Inter-American Relations: The Latin American Perspective 9781685858599

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Inter-American Relations

Inter-American Relations The Latin American Perspective

edited by Robert E. Biles

Lynne Rienner Publishers • B o u l d e r & London

Earlier versions of the chapters in this book were published in two issues of the Texas Journal of Political Studies (Spring/Summer 1986, Fall/Winter 1986-1987) and are reprinted with permission.

Published in the United States of America in 1988 by Lynne Rienner Publishers, Inc. 948 North Street, Boulder, Colorado 80302 and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU ©1988 by Lynne Rienner Publishers, Inc. All rights reserved Library of Congress Cataloglng-In-Publlcatlon Data Inter-American relations : the Latin American perspective / edited by Robert E. Biles, p. cm. Includes index. ISBN 1-55587-119-4 (alk. paper) 1. Latin America—Relations—United States. 2. United States— Relations—Latin America. 3. Central America—Foreign relations—1979- 4. Debts, External—Latin America—History—20th century. 5- Brazil—Politics and government—1964-1985. 6. Latin America—Foreign relations—1948-. I. Biles, Robert E. F1418.I5966 1988 303.4'8273'08—dclO British Library Cataloguing In Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1984. ©

88-l4l6l CIP

Contents List of Tables and Figures

vii

Acknowledgments

ix

About the Authors

x

1

Perspectives That Make a Difference Robert E. Biles

1

SECTION 1 OUTSIDE INFLUENCE: WAR, DEVELOPMENT, AND SELF-DETERMINATION IN CENTRAL AMERICA Introduction

17

Robert E. Biles

2

U.S. Influence in Central America

3

The Impact of the U.S. Military Presence on Honduran Politics Neale J. Pearson

47

4

Colombia in Contadora: Foreign Policy in Search of Domestic Peace Marc W. Chernick

76

V

John A. Booth

22

vi

CONTENTS

SECTION 2 CONSEQUENCES OF THE INTERNATIONAL DEBT: CRISES IN DEVELOPMENT AND INDEPENDENCE Introduction 5

6

7

97

Robert E. Biles

Impact of the Debt Crisis on a Regional Power: The Case of Colombia Rodrigo Pardo Garcia-Pena

100

Brazilian Agriculture and the Debt Crisis Bruce R.Drury

120

Foreign Investment and Latin American Development: An Argentine Perspective William J. Fleming

139

SECTION 3 COPING WITH THE NEIGHBOR TO THE NORTH: MEXICAN-U.S. RELATIONS Introduction

159

Robert E. Biles

8

Mexican-U.S. Trade Relations

9

"Una Cooperación Para las Sodas": Border Problems as Seen from Chihuahua Manuel A. Machado, Jr.

Dale Story

165 179

SECTION 4 SOUTH AMERICA'S GREAT POWER: GEOPOLITICS, NATIONAL SECURITY, AND DEVELOPMENT IN BRAZIL Introduction

Robert E. Biles

187

10 Geopolitical Tension Areas in South America: The Question of Brazilian Territorial Expansion Philip Kelly

190

11 The Militarization and Internationalization of an Economy: Brazil, 1964-1985 TarcisioBeal

210

Index

230

Tables and Figures Tables 3-1 3.2 3A.1 3A.2 3A.3

3A.4

3A.5 3A.6 3A.7 3A.8 3A.9

6.1 6.2

U.S. Economic and Military Assistance to Honduras, 1980-1985 Human Rights Violations in Honduras, 1981-1984 Countries Named Most Frequently as Military Threats, 1983 Countries Named Most Often as Attempting to Destabilize National Government Countries Named Most Often as Responsible for Creating the Conditions that Lead to War in Central America Which Does the Respondent See as Being Better for El Salvador: Victory by Government Forces or by Revolutionaries? Attitudes Toward Support of Salvadoran Revolutionaries, by Population Countries Mentioned as Trying to Help Respondent's Country Countries Mentioned as Interfering Too Much Effect of U.S. Economic Policies as Being Helpful or Harmful Does Respondent Approve or Disapprove of U.S. Military Aid to Government of El Salvador? Value of Major Agricultural Exports, 1973, 1981-1984 Production of Major Agricultural Crops, 1970-1983 vii

54 59 68 68

68

69 69 70 70 71 71 127 129

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TABLES AND FIGURES

6.3 6.4 6.5 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10

Changes in Agricultural Production of Major Crops, 1973-1983 Area Planted in Major Crops Yield for Major Crops Railroads and British Overseas Investment in Latin America, 1825-1913 Breakdown of British Overseas Investment in Latin America, 1875-1913 British Investments in Latin American and Argentine Railroads Crosstabulation of Builder with Location for Trunkline Sections Completed, 1854-1914 Frequency Distribution of Trunkline Section Concessions in Argentina, 1854-1914 Frequency Distribution of Trunkline Section Construction in Argentina, 1854-1914 Crosstabulation of Builder with Location for Trunkline Sections Completed by Era, 1880-1914 Crosstabulation of Builder with Location for Trunkline Sections Authorized by Era, 1880-1914 Total Kilometers of Trunklines Constructed, 1854-1914 Total Kilometers of Trunklines Constructed, by Builder and Location, 1854-1914

130 132 133 143 143 144 147 149 149 150 151 153 153

8.1 8.2

U.S. Percentage of Mexican Imports and Exports Mexico's Trade Deficit with the United States

166 167

10.1 10.2 10.3

193 201

10.4

Spectrum of Potential Brazilian Foreign Policies Relative Military Capacity Scores Selected Comparisons of Economic Growth: Brazil and Argentina Current Brazilian Foreign Policy Emphasis

201 204

11.1

Distribution of National Income

226

Figures 6.1 10.1

Brazilian Agricultural Production and Population

131

South American Balance of Power

197

Acknowledgments The editor gratefully acknowledges all those who have contributed to this book. The authors of the articles merit special thanks for the high quality of their work. Although subsequently updated, all of the articles were originally prepared for two special issues of the Texas Journal of Political Studies (Spring/Summer 1986 and Fall/Winter 1986-1987). Thanks go to the Department of Political Science at Sam Houston State University for permission to publish the papers here. A great debt is owed to Shirley McCarty, assistant editor of the TJPS, for her good advice, and careful work on the word processor, and to Edwin S. Davis, editor of the TJPS, for his editorial assistance. Thanks are extended to Sam Slick, María Jiménez, and Elizabeth Fonseca Downey for translation and language assistance; Jean Biles for editorial support; Larry Dickens, John Holcombe, Beryl Pettus, and Jim Carter for proofreading; the anonymous reviewers for their helpful comments; the members of the Department of Political Science of the Universidad de los Andes, Bogotá, for advice; and Sam Houston State University for computer services and clerical assistance.

ix

About the Authors Tarcisio Beai is professor of history, religious studies, and languages at Incarnate Word College in San Antonio. A native of Brazil, he returns there every two years to do research on contemporary issues, particularly those concerning the Catholic church. He has published fifteen items in The New Catholic Encyclopedia as well as articles in Religion in Latin American Life and Literature, Vozes de Petrópolis (Brazil), Revista de História (Brazil), In Words Commemorated, and The National Catholic Reporter. Robert E. Biles is professor of political science at Sam Houston State University. He has studied, taught, or done research in Mexico, Uruguay, Puerto Rico, and Colombia. In 1984-1985, he did research on women and politics in Colombia under a Fulbright grant. He has published articles in Latin American Research Review, Latin America and Caribbean Contemporary Record, Revista de História Comparada, Political Participation in Latin America, Historia General de América Latina, World Encyclopedia of Political Systems and Parties, Lawyer of the Americas, and others. J o h n A. Booth is professor of political science and chairman of the Department of Political Science at North Texas State University. He has done extensive research in Central America, particularly in Costa Rica. In 1985, he was an observer for the Guatemalan elections. He is the author of The End and the Beginning: The Nicaraguan Revolution and coeditor of Political Participation in Latin America and The Politics of San Antonio.

ABOUT THE AUTHORS

xi

Marc W . Chernick was visiting professor of political science at the Universidad de los Andes, Bogotá, Colombia, from 1984 to 1987. He is a research associate of the Institute for Latin American and Iberian Studies of Columbia University and has published in Colombia on the peace process there. Bruce R. Drury is professor of political science at Lamar University. He has for many years done research on Brazilian public policy and civil-military relations. In 1986-1987, he taught in Malaysia. Drury has published articles in the Journal of Political and Military Sociology, Third World Review, Association of Arid Land Studies, and Lamar Journal of Humanities. William J. Fleming is associate professor of history at Pan American University. As part of his interest in the economic history of Spanish America's Southern Cone, he has done extensive research in Argentina. He is the author of Regional Development and Transportation in Argentina: Mendoza and the Gran Oeste Argentino Railroad, 1885-1914 and Region versus Nation: Cuyo in the Crosscurrents of Argentina's Development, 1861-1914, and has written articles for Investigaciones y Ensayos (Buenos Aires), The Americas, and Journal of Economic History. Philip Kelly is associate professor of political science at Emporia State University. His most recent research in Latin America was in Paraguay during the summer of 1986. He has published articles in the Journal of Latin American Studies, Caribbean Studies, A Defensa Nacional, Geosur, Política e Estrategia, American Review of Public Administration, Inter-American Economic Affairs, Political Geography Quarterly, Buffer States in World Politics, LASA Forum, Revista/Review Interamericana, and others. Manuel A. Machado, Jr. is professor of history at the University of Montana. He taught and did research in Chihuahua, Mexico, during 1983-1984 and the summer of 1985. He is the author of Listen Chicano: An Informal History of the Mexican Americans and The North Mexican Cattle Industry, 1910-1975. He is currently completing economic biographies of a northern Mexico rancher and of Pancho Villa. Rodrigo Pardo is a counselor to the president of Colombia. When he wrote his chapter for this book, he was professor of international politics and coordinator of the Center for International Studies at

xü

ABOUT THE AUTHORS

the Universidad de los Andes in Bogotá, Colombia. He is coauthor of Contadora-, Desafío a la Diplomacia Tradicional and author of articles in Documentos El Mundo, El Tiempo, El Mundo, Cromos, and Semana. Neale J . Pearson is professor of political science at Texas Tech University. He has done extensive research throughout Central America, especially in Honduras. He spent the spring of 1986 on sabbatical in Honduras and Panama doing research on delivery of public services to rural areas. He has published articles in Latin America and Caribbean Contemporary Record, Communism in Central America, Latin American Peasant Movements, Rural Change and Public Policy, Rural Public Services, International Comparisons, and others. Dale Story is associate professor of political science at the University of Texas at Arlington. Most recently a researcher in Mexico under a Fulbright grant, he is now doing research on the Mexican private sector. He is the author of Industry, the State and Public Policy in Mexico and The Mexican Ruling Party.

Perspectives That Make a Difference ROBERT E. BILES

In the last quarter-century, dating particularly from the alignment of Cuba's Fidel Castro with the Soviet Union, there has been a tremendous increase in scholarly work on Latin America. Much of this has focused on the uneasy relationship that has existed between the United States and the region, and most of the work by North American scholars has, not surprisingly, looked at the problem from the U.S. point of view—whether in a friendly or critical fashion. While this is a valuable approach, w e also need to have an understanding of the Latin American perspective—their interests, situation, experience, and policy. Many U.S. policy failures and much misunderstanding can be attributed precisely to the lack of such knowledge. Fortunately, there is excellent work being done in this area, and this collection draws together some of the best of it. A range of researchers, both U.S. and Latin American, prepared the original articles that comprise the book. Some authors deal with foreign policy as such; others look at the domestic consequences of foreign policy. While relations among the Latin American nations are beginning to take on more importance, historically the most important links have been bilateral, between the individual Latin American nations and the powers of Europe and North America; hence, the major focus of the articles is the relationships between the Latin American nations and the industrialized countries, particularly the United States. Each of the four sections of the book provides an introduction and articles analyzing a major policy area. T w o sections examine Latin America's most important contemporary problem areas—the l

2

INTRODUCTION

Central American conflicts and the debt crisis. Both sections analyze, from differing national perspectives, attempts to deal with an international environment that is of critical importance but that places major limits on the ability of the Latin American nations to act effectively in their own interest. A third section considers one of the most important inter-American relationships-—that b e t w e e n Mexico and the United States; differing perspectives and priorities make this also one of the most difficult relationships b e t w e e n friendly nations. T h e fourth section e x a m i n e s Latin America's greatest power—Brazil. Brazil's geographic position bordering most of the other South American nations and its great e c o n o m i c and military power have long made it a major force in inter-American relations, while its e c o n o m i c success in the 1960s made it an important model for others to emulate. Together with the sections on Mexico and Brazil, chapters on three other nations provide a sampling of key Latin American problems. Honduras, a small, poor country moving toward democracy, has found itself caught up in the w e b of Central American conflict and Great Power intervention. With considerable difficulty, it has sought to balance U.S. demands and its own priorities. Before the debt crisis, Colombia, a middle-sized, regional power with a significant guerrilla problem, sought to break its traditional pattern of maintaining a low international profile and closely adhering to U.S. policy. It found, however, that its options were greatly circumscribed by economic necessity and U.S. policy preferences. Finally, Argentina, a major nation in the region, is dealing with the substantial role that foreign investment has historically played in its development.

Three Themes This b o o k reflects what is perhaps the most basic characteristic of inter-American relations: diversity. The authors present a wide range of evaluations—both positive and negative—of the policies pursued by Latin American nations and by the United States. They also make quite apparent the multitude of forces shaping foreign policy behavior. Nevertheless, certain common themes reflecting the nature of inter-American relations run through the articles: (1) that there is great diversity within Latin America, ( 2 ) that Latin Americans and North Americans often see the world differently because of cultural and historical dissimilarities, and (3) that there are differences in perspective created by dissimilar situations within the international environment. Let us examine each of these.

PERSPECTIVES THAT MAKE A DIFFERENCE

3

Diversity First, a simple but basic factor underlying inter-American relations is that Latin America is differentiated and diverse. The region is popularly viewed as an undifferentiated whole without recognition of the differences in level of economic development between, for example, Venezuela and Paraguay or the differences in size between Brazil and Uruguay. Yet these differences loom large in foreign policy decisions. For example, in his article on South American geopolitical tension areas, Kelly notes the key role Brazil's foreign policy posture plays in the situation of its neighbors because of its much greater industrial and military power. A fundamental division among the Latin American nations has developed because of the e m e r g e n c e o f t h e s o - c a l l e d NIC's ( N e w l y Industrialized C o u n t r i e s ) — t h o s e Third W o r l d g o v e r n m e n t s with significant m a n u f a c t u r i n g capabilities w h o h a v e the potential to e x e r c i s e e c o n o m i c p o w e r o n a global level. Governments of countries such as A r g e n t i n a , Brazil, M e x i c o , V e n e z u e l a , and Chile a r e n o t c o m m i t t e d t o a f u n d a m e n t a l restructuring o f the international system ( t h o u g h t h e y may well e x t e n d symbolic support for such efforts) but rather to increasing their share o f the rewards within the present international system. These nations have a vested interest in maintaining the present system. . . . Thus, at the meeting of Latin American g o v e r n m e n t s to discuss joint strategies for dealing with foreign d e b t in Q u i t o in 1 9 8 3 , Brazil and M e x i c o effectively prevented radical alternatives from being approved [4, pp. 11-121.

There are also very real differences within nations. Drury and Beal make clear the major differences in policy orientation, both external and internal, among the contending forces in Brazil, while Pardo and Chernick emphasize the difference in Colombia's foreign policy produced by the 1982 election of a new president, Belisario Betancur. The two internal differences affecting foreign policy most commonly emphasized today are those involving social class and preferred development model. Those governments pursuing development models favoring the popular classes, such as the revolutionary Sandinista regime in Nicaragua or the somewhat populist government of Betancur in Colombia, pursue different foreign policies than do governments supporting elite interests, such as the Brazilian military regime from 1964 to 1985. It is probably true that Latin American leaders are likely to know more about the United States than U.S. leaders do about Latin America. Nevertheless, Latin Americans also fall prey to the tendency to view the United States in undifferentiated terms—or

4

INTRODUCTION

perhaps more commonly to emphasize the role of such groups as the military and the multinationals without noting the important differences made by regime changes (such as from Carter to Reagan) [4, p. 16]. For example, Beal, reflecting a common Latin American view, emphasizes far more than does orthodox North American scholarship the continuity in U.S. policy resulting from the influence of the Trilateral Commission.

Cultural and Historical Perspectives A second underlying theme of inter-American relations implicit in the articles is that for cultural and historical reasons, North and South Americans often see the world very differently. The two groups do have a great deal in common. Both share the Western cultural heritage, the fact and mythology of historical development in the N e w World, and a great deal of economic and cultural interaction. Thus, not surprisingly, many Latin Americans have a close identity with the United States, and this is reflected in their foreign policy preferences. However, because U.S. policy is so often predicated on the assumption of similarities, perhaps w e should emphasize the differences, which often lead to policy failure or difficulties. Wiarda and Kline argue that Latin America has e v o l v e d as a unique fragment of the Western tradition, albeit with strong indigenous features and with its o w n social institutions and political dynamics.

Although North American political culture is strongly Lockean and liberal, that o f Latin America, historically at least, is strongly elitist, hierarchical, authoritarian, corporatist, and patrimonialist [11, pp. 5, 151.

Even if one sees the Latin and North American cultures as less different than do Wiarda and Kline, it is clear that there are major cultural differences that make it difficult for the two societies to understand each other. One indication of this is the difficulty that many U.S. scholars have had in using dependency theory, an explanation of international relations widely accepted in Latin America. North American treatments have often been criticized by Latins for missing the historical and qualitative aspects of the concept. Similarly, many of the deficiencies of the Alliance for Progress can be attributed to the failure of planners to recognize that their "developmentalist scheme was largely irrelevant" to Latin America because it was not rooted in an under-

PERSPECTIVES THAT MAKE A DIFFERENCE

5

standing of Latin American history, culture, and social structure [10, p. 139]. Nationalism. Several aspects of Latin American cultural traditions affect foreign policy. Strangely forgotten by many North Americans is the power of nationalism, a force the United States recognizes in many other parts of the world. In U.S. dealings with the European nations, sensitivity to nationalistic concerns is a regular (if imperfect) policy component. However, in dealing with Latin America, the United States appears to ascribe far less importance to nationalism. For example, lack of U.S. sensitivity to Mexican nationalism has frequently produced strong reactions. Although this lack of sensitivity was particularly marked in the first Reagan administration, it has been a continuing problem from the beginnings of both nations. Perhaps part of the reason it is often overlooked is that it is frequently manifested in a somewhat different form than is often said to be the case in the developed industrial nations. In the Western tradition, nationalism has been a tool of nation-building, because it means that the citizen gives loyalty to the nation over other allegiances, such as those of personal friendship and ethnicity. In Latin America, however, nationalism often may not mean mutual support of the nation but rather a xenophobic antiforeign sentiment. Citizens of a given Latin American nation at times may not unite to help one another, because they feel more loyalty to subnational groupings than to the nation as a whole. But they often do unite in the face of foreign intervention in their national affairs. Since the close of the last century, the most common source of such foreign intrusion has been from the United States. Consequently, there is a strong heritage of anti-Americanism among both intellectuals and revolutionaries in all nations of Latin America. As Schmidt points out, Mistrust and fear of the United States have been central to the Mexican sense of nationhood since the post-independence period....The anti-U.S. bias in everything from culture to internationalist ideology is one of the constants of Mexican life [7, p.9J.

The Mexican case indicates that in their actual policymaking, these same individuals will not necessarily act on the basis of their anti-Yankee statements. Moreover, while anti-Americanism often serves as a unifying factor, many individuals and governments feel close affinity with the United States. For many, feelings about the

6

INTRODUCTION

United States are a mixture of respect for its economic success and internal political system, and rejection of aspects of its culture and its interference in Latin American internal affairs—the oft-mentioned love-hate relationship. For both practical and nationalistic reasons, an increasing number of governments are seeking greater independence from the United States, as Pardo's discussion of Colombia and Booth's analysis of Central America illustrate. Capitalism. A Latin American orientation that has long been difficult for many U.S. policymakers, and particularly the Reagan administration, to understand is the mixture of attitudes about capitalism. In most Latin American nations, there is a wider spectrum of opinion on capitalism than is found in North America, ranging from support of a rather primitive form of capitalism to a widespread fear or at least suspicion of international capitalism. The negative attitudes have several sources. Marxist or neo-Marxist analysis is widely taught and used in Latin America. Even many who are essentially conservative make use of the methodology or language. Latin America's long experience, often negative, with the international marketplace has produced a variety of explanations for Latin America's continuing underdevelopment, many of which emphasize the world marketplace's capitalist nature. "Dependency theory," which is very widely accepted in Latin America, is such a view [3, pp. 100-108], Moreover, for many, Marxist terminology provides a convenient vocabulary to describe and analyze the juxtaposition of poverty and wealth they see. The historically greater role of the state as economic planner, provider of capital, and owner of some sectors, even under conservative regimes, also makes many Latin Americans skeptical of the free market approach often advocated by the United States. Finally, experience with some predatory foreign companies and the memory of the U.S. government backing those companies against Latin American domestic interests and laws provide a fertile climate for suspicion. Beal frankly attacks international capitalism in a fashion that has resonance for more than the far Left in Latin America. Pardo presents a much more moderate critique, but his analysis clearly manifests underlying misgivings. Drury's analysis illustrates the tendency of the large producer to defeat reform and push out the small producer in the kind of free-market approach often found in Latin America. The result may be a choice between disorder and repression. Hence, social reformers also often look with suspicion on free-market solutions. It should not be taken from this discussion that all or even most Latin Americans are anticapitalist. Rather, three points stand out.

PERSPECTIVES THAT MAKE A DIFFERENCE

7

First, most Latin American nations have a much broader spectrum of opinion about the proper relation of the state and the economy than is found in the United States. Second, even strong supporters of capitalism in Latin America commonly accept a substantial government role. And third, international capitalism (including multinationals, the international marketplace, and foreign investment) carries with it an intellectual baggage of memories of past intervention and dependence. Hence, U.S. policies advocating capitalist solutions without accounting for these differences are likely to face major difficulties. Anticommunism. Since World War II, anticommunism and the threat of Soviet expansion have consistently been the central feature of U.S. foreign political policy. Latin Americans, however, have been much more mixed in their perception of a "threat." As Edward Williams comments, The Cold War and the Communist danger exist for Latin America, but with far less immediacy and importance than for the United States. The Latin American response, therefore, has varied. On some issues and at s o m e times, the Latins have offered enthusiastic support to the United States; in other instances, only grudging support has been forthcoming; in other situations, considerable pressure by the United States has been unable to enlist support for many of the nations [12, pp. 47-481.

Latin opposition to the North American "fixation" on communism has at least four major aspects. First, many Latin Americans see the communism issue as primarily a product of the cold war among developed nations. As such, it has little relevance to them; they are more concerned with their own development. They are "profoundly angered" by the fact that it relegates them to a minor position in U.S. foreign policy [12, p. 48]. They feel forced to take positions with which they disagree for reasons they see as faulty. Second, they often see U.S. policymakers categorizing reformers, true social revolutionaries, and moves for national independence as communist threats. Third, the threat of communism has become the major source of direct U.S. intervention in a region in which nonintervention is perhaps the most agreed-upon international goal. Finally, U.S. pressures to be more anticommunist often interfere with Latin American primary goals of development and internal peace. This does not mean that anticommunist appeals necessarily fall on deaf ears. Local Communist parties and other Marxist groups are widely viewed with attitudes that range from mild suspicion to

8

INTRODUCTION

support for death squads to eliminate them. In most nations, the Communist party is a fringe group with only a small following. Although the negative images are not as widespread and are often milder than in the United States, the Soviet Union is widely distrusted in Latin America. Attitudes about Cuba are mixed. Many admire its independence from the United States but fear it as a source or symbol of subversion. On the Left, many condemn it as a Soviet puppet in the same tones they condemn U.S. imperialism. Although there is much concern about U.S. intervention in Nicaragua, Pearson shows that many Central Americans also see the Sandinista regime as a threat to their own countries. Concern about communism is particularly strong on the Right. Anticommunism within Latin America appears to derive from ideological conviction, response to U.S. desires (either voluntary or coerced), and a sense of threat. Threats (real and imaginary) may be perceived as coming from the Soviet Union or Cuba, neighbors such as Nicaragua, or from a variety of internal sources—labor unions, peasant movements, and democratic leftist political parties, as well as Marxist and revolutionary movements. Traditional national conflicts may become mixed with this ideological question. Costa Rica, for example, got along poorly with the Nicaragua of the Somozas and assisted the Sandinistas in their overthrow. But now they do not get along well with the Sandinista regime and have moved closer to the U.S. position. In earlier years, Latin American nations gave support for the U.S. interpretation of the communist threat in the UN and the Organization of American States (OAS), the isolation of Cuba, and the military intervention in the Dominican Republic. In more recent years, with some difficulty the United States has been able to bring about effective support in Central America for its military efforts in Nicaragua and El Salvador. However, the Latin American nations today behave more independently in international organizations, are more mixed in their policies toward Cuba, and provide considerable opposition to the U.S. Central American policy through such mechanisms as Contadora and the 1937 peace initiative of the Central American nations. T o be effective today, anticommunist appeals must ordinarily be tempered with other considerations. Situation

Within the International

Environment

Asymmetry. A third force shaping Latin American perspectives is the region's situation within the international environment. With a f e w exceptions, Latin American states are small to medium in terms of population and, more importantly in the international environment,

PERSPECTIVES THAT MAKE A DIFFERENCE

9

in the size of their economies. For the Latin American nations, historically the most important characteristic of their relationship with the United States has probably been the asymmetry in their economic and military power. With the possible contemporary exception of Brazil, the Latin American nations are so much weaker and poorer that they often have little choice but to defer to the wishes of the Colossus of the North unless they are willing to pay a very high price, as in the case of Cuba. Even Fidel Castro, however, reportedly counseled the Sandinistas not to follow his example. In this book, we see in the article by Story the difficult negotiating position of Mexico when 53 percent of its exports and 62 percent of its imports make up only 6 percent of U.S. trade. The articles by Chernick and Pardo present another clear example—the necessity of Colombia in the face of hard economic times to reverse its recent independent foreign policy course and return to closer adherence to U.S. policy lines. One of Pardo's major conclusions is that the debt crisis changed the bilateral relationship between the United States and Colombia in such a manner as to significantly increase the asymmetry in favor of the United States. This he sees as a reversal of the post-World War II trend toward greater independence on the part of the Latin American nations. Booth argues that "President Reagan . . . has effectively narrowed the policy options of all Central American states. . . . After a decade of relative foreign policy independence from the United States, Costa Rica has retreated in exchange for increased U.S. economic and security aid." Kelly notes the asymmetry in Brazil's relations with its neighbors, all of w h o m are weaker, but argues that there are currently factors constraining the abuse of its advantage. The articles by Booth, Chernick, Pardo, Drury, and Beal also illustrate an aspect of asymmetry often overlooked: the much greater fragility of developing systems. Economic growth, political power, and foreign policy independence all tend to be more tenuous in d e v e l o p i n g nations, making t h e m more v u l n e r a b l e to the international environment and the power of industrialized nations. Both Fleming and Kelly, however, hold out promise that this fragility can be reduced by careful national policies. An indication of the asymmetry of inter-American relations is the long-standing fear of U.S. imperialism—either military or economic. By the mid-1970s, explicit concern with U.S. imperialism, except for the Left, was substantially diminished. However, the invasion of Grenada and Reagan administration policies in the Central American conflicts have renewed and widened concerns about U.S. imperialism. Beal portrays the role of the United States in

10

INTRODUCTION

support of international capitalism in terms that would fit classical economic imperialism. Many writers from both North and South America see a decline in the more open, military forms of imperialism but note that the phenomenon has changed its form rather than its basic nature. Pardo and Booth, for example, note that the United States has experienced a substantial decline in its ability to dictate policy to the Latin American nations and is now less willing to intervene militarily. However, in the debt crisis, the U.S. advantage increased substantially, and "regional" powers such as Colombia had to accept the U.S. position on a wide range of issues. Booth states that when the Reagan administration "sought to restore its vision of the nation's past greatness" in Central America, those nations experienced a loss of sovereignty. Regardless of the term used, it remains clear that the United States and the Latin nations often define their interests differently and that the Latin Americans perceive that the United States commonly uses its considerable resources to impose its own views and support its own interests. To add a note of perspective, Kelly points out the concern of its neighbors with past acts of Brazilian imperialism. Moreover, for Central Americans, the Colossus of the North has historically been Mexico. Interdependence. Because asymmetry is such a powerful factor in inter-American relations, the Latin American nations have long sought means for enhancing their independence. Hence, one change in the international system that Latin Americans have greeted with general enthusiasm is the increasing interdependence among nations. Clearly, this does not mean equal dependence [5, p. 14]. Rather, it means, first, that the United States and the Soviet Union are less able to successfully dictate policy to their allies and dependents; second, that what happens in the world economy shapes the policy of both the superpower and the smaller nations; and third, that smaller nations can at times affect the policies of the major powers. As a consequence, in the 1970s and 1980s a number of Latin American nations with very different internal regimes have grown more independent of the United States [9, p. 13H In this book, Booth emphasizes interdependence in explaining the inability of the United States to achieve many of its goals in Central America. Pearson shows how Honduras used the U.S. dependence on Honduran cooperation in Central America to extract concessions for itself. And Machado notes the highly interdependent nature of the Mexico-U.S. border economy. From the perspective of Latin Americans, interdependence has long been a fact of life. Depending far more heavily than the United

PERSPECTIVES THAT MAKE A DIFFERENCE

11

States on foreign trade and investment, Latin Americans have lived longer and more intimately with the vagaries of the international market. Hence, it is not surprising that the perceptual lens for looking at the international system and the problems of development is different in Latin America than in the United States. Story makes the point, for example, that while the U.S. tends to view Mexico's problems as simply a case of underdevelopment and asymmetry in the size of the Mexican and U.S. economies, many Mexican analysts see the problem through the lens of dependency theory, which would require quite different solutions than the U.S. view would suggest. The growing interdependence of nations has tended to reduce the independence of both developed and developing nations. Kelly's presentation shows the interrelationship between the foreign policy approach chosen by Brazil and the foreign policies of its neighbors, all of whom are smaller. Story, Booth, Chernick, Pardo, Drury, and Beal emphasize the limiting effect that interdependence has on the developing nations. On the other hand, Fleming suggests that careful debt policies can increase the leverage of developing nations over their creditors, and Pearson finds that by withholding cooperation, even a tiny nation such as H o n d u r a s can extract significant concessions from a power such as the United States. Story shows that behind the sometimes harsh public rhetoric between Mexican and U.S. officials, traditional diplomacy is conducted in a much more business-like fashion. Moreover, while the United States is able to influence Mexican policy, Mexico is able to maintain a host of policy positions opposed by its northern neighbor. In the case of Central America, Booth concludes that despite increased influence by the Reagan administration, "U.S. control over Central America as a whole has diminished since the 1960s." While U.S. influence may have declined generally in the last two decades, the degree of i n d e p e n d e n c e exercised by the Latin American nations varies greatly with the size and location of the nation and the international environment. With the growth of its industrial base, Brazil has demonstrated greater independence from the United States and more leadership in its region. The nations of southern South America, farthest from the United States, historically have had more independence, although the destabilization and overthrow of the Allende government in Chile, in which the United States played a role, show that none are b e y o n d U.S. influence. Mexico and the Caribbean, on the other hand, have historically been a special concern of the United States, and have consequently become less independent. Finally, having a scarce resource or good

12

INTRODUCTION

economic times tends to increase independence—as Mexico and Venezuela found when oil prices were high and supplies a problem for consumer nations. On the other hand, Section 2 of this book, on the debt crisis, shows the sharp loss of independence suffered not only by a medium or regional power such as Colombia, but also by the most powerful Latin American nation, Brazil. The Inter-American System. How have the Latin American nations dealt with the issues of asymmetry and interdependence? From the earliest days of independence, there has been a desire to prevent U.S. intervention. However, throughout most of the nineteenth century, problems of nation-building (nationalism, internal disunity, and border disputes) prevented the development of effective policies such as joint action. In 1889, the Pan American movement took organizational form as a means to deal with the problem. Ironically, the original conference was at the instigation of the United States, which has dominated inter-American organizations ever since. Throughout, there has been a tension between, on the one hand, the need of these smaller nations to band together to increase their negotiating power with the United States and, on the other, their need to maintain healthy relations with and on occasion to gain special advantage from the United States through bilateral dealings. When they have acted collectively, the Latin American nations have sought to pool their resources to limit the coercive capacity of the United States or to gain assistance from it [1, pp. 310-12], The inter-American system has gone through three and perhaps four stages. From the First International Conference of American States in 1889 to the Sixth Conference in 1928, there was a sharp divergence between the United States, which preferred to act unilaterally, and the Latin American nations, which wanted a joint mechanism to prevent outside (including U.S.) intervention in their affairs. From then to the end of World War II, there was a "general harmony of interests" [1, p. 3111- In the post-war period, goals again diverged. The primary foreign policy concern of the United States became the cold war, while the Latin American nations maintained their desire to limit U.S. intervention and added the goal of economic development. By the 1970s, a new, more complex pattern was emerging. As Pardo notes, there was a movement toward interAmerican organizations and meetings that excluded the United States, such as the Latin American Economic System (SELA), the UN Economic Commission for Latin America (ECLA), and the Cartagena group. The Latin American nations also sought solidarity with other Third World nations. Although this pattern continues today, collective efforts are still dogged by economic differences,

PERSPECTIVES THAT MAKE A DIFFERENCE

13

traditional national rivalries, and continuing U.S. economic and military dominance. These problems have broken most attempts at regional economic integration and provide constant temptations to seek special advantage through bilateral dealings with the United States. The United States and the European Community are frequently accused of fostering disunity in order to maintain advantage (e.g., [8, p. 4]). Linkages. We generally think of foreign relations as something c a r r i e d on b e t w e e n g o v e r n m e n t s t h r o u g h their official representatives. However, there are a multitude of linkages between governments of one nation and individuals or groups of another, group-to-group linkages, and group-to-individual linkages that profoundly affect foreign relations. Such linkages are extremely important in inter-American relations [2; 3, pp. 92-991. The U.S. ambassador, for example, is usually a key public personality in Mexican-U.S. relations. Similarly, in Honduras, Pearson finds that the close ties of U.S. Ambassador Negroponte and Honduran armed forces commander General Alvarez contributed significantly to Honduras's a c c e p t a n c e of a large U.S. military presence. In Nicaragua, the strong link between the Somoza family and the United States long helped to perpetuate their rule. Beal argues that the Trilateral Commission has had a major impact because of the links it provides among U.S. public and private elites and between U.S. and European policymakers. He also sees strong ties between Brazilian and international elites that have a profound impact on Brazilian domestic and foreign policies. Chernick finds that Colombia's President Betancur (1982-1986) based his foreign policy course in part on the assumption of a strong linkage between Colombian guerrillas and foreign sponsors (Nicaragua and Cuba). Finally, the domino theory often cited by North American policymakers is clearly based on linkage concepts—whether the dominoes fall northward from Central America as President Reagan posits or southward as Colombia's President Betancur apparently feared. The International Monetary Fund (IMF) has long been a major source of international linkage. Never very popular with Third World nations, in the recent international debt crisis it has become a major villain to a wide range of Latin Americans. Because of both its own aid funds and the importance of its approval before creditor nations and the private banks will act, the IMF has played a central role in dealing with the debt crisis. Nations such as Peru that publicly oppose the IMF position become highly vulnerable [6, pp. 283-84]. The Latin American nations have had two particular complaints about the IMF's performance. First, the solution it generally demands

14

INTRODUCTION

requires very hard decisions, which create political problems for w e a k governments and often put the burden on the already most disadvantaged groups of the society. Second, because the advanced industrial nations dominate the IMF, the policies it imposes tend to protect the interests of the developed nations at the expense of the d e v e l o p i n g nations. Versions of these themes are f o u n d in the discussions of Colombia and Brazil by Pardo, Drury, and Beal. The U.S. Federal Reserve Board, because of its coordinating role for U.S. banks and its tendency to follow the IMF and Reagan administration lines, has been viewed in a similar light. The relations between the Latin American nations themselves are not the main focus of this work. However, the articles do cast some light on those relations. Kelly, for example, shows both the historical and contemporary role of Brazil as a power of great importance to all of South America. Pardo examines the idea of a "regional" or "middle" p o w e r and emphasizes the growing importance of interAmerican forums that consciously exclude the United States. The articles on Central America s h o w the continuing i n f l u e n c e of traditional n a t i o n a l rivalries and the p r o b l e m s impeding cooperation.

Conclusions This introduction has emphasized the diversity of Latin American perspectives, the role of cultural and historical factors in shaping them, and the substantial impact of the international environment both in forming and limiting Latin American foreign policies. In different form, all of these concepts appear throughout the book. However, the most recurrent themes come from the last category: the limitations imposed on Latin American policy by the asymmetry of p o w e r and the consequent attempts of Latin American states to gain greater independence. The fact of being small nations with fragile economies in a w o r l d dominated by large powers and a w o r l d economy permeates much of Latin American foreign policy thought and action. The Latin American nations must constantly seek to decrease their o w n vulnerability, satisfy the larger powers, or limit them. T h u s , factors that a f f e c t self-determination, s u c h as development, interdependence, and inter-American cooperation, are of particular importance in Latin American foreign policy. The most important of these is economic development because it is both an almost universal domestic goal and a key foreign policy concern. Whether expressed as hopes, laments, ideology, conscious policy, or

PERSPECTIVES THAT MAKE A DIFFERENCE

15

fortuitous events, these themes run throughout the analyses presented in this book. Very clearly, the United States and the Latin American nations share m a n y c o m m o n values, goals, and institutions, but they also h a v e major differences that are t o o often ignored in the formation of U.S. foreign policy. Perhaps these articles will highlight s o m e of the p e r s p e c t i v e s that a c c o u n t for important policy differences.

References 1. ATKINS, G. Pope. (1977) Latin America in the International Political System. New York: Free Press. 2 CHALMERS, Douglas A. (1972) "Developing on the Periphery." In Yale H. Ferguson, ed., Contemporary Inter-American Relations. Englewood Cliffs, N.J.: Prentice-Hall. Pp. 11-34. 3. DOMINGUEZ, Jorge I. (1978) "Consensus and Divergence: The State of the Literature on Inter-American Relations in the 1970s." Latin American Research Review 12 (No. 1): 87-126. 4. FERRIS, Elizabeth G., and Jennie K. Lincoln. (1984) "Introduction to Latin American Foreign Policy: Latin American Governments as Actors in the International System." In Jennie K. Lincoln and Elizabeth G. Ferris, eds., The Dynamics of Latin American Foreign Policies: Challenges for the 1980s. Boulder, Colo.: Westview Press. Pp. 3-19. 5. LINCOLN, Jennie K. (1981) "Introduction to Latin American Foreign Policy: Global and Regional Dimensions." In Elizabeth G. Ferris and Jennie K. Lincoln, eds., Latin American Foreign Policies: Global and Regional Dimensions. Boulder, Colo.: Westview Press. Pp. 3-18. 6. ROETT, Riordan. (1985/86) "Peru: The Message from Garcia." Foreign Affairs 64 (Winter): 274-86. 7. SCHMIDT, Henry C. (1986) "The 'Campaign Against Mexico': The Public Dimension of Mexican-U.S. Relations, 1982-86." Texas Journal of Political Studies 8 (Spring/Summer): 8-28. 8. SEGAL, Aaron. (1986) "Latins Speaking Same Language." Times of the Americas (October 1), p. 4. 9. VAN KLAVEREN, Alberto. (1983) "El lugar de Estados Unidos en la política exterior Latinoamericana." In Gerhard Drekonja K. and Juan G. Tokatlian, eds., Teoría y Práctica de la Política Exterior Latinoamericana. Bogotá: Fondo Editorial CEREC. Pp. 11941. 10. WIARDA, Howard J. (1986-87) "Misreading Latin America—Again." Foreign Policy 65 (Winter): 135-53. 11. WIARDA, Howard J., and Harvey F. Kline. (1985) "The Latin American Tradition and Process of Development." In Howard J. Wiarda and

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INTRODUCTION

Harvey F. Kline, eds., Latin American Politics and Development, 2nd ed. Boulder, Colo.: Westview Press. 12. WILLIAMS, Edward J. (1971) The Political Themes of Inter-American Relations. Belmont, Calif.: Duxbury Press.

z z z z z ^ z : SECTION 1 ZZZZZZZI

Outside Influence: War, Development, and Self-Determination in Central America

Central America has long experienced foreign—particularly U.S.— involvement. In Nicaragua, U.S. troops intervened in 1857, 1894, 1910, 1912-1925, and 1926-1933, and the U.S. government is now supporting the Contra guerrillas. Foreign support for military action by others has been common—witness the U.S. backing of the 1954 overthrow of the Arbenz government in Guatemala and financing of the Salvadoran government in its war against leftist guerrillas; the aid by Costa Rica and Panama of the Sandinista overthrow of Somoza; and the Cuban and Soviet support of the Sandinista and Salvadoran guerrillas. Central American leaders are also tied to foreign powers by education, business, military, and political interests. Outside of the Left, these links are particularly with the United States—the region's largest trading partner. The economic difficulties of the 1980s have increased the foreign dependence even more. Not surprisingly, foreign involvement is a major concern of Central American foreign policy—whether the goal is to limit it, take advantage of it, or simply survive it. The internal situation of the Central American nations makes handling foreign involvement both difficult and complex. A central goal for all the nations is economic development, a process often accompanied by disruption and disorder. The process is made even more volatile by disagreements over who is to benefit from the fruits of development. Costa Rica, for example, has followed a more egalitarian model, Guatemala a more traditional elitist model. Moreover, not all the governments support expanded literacy and freedom of choice in political as well as economic decisions. It is apparent that civilian and military elites in Honduras and Panama have accepted

17

18

OUTSIDE INFLUENCE IN CENTRAL AMERICA the idea of change and are willing to ride its waves in much the same ways as have the civilian elites of Costa Rica and Venezuela. But their counterparts in El Salvador and Guatemala have not been willing to do so [2, p. 191].

