Foreign Relations of the United States, 1969–1976, Volume E–11, Part 2, Documents on South America, 1973–1976

62. Country Analysis and Strategy Paper¹

La Paz, undated.

AMBASSADOR’S OVERVIEW

In last year’s CASP we were primarily concerned with the need for President Banzer to broaden the base of his government and fortify the resolve of the coalition parties, the MNR, FSB and the private sector, to make the coalition work so the extremists could not return to power and destroy once again the country’s hopes for stability and economic and social progress. I stressed that our major objective for FY 73 was to help the GOB keep the leftist opposition at bay long enough to permit the Government to restore economic stability and growth potential. That objective has been achieved to the point that although the leftists are still present and have not dropped their hopes of overthrowing the Government, they do not presently constitute a threat to the Banzer regime.

The governing coalition, although still not fully consolidated, is much more cohesive than previously and it appears that a broadening of its base by bringing in additional political parties, as suggested in last year’s CASP, is not now as important as is continuing the process of strengthening its present base among the labor, student and campesino sectors. I am optimistic that the coalition, under the increasingly able leadership of President Banzer, will continue in power within this CASP timeframe, and possibly well beyond it. I make that statement with the full realization that the lifespan of the average Bolivian government is nine months, and the present government has already doubled its actuarial life expectancy. I am fully cognizant also of Bolivia’s turbulent history and the tendency for situations and governments here to change overnight. This could occur once again, but even if it does I am relatively confident that such a change would come about from an internal coalition convulsion rather than from action by the leftists, and a successor government would probably be similar in philosophy and policy to the present one.

A strong military is key to continued political stability, and this CASP addresses itself to the need to maintain and support that important pillar of any Bolivian government, which still believes strongly in the potential threat of those exiles who continue plotting in neighboring countries. We carefully reviewed the level of MAP funding and concluded that although Bolivia’s share of regional MAP grant resources is high, it is not excessive, and that any reductions would adversely affect both our efforts here and our region-wide security interests.

While I believe Bolivian fears of externally-aided subversions are exaggerated they are, nevertheless, real to the government. With the victory of the Peronistas in Argentina, whom the GOB views as populist and anti-military, the GOB’s fears will probably become even more pronounced as it now finds a heretofore friendly neighbor replaced by one more philosophically attuned to Chile and Peru, and which may well become another safe-haven for disgruntled Bolivian plotters. Also, the expected Argentine assistance, particularly military, may be less likely to be forthcoming. This event may well turn Bolivia more toward the Brazilian sphere of influence, thereby tending to exacerbate Argentine-Bolivian relations. This relationship, as it evolves, will have implications for our own longer-term hemispheric and bilateral policies, and is deserving of our close and continued attention.

Bolivia is of marginal importance to the U.S. on commercial grounds, and it is unlikely that that level of importance will increase substantially during this CASP timeframe despite our expanding efforts to promote the acquisition of U.S. products. Nevertheless, the GOB is laying the necessary groundwork for a strengthening of its economy and for the attraction of private foreign investment. During the past year it successfully and amicably settled the last two outstanding nationalization cases involving U.S. private interests, and it has since signed an oil exploration contract with Union Oil of California, and others reportedly to come, portending I believe, a notable increase in foreign private investment during the coming years. The GOB also took the long-overdue, momentous decision to devalue its currency, which hopefully will enable it to strengthen its finances and put it in a position where it can obtain approval for new projects by international lending agencies, and attract new foreign development funds. Dramatically improved commercial opportunities for the U.S., however, are not likely to appear during this CASP timeframe. In examining policy considerations surrounding new private U.S. investment we concluded that OPIC guarantees similar to those granted in the past could create difficulties involving other U.S. interests of higher priority, and we recommend that in future investments OPIC be extremely cautious in offering guarantees in the extractive industries, and abstain from offering 100% guarantees in any instance. After a thorough review of Bolivia’s development level and needs we concluded that we can best achieve our interests here by continuing economic assistance during FY 1974 and FY 1975 at a level approximately equal to that of 1973, and continuing to assist Bolivia to attract development funds from international agencies, third countries and private foreign investment.

An area of U.S. concern which has received and will continue to receive our closest attention is our interest in interdicting the export of narcotics and dangerous drugs to the U.S. On repeated occasions I and members of my staff have emphasized President Nixon’s and our Congress’ deep concern over this issue to Bolivian officials from President Banzer down, and have explained to them the potential action, including suspension of all U.S. assistance, which we must take if adequate steps are not taken locally to prevent that traffic. Within the limits of its economic capabilities the GOB has responded fully to our efforts, although the longstanding requirement that it ratify the Single Narcotics Convention is unlikely to be met for some years yet because of the potentially unsettling domestic social and political effects an arbitrary decision of the GOB to end coca production would have. Realizing this, visiting INCB Board members have told us they do not believe ratification is feasible.

To assist the GOB in improving the capability and professionalism of its police forces both for general police activities and more specifically for narcotics enforcement, we have recommended that the USAID Public Safety Program be continued and that the BNDD office be expanded to two full-time officers. We reviewed carefully the question of political prisoners and concluded that conditions have improved noticeably during the past year, and further improvement is likely. We believe that partly as a result of our discreet but persistent persuasion and partly as a result of the GOB’s own desire to reduce this problem to the lowest level consistent with internal security, the GOB will further reduce its repressive measures to the point that most basic liberties will be granted to all but the hard-core subversives by the end of FY 1975. As to the latter, the GOB considers that a “state of war” exists with them.

Our policy recommendations are directed toward preserving and advancing U.S. policy interests primarily through a strengthening of the Bolivian political and economic system. Bolivia needs a period of peace and stability with justice if it is to escape from its underdeveloped state and advance into the Twentieth Century. As a member of this hemisphere in which we have a vital interest, and as the second poorest country in Latin America Bolivia will continue to be of interest to us and to require assistance of us. I believe the policy considerations recommended in this CASP will advance those interests, while at the same time avoiding an over-identification with the U.S., thereby permitting the GOB and Bolivia to avoid the stigma of Bolivia’s appearing to be a U.S. client state.

All our optimism for political and economic development and the stabilization program may come to naught, I fear, if premature and insufficiently controlled sales of tin and certain other stockpile commodities basic to the Bolivian economy are made. Such sales could seriously disrupt Bolivia’s economy, with unpredictable domestic political repercussions.

[Omitted here are Section II, Analysis of Major Issues; Section III, Interest, Policy and Resource Analysis; and Annex A, Summary of Resources.]

1. Summary: Ambassador Siracusa provided an overview of U.S. interests in Bolivia, which included supporting the Bolivian military, providing economic assistance, and interdicting narcotics.

   Source: National Archives, RG 59, Central Files 1970–73, POL 1 BOL–US. Secret. Sent as an enclosure to airgram A–75 from La Paz, April 16. The final version of the CASP has not been found.