Docs 24-48
Montevideo, August 11, 1961, 1 a.m.
/1/Source: Department of State, Central Files, 371.8/8-1161. Confidential. Repeated to Caracas.
148. From Dillon. It would be very helpful here if at appropriate moment near end of conference we could announce that supposedly secret document read by Guevara had previously been furnished to and discussed with Venezuelan Government. Such a revaluation would be of major help in discrediting Guevara. Recognize problem posed by difference in two versions. If Department and Ambassador agree, suggest Ambassador discuss matter frankly with Betancourt to see whether anything along these lines would be practical. Would need decision promptly so as to be in position to act by Monday./2/
/2/August 14.
Sparks
26. Telegram From the Embassy in Uruguay to the Department of State/1/
Montevideo, August 11, 1961, midnight.
/1/Source: Department of State, Central Files, 371.8/8-1161. Confidential; Niact.
155. From Dillon. Would appreciate Department's thinking on best tactics for handling Cubans in closing meetings of conference. Cubans can be expected to ask us whether or not they will be eligible for assistance under alliance. Unless Department has other views I would intend reply that Cuba not member of IDB or IBRD, that Cuba did not approve Act of Bogota and therefore not eligible for social progress fund loans, that US in any event has no intention aiding Cuba as long as Cuban Government controlled by international Communism.
With such an answer we can expect Cuban reply that this proves conference was politically organized to split Cuba from other Latin American Governments and that although Cuba has been prepared to sign final act this made it impossible for her to do so.
Alternatively Cuba may announce firm intention to sign document and then try to imply that by signature they somehow gain right to be assisted. This could pose problem of US and Cuba signing same document. If this should come up I feel we should go ahead and sign making same statement as indicated above. We cannot allow Cuba to wreck conference by tactical act of signature of document satisfactory to US and others.
If neither of these events occur and Cuba remains silent which highly unlikely, I would nevertheless be inclined to include in final statement a paragraph on Cuba along following lines:
"The US Delegation feels that conference is to be congratulated as it has not allowed itself to be turned aside from its [work?] by the attempt of one delegation to inject political issues into this conference. While the opening statement of the Cuban delegate was full of inaccuracies and untruths, in particular regarding the United States, I do not wish to burden this conference with a detailed reply to these false charges. I merely take this opportunity to categorically deny all charges of aggression against the Cuban people. I wish to emphasize that this meeting is not the place to discuss political matters. There is a proper place in our American organization for such discussions. We all know what it is. If the present government of Cuba truly wishes to discuss the Cuban situation they are perfectly aware that the proper forum is the Council of the OAS, and not this meeting."
Particularly desire guidance on challenge to Cuba to take case to OAS.
There is distinct possibility that there may be a public session of some sort on final draft during course of Monday. Therefore prompt reply required for receipt here at conference site no later than 8:00 A.M. Monday. Woodward concurs.
Sparks
27. Telegram From the Department of State to the Embassy in Uruguay/1/
Washington, August 12, 1961, 6:19 p.m.
/1/Source: Kennedy Library, National Security Files, Trips and Conference Series, Montevideo, August 1961. Confidential; Niact. Drafted by Barall, Jamison, and Braddock; cleared by Kerr, Fowler, Sternfeld, Wallner, Coerr, and Korn; and approved by U. Alexis Johnson. A handwritten notation on the source text indicates the telegram was sent to Hyannis Port.
183. IA-ECOSOC for Dillon. Embtel 155./2/ Dept. approves your general approach and suggests following revision your statement to be used your discretion.
/2/Document 26.
Begin Verbatim Text. US delegation has noted politically motivated statements Cuban delegate, replete with inaccuracies and untruths, in particular with regard to US. I do not wish burden this conference with reply these false charges. However, I feel I must reply to the question raised by Cuban delegation as to whether GOC eligible for assistance.
Under Alliance for Progress, there will be drawn together and concentrated for LA substantially increased aid from both US and the battery of aid mechanisms available free world. US does not decide alone eligibility for assistance except with respect to its own agencies. Other free world sources of financing can determine for themselves whether Cuba eligible for assistance and whether meets their separate criteria. However, so long as Cuba is under domination of communism, a system alien and inimical to our own inter-American system, US will oppose access by Cuba to funds provided by US for Alliance for Progress.
Whether GOC signs final document is matter of indifference to GUS. Certainly US delegation has right to question motives of GOC whose delegate, at very inception this conference, charged that entire Alliance for Progress "is a vehicle conceived to separate the people of Cuba from the other peoples of the Americas." GOC has publicly and continuously disavowed its ties to the OAS and has deliberately converted itself into communist state responsive to imperialist designs of Sino-Soviet Bloc. If GOC is now separated from peoples of Americas it has only itself to blame. When Cuba has demonstrated by concrete action its willingness to accept principles and obligations of OAS Charter and remaining solemn agreements of IA system, it can expect assume its place as respected member American family of nations.
US delegation feels conference is to be congratulated for not having allowed itself to be turned aside from its work by attempt of one delegation to inject political issues into this conference. End Verbatim Text.
FYI. Department believes challenge to Cuba to take case against US to OAS should be avoided. Our basic position is that real issue (Communism) is one between rest of hemisphere and Cuba which should be dealt with on initiative members OAS other than Cuba along lines Colombian or other suitable proposal. Moreover, challenge to Cuba use appropriate OAS forum such as ad hoc committee created by 7th MFM long since made and systematically rejected or ignored by Castro regime. Renewal at this time could give impetus to tendency treat problem as one between Cuba and US and weaken efforts toward hemispheric solution.
Since $20 billion figure mentioned in conference encompasses many potential sources of financing including private European capital, recommend you not mention any specific institution or component and avoid impression US unilaterally controls access to all. End FYI.
Rusk
28. Telegram From the Embassy in Uruguay to the Department of State/1/
Montevideo, August 12, 1961, noon.
/1/Source: Department of State, Central Files, 371.8/8-1361. Secret; Priority; Eyes Only. Received in the Department at 7:15 a.m. August 13.
165. Please pass following message to President.
"Dear Mr. President:
For last four days we have been going through hectic merry-go-round typical of Latin American economic conferences which must be seen to be believed. There have been four committees at work each of which has split into two or three subcommittees and they have been considering not only the basic act of Punta del Este to which there have been submitted 79 written amendments, but also 71 other resolutions covering just about every subject under the sun. Decisions made in subcommittee one day are reversed the next and then changed further by full committee. This is same process we went through at Buenos Aires economic conference of 57 but then it took over three weeks compared to ten days for this conference.
Daylight is now appearing and reports of working committees should hopefully be completed late tonight, Saturday, reproduced on Sunday and be considered by general committee of heads of delegations beginning Monday. Results generally follow very closely substance of US draft but with considerable language changes so that each nation can have something it can call its own.
There have only been two points of major substantive importance, the composition of the group of experts and a statement regarding scope of immediate US assistance. Argentina attacked original group of experts as US attempt to infringe sovereignty of Latin Americans. This effectively tied our hands so we backed off, said this was matter for Latins to settle and told our friends among smaller countries that we would favor strongest set-up they could get. Result was small country revolt against Argentina which eventually found herself completely alone. Then came final compromise which is practically identical in substance with our original proposal except that group increased from seven to nine and provision for chairman eliminated. Specific provision also made for use of panels of three so that committee can work on as many as three country plans at once. We had envisaged just such a procedure for our committee of seven.
Problem of US commitment for immediate assistance proved more difficult. This was Uruguayan idea, specifically that of President Haedo whose year in office ends in March and who wants a monument to his term of office. Uruguayan actions have taken on color of pure blackmail and even led to Haedo press statement that Uruguay would withdraw from conference if they could not get satisfaction. They started with proposal that US agree to commit one billion dollars to emergency projects in Latin America between now and end of year. Figure apparently picked because there was US commitment of $500 million at Bogota and this conference at least twice as important as Bogota. They rounded up support from El Salvador, which has behaved poorly here, Bolivia, Haiti, Paraguay and Ecuador although none of others would be problem without Uruguayan push. We said no and negotiated indirectly with Uruguayans for two days using Argentina, Chile, Mexico and El Salvador as go-betweens at various times. Finally I met for two hours this afternoon with Uruguayan Finance Minister and reached agreement which I hope will stick during committee consideration tonight. Substance of agreement is general statement on US willingness to help in short-term projects followed by reference to your message to conference regarding one billion dollars from all US sources in first year of Alliance. There is also statement that US will take prompt action (pro or con) on projects submitted during next sixty days by countries in emergency difficulties. There is understanding that this means only smaller countries and specifically does not include Argentina, Brazil or Mexico. In practice it should mean assignment this fall of about $10 million to Uruguay for schools, health centers and road building. Haedo at one time sent me word that his real price was $20 million but I am sure $10 million will be ample. This whole negotiation was disagreeable in the extreme but Uruguay as host country was in position exert pressure and chose to do so. I imagine part of it may have been Haedo personal pique at your decision not to attend conference.
Cuban resolutions have taken time to handle but have not been serious problem. They have only succeeded in getting in two or three bits of objectionable language which we shall remove during general committee consideration.
Information report was also a problem since experts' draft of general principles was poorly written, objectionable to US and full of political statements which gave Cubans fine opportunity for numerous speeches on political motivation of conference. Final results, however, are satisfactory and meet fundamental US objectives.
In short, conference is proceeding about as we expected roughly on schedule, although Uruguayans today were talking of closing up Thursday instead of Wednesday. Result should be fully satisfactory document and enthusiasm from all sides, but leaving all concerned with hard and continuing task of converting Alianza into concrete action. Final Senate action Monday on foreign aid would be substantial added attraction to conference windup.
Faithfully yours,
Douglas Dillon"
Sparks
29. Telegram From the Embassy in Uruguay to the Department of State/1/
Montevideo, August 14, 1961, 10 p.m.
/1/Source: Department of State, Central Files, 371.8/8-1561. Secret; Eyes Only.
179. Please transmit following message to President:
"Dear Mr. President:
The various committees have now completed their work and the general committee consisting of the heads of delegations will meet at seven tonight, Monday, to arrive at the final conference document. We have been meeting steadily for the past 24 hours with other heads of delegations except for the Cubans in an attempt to clean up the various documents and resolutions and tonight we will have to formalize this action with the Cubans present. In addition, Beltran of Peru, with the strong support of a number of other delegations has prepared a brief hard hitting resume of our work which will be very effective from a public relations point of view. For this reason it will be highly objectionable to the Cubans and since they have not had a chance to see it as yet we can expect a violent explosion from them when it comes up.
We hope to keep to the original schedule and complete our work Wednesday but we will have to have luck with us. Despite what our friends from Uruguay may have been feeding to the press there are no new promises of US aid or new funds and no abandonment of the self-help concept.
Faithfully yours,
Douglas Dillon"
Sparks
30. Telegram From the Embassy in Uruguay to the Department of State/1/
Montevideo, August 16, 1961, 11 p.m.
/1/Source: Department of State, Central Files, 371.8/8-1761. Secret; Priority; Eyes Only.
188. Please transmit following message to President.
"Dear Mr. President:
Conference wound up its substantive work at 3:15 a.m. Wednesday when the general committee completed its approval of short declaration of Punta del Este which was prepared for public consumption in view of length and complexity of basic charter of Punta del Este./2/ Cubans made four or five efforts to amend the declaration but all their amendments were voted down unanimously, except for Bolivia, whose delegation has followed straight communist line throughout conference, clearly taking guidance from the Cubans. Head of Bolivian delegation was sick and out of action throughout conference and this comment does not reflect upon him personally. I was particularly pleased when the conference at my urging accepted unchanged a strong paragraph on promotion of private enterprise rejecting Bolivian motion to substitute the words 'public and private' for 'private'. The close of the conference was remarkable show of solidarity on the part of all except Cuba and Boliva. Final result is, I think, everything we could have hoped for and the Alliance for Progress has now been fully and successfully launched.
/2/For text of the Declaration to the Peoples of America and the Charter of Punta del Este, see Department of State Bulletin, September 11, 1961, pp. 462-469.
Chapter on basic commodities sounds in places like very strong medicine but in every case where it refers to US there are the usual escape hatches which have come to be well recognized in inter-American Conference language. We abstained on two resolutions, one on meat and one on wool, which are in annex of main document, and in each case we were joined in abstention by Mexico. Guevara has had no success in upsetting conference but I do not believe this was his primary purpose. He has by maintaining relatively moderate position during working sessions of conference made it considerably more difficult for any early action along lines of Colombian initiative. I am convinced that his primary purpose here was to forestall such action. In this I am afraid he has had considerable success.
In the substantive work of the conference we received our most continuous and useful support from the large Brazilian delegation which was very strong and which on all substantive issues had no hesitancy in standing with us against Cuban amendments. The Brazilian delegation tried to offset this support by dining and lunching with Guevara a number of times. However they never once supported a Cuban initiative of any sort. We also had fine and helpful relations throughout conference with the Argentine and Mexican delegations. The Mexicans were very helpful on number of occasions which contrasted very favorably with their completely passive attitude at Bogota. Alemann of Argentina was outstanding among Latin Ministers in helping direct course of conference. Beltran of Peru and chief Chilean delegate Figueroa were also most helpful throughout, although Peruvian delegation as a whole was weak and unreliable. We also had help at important moments from Colombian and Venezuelan delegations both of which were of a high order. The other delegations, with the exception of Bolivia and Uruguay, were all friendly and behaved about as could be expected. The Uruguayans while not at all pro-Castro were extremely difficult on all sorts of items throughout the conference. The unsuccessful efforts to blackmail us into a promise of definite sums of short term aid marked low point of conference as far as I was concerned.
