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

CH–5. Despatch from the Chargé in Chile (Belton) to the Department of State¹

No. 1142.

Santiago, May 20, 1958

SUBJECT

• U. S. Policy Toward Chile

Because Vice President Nixon’s South American trip² did not include Chile, the following synthesis of attitudes of friendly Chileans toward U.S.–Latin American policy, combined with the Embassy’s analysis and suggestions for possible modifications, may be helpful in the current re-examination of that policy. The Embassy believes Chilean views are of particular interest because the Chilean free press, combined with Chile’s traditionally democratic governmental processes and outlook, provide a better basis for local understanding of the U.S. than is available in almost any other country south of the border.

Much criticism of U.S. policy has recently developed here. It gradually rose above what might be called the normal level as the Chilean economic situation deteriorated due to low copper prices. It reached flood stage with the Department of Interior press release of April 11 on copper tariffs, and it overflowed on all sides as evidence of criticism in other South American countries accumulated with the progress of the Vice President’s trip.

In considering this problem, the Embassy believes it important to bear in mind that a basically friendly feeling toward the U.S. exists among the majority of Chileans. Much of the criticism, and certainly the most constructive aspect of it, comes from people who recognize, accept, and want a continuation of the U.S. as the predominant foreign influence in this country. It is also highly important to remember that Chileans are adept in seeing the mote in our eye and not the beam in their own, and that the missing elements for which they criticize us are often missing because of our conditioning their supply on Chilean performance, which has been faulty. Nonetheless, if we want Chile to be a strong and friendly ally, we may have to accept certain Chilean failings and find ways to pursue our policy in spite of them, rather than slow down or halt our help while waiting for Chileans to change character.

U.S.-Latin American policy, while recognized as basically sound and accepted as helpful by most Chileans, has nevertheless exhausted its overt appeal here. We solved our major hemispheric political problems and supplemented that action with a welcome reciprocal trade program during the Thirties and Forties, thus creating a reservoir of good will which has carried us a long way and still has significant background values, but which is no longer exploitable. Our part in World War II also helped to build our reputation.

With the political problems mostly out of the way, economic difficulties have taken over the stage. In our efforts to help solve these by loans, grants, technical assistance, and arguing the virtues of private enterprise, we have had only limited success. What we have done has been appreciated, but it has been badly overshadowed by the volume of our assistance to the rest of the world, and by the fact that economic problems larger than any we have helped solve keep appearing. The net effect is one of relative neglect. At the same time, unfortunately, our expressions of willingness to help and our largesse throughout the world have created an atmosphere of paternalism which has caused Chile to expect much more from us than we have delivered, and at the same time to fail to recognize its corresponding obligations.

Specific complaints

Major Chilean complaints boil down to the following:

1) U.S. resistance against commodity arrangements to guarantee reasonable copper prices, while keeping presumed Soviet bloc demand uneffective, leaving Chile, so extremely dependent on foreign trade in copper, to shoulder a cold war burden re this strategic commodity far beyond its capacity.

2) U.S. tendency to revert to protectionism at the expense of its friends in the face of what to Chile appear relatively minor domestic economic problems, thus forgetting our position and obligations as the leading world power.

3) Failure of the U.S.—or of international financial agencies which the U.S. could apparently influence heavily—in spite of declared intentions to the contrary, to provide development capital sufficient to enable Chile to progress enough to keep up with growth rates elsewhere and especially in the U.S, not to mention reducing the vast distance between our standards of living.

4) Failure of the U.S. to distinguish within the hemisphere between truly democratic friends such as Chile and dictatorships.

Apparent use by U.S. of expediency rather than policy in granting aid throughout the world, waiting until things are in a truly dangerous mess before coming to the rescue. Many Chileans feel that a serious Communist menace close at hand is the best guarantee of U.S. support, irrespective of the virtues of the recipient.

The Embassy would add the following additional factors which it believes have an appreciable effect on attitudes here, even though they have not recently been given special publicity:

6) The U.S., still the world’s most liberal and democratic country, has let itself be forced into an appearance of economic and political conservatism. Such a posture has no appeal to the average Latin, who is excited by notions and dramatic examples of idealism. Our greatest triumph here in recent years was our action against France and England re Suez, but it has been overshadowed by too many smaller things with opposite influence.³

7) Our policy toward cultural and non-strategic trade contact between Chileans and the Soviet bloc gives an impression of blind fear which harms us and has had no productive results to our knowledge. In most instances it is more rigid than our policy for U. S. -Soviet contacts, and it does not jibe with our own standards of intellectual freedom and freedom of inquiry and of commerce. We have not lived down the harm McCarthyism did us here and will not until we relax and let the Chileans know we recognize they are as politically sophisticated as we are. When we do, our approaches on problems of strategic trade and other Communist contacts of similar significance will carry far more weight.

