8. National Intelligence Estimate1

NIE 80/90-58


The Problem

To analyze Latin American attitudes toward the United States in the light of general conditions and trends in Latin America and with reference to their bearing on inter-American relations.


Latin American attitudes toward the US are ambivalent. Many Latin Americans, especially among the wealthy and the military, although frequently critical of US policy, admire the US for its achievements, its strength, and its wealth. They feel a kinship with the US in a common Western social and cultural tradition. Many others, especially among the middle groups, including the intellectuals, and urban labor, are less friendly and more critical of the US. These groups, subject to urban pressures, acute economic problems, and rising nationalism, are more aware of the differences in culture and living standards between the US and Latin America than of the common heritage. They are emotional concerning past US interventions in Latin American affairs, the role of US companies in their economies, and recent US relations [Page 61] with dictators: they are envious of US wealth and displeased that the US will not give them a greater share in the form of assistance. (Paras. 6, 32–39)
We believe there is little likelihood that Latin American attitudes toward the US will change substantially for the better during the next few years. In most of the area, a mushrooming population together with soaring economic expectations will cause governments increasingly to attempt economic development beyond their own capabilities. In consequence, governments will press with greater vigor for increased US assistance and, to the extent the US is unable to satisfy such requests, they will adopt the attitude that the US is being unsympathetic. Statism and nationalism will impede new foreign investment in development of basic resources and impose new burdens or restrictions on existing investment, preventing a maximum contribution by private capital to the area’s economic development. Many of the national political leaders, seeking both to gain a greater popular following and to shift the blame for their own shortcomings, will probably increasingly attempt to make the US the whipping boy for the continued slow pace of economic improvement. (Paras. 8–10, 20, 26–29, 40–44, 54–57)
Political instability in Latin America will continue as a major obstacle to improvement in relations with the US. Public pressures for social change, economic improvement, and governments more responsive to popular demands will persist and will keep the area in political ferment. While the present political trend is toward representative governments, such governments will find themselves hard pressed and ill-equipped to deal with the wide variety of national problems and political forces at work. In the major countries, even the military— still the decisive force in times of national crisis—can no longer be depended upon to stabilize the political situation for more than limited periods of time. (Paras. 11–19)
Despite the likelihood of continued and increasing frictions in US-Latin American relations, we believe that Latin America’s basic attachment to the West, and especially its general support for the US position in international affairs, is not likely to change in the foreseeable future. At the same time, the Latin Americans will probably become more vocal and independent in their attitude in the UN on matters involving colonialism, intervention, and economic policy. (Paras. 32–33, 50–54)
We believe that, in general, the Latin Americans are unlikely to consider themselves seriously threatened by the Soviet Bloc and the international Communist movement. They will probably continue to believe that they are outside the main arena of East-West conflict and that in any case the US, for its own interests, will protect Latin America from any overt Soviet threat. Because of their great need for [Page 62] external economic assistance, many Latin American countries will be willing to give sympathetic attention to Bloc offers of increased trade and, in some cases, of economic aid. Few Latin American governments will consider local Communists as a serious threat and, accordingly, in much of the area Communists will be able to operate with relative freedom. For their part, the Communists are not likely to come to dominate any government, but their efforts are directed less to this end than toward worsening relations between Latin America and the US. The existence of anti-US attitudes gives them a relatively fertile field to cultivate. (Paras. 15–17, 45–49, 58)


I. Introduction

The Latin American countries have certain basic ties with the US through a common West European and Christian background, geographic proximity, and economic relations. The attitudes of Latin Americans toward the US are in part a result of their experience, over the past hundred years, with Americans and with US policy. In this respect, Latin Americans remember with nostalgia the period of the “Good Neighbor Policy,” and with distaste, and on occasion anger, such historical events as the Mexican War and US military intervention in the Caribbean. Latin American attitudes are also being affected by the rapid social and economic changes now occurring in Latin America, and by evergrowing popular expectations. Although some attitudes affecting US relations are common to all countries and social classes, there are also important differences in points of view deriving from national and class interests.
To determine the nature of these attitudes and to estimate the manner in which they are likely to affect US relations with the area, we have in the following paragraphs: (a) reviewed generally the basic trends within Latin America; (b) analyzed Latin American attitudes on problems in their relations with the US; and (c) set forth our judgments as to the effects these trends and attitudes will have on the future course of US-Latin American relations.