We will be leaving Montevideo early Friday and I will see Betancourt Saturday morning and lunch with him. We will arrive Washington Saturday evening.
Faithfully yours,
Douglas Dillon"
Sparks
31. Editorial Note
At 2 a.m. on August 17, 1961, the head of the Cuban delegation to the IA-ECOSOC conference, Ernesto "Che" Guevara, contrived to meet the Assistant Special Counsel to President Kennedy, Richard N. Goodwin, at a party given by a Brazilian diplomat in Montevideo. The two spoke for approximately 3 hours. Goodwin made clear to Guevara that he had no authority to speak for the United States Government but would convey Guevara's ideas to the appropriate people in Washington. Guevara expounded on the nature and problems of U.S.-Cuban relations. He repeated his condemnation of the Alliance for Progress. The previous day at the closing session of the conference, he had characterized the Alliance as an instrument of U.S. economic imperialism, which was doomed to failure by its reliance on the privileged governing classes in Latin America to implement reforms. For Goodwin's account of the meeting, contained in his August 22 memorandum to President Kennedy, see Foreign Relations, 1961-1963, volume X, Document 257, and Remembering America, pages 195-202.
32. Memorandum From Secretary of the Treasury Dillon to President Kennedy/1/
Washington, August 25, 1961.
/1/Source: Kennedy Library, National Security Files, Alliance for Progress. Official Use Only.
SUBJECT
Immediate Steps in Furthering the Alliance for Progress
In order to maintain the momentum of the Alliance for Progress created at Punta del Este, and also to make good on the commitments which were made to act promptly on emergency and short-term projects, I believe there are several steps which should be taken so that we can exercise the necessary leadership over the next few months while the new aid agency is being established. These recommendations reflect not only my views but also those of Secretary Rusk and ICA Director Labouisse.
1. It is of primary importance that the quality of U.S. personnel working on our aid programs in Washington and in the field be improved, starting with the selection of an imaginative, knowledgeable and energetic person to serve as the head of the Latin American Bureau of the new aid agency. Meanwhile, I believe that the actions outlined below should serve to maintain the momentum which is required.
2. We should immediately inform all our missions in the participating Latin American countries of the understandings reached at Punta del Este so that they can effectively work with the other governments, especially in the field of emergency and short-term measures. The draft of a circular message is now under discussion between State, Treasury, and ICA/AID. When the aid legislation has been enacted, there should probably be a regional meeting of senior Washington and field personnel involved in carrying out the Alliance for Progress so that our objectives and methods can be fully explained and considered.
3. We should begin immediately to press the Secretary General of the OAS, the President of the Inter-American Development Bank and the Executive Secretary of ECLA to prepare the list of experts on the basis of which IA-ECOSOC will elect the new 9-man committee of development experts, which is to evaluate and make recommendations on long-term development programs. I believe it would be very helpful if the process of reviewing long-term programs could be started within the next two or three months for one or two countries where such programs are well advanced. I suggest that Mr. Labouisse, Assistant Secretary Woodward, and Ambassador Morrison might give this matter their personal attention.
4. The Charter of Punta del Este states that the United States stands ready to act promptly on applications for emergency financial assistance and urges the Latin Americans to make their applications for such assistance, to meet existing situations, within the next 60 days. There is already a temporary inter-agency committee under the chairmanship of Assist-ant Secretary Martin to coordinate views on requests for assistance, pending establishment of the aid agency. This committee should be retained, with the addition of the U.S. Executive Director of the IDB, Mr. Cutler. To assure that applications for assistance are given appropriate political consideration and that bureaucratic delays will be overcome as rapidly as possible, the group should be supplemented by a policy committee under the chairmanship of Under Secretary Ball, including Messrs. Woodward, Leddy, Linder, Martin, Coffin and Goodwin.
5. These emergency needs will have to be met out of Contingency Funds unless the applications meet the legislative criteria for Development Loans or Development Grants or qualify for Export-Import Bank loans.
6. A directive should be issued requiring that this committee be informed of all Latin American aid requests of any kind to U.S. officials.
7. I suggest that the Martin group should make a prompt survey of basic projects in a few of the smaller countries which might be moved quite rapidly.
8. We should inform the U.S. Executive Director of the Inter-American Development Bank that the U.S. will strongly support the large-scale self-help housing program, of the order of perhaps as much as $100 million, which the Bank's staff is now considering. We should support a promotional effort by the Bank to secure good applications and prompt arrangements to expand technical assistance for the carrying out of such projects.
9. Within the next few weeks we should negotiate with the Secretary General of the OAS an over-all agreement enabling us to finance, with the $6 million social progress money earmarked for OAS activities, the various task forces on education, health, land reform and other self-help measures which were provided for in one of the resolutions adopted at Punta del Este. Ambassador Morrison, with the assistance of ICA and ARA, should be requested to take the lead in this matter, under the general guidance of the Martin Committee.
10. We should request our missions to report on the status of self-help measures in the participating Latin American countries as well as long-term development programs which may be approaching the stage of financing. I suggest that the Martin Committee be asked to take the lead in preparing the necessary questionnaire and in keeping one up-to-date record of actions in this field. Meanwhile, the interested agencies must continue work already started so that we can most effectively relate our aid to progress in self-help and reform measures in the recipient countries.
11. The introduction of self-help measures, such as taxes and land reform, will be an extended process requiring continuous representational efforts and negotiations by our field personnel. This will require reorienting field staffs from the purely Point IV approach that has largely characterized our Latin American missions by increasing their competence in broad economic and social problems and policies. It will mean recruiting people with new kinds of skills and making more efficient use of officers with a capacity for this effort.
Douglas Dillon/2/
/2/Printed from a copy that indicates Dillon signed the original.
33. Memorandum From the President's Assistant Special Counsel (Goodwin) to President Kennedy/1/
Washington, September 28, 1961.
/1/Source: Kennedy Library, President's Office Files, Staff Memoranda, Goodwin. No classification marking.
If the world emerges relatively unscathed from the current series of crises, then one of the most important long-range activities of your Administration will be to place the Alliance for Progress on a sound footing. We have already discussed the desirability of establishing a special fund for Latin America sometime early next year. It is clear that current appropriations will not be adequate to do the job which has to be done. Thus, it is absolutely essential that the next three or four months see this program get off to a good start. We cannot raise living standards in a few months, but we can begin on soundly conceived plans and projects; we can work to ensure that some of the Latin American nations show signs of significant self-help and social reform activity; and we can re-shape the procedures and thinking of our Latin American aid personnel.
All these things--and especially signs of activity on the part of the Latins themselves--are vital if we are to get anywhere with an Alianza fund. This means good people to run the program--especially the regional director in the Aid Agency. This regional director should be more than an area chief for A.I.D. He should be the "Coordinator of the Alliance for Progress"--with authority to direct the U.S. representatives on the Inter-American Bank, to be consulted on ExIm Bank activity, and to run, as far as possible, all the varied aspects of Latin American economic development programs.
It is, as we well know, very difficult to get capable enough people to do this. Nothing is more discouraging than to compare the caliber of people who were drafted into the Marshall Plan effort with those who now run our Latin American Aid program--a program which you have said is comparable in "scope and magnitude" to the Marshall Plan. However, there is one fellow now in the government--John Leddy of Treasury--who could probably do this job. Except for Linc Gordon he is the one person I know of who I would be confident could handle the Alianza in its early stages. It is very possible that there are people on the outside who might even be better, but appointing someone from outside would be an act of faith. In addition, if this program is to get off the ground immediately, Leddy's knowledge of the intricacies of our government (he also worked for Dillon in State), and the vagaries of Latin American economics (he worked on the Act of Bogota as well as the Charter of Punta del Este) would be invaluable. This is by far the best fellow I, or anyone else, knows of for the job.
Doug Dillon would not want him to leave Treasury. He regards him as an invaluable assistant. I am convinced Leddy would take the job if pressed, although his loyalty to Dillon as well as the importance of his present post as Assistant Secretary of the Treasury would make him reluctant. You would have to draft him and that depends on the priority you give to this task.
2. As you know, I am very deeply involved in the day-to-day conduct of Latin American affairs. This involvement is inevitable as long as I am acting as an agent of yours in your effort to re-energize a long dormant and ineffective area of our policy. But such involvement is bound to create some difficulties. My relationship with Woodward is, I strongly believe, of the best; and there remains little, if any, resentment in the Bureau of Inter-American Affairs. He regards me as an aid to his policy, not an obstacle.
However, as long as I deal with Cuban exiles and with other Latins I am bound to be the object of some criticism and even personal abuse. I do not mind this in the slightest. It does not bother me or affect my work. I only point it out as a possible potential source of some embarrassment to you. I attach, as an example, a column which appeared in the Northern Virginia Sun./2/ The story itself is a complete fabrication. I never saw this fellow. In fact, I never heard of him until this story appeared. The quote from an "aide of Woodward" is also mythical. I also get word that the Tom Dodd-HUAC-Human Events crowd has been "looking into my background." Fortunately I was born too late to join anything incriminating.
/2/Not attached.
Dick
34. Telegram From the Embassy in Mexico to the Department of State/1/
/1/Source: Kennedy Library, National Security Files, Countries Series, Mexico, General, January 1961-May 1962. Confidential; Priority.
Mexico City, October 19, 1961, 10 p.m.
Secun 26. For President, Secretary, Ball and Hamilton from Bowles. Although I am reporting separately on over-all results of regional meetings our Chiefs of Mission in Lima and San Jose, I would like to add some special comments on the dilemma we face in regard to the Alliance for Progress.
1) The Act of Bogota, Declaration of Punta del Este, and our own recent aid legislation called for no less than an economic and social revolution throughout Latin America.
2) The prestige and integrity of the Kennedy Administration are deeply committed to an all out effort to make this program successful. Indeed many Latin Americans already refer to the program not as the "Alliance for Progress" but as the "Kennedy Plan".
3) Opposition in Latin America to the determined effort which is required will be more formidable than has been generally assumed in Washington. The governments of most Latin American countries have not yet grasped what this program calls for in the way of economic and social change, nor do the economically privileged groups understand the sacrifices which will be required of them.
The obstacles to change vary from country to country but they are all deep-seated and each will be extremely difficult to remove. Some governments, for instance, feel it is impossible even to consider really basic land reform programs. Whatever they propose to do in this direction is likely to be no more than a gesture. Others are persuaded that a progressive tax system is antagonistic to their tradition, interest and in any event is no one's business but their own. Some others, noticeably Venezuela, which have taken important first steps in land reform and tax reform, will vigorously oppose any proposal to adjust the purchasing power of their currency to that of other trading nations, much less to take measures necessary to stop the flight of their capital overseas. When government officials in these countries are asked why the US should be asked to replace with our dollars those dollars and pounds sterling which their own well-to-do people have been transferring to banks in Switzerland, they show little comprehension.
4) As we press reluctant governments for economic, fiscal and social reforms and reorient our defense policy in Latin America toward greater emphasis on internal security measures and less on old-fashioned prestige building military establishments, we will face strong criticism. Diminished political cooperation from many US oriented governments whose leaders do not in fact accept the need for rapid evolutionary change is inevitable. Many of our Missions are likely to become less effective in government-to-government dealings and support from some Latin American representatives in the United Nations will become less assured.
5) If we carry through with our commitment to this democratic revolution as I believe we must, we will be subjected in country after country to powerful attacks by the local oligarchy which will equate every reform we propose with radicalism. At the other extreme will be the Communists and Castroites who will attempt to equate our reform efforts with some new form of Yankee imperialism. In between will be the bulk of the people, in many cases with able and dedicated leaders, who will support our efforts but who lack funds, organization, and access to radio and news media.
6) With a few exceptions, our Chiefs of Mission and their associates are keenly aware of the implications of this situation. Due in large measure to the straight talk which characterized our meetings, they are convinced of need for a firm and consistent US position and determined to carry their share of the burden in spite of difficulties which they know will be created for them personally. Many of those present with long Latin American experience have been arguing for years in favor of the very approach to which we are now committed. Everyone agrees there will be need occasionally for compromise and expediency. But it is felt that these must be kept to a minimum.
7) Nearly all Ambassadors, however, expressed concern that their efforts to induce even at a reasonable pace social and economic reforms as quid pro quo for US loans, grants and technical assistance may not be backed up from Washington. In other words, they fear that the predictably strong reaction from entrenched conservative Latin American interests will cause us to back away when chips are down, in order to avoid the displeasure of politically friendly governments now in office.
8) The challenge that confronts us is a formidable one. I am more than ever convinced that we have an opportunity in Latin America which conceivably may prove to be a turning point in the whole global situation. If we have the courage and insight to stick to our stated objectives, an increasing number of liberal, strongly anti-Communist Latin American leaders with growing public support will begin to line up beside us. If we exert a great effort now to build fruitful relationships with the rising new political generation, we may even, after a few years of extremely frustrating and explosive change, be able to stand on a much more solid political structure in this hemisphere which will be of inestimable value in dealing with the rest of the world.
9) Assuming that we are in fact determined to carry out the democratic role in which we have presented ourselves, there are several important requirements.
(A) The choice of the regional aid administrator for Latin America under Fowler Hamilton is, in my opinion, one of the most important appointments we will make in a long time.
(B) Closer coordination between all the lending and aid agencies must be assured. Efforts will be made to play the aid against the inter-American Bank, the inter-American Bank against the EXIM Bank, etc. It is essential that these agencies reach agreement on terms of operations, interpretations of the Act of Bogota, the Declaration of Punta del Este, as well as the legislation under which they are operating.
