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

ETA–48. Instruction from the Secretary of State to All Diplomatic Posts in Latin America¹

Washington, September 2, 1960

SUBJECT

• Policy Information Statement (ARA-308)
• Special Committee of the Council of the Organization of American States to Study the Formulation of New Measures for Economic Cooperation (Committee of 21)

NO FOREIGN GOVERNMENT DISTRIBUTION

The enclosed Policy Information Statement—forwarded to the Post for use us outlined in Foreign Service Circular No. 49, November 18, 1953²—is also being transmitted to USIA und other interested agencies in Washington for their information and guidance. You are requested to make it available to appropriate officers of USIS and other interested U.S. agencies assigned to your Post.

Instructions regarding USIS treatment of this subject will be issued, as required, by USIA Washington.

HERTER

SPECIAL COMMITTEE OF THE COUNCIL OF THE ORGANIZATION OF AMERICAN STATES TO STUDY THE FORMULATION OF NEW MEASURES FOR ECONOMIC COOPERATION (COMMITTEE OF 21)

SUMMARY

The Special Committee of the Council of the OAS to Study the Formulation of New Measures for Economic Cooperation, popularly known as the Committee of 21, will begin its third meeting in Bogotá, Colombia, September 5, 1960. The Committee’s meetings are considered to be of significant importance by American Republics Governments and high-level national representation is anticipated. The United States delegation will be headed by Under Secretary of State Douglas Dillon. General items to be discussed may be placed within the following headings:

1. Financing of Economic Development.

2. Agriculture, Education, Productivity and Technology.

3. Fluctuations in the Prices of Basic Products.

Thus the Committee plans to address itself to primary matters affecting the economic well-being and the stability of the inter-American community. The President of the U.S.³ has said that the economic development of Latin America is of vital importance to the strength and well-being of the Free World and that “we are determined to press forward with the concrete measures necessary to make inter-American cooperation in the economic field as fruitful as it has been in the political field.” Our full and sincere participation in the work of the Committee, and the sub-Committee of 9, demonstrate our determination. Further evidence of U.S. willingness to work with the other American Republics may be seen in the recent Executive decision, and Legislative authorization, to go ahead with the President’s new concept of cooperative assistance to Latin American social development programs.⁴

I—BACKGROUND

The Committee of 21 had its genesis in an informal Washington meeting of American Foreign Ministers in September, 1958, called in response to a suggestion by Brazil’s President Kubitschek in a speech of June 20, 1958.⁵ The Brazilian Chief Executive addressed himself to a number of subjects, including the problems of the Americas. He expressed his belief that underdevelopment was Latin America’s outstanding problem. President Kubitschek recommended that the matter be discussed at a high-level continental meeting to seek positive solutions. Among the subjects mentioned were: (1) intensification of pioneer investments in economically underdeveloped areas of the hemisphere; (2) expansion of technical assistance programs; (3) protection of prices of basic commodities from excessive and harmful fluctuations; and (4) increase of resources of international financial agencies and the liberalization of their rules and a view to allowing greater latitude of action.

The Brazilian President also pointed out that his correspondence with President Eisenhower⁶ made it clear that the U.S. Chief Executive shared Brazil’s “. . . deep concern over the problems of economic development.”

Subsequently, the Brazilian Government transmitted to the U.S. Government an Aide Memoire, dated August 9, 1958, ⁷ suggesting that “informal contacts for initial understandings should be carried out in Washington . . .with a view to preliminary study and analysis of the problem of underdevelopment in Latin America . . .” “These understandings,” he stated, “might ultimately attain a more coordinated form of expression if there were created a Committee of 21 [nations] for the purpose of concerting the bases of agreement to be approved in a final meeting.” The U.S. Secretary of State, John Foster Dulles, extended an invitation to the American Foreign Ministers, many of whom were already in New York for a session of the United Nations General Assembly, to meet in Washington on September 23 and 24, 1958.⁸ The Secretary proposed informal meetings to discuss several matters, among them the manner in which Brazil’s proposals, called “Operation Pan America,” might be carried out. During the meetings the Foreign Minister of Brazil⁹ recommended joint hemispheric action on six principal points:

1. Study and adoption of measures favoring the use of private capital of the industrialized countries in developing nations.

2. Increase in the volume, and easing of the terms, of loans made by international public credit agencies or the creation of inter-American financial agencies organized with the same objectives in mind.¹⁰

3. Study and implementation of other measures to strengthen the domestic economies principally to fight inflation and to encourage savings and local investment.

