Foreign Relations of the United States, 1958–1960, American Republics, Volume V

36. Memorandum From the Deputy Coordinator for Mutual Security (Bell) to the Assistant Secretary of State for Policy Planning (Smith)¹

Washington , July 5, 1960 .

SUBJECT

• Latin American Policy Paper (NSC 5902/1)²

U.S. aid programs for Latin America, both military and economic, have been the subject of considerable criticism for some time, intensified during the past year by concern over recent political developments.

U/MSC Planning Staff was assigned the task of reviewing the existing programs, with primary emphasis on policy concepts, and a staff paper has been produced. Part A summarizes (1) major findings and conclusions and (2) suggested courses of action. Parts B and C are more elaborate treatments of the military and economic aspects.³

This staff paper reflects discussions with various officers of the Department; it does not purport to have concurrence and clearance anywhere. It is put forward for discussion and it is hoped can provide a basis for a more effective policy and program in the aid field.

NSC consideration of the Regional Policy Paper on Latin America (NSC 5902/1) is scheduled for the near future. A revised paper is to be provided by the Department and a tentative draft thereof has been prepared by ARA. We have suggested deferral of both the ARA draft and of the NSC Planning Board review until our staff paper can be considered and discussed. If, or to the degree, the proposals have merit and secure support in the Department, it would be appropriate to reflect them in the revised NSC paper.⁴

It is my earnest hope you will be able to give the staff paper (at least Part A) your personal attention and indicate whether (1) you agree it is of sufficient value to justify deferring NSC review until the ideas can be discussed and reviewed and (2) you have any suggestions as to the means by which discussion of these ideas can be most effectively achieved.

J.O. Bell

[Part A]

MAJOR FINDINGS AND CONCLUSIONS⁵

Military

1. Whatever the historical reasons which explain the evolution of current U.S. military policy toward Latin America, it is clear that that policy has been subjected to extensive criticism.

2. It has been alleged that the policy makes little sense on military grounds. The presumption for the foregoing allegation is that under previous circumstances the Latin American military contribution to a Western Hemisphere defense was unrealistic and that under present conditions, with the prospect of nuclear warfare, it becomes entirely implausible. Serious doubts may be entertained concerning the degree of contribution which Latin American forces can make to a Western Hemisphere defense. However, it is by no means clear that the United States will in the future be assured freedom from large-scale conventional hostilities and that, under such circumstances, Latin American forces could not make a significant, if limited, contribution to Western Hemisphere defense (particularly involving protection of lines of communication). Although this strategic doctrine still leaves unanswered several questions, the most recent military assessment by the JCS reconfirms the utility of the Western Hemisphere defense concept and of the contribution thereto anticipated from Latin American forces. Admittedly the forces currently in existence have varying capabilities. However, they do have the potential capability for undertaking military missions which, though limited in scope, could nevertheless relieve the U.S. of a significant military manpower and resources drain. To develop that capability, training and material assistance will continue to be required from the U.S.

3. Beyond the modest but not unimportant benefits which a Latin American force contribution can supply, there are other politico-military objectives which must continue to be encompassed within U.S. military policy toward Latin America. One is the need to maintain bases. The need for bases apparently continues to be a current one and, as in the past, it is likely that some military assistance will be required as a quid for retention of base rights. Similarly, our future military policy will have to take account of the possibility of increased communist offers of assistance. To date these have been negligible, but there are evidences of increased Soviet interest in Latin America and increased offers of military as well as economic assistance must be anticipated. U.S. assistance must be adequate to foreclose or at least greatly limit enticement by the Soviets.