(C) In order to assure this essential coordination and to provide the utmost support for each Ambassador in his negotiations with his host government, we should place a high priority on the development of detailed standards which reflect the Act of Bogota, the Declaration of Punta del Este, and our own legislation. Every effort should be made to secure agreement on these standards, not only in aid but in the inter-American Bank, and other aid groups dealing with Latin America.
(D) Increased attention should be given to the military in all Latin American countries. If they can be persuaded that their support for economic and social reform is essential to the establishment of democratic, anti-Communist, secure societies, they can go far to assure the success of this program. If they fail to see the issues and side with the land-owning oligarchies, the result will be either an end to reform, civil war, or both. Haydn Williams has been a great strength in outlining this situation to the Mission Chiefs. He is confident that we can count on Pentagon understanding and assistance.
(E) There has been much too little emphasis in this area on the food for peace program. This can be a major element in the Alliance, particularly in the rural areas where sixty to seventy percent of the people live. The potentiality of this program in Latin America has scarcely been tapped.
(F) As opposition to economic and social reforms called for by the Act of Bogota develops from Latin American sources, we may expect to see similar criticism develop among conservative groups in the US. I believe that we can deal effectively with this sort of criticism by stressing the fact that we Americans have always believed that every farmer has a right to his own land, that a progressive income tax system which we advocate for Latin America has been well established for half a century in our own country. Why should we heavily taxed Americans be asked to contribute to help nations and governments which are unwilling to help themselves?
(G) Every effort should be made to assist our Ambassadors to meet the difficult pressures which they will surely encounter. Wide publicity for the detailed standards which we must develop in cooperation with the other agencies will be helpful in this respect. They will permit our Ambassadors to stress that we are acting solely on the basis of agreements in the Act of Bogota, the Declaration of Punta del Este which each Latin American Government signed, as well as on the instructions from the US Congress with regard to carrying out these objectives.
Even with such precise standards to which they can point we may and probably will see some Ambassadors declared persona non grata if they do their jobs well. These meetings convinced me that our Ambassadors in Latin America face the toughest assignments during the next few years to be found anywhere in the world. We must be certain they do not personally suffer in their careers for carrying out hard assignments just too well.
A personal letter from the President to each Ambassador in Latin America expressing his understanding of the difficulties they will be called upon to face and assuring them of his support would be most helpful. Such a letter from the President would also be an ideal vehicle for the concise, authoritative statement of our long and short range political objectives under the Alliance which, I believe, is urgently needed. I shall draft such a letter upon my return for your consideration.
Murat Williams' experience in El Salvador made a deep impression on all Mission Chiefs. The new government there is making an earnest if mild effort to carry out the objectives of the Declaration of Punta del Este. As a result it is under extreme pressure from the oligarchy in El Salvador which is centered around fourteen major land-owning families, plus some US citizens with major business interests. This group has started rumors that Williams has been forced to resign, that he has exceeded his instructions, that he has been rebuked by Washington, etc. Williams bluntly stated that although he is willing personally to meet whatever pressures may be involved, he would like my assurance that he would not someday receive a telegram from Washington suggesting that he was taking his job too seriously. I assured him this would not occur and after telephone consultation with Ed Gudeman in Washington asked Jay Cerf, Deputy Assistant Secretary of Commerce, to return briefly to Salvador with Williams to demonstrate that the latter has the administration's full support and to attempt to persuade the American businessmen to adopt a more realistic position.
I am convinced that the Alliance for Progress is one of the most important political and economic opportunities since the Marshall Plan. But it is far more complex, however, than any we have tackled before and a great deal of courage and insight will be required to carry it out. If we effectively meet this challenge we will succeed in bringing about peaceful economic and social revolution in Latin America of enormous world-wide consequence. Most Latin Americans whom I have met do not think we have the guts to do it. I have assured him that we have.
Mann
35. Summary Minutes of Meeting/1/
Washington, November 29, 1961.
/1/Source: Department of State, Interdepartmental Committee on Foreign Economic Policy Files: Lot 65 D 68, Interdepartmental Committee of Under Secretaries on Foreign Economic Policy, Alliance for Progress. Confidential.
INTERDEPARTMENTAL COMMITTEE OF UNDER SECRETARIES
ON FOREIGN ECONOMIC POLICY
[Here follows a list of participants 1-1/2 pages long.]
Alliance for Progress
Under Secretary Bowles presided at the meeting and made the presentation on the Alliance for Progress.
Reviewing the history of US relations with Latin America, he said that one of our difficulties has been that we have continued to think in European terms. We considered that world stability depended on European stability. When we finally realized that Europe was no longer the place where all policy decisions were made, we adapted ourselves to the new look in Asia and Africa, but we continued to take Latin America for granted. We can no longer do that, for a real revolution has come to this area.
The Act of Bogota was a historic document of great importance. It makes clear that Latin American development puts responsibilities on the Latin Americans as well as on us. We will put in money only if those countries have development plans and only if they will take action in such fields as taxes, land reform, prevention of capital flight. Congress has made it clear that it is authorizing us to carry the program forward under the conditions and framework outlined at Bogota.
Mr. Bowles doubts that we have considered in depth the requirements and the implications of the Alliance for Progress. Revolution in depth does not take place just by swapping one set of masters for another. What we are asking is that the philosophy of Jefferson and the social reforms of F.D.R. be telescoped into a few years in Latin America. And these steps will have to be taken against the wills of the rich and influential Latin Americans and the people in power. If the tremendous difference between the rich and poor is allowed to continue, Castro-like movements will rise to power. There will be explosions unless we can help create a liberal centrist dynamism that can operate free of the Left and the Right.
The reforms we want them to make appear very radical to them. We take progressive income tax for granted, but this is shockingly radical to those countries. We also take it for granted that there will be governmental interference in our economy whenever there is a clear need for it such as in time of war. We expect the government to stop capital outflow if it is leaving the country at such a rate as to jeopardize our economy. Those countries allow capital flight until their financial resources are all gone and then they ask us to replace them. Our whole system of land ownership is radical by their standards.
The Under Secretary wondered if we realize the full implications of what we are doing when we ask for these reforms. If this program works out, we will have really independent thinkers on the part of Latin American countries. They will not do whatever we want them to do. We will not always be able to rely on their votes in the UN. What will the US reaction be then? Will we say the whole thing was a mistake? Or will we realize that these are the growing pains of independence?
Mr. Bowles mentioned the cable he sent back from Mexico City/2/ (distributed). In it he pointed out some of the problems we will face and said that our Ambassadors would face a hard test as the programs they espouse run afoul of the best families in the countries to which they are assigned. It is very important that our Ambassadors know they can depend on the Department to back them up. "We have a real bear by the tail," Mr. Bowles said, "and I hope we realize it."
/2/Document 34.
The Under Secretary emphasized that this is not a job for any one agency but involves almost every one in Washington. There must be close coordination. We need to develop standard criteria, otherwise the Latin Americans will play off one agency against another. These criteria must be worked out from the Act of Bogota, the Punta del Este conference, and from our Congressional mandate. Mr. Bowles touched briefly on the roles of some of the agencies--State, USIA, Labor, Commerce, Defense and Treasury.
General Discussion
The major points which emerged in the discussion that followed Mr. Bowles' remarks are summarized below:
Tax Reform. A good deal of the discussion centered on tax reform. Income taxes will be particularly difficult to establish. Tax collections must be improved. Career services should be established to make tax collections. It was pointed out that Argentina has almost doubled its tax revenue without raising taxes one cent--merely by tightening up on collections. We need a good rationale for tax reform which will help sell it to the wealthy and powerful Latin Americans.
The Time Element. The program cannot be implemented and reforms cannot happen overnight, but lots of the Latin Americans expect this.
Preventing Capital Flight. Latin Americans should be given tax privileges for productive investment at home, but it should be made difficult for investment capital to go abroad. This means tighter exchange controls.
How to Bring About Reform. Persuasion--with finesse--will be needed as Latin Americans do not like to be told how to run their economies. Such persuasion can be exerted by utilizing forces other than the US Government, such as the OAS, the Inter-American Development Bank, and the Harvard group which will be having another tax conference in Latin America this year.
Reforms have to be built into the country programs and it must be clear that the financing of the plan is dependent on the reforms being carried out. The panel of nine experts will be most important in this regard. In the course of their review, the experts can say if a plan is inadequate with respect to tax or land reform. If it is, we can then say that the panel's recommendation is not favorable, so we can't finance the plan. This is an important new instrument.
The idea that external financing will be in some ratio to internal resource contribution could be an incentive for the governments to collect taxes and encourage local investment. As plans are developed and the Latin Americans realize what has to be done, they will start thinking of the means for generating the money to accomplish the objectives. The Bell report on the Philippines was cited as an example of how to get reforms. We offered the Philippines $50 million a year for five years, but we conditioned our aid on a minimum wage law, land reform, tighter control over foreign exchange, and a progressive income tax. President Magsaysay told US officials later that if the US hadn't put those conditions on its aid, he couldn't have built a reform program.
Use of ECLA. The UN Economic Commission for Latin America should have an important role in the Alliance for Progress. It will take some time for the US to live down its previous negative attitude toward ECLA, but the Latin Americans have great respect for it. Strengthening ECLA is one way of bringing about some of the changes without the onus being on the US. Also, ECLA is a promising place to build up a supply of technicians.
US Private Investment. US private investment is important in the Alliance for Progress. The type of an operation Americans run in a foreign country is one of the most important factors in that country's attitude toward the US. Bringing in know-how is an important contribution. But Latin Americans are worried for fear the repatriation of earnings will be too large.
An excellent example of investment was cited in the Sears operation in El Salvador. Five years ago Sears opened a store there. When it opened, zero percent of the products sold were made in El Salvador. Today 42 per cent are made there. As a consequence of this investment, a furniture factory and a plastics factory have been established, with Sears lending part of the money for those operations. All the employees in the Sears store are locals except the manager, and the pride in the operation is something to behold. Every clerk operates a cash register, and the loss due to theft is no greater than in Sears stores here. Local art is exhibited in the store and is sold without profit to the store so that it serves as an art gallery as well.
The Commerce Department indicated that it is thinking of having a hemisphere conference in one of the countries which has led in social reform. Private investors could show their products and demonstrate what they are doing for the countries in which they are operating.
Need for Point in US Government for Private Investors to Come. Under Secretary of Treasury Fowler said there should be one place in the US Government where private intrepreneurs can come and get an answer to their questions--whether they should make a joint-company approach; whether there should be a veering away from raw material to consumer goods local manufacturing, etc. He thought State the logical place.
Need for a Political Base. A political base must be established which allows reforms to go ahead. The labor unions can be a force for good or a force for the other side. It is not easy to get the labor movements in these countries to move in the right direction, but the Labor Department is giving a lot of thought to this. Social Security and other benefits of a welfare state cannot precede economic development. The question is what kind of priorities are to be established--and what political support can be mustered for them.
Task Force to Formulate Agreed Concepts. It was agreed that there should be uniform standards and criteria for use by AID, the Eximbank, and US representatives on international bodies such as the Inter-American Development Bank, the panel of nine experts, etc. There was concurrence that an inter-agency task force should be established immediately to concern itself with formulating agreed concepts which our agencies and representatives could follow with conformity. AID was asked to take the leadership in this matter.
Joseph D. Coppock/3/
Executive Secretary
/3/Printed from a copy that bears this typed signature.
36. Memorandum From the Under Secretary of State (Ball) to the Assistant Secretary of State for Inter-American Affairs (Woodward)/1/
Washington, January 8, 1962.
/1/Source: Department of State, Central Files, 611.20/1-862. No classification marking. Copies were sent to Swank, Dutton, Jamison, Tully, and Moscoso. A marginal notation indicates the memorandum was intended to be circulated to Goodwin.
When I saw the Attorney General this morning, he made a strong point of asking that on any statements made by the United States at the Foreign Ministers' meeting in Punta del Este/2/ we should emphasize the positive approach through the Alliance for Progress and our concern for the Latin American people, rather than merely the negative approach of our apprehension over the threat of Castroism. I told him that I was sure this was being planned, but he asked me if I would make a special effort to see that this was done. He said that "It would be extremely helpful in several quarters if this could be accomplished."
/2/Reference is to the Eighth Meeting of Foreign Ministers of the Organization of American States convened at Punta del Este, January 21-31.
37. Highlights of the First Meeting of the Working Group on Problems of the Alliance for Progress/1/
Washington, January 16, 1962.
/1/Source: Department of State, S/P Files: Lot 69 D 121, American Republics, 1962. Confidential.
PRESENT
AID--Mr. Chenery, Mr. Moscoso, Mr. Rubin
E--Mr. Trezise
ARA--Mr. Goodwin
S/P--Mr. Rostow
S/P--Mr. Fried
S/P--Mr. Johnson
S/P--Mr. Ramsey
S/P--Mr. Wriggins
Ambassador Stephansky
Treasury--Mr. Leddy
OAS Committee of Wise Men--Mr. Perloff
The working paper prepared by S/P/2/ appeared to be a useful starting point, raising among other questions, (1) the usefulness of attempting to locate Latin American countries in one of four identifiable stages of modernization and (2) the necessity of taking the political (and other non-economic) characteristics of recipients into account when Alliance assistance programs are to be considered.
/2/Not printed. (Ibid.)
Latin America is a peculiarly useful area for examination of the problem of assistance on this combined basis because political and economic factors are closer to being dominant than in other areas where military factors are more urgent. Also economic and political development has proceeded far enough in some cases to reveal major structural imbalances.
In our explorations it is important to remember that aid is only one element of foreign policy, and trade, commodity stabilization, traditional diplomacy and other forms of direct influence may be as useful.
