S/P–NSC files, lot 62 D 1, NSC 5432 series
Progress Report by the Operations Coordinating Board to the National Security Council 1
Progress Report on NSC 5432/1 United States Objectives and Courses of Action With Respect to Latin America
(Policy Approved by the President, September 3,
(Period Covered: April 30–December 1, 1954)
a. summary of major actions
1. A communist-dominated government in Guatemala was overthrown and a government favorable to the U.S. came into power. The U.S. is supporting this new government with relatively substantial military and economic assistance.
2. The U.S. demonstrated increased support and use of the OAS and is increasing its financial support of that organization. Despite several incidents of friction in Central and South America, the U.S. has been instrumental in averting any breach of the peace.
3. Criticism of U.S. economic policy which reached a climax prior to the Rio Economic Conference has somewhat subsided. Criticism at the conclusion of the conference was less severe than might have been anticipated due in part to the sympathetic but firm attitude demonstrated by our Delegation and the assurances given by the Delegation of our determination to help Latin America solve its economic problems on a sound basis. Announcement of our support of an International Finance Corporation;2 liberalization of, and announcement of, loans under our development loan policy, and decisions not to impose additional duties on lead and zinc were major factors in reducing Latin American criticism.
4. The U.S. responded promptly and effectively to urgent appeals from Haiti and Honduras to meet major flood disasters in those countries, and subsequently extended substantial economic aid.[Page 90]
5. A decision to pay transportation, per diem and course costs for military trainees from MDAP countries in Latin America resulted in a substantial increase in the number of such trainees scheduled for attendance at Service schools in the U.S. and in the Canal Zone.
6. New Military Assistance Agreements with Honduras and Nicaragua are being implemented and the military grant program for Colombia was increased by one battalion; but, in general, the U.S. has been unable to accede to requests for increased grant military assistance.
7. The information program during this period was reoriented so as to deliver more impact in the priority countries such as Brazil, Chile, Bolivia and Guatemala. The President’s “Atoms for Peace” proposal,3 the Rio Economic Conference, pertinent recommendations of the Milton Eisenhower report, and activities exposing Communism received continuing emphasis in both planning and output.
b. operational considerations bearing on policy
8. The Working Group sees no need for any change at this time in the policy enunciated in NSC 5432/1. However, the Working Group has not had the opportunity to assess the impact of the Rio Economic Conference on policy.
c. emerging problems and future actions
9. The coming six months will in all probability be marked by a continuation of present problems in the political and economic fields. In the political field, the principal problem will be to find the means of associating the United States with the aspirations of the peoples of Latin America, thus counteracting communist propaganda which consistently and often effectively portrays the United States as the defender of “so-called exploiters” in opposition to the interests of the common people. To win the support of the peoples as well as the governments for our major policy objectives is a task of enormous and long-range proportions.
10. In the economic field, the United States will continue to be concerned with maintaining economic stability and accelerating economic development in Latin America. The United States will also have to face the desire of Latin Americans to have the U.S. assume a larger share of the financial burden involved in solving their economic problems than the U.S. is willing to bear. To meet this situation, the United States should continue its efforts to encourage and strengthen the will and ability of Latin America to take necessary self-help actions and at the [Page 91] same time, as required by U.S. interest, should furnish assistance needed to support and accelerate economic development in Latin America, and by this and other appropriate means demonstrate U.S. desire to aid Latin American efforts to achieve economic progress.
11. Specifically, the following emerging problems and possible future actions require attention:
- Latin America will be greatly concerned with the results of the U.S. policy announced at Rio of assuring the financing of all sound Latin American economic development projects. It is important that this policy be implemented promptly and vigorously.
- The Latin American press, since the Rio Conference, has generally not supported the U.S. position at that conference. It is important to take action to gain maximum support for our announced economic policy.
- The U.S. should strengthen its effort to increase the use of private investment funds, both domestic and foreign, for economic development in Latin America. In this connection, a renewed effort is planned to secure Latin American participation in the Investment Guaranty Program,4 and steps should be taken to obtain necessary Congressional action on the Rio Economic Conference resolution on tax reduction.5
- The Soviet Union will continue its vigorous program indoctrinating Latin American labor with communist ideals. The U.S. should continue to develop its labor program for Latin America to meet this threat.
- Implementation of the policy of extending credit for the sale of military equipment to Latin America has been severely handicapped. These sales have been carried out to date only through the use of regular Department of Defense funds. Solution of the problem apparently requires simplified procedures for the utilization of MDAP program funds for credit purposes and/or new legislation to provide a more flexible means of financing.
- Efforts of some Latin American countries to enforce their claims to sovereignty over wide areas of the high seas beyond the three-mile limit recognized by the U.S., the general enthusiasm among the Latin governments over holding an OAS Conference on the Continental Shelf and related matters in 1955 or early 1956 and the important role of Latin American delegations in UN consideration of the subject, require careful review of the U.S. policy and strategy in this regard.