4. Study and implementation of measures to permit equitable regulation of the market in basic commodities.

5. Study of joint measures to be adopted to meet problems arising from the formation of large European trade blocs such as the European Common Market; studies and measures leading to the establishment of regional markets in the Western Hemisphere.

6. Expansion of technical assistance programs.

Upon the conclusion of the Foreign Ministers’ meetings a communiqué was issued which called for Intensification of action to promote the greatest possible economic development of the continent.¹¹ The Ministers indicated gratification at President Eisenhower’s pledge of full U.S cooperation in achieving concrete results in the common effort to promote the economic development of the American Republics because it [the U.S.] considers that peace, prosperity, and security are truly indivisible. The Ministers recommended that during the period before the Eleventh Inter-American Conference [now scheduled for March 1961 in Quito] special attention be given to working out additional measures of economic cooperation taking as the point of departure the Brazilian proposals known as ‘Operation Pan America” and such others as the American governments might wish to submit in connection with the general subject. The Foreign Ministers were of the opinion that the Council of the OAS should set up a special “commission” of the Council on which 21 republics would be represented. Recommendations of such a group could then be carried out either through OAS organs or by the individual governments. The communiqué also expressed the opinion that practical steps could be taken at once: the establishment of an inter-American economic development institution; intensification of efforts to establish regional markets in Latin America.

On September 24, 1958, the Council of the OAS established the Special Committee for the Formulation of New Measures for Economic Cooperation (Committee of 21). Among the most important matters to be studied were the following: a draft resolution calling for an intensified program of technical training: a proposal for annual meetings of economic experts; a suggestion that the principal coffee consuming countries of the area urgently study the establishment of import quotas; a proposal to study possibilities for the establishment of a system of coffee buffer stocks, retention or export quotas and restrictions on production, a proposal to study ways and means to increase inter-American and international trade; proposals dealing with basic products; and a proposal to study ways and means to assist in increasing the flow of private investment capital to Latin America. The first sessions of the Committee were held in Washington between November 17 and December 12, 1958, and various recommendations and proposals were submitted to the committee.¹² A working group of 14 nations (Argentina, Brazil, Cuba, Chile, Costa Rica, El Salvador, Guatemala, Haiti, Mexico, Paraguay, Peru, U.S., Uruguay, and Venezuela) was established to consider the various items in preparation for the Second Session of the Committee of 21.¹³

The Second Sessions of the Committee of 21 took place in Buenos Aires from April 27 to May 8, 1959.¹⁴ The Committee ultimately settled on thirty-three (33) draft resolutions for approval by the Council of the OAS. While the limitations of space preclude a discussion or even a listing, of all of the resolutions approved by the Council on July 8, 1959, mention of several items will demonstrate the subjects covered and the range of problems under the purview of the Committee of 21:

The Inter-American Economic and Social Council (IAECOSOC) as advisory agency of the OAS on specific economic problems:

Measures to increase the flow of private investments and public capital; Analysis of commodity price-support systems and export subsidy policies; Evaluation, development, coordination of transportation in Latin America; Studies of wool and mineral markets;

Studies on regional industries;

Latin American regional market:

Problems of excessive fluctuation in the markets for basic products; Liberalization of international trade in basic products:

Coordination of technical cooperation and assistance activities;

Survey and evaluation of natural resources;

Development of the home-building industry and financing of low-cost housing; University training of technicians;

Promotion of economic development through agrarian reform,

In February, 1960, the President of Brazil addressed to President Eisenhower an Aide Memoire¹⁵ suggesting that the delays attendant upon completion of the IAECOSOC’s country-by-country economic surveys indicated the desirability of certain limited but immediate steps. The measures set forth by President Kubitschek were as follows:

1. Strengthening of measures for financing Latin-American development, preferably through the Inter-American Development Bank.

2. Technical and financial program for the development of agriculture and of the food industries in conformity with the individual characteristics of each country.

3. Measures to ensure adequate prices and market conditions for raw materials and primary commodities which are basic to the economic and social stability of Latin American countries.

4. Financial and technical assistance to an intensive program for the training of experts in economic development and for the campaign against illiteracy.

Financial and technical aid for the establishment of an inter-American organization for technological and productivity research in support of the industrial development of Latin America.

President Kubitschek also called for a meeting of the Subcommittee of 9 immediately after the COAS meeting scheduled for March 30, 1960. The Subcommittee met in Washington during June 6-June 24, 1960, to consider the Brazilian proposals and related matters.¹⁶ Following the work of the 9, the Council of the OAS at an extraordinary meeting on July 1, 1960, set July 1, 1960 as the date of the opening of the Third Period of Sessions for the Committee of 21 and Bogotá, Colombia, as the site for the meetings.

