11. National Security Council Report1

NSC 5902/1

STATEMENT OF U.S. POLICY TOWARD LATIN AMERICA2

Introduction

1. Latin American plays a key role in the security of the United States. In the face of the anticipated prolonged threat from Communist expansionism, the United States must rely heavily on the moral and political support of Latin America for U.S. policies designed to counter [Page 92]this threat. A defection by any significant number of Latin American countries to the ranks of neutralism, or the exercise of a controlling Communist influence over their governments, would seriously impair the ability of the United States to exercise effective leadership of the Free World, particularly in the UN, and constitute a blow to U.S. prestige. Apart from the Communist threat, the long term security of the United States requires the maintenance of harmonious relations with the other American Republics, whose rapidly growing population and expanding economies will make them of increasing importance.

2. Latin America is and must be dealt with primarily as an underdeveloped area. Its peoples’ aspirations for higher living standards, more industrialization and popularly-based governments are rising more rapidly than they are being satisfied. Although the area as a whole has averaged an encouraging annual rate of growth of over 4 percent in gross national product, much of the gain is offset by the explosive growth of population—the Free World’s highest—which it is estimated will increase Latin America’s population of approximately 190 million at present to some 500 million by the year 2000. Growth in per capita gross national product has been on the order of 2–2.5 percent, but is unevenly distributed so that in many areas urban living standards are showing a tendency to stagnate. Despite a recent general trend away from dictatorships, the area generally has not yet established stable, representative governments or orderly constitutional processes. Discontent with the rate of economic and political progress is basic to present Latin American attitudes toward the United States.

3. Latin Americans look to the United States for encouragement and concrete support for the achievement of their economic and political objectives. Strongly nationalistic, they focus their interests on their own internal problems. Their responsiveness to U.S. leadership in world affairs is conditioned more by their assessment of the degree of positive interest in these objectives than by their own appreciation of the threat of Sino-Soviet power or of Communist infiltration, which they tend to view as remote from their affairs.

4. A key problem in U.S.-Latin American relationships is psychological. Latin American attitudes towards the United States have deteriorated somewhat from the high point achieved during World War II. Contributing to this are: the feeling of Latin Americans that the United States has neglected them while devoting attention and resources to more distant areas in order to combat Communism, the tendency of Latin Americans to shift to the United States the blame for lack of satisfactory progress, and the growth of nationalism characteristic of underdeveloped areas but especially directed towards the United States in Latin America because of the U.S.’s dominant economic, military and political position in the hemisphere. A series of misconceptions about the United States and its policies have gained currency [Page 93]and constitute a serious impediment to better relations. As a result, what we do may be no more important to the achievement of our objectives than how we do it.

5. Nevertheless the situation in Latin America is more favorable to attainment of U.S. objectives than in other major underdeveloped areas. Alone of the underdeveloped areas, it shares our Western cultural, religious, and historical heritage and emerged from European colonialism over a century ago. None of the Latin American nations faces an immediate threat of overt Communist aggression or takeover. Consequently, in comparison with other underdeveloped countries, defense and internal security need not constitute as great a charge on Latin American energies and resources, leaving them relatively more free to concentrate constructively on strengthening their economies and political institutions.

6. On the other hand, we must reckon with the likelihood of a much more intensive Bloc political and economic effort in Latin America. The Communists have at present limited capabilities there, but are utilizing their resources vigorously and intelligently. Their immediate objectives are to disrupt friendly relations with the United States and to promote neutralist foreign policies. Latin American Communist parties have sought with mixed success to de-emphasize their revolutionary aims and to align themselves and work with all elements actually or potentially hostile to the United States in an effort to influence Latin American governments to disengage themselves from U.S. leadership. At the same time, the Sino-Soviet bloc is complementing the efforts of the local Communist parties by a growing economic, cultural, and propaganda effort designed to hold out inducements for a more impartial position in East-West affairs and to portray the United States as the major obstacle to Latin American progress. The effective countering of this effort, by constructive policies as well as by more direct anti-Communist measures, must be an increasingly important element of U.S. Latin American policies.

Objectives

7. Greater friendship, mutual respect and sense of interdependence among governments and peoples of the American Republics.

8. Greater Latin American understanding and support of U.S. world policies as well as greater recognition of the constructive U.S. interest in Latin American aspirations.

9. Sound and growing economies capable of providing rising living standards within the general framework of a free enterprise system.

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10. Increased flow of U.S. and other Free World investment capital to Latin America, and increased trade among Latin American countries and between them and the United States and other Free World countries.

11. Evolutionary development of democratic governments supported by stable political, economic and social institutions compatible with, though not necessarily identical with, those of the United States.

12. Maximum limitation of Communist and Sino-Soviet bloc influence and greater awareness of the nature and threat of international Communism in Latin America.

13. Latin American participation in and support of measures to defend the hemisphere under U.S. leadership.

14. Adequate production of and access to resources and materials essential to U.S. security and identification of such resources and skills as may be capable of making a significant contribution to U.S. recovery in the event of nuclear attack.

15. Emergence of Latin America as a strong component part of the Western community of nations.

16. Further development of Western Hemisphere regional cooperation for the maintenance of peace, regional security and economic and social advancement.

Policy Guidance

General

17. Recognize that, as seen by the Latin Americans, the role and responsibility of the United States is to provide leadership and assistance within a framework of hemispheric partnership which will assist Latin America to achieve political and socio-economic development and sound institutions.

18. Conduct U.S. relations with Latin America in full recognition that pride, disparities of power and standards of living between the United States and Latin America, population pressures, dependence on one-commodity economies and U.S. markets, and opportunities for assistance from the Soviet bloc, are important factors, among others, influencing the present dominant Latin American attitude that the United States should assume a greater measure of responsibility in assisting Latin America toward its goals.

19. a. When feasible and possible, associate U.S. policies with the legitimate aspirations of the Latin American peoples and states, and seek to assure that they contribute, insofar as possible, to better Latin American attitudes toward the United States.

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b. In the conduct of relations with Latin America, reflect acceptance by the United States of a spirit of partnership and equality among the American Republics and a sympathetic understanding by the United States of the special problems and interests of Latin America, especially when these differ from our own.