- In view of the U.S. economic policy as outlined at the Rio Economic Conference, attention should be given to the need for maintaining continuity in the technical cooperation and economic assistance programs in Latin America.
- The probable introduction of legislation to limit imports of petroleum as a measure to protect domestic fuel producers, primarily at the expense of Venezuela, will require serious attention from the Executive Branch.
- The reintroduction of legislation in Congress to increase the domestic sugar industry’s share of the U.S. market is to be expected. If adopted, it would result in a proportionate reduction of foreign suppliers and would adversely affect the economy of Cuba.
- Brazil is in the course of striving to level off an inflationary trend, and Chile is faced with a continuation of rapid inflation. Decisions will be required regarding the appropriate actions which the United States should take to support these countries.
- Efforts to secure the base facilities in Brazil6 requested by Defense may cause the Brazilians to press their request for increased military assistance or other concessions. A decision will be required on these requests.
- The question of opening negotiations with Argentina for a Bilateral Military Assistance Agreement has been raised and will require special consideration in the light of our relations with Argentina and her neighbors, and of public opinion in this country.
- There are likely to be continuing efforts to overthrow the Figueres Government in Costa Rica, and Costa Rica may in consequence call for our assistance under the Rio Treaty.
- In light of significant requests for assistance and limited appropriations for military assistance in Latin America, the Joint Chiefs of Staff have undertaken a general reappraisal of military objectives and programs in Latin America.
d. extent of agency interests
12. The Department of Commerce and the Treasury Department fully participated in the deliberations of the Working Group, including the preparation of this report.
- A title sheet and covering memorandum are not printed. Drafted on Dec. 29, 1954, by the OCB’s Working Group on Latin America, and reviewed at the OCB’s Board Assistants’ meeting on Jan. 7, 1955. As a result of the meeting, a revised draft was prepared, under date of Jan. 10, not printed, and forwarded to the OCB. On Jan. 19, the OCB approved the report for transmittal to the NSC, all agencies represented on the OCB concurring in the report as submitted. (Memorandum by Mr. Sparks to Secretary Dulles, dated Feb. 14, 1955, S/P–NSC files, lot 61 D 167, NSC 5432/1) The report was transmitted to the OCB on Feb. 3. Records of the OCB meetings and the Board Assistants’ record of actions are contained in S/S–OCB files, lot 62 D 430.↩
- Apparent reference to an announcement by the Treasury Department on Nov. 11, 1954; for text, see Department of State Bulletin, Nov. 29, 1954, p. 814.↩
- Outlined in President Eisenhower’s address made before the United Nations General Assembly on Dec. 8, 1953; for text, see Public Papers of the Presidents of the United States: Dwight D. Eisenhower, 1953, pp. 813–822, or Department of State Bulletin, Dec. 21, 1953, pp. 847–851.↩
- For information on the referenced program, see documentation concerning U.S. foreign economic policy in volume i . For additional information, see Staff Papers Presented to the Commission on Foreign Economic Policy (Washington, 1954), pp. 126–134.↩
- Apparent reference to Resolution 69/54 (“Taxation and Tax Treaties”), approved on Dec. 2, 1954; for text, see Report of the United States Delegation to the Meeting of Ministers of Finance or Economy of the American Republics as the Fourth Extraordinary Meeting of the Inter-American Economic and Social Council, Quitandinha, Brazil, November 22 to December 2, 1954 (Washington, 1954), p. 68, hereinafter cited as USDel Report: Quitandinha.↩
- Regarding this subject, see the memorandum by Mr. Holland, July 12, p. 653.↩
- Henry F. Holland.↩
- Assistant Secretary Holland’s trip took place between Sept. 5 and Oct. 10, 1954; extensive documentation is in file 110.15 HO for 1954.↩
- George M. Humphrey.↩
- Herbert Hoover, Jr. ↩
- Albert F. Nufer.↩
- Apparent reference to the Export–Import Bank survey mission which visited Argentina from July 27 to Aug. 11, 1954; pertinent documents are in file 103 XMB.↩
- Lt. Col. Oscar Osorio.↩
- Héctor David Castro.↩
- No such letter has been identified.↩
- The draft is not printed.↩
- Reference is to the treaty of mutual understanding and cooperation and memorandum of understandings reached, signed at Panama, Jan. 25, 1955, and entered into force, Aug. 23, 1955; for text, see TIAS No. 3297 or 6 UST (pt. 2) 2273.↩
