Foreign Relations of the United States, 1977–1980 Volume XXIV, South America; Latin America Region

28. Briefing Memorandum From the Director of the Policy Planning Staff (Lake) to Secretary of State Vance¹

Washington, February 26, 1978

Country Priorities in Latin America

SUMMARY:

Six Latin American countries appear especially to warrant our attention over the next year: Mexico, Brazil, Argentina, Jamaica, Nicaragua and Chile.² The challenges and dilemmas of each relate to the global concerns the Administration stressed in the first year. The problems raised in this memo could provide for a lively discussion should you decide to attend an ARA staff meeting.³

Our Latin American policy during the first year focused, as elsewhere, on issues such as human rights, nonproliferation and arms restraint. Our priorities in terms of issues were relatively well elaborated, but less clear was the importance we attached to the various countries of the hemisphere. Partly in reaction to the apparent crowning by the previous administration of Brazil as a “subhegemonic” power, we publically emphasized the individuality of each Latin state, and eschewed establishing priorities.

The internal setting of priorities—as opposed to public signals—need not imply that selected countries represent our interests in their geographical area; but it can help to clarify our thinking, place developments in context, and order our own time.

Criteria

The criteria for deciding which countries deserve attention is somewhat arbitrary. If we consider, however, the extent of US interests; the pace of change (and the US ability to influence it); and the country’s regional weight, six countries appear especially to warrant our attention over the next year: Mexico, Brazil, Argentina, Jamaica, Nicaragua and Chile. Of course, Panama will remain the number one domestic issue. Cuba’s African policy is of increasing concern, but Cuba’s importance in a hemispheric context will depend on progress in normalizing relations.

Other countries will demand our attention from time to time:

—We will want to encourage the democratization processes in Bolivia, Ecuador and Peru, and press for improvements in basic human rights practices in Uruguay and El Salvador;

—Should the Peruvian financial crisis worsen, we may want to discourage the seizure of power by a severe “Pinochet-style” regime or the temptation to default;

—Venezuela will be preoccupied by its presidential election, but its stance on NIEO and OPEC issues will be important. The President’s trip will permit even greater cooperation and coordination on issues—non-proliferation, human rights, arms restraint—where perceptions are shared;

—And we will want to monitor regional tensions, including Guatemala/Belize, Peru/Chile/Bolivia, and the Beagle Channel (Argentina/Chile).

Mexico

Two difficult issues—immigration and energy⁴—are complicating the bilateral relationship. Perhaps 20% of Mexico’s labor force works from time to time in the US, and the receipts from energy exports could double Mexico’s foreign exchange earnings; while from the US perspective, immigrants from Mexico could reach 10% of our labor force and Mexican oil could support 30% of our import needs by 1985.

Mexico is unhappy with the Administration’s proposal on limiting illegal immigration, and our refusal to agree to pay $2.60 per thousand cubic feet for their natural gas. Agreement on smaller issues—tropical products, prisoner exchange—cannot compensate for the deterioration in relations caused by these two central issues.

We are, however, talking to the Mexicans about reducing the immigrant flow by increasing rural development credit which goes to the root of the problem and serves the human rights of unemployed Mexicans: but we may need to go further. The Mexicans would like to see us reinstate a modified bracero program. The Mexicans also seek assurances that the US market will be open to an increasing quantity of Mexican manufactured goods.

The bargaining process on natural gas pricing may come to a friendly compromise: but if it does not, our energy relationship that holds great promise for substantially reducing our dependency on OPEC will have gotten off to a sour start. Should that occur, we ought to reconsider our “hands off” approach toward Mexican energy development, and, perhaps, design a program for bilateral cooperation on energy.

Lopez Portillo’s first year has generally been successful largely because of the economy’s fulfillment of IMF-recommended performance criteria but at the cost of a decline in industrial employment when 700,000 young Mexicans are entering the job market each year. Mexico’s 65 million population will double in 20 years at current growth rates. The Mexican economy will have to sustain an impressive period of growth to avoid rising unemployment which could generate social and political tensions of great consequence to the U.S. Our long-term interest in Mexico’s economic success may dictate a more forthcoming attitude on certain issues including trade, aid and energy, than our immediate economic interests would seem to warrant.

