and technology with
a determination that such capital be subject and responsive
to indigenous conditions and priorities. In some countries
it was clear that hostility to foreign investment - - or to
private wealth, whether foreign or domestic -- was running
sufficiently deep and strong that multiple expropriations
of the property of U.S. companies were predictable. The
existence of a $14 billion book value of U.S. investment in
Latin America as of the end of 1969 thus had obvious domestic
and foreign implications for U.S. policy.
Policy Response:
In his Foreign Policy Report to the Congress in February
1970, the President outlined the action programs the Adminis-
tration would sponsor in response to these environmental
challenges. The principles upon which these programs were
to be based had been stated in his October 1969 speech. The
President told the Congress that he would propose only those
programs that could realistically be implemented, and would
make no promises that could not be fulfilled.
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A major objective of these programs would be a more
effective sharing of responsibilities in development
assistance matters. We wanted the nations of the hemi-
sphere to evolve an effective multilateral mechanism for
development assistance. In this regard we welcomed the
IA-ECOSOC instruction to CIAP and the IDB to explore ways
to increase their participation in development decisions.
We wanted to encourage the other Western Hemisphere nations
to assume a primary role in setting developmental priorities
and programs, and in keeping their own performance under
critical review. It was in support of this objective that
we pledged financial support for strengthening CIAP, and
agreed to submit to CIAP, for its review, U.S. economic and
financial programs affecting hemisphere nations. We also
continued to support an expanded program in science and
technology through the Council for Education, Science, and
Culture of the OAS and offered consideration of special
U.S. contributions for science projects under this program.
In the all-important area of trade, we would press for
a liberal system of generalized tariff preferences for all
developing countries. We would also embark upon an effort
to achieve multilateral reductions in non-tariff barriers
maintained by nearly all industrialized nations on products
of major interest to Latin America, and we would work in
concert with Latin American nations to identify and analyze
the principal obstacles to expanding Latin American exports
to the U.S. market. We said we would give priority attention
to requests for assistance in export development and promo-
tion. With regard to the Latin American need for an expand-
ing U.S. market for its exports, the President said we would
"have to face frankly the contradictions we will find be-
tween our broader foreign policy interests and our more
particular domestic interests."
Additional important steps pledged by the President
included the following:
-- support for the establishment of regular procedures
for advance consultations on trade measures that
might adversely affect Latin American exports;
-- a proposal to seek to develop an equitable system
for easing the problem of debt burden, and an
expressed willingness to join in an approach to
other creditor nations;
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-- untying of AID loan dollars to permit their use
for procurement in the developing countries in the
hemisphere as well as in the U.S.;
-- removal of other procedural restrictions, including
the "additionality" provision, on the use of AID
funds;
the reaffirmation of our readiness to assist, if
requested, in economic integration efforts;
an offer to share U.S. technological and scientific
capabilities.
These policy declarations were further articulated in
U.S. support for the creation in February by the IA-ECOSOC
of the Special Committee for Consultation and Negotiation
(SCCN), and for that Committee's subsequent consideration of
the problems involved in expanding Latin American trade.
The U.S. agreed to include a large number of products of
export interest to Latin America in our proposal for a
liberal system of generalized tariff preferences for the
less developed countries which was endorsed by UNCTAD in
October. We also offered assistance in the fields of export
and tourist promotion, health and sanitary standards, and
improved preparation of development projects for inter-
national financing. In addition, the President authorized
specific reaffirmation on behalf of Latin America of the
GATT "Standstill Commitment" against increased trade bar-
riers.
In a message to the Congress in September 1970, the
President called for "a truly international development
effort based upon a strengthened leadership role for multi-
lateral development institutions, and declared that the
U.S. "should channel an increasing share of its development
assistance through the multilateral institutions as rapidly
as practicable." To fit those objectives and to implement
the restructured bilateral assistance program, the President
proposed a sweeping reorganization of U.S. foreign assis-
tance operations, including the creation of a U.S. Inter-
national Development Corporation (IDC) to administer
bilateral lending operations and a U.S. International
Development Institute (IDI) to bring science and technology
to bear on the problem of development. It was expected that
this would also permit a significant reduction in the number
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of U.S. Government personnel working overseas on develop-
ment programs.
In line with the President's proposals, the Adminis-
tration had already requested Congressional approval of a
major replenishment for the IDB totaling $1.8 billion. As
an additional move to reduce administrative restrictions
on bilateral aid, it also authorized direct conversion of
AID dollars to meet local currency needs of development
projects.
At the close of 1969, Congress approved legislation
creating the Inter-American Social Development Institute
(ISDI), which will support innovative programs intended to
give citizens of Latin American countries a larger role in
their societies and a greater share of the products of
economic development. AID funds were authorized for trans-
fer to ISDI, which was expected to begin operation in 1971.
With regard to U.S. investment activities in Latin
America, the major premises that would guide the Administra-
tion in setting its policy in this field were well stated
in the President's October 1969 speech:
"Each Government must make its own decisions about
the place of private investment, domestic and foreign,
in its development process. Each must decide for
itself whether it wishes to accept or forego the
benefits private investment can bring
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 economic
development."
In his February 1970 Report the President restated
these premises, saying that there was "no more delicate
task than finding new modes which permit the flow of needed
investment capital without a challenge to national pride
and prerogative."
We intended to give substance to these policy princi-
ples by devoting increased emphasis to loans and technical
assistance to the private sector and for the establishment
of capital markets, by relaxing certain U.S. controls that
could limit U.S. investment flows or which Latin Americans
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believed infringed on their sovereignty, and at the same
time by encouraging Latin American nations to define areas
of mutual interest for foreign investors and recipient
countries and to establish and maintain conditions under
which all private enterprise could operate effectively.
These policy guidelines were given further expres-
sion in the legislation creating the Overseas Private
Investment Corporation (OPIC). It provided that only
those investments which were sensitive and responsive to
the needs of the host country economies and which contrib-
uted to the social and economic development of their peoples
were to be encouraged. The receptivity of the host govern-
ments to private enterprise was another criterion to be
utilized. In addition, the President's decision to support
the creation of an International Investment Insurance Agency
as an affiliate of the World Bank was reflected in NSDM 76
of August 10, 1970. The U.S. would seek to bring this
Agency into operation as soon as the minimum number of
countries specified agreed to do so. The scheme under con-
sideration involved an insurance pool to share risks and
premiums, and would be consistent with the Administration's
emphasis on multilateral approaches and a lowered profile
abroad.
As for the question of the Hickenlooper Amendment,
the Under Secretaries Committee recommended its repeal or
revision and the President decided to propose that the
new foreign assistance legislation (1) avoid any mandatory
time limit for application of sanctions and (2) require
only that the President "take into account" expropriations
in determining countries eligible for U.S. assistance.
Security
The Environment:
In the reassessment preceding the President's October
address, it was assumed that the principal threats to
the security of the hemisphere involved internal subver-
sion and instability rather than the possibility of external
attack (although the former might be externally supported).
Estimates differed, however, with regard to the seriousness
of the internal security threat.
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NSSM 15 stated that:
rising nationalism posed a significant threat to U.S.
interests, particularly when taken in conjunction
with a Soviet presence and a Soviet willingness to
offer itself as an alternative to Latin dependence
on the U.S. The Soviets were likely to fan and ex-
ploit this growing Latin American sentiment for
reducing dependence on the U.S. While it was not
clear how far they were prepared to go in this regard,
this possibility aggravated the difficulties that
Latin American nationalism posed for U.S. interests.
At the same time, NSSM 15 argued that:
- internal security problems appeared to be within the
competence of the security forces of the various
countries to manage and control, although some U.S.
assistance appeared necessary and some of the weaker
countries might require particularly close attention
and additional assistance if the situation deterio-
rated.
"It is highly doubtful that an overtly leftist and
radical movement could install itself by extra-legal
means in any Latin American country
at least over
the next several years. " (Part VI, p. 13)
-- Castro's efforts to export his revolution had been
unsuccessful. The reasons for this failure - the
inappropriateness of the Cuban model to most Latin
countries, the unacceptability of Cuban agents as
leaders in national insurgency movements, and the
increased effectiveness of local security forces --
showed no signs of changing.
The Rockefeller Report took a somewhat different tack,
viewing the threat more alarmingly. It presented the follow-
ing conclusions:
-- It is plainly evident that such [Communist] subver-
sion is a reality today with alarming potential.
- This type of subversion [urban terrorism] is more
difficult to control, and governments are forced to
use increasingly repressive measures to deal with it.
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-- Clearly, the opinion in the United States that Com-
munism is no longer a serious factor in the Western
Hemisphere is thoroughly wrong. The other American
Republics are deeply concerned about the threat that
it poses to them -- and the United States must be
alert to and concerned about the ultimate threat it
poses to the United States and the hemisphere as a
whole.
- Police forces of many countries have not been
strengthened as population growth and great urban
increase have taken place. Consequently they have
become increasingly less capable of providing either
the essential psychological support or the internal
security that is their major function.
In preparation for the NSC meeting of October 15, a
special assessment of the internal security threat in Latin
America was prepared by CIA. It cited the growing social
unrest generated by strong pressures for change in Latin
America. It noted the campaigns of propaganda, agitation,
and in some instances open violence by extremists, including
Communist parties. It also pointed out the resort in some
countries to rural guerrilla operations or urban terrorism
or both. It stated that the efforts of these groups could
exacerbate the instability prevailing in some countries,
"although the strength of various elements that make up the
far left is not in itself sufficient to allow them to seize
power by force."
This assessment cited Cuba's continued encouragement of
local revolutionaries and the continued provision of support
in the form of propaganda, training and funds. At the same
time, the report stated that "Castro has been placing less
emphasis on the 'export of the revolution' and has become
more selective in the allocation of resources for insurgency
in Latin America." The assessment surmised that Castro's
de-emphasis on the export of the revolution "may be due to
his preoccupation with domestic matters as well as to his
at least temporary disillusionment with guerrilla methods."
This review stated that the Soviet Union, anxious to
avoid repercussions on its own campaign to expand relations
with Latin America, had cautioned Havana to exercise more
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discretion in promoting revolution. The Soviets were be-
lieved to be pursuing "normal relations" with Latin America,
but this was not to say that they were necessarily opposed
to violent revolution there. Soviet diplomatic missions
continued to provide bases for espionage, subversion, and
communication with local Communist parties.
While Peking's contribution to subversion was considered
insignificant, the "radical youth of the hemisphere's ghettoes"
could be expected to be nonetheless strongly attracted to
Chinese extremism, Ho Chi Minh's prestige and Che's "martyr-
dom."
There seemed to be little likelihood of a successful
rural-based revolution for the foreseeable future. The main
threat that guerrilla movements were believed to present was
that of "further unsettling already somewhat unstable soci-
eties and draining away scarce national resources
In
a few "politically fragile" countries, notably the Dominican
Republic and Haiti, "a small but well organized guerrilla
movement might become a serious threat indeed, but none
exists now.
The increase in urban terrorism was stressed, along with
the anti-U.S. cast given to it by rising nationalism. It was
pointed out, however, that the far left was badly fragmented
and would constitute more a source of troublesome agitation
and pressure than an immediate threat to any government. The
point was made that the degree to which Communists and other
leftists would succeed in increasing their influence would
depend "more on their ability to exploit local issues and
nationalist sentiment than on Cuban or Soviet actions. "
Policy Response:
The "security policy" of the new Administration was less
explicitly and less extensively articulated than were its
proposed policies relating to general style and to economic
and developmental matters. The general thrust of the Nixon
Doctrine was given specific regional meaning, however, with
the President's decision at the NSC meeting on 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.
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Typical missions envisaged for Latin American armed
forces by U.S. defense planners included: maintaining
internal security conducive to orderly political, social,
and economic progress; contributing to the collective
security of the Western Hemisphere, commensurate with their
separate capabilities; maintaining a capability to defend
their sovereign territory; conducting counterinsurgency,
psychological, and military civic action operations; pre-
venting the introduction of arms, munitions, personnel, and
materiel into the area for subversive purposes; maintaining
and providing security for bases, airports, seaports, and
strategic facilities so that they could be at least poten-
tially available for U.S. and regional peacekeeping opera-
tions; and conducting search and rescue operations and
providing other humanitarian services.
Two basic precepts inherited from the mid-sixties were
incorporated in this Administration's formulation of its
policies in the security field. They were that the United
States should avoid becoming a party to arms escalation and
arms races in Latin America, and that the United States
should encourage the allocation of resources to economic
and social development rather than to military expenditures.
These principles served as operational guidelines in carry-
ing out our military assistance programs and were utilized
with Congress in support of appropriations requests.
Program instruments available for executing our security
policy were grant military materiel programs and grant mili-
tary training assistance, and cash and credit sales of mili-
tary equipment as provided by the Foreign Military Sales
Act. Grant materiel assistance had been terminated in FY
1968 for the four larger countries (Argentina, Brazil, Chile
and Peru), and it had been decided in mid-1968 that such
programs to all Latin American countries should be phased
out after FY 1970, Exceptions were authorized, however, and
the IG/ARA made such recommendations for eleven countries
for FY 1970 and again, but in lesser amount, for FY 1971.
Although cut back roughly 20 percent in 1969 by the Congress,
a continued military training program was considered a major
additional element in our assistance policy.
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It was contemplated that continuing materiel require-
ments would be met, in the absence of the generous grant
programs of prior years, through an expanded credit sales
program. A major inhibiting factor affecting our ability
to utilize the Foreign Military Sales (FMS) legislation in
response to Latin American requests was the restrictive
amendments in both the foreign assistance and FMS legis-
lation. The Administration was nonetheless of the opinion
that we should be responsive to reasonable requests for
equipment needed to modernize obsolete inventories.
Major policy actions in this regard were the decisions
in late 1969 and early 1970 to sell A-4 or F-5 aircraft to
major South American countries, if requested, 1 and to waive
the aid deduction penalty, where applicable, on the grounds
that the purchases were important to the U.S. national secur-
ity. In the case of a Colombian request for A-4F aircraft,
the President agreed in principle to make substantial credit
available and to waive the restrictions of the FMS Act as
well. The Administration's decisions were based on the
conviction that the requests were reasonable, that this type
of aircraft was appropriate to the need, and that our refusal
to sell the aircraft would not only cause resentment but
would result in purchases from Europe (quite possibly of more
sophisticated and more expensive equipment). We believed
that the ability to make such sales ourselves would enable
us to exert some influence toward limiting the diversion of
scarce financial resources and reducing the possibility of
stimulating an arms race.
A study of our military missions initiated late in 1969
and approved by the Under Secretaries Committee in March 1970
concluded that the missions should be continued but at an
overall manning level of roughly one-third the level of
January 1968. Their functions were to be the following:
1) Provide a form of military cooperation that would
maintain the military relationship with the United States
desired by a number of the Latin American countries, particu-
larly those in which the military played an important polit-
ical role;
¹Inquiries or requests had been received from Argentina,
Brazil, Chile, and Colombia.
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2) Provide advice and assistance in the field of internal
security;
3) Administer the Military Assistance Program, and the
sales program when the host country so desired.
In November 1970 as a consequence of the developments
in Chile, the President decided that we should increase ef-
forts "to establish and maintain close relations with mili-
tary leaders in the hemisphere." This policy recognized that
Latin American military establishments were expanding their
role in the political, social and economic arenas.
Another dimension of our security policy consisted of
an attempt to help civil security forces develop and maintain
the capability for providing daily law and order and police
services. Public safety assistance provided by AID was to
be utilized for these purposes. Such assistance was designed
to develop "preventive medicine" capability for countering
subversion and urban and rural violence in their earliest
stages. In this way could be avoided the high costs, both
financial and political, of having to redress with military
forces a situation that might have been dealt with effec-
tively at the beginning if police capabilities had been
adequate. In the face of the rapid growth in 1968 and 1969
of urban terrorism, this kind of assistance aimed at developing
civil police institutions that could keep pace with contempo-
rary sociological change and thus help maintain internal
stability with a minimum of force. In addition, as stated
in "United States Policy on Internal Defense in Selected
Foreign Countries,' issued by the Senior Interdepartmental
Group on May 23, 1968 and reconfirmed by NSDM 20 of July 10,
1969, Public Safety programs were designed to serve the
developmental as well as the security interests of the United
States in developing countries.
Cuba continued to play an important role in our security
policy. Our stance was designed not so much to bring about
Castro's overthrow as to reduce his capacity to support armed
revolutionaries elsewhere in the hemisphere. Underpinning
this policy were efforts which sought, primarily through the
OAS, to maintain Cuba's diplomatic and economic isolation.
We continued also to insist upon preventing the introduction
into Cuba of an externally supported military capability
endangering U.S. security.
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In the event of general hostilities, U.S. military
planning emphasized defense of the Panama Canal, maintenance
of the U.S. presence at Guantanamo, prevention of the estab-
lishment of enemy bases in Latin America or the use by enemy
forces of Latin American facilities, maintenance of essential
sea and air lanes, and retention of U.S. access to strategic
materials, bases, and existing industrial capacity.
The Inter-American System
The Environment:
It was clear that the inter-American system could be
and could do no more than its members wanted of it. Its
Latin American members demonstrated a characteristic ambiva-
lence toward the system, particularly its political-security
aspects.
The Latin American nations valued the protective shield
(furnished principally by the U.S.) provided by the collective
security commitments of the Rio Treaty. We noted that despite
internal instability and subversion, violent political change,
and occasional border disturbances, the hemisphere during re-
cent decades had been singularly free of major armed conflicts.
We attributed this result at least in part to the influence
of the inter-American system's mechanisms that inhibit aggres-
sion and promote peaceful settlement of disputes.
The Latin Americans also saw the system as an effective
restraint and cushion against U.S. power; yet they feared
that our predominant power within the system could make it
into another device for U.S. domination of the region. This
concern contributed to the reluctance of many members to see
the OAS play a more significant "political" role in the hemi-
sphere or to countenance any movement toward the formation of
a permanent inter-American peacekeeping force. The subsequent
Latin American reaction to the Rockefeller Report recommenda-
tion concerning a Western Hemisphere Security Council was
further evidence of this attachment to the principle of non-
intervention.
At the same time, whatever the attitudes in the U.S. and
in Latin America concerning the appropriate role for the OAS,
its capability in the political-security field was recognized
as being at best uneven: on the whole, generally adequate in
matters of collective security; useful but imperfect in the
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peaceful settlement of disputes; relatively ineffectual
in its permanent military/security bodies: and strictly
limited in promoting democratic process and protecting
human rights.