- Col. Marcos Pérez Jiménez.↩
- Ambassador Warren presented the Legion of Merit award to President Pérez Jiménez at Caracas on Nov. 12, 1954.↩
- Merwin L. Bohan.↩
- Charles Erwin Wilson.↩
- Gen. Gustavo Rojas Pinilla.↩
- Paul E. Magloire.↩
- The referenced elections took place on Oct. 10, 1954.↩
- José Figueres Ferrer.↩
- Gen. Héctor B. Trujillo Molina, President of the Dominican Republic; Anastasio Somoza García, President of Nicaragua.↩
- For documentation relating to this subject, see volume i .↩
- For information relating to the President’s decision, see Department of State Bulletin, Sept. 6, 1954, pp. 339–340.↩
- Apparent reference to the Sugar Act of 1948 (Public Law 388), approved Aug. 8, 1947; for text, see 61 Stat. 922.↩
- Reference is to Resolutions 33/54 (“Establishment of a Special Committee on Bananas of the Inter-American Economic and Social Council and Calling of a Specialized Inter-American Conference”) and 34/54 (“International Coffee Situation”) both approved on Dec. 1, 1954; for text, see USDel Report: Quitandinha, pp. 12–13, 14.↩
- The Secretary of the Treasury also served as Chairman of the NAC.↩
- For information on this subject, see Export–Import Bank of Washington, Nineteenth Semiannual Report to Congress for the Period July-December 1954 (Washington, 1955), pp. 2–4.↩
- Labor was included with Industry, Mining and Labor in FY 1952 and FY 1953. [Footnote in the source text.]↩
- Labor was included with Industry, Mining and Labor in FY 1952 and FY 1953. [Footnote in the source text.]↩
- Excludes L.A. share in world-wide projects, voluntary agency programs and other special programs. [Footnote in the source text.]↩
- The Agricultural Trade Development and Assistance Act of 1954 was popularly referred to as PL 480.↩
- The exchange of notes constituting the agreement, signed at Lima, Nov. 25, 1954, were transmitted to the Department of State under cover of despatch 266, from Lima, dated Nov. 29, 1954, not printed. (723.56/11–2954)↩
- A convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was signed by the United States and Honduras at Washington, June 25, 1956, and it entered into force, Feb. 6, 1957 (operative retroactively to Jan. 1, 1957); for text, see TIAS No. 3766 or 8 UST 219.↩
- Documents pertaining to this subject are in file 839.235.↩
- Documents relating to this subject are in file 838.2569.↩
- Mutual Security Act of 1954, approved Aug. 26, 1954; for text, see 68 Stat. 832.↩
- For documentation on the military plan, see pp. 766 ff.↩
- Includes $52.6 millions of W.W. II lend-lease ships the title to which was transferred to Brazil. [Footnote in the source text.]↩
- The text of the referenced agreement is printed on p. 179.↩
- Not printed.↩
- For text of the agreement providing for a U.S. Army Mission to El Salvador, signed at San Salvador, Sept. 23, 1954, and entered into force, Nov. 17, 1954, see TIAS No. 3144 or 5 UST (pt. 3) 2870.↩
- For text of the exchange of notes, signed at Bogotá, Oct. 6 and Nov. 4, 1954, and entered into force on the latter date, extending indefinitely the agreements of Oct. 14, 1946, providing for a U.S. Naval Mission to Colombia, and Feb. 21, 1949, providing for U.S. Army and Air Force Missions to Colombia, see TIAS No. 3146 or 5 UST (pt. 3) 2904.↩
- For text of the exchange of notes, signed at Washington, Mar. 18 and Apr. 20, 1954, and entered into force on the latter date (operative retroactively to June 20, 1953), extending the agreement of June 20, 1949, providing for the services of a U.S. Army Mission in Peru, see TIAS No. 2997 or 5 UST (pt. 2) 1290.↩
- For text of the exchange of notes, signed at Rio de Janeiro, June 29 and Oct. 9, 1954, and entered into force on the latter date (operative retroactively to May 7, 1954), extending and amending the agreement of May 7, 1942, providing for a U.S. Naval Mission to Brazil, see TIAS No. 3130 or 5 UST (pt. 3) 2735.↩
- For text of the exchange of notes, signed at Washington, Aug. 30 and Dec. 6, 1954, and entered into force on the latter date, extending and amending the agreement of Dec. 12, 1940, as modified and extended, providing for a U.S. Naval Mission to Ecuador, see TIAS No. 3220 or 6 UST 777.↩
- For text of the exchange of notes, signed at La Paz, Dec. 3 and 22, 1954, and entered into force on the latter date (operative retroactively to Sept. 4, 1953), extending the agreement of Sept. 4, 1941, as extended and amended, providing for the services of a U.S. military aviation mission in Bolivia, see TIAS No. 3192 or 6 UST 575.↩
- Maj. Reinaldo Varea Dónoso.↩
- Rear Adm. Anibal Osvaldo Olivieri.↩
- Gen. Rodolfo Sanchez Taboada.↩
- Maj. Gen. Lionel C. McGarr.↩
- Lt. Gen. Charles L. Bolté.↩