The draft agenda, subject to approval by the Committee, is as follows:

1. Opening of the sessions

2. Approval of the agenda

3. Consideration of the report of the Subcommittee of 9¹⁷ (which includes the five points in Kubistchek’s Aide Memoire of February, 1960).

4. Other matters

The secretariat has proposed that the Committee set up four working groups or the sessions:

Group I—Financing of Development

Group II—Agriculture

Group III—Basic Products

Group IV—Education, Productivity, and Technology

It is expected that President Eisenhower’s new concept for social development, announced on July 11, 1960,¹⁸ will be a matter of earnest consideration by the delegations at Bogotá. (Reference is made to White House press release, at Newport, of July 11th.) The President, pointed out that the Bogotá meetings would be considering one of the most important components “of our hemispheric future—the problem of social reform and economic growth.” He indicated that the basic ideas which will guide the United States’ participation at Bogotá are:

Widespread social progress and economic growth benefitting all the people and achieved within a framework of free institutions are the imperatives of our time.

2. Our nation’s history and traditions place us in accord with those who seek to fulfill the promise of the future through methods consistent with the dignity of free men. Our interests and sympathies are with them.

3. A new affirmation of purpose is called for in our cooperation with friendly developing countries in their efforts to progress.

In his announcement, President Eisenhower outlined three specific needs which he believes must be mot through cooperative action: practical ways in which developing countries can make faster progress in meeting their own needs and ways in which their friends can most effectively cooperate with them (he mentioned better land utilization, low-cost housing, und minimums for decent living); improvement of the opportunities for the bulk of the population to share in and contribute to un expanding national product; and acceleration of the trend toward greater respect for human rights and democratic government based on free elections. The Congress of the United States has indicated its general concurrence in the President’s concept. END UNCLASSIFIED

BEGIN CONFIDENTIAL

Brazil views President Eisenhower’s proposal as an emergency program applying to social infrastructure, to be followed by a program to deal with economic infrastructure. The Brazilians also are insisting on the principle of programming through a joint commission, either the Committee of 21 or some other multilateral committee, wherein funds available under the new program would presumably be allocated to the various countries by this group.

It is very probable that Brazil will lead representations at Bogotá in favor of some variety of massive U.S. assistance to Latin American economic development and in criticism of the level of existing and announced U.S. assistance. The President’s new proposals are not likely to satisfy Brazilian desires on the scope and volume of U.S. aid.

II—U.S. POLICY AND OBJECTIVES

The United States believes (a) that the current, continuing revolution in Latin America requires energetic steps by each nation’s government, in the direction of meeting the peoples’ legitimate aspirations and that failure to do so can only lead to repetitions of the kind of destructive social upheaval seen in Castro’s Cuba; (b) economic development programs which do not bring relatively quick, though perhaps relatively small, amelioration of dire misery encountered in many areas will not meet the above problem; (c) it is absolutely essential that Latin American governments and nations make reasonable efforts to help themselves in attacking these problems, and (d) the United States stands ready to lend a hand in cooperation with individual national efforts.

We believe that the approach taken by the Committee of 21 in its work over the past two years has not been fruitful and does not promise real accomplishment for the future. The United States will seek, at Bogotá, to achieve restoration to the regular organs of the OAS of the responsibilities which the Committee has been undertaking, with a view to making greater use of the IAECOSOC for the consideration of economic problems, for the conduct of necessary economic studies, and for appropriate recommendations for solutions. At the same time we will seek acceptance of the approach embodied in President Eisenhower’s program.

The U.S. delegation will press for: (a) the establishment of what may be called the Inter-American Fund (or Program) for Social Development, (b) use of the Inter-American Development Bank as the primary mechanism for administration of the fund, (c) acceptance of the principle of self-help, and (d) a strengthened IAECOSOC for Colombo-type discussions on social and economic problems. The action by the meeting will probably take the form of an agreement accepting the above points or whatever part of them may prove acceptable. The text of a draft of such an agreement was given Latin American representatives by Mr. Dillon on September 26, und the text has also been forwarded to each U.S. diplomatic mission in Latin America.¹⁹

III—SPECIAL CONSIDERATIONS (None)

IV—PUBLIC POSITION

Excerpts from the August 23, 1960 testimony before the House Foreign Relations Committee by Under Secretary of State Douglas Dillon (enclosed) may be used us our public position.²⁰

EXCERPTS FROM STATEMENT BY UNDER SECRETARY OF STATE DOUGLAS DILLON BEFORE HOUSE FOREIGN AFFAIRS COMMITTEE—AUGUST 23, 1960

PROGRAM FOR LATIN AMERICA

The United States and its neighbors in Latin America enjoy a special relationship rooted in unique and enduring ties of history, geography and trade. As neighbors we have worked in close political association through the Organization of American States. We have jointly developed and strengthened our economic and financial relationships. We now propose to join forces to deal with the pressing needs for social progress with which so many of our neighbors are confronted.