II. Basic Trends in Latin America

In recent decades Latin America has experienced substantial changes in the size, distribution, occupations, and expectations of its population. Changes in traditional social patterns have taken place at an accelerating rate, particularly in the larger countries, with a direct and at times profound impact upon political and economic institutions. These changes have given rise to pressures for further adjustments that cannot be easily accommodated within the existing social structure.
Probably the strongest single force for change has been the sustained population growth, which exceeds that of any other major world area. Since 1920, the total population of Latin America has more than doubled. It is now about 190 million. There is great disparity in population among the twenty Latin American republics, with 60 percent of the total located in Brazil, Mexico, and Argentina. Twelve of the remaining states have smaller populations than the Buenos Aires metropolitan area.
The rate of urbanization has been even more spectacular. The rapid expansion of the cities is a fairly recent development and is in part associated with the drive of Latin American governments for rapid industrialization of their economies. Literally hundreds of thousands of persons, attracted by the city lights and the prospect of better pay through employment in industrial establishments, service industries, or the burgeoning government bureaucracies, have moved into the capitals or other urban centers from rural areas and small towns in the interior.
Political Trends
The tremendous surge of population to the cities has, in most countries, undermined the political control traditionally exercised by the landed aristocracy, and has led to the growth of groups which are competing with increasing vigor for political power. In the more highly developed countries, a wealthy urban propertied class has become strong and exercises a major influence in political affairs. In addition a professional and salaried middle group, ranging down to low-paid white-collar employees in business and government, and a wage-earning urban labor force have mushroomed in size and have attained considerable political stature. Intellectuals and students exercise an important leadership, primarily through the middle and labor groups. However, in most countries the military remains a potent influence in national political life and its action is often the deciding factor in times of crisis.
It is the urban middle group that today is expressing most effectively discontent with the status quo. Its members are articulate, active in politics, and often willing to endorse radical solutions to pressing economic problems. They often furnish the leadership of the larger political parties. Realizing the significance of the mass vote represented by urban labor, they seek its support by advocating social legislation and economic reform.
Urban labor, numerically the most rapidly increasing group in much of Latin America, is as yet not a cohesive political force in most countries. The bulk of the labor force remains unorganized, despite the rapid growth of trade unions in the cities and the extractive industries. Most labor organizations are closely associated with the government [Page 64] or with particular political parties; independent, nonpolitical labor unions are not important in the labor movement. The labor vote is generally divided among competing leftist parties, but the workers can be united on the basis of protest against their low incomes and poor living conditions. The influx of workers into the large cities has been so great that most governments have been unable to cope with the resulting economic, social, and political problems which it has created. To force political action on these problems, urban labor can increasingly exercise not only the power of the vote, but also that of the strike and mob action. This power can also be exploited by other groups for political purposes.
Intellectuals and students have greatly increased in numbers with the rapid growth of the middle groups in urban areas. Their interest in quick solutions to national problems has predisposed many of them to accept Marxism as a ready-made analysis of the situation in which they find themselves and as a prescription for remedying it. This tendency renders them especially susceptible to Communist influence. As a group, they have an exaggerated sense of national pride, fear and resent foreign influence, and oppose military rule. The influence of intellectuals and students is exerted not only in partisan politics, demonstrations, and mob action, but less directly through employment in the bureaucracy, in the communications media, and in university and secondary schools. The students, though often irresponsible, enjoy considerable freedom because traditionally governments have been reluctant to take forceful action against them.
The Communists are not numerically strong in Latin America, but are adept at identifying themselves with popular sentiments already prevalent and exploiting them for their own purposes. They present themselves as the most ardent and patriotic democrats and nationalists in sight, thus gaining respectability and forcing the pace of change. They foster the tendency of intellectuals, students, and other leaders of opinion to interpret both the local situation and US relations in Marxist terms. Their immediate objective is to gain such influence in other radical parties, in the bureaucracy, in organized labor, and with the populace as to be able to turn governmental policies in neutralist and anti-US directions.
The political influence of the Roman Catholic Church in Latin America is limited by its association with the traditional social and political order and by the prevalence of anticlericalism. In only a few countries, notably Argentina and Colombia, does the Church now exercise a significant political power. The Church, however, has begun to accommodate itself to social and political change by emphasizing the need for improvement in the lot of the working people, in accordance [Page 65] with the relevant papal encyclicals. This trend is likely to continue and to increase the Church’s influence. The Church is the steadfast opponent of communism.