4. U.S. military policy toward Latin America must be viewed in a broader frame of reference than that which is limited to military considerations. Despite criticisms to the contrary, our military policy toward Latin America has not per se incurred serious adverse consequences to other U.S. policy objectives. To the contrary, it has brought important benefits which could not otherwise have been won, e.g. it has contributed to our gaining the support of influential military elements in various Latin American societies, without whose support U.S. policies could not have been effective. Thus, so long as the military element in Latin American societies retains its position of high influence and importance, U.S. military policy must realistically provide for programs and actions which will continue to gain the support of that element. While our past military policy has appropriately taken account of this important, essentially political, objective, and should continue to do so for the future, two important adjustments to our military policies are warranted:

(1) The U.S. cannot afford to be associated with the support of dictatorial and unpopular governments. To this extent provision of military assistance and involvement in cooperative military arrangements (for example, base concessions) should be eliminated or severely restricted (the same principle applies to non-military programs and actions), and

(2) The U.S. must recognize that the longer term trend is for social forces in Latin American society to move away from the influence of the military. Thus, our longer range U.S. policy objectives should place a gradually decreasing emphasis on support of the military and a gradually increasing emphasis on support of other elements in the various societies which appear to be emerging as the dominant forces.

If U.S. military policy retains this awareness of the dynamics of the Latin American social evolution and is responsive to that evolution, there is no reason why it should not remain a positive instrument for advancing U.S. political as well as military objectives.

5. Our military policy has also been criticized on economic grounds. More specifically, it has been argued that it encourages exaggerated military expenditures by Latin American countries, expenditures which could better be applied to economic development purposes. Analysis of the situation suggests that the nature and extent of this problem may have been exaggerated. In the overall, Latin American military expenditures are lower in comparison to GNP than for any other major region of the world. Moreover, though it might be argued in the abstract that use of these resources for economic development purposes would be preferable, practical political as well as security considerations limit the extent to which major reductions in military expenditures and a transfer of resources to economic development purposes would be likely to materialize regardless of U.S. military policies. Nevertheless, where it is possible to do so, the U.S. should encourage increased emphasis on utilization of resources for economic purposes. One way this might be accomplished is to provide, to the extent feasible, for Latin American military forces to be trained and equipped to carry out economic objectives. This approach necessarily does not have unlimited application but it has not been fully utilized in the past, and future policy should make provision for its increased employment.

6. Other changes in the implementation of our military assistance program are also warranted. Specifically a much closer advance coordination of the Latin American activities of the Department of Defense is highly desirable. The timing and approach as well as the assessment of advisability of any given action to be taken by U.S. military authorities requires careful review and control, if we are to avoid giving a false impression as to the importance and urgency which the U.S. places on Latin American military undertakings. This suggests that to a major extent it is the impression which the U.S. military policy and the U.S. military assistance program leaves as much as its actual content and mode of implementation, which requires careful reconsideration. In fact, this points in the direction of one of the main conclusions of our re-evaluation of the benefits and limitations of current U.S. military policy toward Latin America. We have not found that our military policy has been grossly in error; that it has failed to respond to important political and military objectives; that it has been grossly overemphasized; or that it has been a major cause of economic dislocation.

7. It would appear that, in the last analysis, the current state of unsatisfactory relations with Latin America is not attributable in major degree to our military policies and programs. Accordingly, the solution to the problem is not to be found in a major adjustment of our current military policies and programs. Some adjustments have been suggested; they will make a limited contribution, at best, to improved relations. As reflected in the conclusions concerning U.S. economic policies, the real answer to an effective policy toward Latin America, conducive to bringing about the strong alignment and friendship of governments and peoples of the Continent toward the U.S., is to be found in an adjustment in the totality of U.S. policies, internal as well as external, with the resultant improvement in the image of the U.S. as a nation interested in the welfare of its friends and neighbors. Our ability to meet our internal social and political problems in a progressive, effective and humanitarian manner will do much to persuade the Latin Americans that our interests and objectives parallel their own. As subsequently indicated, to this must be added a more adequate recognition of Latin American economic needs by more liberal provision of assistance and adjustment to trade policies. These actions should tend to de-emphasize what now appears to be an exaggerated U.S. concern with military matters and should bring U.S. military policies and programs into better balance.

Economic

1. A long, close, extensive and mutually beneficial commerical relationship between the U.S. and Latin America made it possible until just after World War II to harmonize broadly U.S.-Latin American policy objectives and to implement, in a mutually acceptable manner, courses of action deemed necessary to achieve these objectives.

