Foreign Relations of the United States, 1969–1976, Volume E–10, Documents on American Republics, 1969–1972

48. Minutes of Senior Review Group Meeting¹ ²

Washington, August 17, 1971, 3:15–4:30 p.m.

Subject:

• Latin America (NSSM 108) and the Caribbean (NSSM 117)

Participation:

• Chairman: Dr. Henry A. Kissinger
• State: Mr. John N. Irwin
  Mr. Charles Meyer
  Mr. Robert Hurwitch
  Mr. Samuel Eaton
• Defense: Mr. David Packard
  Mr. Armistead Selden
  Brig. Gen. Maurice Kendall
• JCS: Adm. Thomas H. Moorer
  Brig. Gen. Richard J. Hartman
  Rear. Adm. Robert Welander
• CIA: Mr. Richard Helms
  Mr. James Flannery
• Treasury: Mr. John Petty
• Commerce: Mr. Lawrence Fox
• OMB: Mr. Kenneth Dam
• OPIC: Mr. Bradford Mills
• AID: Mr. Arthur Z. Gardiner
• CIEP: Mr. Deane Hinton
• USIA: Mr. Henry Loomis
• NSC Staff: Col. Richard T. Kennedy
  Mr. Arnold Nachmanoff
  Mr. Robert Hormats
  Mr. Keith Guthrie

SUMMARY OF CONCLUSIONS

1. Overall Policy for Latin America. The IG/ARA will prepare a brief paper, to be used as the basis for a National Security Council meeting, to discuss U.S. policy objectives toward Latin America during the next eighteen months and feasible actions which the U.S. should take, both bilaterally and multilaterally, in support of those objectives. The paper should take into account developments since the preparation of the NSSM 108 study, particularly the President’s new economic program. The paper should also consider, inter alia; (1) the relationship of the domestic evolution of Latin American countries to U.S. national interests and U.S. ability to influence such evolution, (2) areas in which the U.S. can be responsive to Latin American aspirations, (3) the effectiveness of hemispheric approaches under present circumstances, and (4) a more intensive utilization of differential bilateral approaches. With regard to actions to support U.S. objectives, the paper should set forth specific steps—including public policy statements, diplomatic representations, positions in multilateral fora, and bilateral actions—which the U.S. should take during the next eighteen months.

2. The Caribbean. The IG/ARA will prepare a brief study of the political and security aspects of U.S. relations with the countries and dependencies of the Caribbean. The paper should identify developments in the area that are likely to affect U.S. interests in the next three to five years and should set forth alternative actions which the U.S. might take to protect its interests.

3. Military Assistance. The SRG noted that the IG/ARA had endorsed the recommendation of the JCS Military Presence Study favoring a $9.3 million grant materiel assistance program in Latin America FY 72. The Defense Department will determine appropriate means for funding such a program.

4. Military Groups. The SRG agreed that the personnel ceiling for military groups in Latin America should be 290.

Mr. Irwin: Henry [Kissinger] will be late. He suggests we go ahead and begin discussing the Caribbean. I would like to ask Bob Hurwitch to introduce that subject.

Mr. Hurwitch: We have some important interests in the Caribbean. It is a major source of bauxite for us, and we have some important military bases there.

These interests are undergoing a number of challenges: economic nationalism with racist overtones; increased Soviet activity, particularly naval; and the effects of a British pullout resulting in less and less British influence in the area. We examined these challenges and came up with steps the United States should take to safeguard its interests in the area.

Some of these steps are being covered in other NSSM studies. For example, the question of reverse preferences, which comes up because of pending British entry into the Common Market, is being studied by another group. We would only urge that that group take into account our important interests in the Caribbean when making its decision.

We have important interests in bauxite in Jamaica, Guyana, and also Surinam. Depending on how we handle the bauxite issue, there is a potential danger that Chedi Jagan might be able to take power in Guyana. Guyana has expropriated a Canadian company that is substantially owned by U.S. citizens and has made arrangements for compensation with the company. What is done in Guyana could affect Jamaica and the U.S. bauxite interests there, which are guaranteed by OPIC. The bauxite question is being handled in the NSSM 131 study on expropriation. We urge that that study take into account our interests in the Caribbean and provide us enough flexibility to protect them.