Despite the evolution of new political forces, the military retain the ultimate political sanction in most of Latin America, but the character and attitude of the military is itself changing in response to the general social change. Formerly allied with the traditional ruling class and equally interested in the preservation of the status quo, military officers now come increasingly from the middle groups of society and are interested in national development. Elections being still generally ineffectual as a means of bringing about significant political change, such changes usually occur only when the military conclude that they are necessary. As the guardians of national order, the military has deposed some governments whose continuance in office was deemed likely to lead to serious disorder. The deposition of the Perez Jimenez dictatorship in Venezuela under the pressure of an effective general strike is a recent example. The military remain jealous of their privileged position and distrustful of radical politicians, but show a tendency to prefer acceptable civil governments to the burdens of outright military rule.
In contrast to the highly personal politics of the Latin American past, the changes in government which have occurred during the last fifteen years generally reflect recognition of growing social and political pressures. During the war years and immediately thereafter, a number of demagogic, labor-based regimes emerged, committed to rapid and radical social reform (e.g., Peron in Argentina). A subsequent reaction to this tendency produced, in several countries, conservative regimes generally military in character (e.g., Odria in Peru). The current trend, indicated in Argentina, Brazil, Colombia, and Venezuela, is toward duly elected, constitutional regimes, brought to power with military sanction, but reformist in character. The leaders of these reformist governments have shown a greater awareness of the limitations imposed on them by economic realities and have generally used greater moderation in their appeals to labor than did those of the immediate postwar period.
Although most governments are undoubtedly more sensitive to the pressures building up in their societies, they have generally avoided actions calculated to undermine the position of the domestic propertied interests. Yet few of the governments have had the inclination or the strength to attempt forcefully to suppress the growth of competing political groups which are in fact threatening the position of the wealthy classes. As a result, there is a high degree of political ferment throughout much of the area and the countries generally are politically unstable.
Economic Trends
The principal Latin American countries have made substantial progress in developing more balanced economies, but continued progress is threatened by the pressure of a rapidly increasing population and by the uneven rate of development in the urban and rural sectors. The accumulation of capital needed to maintain a satisfactory rate of development has lagged because of low productivity and limited export prospects for the foodstuffs and raw materials on which Latin America still depends for essential foreign exchange.
During 1945–1957 rates of economic growth in Latin America permitted an annual increase in per capita GNP which in real terms averaged about 2.2 percent. This average, however, conceals wide variations during the period and between countries. In the early postwar period, 1945–1950, there was an increase of 2.5 percent annually owing to strong foreign demand for the area’s exports and an accumulation of wartime savings. These sources provided capital support for economic development designed to lessen vulnerability to fluctuations in world demand and to provide employment for expanding urban populations. A slowdown toward the end of the period was arrested by Korean War demand, but in 1952–1953 and again in 1956 levels of real per capita GNP declined or stagnated as a result of the expenditure of reserves and the decline in world demand for many Latin American exports.
Among the six countries (Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela) which account for more than 80 percent of GNP in Latin America, there have been wide variations. The growth rates in the early postwar years were especially high in Argentina, Brazil, Colombia, and Venezuela. Over the whole period, however, growth has been best sustained in Mexico and Venezuela, on the basis of relatively heavy constant receipts of foreign exchange income or investment. Argentina and Chile rank lowest in the group, while Brazil and Colombia occupy an intermediate position.
A critical problem in many Latin American countries is the failure of investment in basic production sectors to keep pace with the rising population, especially in urban areas. Local investors have been reluctant to expand operations in domestic markets, which are still relatively small because of low productivity and low consumer income. This attitude, combined with limited government investment capabilities, has kept the rate of growth of urban employment opportunities below that of the growth in the labor force. As a result, many governments have turned to subsidizing the maintenance of surplus workers in public utilities and other services, often with highly inflationary results and in part at the expense of primary producers.
Even though the rate of industrial development has slowed down, there has been little if any slackening of the migration of farm workers to the cities. This, together with the lack of investment in agriculture, has resulted in a level of agricultural production for domestic consumption which has barely kept up with the population growth. After a postwar slump, there was a slow rise in per capita production of export crops in terms of volume. Only in 1957, however, did such production return to near prewar levels owing to good weather and other temporary favoring factors.
Latin America’s basic economic problem is that which confronts all underdeveloped areas, namely, that of obtaining sufficient capital to exploit more fully their own natural resources, to expand and to make more efficient existing economic activities, and to diversify their economies so as to reduce their dependence on the export of a few raw materials. Gross investment levels in the area—including the renewal of existing capital as well as new investment of fixed capital— improved slightly during 1955–1957, averaging about 18 percent of GNP as compared to 14.5 percent in 1953–1954. However, in countries such as those in Latin America where population growth is rapid and productivity relatively low, annual investment probably has to be 12–15 percent of GNP even to maintain existing per capita endowment of capital goods. Thus, the investment levels realized by some countries probably do not represent a substantial addition to capita stock of productive equipment.