Political

20. Non-Intervention Policy. Continue to adhere to the policy of not intervening unilaterally in the internal affairs of the other American Republics.

[paragraphs 21–a and 21–b (161/2 lines of source text) not declassified]

22. Recognition.

a.
Recognize all Latin American governments qualifying for recognition under the accepted criteria of international law (unless a substantial question should arise with respect to Communist control).
b.
Maintain correct diplomatic and other relations with all recognized governments. Where possible, give special encouragement to those governments which have a genuinely popular base and are effectively striving towards the establishment of representative and democratic governments. Seek to counter any impression that the United States favors dictatorships, either of the right or the left.

23. Hemispheric Solidarity. Strengthen hemisphere solidarity by:

a.
Strongly supporting and strengthening the OAS, utilizing it whenever feasible as a principal means of achieving our objectives and as a major forum for multilateral discussions of political and economic questions affecting the hemisphere.
b.
As may be appropriate, seek to bring the Inter-American Defense Board into closer relationship with the Council of the OAS and to utilize the Advisory Defense Committee of the OAS.
c.
Obtaining greater understanding and acceptance by Latin American countries of the inter-relationship of the security of the Western Hemisphere and the security of other areas of the Free World.
d.
Maintaining close liaison with the other American Republics with a view to maintaining their support for the U.S. position on key issues arising in the United Nations affecting the security of the Free World, but: (1) refraining from placing heavy pressure on Latin American governments on less important issues, and (2) recognizing the differences between the position of the United States and of most Latin American states on issues concerning economic assistance to underdeveloped areas, intervention, and colonialism, among others.
e.
Consulting with Latin American states, whenever possible, before taking actions which will affect them or for which we wish their support.
f.
Promoting with appropriate Latin American leaders close personal relationships and encouraging reciprocal visits by appropriate high government officials and distinguished personages.
g.
When feasible, bringing Canada, Puerto Rico (and, as it gains greater autonomy in foreign affairs, the West-Indian Federation) into closer relationship with the inter-American system.

24. Maintenance of Peace within the Hemisphere. Take all practicable measures, within the limitations of the non-intervention policy, to prevent armed conflicts between states in the Western Hemisphere:

a.
Encourage and support actions by the OAS designed to solve peaceably disputes involving, or likely to involve, armed conflict between American states.
b.
Insist that, in accordance with the UN Charter, the OAS has priority of responsibility over the UN Security Council with respect to threats to peace arising among the American Republics.
c.
Assist American states resisting pressures from their neighbors, when such pressures are inimical to U.S. interests and to the peace of the hemisphere.
d.
Fulfill U.S. obligations in conjunction with Brazil, Argentina, and Chile as co-guarantor of the Peruvian-Ecuadoran boundary; work toward a peaceful settlement of the Nicaraguan-Honduran boundary dispute; and seek to prevent other boundary and territorial disputes from developing into threats to the peace and/or a justification for the maintenance of armaments by the disputants.

25. Canal Zone and Three-Mile Limit.

a.
Maintain in force all the rights, power and authority granted the United States by the Convention of 1903 with Panama, as the basic treaty covering the status of the Canal Zone; seeking positive means of diverting Panamanian attention from the Canal problem to economic development.
b.
Unless and until other criteria are accepted, refrain from giving juridical or de facto recognition to claims by Latin American governments to sovereignty beyond the three-mile limit and endeavor to obtain support for or acquiescence in the U.S. position.

26. Colonialism.

a.
Encourage acceptance and implementation by the interested European states of the principle that dependent and colonial peoples in this hemisphere should progress by orderly processes toward an appropriate form of self-government.
b.
When disputes between American and non-American states over dependent territories cannot be settled by direct negotiations, encourage peaceful settlements by other methods available to the parties.

27. Communism.

a.
Seek to create greater awareness of the specific threats posed to Latin America as well as to world security by Communism by (1) exposing, [1 line of source text not declassified] the activities of local Communist parties and of the Soviet bloc as they relate to Latin [Page 97]America; and (2) carrying out, as appropriate, a prudent exchange of information with Latin American governments on Communist and Communist bloc activities.
b.
Obtain maximum recognition by those states which have ratified Resolution 32 of the Ninth Inter-American Conference at Bogota and/or Resolution 93 of the Tenth Inter-American Conference at Caracas2 of their continuing obligations under these articles with respect to Communism.
c.
To the extent feasible and under methods and procedures that are prescribed by the Department of State to guide personnel operating in the field, encourage individual and collective action by the other American Republics against Sino-Soviet bloc influence and Communist or other anti-U.S. subversion, including:
(1)
Adoption and enforcement of adequate laws to control Communist activities.
(2)
Restriction on the entry, production, and dissemination of Communist and bloc information and propaganda material.
(3)
Restriction on the admission to Latin American countries of identified Communists and of individuals or groups from the bloc when the intent is to raise the prestige of Communism and the Communist countries.
(4)
Limitation of trips by Latin American nationals to bloc countries and to Communist international front meetings.
(5)
Prevention of the opening of new diplomatic and consular establishments by bloc countries and limitation on the size of the staffs and the activities of existing establishments.
(6)
Prevention of direct or indirect trade in strategic materials with the Sino-Soviet bloc.
(7)
Prevention of trade with the bloc (a) on prejudicial terms, or (b) at levels or in fields which would create damaging dependence on the bloc or result in a significant bloc influence over the international actions of the country. Within these limitations, normally refrain from discouraging Latin American countries from trading non-strategic surplus commodities to the European Soviet bloc for consumer goods or other products they can use.
(8)
Rejection of bloc aid in sensitive areas and exclusion of bloc specialists and technicians.

28. Sanction Against Close Bloc Ties. If a Latin American state should establish with the Soviet bloc close ties of such a nature as materially to prejudice our interests, be prepared to diminish or suspend governmental economic and financial cooperation with that country and to take any other political, economic or military actions deemed appropriate.

29. National Leaders. Increase efforts to influence present and potential political, military and labor leaders, journalists, radio commentators, educators, and others exercising substantial influence over the opinion-forming process.

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30. Moderate Leftists. Utilize, as appropriate, the potential of moderate elements of anti-Communist leftist and/or nationalist political and labor movements and other groupings as a means of limiting and countering Communist influence.