A common Latin American perception is that the process of change and the disagreements over who is to share in its economic and political benefits are at the root of the guerrilla movements in El Salvador, Guatemala, and, earlier, Nicaragua. From this perspective, outside involvement (Soviet or U.S.) is generally a consequence, not the origin, of the conflicts. However, some—particularly those on the Right—agree with the Reagan administration analysis that the guerrilla conflicts are primarily a product of outside agitation. The view of the origins, of course, affects very substantially the nature of the threat perceived and the attitude toward foreign involvement. Self-determination is a major concern of Latin American foreign policymakers. Virtually all regimes, of the Right or Left, strongly oppose outside intervention and limitations on their national sovereignty. The degree to which this is a priority, however, varies greatly from one government to another and in keeping with the congeniality of the restrictions. For example, the Somoza regime long acted as a client state of the United States in exchange for the freedom of the Somoza family to exploit the nation internally. But when the Carter administration pressed for reforms and eventually Somoza's exit before a Sandinista consolidation of victory, the answer was no. For most regimes, self-determination also tends to be a lower priority than economic development. When forced to choose between the health of the economy and maintaining national independence, most governments sacrifice the latter. Cuba is the classic Latin American exception. Even Sandinista Nicaragua, according to a common interpretation, moderated its behavior significantly in the first two years of power to maintain trade and aid from the Western powers. Only after the development of the Contra threat did the regime move in a more radical direction. The articles in this section deal particularly with Latin American perspectives on U.S. involvement in the region and its consequences for peace, development, and national self-determination. In doing so, they show some of the diversity that has characterized academic as well as public debate about the Central American conflicts. John Booth, a political scientist specializing in Central America, begins with a highly critical historical analysis of U.S. policy in the region. He finds that contemporary U.S. policies seriously restrict the options of the Central American nations and destabilize their policy

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19

environment. Nevertheless, the growth of interdependence has increased their self-determination by making the United States relatively less powerful. Central Americans have made concessions to the Reagan administration in the face of intense pressures, but they have also on many occasions successfully avoided U.S. demands. Booth also reflects a fear held by some observers that the massive (by H o n d u r a n standards) U.S. military p r e s e n c e in Honduras damages the future prospects of Honduran democracy. The concern is that it creates the possibility of widening the Central American conflicts to include Honduras, undercuts H o n d u r a n authorities, increases corruption, frightens away private investors, and encourages military intervention [1], On the other hand, Neale Pearson, a political scientist and long time observer of Honduras, is optimistic about the direction Honduras has taken in recent years. He finds that, contrary to Booth's view, Honduras has by and large accommodated successfully to the large U.S. presence and that it has not had a disastrous impact on the nation's nascent democracy. While U.S. policies toward Nicaragua and El Salvador have had a significant impact, Honduras has been able to extract a quid pro quo and retain a degree of political independence. Pearson also finds considerable diversity in Honduran perspectives on the U.S. presence and significant popular support for it. Finally, Marc Chernick, a political scientist working in Colombia, analyzes that nation's attempt to facilitate the end of its own guerrilla war through leadership in seeking peace in Central America and a foreign policy more independent of the United States. Colombian president Betancur (1982-1986) attempted a series of domestic reforms but also followed a foreign policy based on the assumption that the guerrillas were sufficiently influenced by outside forces that "the road to domestic peace ran through Havana, Managua and Moscow." Chernick finds this bid largely unsuccessful, in part because of economic difficulties and U.S. opposition. More important in the failure, however, is that "foreign policy is not a critical variable in the questions of violence and peace in Colombia." The linkages between the Colombian guerrillas and foreign sponsors are too weak to p r o d u c e major long-term changes. Foreign policy cannot b e a substitute for domestic solutions. Chernick also concludes that "Colombia, and many nations like her, has limited economic, military, and political capacity to exercise a role of regional influence; nevertheless, in carefully measured steps, Colombia can still pursue a degree of relative autonomy." Beginning with Nicaragua, the following is a brief review of facts and events that have led to present concerns in Central America:

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OUTSIDE INFLUENCE IN CENTRAL AMERICA

The leftist Sandinistas overthrew the pro-U.S. Somoza government in Nicaragua in 1979; the Carter administration maintained relatively normal if troubled relations with the new regime through the balance of 1979 and 1980, but the Reagan administration saw the Central American conflict as a part of the Soviet threat, and in 1981 authorized a destabilization program, including funding of the Contra guerrillas. In El Salvador, leftist armed resistance to the government spread into rural areas in 1972. In 1980, the guerrilla groups formed a unified military command, the FMLN (Farabundo Marti National Liberation Front), and a broad coalition of civilian political supporters, the FDR (Democratic Revolutionary Front). In 1981, the conflict escalated, and the United States sharply increased its military aid. In 1982, elections were held for a Constituent Assembly, which was led by Roberto D'Aubuisson, widely associated with right-wing death squads. In 1984, the more centrist José Napoleón Duarte of the Christian Democratic Party was elected president with the backing of the United States. H o n d u r a s is the second poorest country of Latin America; however, since 1950, it has experienced rapid political change and in more recent years important social changes. It does not face a significant guerrilla threat. The military ruled from 1972 to 1982, when Roberto Suazo Córdova became president. He was followed by José Azcona del Hoyo in 1986. Honduran cooperation with the Salvadoran and U.S. military efforts began in substantial measure during the Suazo Córdova presidency. Colombia, a democracy with strong elite influence, is dominated by two traditional parties, the Liberals and Conservatives. It has traditionally had a low-profile foreign policy and close relations with the United States. The country has been economically and politically stable since 1957, although it has experienced leftist guerrilla activity of varying intensity since the 1960s. Although not strong enough to overthrow the regime, guerrilla violence has been substantial since the late 1970s. Recent presidents include Alfonso López (Liberal, 1974-1978), Julio César Turbay (Liberal, 1978-1982), Belisario Betancur (Conservative, 1982-1986), and Virgilio Barco (Liberal, 1986-). Betancur pursued a more populist line in domestic policy and a more independent foreign policy than the Liberal presidents mentioned. The Contadora Group was formed in January 1983 to seek peace in Central America. It is composed of Colombia, Mexico, Panama, and Venezuela. By 1987, Contadora had lost much of its role in the peace process to an initiative of the five Central American nations

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21

begun in Guatemala in August 1987 under the leadership of Costa Rican president Oscar Arias. Basic facts such as those presented in the preceding paragraphs will be included in subsequent chapters to assist readers who may wish to have more background information on Latin America in general or on specific Latin American countries.

References 1. FEINBERG, Richard E. (1987) Houston Chronicle (May 15), sec. 1, p. 27. 2. PEARSON, Neale J. (1982) "Some Central American Perceptions and Positions in the Face of Big and Middle Power Politics in the Caribbean." In H. Michael Erisman and John D. Martz, eds., Colossus Challenged: The Struggle for Caribbean Influence. Boulder, Colo.: Westview Press.

U.S. Influence in Central America JOHN A. BOOTH

Critics of U.S. foreign policy often blame the United States for Central America's afflictions, while defenders of the United States fault local factors or subversion from abroad. 1 Indeed, U.S. policy and the immense U.S. economy have long exerted great influence upon the tiny Central American states. However, there are both domestic and international influences upon Central America that U.S. power has not been able to affect. This review of U.S.-Central American relations identifies and clarifies those factors over which U.S. policy has been more and less influential, particularly with regard to the present regional crisis. Great asymmetry marks U.S.-Central American relations. The United States, with roughly ten times the population of Central America and accounting for about a third of the region's imports and exports, looms very large for Central America. The economic capacity, market role, and population of the isthmian nations, in contrast, are not nearly z^ important for the health and well-being of the United States. U.S. capital invested in Central America now constitutes less than 1 percent of U.S. overseas private investment, but has recently averaged about 20 percent of the total investment in the region. U.S. political interest in Central America has risen and fallen according to agendas set largely in the United States. U.S. influence upon the region has changed historically with changes in the ideology, political and economic capacity, and foreign policy tools of the United States, and with the evolution of the international political and economic systems.

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U.S. INFLUENCE IN CENTRAL AMERICA

23

Capacity and Limits and U.S. Influence in Central America All nations have political and economic capabilities and limits that shape their behavior in the international environment. The United States has long had capabilities vastly superior to those of the Central American states. As a major power, the United States has sometimes viewed Central America as a resource and at other times simply disregarded the region. The Central American states have never b e e n able either to effectively manage or to ignore the colossal size, power, and influence o f the United States. Such disparity has generally permitted U.S. foreign policymakers to employ the following tools to advantage in the isthmus: 1. Economic tools: Because of the geographical proximity and the asymmetry between the sizes of the large U.S. and the diminutive Central American markets, isthmian nations have depended heavily upon exporting to the United States. The United States has depended little upon Central American products, b e c a u s e coffee, bananas, sugar, and b e e f are produced in many other places. This disparity has permitted the United States leverage over Central American economic and political elites through the use of quotas and tariffs, as well as investment, price, and commodity quality regulations, which can benefit or injure nations or key economic groups within them. Other important U.S. e c o n o m i c tools have included bilateral assistance programs and U.S. influence over multilateral aid programs. 2. Diplomatic tools: The United States has, in part because of its economic influence, also wielded important diplomatic and political tools in Central America. These include both overt and covert moral, financial, technical, and military support for one side or another in domestic disputes. 3. Military tools: Since at least the mid-nineteenth century, the United States has had both naval and conventional forces either present or available for use in the Caribbean at levels far exceeding the military capacity of isthmian nations. In the twentieth century, U.S. military tools have expanded to include military equipment and munitions sales, loans, and gifts; training; covert operations; airborne operations and support; and even strategic and tactical nuclear capability. Central American nations' capacities to respond to such policy tools have been comparatively weak. Small states, whose overriding

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c o n c e r n is survival, generally operate in the international environment with a narrower margin of safety than the larger powers. Small powers have traditionally had a limited number of potential roles to play vis-à-vis big powers. For example, Rothstein argues that small states have usually attempted to appear insignificant and nonthreatening. They adopt a stance of neutrality, demand recognition of the right to exist, or form alliances with major powers or with other small powers [30, pp. 2-34], Although there have been apparent exceptions (such as armyless Costa Rica's neutrality), Central American states have generally allied with the United States to ensure U.S. cooperation, markets, and assistance and to prevent U.S. military intervention. Rosenau, h o w e v e r , argues that declining international polarization and increased world economic interdependence have recently permitted small states more flexibility to pursue their own goals than during previous decades [28, pp. 239-47]. Today, small states are less p r o n e to follow the traditional "acquiescent adaptation" pattern but are more likely to engage in "intransigent adaptation" (by trying to shape the external environment to their own internal elites' needs), "promotive adaptation" (by seeking a new equilibrium between internal needs and the external environment), or "preservative adaptation" (by seeking to maintain the current internal-external environment's equilibrium). Certain important influences on Central America lie largely outside the control of the U.S. government. 2 Although circumstances and U.S. resources sometimes permit some U.S. influence over these factors, control—the definitive capacity to determine their b e h a v i o r — o f t e n eludes American policymakers. The variables affecting control include: 1. International economic cycles: The world economy is too large and complex to fall under the preponderant control of any single nation. Booms and recessions, commodity price levels, private investment levels (especially by truly multinational industrial and banking corporations), and tourism fluctuate markedly and have profoundly influenced production and social structure in Central America. 2. Other nations' foreign policies: Decisions by other major powers, both allies and opponents, have often lain outside U.S. influence. At various times, the Central American policies and actions of Great Britain, Japan, Germany, Colombia, Mexico, Cuba, Israel, and the USSR have influenced Central American events in ways the United States found inconvenient. 3- Local actors: Regardless of available tools, the United States

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25

has frequently found itself unable to manage people and events in Central America [15, pp. 45-66], Central American history is replete with independent, recalcitrant, or intransigent local actors—whether elites or masses, within or outside regimes—that have acted independently of U.S. wishes.3 Problems of capital flight, intransigent despotism, and nationalism have thwarted U.S. desires in Central America. 4. U.S. political and economic capabilities: The capacity of the United States to act in the international environment varies with both internal conditions (economic health, internal unity, and domestic support for foreign policy) and with external conditions (relative U.S. economic strength in the world economy, the security of key materials and commodities supplies and international markets, the strength of alliances, and U.S. influence within its alliances). The stronger the United States is along these dimensions, the more effective it is likely to be in the international arena. But such factors are, at least in the short and middle run, outside the effective control of the U.S. government. At any given moment, then, U.S.-Central American relations are affected by all these factors, some within U.S. control or influence and some beyond. The autonomy or independence of Central American states varies inversely with U.S. controls over these factors. This article reviews U.S.-Central American relations over four periods—prior to 1945, 1945-1968, 1968-1979, and 1979-1987. During these years there prevailed distinctive U.S. perceptions of the region and of U.S. interests there, as well as of variable national capacities, international constraints, and U.S. policy instruments. The United States and Central America Before 1945 U.S. political and economic capacity outstripped those of all Central America by the early eighteenth century. U.S. economic power, the size of its markets for Central American products, the amount of U.S. capital invested in the region, U.S. military capacity, and the size and presence of U.S. diplomatic missions in the region all expanded substantially from the early nineteenth century until the mid-twentieth century. U.S. private investment in the region, for example, rose from $12 million in 1897 to $202 million in 1929. The world depression caused investment to fall to $121 million by 1936, but it recovered to $173 million by 1943 [11, passim]. Until the early twentieth century, the United States was engaged in an eventually

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successful struggle to supplant Great Britain as the major political, economic, and military presence in Central America and the Caribbean. As Britain and the United States reached a modus vivendi in the region, Germany, Japan, and Mexico arose as troublesome competitors to the United States. Among the factors that caused direct U.S. armed intervention in Central America were German investments there, growing German and Japanese naval power and interest in a second transisthmian canal, Mexican support for Liberal rebels in Nicaragua, and nationalistic local actors like Nicaraguan president Zelaya and anti-imperialist rebel Augusto C. Sandino. In Sandino's case, even extreme military means failed to control the situation. Although the United States did not control Central American events before 1945, U.S. influence grew almost steadily in the region, leading to the following observation by U.S. diplomat Robert Olds: Our ministers accredited to the five little republics. . . . have been advisers whose advice has been accepted virtually as law. . . . We do control the destinies of Central America. . . . Until now Central America has always understood that governments which w e recognize and support stay in power, while those we d o not recognize and support fail [26, p. 191-

Before I860, Central America attracted U.S. attention because of its potential for a transisthmian waterway through either Nicaragua or Panama. The transisthmian canal was wanted to shorten the time and distance between the eastern and western U.S. coasts. Canal fever briefly cooled after transcontinental rail connections were made, but in the late nineteenth century canal fever was rekindled, both by the U.S. need to export burgeoning manufactures and for strategic reasons. The canal was eventually built in a Panama made "independent" by U.S. military intervention, a tool soon employed again to deny Nicaragua a right to build a competing waterway. Another important early U.S. design upon Central America originated with slaveholders who wished to annex the region as slave states. This desire led to such insurrectionist activities as those of William Walker in Nicaragua, whose actions drew the rest of Central America into the National War of 1857. The slavery issue disappeared after 1865, but other issues arose, including a desire for empire. As an 1898 Washington Post editorial observed, A new consciousness seems to have come upon us. . . . The taste of empire is in the mouth of the people even as the taste of blood in the jungle [25, p. 2131.

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27

U.S. investors began to develop many interests in Central America in the late nineteenth century, including railroads and the banana industry they spawned. "Dollar diplomacy" brought aggressive promotion of still more U.S. capital investment in Central America by the Department of State, and also the use of U.S. gunboats, leathernecks, and customs house interventions to ensure the repayment of debts. The racism of U.S. foreign policymakers justified much of this intervention, as illustrated by President Taft's comment that "the whole hemisphere will be ours in fact as, by virtue of our superiority of race, it already is ours morally" [26, p. 17]. U.S. private investment in Central America increased almost seventeenfold between 1897 and 1929. U.S. security interests became increasingly important after 1900. Acquiring the Panama Canal and then protecting both it and its monopoly became critical to U.S. naval power. The rise of German and Japanese naval power and the presence of German investments in Central America helped motivate overt U.S. armed intervention in Nicaragua in 1909 and again during World War I. Fear that U.S. occupation of several Caribbean and Central American nations would isolate the United States in the hemisphere led to the withdrawal of U.S. forces and ushered in an interlude of increased respect for the sovereignty of Latin American states. In the 1940s, the United States began to multilateralize the Monroe Doctrine. During World War II, Central America's armed forces were outfitted and trained by U.S. forces, and Central American Germans were interned in the United States. Anticommunism also played a role in U.S. policy. Even before World War II, U.S. foreign policymakers regarded revolutionary Mexico's support of Nicaragua's Liberal rebels as "bolshevism" and intervened against Sandino in part to contain the movement. Central America changed greatly between the late nineteenth century and 1940. U.S. interests contributed to the process of change, although internal actors played a larger role. Domestic elites, for example, established coffee production, the spread of which displaced rural smallholders, concentrated land ownership, and created a source of power, wealth, and foreign exchange long desired by Central American elites. U.S. interests became heavily involved in the railroad construction that brought many blacks to the isthmus, established the banana industry, created new class relations, and accelerated Central America's integration into the world economy. U.S. diplomats and investors intervened heavily and with great resources in domestic politics—manipulating, backing, opposing, overthrowing, and subordinating local politicians and parties. While

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the United States by no means invented political corruption, U.S. actors often wielded such power that they impeded independent political development and weakened domestic institutions. U.S. financial interventions and decapitalization during the Great Depression retarded economic and public service development. Military intervention in Nicaragua created the National Guard, which established the forty-three year Somoza dynasty. U.S. military aid strengthened Central American armed forces, and this helped perpetuate despotism in the postwar era.

The Cold War: 1945-1969 In the aftermath of World War II, the belief that the ideology, methods, and goals of Soviet communism threatened the security of the United States and the capitalist world became the dominant force shaping U.S. foreign policy. By the 1950s, the world had split into two hostile power blocs. Because direct confrontation between the East and West would be so catastrophic, the competition between the blocs spread into the Third World. Central America and the Caribbean became part of the stage for this drama. The United States generally ignored Latin American calls for aid following the war and turned its attention toward Europe. To contain communism and to continue the multilateralization of the Monroe Doctrine begun during the 1930s, in the late 1940s the United States promoted the formation of the Rio Treaty and the Organization of American States (OAS). The OAS became a vehicle for containing communism with its 1954 Caracas declaration that communist "domination of the political institutions of any American state. . . would constitute a threat to the sovereignty and political independence of the American states" [26, p. 27]. Costa Rica had a short civil war in 1948 because of postwar economic disruption, electoral manipulation, and communist participation in government. Led by José Figueres, the new regime made social reforms (nationalization of banking and insurance and abolition of the army) while removing the communists from power and dismantling much of their base in the unions. When Jacobo Arbenz attempted reforms in democratic Guatemala in 1950-1954, however, the presence of communists in his legally elected government triggered U.S. Central Intelligence Agency (CLA) and United Fruit Company involvement in the invasion and coup that ousted Arbenz. President Eisenhower explained with remarkable candor that Arbenz had "created the strong suspicion that he was

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29

merely a puppet manipulated by the communists. For example [Arbenz's government announced] . . . its intention, under an agrarian reform law, to seize United Fruit Company land" [26, p. 291. The legacy of the 1954 coup has been almost uninterrupted military intervention in Guatemalan politics, degenerating human rights conditions, and high levels of political repression [9, passim; 3, pp. 11-1631. While the Guatemalan governments of Castillo Armas and Ydigoras rolled back Arbenz's reforms, other trouble brewed. A world recession in the late 1950s depressed commodity prices and led to widespread unrest in the Caribbean Basin. In 1959, Fidel Castro's July 26th Movement seized power in Cuba after three years of guerrilla struggle. In addition to providing a model for political dissidents elsewhere in the area, Castro's triumph and rapid conversion to Marxism-Leninism and alliance with the Soviet Union sounded a strong warning to both U.S. and Central American leaders—"Reform or be overthrown!" The Cuban revolution helped spawn two new institutions to prevent unrest: the Central American Common Market (CACM) and the Alliance for Progress. Both were seen as complementary means for undermining the appeal of socialism by making capitalism the means by which the benefits of rapid economic growth would "trickle down" to the poor. The common market idea had circulated in Central America in the 1950s under the aegis of the United Nations' Economic Commission for Latin America (ECLA). The United States opposed certain ECLA proposals (integration industries, import-substitution industrialization, and delaying of tariff liberalization) and convinced Central American policymakers to remove many such features from the I960 CACM treaties [19, pp. 3-21], In 1961, the United States embarked upon the Alliance for Progress, which encouraged industrialization in Central America by aggressively promoting the investment of both public and private Central American and U.S. capital. According to U.S. Agency for International Development (USAID) official Frank M. Coffin, the U.S. goal for the CACM was "to open u p the maximum opportunity for domestic private initiative and enterprise and to insure that foreign private investment, particularly from the United States, is welcomed and well treated" [26, p. 44). The CACM and Alliance for Progress greatly accelerated economic growth and industrialization in Central America. Regionwide, foreign investment rose from $388 million in 1959 (3.8 percent in manufacturing) to $755 million in 1969 (30.8 percent in manufacturing) [23, pp. 14-15]. The effects of this investment surge

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included marked increases in Central American gross domestic products (GDP). Real GDP rose from an annual average of 1.7 percent growth in the 1950s to 2.7 percent growth per annum in the 1960S [7, passim]. The lack of integrative industries soon unbalanced investment within the CACM and led to the Salvador-Honduras conflict of 1969. Moreover, industrialization was generally capitalintensive and created few new jobs, so that unemployment grew throughout the 1960s and 1970s. Income and wealth distribution, rather than improving as predicted in the trickle-down approach, became less equal except in Honduras and Costa Rica. In case e c o n o m i c growth should not suffice to contain the possible appeal of socialism, the United States also stepped up military aid with an expanded Military Assistance Program, new counterinsurgency training programs, and increased training for Central Americans at the U.S. Army's School of the Americas in the Panama Canal Zone. T h e Central American Defense Council (CONDECA) was formed in 1964 to coordinate activities of Honduran, Guatemalan, and El Salvadoran militaries against internal subversion and to standardize their training and equipment under U.S. direction. The CIA developed close ties to the AFL-CIOsponsored American Institute for Free Labor Development, became involved in labor and peasant movements, and developed policetraining programs with USAID. This campaign helped professionalize Central American militaries, strengthened their ability to control political participation, and increased political violence in Central America. While the United States did not introduce violence to the region, heavy doses of U.S. training and increased police-military capacity preceded marked increases in the number of civilian deaths in counterinsurgency campaigns and murders by death squads made up of security personnel. Both phenomena developed first in Guatemala in the late 1960s, where these aid programs had first been applied in the late 1950s. Counterinsurgency brutality became a hallmark of the Nicaraguan National Guard in the early 1970s, and b o t h counterinsurgency and death squads began to claim thousands of lives in El Salvador in the late 1970s. The United States acted more drastically in several cases. The CIA organized and trained in Nicaragua the exile army that invaded Cuba at Playa Giron in the abortive 1961 effort to overthrow Castro. 4 In 1965, Lyndon Johnson sent 20,000 marines into the Dominican Republic to crush a reformist revolt staged by social democrat Juan Bosch. The pliable OAS gave a post-facto blessing to the invasion, and CONDECA troops helped occupy the Dominican Republic. In

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31

the late 1960s, U.S. CIA and military advisers trained and advised Guatemalan security forces in the extensive counterinsurgency operation against Marxist guerrillas 14, pp. 195-2251. This operation so decimated the insurgents that it took them a decade to recover. In sum, during the cold war era, U.S. policy toward Central America f o l l o w e d a Manichean c o n c e p t u a l s c h e m e in w h i c h anticommunism—political, military, and economic—took p r e c e d e n c e over other concerns. Development efforts under the Alliance for Progress came as a function of the containment of communism. U.S. ability to coerce its Central American neighbors was considerable, and the United States resorted to force when local actors proved recalcitrant (for example, Guatemala in 1954). The astonishing and irreversible breach o f bloc discipline in Cuba in 1959 r e i n f o r c e d U.S. policymakers' determination to e n f o r c e discipline on the rest of the Caribbean Basin nations.

Retreat from the Cold War: 1969-1979 Major c h a n g e s in the international system and in the political, economic, and military capacities of the United States had occurred by the time the Nixon administration came to Washington in 1969. U.S. capacity to influence the international environment had declined in important ways, and awareness of that change grew in the mid-1970s [28, p. 245]. If the United States had b e c o m e weaker and less able to maintain discipline within its alliance bloc, so too had the USSR [20, pp. 30-56]. World communism no longer appeared to b e the Moscow-dominated juggernaut o f the 1950s. Under these altered circumstances, the Nixon-Ford and Carter administrations substantively altered the U.S. perception of the international arena by concluding that the world was no longer bipolar but multipolar. This reduced to s o m e degree the perception o f threat from the Soviet Union and permitted improved relations b e t w e e n the two major powers. T h e s e c h a n g e s affected U.S. foreign policy toward Central America only gradually, b e c a u s e Central American policy was a minor issue to which little attention was devoted. Only during the Carter administration did Central American c o n c e r n s attract sufficient direct attention to suffer dramatic swings. T h e Carter a d m i n i s t r a t i o n a d d e d to the c h a n g i n g p e r c e p t i o n s o f the international environment a new twist—the Trilateral Commission's belief that the stability of the international e c o n o m i c and political environment would b e improved by an increase in social justice in

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the Third World. Carter argued that the United States and the industrial West lacked the capacity to police world political stability, and that successful struggles for social justice against repression could provide a useful way to contain pro-Soviet communism. The Carter administration's human rights policy orientation, therefore, did not e s c h e w containment of communism, but a p p r o a c h e d containment in a more sophisticated manner than had previous administrations. It recognized that supporting repressive regimes in order to block reforms by moderates would likely increase, rather than decrease, instability and the potential for radical reforms pushed by pro-Soviet elements [16, pp. 60-57], In the real world of Central America, the growing social and economic inequality was hidden from economists and policymakers by good aggregate growth statistics. Brought about by the CACMAlliance for Progress industrialization, the inequalities generated severe sociopolitical strains in the early 1970s. OPEC's oil embargo and price increases made these strains much more severe after 1973. The sharp decline of real working-class wages that began in 1973 increased labor and political mobilization throughout Central America. Governments' responses to this popular mobilization varied drastically: Costa Rica and Honduras permitted real wages to rise to recover pre-1973 purchasing power; Nicaragua, Guatemala, and El Salvador repressed labor organization, increased regime terror against opposition elements, and refused to let real wages recover. Toward the end of the 1970s, coffee prices plunged and e n d e d a short period of relative prosperity. As the Nicaraguan insurrection grew and disrupted industry and intraregional trade in 1978-1979, other Central American countries s u f f e r e d lost production and capital flight, as nervous investors sought more secure places for their wealth [6, passim]. The Nixon administration paid scant attention to Central America. Nixon announced a U.S. determination to reduce direct participation in counterinsurgency and to provide necessary economic and military aid, with the region's nations assuming principal responsibility for their own defense [26, p. 72], The United States had b e e n heavily involved in training and equipping the Guatemalan armed forces for the counterinsurgency campaign of the late 1960s, so that high levels of aid continued to flow to Guatemala. There is evidence that the Nixon administration urged Guatemalan security forces to control their n u m e r o u s death squads in the early 1970s, but to little effect [4, pp. 198-2031. The widening ripples of unrest elsewhere in Central America and in Chile p o r t e n d e d potential trouble in Latin America that the

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administration could ill afford as it tried to extricate itself from Vietnam. Therefore, while developing détente with the Soviet Union, the Nixon administration continued containment of communism in Latin America. Aid levels to Central America in the early 1970s changed little from the 1960s unless a crisis arose. The U.S. government arranged a visit with President Nixon in Washington for Anastasio Somoza Debayle during a 1971 Nicaraguan crisis and helped Somoza weather another crisis in 1972. In the wake of the December 1972 Managua earthquake, U.S. troops accompanied CONDECA forces in Nicaragua to keep order after the National Guard disbanded. Rising opposition activity in 1973 brought sharp increases in U.S. arms sales to Nicaragua (from $272,000 in 1972 to $2,252,000 in 1973) and military assistance (from $581,000 to $1,050,000). U.S. aid and arms sales to El Salvador roughly quadrupled in 1975 after major guerrilla groups and two large popular front organizations (BPR and FAPU) surfaced [6, Table 7J. Such holding actions momentarily strengthened those regimes by reinforcing their armed forces, which in turn defrauded opposition coalitions out of electoral victories in Guatemala and El Salvador. The Carter administration inherited a Central American whirlwind sown in previous epochs and fed by events outside U.S. control. Carter's and Congress's human rights policies fit within Nixon's concepts of détente and multipolarity. However, coming as they did at a moment of extreme internal stress in several isthmian countries, the application of the human rights policies to Central America had unexpected consequences. In Nicaragua, for example, where sociopolitical tensions were the most severe, the Carter human rights policy deprived Somoza of his main external prop and encouraged his opponents to believe that the United States might let them win. Actual aid reductions were nominal at first, but by 1979 Nicaragua had been cut out of the foreign assistance budget, even though money already "in the pipeline" from previous budgets continued to be delivered [5, pp. 128-130], The impact of this policy change was largely symbolic or psychological, bolstering the opposition's spirits and weakening the resolve of the regime. 5 Sanctions did little to improve Nicaraguan human rights performance, however, because Anastasio Somoza Debayle and the National Guard ignored the guidelines and even mounted a rear guard lobbying effort in the U.S. Congress. The United States found itself operating in the late 1970s in a Western Hemisphere vastly different from that of the 1960s, when discipline within the Western bloc was high. A variety of factors

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reduced U.S. influence: the increased number of smaller states in the OAS, the new economic weight of Mexico and Venezuela as major oil exporters, Brazil's growth into an important industrial and political force in the region, the diminished capacity of the United States within the hemisphere, and the growth of support for nonalignment among Latin American states. Thus, Costa Rica and Panama were able to support actively and rather openly, and Mexico and Venezuela somewhat less actively, the anti-Somoza Nicaraguan insurgents in 1977-1979. The OAS, led by the Andean Group nations and Costa Rica, repeatedly criticized and censured the Somoza regime for its human rights barbarities. When, during the final months of the Nicaraguan insurrection, President Carter proposed that the OAS send a peacekeeping force to occupy Nicaragua, the proposal was rejected. Thus, the inter-American system had deteriorated seriously over the previous decade, so that the United States could not count on the organization to carry out the U.S. will. The Carter human rights policies also encouraged revolutionary opposition to the Romero regime in El Salvador. The Salvadoran opposition grew steadily in the late 1970s, as the turmoil in Nicaragua broadened into a popular insurrection. It is impossible to assess whether the psychological boost of removing the United States as a potential enemy was more important to the Salvadoran insurgents than was the example of the Sandinista victory in Nicaragua, although both were important. When the FSLN (Sandinista National Liberation Front), to which the Carter administration had been strongly opposed, came to power in Nicaragua, U.S. foreign policy makers decided that the United States could not tolerate "another Nicaragua" in the region. However, rather than revert immediately to the containment style of previous administrations, Carter chose to support the reformist October 15, 1979 coup d'etat that ousted Romero and attempted ambitious social reform. The progressive junta included much of the Romero regime's opposition [24, chs. 1, 6]. Carter's reformist strategy failed, however, w h e n the military Right and the economic oligarchy captured control of the junta in the early months of 1980. Just as Anastasio Somoza had proven intransigent and untrustworthy in Nicaragua during the last two years of his regime, so did the Salvadoran oligarchy and armed forces in late 1979 and early 1980. Strenuous U.S. efforts to secure collaboration of the military and the economic oligarchy in social reforms and human rights failed [2, pp. 83-1651. The military used the agrarian reform program to terrorize peasant leaders, and oligarchyfinanced death squads slew thousands. This failure of reforms and continued repression s o o n drove key moderates out of the

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government and into the rebel opposition. The FDR-FMLN coalition had formed by April 1980.

Return to the Cold War?—After 1 9 7 9

As 1979 waned, President Carter confronted a grave dilemma. The principles of his human rights and social justice emphasis in foreign policy were being undermined by events both abroad and at home. The 1980 race for president was underway, and the very conservative and hard-line anticommunist Ronald Reagan appeared likely to be Carter's major challenger. Reagan was laying the "loss" o f Nicaragua at Carter's feet and attacking him for insufficient toughness in El Salvador. The agony of the U.S. hostage crisis in Iran also dragged on, providing another pretext for attacking Carter's foreign policies. Indeed, as the campaign continued, Reagan seemed to have tapped a national mood of increasing conservatism [14, pp. 1-91. When intransigent military and civilian elites refused to reform, President Carter jettisoned in El Salvador the human rights and social justice goals that his administration had pursued, however maladroitly, in Nicaragua [8, p. 326; 5, pp. 129-1301. The United States,in fact, sharply increased assistance to the Salvadoran junta after it had been captured by the Right and its reformers had been purged in early 1980 [1, passim; 2, chs. 5-7; 24, chs. 1, 61. Although human rights conditions actually grew much worse in 1980, reaching over 1,000 deaths per month, U.S. military aid rose from nothing in 1979 to $5.9 million in 1980 and to $35.5 million for the 1981 budget, the last formulated by Carter [26, p. 244], In contrast to its hard-line policy in El Salvador, the administration retained some optimism about Nicaragua, where relations remained fairly good. In the words of Viron Vaky, assistant secretary of state for Inter-American Affairs, "I think that ball game is still on there" [26, p. 134]. Ronald Reagan defeated Jimmy Carter and took office in January 1981, having already clearly stated that he viewed the turmoil in Central America as a direct Soviet and Cuban threat to the security of the United States. Secretary of State Alexander Haig made this new view amply clear in a NATO briefing on February 19, 1981: A well-orchestrated communist campaign designed to transform the Salvadoran crisis from the internal conflict to an increasingly

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internationalized confrontation is under way. With Cuban coordination, the Soviet bloc, Vietnam, Ethiopia and radical Arabs are furnishing at least several hundred tons of military equipment to the Salvadoran leftist insurgents. . . . Our most urgent objective is to stop the large flow of arms through Nicaragua into El Salvador. We consider what is happening is part of the global Communist campaign coordinated by Havana and M o s c o w to support the Marxist guerrillas in El Salvador. . . .[W]e will not remain passive in the face of this Communist challenge, a systematic, well-financed, sophisticated effort to impose a Communist regime in Central America. . . .It is a threat, in our view, not just to the United States but to the West at large [17, p. 217].

Reagan immediately escalated U.S. military and economic aid to El Salvador to levels that dwarfed Carter's increases: $81 million in 1982 versus $35.5 million in 1981. Fifty-five military advisers were sent to El Salvador, and the United States began to train Salvadoran troops in Panama, the United States, and Honduras [26, p. 2591. The administration pressed for and helped run a Constituent Assembly election in El Salvador in 1982 and in 1984 supported Christian Democrat José Napoleón Duarte's bid for the presidency. By 1985, U.S. aid to El Salvador had topped $1 billion, and military assistance was more sophisticated than ever before. In 1981, President Reagan authorized a "destabilization" program (an illegal proxy war 6 ) against Nicaragua by CIA-trained exSomocistas, mercenaries, and volunteers known as Contras. By late 1985, the Contra war had grown to include some 15,000 counterrevolutionary troops of the Frente Democràtico Nicaraguense (FDN) and four other groups, including some disaffected Sandinistas. Operating out of Honduras and Costa Rica and in the interior of Nicaragua, the Contras had killed about 4,000 Nicaraguans, greatly damaged oil storage depots and pipelines, mined Nicaragua's harbors, seriously disrupted food and coffee production in the north, and forced the regime to raise a large army by means of an unpopular draft. Despite U.S. congressional prohibition, in 1984 the National Security Council directly aided Contra war efforts and helped the anti-Sandinistas raise private funds. The operation, however, failed to topple or even to weaken significantly the Sandinista regime. 7 The United States suspended its own economic assistance to Nicaragua in 1981, sought to cut off international credits, and in 1985 embargoed U.S. trade. The civilian regime that came to power in Honduras in 1981 was seriously weakened by large increases in U.S. military assistance that ballooned the role of the armed forces [29, passim]. U.S. strategy was

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to convert Honduras into a military counterweight to Nicaragua through U.S. trained troops and greatly expanded U.S.-accessible facilities Qanding strips, training bases for Honduran and Salvadoran forces, radar installations, and supply dumps). Joint, almost continuous U.S.-Honduran maneuvers have been underway since 1983, with between 1,000 and 8,000 U.S. troops in Honduras at any given moment. The United States sent two fleets to the Central American coasts in August 1983 and has made numerous low-altitude reconnaissance overflights of Nicaragua. The maneuvers and facilities would greatly aid any direct U.S. military intervention in the region. U.S. materiel in Honduras has also benefited the anti-Sandinista forces. The Reagan administration has repeatedly requested the resumption of military, aid to Guatemala, which had been suspended in 1978 because of human rights abuses. Guatemala's growing economic hardships led the military regime of General Mejia Víctores to begin returning power to civilians with a 1984 constituent assembly election, followed by November and December 1985 national elections won by moderate Christian Democrat Vinicio Cerezo. Most Guatemalan political actors and spokesmen for the Reagan administration viewed a return to constitutional civilian rule a key to the renewal of U.S. military assistance and large increases in economic aid. 8 Costa Rica has also been persuaded to join in the "containment" of Nicaragua through membership in the U.S.-inspired Central American Democratic Community, along with El Salvador and Honduras. Costa Rica has also been the base of the anti-Sandinista exile movement, the Alianza Revolucionaria Democrática and its military forces, as well as some 2,500 troops of the FDN. U.S. military assistance to Costa Rica escalated sharply in 1984 and 1985. In 1985, the United States began training Costa Rican Civil Guard units in counterinsurgency and other military techniques. Finally, the U.S. invasion of Grenada in October 1983 suggested to many observers an implicit threat to Nicaragua, a test of deployment and tactics for a possible U.S. invasion of Nicaragua, or a trial balloon for domestic reaction to such an operation.

Inventory of Recent U.S. Policy Successes and Failures in Central America What have been the effects upon Central America of U.S. policy since 1979? On the side of policy successes (i.e., instances in which

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the United States achieved its goals, regardless of the ethical merits of particular policies) one may advance the following list: 1.

2.

3.

4.

5.

6.

7.

The rapid increase of U.S. aid to the Salvadoran government since 1980 saved the junta and subsequent governments from defeat by the FMLN-FDR. Continued U.S. assistance has stalemated the FMLN offensive and prevented political settlement of the war. Further U.S. support and encouragement also brought about the 1982, 1984, and 1985 Salvadoran elections and installed the Duarte government. Although parties representing major segments of the democratic Center and Left were effectively excluded by violence, the elections helped legitimize the Salvadoran regime for U.S. domestic purposes and thus facilitated increased U.S. aid [18, pp. 93-152], Since the 1982 Salvadoran election, the continued political pressure and economic assistance of the United States have tenuously held together the bitterly antagonistic coexistence of Christian Democrats, right-wing parties, and armed forces—further enhancing the apparent legitimacy of the Salvadoran regime. Increased U.S. intelligence and air reconnaissance and increased Salvadoran capacity to conduct aerial attacks on guerrilla-held zones have shifted the military initiative toward the armed forces and forced the FMLN to reduce some of its rural military operations. Since 1981, the Reagan administration has sharply slowed or reversed Nicaragua's economic recovery and socioeconomic reforms (with the apparent exception of the agrarian reform) by using the Contra war, a credit boycott, and the economic embargo. By 1985, the war had forced Nicaragua to increase its military spending to almost half of its budget and had reduced the standard of living of most Nicaraguans. The United States has also succeeded in polarizing the isthmus along East-West lines. Honduras, El Salvador, Costa Rica, and to a lesser extent Guatemala have aligned with the United States, isolating revolutionary Nicaragua. The United States has financed Honduras's military buildup and has encouraged harsh anti-Nicaraguan rhetoric, especially by Honduras and Costa Rica. President Reagan, too, has effectively narrowed the policy options of all Central American states. Heavy U.S. pressure on El Salvador, Honduras, and Costa Rica has brought them together in the Central American Democratic Community.