While recognizing its inadequacies, we nonetheless
saw the system as a useful mechanism for blunting the
problems produced by the asymmetrical power relationships
in the hemisphere. In the response to NSSM 15, for example,
we said we were increasingly persuaded that a sharing of
power and responsibility in an effective international
system was "the only good answer to the need we often feel
to act unilaterally in an emergency and the fear of the
Latins that they are really at the mercy of U.S. power
if we choose to use it." An example of the system's util-
ity in this regard was the cooperation obtained from its
members in connection with the isolation of Cuba.
There was considerably less ambivalence in the eco-
nomic and social fields, however, as the inter-American
system had assumed increasing relevance for Latin America
in its expanding role in these fields. Landmarks had been
the formation of the IDB, the Act of Bogotá, the Charter
of Punta del Este, the creation of CIAP, the growing role
of the OAS Secretariat and the OAS Specialized Organizations
in technical assistance, and finally the adoption in 1967
of Charter amendments elevating the Economic and Social
Council, creating a new Council for Education, Science and
Culture, and incorporating into the Charter the principles
of the Alliance for Progress. Nevertheless, as indicated
in the response to NSSM 15, there was reluctance on the
part of both the U.S. and Latin American members to move
much further in the direction of a stronger OAS role in
exerting control over development assistance programs. We
were nonetheless prepared to consider increased support for
CIAP and the IDB. Sufficient experience was not available
to indicate the likely degree of success of the new programs
in such fields as education, science and technology.
At the time of NSSM 15 the OAS was emerging from a
decade of weak executive leadership and administrative dis-
array. A new Secretary General had been recently elected,
giving promise of more dynamic and efficient Leadership.
A new position of Assistant Secretary for Management had
been established. The outlook for an effectively function-
ing Secretariat was thus much brighter.
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Policy Response:
In NSSM 15 our major alternative strategies in various
fields of OAS activity were grouped into several sets of
options affecting the nature and style of our participation.
These options did not appear in the agenda for the NSC
meeting of October 15, which treated only tangentially with
the nondevelopmental aspects of our inter-American relation-
ships. The agenda nonetheless observed that nationalism,
instability, and radicalization/authoritarianism posed an
increasing challenge to the ideals and commitments of the
OAS and Punta del Este charters.
The Rockefeller Report affirmatively endorsed the
record of the OAS and made several specific recommendations
for strengthening it. The Rockefeller mission had concluded
that in the political field the OAS had "dramatically demon-
strated its merit anew" with the negotiations to end the
hostilities between El Salvador and Honduras. In the devel-
opment area, the Report declared that the OAS was doing
increasingly effective work and that CIAP was increasingly
effective in reviewing national development programs and
projects. As for security matters, the Report stated the
OAS could play an even more important role but increased
authority and expanded structures would be necessary.
Specifically, the Report called for the creation of a
Western Hemisphere Security Council.
The Administration did not take action on the Rockefeller
recommendations for a Western Hemisphere Security Council,
a Western Hemisphere Development Committee, or a Western
Hemisphere Institute for Education, Science and Culture.
As far as broad policy was concerned, however, the Presi-
dent's October 31 speech left no doubt of the U.S. posi-
tion. The first of the five archstone principles for
policy was "a firm commitment to the inter-American system,
and to the compacts which bind us in that system -- as
exemplified by the OAS and by the principles so nobly set
forth in its charter." Included in the President's enumera-
tion of principles was the belief that the principal future
pattern of U.S. assistance for hemisphere development must
be U.S. support for Latin American initiatives, and that this
could best be achieved on a multilateral basis within the
inter-American system.
On the occasion of the entry into force February 27,
1970 of the revised charter of the OAS, President Nixon
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pledged "the unswerving effort" of the United States "to
work unstintingly to make the inter-American system respon-
sive to the needs of our people.' He observed that the
charter reforms would strengthen the structure of the organi-
zation, give greater emphasis to the basic principles and
goals "which guide our efforts under the Alliance for Progress,"
and enhance the OAS' ability to help member states settle
their disputes peacefully.
This policy of encouraging a broader role for the inter-
American system was given further expression in U.S. support
for a variety of initiatives described earlier in this
chapter, including:
a. the strengthening of CIAP as a body to review and
coordinate development assistance plans and priorities in
the hemisphere, including the first CIAP review of United
States economic and financial policies affecting the
hemisphere.
b. expanding programs in education, science and tech-
nology through the Council for Education, Science and
Culture.
C. the creation by the IA-ECOSOC of the Special Com-
mittee for Consultation and Negotiation to serve as a
forum for consultations and negotiations on hemispheric
economic problems such as trade, transport, tourism,
financial cooperation, etc.
d. the Administration's request to Congress for
approval of a major replenishment for the IDB.
e. continued support for the OAS position on diplo-
matic and economic isolation of Cuba.
f. the preparation of an OAS convention to facilitate
the extradition and prosecution of persons who have kidnap-
ped or committed other crimes against foreign officials.
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V SITUATION
AND TRENDS
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SITUATION AND TRENDS
Summary
1
I. The NSSM-15 Forecast
3
II. The Current Situation
4
A. Political and Military
4
B. Economic and Social
7
III. The Effect of U.S. Policies
8
A. Political and Military
8
B. Economic and Social
11
IV. Trends
13
A. Political and Military
13
B. Economic and Social
21
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DECLASSIFIED/RELEASED ON 4/23/02
by NARA on the recommendation of the NSC
under provisions of E.O. 12958
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SITUATION AND TRENDS
SUMMARY
The Current Situation
Since mid-1969, Latin American governments have survived
the disruptive effects of radicalism and terrorism without
suffering serious threats to their stability. The Central
American war in mid-1969 and growing black radicalism in the
Caribbean have weakened political stability in those areas.
In Cuba, further economic deterioration has increased Castro's
dependence on the USSR and further eroded his appeal in Latin
America.
The USSR has managed to expand its contacts and its
presence in Latin America in several ways. The rapid move-
ment toward consolidation by the Allende regime in Chile
since November offers the Soviet Union opportunities for
significant further expansion.
Economically, many Latin American nations have been at
high points in their economic cycles, but overall statistics
mask sluggish or reduced growth in some, and many serious
social problems remain. The number of Latin American coun-
tries claiming 200-mile territorial sea limits has increased.
The Effect of U.S. Policies
Forces operating within Latin America itself were far
more responsible for events in Latin America than were U.S.
policies and actions. The Latin Americans view the new U.S.
policies with ambivalence and the USSR probably sees any
changes as largely rhetorical.
Direct U.S. assistance contributed importantly to the
area's overall relatively good economic performance during
the period, but other factors were more influential in their
sum. Although U.S. assistance programs in the social sector
received continuing emphasis, many Latin Americans believe
that U.S. interest in social progress has declined. Prudent
U.S. policies toward private investment have to some degree
allayed Latin American nationalistic fears of foreign domi-
nation, but sensitivity to our policies remains high.
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Trends
Nationalism and a desire for more independence of the
U.S. will remain extremely important in Latin America over
the next three to four years. Violent extremism will remain
a disruptive force, but is unlikely to result in actual
seizures of power by extremists. However, in one or more
countries 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. 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. Cooperation by Latin
American insurgent and terrorist groups across national
boundaries will probably increase. The Latin American mili-
tary can be expected to continue playing important political
roles.
The USSR will continue to stress expansion of its pre-
sence in the area, and will not neglect promising opportuni-
ties when nationalism and extremism increase susceptibility
to Soviet influence. U.S. presence and influence in Chile are
sure to decline.
The inter-American system can perform useful functions
when the Latins perceive a common or clear danger or advan-
tage to themselves, but it will be hampered by definite
limitations.
Overall economic conditions are expected to be only
fair. Alternatives to traditional patterns of private in-
vestment will be increasingly employed. Awareness of the
extent and difficulty of the area's social problems will
probably rise, thus increasing pressures for reform. Con-
tinued expansion and advances in communications will both
widen and deepen the composition of opinion leader groups.
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I. The NSSM-15 Forecast
NSSM-15 anticipated the following developments in the
early and mid-1970's:
With respect to Latin America generally:
- Rapid and widespread change in economic,
social and political institutions.
- Widening gaps in many countries between
economic aspiration and performance, inten-
sified by very rapid population growth and
a rate of urbanization beyond the capacity
of any economic system easily to absorb.
- Political and social instability, with
parallel growth of political radicalism and
increased temptation to turn to authori-
tarian ways to handle problems.
- The unlikelihood of successful, violent
upheaval in any Latin country leading to
revolutionary changes in the social, poli-
tical, and economic structures.
- Sharply increased nationalism in many
countries, articulated by both "left" and
"right", usually targeting against the U.S.
because of omnipresent American political,
economic and cultural influences throughout
the hemisphere.
- A growing tendency to act independently
of us in the world arena.
- An increased tendency among Latin military
groups to take over responsibility for govern-
ment -- and a heightened sense of determination
among the military to recast political and
economic systems.
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With respect to the Soviet threat:
- While the Soviet diplomatic and economic
presence has recently been expanding, Latin
America remains a low priority "target of
opportunity" for the U.S.S.R. The Soviet
strategy today aims at increasing political
influence with Latin governments rather than
promoting their violent overthrow. Communist
parties are generally weak and splintered --
except in Chile.
- Eruptions of anti-American nationalism will
provide the greatest opportunity for expanded
Soviet influence or subversion.
With respect to Chile:
- An indigenous Communist party (Soviet sup-
ported) could gain power at the polls in Chile
- in coalition with other parties. The end
result might be a regime which, though Marxist
in doctrine and form, could conceivably main-
tain a foreign policy essentially independent
of Soviet influence. The reactions of the
Chilean military in such a situation would
depend on the pace and manner in which such a
transition was effected, as well as on pressure
from neighboring countries, especially Argentina.
II. The Current Situation
A. Political and Military
1. Despite the disruptive effects of growing radicalism
and terrorism, governments have been able to deal with them
without suffering serious threats to their stability. Faced
with unrest in several countries which led to intermittent
kidnappings, hijackings and other terrorist acts, both mili-
tary governments and some democratically elected governments
used authoritarian and repressive tactics where considered
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necessary. One new military government emerged (and has
since been replaced by another) in Bolivia; in Ecuador the
elected president dissolved the Constitution, with military
consent; and in Argentina one military government was re-
placed by another, possibly weaker, more populist-inclined
one. On the other hand, free and orderly presidential
elections were held in six countries (Costa Rica, Guatemala,
Dominican Republic, Colombia, Chile and Mexico), despite
terrorist activities in some of them.
Military governments in some countries, concerned pri-
marily with modernizing political, economic and social
structures, moved in reformist nationalist directions. These
efforts were accompanied at times by populist overtones, but
whatever leftist tendencies were displayed in these efforts,
they fell considerably short of basic structural changes.
Some military governments professed hope for a return to con-
stitutional rule; others continued to stress their intention
to exercise power indefinitely.
2. Since mid-1969 the USSR has managed to expand its
contacts and its presence in Latin America in several ways.
Thirteen Latin American nations, including Cuba, now have dip-
lomatic relations with the USSR, and Soviet diolomats are in
a position to encourage, by various means, the continued
erosion of U.S. influence and prestige in the area. Also, in
at least one documented case, Guatemala, they are providing
financial subsidies to the Communist Party to support insur-
rection against the government of Guatemala. Contacts in the
diplomatic, trade and cultural fields have been pursued in
low-key, "correct" style.
Militarily, the Soviets have been engaged in a cautious
"testing" of the U.S. in the Caribbean area during the past
18 months. Construction of a naval support facility near
Cienfuegos, Cuba, was the most conspicuous Soviet effort
along this line. The Soviets also sent naval reconnaissance
planes to Cuba from the Soviet mainland on three occasions
in the past 18 months. Soviet naval visits to the Caribbean
have extended beyond Cuban waters to include intrusions into
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the Gulf of Mexico and port visits to Caribbean islands. In
South America the Soviet earthquake relief airlift to Peru,
though trouble-plagued, was an obvious attempt to project
Soviet air power into the area.
3. The Allende regime installed in Chile in November
1970 has moved rapidly and effectively thus far in initiating
changes which endanger Chilean pluralism and economic and
political ties with the U.S., and which offer opportunities
for significant expansion of the Soviet presence. The Allende
regime is a Marxist popular front coalition, with numerous
potential sources of conflict among the members, but so far
the dominant Socialist and Communist elements have worked
extremely well together. Potential civilian opposition (such
as the Christian Democrats and Nationalists) has been limited
and has not blocked Allende in any important action. The
Chilean military is being handled very carefully by Allende
and has shown little concern over the initial momentum of
Allende's various actions. Allende's longstanding ties with
Castro have borne considerable fruit to date; Cuban DGI offi-
cials have been brought into the country to set up a new
security organization, and Allende quickly reestablished dip-
lomatic and commercial relations with Cuba in defiance of
binding OAS decisions. The latter move, while not yet fol-
lowed by other Latin American states, has set in train a
series of consultations within the OAS membership, with a
number of countries obviously having second thoughts about
existing OAS (and U.S.) policy regarding Cuba.
Elsewhere on the international level, Allende appears to
be following a careful but two-level approach. With respect
to such countries as the U.S. and Argentina, he does not
appear to be seeking a confrontation and has indicated through
various channels his hopes for normal and correct relations.
At the same time, Allende has told several extremist organi-
zations (e.g., from Bolivia and Brazil) that he intends to
provide clandestine assistance for such movements.
4. Instability centered in the Caribbean area manifested
itself in various ways. One event which NSSM-15 did not con-
template was the war between El Salvador and Honduras in 1969,
the first Latin American war in almost 30 years. Latin
American initiative in the OAS, supported by the U.S., pro-
vided the major impetus in stopping the fighting. Scars
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remain, however, and the dispute has set back economic inte-
gration and progress in the area.
In the English-speaking Caribbean, a new restlessness
in search of black identity and dignity surfaced. It has
taken principally the form of nationalistic demands for
greater control over foreign-owned industries, which to date
have attracted little popular support except in Guyana.
5. Cuba's economic situation has deteriorated further,
increasing Castro's dependence on the Soviet Union. Both
trends further reduce the attraction of the Cuban "model" in
Latin America. Even where extremists still look to Cuba,
Castro has been forced to become much more selective in his
support of revolution abroad.
6. Several Latin American countries have moved toward
a common position on the law of the sea, inspired in large
part by countries claiming 200-mile territorial sea limits.
Despite useful preliminary discussions, no significant pro-
gress was achieved in 1969 and 1970 at exploratory fisheries
meetings between the U.S. and West Coast countries (Ecuador,
Peru, Chile) strongly advocating a broad territorial sea.
The January 1971 seizures of U.S. fishing boats in Ecuador, in
numbers previously unequalled, highlighted the difficult
nature of the problem. Meanwhile, several additional coun-
tries--notably Brazil, Argentina and Uruguay--espoused a 200-
mile limit.
B. Economic and Social
1. Although many serious problems remain and positive
developments may well prove transitory, many Latin American
countries have been at a high point of their economic cycle
in the past two years. Total regional gross domestic product
(GDP) grew an average of 6-1/2% annually in 1969 and 1970 in
real terms, compared with an average of 5% annually in 1961-68.
The higher growth rates reflect mainly improved performance in
Brazil, Argentina and Colombia, and a continued good rate of
growth in Mexico and Venezuela; they mask sluggish or reduced
growth in most of the remaining countries which have experienced
political or financial difficulties. Rapid population growth,
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averaging 3 percent, has sharply limited the gains for most
Latin Americans, holding advances well below popular expecta-
tions. Moreover, migration from the countryside has been
largely responsible for rapid urban growth, unemployment and
increased social pressures in a number of countries. During
the same period, trade showed notable gains, foreign exchange
reserves grew substantially, and several countries received
impressive inflows of private investment from the U.S. and
other sources, despite some increased manifestations of
economic nationalism, e.g., recent moves in Venezuela which
have led U.S. firms to consider withholding substantial ad-
ditional investments.
2. An increasing amount of assistance to Latin America
was provided multilaterally. New forms of U.S. Latin American
economic cooperation were worked out in the OAS, despite a
slow start and the inability of the U.S. to meet many of the
Latins' economic demands. The bipolar approach (Latin Ameri-
can regionalism vs. the U.S.) dramatically exemplified by
CECLA did not make much practical headway, mainly because of
resistance from some larger Latin American countries. Eco-
nomic integration efforts at the continental level lagged for
much the same reasons, and sub-regional integration movements
encountered obstacles, notably in the case of the Central
American Common Market.
III. The Effect of U.S. Policies
A. Political and Military
1. Forces operating within Latin America itself were
far more responsible for events in Latin America during
1969-70 than were general U.S. policy and specific U.S. actions.
As an example, U.S. humanitarian emergency earthquake aid and
Mrs. Nixon's visit to Peru had a beneficial effect in improv-
ing U.S. -Peruvian relations, but have had little if any last-
ing effect on Peruvian Government policies with regard to the
U.S.
In the El Salvador-Honduras dispute, the initiative in
the early crisis stage was largely Latin American. However,
U.S. participation and support contributed to the success of
the OAS role, and U.S. quiet persistence became a key element
in the later stages. U.S. logistic support was an important
element throughout.
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The success of Operation Cooperation, which took Mexican
sensitivities into account, in contrast to the unilateral
Operation Intercept, illustrated the importance of style in
our Latin American relationships.
In the case of Panama, plotting by ex-President Arias
in the U.S. and by other Panamanians in the Zone, as well as
asylum given by the U.S. to enemies of Torrijos, have fueled
his latent hostility toward the U.S.
2. The Latin American view of changed U.S. policies
during 1969-70 is ambivalent. On the one hand, Latin Ameri-
can governments approve of opportunities for an increased
role in hemispheric affairs; on the other, they are uneasy
over their capacity to meet their new responsibilities, and
are concerned that "low profile" really means that the United
States is losing interest. Those who approve regard them-
selves as the rightful arbiters of developments in their own
continent. They are confident of their capacity to meet new
responsibilities and see the reduction of U.S. presence as
creating new opportunities for the exercise of their own in-
fluence. On the other hand, some of those who are disquieted
by what appears to them as American disengagement are fearful
that the reduction of the U.S. presence has created a vacuum
which could tempt other powers, both hemispheric and extra-
hemispheric.
The major Latin countries feel they have important bi-
lateral ties with the United States and, being more confident
on the whole, find it useful to cultivate those ties, depend-
ing on the issue. On balance, they tend to react positively
to the policy, though they are often irritated by what they
see as the U.S. failure to accord them the status of equal
partner that should coincide with their increased responsi-
bility. As an example, they aspire to such a relationship
from which consultations occur and information is exchanged
on a preferential basis as compared with their "less signifi-
cant" neighbors.