Despite notable and substantial economic growth in much of Latin America, despite rapid industrial development in many areas, despite some increases in agricultural production, the great majority of the peoples of these nations have achieved little improvement in their standard of living.

Among the reasons for this situation, several have particular significance. A very high rate of population growth has consumed a large part of increasing production. The general living standard has been so low that large percentage increases have involved only small gains in absolute terms. Productivity has been greatly hampered by the lack of education and training. Finally, outdated economic, legal and social practices and institutions have frequently impeded growth.

Thus, we find masses of people still living in extreme poverty, without adequate prospect of favorable change. At the same time there is wide popular appreciation in Latin America that such conditions need not exist and mounting demands that they be improved. Unless hope for improvement can be given, the prospect is for increasing frustration and unrest which can only lead to violence and destruction.

To provide an adequate response to these pressing needs is a task which will take effort, money and time. It will require initiative, effort and courage on the part of the Latin American governments to adopt and adhere to policies and actions which will assure their peoples a reasonable degree of social progress. We believe that the governments of Latin America recognize this need and that they have the will and the determination to take the necessary actions. This is a primary requirement for success.

While it is the Latin American countries themselves which of necessity must find the ways to solve these problems, few if any of them possess the means to do so alone. They need help—help in developing effective programs and help in the form of outside financing.

To provide such help is the purpose of the new social development program which we are proposing. We would contribute capital resources and technical assistance to support the efforts of those Latin American countries which are prepared to initiate effective institutional improvements and self-help measures in the field of social development. We would hope to include in the new social development program for Latin America the Federation of the West Indies, which has achieved self-government and which will soon become fully independent—probably next year.

In a short time we shall be meeting with representatives of the governments of Latin America at Bogotá in a hemispheric economic conference. The discussions at Bogotá will look toward the development of plans for a positive and productive attack on the problems of social development. As I have suggested, effective plans will require strong actions by the Latin American governments, particularly in the field of domestic reform. To encourage them to take such actions, and to make plain that assistance to complement their actions can be anticipated, we need a clear and unmistakable expression of Congressional readiness to provide appropriations. It is for this reason that we are requesting an authorization at this time.

Such an authorization would provide a framework within which we and our friends from Latin America can develop new and more effective plans and programs for attacking the problems of social progress.

We envisage that the Conference should agree upon the basic objectives of a program for social development which gives primary attention to needs in three broad areas: (1) Improvement of the conditions of rural living and land use; (2) Improvement of housing and community facilities; and (3) Improvement of educational systems and training facilities. The program we envisage begins with the development of specific policies, plans and programs by each of the governments concerned. We foresee that the Latin American governments will obtain substantial help and advice from the Inter-American Development Bank, and the Inter-American Economic and Social Council in preparing specific projects and programs to expedite social progress, in examining the adequacy of existing tax systems, institutions, laws and policies to promote such progress and in developing more effective systems of mobilizing human and material resources to further these objectives.

We foresee that the funds which the United States would provide to assist in carrying out these plans and programs would be utilized for the most part for loans repayable in local currencies and administered through the Inter-American Development Bank. Nevertheless, we do not preclude the use of other mechanisms or means including grants where appropriate.

It is our idea that the total effort should be periodically reviewed and discussed within the Inter-American Economic and Social Council where the progress in each country could be assessed and plans for further progress could be discussed.

In these ways we believe the American Republics can proceed effectively basis of common effort to meet their most pressing needs.

