49. Memorandum of Meeting1 2
PARTICIPANTS:
- The President
- Dr. Carlos Sanz de Santamaria, Chairman of the Inter-American Committee for the Alliance for Progress (CIAP)
- Arnold Nachmanoff, National Security Council Staff
Dr. Sanz opened the meeting by expressing his appreciation for the President’s August 17 statement concerning the Tenth Anniversary of the Alliance for Progress. He indicated that he wished to discuss two principal points with the President: the immediate problem of the effects of the President’s new economic program on Latin America, and the longer-term question of US relations with Latin America over the next decade.
Dr. Sanz recognized the need for the United States to take positive actions to alleviate its serious economic problems. He also recognized that a stronger US economy and a more stable monetary system would in the long term be helpful to Latin American development. However, he noted that many of the Latin Americans were concerned about the impact of the 10% surcharge and the 10% reduction in foreign aid. Some countries would be particularly hard hit by the surcharge. Since the United States has a favorable balance of payments with Latin America, and Latin American countries have maintained their reserves in dollars, the Latin American countries do not feel they are the cause of the problems to which the new economic program is addressed. Dr. Sanz felt it would be helpful if the President could give him some indication of his awareness of the impact of these measures on Latin America and that he is seeking ways to minimize the adverse effects.
Dr. Sanz noted that great changes were occurring in Latin America and suggested that it might be useful for the United States to undertake a study of its relations with Latin America over the next decade. He thought this might usefully be initiated after the series of inter-American and international meetings which will be occurring during the next month. [Page 2] He noted that there was concern in Latin America over the fact that the United States had been unable to move as quickly as had been hoped on some of its commitments to Latin America. He referred particularly to generalized tariff preferences. He recognized that US internal economic problems limited the Administration’s ability to move in these areas, but felt it would be useful for the United States to examine its role with regard to development in Latin America over the next ten years.
The President expressed his appreciation for Dr. Sanz’ exposition and stated that the actions he had taken under the new economic program were due to the serious economic problems we faced in the United States and the imbalance in the international monetary system. He fully recognized that those problems were not caused by Latin America. However, the measures taken did have to be applied in a non-discriminatory way, across-the-board, so that they are not directed at particular countries in violation of the GATT rules. The President reaffirmed that the surcharge was temporary and that it will be reevaluated as exchange rates become adjusted and problems with other countries are resolved. The world economic situation had reached the point where it became necessary to negotiate and develop relations which will allow the United States to compete equitably. As the negotiations proceed, the surcharge should no longer be necessary. The President indicated that he could not say how long this might be, but there is no doubt that the surcharge is temporary.
The President stated that he does not believe that the United States should build a wall around itself. That would be a grave mistake, certainly a mistake with regard to Latin America. He affirmed his belief that the United States should help Latin America develop. He, therefore, wanted to see trade barriers go down.
With regard to the reductions in aid, the President noted that we had to make some budgetary cuts. He felt a modest cut in foreign assistance was necessary because of Congressional attitudes. He noted, however, that this would not be applied across-the-board, but rather on a case-by-case basis.
The President stated that the commitment he made both before and after he took office to a continuing program of support for Latin American development remains firm. As this temporary problem recedes, and as the Administration is able to build Congressional support, he affirmed [Page 3] that the United States will give firm support for Latin American development assistance.
With regard to trade, the President asserted his belief that the United States should have a special relationship with Latin America. He noted that Secretary Connally believes this too and suggested that Dr. Sanz meet with Secretary Connally to discuss his ideas on long-term US-Latin American relations. He added that the Treasury Department, which had to raise the revenues, would be more influential on these matters than even the State Department. The President also suggested that Dr. Sanz discuss his thoughts on longer-term relations with Peter Peterson.
The President noted that the US Delegation to the IA–ECOSOC meeting in Panama will be prepared to speak in some detail about the new US economic program, but he indicated that Dr. Sanz may inform the Latin American representatives that:
- —He talked with the President about Latin American concerns relating to the impact of the new economic program, and that the President reaffirmed that the measures were not directed against any country and certainly not the Latin American countries. He recognized fully that Latin America was not the source of the problems.
- —The President reaffirmed that the surcharge is temporary and that the Latin American nations need not be concerned about its long-range effects.
- —The President stated that the foreign aid reduction was a necessary budgetary adjustment at this time, but that looking down the road the United States’ commitment to continuing economic assistance for Latin America is as firm as it was.
- —The President also indicated that the United States would welcome Latin American views on US-Latin American relations over the next ten years.
The President summed up his views by stating that he is strongly interested in and friendly toward Latin America. He noted that the United States and Latin America have many common interests, their economies tend to complement each other, and that we, therefore, have to develop good working relations. He is concerned about the future of Latin America and does not want the nations of Latin America to feel that they are neglected. He affirmed again that the new economic measures are temporary and that they had to be applied across-the-board for legal reasons, but [Page 4] that it is his desire to remove them as soon as we can work out the problems to which the measures were addressed. He reaffirmed that he is committed to more trade opportunities for Latin America and to helping Latin America develop.
Dr. Sanz commented that he was happy to see that the President did not believe in “constructive disengagement”.
The President replied that he did not believe the United States could afford disengagement. The United States cannot afford to let protectionist sentiment prevail. The United States’ economy is still strong and can compete. The new economic program is a form of shock treatment. He recognized that Latin America is like an “innocent bystander” which is receiving some of the stray flak. However, the longer-range prospects for US support for Latin American development are still as firm as before.
Dr. Sanz asked if he might tell the press that he had discussed these topics with the President. The President responded positively and affirmed that Dr. Sanz could indicate that he had received positive reassurance of the President’s commitment to continue development assistance and expanding trade opportunities for Latin America. Dr. Sanz could also indicate that he brought Latin American concern about the new economic program to the President’s attention. The President added that he would have no objection if Dr. Sanz wanted to go a little further and ask the US to waive the surcharge for Latin America. He was a political realist and understood that Dr. Sanz had to be an advocate.
- Source: National Archives, Nixon Presidential Materials, NSC Files, Box 332, Subject Files, Alliance for Progress, March 1969–March 1973. Confidential. The meeting was held in the Oval Office. According to the President’s Daily Diary, the meeting lasted until 10:47 a.m. (Ibid., White House Central Files, President’s Daily Diary) According to a September 9 memorandum from Nachmanoff to Kissinger, there were two versions of this memorandum. The version published was for the White House files only. The version for general distribution did not include the statement by the President that Treasury would be more influential than State on the matter of U.S.-Latin American trade, and included the President’s private comment that he would not object if Sanz de Santamaría sought a waiver of the U.S. surcharge on Latin American commodities. Nixon’s August 17 statement is in Public Papers: Nixon, 1971, pp. 891–892.↩
- In a conversation with Sanz de Santamaría on U.S.-Latin American relations, President Nixon reiterated his commitment to continuing development assistance and expanding trade with the region.↩