OCI DRAFT Trends is Latin America affecting US security

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August 5, 1998
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A,pp~ ved For Release x'0/68/30 : CLA-RDP80R01443R000100040q o .X DRAFT n Latin America affecting US security United States security interests in Latin America are being affected by the sharp rise in economic nationalism, which is already threatening the availability of strategic materials; by a drift toward regionalism, as opposed to the concept of hemispheric solidarity; and by a wider acceptance of neutralist policies. Current Communist strategy seeks to exploit and further these trends. I. Economic nationalism Political leaders throughout most of Latin America are increasingly exploiting the appeal of economic nationalism as. a panacea for all national problems. Currently, Presidents Peron of Argentina, Paz of Bolivia, Arbenz of Guatemala, and to a lesser degree Ibanez of Chile are using this political technique. Last June, for instance, Peron in One of his familiar speeches designed to distract public attention, boasted of Argentina's progress toward economic Independence and predicted that his country would be self-sufficient in fuel, iron, and steel by 1958. In Guatemala, thee, pro-Commun- lst Arbenz administration has harassed large US corporations, placed almost prohibitive restrictions on future investment of foreign capital, and restricted some America# imports in violation of the existing trade agreement. $eale officials close to Arbenz have clearly intimated that tho r goal is the expropriation of all large foreign holdings in; Guatemala. Approved For Release 2000/ P80RO1443R0001000400 06-2 Approved For Release 2000%6$/30 -g,IA- only the armed armed forces prevent similar nationalistic leaders from coming to power in Peru and Venezuela. In Panama, moreover, even the firmly pro-US President Remon, who took office in a strong political position last October, has been exploiting the latent Panamanian nationalism and Yankeephobia in an effort to have the 1936 Canal Zone Treaty revised to Panama's advantage. This new leadership reflects the steady shift in politi- cal power away from the landed aristocracy to organized labor and the urban middle class. The accompanying accelerated economic transformation is characterized by migration to the cities, development of commerce, and a rapid growth in ovulation. this transformation have come new economic problems and social unrest, and lower-and middle-claaass pressure for a wider distribution of the national income in funding political expression in new economic policies. Latin Americans are convinced that they have been held to a colonial, economic status by an unfair trade relationship with the great indus- trial powers, that the latter rig prices against tbea by im- posing price ceilings on imported materials while;;:.doing o control the export prices of manufactured,, 'cods. In particular they feel that their present r04, &s more suppliers of raw materials In exchange for aaanufacturhd go leaves then helplessly dependent on the capricious demands of the big industrial nations. This sentiment found concrete expression in the first policy statement of the new , Chilean Foreign Minister last December when he said that Chile sold nproved For Release 20t00/08/30 : CIA-R P80 014438000100040006-2 raw as or a as aow the war and. had to pay Approved For Release RDP80ROl 443R0001000400 high prices after the war for imported manufactured goods. Be complained of the greater consideration shown by the United States after the war to Europe, an contrasted with Latin America, and intimated that countries in the same position an Chile ought to unite to assure more equitable price rela- tionships between raw materials and manufactured goods. To attain more stable and less dependent economies, various governments are sponsoring ambitious industrializa- tion programs, like Porou's highly-publicized Five Year Plans. The first Plan (1947-51) pushed light industry at the expense of agriculture; the second in attempting to develop heavy industry. Protective to and exchange controls have been employed to prevent foreign competition. Sentiment is also growing for the expropriation or nationalization of foreign- owned enterprises and for stricter control over the nature of foreign investment in the country. In Chile at presen President Ibanez seems personally opposed to nationalization of the large US-owned copper enterprises, but two of his cabinet ministers and certain other supporters agree with the active campaign for nationalization now being waged by the Communists. In Venezuela, on the other baud, almost all important leaders are wary of expropriating the oil industry and frequently allude to Mexico's 1938 experience in "killing goose that laid the golden egg." They emphatically want greater industrialization, however, and