At the January 14 meeting of the Policy Committee of the Bogotá
Conference, Mr. Armour1
suggested that a statement from OFD
on an affirmative economic program and policy of assistance to Latin
America would be desirable.
Attached is a statement setting forth in general terms what might be
the principal elements of such a program.
[Attachment]
A Positive Program of United States
Assistance for Latin America
latin american views on u.s.
assistance
To the Latin American countries economic development is a
foremost objective of national policy. At international
conferences, at United Nations meetings and whenever the
opportunity arises, they have actively sought measures to
promote economic development. The U.S. has repeatedly stated its
desire to assist in their development programs, but in their
eyes performance by the U.S. has been disappointing. They have
been increasingly dissatisfied over their economic relations
with the U.S. as evidenced recently at the conference in Rio de
Janeiro and at Havana2 where their opposition has centered around
the question of economic development. Their dissatisfaction has
been increased by the U.S. occupation with the ERP and other foreign aid programs
which they feel are crowding out consideration of their needs
and will delay still further their plans.
The Latin American countries desire (1) financial assistance, (2)
allocation of capital equipment and supplies, and (3) technical
assistance. They are displeased over their inability to obtain
capital financing, equipment and supplies, and technical
assistance in amounts adequate to their needs.
The International Bank has made no loans to Latin America,
although at Bretton Woods3
there was inserted in the Articles of
[Page 6]
Agreement at the urging of the Latin
Americans a clause providing “equitable consideration to
projects for development and projects for reconstruction alike”.
At the annual meeting of the Boards of Governors of the
International Monetary Fund and International Bank in London in
September 1947, the Latin Americans because of disapproval of
the Bank’s policies planned to introduce a resolution affecting
the Bank’s administration. Due to U.S. efforts the statement
finally presented by Mexico on behalf of the Latin American
countries was fairly mild. Because of the Bank’s limited funds,
demands upon the Bank from Europe and other areas and the Bank’s
hesitancy in making loans to Latin America, it does not appear
that the Bank will adequately meet the needs of these
countries.
Export-Import Bank lending to Latin America has for the past year
or two been on a restricted basis since the U.S. has regarded
the International Bank as the principal agency to make long term
loans for development purposes. If the Export-Import Bank were
to embark upon a broad lending program in Latin America it would
require additional lending authority from Congress.
a comprehensive program
Officers of the Department have indicated to the Latin Americans
that there is to be no plan for Latin America comparable to that
proposed for Western Europe. These statements do not mean, of
course, that this country has or is to have no policy of
assistance to Latin America. What is needed is not so much a new
policy as more effective and integrated implementation of
existing economic policy.
The economic and strategic importance of Latin America to the
United States is generally accepted, as is the fact that the
United States has considerable to gain from development in Latin
America. The principle of hemispheric solidarity has gained
widespread recognition in Latin America as well as in the United
States. Congress and the American public have long felt a
special relationship to Latin America. They have previously
supported special aid to these countries.
While the U.S. has extended a considerable amount of aid to Latin
America over the years, the assistance has been to a large
extent uncoordinated and on a project by project basis.
Moreover, the extent and nature of the aid have not received the
public attention in Latin America which would come from a
unified program presented as this country’s contribution to
development of the Latin American economy.
The amount of assistance that can be effectively utilized for
development purposes in Latin America is quite small in contrast
to that being planned for European recovery. Furthermore, the
largest burden on the U.S. from European aid will occur during
the next 15 months
[Page 7]
and
will be on a decreasing scale thereafter, whereas amounts to
meet Latin American needs would be small at the outset and
increase gradually, the total amounts still remaining
comparatively small. As the program proceeds it is hoped that
private investment will expand and that the more urgent needs of
these countries will have been met.
A unified and positive program of assistance for Latin America
should emphasize self-help, cooperation, and internal
stabilization measures. This country’s bargaining power,
moreover, in obtaining an adequate quid pro
quo would be increased if the various aid measures were
combined into a single program. Thus the U.S. should insist upon
a more favorable attitude toward private foreign investment.