Brazil

The US will want to give Brazil top priority next year, as Geisel’s successor defines himself on human rights, international economic issues and non-proliferation. The President will arrive in Brazil just when the official ARENA party will be chosing its candidate for the presidency. Geisel’s choice, and therefore the almost certain winner, General Figueiredo, is a relative unknown. Nevertheless, he is under increasing pressure from the candidacy of Magalhaes Pinto, a civilian businessman, to commit himself to preserving and continuing the liberalizing reforms begun by Geisel. But hardline military elements continue to see threats from “internal subversion,” and some fear losing their high-level jobs in government-run enterprises. Should they “capture” Figueiredo, or replace him by force with one of their own, repression could begin anew and the liberalization process be set back.

We should try to encourage the moderates in the military to see the reassertion of democratic traditions as aiding Brazil’s rise to greatness, and entry into the “club” of industrial nations. A democratic Brazil could be a counterweight to the hardline Southern Cone regimes, at a time when our own leverage in the region appears to be on the decline.

The Brazilians are ambivalent about their status, demanding the concessions granted LDCs, while seeking the attention worthy of a nascent global power. Brazil finds itself bumping up against rules designed to regulate relations among developed countries—despite being, in many respects, underdeveloped. Brazilian aspirations for “grandeza” center on rapid economic growth, which is linked to export expansion. The success of the MTN, especially in liberalizing trade in labor-intensive manufactures, is vitally important for Brazil. But if Brazil is to become a global power, it must accept the accompanying responsibilities; in the context of the GATT, this translates into a willingness to offer reciprocal tariff reductions, and to discuss such trade-distorting practices as export subsidies.

We are currently drawing up a plan for possible non-nuclear energy cooperation that would apply to LDCs generally, but which the President might announce in Brazil. The proposal is being conceived with Brazil first in mind, to refute the charge that our non-proliferation strategy is actually aimed at crippling Brazil’s industrialization by depriving it of energy. Progress on non-proliferation itself, however, will probably have to wait until the rigid Geisel leaves office in early 1979.

Argentina

Your presentation of the list of 7500 “disappeared”⁵ helped jolt the Argentine military into releasing series of lists of names of prisoners, and movement on the Deutsch case (although not on Timerman) is anticipated. But a pattern of gross violations, including disappearances and torture, continue. Absent significant improvement in the human rights situation, congressional restrictions will prohibit sales of military equipment and training beginning next October 1. In the interim, we will want to leverage available military transfers (with non-lethal, non-internal security applications) to maximum advantage. The issue is whether the Argentine military will more likely respond to blunt, categorical sanctions, or to the gradual release of appropriate items in response to tangible human rights improvements. We are also examining how best to orchestrate our entire range of possible instruments of influence.

The dependence of the liberal economic model of Martinez de Hoz⁶ upon foreign capital makes it highly unlikely that the Argentine government would retaliate against US business interests. Of greater concern is the failure of the Argentines to follow through on their repeated indications that they will sign the Treaty of Tlatelolco. Their decision will ultimately hinge on their perceptions of their own national security and the threat posed by the Brazilian nuclear program. However, our nuclear interests in Argentina are the most powerful reasons for maintaining a working relationship with the Argentine government.

The Argentine political scene is showing the first signs of rebirth since the March, 1976 coup. The apparently ineffectual Videla is being openly challenged by junta member Massera, who is seeking to appeal to domestic and international opinion by calling for human rights improvements and more equitable social policies. The traditional political parties are beginning to regroup and pressure for more political “space.” Many of these voices are unabashedly pro-American—clear indication that our principled stance on human rights may have a handsome political payoff in the future.

Jamaica

Jamaica is increasingly important to the US for several reasons. Manley’s attempts to pursue a basic human needs development strategy within a democratic framework places Jamaica, almost uniquely among LDCs, exactly in tune with two central thrusts of our foreign policy. Jamaica will also be important to our Caribbean initiative. But Jamaica’s preference for immediate balance-of-payments relief conflicts with our longer-term development assistance approach, and could interject a sharply discordant note into the Caribbean Group before it can get off the ground. And since Jamaica is the chairman of the G–77 this year, maintaining a working relationship with the Jamaicans will be central to our efforts to move the North-South dialogue in a more constructive direction.