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After a decade of relative foreign policy independence from the United States, Costa Rica has retreated in exchange for increased U.S. economic and security aid [27, passim], 8. The Ríos Montt regime in Guatemala reversed its predecessor's policy of rejecting U.S. assistance. In response to U.S. demands and international criticism, Ríos curtailed human rights violations in urban Guatemala. (Human rights abuses escalated sharply, however, in rural areas, where the army pursued guerrillas in the Indian highlands [32, pp. 1419; 9, pp. 11-18, 46-61], 9. Guatemala's President Ríos Montt was overthrown in August 1983 by General Mejía Víctores with the apparent foreknowledge and approval of U.S. officials, if not their active collaboration. Soon afterward, General Mejía announced a policy of closer cooperation with the United States, sought renewed U.S. aid, and conducted the 1984 and 1985 elections that reestablished a civilian government in January 1986. 10. In August 1984, Nicaragua announced that it accepted the terms of a draft Contadora treaty already initialed by the other four Central American nations. The United States, however, then persuaded Costa Rica and Honduras to withdraw their agreement and introduce additional conditions that scuttled the treaty.9 In contrast to these policy successes, which of its goals has the United States not been able to carry out in Central America since 1979? The list is lengthy: 1.

2.

3.

Despite its massive economic aid to El Salvador, the United States has been unable to gain the Salvadoran elite's cooperation to stem capital flight. The Salvadoran economy has continued to decline not merely due to FMLN sabotage, but because the capital taken out of the country since 1979 has apparently well exceeded the amount of aid the United States has poured in. The United States has had but modest success in promoting improvements in the human rights performance of El Salvador. Death squad activity has been curtailed substantially, but civilian casualties from military operations have risen, celebrated cases involving U.S. citizens have not been solved, and almost no one has been punished for human rights violations [22, pp. 337-340]. The United States has had limited or no success in

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promoting socioeconomic reforms in El Salvador to address the roots of insurgency. The Constituent Assembly, for example, legally dismantled the most critical parts of the agrarian reform program [22, pp. 286-324]. 4. The United States has been unable to effect a defeat of the FMLN by the Salvadoran armed forces. Only with difficulty were Salvadoran forces persuaded to follow recommended tactics. Nor has U.S. assistance significantly impeded the FMLN's ability to obtain arms, whatever their precedence. 5. Strenuous U.S. efforts for four years have failed to create a workable governing coalition (one that could stand alone or hold itself together without U.S. aid and pressure) between El Salvador's Christian Democrats and the far Right. Determined U.S. efforts have neither established meaningful civilian control over the armed forces nor restored any semblance of rule of law. 6. The United States was able to obtain little more than a cosmetic improvement in the human rights performance of the Rios Montt and Mejia Victores governments of Guatemala, except for the period before the 1985 election. Though lower in 1985 than under the Lucas Garcia regime (1978-1982), levels of deaths and disappearances in late 1985 remained higher than they had been in 1978 when U.S. military aid to Guatemala was cut off because of human rights abuses [9, pp. 46-62], 7. The United States has been unable to topple the Sandinistas from power in Nicaragua, nor to force them to negotiate with the Contras. Indeed, many observers believe that the Contra war has strengthened both the FSLN and its popularity among certain Nicaraguans. 8. The United States failed to disrupt Nicaragua's November 4, 1984 national elections, despite strenuous efforts to persuade moderate parties to withdraw and a vigorous publicity campaign to discredit the election. The election, in which the FSLN won 67 percent of the vote with a 75 percent turnout, probably increased both the internal and external legitimacy of the Nicaraguan revolutionary government [21, passim], 9. The United States has failed to convince important U.S. allies in NATO and in the OAS that the Sandinistas in Nicaragua constitute a significant threat to Western security, or that the FMLN-FDR opposition in El Salvador is an illegitimate and truly security-threatening movement. In the cases of Mexico and Venezuela, this discrepancy in perception of the

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problems of the Central American region is the more remarkable, becausc both lie closer to the isthmus and are militarily weaker than the United States [12, passim], 10. U.S. hostility has forced Nicaragua to depend much more heavily u p o n the USSR and other Eastern bloc nations, although Nicaragua has done this far less abruptly than did Cuba in 1959-1961. Nicaragua retained much more support from other Western nations than did Cuba six years after Castro came to power, although Nicaragua's Western support had ebbed somewhat by late 1985. 11. Honduran democratic performance has been very frail, and a grave constitutional crisis almost disrupted the 1985 national election. Continued civilian rule in Honduras a p p e a r e d to be threatened by an i m p e n d i n g severe economic adjustment (and potential popular unrest) thrust u p o n the incoming administration by the International Monetary Fund in early 1986. 12. The Reagan administration's failure to win public, media, and congressional support for the expanded U.S. participation in Central America in 1981-1983 led to the establishment of the Bipartisan National Commission on Central America. The commission's 1984 report attempted to validate the administration's Central America policies. However, a majority of the commission repudiated the administration's efforts to relax human rights standards, and the report failed to rally either the media or congressional support the White House sought. One important reason for the Reagan administration's decidedly mixed record is that U.S. power and influence in the region are relatively weaker than they were during the Eisenhower and Kennedy years. The United States is less able to compel even the symbolic cooperation of its NATO allies. OAS members such as Mexico and Venezuela, with their oil reserves, and Brazil, Argentina, and Mexico with their huge debts, now command the attention and cooperation of m a n y other Third World nations, of private and public international bankers, and of many governments. These middlerange powers now neither share the bipolar world view of Mr. Reagan nor feel compelled to cooperate with the United States when their perceptions of their o w n interests differ from those of U.S. foreign policymakers. Thus, Latin American nations such as the Contadora G r o u p 1 0 have sought to mediate the conflicts in the region rather than to follow the United States' policies.

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congressional skepticism within the United States. T h e lingering suspicions a b o u t administration intentions, reminders o f Vietnam, v i g o r o u s press scrutiny, and strong l o b b y i n g against increased involvement by an extensive network of opponents have effectively raised the domestic stakes for the administration should it wish to escalate further. Although the administration has rather skillfully h a n d l e d c o n g r e s s i o n a l o p p o s i t i o n to i n c r e a s e d i n v o l v e m e n t , Congress has refused to supply all the military aid requested since 1982 and might well repudiate a major escalation.

Conclusions U.S. control over Central America as a w h o l e has diminished since the 1960S, even though the Reagan administration has substantially increased its influence over several countries. The long-term decline in U.S. influence has c o m e about b e c a u s e the United States is a relatively less powerful nation today than it was in the 1960s. The world in which it operates has changed dramatically. T h e Reagan administration has sought to restore its vision of the nation's past greatness b y rebuilding its military might and by increasing efforts to i n f l u e n c e events in Central America and the Caribbean. Intense pressure on the governments of Honduras, El Salvador, and Costa Rica has substantially i n c r e a s e d American influence o v e r those governments, but the long list of frustrated U.S. goals cited above indicates that important sociopolitical forces within e v e n its most dependent Central American allies still elude U.S. control. Can the United States further strengthen its influence in Central America? T h e prospects s e e m mixed in the a b s e n c e o f a dramatic escalation o f the U.S. use o f armed force. T h e United States cannot engineer reforms in Central America without the willing cooperation o f local elites a n d will remain u n a b l e to bring about either the stabilization or c o n t a i n m e n t o f popular revolutionary m o v e m e n t s without such reforms. D o the military and e c o n o m i c resources o f the United States permit a definitive reassertion o f U.S. h e g e m o n y over the Central American isthmus? T h e United States certainly has the e c o n o m i c and military capacity to dominate all o f Central America b y f o r c e — if it could unambiguously dedicate its resources to the task. Realism, h o w e v e r , demands skepticism about the willingness o f the United States to introduce combat troops into El Salvador or Nicaragua. Military intervention's costs to U.S. domestic tranquility and to the electoral future o f the Republican party could b e high, public

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support for the simple and " c h e a p " G r e n a d i a n invasion notwithstanding. Neither the public nor the Congress appear to perceive enough of a security threat in Central America to rally behind a U.S. invasion. Direct U.S. intervention in either country would require very large numbers of troops, cost many lives on both sides, take years, and risk generalizing conflict across international borders. It would concentrate U.S. interest, military resources, and diplomatic energy upon Central America to the detriment of its attention to the Middle East, the Philippines, South Africa, and the Soviet Union. Such costs and other interests of the United States appear to make direct U.S. combat involvement in either El Salvador or Nicaragua unlikely—if the situation is perceived in these terms by the Reagan administration. What can the United States do in Central America? U.S. assistance to El Salvador can continue to sustain the regime and prolong the conflict there. Continued U.S. resistance to negotiations can also indefinitely block a political solution. Unable to topple the Sandinistas, the United States can continue to undermine the Nicaraguan e c o n o m y and harass the regime so as to w e a k e n the social and economic reforms that benefit the poor, diminish the political space of the opposition, radicalize the FSLN leadership, and progressively isolate the Sandinista regime from the West. On the positive side, the United States could, gradually and with some difficulty, promote social justice and integration through diplomacy, negotiations, and carefully crafted aid programs. Finally, sincere U.S. support for peace negotiations could contribute significantly to a reduction in tensions and conflict in Central America.

Notes 1. This is a revised version of a paper presented at the Latin American Studies Association meeting in Mexico City in 1983. My thanks to Dennis Gilbert and Robert Biles for comments on that paper. 2. Falcoff uses this point to exculpate the U.S. for Central American problems [15, pp. iii-v], 3. Examples include the Arbenz government in Guatemala, Salvadoran and Guatemalan regimes that refused U.S. aid rather than comply with U.S. human rights demands, and such Nicaraguan regimes as Benjamin Zeled6n and Augusto C. Sandino. 4. The concept of the Reagan administration's anti-Sandinista Contra war bears more than a passing resemblance to the Bay of Pigs invasion. 5- For example, see Somoza's own comments on the impact of U.S. policy in [31, ch. 17].

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policy in [31, ch. 17]. 6. The administration's support for the Nicaraguan counterrevolutionary forces appears to violate the Neutrality Acts, the charters of the United Nations and the Organization of American States, and the Rio Treaty. 7. This conclusion is based on the author's interviews with numerous Nicaraguan officials and U.S. diplomats in August 1983, November 1984, and August 1985. See also New York Times, November 28, 1983, p. 11. 8. Based on author's interviews with U.S. diplomats and advisers and with Guatemalan officials and political observers in Guatemala, SeptemberOctober 1985. 9- New York Times, September 23, 1984, p. 1; September 25, 1984, p. 6; October 2, 1984, p. 1; February 14, 1985, p. 310. Mexico, Panama, Colombia, and Venezuela.

References 1. BALOYRA, Enrique. (1983) "El Salvador: Civil War, Actors and Coalitions." Paper presented at the Latin American Studies Association meeting, Mexico City (September 28-October 1). 2. BALOYRA, Enrique. (1982) El Salvador in Transition. Chapel Hill: University of North Carolina Press. 3. BLACK, George, with Milton Jamail and Norma Stoltz Chinchilla. (1984) Garrison Guatemala. New York: Monthly Review. 4. BOOTH, John A. (1980) "A Guatemalan Nightmare: Levels of Political Violence, 1966-1972." Journal of InterAmerican Studies and World Affairs 22 (May). 5. BOOTH, John A. (1985) The End and the Beginning: The Nicaraguan Revolution. 2nd ed. Boulder, Colo.: Westview Press. 6. BOOTH, John A. (1982) "Toward Explaining Regional Crisis in Central America: Socioeconomic and Political Roots of Rebellion." Paper presented at the 44th International Congress of Americanists, Manchester, England (September 6-10). 7. BOOTH, John A. (1984) "'Trickle-up' Income Redistribution and Development in Central America during the 1960's and 1970's." In Mitchell A. Seligson, ed., The Gap Between Rich and Poor: Contending Perspectives on the Political Economy of Devèlopment. Boulder, Colo.: Westview Press. 8. BOOTH, John A. (1984) "Revolution in Nicaragua: Across a Frontier of History." In D. E. Schulz and R. H. Graham, eds., Revolution and Counterrevolution in Central America and the Caribbean. Boulder, Colo.: Westview Press. 9. BOOTH, John A. et al. (1985) The 1985 Guatemalan Elections: Will the Military Relinquish Power? International Human Rights Law Group, Washington Office on Latin America, Washington, D.C. (December). 10. BROWN, Seyom. (1983) The Faces of Power. New York: Columbia University Press.

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Transnacionales en Centroamérica. Mexico City: Siglo XXI. 12. DEL AGUILA, Juan. (1982) "Mexican, Cuban and Venezuelan Objectives in Central America: Policies and Constraints." Paper presented at the 44th International Congress of Americanists, Manchester, England (September 6-10). 13. DUGGER, Ronnie. (1983) "Ronald Reagan and the World." Texas Observer (November 25). 14. DUNKERLEY, James. (1982) The Long War: Dictatorship and Revolution in El Salvador. London: Junction Books. 15. FALCOFF, Mark. (1984) Small Countries, Large Issues. Washington, D.C.: American Enterprise Institute. 16. FEINBERG, Richard E. (1982) "The Recent Rapid Redefinition of U.S. Interests and Diplomacy in Central America." In Richard E. Feinberg, ed., Central America: International Dimensions of the Crisis. New York: Holmes and Meier. 17. GETTLEMAN, Marvin E. et al. (1981) El Salvador: Central America in the New Cold War. New York: Grove Press. 18. HERMAN, Edward S. and Frank Brodhead. (1984) Demonstration Elections: U.S.-Staged Elections in the Dominican Republic, Vietnam, and El Salvador. Boston: South End Press. 19. JONAS, Susanne. (1973) "Masterminding the Mini-Market: U.S. Aid to the Central American Common Market." North American Congress on Latin America: Empire Report 1 (May-June). 20. KURTH, James R. (1982) "The United States and Central America: Hegemony in Historical and Comparative Perspective." In Richard E. Feinberg, ed., Central America: International Dimensions of the Crisis. New York: Holmes and Meier. 21. LATIN AMERICAN STUDIES ASSOCIATION. (1984) The Electoral Process in Nicaragua: Domestic and International Influences. Austin, Tex. (November 19). 22. McCLINTOCK, Michael. (1985) The American Connection, Volume I: State Terror and Popular Resistance in El Salvador. London: Zed Books. 23. MENJIVAR, Rafael. (1974) "Prólogo." In Rafael Menjivar, ed., La Inversión Extranjera en Centroamérica. San José, Costa Rica: Editorial Universitaria Centroamericana. 24. MONTGOMERY, Tommie Sue. (1982) Revolution in El Salvador. Boulder, Colo.: Westview Press. 25. PATERSON, Thomas G. et al. (1977) American Foreign Policy.- A History. New York: D.C. Heath. 26. PEARCE, Jenny. (1982) Under the Eagle: U.S. Intervention in Central America and the Caribbean. London: The Latin America Bureau. 27. ROJAS ARAVENA, Francisco. (1983) "La política internacional costarricense e n la administración Carazo (1978-1982)." Serie D o c u m e n t o s de Estudio, Escuela de Relaciones Internacionales, Universidad Nacional Autónoma, Costa Rica. 28. ROSENAU, James N. (1982) "National (and Factional) Adaptation in

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29.

30. 31. 32.

Central America: Options for the 1980s." In Richard E. Feinberg, ed., Central America: International Dimensions of the Crisis. New York: Holmes and Meier. ROSENBERG, Mark B. and Philip L. Shepherd. (1983) "Two Approaches to an Understanding of U.S.-Honduran Relations." Dialogue #14, Occasional Papers Series, Latin American and Caribbean Center, Florida International University, Miami (March). ROTHSTEIN, Robert L. (1968) Alliances and Small Powers. New York: Columbia University Press. SOMOZA, Anastasio and Jack Cox. (1980) Nicaragua Betrayed. Boston: Western Islands. U.S. HOUSE OF REPRESENTATIVES. (1983) "United States Policy T o w a r d Guatemala." Hearing of the Subcommittee on Western Hemisphere Affairs of the Committee on Foreign Affairs. Washington, D.C. (March 9).

The Impact of the U.S. Military Presence on Honduran Politics NEALEJ. PEARSON

The inauguration of J o s é Azcona del Hoyo on January 27, 1986 marked the first time in nearly fifty-two years that one freely elected civilian president s u c c e e d e d another in Honduras. This is a remarkable fact b e c a u s e Honduras has had 126 c h a n g e s o f government and 16 constitutions since its independence in 1821. Among the most serious problems facing the civilian presidents is the continuing impact of military issues. T w o of the most important of these are the consolidation of power by the Sandinista National Liberation Front in neighboring Nicaragua after July 1979 and the escalating civil war in another neighbor, El Salvador. These events raised such strong national security concerns among both civilian and military leaders that President Roberto Suazo Cordova, elected by the Partido Liberal (PL) in 1981, had to change the foreign policy direction set out in his inaugural address. On January 27, 1982, Suazo Cordova had said that Central A m e r i c a o u g h t t o b e a n a r e a of pacific living t o g e t h e r (convivencia) in w h i c h its p e o p l e s and leaders establish and maintain understanding by m e a n s of edifying dialogue as part o f a z o n e of p e a c e which is not t o r m e n t e d by the warlike noise o f polarizing confrontations. . . . Honduras d o e s not pretend nor desire t o be converted into an arbiter o f the expectations, anguishes, and h o p e s of the region. That is not its role. Rather, it longs to be an actor for equilibrium and c o n c o r d , true t o the principle of self-determination and nonintervention [22].

In keeping with this policy Minister of Foreign Relations Edgardo Paz Barnica proposed a Honduran Plan o f Peace to the Permanent Council of the Organization of American States (OAS) on March 23, 1982. Its six fundamental points were the following: 47

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1. General disarmament in the region 2. An objective and reasonable reduction of foreign military and other advisers 3. International supervision and vigilance 4. Stopping the arms traffic in the region 5. Absolute respect for delimited and demarcated frontiers and for the traditional lines and jurisdictions of the States of the region 6. A permanent multilateral dialogue [281 Many people—especially Hondurans—felt that this peace plan meant that the nation was moving from a role as spectator to a role as one of the principal actors of the region and that civilians within the Liberal party had consolidated their power over the Honduran military [27, p. 44], However, this initial policy of neutrality began to deteriorate over the course of the following year, due to (1) events within the other countries of the region; and (2) the strong anticommunist position of General Gustavo Alvarez Martinez, whom Suazo C6rdova named as chief of the armed forces. General Alvarez's close cooperation with U.S. ambassador John Negroponte led to what many Hondurans and North Americans called a militarized state, an "occupied country," and "the U.S.S. Honduras," which acted as a "vassal" or agent of U.S. foreign policy rather than as an independent sovereign state [25, 91. Developments objectives towards guerrillas affected institutions but also limited bargaining important symbolic

since 1982 show how U.S. foreign policy Nicaragua's Sandinista regime and Salvador's Honduran domestic and foreign policymaking how a small nation ultimately was able to use its position in a regional environment to exact and economic concessions from a great power.

The Early Suazo C6rdova Government On November 29, 1981, after nine years of military rule, an impressive number of Hondurans—1,214,735 or 82.5 percent of those registered—went to the polls and elected Liberal Suazo C6rdova as their president over longtime National party leader Ricardo Zuniga Agustinius. Voters also elected 44 Liberals, 34 Nationalists, 3 members of the Party of Innovation and Unity (PINU), and 1 Christian Democrat to the 82 member unicameral Congress. The new president kept a campaign promise and named a cabinet that crossed party lines. Suazo Cordova's government had to deal with serious problems

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of inflation, little or no international reserves, an estimated 17 percent unemployment, an estimated 40,000 landless families in the rural sector, and a regional environment in which neighboring El Salvador, Guatemala, and Nicaragua were in turmoil. It would have been a formidable task for a government of a developed country, but the Suazo Cordova government had to make policy for a nation of nearly four million that was the second poorest in Latin America. Its $610 per capita income in 1982 was higher only than Haiti's, and its literacy was only 60 percent. On the other hand, the country had escaped the extremes of political violence that had marked its neighbors in the previous thirty years. The strong tradition of military intervention remained a major problem for Suazo Cordova. In his inaugural address, he said the "armed forces . . . should reject the attractions of a dictatorship and instead promote and defend the democratic ideals of the people" [12]. Probably the most important, and among the more controversial, of his cabinet appointments was that of Colonel Gustavo Alvarez Martinez, then commander of the police (FUSEP), as chief of the armed forces—a post more important than minister of defense, which is primarily an administrative position. Subsequently, the Congress modified army regulations to promote Alvarez to brigadier general and later to general of division without his having served sufficient time in grade—thus irritating other colonels with more seniority. (Those colonels were sent abroad as military attaches.) At least five major issues surrounded Alvarez's tenure as military commander. A highly talented administrator, he was also a strong anticommunist. He collaborated with the Salvadoran army in sealing border areas against guerrillas using Honduras as a sanctuary and training area and provided "protection" for anti-Sandinista Contras who established training camps and sanctuaries in Honduras. In a January 26, 1982 interview, he wished "El Salvador did not have its current problems of violence," adding that "if El Salvador falls,the next objective of communism will be Honduras" [11]. On November 19, 1982, he affirmed that "it is not possible to coexist peacefully with a Marxist regime in Nicaragua."1 Over time, some military and FUSEP units began to harass and arrest labor, peasant, and student leaders who belonged to the Christian Democratic trade union or peasant groups, as well as Marxist-oriented or communist groups. Some observers saw this as a Honduran application of the National Security Doctrines of Argentine and Brazilian generals in the 1970s.2 I will treat this theme in a later discussion. A second issue of importance was the formation of the

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Association for the Progress of Honduras (APROH) by Alvarez and a coalition of conservative businessmen led by industrialist Miguel Facusse. APROH began to influence both domestic and foreign policy, especially as the group charged with elaborating the official documents that the government of Honduras presented to the Kissinger Commission in 1983. Granted legal status by Suazo in January 1983, APROH included the rector of the National University (UNAH) and leaders from the National party, the business sector, and labor federations, with the presidency in the hands of Alvarez. Initially, its principal objectives were the attraction of foreign investment and the maintenance of a coalition against extremists of the Left. It was to be a conservative and moderate counterpart to the popular fronts of solidarity with the people of El Salvador, Guatemala, or Nicaragua created by sympathizers with the forces of change or revolution in those countries. APROH quickly came to be controversial both internally and internationally. It developed close ties with Colonel Bo Hi Pak's Cansa Internacional, a front group for the Reverend Sun iMyung's Unification Church, before it was disbanded in mid-1984 after the ouster of Alvarez.3 Alvarez's use of power in nonmilitary areas was due in part to the tendency of leading civilians in both the private and public sectors to curry favor and protection from national and regional military commanders. Over time, Alvarez came to isolate himself from the traditional collegial participation in decisionmaking that marked the Superior Council of the Armed Forces. In early 1984, his increasingly apparent political ambitions outside the armed forces raised a third important issue, not only within the Liberal party but also in the Armed Forces Council. The key event was his help in restructuring the National party so that General Juan Alberto Melgar Castro (chief of state from 1975 to 1978) and opponents of Ricardo Zúniga could control the party. A fourth issue that irritated many civilians of all parties and some sectors of the military was Alvarez's role as architect or collaborator with U.S. ambassador John Negroponte in making Honduras a key element in the U.S. strategy against the Sandinista regime in Nicaragua and the leftist guerrillas in El Salvador. Establishment of a Regional Military Training Center (RMTC) at Puerto Castilla on the northeast coast, acquisition of arms from the United States for an estimated 12,000 anti-Sandinista Contras, and increasingly larger joint military exercises between Honduran and U.S. troops in 1983-1984 were the result of agreements between Alvarez and Ambassador Negroponte or the Pentagon. The agreements raised serious issues about policymaking institutions in both

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Honduras and the United States. In addition, the training of 700 Hondurans compared with 1,500 Salvadorans in 1983 and 3,400 Hondurans versus 4,350 Salvadorans in 1984 was not popular with Hondurans, whose border dispute with El Salvador has not been settled since the 1969 hundred days war (also called the Soccer War). Under the terms of a 1954 military agreement, Honduras and the United States have participated in summer military exercises since 1965. Under Alvarez's arrangements, an increasing number of U.S. troops began participating. In February 1983, 1,600 U.S. troops joined 4,000 Honduran troops in operation Ahuas Tara I (Mosquito for "big pine"), the largest military exercise ever held in Central America until exercise Cabanas 85. In the latter, 5,000 U.S. engineering and tactical troops participated in various construction and airborne/counterinsurgency field training exercises in the vicinity of Jocon and San Lorenzo, Department of Yoro, from July 7 to early October 1985. 4 The exercises were interpreted by the Sandinista regime and Hondurans critical of Suazo Cordova as an effort to intimidate Nicaragua. The number of permanent U.S. military personnel in Honduras was small in 1982-1983. Two army and one air force attaches were in Tegucigalpa, and anywhere from forty to ninety-eight "trainers" came in for short periods of one to two weeks. By late 1984, however, an estimated 1,700 military personnel were on more or less permanent assignment at air bases at La Ceiba, Puerto Castilla near Trujillo, Puerto Lempira, Aguacate, Palmerola, and San Lorenzo and at two radar facilities. Palmerola—located about fifty miles north of Tegucigalpa—was also close to Suazo C6rdova's hometown of La Paz, where he spent most weekends on government and political business; there he could also observe reconnaissance planes on their way to monitor guerrilla movements in El Salvador. According to some members of the U.S. Congress, the Reagan administration failed to provide appropriate Senate and House committees "with a full picture of its military construction plans and objectives in Central America" [1, p. 10]. Leyda Barbieri, a senior associate of the Washington Office on Latin America, wrote in November 1985 that: In 1984, the Comptroller of the General Accounting Office (GAO) found that the U.S. Defense Department used "improper" funding sources for military construction and exercises and for providing medical services to Hondurans during the exercises. The GAO reported that the Congress should have authorized money under categories such as Security Assistance, or Military Construction or through the Agency for International Development (AID).. . . In

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addition to the questions of legality of much of the construction and o f many of the exercises. . . another unsettled matter is whether the U.S. presence in Honduras is temporary or permanent. U.S. critics argue that the facilities represent a permanent U.S. presence because they can be used for many years to come. The GAO noted only that the facilities "are substantially" less "temporary" than the administration's standard definition of the term, thereby insisting on the need for congressional control [1, p. 10].

On the Honduran side of the matter, the National Congress' role under the constitution is similarly undermined by executive action not only characteristic of Honduran presidents since independence but also of executives in many parts of the world. Congress's role under the January 1982 constitution is outlined by Ernesto Paz Aguilar: "Treaties and agreements of a political, military character, those relating to the national territory, sovereignty and concessions, and those that imply financial obligations from the Public Treasury require the approval of the National Congress."5 Paz Aguilar goes on to note that: In equal form, the Treaty-making Power is divided among the executive and the legislative [under Article 205, Paragraph 191 with respect to contracts that involve exemptions, incentives, fiscal concession or contracts that may be produced in a following period of government. [Under Article 205, Paragraphs 26, 28 and 291 It is the exclusive competence of the legislature to declare war and make p e a c e ; authorize or negate the transit of foreign troops through national territory; and authorize the reception of foreign military missions of assistance or technical c o o p e r a t i o n in Honduras [27, p. 21].

The establishment of the Regional Military Training Center (RMTC) at Puerto Castilla was presented to the Congress by Efraim Bu Giron, the assembly's president, with indignant remarks that military leaders violated the Constitution when they signed the pact. However, the subsequent congressional vote revealed the limits of indignation. The only three votes against the RMTC were cast by the three PINU deputies; the one Christian Democrat abstained on the issue; and Bu Girôn and several members of his faction of the Liberal party all voted for the RMTC.6 In Honduras, the Foreign Ministry did not negotiate such matters as the establishment of the U.S. military there. Rather, U.S. bases, relations with Nicaragua, and such questions as a strike by employees of the National Electrical Enterprise (ENEE) were decided by the National Defense and Security Council. Although created by the 1982

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constitution, the Council's attributes and bylaws have not been enacted by the Congress or promulgated by the president according to Paz Aguilar or my own knowledge [27, pp. 21-22], The Council is composed of the President of the Republic, together with three civilian ministers and six military leaders. A fifth issue—perhaps the proverbial straw that broke the camel's back for the senior lieutenant colonels and colonels—was Alvarez's attempt to restructure the armed forces high command in early 1984. Under the change, major decisions would be made by a newly constituted board of eight senior commanders—and not the much larger CONSUFFAA (Superior Council of the Armed Forces) which was composed of mid-level officers such as battalion commanders. 7 The threat to their role galvanized officers to plot Alvarez's ouster. Tensions between many Liberal party leaders and Alvarez over policymaking processes had grown so much by late January 1984 that Alvarez was forced to publicly deny that there were differences between him and the president [131. Several days later, Suazo made an unusual public statement which may have been directed at Alvarez, but which could also have been aimed at business and political leaders, who had been predicting—or plotting—a coup off and on since Suazo Cordova won the November 1981 election: I want to take advantage of this opportunity to ask all politicians— liberals, nationalists, Christian Democrats and Pinuistas—to stay out of the barracks. Politicians should not try to involve an Army man in politics. The Army must be solidly united and dedicated solely to the defense of our territorial integrity and sovereignty and to maintaining peace and order. I hope that the solid unity of the Army will remain unchanged for the benefit of Honduras and all the Hondurans, because the day the Army loses its unity is the day we will be the prey of those who try to subvert order [14].

Neither Suazo nor the U.S. government was directly involved in Alvarez's ouster on March 31, 1984 by Air Force Commander General Walter López Reyes and two army colonels, in collaboration with troops at several bases. Indeed, it appears that one reason why Ambassador Negroponte was replaced in early 1985 was his inability to detect the growing resentment against Alvarez Martinez and the joint civilian military fear by Hondurans that the United States might involve them in a war with Nicaragua. While such a war might benefit the United States, it was not seen as in the long-range national interest of Honduras.

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Ernesto Paz Aguilar and other Hondurans were critical of the Suazo Cordova g o v e r n m e n t for yielding to the Reagan administration's policy initiatives in Central America in return for a rain of dollars which never came [27, p. 26], while U.S. critics of the Reagan administration complained of the great increases in military assistance in either dollar or percentage terms. Yet none of the critics compared the changes in economic assistance that also occurred or noted that both military and economic spending might have had a multiplier effect in stimulating the relatively stagnant economy that the Suazo Cordova administration inherited in January 1982. Table 3.1 shows U.S. economic and military assistance to Honduras from 1980 to 1985 and compares it with military aid by the U.S. to Honduras's Central American neighbors.

Table 3.1 U.S. ECONOMIC AND MILITARY ASSISTANCE TO HONDURAS, 1980-1985, WITH DATA ON MILITARY ASSISTANCE TO OTHER CENTRAL AMERICAN NATIONS CThousands of U.S. Dollars)

Costa Rica

El Salvador 6,747 35,495 82,002 136,300 86,300 n.a.

Guatemala

Honduras Military-Economic n.a. 4,081 36,100 13,935 78,100 31,275 38,000 37,400 41,000 82,200 62,400 143,400

— — 1980 — 1981 35 — 1982 2,058 2,625 200 1983 1984 2,150 10,350 n.a. n.a. 1985 1984 per capita $16.41 $35.26 $0.90 $10.08 $1.29 Sources-. Honduras Data 1980-1984: 30, p. 531. 1985 Data: 41, p. 1. Data for Other Central American nations: [34, p. 566). The 1983 amount was a 1983 proposal to the House of Representatives Committee o n Foreign Affairs, while the 1984 amounts were requests obtained by the Washington Office on Latin America; see [34]. Higher amounts or the most recent figures have b e e n used where there are discrepancies. Per capita is calculated from estimated 1983 population.

It would seem that if Honduras did not receive a "rain of dollars," it received a "bountiful shower." Some critics also complained about the Salvadoran military receiving more money, but it appears to me that this is a separate question from the ability of Honduras to exact a dollar price from the United States. It would appear that Honduras did much better than both Costa Rica, a democratic society, and Guatemala, an authoritarian society now undergoing the transition to an elected democratic regime.

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55

Short-Range Consequence of the Ouster of Alvarez Two consequences of the ouster of General Alvarez Martinez were a renegotiation of the terms under which U.S. military forces operated in Honduras and the appointment of a special committee headed by Colonel Enrique Suârez to investigate abuses of human rights. After negotiations in both Washington and Tegucigalpa from June 1984 to February 1985, Presidents Suazo Cordova and Reagan issued a joint communiqué on May 21, 1985, which amended a 1982 annex to the 1954 U.S.-Honduran Military Assistance Agreement. The negotiations did not result in a new mutual defense or security treaty under which the United States would commit itself in writing to aid Honduras in case of an outside attack—presumably from the Sandinistas or a future Salvadoran regime. However, the Hondurans did receive verbal assurances from then National Security Adviser Robert McFarlane of U.S. assistance in the case of a Nicaraguan attack.8 The joint communiqué—in effect, an Executive Agreement which did not need approval of the legislatures in either country—allowed the U.S. Air Force to expand and improve Honduran facilities at the Palmerola Air Base for U.S. use through at least the year 1990. The United States also committed itself to operating the RMTC at Puerto Castillo, staffed at the time by 150 U.S. Special Forces personnel. Honduras demanded that it have complete sovereignty over the RMTC and that more Honduran soldiers than those from any other country be trained there—a symbolically important issue given the slightly larger number of Salvadorans than Hondurans trained there in 1985-1984.9 All nations receiving U.S. military assistance in Central America and the Caribbean would be eligible to send troops to the RMTC for training. Honduras—not the United States—would issue invitations for the training and thus have a veto right over who was trained. (This type of symbolic issue led to the closure of the School of the Americas in the Canal Zone in 1984 and its transfer to Fort Benning, Georgia, because of the unwillingness of the Panamanian government to accept U.S. command of the facility.) The United States also reportedly demanded that Honduras devalue its currency or at least allow creation of a parallel market with more "reasonable exchange rates." The Washington Post reported on February 24, 1985 that if Honduras did not comply, it "could lose $72.5 million in fiscal 1984 economic aid. Another $75 million is at stake in 1985 money" [26], The Honduran government— especially an international negotiating team headed by Roberto Galvez Barnes—was concerned, however, about the automatic increase in its international debt that such a devaluation would

56

OUTSIDE INFLUENCE IN CENTRAL AMERICA

create. As a consequence, Honduras withheld its cooperation from the 1985 war games and thus forced the United States to back down— and got the money. On August 31, 1985 the Los Angeles Times reported that "the United States released about $25 million in aid that had been withheld because Honduras [had] failed to . . . devaluate its currency" [431. Once the United States backed down, Honduran military officers resumed their cooperation in the military games. Another symbolically important issue benefiting Honduras was the placement of U.S. troops under the jurisdiction of Honduran courts for off-base offenses against Honduran law. Given the operation of the Honduran police and judicial systems and the history of human rights abuses, there is now incentive for the United States, to encourage further improvements in these systems. In early January 1985, Foreign Minister Pas Barnica signaled a different approach to the Nicaraguan Contras and the Sandinista regime, as well as "squeaking the U.S. dollar wheel to get a little grease," by saying that Honduras would expel the Contras immediately. In February, Two U.S. State Department contract employees seeking to visit a rebel camp . . . were turned back by Honduran soldiers because they lacked a newly necessary written permit. The Honduran military also . . . ordered guerrilla leaders to close a hospital on the outskirts of Tegucigalpa and a large office where rebels used to receive visitors and reporters a short distance from the Honduran Foreign Ministry and the U.S. Embassy [7, p. 12].

In late February, however, the government said that all foreigners could stay as long as they respected the laws of the land [7, 19, 8]. Impact of the U.S. Military Presence on Internal Party Matters While Honduras may be a developing country in an economic sense, it is fully developed in terms of the capacity of its politicians to engage in plots and conspiracies. While the most vocal opposition to the increasing U.S. military presence and support for the Contras predictably came from the Honduran Communist party, enough opposition had developed within the Christian Democrats, PINU, and even Suazo Cordova's own Liberal party, for Suazo to demand more recompense from Washington. In a July 18, 1983 letter to

U.S. MILITARY PRESENCE & HONDURAN POLITICS

57

President Reagan, he asked for approximately $400 million to meet the country's economic needs: You, Mr. President, are informed that w e have not vacillated in taking decisions to improve the health of our e c o n o m y and that these actions have a high political cost. But the establishment of the Regional Military Training Center signifies an even greater political cost, particularly in our foreign policy. And even though I recognize that w e are defending our own national interest, your illustrious Government ought to recognize that fundamental strategic interests of the United States are being protected at a very low cost to your country. But our people are beginning to ask with greater vigor if it is convenient to our own interests to be so intimately linked to the interests of the United States if we receive so little in exchange. W e estimate that the budgetary aid solicited will represent a relatively low cost if the political and military risks assumed by Honduras are taken into account [23, pp. 23-24],

In October 1983, Enrique Aguilar Paz, a former minister of health in the Melgar Castro government and 1985 PINU candidate for the presidency, criticized "the lack of pluralism" in Honduras and the fact that Honduras had been converted into a "virtual 'protectorate'" of the United States [36]. Carlos Roberto Reina, leader of a faction of the Liberal party known in the 1985 elections as M-LIDER, also began complaining openly not only in Honduras but in his travels to other parts of Central America, especially Costa Rica. In the group's National Congress of June 9, 1984, Reina and M-LIDER complained about the positions assumed by Suazo and the Rodista or Oficialista section of the Liberal party: The total submission of the government to the Reagan policy for Central America, which places Honduras on the border of war, converts it into a base of operations for foreign military forces and sacrifices the legitimate national interests of our small country to the strategic interests of the Reagan Administration [33, p. 24],

The National Party (PN)—traditionally the most conservative and anticommunist of the two principal traditional parties—also joined the chorus of dissent on foreign policy after the ouster of Alvarez. It will be recalled that General Alvarez was working with Melgar Castro, Mario Rivera López and others to reform and update the party so it might compete in the 1985 elections. Having rarely found itself out of power or access to power since 1963, the PN found the role of opposition party somewhat difficult in 1982-1983-

58

OUTSIDE INFLUENCE IN CENTRAL AMERICA

By early 1984, PN leaders began criticizing the Suazo government's economic policies—or lack of them—and Suazo's preference to spend his weekends in the small town of La Paz rather than in the capital. 10 Perhaps recognizing a shift in military attitudes, PN leaders went after both the United States and the Liberal party in April 1984: The U.S. Ambassador neither can nor should remain deaf and blind to Honduran reality. In an effort to impose democracy both in El Salvador and Nicaragua, the northern colossus seeks a stability already lost for Central America. Honduras has become its bastion, and all operations designed to impose democracy are launched from here. But the Ambassador d o e s not see. H e refuses to recognize that here in Honduras, democracy is languishing and is being eroded. W h i l e hymns are sung [by the Reagan administration] to Honduran democracy, Suazo Cordova's government makes 100 or 200 Honduran citizens disappear. T h e y are found much later in c o m m o n graves and isolated sites. They are murdered by the current regime, which—while carrying out these perverse actions— shrieks that democracy prevails here and whispers to the winds the evil excuses that the military men are to blame for all these evil actions, w h e n those w h o disappear are enemies o f the regime, not of the army. The Ambassador does not want to know that this is happening in what is depicted daily as a perfect democracy [15].

It is difficult to know if the Nationalists—whose Mancha Brava roughed up many political opponents in election campaigns and other instances in the past—were experiencing a legitimate concern for human rights or if they were testing the political atmosphere with an appeal to the expected 400,000 new voters w h o had entered the political process since the 1981 elections. In any case, the PN joined the chorus of Hondurans of different political persuasions blaming the disappearance or assassination of labor, peasant, and student leaders on death squads linked to Alvarez Martinez, APROH, the Contras, and U.S. ambassador Negroponte.