As for the British pull-out, one year ago the British had a rigid timetable which was tied to Bahamian independence. Recently the British have indicated that they have less urgency. The Bahamian Government has put off independence for two years. The British Hondurans wax and wane about their desire to declare independence. They are working with the British and the Guatemalans on this. Our general recommendation is that we do everything possible to keep the British in the area as long as we can and that we do nothing, particularly in the way of aid programs, that would indicate a willingness on our part to take over their burdens in the area, at least during the next couple of years.

In the economic field we have a number of other troublesome issues—sugar, which is important in the Dominican Republic, rum, and textiles. Economic nationalism is endemic in this whole area. The countries don’t yet have economic independence from the white man. We feel that we ought to be able to take some steps to deal with this social-economic-political situation in order to lessen these pressures. There are things we could do in a minor way involving textiles, sugar, and rum. We are not urging an overall reversal of policy for this purpose, but when our commodity and commercial policies do engage our special Caribbean interests in the military, security, and investment field, we recommend that these policies be sufficiently flexible to protect those interests.

We have few bilateral aid programs in the Caribbean. Our general policy is to funnel aid through multilateral channels. We don’t want to drive the British and Canadians from the Caribbean by rushing in to provide economic assistance. There are some areas where there is room for bilateral aid. We would like to present some ground rules to follow in determining whether we furnish bilateral aid. We would like to have it understood that we will furnish bilateral aid when (1) the international lending agencies are not involved, (2) British and Canadian activities will not be forced out, and (3) it is in our interests.

Mr. Irwin: Do you want to discuss base requirements, or should we call on Defense for that?

Mr. Hurwitch: We have quite a few bases in the area. Our requirements are constantly under review. At present our reviews indicate that the great majority of the bases we have are needed and should be retained. The Bahamian Government may seek to modify our base agreements upon independence. Defense—and State agrees—feels we should make changes and be willing to pay for the bases if necessary.

Mr. Irwin: What would you say are the major issues we face in the Caribbean?

Mr. Hurwitch: Textiles is one. In any review that is undertaken of our textile policy, particular attention should be given to Caribbean sensitivities. Commerce took exception to this approach [as proposed in the IG] and reserved its own position on the matter. In general, Commerce felt that a political-geographic forum [such as the IG] was not appropriate for discussion of textiles. Is there a Commerce representative present? Perhaps it would be better for them to explain their position.

Mr. Fox: The summary you have given is correct.

Mr. Irwin: Where lies the difference between Commerce and other agencies? What is the IG recommending?

Mr. Hurwitch: The IG recommends that any Administration review of policy on commodities take into account Caribbean sensibilities.

Mr. Fox: We can agree with that. Discussion of textiles would take place in the Cabinet Committee on Cotton Textiles. We feel that textiles ought to be treated as a question of general policy in a general forum. Our first position was that a discussion of textiles didn’t belong in the NSSM 117 paper. However, we feel the particular formulation given in the paper is satisfactory.

Mr. Petty: When you refer to “special interests”, what do you mean?

Mr. Hurwitch: Our interests in the area. In the forum where our textile policy is determined, it would be helpful to be aware of the special interests we have in the Caribbean.

Mr. Irwin: I suppose the most important commercial issue in the Caribbean is bauxite. The IG prefers Option 1 which calls for the U.S. to exercise good offices [between the Jamaican Government and the U.S. companies]. Does anyone have any other preferences? We are faced with a dilemma involving Guyana and Jamaica. In Guyana, where an expropriation has already taken place, we don’t want to condone nationalization, but we also don’t want to bring Jagan to power. At the same time we don’t want to treat Burnham and the Guyanese in such a way as to encourage the Jamaicans to expropriate our bauxite interests in their country.

Mr. Mills: Our position at OPIC is that we support Option 1, but if things develop adversely, we must consider other options. Right now we can support Option 1, since Guyana seems to be quieting down.