31. Opposition Elements. Maintain contact with elements of the opposition to recognized governments to the extent and at a level which (a) will not seriously impede the achievement of U.S. objectives through the recognized government; (b) will not associate the United States with efforts to overthrow recognized governments by unconstitutional means; or (c) will not create an impression that the United States supports or condones the establishment of authoritarian regimes, either rightest or leftist; these limitations not necessarily to apply to a country in which there is a reasonable expectation that the government will act in the interest of Communism.

32. Intellectuals and Students. Devote increased attention to the development of attitudes favorable to U.S. policy objectives among the Latin American teaching profession, students and intellectuals by such means as (a) exchange programs specifically designed to influence attitudes in educational systems; (b) cultural, sports and information programs specifically planned to enhance U.S. prestige among such groups; (c) encouraging private U.S. organizations capable of increasing their efforts in these and related fields; and (d) encouraging other Free World governments, groups and individuals to supplement U.S. efforts in these respects.

33. Labor.

a.
Encourage non-Communist labor organizations.
b.
Encourage U.S. labor organizations to carry out sound programs designed to strengthen free labor in Latin America.
c.
Encourage and support the training of anti-Communist labor leaders in the United States and other countries of the hemisphere.
d.
Encourage, as may be appropriate in individual countries, the activities of the Organizacion Regional Inter-Americana de Trabajadores (ORIT) and other Free World labor organizations.
e.
In the employment of local labor by the U.S. Government pursue exemplary labor practices and encourage such practices on the part of private U.S. employers.
f.
Encourage Latin American countries to increase incentives tending to influence labor toward a democratic system based on free enterprise.
g.
As may be appropriate, encourage and/or conduct labor information activities designed to counteract Communist infiltration in labor organizations and to assist them in learning the purposes and methods of free trade union organization.
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Internal Security

34. Proceed as feasible in selected countries with the implementation of the program for strengthening the capabilities of the local public safety forces and activities necessary to maintain internal security and to render ineffective the Communist apparatus, but take into account the dangers of U.S. association with local public safety forces which adopt extra-legal and repressive measures repugnant to a free society.

Economic

35. Technical Assistance. Strengthen and program, on a longer term basis, technical cooperation; provided, always, that each recipient country has a genuine interest in and desire for our participation in programs undertaken by it, and that our participation makes a contribution toward the achievement of our foreign policy objectives commensurate with its cost. Within these policy limits, increase specialized training of Latin Americans in host countries, the United States, including Puerto Rico, and third countries.

36. Trading Policies. In order to expand inter-American trade:

a.
Make every effort to maintain stable, long-term trading policies and avoid, to the maximum extent possible, restrictive practices which affect key Latin American exports to the United States.
b.
Work toward a reduction of tariff and other trade barriers with due regard to total national advantage.
c.
Encourage those American Republics which are not now members of GATT to accede to GATT and to negotiate reductions of trade barriers within the GATT framework.
d.
Demonstrate U.S. concern for the commodity problems of Latin American nations. In an effort to find cooperative solutions, be prepared to discuss and explore possible approaches to such problems in accordance with U.S. policy on international commodity agreements.
e.
Encourage and endorse the establishment of customs unions or free trade areas in Latin America which conform to GATT criteria.
f.
Be prepared to endorse proposals for regional preference arrangements which do not conform to GATT criteria, if consistent with over-all foreign economic policy.

37. Economic Development. Recognizing the sovereign right of Latin American states to undertake such economic measures as they may conclude are best adapted to their own conditions, encourage the Latin American nations:

a.
To make maximum contribution to their own economic development.
b.
To base their economies on a system of free private enterprise adapted to local conditions.
c.
As far as practicable, to curtail diversion of public funds to uneconomic state-owned industries.
d.
To take all feasible steps to create a political and economic climate conducive to private investment, both foreign and domestic.
e.
Where appropriate, to diversify their economies on a sound basis.

38. Recognizing that Latin American economic development will require an additional flow of external private and public capital:

a.
Encourage Latin American countries to look to private capital and international lending institutions as major sources of external capital for development, negotiating wherever feasible (1) suitable income tax agreements designed to reduce obstacles to international trade and investment and to give recognition to tax incentives offered by Latin American countries, (2) investment guarantee agreements, and (3) where needed, Treaties of Friendship, Commerce and Navigation.
b.
Be prepared to extend public loans which are consistent with relevant U.S. loan policy considerations, seeking by the use of appropriate U.S. Government lending institutions to make a substantial flow of capital available for Latin American economic development, to alleviate balance of payments crises, and to stimulate economic reforms.
c.
Facilitate as appropriate favorable consideration of applications to international institutions for credits consistent with U.S. loan policies and support the approval of such applications by the Boards of these institutions.
d.
Encourage efforts by international lending institutions to bring about desirable financial and economic reforms.
e.
Cooperate with the Latin American countries to establish at an early date an Inter-American Development Institution which will seek to collaborate with other development institutions and sources of public and private capital with a view to expanding the resources for financing economic development. Support incorporation in it of a highly qualified technical staff capable of assisting Latin American countries in development planning and with preparation and engineering of development projects.
f.
Be prepared to extend limited amounts of special economic assistance on a grant or loan basis in those exceptional circumstances when other means are inadequate to achieve economic and political stability essential to U.S. interests.
g.
Encourage other Free World countries to provide capital and technical assistance to Latin America.
h.
Continue to assist in the financing of the Inter-American Highway and the Rama Road in accordance with existing agreements and established legislative authority.

39. In carrying out programs involving disposal of U.S. agricultural surpluses abroad:

a.
Negotiate with Latin American governments sales of surplus agricultural commodities where appropriate.
b.
Give particular attention to the economic vulnerabilities of the Latin American countries and avoid, to the maximum extent practicable, detracting from the ability of these countries to market their own exportable produce.
c.
Encourage the use in the purchasing countries of the local currency proceeds of sale for loans for economic development purposes, with particular emphasis on private enterprise.

40. Encourage the use in peacetime of selected Latin American military personnel and units in development projects where such use will not interfere with the capability of the units involved to perform their military missions or to meet the military requirements for which they were organized. Activities along this line may include training and equipping engineer units with construction equipment where such activities will contribute to economic development through the construction of public service projects, including communications.