For the smaller states, the balance is less clear; on
the whole the transitional pressures of a new U S.-Latin
relationship have been more severe for them, faced as they
are with the contradictions between nationalistic aspirations
and the frustrating realities of economic dependence.
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U.S. restrictions on sales of military equipment have con-
tributed to a diminution of our security cooperation with the
Latin American military, at least in the larger South American
countries. The U.S. attitude has been regarded as paternalistic
and has led to resentment on their part. On the other hand,
nationalistic trends among the military have contributed to
their desire to be more independent of us, and their growing
political role has led them to see their relationships with
the United States in broader terms than the provision of
military equipment.
Latin Americans are ambivalent, too, concerning the
United States position regarding the internal politics of
Latin American countries. Most welcome the non-intervention
cast of our decision to deal with countries as they are.
But at the same time they are concerned when this U.S. prag-
matism is seen as weakening support for their own particular
ideological preferences. Thus many tend to overlook our
statement of preference for democracy and feel that we are no
longer SO convinced of the importance of free institutions.
Others are concerned that we are unresponsive to the new
"communist" threat. And still others fear a loss of U.S. sup-
port for economic and social reform.
U.S. restraint with regard to the newly elected Allende
administration in Chile has generally met with Latin American
approval.
3. The USSR probably views any changes in U.S. policy
toward Latin America as largely rhetorical. In the Soviet
view, Washington continues to maintain a "neo-colonial" rela-
tionship with its southern neighbors and hopes that United
States reverses both inside and outside the hemisphere will
cause the United States to retrench in its attempts to
strengthen its ties with Latin America. The USSR is pleased
with manifestations of economic and political nationalism,
accompanied by anti-Americanism, which will continue to under-
mine U.S. influence and open opportunities for an augmented
Soviet position. Moscow hopes the United States, frustrated
and alarmed by the problem of dealing with instability, will
become SO identified with status quo "reactionary" forces that
it will come into increasing conflict with forces for "pro-
gressive" change, with opportunities for expanded Soviet
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guidance and support for the latter. It likewise hopes that
anti-Soviet forces in Latin America can be tarred with the
"imperialist" brush.
B. Economic and Social
1. Though direct U.S. economic assistance has been im-
portant, other factors (some of which were affected by our
assistance) were more influential, taken together, in Latin
America's relatively good economic performance: Some of these
factors were a high cyclical point in world market prices,
better financial policies, improved export promotion programs,
increased private investment and aid from multilateral sources.
New U.S. efforts to lower trade barriers and remove irritants,
both bilaterally and multilaterally, have been marginally
useful, but fell considerably short of satisfying their as-
pirations.
Economic integration has made little or no progress at
either the regional or sub-regional levels. Our low-key sup-
port for such activities has helped contain Latin American
concern that the main beneficiaries of integration will be
U.S. firms and large international corporations rather than
local enterprises.
The IA-ECOSOC meeting of November 1969 in Washington was
the first inter-American meeting to take place after Presi-
dent Nixon's October 31 speech. Because of the newness of
U.S. policy and the apparent new-found Latin American unified
CECLA approach, United States and Latin American participants
to this meeting sparred indecisively, leaving a somewhat
frustrated atmosphere on both sides, but resulting in a pro-
posal for a new forum to pursue these issues, the Special
Committee for Consultation and Negotiation. When the
IA-ECOSOC reconvened at the ministerial level in February 1970
in Caracas, both sides had become more versed at the new
relationship. The U.S. was able to be more forthcoming on
substantive issues, while Latin American large-country small-
country divisions emerged. The result was an easier atmos-
phere and the formal creation of the SCCN, which has provided
a continuing forum for negotiation on economic matters.
Though SCCN's substantive achievements have been limited, the
change in style is important: the United States has been able
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to appear responsive -- i.e., a meaningful partner -- at least
on some problems, thus taking the edge off some Latin American
resentments.
A similar style change well received by Latin Americans
was the review by CIAP in 1970 of U.S. economic policies to-
ward Latin America for the first time.
2. Prudent U.S. policies toward private investment have
to some degree allayed Latin American nationalistic fears of
foreign domination, but sensitivity to our policies remains
high. The non-application by the U.S. of the Hickenlooper
Amendment in the IPC case in Peru contributed to maintaining
reasonably good United States-Peruvian relations, had a net
beneficial effect on U.S. relations in Latin America, and did
not stimulate a wave of similar expropriations throughout
Latin America, though it may have encouraged some countries
in imposing tougher curbs on U.S. firms.
In the Bolivian Gulf expropriation case, adept company
negotiations, supported by a helpful but low-key U.S. Government
approach at the diplomatic level, defused a potential issue
in overall relations. Latin American anxieties were also
allayed by President Nixon's statements on October 31, 1969
that Latin American governments must make their own decisions
about whether they wished private investments, and that the
U.S. would not encourage U.S. private investment where it was
not wanted or was faced with unwarranted risks.
3. Although U.S. assistance programs in the social sector
received continuing emphasis, many Latin Americans believe that
the U.S. interest in social progress has declined. In the
last two years about half of U.S. bilateral and IDB assistance
has gone into the social and civic development fields. Other
U.S.-sponsored programs, like the Inter-American Social Develop-
ment Institute, continued to emphasize the social sector.
Nevertheless, Latin American failure to achieve many aspira-
tions in the social field, the lesser amount of public atten-
tion given Latin American social issues by the U.S. compared
with the 1960's, and the problem of defining social progress
have contributed to Latin American skepticism.
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IV. Trends
A. Political and Military
1. Nationalism and its accompaniment, a desire for in-
dependence of the U.S., will remain extremely important factors
in the political, security and economic spheres, both bilat-
erally and multilaterally. The increasingly nationalist but
reasonably responsible leadership of the larger and more de-
veloped countries, often including their military establish-
ments in important political roles, will be less influenced
by the United States. This will not necessarily mean that in
every case they will be anti-U.S. It does mean that although
they will pay close attention to their relations with the
U.S. and will be concerned with developments elsewhere, such
as in Chile and Cuba, their main concerns will be internal,
and directed toward modernization and development of their
own societies.
The governments of even these larger countries will not
have an easy time of it. Their attempts to combine economic
growth with stability will be increasingly vulnerable to a
number of factors, including popular demands, social pres-
sures (rapid population growth, unemployment and mushrooming
cities, which will severely restrict gains from economic
growth), economic fluctuations, impatient dissident elements
and subversion supported by the Soviet Union, Cuba or home-
grown radical extremists. They will resort to continued
authoritarian and centralizing methods. Many of our erst-
while friends, including elements of the military, the media,
business elites, and technocrats, will at times sound ultra-
nationalist and stridently anti-U.S. Our relations with
these governments will be increasingly prickly. Aside from
the merits of specific issues between the U.S. and Latin
countries, there will continue to be a tendency for the
Latins to use the U.S. as a scapegoat when corvenient to re-
lieve internal pressures or to cover failures.
All these problems will be magnified many times over
for the smaller countries in the area, far less equipped with
the institutions to deal with the modernization process which
they too want to see take place. Occasional explosions can
be expected as nationalism, combined with latent frustrations,
pushes situations to the boiling point. Even here, however,
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revolutionary outcomes are by no means certain: governments,
as in the recent past, will be able to deal with their prob-
lems, by repression in some cases, and under reasonably free
conditions in others, but without necessarily resorting to
solutions flavored with ultranationalism.
Particularly in the Caribbean area, historically the part
of Latin America of greatest sensitivity to us, outbreaks in
small countries are likely to have a strong anti-U.S. flavor.
What they do will often make no rational sense, and will have
to be seen as the accumulation of years of smoldering griev-
ances. Sometimes they will be more concerned with increasing
their say over how things are ordered in their countries
than they will be with improving the economic well-being of
their inhabitants. The continuing British withdrawal from
the area and its proximity to the U.S. will make unrest here of
increasing sensitivity to the U.S.
In Panama, Torrijos' latent hostility and impatience for
early successful canal talks with the United States, reinforced
by growing economic problems, may result in his making some
ostentatious move toward the Soviet Bloc if negotiations are
long delayed or become deadlocked. He may also threaten to
unleash students and others in anti-U.S. demonstrations.
The Latin American nations claiming 200-mile territorial
sea limits can be expected to assert their claims with in-
creasing vigor and to seek more support from other LDC's in
preparation for the UN Law of the Sea Conference beginning in
1973.
Nationalism will also be manifest in regional efforts.
The view that this hemisphere's nations share basically
identical interests within the inter-American system can be
expected to face continued erosion as the Latin Americans
increasingly emphasize their own underdevelopment, cultural
similarities, and common desire to assert their independence
of the United States as being more meaningful to their pre-
sent situation. Chile will exert a negative influence on
the inter-American system. Chile and possibly other countries
will probably show a tendency at times to take purely inter-
American issues to the UN.
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Further attempts can be expected to achieve a "Latin
American" consensus along CECLA lines, independent of the
United States. Although these attempts may have limited
success, several factors will make unlikely the emergence of
such a consensus in any important sense. Among these factors
are: (a) differences between more radical and more moderate
governments; (b) conflicting economic interests; (c) historical
rivalries; and (d) the desire to conserve close bilateral re-
lationships with the United States, both by the more mature
and self-reliant larger countries, on an increasingly assertive
basis, and by the smaller countries, particularly those in the
Caribbean unable to satisfy their desires for modernization
in either a regional or sub-regional framework.
2. Violent extremism will be a disruptive threat through-
out the region, but will be unlikely to result in actual
seizures of power by extremists; cooperation by Latin American
insurgent and terrorist groups across national boundaries has
not been extensive, but will probably increase in the next few
years. Urban terrorism will increase and kidnapping will con-
tinue as a tactic. Some groups will probably continue to
espouse rural insurgency as the best path to power. However,
in one or more countries extremist tactics, together with
specific rallying causes that might arise, could erode institu-
tions to a point where increasing repression might generate
widespread disorder and eventual revolutionary crisis. 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.
Though the potential for rivalry between Cuba and Chile
exists, a "brotherly" axis between the two seems likely.
Possible future Cuban-Chilean cooperation in the export of
revolution is likely to be circumspect. If at least moder-
ately successful, Chile's experiment would make the peaceful
route to independent Marxism more respectable to other Latin
Americans.
Castro's well developed military-security apparatus is
almost certain to assure him continued control. Moreover,
any Castro successors would be still more subservient to Moscow.
No early improvement in the Cuban economy is in prospect.
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Continuing Castro overtures to selected Latin American
governments, the decline of Cuban material support for vio-
lent revolution, the general Latin American trend toward
demonstrating independence of the U.S., and their sentimental
identification with Cuba as another Latin American country,
will probably further reduce antagonism against him among
governments which have already begun to waver on the Cuban
issue. Their attitudes are not likely to be affected by
Soviet-Cuban military ties, highlighted by Cienfuegos, since
many Latin Americans regard such ties as primarily a problem
for the U.S. Moreover, some may feel that the military-ties
problem is another reason for de-isolating Castro in order
to decrease his dependence on the USSR.
Some governments will move to reestablish ties with
Cuba, diplomatic or otherwise, which will in turn increase
pressures to reexamine hemispheric policy toward Cuba. If
a key country -- like Venezuela -- should reconsider its
policy, sentiment for lifting OAS sanctions and resorting
bilateral relations with Cuba would snowball.
3. The Soviet Union will continue to emphasize expansion
of its presence in Latin America. Though Latin America will
remain a relatively low priority area for the Soviets, they
will continue to engage in a broad range of activities, not
neglecting promising opportunities for encouraging subversion
if they can do SO without endangering their more respectable
tactics. Their remaining area for expansion of diplomatic
ties is Central America and the Caribbean.
Communist China will also push for expanded relations,
but will not have the same success.
There are Soviet military attaches in Mexico, Argentina
and Peru, and it is likely that attaches will be assigned to
other countries. Some Latin American governments might sound
out the USSR for various types of military equipment, particu-
larly if the United States were completely closed out as a
source of military equipment.
Any substantial expansion of the Soviet military presence
would probably only take place if a regime receptive to Soviet
influence were in power. The Soviets will not hesitate to
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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 de-
veloping scientific facilities to assist in space tracking,
navigation, and communications; and cooperation with friendly
Latin American countries in support of Antarctic operations.
Specifically in Chile, the Soviets cculd provide some
military equipment, along with technical missions, if the
Allende regime asks. A military base or other major overt So-
viet military presence would, however, be considerably less
probable because of Soviet and Chilean awareness of the likely
adverse reaction of Chile's neighbors, as well as some internal
Chilean constraints. In the future, should the Allende regime
be receptive, however, the USSR might attempt to secure the
use of facilities for the maintenance and replenishment of
Soviet combatant ships and submarines. From a geographic view-
point, Chile's location is convenient to provide such support
for possible round-the-world naval operations and for possible
operations on a more enduring basis in both the southern At-
lantic and Pacific Oceans.
4. U.S. presence and influence in Chile, regardless of
the domestic course of events are certain to decline, and if
present trends continue, a serious deterioration in relations
can be expected. Chile will develop new relationships with
other major powers, the most important for the U.S. being those
with the Soviet Union. A complete substitution of Soviet in-
fluence and presence for that of the U.S. is not likely, how-
ever, because Allende and many of his "Chilean nationalist"
supporters will seek to avoid becoming wedded to the Soviet
Union. In turn the Soviets, though they will be ready to pro-
vide significant assistance over the long term to prevent the
economic collapse of Allende, are more interested in using
Chile as a cornerstone for the gradual long-term expansion of
their interests in Latin America than in duplicating Cuba's
total dependency.
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Internally, Allende is likely to resort to increased
authoritarian methods, particularly as his regime encounters
shortfalls in its ambitious economic and social goals. Key
determinants on the degree of authoritarianism will include
the amount of unity within the Popular Unity coalition, the
degree to which the military has been politicized, and Allende's
own proclivities.
To maintain his leftist credentials and to accommodate
internal pressures, Allende is likely to facilitate some ac-
tivities of insurgent movements against the governments of
neighboring countries. This support is likely to be limited
in scope, however, since Allende is unlikely to risk provoking
his neighbors. Nevertheless, Allende probably will be unable
to prevent more extreme members of his coalition from utilizing
his regime's powers and resources in efforts to provide more
significant aid.
5. The military can be expected to continue to play im-
portant political roles. However, the military operate in com-
petitive political systems in which civilian and military re-
gimes can be expected to "see-saw" in and out of power. Their
role of influencing or making decisions is likely to be effec-
tive over time only if they have broad civilian support or at
least tacit approval. To the extent that popular demands are
not met, they will feel pressed to move to one or a combination
of alternatives, including increased populism, increased re-
pressiveness, a return to traditional politics, or develop-
ment of a one-party system. Polarization of political forces,
coupled with economic decline and anti-U.S. nationalism, could
provide opportunities for development of a wider Soviet pres-
ence. Resulting radical nationalist regimes might be open to
Soviet arms offers, sowing seeds of internal discord and fan-
ning the flames of inter-American tensions. In the face of
these problems, particularly in the presence of a Marxist re-
gime in Chile, closer ties are likely among military leaders
in southern South America.
The Latin American military will proceed with arms mod-
ernization programs whether the U.S. likes it or not. If the
U.S. makes these modern arms available, or at least refrains
from attempting to prevent them from obtaining these arms from
other sources, strains over this issue between the U.S. and,
particularly the larger South American countries, will be les-
sened. In most cases, specific U.S. policies regarding arms,
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missions, etc., will do less to determine military attitudes
in major countries than overall relations between the U.S. and
host governments, or than the military perception of threats,
e.g., from neighbors, insurgency, or the changing Soviet pres-
ence. However, relations between the U.S. and the Latin Ameri-
can military will provide an important channel of access to
them, especially during crisis periods.
At the same time closer relations by the military with
leading Western European arms suppliers can be expected, pos-
sibly resulting in the establishment of at least a few European
military missions (perhaps repeating patterns which go back to
the past century) and withdrawal of U.S. missions.
6. Although the recently reorganized inter-American
system can perform useful functions when the Latins perceive a
common or clear danger or advantage to themselves, it has defi-
nite limitations. Those limiting factors include its multi-
lateral character (i.e., policy organs which are representative,
deliberative bodies, comprehending often widely divergent points
of view), difficult problems for the OAS in the years ahead,
and increased Latin American resentment and assertiveness to-
ward the United States.
Although the Rio Treaty can be invoked at the request of
one party, obliging the OAS to undertake measures to bring the
conflict under control, the ability of the OAS to take effec-
tive action in the peaceful settlement of disputes between
American states will continue to be limited by the willingness
of both parties to submit their disputes to it. These limi-
tations may produce situations in which ad hoc forms of mul-
tilateral action--e.g., the four-power U.S.-Brazil-Argentina-
Chile approach to the 1942 Peru-Ecuador conflict--would have to
be employed.
The El Salvador-Honduran war is an illustration of intra-
hemispheric armed conflicts that may occur in the future. The
seeds for such conflicts elsewhere in the hemisphere are not
lacking. The combination of (1) longstanding grievances over
unresolved border areas, sometimes containing potentially valu-
able economic resources, (2) frictions resulting from large
numbers of nationals of one country in another territory, (3)
mobilization tactics by populist-type governments requiring a
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foreign enemy, and/or (4) availability of new arms from foreign
sources, may result in future outbreaks. The tensions generated
by interstate conflicts may well be used to bolster demands for
increased military budgets.
There is likely to be a growing disposition by larger coun-
tries in the hemisphere to get involved in, and on occasion to
intervene, in the affairs of their smaller neighbors. Argentina's
and Brazil's keen interest over developments in Bolivia, and
Venezuela's concern over unsettled conditions in Curacao and
Trinidad, are examples of this tendency.
Circumstances may arise which might lead us to consider
unilateral action outside the OAS framework to protect U.S.
nationals in the event of a breakdown of law and order in a
Caribbean country, e.g., Haiti. A strongly adverse Latin
American reaction could be expected, although its intensity
would be mitigated by (a) quick withdrawal after evacuating
U.S. citizens, and especially (b) by remaining within the OAS
framework to the greatest extent possible.
The economic organs of the inter-American system will con-
tinue to provide useful forums for the discussion of U.S.-Latin
American issues. Even if the debates are at times acrimonious
and the United States is less forthcoming in economic terms
than the Latins would like in these bodies, our mere willing-
ness to continue the dialogue will in itself probably be a
politically useful means of accommodating their new-found
sense of assertiveness. Although in these discussions the
range of concessions now possible for the United States to
make on the matter of trade barriers is unpromising, the Latins
will continue to press in this area, bilaterally as well as
multilaterally.