Because up till now the criteria for aid have been explained to Congress in broad terms, emphasizing the need for long term aid, our hands may be unnecessarily tied unless we are able this year to explain with much greater sophistication the uses and limits of the present aid criteria. With Congress we must discuss candidly the underlying problems of effecting a turn-around in aid policy, which demands a turn-around in the policies of the recipient governments themselves. Since we must bring the recipient countries along with our own changing concepts, it takes time. Often there are signs of change--notably the early formulation of plans--which do not strike the casual observer and are not yet affecting official policy in recipient countries. Accordingly, we have reason to attempt to persuade Congress that our aid policies in Latin America are not in as disheveled a condition as it may appear.
What are the most urgent reforms which we should insist upon?
We should distinguish reforms urged for essentially political reasons from those aimed at promoting economic development. The former might be designed to shift the locus of power from backward-looking to forward-looking groups, to prevent the defection of important groups, or to bring the government closer to the people. Land reform in many countries might serve such purposes. Tax reforms may serve a more exclusively developmental purpose, although certain types of tax reforms might work against development if they were mainly political in their intent.
What techniques have we for applying political pressures in order to induce conformance to reform criteria? There are some countries where the politically dominant groups are not interested in reform, where their power remains for the present relatively unimpaired--either because change has not yet challenged their traditional base of power or because they can count upon the loyalty of the military. We cannot expect to influence such regions very much toward reform, unless they face urgent financial or other crises.
How can we develop the skills, organizational and other know-how, for promoting the strength, unity and constructiveness of the middle and left of center political elements who are likely to be the best guarantors of the kind of orderly yet expeditious change which the Alliance sets as its model? Often such political groupings exist in latent form but lack organization.
Where aid must be given for political reasons, such as to prevent a diplomatically friendly regime from falling, we should endeavor to (a) give it some economically sensible purpose, and (b) strengthen the hand of those who want to press forward toward development. Military aid in the past has often served the purpose of shoring up an unpopular regime and, unfortunately, it has often been given to men with little interest in development, whereas we should use aid to enhance the influence and prestige of those who are interested in development.
The term "political aid" is regularly used in two different senses: (a) aid designed to have a favorable impact upon our relations with a particular country (e.g. aid to Panama designed to reduce demands for unacceptable changes in our Panama Canal relationship); and (b) aid designed to have an effect upon the political structure or political process of the country aided. In actual fact, of course, the distinction is often not so clear-cut. It is clear that Congress objects to political aid in the first of these two senses; it is less certain whether Congressmen could not be convinced of the value of the second kind of political aid.
Alliance as at present formulated lacks an illuminating overall political objective for the hemisphere and its place in US grand strategy. The last Administration made the promotion of a free enterprise community our objective. That was simple and it had an appeal to certain groups. It contained a self-help element. Is our present objective the creation of some new kind of inter-American system? Lacking a clear objective, we are not clear where we must . . . trim developmental objectives in order to insure survival of friendly regimes, or where we can sacrifice a regime friendly in the short run so long as it is likely to be replaced by one more determined to bring rapid political and economic change.
Bolivia has passed through the Punta del Esta barrier, but it poses profoundly difficult problems. Commitment and promise have outrun capacity to perform: mass organizations have leaped forward in their ability to swing power while government administration, the political system, economic productivity and the balance of payments position have all fallen far short. On the other hand, Bolivia's leaders are well-endowed with that indispensable precondition for development--the will to modernize--and this may be the most important ingredient of all.
Particularly here, there may be very real merit in concentrating efforts on a few cases which can become demonstrations of what we are able to do when we set our minds to it. Too much dispersion may lead to inconspicuous results; concentration of effort may make demonstrations possible.
Can we appropriately discuss "criteria" and expect to have them operative when we are in fact within an "alliance" in which the recipients, too, pre-sumably have something to say about what they require? When others are as deeply involved in the planning as they are presumed to be, criteria defined by the US may not be applicable.
Some insurance in cases of risky policy. If we could assure countries that we could stand behind them if they undertook policies with some economic risk, such as land reform, tax reform, etc., it might be a useful inducement to bolder development initiatives.
Despite our talk of "self-help", many government leaders in Latin America just don't take us seriously. In part this is because they do not see how they can insist upon further measures of self-help and still remain in power. In part, too, they believe our assistance to be largely politically motivated. We must be alert to the demonstration effect of our assistance policies. They must have it demonstrated that those who try to meet the criteria will obtain more resources for development. If we shore up too many friendly regimes for political reasons without putting due weight on economic development criteria, they will not take our talk of self-help and reform seriously.
Perhaps the most difficult problem is finding ways of engaging the local political system in the development enterprise. Unless there develop local political pressures working toward self-help, reform and development, US efforts to insist on aid criteria will be diplomatic liabilities. This may be the most important task facing us.
Some important cautions were expressed on the way work should be conducted: (1) an unduly elaborate analytical scheme may not be applicable for lack of data, the margins for statistical error in many cases being so large as to more than outweigh any possible increments of resources forthcoming from abroad; (2) since each situation was unique, and fraught with intangibles, generalized propositions would not be likely to be applicable in more than one or two cases, and each one country would have to be examined independently in any case.
For instance, too rapid tax reforms can cause disinvestment and flight of capital, land reform initially produces a fall in production and balance of payments difficulties. Therefore, one must be able to reach an equation combining political growth, social gains and economic development. Each country's equation will be different. On the other hand, an unstructured empirical analysis of individual countries was not likely to be fruitful.
It was decided to proceed along the following lines:
(1) A smaller working group would be established, combining AID and S/P personnel, to formulate a set of questions which would, if answered, get at the key economic and political problems in carrying forward the Alliance criteria in individual countries. These, when refined, would provide a working framework for some country studies.
(2) Five or six studies would then be undertaken, in considerable depth, on countries of major importance to the US which represent different characteristic Alliance problems.
(3) The criteria problem would then be re-assessed and the possibilities of extending this method to other countries in Latin America and elsewhere.
38. Research Memorandum Prepared in the Bureau of Intelligence and Research/1/
RAR-11
Washington, January 17, 1962.
/1/Source: Department of State, S/P Files: Lot 69 D 121, American Republics, 1962. Limited Official Use; Noforn. Drafted by Bushnell. Sent to the members of the Secretary's Policy Planning Committee under cover of a February 9 memorandum from Rostow. It was intended as the basis for a discussion by the Committee at a meeting held on February 13; see Document 40.
LATIN AMERICAN POLITICAL STABILITY
AND THE ALLIANCE FOR PROGRESS
Abstract
Broadly-based political stability is a goal sought by the United States in the Alliance for Progress./2/ Some Latin American countries have already made real headway toward this goal, especially Mexico, Uruguay, and Costa Rica, and to a lesser extent, Venezuela and Argentina. The governments in these countries are oriented toward middle class interests and are based on fairly wide popular support; their political institutions provide means of articulating the interests of important groups in the population. Thus they are reasonably well protected against internal subversion and foreign intrigue, despite weaknesses and stresses in their systems of government.
/2/This paper was prepared in response to questions raised by Research Memorandum RAR-6 of November 17, 1961, "Alliance for Progress Goals Linked with Presidential Upsets", which described blocks to reform in countries with narrowly-based governments. [Footnote in the source text. RAR-6 suggested that the leaders of Latin American countries attempting to implement Alliance for Progress reforms had drawn the wrath of both the extreme right and revolutionary left in their nations. This resulted in destabilizing political pressures that led to the ouster of the Presidents of El Salvador, Brazil, and Ecuador. (Department of State, S/P Files: Lot 69 D 121, American Republics, 1961)]
For other Latin American countries to reach this degree of political stability involves their making a series of changes to which serious obstacles exist in their social patterns and in pressures from right and left against orderly reform. Some of the governments, even though they are organized on a narrow interest base, respond in a measure to popular needs, but by and large the ruling groups lack zeal for reform, with all its hazards. The military institution, a key element, is inclined to the status quo. Organized labor, often the major popular sector, is generally disoriented and vulnerable to the appeals of the revolutionary left. The growing middle class sector has generally not been a stabilizing force. However, the Alliance for Progress can provide the framework for enlisting middle class elements in support of evolutionary reform, permitting a mutation from the present narrowly-based political systems to more broadly-based but still moderate governments.
Progress Toward Stability
Not all Latin American governments suffer from chronic instability. In some countries there are organized bases of popular support for constitutional authority and substantial immunity to subversive movements of the left and right. Included among these countries are Mexico, Uruguay, Costa Rica, and perhaps Venezuela and Argentina. In their societies the danger of subversion from the right has been greatly reduced. Political action by the military is curbed because of the strength and influence of well-organized popular forces which are relatively immune to propaganda from the revolutionary left.
Costa Rica and Uruguay have developed greater political stability because of their cultural and social unity and the evolution over a long period of a large middle class. The stability of the other countries (Mexico, Venezuela, Argentina), which are more complex and less unified, is the end product of radical reform or revolution carried out under the leadership of mass-based political parties. In Mexico the reorganization of political life on a popular base took a generation of civil war and revolution. Argentina and Venezuela achieved means of articulating and providing representation for the interests of broader groups in the community through less violent, far-reaching and long-drawn-out progress toward the new political order.
The broadening of the political base in these countries of radical reform is not to be looked upon wholly in terms of modern western (Anglo-American) experience either as to methods or results. These societies have emphasized national sovereignty, popular welfare, and industrial development rather than personal political and economic liberties. The middle class reformers or revolutionary leadership proclaimed these goals and made it their first order of business to pursue them and thereby to consolidate a mass following. Political change was accomplished by a greater centralization of government authority, with strong overtones of fascism in the Argentine experience under Peron. The governments created by the Mexican PRI, the Argentine Peronists, and the Venezuelan AD were designed to manipulate and shape their countries through playing a large role in both political and economic affairs. They were to be directly responsible for the strategy of achieving national goals. Achievements in turn were to strengthen their claim to continuing leadership in the society.
The record of stabilization in the new pattern suggests hazards as well as advantages in Latin-style democracy. The balancing of wider interests may cause new rigidities even while it brings stability. Very large bureaucracies have grown up to carry out economic missions as well as to serve the functions of patron to the humble and broker between multiplying pressure groups. In Argentina, while carefully balancing the forces of labor and the military, the Frondizi regime is attempting to bring about a resumption of economic growth and to move Argentina off the dead center eventually reached by the Peronist regime with its deficit financing, overblown bureaucracy, feather-bedding unions, business monopoly, and neglect of agriculture. In Venezuela there is great danger that the abuses and corruption of the dictatorship will be translated into abuses of economic democracy if large numbers of citizens come to rely on government support instead of productive work. In Mexico the new social system has yet to embrace much more than half the population in its benefits.
The essential common factor among the broadly-based moderate governments is that they are middle class governments with relatively good linkages to the mass of the population. The mass support for these regimes goes beyond the enthusiasm conjured up by heated election campaigns. The continuity of popular support which defends them against movements from the political extremes reflects the development of mass organizations that are either keyed into the dominant political system or are able to articulate popular interests and make good their claims to obtain benefits for the people through established means of communication with the government. Not all middle class governments with broad bases of support, however, are stable and moderate. In Bolivia and Cuba the overthrow of the established order by middle class radical groups destroyed capital resources, caused an exodus of technicians and entrepreneurs, and made both countries dependent upon foreign aid for their basic necessities. Moreover, the Mexican Revolution and to a lesser degree the Peronist reforms that effected the transfer of power to the middle class were severely wasteful of national resources and capabilities.
Obstacles to Stability
What are the prospects that other Latin American countries will reach political stability through widened popular participation and support of authority? Can the transition proceed without leading into a harsh totalitarian system as in Cuba or a breakdown as in Bolivia? The answer may be in doubt for all except a few of the other thirteen Latin American republics.
With luck and good planning this few could include Brazil, Chile, and Colombia. Even in these countries the prospects for achieving a broadened and strengthened base of authority while maintaining stability are far in the future if they have to be realized through the slow-moving processes of gradual, evolutionary social and economic change. On the other hand, forcing the pace by political action of the type applied in Mexico or Argentina could open the way for excesses of the Cuban type, associated with Soviet intervention. It could lead to civil war even without foreign support of the revolutionary left. Venezuela, with its large petroleum revenues, is not a model for the poorer countries of the area. The cultural and social endowments of Uruguay and Costa Rica simply have no parallel elsewhere.
Some Latin American governments with a narrow political base are sensitive to popular pressures and undertake piecemeal reforms. But significant reform is barred by the difficulty of the problems to be solved or the reluctance of ruling groups to push essential measures. Most governments appear to be paralyzed for fear of offending propertied interests and precipitating action by vested interests in conjunction with the military on the one hand, or of encouraging the revolutionary left on the other. The feeling that radical change is foolhardy has doubtless been reinforced by the experience of reform-inclined executives in Brazil and Ecuador. In any case, the present leadership finds maintenance of the status quo the lesser of two evils.
The military may be torn between their traditional alignment with the propertied class and, on the other hand, their growing fear of revolution if reform lags, and in some cases the aspirations of personnel drawn from reform-minded sectors of society. However, the overriding fear may well be apprehension that once the mob is out of control its new leadership will liquidate the military. The tighter the lid has been held down, the stronger will be anticipations of reaction tending to take an extreme form. Thus, in the absence of a strong responsible civilian leadership to furnish a lead toward reform, the military may be incapable of playing a positive role. Whether the leadership is in the hands of reaction or reform, they tend to stand with constitutional authority.