will try to drives harder and harder bargains with foreign investorso Approved For Release 209j/3Q ICIA-RDP80R01443R000100040c 06-2 Approved For Release 200 /30 ~t1A-RD - impact of any such expropriation drive on American economic interests is indicated by the fact that US direct' Investments in Latin America at the end of 1850 totalled 4.6 billion dollars compared to 3.5 billion in the rest of t world except Canada. - trade with Latin America totalled 7 billion dollars in 1951, of which 3.6 billion was US exports. This compares with 6 billion dollars total trade with Europe, of which 4 billion was US exports. This growing economic nationalism already threatens the flow of a number of key strategic raw materials to Western defense. Latin America, a major source of many such commodities, accounts for about 80% of the entire free world's production of petroleum, nearly 30% of its tungsten, and 18% of its tin. For the U6, Latin American production is particularly important, supplying over 30 strategic mineral, fiber and chemical products. For example, about 71 of US copper imports come from Latin America--Chile alon supplying about 58% during the first 10 months of 1952. About 81% of US bauxite imports--almost one-half of the total equireaents--comes from the Dutch possession of Surinam, where there have been rumblings of political discontent during the past year and the plants' means of protection against sabotage are most inadequate. The recent nationalization of tin in Bolivia did not deny United States access to Bolivian tin, but did result least temporarily, in a decline in exports, and indications that future output may drop. The orbit has been able to Approved For Release 7n(1Z1B1l't4G RDP80R01443R000100040a06-2 acquire more copper, on a clandestine basis, as a result of 12 mouth period ending 2 May 1952 are estimated at 15,00 0 metric tons, United States imports any be affected by the change Chile's nationalization of marketing. Known and probable diversions of Chilean copper to the Soviet Orbit during the psis from exploitation of raw materials for export to vation of these raw materials for domestic industrial- zation programs. The availability of Brazil'* oil and manganese, for example, is seriously affected by such consid- eraations. 11. moons lie m Directly related to economic nationalism is the trend Most serious, largely because it is based upon Yankeephobia, is Porou's effort to substitute Argentina for United States leadership. The of fectiveness of his anti-US propaganda in- creased in 1952, but he has recently indicated an interest in improving relations with Washington. Argentine comment on toward regionalism an opposed to hemispheric solidar t Eisenhower has been generally favorable, and direct ;acke against the United States have been reduced. Basic Peronista objectives, however, probably have not been altered. Perou's recent diploma-tic overture to Ambassador: Nufor appears to be similar to those of 1950 and 1951 which preceded requests for special favors, Approved For Release 20002P80R01443R000100040a 06-2 Approved For Relea southern Bouth America Peron is attempting to set up an independent regional economic bloc; Chile and Bolivia have already responded favorably to his proposals for pooling resources and setting up a customs union. Peron, through his labor attaches, Is also urging Latin American labor to abandon GRIT, the hemispheric affiliate of the non-Communist roational Confederation of Free Trade Unions, and join ATLAS, the Argentine-sponsored Latin American labor movement Another example of regionalism is found in the Caribbean area, where Guatemala and Costa Rica have in the past used the Caribbean Legion--an irregular military group of political exiles and professional revolutionaries of many nationalities --as, a clandestine instrument of their "anti-dictatorbssip'r foreign policy. The Legion is not considered a threat to any Caribbean government, but in recent months certain other Caribbean nations have been using the Legion's existence as a pretext for trying to organize a rightist alliance for their own purposes. Because of their common economic problems vie-a-vim t United States, all the countries to the south have shown some tendency to form a single 'Latin American bloc in order to promote individual national interests. This tendency has been strengthened by their awareness of the increased power they can wield in the United Nations by casting their 20 General Assembly votes on bloc. In the Seventh General Assembly, for example, 15 Latin American countries approved the Uruguayan-Bolivian resolution affirming the sovereign dMAROWSROOT804:80HYP Igg Approved For Release 20 ,; ? P8OR01443R000100040 abstained. In committee meetings they succ frustrated United States attempts to define clearly the obligation of the country to provide compensation to the foreign stockholders. All but Haiti, which