Foreign Relations of the United States, 1969–1976, Volume E–11, Part 1, Documents on Mexico; Central America; and the Caribbean, 1973–1976

5. Study Prepared in Response to NSSM 173 by the NSC Interdepartmental Group for Inter-American Affairs¹

Washington, undated.

U.S. POLICY TOWARD LATIN AMERICA

RESPONSE TO NSSM 173

ABSTRACT

A. An Assessment of the Past Four Years

It had been foreseen in 1969 that the forces of nationalism and ferment at work in Latin America would in the coming years jeopardize our interests as well as diminish our influence there. We believed that we could best limit any damage by shifting from a paternalistic relationship to one in which the U.S. would be less directive. While maintaining commitments that we had assumed as the most advantaged member of the inter-American community, we wished to have the Latin American states take initiatives, based on their own priorities, which we might then support. Our goal was a relationship of shared responsibilities and mutual respect, “a more mature partnership.”

This transition to a new equilibrium in our relations with Latin America would necessarily have been difficult under the best of circumstances. The strain in our relations that inevitably accompanied such a shift could only have been assuaged by policies and programs designed to reassure the Latin American nations that a “special relationship” continued to exist.

Because of a variety of constraints largely unforeseen in 1969, virtually the contrary was the case. Latin America was not singled out for special attention. It was not consulted about or given advance notice of important U.S. decisions. Generalized trade preferences were not introduced until more than three years after the commitment was made. Latin America was not exempted from the ten percent surcharge. The replenishment of the IDB was allowed to fall two years behind schedule.

Much of our focus on Latin America was negative in effect. Sanctions on U.S. economic assistance were broadened as a reaction to the threat of uncompensated expropriation of American investment. Military relations continued to be weakened by the restrictions on our military sales efforts, Congressional sanctions, and the erratic general course of security assistance policy toward Latin America. Congressional actions served to reinforce the impression of indifference, if not antagonism.

At the same time, the Latin American response to our policy shift was not as full or as positive as we might have expected. Latin leaders did not adopt the forthcoming and cooperative posture vis-à-vis the United States that would have been their contribution to a successful mature partnership. Many Latin Americans have been ambivalent about ending U.S. paternalism, wishing to continue to reap benefits from a special relationship but being wary of domination by the United States. The Latins did not appear to appreciate sufficiently the magnitude of the problems which were besetting the United States and which prevented us from fully carrying out our intended policies in Latin America. Moreover, a certain amount of Latin dissatisfaction and even hostility would have prevailed even if the U.S. had made good on all its commitments, given that Latin aspirations were so high and the U.S. presence so predominant.

Under these circumstances, and with little in the way of positive new U.S. programs to reinforce it, the less intrusive style and posture adopted in 1969 could not be and was not as effective as we had expected. Indeed, fisheries disputes, uncompensated expropriations and the sanctions that followed prevented us from remaining as unobtrusive as we had desired. Consequently, the degree of political disaffection from us among some of the Latin American countries has been greater than would otherwise have been the case; the level of polemics and confrontation has similarly risen. We have not been as successful in limiting the damage to our interests as we had anticipated or in preserving as large a measure of our influence in the hemisphere as we had hoped. While the damage to our interests and influence in Latin America has not been irreparable, failure to arrest if not reverse the trend toward political alienation could seriously risk our position in the hemisphere.

B. The Projected Environment and Its Impact on U.S. Interests in Latin America

U.S. interests are heavily engaged in Latin America. They may be grouped under three broad categories (for a more complete list, see the main text.)

U.S. National Defense:

A Latin America with a military posture that is predominantly in favor of the United States.

U.S. Economic Prosperity:

A Latin America with which the United States can enjoy a mutually beneficial economic interchange.

World Order:

A Latin America that is a positive force for the kind of world order we seek.

Latin America constitutes a significant defense asset as long as it remains predominantly in our military sphere of influence. Because most of Latin America continues to be aligned with us on security matters and extra-hemispheric powers have not penetrated the region with the exception of Cuba, we are enabled to economize the use of U.S. forces and employ them elsewhere, even though geography gives us a special security interest in the area. U.S. economic interests in the region are significant: Latin America is the most important region for us in economic terms outside the developed world. U.S. investments in Latin America and the Caribbean totaled $16 billion in 1971 and returned $1.2 billion to the United States in earnings in that year. The area took almost $7 billion in U.S. exports in 1971, 15 percent of the total. We traditionally have had a surplus in our trade with the region, and three of the countries are in the top twelve markets for U.S. goods in the world. By the end of this century, the population and per capita income in Latin America should double and the larger countries of the region will be developed economies, as defined today.