Latin America, in view of its growing economic aspirations and the probability that its terms of trade will not substantially improve during the next few years, almost certainly cannot provide from its own resources sufficient capital to maintain a satisfactory rate of economic development. In particular, most countries will have great difficulty with respect to the foreign exchange increment of investment. The general level of prices for Latin America’s primary products has declined since 1954 while world prices for manufactures have risen.2 Export volume has failed to compensate for losses in earning power and for increased demands for imports in part responding to greater needs for energy, transport supplies, industrial raw materials, and heavy equipment. Moreover, the ability to increase earnings by the export of traditional products is restricted by world oversupply in most important export commodities, such as coffee, cotton, wheat, wool and nonferrous metals, by US sales of competitive surplus products, and, in some cases, by domestic production problems and rising costs.
Despite their obvious shortages of foreign exchange, the Latin American countries have pressed the import of capital equipment. This, together with rising imports of consumer goods, has resulted in sizeable trade deficits over the past few years. These have been covered by sales of gold and foreign exchange reserves, by overseas commercial credits, by official loans, and by investment of capital from abroad. The gross inflow of outside capital has more than doubled, but net receipts have been considerably reduced by outflows of amortization, repayments of official debts, and remittances on private investment. Of Export-Import Bank disbursements to the area, which totalled $1.2 billion between 1950 and 1957, 42 percent were for balance of payments purposes, including the payment of past debts created by the importation of consumer as well as capital goods. The bulk of capital inflow has been to Venezuela, Brazil, and Mexico.
Despite Latin America’s need for economic development capital, most governments are reluctant to encourage a flow of private foreign investments. In all cases, they are under pressure from nationalist groups, and in some, the governments themselves believe that the public should own and develop basic resources. Chile, Venezuela, and Peru, which have accepted investment in large-scale mining and petroleum operations, have been the main exceptions to this general rule in recent years. In Argentina and Bolivia, the governments have become increasingly aware of the potential contribution that private foreign capital can make to economic development, and they are attempting to open the way for large-scale foreign private participation in the development of petroleum. There has also been private foreign capital invested in manufacturing, especially in Mexico and Brazil where domestic markets are relatively large.
In Latin America the state has traditionally played an important role in the economy and there is in the area a widespread preference for state economic initiative, particularly as against foreign private enterprise. State intervention has recently received a strong impulse from rapid change in the society that in many cases has almost forced the state to take a more active role. Domestic capital, typically organized on a family basis and limited in quantity, has been unequal to the task of developing basic industries and exploiting national resources, while private foreign capital has been excluded in certain areas, principally petroleum, by nationalist opposition.
In sum, Latin America generally is well into a period of accelerating change. Traditional social patterns are being eroded, and in some cases shattered, competition for political power is increasing, and aspirations for economic and social improvement are rapidly outdistancing financial and technical capabilities. Adjustment to change by [Page 69] the various elements in the social order has in general proceeded more rapidly in those countries with superior physical resources and large populations, e.g. Argentina, Brazil, and Mexico. But in all countries there are severe strains, and at least for the next decade Latin America will continue to be an area of instability.
As a major aspect of this change, national leadership generally has passed from the hands of the wealthy rural landowners, who were culturally part of the West European world, to the newly expanding urban business-professional classes, which tend to be less cosmopolitan and more nationalistic in outlook. These feelings of nationalism, shared by intellectuals and labor, have been major factors influencing the attitudes of Latin Americans toward external affairs, especially Latin American relations with the US.

III. Attitudes Affecting Latin American Relations With the US

Latin America’s attachment to Western society is strong, based on cultural tradition and historic, political, and economic associations. Iberian Catholic culture was superimposed on the Indian civilization during the three centuries of Spanish and Portuguese rule. In the 19th century, the Latin American ruling groups extended their contacts to include France and England, and gradually the US. However, the Latin American countries differ greatly in cultural and political patterns and economic development from the US and other pace-setting countries of the Western world. US-Latin American differences of language, religion, race, and institutions, and the disparities resulting from Latin America’s economic lag are emphasized in the present period of change and widespread insecurity in the area.
Although the bulk of the Latin Americans consider themselves part of Western society, they are preoccupied with local problems and are generally apathetic toward events outside their own area. This self-centered and passive attitude is encouraged by the area’s geographic remoteness from centers of international friction, by reliance on US protection from overseas interference, and by an awareness of limited ability to influence global politics. Only a few governments manifest concern with world affairs; and these are often motivated by a desire to gain international prestige or to establish a claim upon the US for reciprocal services.