abstained, voted for an Argentine resolution calling for "parity"' between raw material prices and those of manufactured goods. This regionalist tendency is also gaining strength within the Organization of American States (OAS) largely be- cause of Latin Americas awareness of the improved bargaining position given it by United States defense needs. At the 1951 meeting of American Foreign Ministers, the Latin American nations asked assistance for their general economic develop- ment in return for agreeing to the output of strategic materials. III. Neutralism Owing to their geographic isolation from the East-West struggle, many Latin Americans tend to neutralism, a position which finds i0 leading proponent in Peron. Argentina, though attacking the United States much more strongly than it does the USSR, is urging the general adoption of a "third position," of complete aloofness from what it claims are purely American-Soviet differences. Latin America, it argues, has nothing to gain and such to lose from involvement in eat conflicts. Approved For Role- pP80R01443R000100040 06-2 Approved For Release 2000 06-2 The growing reluctance of Latin American nations to make commitments that would bind them in the event of a new world war became apparent when the United States requested nine of them to conclude bilateral military assistance agreements. Only with Cuba, Peru, and perhaps Chile can the results be termed successful. Mexico suspended negotiations, partly because of the mid-1982 presidential election, but also because of Mexico's reluctance to become involved in commitments which night send its troops outside national boundaries; an under- lying belief that Mexico's geographic position would assure US aid regardless of a bilateral agreement; and Mexican dis- satisfaction with US offers of anti-aircraft equipment rather than for improving Mexico's own military industry. The Dominican Republic in still negotiating; Brazil and Uruguay have thus far failed to ratify the agreements they signed almost ssa year ago. Colombia is at present not meeting sl its commitments under the pact with the United States to train troops in coastal defense; Ecuador has indicated disssatisfac-r tion with the pact it signed last year because this provides only antiaircraft artillery, whereas the army desires infantry supplies. Latin America gave its prompt approval, both within the UN and the Organization of American States, when the United States intervened in Korea, but the enthusiasm soon waned. Colombia sent troops, but the plans of other countries to do so were first delayed and then dropped. The Latin American Approved For Release 20 80R01443R0001000409 06-2 Approved For Release 2 A 8ORO1443R000100040g06-2 nations have also aeon little need to implement their 1951 pledge. to increase the output of strategic materials. While they admit the necessity and advantage of some cooperation in an all-out war, there is a growing belief that the present crisis is not so urgent an the United States insists, that it does not warrant sacrificing their men, depleting their resources, and suspending Industrialization programs. Approved For Release MMMM ',"IMJK-RDP80RO1443R000100040a06-2 IT. Communism Current communist strategy nooks to exploit and hasten the. trends toward economic nationalism, a purely Latin Ameri- can regionalism, and neutralism. This strategy is advanced viet and Satellite diplomatic missions as wail an by fodnt the national Communisti parties, labor organizations, eu Lu strategic industries and vital installations, obably be. brought under control by natio the Communists are nowhere a, eugh to {dominate government policy.* Even in Cuba Popular Socialist Party, one of the largest Communist parties h over 60,000 known electoral est. ormer price regime and in even a lessor Batista government. Its future tegy may be affected' b ; the current struggle between Batista and opposition claeate eadrd by the deposed president; but n ehnuid ,the' latter -4triumph, Communist Influence y . increase. poobably not appreciabl ties to the National Anse bly In-Ports are Communists, but in the foreseeable future ul teats power will remain with the ficials from metropolitan prance, Approved For Release ,ZUUUI%WOtf P80R01443R000100040 The local Communists are capable of some serious iht nod foreign agents probably represent a Ore 06-2 // - Approved For Release 20U .. . _ - DP80RO1443ROOQ100040q Coanunist-proposed measures, however,, have been openly by the Guateea lan Government and have been plagi- arised by Argentina.' The. "dissident" Communists, who have gained considerable ;cep in Argentina, have ready access to Peron, and advise hie on key policies such as the ant There, doubt of their loyalty to international coaaeaaku era, accepts then as good Peronistas. The Soviet and satellite diplcattic a who is easily influenced and isolated by his coder to obtain strategic materials, thereby playing on the widespread desire of Latin American and the drive for eednomic self-suf: irected their activities toward the promotion of to reduce their dependence on the United States. At present there are Orbit missions In **ca, Ecuador, Bra- y, and Argentina; trade propaganda is given fur- culation by traveling commercial rep g firms, and local Communist cultural tr ale societies. Accelerated s to obtain s Ives egic materials were foreshadowed at the Moscow Economic Conference in April 1982, at which over $0 Latin American delegates were present. 