Even more significantly, the countries of the region will be an important and inescapable part of the new world order which we are trying to help shape. Latin America is the touchstone of our relations with the developing world. It is the region of the developing areas in which our influence is most pervasive. Moreover, the breadth and complexity of U.S.-Latin American relations, while advancing U.S. interests, also provide ample occasion for conflicts between us and Latin American states. This web of interdependence constitutes both an opportunity and a challenge to our desire to help create a new international order, based on the peaceful adjustment of differences and cooperative efforts to solve common problems.

The environment for U.S.-Latin American relations in the next few years will be a difficult one. Strong forces in the region are pulling the U.S. and Latin America apart. Domestic and international constraints will limit our ability to carry out a Latin American policy that is fully responsive to our interests in the area. The changing U.S. and Latin American relationships with the rest of the world will encourage a further loosening of our previously close ties. The fact that other world powers now offer greater alternatives for Latin American foreign relations gives these countries a greater feeling of freedom to express their concern over our role. Although we will remain by far the most important foreign influence in Latin America, our ability to affect Latin American policies and decisions will continue to diminish.

On the whole, the transition to a more equal, more mature relationship will inescapably have costs for U.S. interests in the form of political differences on specific issues, some damage in individual cases to U.S. economic interests, and possibly some further weakening of our military position in the hemisphere. The question is to what extent we can minimize that damage and, at the same time, lay the groundwork for a long-term relationship in which our basic interests will prosper.

For these reasons, the most significant threat to all our interests in the area is the potential political alienation from the United States of a significant number of Latin American states. Increasing political alienation, which at present is incipient, could do our interests serious harm. It could be accompanied by a spread of Soviet military activities and a further growth of third country military sales which, in turn, would erode our security position and lessen our overall influence. It could result in expropriations of important U.S. investments and some loss of trade to our competitors. Most important of all, it could make Latin America an obstacle rather than a partner in our efforts to promote a better world order in such diverse and important fields as a worldwide law of the sea, international action to eliminate narcotics traffic and terrorism, and new international monetary and trade systems. There is also an intangible, but nevertheless real, cost in terms of the loss of worldwide confidence in U.S. influence and power if the U.S. is unable successfully to manage the transition in its relations with Latin America.

The degree to which Latin America is a help or a hindrance, an opportunity or a threat to U.S. interests, is obviously not under our control. But we can significantly influence the outcome by the policies which we follow.

If we confine ourselves to reacting when a U.S. interest is in jeopardy, if we respond to each challenge to our interests with sharpness and force, political alienation will grow and conflicts and disputes will spread. A decade from now we will indeed have a new relationship, but it will be a generally hostile one.

If we temper our reactions to nationalism with a broad view as to all the U.S. interests at play in each situation, we will have a better chance of preserving an environment favorable to all our interests. This may mean at times acting with greater tolerance and forbearance than the Latins are likely to display towards us. A willingness to accommodate can successfully cope with nationalism in Latin America, just as it has paid off in approaches to our adversaries on the world scene.

We should also remind ourselves that, in spite of periodic Latin American nationalistic excesses or occasional casualties to an American economic or political position, the underlying environment in Latin America can continue to be favorable to U.S. interests. Latin American societies and institutions have a remarkable resiliency in the face of enormous internal strains as well as externally-supported efforts to subvert them. Marxism has not swept the continent and the results from the present Marxist experiment in Chile are likely to make that solution less attractive. Future political regimes in the area are likely to be pragmatic and eclectic, albeit highly nationalistic. There is no inherent reason why the United States cannot have satisfactory and fruitful relationships with them. There also exists a considerable, if diminishing, reservoir of goodwill toward the United States, particularly among the politically powerful Latin American military, but also among intellectuals, politicians, and other opinion-makers.

Our task in the year ahead is to build on these positive elements in our relationship and to blunt the effects of potentially adverse trends.

C. U.S. Goals and Objectives

1. Goals for U.S. Policy

Goal A:

Reversal of the trend toward political alienation of the area from the U.S. and the avoidance of a coalition of Latin American nations hostile to the U.S.

