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

52. Memorandum From the Counselor to the President (Finch) to President Nixon¹ ²

undated

SUBJECT:

• Mission to Latin America

GENERAL

It is certainly not true that we have no friends left in Latin America. The warmth of my reception as your envoy demonstrates that there is a vast residue of friendship and cooperative spirit in Latin America with respect to the United States on the part of the great majority of the people as well as their governments. The reaction to your mature partnership approach has been on the whole receptive and I am convinced we are on the right tract by making such a relationship with the countries of the region our ultimate goal. We should recognize that the mature partnership is a goal and not a means. The means to attain it must be found.

Likewise, I believe we were correct to seek a lower profile in our relations with Latin America, though not a lower level of support and activity. Reducing our profile has made us a less tempting target for nationalist attacks. However, the low profile approach is by definition a defensive tactic and cannot by itself produce positive results. By the same token, your determination to accept countries as they are and to work with them individually to attain our joint goals is sound, but our determination to deal with our friends and allies individually, recognizing their special problems should not lead to doing everything on an ad hoc basis. An overall plan is necessary. What has been lacking in our Latin American policy to date is a coherent plan or operational strategy in both the political and economic areas which links our overall goals to our day-to-day programs. The suggestions which follow together with some of the studies presently in the National Security Council System represent the beginnings of such a strategy. An improved strategy plan coupled with more dynamic leadership at all levels should materially improve our chances of success in the region.

In the course of developing an operational strategy we must make some hard decisions in several areas between a global approach or an approach which allows for distinguishing among countries or areas in which we have special interest. The whole area of trade policy is a case in point but there are others.

We must also place more emphasis on continuing high-level consultations with the Congress on Latin American problems in order to facilitate the funding and implementation of the component parts of our Latin American program. This effort should include the personal participation of high-level figures in the Administration as well as improvement in the quality of our Congressional liaison staff working on Latin America.

POLITICAL/SECURITY

Latin America is passing through a period of dramatic change brought about by rapid economic development, demographic explosion, excessive nationalism, and changing power relationships at both the global and hemispheric levels. Specific factors which must be considered in developing our operational strategy in the political area include: growing Soviet presence, the appearance of a Marxist Government in Chile, the continued communist domination of Cuba, and the continued threat of Marxist oriented movements in countries like Uruguay, Bolivia and Colombia.

Another problem will continue to be chronic instability and poor economic performance in the smaller countries of the region. While we should obviously remain concerned about their future welfare and committed to their development, our basic strategy must rest on the larger, more viable nations which have shown a good record in surviving the straints created by industrialization and social change. The chief pillars of our Latin American strategy must be Brazil, Argentina and Mexico. In their own sub-area, Venezuela and Colombia will also remain key states.

Because they border both Chile and Bolivia, Argentina and Peru will have a particular importance for us, at least in the short run. Both these countries stand at a crossroads in their own political and economic development. Argentina is struggling to reintegrate the Peronist masses without destroying the political and economic institutions of the country. Peru is engaged in an interesting political and social experiment, a highly nationalist and populist revolution led by the military which, nevertheless, is strongly anti-communist. Our strategy should pay special attention to these countries. In the case of Peru, we should seek means of circumventing obstacles which have thus far prevented us from improving our relations. These obstacles include the fishing dispute and the International Petroleum Corporation expropriation case.

On another level, Brazil and Mexico are outstanding examples of the successful marriage of private enterprise, foreign investment and national identity and direction. In short, these two countries are experiments which have worked. They are of central importance to us because of their strength and prestige, and also because of their demonstration value. We must do everything we can to strengthen our already close relationship with them.

The Latin Americans do not define their relationship with the US solely or even largely in economic terms. If anything, they place greater importance on political and strategic considerations than we do. Economics will continue to be important as a means of obtaining our political goals, but our strategy should be primarily a political and not an economic one.

