58. Study Prepared in the Central Intelligence Agency1 2
[Omitted here are a table of contents and Sections I through X.]
[Page 2]XI. LATIN AMERICA
Throughout Latin America, governments continued in 1972 to come under severe pressures to achieve economic development and social reform. The rate of progress has varied greatly in the hemisphere, but no country has reached a sufficient level of development to warrant confidence that both goals will be reached soon. Even in countries that enjoy relatively enlightened leadership, tradition-bound political groups and social institutions offer strong resistance to change. Other problems, such as high population growth and the rapid influx of impoverished, illiterate, and unskilled people into urban areas also hindered progress.
Developments in Latin America during 1972 reflected the intensification of nationalistic sentiment that has characterized recent years. Nationalism contributed to further shifts in international relationships and to pressures against US and other foreign investment. There was generally increased interest among Latin American governments in expanding ties with Europe, the Soviet Union, Japan, and to a lesser extent, Communist China. Thirteen Latin American nations now have formal relations with Moscow; Paraguay is the only South American country that has not recognized the USSR. Argentina, Mexico, and Guyana opened diplomatic relations with Peking during the year, and several countries exchanged commercial missions with Communist China. Nationalism was a major ingredient in the tendency among Latin American leaders to pursue what they described as revolutionary policies. This was true in Brazil, Panama, and Peru, as well as in Chile, which has a Marxist president.
Latin America’s economic growth slowed for the second consecutive year in 1972 but remained above the 5.3 percent average rate of the 1961–70 period. The gross domestic product for Latin America grew by an estimated 5.7 percent in real terms, down from the 6.1 percent obtained the previous year and considerably below the post-1960 record of 6.8 percent reached in 1970. Despite this slowdown and the continuing high rate of population growth (2.8 percent annually), per capita income gains in 1972 averaged 2.8 percent for the region, surpassing the 2.5 percent goal established under the Alliance for Progress and considerably better than the 1961–70 average of 2.3 percent. The region’s progress during 1972, as in the previous year, owed much to the extremely rapid growth of the Brazilian economy (about 9.5 percent). Excluding Brazil, economic growth in the region averaged only 4.3 percent, and per capita growth only 1.5 percent. Although the Mexican economy recovered substantially in 1972, growth fell sharply in Peru and Chile and remained low in Argentina and Uruguay. Most countries saw the gap widen between themselves and rich nations outside the hemisphere.
[Page 3]The armed forces, to varying degrees, exercised political power in Argentina, Brazil, Bolivia, Panama, Peru, and Ecuador. In Ecuador a military coup ousted President Velasco and installed General Rodriguez as the national leader. To a great extent the armed forces in these countries apparently are convinced that they alone are capable of ensuring progress at present stages of development.
During 1972 national elections were held in Jamaica, where the opposition party regained power after a ten-year lapse, and in El Salvador, which saw a closely contested presidential race decided by the legislature. In Panama, elections restored the presidential system with National Guard Commander, General Torrijos, retaining supreme executive power under a new constitution. Prime Minister Pindling of the Bahamas won a strong victory in September elections, thus giving him the mandate he sought to press on to independence in 1973. In Nicaragua a constituent assembly and a three-man executive were elected to serve until 1974.
Uruguay’s President Bordaberry began his term on 1 March and proceeded in the months thereafter to develop effective security measures that enabled the military to inflict serious damage on the Tupamaro terrorist movement. In Argentina, the military-controlled government initiated a process to return power to an elected government in 1973, a task complicated by the difficulty in reaching an understanding with the followers of ex-dictator Juan Peron, who form the country’s strongest political movement.
In Chile, serious economic problems, including consumer shortages and an inflation rate well over 100 percent, were compounded by Marxist President Allende’s campaign to expand state control over the economy. Frequent major strikes and large-scale public protests contributed to unrest and occasional rumors of a military coup. Although Allende was usually able to keep the tactical advantage over the opposition, pressures on the government increased significantly.
Efforts at regional economic cooperation showed some gains during 1972, although major obstacles to full integration remained. The Andean Pact group prepared to admit Venezuela as a sixth member. In the Caribbean, several English-speaking states agreed on preliminary plans to initiate a common market during 1973. The Central American Common Market showed signs of reviving after a period that threatened to destroy its chances to bring greater regional economic cooperation.
Some persistent problems affecting US interests remained unsolved; at least some of them reflected the heightened sense of nationalism on the part of a number of countries. The dispute continued between Peru and the [Page 4] International Petroleum Company over payment of compensation for the company’s expropriated assets. Chile’s unwillingness to provide compensation for the expropriated holdings of the two largest US-owned copper firms in Chile was a continuing source of friction. Salinity problems remained a nettlesome factor in Mexican-US relations, with both countries seeking equitable means of alleviating damage to Mexican soil. Several nations were firmly pursuing a policy designed to establish their sovereignty over an expanded territorial sea, in several cases up to a 200-mile limit.
There was growing support in Latin America for steps to end Cuba’s isolation in the hemisphere. Peru’s renewal of diplomatic relations with Havana in July undermined the OAS sanctions against Cuba. Guyana, Jamaica, Trinidad-Tobago, and Barbados have agreed to seek early diplomatic ties with Cuba. Meanwhile, the Castro Government’s close relationship with the Soviet Union appeared to have been further strengthened by Fidel Castro’s extended visit. Shortly after his return to Havana it was announced that CEMA, the Soviet-dominated economic partnership, had accepted Cuba as a member. Nevertheless, the Cuban economy showed no improvement over the poor performance of the previous year. Only about 4 million tons of sugar were produced—the second lowest figure in Castro’s 13-year rule.
Despite the lackluster record of insurgency movements in the hemisphere, Cuba has continued to call for armed revolution in countries of the hemisphere where it believes conditions are exploitable. Direct Cuban support for guerrilla activities has for tactical reasons become more selective and is now limited to Guatemala and one or two other countries.
Politically motivated violence, at times directed against US installations, occurred occasionally in several countries as dissident groups attempted to exploit underlying dissatisfactions. Bombings and other isolated violence occurred, notably in Mexico, Argentina, and Chile. In Brazil, on the other hand, the terrorists continued to suffer setbacks at the hands of the security forces and became less and less effective. Small guerrilla bands continued to operate in Guatemala, Venezuela, and Colombia, but without much success.
Advocates of black power were active in the Caribbean; a principal objective is to end foreign domination of the local economies. Aside from contributing to occasional minor disruptions, however, black power groups have had relatively little impact.
[Page 5][Omitted here are Sections XII through XXIII.]
- Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–194, NSSM Files, NSSM 161. No classification marking. The study is titled, “Response to NSSM No. 161—A Review of Major International Developments During 1972.” NSSM 161, the President’s Annual Review of American Foreign Policy, was issued September 25. (Ibid.)↩
- In its annual review of worldwide developments, the CIA noted continuing problems with Latin American economic nationalism and politically motivated violence affecting U.S. interests in the region.↩