The Human Rights Issue

After General Alvarez's ouster—probably the most important political event since the election of Suazo Cordova in 1981—General López and chief of staff Efraín González frequently stated the military's concern for human rights. A three-page summary of the

U.S. MILITARY PRESENCE & HONDURAN POLITICS

59

armed forces panel's probing of alleged abuses in 1982/83 was released on December 29, 1984. While the report itself was classified secret, the summary reported evidence that Nicaraguan Contra guerrillas were responsible for the disappearance of at least eighteen Hondurans and possibly a larger number of Salvadorans involved in smuggling arms to Salvadoran guerrillas on behalf of Cuba or Nicaragua. Other abuses were attributed to FUSEP personnel, as well as irregular left-wing and right-wing Salvadoran groups operating in both Honduras and Nicaragua. To some extent, it is both a criticism and a positive comment about the Honduran political system that the military were willing to make public such a report and that Supreme Court President Carlos Manuel Arita Palomo would say in mid-1984 that the FUSEP police did not "give a damn" about the habeas corpus provisions of the constitution when the police-denied knowledge of the whereabouts of sixteen persons involved in 112 petitions of habeas corpus sent by the Court to FUSEP [1, p. 71 Statistics of the Honduran Commission on Human Rights (CODEH) show a decline in the number of assassinations and political kidnapings (or disappearances) since 1982—when the Suazo Cordova regime came into power. The number of reportedly illegal detentions went up in 1984, for reasons that are not fully understood. This probably was because of FUSEP apprehension of large numbers of strikers of the Communist-influenced National Electrical Enterprise (ENEE) union. Table 3.2 provides an overview of recent trends in the human rights situation. Exact numbers are sometimes difficult to determine. Dr. Ramón Custodio, a physician who is president of CODEH, is the source for January 1985 information published by the Washington Post that "politically-motivated killings totaled 134 and 'disappearances' or kidnapings totaled 123 from 1981 through 1984" [20], During a May 8, 1985 press conference, Custodio charged Ambassador Negroponte of Table 3 2 HUMAN RIGHTS VIOLATIONS IN HONDURAS, 1 9 8 1 - 1 9 8 4 Jan-June

Assassinations Disappearances (kidnapings) Illegal detentions

Source. [34, p. 580].

1984

TOTAL

1981

1982

1983

40

95

59

53

25

24

8

110

446

386

99

1,016

1,947

24

218

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OUTSIDE INFLUENCE IN CENTRAL AMERICA

"being a promoter of the death squads," supported by the American Embassy and the CIA, responsible for "the disappearance of 147 Hondurans" [17]. According to Central America Report for May 31, 1985, Custodio claimed Negroponte w a s involved with a terrorist network set up by the Pentagon and the CLA: The 14-member squads allegedly making up the system are experts in sabotage, explosives, interrogation, and cartography. . . . Their special mission is the elimination of the leftist opposition in Honduras and the provision of unofficial aid to the Contras. Custodio further claims the groups are advised by the Green Berets; Ricardo Lau (ex-head of intelligence for the Nicaraguan Democratic Forces and implicated in the murder of Salvadoran Archbishop Oscar Romero); and a nephew of General Gustavo Alvarez Martinez, Lt. Oscar Alvarez. According to Custodio, these groups are responsible for the disappearance of 147 people, and hundreds of politically motivated killings, torturings and imprisonments.11 In both the May 8, 1985 press conference and the May 31 Central America Report, Custodio said that his organization was asking the Suazo C6rdova g o v e r n m e n t to "expel Negroponte for his part in t h e s e c r i m e s " — a f t e r it h a d b e e n publicly a n n o u n c e d that N e g r o p o n t e w a s leaving H o n d u r a s to assume a n e w post in Washington, D.C. [4], Just h o w many persons were killed for political reasons in 1984 or disappeared in 1 9 8 3 - 1 9 8 4 is further muddied when one examines the Annual 1984 Human Rights Report prepared by the American Embassy in Tegucigalpa and released by the State Department in 1985. A. Political Killing: The head of the Private Committee for the Defense of Human Rights in Honduras has accused the Government of involvement in deaths that were allegedly politically motivated. No more than five cases were alleged by various interested parties during 1984 [compared with CODEH's 1984 report Balance that charges 24 were killed the first six months of that year]. The government has responded that either these cases occurred during active pursuit of guerrillas and subversives or that private conflicts resulted in some of the deaths. B. Disappearance: According to the Committee for the Defense of Human Rights, a total of 112 unexplained disappearances have occurred in Honduras during 1981-1984 [compared to the 110 included in the 1984 Balance and the 123 "disappearances" reported by the Washington Post article in January 19851. Five new cases were

U.S. MILITARY PRESENCE & HONDURAN POLITICS

claimed in 1984, compared to ten cases in 1983- [These figures are lower than the 8 and 24 figures used in the 1984 Balance]. These five cases date to the period January-March 1984, and there have been no substantiated incidents since then. The most dramatic of the disappearances were those in March of Rolando Vindel, Secretary General of the Electrical Workers Union, and Gustavo Morales, Sub-Director of the National Lottery. . . . The government denies knowledge of their whereabouts or of events leading to their disappearances. It denies as well that they are being held by security forces. Government officials continue to claim that many of those w h o "disappeared" are in fact exiles w h o left Honduras to receive guerrilla training in Nicaragua or Cuba. Several others, although their names appear on the "disappeared" list, have been found living normal lives. D. Arbitrary Arrests, Detention, or Exile: Although there has been a reduction in the amount of detention time before a hearing, e x t e n d e d prearraignment detention is fairly c o m m o n . Under Honduran law, a person must be presented before a judge within 24 hours of arrest and the judge must decide within six days whether there is sufficient evidence to hold the accused for trial. In practice this is not always followed, often due to administrative problems. Cases of persons accused of subversion or terrorism are likely to be delayed several days or weeks. Security forces complain that the rules of evidence under the 1906 penal procedure code do not allow sufficient time for leads in security cases to be explored, resulting at times in delays in presenting a detainee to the court owing to the security forces' wish to complete investigations after detaining the suspect. The present penal code, including the procedural code, has now been revised, and the new code will be implemented in March 1985. Although most arrests are made openly, in some cases, most often those involving alleged terrorist or subversive activity, arrests are made secretly and the accused held for several days without authorities acknowledging the detention. An "appeal for person exhibition" can be filed with the Supreme Court to locate an individual, but the success of this motion depends entirely on the cooperation of security forces. Recently, in a promising d e v e l o p m e n t , a judge requested a n d received permission to search a local military prison for missing persons. . . . E. Denial of Fair Public Trial: Although slow and at times cumbersome, the judicial system does allow for fair trial. There are n o secret tribunals. Persons are tried for criminal acts and not for political beliefs, although social and economic status are factors in obtaining adequate access to legal process. . . . There are no political prisoners [40, pp. 580-82]

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OUTSIDE INFLUENCE IN CENTRAL AMERICA

Several Americans and Hondurans were detained by Honduran police and military personnel in counterinsurgency operating in Yoro during the joint U.S.-Honduran Cabanas 85 military exercises [3U. CODEH and the Committee of the Families of DetaineesDisappeared (COFADEH) filed charges against officers engaged in violations, but none of the accused militar/ had been asked to appear in court as of early December 1985. In the section on disappearances, the 1984 Embassy report also noted that: H u m a n rights g r o u p met in 1984 with high g o v e r n m e n t officials, including Foreign Minister Paz Barnica, Armed Forces Chief General Walter López and Armed F o r c e s Auditor General Suárez Benavides t o discuss disappearances. The meetings w e r e hailed as successful and encouraging by local human rights leaders [40, pp. 580-81].

Honduran and Central American Public Opinion

Earlier in this discussion I described elite attitudes and actions in response to the U.S. military presence in Honduras. What was the popular reaction? Public opinion polls conducted in 1983 in San Salvador, San José (Costa Rica), and the two major Honduran cities of Tegucigalpa and San Pedro Sula showed that samples of the population with at least one year of secondary school education perceived Nicaragua, Cuba, and the Soviet Union as military threats and as responsible for creating conditions that lead to war in Central America. More of those sampled favored a government victory in El Salvador over a revolutionary victory, and U.S. military aid to the Salvadoran government met with more approval than disapproval. While the United States, along with Cuba and the Soviet Union, were perceived as interfering in Central American affairs, the United States was perceived in a positive light in terms of helping solve the economic problems of the surveyed countries and helping stabilize the country's government. Data for these conclusions are found in the nine tables in the Appendix. The findings should be taken with some caution, because no information was available on those with less education or on rural residents. However, a Spanish International Network (SIN) survey conducted in Honduras just before the November 24, 1985, election obtained similar results from a sample of the general population [371. Using similar questions, the survey found that Nicaragua and Cuba were seen as military threats and that U.S. military aid had popular support. Additional evidence comes from a January 1987

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63

survey in Honduras, Costa Rica, Guatemala, and El Salvador carried out by the Costa Rican affiliate of Gallup International and sponsored by the U.S. Information Agency. It found that: At least 70 percent in all four countries describe Nicaragua as an instrument of Cuba and the Soviet Union. Eighty percent see Nicaragua as a threat to the region. Seven in ten Costa Ricans and Hondurans believe Nicaragua is trying to weaken their respective governments. . . . Large majorities in all four countries claim it will be better for Nicaragua if the resistance wins and better for their own countries as well. More than two-thirds of the respondents in all four countries are aware of and approve of U.S. aid, both military and nonmilitary, to the Nicaraguan resistance [32, p. 113]-

The 1985 Campaign

The U.S. Military Presence

as an Issue

As James A. Morris has noted, "With few exceptions (1957, 1980, and 1981), Honduran elections have not succinctly represented the popular will. Historically, elections have b e e n excessively manipulated and often accompanied with violence" [24, p. 5731. For North American observers critical of the Honduran political process, the impact of the U.S. military presence and Reagan foreign policy was not seriously addressed in the 1985 campaign. Leyda Barbieri wrote: Personal and political power struggles among candidates have been highlighted rather than the ideological differences among them. Relevant Honduran issues were not seriously addressed by any of the presidential candidates. The undebated issues included how to cope with the explosive economic crisis, Honduras' strategic role in Central America, the outcome of the presence of thousands of Nicaraguan contras on national territory, the unresolved border dispute with El Salvador, a serious investigation of human rights violations and the presence of several U.S. facilities and hundreds of U.S. troops in Honduras. The campaign especially among the Liberals and Nationals was one of political cannibalism, insults and ' ?s. In general, the political electoral panorama was dominated by traditionalism, by demagogic platforms . . . and by unpopular conservative proposals which do not necessarily address a profound change in the society nor the subordination of Honduras' interests to Reagan's war plans for Central America [1, p. 12],

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An examination of Honduran newspapers and Rumbo Centro Americano (San José, Costa Rica) from September to the election, along with eight days in the Tegucigalpa area observing the last campaign rallies, radio and television advertising, and roundtables, indicates that some of this was true.12 Nevertheless, most of the candidates touched upon the issues raised by Barbieri, although one had to be a careful observer to detect whether a candidate or spokesman was answering an issue frankly or trying to finesse it. As in the United States and Western Europe, it was generally the minority party candidates or aspiring factional leaders, not the front-runners, who raised the international issues. Carlos Roberto Reina (M-LIDER), Enrique Paz Aguilar (PINU) and Hernán Corrales Padilla (PDCH) raised the issue of human rights abuses and questions about the presence of U.S. troops and the Contras-Sandinistan conflict most frequently during the campaign. However, they received only 6.3 percent of the total valid votes. The individual front-runner, with 43 percent, Rafael Leonardo Callejas Romero (MONARCA), did not really discuss these issues until the last week of the campaign, when he appeared before a national television audience and press conference for international and domestic journalists. José Azcona (AUPO), the eventual winner, generally avoided the issues until after the election. In a November 26 press conference, he said, "We are going to maintain the nation's dignity and the respect for Honduran sovereignty." And he feigned lack of knowledge of the existence of "counterrevolutionary Nicaraguan camps" in Honduras. In response to a question by a La Prensa reporter on "treaties with the United States" in which "Honduras gave a lot without receiving anything in exchange," Azcona cagily said: You have to know how to negotiate when dealing with persons, groups, and nations. Although we have not known how to negotiate with the United States and have not obtained all the advantages and benefits to compensate for the friendly relations we have with that country and concerning matters of mutual defense, this is something of the past. I think that the Hondurans have the right to talk face to face with any country in the world, regardless of how powerful that country is [18, p. 7).

In response to a question by José Augusto Padilla of Radio Martí on the "presence of anti-Sandinista groups in Nicaragua," Azcona said: There has been a great deal of discussion on this matter. I will say

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65

that I am unaware of the existence of counter-revolutionary camps. . . . Should those camps exist, they are in violation of Honduras' Constitution and laws, and we will have to adopt the appropriate measures to solve that problem. I repeat: I have not been in any contra guerrilla camp, although there are foreign reporters who have been there. I have not been there. I suppose they exist, and we are going to solve this problem because that is in violation of our Constitution and our laws [18, p. 8]. Azcona was in effect following a position taken by General López Reyes on November 3—and one similar to those of the Costa Rican and Honduran governments before July 1979 when they denied the existence of Sandinista camps or aid to opponents of Anastasio Debayle Somoza: Although Honduras is in the midst of the most conflict-ridden area of America and is a neighbor of the country that generates the most serious conflicts and, in fact, suffers aggressions, . . . our Army does not permit the installation of camps belonging to people who are hostile to Nicaragua. [General] Walter López noted that the Honduran Army "constantly patrols the border area and has not found a single Nicaraguan counterrevolutionary camp in those places mentioned by the Managua Sandinista regime." According to the military officer, . . . the information published last Thursday in the newspaper Tiempo showing several photos of various camps in this country is "speculation." The daily located the main rebel camp in Ciudad Nueva, southwest of Tegucigalpa, in the middle of five Honduran military installations. The camp is known as "La Quinta" and is guarded by Honduran soldiers and armed men in civilian clothes. I am not surprised about the claims that there are anti-Sandinist counterrevolutionary camps in our country, much less the claim that the principal camp should be in the midst of our military installations, because we have been the target for the past several years of a national and international campaign to discredit us. . . . We have never permitted the installation of contra camps in Honduras, and we shall not permit that in the near or remote future because we are respectful of international law. . . Our vocation is pacifist, and our government, our Army, and the people support the peace efforts of the Contadora group [18, p. P9L

The Presidential

Candidates

and the Election

Outcome

Rumors of a military coup were circulated by persons in all parties, especially during a constitutional crisis over the Supreme

66

OUTSIDE INFLUENCE IN CENTRAL AMERICA

Court and the election process that lasted from March to May 21, 1985. Both matters were resolved after labor and peasant groups— collaborating with General López Reyes—presented alternatives to resolve the conflict and threatened to call a general strike if the problems were not resolved [1, pp. 13-14, 37; 21; 16], Representatives of all the parties and factions within the Liberal and National parties agreed that internal party elections would be held simultaneously with the November 24 general election without a runoff. In what would be an Uruguayan-style approach to selecting a winner, the winning presidential candidate would be the leading vote-getter among the candidates in the political party that received the greatest number of total votes. (Previously, the winner was the presidential candidate who received a simple majority—at a time when party leadership and candidate selection were more authoritarian and thus simpler). Members of Congress, council members, and mayors were to be selected by the proportion of votes received by a presidential candidate's slate in a municipal or departmental (county or state) election district. Spokesmen of factions of the Liberal and National parties continued to press for different interpretations of the Constitution and election bylaws. However, all of the nine parties to appear on the November 24 ballot (or in one case, their principal candidates) finally agreed to repeat their earlier assurances in a November 23 meeting at Air Force Headquarters with General López Reyes. This meeting developed after the National Election Tribunal (TNE) and the Foreign Ministry had arranged a 9:00 a.m. session with the candidates at the Holiday Inn Downtown for international observers and journalists from Latin America, Western Europe, Taiwan, and the United States. Eventually, the session took place at 10:30 a.m., but not before matters were further muddied, somewhat humorously, by a special press conference called at 9:30 a.m. by U.S. Ambassador John Ferch to answer the tantalizing if not picaresque question of whether the United States had lent a helicopter to President Suazo for a trip to inaugurate a new school. Two National party leaders had charged that he had used it to fling from the sky leaflets that urged voters to support his former minister of government, Oscar Mejía Arrellano, for president. The leaflets also charged the principal National party candidate, Rafael Leonardo Callejas, with being a homosexual. Ambassador Ferch would say only that the U.S. Air Force installation at Palmerola had received a request from the president's office, that he had been supplied with a helicopter, and that the embassy had nothing further to say. The ambassador then went on to answer other questions about the alleged presence of Contras in Honduras and

U.S. MILITARY PRESENCE & HONDURAN POLITICS

67

whether the United States had any preferences from among the candidates; it did not. Unofficial returns announced the second week of December showed Liberal José Azcona del Hoyo as the president-elect. He received only 27 percent of the valid votes cast, compared to 43 percent for the National party's Callejas. However, Azcona del Hoyo was the leading vote-getter among the Liberal party candidates, who together garnered 51 percent to the 45.5 percent for the National party. The Christian Democrats received only 1.9 percent and the PINU 1.5 percent [39, 34]. The turnout, 83.9 percent of registered voters, was as high as that of any other Latin American nation except Costa Rica—and certainly much higher than that in a U.S. election.

Conclusions It can be argued that the policies of the Reagan administration toward Nicaragua and El Salvador influenced developments in Honduras—especially during the tenure of General Gustavo Alvarez Martinez as chief of the armed forces (January 27, 1982-March 31, 1984). However, President Suazo C6rdova and the Honduran military (1) exacted a price in the form of increased military and economic aid and (2) retained enough political independence to reshape U.S. policies and to force out a U.S. ambassador whose wishes probably did not include political accommodation with the Sandinista regime. Opinion polls appear to indicate that the Honduran public looks upon U.S. military and economic assistance with less concern and fear than do many academics, journalists, or politicians in Honduras and the United States. Moreover, results of the November 24, 1985 elections certainly did not show any significant support for the candidates or parties most critical of the U.S. military presence in Honduras.

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Appendix: Central American Public Opinion Table 3A.1 COUNTRIES NAMED MOST FREQUENTLY AS MILITARY THREATS, 1983 Costa Rica El Salvador Honduras Nicaragua 80% 69% 45% Cuba 37 37 38 USSR 24 24 14 Number of respondents (500) (500) (700) Source. [42, p. 31. The sample of persons with at least one year of secondary education was conducted in San J o s é in February 1983, in San Salvador in July 1983, and in Tegucigalpa and San Pedra Sula in August 1983- Names of nations were not suggested to respondents.

Table 3A.2 COUNTRIES NAMED MOST OFTEN AS ATTEMPTING TO DESTABILIZE NATIONAL GOVERNMENT Costa Rica El Salvador Nicaragua 40% 55% Cuba 31 39 USSR 24 18 Source: [42, p. 3]. Names of nations were not suggested to respondents

Honduras 79% 36 9

Table 3A.3 COUNTRIES NAMED MOST OFTEN AS RESPONSIBLE FOR CREATING THE CONDITIONS THAT LEAD TO WAR IN CENTRAL AMERICA Costa Rica El Salvador Honduras Cuba 50% 55% 72% USSR 41 54 61 Nicaragua 33 21 27 United States 26 10 10 Source: [42, p. 4.] Respondents were given a list of countries from which to choose.

U.S. MILITARY PRESENCE & HONDURAN POLITICS

69

Table 3A.4 WHICH DOES THE RESPONDENT SEE AS BEING BETTER FOR EL SALVADOR: VICTORY BY GOVERNMENT FORCES OR BY REVOLUTIONARIES? Costa Rica

El Salvador

Better for El Salvador if government forces win

46 %

Not Asked

Better for El Salvador if revolutionaries win

15

Not Asked

No opinion

21

Not asked (respondent insufficiently aware of conflict)

Honduras 82 %

3 7

18 100 %

8 100 %

Source: [42, p. 4],

Table 3A.5 ATTITUDES TOWARD SUPPORT OF SALVADORAN REVOLUTIONARIES, BY POPULATION Costa Rica Revolutionaries have support of (a majority o f ) the people a Revolutionaries are simply armed rebels No opinion Insufficiently aware of conflict

El Salvador

Honduras

6 %

8 %

26 % 52 4 18 100 %

58 36 —

100 %

76 8 8 100 %

Source: [42, p. 6]. Costa Rica, the question asked about "support of the people," without specifying "majority" of the people. In San Salvador, the question asked about "support of a majority of the people." Wording of the question probably accounts for differences in the proportion of Costa Rican respondents compared to the other two countries. a In

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OUTSIDE INFLUENCE IN CENTRAL AMERICA

Table 3A.6 COUNTRIES MENTIONED AS TRYING TO HELP RESPONDENTS COUNTRY 2 Countries Named Most Often

Costa Rica

El Salvador

Countries helping solve country's economic problems

United States Venezuela Mexico West Germany

87% 17 11 10

82% 24 1

Countries trying to stabilize the government of survey country

United States Venezuela Panama

72% 16 9

81% 10

Countries helping respondent's country prepare to defend itself

United States Panama Venezuela Israel Honduras

46% 19 14

Honduras 93% 12 1 2

5

90% 7 7

—

82% 2

94% 5 4 6

5 1 11

9 —

—

Source: [42, p. 7]. limit on number of countries respondent could name.

aNo

Table 3A.7 COUNTRIES MENTIONED AS INTERFERING TOO MUCH* Countries Named Most Often Countries interfering too much in Central America

Countries interfering too much in internal affairs of the survey countries

Costa Rica

Cuba United States USSR Nicaragua El Salvador Mexico

48% 42

United States Nicaragua Cuba USSR Mexico

Not asked 17

35 23 5 2

El Salvador

Honduras

22% 22 22 11

50% 19 40 14

—

—

8 29% 17 10 9 4

Source.• [42, p. 71Respondents were permitted to mention as many countries as they wished.

—

29% 15 14 11 1

U.S. MILITARY PRESENCE & HONDURAN POLITICS

71

Table 3A.8 EFFECT OF U.S. ECONOMIC POLICIES AS BEING HELPFUL OR HARMFUL

More helpful More harmful Little effect No answer or don't now

Costa Rica

El Salvador

Honduras

60 % 17 20

43 % 7 28

64 % 5 29

3 100 %

22 100 %

2 100 %

Source.- [42, pp. 7-8].

Table 3A.9 DOES RESPONDENT APPROVE OR DISAPPROVE OF U.S. MILITARY AID TO GOVERNMENT OF EL SALVADOR ?* Costa Rica

El Salvador

Honduras

Approve of U.S. military aid

36 %

51 %

Disapprove of U.S. military aid

24

10

8

4

24

12

No opinion Not asked because not sufficiently aware of conflict Not asked because did not name U.S. as country supplying military aid

18

18 100 %

—

15 100 %

41 %

8

31 100

% Source: [42, p. 5]. a In Honduras, 28% named Honduras as one of the countries giving military aid to the government forces in El Salvador; 10% mentioned Venezuela; 10% mentioned Panama; various other countries were mentioned in smaller percentages. Only 14% named no country as giving military aid to government forces in El Salvador.

Notes 1. O n July 9, 1982 Alvarez Martinez told the nation in a radio address that "the Armed Forces of Honduras, the Government of Honduras . . . have to be in solidarity with the Salvadoran Government . . . and w e have to support it" [10]. 2. Leyda Barbieri [1, p. 51 says Alvarez "learned Argentina's 'dirty

72

OUTSIDE INFLUENCE IN CENTRAL AMERICA

war 1 tactics" while attending military school as a cadet in Argentina. This is doubtful. Alvarez n o doubt consulted various Argentine officers, on active duty or retired, w h o were in Honduras in 1982/83 [31, p. 531]. Brazil's National Security Doctrine is discussed by Beal in a later chapter. 3. A detailed description of APROH is found in [34, pp. 563, 572-73]. 4. Reference [30, pp. 529-30] is a source for information on the joint exercises of 1982-1983, while [34, pp. 565-67] has a table on the stated and u n s t a t e d p u r p o s e s of U.S. t r o o p s at different locations in 19831984. Reference [41] is a six-page U.S. Embassy summary of the U.S. Security Assistance Program from Ahuas Tara I and II in 1983/84 to Universal Trek (a naval exercise) and exercise Cabanas in 1985. Reference [2] is an interview in which Alvarez discusses the role of U.S. troops in Honduras and states that "Ambassador Negroponte is not a proconsul but someone w h o respects our decisions w h e n there is some conflict if you can call it that." 5. The quoted material is my translation of Paz Aguilar's remarks and is not a direct translation of the articles of the Honduran Constitution of 1982 [27, p. 21]. 6. Efrain Diaz Arrivillaga, the PDC Deputy, said that the Congress was nothing more than "a simple rubber stamp which the Executive Power wished to use" [27, pp. 21-22]. 7. James A. Morris [24, pp. 568-69] was one of the first to recognize the collegial nature of decisionmaking in the Honduran army w h e n junior officers forced the retirement of forty senior officers w h o were incompetent in the 1969 war with El Salvador or involved in corruption—or both. 8. McFarlane reportedly walked out in a huff at a January 18, 1985 dinner at the Honduran Air Force Officers Club because of L6pez's insistence that the United States commit itself to military support in case of outside attack. While they trusted him and President Reagan, they were worried that a future U.S. president "might not be so strong" and would fail to act in such an attack [6]. 9- The U.S. Embassy [41, p. 6] notes that the RMTC at Trujillo had trained 5,611 Salvadorans, 5,917 Hondurans, and 45 Costa Ricans between June 1983 and June 21, 1985, when it was closed down. "The urgent need for out-ofcountry training of Salvadorans has decreased as the El Salvador armed forces have become more efficient" and established a basic training center at La Union. 10. Some critics of Suazo also blamed the closing of the Chico Club, a downtown restaurant, on the Suazo administration's refusal to host cocktail parties and diplomatic receptions in a time of fiscal austerity. Suazo also led an austere life in La Paz during a regime marked by few social events, to the chagrin of many Tegucigalpa hosts and hostesses. 11. The inclusion of Alvarez's name is unfortunate. At the time, he had only recently graduated from Texas A&M and was not an expert on counterinsurgency. 12. For an excellent series of articles by Dennis Volman on the campaign and the election, see [5].

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References 1. BARBIERI, Leyda. (1985) "Honduran Elections and Democracy: Withered by Washington." Washington, D.C.: Washington Office on Latin America (November). 2. CAMBRONERO, Marlene. (1984) "General Gustavo Alvarez: 'Soy demasiado sincero para dedicarme a la politica1." La Nación Intemacional. San José, Costa Rica (February 9-15). 3. CENTRAL AMERICA REPORT. (1985) Guatemala City, Guatemala (March 1).

4. CENTRAL AMERICA REPORT. (1985) Guatemala City, Guatemala (May 31). 5. CHRISTIAN SCIENCE MONITOR. (1985) November 19-29. 6. CODY, Edward. (1985) "Honduras Backs Away from Demand for Pact." Washington Post (February 28). 7. CODY, Edward. (1985) "Nicaraguan Rebels Make Do, Await Aid." Washington Post (February 26). 8. "Contras Can Stay." (1985) Central America Report. Guatemala (March 1). 9. "Danger Awaits U.S.S. Honduras." (1985) Chicago Tribune (January 16). 10. EL TIEMPO. (1982) San Pedro Sula and Tegucigalpa, Honduras (July 13). 11. FBIS. (1982) Daily Report, Latin America Washington, D.C.: Foreign Broadcast Information Service (January 27). 12. FBIS. (1982) Daily Report, Latin America. Washington, D.C.: Foreign Broadcast Information Service (January 28). 13. FBIS. (1984) Daily Report, Latin America. Washington, D.C.: Foreign Broadcast Information Service (January 25). 14. FBIS. (1984) Daily Report, Latin America. Washington, D.C.: Foreign Broadcast Information Service (February 6). 15. FBIS. (1984) Daily Report, Latin America. Washington,, D.C.: Foreign Broadcast Information Service (May 1). 16. FBIS. (1985) Daily Report, Latin America. Washington, D.C.: Foreign Broadcast Information Service. (April 23). 17. FBIS. (1985) Daily Report, Latin America. Washington, D.C.: Foreign Broadcast Information Service (May 9). 18. FBIS. (1985) Daily Report, Latin America. Washington, D.C.: Foreign Broadcast Information Service (November 27). 19. "Honduras Says It Will Deport 'Contra' Rebels." (1985) Baltimore Sun (January 4). 20. McCARTNEY, Robert J. (1985) "Honduran Military Probes 'Contra' Role in Abuses." Washington Post (January 20). 21. McCARTNEY, Robert J. (1985) "Honduran Political Crisis." Washington Post (March 31). 22. Mensaje del Dr. Roberto Suazo Cordova Al Asumir la Presidencia Constitucional de Honduras. (1982) Tegucigalpa, Honduras: Tipografia Nacional. 23. MOLINA CHOCANO, Guillermo. (1984) "Problemas de la democracia en Honduras—Problems of Democracy in Honduras." Paper presented to

74

24.

25. 26. 27.

28.

29.

30.

31. 32. 33.

34.

35. 36. 37. 38. 39.

OUTSIDE INFLUENCE IN CENTRAL AMERICA

the conference "Honduras: An International Dialogue," Latin American a n d Caribbean Center, Florida International University, Miami (November 29-December 1). MORRIS, James A. (1985) "Honduras: Civil Military Politics and Democracy." In Howard J. Wiarda and Harvey F. Kline, eds., Latin American Politics and Development, 2nd ed. Boulder, Colo.: Westview Press. OAKES, John B. (1985) "Treating Honduras as a Vassal State." New York Times (January 11). OMANG, James and Edward Cody. (1985) "Honduras Wary of U.S. Policy." Washington Posi (February 24). PAZ AGUILAR, Ernesto. (1986) "Evolución reciente de la política exterior y seguridad nacional de Honduras (The Foreign Policy and National Security of Honduras), in Mark B. Rosenberg and Philip L. Shepherd, eds., Honduras Confronts Its Future: Contending Perspectives on Critical Issues. Boulder, Colo..- Lynne Rienner Publishers, Inc. PAZ BARNICA, Edgardo. (1982) "Plantamiento del señor Ministro de Relaciones Exteriores ante el Consejo Permanente de la OEA el 23 de Marzo de 1982." Tegucigalpa, Honduras, mimeo handout. PEARSON, Neale J. (1983) "Honduras." In Jack Hopkins, ed., Latin America and Caribbean Contemporary Record, Vol. 1, 1981-1982. New York: Holmes and Meier. PEARSON, Neale J. (1984) "Honduras." In Jack Hopkins, ed., Latin America and Caribbean Contemporary Record, Vol. 2, 1982-1983- New York: Holmes and Meier. "Priest Released; No Charges Brought." (1985) Dallas Morning News (August 23). PURCELL, Susan Kaufman. (1987) "The Choice in Central America." Foreign Affairs 66 (Fall). REINA, Carlos Roberto. (1984) "Los derechos humanos y la justicia social en Honduras—Human Rights and Social Justice in Honduras." Paper presented at the conference, "Honduras: An International Dialogue." Latin American and Caribbean Center, Florida International University, Miami (November 29-December 1). ROSENBERG, Mark B. (1985) "Honduras." In Jack Hopkins, ed., Latin America and Caribbean Contemporary Record, Vol. 3, 1983-1984. New York: Holmes and Meier. RUMBO CENTROAMERICANO. (1985) San José, Costa Rica (December 13-19). "Somos País o c u p a d o : Enrique Aguilar Paz." (1983) La Tribuna. Tegucigalpa, Honduras (October 28). SPANISH INTERNATIONAL NETWORK. (1985) "SIN Pre-Election Survey: Honduras." Press release, November 22. TAMAYO, Juan O. (1985) "Honduras' Bizarre Struggle Based on Rival Ambitions." Miami Herald (March 31). TRIBUNAL NACIONAL DE ELECCIONES. (1985) Elecciones 85, Estructura del Sistema Electoral e Información General del País. Tegucigalpa, Honduras (November).

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40. U.S. DEPARTMENT O F STATE. ( 1 9 8 5 ) Annual Human Rights Report, 1984. Report Submitted to the Committee on Foreign Relations, U.S. Senate. Washington, D.C. (February). 41. U.S. EMBASSY. (1985) "U.S. Military Activities in Honduras." T e g u c i g a l p a (October 11). 42. U.S. INTERNATIONAL COMMUNICATIONS AGENCY. ( 1 9 8 3 ) Current Public Opinion in Central America. USIA Circular CM-266. Washington, D.C. (October 28). 43. WILLIAMS, Dan. (1985) "Reassurances, U.S. Aid Ends H o n d u r a s Rift." Los Angeles Times (August 31).

Colombia in Contadora: Foreign Policy in Search of Domestic Peace MARC W. CHERNICK

In the years 1982-1986, Colombia attempted to forge an effective foreign policy that would achieve a greater degree of autonomy from the United States and facilitate a domestic program of opening negotiations with the leadership of Colombia's long-standing guerrilla insurgency. The cornerstone of that policy was Contadora, the name that became synonymous with the Central American peace efforts of Colombia, Mexico, Venezuela, and Panama. The regional peace initiative embodied Colombia's differing political objectives: it supported claims to a role of independent regional power; it created the international precedents for the intended program of national reconciliation; and it established a new basis for discussions with Cuba and Nicaragua, unblocking a perceived obstacle to domestic negotiations with the national guerrilla movements. Several analysts have examined Colombia's foreign policy during the presidency of Belisario Betancur (1982-1986) from the perspective of the search for international autonomy and regional leverage [7, 15, 34]. The analysts agree that Colombia has lacked the necessary economic and political instruments to act effectively as a regional power. 1 It had neither the oil wealth of Mexico and Venezuela in the late 1970s and early 1980s nor the special relationship with a superpower that has permitted Cuba to be a major regional actor beyond its internal economic and strategic capacity. Bagley and Tokatlian conclude: President Betancur reoriented his country's foreign policy over the first three years of his government along more independent and 76

COLOMBIA IN CONTADORA

77

nationalist lines. In the process, he dramatically improved his country's international image and garnered a great number of international kudos for his efforts. Despite some notable milestones (e.g., renewed cooperation with Latin America, the Contadora Process, and the Consensus of Cartagena), the harsh reality is that the Betancur strategy has produced few if any results. Despite his goal of increasing the country's influence and autonomy in regional and international affairs, after three years of Belisarismo, Colombia has actually witnessed reduction in its foreign policy autonomy; . . . efforts at collective action (Non-Alignment, Contadora, and the Consensus of Cartagena) have been difficult to put into practice [7, p. 551. Similarly, Pardo, analyzing the Contadora initiative, concluded: Each of the nations of the Contadora Group has had to bow its head in the face of pressure from Washington, largely as a result of the debt crisis. Mexico has stopped selling petroleum to Nicaragua on credit, demanding pre-payment for each shipment; Colombia has made a 180 degree turn in its relations with the U.S.; and Venezuela, despite the return of Acción Democrática to power, has not returned to the high profile and third-world oriented foreign policy that characterized the last adeco government. . . . There is an asymmetry of power between Washington and [the nations] of the Contadora Group, and thus there is a clear winner in the competition between the two sides [33, p. 112]. This paper will pose a different set of questions in relation to Colombian

foreign policy.

It will ask: What was the impact

of

Colombia's n e w direction in foreign policy on its domestic program of democratic opening and internal negotiations with guerrillas to end what some call the country's "undeclared civil war"? What are the relationships between Colombia's guerrilla movements, on the one hand, and Cuba, Nicaragua, and the Soviet Union, on the other? Has

a policy

Central

of nonalignment

America

through

the

and

the promotion

Contadora

Group

of peace

been

able

in to

influence the policies of the Colombian guerrillas or the relations between Colombia and the states that have direct ties with the armed opposition groups? The answers to these questions present certain challenges to both U.S. and Colombian policymakers and undermine some basic assumptions in the foreign policies of both nations. Despite the n e w orientations in foreign policy, Colombia's domestic peace process has stemmed neither the mounting cycle of guerrilla violence and military operations nor the erosion of authority and legitimacy of

78

OUTSIDE INFLUENCE IN CENTRAL AMERICA

the traditional institutions [16], The failures represent fundamental constraints in the development of an independent foreign policy, as well as certain misperceptions concerning the root causes and international linkages of Colombia's domestic insurgency. The experience of Colombia during the four Betancur years reveals that foreign policy can only marginally contribute to domestic peace and that foreign policy cannot b e a substitute for fundamental reforms in the existing regime.

Regime Crisis and Domestic Violence Colombia is experiencing a profound crisis of public order and legitimacy. One of the most important roots of the crisis is the legacy of the National Front regime implemented in 1958. 2 Among its consequences are the distortion of the democratic institutions of elections, separation of powers, and party alternation. The regime has operated almost continuously under the provisions of the State of Siege, which gives extraordinary powers to the executive and the military, particularly in the control of public order and the administration of justice [38, 21, 291. Throughout the 1960s and 1970s, the government deferred, coopted, and repressed popular mobilization and worker demands, thus avoiding the political crises that emerged in the southern cone while following similar economic development models. The results were twofold: impressive growth rates averaging between 4 and 5 percent in the 1960s and 1970s and an increased concentration of wealth in the hands of a few, while income and living conditions deteriorated in the poorest sectors of society. 3 By the late 1970s and throughout the 1980s, symptoms of regime crisis abounded: the proliferation of popular protest movements, strikes, and urban terrorism; multiplication of guerrilla groups, a few with roots in the traditional parties or the earlier partisan guerrillas; depoliticization of the parties and high rates of electoral abstention; marginalization of C o n g r e s s from the decisionmaking p r o c e s s ; presidential dependence u p o n the powers of the State of Siege in order to govern; and growing autonomy of the military w h o increasingly a b u s e d human rights in their fight against subversion and civil disorder. As legitimacy d e c l i n e d a n d political violence grew, the g o v e r n m e n t r e s p o n s e b e c a m e increasingly authoritarian a n d repressive. President Julio César Turbay Ayala (1978-1982) openly moved the system toward the extremes of its authoritarian capacity.

COLOMBIA IN CONTADORA

79

In response to the political crisis, Turbay strengthened the powers of the State of Siege through a decreed National Security Statute. Fashioned after similar legislation in the southern cone, it gave the military unprecedented control in the maintenance of public order and the trial and incarceration of accused subversives [21], The policy had its counterpart in pro-U.S., anticommunist policies. The available e v i d e n c e indicates that political violence multiplied at an unprecedented rate during the Turbay presidency. Civilian deaths as a result of political violence increased by 318 percent between 1980 and 1981 alone. Assassinations of military personnel increased by 168 percent during the same period. 4 By 1980, four major and several minor guerrilla groups were operating in the major cities and in practically every department of the country. The principal groups were: FARC (Revolutionary Armed Forces of Colombia): pro-Moscow, communist, the largest of Colombia's guerrilla forces. M-19 (April 19th Movement): combines nationalist rhetoric with a heterodox Marxism; has ties to Cuba and Nicaragua. The M-19, alone among Colombia's guerrilla groups, places a strong emphasis on international relations—establishing contacts with Latin American and European church groups, labor unions, student movements and even governments. They also have ties to Libya. ELN (National Liberation Army): f o u n d e d as a pro-Cuban guerrilla group in the 1960s, but has since loosened ties to Cuba. Developed within an ideology of Christian Marxism. EPL (Popular Liberation Army): founded as a pro-Maoist group but later repudiated the Chinese strategies. Currently the EPL has no known external ties. The Colombian guerrillas never achieved a unified front such as had developed in Nicaragua with the FSLN and in El Salvador with the FMLN. (In late 1987, the FARC, ELN, M-19, and two other guerrilla g r o u p s a n n o u n c e d they had merged in the Simón Bolívar Coordinating Board. Whether the front will actually produce unity is unknown.—Ed.) By 1982 the questions of peace and guerrilla violence dominated the national political debate. Elected that year, Conservative party president Belisario Betancur profoundly shifted the orientation of government policy in an attempt to arrest the breakdown of public order and the decline of institutional effectiveness and legitimacy. He declared that political violence had origins in objective social conditions that gave rise to the subjective decision

80

OUTSIDE INFLUENCE IN CENTRAL AMERICA

to take up arms. Both the objective and subjective factors must be addressed. Betancur's politics, which eventually constituted Colombia's peace process, consisted of: 1. An unconditional amnesty offered to the guerrillas in November 1982 (The amnesty eventually benefited some 1,500 guerrillas, some of them held as political prisoners—most notably the imprisoned leadership of the M-19.) 2. Proposed democratic reforms that would open the system and guarantee political participation (The Betancur administration presented in the annual legislative sessions of Congress a series of bills and proposed constitutional reforms that included the popular election of mayors, a statute to define opposition, financing of political parties, and administrative reform.) 3. Cease-fire agreements that were eventually signed with four guerrilla groups (Agreements were signed with the FARC on March 28, 1984, in La Uribe, Meta. Separate agreements were signed on August 22 and 23, 1984 by the M-19, EPL, and a minor group, ADO in Bogotá, Medellín, Corinto [Cauca], and El Hobo [Huila].) 4. A National Rehabilitation Plan designed to foment economic development in the rural areas most affected by the violence Taken together, President Betancur's policies represented a recognition that the political system was unrepresentative and had failed to provide channels of democratic participation to groups outside the narrow confines of the bipartisan system. At the same time, President Betancur set a new course for Colombian foreign policy—reversing the position of the previous administration and trends covering much of this century. 5 The nation had a long tradition of close relations with the United States that dated back to the agreements reached in 1914 concerning reparations over the loss of the Central American province of Panama. President Turbay had maintained or enhanced the tradition with a high profile, pro-U.S. position in international relations. Under Turbay, relations with Cuba were suspended, following the penetration of M-19 guerrillas into southern Colombia. And relations with Nicaragua seriously deteriorated after the Sandinistas laid claim to the Colombian archipelago of San Andrés and Providencia, which lies off the Atlantic coast of Nicaragua. Colombia responded by resolving longstanding differences that still existed with the United States over

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81

these islands, and, in what appeared to b e a policy emanating from the C o l o m b i a n military, e n t e r e d into negotiations with the United States over the u s e o f the islands as a strategic naval base [7, p. 7]. In the concluding years o f the Turbay administration, Colombia w a s the leading Latin American v o i c e affirming the thesis of the newly elected Reagan administration that Cuba and Nicaragua w e r e the principal s o u r c e s o f subversion and domestic unrest in Central and South America. T h e culmination o f Colombia's activist, pro-U.S. stance was its isolation from other Latin American nations during the Falkland/Malvinas conflict. C o l o m b i a refused to support Argentina and tilted t o w a r d the U.S. p o s i t i o n in s u p p o r t o f the British reconquest o f the islands. Belisario B e t a n c u r made decisions to lessen Colombia's political d e p e n d e n c e o n the United States and to reverse its diplomatic isolation in Latin America. O f equal importance, he actively fostered a regional p e a c e initiative in Central America as an integral part o f his search for a domestic p e a c e . Given the k n o w n ties o f the M-19 with Cuba and Nicaragua, Colombia's diplomatic offensive in Central America was a logical c o m p l e m e n t to the domestic p e a c e strategy. M o r e o v e r , it a p p e a r s that the early p e a c e efforts w e r e directed principally at the M-19, with the intention o f incorporating this nationalist guerrilla group into the Colombian political system. T h e M-19 h a d d e v e l o p e d a national political p r e s e n c e and large degree of public sympathy, both domestically and internationally, following their w i d e l y p u b l i c i z e d t a k e o v e r o f the D o m i n i c a n E m b a s s y in B o g o t á in 1980 [32, 3, 4], T h e other groups w e r e secondary in the initial calculations [26].