Some but not much real progress is likely in economic
integration, either at the LAFTA or the sub-regional level.
In addition, Latin Americans will continue to suspect that the
main beneficiaries of integration will be large U.S. firms and
multinational corporations.
The large countries--notably Agrentina, Brazil and Mexico--
will continue to be more interested in trade among themselves
and with the developed countries than with the smaller Latin
American countries.
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7. The rapid expansion and technological advances in com-
munications in Latin America will both widen and deepen the
composition of the opinion leader groups in each country, with
a commensurate effect on policymakers. Latin governments will
be under increasing pressure to respond to demands from elements
of society heretofore largely excluded from influence because
of a lack of awareness. This broadened participation in Latin
society has important implications for the U.S. in communicat-
ing its policies to the hemisphere.
B. Economic and Social
1. Latin American economic conditions for the next three
to four years are expected to be only fair overall. Contribut-
ing factors include: (1) political and institutional instabil-
ity and growing nationalism, resulting in slowed-down invest-
ment, (2) declines in export prices, reinforced by limitations
on capacity and competing domestic demands for manufactured
products, (3) greater outflows of funds for debt repayment and
profit remittances, (4) slowness in developing a competitive
manufacturing sector, and (5) continuing pressure of population
on resources, which are likely to keep the growth rate lower
than in 1969-70. Imposition of new import quotas by the U.S.
would slow growth still more.
Patterns of trade are likely to continue to shift toward
Western Europe, Japan and Communist countries and away from the
U.S., but this movement is likely to be slow. Trade between coun-
tries of the region is also likely to increase slowly. The
barriers, both on the part of the Latin Americans and others,
which have impeded the rapid growth of such trade in the past,
will probably not be swept away quickly or easily. In any case,
there is no real present alternative to Latin America's exist-
ing direction of trade, in which the U.S. is the single largest
partner and Western Europe and Japan divide up a portion about
equal to the U.S. share.
Investment is likely to continue to flow to the larger and
more dynamic economies in the area, provided that political con-
ditions remain reasonably stable. Almost everywhere, however,
economic nationalism is going to be an increasing problem for
U.S. and other foreign investors. The emphasis of the Latin
Americans will be on a greater share of control and profits,
and they will insist that the investments be in fields and on
terms which will be of primary benefit to their modernization
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- 22 -
process, although there will be marked differences in the pol-
icies followed by individual countries. Investment in manu-
facturing which offers the transfer of modern technology will
be more desired than in extractive industry, bank or public
utility investments.
2. Alternatives to traditional patterns of direct for-
eign investment will be increasingly employed. Some of these
include: management and service contracts, joint ventures,
portfolio investments, and fixed-term arrangements under which
majority control will pass to local interests. Takeovers of
majority control and creeping nationalizations, by ostensibly
legal means, will become more common, but outright expropria-
tions are not expected to be widespread. In some cases, such
as Chile, local governments may go through an ultranationalist
phase of complete rejection of foreign--especially U.S.--private
investments; however, restraint on the part of the investors
and governments affected may keep the door open for modified
forms of foreign--though in the case of Chile, probably not U.S.--
participation after nationalist passions have run their course.
Latin Americans will look increasingly to multilateral
lending agencies and to Western Europe, Japan and Communist
countries, in an attempt to diversify their scurces of invest-
ment. Those sources will be responsive, and new forms of mixed
public-private international consortium arrangements will be
used increasingly. The agencies and countries concerned, how-
ever, have other commitments and will drive hard bargains. The
U.S. as a source of public and private investment will remain
very important. Many U.S. investors can be expected to show the
flexibility necessary to adapt to changing circumstances and
thereby contribute to Latin America's modernization process.
3. Awareness of the extent and difficulty of the area's
social problems will probably rise, thus increasing the pres-
sures for political, juridical and economic reform. The statist
Peruvian and Chilean efforts will be watched closely and will
have at least an initial, although not necessarily longer-
term, attractiveness to many in Latin America, influencing even
relatively conservative governments to pay more attention to
social issues. This tendency is already being seen in a num-
ber of countries. Development plans and investment decisions,
including those affecting foreign capital, will increasingly
take account of the opportunities opened for employment and
the upgrading of human resources.
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4. As an increasing proportion of U.S. assistance funds
is channeled through multilateral assistance agencies, U.S.
decisions regarding international agency lending will be in-
creasingly difficult where countries have struck at private
U.S. interests and/or where politically radical regimes have
assumed power. The problems which will emerge, often in com-
bination with each other, are: a) whether to approve lending
when compensation for nationalized U.S. properties is not
forthcoming or is available only on extremely soft and uncon-
ventional terms (such as long-term government bonds) ; b) wheth-
er to permit the internal politics of a recipient country and
its political attitudes toward the United States to influence
our lending decisions; and c) whether to adopt different
policies in different international institutions. One or
more aspects of these problems have already arisen in Peru,
Chile and Bolivia and are likely to continue to pose diffi-
culties. There will almost certainly be other cases in the
future.
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VI INTERESTS
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UNITED STATES INTERESTS IN LATIN AMERICA
AND LATIN AMERICAN INTERESTS IN THE UNITED STATES
1
I. Introduction
II. United States Interests in Latin America
3
3
General
Threats to United States Security
from Latin America
4
Political-Psychological Interests
5
5
Economic Interests
Relative Importance of Countries
6
and Sub-Regions
Summation of United States Interests
7
III. Latin American Interests in the United
9
States
9
General
10
Security
Political-Psychological
11
11
Economic
Latin American Ability to Advance
its Interests, and the Roles and
Attitudes of Power Groups within
Latin America
12
14
Summary
IV. Consonance of or Conflict Between United
States and Latin American Interests -
A Problem of Perception
15
V. The Special Relationship -- What it Is
18
and Is Not
VI. Policy Implications of the Foregoing
Discussion of United States and
Latin American Interests
19
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DECLASSIFIED/RELEASED ON 4/23/02
by NARA on the recommendation of the NSC
under provisions of E.O. 12958
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RS
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SECRET
UNITED STATES INTERESTS IN LATIN AMERICA
AND LATIN AMERICAN INTERESTS IN THE UNITED STATES
I.
Introduction
The following definitions and considerations have gov-
erned the use of key terms in the preparation of this paper.
Our national interests in foreign affairs are the gen-
eral and usually long-lived purposes and conditions which
the American people would like to see advanced, either by
us or by others, elsewhere in the world. Goals and courses
of action descend in degree of generality from interests.
National interests in foreign affairs derive from
nations' basic motivations for survival, for identity and
influence, for economic gain, and for access to the rest of
the world.
Thus national interests in foreign affairs may be cate-
gorized conveniently as security, political-psychological,
or economic in nature. These categories interact. It may
be argued that there is a fourth category which is humani-
tarian in nature, but that category is assumed in this paper
to derive from the motivation for identity (or self-expression)
and is therefore subsumed under the political-psychological
category.
The relative weights or priorities assigned by a given
nation or group of nations to their interests vary according
to circumstances.
Moreover, a nation's current perception of its foreign
interests may differ from a more analytical, longer-term
view of those interests; and the perception OE those inter-
ests is likely to vary among power groups within a nation.
The importance, or weight, of the various interests
which are discussed in this paper is roughly characterized
by the adjectives vital, major, or peripheral.
A vital interest is understood to be one which directly
concerns a nation's ability to survive or at least to sur-
vive in its existing essential character. A nation normally
would be prepared to maintain forces and ultimately to risk
war at whatever scale of conflict necessary to preserve its
vital interests.
A major interest is at the next level; it is one which
significantly affects a nation's well-being. A nation would
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normally safeguard its major interests by political, psy-
chological and/or economic means, but would be prepared to
undertake limited military action to support these types of
measures.
A peripheral interest is one that is felt by a nation
to be desirable, but which does not significantly affect
the well-being of the nation as a whole. A nation typically
would not be willing to undertake direct military action in
support of a peripheral interest.
As noted above, the weights assigned to interests may
objectively change, or may be perceived to change, as cir-
cumstances change. For instance, an interest which may be
major now could become vital later, or vice versa, as cir-
cumstances change.
Moreover, a number of major interests could cumulate
to be a vital interest.
These possibilities of escalation of importance in time
or by cumulation face the policy maker with the complicating
factor of needing to decide not only how important an inter-
est is now, and what the cost of dealing with it is now, but
also how important it may become later and what the cost of
dealing with it may be then.
A nation's disposition actively to pursue its foreign
interests depends not only (a) on its perception of and the
weight it assigns to those interests, but also (b) on the
degree to which it considers them to be challenged--or sees
an opportunity to advance them--; (c) on what it considers
to be its capabilities to counter the challenge or to con-
tribute to their advance at tolerable cost; and (d) on what
it believes to be the likely future in all of the foregoing
respects. This relationship between perception of priority,
weight and challenge now and in the future on the one hand
and perception of capability and cost now and in the future
on the other is more significant in determining what will
actually be done than is a coldly objective view of the in-
terest itself.
In the following sections of this paper United States
interests in Latin America are treated first, followed by
Latin American interests in the United States, and then by
a discussion of the degree of consonance of, cr conflict
between, United States and Latin American interests; the
special relationship between the United States and Latin
America; and, finally, the implications for United States
policy.
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II. United States Interests in Latin America
General
The United States has a series of major interests in
addition to peripheral interests in Latin America, some of
which could become vital interests in the future and a num-
ber of which could be cumulated now or in the future in
various combinations to a vital interest.
This judgment is made while recognizing the higher
priority assigned to the challenges to the United States in
other areas of the world. Western Europe, the USSR, Japan,
China, the Near East and Southeast Asia all currently out-
rank Latin America in regional priority of United States
concern, the first four because of greater power and the
latter two because of greater criticality of current issues.
Over the next few years it is unlikely that the political
changes expected in Latin America will decisively affect
the course of events within the United States. No Latin
American country is a great power. No Latin American coun-
try presently has a nuclear weapons capability. Our eco-
nomic stake in Latin America, the Panama Canal and strategic
materials controlled by Latin America are not critical to
U.S. survival.
Nevertheless, our interests in Latin America are impor-
tant and their significance will grow with time--as our rel-
ative world power position declines (regardless of abso-
lute power increases). Moreover, the continuance of current
trends in Latin America to extremism and to anti-U.S. na-
tionalism combined with a growing Soviet presence increas-
ingly challenge our interests.
The United States' interests in Latin America are
founded on -
-- Geographic proximity (although this point does not
apply to the countries of southern South America).
-- The presence in Latin America of certain strategic
resources (including the Panama Canal).
-- The special ties of tradition and potential for
friendship deriving, despite significant differ-
ences, from our common European heritage.
-- The cumulative effect the countries of the area can
have on world order and our world position.
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-- Very substantial trade and investment.
-- The fact that one or more Latin American countries--
Brazil, Mexico, Argentina--could eventually become
a major power.
-- Humanitarianism.
The special factors which set Latin American countries
apart from other developing countries in our relations with
them are geographic proximity, tradition, elements of com-
mon heritage, the level of our trade and investment in the
area, and well-established regional institutions and accords
reflecting the operation of the other factors.
Threats to United States Security from Latin America
No Latin American country is now, or for the foresee-
able future will be, in itself a direct military security
threat to the United States. Brazil has the potential to
be such a threat in time, but a direct military threat from
it is highly unlikely in this century.
The United States' security concerns in Latin America
over the next five to ten years are (a) the Soviet capabi-
lity to launch strategic weapons against the United States
from submarines operating within the area and potentially
from land bases in the area; (b) the possible establishment
of hostile military and naval bases in Latin America; (c)
the possible denial to the United States of access on rea-
sonable terms and with reasonable security to the Panama
Canal; (d) the possible denial to the United States of ac-
cess to bauxite in Jamaica and petroleum in Venezuela; (e)
the possible defense implications of the trend in Latin
America toward expanded territorial seas claims; (f) the
possible denial to the United States of access to certain
naval bases and facilities in the area; (g) Cuban and pos-
sible Chilean efforts to aid insurgents; (h) an expanded
Soviet presence; (i) continued manifestations of violent
extremism, insurgency, anti-U.S. nationalism, and radical-
ism; (j) the indirect effect on the world power balance of
the undermining of our prestige, influence and self-con-
fidence that can come from a series of negative political
developments in the hemisphere; and (k) a possible weaken-
ing of the inter-American security system.
Although the basing of Soviet missiles in Latin Amer-
ica would not provide the USSR with a decisive strategic
advantage over the United States, it would be a significant
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way of escalating the level and complexity of the nuclear
balance, introducing new control uncertainties, and in-
creasing the cost of defense. And it could have a negative
psychological effect on our own will and on that of other
countries. The negative effects would be greater the great-
er the number and the size of the countries providing bases.
The same can be said to a lesser degree of Soviet naval
basing facilities.
Political-Psychological Interests
The above-stated security concerns derive primarily
from Latin America's reactive nationalism and experimentation
with extremism (which ultimately can become anti-U.S. to-
talitarian socialism, a possibility enhanced by increasing
Soviet presence). And Latin America's reactive nationalism
and experimentation with extremism are causes for security
concern not only because they may produce a greater will
for cooperation with our major adversaries in the world,
but also because they may affect the sense of well-being
and confidence of the United States, undermine the United
States political position before world opinion and in world
forums in favor of its adversaries, and threaten its eco-
nomic interests. Moreover, the security concerns, to the
extent they become realities, can, in their turn, signifi-
cantly adversely affect the United States psychologically
and politically.
The United States has two additional types of political-
psychological concerns in Latin America.
The first is its concern for the many thousands of
United States citizens who live in, work in or visit Latin
America. The United States sense of well-being would be
significantly affected were the lives or welfare of many
of them to be seriously in jeopardy for political reasons
in Latin America.
The second is the humanitarian concern for the under-
privileged in Latin America. This concern tends to recede
as the other concerns discussed above come more to the fore.
Economic Interests
The United States' economic interests in Latin America
are substantial.
United States merchandise imports from and exports
to 22 OAS members totalled some $9.7 billion in 1969,
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or about 13 per cent of total United States merchandise
trade worldwide.
Private direct investment in Latin America of $14 bil-
lion (1969 book value) compares with $22 billion in Western
Europe, $21 billion in Canada, and about $6 billion in
other LDC's.
The Latin American market for goods and services should
continue to expand, particularly as the major countries
of the region develop. As Latin America seeks the benefits
of continued capital inflow and advanced industrial tech-
nology and management techniques, investment opportunities
may also grow, although on much different terms than in the
past.
Relative Importance of Countries and Sub-Regions in
Latin America
While we recognize the great diversity among the coun-
tries of Latin America, we believe that an attempt to class-
ify them according to their degree of significance to the
United States is worthwhile.
In a sense all countries of the region are of consid-
erable significance to the United States because (1) bases
for offensive strategic military weapons in any of them
would complicate the defense of the United States, (2)
extremist political and economic solutions and related
strong anti-US nationalism in any of them, and (3) the United
States' reaction to these phenomena could contribute to
erosion of the United States' position of influence and
leadership in the world. Certainly they are all signifi-
cant when their populations, resources, economies and
political and strategic potential are cumulated. And they
are significant because they form part of the inter-American
system.
At the other extreme none of the countries is a great
or middle power on the present world scene and only Brazil
has the potential to become such a power in the middle-
term future.
But there are degrees of significance which may be use-
fully stated. Brazil is the most important country of the
region because of its size, its potential, its current
economic dynamism, and its sense of mission. Mexico is
large enough to be a significant middle power over time,
is self-confident, and is of particular importance because
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it borders on the United States. Colombia and Argentina
also have size and potential, and Venezuela has unusual
economic resources. The remaining countries of particular
significance to the United States are other strategic
resource and base countries--Panama, Jamaica and the
Bahamas--and, from a negative point of view, those
countries which have adopted left extremist regimes--Cuba
and Chile. Peru also is especially important as a potential
offset to Chile.
It is to be noted that seven of the eleven countries
mentioned are in or around the Caribbean. The Caribbean
area has the additional special importance of being on the
access routes to the Panama Canal and very close to the
United States.
Summation of United States Interests in Approximate
Order of Priority
Against the background of the foregoing discussion,
the major United States objective interests in Latin America in-
stated below in rough rank order, with the first two
dicated are as being at a significantly higher order of import-
ance than the remaining nine. It is recognized that the
order that is given may vary in the future as circumstances
change:
A. Very Important
1. Preservation of a predominance (by the com-
bination of numbers and importance) of independent,
self-sustaining Latin American countries favorably
disposed to the United States.
2. Denial of Latin America as an area from which
a strategic attack could be launched against the United
States.
B. Important
3. 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 considera-
tion for the "mature partnership" concept.
4. Maintenance of access to the Panama Canal, in-
cluding, under existing circumstances, its protection
and control by the United States.
1/ ISA and JCS prefer "Protection and control of the Panama
Canal as essential to maintaining our access to its use."
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5. The existence of a strong inter-American system,
including an effective collective security function.
6. Unimpeded transit for United States forces on
the high seas and in international air space in the area.
7. Mutually beneficial economic interchange, in-
cluding reasonably favorable trade and investment cli-
mates.
8. Denial to hostile powers of bases in Latin
America that would enhance their non-strategic mili-
tary capabilities.
9. Continued access to bauxite in Jamaica and
petroleum in Venezuela.
10. Protection of the large number of U.S. citizens
who live in, visit, or have economic ties in Latin
America.
11. Continued access to certain naval and air bases
and facilities in the area.
All of the above stated interests are major interests in
terms of the definition given earlier in this paper. More-
over, concurrent serious impairment of a number of these in-
terests, including one or both of the two most important ones,
could jeopardize the ability of the United States to survive
or at least to survive in its existing essential character.
This is true primarily because of the effect on the morale of
the United States and on its image of leadership in the world
which such impairment could have. Thus a number of these major
interests could cumulate now or in the future in various com-
binations to be a vital interest. Finally, circumstances
could change so that one or more of these major interests
could individually become a vital interest.
It follows from the discussion in the previous sections
of this paper that the United States relations with Brazil,
Mexico, Venezuela, Colombia, Panama, Argentina, Jamaica,
The IG/ARA has concluded that bauxite from Jamaica and
petroleum from Venezuela are currently of major interest 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, re-
quires more detailed examination than it has been able to
undertake.
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the Bahamas, Chile, Cuba and Peru are currently of greater
importance to the United States than are its relations with
other countries of the area.
Economic and social progress, freedom of communications
media in Latin America, and maintenance of an adequate meas-
ure of internal security are very significant. However,
they are not here considered to be interests in themselves,
but rather means to advance the above-stated interests. For
instance, the moderation of the frustations which are a
primary source of anti-United States nationalism and experi-
mentation with extremism will require a continued deep
concern for the rate of progress in social and economic
development and effective programs to facilitate an adequate
rate of progress.