2. If, from a purely economic point of view, U.S. policies and implementing courses of action in certain Latin American countries have advanced sounder (although inadequate) economic development than elsewhere, politically, U.S.-Latin American relations have deteriorated. This is true when viewed objectively within the more restricted inter-American context. This is also true, perhaps even in a more profound sense, when viewed within the context of U.S. objectives and implementing courses of action (especially with respect to the Mutual Security Program) being applied to Western Europe and Asia. In Latin America’s eyes, the U.S. appears to have developed with countries of these areas closer collaboration both bilaterally and regionally within organizations, such as NATO, OEEC, CENTO, and SEATO.

3. Our essential conclusion is that the United States has not succeeded, either politically through the machinery of the OAS, or economically through existing levels or techniques of assistance, to accord to the countries of Latin America the recognition, consideration or treatment commensurate with their partnership status in the Western Hemisphere or with the minimum economic development requirements which arise from an evolving socio-politico-economic revolution. To a large degree this can be attributed to the inadequacies or outright invalidation of certain concepts underlying United States policy vis-à-vis Latin America. Those concepts and/or assumptions which are partially or in whole no longer applicable in the face of the burgeoning socio-politico-economic revolution in Latin America are:

a. The concept that Latin American economic and other requirements can be best assessed and met through a regional approach.

b. The concept that, despite the pressures of social revolution, similar in intensity to those being experienced in other parts of the world, Latin American economic development needs can be met primarily through the flow of private U.S. investment capital and banking loans.

c. The concept that in Latin America, contrary to our policy in other developing areas (India, Pakistan, Indonesia), the domestic private sector rather than the public sector should and can be relied on as the primary means of developing national economic resources.

d. The assumption that certain United States short-term domestic actions (strategic stockpiling, import restrictions, etc.) can be pursued in a manner unrelated to their impact upon the export earnings of the Latin American countries, in the face of a complete Latin American policy review and belated support of a new look at existing mutual security objectives and implementing techniques.

e. A growing concept that common market, free trade and economic integration associations and agreements should and can be supported more vigorously by the United States in Europe and other areas of the world than in Latin America, and without regard to their interdependence.

f. The assumption that the United States should and can associate itself more closely with regional organizations in Europe and elsewhere (NATO, SEATO, CENTO, OEEC, etc.) than it does with Latin America (OAS).

g. The assumption that a growing communist threat in Latin America can best be countered by predicating mutual security and political policy upon individual country reaction to this common threat and upon opposing Latin American trade with, and acceptance of, Soviet bloc economic assistance.

4. A new national security policy for Latin America should be formulated in such a way as to take cognizance of the foregoing inadequacies of policy concepts and/or assumptions. It should likewise reflect the growing disparity as between U.S. achievements and objectives and those of the Latin American peoples and governments, recognizing the fact that Latin Americans will give first priority to attain their own domestic, economic and social objectives; that their policies in pursuance of these domestic objectives may encompass acceptance of trade with, and economic assistance from, the Soviet bloc; and that likewise their domestic policies may place a selectively greater emphasis on the role of the government rather than private enterprise as the principal instrument to attain rapid economic development.

5. Accordingly, as a sine qua non to providing a policy framework, within which a more effective Mutual Security program can be developed over the next decade in Latin America, the current NSC policy review should formulate U.S. objectives and policy in a manner which will provide for:

a. A closer harmonization with and conformity to Latin American objectives and aspirations;

b. A statement of concepts and assumptions underlying future U.S. policy toward Latin America which modifies appropriately those past concepts and/or assumptions which have been identified as being in part or in whole no longer applicable to the evolving situation in Latin America;

c. According, in both absolute and relative terms, increased importance to closer political, economic and military coordination and collaboration with the Latin American Republics bilaterally and through OAS;

d. Establishment in the future of NSC country policies for each individual country as opposed to the historically accepted but unwieldy and no longer realistic regional approach.

6. United States trade, financial and economic assistance policies should be brought into better harmony with the minimum needs generated by the evolving Latin American socio-economic revolution. In this connection there is reason to believe that it would be advantageous to institute long-range country development planning for each of the Latin American Republics.

