4. Memorandum from Hilsman (INR) to Woodward (ARA), July 181
SUBJECT
- Latin American Concern for Bolivia: An Opportunity for the US
The Bolivian regime of Paz Estenssoro is kept in power by US assistance. Even with a more generous level of aid promised under a new development program, there is no assurance the regime can survive. Most likely replacements are a Castro-type regime or an Army dictatorship that might give way to extreme leftists. US concern that order be maintained in the country is shared by the governments of Bolivia’s neighbors, especially Argentina and Brazil. The concern of these governments points to the possibility that they might be brought to cooperate in shoring up the Paz regime and that they might strengthen the prospects for stabilizing and developing the Bolivian society by their participation in the aid programs.
The Paz Estenssoro regime is so weak that it almost certainly will be unable to carry out a redevelopment of the Bolivian economy. The government’s lack of authority, and widespread social unrest expose the Paz regime to extremist pressures supported by the promise of Soviet aid. The achievement of hoped-for economic viability and social order awaits a generation of training, discipline, and investment to [Typeset Page 10] bring the illiterate and unskilled population into the modern world. Meanwhile, the planned level of US aid may be sufficient to keep Paz in power, but even this is uncertain unless moderate forces can be strengthened and the extremists’ hope of Soviet support discouraged.
The United States has gradually come to assume almost sole responsibility for Bolivia in recent years. The country is, however, also of direct concern to the neighboring governments of Argentina, Brazil, Chile, and Peru. Some of these governments may take a philosophic view of Soviet domination of the regime in Cuba, but all are undoubtedly opposed to establishment of a Castro-type regime in Bolivia.
The neighboring governments have in recent weeks voiced their concern over the rapidly deteriorating political and economic situation in Bolivia, following renewed crises in that country. During a visit to Bolivia in late May, Argentine President Frondizi expressed to President Paz his concern over extremist inroads, agreed to provide food supplies on credit to Bolivian tin mine commissaries, and discussed prospects for expansion of trade and transportation between the two countries. During June both Brazilian President Quadros and Peruvian Prime Minister Beltran expressed to Ambassador Stevenson their strong concern over the Bolivian situation.
In view of the weakness of government authority in Bolivia and the desire of the neighboring governments to prevent an extremist takeover with Soviet support, these governments may well be open to becoming more involved in Bolivian affairs. They may be receptive to US efforts to seek their assistance in preventive measures to strengthen the Paz regime and the moderate forces in Bolivia.
[Facsimile Page 2]Building upon the evidences of their concern, the US could seek the active cooperation of Bolivia’s neighbors beginning with the negotiations connected with the IA-ECOSOC conference scheduled to be held on August 5. This cooperation could occur within the framework of a program for economic operations on a number of fronts, and would doubtless have to be accompanied by assurances of US willingness to back selected projects either directly or indirectly. The various neighbors might participate in a program with elements like these:
1) Argentina: development of Bolivian highways, railroads, petroleum resources; supply of food in substitution of existing US supplies;
2) Brazil: development of railroads and petroleum resources; agricultural promotion;
3) Peru: railroad and hydroelectric development; intensive social stabilization measures in the Puno area adjacent to the Altiplano;
4) Chile: promotion of Bolivian industrial development.
The question of Bolivia’s integration into the proposed Latin American Free Trade Area (LAFTA) could also be considered, as well as a program for technical aid from leading industrial countries in Latin America.
[Typeset Page 11]The recent US sponsored multilateral arrangement with West Germany and the Inter-American Bank to aid the Bolivian tin mining industry and the recent US-British talks concerning aid to the Bolivian railroads enhance the opportunity for South American participation. Aside from their interest in Bolivia as a regional problem, the South American governments, especially those of Argentina and Brazil, would welcome the prestige of association with an international consortium including the Western European states. Certainly, should one of these governments move to join in the effort to stabilize and reorganize Bolivia, the others would hasten to assert their position by taking an active part in the operation.
The immediate effect to be expected through the cooperation of neighboring governments in economic aid to Bolivia would be public and concrete evidence that these leading South American governments intend to stand by the Paz regime. This affirmation of support through plans for economic aid would encourage moderate forces in Bolivia and throw a block in the way of groups agitating for a Castro-type solution. Over the long run, it might be hoped that aid from neighboring countries, especially Argentina and Brazil, would serve to develop the southern and eastern regions of Bolivia and to integrate Bolivia into the South American economy.
- Latin American and U.S. concern for Bolivian stability and security. Secret. 2 pp. DOS, CF, 724.00/7–2461.↩