Most, if not all, of the major objective interests
listed above are perceived by the United States, but not
necessarily in the order of priority or with the relative
weights given in the listing. For instance, our economic
interests often have been placed higher on the scale and
our interests in political events in the nations of the
hemisphere lower. Yet political events can be the basis
for what happens regarding all our other interests in the
hemisphere, as well as affect our self-confidence and our
ability to influence events elsewhere in the world.
Finally, as was noted in the introduction, a nation's
disposition actively to pursue its foreign interests depends
not only (a) on its perception of and the weight it assigns
to those interests, but also (b) on the degree to which it
considers them to be challenged--or sees an opportunity to
advance them--, (c) on what it considers to be its capabi-
lities to counter the challenge or to contribute to their
advance at tolerable cost, and (d) how it perceives the
future in all of the foregoing respects.
III. Latin American Interests in the United States
General
We consider that Latin America has several vital inter-
ests in its relations with the United States. Latin America
in general depends on the United States for military pro-
tection from extra-hemispheric powers. The United States has
intervened militarily or para-militarily in the past, and
might again, in Latin American nations in the pursuit of
what it perceived to be its own interests. The United States
economic power and influence is such in Latin America that
the United States can very substantially affect the economic
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welfare of most Latin American countries if it wishes to do
so. Latin Americans view the preservation of their own
cultures to be of vital interest and see them increasingly
challenged by exposure to United States culture borne by
modern communications media and the pervasive United States
presence.
Latin America is aware that it has vital interests in
its relations with the United States. But its perception
of the nature and priorities of those interests is quite
different than an objective view of those interests would
seem to us to be. That perception is formed by the two
principal forces motivating Latin America today in both
its internal and its external affairs. Those motivating
forces are (1) the desire for more rapid economic and social
progress, reacting primarily to the example of the developed
countries and to the stimulus of the Alliance for Progress;
and (2) nationalism--the desire to assert stronger and more
independent national identities, reacting in significant
degree, but not solely, to the pervading United States pres-
ence and the historic hemispheric relationships.
These generalizations are valid for the area as a whole
despite wide-ranging differences in the situations of each
of the twenty-three nations which today make up what we
deal with as Latin America.
Security
Although Latin America clearly depends on the United
States for protection from extra-hemispheric powers, most
Latin Americans have had a declining concern for the poten-
tial security threat from outside the hemisphere since the
cold war during which period the Rio Treaty was signed. Im-
plicitly the concern for the potential security threat from
outside the hemisphere has been left to the United States. As
the United States periodically asserted its hegemony through
armed intervention in the Caribbean, and as its economic
and cultural influence became increasingly pervasive rela-
tive to European influence after World War II, the Latin
Americans came to look upon the United States as the main
real threat to their independence--doubtless more through
economic and cultural dominance than through actual mili-
tary action--but to many of them a real threat.
The USSR probably does not even come in second as a
perceived external threat for most Latin American nations.
Given the United States security umbrella, and the remote-
ness of the USSR, it is safe to say, for example, that
Argentina is of greater concern to Chile, Chile to Peru,
Peru to Ecuador, Venezuela to Colombia and vice versa, and
El Salvador to Honduras and vice versa. Armed conflict has
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occurred among a number of Latin American nations in the
past and doubtless will occur again. The OAS plays a signif-
icant role in moderating such conflicts or potential con-
flicts and is appreciated by Latin American countries for
this role.
Political-Psychological
The drives for economic and social progress and for
independent national identity are as strong as they are in
Latin America as overall national interests--internal and
external--because of the high frustration and the deep sense
of inadequacy that much of Latin America currently feels.
Latin America's frustration and sense of inadequacy derive,
in turn, from its very failure to achieve its aspirations
for economic and social progress, its dependence on the
United States, and the confusion and uncertainty produced
by change itself and by the mass of information and welter
of new concepts and value signals flowing to an increasingly
broad spectrum of its modernizing societies over modern com-
munications media.
Because nationalism and the drive for economic and
social progress are so strong, concern for free institutions
becomes a secondary consideration in many of the countries,
and there is a bias toward experimentation with radical so-
lutions, perhaps in part simply as a rejection of United
States style solutions. The process of experimentation and
turning away from the United States has only begun and pro-
bably will intensify before it runs its course. The United
States cannot prevent the process, but it can affect it,
perhaps as much by what it does not do as by what it does do.
Economic
Latin America encounters a conflict in its perceived
interests in the economic field. On the one hand, it wants
to be politically independent from the United States, and
to protect and exploit its natural resources itself. It is,
moreover, inclined to experiment with extreme solutions and
to become increasingly more restrictive with regard to for-
eign investment and trade. But on the other hand it also
wants to progress rapidly economically and socially and, to
this end, wants capital, managerial techniques, technology,
and favorable trade treatment from the United States.
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Latin American Ability to Advance its Interests, and
the Roles and Attitudes of Power Groups within Latin
America
To serve their perceived interests in economic and
social progress and independence from the United States,
some Latin American countries are jeopardizing existing or
developing free institutions and risking domination by
another, less benign foreign power. Cuba has already turned
to totalitarianism and is now at least as dependent on the
USSR as it previously was on the United States. Chile is
risking following the same course. A number of other coun-
tries have at least temporarily sacrificed a measure of
democratic political processes in the hope of thus achiev-
ing a more rapid rate of economic and social progress and
asserting a more definite, independent national identity.
But the real capabilities of any Latin American coun-
try to achieve a rate of economic and social progress which
will meet the unduly raised expectations of its people and
also to be fully independent are limited. Indeed, in the
modern world of complex economic interdependence and multi-
ple transnational interests, this can be said of most, if
not all, nations. Thus authoritarian socialist experiments
of whatever nature to attempt to achieve these ends are all
likely to fail, just as experiments under any other politi-
cal and economic system will also fall short of exaggerated
aspirations. The choice then will be whether to become
even more extreme in the effort to achieve a satisfying com-
bination of economic and social progress and to assert na-
tional identity or, understanding the real limitations on
the progress that can be made and the independence that can
be achieved, to place greater emphasis on more open poli-
tical systems which provide more internal opportunities for
political, economic, and intellectual expression and/or an
escape valve for frustration. Argentina is now moving in
one direction, but perhaps only temporarily so, Chile in
another. What the overall direction of Latin America will
be in the coming years is an open question. A powerful
long run force in favor of selection of the more realistic
and more moderate course is the historic failure of totali-
tarian socialism really to satisfy its people wherever it
has been tried. The evidence of the failure of the Cuban
example and perhaps later the Chilean example will be highly
important if permitted clearly to be seen. But dangers in
the medium term are the difficulty in reversing experiments
in totalitarian socialism once undertaken; the possibility
that the real significance of the failures will be per-
mitted to be obscured by other factors such as the bogeyman
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of United States dominance and even intervention; and
the possibility that not just a few, but rather several
Latin American countries--including one or more of the
most important ones--will try extreme experimentation be-
fore the failures of extremism are proven. Moreover, while
totalitarian socialism historically has failed economically
and at high political cost, it may be argued to have had
short-term social successes which can offset the economic
and political costs at least for a time.
It goes without saying that this drama will play itself
out differently in each country. In some countries the con-
cern for independence may decline or increasingly be directed
against other larger countries of the region or against Rus-
sia, Japan, or even some countries of Western Europe rather
than the United States as the perception of the United
States threat recedes. The exact nature of the political,
social and economic solutions tried in the countries of
Latin America is likely to vary across a broad spectrum, sel-
dom fitting a neat historic stereotype. Relative success
in economic and social development and a clearer under-
standing of the real limitations on economic and social
progress in the short term, and of the costs of extremism,
may produce greater moderation. But the process of reaching
stability under a satisfactory system will be a long one
for many, if not most, of the Latin American countries.
With respect to the differing roles and attitudes of
power groups within countries, it is safe to say that the
masses--particularly in the countryside--are largely either
apathetic or primarily interested in economic progress.
Politically they will be followers. It is also safe to say
that the influence of the traditional oligarchy will de-
crease. The oligarchs will move to sunnier climes before
they will fight. The most influential power groups, then,
will be (a) the students and intellectuals; (b) the infor-
mation media; (c) the new technical, managerial and middle
class groups; (d) the military; (e) the church, (f) labor,
and (g) the professional revolutionaries. Of these groups,
the students, intellectuals and in some countries labor
tend to be for extremism, because they are generally ideal-
istic and for change and because they have not disciplined
themselves to consider the objective limitations of any
human society and all the likely consequences of what they
propose. The information media, the new technical, manage-
rial and middle class groups, the military, and in
some countries labor are more realistic, more interested in
preserving existing institutions and more affected by con-
crete programs (as in fact they have been under the Alli-
ance for Progress), but ideas are also important to them.
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Summary
From the foregoing the primary, objective, overall Latin
American internal and external interests seem to be (a) a
reasonable rate of economic and social progress, (b) avoid-
ance of irreversible jeopardy to open political and economic
systems, and (c) independence from domination by any outside
power.
Latin America's principal, and inter-related, interests
in its relations with the United States are then seen to be:
1. Maintenance of the flow of United States capital
and technology and obtention of liberal trade and aid
treatment.
2. Development of offsets to the pervading United
States presence and the gaining of control of key natural
resources as means of demonstrating and maintaining in-
dependence.
3. Avoidance, at the same time, of dependence on
another power.
4. Maintenance of an effective inter-American system,
with United States participation.
5. Maintenance of the United States security
umbrella against potential future extra-hemispheric
attempts at incursion.
The perception of many Latin American leaders tends to-
day to concentrate SO much on the second of the above enu-
merated objective interests in relations with the United
States, and on the internal interest of more rapid economic
and social progress, that the other internal and external
interests stated above do not receive due emphasis.
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IV. Consonance of or Conflict Between United States and
Latin American Interests - A Problem of Perception
Placed side by side there is nothing necessarily
inconsonant in the objective interests of the United
States and Latin America:
United States Objective In-
Latin American Objective
terests in Relations with
Internal Interests and its
Latin America, in Order of
Interests in Relations with
Importance
the United States, in Order
of Importance
1. Preservation of a
1. A reasonable rate
predominance of independent,
of economic and social pro-
self-sustaining Latin Ameri-
gress, contributed to by
can countries favorably dis-
capital and technology and
posed to the United States
liberal trade treatment
States.
from the United States.
2. Denial of Latin
2. Avoidance of irre-
America as an area from
versible jeopardy to open
which a strategic attack
political and economic
could be launched against
systems.
the United States.
3. Maintenance of in-
3. Maintenance of
dependence from any foreign
confidence of Latin America
power, in part through de-
and of the world in the ef-
developing offsets to the
fectiveness, maturity and
pervasive United States
responsibility of our lead-
presence and through gain-
ership.
ing greater control of key
natural resources.
4. Maintenance of ac-
cess to the Panama Canal.
4. Maintenance of an
effective inter-American
5. Existence of a
system, with United States
strong inter-American Sys-
participation.
tem.
5. Maintenance of the
6. Unimpeded transit
United States security um-
for United States forces on
brella against potential
the high seas and in inter-
extra-hemispheric encroach-
national air space in the
ment.
area.
7. Mutually beneficial
economic interchange, in-
cluding reasonably favorable
trade and investment climates.
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United States Objective
Interests in Relations
with Latin America, in
Order of Importance (cont'd)
8. Denial to hostile
powers of bases in Latin
America that would enhance
their nonstrategic military
capabilities.
9. Continued access to
bauxite in Jamaica and pe-
troleum in Venezuela.
10. Protection of United
States citizens in the area.
11. Continued access to
certain naval and air bases
and facilities in the area.
Although there is no necessary inconsonance in United
States and Latin American interests, there is in fact in-
consonance in the current perception of these interests.
This inconsonance in perception arises (a) from Latin Ameri-
can nationalism currently directed mainly against the United
States, (b) from the very different perception of the ex-
ternal threat by the two sides, (c) from the different prior-
ities or weights that each gives to its interests, and (d)
from inter-interest conflicts for both.
To be more specific, the United States' interests (1)
in preservation of a predominance of independent, self-
sustaining Latin American countries favorably disposed to
the United States and (3) maintenance of the confidence of
Latin America and of the world in the effectiveness, ma-
turity and responsibility of our leadership are consonant with
all Latin American interests. But favorable disposition to
the United States and acceptance of United States leadership
currently may be perceived by many Latin Americans as im-
plying dependence and thus to be in conflict with Latin
American interest number 3. In addition, Latin America has
an inter-interest conflict between accepting private capital
from the United States which would contribute to its develop-
ment (interest 1) and maintaining independence and control
of certain of its resources (interest 3).
The United States also has an inter-interest conflict
between those national internal interests which produce
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internal demands on resources and for trade restrictions and
those external interests in our relations with Latin America
(especially interests 1, 3 and 7) which produce require-
ments for assistance funds and liberal trade treatment.
The United States' interest (2) in the denial of Latin
America as an area from which a strategic attack could be
launched against the United States is consonant with, and
in its significance for the security and in fact survival
of the United States, contributory to, all five Latin Ameri-
can interests. The same argument may be made for the
United States' other security interests (numbers 4, 6, 8, 9
and 11) and for the security aspects of its other interests.
There are problems, however, in the facts that (a) Latin
America perceives the USSR as less of a threat than does the
United States (or at least is inclined to leave the dealing
with the Soviet threat up to the United States) and (b)
that Latin America is at present more concerned over actual
dominance by the United States than by potential dominance
by the USSR. These differences in perceptions of the threat,
accompanied by the fact that Latin American nationalism is
currently directed primarily against the United States,
mean that Latin America is considerably less concerned over
security issues in the hemisphere relating to actual or po-
tential extra-hemispheric threats than is the United States.
United States interest (5) in the existence of a strong
inter-American system is the same as Latin American interest
number 4. Here again Latin America has an inter-interest
conflict with its interest number 3, however, because of
the tendency that has existed - and which is difficult to
avoid - for the United States to dominate the inter-American
system.
United States interest (6) in unimpeded transit for
United States forces on the high seas and in international
air space in the area is at present in apparent direct con-
flict with interest (3) of many Latin American countries
in gaining greater control of key natural resources - in
this case the resources of the adjoining seas; continental
shelves, slopes and rises; and seabeds. A tradeoff between
these conflicting interests is possible in theory.
United States interest (7) in mutually beneficial eco-
nomic interchange is consonant with Latin America's inter-
est (1) in a reasonable rate of economic and social progress
contributed to by the United States. But the mere differ-
ence in the priority of these interests for the two sides
implies a problem, and there are inter-interest conflicts
for both which have been indicated above in the discussion
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of the consonance or conflict of United States interests
(1) and (3) with Latin American interests.
United States interest (9) in continued access to
bauxite in Jamaica and petroleum in Venezuela is in con-
sonance with Latin American interests, but questions over
the manner of access raise problems between United States
interest (10) in the protection of United States citizens
and Latin American interest number 3.
The physical protection of United States citizens in
Latin America and the keeping open of opportunities for
United States citizens to travel and live in Latin America
(interest number 10) are consonant with all Latin America's
interests. Their economic well-being can come into con-
flict with Latin America's interest number 3, however. This
conflict can be reduced (a) by a reasonable willingness by
United States investors to accommodate to Latin American
desires for increased control of investment, and (b) by
Latin America's placing greater relative emphasis on its
interest in economic and social progress.
The foregoing discussion would seem to support the
hypothesis that the inconsonance in the United States and
Latin American perceptions of their interests arises from
Latin American nationalism currently directed mainly against
the United States, from the very different perception of the
external threat by the two sides, from the different weights
that each gives its interests (primarily because of the first
two cited factors), and from inter-interest conflicts for
both.
V. The Special Relationship -- What it Is and Is Not
We have concluded in this paper that, for the United
States, Latin America differs from other developing areas
because of geographic proximity, a degree of common heri-
tage, tradition, the level of our economic interests, and
the existence of regional institutions and accords.
These factors have produced within the United States,
in Latin America and in the world a belief that the United
States bears greater responsibility for events in Latin
America than for those in other developing areas.
Moreover, the analysis in the previous sections indi-
cates that most United States and Latin American objective
interests are consonant.
On the other hand, differences in cultural heritage,
stages of development, internal problems, power, and per-
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ception of primary interests combine to produce misunder-
standings. These differences, coupled with the existence
of higher priority United States interests in other parts
of the world, also are breeding ground for Latin American
resentment against the United States.
Thus Latin America wants assistance and protection
from the United States and, in fact, considers the provi-
sion of that assistance and protection to be a United
States obligation. But at the same time Latin America
does not want to be dominated by the United States econom-
ically, politically or culturally.
Thus also the United States believes it should assist
and protect Latin America, but has tended to be impatient
with Latin American inconformity and to believe that it
could and should be the arbiter of events in Latin America.
Therefore a special relationship does not currently
exist between the United States and Latin America in the
sense of a relationship of high mutual confidence. Nor
does it currently exist in the sense that the United States
can control events in Latin America at its will. A special
relationship does exist in the generally accepted sense of
United States special responsibilities in Latin America,
and in the degree of mutuality of objective, although not
perceived, interests. The sense of special United States
responsibilities in Latin America has its basis in the
series of factors listed at the beginning of this section
which make relations with Latin America different for the
United States than relations with other developing countries.
These same factors affect the degree of mutuality of the
objective interests of the United States and Latin America.
VI. Policy Implications of the Foregoing Discussion of
United States and Latin American Interests
Eleven major United States interests in its relations
with Latin America have been identified. Six of the eleven
major interests are primarily security in nature, four
primarily political-psychological, and one economic.
The six security interests are as important to us
as they are mainly because of the existence of a hostile
superpower in the world--the USSR--which could act to create
a serious security threat from Latin America if given the
appropriate opportunity. The importance of two of the
political-psychological interests and even, to a degree, of
the economic interest is also increased by the existence
of that hostile superpower. One must assume that a super-
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power hostile to the United States will continue to exist
for the indefinite future. In fact, the world of the future
is likely to contain a number of powers more nearly equal
in their strength than has been the case in the immediate
post World War II period. Those powers will be at least
competitive with each other and potentially, if not actually,
hostile to the United States. Moreover, the weight of
Latin American countries in the balance will increase as
time passes. Therefore, from the world balance of power
point of view, the importance of United States interests
in Latin America is unlikely to diminish, and is more
likely to increase.