Other means solely in the political area of which we should make expanded most energetic use are:

• —more intensive consultations on a wide range of subjects on both the top level and the working level. Except on sensitive national security matters, our consultations should reach a volume and cover a range of subjects similar to those we are accustomed to holding with our Western European allies.
• —increased high level visits in both directions. At least two State Visits every year should be set aside for Latin American chiefs of state. In addition, Cabinet level officers of our Government should make frequent visits to the region. Since Latin America is an area where political, diplomatic and economic considerations rather than military and security ones are paramount, the Secretary of State should probably play a greater personal role in our developing relations with Latin America than has been the custom in the past. In addition, we should look for opportunities to arrange frequent conferences at the Cabinet level in various functional areas (i.e., meetings of western hemisphere Foreign Ministers, Ministers of Finance, Health and Agriculture, etc.).

It is also vital that we upgrade our representation in the area. Its relative importance to us will grow rather than diminish as our commitments in other parts of the world decline, and our determination to deal with the problems of Latin America on an individual country basis means that our principal representatives must be the best available in order to provide the sound advice and skillful handling of our programs upon which the success of our policies will depend. Assigning Latin America high priority in the distribution of personnel resources applies to the military as well as the civilian agencies and to the Washington bureaus as well as overseas posts.

A key vehicle in carrying out our political strategy will be military and security assistance. Our restrictive policies on military assistance over the past decade have been a source of extreme irritation to our Latin American friends and allies, and especially to the larger countries we need most. They are turning increasingly to European arms suppliers and our influence with them has declined proportionately. In addition, we are losing a major input to our balance of payments. We must be prepared to meet reasonable requests for equipment and training to allow our friends to modernize their armed forces, and to provide terms which are competitive with European arms suppliers.

Though Cuba and the Soviet Union have outwardly played down the role of subversion in their own policies and are seeking respectability in the eyes of the Latin Americans, subversion, nevertheless, remains a major factor we must contend with. The threat from subversion is likely to increase as more countries recognize Communist China and Communist Chinese representation in the region expands. The Marxist Government of Chile may also begin to support subversion abroad once it becomes fully consolidated at home. In the face of this threat we should upgrade our own intelligence and security liaison activities with the emphasis on improved quality rather than greater numbers.

While it does not seem likely that the Organization of American States will reverse itself with respect to Cuba in the near future, pressure for it to do so is likely to grow. In addition, a growing number of countries in Latin America will seek to normalize their relations with Cuba bilaterally. While the views and policies of the Castro Government provide us with no reason to consider changing our own policies in the near future, we should recognize that we may become increasingly isolated on this issue in the future as did on the Chinese representation issue in the UN in the years past. Accordingly it would be prudent to undertake and in depth review of our posture towards Cuba at this time.

ECONOMIC

The chief topic raised with me by heads of state and cabinet ministers in the larger countries was the 10% surcharge. The surcharge does some real damage to these countries and its psychological impact is even greater. The Latins feel that they are being made to pay for a situation they had no part in creating, point to the $500 million trade surplus we have with the area, and fear US trade restrictions will place a ceiling on their industrial growth by reducing the growth potential of newer, non-traditional export items. In some cases, the 10% surcharge may damage the US economy more than the Latin American economy. It was pointed out to me in Mexico that Mexico imports far more from the US than it exports to us, and it will not long be able to pay for its imports if its exports are restricted further.

It now appears that progress in the Group of Ten Monetary Meeting currently being held will make it possible to lift the surcharge on a world-wide basis in the near future. If this is not the case, you should take steps to exempt the Latin American countries from the surcharge within a short period of time. This could be done on a country-by-country basis, a commodity-by-commodity basis, or by means of exempting all the less developed countries from the surcharge. The last is the preferred approach. In the absence of some kind of action on the surcharge soon, relations with the Latins will continue to deteriorate and restoring them will become increasingly difficult.