1. Source: Department of State, Central Files, 611.00/9–260. Confidential. Drafted by Robert Ross of the Bureau of Inter-American Affairs on August 11, 31; cleared with Alexander M. Rosenson, Deputy Director of the Office of Inter-American Regional Economic Affairs; Simon N. Wilson, Officer in Charge of Inter-American Organizations and Conferences; Juan N. Gorrell of the Bureau of Public Affairs; and Frank A. Mau of the Executive Secretariat’s Reports and Operations Staff; and approved by Francis M. Herren, Deputy Director of the Bureau of Public Affairs’ Policy Plans and Guidance Staff. The instruction was also addressed to the consulate generals at Guayaquil, Maracaibo, Porte Alegre, Puerto la Cruz, Recife, Salvador, and São Paulo.
2. In Foreign Service Circular No. 49, November 18, 1953, the Department of State defined its substantive relationships with the United States information Agency and distributed this information to all Foreign Service posts. A copy of this circular is filed in the Records Management and Research Division of the Bureau of Personnel’s Office of Management.
3. Dwight D. Eisenhower.
4. On August 8, 1960, President Eisenhower requested Congress to authorize the appropriation of $600 million for the establishment of a new social program in Latin America, $100 million of which was to be set aside for the rehabilitation of Chile. For portions of the text of the President’s message, see the Department of State Bulletin, August 29, 1960, p. 314. On August 31, the Congress approved legislation reflecting the President’s request, and the bill was enacted into law on September 8. For text of the American Republics Cooperation Act (Public Law 86–175), see 74 State 869.
5. On June 20, 1958, the Embassy in Brazil transmitted the text of President Kubitschek’s speech to the Department of State. (Telegram 1754 from Rio de Janiero; 732.11/6–2058)
6. For the texts of President Kubitschek’s letter of May 28, 1958, to President Eisenhower and President Eisenhower’s response of June 5, see the Department of State Bulletin, June 30, 1958, p. 1090.
7. The text of the Brazilian Aide-Mémoire, which was transmitted to the American Ambassador at Rio de Janerio on August 14, 1958, is in the OAS files, Lot 60 D 665, “Informal Meeting of American Foreign Ministers, Briefing Book, Background Information.”
8. Documentation on the meeting in Washington on September 23–24 is in Department of State decimal file 363 as well as in the following Department of State lot files: OAS Files, Lot 60 D 665; Rubottom Files, Lot 60 D 533, and Conference Files, Lot 64 D 559, CF 1117–CF 1121.
9. Franciso Negrão de Lima.
10. It may be noted that the announcement of the establishment of the Inter-American Development Bank, with U.S support, had been made in mid-August. [Footnote in original source text.]
11. For the text of the communiqué issued on September 24 at the conclusion of the Foreign Ministers’ meetings, see the Department of State Bulletin, October 13, 1958, p. 575.
12. Documentation on the meetings held in Washington between November 17 and December 18, 1958, is in Department of State decimal fie 363 as well as in the following Department of State lot files: OAS Files, Lot 69 D 665 and ARA/REA Files, Lot 61 D 248.
13. The working group met in Washington from January 15, 1959, until March 30, 1959. Documentation on its deliberations is in Department of State lot files 363 and 811.0020 as well as in the following Department of State lot files: ARA Special Assistant’s Files, Lot 69 D 371; OAS Files, Lot 60 D 665; Rubottom Files, Lot 61 D 279; and ARA/REA Files, Lot 63 D 415.
14. Documentation on the Buenos Aires sessions of the Committee of 21 is in Department of State decimal file 363 as well as in the following Department of State lot files: OAS Files, Lot 60 D 665 and Rubottom Files, Lot 61 D 279.
15. The text of the Brazilian Aide Memoire, which President Kubitschek handed to President Eisenhower on February 23, 1960, is in Department of State file 371.04/2–2360.
16. Documentation on the meetings of the Subcommittee of 9 in Washington is in Department of State decimal file 371.04 as well as in the following Department of State lot files; OAS Files; Lot 60 D 665; ARA/REA Files, Lot 61 D 248; ARA Files, Lot 62 D 302; and ARA Files, Lot 62 D 230.
17. The text of the “Report of the Subcommittee of the Special Committee to Study the Formulation of New Measures for Economic Cooperation” was approval by the Subcommittee of 9 on June 24, 1960. The text is in OAS Files, Lot 60 D 665, “Committee of 21-U.S. Delegation Position Papers.”
18. For the text of President Eisenhower’s statement of July 11, 1960, see the Department of State Bulletin, August 1, 1960, p. 166.
19. Under Secretary of State Dillon handed the draft text of the “Agreement for the Establishment of an Inter-American Program for Social Development” to Latin American representatives in Washington on August 26, 1960. Documentation concerning the formulation and presentation of this document is in file 371.04.
20. Under Secretary of State Dillon testified before the House Foreign Affairs Committee on August 23, 1960, in support of President Eisenhower’s request that the Congress authorize the appropriation of $600 million for the establishment of a new social program in Latin America.