Our current intelligence assessment is that Latin
America will probably remain a relatively low priority area
for the USSR. The USSR, however, will emphasize expansion
of its presence in Latin America and will continue to engage
in a broad range of activities, not neglecting promising
opportunities for encouraging subversion if it can do so
without endangering its more respectable tactics.
Those opportunities have arisen in the past, and op-
portunities--c at least the potential for opportunities--
will arise in the future, primarily for three political-
psychological reasons. Those three reasons are: (1) Latin
America's reactive nationalism against the United States;
(2) Latin America's experimentation with left extremism;
and (3) --mainly because of the effect of the first two rea-
sons and Russia's own low profile thus far--Latin America's
current failure to think of the USSR as a significant threat
to it.
The first two of these reasons would adversely affect
United States interests in Latin America even if there were
no competitive powers in the world. Under that circum-
stance the most important United States interests in Latin
America would be economic and psychological. Anti-United
States nationalism and experimentation with extremism
would produce challenges to those interests then just as
they produce challenges to existing United States interests
now.
We have concluded in Section III above that Latin
American reactive nationalism directed against the United
States and experimentation with extremism are the products
of Latin America's frustration and sense of inadequacy de-
viving from (1) its failure to achieve its aspirations for eco-
nomic and social progress, (2) its historical relationship with
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and dependence on the United States, and (3) the confusion
and uncertainty produced by rapid change itself and by the
mass of information and welter of new concepts and value
signals flowing over modern communications media to Latin
America.
The formulation and execution of United States policy
should take into account these three root causes of Latin
American reactive nationalism directed against the United
States and of Latin American experimentation with extremism.
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VII SECTOR
PARERS
D
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A. POLITICAL-
PSYCHOLOGICAL
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POLITICAL-PSYCHOLOGICAL
I. Introduction
1
II. Implications of Recent Developments
and Anticipated Trends
2
A. Major U.S. Interests in
Latin America
2
B. Events with Possible
Implications for U.S. Interests
3
C. Assessment of the Impact of
Recent Events and Anticipated
Trends upon U.S. Interests
5
III. Assessment of Adequacy of Current
U.S. Policies and Programs and
Recommendation of Courses of Action
24
Internal Political Developments
and Bilateral Political Relations
26
Chile
29
Cuba
30
The Soviet Presence
30
Western European and Japanese
Presence
32
Territorial Sea
33
Information
33
Other Policies
34
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POLITICAL-PSYCHOLOGICAL
I. Introduction
We have seen, in an earlier section of this study,
that the central assumptions of the Latin American policy
of the Nixon Administration were (1) that a "special
relationship" exists between the U.S. and Latin America
and that this relationship is in our interest and should
continue and (2) that the concepts and policies of the
past were no longer adequate to meet the ferment and
tensions present in the developing American societies and
that new policies were needed if the special relationship
was to be maintained in the face of these developments.
In the course of the NSSM 15 policy review, the Administra-
tion evolved the policies described in the earlier section
to achieve this objective.
The purpose of the present paper is to assess these
policies in the light of the events of the past 18 months
to determine whether they are still adequate. Although
the first step in the Administration's 1969 policy review
was an effort to define U.S. interests in Latin America,
the analysis underlying this definition was perhaps less
detailed and systematic than the rest of the review. Con-
sequently, the IG/ARA decided to preface the present re-
appraisal of our Latin American policies with the detailed
analysis of U.S. interests in Latin America and Latin
American interests in the U.S. which appears in an earlier
section of the study. This definition of interests pro-
vides the framework for the NSSM 108 policy review. In
the present section of the review, we shall (1) assess the
extent to which each of the interests listed in the inter-
ests study has been affected by the events of the past 18
months and the likely trends of the next three or four years
(as described in an earlier section of the study) ; (2) state
the implications for our policies that this assessment re-
veals; and (3) make policy recommendations as appropriate.
In assessing the impact of events upon interests, we shall
consider one by one the impact of each relevant event on
each of the eleven major interests listed in the interests
study. (For easy reference, the interests are repeated in
Section II (A) below and a summary of significant events is
listed in Section II (B) below.)
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Today as in 1969 the most important factors in our
relations with Latin America which the policy-maker must
take into account are reactive nationalism directed against
the U.S. and experimentation with extremism. In its assess-
ment of Latin American interests in the U.S., the paper on
U.S. interests concluded that these were the products of
Latin America's frustration and sense of inadequacy deriving
from its failure to realize its aspirations for economic and
social progress; its historical relationship with and de-
pendence on the U.S.; and the confusion and uncertainty
caused by rapid change and the increasingly sharp impact on
modernizing societies of a mass of information and new ideas
transmitted by modern communications media. As we seek ways
to adjust our policies to new realities in Latin America,
these are the key factors to be kept in mind.
II. Implications of recent developments and anticipated
trends for U.S. interests in Latin America.
A. The following have been determined to be the major
U.S. interests in Latin America.
1. Preservation of a predominance (by the combi-
nation of numbers and importance) of independent,
self-sustaining Latin American countries favorably
disposed to the United States.
2. Denial of Latin America as an area from which
a strategic attack could be launched against the
United States.
3. 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 con-
sideration for the "mature partnership" concept.
4. Maintenance of access to the Panama Canal, in-
cluding, under existing circumstances, its pro-
tection and control by the United States.
5. The existence of a strong inter-American system,
including an effective collective security function.
6. Unimpeded transit for United States forces on
the high seas and in international air space in the
area.
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7. Mutually beneficial economic interchange,
including reasonably favorable trade and investment
climates.
8. Denial to hostile powers of bases in Latin
America that would enhance their non-strategic
military capabilities.
9. Continued access to bauxite in Jamica and
petroleum in Venezuela.
10. Protection of the large number of United
States citizens who live in, have economic ties
with or visit Latin America.
11. Continued access to certain naval and air
bases and facilities in the area.
B. The following are the events of the past 18 months
which have possible implications for U.S. interests
in Latin America.
1. The election in Chile of a Marxist popular
front coalition which has moved rapidly and effec-
tively thus far in initiating changes which endanger
Chilean pluralism and economic and political ties
with the U.S. and offer prospects for significant
expansion of the Soviet presence.
2. Further deterioration of Cuba's economic situa-
tion, increasing Castro's dependence on the U.S.S.R.
Both trends further reduce the attraction of the
Cuban "model" in Latin America. Even where extremists
still look to Cuba, Castro has been forced to be-
come much more selective in his support of revolu-
tion abroad. There was an apparent continuation in the
U.S.S.R.'s adherence to the understanding that it
would not introduce missiles into Cuban territory,
an understanding extended to include facilities for
servicing submarines carrying nuclear weapons. With
the exception of Chile, there is continued observance
of OAS sanctions against Cuba by all adherents to the
1964 decisions, but there are increasing indications
that OAS solidarity on this issue is under pressure.
3. Continued revolutionary activity by leftist
groups, including increasing resort to urban
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terrorism, as well as continued "radicalization"
of politics but no significant increase in the
revolutionary threat to existing regimes.
4. Except for Chile, no major changes in the
political lineup of Latin American regimes-- no
further cases of moderate or constitutional regimes
being supplanted by authoritarian regimes or vice
versa. Military influence continued to be strong,
and in some countries moved in reformist directions.
5. Continued strong manifestation of nationalism
with anti-U.S. overtones in many countries.
6. Continued growth of the Soviet diplomatic, cul-
tural, and commercial presence and of Soviet mili-
tary activities in Latin America.
7. Emergence of black radicalism in the Caribbean.
8. Significant Latin American arms purchases in
Western Europe occasioned in part by restrictions
on the availability of arms from the U.S.
9. Some economic progress (particularly notable in
Brazil) but little appreciable abatement of social
tensions.
10. Slow progress in the strengthening of multi-
lateral institutions for the purpose of developing
an effective multilateral framework for bilateral
assistance. There has been some uneasiness on the
part of some countries that our efforts to move in
this direction mean loss of interest.
11. Growing Latin American fears of U.S. protec-
tionism and impatience with the continued delays
by the U.S. in implementing its plan for generalized
LDC preferences. These developments have tended to
reduce the favorable impact on Latin American opinion
of the establishment of the SCCN and U.S. efforts to
promote Latin American interests in the negotiation
of the international agreement on LDC preferences.
12. Increased flows of United States private invest-
ment to selected areas of Latin America but at the
same time increasing manifestations of economic na-
tionalism in many Latin American countries.
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13. The emergence of diverging interpretations
of the extent of the territorial sea as an in-
creasing source of contention between the United
States and a number of Latin American countries.
C. Assessment of the impact of recent events and
anticipated trends upon U.S. interests.
Interest #1--A predominance of independent, self-
sustaining states favorably disposed to the United
States.
Events Which are Relevant to this Interest
#1--Chile. Although the growing consolidation
of the Allende regime does not of itself seriously
weaken the predominant grouping of independent
nations, well-disposed towards the U.S., it could
contribute to the undermining of the independence
of other countries or help persuade them to adopt
policies hostile to the U.S. On the former point,
Chile could support subversive activities against
other countries. To maintain his leftist creden-
tials and to accommodate internal pressure, Allende
is likely to facilitate some activities of insurgent
movements against the governments of neighboring
countries. This support is likely to be limited in
scope and mainly covert, however, since Allende
is unlikely to risk provoking his neighbors. Never-
theless, Allende probably will be unable to prevent
more extreme members of his coalition from utilizing
his regime's powers and resources more openly. This
capability must be weighed against the intelligence
assessment that no Latin American government is so
weak that it could be overthrown directly by an in-
surgent movement organized or supported by Chile.
Support from Chile for revolutionary groups in
neighboring countries could erode the stability of
the governments of those countries.
Chile will pursue a policy in the OAS and in its
bilateral diplomatic relations of seeking to pro-
mote oppositon to United States policies. The de-
gree to which this would threaten this U.S. interest
must be weighed against the likelihood that other
Latin American governments would allow their attitude
toward the U.S. to be determined by the promptings
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of Chile rather than by a perception of where their
interests lie. We do not believe Chile's activi-
ties in the OAS and in its bilateral relations are
likely to succeed to the point of being detrimental
to this interest.
Chile could serve as an example to other countries,
arousing hopes of Marxist groups and lending re-
spectability to Marxism as a solution for Latin
American problems. The seriousness of this threat
must be weighed in the light of the internal situa-
tion of other countries. The current intelligence
estimate is that violent extremism in the hemisphere
will remain a disruptive force, but is unlikely to
result in actual seizure of power by extremists.
Another factor to be weighed is the extent to which,
on the one hand, alarm at the events in Chile will
lead other governments to adopt more repressive
measures toward leftist groups, which might seri-
ously weaken their revolutionary potential but
might also generate widespread disorder and eventual
revolutionary crises; and, on the other hand, whether
Chile's example might increase pressure on other
governments to adopt more vigorous programs of eco-
nomic and social reform, thus conceivably reducing
the revolutionary threat in their countries. In
the final analysis, the extent to which other coun-
tries might freely adopt Chile as a model will
depend on the success of Chile's experiment with
Marxism. If Marxism transforms Chile into another
"wasteland" like Cuba, there will be no problem.
But if it succeeds in satisfying the aspirations of
the Chilean masses without stifling economic growth,
it could become a powerful pole of attraction for
other countries.
#2--Cuba. Cuba could threaten this interest in two
ways. It could undermine existing pro-U.S. regimes
through organization or support of subversive activi-
ties. It could promote opposition to U.S. policies
among Latin American countries, possibly in co-
operation with Chile. According to the intelligence
estimate, the further deterioration of its economic
situation has forced Cuba to become much more selec-
tive in its support of revolution abroad. We con-
clude from this that its chances of success in
exporting its revolution throughout the hemisphere
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are no greater than before. Moreover, its reduced
attractiveness as a model weakens its ability to
influence other countries, although pro-Castro
elements in those countries remain unflagging in
their support. In sum, it is unlikely that Cuba
would succeed in organizing opposition to the
U.S.
The outlook is for increased tolerance of the
Castro regime by some Latin American countries.
This trend can be accounted for by one or more
of the following factors: a declining concern
about the Cuban threat; an increased sense of
need to placate domestic leftist groups; or a de-
sire to assert independence from the U.S. This
has a potentially damaging effect on this interest.
#3--Revolutionary Activity. Revolutionary activity
by leftist groups is a potential threat to this inter-
est because it could lead to the establishment of
leftist regimes which might come under strong
Soviet influence or even control, or pursue poli-
cies openly and strongly hostile to the United
States, or both. Violent extremism in particular
will be a disruptive threat throughout the region,
but will be unlikely to result in actual seizures
of power by extremists; cooperation by Latin Ameri-
can insurgent and terrorist groups across national
boundaries has not been extensive, but will probably
increase in the next few years. Urban terrorism
will increase and kidnapping will continue as a
tactic. Some groups will probably continue to
espouse rural insurgency as the best path to power.
We conclude that revolutionary activity per se
will not seriously impair the interest of preserving
a predominance of independent, self-sustaining Latin
American countries favorably disposed to the U.S.
However, in one or more countries extremists 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. 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.
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#5--Nationalism. Latin American nationalism fre-
quently has anti-United States overtones. Con-
sequently, intensification of nationalist trends
could have unfavorable implications for the inter-
est of preserving a group of countries favorably
disposed to the United States. The outlook is for
further intensification of nationalism in Latin
America. Some regimes will at times sound stridently
anti-U.S. and our relations with them will be in-
creasingly prickly. The nationalist desire to as-
sert independence from the U.S. may cause some
countries to seek closer ties with the U.S.S.R.,
which might pose a long-range threat to their inde-
pendence. The nationalism which leads it to assert
its independence from the United States, however,
should also prevent a country from falling SO
strongly under Soviet influence as to lose its
independence. We conclude that nationalism in the
hemisphere will be an increasing source of friction
in our relations which could be exacerbated unless
we exercise considerable skill in dealing with it.
#6--Soviet Presence. In recent years, the U.S.S.R.
has managed to expand its contacts and its presence
in Latin America in several ways. Thirteen Latin
American nations, including Cuba, now have diplo-
matic relations with the U.S.S.R. Also, in at least
one documented case, Guatemala, the U.S.S.R. is pro-
viding financial subsidies through the Soviet Embassy
in Mexico to the Guatemalan Communist Party to sup-
port insurrection against the government of Guatemala.
Elsewhere, contacts in the diplomatic, trade and
cultural fields have been pursued in low-key,
"correct" style. The intelligence estimate is that the
Soviets will encourage subversion only if they can do
so without endangering their more respectable tactics.
Militarily, the Soviets have been engaged in a
cautious "testing" of the U.S. in the Caribbean area
during the past 18 months. Construction of a naval
support facility near Cienfuegos, Cuba, was the most
conspicuous Soviet effort along this line. The
Soviets also sent naval reconnaissance planes to
Cuba from the Soviet mainland on three occasions in
the past 18 months. Soviet naval visits to the
Caribbean have extended beyond Cuban waters to include
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intrusions into the Gulf of Mexico and port visits
to Caribbean islands. In South America the Soviet
earthquake relief airlift to Peru, though trouble-
plagued, was an obvious attempt to gain political
capital, primarily in Peru.
No regime at present seems so weak that this level
of Soviet encouragement of subversion could topple
it. Moreover, those nations which have sought
diplomatic ties with the U.S.S.R. have usually
been motivated by a desire for increased trade as
well as a desire to assert their inđependence from
the United States. The U.S.S.R. can and undoubtedly
will use increased diplomatic and other ties to
seek to counter United States influence, but there
is little reason to believe that it would be capable
by itself of bringing about the development of
hostile attitudes on the part of the Latin American
governments toward the United States. The decisive
factor in the Latin Americans' attitude toward the
U.S. would continue to be their perception of their
own interests. U.S. behavior toward them would be
an important element in this perception. We con-
clude that the increase in Soviet activities in
Latin America does not at present constitute a
serious threat to this interest. However, the
U.S.S.R. is in a position to encourage the con-
tinued erosion of U.S. influence and prestige in
the area by various means.
#8--Arms Purchases. During recent years, there has
been an unmistakable trend in Latin America away
from U.S. sources of arms toward Europe, which for
the Fiscal Year 1967-1969 period provided more than
double the amount of arms provided by the U.S.
through military credit sales. Although this trend
cannot be attributed solely to our unwillingness or
inability to make available for purchase military
jet aircraft and other "sophisticated weapons",
these reasons have played a sizable role in creating
a feeling of resentment and disillusionment among
many military leaders and a view among them that
U.S. interest in Latin America is waning. Although
the growing political role of the military in Latin
American has led them to see their relationships
with the U.S. in broader terms than the provision
of military equipment, their dissatisfaction with
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our arms purchase policy runs counter to our
interest of maintaining a group of countries
favorably disposed toward the U.S.
--Continued Social Tension. In the past 18
months, economic growth has been concentrated in
three or four countries, with sluggish or reduced
growth in most of the others. Rapid population
growth has been an important factor in holding
advances well below popular expectations. Thus
social tensions have continued to be severe,
with little prospect of abatement. Social ten-
sions are one of the root causes of anti-U.S.
nationalism and leftist extremism and are thus
a threat to this interest.
--Multilateral Aid. There has not been enough
time to see whether increased U.S. emphasis on the
use of multilateral channels for development assis-
tance will lead to increased self-confidence and
independence on the part of the Latin American
nations. There is also insufficient evidence to
permit any firm conclusion as to whether the shift
from bilateral to multilateral aid is being in-
terpreted by them as a loss of U.S. interest and
thus adversely affecting their attitudes toward the
U.S. The most one can say at this point is that
countries with greater economic dependence on the
U.S. appear uneasy about the shift in aid policy.
We conclude that there is insufficient evidence to
indicate the impact the new aid policy is having
on this interest.
#11--Trade Policy. The new U.S. commitment to con-
sult on trade and U.S. efforts on behalf of Latin
Americans in negotiations on trade preferences have
had a positive effect on Latin American attitudes
toward the U.S. but this has been offset by con-
cern about U.S. protectionism. In view of the
great importance of the U.S. as a market for Latin
American exports, a continuation of the trend to-
ward protectionism in the U.S. would undoubtedly
lead to a sharp increase in anti-Americanism. In
addition, a significant reduction in Latin American
access to the U.S. market could affect the economic
viability of some countries. We conclude that
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failure by the U.S. to maintain a liberal trade
policy would have an adverse impact on this
interest.
#12--Investment. The threat posed to important
U.S. investments in Latin America by the con-
tinued growth of economic nationalism in many
countries is a potential source of bitter con-
flict between the U.S. and the Latin Americans
which could seriously threaten the interest of
preserving a grouping of states well-disposed
toward us. On the other hand, the restraint with
which we have responded to acts of expropriation
(e.g. our refusal to invoke the Hickenlooper
Amendment against Peru) has helped reduce the
unfavorable impact of this development.