Foreign Policy and Domestic Peace: A Reassessment According to o n e analyst, Few times has there existed a more direct relation between Colombia's international relations and its domestic political situation. As is well known, all the candidates who ran for the presidency of the Republic in 1982 gave priority to the peace problem in Colombia. Once in power, Dr. Belisario Betancur announced in his inaugural address a new direction in foreign policy, in particular a position of third-worldism in announcing that Colombia would seek entrance into the Non-Aligned Movement [13, p. 80]. According to this analysis, evidently shared b y President Betancur, p e a c e in C o l o m b i a c o u l d n o t b e a c h i e v e d w i t h o u t a g r e a t e r

82

OUTSIDE INFLUENCE IN CENTRAL AMERICA

autonomy at the international level. Moreover, the road to domestic peace ran through Havana, Managua, and Moscow. At the same time, given that Colombia's undeclared civil war was reaching destabilizing levels of violence, President Betancur was concerned about the internationalization of the Central American conflict and its insertion into the East-West arena. Domestic peace would require the deinternationalization of Central America's zones of war and border tensions, lest Colombia's guerrilla warfare be caught in the regional polarization. Cepeda has written: The principal effect of the [new] Colombian foreign policy was to prevent the Central Americanization of the Colombian conflict. It cannot be denied that Colombia . . . was on the verge of a twofront war, and with the same enemy. On one side, the territorial claims of Nicaragua, and on the other, the internal threat by the guerrillas. This, along with the precarious situation with our neighbor Venezuela. The escalation of this situation would have led inevitably to the Central Americanization of the Colombian conflict by w a y o f North A m e r i c a n aid and the corresponding internationalization of Colombia's internal subversion and the definitive placement of this guerrilla war within the East-West conflict [14, pp. 142-431.

The analysis was a variation of the Reagan assertion that revolution in Central America would pass northward to Mexico. Given the level of violence and the history of the guerrilla insurgency in Colombia, if dominoes were to fall, they would likely fall southwards. After four years, there is reason to reassess the Betancur strategy. The Colombian guerrilla movements have proven to be less dependent upon the foreign powers with which they maintain relations than was thought. They have demonstrated a remarkable degree of self-sufficiency in terms of training, finance, acquisition of arms, and political demands. Ties exist and are verifiable. But in most cases, those relationships are not decisive within a given group's process of decisionmaking. Furthermore, the nature of the relationships varies considerably from group to group. The history of the M-19's participation in the Colombian peace process confirms several of these assertions. In January 1983, while Colombia was pursuing the initial contacts with Cuba to enter the Movement of Nonaligned Nations, the M-19, the guerrilla group with the closest ties to Cuba, met in Panama to decide their position toward the government's amnesty. Their decision was that, although

COLOMBIA IN CONTADORA

83

the amnesty meant the release from prison of almost their entire central command, amnesty did not mean peace. The armed struggle would continue. Other factors were playing a more decisive role. These included the apparent strength of the guerrilla movement in El Salvador and the success of the Nicaraguan revolution in 1979, w h i c h had reinspired h o p e s of revolution throughout Central A m e r i c a and parts of South America, most notably Peru and Colombia. Cuba reportedly supported, and e v e n c o u n s e l e d the M-19's rejectionist stance, although no Cubans attended the meeting. Stated one participant in the Panama meeting: There were several reasons for the decision made in Panama: 1. There were practical problems. It is not easy to change a guerrilla organization oriented to fight. We would have lost compañeros and divided the organization. 2. More importantly, we did not trust the army, the congress, or the landowners. The oligarchy did not want peace. We were conscious of the history of betrayed amnesties in Colombia, beginning with the assassination of Liberal guerrillas following the amnesty of 19533. We analyzed the El Salvadoran experience of the FMLN. We needed to create a military force. The leadership [of the M-191 traveled to Central America when they were released from jail. Besides, there were many M-19 militants in Nicaragua. One . . . was a Sandinista official. Cuba and Nicaragua did not understand the possibilities of what was happening in Colombia. They did not understand the proposals of Betancur. I was in Cuba, with [M-19 founder] Bateman. The Cubans were with [defeated Liberal presidential candidate] López. The rejections by Cuba and Nicaragua were important in the Panama decision. Their analyses carry weight in the organization. But the success of the guerrillas in El Salvador was what carried the most weight, as well as the repression against Oscar Romero and other legitimate groups [23]. By the end of 1983, the situation had changed and a different set of regional tendencies w e r e discernible. One, the Contadora Group was firmly established, largely as a result of the efforts of Colombian president Belisario Betancur. Two, the intentions of President Betancur to pursue actively a domestic peace initiative were n o w fully credible domestically, as well as in the international community. Three, the United States had d e v e l o p e d a m o r e activist a n d militaristic foreign policy in Central A m e r i c a — demonstrated by the

84

OUTSIDE INFLUENCE IN CENTRAL AMERICA

invasion of Grenada in O c t o b e r 1983, the bolstering of a paramilitary force on Nicaragua's borders, and the permanent war games in Honduras. At the same time, the United States was providing large-scale aid and "political modernization programs" in the areas of El Salvador controlled by the government. Within this international context, Cuba and, apparently, the Soviet Union reassessed the regional strategy of supporting insurrections through "national liberation groups" and moved towards an official policy of supporting negotiations, power sharing between governments and armed opposition groups, and limits to foreign military advisers and arms purchases. Fidel Castro wrote at the time: We are sincere partisans of the idea that confrontation should be replaced by dialogue. We have given our support without reservation to a negotiated agreement, with the participation of all representative forces, for the war that has convulsed El Salvador. Through the implementation of this political position, Cuba has given its full support to the efforts of the Contadora Group. In expressing my support for the noble proposals of the Cancún Declaration and the efforts of the Contadora Group, that you have inspired, I am at your disposition, Señores Presidentes, to contribute to whatever initiative in which the presence and involvement of Cuba would seem to you most useful.^

Was the new Soviet-Cuban attitude the result of Contadora or U.S. pressure? The question cannot be answered here. What can be stated is that Contadora failed in restraining Washington's program of militarizing the region in an effort to stop Soviet-Cuban-Nicaraguan adventurism. Nevertheless, Contadora provided, if only symbolically, a more acceptable alternative to U.S. policy for the Central American nations, as well as for Cuba, the USSR, and in general, Latin America and the international community. Most importantly for this study, Contadora was initially successful in creating a positive regional and international climate for the signing o f cease-fire agreements between the Colombian government and four national guerrilla movements. By August 1984, Cuba had reversed its original position and supported the M-19's participation in the Colombian peace process. The new regional context in Central America also contributed to the FARC's decision to sign the cease-fire agreements in March 1984, and

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probably marginally contributed to the decisions of the EPL and ADO (Movement of Worker Self-Dcfense). In sum, foreign policy was just what President Betancur had stated it to be: the international dimension o f a domestic program of democratic opening and reform. The cease-fire agreements did not mention foreign policy, but they did enumerate a list of domestic social, economic, and political reforms, from housing to agriculture to the rights of opposition parties. Why, then, did the M-19 unilaterally declare the cease-fire broken only ten months after the signing of the agreements? The M-19 cited the history of repeated skirmishes and open confrontations with the Colombian military. They also denounced the lack of safeguards for their militants, several of whom had been assassinated or wounded, as well as the failure of the government to seriously pursue even minimal reforms. 7 According to one analyst with close ties to the M-19, the Cubans did not support the decision [251. Another analyst, a former Communist party activist, suggested that Cuba maintains a distinction between state-to-state relations and party-to-party relations. This tendency has been mentioned by other researchers studying the foreign policy of Soviet-bloc nations [36], According to this view, the Communist party of Cuba often pursues different policies than the Cuban Foreign Ministry. In the absence of further investigation, it is not possible to determine whether this was a coordinated strategy or an example of bureaucratic politics similar to that described by analysts of U.S. politics. The analysis is further complicated when one looks at the participation of the FARC, which followed a different trajectory within the peace process. The FARC is the largest armed opposition group in Colombia. In 1982, the minister of defense estimated that they had over 12,000 men spread throughout the rural zones of Colombia in twenty-five fronts. 8 The FARC is generally considered the armed wing of the Communist party of Colombia (PCC). However, unlike the PPC, which came out of the urban labor movement of the 1920s, the FARC's origins can be traced to the early period of partisan violence and the peasant organizations that were organized for self-defense in the late 1950s and early 1960s. Its origins, like those of the M-19, are firmly rooted in Colombian history. Despite the different traditions, the FARC and the PPC have been close allies since the FARC's inception. The FARC has not developed the foreign policy apparatus or the domestic propaganda machinery of the M-19. Its international relations are handled directly through the PPC. The FARC thus has ties to Cuba and Nicaragua and most directly with Moscow. The

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relationship between the FARC and Moscow appears to be closer than the links of any other Colombian guerrilla movement with a foreign power. Former minister of defense Fernando Landazabal claims that in the period w h e n Colombia was negotiating the resumption of relations with the Soviet Union in 1968, the PCC gave orders to the FARC to cease hostilities. According to General Landazabal, that cease-fire endured for two years and terminated once relations were established [28]. However, Moscow reportedly leaves the PCC and the FARC free to decide specific strategies or objectives. As such, the participation of the FARC in the p e a c e process has b e e n conditioned almost exclusively by domestic factors. Despite the increased repression from both progovernment and guerrilla forces as the other guerrilla groups returned to the m o u n t a i n s , a n d despite the growing public opposition to government policies of national reconciliation and dialogue, the FARC and the PCC have pursued a strategy of expanding their legal presence through the mechanisms of the peace process. A new political movement was founded—the Unión Patriótica (UP)—using the existing political machinery of the PPC. The UP participated in the parliamentary elections of March 1986, with fourteen congressmen elected alone or in alliance with members of the Liberal party. In the presidential elections in May, the UP received almost 400,000 votes, or approximately 4 percent of the national vote, and emerged as the principal political force in the national territories of Guaviare and Arauca. Though modest in comparison with the vote for the traditional parties, this success is more than the Left has achieved previously at the polls. Yet, the FARC has maintained its men and their arms, bringing into question their "loyalty" to the political regime. 9 Today the contradiction of a legal Communist party and an illegal military arm in the mountains is more acute than ever. The regular skirmishes between the FARC and the Colombian armed forces underscore the point. The FARC has denounced repeated confrontations between their fronts and the Colombian military, despite the cease-fire agreements. It claims that the military has attacked several of their camps and dislodged some of their fronts. Moreover, the leadership of the FARC asserts that 165 militants of the UP were assassinated during the last six months of the electoral campaign [10]. By October 1987, the number killed had grown to 471. Throughout, the FARC has maintained a consistent position: they intend to take advantage of the "democratic opening" and increase their political and electoral

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activities; they also affirm their right to keep their arms as a guarantee that the process will continue. Finally, there is the question of the other guerrilla groups in Colombia, particularly the EPL and the ELN, which today have few or no international ties. Both the EPL and ELN trace their roots to the radical student movements of the 1960s, which were profoundly influenced by the success of the Cuban revolution. The birth of the EPL reflected the dominant divisions within the politics of national liberation movements in the 1960s: pro-Moscow communism developing a Leninist vanguard party versus pro-Maoist strategies emphasizing grassroots political action in rural zones and prolonged warfare. The EPL consciously rejected the theory of the foco that emerged from the experience of twelve men landing in an isolated zone of Cuba and igniting a revolution through military and political action. The image produced frustrated hopes throughout Latin America. The EPL has no direct external ties. It, too, eventually signed a cease-fire agreement on the same day as the M-19 during August 1984. They declared the truce broken following the assassination in Bogotá of their representative on the National Peace Commission, Oscar William Calvo, in November 1985. The ELN, on the other hand, was originally the guerrilla movement with the closest ties to Cuba. However, it was militarily decimated in western Antioquia in 1973, and its reconstruction was accomplished independently of the Cubans. Since the mid-1970s, there reportedly has been only minimal contact between the ELN and Cuba [22, 1], The demise of the ELN-Cuban relationship parallels the strengthening of Cuba's ties to the M-19, which seem to have been fortified following Cuba's contribution to the settlement of the takeover of the Dominican Embassy in Bogotá in 1980. Despite Contadora and the new relationship between Colombia and Cuba, the ELN never signed a cease-fire agreement. Yet, ironically, an incident involving the ELN was used to confirm the international linkages of the Colombia guerrillas. In January 1983, the ELN kidnaped President Betancur's brother, Jaime Betancur Cuartas, who was a member of the Council of State. Following letters from Presidents Fidel Castro and Daniel Ortega, the guerrillas released their hostage unharmed. Rather than demonstrating Cuban and Nicaraguan influence, the fact that the kidnaping took place, as well as the ELN's refusal to participate in the cease-fire negotiations, demonstrated the lack of outside influence on this particular group. These abbreviated histories suggest that the divisions and different orientations of the Colombian guerrilla movements limited

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the potential success of Colombia's new foreign policy direction to creating a better atmosphere in which to pursue negotiations. Each of the groups could laud the move towards greater independence from U.S. policy; yet the modest nationalist gestures of President Betancur and the conditioned support for Nicaragua and Cuba were too far removed from the politics of the majority of Colombian guerrillas. During this period, for example, the conditions of landlessness and tensions between landowners and Indians in the department of Cauca gave rise to yet another guerrilla group, the Quintin Lame [26, 17, 37], while a group of FARC dissidents formed the Frente Ricardo Franco. T h e original analyses of the international linkages of the Colombian guerrillas as they related to the development of the peace process were not mistaken, but they were overvalued. Foreign policy is not a critical variable in the questions of violence and peace in Colombia. Foreign policy can raise Colombia's profile in the international arena. It can even, marginally, condition elements of the foreign policy of other nations, such as was the case of Cuba and, for a time, Nicaragua. But foreign policy cannot be a substitute for domestic negotiations, change, and democratic opening.

U.S. Power and The Limits To Change As Bagley and Tokatlian argue, the global recession of the early 1980s underscored Colombia's dependence. It narrowed the possibilities not only for an independent foreign policy but for domestic reform as well. The Colombian e c o n o m y could not divorce itself from its regional neighbors; the economy slid into recession in 1983 as commercial loans remained restrictive or unavailable throughout the continent. The Colombian state was forced to nationalize t w o major Colombian banks to prevent their collapse, a pattern that was occurring from Mexico to Chile. The recession led to high unemployment, falling international reserves, and a burgeoning trade deficit. T w o years into his presidential term, Betancur was forced to adopt strict austerity measures and to seek International Monetary Fund ( I M F ) monitoring to attract n e w international loans and investment. These conditions weakened his domestic leadership and his ability to negotiate an internal peace based on political and social reforms and redistributive economic development. The situation also demanded a reassessment of the country's foreign policy. The search for U.S. support in the World Bank, in the IMF, and among f o r e i g n creditors r e q u i r e d

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rapprochement. U.S. support was critical to the IMF-Colombia agreement of April 1985 [7]. The quid pro quo was progress on Washington's agenda in bilateral relations. Heading that agenda was Washington's campaign to control drug trafficking. The drug policy was double-edged: drugs were linked to the Colombian guerrillas. In one stroke, the United States undermined the domestic peace initiative by declaring that the guerrilla insurgents were in league with the nation's drug traffickers. The message was that the "narco-guerrillas" should be confronted with military force, imprisoned, and prosecuted—not amnestied and integrated into the Colombian political system [2], The available evidence does not support the U.S. charge. The only academic study that has addressed the impact of drug trafficking on Colombian society has discarded the thesis of the narco-guerrilla. The study found links with all sectors of society, including politicians, military officers, and businessmen, and only limited cooperation between drug dealers and guerrillas on the local level [ l l ] . 1 0 However, the vociferous U.S. charges provided a powerful argument for the opponents of Betancur's peace process. The second item on Washington's agenda was Central America. Again, Washington expected greater restraint by Bogotá in its support for a negotiated settlement that would, in Washington's view, legitimate and consolidate the Sandinista regime. In so doing, Washington pressured Colombia to distance itself from Nicaragua. At the meeting of the Organization of American States (OAS) in Cartagena in December 1985, Secretary of State George Shultz placed a stick of dynamite in Colombia's domestic politics, as well as its leadership role in the Contadora process. Shultz announced without warning that the arms found in the ruins of the Palace of Justice in Bogotá, following an M-19 guerrilla operation that cost the lives of over a hundred persons including eleven Supreme Court justices, had been traced to Nicaragua. The provision of arms to the M-19, announced the U.S. diplomat, supported the position that Nicaragua was fomenting revolution throughout Central and South America. The links between the communist Nicaraguans and the M-19 are very clear. . . . The efforts of the communist Nicaraguans to disturb their neighbors is not limited to El Salvador and is not limited to Central America. This is the message that the people must understand. . . . We want to underscore the point that the conduct of Nicaragua is at the root of the problem, and the Nicaraguan behavior is what basically has produced the 'contras' [18].

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Shultz o f f e r e d no evidence. The Colombian authorities, particularly the military when they picked u p the refrain, offered no evidence beyond the statements of the U.S. secretary of state. Weeks later, some serial numbers were presented tracing the weaponry to a Venezuelan shipment to Somoza's National Guard. The Nicaraguans, when presented with the evidence, suggested that the arms had found their way into the international arms market through members of the National Guard w h o had fled the country following the revolution. Whatever the veracity of the charges, Shultz's unexpected intervention in Cartagena led to calls for a b r e a k i n g of diplomatic relations with Nicaragua and harsh criticism of Colombia's efforts in Central America on behalf of a g o v e r n m e n t that had actively attempted to destabilize the Colombian regime. The United States has at times been blunt in its opposition to the Colombian peace process. A White House spokesman declared in March 1986: President Betancur has demonstrated his g o o d intentions by extending the hand of friendship to the Sandinistas and has maintained a conciliatory policy toward the communist guerrillas in his o w n country. Regretfully, the response to these policies has b e e n the g r o w i n g Sandinista support of terrorist activity in Colombia, including arming the Colombian guerrillas that attacked the Place of Justice in Bogota last November where they killed eleven members of the Supreme Court of Justice. . . . The answer of President Betancur to the failure of his policy has been n e w concessions to the communist government in Nicaragua. . . . We express our disagreement with his approach. We continue to be convinced that the Sandinistas are going to negotiate seriously with their neighbors and with the Nicaraguan opposition only if the democracies of the world remain firm and continue applying pressure [20].

The United States also applied pressure by threatening to withdraw from the International Coffee Agreement, an act that would send the coffee-producing economies into disarray as the then current high prices began to fall. Coffee still represents 55 percent of Colombia's export earnings [191. The U.S. attacks were aimed at undermining domestic support for Betancur's policies. They were largely successful. The Liberal daily, El Tiempo, dedicated its editorial of February 22, 1986 to the question of Colombian foreign policy and U.S. withdrawal from

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the c o f f e e concluded:

pact.

The

editorial,

entitled

"Dollars

or

91

Rubles,"

T h e g o v e r n m e n t is a w a r e — a n d all Colombians k n o w it—that the p r e s e n c e o f the United States in the [coffee] Pact is a question o f fundamental importance for our nation. T o it, w e should focus all our energies and intentions, b e c a u s e a mistaken path in the policy o f searching for p e a c e in Central America unfortunately possesses the quality of not being in agreement with the policies developed by Mr. Reagan. W e all k n o w h o w d a n g e r o u s it is to c h a l l e n g e the efforts and intentions of the North American president. T h e position of his country o n the problem of coffee depends, in large measure, on his desire and proposals. . . . Whatever action that disturbs this end is absurd and c o u l d constitute a c r i m e against the national interests. For t h e s e reasons, w e believe that the position of the President and his Foreign Minister d e s e r v e s to be m o r e seriously questioned, b e c a u s e in it is involved the future o f our nation, which s u p e r s e d e s w h a t e v e r e p h e m e r a l aspiration o f personal glory. T o c o n c l u d e , you c a n n o t continue living with dollars and voting with rubles.

The editorial represents a return to the argument that guided the foreign policy of the Turbay years: national interest is best served by supporting the position of the United States. Apparently, this became the position of the leadership of the Liberal party as it returned to power following the Liberal landslide in the presidential elections of May 1986 [8],

Conclusions Colombia, under the government o f President Belisario Betancur, attempted a foreign policy mix that would achieve a degree of regional independence in political affairs and create the conditions for a major restructuring of domestic policies. Contadora was the centerpiece of that policy. It was the instrument with which Colombia attempted to link its international relations with its domestic peace strategy. Given the international linkages of the most prominent and politically capable guerrilla movement, the M-19, and considering that the destabilized situation in Central America threatened to engulf Colombia, Betancur's foreign policy was viewed as an essential element in the reconstruction of domestic peace. Pardo, Bagley, Tokatlian, and others have demonstrated that Colombia lacks the necessary policy instruments and power to assert

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regional influence. This study reinforces those conclusions. Like Contadora, which is based on diplomatic persuasion, 1 1 Colombia had to rely principally on the force of the personality of President Betancur. The costs of President Betancur's foreign policies have not proven excessive, as measured by the damage in U.S.-Colombian relations. However, Colombia has had to back down in several key areas: drugs, negotiations with the IMF, foreign investment codes, future arbitration agreements, and Central America. The Liberal government that followed had to confront the unpromising combination of: (1) a very active guerrilla movement that despite its international ties maintained almost complete autonomy, and (2) the failure of the Contadora Central American peace initiative, which had little possibility to help the domestic situation but could contribute to the deterioration of domestic peace. The historical detour of the four Betancur years demonstrated the limits to foreign policy as a vehicle to achieve domestic peace. A new orientation in foreign policy cannot be a substitute for a broadbased program of economic and political change. Foreign policy is an independent variable that can only contribute indirectly to domestic peace in concert with a realistic program of domestic reform. The apparent reorientation of Cuban foreign policy in the region as a result of Contadora, U.S. pressure, and Colombian-Cuban bilateral relations was not sufficient to prevent the M-19 from breaking the cease-fire. One must be careful in generalizing the Colombian experience. The external ties of guerrilla movements are not reliable indicators of their possible participation in a domestic process of negotiation and reform. In Colombia, contrary to expectations, the pro-Soviet, communist guerrillas have proven to b e the most reliable negotiating partners, while the nationalist, M-19 precipitously walked out of the national dialogue. Finally, the experience of the Betancur government underscores the fact that Colombia, and many similar nations, has limited economic, military, and political capacity to exercise a role of regional influence: Nevertheless, in carefully measured steps, Colombia can still pursue a degree of relative autonomy through diplomatic initiatives such as the Contadora Group or even in the OAS, where collective power is augmented. The limits to Contadora do not mean that the strategy is wrong. Today, Latin leaders have a voice in Washington, even if they do not have the power in the current political context to impose Latin American solutions to Latin American problems.

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Notes 1. Bagley defines regional power as "three distinct attributes or characteristics of states that, when considered together, have a determining role on their behavior within the international system: (1) resources or capacity, (2) will or motivation, and (3) relative impact" [51. 2. Colombian politics has been dominated by two parties, the Liberal and Conservative, since the middle of the last century. After the overthrow of the Rojas dictatorship, the two parties made a pact aimed at keeping down the severe partisan violence, known as La Violencia, which had marked the country since the late 1940s. This pact, the National Front, was a constitutional agreement between the leadership of the Liberal and Conservative parties to share power for a period of sixteen years, 1958 to 1974. The agreement was ratified in a national plebiscite in 1957. It mandated alternation in the presidency and parity in all administrative and legislative areas of government. The underpinnings of the National Front have been maintained, principally through Article 120 of the National Constitution, which obligates the president to invite the runner-up party to join the government. From 1974 to 1986, the period of the first three post-National Front governments, neither party has refused to share power; a primary function of the parties is the dispensing of patronage benefits within the national bureaucracy. However, following the 1986 elections, the Conservative party declined to join the government, thus paving the way for a restoration of party competition. 3. Bejarana notes that national income more than doubled in the last fifteen years. He also cites a report issued by the United Nations Economic Commission for Latin America (ECLA) that covers income distribution patterns in 69 countries. Ranked from most equal distribution, 1, to least equal distribution, 69, Colombia ranked 61 [9]. 4. Based on data provided by [21]; calculations by [3315. Colombian scholars have been debating the question of whether Betancur's policies constituted a rupture of earlier pro-U.S. policies or a deepening of a trend toward regional autonomy first initiated under President Alfonso López Michelsen (1974-1978), when relations were restored with Cuba and Colombia manifested its support for Panama during the Panama Canal negotiations. However, López did not actively pursue the type of domestic and international positions that might facilitate internal peace or place Colombia among the nonaligned nations. For a summary of the debate, see [34], 6. Letter from Fidel Castro to the presidents of the Contadora nations following their meeting in Cancún, Mexico in July 1983, in [6]. 7. For an analysis of the participation of the M-19 and other groups during the Peace process, see [16]. 8. The figure includes self-defense organizations plus urban and rural support groups [24], 9- It might be appropriate to apply the term "semi-loyal" to the UP. The idea of a "semi-loyal" opposition was first introduced by Juan Linz [30]. It

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refers to an opposition that is antigovernment or against the parties in power while seriously questioning the legitimacy of the regime, often resorting to extralegal activities to pursue objectives. In Linz's terms, it is neither fully loyal nor completely disloyal. 10. A recent journalistic investigation of the M-19 and its arms supplies presents a similar picture [12]. 11. Contadora was so defined by the Mexican foreign minister, Bernardo Sepúlveda, in an interview with LeMonde, March 16, 1984. Cited in [15].

References 1. ALAPE, Arturo. (1985) La Paz, La Violencia: Testigos de Excepción. Bogotá: Editorial Planeta. 2. AMERICAS WATCH. (1986) The Central Americanization of Colombia? Human Rights and the Peace Process. An Americas Watch Report. New York. 3. ARANGO Z., Carlos. (1984) Agradezco a Dios y al Comandante Uno. Bogotá: Editor Ecoe. 4. ASCENCIO, Diego and Nancy. (1983) Our Man Is Inside. Boston: Atlantic Monthly Press. 5. BAGLEY, Bruce Michael. (1983) Regional Powers in the Caribbean Basin: Mexico, Venezuela and Colombia. Occasional Paper No. 2, Latin American and Caribbean Program, SAIS, The Johns Hopkins University. Washington, D.C. (January). 6. BAGLEY, Bruce Michael , Roberto Alvarez, and Kathryn J. Hagedorn, eds. (1984) Contadora and the Central American Peace Process: Collected Documents. SAIS Papers in International Affairs, No. 8. Boulder, Colo.: Westview Press with SAIS, The Johns Hopkins University. 7. BAGLEY, Bruce Michael, and Juan Gabriel Tokatlián. (1985) "Colombian Foreign Policy in the 1980s: The Search for Leverage." Occasional Paper No. 7, Latin American and Caribbean Program, SAIS, The Johns Hopkins University. Washington, D.C. (September). 8. Barco—Política Internacional de Colombia en el Caribe, (n.d.) Documento No. 17, Campaña Liberal. 9. BEJARANA, Jesús Antonio. (1984) La Economía Colombiana en la Década del 70. Bogotá: Fondo Editorial CEREC. 10. CABALLERO, Antonio. (1986) "Los patriarcas de la Uribe." Semana (June 17-23). 11. CAMACHO GUIZADO, Alvaro. (1981) Droga, Corrupción y Poder: Marihuana y Cocaína en la Sociedad Colombiana. Cali: Universidad del Valle, CIDSE. 12. CASTRO Caicedo, Germán. (1985) El Karina. Bogotá: Plaza y Janes. 13. CEPEDA, Fernando. (1983) "Comentario." In Marco Palacios, ed., Colombia No Alineada. Bogotá: Biblioteca del Banco Popular. 14. CEPEDA, Fernando. (1985) "Contadora: El proceso de paz en

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15.

16.

17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

31. 32. 33.

34.

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Colombia y Centroamérica." In Fernando Cepeda Ulloa and Rodrigo Pardo García-Peña, eds., Contadora: Desafío a la Diplomacia Tradicional. Bogotá: Editorial Oveja Negra and CEI, Universidad de los Andes. CEPEDA ULLOA, Fernando, and Rodrigo Pardo García-Peña. (1985) Contadora: Desafío a la Diplomacia Tradicional. Bogotá: Editorial Oveja Negra and CEI, Universidad de Los Andes. CHERNICK, Marc W. (1985) "The Peace Process in Colombia: Democratic Opening in the Bi-Partisan Regime?" Paper presented at the 45th Congress of Americanists, Bogotá (July). CRIC [Regional Commission for the Indians of Cauca], (1984-85) Reports and communiqués. "E.E.U.U. denuncia apoyo de Nicaragua al M-19." (1985) El Tiempo. Bogotá (December 2). "E.U. en desacuerdo con declaraciones de BB." (1986) El Tiempo. Bogotá (February 14). "E.U. en desacuerdo con declaraciones de BB." (1986) El Tiempo. Bogotá (March 11). GALLON, Gustavo. (1979) Quince Años del Estado de Sitio en Colombia, 1958-1978. Bogotá: Editorial América Latina. Interview between a European journalist and an ELN dissident. (1986) Bogotá (February). Interview with a former member of the M-19 who participated in the Panama meeting. (1986) Bogotá (April). Interview with General Fernando Landazabal, Minister of Defense, 1982-1984. (1984) El Tiempo. Bogotá (January 5). Interviews. (1986) Bogotá (April). Interviews. (1985) Popayán and Cali (October). Interviews with members of the Peace Commission. (1985) Bogotá. LANDAZABAL REYES, Fernando. (1985) El Precio de La Paz. Bogotá: Editorial Planeta. LEAL, Franciso. (1984) Estado y Política en Colombia. Bogotá: Siglo Veintiuno Editores. LINZ, Juan. (1978) The Breakdown of Democratic Regimes: Crisis, Breakdown and Reequilibration. Baltimore: Johns Hopkins University Press. MINISTERIO DE GOBIERNO. (1985) Política de Paz del Presidente Betancur. Bogotá (April). PABON, Rosemberg. (1985) Así Tomamos la Embajada. Bogotá: Editor Ecoe. PARDO GARCIA-PENA, Rodrigo. (1985) "El grupo d e Contadora y la administración Reagan: interdependencia vs. realismo." In Fernando Cepeda Ulloa and Rodrigo Pardo García-Peña, eds., Desafío a la Diplomacia Tradicional. Bogotá: Editorial Oveja Negra and CEI, Universidad de los Andes. SANTAMARIA, Ricardo, and Gabriel Silva. (1983) "La reforma política y el proceso de paz." El Mundo (Medellln). Documento 82 (July 23).

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35. SILVA LUJAN, Gabriel. (1985) Política Exterior, Continuidad o Ruptura Bogotá: CEREC and CEI, Universidad de los Andes. 36. TURRENT, Isabel. (1985) "La Unión Soviética y América Latina." Paper presented at the Conference on the Central American Crisis and Its International Implications, organized by the Institute of International and Strategic Studies, London, and El Colegio de México, Toluca, Mexico (May 29). Cited [13], above. 37. Unidad Indígena. (1984-1985). (newspaper) 38. VASQUEZ CARRIZOSA, (1979) Alfredo. Poder Presidencial en Colombia: La Crisis Permanente del Derecho Constitucional. Bogotá: Editorial Doby.

SECTION 2

Consequences of the International Debt: Crises in Development and Independence This section presents three perspectives on the international debt crisis that has racked Latin America in recent years. In 1982, events that had been building during the previous three years erupted as a series of debt crises. Most Latin American nations are still living with the consequences. Both the origins and the solutions to the crises are seen differently by the developed and developing worlds. Many Latin Americans see it as primarily the result of forces beyond their control—particularly their dependence on the international market, the economic and political preponderance of the United states, and the rise in oil prices created by OPEC. Other observers, such as the authors of the first two articles in this section (Rodrigo Pardo and Bruce Drury), emphasize these problems and add as additional causes well-intentioned but mistaken policies of the Latin American governments in dealing with domestic and international economic forces. Tarcisio Beal, whose article appears in Section 4, sees the mistaken policies as being made consciously by national leaders in league with international capitalism. The developed industrial nations share some aspects of the Latin American view in that they perceive the crisis as almost "an act of God." However, the tone of their explanations puts more emphasis on the technical workings of the international economy than on the structural disadvantages found in the Latin explanations, e.g. [2, p. 491. First World explanations also tend to blame the "relatively high levels of government ownership of enterprises" [4], the large state share of the GNP, and the state role in planning and investment commonly found in Latin America [5, 6]. The views on the more current question—how to deal with the debt crisis—are if anything more divergent. From the point of view of the Latin American nations, the problem is a growth or 97

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development crisis. For example, at the January 1987 meeting of the Latin American Economic System (SELA), participants argued that the foreign debt "cannot be paid unless there is sustained development throughout the area." The Latin American economic ministers "agreed that it was impossible to simultaneously service the debt and promote development" [31. The Latin economies must be allowed to recover from the depressed conditions and distortions produced by both the debt problem and the solutions imposed by the banks and the International Monetary Fund (IMF). Pardo, Drury, and Beal all stress the distortions caused by the "cure" and raise serious questions about its efficacy. On the other hand, from the perspective of the developed nations, the problem is a debt crisis requiring the Latin economies to sharply improve their balance of trade. In a weak world economy, this requires contractionary policies. The two perspectives, thus, suggest quite contradictory solutions [1]. The differences in economic perspective also have a significant impact on the desire of Latin Americans to determine their own domestic and international policy lines. Opposition to IMF solutions comes in part from opposition to the strategy itself but also from the fact that the strategy is externally imposed. Because domestic and international interests are so closely linked in any attempt to deal with the debt, the issues become even more sensitive and complex. To meet debt payments requires sacrifices that are borne by some sectors more than others. The structure of the nation's economy and political power may also change. The first two articles in this section highlight the negative consequences of the debt crisis on Colombia and Brazil. Pardo, a political scientist at the University of the Andes in Bogotá, uses an examination of the attempt of Colombia's President Belisario Betancur (1982-1986) to achieve peace with the nation's guerrilla movements as a case study of the difficulties faced by "regional powers" in establishing their own solutions to problems in times of international economic difficulty. Two aspects of the article are particularly worth noting. First, it is an excellent analysis of the interrelation of economics, domestic politics, and international relations. Second, the essentially moderate critique from an observer who, in many respects, is friendly to the United States provides a clear picture of what some will see as the modern form of traditional U.S. imperialism. The second article, by political scientist Bruce Drury, examines the consequences for Brazilian agriculture of the debt crisis and the economic strategies subsequently followed. To meet its international obligations and the demands of the IMF, Brazil gave advantage to large producers and export crops. This increased

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total agricultural production and helped meet the debt payments, but it also meant increased inequity in access to land and less f o o d available to Brazil's large number of poor. The threat this poses to Brazil's democracy is considerable. Drury concludes by calling for the United States to "push the bankers and the IMF toward a reasonable long-term solution of Brazil's debt problem." E c o n o m i c historian W i l l i a m F l e m i n g brings a historical perspective to the current debt crisis by examining the impact of British capital on the development of Argentina's railroads during the period 1854-1914. H e concludes that public policies favoring foreign investment d o not have to perpetuate dependent growth if the recipient nation's policies condition the flow properly and utilize the funds for productive purposes. "The lesson is that the crucial decisions to be made are local and need to rest on local cultural, social, e c o n o m i c , and political factors, not f o r e i g n concerns." Fleming also finds that, for the recipient country, contracting foreign debts through indirect investment is superior to direct foreign investment.

References 1. ENDERS, Thomas O., and Richard P. Mattione. (1984) Latin America: The Crisis of Debt and Growth. Washington, D.C.: Brookings Institution. 2. INTERNATIONAL MONETARY FUND (IMF). (1984) Annual Report 1984. Washington, D.C.: IMF. 3. "Latin Economic Ministers Agree: Debt is Chief Obstacle." (1987) Times of the Americas (February 11), p. 2. 4. MIDDENDORF, J. William II. (1985) Current Policy. No. 638. Washington, D.C.: Department of State. 5. PINELO, Adalberto J. (1985) "Political Implications of International Monetary Fund Conditionality for Latin America." Paper presented at the annual meeting of the American Political Science Association, New Orleans (August 29-September 1). 6. SHULTZ, George. (1985) "Beyond the Debt Problem: The Path to Prosperity in Latin America." Current Policy. No. 768. Washington, D.C.: Department of State.