Goal B:

Cooperation of Latin America with the United States in seeking to work out solutions to the major global problems of the next four years.

Goal C:

A high rate of economic development and social progress in Latin American countries as an important means of furthering our political and economic interests.

Goal D:

The maintenance and improvement of our economic position in the region, including access for U.S. exports, access to sources of essential imports, and reasonable treatment for U.S. private investment.

Goal E:

The maintenance and improvement of our security position in the region, keeping the Latin American military aligned with us on security issues and avoiding their political alienation.

2. Optional Strategies

We see three broad strategies which the U.S. might adopt in order to achieve its goals in Latin America.

Strategy A

This strategy would be heavily oriented toward the constraints, domestic and global, which will weigh upon the U.S. in pursuing its goals and objectives in Latin America. The proponents of this strategy would emphasize the point that we cannot have a policy toward Latin America which is not of a piece with our global objectives and our domestic situation and that the problems which we have encountered in implementing the policy decisions taken with regard to Latin America in 1969 derive from the constraints upon our own power, as much as from differences between us and the Latins. During the next several years, our energies and attention will be heavily engaged in working out new international economic relationships, and a new basis for the NATO alliance as well. U.S. opinion will continue to be cool toward foreign assistance and there will be strong domestic pressures to protect certain American industries from foreign competition.

This strategy views these restraints on pursuing an active Latin American policy as likely to be overwhelming. Strategy A, therefore, would attempt to minimize the degree of our engagement with Latin America, ward off commitments, and meet specific challenges to U.S. interests in the region by the judicious use of economic and political leverage. It would stress bilateralism and deemphasize the OAS. It would try to hasten the end of a “special relationship.” It would concentrate on maintaining friendly relations with a few large countries, such as Brazil and Mexico, and be reconciled to less satisfactory relations with many other Latin American states. This strategy assumes that, while there would be further damage to U.S. interests in the area, the costs would not be unacceptably high and that our position in the area would eventually improve. This strategy implies a decision to conduct a kind of holding operation in Latin America.

Strategy B

This strategy regards the probable damage to U.S. interests in Latin America as unacceptably high without more positive action on our part than envisaged under Strategy A. It accepts the need for a conscious effort to reverse present trends and assumes that some adaptation of our instruments is feasible. It is premised on the belief that there will be political alienation from the U.S. in other Latin American countries if present trends continue. It assumes that the domestic and global constraints that have hampered the U.S. in pursuing its goals in Latin America for the past few years will not be as severe in the next four years. It anticipates an improvement in our balance of payments situation, more maneuverability on trade and investments policy, a subsiding of the tide of neo-isolationism that has rolled over the country as a reaction to the Vietnam war.

This strategy would require more attention to our relations with Latin America than in the recent past, a continuance of cooperative development efforts with Latin America and a more active and innovative search for accommodation with Latin American countries on specific issues between us. It would involve placing greater emphasis on the positive in our relations with Latin America. It would continue a degree of the “special relationship,” consistent with the ties of history, geography, existing institutions, and mutual interests. It would imply the allocation of somewhat more resources to Latin America. It would bridge the existing gaps between military policy objectives, directives, and implementation.

It would require some change in present policies and more personal involvement at high levels of the U.S. Government to convince the Latins of our desire to build on convergent interests and to give Latin America a higher priority within the U.S. Government.

Strategy C

This strategy takes a more pessimistic view of the threats to our interests in Latin America than either Strategies A or B. It would mean a much more active policy than we have attempted to pursue since 1969. It would take the form of a major new emphasis to the region, similar to that which characterized the early years of the Alliance for Progress and it would assume the Latin Americans would welcome this approach. It would probably have the effect of tying the region to us more closely and reversing the trend in Latin America toward more diverse world relations. The strategy would require a major effort to design trade and assistance policies and programs that would give Latin America maximum attention. It might include, for example, the creation of a regional trading bloc, active U.S. support for an SDR-link, or a special foreign aid program for Latin America.

This strategy would require the mobilization of broad political support in the United States in order to overcome the psychological and resource constraints which have been operative for the past several years.

D. The Choice of a Strategy and Objectives

1. A Strategy

The mature partnership concept remains the best guide to U.S. policy in dealing with the challenge posed by the transition in U.S.-Latin American relations. What is needed at this juncture in our relations with Latin America is a greater effort on the part of the United States to implement the mature partnership policy with concrete actions.