#13--Territorial Sea. This dispute has emerged
increasingly as an issue which could dispose a
number of Latin American nations unfavorably
toward us.
In summary, we conclude that the events of the
past 18 months do not constitute a serious threat to
the interest of preserving in the hemisphere a pre-
dominance of independent, self-sustaining nations
favorably disposed to the U.S. Such a predominance
exists today and will probably continue to exist
during the time frame which concerns us in this study.
Nonetheless, the trends which we have identified--the
rapid consolidation of the Allende regime in Chile and
the potential threat which this regime could represent
to the stability of its neighbors, the continued ex-
pansion of the Soviet presence, the persistence and
probable intensification of violent extremism and
anti-U.S. nationalism throughout the region, growing
Latin American concern about protectionist trends in
the U.S., and the serious potential for hostility on
the part of some nations toward the U.S. created by
conflict over national investment policies and the
extent of the territorial sea--are potentially detri-
mental to this interest and could have an impact in
the future which is greater than they have had in the
past. We note, however, that many of these trends are
manifestations of the complex historical process of
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the search for national identity in Latin America
and that these trends were foreseen in the NSSM 15
Study.
Interest #2--Denial of Latin America as an area
from which a strategic attack could be launched
against the U.S.
Events Which are Relevant to this Interest
#1--Chile. So far, the U.S.S.R. has shown no
interest in obtaining military bases in Chile.
The intelligence estimate is that Soviet military
activity there will probably be confined to foot-
in-the-door operations, with military bases con-
siderably less probable because of Soviet and
Chilean awareness of likely adverse reaction by
Chile's neighbors as well as internal Chilean
constraints.
#2--Cuba. Cuba has already given ample evidence
of its willingness to allow its territory to be
used as a base for Soviet missile activity.
Whether this will again occur depends less on
Cuba than on the U.S.S.R. If recent events are
any indication, watchfulness and a strong re-
action by the U.S. will be necessary to ensure
that the U.S.S.R. respects commitments made
during the Cuban missile crisis.
#5--Nationalism. Growing nationalism with anti-
U.S. overtones, which has increased during the
past 18 months and which can be expected to in-
crease further, might well lead some countries
to seek closer ties with the U.S.S.R. as an
assertion of independence from the U.S. However,
it seems highly unlikely that this motive could
lead governments to permit Soviet bases on their
territory. The pressures of nationalism, as we
have noted above, would work against too close
an association not only with the U.S. but with
the U.S.S.R. as well.
#6--Soviet Presence. The intelligence estimate is
that any substantial expansion of the Soviet mili-
tary presence would probably take place only if a
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regime receptive to Soviet influence were in
power. The likelihood of this happening in the
next three to four years does not appear great:
the intelligence estimate is that violent
extremism will be unlikely to result in actual
seizures of power by extremists and that even
though the pressures of nationalism, combined
with latent frustrations, will continue to
increase, governments, as in the recent past,
will be able to deal with their problems.
In summary, the events of the past 18 months have
not, in our opinion, significantly increased the likeli-
hood that the U.S.S.R. will acquire bases in this hemi-
sphere from which it can launch a nuclear attack against
the U.S. There are no indications, moreover, that the
U.S.S.R. is seeking to acquire land bases for such
purposes but we note its recent testing of the possi-
bility of acquiring facilities in Cuba for its nuclear-
armed submarines.
Interest #3--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.
Events Which are Relevant to this Interest
#1--Chile. If Chile were to evolve into a full-
fledged Communist state, possibly even becoming
a satellite of the U.S.S.R., and committed to a
policy of open opposition to the U.S., this could
conceivably erode confidence in the effectiveness
of our leadership. Other nations might believe
that, as the NSSM 15 study put it, "our power had
been diminished" because they consider this hemi-
sphere "as within our 'special preserve'. " This
could lead to loss of influence in Latin America
and elsewhere in the world. On the other hand,
if we overreact, by resorting to extreme measures
of economic denial or use of military force in
an effort to overthrow the Allende regime, for
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example, this would lead to strong resentment
in Latin America, thus reducing the effective-
ness of our leadership. It would also raise
doubts elsewhere in the world about our maturity
and responsibility. By the same token, if we
react calmly and with restraint toward Chile,
this might strengthen confidence in the maturity
and responsibility of our leadership. In this
connection, we note the statement in the intel-
ligence estimate that U.S. restraint with regard
to the Allende regime has generally met with
Latin American approval.
#2--Cuba. Continued observance by the OAS states
of sanctions toward Cuba helps maintain the im-
pression of effective U.S. leadership. However,
support for our Cuba policy has begun to erode
and this in turn could lead to erosion of our
prestige. If we reacted by applying strong
pressure on other OAS members to hold them in
line, we might, if successful, limit the damage
to our prestige. But it is also possible that
this would be viewed as interventionism and
would raise doubts about the maturity of our
leadership. By the same token, if we reacted
with moderation, this could conceivably strengthen
the impression of mature and responsible leader-
ship.
#3--Revolutionary Activity. The U.S., by refusing
to become unduly alarmed over continued terrorist
activity with anti-U.S. overtones, including kid-
napping of U.S. officials, has demonstrated mature
and responsible leadership.
#4--Authoritarianism. Authoritarian, but not left
extremist, regimes would not have a significantly
adverse effect on this interest. However, the
existence of additional left extremist regimes,
given that such regimes would be more likely to
adopt anti-U.S. postures, could adversely affect
confidence in our leadership. The emergency of
such regimes might be possible in Chile, Peru, and
Bolivia. At the same time, overreaction on our
part to such a development would, as in the case
of Chile described above, lead to resentment in
Latin America and raise doubts about our maturity
and responsibility.
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#5--Nationalism. The growth of nationalism with
anti-U.S. overtones has undoubtedly had some
adverse effect on U.S. prestige in the hemisphere
and elsewhere. But it can also be argued that,
by reacting with calm and restraint to this un-
pleasant phenomenon, we are demonstrating maturity.
We would also be presenting a smaller target. In
any event, nationalism with anti-U.S. overtones
has so far not in our view attained a level which
would seriously threaten U.S. leadership in the
hemisphere.
#6--Soviet Presence. To the extent that the
maintenance of Latin America as a U.S. sphere of
influence contributes to an image of power and
inspires respect, the recent and anticipated
expansion of the Soviet presence could damage
our prestige, since nations elsewhere in the
world might conclude that our influence in the
hemisphere was diminishing. Here again, however,
it can be argued that, by viewing this develop-
ment calmly, taking the position that, so long as
it behaves, the U.S.S.R. has a right to maintain
a presence in Latin America, the U.S. will favor-
ably influence attitudes about the maturity and
responsibility of its leadership. By the same
token, overreaction in the form of putting strong
pressure on Latin American governments in an ef-
fort to prevent them from establishing relations
with the U.S.S.R. could create resentment and
damage the effectiveness of our leadership, and
would probably fail in any event.
12--Investment. Conflict which has arisen from
expropriation of U.S. property by Latin American
governments has a potential for seriously damaging
confidence in our leadership. If governments
seize our property with impunity, an impression
of weakness is created. On the other hand, if we
react by imposing punitive measures, we create
resentment in other Latin American countries, thus
reducing the effectiveness of our leadership. We
also raise doubts elsewhere about the maturity of
our leadership.
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#13--Territorial Sea. Growing conflict over this
issue between the U.S. and a growing number of
Latin American states could damage the effective-
ness of our leadership. It could also have an
adverse effect on our prestige elsewhere in the
world.
In summary, the events of the past 18 months have
not, in our opinion, seriously damaged confidence in
U.S. leadership. However, there are a number of de-
velopments which may occur in the years immediately
ahead which would severely test U.S. leadership.
Among these are the increasing commitment of Chile to
a policy of open opposition to the U.S.; increasing
erosion of Latin American support for our Cuba policy;
intensification of terrorism and nationalism with anti-
U.S. overtones; and conflict over U.S. investment and the
territorial sea. Our leadership will be judged, both
in the hemisphere and elsewhere in the world, by the
maturity and the skill we display in dealing with
these trends.
Interest 4--Maintenance of access to the Panama
Canal, including under existing circumstances its
protection and control by the United States.
Events Which are Relevant to this Interest
#5--Nationalism. Nationalism in countries other
than Panama is not likely to constitute a threat
to access. The intelligence estimate is that
Torrijos' tendency to be rather hostile toward the
U.S. and his impatience for canal talks, reinforced
by Panama's growing economic problems, could result
in an ostentatious move toward the Soviet bloc if
negotiations are long delayed or become deadlocked.
He may also threaten to unleash anti-U.S. demonstra-
tions. On the other hand, high Panamanian officials,
including General Torrijos, are fully aware of the
economic importance to Panama of an efficiently run
canal and would be unlikely to allow that interest
to be seriously threatened. They are also aware
of our interest and determination in ensuring the
continuing operation of the canal. In conclusion,
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while there may be some incidents that would inter-
rupt the operation of the canal, it is unlikely
that developments will occur which will seriously
impair this interest.
#6-- Soviet Presence. The Soviets have engaged in
a cautious test of the U.S. in the Caribbean area
during the past 18 months, including construction
of a naval support facility near Cienfuegos, dis-
patch of naval reconnaissance planes to Cuba on
occasions, Soviet naval visits into the Gulf of
Mexico, and port visits to Caribbean islands. How-
ever, there are no indications that the U.S.S.R. is
SO foolhardy as to seek to interfere with access to
the canal in peacetime. While the situation in Costa
Rica bears watching, we do not foresee developments
which would increase the U.S.S.R.'s capability of
interfering with access or blocking the canal in
wartime.
In summary, none of the events of the past 18 months
appear to us to have placed access to the Panama Canal
in jeopardy. So far as the future is concerned, na-
tionalism in Panama itself, where Torrijos may react
violently if he is not satisfied with progress in the
talks, could strain our defense and operation of the
canal.
Interest 5--Preservation and Strengthening of the
Inter-American system, including its collective
security functions.
Events Which are Relevant to this Interest
#1--Chile. As we have noted above, Chile will
pursue a policy in the OAS of seeking to promote
opposition to U.S. policies and leadership. On
the other hand, if Chile were known to be promoting
subversion in other countries or seeking closer ties
with the U.S.S.R., this could conceivably arouse
alarm throughout the hemisphere and strengthen the
inter-American system, perhaps leading, among other
things, to increased interest in the collective
security functions of the inter-American system.
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The net impact of developments in Chile on the
inter-American system will depend on which of these
factors, one working to weaken the system, the
other to strengthen it, will have the greater
influence on the other members. We conclude that
the net impact will be adverse.
#2--Cuba. Cuba's influence in the hemisphere has
declined and its ability to promote opposition to
U.S. policies and leadership in the OAS has also
declined. On the other hand, to the extent that
the fear of Cuba recedes, the other countries,
desirous of manifesting independence of the U.S.
and of mollifying their leftist elements, may
become less willing to support the OAS sanctions
policy. This creates a possible area of conflict
which could weaken the inter-American system.
#5--Nationalism. Nationalism as an emotional
force tends to becloud issues and thus impedes
rational discussion of these issues in an inter-
American forum. To this extent nationalism weakens
the inter-American system. Where a sense of na-
tionalism assists a government to perceive its own
interests more clearly, to this extent it can
serve to strengthen the inter-American system.
The growing force of nationalism, whether it en-
hances or damages the inter-American system on a
given issue, will probably bring changes in the
system as we now know it with unpredictable con-
sequences for U.S. interests in the hemisphere.
We conclude that nationalism will become an in-
creasingly important factor in determining the
future character of the inter-American system,
including the possibility of accentuated bipolari-
zation-with possible benefits for as well as
losses to the system as a whole.
#6--Soviet Presence. This is not a threat to the
inter-American system. With the exception of Chile,
those Latin American countries which have estab-
lished ties with the U.S.S.R. have done this in
the hope of promoting trade or as means of appeas-
ing leftist elements in their societies or assert-
ing independence of the U.S., without manifesting
lessened attachment to the inter-American system.
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#10--Multilateral Aid. The increased U.S.
emphasis on multilateral channels for our
development assistance has led to more emphasis
on and resources for several inter-American
institutions, foremost among them, CIAP, the
IDB, and the economic, social, and cultural
programs of the OAS. It is too early to measure
the full significance of this new emphasis for
the inter-American system as a whole; it is
clear, however, that the individual institutions
have benefited.
#11--Trade Policy. Latin American countries
have increasingly adopted the viewpoint that
their trade problems require joint action, and
they have seen in the OAS a suitable forum
both for joining forces and for confronting
the United States over its trade policies.
These pressures have resulted in the establish-
ment of a special organ of the OAS for this
purpose (SCCN), in which the Latin American
countries expect that the U.S. will be forth-
coming in its dealings with them. The support
for the inter-American system which this has
implied on our part has unfortunately been over-
shadowed in Latin minds by the growing pro-
tectionist mood generally in this country and
in particular the absence thus far of a generalized
preference system. To the extent that Latin
Americans conclude that this mood more accurately
reflects our intentions toward the hemisphere
than actions we might take in SCCN, the inter-
American system itself will suffer some loss
of prestige and confidence.
#13--Territorial Sea. Differences among a
growing number of Latin American countries, and
with the U.S., on the extent of the territorial
sea will constitute a serious test of the
inter-American system.
In summary, events of the past 18 months have
not, in our opinion, caused any significant weakening
of the inter-American system. However, there is a
potential for future trouble which will require
careful attention. Developments in Chile could
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cause Chile to become a seriously disruptive force
in the inter-American system. In these circumstances,
the situation could become exacerbated if the U.S.
were to play its hand badly. Assuming U.S. restraint,
the worse Chile behaves, the more likely is it that
the other countries will draw together in the OAS,
seeking the protection of its collective security
guarantees. Another source of contention will
probably be the issue of the territorial sea.
Interest 6--Unimpeded transit for United States
forces on the high seas and in international air
space in the area.
Events Which are Relevant to this Interest
13--Territorial Sea. It has not been determined
whether the assertion of a 200-mile territorial
sea would be used to impede transit in super-
jacent international air space. However, if
the view of those countries which claim a 200-
mile territorial sea were to prevail, this
would constitute an extremely serious threat
to unimpeded transit on the high seas.
Interest #7--Mutually beneficial economic inter-
change, including reasonably favorable trade
and investment climates.
Events Which are Relevant to this Interest
#1--Chile. The events in Chile seriously threaten
the investment climate in that country. Success
by Chile in expropriating U.S. firms might
encourage other countries to follow its example.
#5--Nationalism. This factor is best assessed
under the heading of investment. (See #12 below.)
#9--Continued Social Tension. Continued social
tensions resulting from slow economic progress
have promoted and will continue to promote
economic nationalism, with consequent unfavorable
implications for the investment climate.
#11--Trade Policy. Our efforts to advance Latin
American interests in the field of tariff pref-
erences and our commitment to consultation in
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the SCCN have contributed to the maintenance of
a favorable trade climate. However, continued
protectionist tendencies in the U.S. and delays
by the U.S. in implementing its plan for
generalized LDC preferences have worked in the
opposite direction.
2--Investment. Growing economic nationalism
in Latin America poses a serious threat to the
maintenance of a favorable investment climate.
U.S. restraint in reacting to expropriation,
particularly its refraining from invoking the
Hickenlooper Amendment against Peru, has
mitigated the damage to our relations in the
hemisphere. On the other hand, it may have
encouraged some countries to impose tougher
curbs on U.S. firms.
In summary, this interest appears threatened
mainly by two developments, the deteriorating climate
for American investment in several countries and the
persistence of protectionist tendencies in the U.S.
Interest #8--Denial to hostile powers of bases
in Latin America that would enhance their non-
strategic military capabilities.
Events Which are Relevant to this Interest
#1--Chile. A potential threat to this interest
would arise if Chile were to provide sea trans-
port facilities operated in large part by Soviet
personnel since these would have a potential
military application. However, Allende has given
no indication he would welcome such a relation-
ship with Moscow. It seems likely that the
Soviets are more interested in using Chile 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 relation-
ships with such states as Peru, Argentina, and
Brazil.
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#2--Cuba. The USSR already has this kind of base
in Cuba.
# 3--Revolutionary Activity. There is no present
likelihood that this will bring to power regimes
which would permit hostile powers to establish
such bases on their territory.
#5--Nationalism. The assessment of this event
under Interest #2 is applicable here as well.
#6--Soviet Presence. The Soviets can be expected
to give careful consideration to opportunities
that might be presented, should a Latin American
country be receptive, for the establishment of
a Soviet military or naval facility. The estab-
lishment 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.
In summary, except for Cuba and possibly Chile,
there is no present threat to this interest and none
foreseeable over the next three or four years.
Interest #9--Continued access to bauxite in
Jamaica and petroleum in Venezuela.
Events Which are Relevant to this Interest
# 12--Investment. Economic nationalism in
Jamaica (which may possibly be spurred by the
example of Guyana to move toward expropriation
of U.S. bauxite interests) and in Venezuela
(which has imposed a retroactive production tax
on U.S. oil producers) could conceivably develop
into a threat to continued access to these two
raw materials.
Interest #10--Protection of the large number of
U.S. citizens who live in, visit, or have economic
ties in Latin America.
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Events Which are Relevant to this Interest
#3--Revolutionary Activity. Although violent
extremism presents no threat to existing regimes,
it could lead to uprisings, kidnappings or other
forms of violence that could endanger the lives
of U.S. citizens. (In fact, several private
U.S. citizens have been the victims of terrorist
kidnappings in Latin America.)
#5--Nationalism. Although the anti-U.S. mani-
festations of nationalism have not yet led to
the creation of a climate so unfavorable as to
constitute a threat to the security of U.S.
citizens, this is a possibility which cannot
be ruled out.
#7--Black Radicalism. The assessment of Event 3
above is also applicable here. In fact, the
possibility that U.S. citizens might be endangered
by sudden violent uprisings is probably greater
in the Caribbean than elsewhere because of the
larger number of U.S. residents and tourists
in this area (the black uprising in Trinidad
in 1969 is an example).
#12--Investment. Rising economic nationalism
has already endangered important American invest-
ments in several countries and there will un-
doubtedly be other cases of this in coming years
unless new understandings, including conceivably
the adoption of a general investment code, are
worked out with Latin American governments. The
restraint of the U.S. Government's reaction to
expropriations in Peru and Bolivia has probably
been effective in allaying Latin American fears
of foreign domination. On the other hand, failure
to apply the Hickenlooper Amendment may have
encouraged some countries to impose tougher
curbs on U.S. firms.