7. In connection with the ensemble of the foregoing conclusions, it must be recognized at this time that, for the foreseeable future, there will remain areas in Europe, Asia and Africa which will be under a more immediate threat of external Soviet or Soviet inspired aggression or internal communist assumption of power, than any given country in Latin America, with the possible exception of Cuba. Selected countries in these areas will receive inevitably what might be construed as preferential treatment with respect to the type, magnitude, and terms of U.S. aid. It is vital to the achievement of U.S. national security objectives that this relativity be understood and accepted with good grace in Latin America. This, of course, presupposes a broader and more concentrated public relations operation. It is also a fact that in Latin America itself, due to the vastly different conditions and requirements. of each country, the United States, exercising its best judgment, may determine to apply different standards to the developmental assistance extended to different countries. For example, it may be determined that maximum assistance be given to those countries which appear on the verge of a major economic breakthrough, such countries being logical recipients of aid in the form of loans almost exclusively from international or multilateral institutions and the ExIm or private banks. Such a determination might well be carried through to a logical conclusion that the mutual security economic assistance effort be channeled to the smaller, economically, financially and technically, weaker countries. It is vitally important that a carefully prepared climate of understanding be created to avoid misunderstanding of any such basic U.S. aid policy.

SUGGESTED COURSES OF ACTION

Military

1. Five-Year Military Assistance Plans. Review 5-year Military Assistance Plans with a view to developing coasted, strategically realistic plans based on Western Hemisphere defense concept. (Presently in process.)

2. Increased Capabilities in Relation to Budgetary Action. Identify specific nature of inadequacies in Latin American forces having Western Hemisphere defense missions and propose aid programs to correct deficiencies where this is possible. In this connection, to the extent that inadequacies in forces are due to budgetary deficiencies, do not propose increased indigenous country defense spending, but do consider possibility of selected increases in U.S. military aid either (a) to cover requirement directly or (b) to do so indirectly through financing foreign exchange requirements contained in country’s budget thus freeing country resources to cover local currency costs (e.g. soft goods; pay; etc.).

3. Base Requirements. Identify all known base rights requirements for next five years and review (a) importance to U.S. and (b) alternatives to retention. Consider releasing all of minimum essentiality and for remainder (a) assess probable aid quid pro quo requirements, (b) consider what mix of aid, economic and political, would be desirable from U.S. point of view.

4. Strategic Resources. Review needs for strategic resources and consider long-range programs for purchase (see economic courses of action).

5. Internal Security. Assess current status of internal security situation with a view toward suggesting increased military assistance for this purpose where warranted. If requirement is extensive in magnitude and in number of countries covered, consider requesting legislative changes eliminating restrictions on aid for internal security purposes.

6. Use of Military for Economic Development. Assess extent to which Latin American military forces can be trained and equipped to carry out economic development functions without serious detriment to their military capabilities. Develop programs to implement this objective.

7. Orientation of Latin American Military. Recognizing current importance of Latin American military personnel, continue and accelerate orientation training programs for key senior and intermediate level officers. State and DOD should develop specific training courses which would not be limited to military matters, but would be designed to leave lasting favorable impression of the U.S.

8. DOM–state Liaison on Military Matters. Improve state-DOD liaison on proposed military policies and programs for Latin America well in advance of actual implementation date. To this end seek to establish more comprehensive and continuing contacts at the various levels within the Pentagon and with the various State offices, including ARA, U/MSC, M and G.

Economic

1. Liberalization of U.S. Trade and Import Policies. Recognizing the overriding importance to the Latin American countries of expanding their export of primary commodities to meet growing balance of payment problems, take specific remedial action, including Congressional sanction if necessary, in the following fields:

a. Increased tariff concessions in the area of basic commodities.

b. Liberalized import quotas on lead, zinc and petroleum, using subsidies where necessary to maintain essential domestic production, but aiming for eventual introduction of free markets for such minerals.

c. Rationalized U.S. Government purchases for, and sales from, strategic stockpiles contracyclically, after consultation with Latin changes in stockpiling policy.

d. More active and positive support for Latin American countries in the field of international commodity problems and the establishment of commodity agreements.

e. Timing sales of specific agricultural surpluses in specific areas, in order to assure minimal disruption of usual Latin American market agreements and established trade patterns.