Impact of the Debt Crisis on a Regional Power: The Case of Colombia R O D R I G O PARDO GARCÍA-PEÑA Translated by Sam L Slick and Elizabeth F o n s e c a D o w n e y

Since the Nixon Doctrine, enunciated in 1969, the concept of "regional" or "middle" powers has been used in Latin America to designate the role of countries that have acquired the power resources to carry out an autonomous and influential foreign policy in their region. 1 Generally seen as Latin American regional powers are Mexico, Venezuela, Cuba, and, recently, Colombia. In the current crisis in Central America, the regional powers have played a very active role that has led various analysts to seek a deeper understanding of the concept of "regional power" and a better description of the international behavior of these nations. Guadalupe González catches the essence of these analyses when she argues that there are three defining characteristics of the concept of regional power: (1) the occupying of an intermediate position in the structure of world power in terms of resources and capacities; (2) the relative magnitude and quality of the internal dimensions of power; and (3) the political will to widen the margins of international participation and adopt an active, differentiated, and autonomous foreign policy [18, pp. 309-3131. In 1981, twelve years after the Nixon Doctrine transferred part of the responsibility for the containment of communism to regional powers, the Reagan administration convened a "Club of Regional Powers." The "Nassau Group," composed of Canada, Mexico, Venezuela, and the United States, had as its objective a better coordination of the countries' foreign aid programs. Colombia, in March 1982, negotiated its entrance into the club with the promise of enlarging its foreign aid programs [4], There was no doubt about the designation of Mexico and 100

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Venezuela as regional powers. The entrance of Colombia into that category, on the other hand, was the result of a process of negotiations. Nevertheless, the major involvement of Colombia in regional affairs from the beginning of the 1980s and its solid financial situation at that time did give respectability to its aspirations to the title of Regional Power, and in January 1983 it joined the Contadora Group with a leadership role. This group also brought together the regional powers of Central America, but, contrary to the NASSAU Group and the Nixon Doctrine, they did it on their own initiative with the object of seeking more autonomy from the United States. They shared a view of the crisis in Central America that was opposed to and irreconcilable with the view of the Reagan administration. The behavior of regional powers varies with changing political and economic circumstances. In addition to the factors necessary to have power within a region, an autonomous foreign policy depends on the relations that the country has with the superpowers. The less the disparity between the regional power and the superpowers, the greater possibility there is for the middle power to advance its foreign policy initiatives. Because the United States plays a predominant role in the crisis in Central America, the relations between that country and the regional powers is particularly relevant to the international politics of the area and to the role played by the regional powers. In this respect, two recent developments stand out: the renewed will of the United States under the Reagan administration to consolidate a North American hegemony in the area, and the foreign debt crisis that underlines the dependence of Latin American countries on the resources of the developed nations. This study is devoted to analyzing the reaction of Colombia to its negative balance of payments in 1984. It attempts in particular to identify the effects of the unfavorable balance upon foreign policy initiatives in Central America and the Caribbean. When the international debt crisis unfolded in 1982, Colombia seemed an unlikely candidate to participate in it because of its solid financial position. Nevertheless, it soon suffered a notable deterioration of its financial position and was on the edge of a debt crisis that came to affect its foreign policies. Was this financial crisis inevitable? Were errors in the management of economic affairs the causative agents in all cases? Was this the Nova Dependencia described by Celso Furtado? Did the financial imbalance imply, for Colombia and countries like it, the impossibility of adopting their own foreign

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policy initiatives? The analysis on the following pages centers on these questions. A Regional Power In Search of Peace Three Acts, One Objective When the National Movement of Belisario Betancur came to power on August 7, 1982, Colombia began to act as a regional power, although the economic obstacles encountered in mid 1984 created difficulties for the policy. Colombia's actions as a regional power were of key importance in a process directed by the president that was aimed at negotiating peace with Colombia's domestic guerrilla groups. 2 During the previous years, such groups had acquired special relevance. For the first time in Colombia's long tradition of guerrilla activities, there appeared an urban guerrilla group—the M-19, which grew out of the April 19, 1970 elections. This movement carried out its most daring activities during the middle and end of the 1970s. The Liberal government of Julio César Turbay Ayala responded to the M-19 with the largest dose of repression administered in Colombia's recent history. The legal basis of the antiguerrilla actions was the "Security Statute" promulgated under a Decree of State of Siege in September 1978. The results were contradictory. The M-19 was displaced from the cities to the countryside. However, it and other guerrilla groups responded with even greater commitment to the revolutionary struggle. The country witnessed acts of unusual daring carried out by those who took up arms in search of change: The embassy of the Dominican Republic was taken over by the M-19 and seventeen ambassadors were held hostage; nearly 5,000 arms were stolen from the army depository by use of a tunnel permanently guarded by the military; traditionally rural guerrilla groups achieved notable successes in the consolidation of their presence in certain areas, as in the case of the Revolutionary Armed Forces of Colombia (FARC) in the middle Magdalena region; an invasion by the M-19 was attempted in the south of Colombia after several months of training in Cuba and after acquiring arms with the money obtained from the ransom of the hostages taken at the Dominican embassy; and kidnaping and extortion, according to the information available, reached a peak as the principal means of financing the different guerrilla movements [28, pp. 53 and 551. In the face of an intense campaign initiated by the Left for some means of reaching an understanding, the government responded

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with two amnesty laws. One was approved by Congress, and another was decreed by the Executive. Both, however, required the surrender of weapons as a condition for pardon. The result was that the majority of the guerrilla movement continued to fight, while popular demand for a broader amnesty grew. Reflecting this popular opinion, all of the candidates in the 1982 election campaign included a peace plank in their platforms and offered generous programs to legally reintegrate those citizens who had taken up arms.3 Belisario Betancur, upon assuming power as president in 1982, took advantage of this favorable moment to propose a domestic program offering incentives to the guerrillas to lay down their arms and return to the system. As a parallel policy, his government adopted a foreign policy of mediation in the Central American conflict. This was necessary because he perceived that the continued escalation of the military conflicts on the isthmus eventually would reach an international level which could involve Colombia directly, particularly if its own hostilities between the army and the guerrillas were not stopped. An active foreign policy in the region was therefore required. But it would have to maintain distance from the United States because the peace sought was very different from that envisioned by the Reagan administration. To the domestic politics of peace, then, it was necessary to add a specific foreign policy of peace. To make these policies viable, it was necessary to introduce a third element into the delicate machinery: economic policy. A solid fiscal situation would facilitate a high profile foreign policy. And only to the extent that the government could count on sufficient resources would it be able to advance programs that would make a peaceful life attractive to those who had for so long been involved in the clandestine life of the guerrilla. A healthy economic life with possibilities of employment and solid growth was a necessary condition for the functioning of the domestic politics of peace; without it, those given amnesty would be called to fill the lines of the unemployed.

The Fertile Land At the beginning of the Betancur administration, Colombia had all the necessary conditions to put its three-part peace program in motion. The search for peace with the guerrillas had become a national concern. The electoral campaign in which all of the candidates agreed upon offering an olive branch to the guerrillas had produced a broad consensus. Contrary to what had happened during the Turbay administration, when the amnesty laws received

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serious damage from various sectors, the amnesty law passed immediately after the inauguration of the Betancur administration received widespread acceptance. In record time, the Liberalcontrolled Congress passed the bill presented by the former leftist presidential candidate, Gerardo Molina, and supported by the Conservative president. Additionally, there existed foundations for a high profile foreign policy. Since the middle of the 1970s under López Michelsen (19741978), Colombia had adopted an active foreign policy, and during the government of Turbay Ayala (1978-1982), the country began to participate in the Central American crisis. This participation was part of Colombia's role as most faithful ally of the United States [31. Relations with Cuba had been suspended after determining that members of the M-19 had been trained on the island, and relations with the Sandinista government had deteriorated as a result of the claim that the Sandinistas had made on the archipelago of San Andrés and Providencia, a Colombian possession [14, p. 1051. Within this "special relationship" b e t w e e n Bogotá and Washington, Colombia became in March 1982 a part of the Nassau Group that the Reagan administration h a d c o n v e n e d with the p u r p o s e of coordinating the economic aid sent to the countries of Central America by the regional powers [4, p. 631. In addition to Colombia's incipient foreign policy activism, at the moment Belisario Betancur came to power, the country had the necessary economic conditions to operate in the international arena. Contrary to what was happening in the rest of the continent, which found itself on the first steps of the foreign debt crisis, Colombia had one of the highest levels of international reserves in its history. Some symptoms of deceleration were noted in the producing (real) sectors, but viewed in a continental context, the Colombian economy seemed an oasis [131. In the mid-1970s, the increase in coffee prices was reflected in high foreign exchange earnings. The economic policy of the Liberal governments of López Michelsen and Turbay Ayala, following the typical historical pattern of the country, was cautious and moderate. Instead of spending the new-found bonanza, the López Michelsen administration introduced programs of monetary stability that permitted the accumulation of international reserves. Later, during the Turbay Ayala administration, through acquisition of new credits, the level of reserves continued rising, despite the decline in coffee prices [17, p. 118]. Thus, it appeared that all the tools were available to assemble the machinery that would p r o d u c e domestic p e a c e and that the

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economic situation would provide an adequate base. Acting on this, the Betancur administration adopted what it considered the necessary foreign policy, peace, and economic initiatives. On the domestic level, the government's peace strategy had various elements. The first of these was the approval by Congress of a broad amnesty law for citizens involved in fighting with the government [28, p. 591. At the same time, the Peace Commission, whose members had been named by the Turbay administration, was expanded in both number of members and the political leanings they represented. Through the commission, a dynamic negotiation was undertaken between the now ex-subversive groups and the government. These negotiations confirmed the necessity of carrying out reforms in the major institutions of the political system, which would permit them to broaden and make room for the new elements. The first minister of government of the Betancur administration, Rodrigo Escobar Navia, sponsored a meeting with representatives from diverse groups, political parties, and the guerrillas, in which he proposed a "political reform" that included ten basic points [28, p. 60], All of them were directed toward the objective of guaranteeing a role that those guerrillas who operated within the legal system would be able to act freely. Later, the government presented various bills to Congress, including the initiatives of Escobar Navia. 4 The negotiations continued and culminated with the signing of accords between the government and guerrilla groups that contained a "cease-fire" and a "truce," after which the guerrilla groups would become political parties. 5 All of this unfolded within what was earlier in this discussion called the first element of the peace process. The second, as previously noted, was composed of economic policies. In economics, the Betancur administration sought a "new look" in its policies. Despite the fact that it inherited an excellent fiscal situation, some symptoms of economic stagnation were present in the productive (real) sector. The financial sector also found itself in the midst of a profound crisis that had exploded during the last months of the Turbay Ayala government. It had become so serious as to produce the intervention of a major credit institution by the Superintendency of Banking in June 1982. The beginning of panic, the decline of assets (captaciones), and the unleashing of irregular practices carried out by agents of the financial sector forced the new administration to focus its attention on a series of cases one by one, like firemen. The development of the new economic policies was postponed until after the fires had been put out [25, p. 34], When these problems no longer usurped his attention, the

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president, in general terms, drew on the structuralist approach of the Economic Commission for Latin America (ECLA) as a source of inspiration [20, p. 34]. Restrictions were imposed on some imports, and mechanisms for stimulating exports by means of state subsidies were reinforced. There was also an attempt to create an income and salaries policy to control inflation and reactivate industry through the fall of real wages that the policy would produce. At the same time, a massive program of low-income housing construction was proposed. It would serve as a mechanism to stimulate the economy [24, p. 1431. As was previously mentioned, everything was seen as having effects on the politics of peace. For example, a tax reform was proposed to stop the growing fiscal deficit and enable the government to act on rehabilitation programs for the regions racked by violence. 6 Finally, the third wheel of the machinery that would push the country toward peace, foreign policy, was put in motion [9, pp. 80 passim]. To avoid the spread of the Central American conflict, Betancur sought to distance himself from the United States. This would permit him to intervene in the regional crisis with a political posture different from that of the Reagan administration. Betancur identified Colombia's interest in the area as the necessity to control the "regionalization" of the conflict, that is, its spread throughout the region. Disarmament was the principal objective to be sought. Colombia would enter the Contadora Group to look for a solution to a crisis that affected its vital interest. It would do so from a perspective that was contrary to and incompatible with that of the White House. Because of the perceived importance to Colombia of joining the Contadora Group and because participation implied a 180-degree change of direction with respect to Washington, Betancur played a positive leadership role during the first months of the Contadora diplomatic process. Contrary to the other three countries that formed the group, Colombia took a step that changed the direction of its foreign policy: it was distancing itself from Washington and looking for greater autonomy. In his inauguration speech, Betancur announced his intention of affiliating Colombia with the Movement of Nonaligned Nations. In December 1982, during a visit by President Ronald Reagan to Bogotá, the Colombian president criticized in strong language the traditional actions of the United States in the South American continent and announced to Newsweek magazine that Colombia did not want to be a U.S. satellite (cited by [8DIndeed, a Third World position came to characterize Colombia's foreign policy in place of its recent cooperation with the United

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States. The mediation in Central America, along with the theoretical perspective upon which the Contadora Group had been developed, forced a redesigning of Colombia's relations with Cuba (suspended since 1981) and also with Nicaragua (strained by the Sandinista claim on San Andrés). At the same time, it required a new treatment of relations with the United States, replacing the "special relationship" with one appropriate to two mature states with elements of agreement, near-agreement, and disagreement. Among the elements to be reconsidered, drug trafficking occupied an especially important place. Betancur believed that the Extradition Treaty signed during the Turbay Ayala government could not be applied while still preserving national autonomy. 7 For almost two years, the requests for extradition made by the White House were rejected by the Colombian government.

The Peace Process and Economic Crisis Halfway through 1984, two years after Betancur's election and assumption of power, clear signs began to appear that the peace machinery, even with all three component parts in place, was not working well. In the months following his anniversary all three parts of the process showed even more deterioration. Difficulties appeared on the horizon concerning the negotiations with the guerrillas. On numerous occasions, the peace treaties were not respected, and there was frequent and intense combat between the guerrillas and the army. Those opposing the peace process began to question more and more openly the benefits of "handing over the country to international communism." The projects for the "Democratic Opening" began to encounter serious difficulties in gaining approval in Congress. The 1983 legislative session left the majority of the projects hanging, and the 1984 session only managed to save a few. Over time, the politics of peace was encountering an increasing number of enemies and skeptics. T h e earlier practices of kidnaping, extortion, and threats continued. They were carried out variously by common criminals who covered themselves by claiming a guerrilla background, by dissident guerrilla groups that did not accept the peace treaties, and sometimes by the guerrillas themselves. All gave impetus to the arguments of those who opposed negotiations with the guerrillas. Those sectors within the government itself that demanded a change in the treatment of the "subversives," such as the military, saw their influence increase. Some of the repressive measures they had long

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requested began to be taken. In the month of March 1984, for example, the meeting in los Robles of a public congress of the M-19 was not permitted. 8 By the middle of 1985 it was clear that the balance between obstacles and opportunities for the peace process favored the former. The "national dialogue" had resulted in failure; the battles between the M-19 and the army were increasing, and the breaking of the peace accords between the government and the M-19 served as strong indicators that the following months would see the beginning of a war of blood and fire. On the other hand, hopes arose with respect to the Revolutionary Armed Forces of Colombia (FARC). The peace process with this, the largest, guerrilla faction received fresh life with the FARC's creation of a new political party—the Patriotic Union—as a channel for its peaceful participation in politics. With this act, the FARC demonstrated its willingness to continue the process with the goal of participating in the elections of 1986. It would seek better instruments, more peaceful and more effective, for gaining power. From the beginning, there were dissident groups within the FARC that opposed the decision of the High Command to accept the olive branch offered by the government. Organizations such as the Ricardo Franco Front made their disagreement concrete by declaring war on those who had "betrayed the guerrilla ideals." As a consequence, the violence took on new forms. To the war between the army and the M-19 was added the conflict between internal factions of the guerrilla groups. And on top of these came increases in common crimes and violence inspired by other illegal activities, such as the drug traffic. All of this caused those who opposed to the process of reconciliation to increase the quantity and the shrillness of their complaints. Public opinion came increasingly to accept their arguments, especially their criticisms of the M-19. Once again, the guerrilla problem reemerged as the central theme of public debate (see, for example, [30]). The second part of the peace strategy, economic policy, also began to suffer major deterioration toward the middle of 1984, as the Betancur administration was about to complete two years in power. By July 1984, a large fiscal deficit, accompanied by a foreign exchange imbalance and serious obstacles to the acquisition of external credits, began to indicate the strong possibility that a monetary crisis would develop [16]. On July 20, 1984, the minister of finance was replaced, and the new minister, Roberto Junguito Bonnet, announced the changed situation to Congress. Very much contrary to what his predecessor and other government spokesman had been repeating, Colombia was on the brink of a monetary crisis. The

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country that had been considered a model of moderation in the management of its economic affairs, the oasis in the 1982 external debt crisis, now had to enter into a complex process of negotiation with the International Monetary Fund (IMF) in an anxious search for new avenues of credit. On October 29, 1984, the press released a secret memorandum from the minister of finance to the president of the Republic. Based on recent negotiations in Washington and New York, it concluded that Colombia had no other recourse but to enter into an immediate formal standby agreement with the IMF [2]. In the same document, the minister maintained that the immediate opening of negotiations with the IMF would permit the country to work from its strongest negotiating position. The increasing deterioration of international reserves was bringing Colombia continually closer to an exchange crisis, and if the country waited until the crisis was imminent, there would be no recourse but to accept all of the conditions imposed by the IMF.9 Despite the situation, Betancur's economic team adopted a strategy for avoiding an agreement with the IMF. 10 After five months of discussions, the IMF accepted Colombia's proposal. The government agreed to accept orthodox adjustment measures, and the IMF, for its part, gave a favorable review so that the private banking sector would extend new credits. 11 As part of the agreement, the IMF would "monitor" Colombian economic policy every three months. This arrangement was considered a success by Betancur and his team because they had "sidestepped the IMF," that is, avoided the standby agreement. The government argued that it had conserved its autonomy for designing economic policy. "Colombia knows what it has to do to solve [its economic problem]," said Betancur to the nation, "and is ready to do it by herself, without anybody imposing it" [291. The country committed itself, then, to becoming more deeply involved in the execution of austerity measures that implied high social costs in the immediate future and that went strongly against the peace process [51. The measures implied a subordination of economic as well foreign policy to the goal of reopening external credits. At the time, they met considerable opposition from Colombian economists, who believed that the policies in themselves did not contain the means to resolve the financial crisis [151. Rather, by encouraging the freeing of imports, they would create incentives to increase the expenditure of foreign exchange. Finally, the third component of the peace process, foreign policy, began to follow the pattern of the first two parts. By mid-1984

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it, too, had begun to fail. In response to the barbarous assassination of the minister of justice, Rodrigo Lara Bonilla, on April 30, 1984, supposedly by drug traffickers, President Betancur threw aside his former attitude toward the Extradition Treaty with the United States. It would, he announced, be promptly utilized in the war he was declaring against the drug dealers. Thereafter, Betancur not only accepted various extraditions of Colombians to the United States, but collaborated closely with the U.S. government in all areas related to the war against drug trafficking. The cooperation was so great that President Reagan publicly expressed his approval of the "new" attitude in a public letter to the president [261. Moreover, the official communique published by both governments soon after the meeting of the two presidents in Washington on April 6, 1985 dealt only with drug trafficking and the desire to work toward its eventual elimination. Betancur's one modest victory was a brief allusion to the need to combat drug consumption in the United States [27]. Another event during President Betancur's trip to Washington created great controversy. In order to gain congressional approval, President Reagan's peace proposal for Nicaragua included designating funds for the anti-Sandinista Contras as "humanitarian aid." Although the proposal was criticized by the Sandinistas and by some Democrats in the U.S. Congress, President Betancur took the u n e x p e c t e d position that the proposal was "positive and constructive" [7]. As was to be expected, this surprising declaration was followed by manifestations of support from some Central American presidents, and others took advantage of the opportunity to draw closer to Washington's position. Belisario Betancur, confronted with the high costs of his imprudent declaration, tried to correct himself in an interview with the New York Times in Bogotá [6, 32]. This in turn occasioned a violent response by the U.S. State Department. Also at the same time as Betancur's trip to Washington, Colombia subscribed to an agreement with OPIC (Overseas Private Investment Corporation). This implied accepting that future disputes between North American investors and individual Colombians would be mediated by U.S. laws and judges or by international arbitration tribunals. The sharp contradiction between these actions and the unwillingness to apply the Extradiction Treaty at the beginning of the Betancur administration clearly reflected the deteriorating Colombian economic situation. This was the principal component of Betancur's three-part policy framework, and the success of each one of the parts was a necessary condition to the success of all [31].

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The decisions to "informally" accede to the IMF and to accept OPIC's c o n d i t i o n s s h o w that the C o l o m b i a n government subordinated the peace process and foreign policy to resolving the economic crisis. It undermined the peace process because the measures "suggested" by the IMF acted as major disincentives for the guerrillas who wished to return to legal life. It changed foreign policy directions because it altered the relations vis-à-vis the United States, making them more asymmetrical in favor of the latter. A careful examination of Colombia's domestic economic policy, especially the measures taken to correct its deteriorating external situation, affords a better understanding of the actual possibilities that a middle power has of achieving a foreign policy that is both high-profile and independent of the United States in the face of a changing international economy.

Betancur's Response to the Economic Crisis As was said before, the economic situation existing on August 7, 1982, when the government of Belisario Betancur was inaugurated, was comfortable with respect to the external sector. The same could not be said about the productive (or real) and financial sectors. Nevertheless, the most important part of the present analysis deals with the external sector, as it is the one that fell into crisis around July 1984 and forced the government to negotiate with the IMF. In July 1982, the level of Colombia's international reserves was US $5,158.3 million, quite high by historical standards. Some evidence, nevertheless, indicated that the situation of the external sector had a high potential for deterioration in the following months. The trade balance had been in deficit since 1981 and was showing a clear tendency to worsen [17, p. 122]. International reserves began to dwindle. In Betancur's first year of government, the level fell US $1,214.2 million. This was partially due to currency devaluations in 1983 by neighbors Venezuela and Ecuador. T h e devaluations greatly affected border commerce to the detriment of Colombia, for whom imports from its neighbors became cheaper, while Colombian exports to the two countries b e c a m e more expensive. The Colombian government did not respond with the necessary counter measures to avoid the shrinking of reserves [24, p. 146], To a large extent, this occurred because the policies necessary to stem the losses involved high social costs that would have reduced the credibility of the peace process at the moment the national debate

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was beginning to take shape. Some measures were taken—higher tariffs and subsidies for exports, a slightly increased level of devaluation, and import controls. However, they came too late. At the same time, the policies to stimulate the economy were in error. The incomes and salaries policy sought to increase salaries at a rate lower than that of inflation. Unfortunately, this shrank aggregate demand precisely when an increase was needed, and the result was a recession. Parallel to this was another mistake. Ignoring the situation of the external sector (a deficit that was likely to contribute to monetary contraction), the government applied monetary policies aimed at contracting the money supply. This exaggerated emphasis on controlling inflation created significant obstacles to production [24, p. 142], In 1983, a change in the general orientation of some of the policies had positive repercussions on production levels. Monetary policy was relaxed, and industry began to revive, achieving an acceptable growth rate in 1984. For its part, the trade balance also began to show the effects of the import controls, and the trade deficit began to decrease [17, p. 122], These changes, however, were not sufficient to avoid a sharp fall in international reserves, reinforced by intense capital flight. 12 Faced with this and the stoppage of credit to Colombia by the international banks, the government initiated the negotiations with the IMF. Betancur sought a quarterly monitoring of economic policy by the IMF that would serve as a guarantee for the banks and thus permit them to approve new credit resources for the nation. In October 1984, as the exchange crisis became more imminent, the administration undertook adjustment measures on its own initiative. Thus, the economic policies of peace remained subordinated to the objective of reopening sources of credit [23, 22], and the incipient reactivation of production in the real sector encountered major obstacles in the policies "suggested" by the IMF. With respect to both capital investment and debt, the economic policies of the Betancur administration made a 180-degree turn. Soon after opting for a policy of low foreign indebtedness, the government sought, as an alternative, the creation of incentives for private investment. To do this, it resorted to unusual legal juggling aimed at salvaging the controls imposed by Colombian legislation. These controls were inspired by Decision 24 of the Andean Pact, which has since been gradually abandoned. "We prefer partners and not creditors," President Betancur repeated many times. In order to obtain the capital required to maintain economic growth in the midst of a widespread shortage of

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international credit, he found it necessary to welcome private funds. The burial of Decision 24, the call for North American investors through entry into OPIC, and the acceptance of the IMF measures opened the way to a new type of relationship between domestic and international capital. In summary, it is clear that the economic policy of the Betancur administration, more by omission than by action, became joined with elements from the international environment to precipitate disequilibrium in the foreign sector. This finally forced taking certain measures that weakened the combination of instruments the government had counted on to advance the peace process. 13

Conclusion The end of World War II consolidated the position of the United States as the major Western power. However, in the years since then, U.S.-Latin American relations have changed fundamentally: U.S. hegemony is in erosion [33, p. 17]. Various authors have noted as an indicator of this process the recent inability of North American leaders to make Latin governments march to the tune that best serves the interests of the United States. In years past, the intervention of the U.S. secretary of state would have avoided the Malvinas (Falkland) War. Contrary to the experience of Lyndon Johnson in 1965 in the case of the Dominican Republic, President Carter could not gain agreement in the Organization of American States (OAS) in 1979 to send a peacekeeping force to Nicaragua. The invasion of Grenada encountered strong opposition among the nations "at America's back door," while the invasion of Nicaragua has not been carried out only because the cost is too high. The "cost" of invasion did not exist between 1909 and 1933, when U.S. marines occupied Nicaraguan soil, but today it does. An important part of that cost is the continent's rejection of such actions. Economic evidence also suggests that the change toward greater Latin American autonomy is proceeding apace. Latin American exports have diversified with respect to their destination, as has the origin of imports. The percentage of the continent's total trade that originates or ends in the United States shows a clear downward trend. The inter-American system is suffering a crisis. It was incapable of acting in the Central American conflict, in the debt crisis, or in the South Atlantic war. As a consequence, the system has seen the development of parallel arenas in which the Latin nations can consider issues autonomously and without the pro-North American

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straitjacket that characterizes the OAS and the other regional organizations. Examples of these new arenas are Contadora and the Consensus of Cartagena. In them and elsewhere, voices have been raised advocating foreign policies originating in and appropriate to the Latin American nations. Among the countries advocating Latin American perspectives, the most outspoken are those who have achieved, through natural resources or industrialization, an economic structure that is less dependent on the United States or more needed by it. These nations have used their economic resources to back the development of their own foreign policies. Their decisions may agree or disagree with those of Washington, but they are made and carried out autonomously. Despite these developments, the external debt crisis that emerged in August 1982 produced a clear step backward. The Latin American nations swiftly became more dependent on the economic growth of the developed world and on new resources from its financial institutions. In particular, "The debt crisis . . . suddenly renewed Latin America's 'dependence' on the United States" [33, p. 2], Independently of their natural resources or economic policies, all of Latin America was falling into crisis. The case of Colombia, the major candidate to avoid the debt crisis, shows that the entry of Third World e c o n o m i e s into the international system implies inevitable restrictions on domestic autonomy. Who now remembers the "political risk" evaluations used to rank Latin American sovereign borrowers according to credit worthiness? Highest ranked in 1980 by both Euromoney and Investor was Mexico, the nation that precipitated the crisis. Third in both rankings was Argentina, an early casualty because of the South Atlantic War. Second came Venezuela, currently also in extreme difficulties [33, p. 11.

As was noted at the beginning, Colombia had the best assets to confront the hemispheric crisis. Moreover, the international organizations that participated in the crisis, from its gestation to its solution, had considerable reason to reward the traditionally orthodox and disciplined management of the Colombian economy. They could have done so by supporting President Betancur's attempt to negotiate a different framework for resolving the debt problem than that followed by the majority of the nations of the continent. Nevertheless, Colombia's gain from the informal accord with the IMF was modest and excessively costly. Economic policy departed

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radically from the principles the government had originally proposed. The austerity adopted implied a drastic reduction of the instruments the government had available to advance the peace process. On the one hand, the policies put the greater part of the burden for resolving the crisis on the backs of the least favored of the society. On the other hand, the atmosphere of discipline and "belt tightening" was the least propitious for the guerrillas to find incentives to return to the legal life. The debt crisis and the negotiations with the IMF also created obstacles for the new foreign policy orientation the Betancur administration was attempting to introduce. The debt problem moved up to first place in the priorities both for the general management of foreign relations and for bilateral relations with the United States. Colombia had to accept an agreement with the Overseas Private Investment Corporation, a different adjustment model, the U.S. view of the importance of the drug issue, and, although in odd circumstances, Reagan's proposal to provide assistance to the Nicaraguan Contras under the label of "humanitarian aid." The relationship between foreign policy and economic situation should not be exaggerated. Among the determinants of foreign policy, the economic situation is only one of several. Multilateral diplomacy and political will, as well as sufficient power, are necessary conditions to carry out a foreign policy that is autonomous, independent, and high-profile. Depending on the changing circumstances of international politics, one or the other of these elements can gain preponderance, and only through its adequate management can the country maximize its negotiating position. In the case of the economic circumstances Colombia faced from the middle of 1984 to 1985, the debt crisis had a substantial effect on foreign policy. However, before generalizing this experience to the point of exaggerating the importance of the economic situation in defining foreign policy, one should take into account the character of the debt crisis. In the first place, this was a crisis of the foreign sector. And second, the community of nations adopted one scheme among the many theoretically possible for resolving the crisis. This approach had a very specific nature. Basically, the weight of the solution of the problem was placed on the debtor nations rather than, as in previous occasions when similar crises arose, dealt with through a more equitable distribution of the costs. Within this approach, moreover, the United States had a very important role both through agencies of its own government and through its having the largest vote in the IMF and other multilateral credit agencies.

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CONSEQUENCES OF THE INTERNATIONAL DEBT

Finally, the IMF played the role of intermediary between the debtor nations and the lending institutions. It also carried out its traditional role of granting short-term credits to deal with situations of balance of payments disequilibrium. To these factors derived from the particular approach chosen by the nations involved in the crisis we must add one more, which comes from the nature of the indebtedness: the credit institutions are concentrated in the United States, and the debtor countries are in Latin America. This reflects and tends to reinforce an asymmetry in the structure of international power. Thus, the fundamental reason some countries, such as Colombia, found their ability to develop innovative foreign policies limited by the debt crisis was that the crisis affected their bilateral relations with the United States. Washington acquired additional negotiating tools through the role that it played in the IMF (where it dominated the voting structure) and through the role of the chairman of the Federal Reserve Board in the negotiations between the Latin American countries and the banks over the design o f the payment plan. The asymmetry of resources grew in Washington's favor. In the bilateral negotiations b e t w e e n the various Latin American nations and the U.S. government, the latter enjoyed new and better resources with which to negotiate. In other words, the debt crisis significantly affected the foreign policies of regional powers such as Colombia despite the considerable increase, during the 1970s, in their capabilities for negotiating with the United States.

Notes 1. A broader version of this work, including a comparative analysis of the Venezuelan case, was presented to the seminar, "Determinantes de la politica exterior," organized by CSUCA, May 17, 1985. 2. For the interrelationship between foreign policy and the peace policy, see [10] and the preceding article by Chernick. 3. The Turbay Ayala administration adopted other means of conciliation. See [10, p. 831. 4. A description of the projects is found in [11], 5. On May 28, 1984, the High Command of the FARC-EP (Revolutionary Armed Forces of Colombia) gave the order for a cease-fire to all the commanders of its twenty-seven fronts. In December of the same year, the FARC began a "year of truce," and in April 1985 announced its conversion into a political party, the UP (Patriotic Union). The FARC accounted at the time for about 80 percent of the Colombian guerrillas. Other groups, such as the M-19, EPL (Popular Liberation Army), and a faction of the ADO (Movement of Worker Self-Defense), signed "cease-fire" agreements August

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24 and 25, 1984. The M-19 requested a "National Dialogue," and the government formed a commission for that purpose. It met in subcommittees without much progress. Representatives of the EPL initially participated in the dialogue but eventually stopped attending. 6. These measures were taken under a Decree of Economic Emergency which was subsequently declared unconstitutional by the Supreme Court of Justice. Bills were then sent to the National Congress, where the majority were approved after a delay that permitted a major deterioration of the already oppressive fiscal deficit. 7. Colombian objections to the Extradition Treaty were in part a nationalistic response to both the pressure applied by the United States to obtain it and the idea of Colombians being handed over for trial by a foreign court. There were also objections to the fact that the principal targets of the treaty were Colombians w h o were not charged with having violated Colombian laws. (Some major drug dealers ran large operations violating U.S. laws but avoided provable connections to violations of Colombian law.) Editor. 8. As the M-19 completed another anniversary of its creation, the major cities of the country were militarized through a series of "security measures" [1], In the following months, the growing war between the M-19 and the Army produced the ending of the cease-fire accords by the guerrillas. The announcement was made by Alvaro Fayad on June 21, 1985. 9. The d o c u m e n t said: "...to the degree that international reserves continue falling, not adopting the required adjustments immediately will inexorably lead in the first months of 1985 to Colombia having to sign the formal contingency agreement with the IMF under negotiating conditions worse than those now prevailing" [2], 10. In a press release, Minister Junguito said: "The international banks will be asked to cooperate financially without the formal agreements with the IMF" [19]. 11. It should b e noted that in order to avoid the erosion of Colombia's negotiating position, the government on its own put forth drastic economic adjustment measures between October 1984 and April 1985. See [12]. 12. The flight of capital was motivated by the great laxity in the management of monetary policy in the face of the increasing rhythm of devaluation and the continuing high rates of interest in the international market. 13. According to Kalmanovitz and Tenjo [21], " . . . in the face of the pressures from international creditors and the need to hasten economic adjustment, the government has had to redefine the alignment of its economic, social, and political strategy for confronting the situation imposed by a general crisis of the process of accumulation." It should be noted that the Colombian government, in the peace agreements signed with the guerrillas, promised a series of "rehabilitation programs" and economic reforms on behalf of those accepting amnesty. The precarious fiscal situation put obstacles in the way of fulfilling those promises.

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References 1. 2. 3.

4.

5. 6. 7. 8. 9. 10.

"Acuarteladas FFAA por aniversario del M-19 " (1985) El Tiempo (April 19), p. 3-A. "Acuerdo formal con FMI y emergencia económica sugirió Junguito a BB." (1984) El Tiempo (October 29), p. 1-A. BAGLEY, Bruce. (1982) "Colombia en el Caribe: ¿el nuevo aliado norteamericano?" In Juan Tokatlián and Klaus Schubert, eds., Relaciones Internacionales en la Cuenca del Caribe. Bogotá: Biblioteca de la Cámara del Comercio. Pp. 371-90. BAGLEY, Bruce. (1983) Regional Powers in the Caribbean Basin: Mexico, Venezuela, and Colombia. Occasional Paper No. 2, Washington: Latin American and Caribbean Program, SAIS, The Johns Hopkins University. Washington, D.C. (January). BEJARANO, Jesús A. (1984) "Colombia, el FMI y las políticas de ajuste: ¿quién paga los costos?" Presentation on behalf of CEREC to the Foro Regional de Medellin, November 20. "Betancur aclara su posición ante Reagan." (1985) El Tiempo (April 18), p. 1-A. "Betancur vs. Reagan." (1985) Semana No. 153 (April 9-15): 22-26. BUSTAMENTE, Jorge. (1983) "¿Una nueva política exterior colombiana?" Carta Financiera (Bogotá: ANIF) No. 55 (February): 35-53. CEPEDA, Fernando. (1983) "Comentarios." In Marco Palacios, ed. Colombia No Alineada. Bogotá: Biblioteca del Banco Popular. P. 80. CEPEDA, Fernando. (1985) "Contadora: el proceso de paz en Colombia y Centroamérica." Revista Nacional de Agricultura No. 870 (March): 80102.

11. 12. 13. 14. 15-

16. 17. 18.

19.

CEREC. (1984) La Reforma Política. Medellin, Documento El Mundo, No. 71, August 17. "Colombia sí puede obtener crédito sin pacto con el Fondo." (1985) El Tiempo (March 24), pp. 1-A, 8-A. "Colombia: un oasis." (1982) Semana No. 20 (September 21-27): 41. DREKONJA, Gerhard. (1983) Retos de la Política Exterior Colombiana. Bogotá: Fondo Editorial Cerec. FENALCO. (1985) "Colombia y el FMI: ¿Quién resuelve los interrogantes?" Presented at the conference "Aproximación de Colombia al FMI, Bogotá, Universidad de los Andes, Fenalco, y Fedesarrollo, (April 16). GARAY, Luis Jorge. (1985) "El proceso de endeudamiento en Colombia." Controversia No. 121 (Bogotá: CINEP). GAVIRIA, César. (1984) Deuda Pública Latinoamericana. Bogotá: Contraloria General de la República. GONZALEZ, Guadalupe. (1983) "México." In Gerhard Drekonja and Juan Tokatlián, eds., Teoría y Práctica de la Política Exterior Latinoamericana. Bogotá: CEREC-CEI. Pp. 299-353. JUNGUITO, Roberto. (1984) Press Release. Bogotá, Ministerio de Hacienda y Crédito Público, November 25-

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20. 21.

22. 23-

24. 25. 26. 27. 28. 2930. 31. 32. 33.

119

KALMANOVITZ, Salomón. (1982) "¿El retorno del estructuralismo cepalino?" Semana No. 15 (August 17-23). KALMANOVITZ, Salomón, and Femando Tenjo. (1985) "De cambio con equidad a ajuste con crecimiento." Economía Colombiana (February): 49. LORA, Eduardo. (1985) "Entre el ajuste fiscal y la crisis cambiaría." Economía Colombiana (February): 56. OCAMPO, José A. (1985) Presentation at the conference Aproximación de Colombia al FMI, Bogotá, Universidad de los Andes, Fenalco, y Fedesarrollo (April 16). PERRY, Guillermo. (1984) "La política Económica de la Administración Betancur." Coyuntura Económica (October). RAMIREZ OCAMPO, Jorge. (1982) "Los objetivos de la política económica." Semana No. 29 (November 23-29). REAGAN, Ronald. (1985) Letter to President Belisario Batancur, March. REAGAN, Ronald, and Belisario Betancur. (1985) Joint communication, Washington, April 6. SANTAMARIA, Ricardo, and Gabriel Silva. (1984) Proceso Político en Colombia. Bogotá: Fondo Editorial Cerec. "Se abren paso sin acuerdo formal con el FMI: Bentancur." (1985) El Tiempo (April 8), pp. 1-A, 15-A. "Severas críticas de López a proceso de paz." (1985) El Tiempo (April 27), p. 1-A. SILVA LUJAN, Gabriel. (1984) "La dinámica del sector externo, la política exterior y la estrategia de paz." Estrategia (August): 44—48. "Texto de la entrevista de Belisario Betancur con el New York Times." (1985) El Tiempo (April 18), p. 8-A. WHITEHEAD, Laurence. (1984) Debt, Diversification and Dependency: Latin America's Changing International Political Relation. Working Paper No, 159. Washington, D.C.: The Wilson Center, Latin American Program.

Brazilian Agriculture and the Debt Crisis B R U C E R. DRLIRY

Brazilian agriculture has expanded rapidly in the last decade. Production of major plant crops increased from 151,000 tons in 1973 to 287,000 tons in 1983, an increase of about 90 percent. At the same time, however, hunger and malnutrition have become very serious problems. The major cause of this food crisis is the $100 billion external debt that Brazil has incurred. This huge debt has shifted the emphasis of the agricultural sector to production of export crops, and the results have been food shortages, inflated prices, and significant dislocations in rural Brazil. From an economic standpoint, the ability of Brazil to pay off its debt, or even to make interest payments on time, is of great concern to the international banking community and the United States; however, the debt repayment may have even more severe political ramifications. Brazil is now attempting to establish democracy after twenty years of military rule, and the management of the debt crisis, together with its effect on agriculture, will be critical to the survival of the government of President José Sarney.

The Role of Agriculture Although Brazil has a strong industrial sector, approximately 40 percent of the economically active population derives its living from agriculture. As the largest economic sector of the society, as the provider of food for a rapidly growing urban population, as an export producer for generating foreign exchange, and as a market for domestically produced machinery and consumer goods, Brazilian 120

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agriculture could hold the key to future national prosperity. The importance of the agrarian sector was expressed in the government's 1963-1965 Plan for Economic and Social Development which stated that ". . . the country's deficient agrarian structure . . . stands as the most serious obstacle to a rational improvement . . . of our domestic economy" [36, p. 216], More recently, Brazil's Third National Development Plan (19801985) assigns to agriculture the tasks of reducing inflation by increasing the supply of food, earning foreign exchange through agricultural exports, reducing oil imports through the production of alcohol, and creating rural jobs in order to reduce poverty and rural-to-urban migration [39, p. 31. Agriculture still accounts for more than 60 percent of Brazil's exports (although down from almost 80 percent in the 1960S before the industrial boom). With agricultural products making up only 10 to 15 percent of imports, the farm sector is by far the most significant source of foreign exchange [39, p. 131. In terms of the domestic market, Josué Montello of the Brazilian Institute of Geography and Statistics reported that the 5 percent increase in national industrial output in the first half of 1984 was due almost entirely to the demand for machinery, fertilizer, and chemicals from Brazilian agriculture [27]. Despite its importance to the economy, Brazilian agriculture is not yet capable of all the tasks outlined in the Third National Development Plan; that is, it is incapable of generating significant foreign exchange and, at the same time, producing and distributing sufficient food for the population. Even before export agriculture became the major emphasis, malnutrition was a critical problem in Brazil, especially in the cities. In 1975, it was estimated that only 32.8 percent of the populace had an adequate diet; 18.6 percent had deficits of up to 200 calories per day; 31.3 percent had déficits of 200 to 400 calories; and 17.3 percent had deficits of more than 400 calories [13, p. 92]. Brazil's infant mortality rate in 1978 was almost twice that of nine other developing nations with equivalent GNPs [13, p. 21], Although the government has used price controls and has maintained a rather expensive program of subsidies for certain foods, it has not been successful in thwarting malnutrition and related health problems. The debt crisis has seriously exacerbated this "social debt." The agricultural sector has also been seen both as a cause of certain social and political ills and as a cure for those ills, if the rural social structure were reformed. The inequity of the land tenure system creates significant economic and political power for the conservative latifundists, deprives Brazilian peasants o f the opportunity to make an adequate living, and foments unrest in the

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countryside and the cities. Various government programs have sought to increase agricultural productivity and to resolve social problems by reducing the inequities of the rural sector. The 1975 National Alcohol Program (PNA) had the primary goal of reducing Brazil's reliance on imported petroleum, but it also had the social objectives of reducing regional and individual income disparities and of expanding employment opportunities in agriculture [33, P224], The social goals of these programs have been frustrated, in part, by the debt crisis. (It should be mentioned that the political power of the latifundists and the large-scale commercial farmers has b e e n more instrumental than the debt crisis in stymieing agrarian reform.) With abundant land and labor and a generally favorable climate, Brazil has the potential for feeding its own people quite well and of producing significant surpluses for export. However, in the following discussion, various factors relating to the debt crisis have created rather extreme distortions in the agricultural sector and in turn will undoubtedly result in severe political difficulties for the civilian government of President Sarney.