General Attitudes Toward the US
Latin American attitudes toward the US are ambivalent. Informed Latin Americans generally admire the advanced technology and material prosperity of the US and desire the same for themselves, but they also express envy by disparaging US materialism. They admire the stability and flexibility of US democratic processes and desire stable yet representative government in their own countries, but they [Page 70] are also keenly aware of imperfections in US democracy and highly sensitive to any supposed suggestion of Anglo-Saxon superiority over Latin or colored peoples in US relations with them. They subscribe to the concept of Hemisphere solidarity for idealistic as well as mercenary reasons, but they also know themselves to be markedly different from North Americans in many respects. They rely on the US to protect them in the event of war, but they feel little obligation on that account, since they assume that the US must do so for its own security. They do feel, however, that the US is under obligation to render them preferential economic and military aid, since they have been aligned with the US in both world wars and have supplied valuable raw materials. At the same time that they demand such aid, they are acutely fearful of the bogey of US economic imperialism. They can at one and the same time condemn any supposed US interference in their internal affairs and denounce the US for permitting dictatorship to exist in any Latin American country.
Within this framework, the attitude of an individual Latin American toward the US is conditioned by the stratum of society to which he belongs. It tends to be more favorable among the wealthy or well-to-do, who now seem to look more to the US than to Europe. Many are well acquainted with the US by reason of education, travel, or business. They have large financial interests in the US and tend to send their children to US universities. A favorable opinion of the US, however, does not necessarily lead them to support private US investment, which in their view often competes with their own interests and carries the threat of economic imperialism.
The growing urban middle and lower classes are generally less well disposed toward the US than are the wealthy classes. They, especially the vocal intellectual group, have been deeply and unfavorably impressed by past US actions from which fervent and influential writers derived and made popular such slogans as “dollar diplomacy,” the “big stick,” “Yankee imperialism,” and the “Colossus of the North.” They look back upon the “Good Neighbor Policy” as a happier period in US-Latin American relations, but consider that the present US attitude toward Latin America falls short of that standard. Members of these groups generally have had few direct associations with the US or other Western societies, which they tend to view in terms of their own essentially parochial experience, and often in terms of anticapitalist indoctrination. They view US racial barriers as a contradiction to our professed democratic principles and resent them on personal or moral grounds.
Especially among these classes there are elements who feel that the US, for its own selfish reasons, has stood in the way of the development of more representative government by maintaining unnecessarily close relations with dictatorial regimes. They view US military [Page 71] aid to dictators, not as meeting the requirements of Hemisphere defense, but rather as a mode of supplying those dictators with weapons for use against popular opposition, and cite US economic aid and diplomatic courtesies to dictators as further evidence of our predilection for them. This attitude has been a major problem in our political relations with certain Latin American countries, and was reflected in the demonstrations against Vice President Nixon during his visit to Venezuela.
The Attitude of the Military Toward the US
Despite increasing responsiveness to nationalist influence, the attitude of most of the Latin American military officer corps toward the US is generally favorable. Military leaders probably have a closer identification with US hemispheric interests than do leaders of other groups in Latin America. They tend to regard common defense arrangements with professional favor, and are generally active in the Inter-American Defense Board. Twelve countries have entered into bilateral security agreements with the US. The military leaders seek to associate with US military power for reasons of prestige and self-interest and look to the US for assistance in improving the effectiveness of their limited armed forces. They have availed themselves of the services of US military missions and of training at service schools in the Canal Zone and in the US. Officers attending these schools have been impressed by the professional standards of the US military, including their detachment from party politics.
Nevertheless, the military displays dissatisfaction with US policies from time to time. It is resentful over the fact that US military assistance to Latin America has amounted to slightly less than two percent of US worldwide military aid. Latin American military leaders feel that, as neighbors and constant allies, they merit as much, if not more, consideration as that given other, less reliable recipients of US aid. Some—stirred by area rivalries, mutual suspicions, and concern for national prestige—complain of inequities in the distribution of US military aid in Latin America. On the other hand, some civilian political leaders consider that military aid is unproductive, that it only increases the burden on their limited financial resources, and that it enhances the political power of the military and the danger of military dictatorship.