Mr. Packard: This issue is a lot more important to some other people [in the U.S. Government] than it is to you. We almost have to do whatever is necessary to avoid having this [the bauxite problem] get out of hand.

(Dr. Kissinger joined the meeting at this point.)

I understand your desire to keep the textile negotiations on a broad industry-wide basis. However, there are cases where we might want special treatment because of our national interests.

Mr. Fox: We don’t say that other interests might not have a higher priority. We only say that the textile question should be dealt with centrally in the Cabinet committee that has been established for that purpose. In that forum special considerations regarding textiles [in the Caribbean] can be put forward. We are suggesting that the issue of textiles in the Caribbean could be put into the Cabinet committee.

Mr. Packard: Your procedures are probably right. I just wanted to point out that there are special interests that override the general textile policy.

Mr. Hurwitch: Bauxite is perhaps the most important of our special interests. Our broad policy line is to try to maintain the proper balance in our approaches to Guyana and Jamaica. We need the flexibility to be able to keep Jagan out of power in Guyana while maintaining our interests in Jamaica.

Mr. Helms: (to Mr. Hurwitch) What is the timetable for British withdrawal?

Mr. Hurwitch: It is all tied up with the negotiations for entry into the Common Market, the issue of what to do with the Bahamas, and the problem of the associated states in the British West Indies.

(to Dr. Kissinger) I can review briefly our discussion so far. What we are concerned with are opportunities to alleviate the challenges to our interests in the Caribbean that have arisen in connection with such matters as expropriations, textiles, and our bases. What we need is sufficient flexibility to protect our interests.

Dr. Kissinger: What sort of charter do you need?

Mr. Hurwitch: At the moment this is really out of ARA’s hands.

Mr. Hinton: There is no problem with insuring that these special considerations are taken into account. What happens in these situations [involving broad economic issues] is that a flock of countries want special treatment. It is very hard to deal with trade problems in the context of specific countries; you are always being forced to choose friends and enemies. We are better off with a general rule in dealing with these matters. This allows for some flexibility.

I don’t see how we can write options that avoid the substance of these economic issues.

Dr. Kissinger: I know we can do that! Whether we can write options that are relevant is another matter.

Mr. Hurwitch: We have gone through a rather rigorous intellectual process in preparing this study. It is keyed to recognized U.S. interests. It does not just say: “Let’s make friends with the world.”

Mr. Meyer: The Caribbean study pinpoints problems much more specifically than the NSSM 108 study. Two irritants that come up frequently are the $100 duty-free limit for tourist purchases and the duty on rum.

Mr. Hinton: We don’t have much statutory authority to act on these.

Mr. Fox: Perhaps we can do it by working out a way to separate duties on dark and light rum.

Dr. Kissinger: We should get to the heart of the problem. These economic issues should be dealt with in the appropriate special forums.

As I remember, this Caribbean study grew out of a visit from one of Charlie’s [Meyer’s] clients [Prime Minister Shearer of Jamaica], whom we let into the President’s office. He told the President that the Caribbean countries constituted a special problem. The population was largely black and English speaking and had no historical connection with Latin America. The President ordered a study to see if there were special aspects to our relations with the Caribbean which warranted not putting that area under our overall Hemispheric policy. This issue [special considerations in the Caribbean] comes up in connection with the economic matters you have discussed. I wonder if it also comes up in connection with the political situation in the Caribbean. I know you had a meeting on black nationalism in the area.

Mr. Hurwitch: We brought our Ambassadors back here to discuss the problem.

Dr. Kissinger: I wonder if we could look into those political issues rather than the economic problems, which should probably be turned over to Peter Peterson.

Mr. Meyer: There is really no regional unity in the Caribbean.

Dr. Kissinger: That is not what your friend [Prime Minister Shearer] said to the President.

Mr. Meyer: He got what he wanted: a special committee to look over his problems, and some special aid programs.

Dr. Kissinger: What we need to know is what the uniqueness of the Caribbean consists of and what sort of decisions we might have to face.

Mr. Helms: Would this also include the French islands?

Mr. Meyer: They are handled by EUR.

Mr. Irwin: My impression is that right now the principal issues in the Caribbean are economic.