8) Chileans are not convinced that the use of force to accomplish our objectives has been completely discarded. They are convinced we intervened in Guatemala, and they view with serious concern the recent sending of paratroopers toward Venezuela. They worry that if they do not get enough development assistance to raise their standard of living appreciably, Communism will get a firm foothold and the U. S., against its will and principles, will have to intervene by force, starting the era Pax Romana a la U.S.A.

9) We have failed to convey to Chileans the fact that the battle we are fighting against the USSR is their battle, and that the money we spend in Europe and Asia is not spent because we like Greeks or Iranians better than Chileans, but because those are the places the line is most in danger of breaking. Chileans are essentially isolationist, so this argument can’t be won by talk alone, but only by giving them a sense of participation.

10) Our recent interest in Africa is even harder to explain to Chileans than are our European and Asian expenditures. They see Africa as almost as remote from the Soviet orbit as South America, and any developmental assistance we give there as directly harmful to their own interests because it fosters the African capacity for economic competition against Latin America.

11) We have made it appear that our economic assistance is available only if it is to be applied according to our own ideas of economics. As a result we often seem to be making “free enterprise” or “people’s capitalism” the “goal” rather than a possible and preferred “means” toward our major purpose of promoting economic development. Many of our aid and loan programs assist government and semi-government development programs. Since this is often in accordance with local economic theory, we should exploit this de facto situation.

12) Chileans, as a people, undoubtedly know us, as a people, better than we know them. Everything, including our world position, movies, press wire services, USIA, make that inevitable. Yet they understand us poorly. That being the case, how can we expect to understand them well. They have none of our means to bring themselves to our attention. Our ignorance of them is abysmal. Our lack of interest is almost as great. They know this and it offends them.

Review is called for.

The problems above have not created bitterness in Chile toward the U.S., but they have created an atmosphere in which Chileans are clearly satisfied that the Nixon trip brought Latin American-U.S. problems dramatically to the forefront. No one here excuses the excesses of Lima or Caracas, and all are quick to say it “couldn’t happen here.” They are clearly pleased, though, that one way or another their problems finally reached the front pages of the U.S. press, and they are reasonably sure this would not have happened in any other way.

What to do? If we want to alleviate these problems, if we want to keep peace in “our own patio” and, most of all, if we want to create a strong, friendly neighbor out of Chile, new verve must be added to our policy. Quoting the title of El Mercurio’s May 16 lead editorial, “The U.S. Has the Floor.” But Chileans want to hear some new ideas from us, not more explanation of old ones. Nevertheless it would be tragic if we panicked at this stage and started throwing money or anything else around carelessly. Our attitude of requiring performance with our assistance and of helping those who help themselves is fundamentally sound. We need, however, to reassess not only the degree of help they can, but will, give themselves, taking into consideration the social and political facts of Chile as well as the economic ones. Likewise, we need to reassess how we can get the best public relations mileage out of what we do. Lack of understanding is the root of much of our trouble, but new systems and techniques are needed, rather than more volume.

Some Suggestions

Following are some broad ideas for U.S. Government action which may be helpful in considering the situation:

1) Take initiatives which will provide reasonable and fair solutions for copper and other commodity problems. If the presently projected subsidy plan for non-ferrous metals is carried out, be certain it works in such a way that it will be helpful and not harmful to the economic life of Chile and other affected countries.

2) Provide a source of financing which will enable Chile to achieve economic development as fast as the remainder of its social and economic structure permits. Demonstrate faith in the economic future of Chile by taking long term developmental risks. If we are willing to loan money for balance of payments in order to keep Chile afloat, we should be willing to loan money to enable her to steam ahead. By doing so, we will contribute appreciably to the country’s capacity to pay back the relatively non-productive loans for the former purpose. Let’s dust off the Chilean Agricultural and Development Plan and see if we can’t really help them get it started.

3) Take advantage of the Chilean and other Latin American ambition to achieve a regional market. Let us come out four-square in favor of it—Chileans feel we are opposed to it for selfish reasons. Our support could make it a success. Besides contributing directly to the solution of a serious economic problem in this area, it could be a vehicle through which we could gradually help in the achievement of many other projects in the economic field.

4) Channel more of our economic development assistance into sectors where it will have a broad social as well as economic impact. In Chile almost all U.S. Government, international, and private financing has gone into activities in remote areas or to private companies, also frequently in remote areas, where the man in the street sees little direct benefit to him. A few newspaper stories is all he knows about it and he soon forgets that. This applies to the nitrate, copper, steel and coal industries, and the Government-owned electric plants. Loans in areas where everybody could see the direct effects, such as those for the railroads and the highways, have been held up by the World Bank.