Attitudes on Economic Matters
Latin American attitudes toward the US are to a considerable extent shaped by the fact that the US is the area’s principal trading [Page 72] partner and chief source of investment capital.3 Because the economies of most Latin American countries depend on advantageous sale abroad of the primary raw materials which they produce, there is a tendency to blame the US, as the biggest buyer, for the domestic economic difficulties which result from any deterioration in terms of trade. Furthermore, many Latin American countries too poor to undertake large-scale economic development programs are increasingly taking the position that the US has an obligation to contribute to such programs.
The Latin American view of the US has also been colored by the fact that much of US investment in the area has been made by large US private enterprises, which have often conducted their affairs in a high-handed manner. Nationalist attacks have been particularly violent against large US firms in such fields as mining, agriculture, and public utilities. Some of these enterprises enjoy special concessions which would not be granted in present circumstances. As a result, many Latin Americans continue to visualize US foreign economic policy in terms of Wall Street, the big stick, and robber barons.
While there is great similarity of view throughout Latin America with respect to the US and its economic policies, there are also some important differences, at least in government policies. These differences among the countries are in large part traceable to the wide variation in the rate of economic and social change, in the degree of political stability, and in historic relationships with the US. Public resentment against foreign companies is most deep-seated and persistent in those countries where US capital plays a major role in the national economies.
On the other hand, the larger countries, which are drawing away from their smaller neighbors at an accelerating rate, are showing signs of taking a more responsible attitude in relation to their own problems of economic development. In these countries, determination to achieve economic progress has combined with a greater national self-confidence to produce some improvement in official attitudes toward US private investment. However, only in Mexico has the government, over the past two decades, been able to develop a stable environment for foreign investment complementing national enterprise. Argentina seems to be making headway toward an accommodation with foreign capital, although the authorities must move cautiously because of the strength of antiforeign feelings among labor and other groups. Brazil, with the greatest resource and population potential of any Latin American country, has not yet been able to overcome opposition to foreign capital in petroleum.
Given this complex of attitudes and severe economic problems, Latin American grievances against the US on specific issues have multiplied since 1945, not only among the public, but also among government officials. For example:
Latin Americans believe that the US has denied their area the consideration to which it is entitled on grounds of neighborhood and of past and prospective wartime cooperation. They are dissatisfied with the outcome of recent formal OAS meetings—Rio de Janeiro (1954),4 Panama (1956),5 and Buenos Aires (1957)6 —at which economic development was discussed, but nothing of a substantive nature was decided upon. They are particularly sensitive over their failure to receive financial and military aid commensurate with that given by the US to other areas of the world.7
Latin Americans are critical of US trade policy which, though favoring freer trade in principle, continues to add to restrictions on imports. Since certain of these restrictions apply to important Latin American exports, they take their imposition as evidence of a lack of US good will toward Latin America and of the unreliability of the US as a commercial partner. Peru, Bolivia, and Mexico reacted sharply to US imposition of import quotas on lead and zinc. Venezuela’s resentment of US restrictions on petroleum imports was out of proportion to its economic injury. Chile and Uruguay have shown irritation at the increase in US import duties on copper and wool.
Since the US is their major market, Latin Americans hold it largely responsible for the great fluctuations in world price for Latin American exports. They have been especially irritated by US refusal to participate in schemes for the stabilization of markets and prices for such commodities as coffee, zinc, tin, and cotton. Latin American governments also resent US sales abroad of those surplus agricultural commodities which compete with their own exports.
The unwillingness of the US to give direct financial support to certain government operated agencies—such as those concerned with oil development in Mexico, Bolivia, Brazil, and Argentina—has been an irritant to many Latin Americans, especially since the US has assisted other types of state enterprises in Latin America and elsewhere in the world.
Latin Americans are critical of what they believe to be the tight US loan policy, long delays in the handling of loan applications, and the stringent conditions of US public loans, which they regard as [Page 74] unwarranted interference in their internal affairs. Their irritation is heightened by their difficulties in drafting projects which are considered acceptable by the US and thus eligible for a loan. The Latin Americans hold the US responsible for the similarly stringent conditions imposed by the International Bank and the International Monetary Fund. In particular, most Latin American countries oppose suggestions that they adopt anti-inflationary measures, since they believe that inflation is a necessary accompaniment of economic development. There is a wide variation in reactions among the Latin American countries to other conditions for loan assistance. Mexico, with a relatively even financial income, adequate administrative agencies, and the greatest ability in managing resources for economic development, has the best working relations with the US and international lending agencies. At the other extreme, Brazil resists strongly such conditions, especially those which require austerity.