Informational and Cultural

41. In addition to lines of action indicated above place special emphasis, as a matter of urgency, on increased U.S. informational and cultural activities designed to:

a.
Present the United States as a constructive force cooperating with Latin America on a basis of partnership toward the achievement of a greater measure of political and economic progress.
b.
Promote greater understanding and acceptance by Latin American countries and peoples of primary responsibility for progress.
c.
Obtain a better mutual understanding by the peoples of Latin America and of the United States of each others’ special characteristics and problems.
d.
Obtain the cooperation of the American Republics in assuming a large measure of responsibility for promoting better mutual understanding within their own countries through such means as the establishment of national commissions of distinguished citizens to work for these purposes.

42. To the extent feasible encourage U.S. nationals, including business and industry represented in Latin America, to participate broadly in efforts to achieve the purposes of the preceding paragraph.

Military

43. Assume primary responsibility for hemispheric military operations in the Atlantic and Pacific Oceans and the Caribbean Sea, including the sea and air approaches to the Panama Canal, and seek, in our military and other relations with the states concerned, acceptance of U.S. military control of the defense of these sea areas.

44. a. Encourage acceptance of the concept that each of the Latin American states is responsible for providing, through effective military and mobilization measures, a contribution to the defense of the hemisphere by insuring its internal security and by the defense of its coastal [Page 102]waters, ports and approaches thereto, bases, strategic areas and installations located within its own territory, and routes of communication associated therewith.

b. In exceptional cases, be prepared to accept participation by a Latin American state in combined operations in support of U.S. military responsibility under paragraph 43 above, where its location and resources make such participation feasible, and where political or hemisphere defense considerations make such a course of action desirable in the interest of the security of the United States.

45. a. Make available to Latin American states, on a grant basis if necessary, the training and minimum military equipment necessary to assist them to carry out the missions relevant to hemispheric defense in the preceding paragraph, except that internal security requirements shall not normally be the basis for grant military assistance.

b. Discourage Latin American governments from purchasing military equipment not essential to the missions in paragraph 44. However, if a Latin American government cannot be dissuaded from purchasing unneeded military equipment, and if it is essential for U.S. political interests, make additional equipment available on a cash, credit or, under extraordinary circumstances, grant basis, if appropriate.

c. In order to be in a position effectively to supply military equipment on a reimbursable basis in accordance with a and b above, make equipment available to Latin American countries on terms which insofar as feasible are sufficiently favorable to encourage the Latin American governments to obtain such equipment from the United States rather than from another source.

d. In making military equipment and training available to Latin American countries, take into account the provisions of paragraph 22–b, relative to the type of Government involved, exercising caution in the provision of such assistance to dictatorships.

46. Encourage, to the maximum extent consistent with the needs and capabilities of each Latin American nation, the standardization along U.S. lines of military doctrine, unit organization and training. Except when it will create undue demand on the United States seek, in the interests of standardization as well as for other reasons, to discourage purchases by Latin American governments of military equipment from other countries, especially Communist countries, primarily by assuring the Latin American countries that we will endeavor to fill their essential requirements expeditiously and on reasonable terms. Where appropriate, seek to prevent other Free World countries from selling military equipment to Latin American states.

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47. Seek to develop a conviction that collaboration, including military purchases, by any of the American states with Communist nations would be a serious hazard to all of the nations of this hemisphere.

48. If participation of Latin American military units is required in future extra-continental defense actions, provide logistical support, if necessary without reimbursement, to such forces.

49. Take action as necessary, including military action, to insure the continued availability to the United States of bases and base rights in Latin America that are considered vital to the security of the United States.

50. Seek the continued cooperation of the Latin American states in carrying out the hemisphere mapping program.

51. Continue our active participation in the Joint Military Commissions we have with Brazil and Mexico, and make effective use of the IADB to achieve our military objectives.

52. Foster close military relations with the Latin American armed forces in order to increase their understanding of, and orientation toward, U.S. objectives and policies, and to promote democratic concepts and foster pro-American sentiments among Latin American military personnel.

53. Provide adequate quotas for qualified personnel for training in U.S. armed forces schools and training centers. Seek, as appropriate, new legislative authority to facilitate provision of such training to personnel from all Latin American countries. Encourage Latin American states to fill their authorized quotas at the three Service Academies.

54. Continue, and establish where appropriate, military training missions in Latin American states, countering any trend toward the establishment of military missions, or agencies or individuals with a similar function, other than those of the American Republics.

55. Conduct a special study of the potential contribution of Latin American resources, production and skills to U.S. recovery following a nuclear attack.

[Here follows a 21–page Financial Appendix.]

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Annex B

GENERAL CONSIDERATIONS

I. Importance of Latin America

1. Latin America plays a key role in the security of the United States. In the face of the anticipated prolonged threat from Communist expansionism, the United States must rely heavily in the coming years on the moral and political support of Latin America for its policies designed to counter this threat.

2. Over the next half century, Latin America is likely to play an increasingly important role in world affairs. With a population expected to reach some 500 million by the end of this century and possessing a wide range of undeveloped resources, it represents a large potential of economic and political power. If this potential is realized and applied on the side of the Free World, the capability of the United States and its Western allies to deal successfully with Communist expansionism for an indefinite period will be enhanced. The availability of Latin American resources and political support could be of considerable importance to the military defense of the Free World. But if Latin America fails to progress, the area is likely to become a drain on the energies and resources of the United States.

3. In the coming decade, a significant drift by Latin America away from its traditional alignment with the United States towards a position of “neutralism” would profoundly alter the world political balance to the disadvantage of the United States. A defection by any significant number of Latin American countries to the ranks of neutralism, or the exercise of a controlling Communist influence over their governments, would seriously impair the ability of the United States to exercise effective leadership of the Free World, particularly in the UN, and constitute a blow to U.S. prestige.

4. A shift of any significant number of Latin American countries to neutralism would also have serious repercussions on the security situation elsewhere. It would adversely affect the capability of the United States to carry out its policy towards Communist China and to retain the support of SEATO and Baghdad Pact powers, which would feel increasingly isolated by the then-dominant neutralist trend of the underdeveloped world.