Better coordination between financial assistance, the lending of
technical experts and of grants for cultural and other purposes
would provide more effective utilization of this country’s
assistance. The entire program, furthermore, should be closely
linked to this country’s military needs and to cooperation by
Latin America in this field.
At the Bogotá Conference the Secretary should express with
emphasis the U.S. desire to assist, within its capacity, the
American Republics in the prompt realization of a broad program
of economic development. He should point out that during the war
and the period since the end of hostilities, the U.S. was able
to extend a considerable amount of aid to these countries in
spite of urgent demands elsewhere. He should then state that it
is now time to accelerate the economic development of the
American Republics and that the U.S. stands ready to assist
actively in this endeavor.
The Secretary should urge the speedy establishment of effective
machinery, as proposed in the Basic Agreement, to increase not
only the tempo but also the scope of development activities. He
should suggest that the Inter American Economic and Social
Council immediately undertake, with the cooperation of each
country interested, to prepare a program for the development of
the hemisphere based upon the economic potential of each
country. He should pledge the full support of the U.S.,
emphasizing that the realization of the goal sought is to a
large extent dependent upon concrete internal measures of
self-help and upon the cooperation of all the countries. The
immediate objective, which might be indicated by the Secretary,
would be a 5-year development program covering the following
points:*
1. Expansion of
Production
The Council would consider the main types of production to be
expanded, such as steel, textile, cereals, etc., and the
suitability of the
[Page 8]
proposed expansion to the different areas. The Council should
not attempt to prepare a blue print for Latin American
production but should endeavor to determine in general terms
what commodities the countries need most, which ones are most
efficiently produced at home for domestic consumption and
export, and which ones are obtained more economically by
importation. The study would endeavor to establish realistic
production targets for certain commodities for the 5–year
period, taking into account costs, availability of capital
equipment, technical and managerial skills and possible
financing.
2. Financing
The Council would study possible means of financing the program
including the availability of existing resources, both internal
and external, and the maximum amount of debt each country should
contract. The survey would suggest the amount of development
which might be financed internally and the amount required from
external sources; including private investment, the
International Bank, the U.S. and other governments. In this
connection it is essential that measures be taken by the various
countries which would encourage the inflow of private investment
capital from abroad, and which would promote the domestic
accumulation of capital and its retention at home.
3. Economic and Financial
Stabilization
The Council would consider the internal economic and financial
reforms which are necessary to the success of a development
program, especially in the fields of currency, taxation, and
fiscal administration. The Council would ask countries to
undertake certain reforms, where necessary, if they wished to
become eligible for assistance and to participate in the general
program. The Council would recommend, in consultation with the
International Monetary Fund, monetary and exchange measures
which would facilitate international trade among the American
Republics themselves and with the outside world. In particular,
consideration would be given to the possibility of a common.
Latin American currency.
4. Technical Assistance
The Council would survey the types of technical assistance needed
and would assist countries in obtaining qualified experts
promptly, as contemplated by the Basic Agreement. An important
type of assistance would be the provision of technical training
at home or abroad for qualified individuals.
5. Foreign Trade
The Council would recommend commercial policies, in consultation
with the International Trade Organization, important to an
expansion, of trade and to the entire development program.
[Page 9]
measures to be undertaken by the
u.s.
The U.S. for its part in the program, and provided the Latin
American countries accepted and carried out their part, would
expect to undertake the following which should be stated by the
Secretary:
- 1.
- To liberalize this country’s lending program through
the Export-Import Bank, both as to amount and as to the
purpose and maturity of loans, in harmony with the
overall program.
- 2.
- To support the establishment of Inter-American
machinery whether under the Council or otherwise, to
study development problems, serve as a center of
information and facilitate development generally through
such functions as may be assigned to it.
- 3.
- To expand this country’s grants for health,
sanitation, education and cultural purposes.
- 4.
- To make available a greater amount of technical aid
and to this end to build up a group of experts in
various fields who would be available to go to the
different countries for periods of a few months to a
year or more to work closely with local officials, as
authorized by the recently enacted Mundt Bill.