In summary, the threat to the welfare of U.S.
citizens has increased somewhat in the past 18 months.
Given unstable political situations and rising
nationalism in a number of countries, a potential
for increased trouble undoubtedly exists and will
continue to exist for some years to come.
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Interest #11--Continued access to certain naval
and air bases and facilities in the area.
Events Which are Relevant to this Interest
#3--Revolutionary Activity. Although there have
been no such cases to date, it is conceivable that
terrorist groups could sabotage or otherwise
interfere with access to such facilities.
#5--Nationalism. So far nationalism has not led
any Latin American government to withdraw base
rights, although it has been a factor in influencing
decisions to reduce our holdings. Growing
nationalism will probably result in continuing
pressure for reduction of our base rights.
#7--Black Radicalism. The assessment of Event 3
above is also applicable here.
III. Assessment of Adequacy of Current U.S. Policies and
Programs and Recommendation of Courses of Action
Introductory Note
In this section, we shall assess the adequacy of
current U.S. policies and programs in the light of the
foregoing analysis of the impact of the events of the past
18 months on our Latin American interests and make policy
recommendations when this seems indicated. The policies
we shall be considering here are individual and subsidiary
elements in the broad general policy adopted by the Nixon
Administration in 1969. That policy can be defined as
the effort to transform the character of the special
relationship from one which the NSSM 15 study described
as "uneasy hegemony" to one of "mature partnership."
We adopted the new policy because we were convinced
that the old policy of hegemony did not reflect the forces
of change which have been sweeping through the Western
Hemisphere and that a special relationship based on a
policy of hegemony, however benign, could not be maintained
in the face of the nationalism, with anti-American overtones,
which had emerged as a major political force in Latin
America. This historic change in policy was made in full
consciousness of the risks that attended it. It was
recognized that some of the Latin American nations,
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sensing new impulses to experiment with political models
of a more extreme character in an effort to solve the
problems of their societies, might adopt courses that ran
counter to our interests. It was also recognized that the
new policy would be extremely difficult to carry out,
requiring as it did the shedding by both sides of deeply
ingrained attitudes and habits. Nonetheless, careful con-
sideration of alternative policies led to the conclusion
that the alternatives carried even greater risks.
IG/ARA believes that this conclusion is still valid
today and that the broad policy of "mature partnership"
should be continued. It is conceivable, however, that
within this broad policy framework subsidiary policies and
programs may need revision in the light of recent events.
It is the adequacy of these subsidiary policies that the
following section assesses.
NSSM 108 asked for a reappraisal of the assumptions
which underlay the Administration's Latin American policy.
As we have seen, one of the central assumptions of that
policy is that a "special relationship" exists between the
U.S. and Latin America and that this relationship is in
our interest and should continue. In response to the
President's directive, we have given a good deal of
thought to the fundamental question whether the concept of
a special relationship, however modified to accommodate
Latin sensitivities, is still essential to United States
interests and indeed whether it is consistent with the
concept of a mature partnership. We considered such
questions as whether, on the one hand, geographic proximity
and strong ties of history and tradition create a special
relationship whether we like it or not and whether, on the
other hand, there is not something patronizing about our
insistence on the existence of a special relationship
which flies in the face of our announced desire to establish
a relationship of political equality with the nations of
Latin America; whether indeed, given the enormous disparity
of power between the United States and Latin America, a
special relationship is possible which would not be
dominated by the United States, thus negating that mutuality
of interest which is the presumed justification of the
special relationship. It also occurred to us that the
substance of the special relationship may be less significant
than the way we talk about it publicly.
We came to no final conclusions on this question.
It
is SO complex and requires such detailed and extensive
analysis that it would not have been possible to do it
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justice within the time allotted for the NSSM 108 study.
Nonetheless, the question is of such fundamental importance
for our relations with Latin America in an age of rapid
change and rising nationalism that we believe the Adminis-
tration should devote a special study to it upon the
completion of the NSSM 108 policy review.
1. Internal political developments and bilateral
political relations.
NSSM 108 speaks of "measures to improve bilateral
political relations" with selected nations. It also speaks
of "differential approaches" to nations and subgroupings.
These are not clearly defined concepts. What we take them
to mean are positive expressions of favor by which we seek
to influence the attitudes and behavior of certain categories
of country more strongly than others.
Our present policy on bilateral political relations
nas not been clearly articulated but can be deduced from
our practice. In theory, we observe the most favored
nation principle, which is consistent with the principle
of the sovereign equality of states on which the OAS is
founded. In actual practice, our policy has a strong
traditional element of what can be called pragmatic dif-
ferentiation. Because of purely pragmatic considerations
of proximity, size, security, or shared interests, we
have traditionally sought to maintain closer and more
cordial relations with some governments than with others
and continue to do so. By the same token, some subregional
groupings assume greater importance for us than others.
Thus, to illustrate, our relations with Mexico, because of
its proximity, size, and the current orientation of its
government, are probably closer than those with any other
country in the hemisphere. We also attach particular
importance to our relations with Brazil because of its
size, potential and economic dynamism. Colombia and
Argentina are important to us because of their size and
potential and Venezuela and Jamaica because they control
important raw materials. Panama is important because of
the canal. Currently, Chile is important because of the
problem presented by the first elected Marxist government
in the hemisphere. In addition, developments in the
Caribbean basin have greater sensitivity for us because
of its proximity than do developments on the continent of
South America. We reflect these varied interests and
degrees of importance in our diplomatic relations in an
entirely pragmatic and individual way without following one
single yardstick.
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From time to time, there have been temporary departures
or partial departures from this policy of pragmatic dif-
ferentiation. Thus in the 1960s we tried to use various
policy tools, such as the withholding of diplomatic
recognition and economic aid, to promote social reform
and political democracy in Latin America. In 1969 this
policy was tacitly abandoned with the adoption by the NSC
of a policy of "circumspect pragmatism", that is, of
dealing "realistically with governments as they are." The
latter policy was in keeping with the conclusions of NSSM 15
to the effect that our attempts to utilize such tools as
the withholding of diplomatic recognition and economic and
military aid to promote representative democracy had
failed, that institutional forms of North American rep-
resentative democracy may be ill-suited for much of Latin
America, that our ability to effect political change in
other countries is extremely limited, and that if Latin
American political attitudes and institutions are to change
at all, they must be changed by Latins in Latin style and
at a Latin pace.
If we were to abandon our traditional policy of
pragmatic differentiation and adopt a conscious policy
of differentiating in our policy toward individual Latin
American countries or sub-regional groups in accordance
with certain arbitrary criteria, the following are the
principal considerations among which we might choose in
determining where to concentrate our efforts:
a. The extent to which the country is favorably
disposed toward the United States, shares our attitudes
toward key problems, and/or is prepared to support our
position in international forums.
b. The extent to which the country supports an open
internal political system as opposed to an authoritarian
one.
C. The extent to which it appears stable and likely
to continue to be able to control internal for S inimical
to U.S. interests.
d. The relative size, importance, and influence of
the country in the Latin American context.
e. The degree of its effectiveness in pursuing
economic and social development.
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f. The presence in the country of natural resources,
base rights or other facilities important to the United
States for security reasons.
g. Its geographical proximity to the United States.
The following are some of the kinds of techniques
that might be utilized if one were to differentiate.
-- public evidence of favor, in the form of exchanges
of visits by heads of government and other important
officials, and favorable public statements by
important officials;
private evidence of favor, in the form of consul-
tation on important multilateral issues and
exchange of correspondence between heads of govern-
ment and other important officials;
-- granting or withholding of bilateral economic,
technical and military aid;
-- entering into military or mutual assistance pacts;
-- granting or withholding of diplomatic recognition.
Not all of these techniques would necessarily be
appropriate to all of the various options we have cited.
Furthermore, some of them would be of dubious utility in
any event. For example, the opportunity to use bilateral
assistance for political ends, at least over the longer
term, is clearly reduced by the decision to channel our
development assistance through multilateral institutions
and to seek to avoid using development loans for short-
term political considerations (NSDM 76). The degree to
which, over the short run, a continuing bilateral assist-
ance program can be utilized for purposes of "differentia-
tion, " may be restricted by the new organizational arrange-
ments for foreign assistance. Military assistance is a
flexible means for effectively implementing a policy of
differentiation, but it is also likely to entail accompanying
political costs.
A policy of constant or automatic differentiation on
the basis of any one of the above-listed considerations
would have serious limitations. It could markedly reduce
our capability of flexible response to other listed con-
siderations and to specific threats to U.S. interests.
In addition, it would be extremely difficult to define in
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meaningful operational terms what we meant by such words
as "favorably disposed, " "stable," "forces inimical to
U.S. interests,' etc. Furthermore, certain of these
considerations are too transient to permit any effective
formulation or application of long-range policy tied to
them.
We conclude that the present policy of observing the
most favored nation principle in our formal diplomatic
relations with the other nations of the hemisphere while
in actual practice maintaining closer relations with
some nations than with others on purely pragmatic grounds
has been on the whole successful and has given our
diplomacy desirable flexibility.
Recommendation: Our present policy of differentiating in
our bilateral relations with the countries of Latin
America on pragmatic grounds provides us with the greatest
flexibility in our political relations and should be
continued. The same pragmatic considerations should guide
us in our relations with sub-regional groupings, such as
the nations of the Andean Pact, the Central American
Common Market and the Caribbean Basin.
2. Chile
Our present posture toward Chile was well-described
by President Nixon in his recent television interview.
The President said that what happened in Chile "was the
decision of the people of Chile, and that therefore we
accepted that decision and that in our programs with Chile
we still recognize the government and we still have our
People-to-People Program and we still have our Peace Corps
programs. Those programs will continue as long as Chile's
foreign policy is not antagonistic to our interests."
We recognized the "right of any country to have internal
policies and an internal government different from what
we might approve of. What we were interested in was their
policies toward us and in the foreign policy field."
Our policy toward Chile is spelled out in NSDM 97.
Our assessment of the implications of recent events gives
us no reason to question the adequacy of this policy.
Our behavior toward Chile has given the Chilean government
no basis for adopting a policy of hostility toward us or
of drawing closer to the U.S.S.R. in a protective reaction.
Consequently, if Chile should become hostile, it would be
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difficult to argue that we drove her to it. Moreover,
our moderation toward Chile has won the approval of the
other Latin American countries; a policy of active opposi-
tion would undoubtedly have had the opposite effect.
Recommendation: The present policy toward Chile should
be continued so long as Chile does not embark on a course
of deliberate hostility toward us or toward its neighbors.
3. Cuba
Our present policy toward Cuba is one of isolating
Cuba and maintaining the 1964 OAS sanctions. Our assess-
ment of recent events supports the adequacy of this policy.
It has been a factor in limiting Cuba's ability to export
its revolution. However, the OAS policy of sanctions
toward Cuba is meeting resistance from some other Latin
American countries.
Recommendation: Our present policy toward Cuba should be
continued unless final action on NSSM 32 (which is still
pending) results in another decision. However, in view
of the intelligence estimate that antagonism toward Cuba
in the hemisphere is likely to decline further and that
pressures among other Latin American countries to re-
examine hemispheric policy toward Cuba are likely to
increase, we should keep our own policy under continuing
review.
4. The Soviet Presence
In 1943 the U.S. actively supported the establishment
by the Latin American nations of diplomatic relations with
the U.S.S.R. as a measure of cooperation during the
critical days of World War II. The basis of our present
policy toward official permanent Soviet and other Communist
country presence in Latin America is a preference that this
presence be as limited as possible, although we are not
opposed to normal Latin American trade with the U.S.S.R. or
other Warsaw Pact countries. Our main reason for opposing
official permanent Communist country presence in Latin
America is that it facilitates Communist influence as
well as Communist penetration for purposes of subversion,
espionage and illegal political activity. In expressing
our opposition to the recent establishment of Soviet
missions, we have tailored our representation to the
political equities of each situation.
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Further, our present policy does not seek to per-
suade host governments to terminate the Soviet presence
in their countries. Instead we emphasize doing what we
appropriately can to minimize the influence of Soviet
missions in host countries and calling attention to illegal
activities engaged in by Soviet diplomatic representatives
when we have knowlege of such cases and urging their
expulsion. We leave to the judgment of individual missions,
the decision as to what action if any should be taken to
convey U.S. views on this question to Latin American
officials and leaders. However, concern is not to be
expressed to host governments solely over an increase in
trade with Communist countries or the purely trade
promotional efforts of Communist commercial missions.
This policy was last enunciated in May 1970. We
regard the notable increase in Communist government diplo-
matic representation in Latin America during the past
few years as contrary to our interests and as a setback
for this aspect of our Latin American policy. We attribute
our lack of success primarily to (1) the Latin American
nations' desire to exercise their sovereignty and play a
more important role on the world scene, rather than merely
leaving the Soviets for the U.S. to deal with on their
behalf; (2) their perceived political need to mollify the
growing leftist elements in their societies; and (3) the
illusion that relations with the U.S.S.R. will bring in
its train economic benefits. These factors are essentially
beyond U.S. control or ability to influence decisively.
In the light of these circumstances, the U.S. has been
unwilling to make the question of the establishment of
diplomatic relations with the U.S.S.R. a major issue in
its relations with those Latin American nations who were
contemplating such a move, for we believed that such
an effort would not only fail but would also be counter-
productive.
Our policy of low-key representations to remind host
governments, where Soviet diplomatic establishments exist,
about the security problems that such presence creates
has resulted in greater awareness of the security danger.
We conclude that our opposition to official permanent
Communist country presence in Latin America has failed
for the reasons described above to persuade Latin
American nations that their interests lie in the same
direction. We also conclude that our opposition is un-
likely to prevail in the future but that the increasing
Soviet presence is of sufficient concern to us to warrant
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our continuing close collaboration with the host govern-
ments to minimize the adverse effect of such presence.
Recommendation: That we continue our efforts to impress
upon host governments the security considerations posed
by Soviet presence; ensure close liaison with host
governments on the nature and extent of Soviet activities;
and be prepared to respond favorably to host government
requests for assistance to counter such Soviet activities
as they believe inimical to their interests.
We accept the conclusions of the security working
group on the adequacy of our policies toward Soviet
military activities in the hemisphere.
5. Western European and Japanese Presence
There does not at present appear to be a clearly
articulated U.S. policy on what our attitude should
be toward Western European-Japanese presence (cultural
contacts, trade, investment, military assistance and
arms sales, etc.) in Latin America. The NSSM 15 study
gave this question some attention and concluded that
"given the overall congruity of world outlook between
the U.S. and its Western European allies, expanded con-
tacts between Latin America and these nations should
contribute to the furthering of broad U.S. goals. More-
over, they would help to dilute the intensity of U.S.-
Latin relations in a period of heightened friction over
a wide range of subjects. More cultural contacts and
economic aid from Western Europe should benefit the whole
set of relationships." However, we have seen no firm
indications that it has become official policy to look
favorably or otherwise on an expanded Western European-
Japanese influence and presence in the hemisphere as a
complement to our own.
Recommendations: We saw political and economic advantages
in a greater Western European-Japanese presence in the
hemisphere. Politically, this would help reduce the
extreme visibility of our own presence throughout the
hemisphere which has been one of the principal causes
of friction in our relations with the Latin Americans.
Economically, it might possibly lead to increased aid
by these countries to Latin America. However, the
implications of increased Western European and Japanese
trade, investment, military assistance and arms sales in
Latin America seemed sufficiently complex to lead us to
suggest that a separate study of this question be undertaken.
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6. Territorial Sea
The present U.S. policy is to seek a world convention
on the law of the sea covering all aspects of the problem
and in the meantime to avoid concessions which would
prejudice the attainment of such a convention. An in-
creasing number of Latin American countries now claim a
200-mile limit. Although their primary purpose in
claiming a broad territorial sea is to obtain exclusive
control over fishing waters, acceptance of a 200-mile
limit would not only affect U.S. fishing interests but
would also have serious effects on the strategic mobility
of U.S. naval and possibly air forces.
If present positions are maintained on each side,
we shall soon find ourselves on a collision course with
a large and important group of Latin American countries,
with unpredictable consequences for our political
interests in the hemisphere and our law of the sea position.
Recommendation: Pending the achievement of an international
agreement on the law of the sea, we should make a major
effort in Latin America and with the U.S. Congress to
obtain agreement on an interim arrangement that would
alleviate tensions with the Latin American countries re-
lating specifically to fisheries jurisdiction, without
prejudicing our position on the law of the sea.
7.
Information
Following President Nixon's Latin American speech
of October 1969 our information policy shifted from its
former emphasis on publicizing U.S. aid programs to a new
emphasis on stimulating psychological acceptance by the
Latin Americans of the assumption by the Latin Americans
themselves of a primary role in their economic and social
development. USIA also seeks to encourage multilateral
organizations to undertake vigorous and effective informa-
tion programs. It has sought to recast the image of the
U.S. relationship toward the hemisphere from one of
hegemony to one of constructive and responsive partnership.
We do not have enough information to assess the
adequacy of this policy. The policy goal of seeking to
explain and win acceptance of the new policy of mature
partnership is clearly correct. Our shift to this new
policy was dictated by a conviction that the old policy
was hurting our interests in Latin America because of its
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increasing unacceptability to most Latin American nations.
If we are to realize the benefits which we anticipated from
the new policy, it is essential that it be clearly ex-
plained and clearly understood throughout the hemisphere.
What is not certain is whether our information policy is
succeeding in this effort, in particular whether it has
been able to reassure those Latin Americans who fear that
the "low profile" really means loss of interest in Latin
America. What is also unclear is the extent to which
overseas personnel of all U.S. Government agencies under-
stand the new policy and are practicing it in their daily
contacts with the peoples and governments of Latin America.
Recommendation: The emphasis of our present information
policy on promoting understanding and acceptance of our
new policies of the "low profile" and mature partnership
is correct and should be continued. However, an effort is
needed to determine how effective this policy has been
and what changes if any are needed in its implementation.
USIA is in the process of carrying out a major image
survey in Latin America. This survey will be an important
element in orienting our information programs to be
completely aligned with the new policy. An effort should
also be made to determine whether U.S. Government personnel
abroad adequately understand the new policy and are
carrying it out effectively. The new Management Evalua-
tion Group of the Department of State recommended by its
management reform task forces may offer one vehicle for
doing this. Policy statements and visits to the field by
senior officials offer others.
8. Other Policies
Our policies on security, the inter-American system,
aid, trade and investment have major implications for our
overall political relations with the Latin American
countries. These policies have been reviewed in other
sector papers which have addressed their political as
well as technical aspects.
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