The main organizational focus that commonly exists amongst the people in general is the trade unions; this sector of labor is subject to a confusion of impulses. A strong stand against Castro/communist penetration will be found amongst labor groups in Mexico, Argentina, Venezuela, Colombia, and Uruguay, but in most of the countries these groups have no effective reformist leadership around which to rally. Meanwhile communist forces are strengthening their political thrust and gaining the confidence of revolutionary leftwing and campesino groups--although these groups are still limited in numbers. Throughout the area many labor organizations remain passive against a threat to government authority.
The example of Cuba has the effect more of reinforcing the determination of propertied groups to maintain a tighter control than of stimulating an impulse among them to sponsor reform. Their inclination to maintain the status quo is increased by their inability to appease popular pressures and to gain organized mass support through half measures and programs of change that are limited in scope. They may be further confirmed in this immobilism by their ability to count on military backing against radical reform movements. In these circumstances the propertied groups offer less than effective partnership in prosecuting reforms under the Alliance for Progress. They even offset foreign financial aid by removing their capital to safe havens abroad. Such reforms as they sponsor tend to be hesitant and badly executed, and in the long run the reforms can serve little purpose in achieving political stability.
In most of those countries where it lacks the force to take over the governments, the middle class still plays a disturbing role in the political system. It has grown rapidly in recent years with the expansion of the urban complex, greater educational opportunities, and the area-wide burst of economic growth following World War II. Usually dominant in the management of mass-based political parties, trade unions, campesino organizations, communications media, the educational system, and the military, middle class leaders have key but still subordinate roles in the society. They are inclined to be dissatisfied with their secondary position and relatively humble status. The rank and file of the middle class, dependent salaried personnel and small business men, is under pressure from inflation, the housing shortage, and monopoly pricing. Many are only slightly above a decent subsistence level. Thus the Latin American middle class is not comparable to the moderate, propertied middle class of either Western European or US tradition. Its loudest voices are chauvinistic, anti-capitalist, and resentful of a status quo that limits its horizons and seems to deny the possibility of rapid progress for the nation as a whole. The middle class in many countries of Latin America where it has not yet achieved dominance in the society represents a most serious danger to the present order of things.
Role of the Alliance for Progress
In the charged political atmosphere of these years, pressure for Alliance for Progress reforms may actually feed extremist strength since propertied groups are not ready to give way without a struggle to governments that propose rapid social change. Nevertheless, despite its immediate effect in stirring up political discords, the Alliance for Progress may carry with it means to resolve the conflict between middle class aspirations and mass hopes as against the status quo. Its goals presuppose a whole range of social operations that require the services of hundreds of thousands of members of the middle class, ranging from individuals with no more than vocational training to intellectuals skilled in the arts of communication, and also including the military. These tasks include services to labor unions, rural education, rural extension, cadastral surveys, conservation, cooperative organizations, as well as employment in the growing industrial and modern service sector. Most of the proposed reforms will be labor intensive since many individuals are needed to organize the new social and economic units and to act as intermediaries for the dissemination of techniques already well understood but not now practiced outside the urban areas or in a relatively small urban sector.
These civilian activities performed by the military would also spread the rule of law and order and increase respect for government in rural areas. All these programs for the military would have a dual purpose--they would directly contribute to the development of the country and to the improvement of living standards at the same time that they involved the military in the Alliance, increased popular respect for the military, and indoctrinated the military in the benefits of widespread socio-economic progress.
All Latin American armed forces will not be eager to participate in such development programs. They would prefer prestigious modern fighting equipment to bulldozers and surveying equipment; but the supply of military equipment can be made dependent at least in part on the execution of civil action programs. The military, especially the officers, may be unwilling to spend long periods of time in the backward rural areas, but some officers may find satisfying careers in civil action programs once they are started. In Bolivia many recruits would like to stay in the military if more than private's pay were available for men engaged in civil action work.
Students and Teachers
To involve university students and teachers in the Alliance for Progress is difficult because these groups do not generally have continuing organizations with widespread support. Failure to enlist their support, however, may doom the program because these groups reject moderate reform and students provide the infantry for the violence of the revolutionary left. Moreover, in pursuing its aim of promoting self-help, one of the main targets of the Alliance must be education. Improvement in the quality and quantity of education can contribute powerfully to weaning students from extreme leftist philosophies if aid is directed to strengthening universities and faculties which have moderate political leanings. In general the politically moderate pro-United States universities are also those which do outstanding work in education--for example, the University of Concepcion (Chile), which is located in an agricultural area and emphasizes agricultural technology; the University of Minas Gerais (Brazil), which is noted for its advanced work in the social sciences; or the University of Valle (Colombia), which is reported to have a full-time faculty of 172 for a student body of 250 in medicine, 240 in engineering, 100 in economics, 50 in nursing, and 500 in part-time extension courses in the same fields.
There are many factors underlying the widespread leftist political action among students and teachers, of which some of the most important follow. Students almost universally attend only part-time, as does the faculty. The students and frequently even the faculty are not required to attend class. Students concentrate in law and liberal arts faculties far beyond the possibility of remunerative employment in activities other than politics. Students control the universities through their representation on governing councils. Facilities are usually lacking for study, especially libraries and laboratories.
Support from the Alliance can help to remove these basic conditions which lead to extremist political activity. In some cases new universities, including regional universities, could be established. New schools and faculties to strengthen studies in agricultural technology, social sciences, and other neglected disciplines could be created under the Alliance. Aid should also be directed to those institutions and faculties which include the fewest far left agitators.
How effective a serious approach to education can be in discouraging irresponsible political activity may be gauged from the University Center (faculty) of General Studies at the National University of Honduras. This faculty was recently organized to provide general subjects in preparation for the specialized faculties and to introduce needed new professional courses. A difficult curriculum and a disciplined approach to practical education are the hallmarks of the new faculty. In the elections of July, 1961, for leadership of the student federation the students of the new faculty ran up a large enough majority for the democratic candidates to offset the small majorities won by the communist-inclined candidates in each of the six other faculties, although the leftists still control the federation through the faculty representatives.
Careful distribution of aid to education can weaken the universities and faculties which are politically oriented to the left by building up universities and faculties which, because of their own participation in the Alliance, will tend to support it. There may, to be sure, be less political organization and activity in schools which devote themselves to preparing technical personnel for work in the development effort. Yet it is to be anticipated that, as these graduates grow into their work of construction and leadership, they will swell the ranks of the moderate, centrist minded groups on the political stage of the nation.
39. Research Memorandum From the Director of the Bureau of Intelligence and Research (Hughes) to the Assistant Secretary of State for Inter-American Affairs (Woodward)/1/
INR-35
Washington, January 19, 1962.
/1/Source: Department of State, S/P Files: Lot 69 D 121, American Republics, 1962. Limited Official Use; Noforn. Also sent to the members of the Secretary's Policy Planning Committee under cover of a February 9 memorandum from Rostow. It was intended to serve as the basis for a discussion by the Committee held February 13; see Document 40.
SUBJECT
Creating Allies for Socio-Economic Progress With Political Stability in Latin America
Since RAR-6 on the polarization of political forces presented a rather bleak picture,/2/ we have tried to do some thinking which may be of interest to you on the positive aspects of the Alliance.
/2/See footnote 1, Document 38.
Abstract
Organized political forces in most Latin American countries are polarized on the status quo right and the far left. There is an uneasy balance between left and right which is unfavorable to prospects for orderly advancement. Success of the Alliance for Progress may therefore depend on the ability of the Alliance to build its own organized support of moderate groups by directing a substantial part of the available foreign funds to projects that specifically aim at strengthening major groups and institutions in the center at the same time that they contribute directly to socio-economic progress. Organized groups that may with particularly successful results be involved in the process of development are moderate labor unions and military organizations. The power of the revolutionary left among students may be reduced if AID can involve chosen educational institutions more fully in its program. The disbursing of aid through organizations somewhat independent of the government also minimizes US reliance on the current government as the only purveyor of evolutionary change.
The Problem
In Latin America the United States desires to promote orderly evolution avoiding the extremes of castrista revolution and maintenance of the status quo. For such evolution to proceed in changing the face of Latin America the Alliance for Progress must have strong, well-organized local allies. Yet, in most countries the organized politico-economic groups tend to polarize at the extremes of the revolutionary left and the status quo right (see RM-RAR-61-6, 8, and 10). These poles are especially powerful because each is based on a hard-core of experienced political tacticians: the left on the communists, the right on the less formally organized but for the time being more powerful socio-economic landowning and business interests. To offset these extremes the Alliance for Progress needs support from other organized power groups in the community.
The Proposal
Four potential allies in most Latin American countries are the labor unions, the military, the universities and secondary schools, and the church. Now the extreme power groups usually control most of these institutions or at least make them ineffective in political power. In general the military and the church are strongly influenced by the vested interests of the right, while extreme leftists have gained leadership in many universities and labor unions. Yet these groups are potentially centrist; and, if the Alliance for Progress can wean them from the control of the extremists and strengthen their independence and power, it can build its own consistent reliable support.
The possible methods of using the Alliance for Progress to build support for evolutionary development vary enormously among the countries and among various groups. The basic method would be to channel financial assistance through actual or potential allies in labor, the military, and the educational system, when such assistance would strengthen the underlying bases of moderate political action at the same time that it served specific goals of the Alliance for Progress. The church, which is not considered in detail in this paper, could be counted on more and more to push social action favoring political stability as the programs of other responsible agencies gained momentum. As a general rule Alliance funds will be just one additional means of steering crucial elements toward support of moderate but steady socio-economic progress. The many other programs, like information, educational exchange, and direct personal contact, could also be speeded and coordinated. Not only the church but numerous other private groups in Latin America, both national and foreign, are ready to join in these programs if given a lead in the right direction.
Some US financial and technical aid now goes to labor and military groups in Latin America. What is proposed is a very high priority to these groups as a means of directly improving the political environment for the Alliance for Progress.
In those Latin American countries--Mexico, Argentina, Venezue-la--where substantial socio-economic change has occurred during the last three decades, the process has involved a bureaucratic centralization of power in the government, accompanied by Parkinsonian inefficiency (see RM-RAR-62-11). The decentralization suggested here for some development efforts is not an attempt to stop centralization of power altogether, for centralization is essential for rapid development in the Latin American cultural and economic environment. Rather, the building of moderate centrist groups will supplement and modify the inevitable concentration of power in three ways: (1) by providing articulate political demands for creation and use of desirable central government power, (2) by reducing slightly the strain of increasing demands on the civilian central bureaucracy through dispersion of control over a small part of the development program to independent power centers, (3) by providing independent guidance and criticism of the dominant central authority so as to limit inefficiency and diversion from the central task of development.
Selection of Aid Recipients
U.S. aid to Latin America has been directed through the local civil authorities except for substantial quantities to selected local businesses of either foreign or domestic ownership. Aid directed to or through the government tends to gain immediate support for US policy, but it also tends to build animosity among those groups that oppose the government, because they find US aid supporting (directly or indirectly) the political "ins." In the past, when the opposition assumed power, it quickly turned to the United States despite past bad feeling, because there was no alternative source of the aid necessary to maintain the new government in power. Now, however, as its economic power increases, the USSR becomes an alternative source of economic aid--and a source whose ideology appeals to the far leftists more than the American politico-economic ideology appeals to the status quo right.
To strengthen the supporters of present governments exclusively is by no means vital to long-term interests of the United States. In fact, the United States is best able to work with a country where any government will be backed and controlled by a selection of moderate groups. Thus, to create and strengthen moderate groups in a society serves the United States long-term interests, whether or not these groups are in power at a given moment. To the extent that aid is not controlled by the political "ins" the United States avoids building potential enemies among the political opposition. It remains true, of course, that much aid must in any case be channeled through the existing government because in many fields it is the only organization which can carry out the programs. In some countries such as Chile, Peru, Paraguay, and Nicaragua aid to the governments may be needed as a lever to gain permission for the United States to extend aid to groups or institutions that are not controlled by the political incumbents.
Labor unions and the military are the two groups which may most easily be built into strong auxiliaries of the Alliance for Progress in Latin America. Both the unions and the military influence large numbers of people. Both are usually lower-class organizations with middle-class leadership. Both have continuing organizations and patterns of leadership, an established continuing function, and a desire to maintain at least some independence from the politicians of the current government. The course of the Cuban revolution is making the leaders of both groups realize that non-communist labor leaders and the traditional armed forces are among the first to be liquidated by a Castro-communist regime.
Labor
Programs to build moderate labor unions might center on making loans and grants directly to selected union federations and locals for cooperative socio-economic projects that benefit their members. An example is the project now under way through which AID will contribute $350,000 toward constructing, furnishing, and operating labor temples in Guayaquil and Quito, Ecuador. The labor centers will house headquarters of individual unions, provide meeting places, and offer services such as training courses and legal aid. In some cases directly productive investments can be channeled through labor organizations. For example, the Inter-American Bank recently loaned $640,000 to a cooperative of 4000 meat-packing workers in Montevideo to expand the operations of a plant abandoned by private enterprise and reopened by the workers' cooperative. The cooperative has been under attack from a rival communist-controlled union.
Such projects as union housing cooperatives might receive IDB loans. A combination of AID loans and grants might finance such community projects as worker clinics, trade schools, and meeting halls. Export-Import Bank loans might provide tools of the trade to such unions as those of taxi drivers--for example the dynamic but moderate Chauffeurs of the First of May in Bolivia. The DLF, IDB, or IFC might finance worker cooperatives that have been taking over various enterprises previously owned by governments. Similar financing might be available for union cooperative stores, whose buying power can effectively reduce living costs for workers as they have in Argentina. Technical and financial assistance could be given to members of farm unions who purchase their own land and equipment, and to marketing cooperatives.