Dr. Kissinger: We want to avoid a Dominican-Republic-type situation in which we are triggered into action in a way that we had never thought about previously. We should review the essential elements upon which the President might be called to make a decision. We would be that much ahead in a crisis. This should be done in the IG.

Mr. Packard: We should also consider how to steer things in the right way in the Caribbean.

Dr. Kissinger: That’s right.

Now can we turn to the Latin America study?

Mr. Fox: I understand that we may be reviewing our Cuba policy. If you are planning to look at our economic interests as far as Cuba is concerned, Commerce would be prepared to participate.

Dr. Kissinger: I’m not sure that there is likely to be any review. But if the issue comes up, we will make sure that Commerce gets a chance to express itself.

Dr. Kissinger: Now let’s get on with Latin America. This NSSM was developed after the Chilean election. It was bumped off the SRG schedule several times, and a number of the issues raised have already been overtaken by events. Some of the choices did not seem very meaningful. For example, what is meant by selective encouragement as opposed to selective discouragement? These terms need to be more crisply defined. Selective discouragement also implies selective encouragement. Rather than go through the choices posed in the paper (they have been more or less overtaken by events), I wonder whether I couldn’t raise another set of questions and get them addressed. Even the military presence issue has already been taken care of.

Mr. Meyer: It has not really been settled. We would still like to fix a ceiling of 290 people [in milgroups].

Mr. Packard: Now you are willing to go up.

Mr. Meyer: We always were.

Dr. Kissinger: Does anyone have any objections?

Mr. Packard: Then it is agreed that we should have 290 people—290 good people.

Mr. Irwin: With language qualifications.

Dr. Kissinger: The President has said he wants to maintain close contact with the military in Latin America.

The other issue is the grant MAP materiel program. There are three choices: $9.3 million in the budget, $9.3 million to be taken from the contingency fund but not earmarked, and $9.3 million to be earmarked in the contingency fund. There seems to be agreement on the amount of $9.3 million. Isn’t this merely a bookkeeping problem?

Mr. Irwin: If it is in the contingency fund, it ought to be earmarked for Latin America.

Mr. Packard: We will try to get it.

Mr. Dam: You have to be careful how you budget the contingency fund. Once you start earmarking, you might have a problem getting any contingency fund at all from Congress.

Mr. Irwin: One of the problems is whether there should be any grant aid. We have been trying to get away from grant aid. It was a small, relatively inconsequential program. It was not necessary for our relations with the Latin American governments or for their military security.

Our plan was to follow a liberal policy on trade, investment, and channeling funds through the Inter-American Development Bank, as well as other aspects of our economic relations. But we have made so little progress on these that there is little we can do except provide military assistance. Also there is perhaps a link to the expropriation problem. If we take a hard line on expropriations, we can compensate by being soft on military assistance.

Dr. Kissinger: Why? Was it our policy to be soft on expropriation?

Mr. Irwin: We have been seeking to reduce the hegemony of the United States in Latin America.

Mr. Packard: We ought to do what we can in Latin America.

Mr. Selden: The grant. MAP may be only a little, but it is important to the Latin Americans.

Dr. Kissinger: Our purpose has been to reduce our visibility, not to reduce our influence. We were trying to achieve this by less unilateral action on our part.

Mr. Petty: We are going from a low profile to no profile. One problem is that of trying to devise a homogeneous policy for all of Latin America. There is no differentiation—no attention to particular bilateral problems. All of them are submerged in a low-profile Western Hemisphere policy. We need to suggest more appropriate ways for dealing with bilateral problems.

Dr. Kissinger: Can I get back to the general discussion? Then we can raise these questions again. We have certainly achieved low visibility.

Mr. Irwin: With low participation.

Dr. Kissinger: There has been no Presidential address on Latin America in two years. There has been no legislation on general tariff preferences. We have not been responsive on sugar quotas, and we have not been able to obtain the replenishment for the Inter-American Development Bank. The International Coffee Agreement has been held up. All of this has had a deleterious effect on our relations with Latin America. At the same time we have a new government in Chile which provides an alternative model to other Latin American countries and which is increasingly hostile and potentially dangerous to us.