Attitudes Toward Communism
Latin Americans tend to consider themselves outside the arena of East-West conflict and therefore not directly threatened by either the military and political power of the Sino-Soviet Bloc or the subversive potential of the international Communist movement. Their governments generally support the US on issues with the Bloc, but they feel that the US tends to exaggerate both the danger of general war and the threat of international communism. Most countries of the area maintain no active diplomatic relations with the Bloc because, in their detached situation, they perceive nothing to be gained thereby which would offset giving offense to the US. Yet they tend to resent the suggestion that they are not mature enough to be permitted to do what the US itself does.
Six states—Argentina, Bolivia, Brazil, Colombia, Mexico, and Uruguay—have accepted resident diplomatic or consular representatives from Soviet Bloc countries. The countries of the River Plate and, more recently, Brazil and Chile have been the only significant theaters of Bloc operations in Latin America measured in terms of offers of trade or aid. These latter countries—all suffering from severe economic difficulties—have treated such offers with respect, and in a number of cases have accepted them. Also, the governments, concerned with economic deterioration and seeking to improve bargaining power with the US, at times have sought to build up trade and aid possibilities with the Bloc.
Latin American attitudes toward indigenous Communists have varied with time and place. The prewar authoritarian regimes harried the Communists as they did all radical reformists whom they considered dangerous. This common experience of persecution tended to establish a bond of sympathy between the Communists and liberal elements also opposed to the old regimes. Thus many liberal leaders in Latin America have some youthful association with Communists and [Page 75] are often accused of being crypto-Communists. The immediate postwar radical regimes were disposed to insist on political liberty for Communists as a mark of their liberal character. With the onset of the cold war and the establishment of more conservative governments in many countries the trend was reversed. Some Communist parties were outlawed and Communist activities generally were restricted. As in Venezuela, however, some military dictatorships feared the non-Communist opposition more than they did the Communists and permitted the Communists a limited freedom of action in order to weaken and divide their opponents.
Now, with the installation of more representative governments, the trend is toward increasing toleration for Communist political activity. Unless the Communists are obviously and effectively working against the essential interests of the regime or interfering with public order through strikes and violence—a situation which Latin American Communists have generally sought to avoid in recent years—most public officials see little need for repression. Some regimes, however, have used the threat of communism as an excuse to repress opposition parties as well as to curry favor with the US. In the past year Communist parties have been legalized in Chile, Colombia, and Venezuela, bringing the number of legal parties in the area to eight; they retain legal standing in Bolivia, Mexico, Ecuador, Argentina, and Uruguay. Communist parties are active, even though illegal, in Brazil, Peru, Cuba, and Guatemala.
All Latin American countries except Mexico now subscribe to the US-sponsored anti-Communist resolutions of the inter-American conference at Caracas in 1954, but few do so with conviction. They have tended to regard US pressure for more effective implementation of these resolutions as unwarranted interference in their domestic affairs. In the face of the current trend, the resolutions are likely to be increasingly disregarded.
Attitude Toward Cooperation In International Organizations
The Latin American countries generally support the US position in world affairs, particularly on issues between the US and the Soviet Bloc. In the United Nations they have provided voting strength required to maintain the Western position. However, on issues involving economic development, colonialism or intervention, points regarding which Latin Americans are extremely sensitive, individual countries have at times taken positions opposed to that of the US.
The Latin Americans value the Organization of American States as an expression of Hemisphere solidarity (with implications regarding a US obligation to render neighborly assistance), as a convenient means for dealing with some regional problems, and as a mechanism through which they can bring their combined influence to bear [Page 76] on the US. The Latin Americans, however, seem to have little interest in programs to which they must contribute more than they expect to receive and are reluctant to support any proposed activity which might infringe on their sovereign prerogatives.

IV. The Prospects for Latin American-US Relations

Latin America’s basic attachment to the West, and especially its general support for the US position in international affairs, is not likely to change in the foreseeable future. However, the Latin American vote in the UN will almost certainly be less reliable on matters involving colonialism, intervention, and economic policy. As Latin American support becomes more essential to the US with the admission of new Asian and African states, Latin American governments will press for increased rewards from the US.
Latin American military cooperation with the US is almost certain to continue in the foreseeable future. There will be frictions arising out of the amount of assistance programmed and the priorities given delivery of arms to Latin America. The pro-US attitude of the military and their continuing interest in collective defense in the Hemisphere bear heavily in favor of US retention of base rights in the area. However, there will be new pressures to increase national benefits from these base rights and from the Canal Zone in the case of Panama. It is also possible that renegotiation of US base rights outside Latin America will strengthen these pressures.