II. Communist Strategy in Latin America

5. Since the ascendancy of Khrushchev in 1953–54 and the overthrow of the Communist-controlled regime in Guatemala in 1954, Communist strategy has increasingly focused on the short-term objective of generating pressures on Latin American governments to [Page 105]weaken their ties with the United States in the hope of eventually transforming Latin America into another neutralist area. The Communists, recognizing that Communist doctrine has had little persuasive ideological appeal to most Latin Americans, accepted the fact that Communist parties at present are not in a position to come to power in any Latin American country. They have evidently learned from their Guatemalan experience that, even if opportune, an isolated Communist seizure of control tends to undercut over-all Communist objectives for the area by alarming and rallying the hemisphere against international Communism. They have, accordingly, directed Communist parties in Latin America to camouflage their revolutionary aims, to identify themselves with nationalist aspirations, and to cultivate all elements susceptible of being guided or incited into actions inimical to cooperation between Latin America and the United States.

6. The Communists have had considerable success in capitalizing on the social unrest, economic problems and ultra-nationalism prevalent in most parts of Latin America. In the area as a whole, they have been particularly successful in using organizational techniques to exert a disproportionate influence over Latin American students and other organized intellectual groups, as well as over organized labor. In some countries they have also succeeded in making practical arrangements with opportunist politicians and groups.

7. Supplementing the efforts of local Communist parties to generate pressures on Latin American governments from below to modify their foreign policies, the Soviet bloc has, especially since 1953, worked on a government-to-government basis to hold out economic and other inducements for Latin American countries to move away from the status of inter-dependence with the United States. The level of Communist bloc trade has increased over the past five years, but still accounts for less than 2% of Latin America’s total trade and does not pose an immediate threat to the trading independence of any Latin American state. More important than its impact on the economies of the area, was the political impact of the Communist bloc offensive, particularly in holding up to Latin American opinion the picture of a huge market for unsalable agricultural and mineral products which would open up if Latin America disengaged itself from its close political alignment with the United States.

8. In the cultural field, the Communist bloc has followed up the prestige gained by the launching of the sputniks and other Communist scientific achievements by stepping up cultural exchanges with Latin America, its programs with respect to youth and labor currently exceeding U.S. government programs in those fields. There has also been a significant increase in Communist bloc radio and printed informational materials flowing into Latin America.

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III. Assets of U.S. Policy in Latin America

9. The assets available to the United States to strengthen the alignment of Latin America with the West and to neutralize the Communist effort are very considerable. The principal assets are summarized below.

10. Strategic. Because of its geographic position, Latin America, of all the great underdeveloped areas, is least menaced by Sino-Soviet military might. Moreover, the principle of regional collective security under U.S. leadership—which evolved as the basis of U.S. security policy for the hemisphere from the Monroe Doctrine to the Treaty of Rio de Janeiro—has gained more general acceptance in Latin America than in any other underdeveloped area. Behind this shield, the area has become singularly free of military strife among its component states; and the inter-American system, now institutionalized in the Organization of American States, has pioneered the development of effective means to keep peace within the area.

11. Historical and Cultural. While the sharp differences between the North American outlook and the Latin mind, and the diversities among the Latin Americans themselves, should not be minimized, it is nonetheless true that one of the major U.S. assets in dealing with Latin America is that it is the only one of the major underdeveloped areas which derives its civilization from the same Mediterranean and Western European antecedents as this country. Its political and constitutional ideals, though often not observed in practice, derive, like those of the United States, from eighteenth century political thought. As in the case of the United States, the influences exerted by nineteenth century materialist thought and class warfare have been relatively slight. The area generally tends to be evolutionary rather than revolutionary in its approach towards social reform, although in recent years Marxism has had a disturbing influence in intellectual circles. The advent of modern communications and the expansion of trade have greatly augmented Western influence on the area’s concept of society. The influence of the United States has steadily increased in comparison to the influence of Western Europe.

12. The tradition of inter-American solidarity and a sense of common destiny are additional factors tending to strengthen the bonds between Latin America and the United States. For more than a century Latin America has been deeply committed to a concept of solidarity and special relationships between the nations of the Western Hemisphere. This concept, now embodied in the Organization of American States, offers unique opportunities for the United States to exercise its leadership in the hemisphere.

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13. Economic. The economic links between Latin America and the United States are stronger than with any other major underdeveloped area. Approximately 22% of U.S. exports go to Latin America, and 29 percent of U.S. imports come from Latin America. This trade with the United States represents about 45 percent of total Latin American exports and about 50 percent of total Latin American imports. Private U.S. long-term direct and other investments in Latin America, now amounting to something more than $10 billion, are larger than our investments anywhere else except Canada. Our trade and investments have, to an important degree, contributed to economic growth in Latin America and helped Latin America to achieve a situation more favorable to further economic growth than other major underdeveloped areas.

IV. Principal Problems

14. The principal problems affecting United States relations with Latin America can be discussed under four headings: Latin America attitudes, economic and social developments, political problems, and military relations. In general, the problems which beset the area are typical of those which have characterized other underdeveloped areas in the post-World-War-II period, although their impact has been somewhat softened by the historical relationship between Latin America and the West and by the fact that Latin America, in distinction to the new nations of Asia and Africa, had largely completed its emancipation from European colonial rule in the nineteenth century.

Latin American Attitudes.

15. Rising aspirations are present throughout the area for more rapid progress towards higher living standards, for more rapid industrialization, for governments more responsive to the popular will and for greater civil liberties. In common with other underdeveloped regions, Latin America in the past two decades has seen a phenomenal rise in popular aspirations for modernization of the economic and political structure as a result of the impact of improved communications and education, of the accelerated urbanization of population, of social transformation giving a greater voice to the middle and laboring classes, and of the modern emphasis on democracy and civil liberties. These aspirations have also been fanned by Latin American political leaders of all kinds, but especially by the leftists and Communists, who have painted a completely unrealistic picture of the ease and rapidity with which higher living standards could be achieved. When rates of economic and political advancement have not kept pace with aspirations, frustrations have resulted. In particular there has been an increased tendency to look to the United States—under the stimulus of [Page 108]this country’s world wide post-war assistance programs as well as because of our role as the Western Hemisphere’s leading country—as the source of external assistance to bridge the gap between what Latin Americans can achieve themselves and what they desire to achieve. Similarly, the Latin Americans resent U.S. trade policies and actions, which adversely affect their export earnings. Since the United States cannot supply external assistance in sufficient volume to bridge the gap between aspirations and realities, and in view of the difficulty of reducing Latin American aspirations to more realistic levels, it can be expected that over the coming years there will be a degree of continued friction over the magnitude of U.S. aid to the area, as well as over U.S. trading policies affecting Latin American products.