No matter what we do it remains true that the Latin American sense of political identity depends on opposing us. In a similar way, Romania is bound to be opposed to the Soviet Union. At the same time, economic and political conditions in Latin America put a high premium on radicalism, either of the left or in the form of Nasserism. These are trends which we cannot eliminate.

We do have a traditional special relationship with Latin America, as symbolized by the OAS. However, we don’t have a clear concept for ourselves of what we ought to be doing in Latin America. We have in the past taken a Hemispheric approach. Now that we are faced with Chile and Cuba and the development of military governments in other countries, is it possible to take this approach? I am just asking the question. I don’t know the answer. If you group the Latin Americans as a unit, you force them to pool their weaknesses against us, as, for example, in the expropriation crisis in Chile. The governments that have the most to fear from Chile feel they have to join with Chile. Is a multilateral approach the best or should we look at Latin American relations as a series of bilateral relationships?

Mr. Hurwitch: Our relations are predominantly bilateral rather than hemispheric.

Mr. Irwin: We talk about a hemispheric approach, but each country has special interests. I think we confuse ourselves by emphasizing multilateralism.

Dr. Kissinger: Could we get the IG to address the question of defining the areas where we can be responsive to Latin American concerns? The IG should also consider the general question of what our relationship to Latin America should be. It should also look at what relationship exists between their domestic evolution and our national interests and the extent to which we should be involved with their domestic evolution. We are almost back where we were two years ago.

Mr. Meyer: We can’t avoid a regional approach as long as we have the institutions.

Dr. Kissinger: We don’t have a coherent policy, which, I admit, is probably due to lack of policy leadership. We should consider what sort of policy statements should be made and what bilateral and multilateral actions we might take. That way we would at least know where we are going, and you would not have to get out of us a grudging statement on the anniversary for the Alliance of Progress.

Mr. Hurwitch: There are a couple of pages addressing this issue in the paper—on page 23 of the Overview.

Mr. Meyer: The policy we developed two years ago has been overtaken by events. Now we should look at what we should do during the next six or ten or twelve months.

Dr. Kissinger: Eighteen months. This paper is a series of general recommendations.

Mr. Hurwitch: The overall recommendation was that the policy set forth in the President’s October 1969 speech be carried on. I grant that the decisions of the last couple of days have affected what we are able to do and that it might be well to look at the paper again. There was general agreement in the paper that we were on the right course in Latin America.

Dr. Kissinger: I read the paper. I didn’t get out of it any overall thrust that would answer the questions I mentioned earlier.

Mr. Meyer: I agree that there is no overall thrust. What we prepared has now gone by the board.

Dr. Kissinger: For example, the other day I had a meeting with the Anaconda people. Their general line was that we should be tough but if the Chileans pay, we should facilitate international credits for Chile. It developed that they were really asking us to pay the Chileans to pay them [Anaconda] off. What happened in Chile shows how the forces in individual Latin American countries can coalesce to create something no one wanted, something that probably could have been prevented, and something that the vast majority of Chileans did not desire.

What you should do is give us an approach for dealing with a continent that has historically been close to us but has historically been the most intractable for us to deal with. I think this would help you to get what you are after, for example, when you send over a message on the Alliance for Progress. We function best when we know where we are going.

Mr. Meyer: Latin America’s importance in the relative scheme of things is negligible. There is a certain attendant tendency on their part to use their nuisance value to get attention.

(Mr. Petty left the meeting at this point.)

Dr. Kissinger: (Referring to Mr. Petty’s departure) We have the Treasury view, which is that we must be tough with the Latin Americans on expropriation. This approach can be looked at in two ways: (1) on its merits as a means of forcing a satisfactory settlement of expropriations that have already taken place, and (2) on the basis that even if it doesn’t pay in one country, it will prevent other countries from following the same course. If what we are doing amounts to having no friends in Latin America, then we should point this out. We are getting nitpicked to death on a series of individual questions that come up in the most grating form. We need to establish a more basic focus for our Latin American policy.