Increasing support for unions would primarily be a matter of giving selected unions priority in the disbursement of AID and IDB assistance for housing, health, education, and cooperative productive enterprises. (Financial assistance to unions is supported in item III,4,b of the Latin American Guidelines for Policy and Operations.) Careful selection of the unions to receive Alliance aid would be essential to insure that only strongly based unions with non-communist but dynamic leadership are assisted in extending their benefits and thus their membership and strength. There are many unions in Latin America that deserve US support, as, for example, Aprista unions in Peru (like the Federation of Textile Workers and the Lima Union of Bus Workers), democratic unions in Argentina (General Confederation of Commercial Employees and Confederation of Municipal Workers), progressive industrial unions in El Salvador (Cigarette Factory Union and Brewery Union), and budding moderate unions in Brazil (the S#o Paulo clothing workers and metallurgical workers). The labor attache and other members of the Embassy and USOM staff should be able to select such unions and in many cases informally to generate planning and preparation of project plans and loan or grant applications.
The increase in cooperative socio-economic activity will in itself lessen the importance to unions of activity in politics as the main means of accomplishing union goals. The improvement of living standards through cooperative action will give immediate meaning to union membership and tend to direct union interest to productive activity. Moreover, by actually participating in the Alliance unions will tend to become supporters for other aspects of the Alliance program in their country.
All the financing would not have to be furnished by the United States; as loans to union cooperatives become accepted, local banks, government agencies, and employers will find it desirable and even necessary to assist.
The Military
The possible military role in the Alliance for Progress is quite different from that of free trade unions. At present, military support for the Alliance is fostered by the US information program, trips to the United States, attendance at US service schools, and the work of US attaches; this military support can be increased if the military becomes directly involved in bringing the benefits of the Alliance to the people, especially in rural areas. A program of this sort would require a large-scale expansion of the present limited civil action programs (as suggested in item 62 of the Latin American guidelines and supported by General Lemnitzer in his November 9 and November 30 memos to the President).
Bolivia now has a civil action program of this sort under way. About one-third of its small army is said to be engaged in colonization and road building in eastern Bolivia and another one-third is working on agricultural projects in the Altiplano. However, the effectiveness of military civil action programs in Bolivia is severely limited by the lack of trained personnel and necessary equipment.
Development loans from the IDB and AID loans and grants as well as technical assistance from the US military might be used to train and equip construction battalions to build roads, irrigation facilities, schools, and other public works in rural areas. Small military groups might be trained and equipped to conduct on behalf of civilian ministries the cadastral surveys which are a vital part of any agrarian reform program. Training of military recruits might include teaching in elementary agricultural skills. In conjunction with their public works programs in rural areas the military might conduct adult education courses and thus contribute to spreading literacy and elementary agricultural techniques.
It may well be that a most valuable return from Alliance for Progress reforms, once they are underway, will be in terms of political stability--with an indirect byproduct in confidence favoring continued economic growth. Social pressures would be much reduced if the use of middle class energies in the execution of reforms should expand the proportionate size of those middle class elements which subscribe to moderate political action and take a responsible part in national political life. In political terms it would mean new opportunities to effect peaceful evolution from the present narrowly-based political systems to government based on more active cooperation of classes and wider agreement on national goals. The political system produced by such a mutation could in many ways be more in accord with US interests than one achieved by radical change which forced the propertied class to hand over their dominant position to the middle class as the leader of extremist mass-supported organizations.
40. Highlights of Discussion at the Secretary of State's Policy Planning Committee Meeting/1/
Washington, February 13, 1962, 10 a.m.
/1/Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Secret. Drafted by Wriggins.
SUBJECT
Three INR Papers on Aspects of Political Change in Latin America
PRESENT
S--the Secretary
AID--Mr. Chenery
AID--Mr. Coerr
USIA--Mr. Murrow
B--Mr. McGhee
G--Mr. Johnson
S/R--Mr. Thomson
S/P--Mr. Morgan
S/P--Mr. Ramsey
S/P--Mr. Fried
S/P--Mr. Wriggins
INR--Mr. Hilsman
P--Mr. Rowan
CU--Mr. Coombs
AF--Mr. Herz
ARA--Mr. Goodwin
EUR--Mr. Elting
FE--Mr. Usher
NEA--Mr. Cottam
The INR papers were found to be provocative and stimulating./2/ There was some question whether the examples chosen in RAR-6 in fact represented examples of the useful hypothesis of the paper. It was explained that these were all preliminary papers intended as suggestive for those concerned with the Alliance and background for a larger, long-term study of "political development" now under external contract.
/2/RAR-6, RAR-11, and INR-35; see Document 38 and footnote 1 thereto and Document 39.
The Alliance for Progress, it was pointed out, was primarily political in nature, ultimately designed to encourage the growth of reasonably stable governments capable of absorbing reform and change, secure from both the extreme Left and the extreme Right. In Latin America we seek more than we seek in Asia, i.e., neutral countries capable of maintaining their own stability. Rather, we hope the Alliance for Progress will increase the strength of the free world alliance as these countries industrialize and develop over the next twenty years. The danger is that many Latin American countries may fall not merely into neutralism but all the way into the Communist orbit. Bolivia, Ecuador and one or two others could well become Cubas.
Alliance for Progress reforms may work primarily to reduce political and social tensions or they may contribute to improving output by accumulating more resources and directing them into more productive channels. The former should buy us more time to assist governments and political systems to make the difficult adjustments necessary as they move to greater productivity and ultimately to political viability.
There are four main difficulties. Firstly, the entrenched oligarchies in many countries are resistant to change and refuse to face the facts of political life. In some countries, the Alliance is very likely to fail because of the inflexible attitudes of the oligarchic leaders. Secondly, a stable and responsible middle class is not yet developed. Thirdly, there is danger that in our efforts to ease the way for reforms and changes which we consider to be inevitable, we will so arouse mass impatience that we will release forces we cannot control. Che Guevara believes this will be the outcome of the Alliance. The fourth difficulty concerns the lack of qualified people in the U.S. and Latin America, capable of economic planning and possessing the necessary political skills to manage political and economic transitions. At the moment, no single sound development project is lacking funds. The real shortage is lack of planned projects.
It is difficult to determine how much self-help and reform we can insist upon in relation to the political limitations facing a recipient government. S/P is heading up a study on this problem./3/ At present, there is no correlation between per capita assistance received by countries and their performance in terms of self-help and reform criteria. Indeed, the most irresponsible countries, those which get into balance-of-payments or other major financial difficulties, are the ones which have received most assistance. We thus reward the irresponsible and discriminate against the responsible.
/3/Not found.
While some stressed the importance of concentrating on the oligarchy and finding ways of persuading it to change its ways, others emphasized the importance of doing what we could now to multiply production and increase the opportunity and achievement of the masses. Well thought-out technical assistance programs focusing on crucial sectors, such as improved seeds and agricultural methods, are one way to do this. Undue preoccupation with the oligarchies will lead to a flight of capital and political disruption which the Communists and other extremists can use to their advantage. We should draw on our experience and recall that not by leveling down have we progressed in the United States, but by leveling up. We should, therefore, attempt to combine indigenous and foreign resources to find the quickest means of progress, which can be experienced by ordinary people, as in agricultural production, eliminating debilitating diseases and in education. Seed corn projects in Mexico, the Puerto Rican rural health service, and the U.S. Extension Service were examples. We must, it was held, concentrate on what we can do now to work with the people on the bottom and help them to get on with their own development.
It was also felt that the problem posed to us by the oligarchies was not so much to limit their high privilege, but to induce them, with our assistance, to encourage greater participation of the middle and lower social strata in national life. The symbolic importance for us of not being too closely identified with the oligarchies was stressed. We should not forget the very important role played by intellectuals, teachers, students and journalists in the formation of opinions for the future. We seek to induce them to overcome their alienation and to play a more constructive role in society. Mr. Achilles is conducting a study in this connection, in Communist tactics toward youth and education and how we can deal with these problems more energetically.
Prior to the Alliance, we allowed the Communists to hold the monopoly of sympathy toward change. Only lately--and with the Alliance--have we begun to demonstrate our interest in change.
We must persuade the home offices of U.S. business to encourage their field staffs to get behind the Alliance. For those interested in the mass Latin American market, there is no difficulty but extractive industries need more attention on our part. The good work already undertaken through Advisory Councils and the like, to explain in the long-run U.S. interest in the success of the Alliance, should be stepped up.
Latin Americans are fighters, and they will fight two things: dictatorship and intervention. We must be wary not to become tarred with the brush of "intervention" even as we attempt to induce governments to follow our aid criteria. A broadening of U.S. contacts with the area will improve our chances of encouraging a fight on dictatorship through reforms and of avoiding the charge of governmental intervention.
41. Memorandum of Conversation/1/
Washington, February 16, 1962, 4:17-5:50 p.m.
/1/Source: Department of State, Presidential Memoranda of Conversation: Lot 66 D 149, January-March 1962. Confidential. Drafted by Sternfeld on February 26. The time of the meeting is from the President's Appointment Book. (Kennedy Library)
SUBJECT
Alliance for Progress
PARTICIPANTS
The President
Mr. Dungan, Assistant to the President
Mr. Coffin, Acting Administrator of AID
Mr. Moscoso, United States Coordinator of the Alliance for Progress
Mr. Woodward, Assistant Secretary--ARA
Mr. Goodwin, Deputy Assistant Secretary--ARA
Mr. Bissell, Deputy Director--CIA
Mr. Hansen, Assistant Director--BOB
Mr. Coombe, Assistant Secretary--CU
Mr. Rostow, Councilor
Mr. Morales Carrion, Deputy Assistant Secretary--ARA
Mr. Hilsman, Director of INR
Mr. Linder, President--Ex-Im Bank
Mr. Shriver, Director--Peace Corps
Mr. Nitze, Assistant Secretary of Defense--ISA
Mr. Haydn Williams, Deputy Assistant Secretary of Defense
Mr. Sternfeld, Director, Office of Development Planning--AID
The discussion was opened by Mr. Woodward, indicating to the President that a message addressed to Latin America telling of the forward strides that have been taken domestically in the fields of integration, housing and education would have a tremendous impact on the Latin American populace. Mr. Woodward also indicated that of tremendous significance to L.A. would be the results of the forthcoming commodity discussions, particularly the coffee stabilization agreement, which, if preliminary discussions are successful in March, will be taken up in the U.N. in June.
Mr. Goodwin then presented a series of papers to the President./2/ The President questioned the drop-off in commitments of U.S. aid to Latin America in January and also wishes to know who was responsible for the Inter-American Bank since its disbursements have been so low in comparison to the commitments. He was informed that the lag in IDB disbursements was probably related to the long lead time connected with the individual projects. As to the low level of commitments in the month of January, there was no complete explanation possible. Mr. Linder of the Export-Import Bank indicated that he had several projects in the pipeline and that he expected to make available about 300-350 million dollars in loans to Latin America in the next year.
/2/See Document 40.
The President discussed the situation in Argentina and raised a number of questions relating to the 1963 proposed program for Argentina and Ecuador and total Alliance for Progress requests. (It appears that the President will wish to review the individual country proposals within the next 10 days.) He indicated that the $3 billion authorization request should be over and above the amounts available for lending in L.A. under the 5-year commitment authority. This would indicate to the Congress that we were not attempting to use the funds previously justified for Latin America to be spread among the other countries of the world.
The President expressed some concern that the justifications to the Congress should not be too vague, that specific projects be set forth to justify our fund request. He suggested that Mr. Moscoso receive a complete briefing on the tactics of Representative Passman in conducting hearings.
The President indicated his strong view that the fate of the whole aid program rests on the success of the Alliance for Progress and that operations and activities connected with the Alliance for Progress should be given the highest priority (five to one), notwithstanding the requirements of the other areas in AID for staff and other sources.
The President indicated he did not wish Mr. Moscoso to be called an Assistant Administrator. He believed within the AID organization he should be called Director or Coordinator for the Alliance program.
The President inquired into the status of the proposed contract with the National Academy of Science on the hoof and mouth disease problem in Argentina. He directed that action be taken to consummate the contract and that no publicity be given to the possible effect eradication of this disease would have on imports by the U.S. from Argentina.
Action: AA/LA with White House Science Adviser
The President inquired as to the low level of PL 480 in Latin America and requested a memorandum as to the possibility of expanding these programs. He also inquired as to the large amounts of PL 480 going to Egypt and the reasons therefor.
Action: AA/LA with A/MR and White House Coordinator of Food for Peace
The President approved the establishment of a Latin American Policy Committee under the chairmanship of ARA, with membership of USIA, AID, CIA and Defense. He requested that this Committee review on a weekly basis the over-all political problems and economic programs by country and that a report be furnished him each week.
Action: ARA
The President directed that Mr. Moscoso conduct a thorough study of all procedures which may be hampering the program and that AID make available the services of Mr. William Parks for this purpose. He also directed that ways be found to fill current job vacancies in the LA Bureau and that steps be taken to bring in small numbers of highly qualified men, with in-service training being used as the means of increasing their utility. He asked Mr. Nitze whether personnel from DOD could provide some knowledgeable people formerly employed by them as attaches. There seemed to be general consensus that this source would not be too useful.
A discussion was held as to the need for authority to remove people who are employed in the L.A. programs without regard to existing statutes. The President was informed of the current evaluation team headed by George Train travelling through L.A. Mr. Coffin indicated the tentative decision of Mr. Hamilton on not requesting the renewal of the 621 firing authority for the agency as a whole. The President, however, indicated that it might be desirable to pinpoint this for Latin America only. The solution to this matter will be presented to the President in the context of the legislation to be submitted to the Congress.