Post-Coup Agricultural Expansion, 1964-1973 Although Brazil was predominantly an agrarian society, agriculture received relatively little governmental attention until the military coup of 1964. (The one exception was the northeast during that region's periodic droughts.) In the post-World War II period, Brazilian farm production expanded steadily despite policies that gave preference to industry and actually discriminated against the agricultural s e c t o r [1, p. 327]. An overvalued e x c h a n g e rate discouraged exports, and price controls on basic commodities i n h i b i t e d the e x p a n s i o n o f f o o d p r o d u c t i o n for internal consumption. Low factor costs—such as abundant and cheap labor and inexpensive land on the frontier—and an expanding highway network were the impetus for increased production [39, p. 2], T h e military g o v e r n m e n t e a s e d price controls in 1964, liberalized trade policy in 1967, and established a moving and generally realistic e x c h a n g e rate. T h e s e factors, plus a general expansion of world commerce in the late 1960s and early 1970s, resulted in a significant increase in agricultural production. As an authoritarian regime without electoral origins, the military g o v e r n m e n t attempted to legitimize itself through e c o n o m i c performance. Industrial expansion was the major area of emphasis; however, agricultural policy was also changed to reflect development

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goals. Policies were initiated that attempted both to stimulate sustained agricultural growth and to improve rural social conditions. The 1964 Land Statute (Estatuto da Terrà) established a system of progressive taxation on large and inefficient farms and set up a program for the distribution of government land to landless peasants [15, pp. 196-97], Since production per hectare varies inversely with the size of the farm (small farms receive proportionally greater inputs of capital and labor), the Land Statute sought to increase production while reducing economic inequities [3, pp. 44-53; 15, pp. 83-87], Similar efforts to stimulate rural development, especially in the northeast and the Amazon, were made through the Program for National Integration (PIN) of 1970 and PROTERRA of 1971. PIN envisioned a vast colonization scheme in the Amazon. Sixty thousand families were to be provided with 100 hectare farms at minimal cost and were to receive extensive financial and technical assistance [19, pp. 22-231. PROTERRA was created to buy and distribute land in the northeast. Again, the government was to provide considerable capital and agricultural extension support [15, pp. 17-18]. Both plans were only partially implemented. PIN had placed only 6,000 families, most of whom left their farms when the promised support did not materialize, and PROTERRA had distributed only 17,000 hectares of land when the debt crisis altered the government's policy. Poor planning, opposition from the landowners, agency infighting, and finally the debt crisis defeated the efforts to increase productivity and to reduce individual and regional inequities [12, pp. 144-46]. Ultimately, the government used the reform programs to justify investments in expensive infrastructure, such as roads and a large bureaucracy, that primarily benefited largescale commercial enterprises oriented toward export [34, pp. 343-44; 5, pp. 1045-47]. Brazil's "economic miracle" of the late 1960s and early 1970s was the result of government's use of repressive measures to hold down labor costs and to reduce inflation. This allowed Brazilian industry to expand rapidly by utilizing unused capacity in an atmosphere of liberal trade policies and an expanding world economy. Agricultural performance during this period was not "miraculous," but it did respond positively to increased credits for farmers, limited price regulation, and the free trade atmosphere. Unfortunately, these policies were largely discontinued after 1973, and, more importantly, the reform and colonization programs that could have been the basis for a more prosperous and egalitarian rural sector were either abandoned or reoriented in favor of export agriculture.

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CONSEQUENCES O F THE INTERNATIONAL DEBT

The Debt Crisis The present Brazilian government has the unpleasant task of paying the interest on a foreign debt of $100 billion and, ultimately, it must find a way of retiring the principal. This debt crisis stems from the postwar decision to emulate the U. S. pattern of petroleum-based, energy-intensive development, which then led directly to three corollary policies. First, Brazil created PETROBRAS—a verticallyintegrated, state monopoly oil company—to discover, produce, refine and distribute the oil that every Brazilian believed existed under the country's vast surface. Second, the government chose to expand the transportation system by means of a highway network and, in turn, to allow the rail and maritime systems to atrophy. Third, the cornerstone of the industrial sector was to be the manufacture of vehicles that would burn the PETROBRAS oil on the new highways [35, p. 31. Alas, the expected oil eluded discovery, and the result has been huge debts, malnutrition, increased infant mortality, and a variety of other economic and social problems [7, pp. 164-651. The folly of the development model did not become apparent until after 1973, because, although Brazil did not find oil, the international price was quite low, and the nation accepted oil importation as a temporary and cheap inconvenience. Even after the first oil shock in 1973, policymakers were not overly alarmed, because there was an abundant supply of loan money for imported oil and for a number of megaprojects—petrochemical plants, aircraft factories, and nuclear power plants—whose high-tech exports or replacement of imports would ultimately allow Brazil to pay off the still-moderate debt [14, pp. 22-231. The technocrats in the government responded to the first oil shock with supply-oriented policies that sought to provide adequate fuel to the energy-intensive industrial sector. This not only added to the growing debt, but the emphasis on large, capital-intensive projects diverted attention and money from smaller and less glamorous labor-intensive enterprises that could have taken advantage of Brazil's labor surplus [14, p. 231. When the second shock hit in 1979 as a result of the revolution in Iran, Brazil was forced to restrict demand through price increases, which affected the public far more than the protected industries [7, pp. 168-69]. Inflation, higher food prices, unemployment, social service reductions, tax increases, and a sharp decline in real wages were the results of the government's attempt to maintain a supply of capital and energy for the high-tech megaprojects.

BRAZILIAN AGRICULTURE & THE DEBT CRISIS

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The second oil shock was accompanied by an increase in interest rates which made the "debt problem" a true "debt crisis." A Brazilian scholar wrote: At first, between 1970 and 1976, Brazil borrowed money to increase its rate of accumulation and consumption. Later, between 1978 and 1980, Brazil borrowed money to maintain its level of consumption. Since 1981, we borrow money not to maintain consumption, but almost exclusively to pay interest [30, p. 172],

Celso Furtado contends that Brazil and the international banking community were equally to blame for the crisis. Brazil was eager to borrow, and the bankers were eager to lend, until things got out of hand in the 1979-1982 period. Deteriorating terms of trade and higher interest rates cost Brazil an estimated $47 billion, more than one half of its 1982 debt. The bill for interest alone in this period was $31 billion [9, p. 31. By 1982, Brazil had two alternatives. It could declare a complete moratorium (i.e., default) and risk becoming a pariah nation in financial circles. This would have put virtually all the development projects in jeopardy. The other alternative was to work through the International Monetary Fund (IMF) in an effort to restructure the debt. Brazil had avoided the IMF since the 1950s, when President Kubitschek denounced the IMF for being, as the agent of international banks, completely incapable of understanding the problems of developing nations [30, pp. 206-7]. This time, however, Brazil had little choice. Negotiations with the IMF in 1982 resulted in an agreement giving Brazil a temporary moratorium on the principal and $7 billion in new loans in exchange for a Brazilian promise to reduce inflation, government spending, and imports and to produce a $6 billion trade surplus in 1983The debt crisis has been managed but certainly not overcome. Brazil did surpass the balance of trade requirement in 1983 by ending the year with a surplus of $6.4 billion. The surplus of 1984 was nearly $13 billion, and the estimate for 1985 is something in excess of $10 billion [22], The problem is that the interest payments alone were $12 billion in 1984 and were to increase to $14.7 billion by 1987 [28]. The debt crisis, the austerity measures of the IMF, and the worldwide recession resulted in a severe recession in Brazil, and it is not likely that Brazil can squeeze its economy further. The crisis has had a profound effect on Brazilian agriculture and, as a result, presents serious social and political problems.

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CONSEQUENCES OF THE INTERNATIONAL DEBT

Exports Versus Food and Reform Brazilian governments have consistently expressed the goal of reforming the agricultural sector in order to increase food production for domestic consumption and export, to alleviate economic inequities in rural Brazil, and to reduce the pressure on urban areas by increasing rural employment opportunities. However, the short-term necessity to generate a trade surplus through increased agricultural exports, added to the political power of the latifundists and large-scale commercial farmers, has forced recent governments to surrender long-term, idealistic objectives in favor of short-term political and economic reality. Export agriculture has defeated food and reform. Brazil certainly has the potential to take advantage of export opportunities, as a North American economist stated in 1975: T h e most p r o m i s i n g future for the agricultural s e c t o r is an expansion o f exports. In a world where food shortages seem to be evermore serious, Brazil o c c u p i e s the unique position of having almost infinite possibilities for e x p a n d i n g agricultural output through adding acreage and through increased productivity [31, p.

106], Given the error in the choice of the development model, it was indeed fortunate that Brazil had the ability to take advantage of the agricultural export market. After the first oil shock in 1973, the government established a clear bias for industry over agriculture, and within agriculture there was a clear bias in favor of import substitution and exports. Credit subsidies, for example, went predominantly to large commercial farming enterprises, whose products tended to b e exported or substituted for imports [39, pp. 2-31. Producers of food for domestic consumption, w h o tended to smaller farms, received much less assistance. The value of agricultural exports in constant U. S. dollars increased from $4.9 billion in 1973 to an estimated $14.7 billion in 1984, with agricultural exports accounting for more than 60 percent of Brazil's total export value [39, p. 13; 24], The increases for six major export commodities are shown in Table 6.1. The rather stable value of sugar exports is remarkable given the fact that a large proportion o f the sugar production was, by 1984, being used as import substitution for the production of fuel alcohol. Export earnings from agriculture were obviously beneficial in managing the debt problem, but the tilt toward export agriculture had a deleterious effect on the distribution of land and income in

BRAZILIAN AGRICULTURE & THE DEBT CRISIS

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Table 6.1 VALUE OF MAJOR AGRICULTURAL EXPORTS, 1973, 1981-1984 3 (millions of U. S. dollars) Exports Beef Chicken Orange Juice Sugar Coffee Soybeans

1973

1981

1982

1983

1984

215

414

443

515

521

b

354

286

242

260

64

659

573

609

1,415

527

975

600

515

586

1,244

1,517

1,858

2,325

2,856

527

3,191

2,122

2,562

2,566

5,882 2,577 7,110 6,768 Source. [4]; 1984 data from [2, p. 377]. a T h e values e x p r e s s e d include basic commodities and p r o c e s s e d products. ^Negligible.

TOTAL

8,204

the rural sector. In Amazonia, the small-farm colonization aspect of the PIN was shelved in 1975 in favor of support for highly capitalized ranching and mining enterprises, which would generate more foreign exchange. Many small farmers, either purchasers or squatters, were evicted from their land by legal or violent means [5, p. 1050]. Similar situations occurred throughout the country as the commercial enterprises consolidated large holdings at the expense of small-farm food producers. The government's support for export agriculture w a s largely limited to production credits, but the large amounts of money provided to the commercial farming enterprises had a major impact. The National System of Rural Credit, established by Getulio Verges in 1937 as a means of assisting small farmers, directed most of its credits to the large producers. In 1979, 10 percent of the recipients received 72.8 percent of the loans [16], Since the interest rate was generally only one-fifth or less of the inflation rate, the commercial farmers often put the money into high-paying commercial savings accounts or u s e d it in land speculation. Food-crop producers were deprived of capital and could not compete for land inflated in value by the speculation. Despite the surpluses in export agriculture, Brazil had to import significant amounts of food [35, pp. 14-151. The government's preferential treatment of large-scale export agriculture made it difficult for the food producers to secure modern inputs of fertilizers and pesticides, b e c a u s e they lacked the credit

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CONSEQUENCES OF THE INTERNATIONAL DEBT

needed to buy these commodities which had become very expensive due to higher petroleum costs [39, pp. 57-591. Furthermore, the debt problem was made slightly more severe because the commercial operators required more petroleum fuel and petroleum-based fertilizers and chemicals than did the smallholders. As a result of the government's benevolence for export agriculture, food production in Brazil has remained relatively flat, while the production of export commodities, as shown in Tables 6.2 and 6.3, has increased dramatically. Table 6.2 gives the aggregate production of eight major farm crops for 1970 through 1983- Table 6.3 measures the change in production of these crops indexed to an average of the production figures of 1970-1972. The three-year average should counter the variability created by weather and other short-term factors. Although sugar, soybeans (as edible oil), and coffee are consumed in Brazil, they are primarily export crops, or, as in the case of sugar, used for import substitution. Sugar cane and soybeans clearly exceed food crops of rice, manioc, black beans, wheat, and corn. The impressive figure for corn is primarily attributable to the increased demand for livestock feed, which in turn is reflected in exports of beef and frozen chicken. Figure 6.1 shows production changes in food and export crops in relation to population. The export crops—sugar, soybeans, and coffee.—made impressive increases from 1976 to 1983, growing to 272 percent of the 1970-1972 averages. On the other hand, the food crops of rice, manioc, wheat, beans, and corn did not keep up with population increase. In 1983, the five food crops were only 94 percent of 1970-1972 production, while the population had increased by 33 percent. If corn is eliminated as a food crop because of its use as rations for animals intended for export, major food-crop production declined to only 81 percent of the 1970-1972 average. After the extremely poor performance of food crops in 1978 and 1979 (pardy due to weather conditions), the government increased its credits for agriculture. Wheat and rice farmers received twice as much money in the form of subsidized loans as their production proportions would have indicated, but the other important food crops, black beans and manioc, were almost ignored [39, pp. 20-231. Even though more money went to wheat and rice producers, the bias was still in favor of export agriculture, and relatively little money went to small-holders. Credit for the wealthy few lowered crop prices for all, increased the competition for land, and allowed profit-taking from the commercial loan market [39, pp. 24-251. Recognizing the poor performance of food crops, Agriculture Minister Nestor Jost set 1985 planting targets for food crops at two

BRAZILIAN AGRICULTURE & THE DEBT CRISIS

129

Table 6.2 PRODUCTION OF MAJOR AGRICULTURAL CROPS, 1970-1983 (thousands of metric tons) Export Crops

Food Crops

Year 1970

Sugar 79,753

Soybeans 1,508

29,465

Black Beans 2,211

Wheat 1,844

1971

80,838

2,077

3,103

14,130

6,593

30,229

2,688

2,011

1972

85,106

3,223

1,410

14,500

7,824

29,830

2,676

684

1973

91,994

5,012

1,746

14,186

7,160

26,527

2,332

2,(01

1974

95,624

7,876

3,231

16,273

6,764

24,798

2,238

2,858

1975

91,525

9,893

2,545

16,334

7,782

26,118

2,282

1,788

1976

103,173

11,223

752

17,751

9,757

25,443

1,840

3,212

1977

120,082

12,513

1,951

19,256

8,894

25,929

2,290

2,066

1978

129,145

9,541

2,535

13,569

7,296

25,495

2,194

2,691

1979

138,899

10,240

2,666

16,306

7,595

24,926

2,186

2,927

1980

146,290

15,153

2,133

20,374

9,748

24,045

1,969

2,641

1981

155,924

15,007

4,064

21,117

8,228

24,516

2,341

2,210

1982

184,219

12,835

2,007

21,865

9,718

24,039

2,907

1,820

1983

216,703 [4.1

14,582

3,331

18,744

7,750

21,746

1,587

2,265

Source.

Coffee 1,510

Corn 14,216

Rice 7,553

Manioc

million hectares over 1984. But he was unwilling to promise that adequate credits for f o o d crops would be available for 1985, even though he admitted that the government's bias for export crops was a major problem in food production [26], G o v e r n m e n t efforts to control inflation and to satisfy the people's demand for bread and wheat products targeted wheat for special subsidies and price controls. The efforts backfired, however, as the price controls increased the demand for wheat at the expense of m a n i o c a n d other grains, while weather conditions a n d inappropriate farming practices kept production down [39, pp. 42-44], Over the past decade, Brazil has normally imported over one half of its wheat consumption. Brazil did increase production by 100,000 tons in 1983, not as a result of government encouragement but

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CONSEQUENCES OF THE INTERNATIONAL DEBT

Table 6.3 CHANGES IN AGRICULTURAL PRODUCTION OF MAJOR CROPS, 1973-1983, INDEXED TO 1970-1972 AVERAGE Export Crops

Food Crops

Population

Sugar cane

Soybeans

Coffee

Corn

1970/72

100

100

100

100

100

100

100

100

100

1973

112

220

87

99

98

89

92

134

105

1974

117

347

161

114

92

83

87

189

108

1975

112

430

127

114

106

88

90

118

111

1976

126

495

37

124

133

85

73

212

115

1977

145

551

97

135

123

87

91

137

118

1978

158

420

126

95

100

85

87

178

121

1979

170

451

133

114

104

83

87

193

125

1980

179

668

106

143

133

81

78

175

128

1981

190

661

202

148

112

82

93

146

129

1982

225

566

100

153

133

81

115

120

132

1983

265

643

166

131

106

73

63

150

135

Year

Rice Manioc

Black Beans

Wheat

Source: Derived from Table 6.2.

because of favorable weather. Land once used for wheat in Rio Grande do Sul and Parana continues to be diverted to higher-priced export crops [231. The cost of wheat imports declined from about $1 billion in 1978/79 to a little more than $800 million in 1984 only because of government restrictions on imports. Export crop production increases have occurred because of extensive measures, not intensive practices. In 1984, agricultural exports registered an increase of more than $1 billion over 1983, but the increase was due to additional planting and especially to higher prices for coffee, cocoa, orange juice, and soybeans [11]. As shown in Table 6.4, land planted in food crops increased by only 6 percent from 1973 to 1983, while land devoted to export crops increased by 81 percent. For food crops, productivity per hectare has declined or improved only marginally. In 1983, yields for manioc and beans

BRAZILIAN AGRICULTURE & THE DEBT CRISIS

131

Figure 6.1 CHANGES IN BRAZILIAN AGRICULTURAL PRODUCTION AND POPULATION, 1973-1983

300 S 250 200

100 50 1973

1975

1977

Year

1979

1981

1983

Legend: - ___

Food Crops Export Crops Food less Corn Population

Source: Computed from Table 6.2. Base data are averages of 1970-1972.

were down significantly in comparison to 1973. While export crops have fared better, only coffee yields have improved greatly (Table 6.5). The rather unimpressive performance in yields generally reflects the extension of farming into new, marginal land and the low use of modern inputs such as fertilizer, pesticides, and improved varieties [1, p. 319]. In general, the producers of export crops have received more government credits and thus could purchase better seed, fertilizers, and pesticides and secure the better land. Food producers were pushed to the marginal land and could not buy modern inputs. Animal production in Brazil has not been impressive despite the vast territory devoted to ranching. The one area of significance is poultry, and here again production for export is favored. Brazil has found a favorable market for frozen chickens, as was shown in Table 6.1, and this in turn explains a significant part of the increase in corn production. Beef exports have increased, but at the expense of domestic consumption. Inflation and reduced purchasing power have forced Brazilians to switch to cheaper pork and poultry, and thus more beef is available for export [18]. Again, the need to generate foreign exchange takes precedence over domestic food requirements.

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CONSEQUENCES O F THE INTERNATIONAL DEBT

Table 6.4 AREA PLANTED IN MAJOR CROPS (thousands of hectares) % Change Crop

1973

1976

1979

1981

1982

1983

1973-1983

Rice

4,795

6,656

5,452

6,102

6,016

5,110

107

Manioc

2,104

2,094

2,111

2,067

2,126

2,021

96

Black Beans

3,815

4,059

4,212

5,027

5,930

4,069

107

Wheat

1,839

3,540

3,831

1,920

2,625

1,885

103

Com

9,908

11,118

11,319

11,520

12,601

10,742

108

22,461

27,467

26,925

26,636

29,298

23,827

106

Sugar Cane

1,959

2,093

2,537

2,826

3,073

3,447

176

Soybeans

3,615

6,417

8,256

8,501

8,202

8,136

225

Coffee

2,080

1,121

2,406

2,618

1,857

2,279

110

EXPORT TOTAL

7,654

9,631

13,199

13,945

13,132

13,862

181

30,115

37,098

40,124

40,581

42,430

37,689

125

FOOD TOTAL

TOTAL

Source.

[4].

Import Substitution Versus Food Import substitution is a c o m m o n practice used by developing nations to promote domestic industry and to reduce the drain on foreign exchange. Given Brazil's relative lack of domestic petroleum, the increasing price of imported oil, and the already sizable debt, the 1975 National Alcohol Program (PNA) made good sense. The technology had already b e e n developed in Brazil and, besides the balance of payment benefits, alcohol production from cane sugar or manioc could be quite favorable to small farmers, especially in the impoverished northeast. As initially presented, the PNA was not to detract from food production and was to have a variety of positive economic and social aspects. However, the political power of the large producers and the urgent need to reduce oil imports diverted PNA away from its social objectives and adversely affected food production. The government opted to direct 90 percent of the available credits and subsidies to sugar cane alcohol, mostly in the Sao Paulo region [14, p. 24], despite of the obvious merits of manioc. Manioc is more

BRAZILIAN AGRICULTURE & THE DEBT CRISIS

133

Table 6.5 YIELD FOR MAJOR CROPS (kg per hectare)

Crop

% Change 1973-1983

1976

1,495

1,466

1,393

1,348

1,615

1,517

101

12,638

12,150

11,825

11,849

11,307

10,760

85

584

453

518

466

490

390

67

Wheat

1,104

908

764

1,151

693

1,202

109

Corn

1,432

1,597

1,441

1,833

1,735

1,745

122

46,960

49,294

54,749

55,175

59,948

62,867

134

1,386

1,750

1,240

1,765

1,565

1,792

129

670 839 Computed from [4].

1,108

1,552

1,080

1,462

174

1979

1981

1982

1973

1983

Food Crop Rice Manioc Black Beans

Export Crop Sugar Cane Soybeans Coffee Source:

labor intensive, can be grown on marginal land, and is less seasonal. Thus, manioc alcohol production could have provided year-round employment for the abundant labor force of the northeast, where the soil is adequate for manioc but not for most food crops [33, pp. 225311. Because manioc has no political "godfather," its poor peasant growers could not compete with the politically powerful "sugar sheiks" of the southeast [7, p. 167]. With the support of government subsidies, the commercial farmers of the southeast bought out the small farmers, and land once devoted to f o o d crops was given over to sugar cane [14, p. 25; 33, pp. 229-30]. A program that could have improved the lot of the poorest farmers became a program that increased the inequity of land-holdings and reduced f o o d production. PNA has, however, significantly reduced the amount of oil imports.

The Prescription Works But Has Serious Side Effects The IMF prescriptions for Brazil's debt crisis have kept Brazil solvent but at a price that is unpleasant in the short run and perhaps highly

134

CONSEQUENCES OF THE INTERNATIONAL DEBT

detrimental to Brazilian society in the long run. Carlos von Doellinger of Brazil's Economic and Social Research Institute reflects the frustrations of the situation: The problem is that despite the fact that w e are producing more than w e c o n s u m e and, therefore, generating more wealth per capita, w e are forced to remit abroad the major part of the e x p o r t effort in order to pay the interest on the foreign debt [quoted in 37].

Despite occasional government statements that the economy is improving, Brazilians perceive a significant decline in real income and purchasing power. One Paulista stated bitterly: "The IMF comes in and harvests all the grain" [8]. After the second oil shock, Brazil cut its imports sharply, reduced government expenditures, and devalued the cruzeiro to encourage exports in an effort to maintain credit with foreign bankers. With the near collapse of Mexico in 1982, the cautious international bankers insisted that Brazil resort to the IMF for future credit and advice. The austerity measures proposed by the IMF were the type of severe conditions that U. S. Treasury Secretary Regan had recommended to the IMF [20]. Brazil was to cut government spending, end export subsidies, reduce imports to a bare minimum, and reduce inflation to below an annual rate of 100 percent. The IMF austerity conditions became more punitive with the onset of a world recession and the continuance of high interest rates, but Brazil has, with a significant amount of grumbling, complied with the requirements. The final price of the debt crisis and the austerity measures is yet to be ascertained, but an initial survey does not lend itself to optimism. In rural Brazil, the push for farm exports has not only defeated efforts to equalize land tenure but has resulted in increased inequity of land access and has accelerated the growth of an economically marginal rural proletariat. Export agriculture with modern inputs of machinery, fertilizer, and pesticides has pushed peasants off the land. Without land, these "bdias frias" (cold lunch boys) become low-wage seasonal laborers, subsisting on the margins of rural towns between occasional jobs [32, pp. 98-103; 10, p. 270]. The problem was exacerbated by the most severe drought in 100 years in the Northeast, where an estimated 30,000 to 60,000 died from hunger [18]. The emphasis on export agriculture and extraction of mineral wealth for export may have adverse long-range ecological effects. Marginal land is being farmed or mined without regard for soil depletion and erosion. In the Amazon, the rain forest is being

BRAZILIAN AGRICULTURE & THE DEBT CRISIS

135

cleared for mining, farming, or ranching in a manner that may result in profound resource impoverishment [5, p. 1052]. Streams in the Southeast are being polluted by residue from sugar cane alcohol distillers without concern for the aquatic life or the people who use the streams for drinking water [33, p. 2331. In the cities, the IMF (but in reality the debt crisis) is being blamed for unemployment, bread lines, and a loss of national sovereignty. Alan Riding of the New York Times [21] reported that the streets of Rio de Janeiro are filled with itinerant vendors and derelicts. Government health clinics have noted a rapid increase of malnutrition cases, and there is a crime wave brought on by the large number of unemployed youths. Then-President Figueiredo stated in December 1984 that food production had increased in 1983 and 1984 [29], but government statistics, as shown in Tables 6.1-6.5 above, demonstrate that the food is being exported or turned into alcohol for fuel. Since 1981, the per capita Gross Domestic Product (GDP) of Brazilians has declined by an average of 3-3 percent per year, while the price of food has increased in real terms [251. Inflation in mid-1985 was running at an annual rate of 250 percent, and the IMF stipulation that wage adjustments could be no more than 80 percent of inflation means that the buying power of Brazilian consumers will continue to erode. Unless President Sarney can find a "jeito" (a last moment, miraculous solution), urban unrest will be manifest when the initial euphoria of democracy fades. In addition to the problems of the countryside and the hunger and discontent in the cities, the debt crisis and the IMF prescription present a potentially serious national concern. Brazil has become dangerously d e p e n d e n t on the developed world for the foreign exchange needed to keep the economy functioning. Former Central Bank director Carlos Viacava reported that 95 percent of the trade surplus needed to service Brazil's foreign debt derives from trade with the ten richest nations and nearly one half is from trade with the United States [38]. Brazil is thus vulnerable to economic fluctuations and to external pressure. Many Brazilians believe the hard line of the IMF was dictated by the U. S. government through the U.S. votes on the IMF Board and through Federal Reserve pressure on the U.S. banks to w h o m Brazil owes large amounts of m o n e y [17]. Brazilians complain that they have lost their national sovereignty and are prisoners of the international bankers and the United States. When the nation returned to civilian rule in 1985, the n e w government had to seek a long-term restructuring of the debt while

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CONSEQUENCES OF THE INTERNATIONAL DEBT

attempting to reduce domestic discontent by increasing efforts in housing, education, and health care and by encouraging a shift to food production for domestic consumption [6]. The problems for President Sarney continue to be immense. The government must satisfy a restive population with food and services (more domestic spending and consumption) and satisfy the IMF bankers by generating surpluses to send abroad for debt service. The two requirements seem to be antithetical, and thus the prognosis is not good. Some hope does appear, however. Declining interest rates have reduced Brazil's overall debt and thus could lower debt service payments slightly. An expanding world economy and especially an expanding U. S. economy will increase Brazil's export opportunities. Moreover, since Brazil's exports are tied to the U. S. dollar, the current decline in the dollar vis-à-vis other currencies will make Brazilian exports more competitive. Finally, recent lower crude oil prices and Brazil's progress toward energy self-sufficiency will reduce the import bill and enhance the balance of trade surplus. These rays of hope may not be enough if the IMF, with U. S. encouragement, continues the hard line. This might be the proper time for the United States to accept the notes of optimism and to push the bankers and the IMF toward a reasonable long-term solution of Brazil's debt problem. Such action would seem to be critical to the survival of Brazil's fledgling democracy. References 1. BAER, Werner. (1983) The Brazilian Economy: Growth and Development, 2nd ed. New York: Praeger. 2. BANCO CENTRAL DO BRASIL. (1985) Boletim (No. 2). 3. BERRY, Albert and William R. Cline. (1979) Agrarian Structure and Productivity in Developing Countries. Baltimore: The Johns Hopkins University Press. 4. BRASIL, FUNDACAO INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATISTICA [IBGE]. (Various Years) Anuärio Estatistico do Brasil Rio de Janeiro: IBGE. 5. BUNKER, Stephen G. (1984) "Modes of Extraction, Unequal Exchange and the Progressive Underdevelopment of an Extreme Periphery: The Brazilian Amazon, 1600-1980." American Journal of Sociology 89: 10171064. 6. ECONOMIST INTELLIGENCE UNIT. (1985) Quarterly Economic Review of Brazil (No. 2): 8-12. 7. ERICKSON, Kenneth Paul. (1981) "State Entrepreneurship, Energy Policy and the Public Order in Brazil." In Thomas C. Bruneau and Philippe Capitalism: Brazil's Contemporary Faucher, eds., Authoritarian

BRAZILIAN AGRICULTURE & THE DEBT CRISIS

8. 910. 11. 12.

13. 14

15.

16. 17. 18. 19. 20. 21. 22. 23. 24. 2526. 27. 28. 29. 30. 31. 32.

33. 34.

137

Economic and Political Development. B o u l d e r , Colo.: Westview Press. Pp. 141-77. FOLHA D E SAO PAULO. (1984) September 2, p. 37. FURTADO, Celso. ( 1 9 8 4 ) "Time to A c c o m m o d a t e Debtor Nations." New York Times (April 22), Sec. 3, p. 3. HEATH, J . R. ( 1 9 8 1 ) "Peasants or Proletarians? Rural Labour in a Brazilian Plantation E c o n o m y . " The Journal of Development Studies, 17: 268-81. JORNAL D O BRASIL. (1984) Rio d e Janeiro.(June 11) p. 16. in Brazil: Regional KATZMAN, Martin T. ( 1 9 7 7 ) Cities and Frontiers Dimensions of Economic Development. C a m b r i d g e : Harvard University Press. KNIGHT, Peter T. a n d Ricardo Moran. (1981) Brazil: Poverty and Basic Needs. Washington, D.C.: T h e World Bank. KNIGHT, Peter T. a n d Ricardo Moran. (1981) "Bringing the Poor into the and Development D e v e l o p m e n t Process: T h e C a s e of Brazil." Finance 18: 22-25. KUTCHER, Gary P. a n d P a s q u a l e L. Scandizzo. ( 1 9 8 1 ) The Agricultural "Economy of Northeast Brazil. Baltimore: T h e J o h n s H o p k i n s University Press. LATIN AMERICAN REGIONAL REPORTS—BRAZIL. (1981) March 7, p. 5. LATIN AMERICAN REGIONAL REPORTS—BRAZIL. (1983) S e p t e m b e r 16, p. 7. LATIN AMERICAN REGIONAL REPORTS—BRAZIL. ( 1 9 8 4 ) October 19, p. 7. MAHAR, D e n n i s J. ( 1 9 7 9 ) Frontier Developmental Policy in Brazil: A Study of Amazonia. N e w York: Praeger. NEW YORK TIMES. (1983) September 26, sec. 4, p. 1. NEW YORK TIMES. (1984) August 12, sec. 3, p. 4 NEW YORK TIMES. (1985) January 3, sec. 4, p. 8. O ESTADO D E SAO PAULO. (1984) January 5, p. 26. O ESTADO D E SAO PAULO. (1984) January 7, p. 23. O ESTADO D E SAO PAULO. (1984) May 1, p. 26. O ESTADO D E SAO PAULO. (1984) J u n e 2, p. 23. O ESTADO D E SAO PAULO. (1984) August 16, p. 36. O ESTADO DE SAO PAULO. (1984) October 14, p. 38. O ESTADO D E SAO PAULO. (1984) D e c e m b e r 8, p. 2. PEREIRA, Luis Bresser. (1984) Development and Crisis in Brazil, 19301983. Marcia Van Dyke, trans. Boulder, Colo.: Westview Press. R O B O C K , Stefan. ( 1 9 7 5 ) Brazil: A Study in Development Progress. Lexington, Mass.: D. C. Heath. SAINT, William S. ( 1 9 8 1 ) "The W a g e s of Modernization: A Review of the Literature o n T e m p o r a r y Labor Arrangements in Brazilian Agriculture." Latin American Research Review, 16: 91-110. SAINT, William S. ( 1 9 8 2 ) "Farming for Energy: Social O p t i o n s U n d e r Brazil's National Alcohol Programme." World Development 10: 223-38. SCHMINK, Marianne. ( 1 9 8 2 ) "Land Conflict in A m a z o n i a . " American Ethnologist 92: 341-57.

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35. SMITH, Peter Seaborn. (1984) "Reaping the Whirlwind: Brazil's Energy Crisis in Historical Perspective." Inter-American Economic Affairs 37: 320.

36. SYVRUD, Donald E. (1974) Foundations of Brazilian Economic Stanford: Hoover Institution Press. 37. VEJA. (1984) Sào Paulo (October 3), p. 97. 38. VISAO (1984) Säo Paulo (September 3), pp. 62-64.. 39. WORLD BANK. ( 1 9 8 1 ) Brazil: A Review of Agricultural Washington, D.C.: World Bank.

Growth.

Policies.

Foreign Investment and Latin American Development: An Argentine Perspective WILLIAM J. FLEMING

The United States government, international agencies, and the private sector have poured many billions of dollars into the Latin American economies since the end of World War II. While those funds helped to generate change and growth, they did not precipitate sustained development. On the contrary, for the past several years, Latin America has experienced hyperinflation at nightmarish rates, rapidly devaluing currencies, and foreign debt crises that threaten both national solvency and political stability. Many nations endured radical swings in political power between the Right and Left, accompanied by substantial domestic violence. As analysts and policymakers search for solutions to these contemporary problems, it is well to recall that this is by no means the first time that massive flows of overseas investments have been followed by as much crisis as growth. From the last quarter of the nineteenth century to the eve of World War I, British capital moved into Latin America at an impressive rate. By 1914, British investments had increased tenfold and totaled more than one billion pounds. As with its contemporary counterpart, the flow was uneven and skewed toward a few major nations. Argentina, Brazil, and Mexico alone received 73 percent of Britain's pre-1914 Latin American investments [9, Tables 1 and 2], The geographic focus seemed to reflect the primary resource needs of the industrializing countries. Accordingly, foreign capital in the receiving nations concentrated on economic activities that represented infrastructure construction, which frequently facilitated exports. Railroad lines, for example, took slightly more than onethird of total British overseas investment. Public utilities and 139

140

CONSEQUENCES O F THE INTERNATIONAL DEBT

financial institutions accounted for another 20 percent. Subsequently, the nations favored by foreign capital developed primary export economies that depended on continual infusions of funds from abroad and on the strength of foreign markets. In the case of Argentina, this meant the rapid growth of an agroexport sector that is still the hallmark of its economy. The historical origins of the modern Latin American economies thus rest on three basic elements: foreign investment, infrastructure construction, and primary export-led growth. Although we know a great deal about each of these elements by themselves, we know very little about their causal relationships. Yet, resolving contemporary Latin America's economic troubles requires such knowledge. If foreign investment, for example, may be shown to consistently favor economic activities reflecting primarily the interests of the investing countries, then very little may be expected from public policies that favor overseas capital as a means of generating sustained development. The risks of heavy foreign debt that have become so obvious in recent years would hardly be justified if the risk-taking bore little hope of diverting a domestic economy away from dependency on international market conditions. The purpose of this study, then, is to examine the historical relationship between overseas investment and infrastructure construction in Latin America, with an emphasis on Argentina, in order to provide an initial test of whether a causal linkage existed in the past between those two essential elements of Latin America's economic growth.

British Investment: Motives and Consequences In a study of British overseas investments in Latin America, J. Fred Rippy identified the primary motive of these investments as profit, pure and simple [6, especially the Introduction], British capital was sent abroad in anticipation of higher profits than those "currently" available at home. Benefits (other than the receipt of profits) that may have occurred to either the recipient or home economies were largely accidental, secondary by-products of the investments themselves. In the recipient countries, overseas investments might have led to raising the standard of living, or to lowering it under new but poor labor conditions. If there was no master plan for "uplifting the natives," there was also no primary devotion to the economic interests of the United Kingdom. Rippy's analysis is frequently critical of British foreign investor behavior. In the early nineteenth century, the investors operated in

AN ARGENTINE PERSPECTIVE

141

almost total ignorance of real world conditions. In the 1820s, mining associations set out to obtain ore from areas devoid of workers, fuel, and roads; a churning company proposed to send milkmaids to the pampas; and one firm shipped furs and warming pans to the tropics. Of forty-six joint stock companies formed at this time, only three or four made a profit; most collapsed before 1840, nearly all by 1850. By the end of 1827, every Latin American bond issue had defaulted. By 1833, only half of the twenty-six mining companies remained, and only seven lasted until 1842 [6, pp. 17-18, 32], Given that disastrous early experience, the British investor turned elsewhere for profit, until later in the century. A slow return to Latin American offerings began in the 1860s, so that by the end of 1880, total British nominal investments in Latin American enterprises equaled £56 million with another £133 million in government bonds. Then, over two ten-year periods (1880s and 19031914), British private investment in Latin America reached unparalleled flows. During the first period, investments rose to £194 million in government securities and £231 million in private enterprises. By the end of 1913, total investments amounted to nearly £1 billion—£316 million in government securities and £683 million in private enterprises [6, Tables 3, 7, and 191. British overseas investment divides into three major categories for the period under study: government securities, railroads (the largest share of private enterprise investment), and other private enterprises. Until the mid-1880s most of overseas investment went into fixed-rate government securities with short-term interest payments. As a percentage of total investment, these instruments represented: 76 percent in 1865, 74 percent in 1875, 69 percent in 1880, and 64 percent in 1885. The downward trend after 1875 reflected escalating investments in private enterprise, a trend that became more marked from the 1880s forward. For that period, the divisions were: 45 percent in 1890, 47 percent in 1895, 42 percent in 1900, 45 percent in 1905, and 38 percent in 1913 (see Tables 7.1 and 7.2). The strong shift toward investment in private enterprises from the 1880s forward indicates a change from indirect investment in growth through financing government loans to direct investment in building the infrastructure for export-led growth. Railroad investments escalated strongly in the 1880s and even more strongly after 1900. From the late 1880s on, railroad investments consistently represented slightly more than one-third of all investments and roughly two-thirds of all private investment until the eve of World War I. If public utilities and financial institutions are added to

142

CONSEQUENCES OF THE INTERNATIONAL DEBT

railroads' share, the three consumed 20 percent of all investments in 1875, 47 percent in 1895, and 54 percent in 1913 (see Tables 7.2 and 7.3). That is, throughout the period 1875-1913, well over 90 percent of all British overseas investments went into government securities, railroads, public utilities, and financial institutions. With a significant proportion of private enterprise capital flowing from overseas into railroads in the late nineteenth century, distinguishing the nature of that investment becomes crucial to the nexus b e t w e e n international capital and Latin American development. The railroad systems of countries like Mexico and Argentina would eventually be established along axes that favored particular import-export relationships—with the United States in the case of Mexico and Europe in the case of Argentina. It is here that foreign investors seeking to promote economic activities favorable to home interests should be seen funneling their capital toward specific kinds of investments. However, until the last quarter of the nineteenth century, the overseas investor clearly preferred fixed-rate government securities. The shift to railroads represents an extension of this preference, made worthwhile by company profits that would accrue from carrying exports. This may seem contradictory, since most railroad stock in the nineteenth century was issued as ordinary shares. However, railroad construction at the time, in Argentina, for example, often involved government-guaranteed returns per kilometer of mainline valued at some officially recognized amount of capital. The data for Latin America as a whole indicate an investor preference for fixed-rate instruments. The overseas movement of capital exhibited an inverse relation to British home investment [4, Figure 1.2], When potential dividends from abroad looked more attractive than those at home, the British investor bought primarily fixed-rate government bonds and, secondarily, railroad stocks, bonds, and other debt instruments. Although private enterprise investment went into ordinary shares initially, it shifted quickly to fixed rate-instruments. Between the late 1860s and early 1880s, ordinary shares declined from 87 percent to 57 percent of total private investment. Preference shares, debentures, and mortgages (primarily the latter two) increased accordingly. From 1885 through 1913, the split between ordinary shares and fixedrate instruments averaged 43 percent and 57 percent, respectively [9, Table 71. Since the data are cumulative, they mask the strong appeal of fixed-rate instruments from the late 1870s forward. To achieve such significant changes in the percentage distribution between the two general types of issues, new issues must have b e e n

AN ARGENTINE PERSPECTIVE

143

Table 7.1 RAILROADS AND BRITISH OVERSEAS INVESTMENT IN LATIN AMERICA, 1825-1913 (000,000 pounds) Item Gov't, loans

1825

1865

1875

1880

1885

1890

1895

1900

1905

1913

21

62

129

123

161

194

262

228

308

445

Private issues

4

19

46

56

89

231

290

312

381

734

TOTAL

25

81

175

179

250

425

552

540

689

1179

Railroads

0

10

24

34

59

147

200

200

237

404

RRs as % of total

0

12

14

19

24

34

36

37

34

34

RRs as % of private 0 60 66 63 69 63 53 Sources-. [9, Tables 1 and 6] and [6, Tables 3 and 7 and p. 451.