16. Nationalism has steadily intensified in Latin America, where the United States is an especially vulnerable target because of its preeminent position in the economy of most countries as well as the hemisphere’s most powerful political and military force. Although Latin America generally credits the United States with maintaining its policy of non-intervention in the political sphere, influential segments of Latin opinion equate the attainment of an economy less dependent on the U.S. market and on the operations of large U.S. companies with the achievement of full sovereignty. This desire for economic independence takes extreme and xenophobic forms, among ultra-nationalists, who so strongly desire to exclude the United States that they are willing to do so even at the cost of postponing indefinitely the development of resources urgently needed for economic growth. In the case of “moderate” nationalists, there is acceptance of the fact that, in order to achieve an acceptable rate of development, it will be necessary to admit U.S. investment and trade on equitable terms for the foreseeable future. But even among these moderate nationalists, the ultimate goal is the development of national economies in which nationals of the country will control the enterprises and in which trade with a single country will not dominate the economy. Thus a conflict arises between the desire to avoid dependence on trade with and investment from the United States and the need to rely on U.S. trade and investment for resources to promote economic growth.

17. Neutrality, in the form of a desire to be disengaged from the cold war, is a strong undercurrent in many Latin American countries though it is glossed over by the willingness of Latin American governments to accept the lead of the United States in the United Nations and in other circumstances when they are forced to take sides. Latin America, behind the shield of United States power, is primarily concerned with its own problems of economic and political development and, while often sharing U.S. opposition to Communist ambitions for world domination, feels remote from practical involvement in the conflict. In recent years, this natural tendency toward neutrality has been [Page 109]accentuated by the growth in other underdeveloped areas of “neutralist” countries and blocs with which, as underdeveloped countries, the Latin Americans share common interests.

18. Insufficient awareness of the Communist danger.

a.
As a corollary of the above, most Latin American governments and peoples lack sufficient awareness of the intentions and tactics of local Communist parties and the Soviet Bloc governments. They tend to believe that the United States over-emphasizes Communism as a threat to the Western Hemisphere, and consequently, they tend to take insufficient precautions against internal Communist subversion and in dealings with the Soviet bloc. The current phase of Communist tactics, emphasizing “legitimate” political activities, identifying Communism with national aspirations, and playing down Communist revolutionary aims, lends itself particularly to a relaxation of Latin American alertness on internal security. This problem is compounded by the tendency of some Latin American political leaders to ally themselves with Communists for immediate practical advantages and to propound demagogic programs which parallel and reinforce Communist promises.
b.
The United States has pursued a policy of directly and indirectly encouraging Latin American countries individually and collectively to take more forceful actions against Sino-Soviet bloc influence and Communist subversion. It has attempted to influence Latin American countries to minimize political, cultural and certain economic contacts between Latin American countries and the bloc. We have maintained this policy toward Latin American relations with the Soviet bloc despite the fact that we encourage exchanges and cultural contacts between the Soviet bloc and such countries as the United States and the UK.3 Particularly because of this inconsistency, the United States may at times encounter difficulties in implementing this policy in Latin America.4 In practice, however, the United States has had considerable success in encouraging Latin American countries to enforce much greater restrictions on bloc activities than the United States has enforced. The existence of a differential in this respect has not had significant political repercussions in Latin America. Hence it seems likely that discreet U.S. efforts can continue to have considerable success [Page 110]in limiting bloc cultural and exchange activities without engendering counterproductive local reactions, although our ability to do so may diminish with time.

Social and Economic Development.

19. Economic development. Latin America is, and increasingly conceives of itself as, an underdeveloped area. Although the area made greater progress in the post-war period than other underdeveloped areas, the pace of economic growth has tended to slacken in recent years and its benefits have been very unevenly distributed geographically and among social classes. In some urban areas living standards are showing a tendency to stagnate at a time when aspirations for higher living standards have been growing for Latin America as a whole. The rate of growth—measured in terms of increase in the per capita gross national product—declined moderately from an average of approximately 2.4 percent in 1945–50 to approximately 2.1 percent in 1950–57. The higher rates of growth in Cuba, Mexico, and Venezuela had an important effect in raising the over-all averages in both periods.

20. Population growth. A factor which complicates the problem of attaining higher living standards in Latin America is the enormous rate of growth of its population. The area is expected to have a population neighboring on 500 million by the end of the century, and some 37 million people are expected to be added to the Latin American labor force by the year 1975. Latin America must maintain an increase in output of about 2 percent per year merely to keep up with this expanding population.