While Strategy A does not preclude taking some positive steps toward Latin America, in the opinion of the IG/ARA it would fall far short of giving the mature partnership real meaning. Although this strategy might appear to be more consistent with the projected constraints on the U.S.—and that is the chief argument in its favor—it would not, in our opinion, be sufficiently responsive to the threats—and opportunities—present for U.S. interests in Latin America as now foreseen.

As for Strategy C, the IG/ARA believes that it would require such a reordering of national priorities as to be unrealistic.

The IG/ARA recommends that the second strategy be the one to guide U.S. policy for the coming four years. This strategy is a middle course between a disengagement which would risk greater alienation and an attempt at an embrace which would be rejected. It is the only strategy which would serve all of our goals. The strategy recognizes the serious constraints on our ability to influence events in Latin America and on our resources. But it is responsive to Latin America’s felt needs for a greater sense of status and a greater share in the benefits of the world economy. It is more confident than is Strategy A that the judicious application of American power can make an important difference as to the outcome of the current precarious transition to a more mature partnership.²

2. Objectives

The selection of a broad strategy to achieve U.S. goals in Latin America permits us to move to the question of objectives (summarized below), which give the strategy chosen operational significance. (For a statement of specific objectives in detail, see the main text.)

Goal A. Reversal of Trend Toward Political Alienation

—Prevent current and future bilateral disputes with individual Latin American countries from escalating in such a manner as to prejudice other U.S. interests in the countries concerned and in the region as a whole.

—Overcome present widely-held view in Latin America that U.S. leadership is indifferent to the area’s problems and considers Latin American countries unimportant.

—Continue to accept a “plurality of ideologies” as compatible with U.S. interests but make clear our belief in our own principles, including those concerned with civil liberties.

Goal B. Latin American Cooperation on Global Issues

—Change the focus of the inter-American system from its current exclusively north-south orientation to one which reflects more clearly the global nature of the economic and political problems being dealt with.

—Build on convergent interests between the U.S. and Latin American countries vis-à-vis the rest of the world.

Goal C. Economic Development and Social Progress in Latin America

—A flow of U.S. and other foreign capital, public and private, into the area at a level which will permit the countries of the region to obtain the additional resources in foreign goods and services necessary to sustain a high level of economic growth.

—A rapid expansion and diversification of the region’s exports, to supplement capital flows as a source of foreign exchange and to permit orderly service of debt and investment remittances.

—Development of the countries’ economies along generally open market-economy lines.

—A continuation of an emphasis on self-help, reform, and a concern for the human side of development, including more equitable income distribution.

—A reduction in the rate of population growth.

Goal D. Maintenance and Improvement of Our Economic Position

—Encourage policies and practices that provide reasonable and non-discriminatory access for U.S. goods and services to Latin American markets, bearing in mind the close relationship between exports and imports.

—Promote a climate conducive to maintaining and increasing foreign private investment where this is wanted by the Latin American countries.

Goal E. Maintenance and Improvement of Our Security Position

—Strengthen effective influence with the Latin American military through broadened professional contacts.

—Reestablish the U.S. as a primary source of Latin American arms supply.

—Limit Latin American military capabilities for intra-regional conflict through increasing their dependence on U.S. arms supply.

—Preempt other foreign military influence, especially that of the Soviets.

[Omitted here is the remainder of the study, including sections entitled, “A Choice of Strategies and a Statement of Objectives,” and “Operational Problems: Issues and Options.”]

1. Summary: This study reviewed U.S. policy toward Latin America since 1969 and recommended a new strategy for relations with the region.

   Source: National Archives, RG 59, ARA Files, Lot 75D476, JBK Chron—August 1974. Secret. NSSM 173, March 7, is published as Document 1. The study was transmitted to Kissinger under a May 29 covering memorandum from Crimmins with a copy of NSSM 173. All brackets appear in original except those indicating text omitted by the editors or identifying original footnotes.

2. The Treasury agrees with the need for more attention and a more positive style, and with a more active and innovative search for accommodations with regard to specific issues. On the other hand, the Treasury disagrees with Strategy B to the extent it “implies the allocation of somewhat more resources to Latin American programs.” Treasury believes that the basic problem in Latin America is essentially political, and not likely to be solved by any amount of additional resources we can realistically expect over the next couple of years, given the mood of the Congress, our inflationary pressures at home, and our balance of payments constraints. [Footnote is in the original.]