2. Promotion of Long-Range Country Development Plans and Supporting Actions. Institute long-range country development planning for each of the Latin American Republics, in lieu of the regional project approach, in order to have U.S. trade, financial and economic assistance policies reflect realistically appraised Latin American socio-economic developmental requirements, and in order to permit a substantially increased proportion of total U.S. resources to be directed to Latin America. As supporting actions to the foregoing the following actions should be taken:

a. A task force should be formed to make recommendations as to the status and adequacy of existing long-range country plans and to lay the foundation for the development of such plans where they do not exist. Among other things it should develop recommendations as to whether the long-range country plans should be developed bilaterally by (1) ICA or (2) ICA in collaboration with DLF and ExIm Bank; multilateral, by (1) IBRD, (2) IDB or (3) IBRD and IDB; or by a combination of the bilateral and multilateral approaches.

b. Until satisfactory long-range plans can be developed to the point where they can become a basis for U.S. aid direction, ICA could develop bilaterally sharply stepped up country programs in the fields of housing, agricultural development, land resettlement, and other associated non-self liquidating projects. In collaboration with the DLF, the IDB and other lending agencies, ICA should develop reasonable budget requests for 1962 and 1963 to permit an increased flow of U.S. special assistance to meet these intermediate requirements for economic development capital.

c. Liberalization of DLF repayment terms by lowering current interest rates and extending the usual amortization period. Such a policy should be applied not only by DLF, but also by IBRD and IDB to those countries having temporary balance of payment difficulties arising from adherence to long-range monetary and fiscal reforms and to those countries whose present resources limit severely their capacity to service additional debt.

d. Give maximum support to the Central American common market Treaty of Economic Association, through a direct U.S. contribution to the Development and Assistance Fund provided in the foregoing treaty for the purpose of “contributing . . .⁶ to the integration and economic development of the associated countries, facilitating public and private investment for productive purposes”. (Boldness in the U.S. approach to support of this first Latin American common market and regional integration effort, and encouragement for the proposed free trade area among Argentina, Bolivia, Brazil, Chile, Paraguay, Peru and Uruguay, would go a long way to demonstrate U.S. Latin American solidarity of interests on a level similar to that accorded to Western Europe.)

3. Strengthening OAS. As a means to improve and strengthen OAS as an effective instrument for the coordination of inter-American political, economic and military policies, give serious consideration to the 16 proposals for action to strengthen the OAS contained in a report, dated December 24, 1959, prepared for the Senate by Northwestern University.⁷ (If implemented, some of these recommended measures, such as establishment of an Inter-American Staff College, an inter-American auxiliary military force, and Inter-American Leadership Foundation, an inter-American free and autonomous university and the relocation of OAS headquarters in an inter-American district, might well warrant MSP funding.)

4. Creating Favorable Climate of Understanding. To create the requisite climate of understanding for future Mutual Security Program policies and programs in Latin America, at such time as a new U.S. policy approach to Latin America has crystallized, give serious consideration to selecting a forum such as the IDB or OAS to:

a. Place before responsible Latin American officials a frank and full exposé of U.S. economic assistance objectives and policies to be applied to Latin America and to other areas of the world; and

b. Discuss and consider Latin American proposals for any modifications which they deem vital to the achievement of their minimum objectives.

1. Source: Department of State, S/S–NSC Files: Lot 62 D 1, Latin America as a Supply Base in Event of Nuclear Attack on U.S. Secret. Drafted by Bell.
2. Document 11.
3. Parts B and C of this paper are not printed.
4. See Document 15.
5. Drafted by Herbert N. Higgins, Seymour Weiss, and Charles E. Click of the Office of the Deputy Coordinator for Mutual Security on July 1.
6. Ellipsis in the source text.
7. The Organization of American States, a study prepared at the request of the Subcommittee on American Republic Affairs of the Committee on Foreign Relations, U.S. Senate, 86th Congress, 1st Session. [Footnote in the source text.]