21. Problems in attaining more rapid economic growth.

a.
Instability of foreign exchange earnings. Latin America depends on the export of coffee, petroleum, nonferrous metals, sugar, cotton, wool, grains and meat for 70 percent of its export earnings. Wide fluctuations in the prices of several of these commodities since World War II have subjected some Latin American countries to alternating and largely unpredictable periods of foreign exchange abundance and stringency, adding to the difficulties of planning for orderly economic development. The United States is either a major buyer or a major seller of each of these commodities. U.S. quotas, tariffs, health regulations, or “voluntary” restrictions limit the U.S. market with respect to all of those listed but coffee, and U.S. surplus disposal programs affect the foreign market for cotton and grains.
b.
Lack of management and technical skills. Latin America generally has not made all the effort possible to make orderly and maximum use of the available resources. Under pressures in unstable political situations, Latin American leaders have been hesitant to adopt austerity measures to protect their currencies and, despite the fact that Latin [Page 111]Americans tend to look to their governments rather than to their business communities to take the lead in economic development, few Latin American governments have made vigorous efforts to define specific economic goals, mobilize available resources and set realistic priorities. The lack of adequate management at the top of the economic structure is matched by a lack of technical skills, which is closely related to the lack of adequate education among the urban and agrarian working population.
c.
Domestic economic policies. The majority of Latin American governments have maintained relatively sound currencies, but the inability or failure of a number of the countries, including some of the most important, to do so, contributes to inflationary pressures and causes much of the available capital to be invested in speculative ventures. In some cases overvaluation of exchange rates causes excessive imports. Some countries have followed production and price support policies for commodities such as coffee which have stimulated production to levels considerably above world demand. In many countries the limited domestic public funds available have been devoted to non-productive purposes and to industrial and commercial operations which might better be left to private enterprise, rather than to much needed social development in such basic fields as transportation, communication and education.
d.
Climate for private investment. Although Latin America as a whole has attracted more U.S. private investment than any area except Canada, in some countries laws and regulations affecting domestic or foreign private business are discriminatory and unreasonable. Government-regulated enterprises are often handicapped by rate-making policies which preclude profitable operation. In some countries, entrepreneurs cannot be confident that the government will respect contract and property rights. Political instability, with the likelihood of frequent changes in governments and in economic policies, makes domestic and foreign private capital hesitant about investing in long-term projects. Several countries have not allowed private foreign capital to develop their petroleum resources, even though government monopolies have proved unable to develop them, and thus are compelled to spend for petroleum imports large sums which might otherwise be available to finance development.
e.
Political and economic compartmentalization of the 20 Latin American republics also represents an obstacle to economic growth. Although there have been some consideration and planning—in Central America, among Argentina, Chile, Uruguay and Brazil, and among the northern countries in Latin America—of the lowering of nationalistic barriers to trade, to date Latin American countries have not worked cooperatively to expand trade among themselves and, more [Page 112]often than not, economic rivalries and political jealousies have impeded the development of a common approach to economic problems of mutual interest.

22. Labor. Organized labor in Latin America is increasing its significance as a political and economic force. Reflecting the dissatisfaction of the wage-earning elements of the population with living standards, labor unions tend to lend support to the radical and nationalistic currents of Latin American political life. The Communists are particularly active, openly or clandestinely, in the Latin American labor movement and, generally, have been more successful than anti-Communist elements.

23. Other changes in the Latin American social structure. With rapid urbanization, propertied groups with commercial, professional and industrial interests are displacing the conservative agrarian ruling groups while the urban white-collar population, as well as labor, is becoming increasingly influential. In most Latin American countries, the military retains a key role in the political structure but, in many countries, as the officer corps is increasingly recruited from the urban middle classes, it is losing its identity with the former agrarian ruling groups. In the urban context also, students and intellectuals are playing an increasingly powerful and usually nationalistic and radical role in forming the outlook of Latin American countries toward the problems which confront them.

Political Problems.

24. Demands for greater democracy and civil liberties have accompanied the increasing influence of urban middle and working classes. The desire for increased civil liberties remains an important, though ill-defined, goal in most Latin American governments. However, in practice, there continue to be wide variations in progress toward “democratic” governments from country to country and in different economic and social periods. In general, the immediate post-war period saw a replacement of many strong-man or military regimes by liberal civilian governments, but many of these failed to deal effectively with the problems they faced and were in turn replaced by more authoritarian regimes. In the current phase, there has been a return again to civilian governments more responsive to popular demands and today only a few governments can be classified as authoritarian. Although the long-range trend appears to be in the direction of governments which are more popularly supported, and especially by urban populations, it is not clear whether these popularly-based governments will tend more in the direction of Western representative government or in the direction of governments—such as the Peron regime in Argentina—based on authoritarian organization of the emerging urban groups. The outcome will depend in part on the [Page 113]degree of success which Latin American countries have in developing a native capitalistic strata having an ownership stake in the principal economic activities. In the years immediately ahead, however, there are likely to be recurring cycles of civilian popularly-based and authoritarian governments.

25. Relationship of the United States to “dictatorial” and “democratic” governments. Closely allied to rising popular desires for more democratic governments and the difficulties which Latin America has generally continued to find in establishing viable, representative regimes is the phenomenon that much of Latin American opinion holds the United States responsible in an important degree for the area’s dictatorial regimes on the grounds that U.S. military and economic cooperation, diplomatic recognition and/or other evidences of support contribute significantly to such regimes’ ability to stay in power. The inference is drawn that the United States is, at best, disinterested in the development of democracy in the area and, less charitably, that the United States on balance favors authoritarian regimes as providing greater stability, greater resistance to Communist penetration and a better climate for U.S. economic interests. However, a departure from the historic U.S. policy of maintaining relations with all governments of the area regardless of political complexion would imply a departure from our obligation not to intervene in internal affairs, a policy to which Latin Americans attach equal or greater importance than to their desire for U.S. assistance in the elimination of unpopular dictatorial regimes. In the past the United States has intervened in the internal affairs of other American states in support of democratic and against dictatorial elements, but these efforts have been ineffectual and even counter-productive. They have often brought the condemnation of the partisans of both elements upon the United States. It is, however, possible for the United States within the limits of nonintervention to pursue a policy of encouraging those governments which have a genuinely popular base and are effectively striving towards the establishment of representative and democratic governments, while maintaining correct diplomatic and other relations with other recognized governments as may be necessary to safeguard the national interest.

26. Non-intervention and the inter-American system.

a.
The policy of non-intervention and juridical equality of the American states which, since 1933, has been the cornerstone of U.S. relationship toward Latin America is likely to require further development, definition and strengthening in the future.
b.
The expansion of U.S. military, economic, cultural programs in Latin America has brought this country into more intimate contact with problems which profoundly affect the political forces and the social structure within the Latin American countries. One result has [Page 114]been to blame the United States for the damages inevitably suffered by social groups and political interests adversely affected. The increased use of the International Monetary Fund and the International Bank for Reconstruction and Development, and the proposed establishment of an Inter-American Development Banking Institution represent, in part, pioneering efforts to take a more multilateral approach to economic problems involving outside pressures on national economic policies, while preserving control over essential U.S. interests. U.S. participation in working out commodity problems and the establishment of a Special Committee of the OAS to deal with economic proposals are further indications of our willingness to deal with economic problems in multilateral forums.
c.
A further problem which could have significant effects on the policy of non-intervention is the re-emergence in a few countries of guerilla activities and banditry. The inter-American system is predicated on the existence in Latin America of governments in effective control of the national territory which, among other things, can be held responsible for giving effective protection for American and other foreign lives and property. Since the adoption of the non-intervention policy in 1933, violent changes of government have characteristically consisted of quick coups in the capital cities, and the inter-American system has been largely and successfully concerned with maintaining the peace between established governments. Experience has yet brought insufficient guidelines to determine how effectively to deal in the context of the non-intervention policy and the OAS with threats to foreign lives and property in guerilla-held territory where the recognized government lacks the means to discharge its responsibilities under international law.