Another topic of conversation with leaders in the countries visited was nationalization and expropriation. I repeatedly made clear the presence of a wave of protectionist sentiment in this country and particularly in the Congress, and indicated it may be necessary for the US Government to take a stronger stand on the issue of expropriation than it has in the past. It was also evident to me that there is a strong nationalist spirit, in all the countries of Latin America, and not just those with leftist regimes. These countries have strong feelings in principle about the sovereignty of the state and its ability to expropriate private property for public uses. On the other hand, the more responsible countries, such as Mexico and Brazil, recognize the vital importance of private capital flows to their own future development as well as the need for private investors to know what the rules of the game are. In order to gain the cooperation of the Congress in passing key legislation as well as to help define the rules of the game for private investment in Latin America, some kind of expropriation statement by the Administration will probably be necessary in the near future. However, that statement should not be punitive in tone and should recognize that most of the countries in Latin America have, in fact, behaved responsibly with respect to foreign investment and can be expected to continue to do so. Such a statement should only be made as part of the announcement of a positive economic package or program with respect to Latin America such as trade benefits, or economic assistance (e.g., the IDB replenishment bill).

Looking beyond the 10% surcharge and the immediate problems posed by foreign investment, a basic issue concerns our total trade relationship with Latin America. The fundamental question is whether the Latin American countries shall have a preferential status in trade with the US, or whether they will be lumped in with all other countries under our global trade policies.

The Latins feel strongly that the so-called special relationship between them and the US is meaningless unless it carries with it some preferential treatment in several areas, but most especially in trade. We have not yet sent our generalized trade preferences legislation to the Congress out of fear of what might happen to it considering the present mood of the Congress. By contrast, both Japan and the European countries have already implemented their generalized preferences schemes. You committed yourself to specialized preferences for Latin America in the event generalized preferences could not be obtained. My own view is that Latin America is so vitally important to us both in a political sense and as a rapidly expanding market for our own exports that specialized trade preferences should be seriously considered if generalized preferences are not attainable. A high and growing level of trade between the US and the Latin American countries is the best way of insuring their loyalty to us. You should note, however, that specialized preferences on a regional basis are opposed to some of our current trade policies and would require a major policy decision from you.

On the aid side, our multilateral approach is basically sound, particularly in the larger countries which are more capable of looking after themselves and are seeking a relationship of equality with us rather than a client relationship. However, we need to maintain bilateral programs with respect to the smaller countries which are unable to compete with the larger ones for limited funds in the multilateral organizations due to their difficulty in coming up with “bankable” projects. Especially in the smaller countries, a great need continues to be not only capital but also technical assistance in a variety of fields. In addition, we should bear in mind that, while the multilateral approach has the advantage of reducing political tensions arising from a donor-recipient relationship, it also deprives us of the political advantages of that kind of relationship. While our major emphasis should probably continue to be on the multilateral approach, especially in the larger countries, we should consider an expanded bilateral program in some of the smaller countries or in depressed regions of the larger ones. These bilateral programs should stress non-controversial projects such as those in health, agriculture and transportation.

SPECIAL PROBLEMS

A. Narcotics

In accordance with your instructions, I discussed the growing narcotics problem the world over with chiefs of state and high officials in all the countries visited. I found a high degree of receptivity to my initiatives especially with respect to enforcement. All the countries visited, and especially the larger ones, are already taking forceful steps to improve their own procedures. Improved performance on the enforcement side is due to a considerable extent to the threat posed by a rapidly growing narcotics problem within these countries themselves.

There is as yet relatively less interest and understanding in the prevention of drug abuse, though some programs are getting under way in the larger countries. We offered to be of assistance in this area by providing them with information on our experience both with programs which do work and with those which don’t. The positive atmosphere we encountered with respect to the narcotics problem should be followed up as quickly as possible. Similar high-level approaches should be made in the countries we did not visit during this trip.

B. Fisheries Dispute

The fisheries dispute with Ecuador and Peru continues to be a critical irritant in our relations not only with those countries but with all of Latin America. A similar issue is beginning to become a problem in our relations with Brazil which, of necessity, must be the fulcrum of our policy in Latin America. The fishing dispute renders it extremely difficult to find avenues for improving our relations with Peru, another important element of our strategy. Therefore, it is essential that this irritant be removed as quickly as possible.