Mr. Hurwitch: In our paper, on page 5 of the Overview, we said, with regard to the current situation, that “frustration and a sense of inadequacy continue to characterize Latin America”.

Mr. Meyer: Given this situation, what do we do during the next eighteen months?

Dr. Kissinger: Right. In your paper you have general statements and specific issues. What is needed is some analysis at a middle level—between the general statements and the very specific issues. For example, you should look at the relation between visibility and our other interests. What has been the impact of events of the last four months? What stance should we adopt toward social and political revolution in Latin America?

Mr. Hurwitch: Our paper has tried to set forth what is called a damage-limiting policy.

Mr. Irwin: (to Dr. Kissinger) I think you are right that we should sharpen up the analysis. We should consider how you avoid a situation like that in Chile, how to speak to the social forces at work in Latin America, and how to deal with trade and investment there.

Dr. Kissinger: That is true. These questions ought to be analyzed. We ought to have an NSC meeting on Latin America. The only way to get the President’s attention is to have him sit through a two-hour discussion of Latin America. That is what I am trying to structure.

Mr. Meyer: Another question is the utility of regional programs. We should look at Latin America country by country.

Dr. Kissinger: At least for the major countries. I will try to get this on the NSC schedule by mid-September.

Mr. Meyer: We all tend to focus on Chile. We forget that there are a couple of healthy countries in Latin America.

Dr. Kissinger: Name two.

Mr. Fox: The Latin Americans look to us for economic benefits while politically they kick us in the pants. The area where we can provide economic benefits is decreasingly in the public sector because there are no funds available. It is the private sector that has to be relied on for the greatest contribution. Yet, we don’t organize private sector activity abroad and don’t want to. Thus, we are dealing with benefits the U.S. Government is not in a position to provide or uphold.

Dr. Kissinger: I have no problem in recognizing this situation. The NSC hasn’t looked at Latin American policy for two years. My intention is to get some high-level attention.

Mr. Packard: We ought to consider whether perhaps a more aggressive policy is needed.

Dr. Kissinger: What would an aggressive policy be?

Mr. Packard: We could take a stronger position in support of U.S. business.

Dr. Kissinger: What would be the appropriate method?

Mr. Mills: I don’t think we can assume that there is nothing more the U.S. Government can do to help U.S. companies.

Mr. Packard: There are many things that we can do and that we ought to consider.

Mr. Fox: On the positive side there is much that could be done to improve the investment climate. If we go at this too aggressively, we might just create more problems in the current atmosphere in Latin America. What can we do beyond what OPIC does? Somehow Latin American Governments undervalue what U.S. companies can do. I don’t think it will be very simple to make a breakthrough in this area. There are rewards for the type of political behavior that discourages private investment.

Mr. Packard: We could take a tough course on Chile and make it disadvantageous for them to take over the copper companies.

Dr. Kissinger: That ought to be one of the options. (to Mr. Irwin and Mr. Meyer) We will be in touch on arrangements for the meeting.

Mr. Meyer: We will be facing a new ball game in the IA–ECOSOC meeting, scheduled for September 10–20. We lack the public resources to respond to the Latin Americans desires; the importance of the private sector will come out. I would suggest that Arthur Burns be a member of the delegation.

Dr. Kissinger: I will raise that. Let’s aim for another SRG meeting and then an NSC meeting in September.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–112, SRG Minutes (Originals), 1971. Secret; Nodis. The meeting took place in the White House Situation Room. The response to NSSM 131 is published in Foreign Relations, vol. IV, 1969–1976, Foreign Assistance, International Development, and Trade Policies, 1969–1972, Document 157. The IG recommendations on the Caribbean are published in Document 46. The recommendations of the NSSM 108 study are published in Document 47. Nixon met with Shearer on August 11, 1970. The IG/ARA paper on the Caribbean, September 3, supplemented the response to NSSM 117. (NA, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–181, NSSM Files, NSSM 117) The requested paper for a NSC meeting has not been found, and there is no record of a meeting.
2. The Senior Review Group discussed bilateral and multilateral policy objectives in Latin America and the Caribbean, including military assistance to the region.