18. Memorandum From Secretary of the Treasury Dillon to President Kennedy1
- IA-ECOSOC Conference at Montevideo
Our preparations for this Conference have now been completed.
Our major objective will be to reach a comprehensive inter-American agreement along the lines of the draft “Accord Establishing an Alliance for Progress,” with which you are familiar.
Preliminary reactions to our draft Accord from a number of Latin American countries, including Brazil, Mexico and the Central Americans indicate a strong desire to include in the Accord chapters on Basic Primary Products and Economic Integration. We can agree to this, depending on the nature of the commitments.
The main substantive problems I foresee at the Conference are these:
- There is strong Latin American support for a U.S. commitment to arrangements to provide compensatory financing to offset price declines for Latin American exports. A specific plan—costing $1 billion, of which not more than $200 million could come from Latin America—was put forward by the OAS group of experts which prepared the documentation for the Conference. Apart from its initial cost, we do not yet know whether a plan like this could work on a self-sustaining basis—i.e., without degenerating into a scheme for repeated injections of each. Hence, we can express interest in the plan and agree to study it, but my present feeling is that we must resist accepting the plan in principle until further study is made.
- The Argentines have urged U.S. financial support for a regional fund to permit the Latin Americans to extend export guarantees to promote their exports to each other, particularly of capital equipment (some of which Argentina produces) and other manufactures. This particular kind of financing would be very hard for Congress to swallow, since we would, in effect, be subsidizing Latin American exports in direct competition with our own exports. We would have less difficulty with arrangements whereby the Latin Americans themselves provided export financing as a part of their over-all development programs, with U.S. assistance being related to these programs as a whole rather than to the export financing aspect. It is not clear how far the other Latin Americans will support the Argentine proposals since they are only of interest to those few countries with some capacity to export manufactured goods.
- A number of countries have raised questions about the proposal for an Export Committee on Development to evaluate individual development programs, a proposal which we are supporting. Argentina has strongly opposed the idea and Mexico has urged the Committee not be “compulsory.” The fear expressed is that the Committee would represent interferences with national sovereignty. This, of course, would not be the case and I suspect that the real reason for opposition to the Committee is the belief that the United States will really use it in order to assure adequate self-help efforts on the part of recipient nations, just as we now rely on the IMF to induce countries to adopt satisfactory fiscal and monetary measures, I am confident that some useful machinery can be agreed upon but we will have to make concessions of form.
- The Latin Americans will want from us a much stronger statement on U.S. public assistance to their development than it is possible to provide in the formal language of the draft Accord. Accordingly, I propose in my major statement to include language along the following lines: In the first 12 months following the invitation by President Kennedy to join in an Alliance for Progress, we foresee public U.S. assistance to Latin America exceeding $1 billion—more than three times the amount for 1960 and more than double the average for 1950-60. It is not possible to predict a precise range of assistance for future years since this will vitally depend on efforts of the Latin American countries themselves in preparing and executing effective development programs. However, I wish to reaffirm and re-emphasize the pledge of President Kennedy that if the Latin Americans are ready to do their part, then the U.S. would help to provide resources of a scope and magnitude sufficient to make this bold development program a success—just as the U.S. helped to provide the resources adequate to help rebuild the economies of Western Europe. As the President stated, “only an effort of towering dimensions can ensure fulfillment of our plan for a decade of progress.”
A statement on these lines would square with ICA projections of U.S. public assistance to Latin America and is acceptable to Secretary Rusk.
Undoubtedly many other problems will arise in the course of the meeting, but these are the principal ones which can now be foreseen.
I have discussed our approach to the Montevideo Conference, including the foregoing points, with the House Foreign Affairs and Senate Foreign Relations Committees. They appeared to be entirely satisfied.