49499~nj-- Approved For Release 2000/08/30 : CIA-RDP80R01443R000100040006-2 Approved For Release 2000/08/30 : 000100040006-2 $ubs*queatly there was created the 8Ocitl and Economic Control Coaaiaaiou for Latin America, with headquarters in Prague, Which seeks to establish i*teraatiOasi 00""10 and culturs On I February 1953 tins's new sarbssesdar to the Soviet Union reportedly discussed trade negotiations between the two countries in a 45 minute meeti alin. 5iatilsr'developments in the rest of Latin America the conclusion of a Polish-Brazcilia trade pact, negotiatio gentine trade agre -ut, and intensified e for vak by tine , Hungarian, Rumanian, and Csech slo. tabiish diplomatic and commercial relations with Chile. Most of these trade promotion efforts have but they have lade Latin Americans more aware of the potential profits in East-West trade, Current international Communist policy apparently a for Latin American C iste to cooperate with non-Communis political groups to promote nationalism, even at the sacr 'ice of Communist identity. sad leadership. Communist support Approved For Release 2000/08/30 : CIA-RDP80R01443R000100040g06-2 Approved For Releajj- r FA RDP80R01443R000100040 I Ur &tL_ 06-2 nalism and support of non -Communist, nationalistic, now to Latin Anerica but it may be siguiti- had ary General of the Mexican Communist Party, who d its none to the Guatemalan Labor Party after a visit that in December the Guatemalan C bmmsunissst Party offtcia $iailarly, In Argentina, the Communist party euppor, returned from Moscow. Ly en regime, and in Mexico, Vicente Lombardo Toledo no, leader recently announced his administration of Ruiz Cortines. Who pparently anticipate an intensification of eco- a and for the leftist revolution in via last April. Latin American C unistse evidently want an those which net the stage for Perouist sition to provide leadership or to suggest positive programs of actions through alliances with, or infiltration of, the Be major a1 parties, even though their can parties are ad subject to repression. veness of Communist of forts to exploit tionalist sentiment has already been demonstrated in Brazil where the Coaaunist-sponsored postwar campaign to prevent The contacts resulting from this tactic were usefu foreign exploitation of petroleum has achieved support. Approved For Release 2000MM8 30J FI 0R01443R000100040c 06-2 Approved For Release ul "Upwll =RDP80RO1443R000100040006-2 (fort to prevent the dispatch of troops to Korea, despite the special urg the Unitdd Organized labor has probably been the group most recep- ivs spaganda for the nationalization of for- ?ign-owned enterprises. Since 1950, the pro-communist Latin `ederation of Labor (CTA anti-imperialist fronts" in al concentrate on common labor objectives instead cal goals. Though denouncing Peronian, it has praised cored ATLAS, and reputedly plans to invite objectives of Its new labor competitor, res ofboth ATLAS and the anti-Communist GRIT to sass this year. With the support of the World of stion sf Trade Unions, the Latin American Confederation ;ored regional trade union conferences and has probably Increased its potential effectiveness. It has s rer, been successful in promoting unity with non- ups or in preventing the substantial drop in mbe salting in part from the increased aut Communist pressures of many of the governments. Communist propaganda presents Latin America as a area which is obliged to make excessive economic, ud military sacrifices to supper, Approved For Release 20 P80ROl443R000100040 06-2 empted,to form been organized to advance this propaganda, and through then the Communists have effectively broadened their contact Me ity child wel The inadequate attention Latin Amerl quontly give to civil rights public health and education blamed on the governments' collaboration with, or domination by, the United states.. Indirectly aided by delegates have be last e Conference in October 1952. An even larger Latin ce, possibly reaching 200, was pros, the Vienna Pose* Conference in December. These deleg often the opportunity to attend training courses in Europe and to mite or lecture on #lr retur a broad popular pro-communist y'e xamplo, some 90 gates representing 12 Latin American nations attended the pportunity Approved For Relea 9130 : CIA-RDP80R01443R0001000400 hey could be hould 06-2