Action: BOB in clearance of the proposed legislation
On the question of supergrades, it was agreed to withhold further action until Mr. Hamilton completes discussions with the Chairman of the Civil Service Commission on obtaining additional positions from the Civil Service pool.
Mr. Coombs indicated that he had an education program for L.A. totaling $100 million a year. He also indicated some concern over the need to indicate U.S. interest in a forthcoming UNESCO-sponsored conference in Santiago. The President requested that Mr. Coombs' proposal be presented to him after appropriate staffing. A later session may be necessary to review Mr. Coombs' recommendation.
Mr. Nitze indicated to the President that various determinations requiring the President's action have been pending in AID for 4 months. The President directed that these determinations be made available to him for action and if further delays are necessary, to explain the reasons therefor. He indicated that Senator Fulbright reported that views in the Senate have changed considerably on restricting the amount of military aid to Latin America and that it would be possible to provide additional assistance if required.
Action: Bureau of Budget and Department of Defense will review possible needs for additional military aid to L.A.
Mr. Nitze also raised the problems in connection with the Inter-American Defense College and the lagging contributions by other Latin American countries.
Action: Bureau of the Budget with State and Defense will report to the President on the problem of moving ahead in establishing the college
42. Memorandum of Conversation/1/
Washington, March 9, 1962, 10:15-11:20 a.m.
/1/Source: Department of State, Presidential Memoranda of Conversation: Lot 66 D 149, January-March 1962. Confidential. Drafted by Chenery on March 10 and approved by the White House on April 20. The time of the meeting is from the President's Appointment Book. (Kennedy Library) The meeting took place at the White House.
SUBJECT
Conversation with the President on AID Matters
PARTICIPANTS
The President
Mr. Ball
Mr. Bell
Mr. Dungan
Mr. Hamilton
Mr. Lingle
Mr. Coffin
Mr. Gaud
Dr. Chenery
Mr. Nicholson
[Here follow paragraphs 1-4, a discussion of AID administrative matters.]
5. There was an extensive discussion of the Alliance for Progress and the difficulties in getting it properly organized. Mr. Lingle stressed the need for a clear directive from the President to AID so that responsibility would flow in a direct line through the Office of the Administrator to the Coordinator of the Alliance (and a definition of responsibilities for the Alliance within the Department of State). The President explained his reaction to the chaotic picture that was presented in the previous meeting on the Alliance two weeks ago,/2/ but agreed with Mr. Hamilton and Mr. Lingle as to the desirability of the Alliance remaining within AID. It was agreed that the Alliance should be visible as a separate entity but not otherwise become a separate agency. The President said that the other AID regional bureaus would have to recognize the special position of Latin America in the AID program at this time and not feel neglected because of the emphasis being put on the Alliance. It was generally agreed that the main problem in getting the Alliance organized was to find a strong deputy for Mr. Moscoso who could take over most of the administrative work and leave him free for program decisions, negotiations, and external representation of the Alliance. The possibility of Mr. Nicholson's being available as a Special Assistant to Mr. Hamilton to help organize the Alliance for Progress was discussed.
/2/See Document 41.
[Here follows paragraph 6, a discussion of AID administrative matters.]
43. Memorandum From the Deputy Assistant Secretary of State for Inter-American Affairs (Goodwin) to President Kennedy/1/
Washington March 14, 1962.
/1/Source: Kennedy Library, President's Office Files, Goodwin. No classification marking.
SUBJECT
Historical Genesis of the Alliance for Progress
The statement of the N.Y. Times/2/ that the Eisenhower Administration thought of the Alliance for Progress and you merely named it is wholly inaccurate and will certainly come as a surprise to those Latin American leaders--such as Kubitschek--who desperately tried to get previous administrations to adopt some such policy without success.
/2/Reference is to a New York Times editorial of March 13, which read: "It is often forgotten, by the way, that while President Kennedy gave the program [Alliance for Progress] its name, the concepts were enunciated--and the $500,000,000 committed--by the Eisenhower Administration in 1960."
1. For the first seven years of the previous administration there was no policy toward Latin America--merely a continuation of old practices, policies and attitudes.
2. In 1960--alarmed by the growing deterioration of the situation in Latin America and under the prodding of Doug Dillon--we supported the Act of Bogota and asked Congress for $500,000,000 to implement it. This Act was a step forward, but a limited step. It was restricted to U.S. assistance in the field of social progress--the construction of schools, homes, waterworks, public health facilities, etc., and it said that Latin American nations must help themselves in these fields. It was a program of social development, and social development only, on a limited scale with the $500 million to be spent over a period of two years and the fund to be mostly administered ($400 million worth) by the Inter-American Bank.
3. The Alliance for Progress, it is true, incorporated the principles of the Act of Bogota, but went far beyond this Act to a new concept of Inter-American cooperation. A few specifics will serve to illustrate this.
a. The Alianza was based on a long-term program of economic development, a program to increase productive capacity, accelerate rates of growth and make a permanent increase in standards of living. It envisaged a decade-long plan of hemispheric development leading to the stage of self-sufficient growth. The entire program of long-term economic development--the keystone of the Alianza--was new to this Administration.
b. The Alianza introduced the concept of long-term planning and programming. This was absent from previous U.S. policies and yet must be considered the basis for today's development efforts.
c. The entire institutional structure, including the OAS Experts, the Planning Institute, etc.--with the exception of the Inter-American Bank--has been newly created by the Alianza.
d. The stress on social reform as a condition of development aid--although first intimated in the Act of Bogota--has become a matter of central emphasis under the Alianza. It was impossible to demand social reform as a condition of long-term development financing before this, because long-term development financing was not available.
e. The entire program of commodity stabilization is new since our previous policy actually opposed the idea of stabilizing commodity prices.
f. The Alianza was the first to put U.S. support behind programs of economic integration in Latin America.
g. The magnitude of the plans is incomparable--this year we spent approximately three times as much as previous administrations ever spent in any one year.
h. Almost all the political components of the Alianza represent new thought, including our current stress on political democracy (and coldness toward dictatorial governments) and, more important, our basic decision to identify the United States with the progressive democratic forces in Latin American countries.
If the Alliance for Progress had a predecessor it was Brazil's Operation Pan-America and not the policies of previous administrations. The bitterness of the Brazilian government at our failure to seriously consider Operation Pan-America is the surest evidence of how much things have changed in the last year.
In addition to the specifics of your policies the entire atmosphere of our relations to Latin America, our attitudes, our progressiveness, our receptivity to Latin needs, has shifted dramatically since last January. No one would be more surprised to hear that we were simply following past policies than the democratic leaders of Latin America who have viewed the Alliance--in both public and private statements--as a new breakthrough in Inter-American relations, and the last, best hope of democracy in this hemisphere.
Dick
44. Memorandum by the Deputy Assistant Secretary of State for Inter-American Affairs (Morales-Carrion)/1/
Washington, April 9, 1962.
/1/Source: Department of State, S/P Files: Lot 69 D 121, American Republics, 1962. No classification marking. Sent to Rostow by Teodoro Moscoso, U.S. Coordinator of the Alliance for Progress, under cover of a May 1 memorandum. Rostow sent copies to McGhee, Johnson, Nitze, William Bundy, Rowan, Parker, Fowler, Helms, Cline, McGeorge Bundy, and Kaysen under cover of a May 3 memorandum. According to Rostow's covering memorandum, Moscoso referred to this paper in a meeting with this group on May 1. No record of the meeting was found.
This memo aims to focus attention on the Alliance for Progress as essentially a political and ideological force in the Hemisphere. It summarizes some of the difficulties the Alliance is facing in the ideological field and sets forth some operational guidelines.
A. The Ideological Gap
1. Ideologically, the Alliance is facing stormy weather. Its avowed aim is to bring about in Latin America a free, open, prosperous society, democratically oriented and capable of great cultural creativeness. Its instrument is an intense developmental effort in the social and economic field.
2. To many a Latin American eye, the Alliance is simply a money-lending operation in the fiscal or financial fields. The publicity which surrounds each loan or grant helps to underscore the "money-lender" image. And no money-lender in history has ever evoked great enthusiasm. We have yet to see a charismatic banker.
3. The Alliance presupposes certain basic notions of economic development and national planning. These are sophisticated notions with no mass-appeal, unless they are given a heavily political flavor. The present lingo of economic technocracy simply does not reach the average Latin American. His slogans come from the world of nationalism, not the world of technocracy. Hence, the ideological gap.
4. The Alliance is increasingly seen in Latin America as a U.S. policy. It is basically linked with the United States and not with its Latin American background or, indeed, with its Latin American origins. It does not seem to have an autochthonous flavor, in spite of the fact that most of its conceptual framework is derived from recent Latin American economic and social thinking. It still looks "foreign" and "imported", it still looks as a "Made in U.S.A." product.
5. The biggest psychological obstacle the Alliance is facing is that it has not been wedded to Latin American nationalism. The single, most powerful, psychological force now operating in Latin America is nationalism. It provides the emotions and slogans for political action through the ideological spectrum. It animates the military and the extreme left. It dominates the universities and the labor unions. Unless the Alliance is able to ally itself with nationalism, to influence it in a constructive direction, to translate the abstract terminology of economic development into familiar concepts related to nation-building, the Alliance will be pouring money into a psychological void.
6. Washington thinking about the Alliance has mainly centered on the urgency of its economic and administrative problems. Immediate action in streamlining aid has been the goal, as witnessed by the White House meetings. The professional economists have been summoned to do a job. But there is lack of a similar effort to think through the political and ideological problems. Furthermore, an impressive array of top Latin American economists (Prebisch, Herrera, Sol, etc.) has been available for constant consultations on the economic phase. But no equivalent group has steadily worked on the political and ideological aspects. And yet the Alliance can only be wholly successful if it is politically and ideologically successful. Again, this is the present ideological gap.
B. Some Operational Guidelines
A warning is in order: It is easier to devise an economic development program than a political or ideological offensive. Statistical facts are easier to understand than human emotions. A great psychological gulf has separated the U.S. from Latin America. Its magnitude is greater than the economic gulf to which it is, nevertheless, closely related. No easy formula is available. What follows are just a few pointers of urgent priority, with due recognition to the fact that the action proposed will probably involve action outside the usual government channels.
1. Help to progressive, democratically-oriented political parties
This is an order of the first magnitude. We have committed ourselves to a $20 billion effort in economic development. Have we asked ourselves how much are we willing to invest in political development? Fifty thousand dollars to help a party like the APRA might go a longer way than a $100 million loan to an Odria-type government in Peru.
2. Need to Create a Political Apparatus
We have a seminal experiment in the Costa Rican Political Institute. This could be expanded into four centers: the present one in Costa Rica; an Institute for the Andean region, geared to the Indian heritage; an Institute for the River Plate; an Institute for Brazil. These Institutes, besides developing young cadres of political leadership, could become active centers in the distribution of the ideological literature so badly needed at present. Furthermore, the Institutes could establish close cooperation with progressive parties and help in providing economic support.
3. Need of an Offensive on the Intellectual Front
We can have no ideological breakthrough unless we fully understand the role of the intellectual in Latin American society and his influence on public opinion. A cultural or literary society in Latin America could have, sometimes, more of a revolutionary impact than a political party. A well written article might destroy the initial impact of a hundred million loan. We need a special program geared to the intellectuals wherever they are--a program that would support their magazines and their newspapers, that would publish their books and would grant them due recognition through awards, travel grants, etc. Here we will have to face up to the communists who are doing, in many places, a terrific job. While we concentrate on the loans, they concentrate on the minds. Some of the top Latin American writers, poets, and artists have been converted to Marxism. They are now the prestige symbols of the Red putsch.
4. Need of a Massive Book Program
We need a paperback breakthrough in Latin America. We have to challenge the communists in the popular bookstands, in the "barracas del estudiante," now swamped by Marxist literature in all fields. The problem is not simply to translate American books. Latin America is part of the Western world, of the Atlantic community. We have to marshal the best thought of the West to engage in this offensive, and this effort has to be undertaken with full Latin American participation; indeed, under Latin American direction, wherever possible.
5. Need of Participation by Private Institutions
We have to help develop a new type of institution, more flexible than the present foundations and institutions, which could deal with parties, political institutes, publishing firms, student groups, literary and cultural societies, etc., and do things beyond the scope of government.
45. Department of State Guidelines Paper/1/
Washington, May 1962.
/1/Source: Kennedy Library, Schlesinger Papers, Latin America, Blue Label, May 1962-February 1963. Secret.
LATIN AMERICA
GUIDELINES OF UNITED STATES POLICY AND OPERATIONS
I. Basic Approach
1. The importance of Latin America to United States policy is older than the Monroe Doctrine and stems from the position of two continents whose security is interdependent. Today, three factors of Latin American development are intimately interlinked and together define the challenge facing the United States.
(a) In many countries, social tensions are mounting, and growing public dissatisfaction is directed against privileged groups who have ruled for generations without successfully dealing with major social and economic problems.
(b) There is a growing desire on the part of important governments to demonstrate that their foreign policy is independent of US control.
(c) Using Cuba as a major base of operations, Communist organization is attempting with purpose and skill to capture both of these movements and turn them against the United States.
2. Our strategy in this situation is: a) to lead and assist Latin America, through the Alliance for Progress and other means, in a major effort to satisfy basic human wants, to effect agrarian and tax reforms, and to promote self-help, cooperative efforts; b) to frustrate the efforts of Communists to gain control of the movements demanding reforms, to strengthen Latin Americans' will and capacity to resist Communist subversion, and to isolate and promote the downfall of the Communist beachhead in Cuba; and c) to strengthen the inter-American system and cultivate closer relations with all the Latin American countries and peoples, especially with those key nations which appear destined to play an important role in the hemisphere and in the world, such as Brazil, Argentina, and Mexico.