We greatly improved our relations with the Manley government during 1977, but Manley is not convinced that we are planning to do enough for him to resolve his fundamental problems. Undoubtedly, his expectations are unrealistic and he has not been sufficiently willing to confront hard trade-offs at home. Nevertheless, we will need to convince Manley—the leader in the Caribbean, after Castro, with the greatest regional and international image—that the West can provide his struggling island with sufficient opportunities. We need to keep the broad range of our relationships with Jamaica under review, to see where and how, these opportunities can be enhanced.

Nicaragua

Because of our long association with the Somoza regime, the political changes underway pose a considerable challenge to the U.S.: a harsh outbreak of anti-Americanism is possible—unless the US can demonstrate to Nicaraguans our absolute neutrality. Our human rights policy has begun to improve our image, but Congressional approval of FMS credits, the physical presence of American military advisers to Somoza’s armed forces, and our ongoing AID mission (for basic human needs, a distinction difficult for Nicaraguans to grasp) has made the US position vis-a-vis the Somoza regime less clear than it is, say, in the case of Pinochet in Chile.

In a recent policy review, we decided that we would try to avoid being seen to be propping up Somoza by remaining as aloof as possible from internal political maneuverings. At the same time, the opposition must comprehend that no deus ex machina (i.e., the U.S.) will find solutions for them. Our underlying assumption is that Nicaraguans can only build a viable and lasting democracy if they undertake and complete the task themselves. Continuing entreaties for support from the various political groupings will test our resolve to stick to our private and public policy of non-interventionism.

Chile

Our energetic human rights stance has gone a long way to undoing, in a remarkably short period of time, US identification with the Pinochet regime. During the last year, Pinochet may have gone as far as he felt was consistent with his regime’s security, in reducing the worst forms of human rights abuses. Disppearances and torture are much less frequent now. Whether Pinochet will lift the state of seige and remove other decrees that impinge on the rule of law may be determined in the course of this year. Pinochet’s banishment of twelve leading Christian Democrats indicates that he will not yet tolerate opposition political activity.

The dilemma we face is how to continue subtly to press the GOC to improve its human rights practices without jeopardizing the major points we’ve gained in domestic and international opinion by separating ourselves from the Pinochet regime. If the human rights situation actually deteriorates, as Pinochet’s speeches following the plebiscite suggested, we will have to find ways to show our displeasure without eliciting further repressive measures that would jeopardize dissenters within Chile.

Should the recent decisions by Exxon Minerals and Goodyear to invest in Chile be echoed by other US firms, a new domestic constituency favoring more sympathetic treatment for Chile would develop. Highly visible US investments may generate a second difficulty: Chileans will wonder at the apparently divergent concerns of private and official US citizens.

Conclusion

Unfortunately, these priority countries will not be easy to deal with in the coming year. Indeed, they become priorities because of the challenges they pose. In each case, the central issues involve global concerns: Mexico, energy; Brazil and Argentina, human rights and non-proliferation; Jamaica, balance-of-payments financing and other North-South issues; Nicaragua and Chile, human rights. This indicates that our general foreign policy priorities are right. Our ability to implement them in these concrete country cases will determine their ultimate success or failure.

One of your next meetings with bureau staffs might be with ARA. The problems raised in this memo would provide for a lively discussion.

1. Source: National Archives, RG 59, Central Foreign Policy File, P780046–0321. Secret; Limdis. Drafted by Feinberg on February 24. A stamped notation indicates that Vance saw the memorandum.
2. An unknown hand underlined the names of the six countries.
3. At the end of this paragraph, Lake wrote: “It might also be of interest for the ARA Chiefs of Mission conference next week.”
4. An unknown hand, presumably Vance, underlined the phrase “immigration and energy.”
5. In telegram 8958 from Buenos Aires, November 28, 1977, the Embassy reported that during Vance’s trip to Argentina, Vance and Montes had discussed “a list of persons missing or imprisoned, prepared by private groups in the U.S. and having no official character,” and that the Embassy had transmitted that list to the Government of Argentina. (National Archives, RG 59, Central Foreign Policy File, D770440–0373) See Document 68.
6. Lake inserted the phrase “Finance Minister” before Martínez de Hoz’s name.