Over the next few years, the countries of Latin America will almost certainly seek greater external assistance. Because of the rapidly increasing population and rising expectations, the various countries will be hard put to meet current consumption and almost certainly will not have sufficient resources substantially to expand their own productive capacities. In this situation, most Latin American countries, individually and collectively in the OAS, will seek greater US governmental assistance and will press the US, as the area’s major trading partner, to take steps to maintain Latin America’s income from its exports.
Growing capital requirements will probably cause some governments to look more favorably upon foreign private investment. Such investment in manufacturing, particularly in Mexico and Brazil, is likely to expand, but investment in mining will probably not reach the high levels of the past decade. Governments of some countries will probably accept private foreign investment to initiate or expand petroleum production, but under terms which will be less favorable to the investor than in the past.
On the other hand, frictions in several countries are likely to continue with respect to existing foreign investment in oil, utilities, mines, and fruit plantations, and in all likelihood some of the rules [Page 77] under which foreign firms operate will be changed. In Venezuela, where potential for increased oil production is enormous, there will probably be increased pressure to renegotiate existing concessions to give the country a greater share of the profits. There will be increased pressure toward nationalization of the remaining foreign owned power companies and railways. Difficulties with the fruit companies will persist, particularly in Guatemala, Honduras, Costa Rica, and Panama, but they will almost certainly be permitted to continue their operations.
Progress toward a Latin American common market will be slow, but steps being taken to establish regional trade or payments arrangements offer some hope of a further improvement of the area’s economic status. Nationalism, which adversely affects relations with the US, also is an obstacle to closer economic integration of Latin America. The general reluctance of Latin American governments to narrow their field for independent action is intensified by traditional hostility between some of the countries and by difficulties in adjusting the interests of the larger countries to those of their smaller neighbors. US agreement to discuss the formation of a regional development bank has at least temporarily assuaged Latin American desires for a special financial organization to serve the area.
In general, the climate for Communist activities in Latin America will continue to improve over the next few years. Most governments will probably continue to be reluctant to take effective measures to prevent an over-all strengthening of the Communist position in the area. The Communists are not likely to come to dominate any government, but their efforts are directed less toward this end than toward worsening relations between Latin America and the US. To achieve this purpose, the Bloc governments can be expected to offer Latin America increasing opportunities for aid and trade, while the local Communists will step up their efforts to channel the growing Latin American nationalism into a neutralism hostile toward the US. Economic ties between the Bloc and some South American countries, particularly Argentina and Uruguay, will probably increase, while a further exchange of diplomatic missions between the Bloc and Latin America is likely to take place. Soviet and local Communist capabilities to disturb relations between Latin America and the US will reinforce those anti-US attitudes which already exist there.
  1. Source: Department of State, INR Files. Secret. National Intelligence Estimates (NIEs) were high-level interdepartmental reports containing analyses of vital foreign policy issues. They were drafted by officers from those agencies represented on the United States Intelligence Board (USIB), and coordinated and disseminated by the Central Intelligence Agency to the White House, NSC, Departments of State and Defense, OCB, Atomic Energy Commission (AEC), and the Federal Bureau of Investigation (FBI). According to a note on the cover sheet, the CIA and the intelligence organizations of the Departments of State, the Army, the Navy, the Air Force, and the Joint Staff participated in the preparation of this estimate. All members of the USIB concurred in the estimate on December 2. The AEC and FBI representatives to the USIB abstained on the grounds that the subject was outside their jurisdiction.
  2. Thirteen primary products account for more than 70 percent of Latin America’s export earnings—petroleum accounts for 26 percent; coffee, 20; and a variety of other agricultural commodities and nonferrous metals make up the remainder. [Footnote in the source text.]
  3. US private long-term investment in Latin America totals 9.7 billion, or about 30 percent of such US private investment abroad. [Footnote in the source text.]
  4. Meeting of ministers of finance or economy of the American Republics at the Fourth Extraordinary Meeting of the Inter-American Economic and Social Council (commonly called the Rio Economic Conference), held at Quitandinha, Brazil, November 22–December 2, 1954; for documentation, see Foreign Relations, 1952–1954, vol. IV, pp. 313 ff.
  5. Meeting of the Presidents of the American Republics, held in Panamá, July 21–22, 1956; for documentation, see ibid., 1955–1957, vol. VI, pp. 437 ff.
  6. The Economic Conference of the Organization of American States, held in Buenos Aires, August 15–September 4, 1957; for documentation, see ibid., pp. 497 ff.
  7. About two percent of total US foreign aid since World War II has been allotted to Latin American nations and most of this has been in the form of repayable interest-bearing loans. [Footnote in the source text.]