3. In this enterprise we must exert positive leadership. We must cooperate to the fullest with the self-help efforts of countries seeking to modernize themselves. We must disassociate ourselves from reactionary forces which decline to respond to the needs of the people, and learn to discriminate between legitimate expressions of dissatisfaction with the existing social order and Communist-inspired agitation. We must influence and help the military to become guardians of constitutional order and agents of constructive change. We must be patiently understanding of the growing pains of countries which, in striving to establish their national identity, are feeling a temporary need to dramatize their independence from us. We must commit the resources required for the task.
4. During the next decade, our problems will become more complex, rather than less. The tide of change is bound in the short run to work against certain of our immediate interests. Old power groups will be increasingly estranged from us as we press for basic reforms. New groups in power will often be more difficult to deal with than leaders of the past. Through these years, we will have to keep our long run interests clearly in mind--a continent to the south made up of viable political societies capable of maintaining their independence and of dealing adequately with their own internal problems.
[Here follow the remaining 70 pages of this paper consisting of four additional sections: II, "Background," III, "Objectives," IV, "Lines of Action," and V "Contingencies."]
46. Memorandum From the Deputy Assistant Secretary of State for Inter-American Affairs (May) to the Assistant Secretary for Inter-American Affairs (Martin)/1/
Washington, August 13, 1962.
/1/Source: Department of State, Central Files, 371.8/8-1362. Confidential. Drafted by May. Also sent to the Deputy Assistant Administrator of AID, Graham Martin, and the Assistant Secretary of the Treasury, John Leddy. A copy was sent to William Turnage, Director of the Office of Inter- American Regional Economic Cooperation.
SUBJECT
Recommendations for IA-ECOSOC Meeting in Mexico City
It is almost certain that the meeting will be convened on October 1 at the expert level and on October 22 at the Ministerial level. On the assumption, therefore, that one of the subjects to be covered at the expert level meeting will be preparation for decisions to be reached at the Ministerial meeting, we have about seven weeks in which to prepare our positions and, to the extent necessary, to obtain general understandings from the other participating countries so as to preclude serious conflicts at Mexico City. Two suggestions are summarized below, with the thought that steps should be undertaken as soon as possible to reach a general inter-American understanding with regard to those suggestions prior to the meeting:
I. That certain IA-ECOSOC subcommittees be constituted for the purpose of creating a multinational mechanism for evaluating the progress attained in Latin America under the Alliance for Progress, as well as for the purpose of promoting a more rapid rate of progress throughout the area. I believe it is obvious that the United States has accepted an undue share of the responsibility for evaluating and promoting the progress in each of the Latin American countries. The subcommittees suggestion is designed to promote as much responsibility as possible in each of the Latin American countries for the rate of progress in each of the others.
The specific suggestions set forth below may facilitate discussion of this subject:
A. Initially, there might be four subcommittees concerned, respectively, with fiscal reform, agrarian reform, educational reform, and planning.
B. Each subcommittee might consist of 5-7 member countries, each country to be represented by its most highly qualified expert on the subject matter being considered by that subcommittee. Each other country represented on the IA-ECOSOC could send an observer to the meetings of each subcommittee, and the observers would be allowed to participate in the discussions of the meetings, though not authorized to vote.
C. Each subcommittee would meet regularly every three months to:
1. Review the quarterly and annual progress reports to be prepared by the Secretariat of the Pan American Union on the progress achieved on the subject in question in Latin America in general and in each Latin American country in particular.
2. Write a quarterly and an annual subcommittee report evaluating the rate of progress in the area concerned. The reports could be on a functional basis, such as the rate of title clearance for agricultural land in all of Latin America. The reports would, as appropriate, refer to progress by country, as for example by extending special commendation to a specific country for the enactment and implementation of agrarian and fiscal reform.
3. Submit quarterly and annual recommendations for steps to be taken to improve the rate of progress. These reports also could be written in terms of function, as by recommending specific steps to be taken to increase the number of cadastral surveys in Latin America. The reports also could recommend specific steps to increase the rate of progress in each country.
D. Each subcommittee could, within limitations, establish its own rules of procedure. Each could determine whether to meet regularly in just one city or to meet in different cities each time. Each could decide whether to have a permanent chairman or rotating chairmanship. Each could determine the number of days and the specific dates for each meeting, provided that the last meeting prior to the annual IA-ECOSOC meeting should be held on dates which would permit the submission of an annual report by each subcommittee to the separate country representatives of the IA-ECOSOC within a period of no less than 2 months prior to the scheduled meeting of the IA-ECOSOC.
(While I am biased against both committees and meetings, I believe they could be useful in this instance for the purpose of getting each country directly involved in the affairs of each of the other countries within the Alliance. I believe this mechanism would be much preferable to reliance upon the staffs of any permanent institutions, whether the OAS, ECLA, or the IDB. I should say also that while I do not expect the multinational committee mechanism to show quick and useful results, I cannot envisage any other mechanism which is as likely to be fruitful.)
II. A "super committee" should be set up for the purpose of inducing each of the various Latin American countries to exert greater effort in achieving the objectives of the Alliance. Ex-President Kubitschek of Brazil has already taken some initiative in this regard. Ex-President Lleras Camargo of Colombia may also be willing to participate in this effort. It has been suggested that this sort of super committee might report to the Council of the OAS in a purely advisory capacity. Alternatively, it might be given general, non-specific, responsibility for consulting with the separate Latin American governments and for formulating suggestions which might be presented at the annual meetings of the IA-ECOSOC.
Obviously, I have no clear idea as to what such a group might in fact do. It seems clear to me that these outstanding statesmen could not be expected to concern themselves with technical matters, nor should they be encouraged to do so. However, two or three men such as Kubitschek and Lleras Camargo might be able to do much, by virtue of their public stature, to help create or to strengthen the mystique of the Alliance for Progress through some sort of informal and non-defined association with the Alliance. On the other hand, care must be taken to avoid giving them too much responsibility, lest they make public recommendations conflicting with those emanating from the 9 wisemen or the IA-ECOSOC. I have no doubt that these men could be useful for promoting the Alliance, but very careful understandings should be reached with them as to the limitations of their responsibilities, before they are given an important public role.
47. Memorandum From the President's Special Assistant (Schlesinger) to the President's Special Assistant (Dungan)/1/
Washington, October 15, 1962.
/1/Source: Kennedy Library, Schlesinger Papers, Chron File, 1962. Confidential. Copies were sent to Kaysen, Hansen, and Goodwin.
SUBJECT
Alliance for Progress
I have lost track of the Alliance in recent weeks, but I am a little disturbed by some stray items which have recently crossed my path.
Obviously the Alliance is in the throes of a much needed effort to build the contribution of private capital to Latin American development. This is plainly a necessity: public effort by itself cannot come near doing the job; and, as the need for social overhead capital is met, the private sector must more and more become the main engine of economic expansion. It is also a healthy redressment of what seemed in the first months of the Alliance an excessive commitment to public investment and planning. And it is a natural response to the frustrations of dealing with indolent, inefficient and uninterested governments.
Nonetheless there is surely danger in going overboard in this direction and reverting to the Eisenhower Latin American policy.
The answer of the United States Government to the problem of hemisphere development in the fifties was to stake everything on bringing about the private investment climate deemed essential to an adequate rate of economic growth. This climate was to be achieved in two ways: (1) in the economic field, through insistence on policies of monetary stabilization; (2) in the political field, through insistence on government committed to the protection of private foreign investment (including, if necessary, military dictatorships).
The Eisenhower policy was a failure. Nonetheless it has its attractions for those (still) in the bureaucracy who shaped the policy and have never been enthusiastic about the public-sector aspects of the Alliance; moreover, it is a policy which wins cheap and unthinking applause and a reputation for "realism" in North American business circles. But the policy is as wrong today as it was in the fifties--more so, because of the churning up of political sentiment in the intervening years. Adolf Berle discusses this point effectively in his new book. If we return to the Eisenhower policy and make the creation of a "proper" climate for foreign private investment our main objective in Latin America, we might as well kiss the Alliance--and the hemisphere--goodbye.
These reflections are stimulated by a number of things which, I trust, are not straws in the wind:
1. I attach No. 1120 from Mexico City./2/ Here, at a meeting of experts to discuss the Alliance, a Brazilian cited Argentina as an example of the political pitfalls of rigorous conformity to IMF standards. In response, the representative of the Kennedy Administration "suggested that Frondizi's failure resulted not from following IMF but from failure to do so."
/2/Not found.
I do not argue that we should applaud 30 percent inflation. But the statement of the U.S. representative is exceedingly questionable so far as facts are concerned; and, if our new hemisphere line is to be the infallibility of the IMF, then we are right back with Eisenhower.
2. I call your attention to Embassy Airgram A-437 from Mexico City/3/ entitled "Mexican Discrimination Against United States Investment Threatens Alliance for Progress (An Analysis of Causes, Tactics, Consequences and Remedies)." Obviously Mexican policies which drive away foreign capital are, in the main, bad for Mexico; and obviously an analysis of the techniques of discrimination is well worth having. But the basic presuppositions of this memorandum are (a) that there are no legitimate motives for economic nationalism--its proponents are either demagogues trying to keep in power, crooks seeking to pick up equity ownership in the confusion of Mexicanization and forced industrialization, or Marxists; (b) that the big failure of the United States in Latin America has been "the failure of both the United States Government and U.S. private business enterprise over a long period of years to protect United States investments"; and (c) that the urgent necessity is "to mobilize United States economic power in both the private and public sectors, so that our economic power, like our military power, will be a threat in being, enabling us in a fair and flexible way to further the objectives of our foreign policy by using it to require of Mexico and other governments cooperation on their part," especially "to improve the investment climate essential to an adequate rate of economic growth."
/3/Dated September 28. (Department of State, Central Files, 812.00/9-2862)
Some of the specific suggestions in this memorandum sound useful; but the philosophy of the memorandum is completely the philosophy of the Eisenhower Administration and at war, as Berle's book emphasizes, with the realities of life in Latin America.
3. There is the appointment of General William Draper as head of the country team inspection mission to Brazil./4/ I have known Bill Draper for years, and he is a man of certain qualities. Nothing would be more appropriate for the Eisenhower Administration than to send to Latin America a Republican investment banker whose most recent big assignment was as chairman of the Mexican Light and Power Company. It seems to me wholly incongruous, however, for Bill Draper to go as a representative of the New Frontier to a country where even American businessmen are coming to feel that foreign ownership of public utilities is a blind alley.
/4/Reference is to the team composed of Lincoln Gordon, Ambassador to Brazil; Teodoro Moscoso; James Loeb, Ambassador to Peru; and Ben Solomon Stephansky, Ambassador to Bolivia.
4. There is the decision to resume military aid to the Peruvian military junta--a decision in terms which allowed the junta to announce on October 11: "The situation will permit us to continue, from now on, the close collaboration of our armed forces with those of the United States in the execution of the plans of continental defense and those of economic and social development of Peru." This announcement, even though qualified from Washington, weakens the argument for withholding economic assistance from Peru and suggests that we are quite prepared now to accept military dictatorship in Latin America--even a military dictatorship which is currently working with Communists in the trade union movement in an effort to destroy APRA leadership of organized labor in Peru.
5. There is an apparent shift in the kind of men we are sending as Ambassadors to Latin America. A good deal of the purchase the Alliance has been able to get has been due to the first wave of ambassadorial appointments--Gordon, Moscoso, Loeb, Stephansky, J.B. Martin. But the recent tendency has been to send to Latin America men who have no particular sense of identification with the Kennedy Administration and who could live (and in some cases did live) quite as happily with the Eisenhower Latin American policy.
No doubt I am unduly apprehensive. But this apparent recrystallization of elements of the Eisenhower policy within the framework of the Alliance for Progress is troubling and, I believe, will get us nowhere.
Arthur Schlesinger, jr./5/
/5/Printed from a copy that bears this typed signature.
48. Editorial Note
The Inter-American Economic and Social Council of the Organization of American States convened in Punta del Este at the expert level October 1-21 and the Ministerial level October 22-27. The purpose of the meeting was to review the progress of the Alliance for Progress after its first year. Deputy Assistant Secretary of State for Inter-American Affairs Herbert K. May headed the U.S. Delegation to the first series of meetings. Secretary of the Treasury C. Douglas Dillon arrived in Uruguay on October 22 to participate in the Ministerial sessions but was recalled immediately to Washington as the Cuban missile crisis escalated.
Dillon addressed the Council on October 23 before leaving Punta del Este. He acknowledged that Alliance for Progress programs were being implemented more slowly than had been anticipated but expressed confidence that they were moving Latin America in the right direction. He affirmed the support of the United States for economic integration in Latin America and for commodity price support agreements in the region. He confirmed that the United States had fulfilled its pledge to commit $1 billion to the Alliance for Progress before March 1962 and pledged to continue aid to Alliance programs in the year ahead "on the same general order of magnitude." (New York Times, October 24, page 23) Before he left Uruguay, Dillon named Teodoro Moscoso to take his place at the final sessions of the conference.
Documentation on the conference is in Department of State, ARA/IPA Files: Lot 69 D 211, IA-ECOSOC: USDEL to Annual Mtg. of the IA Econ. and Social Council at the Ministerial Level, Mexico City, October 1962; and ibid., ARA/USOAS Files: Lot 76 D 381, First Annual Meeting Economic and Social Council, Mexico, 1962.
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