5) As one means of fulfilling the above recommendation, undertake a serious effort to help remedy the tragic housing situation. We loan money for buildings to house machines, but we have been unwilling to help house that other even more important productive factor—men. In Chile this is not a matter of providing comforts. It is the difference between life and death for thousands of individuals. Out of Santiago’s population of one and one-half million people, more than 200,000 live under tin cans. Another 500,000 are in what we would call slums in the United States. There will be frost on the ground here most mornings for the next four months. The other day we had two inches of rain in eight hours. People living as millions of Chileans live can’t stand such conditions and remain healthy and productive. We can’t build houses for everyone in Latin America, but we can give appreciable assistance. Technical assistance is being given but it alone is not enough. It must be accompanied by economic assistance utilizing private initiative and private means. To tap private capital and private savings might help establish a system of savings and loan associations such as we have in the United States, offering DLF money for initial capital in much the same way as our Government did in the early days of the Federal Savings and Loan System and as it now does through purchase of mortgages by the Federal National Mortgage Association; and we might extend FHA insurance to include investments in Chilean mortgages by United States private capital.

6) Increase our PL-480⁴ Title III program to the maximum to provide undernourished people the food we can’t sell. Create, support, or expand school lunch programs and other effective distributional means. Excellent progress has already been made with Title III in Chile but we would like to see it continue and improve.

7) Demonstrate that we do recognize the difference between a Dominican dictatorship and a Chilean democracy. We have already proved that giving the cold shoulder to the dictators is not the ideal way. Continue to treat them courteously and with sufficient cordiality to guarantee their cooperation where this is essential. Reflect the differences we recognize and feel by doing extra things for the true democracies. Wrap up some nice packages, some cultural, some financial, some political, but all of a type providing mutual benefits. Present them to the democracies, letting it be known we are doing so because they are democratic.

8) We must work to get the full benefits of the impact of the helpful things we do here, through better coordinated publicity and more expeditious action. We have often announced sizable loans at times or in ways which gave us practically no propaganda value. Others we have not announced at all. Often we have, without remark, let the Chileans give advance publicity about large sums they were seeking to borrow, so when we loaned less we got criticism instead of congratulations. After advancing loans, we have red taped the procedures to the extent that we have created disappointment and disillusionment on the part of the recipients, e.g. the Smathers loan to the Council of Rectors here, which was agreed upon a year ago and which is still awaiting legalities in Washington which are alienating the Rectors of all of the universities of the country.

9) We should give life to the Inter-American Defense Board or some other hemispheric organization as a principal instrumentality for our defense policy in Latin America. Through it we could give Chile, and probably each of the Latin American countries, a sense of participation in the world struggle against Communism, which certainly Chile, and probably most of the rest, do not have now. Through it we could also bring home the difference in the types of military expenditures which they make, encouraging them to reduce those which do not have hemispheric defense value.

10) Improve coordination of U.S. government publicity. The U.S. private press wire services are not subject to control, and neither are the local headline writers who work on their stories. Our own government public relations activities are, however. The extremely unfortunate press release of the Department of Interior of April 11 on copper tariff legislation cost us incalculable amounts of good will. We can blame no one but ourselves for this flub.

11) Encourage the Pan American Union to step up its publicity operations within the United States. Until our own people know something about Latin America, it is unreasonable for them to support programs designed to create good relations between us and Latin America, especially if these programs may involve some personal sacrifice on their part.

12) Start again the publication of a Government organ in Latin America to set forth our viewpoints on our policies. We are now doing very well in Chile having much material sponsored by us published in the regular press. This is not a substitute, though, for an authentic source where the definite word of the United States Government is available. We have many understandable and reasonable explanations for things we do. Because of our dependence on third parties to put them forth, they are less well said and lack the ring of authenticity they need.

The Embassy recognizes that the above problems and suggestions are easier to state than they are to solve or put into effect. It recognizes, also, that the major problem of getting the Chileans to do their share remains. It believes, however, that a spirit of enterprise and an urge for fundamental change and improvement exist here. These have been hampered recently by economic problems arising from low copper prices, but they will emerge again with full force if the U.S. is able to do helpful things and do them in a way to provide hope and encouragement to the vigorous elements within Chile.

William Belton
Chargé d’Affaires ad interim

1. Source: Department of State, Central Files, 611.25/5–2058. Confidential. Information on the source text indicated that this despatch was “Written with the advice, counsel and assistance of:” Robert H. S. Eakens, Counselor for Economic Affairs, Donovan Q. Zook, First Secretary-Counselor, and Robert J. Door, First Secretary; Oliver L. Sause, Jr., Deputy Director, USOM, Nicholas A. Luongo, and Harold Robinson of the USOM; George Butler and Hewson A. Ryan of the USIA mission; and Col. Leland R. Drake, Army Attaché.
2. Reference is to the Vice President’s good-will tour of eight South American countries, April 27–May 15, 1958. For documentation concerning the trip, see Documents BL–5–9, 12; CH–5; CO–9; EC–3–7; NI–4, 7; PA–1; PE–5–6, 8–11; UR–2–3.
3. For documentation on the subject, see Foreign Relations, 1955–1957, vol. VII, American Republics: Central and South America, Chapter 7.
4. For the text of P.L. 480, the Agriculture Trade Development and Assistance Act of 1954, see 68 stat 454.