27. Other OAS problems.

a.
The Organization of American States has a number of problems apart from those listed above connected with the maintenance of the policy of non-intervention. Among them are the increasing tendency of Latin Americans to look towards Pan Latin Americanism instead of towards Pan Americanism; their unwillingness to assume their share of the burden for carrying out policies and programs through the OAS; and their tendency to obstruct efficient action by procedural and political wrangles.
b.
The relationship of Canada in the inter-American system remains undefined, as does the relationship of Puerto Rico and the West Indies Federation. A more important role for these countries and territories in inter-American affairs is in the interest of the United States for a variety of reasons. They are the only self-governing countries in the Western Hemisphere which have no role in the present inter-American structure. Puerto Rico has, outside the framework of the inter-American system, come to play an increasingly useful role in our [Page 115]relationship with Latin America. Canada and the West Indies Federation share with the United States the English language and political tradition, while Canada, as a more developed country, has economic interests and outlooks more similar to ours than other countries of the hemisphere. Their inclusion in a greater measure in the inter-American system would tend to strengthen the position of the United States and to weaken the tendency of a concept of the United States versus Latin America. The progress in drawing Canada and the West Indies Federation more closely into the inter-American system is likely to be slow, however, as at present there is little active interest by either side in a closer relationship. Canada does participate on an observer basis in some activities in the OAS.

Military Relations.

28. The role of the Latin American armed forces in the framework of the U.S. strategic concepts for global and limited war is limited. It is not contemplated that Latin America would be required to provide units for military operations outside the hemisphere for military reasons, although a token contribution may again be politically desirable to give an international character to certain military operations and to give Latin American countries a sense of participation in a war effort. Within the hemisphere, military planning contemplates the need for each of the Latin American states to assist in the defense of the hemisphere (a) by defense of its coastal waters, ports and approaches thereto, bases, strategic areas and installations located within its own territory, and routes of communication associated therewith; and (b) by participation in certain coordinated collective defensive actions of the American states. Additionally, the maintenance of internal security is recognized as a contribution by Latin American armed forces to hemispheric defense, inasmuch as a breakdown of internal security in the Latin American countries during a period of general war might endanger U.S. interests, such as access to important strategic bases and materials, and might require the diversion of U.S. forces from other missions.

29. Our military relationships with Latin America are founded on the Rio Treaty and an extensive pattern of relationships which preceded or stemmed from this treaty. These relationships include participation in the Inter-American Defense Board and in Joint Military Missions; U.S. military missions, military assistance agreements, and base rights agreements, certain combined training missions; and the attendance of a large number of Latin American officers at U.S. military schools. Our relations with the Latin American countries are complicated by the desire of many of them to obtain military equipment beyond militarily justifiable requirements (a) to enhance their prestige, (b) as a result of inter-American rivalries, or (c) to strengthen the [Page 116]position of military groups in internal affairs. The allocation in some countries of scarce resources to unjustifiable military expenditures obstructs or retards economic development, both by restricting public investment in necessary projects and by tending to promote financial instability. Many Latin American countries turn to Western Europe for military equipment when they encounter difficulty in obtaining it from the United States, or when it is offered on a more favorable commercial basis by European suppliers. Such purchases can weaken the U.S. effort to standardize Latin American equipment on U.S. lines. Inasmuch as this standardization not only serves military purposes but is also a means of maintaining U.S. influence over Latin American military forces and through such forces on the political orientation of Latin American governments, the United States in some cases, cannot refuse to supply military equipment beyond the militarily justifiable requirements without adversely affecting political objectives.

Conclusion.

30. A central problem of U.S. policy formulation in Latin America is (a) how to utilize and strengthen the assets which tend to link Latin America with the United States and the West, while at the same time (b) dealing effectively with the area’s principal problems as an underdeveloped area in such a way that the United States is identified as a constructive force in the area’s effort to achieve higher political and economic standards. It must also be a fundamental objective of the United States to retain the ascendancy as the leader of the Western Hemisphere and to undercut the efforts of international Communism to disengage Latin America from it traditional alignment with this country.

31. The problems described above reveal the difficulty the U.S. faces in maintaining its good relations with Latin America and achieving our objectives there. The principles guiding our present policies, most of which were developed before World War II, remain valid. However, as in the case of our trading policies, we have not always been able to adhere consistently to these principles and have perhaps not made efforts in all fields commensurate with the magnitude of the problems. It is clear that a consistent and continuing major effort will be required if the United States is to develop further its historic strong ties with Latin America and play a constructive role in assisting Latin America in solving its problems.

  1. Source: Department of State, S/S–NSC Files: Lot 62 D 1, NSC 5902 Series. Secret. A title sheet, a February 16 transmittal note by Lay, and a table of contents are not printed. NSC 5902/1 was approved by the President on February 16, superseding NSC 5613/1.
  2. Except as specifically stated herein, this statement of policy does not apply to dependent overseas territories of European powers. [Footnote in the source text.]
  3. See Annex A. [Footnote in the source text. Annex A is not printed.]
  4. Treasury would insert the following sentence at this point: “U.S. efforts to discourage the acceptance of Soviet trade offers are subject to the accusation that the United States is merely seeking to promote its commercial interests to the disadvantage of Latin America.” [Footnote in the source text.]
  5. Treasury would add the following to this sentence and delete the remainder of the paragraph: “without adversely affecting the objective of promoting attitudes of partnership and juridical equality, particularly if it is necessary to exert any great degree of pressure in order to obtain anti-Communist actions”. [Footnote in the source text.]