Over the past six months it has become clear that Ecuador and Peru are prepared to accommodate our security concerns providing we accommodate their interests in control and exploitation of natural resources in adjacent waters. Thus far, we have failed to take full advantage of this breakthrough due to difficulty in getting the bureaucracy to act constructively and decisively. My visit served to get conversations going again, and though two days in each country was obviously insufficient to arrive at solutions to this long-standing problem, a useful start was made. The momentum should be kept up by immediately sending a qualified representative to Ecuador and Peru to begin pre-negotiations on the basis of purchase of fishing licenses under protest in exchange for the support of these countries for our security interests in freedom of passage on the high seas and through straits and narrows. We would expect that any agreement would be considered transitional and protect the juridical positions of all parties at least until the 1973 Law of the Sea Conference. As soon as agreement in principle can be reached during pre-negotiations, we should return immediately to quadripartite negotiations to formalize the agreement.

In the meantime, we should conduct discreet consultations with the California fishing industry, and also with the Congress, designed to determine how far they would be willing to go in any licensing arrangement and also to educate them as far as possible to the pressing need for resolution of the outstanding issue.

C. Individual Projects

We encountered considerable interest in a number of specific proposals in the health, economic and agricultural areas. To note one example, there was great enthusiasm in most of the countries about the idea of a commitment and cooperative program to eradicate polio from the hemisphere within a short period of time just as we have already eradicated smallpox. We are examining these projects and will move ahead with those which prove feasible as quickly as possible.

COORDINATION

We were impressed in the course of our trip by the bewildering number and variety of different activities and programs being carried out in the region by various agencies of the US Government, international organizations, and private or semi-private institutions. As a result, agencies of the US Government which have programs in the region may be ignorant of those being carried out by other agencies, and have little notion about how the two should mesh. Not infrequently, our Ambassadors and their staffs lack a full and coherent picture of just what is going on. This problem is a long-standing one and is not peculiar to Latin America. Recognizing the nature and seriousness of the problem, the Latin American area staff of the State Department has begun to develop a method of coping with it based on the principles of systems analysis. The most advanced version of this system, known as the Country Analysis and Strategy Program (CASP) was tried out in several countries last year and will be used in all Latin American countries this year. While still in an experimental stage, the CASP system should be encouraged not only because of its usefulness in Latin America but because it can serve as a model for dealing with similar problems.

BILATERAL PROBLEMS

A number of strictly bilateral problems came up in the course of the trip. One example is the salinity problem with respect to the waters of the lower Colorado River which we deliver to Mexico. This question continues to be the major outstanding point of friction in our relations with Mexico. I have already reported on these bilateral issues to the Secretary of State.

ACTIONS REQUIRED

On the basis of our conversation last Tuesday, I believe you are in substantial agreement with a number of recommendations I have made above. Therefore, I have prepared a directive (Tab A) for your signature embodying these recommendations. I recommend that you sign this directive in which Dr. Kissinger concurs.

There remain some issues where there is substantial disagreement within the Administration or elsewhere. We need your guidance on these problems. I have prepared an inventory (Tab B) of these issues together with our recommendations for your consideration and decision.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–178, NSSM files, NSSM 108. Secret. Drafted on December 2 by Hewitt. The memorandum is un-initialed. According to a January 18, 1972, covering memorandum from Hewitt to Kissinger, Nixon instructed that Finch’s report, when finalized, be included in the Latin American Policy Review, in which he wanted Finch to participate. No final version of Finch’s report or the Latin American Policy Review has been found. Hewitt recommended that Kissinger call Finch to inquire about the status of his report. No record that Kissinger contacted Finch has been found.
2. Finch asserted that U.S. policymakers needed to come up with a coherent plan to link overall U.S. policy objectives to day-to-day programs.