64

62

55

Table 7.2 BREAKDOWN OF BRITISH OVERSEAS INVESTMENT IN LATIN AMERICA, 1875-1913 (000,000 pounds) Sector

1875

1885

1895

1905 £ % 237 (34)

Railroads

24

(14)

59

(24)

200

(36)

Public utilities

8

(5)

10

(4)

18

6)

41

Finance

3

(2)

4

(2)

40

(7)

35

(20)

73

(29)

258

Government issues

129

(74)

161

(64)

Subtotal

164

(94)

234

11

(6)

16

Subtotal

Other

1913 404

(34)

(6)

139

(12)

51

(7)

97

(8)

(47)

329

(48)

640

(54)

262

(47)

308

(45)

445

(38)

(94)

520

(94)

637

(92)

1085

(92)

(6)

32

(6)

52

(8)

94

(8)

TOTAL 250 (100) 552 (100) 175 (100) 689 (100) 1179 (100) Source: Derived from [9, Table 1], a D u e to rounding of both monetary and percentage figures, some percentages may appear to be off by one point.

144

CONSEQUENCES OF THE INTERNATIONAL DEBT Table 7.3 BRITISH INVESTMENTS IN LATIN AMERICAN AND ARGENTINE RAILROADS (000,000 pounds)

AREA Total investment

1880 179

1890 425

1900 540

1913 1179

Total private investment

56

231

312

734

Latin American railroads

34

147

200

404

Total Argentine investment

20

157

—

481

9

85

—

296

Total Argentine private investment

Argentine railroads 64 8 94 215 Sources-. Derived from [9, Tables 1, 2, and 61; and [6, Tables 3 and 7 and p. 451-

preponderantly fixed-rate. In the absence of data to make such an adjustment, it is clear that at least 75 percent of all British overseas investments (including government loans) was in fixed-rate instruments between 1865 and 1913 [9, Table 71. In other words, the aggregate data reflect an overwhelmingly strong pattern of indirect investment by the British overseas investor. The investor favored fixed-rate, relatively secure, and shortterm paying instruments issued by either governments or private enterprises. Based on this pattern, one might modify Rippy's characterization of the overseas investor's goals from profit, pure and simple, to income, pure, simple, and steady. At any rate, what the government or a particular business did with capital acquired through these instruments was of secondary concern to such an investor. If we add government obligations to those of the private sector, we find that although instruments of debt experienced a linear decline from 80 percent of British overseas investment in 1865 to 65 percent in 1913, they still represented two-thirds of the total. In the aggregate and except for the abnormal conditions of bankruptcy, receivership, default, and the like, capital arriving in Latin America from England carried with it little concern for and frequently no control over how the money was used, as long as it produced the steady income evidently desired by the investor. The nexus between foreign capital and infrastructure construction to support primary

AN ARGENTINE PERSPECTIVE

145

export-led growth favorable to developed countries appears to weaken significantly. It also appears that instead of an international focus, the investigation of such linkages requires a national or local focus. It was in the recipient countries that the decisions were made by government officials and business people about using the capital received from abroad. The Argentine Case As one of the major recipients of British capital, Argentina serves to illustrate the key role of national policy in shaping the impact of foreign investment. By 1914, Argentina had developed the largest railroad system in Latin America and the eighth largest network in the world. Argentina alone received approximately 40 percent of all British direct overseas investment in Latin America and an equivalent proportion of British investment in both government and private securities. Foreign purchases of railroad stocks and bonds occupied 45 percent of all investment in the country and 73 percent of all British investment in the country (see Table 7.3). Viewed in general terms, there seems to have been a close relationship between these investments and the historical transformations that caused the growth of Argentina's economy. At the core of the country's railroad network were four widegauge, British-owned lines: the Oeste (Western), Central, Sud (Southern), and Pacífico (Pacific). The emergence of the four lines in the nineteenth century paralleled the development of a national economy sustained by agriculture and stockraising on the humid pampa. By the beginning of this century, the national network was oriented toward the coast, and the four wide-gauge systems controlled the movement of goods and people to and from the ports of Rosario, Buenos Aires, and Bahía Blanca. The structure of this network contributed to the end of provincial insularity and the achievement of political unification. It also tended, however, to make the once vital interior economies of the north and west dependent on coastal prosperity and consumer demand [2], Thus, the country's foreign-owned railroads have entered into virtually all discussions of Argentina's growth, not from the relatively narrow angle of transportation economics but from a broader vantage point. They are the most conspicuous and significant indicator for viewing the impact of foreign investment and the international economy on the development of a Latin American nation that was free of many problems, such as overpopulation and high illiteracy rates, that seem to inhibit economic growth elsewhere. For this reason Argentina makes an excellent test case of the

146

CONSEQUENCES O F THE INTERNATIONAL DEBT

relationship development.

between

overseas

investment

and

domestic

Analysis The presence of the major British-financed rail lines on the pampa, the agroexport center of the country, implies that foreign investment in railroad construction concentrated in this region to provide the transport infrastructure to feed products to ports for export to England and other European nations. This characterization has never been subjected to statistical verification. To test its validity, the following hypothesis was formulated: For the period 1854-1914, railway construction in Argentina by private companies and public authorities divided along geographic lines: private/pampa, and public in the interior. To test the hypothesis, data were gathered from official government statistics covering the period 1854-1914 for these variables [1, pp. 1-231: • • • • •

Length of trunkline section in kilometers Whether the builder was a private or public entity Year of authorization for the trunkline section Year of completion for the trunkline section The location of the trunkline section

The location for each trunkline section was coded as "pampa" or "interior." The allocation of a section to one region or the other was determined by following a traditional definition of the pampa's limits. All areas outside the pampa were coded as "interior." The pampa's borders were taken to be: on the north, a line extending from just south of the city of Rosario to just south of the city of Córdoba; on the west, by the 64th degree of longitude; on the south, by the Colorado River; and on the east, by the Atlantic Ocean [7, pp. 15-21, and maps 1 and 2]. In modern times, "this area, comprising less than one-fifth of the land, supports two-thirds of the population and contains the country's major industries, urban centers, educational facilities, and wealth" [8, p. 231. The years covered by the test were coded into five categories: 1854-1861, prior to national unification; 1862-1879, prior to the opening of the pampa to settlement and development; 1880-1891, the

AN ARGENTINE PERSPECTIVE

147

first period of national growth based on primary exports; 1892-1901, severe financial crisis; and 1902-1914, the second period of exportled growth. These five periods coincide with traditional politicaleconomic divisions of the country's history. The data were then subjected to basic descriptive statistics and to a series of two-way crosstabulations. The results of the tests, presented in Tables 7.4 to 7.8, were both surprising and intriguing. Private vs. Public

Builders

Of the 223 trunkline sections built between 1854 and 1914, private companies constructed 81 percent. By geographic division, the pampa held less than half the sections. The two-way crosstabulation of builder (private/public) with geographic location (pampa/ interior) produced a contingency coefficient of only .008 (Table 7.4). What this means is that there was virtually no difference in the propensity of private and public builders to differentiate their construction activities by geographic location. The pampa was the site of 49 percent of the construction activities of private builders and 48 percent of that of public builders. These results sustain one null version of the hypothesis. That is, for the period 1854-1914, there was no relationship between whether the builders were private companies or public authorities and the geographic location of Argentine trunkline construction. The private, largely British-owned railroads showed no special inclination to build their lines in areas that would favor the development of an agroexport economy. Instead, Table 7.4 CROSSTABULATION OF BUILDER WITH LOCATION FOR TRUNKLINE SECTIONS COMPLETED, 1854-1914 Pampa

Interior

Row Total

88 (48.0

93 (51.4)

181 (81.2)

Count: Row %

20 (47.6)

22 (52.4)

42 (18.8)

Column Total

108 (48.4)

115 (51.0

223 (100.0)

Private: Count: Row % Public:

Contingency coefficient = 0.008 Source: The data base for this and all remaining tables is [1, Table 1, pp. 1-23].

148

CONSEQUENCES OF THE INTERNATIONAL DEBT

looking at the whole period 1854-1914, they showed as much interest in providing transport facilities to remote interior economies as in facilitating the development of the humid pampa on the coast.

Impact of Eras Included in the original data were two dates for each section: one for the year in which the line was authorized by the national or provincial government and one for the year the section was completed. Utilizing both dates permits us to identify not only the pace of construction but also the "interests" of builders in constructing lines and their regional orientation (as used here) by political-economic era. This gives us some insight into such salient questions as: Did private interests shift their attention during the boom of the 1880s to the pampa? To what degree did the international financial crisis of the 1890s affect the initiation of new projects and the completion of existing concessions? And did the recovery and second boom after the turn of the century precipitate a drive to expand the trunkline network? The initial answers to these questions are reflected in Tables 7.5 and 7.6 More than a third of the sections (37 percent) were authorized during the 1880s, while two-fifths (40 percent) were completed in that decade. By 1891 more than two-thirds of the system that was in place in 1914 had been approved for construction, while a little more than one half of the network had been constructed. The crisis decade of the 1890s depressed railroad construction activity tremendously, but the return of prosperity did not bring a parallel return of the pace of construction. During the 1890s, authorizations dropped by nearly 50 percent from the previous era. Whereas 40 percent of the system was built during the 1880's, only 20 percent was completed during the 1890s. After the turn of the century, construction increased slightly, but the number of concessions for new trunklines continued to decline. In fact, the percentage of the eventual network that was authorized between 1902 and 1914 was half of that for the decades of the 1860s and 1870s, prior to the first national economic boom. In other words, the bulk of Argentina's national network was already in place by the end of the economic boom of the 1880s, and the pace of trunkline construction dropped thereafter. That the apex occurs in the 1880s is consistent with the traditional view of that period as a time of strong foreign-oriented public policy and of dedicated investor interest in the pampa's development. However, an analysis of both construction and authorization patterns for the 1880s and subsequent eras reveals a slightly different

AN ARGENTINE PERSPECTIVE

149

Table 7.5 FREQUENCY DISTRIBUTION OF TRUNKLINE SECTION CONCESSIONS IN ARGENTINA, 1854-1914* En

Absolute Frequency

Relative Frequency %

Cumulative Frequency %

1854-1861

12

5.4

5.4

18Ó2-1879

57

25.6

31.0

1880-1891

83

37.2

68.2

1892-1901

43

19.3

87.4

1902-1914

28

12.6

100.0

To:al 223 100.0 Source: [1, Table 1, pp. 1-23). ^"Concessions" refers to the year in which the government (provincial or national) authorized the line.

Table 7.6 FREQUENCY DISTRIBUTION OF TRUNKLINE SECTION CONSTRUCTION IN ARGENTINA, 1854-19l4 a Absolute Frequency Era

Relative Frequency %

Cumulative Frequency %

1854-1861

4

1.8

1862-1879

32

14.3

16.1

1880-1891

90

40.4

56.5

1892-1901

44

19.7

76.2

1902-1914

53

23.8

100.0

1.18

TOTAL 100.0 223 Source: [1, Table 1, pp. 1-23]. a"Construction" refers to the year in which the trunkline section was completed.

geographic emphasis for transport investments (Tables 7.7 and 7.8). For the 187 sections built between 1880 and 1914, the division between privately and publicly built is 82 percent and 18 percent, respectively. The geographic distribution of the sections favored the interior: 43 percent on the pampa and 57 percent in the interior.

150

CONSEQUENCES OF THE INTERNATIONAL DEBT Table 7.7 CROSSTABULATION OF BUILDER WITH LOCATION FOR TRUNKLINE SECTIONS COMPLETED BY ERA, 1880-1914

Era 1880-1891

Builder Private: Public:

1892-1901

Private: Public:

1902-1914

Private: Public:

1880-1914

Private: Public:

Pampa

Interior

Row Total

Count Row % Count Row %

28 (42.4) 12 (50.0)

38 (57.6) 12 (50.0)

66 (73.3) 24 (26.7)

Count Row % Count Row %

21 (55.3) 0 (0.0)

17 (44.7) 6 (100.0)

38 (86.4) 6 (13.6)

Count Row % Count Row %

19 (38.0) 0 (0.0)

31 (62.0) 3 (100.0)

50 (94.3) 3 6.7)

Count Row % Count Row %

68 (44.2) 12 (36.4)

86 (55.8) 21 (63.6)

154 (82.4) 33 (17.6)

Column Total

80 (42.8)

107 (57.2)

187 (100.0)

Source. [1, Table 1, pp. 1-231.

Private builders favored the interior over the pampa by 56 percent to 44 percent, respectively (Table 7.7). Unfortunately, the cell sizes for two of the three eras covered by this period are too small to permit the use of standard measures of association. Nevertheless, the contents of the cells are intriguing. For two of the three eras (1880-1891 and 1902-1914), private builders constructed more sections in the interior than on the pampa. The public sector built no lines on the pampa and few in the interior after 1891. What is important here for the proposition that the foreign-financed lines favored the pampa-based export economy is that these two periods represent the major boom eras in the nation's pampa-based growth. One would expect a flurry of construction activity to accompany the export economy's "takeoff." Instead, 58 percent of the sixty-six sections completed by private companies in the 1880's were in the interior. During the second boom period, after the turn of the century, 62 percent of the fifty privately built sections appeared in the interior (Table 7.7). In order to check for a "lag" factor biasing the results reported in

AN ARGENTINE PERSPECTIVE

151

Table 7.8 CROSSTABULATION OF BUILDER WITH LOCATION FOR TRUNKLINE SECTIONS AUTHORIZED BY ERA, 1880-1914

Era

Builder

1880-1891

Private: Public:

1892-1901

Private: Public:

1902-1914

Private: Public:

Pampa Count Row % Count Row %

32 (43.8) 10 (100.0) 42

Interior

Row Total

41 66.2) 0 (0.0)

73 (88.0) 10 (12.0)

41

Column Total

60.6)

Count Row % Count Row %

18 (45.0) 0 (0.0)

Column Total

18 (41.9)

Count Row % Count Row %

13 62.0) 0 (0.0)

25 (58.1) 12 (48.0) 3 (100.0)

Column Total

13 (46.4)

15 (53-6)

(49.4) 22 (55.0) 3

(100.0)

(100.0) 40 (93.0) 3 (70) 43 (100.0) 25 (89.3) 3 (10.7) 28

(100.0)

Source. [1, Table 1, pp. 1-23].

Table 7.7, crosstabulations were also run for era of authorization. The first set derives from the completion dates for the sections. It thus represents the end of a process that, for some or even many lines, may have started before the booms began, or at least became evident to private investors. Petitions for permission to build new lines, however, should represent both the current and anticipated profitability of constructing lines in one or the other of the two regions under consideration here. Table 7.8 contains the results of the crosstabulations by era of authorization. Certainly, promoters rushed to build lines on the pampa during the 1880s. More lines were approved for construction during that era than in the next two eras taken together. However, the activity extended into the interior with even greater intensity. Of the seventy-three sections granted to private entrepreneurs, 56 percent were for interior lines. Because the public sector focused exclusively on the pampa, the overall division between the two regions is nearly 50-50.

152

CONSEQUENCES OF THE INTERNATIONAL DEBT

During the 1890s, when the country fell victim to a deep financial crisis, new concessions declined significantly. However, the private sector continued to focus on the interior, with 55 percent of its forty sections located there. The public sector switched its focus to the interior, although the financial crisis obviously hindered this sector, with only three concessions recorded in a ten-year period. Still, the overall division between the two regions favored the interior by 58 percent to 42 percent of the new authorizations. The division in favor of the interior declined but did not end during the second boom when 54 percent of the new concessions were located in the latter region. However, the number of concessions had dropped to such relatively low levels that percentages become misleading. For example, the private sector did favor the pampa in its concessions by 52 percent to 48 percent, but this means by just one section. On the basis of such descriptive statistics, it appears that a second null version of the hypothesis is denied. That is, there is a relationship by economic era between the geographic location of Argentine railway construction and whether the builders were private companies or public authorities. However, the relationship stems not from the concentration of the private sector on the pampa, but the focus of both the private and the public sectors on the interior. This runs counter to the conventional wisdom that private companies favored the pampa export sector over the interior. The reader should bear in mind that the above tests are based on construction activity, specifically the number of sections (not kilometers) built. The tests examine the inclination manifested by private investors operating with foreign capital to build lines according to geographic criteria, that is, to favor an agroexport region over any other region. For this reason, the data in Tables 7.9 and 7.10 are interesting. During the period 1854-1914, a total of 17,084 kilometers of trunklines were constructed. Of that amount, 51 percent were on the pampa and 49 percent elsewhere. Private companies constructed 93 percent of the pampa's share and 88 percent of the interior's share. Overall, they accounted for 91 percent of all kilometers of trunklines built. The public sector constructed almost twice as many kilometers in the interior as it did on the pampa; however, the numbers were not large in comparison with the private efforts. For most of the period 1854-1914, the private companies favored the interior over the pampa. Only during Argentina's second major boom did the private companies begin to concentrate their efforts on the pampa in terms of total kilometers built. Moreover, nearly 800 kilometers (52 percent) of the difference in favor of the pampa is

AN ARGENTINE PERSPECTIVE

153

Table 7.9 TOTAL KILOMETERS OF TRUNKLINES CONSTRUCTED, 1854-1914 Pampa Kms % 36 (100)

Interior Kms 0

Era 1854-1861

Total Kms 36

1862-1879

1770

943

(53)

827

(47)

1880-1891

7063

3094

(44)

3969

(56)

1892-1901

3219

1433

(45)

1786

(55)

1902-1914

4996

3246

(65)

1750

65)

TOTAL 17,084 Source. [1, Table 1, pp. 1-23].

8752

(51)

8332

(49)

% (0)

Table 7.10 TOTAL KILOMETERS OF TRUNKLINES CONSTRUCTED, BY BUILDER AND LOCATION, 1854-1914

Era 1854-1861

PAMPA Private Public Kms % Kms % 36 (100) 0 (0)

INTERIOR Private Public Kms % Kms % 0 0 (0) (0)

1862-1879

771

(82)

172

(18)

764

(92)

63

(8)

1880-1891

2705

(87)

389

(13)

3231

(81)

738

(19)

1892-1901

1433

(100)

0

(0)

1603

(90)

183

(10)

1902-1914

3246

(100)

0

(0)

1694

(97)

56

(3)

TOTAL 8155 Source. [1, Table 1, pp. 1-23].

(93)

597

(7)

7292

(88)

1040

(12)

accounted for by a single, north-south line connecting the ports of Rosario (Santa Fe province) and Bahia Blanca (southern Buenos Aires province). Questions Raised Because it is not designed to answer many vital questions linked to the general theory from which the hypotheses were formulated, this initial analysis leaves a number of issues untouched, while it

154

CONSEQUENCES OF THE INTERNATIONAL DEBT

raises several more. A look at any railroad map for Argentina from the beginning of this century will show that there were many more lines within the pampa region than in any other region. The difference, we may suspect, lies in branchline construction; the test just reported dealt only with trunkline construction. In general terms, the trunklir.es come in anticipation of demand and are thus often developmental by their nature, while the branchlines come in response to existing demand along the course of an established line. Assuming that subsequent study verifies this distinction, questions would naturally arise concerning why the "interior" trunklines did not generate sufficient traffic to justify the construction of many more branches than apparently occurred. This problem requires a closer look than has been taken to date at the nature of the regional economies of Argentina, and at a number of railroad-related problems that other analysts have raised [4, 5, 11]. For example, the lines in the interior tended to stretch out over long distances with few interconnections. Some provinces had little or no railroad service. Scholars have also questioned the quality of railroad service, the freight rate policies the companies pursued, and the linkages to provinces specializing in consumables for sale to the booming coastal markets. These and many other issues must be examined closely before we will have an adequate answer to the general question of what impact British overseas investment in Argentine railroads had on the nation's domestic development. What this analysis makes clear, however, is that the answer will not be found in a presumed propensity on the part of British capital to support railroad construction exclusively or primarily on the pampa to generate and service a primary-export agrolivestock economy. This test also reveals that although the effort to identify international linkages between foreign investment and Latin America's e c o n o m i c growth has been both interesting and beneficial, the focus of historical analysis must be reoriented to the domestic national, regional, and local levels. It is here where foreign capital made its effects felt. It is here where the economic activities of those who benefited from foreign sources of capital were carried out. And it is here where empirical analyses will indicate the degree to which grand theory and historical reality are in agreement. The data for Argentina demonstrate the need for such a reorientation. Foreign investors did indeed favor infrastructure construction among private sector activities, but they did so in pursuit of higher returns than they could get on home or other foreign investments. Their funds did not flow overseas for the

AN ARGENTINE PERSPECTIVE

155

purpose of constructing infrastructure to support the growth of primary exports of benefit to the home economy. Instead, because Argentina made railroad construction itself profitable, regardless of where the lines were built, and because the foreign investor was concerned with high returns, not where the companies they supported built lines, foreign capital supported at least as much trunkline construction activity in the interior as it did on the coast. The result was the most extensive trunkline network in Latin America, one that connected all the Argentine provinces of the time. Why the country's railroad system (trunk plus branch lines) turned out, by 1914, to be oriented toward the coast and to have concentrated on the humid pampa and its agroexport economy is not a question that can be answered fully by the analysis presented here. The data examined in the body of this work, however, do suggest a viable explanation. Private companies built trunklines throughout the nation from the 1860s through the early 1890s in anticipation of stimulating the economic growth of the areas through which their tracks ran. The national policy of guaranteeing a fixed return on authorized capital invested per kilometer of trunkline made it possible for concessionaires to acquire the financial support of foreign investors. This practice came to an end in the early 1890s when Argentina experienced a severe debt crisis that lasted for most of the decade Q31 and [10] are the key works on this subject). The payment of the guarantees had contributed to the debt burden and had to be terminated as part of the solution for overcoming the crisis. During the debt crisis years, foreign investment virtually dried up, and both construction and requests for new concessions declined sharply. After Argentina recovered from the crisis around the turn of the century, trunkline construction picked up, and branchline construction boomed. In the absence of the earlier guarantees, companies paid greater attention to more immediate and real profits from a line's yearly operations. Construction was thus more closely attuned to market forces than before. Since regional economies of the interior had not responded as well as the pampa to the spread of rail lines, their networks did not blossom with branchlines or interconnecting trunklines. The interior lines, after all, had to compete with the pampa lines for fresh capital to support new construction. With the pampa economy expanding in unprecedented terms, the profitability of investing in railroad construction there seemed immediate, whereas the languishing interior economies could hold out no such hope. This financial reality pulled foreign capital toward pampa investments, a multiplier

156

CONSEQUENCES OF THE INTERNATIONAL DEBT

effect took over, and the result was both a national economy and a national transport network oriented strongly toward the coast and the export sector. If foreign capital did little to direcdy stimulate the growth of a national economy dependent on primary exports, it also did little to prevent such dependent growth from dominating the country's economic life. Contemporary Implications The historical record has a great deal to offer contemporary investors, analysts, and policymakers. First, Argentina's nineteenth century experience with massive inflows of foreign capital does not justify fears that such funds condition the direction of national growth. Public policies favorable to foreign investment will not necessarily perpetuate the boom-bust cycles of dependent growth. Whether they do so will depend on how recipient nation policies condition the flow and favor one sector or another of the domestic economy. The effects will also depend on what the public sector does with the capital it receives from abroad and how the private sector invests the funds it receives. The lesson is that the crucial decisions to be made are local and need to rest on local cultural, social, economic, and political factors, not foreign concerns. The financier is interested in profit; the nation is interested in development. The path to development chosen by a country is thus of little concern to the international investor as long as the latter may reap an attractive profit from financing movement along the path. Argentina fared best in the nineteenth century when public policy actively sought the spread of rail lines throughout the country through the guarantee system. The country fared worst, from the standpoint of domestic development, when railroad construction was left to market forces. Second, Argentina's experience also reveals that the neutrality of foreign capital (its concern with profit, pure and simple) requires that the flow of funds be conditioned. Otherwise, when large amounts of capital become available under loose credit terms, the flow of funds will rush over the economic terrain in haphazard fashion. It will cover dubious if not absurd activities with the same facility that it underwrites viable concerns. The data from the early nineteenth century may seem to represent an extreme and exceptionable case in point, but during Argentina's first major boom later in the century, similar events occurred. The problem is that uncontrolled access to too-easy credit eats

AN ARGENTINE PERSPECTIVE

157

up valuable credit lines and piles up foreign debt disproportionate to any reasonable hope of paying off that debt. That is, only a certain portion of the indebtedness underwrites economic growth enterprises that have a solid chance of eventually producing enough revenue either for private interests or the state to cover its debt. Thus, it becomes necessary to contract more debt, not to promote growth, but to meet payments on old debts. As long as easy credit obtains, this can be done, but when credit begins to dry up, the recipient nation will begin to slide rapidly into a severe debt crisis. This happened to Argentina in the early nineteenth century, in the 1890s, and in recent years. Finally, a nation's development plans are best served by contracting foreign debt through instruments of indirect investment. These provide the means for transferring capital from where it is abundant to where it is scarce while allowing the recipient nation the greatest latitude in determining how the funds are to be used. Fomenting direct investment in private enterprise by overseas investors necessarily places the decision as to which activities and sectors are to be promoted in the hands of foreigners with restricted interests. That is, such investors may be concerned with expanding some home company's operations, or with short-term profits, or with marketing particular products. Their primary focus, in any event, will be on the balance sheet of the enterprise, not on the growth and development of the nation. They will also be far less likely to put their money into long-term developmental projects, preferring instead to follow short-term market conditions. The creditors for a country's foreign debt, on the other hand, have a vested interest in the nation's growth and development in general. They are automatically committed to the health of the recipient nation's economy, not just to a particular enterprise's profitability. Moreover, this de facto partnership means that in times of economic distress for a developing nation, the latter can count on the assistance of foreign creditors in overcoming the crisis. Whereas the overseas entrepreneur who has direct investments in private enterprise can sell off stock or close down a plant, the foreign creditor is in no such position. Even when a foreign debt crisis becomes severe, as in the 1890s and in the last few years for Argentina, foreign creditors must work with debtor nations to help them out of the crisis in order to recover their money. In short, the historical record of the relationship between foreign investment and Latin American development suggests strongly that, used carefully, foreign-debt-driven economic growth works more to an underdeveloped country's benefit than to

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its detriment and can in fact be the means to achieve sustained d e v e l o p m e n t . Rather than i n c r e a s i n g the r e c i p i e n t n a t i o n ' s d e p e n d e n c y on foreign nations and their markets, foreign capital can reduce external dependency.

References 1. ARGENTINE REPUBLIC. (1926) Estadística de los Ferrocarriles en Explotación. Buenos Aires: Ministerio de Obras Públicas. 2. FERRER, Aldo. (1971) La Economía Argentina: Las Etapas de su Desarrollo y Problemas Actuales. Buenos Aires: Fondo de Cultura Económica. 3. FORD, A. G. (1962) The Gold Standard, 1880-1914: Britain and Argentina. New York: Oxford University Press. 4. FORD, A. G. (1975) "British Investment and Argentine Economic Development, 1880-1914." In David Rock, ed., Argentina in the Twentieth Century. Pittsburgh: University of Pittsburgh Press. 5. PULLEY, Raymond H. (1966) "The Railroad and Argentine National Development, 1852-1914." The Americas 23:1 0 u n e >6. RIPPY, J. Fred. (1977) British Investments In Latin America, 1822-1949New York: Arno Press. 7. SCOBIE, James R. (1967) Revolution on the Pampas: A Social History of Argentine Wheat, 1860-1910. Austin: University of Texas Press. 8. SCOBIE, James R. (1971) Argentina: A City and A Nation. New York: Oxford University Press. 9. STONE, Irving (1977) "British Direct and Portfolio Investment in Latin America Before 1914." Journal of Economic History 37, p. 3. 10. WILLIAMS, John H. (1920) Argentine Trade Under Inconvertible Paper Money, 1880-1900. Cambridge, Mass.: Harvard University Press. 11. WRIGHT, Winthrop R. (1974) British-Owned Railways in Argentina: Their Effect on the Growth of Economic Nationalism, 1854-1948. Austin: University of Texas Press.

SECTION 3

Coping with the Neighbor to the North: Mexican-U.S. Relations Relations between Mexico and the United States represent a paradox. On the one hand, in the period 1982-1986, Mexican officials complained about a U.S. "campaign against Mexico" featuring strong public attacks by administration leaders on a wide variety of Mexican policy actions. And according to one U.S. observer, "the Mexican ambassadorship may well be the most difficult U.S. foreign mission" [6, p. 15]. On the other hand, in the view of Mexican commentator Jorge Castañeda, Mexican-U.S. relations have not traditionally been an item on Mexico's agenda of critical, unsolved problems. Relations have varied over time, depending on the governments and the issues in question. But aside from the endemic asymmetry between the two neighbors, relations have not been a major headache for either country [1, p. 300].

The relationship is a continuing, often prickly problem but one with which Mexico regularly copes. Perhaps the key to understanding this apparent contradiction is the distinction between the public statements of officials and commentators carried in the press and the quieter official relations through normal diplomatic channels. Official diplomatic relations between Mexico and the United States have been characterized by both calm and conflict. Major substantive issues do divide the nations, and on occasion these have led to conflict. Over time, however, the extensive shared interests tend to produce solutions, as Story's analysis of trade relations shows. Public pronouncements on both sides of the border, however, frequently reflect a range from suspicion to abrasiveness. Given the key role of anti-U.S. attitudes in forming Mexico's sense of nationalism, "for a Mexican writer or political leader to say very much publicly in favor of the United States would cause him to lose credibility" [6, p. 10], Thus, public 159

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statements by Mexican officials, and headlines, are often abrasive or challenging. However, they are commonly accompanied by more moderate actions carried out quietly. U.S. public statements, for their part, have traditionally reflected considerable insensitivity and, in the 1980s have also frequently been abrasive or challenging. The actual contradiction, then, is that on both sides of the border, official relations tend to show more civility and rationality than the accompanying public statements. Mexican-U.S. relations have never been easy. The 2,000-mile border, the acquisition of half of Mexico's territory by the United States, the cultural and language differences, the major difference in economic level, and the extensive economic and cultural interchange between the countries have produced great Mexican sensitivity to the behavior of the Colossus of the North. The United States, however, has not reciprocated. The primary international political focus of the United States is on Europe, and although Mexico is the United States' third largest trading partner, it represents only 6 percent of the total. Thus, Mexicans feel that they are insufficiently understood by the United States and that U.S. policy does not sufficiently consider their position and interests. Relations are further marred by prejudices and stereotypes on both sides. U.S. stereotypes of Mexicans as indolent and incompetent reinforce the tendency to look elsewhere and to treat Mexico in an offhand fashion. Mexicans, too, have their prejudices. Mexicans often stereotype North Americans as "joyless, work-obsessed, culturally deprived and overly aggressive" [3, p. 4], A 1986 New York Times poll found that Mexicans considered "their way of life and moral and social values to be far superior to those of people in the United States." They were particularly concerned about drug abuse in the United States. Nevertheless, the poll found that "a large majority of Mexicans consider the United States to be a friend" and admire "its democratic system of government and strong economy" [8]. Until 1970, Mexican foreign policy tended to be relatively passive and low key.... Mexico turned inward toward achieving a rather impressive record of political stability and economic development. The outside world was regarded as a hostile and dangerous force and the role of foreign policy was to insulate the internal efforts to make Mexico a viable nation from the Cold War and global conflict [5, p. 1031.

Mexico's major foreign policy concern was relations with its large and dominating northern neighbor. Primarily in response to the threat posed by the United States, Mexico developed as the guiding

MEXICAN-U.S. RELATIONS

l6l

principles of its foreign policy nonintervention and national sovereignty. In the 1970s, however, Mexican foreign policy became more assertive and activist, attempting where possible to blend the practical necessity of coexisting with the United States with a highly independent, often leftist international position—a pattern that continues to the present. President Luis Echeverría (1970-1976) began the change, although the initial shifts he made were more symbolic than substantive. On tangible bilateral issues he was cooperative and conciliatory, but he also tried to change the Mexican economy to make it less dependent, substantially increased relations with other nations and international institutions, and vigorously championed Third World issues. His successor, José López Portillo (1976-1982), appeared to seek more cooperation than confrontation with the United States; however, strengthened by diminishing U.S. influence and the growing importance of Mexico's recent oil discoveries, López Portillo made Mexico a regional power with a new-found interest in Central America. Although President Miguel de la Madrid (1982-1988) generally used milder rhetoric than his predecessor, he continued the basic foreign policy direction of his predecessors [5, 4], Of the variety of issues that are a part of Mexican-U.S. relations in the 1980s, three are generally viewed as most important: the wars in Central America, Mexico's substantial foreign debt, and the large number of illegal Mexican immigrants in the United States. Historically, Mexico had essentially ignored the Central American nations, but under López Portillo in 1979, it broke relations with Nicaragua's Somoza and supported the Sandinista guerrillas. In 1981, it added support for the Left in El Salvador. This activity caused Mexico to be vigorously denounced by other Latin American nations as interventionist and produced substantial conflict with the United States. Nevertheless, Mexico has continued to be highly critical of U.S. actions in the region. While U.S. policymakers have tended to paint Mexico's position as one of unthinking, reflexive support for the Left in the region, Mexico sees its actions as realistic coexistence with present and future powerholders. The policy is defended on three grounds. First, the policy is not one of simple support for the Left as such. Rather, it is a policy of coexistence with a wide plurality of nations, which is seen as realistic. This realism meant support for the leftist Sandinistas (who eventually won) but also for the government of Guatemala even when it was rightist and repressive. Guatemala's leftist opposition was not seen as viable, and Mexico was not anxious to see revolution spill over its border with Guatemala. Second, Mexican leaders believe that their actions have

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allowed them to play a moderating role—restraining Cuban activism in Central America, heading off greater dependence on Cuba by the Central American Left, and tempering Sandinista policy. Third, the Mexican government's support for the international Left is a means to the e n d of protecting its own domestic position. It increases support or at least acquiescence from the domestic Left and reduces intervention b y the foreign Left. "Cuba has refrained from supporting leftist activities in Mexico.... Similarly, the Central American Left studiously refrains from criticizing Mexico or stirring up Mexican domestic politics" [4, p. 238]. This last reason for Mexico's policies seems to be accorded insufficient weight by U.S. officials [4, pp. 237-39; 2, pp. 216-17, 224-251. Despite the heat generated by the Central American issue, probably the two most difficult issues facing Mexico and the United States are repayment of the international debt and the illegal alien issue. Mexico has long enjoyed substantial and sustained e c o n o m i c growth. However, the combined effect of high population growth, the weakness of the international oil market, the $85 billion international debt, and poor domestic e c o n o m i c performance since 1982 has created severe problems that are affecting relations with the United States. Principal a m o n g Mexico's problems are the issues of repayment of the d e b t — o w e d primarily to U.S. institutions—and trade relations with its largest trading partner, the United States. Finding solutions is made more difficult by the differing perspectives of the two nations. T o the United States, international debt and falling oil prices are primarily e c o n o m i c problems that involve contractual obligations and changed supply and demand relationships in markets. To Mexicans, there is both an e c o n o m i c and a domestic political dimension. To Mexicans, the banks to whom they owe debts are both creditors and villains, and falling oil p r i c e s are a reflection not only of m a r k e t p l a c e p h e n o m e n a but also are a source of lost face and diminished national pride [3, p. 1].

The issue of the large Mexican immigration to the United States is o f great significance to Mexicans for two reasons. One is rooted in nationalistic sentiments. It should not be surprising that the fate of one's countrymen, whether in the United States legally or illegally, is o f great c o n c e r n . In addition, the reactions to the immigrants' situation are filtered by the long standing sensitivity to U.S. actions. The second reason this is such a difficult issue is that immigration to the north has long served as a safely valve for social and e c o n o m i c pressures in Mexico. "The border separates the largest per capita

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income disparity of any two neighboring countries in the world" [9, pp. 213-14]. Those unhappy with their lot have the option of leaving rather than staying and considering revolution. Repatriation of funds by immigrants is also important to many left behind and to the economy itself. In the 1980s, Mexico's more independent foreign policy— particularly its support of the Left in Central America—put it into sharp conflict with the more assertive and conservative orientation of the Reagan administration. The result was a period, from 1982 to at least 1985, of very harsh public rhetoric by Washington criticizing a wide range of Mexican policy and behavior—what Mexicans called "the campaign against Mexico." A central figure in this was the U.S. ambassador to Mexico, John Gavin, who became unusually visible and critical. By 1986, the intensity of the rhetoric had diminished [6]. An indication of the complexity of Mexican-U.S. relations is that while public attacks on Mexico by some Washington officials continue, Gavin's successor as ambassador, Charles Pilliod, Jr., avoids abrasive public diplomacy and "regularly orders diplomats under him to revise their reports, telling them to stress the positive in their messages to Washington" [7]. Two of the major problem areas affecting Mexican-U.S. relations are explored in this section. Dale Story, a specialist in Mexican political economy, analyzes Mexico's most important trade relationship—that with the United States. He details the development of Mexican trade policy and the difficulties of negotiating with a giant. Although he concludes that Mexico has made substantial concessions, he also finds that it has gained some of its principal objectives for increasing access to U.S. markets. In the concluding chapter, historian Manuel Machado takes a colorful look at a very serious set of problems—the Mexico-U.S. border. He is critical of both countries' failure to recognize the interdependence of the border region and pessimistic about the ability of either side to deal with the human and economic problem of the undocumented immigrants—those who have entered the U.S. illegally. A brief review of the contemporary Mexican period would begin with the major social revolution of 1910-1917. Since 1929, Mexico has b e e n dominated by a single party, the PRI (Institutional Revolutionary Party), which contains most of the major sectors of the country, except for the military and big business. Originally revolutionary in its thrust, in the post-World II period, it has b e c o m e more conservative in practice, while maintaining the revolutionary rhetoric. The opposition comes from a series of

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smaller parties, the most important of which is the conservative and relatively pro-U.S. PAN (National Action Party). The dominant g o v e r n m e n t a l institution in the country is the presidency. The president is c h o s e n in a c o m p l e x bargaining p r o c e s s by the preceding president and then formally elected by popular vote for a single six-year term. The President, w h o has very great but not absolute power and influence, directs the country's foreign policy.

References 1. CASTANEDA, Jorge G. (1985/86) "Mexico at the Brink." Foreign Affairs 64 (Winter): 287-303. 2. FERRIS, Elizabeth G. (1984) "Mexico's Foreign Policies: A Study in Contradictions." In Jennie K. Lincoln and Elizabeth G. Ferris, eds., The Dynamics of Latin American Foreign Policies: Challenges for the 1980s. Boulder, Colo.: Westview Press. Pp. 213-28. 3. GILBREATH, Kent. (1987) "Much on Mexico's Minds." Houston Post (January 3), sec. 6, pp. 1, 4. 4. LEVY, Daniel C. (1986) "The Implications of Central American Conflicts for Mexican Politics." In Roderic A. Camp, ed., Mexico's Political Stability: The Next Five Years. Boulder, Colo.: Westview Press. Pp. 23564. 5. POITRAS, Guy. (1981) "Mexico's Foreign Policy in an Age of Interdependence." In Elizabeth G. Ferris and Jennie K. Lincoln, eds., Latin American Foreign Policies: Global and Regional Dimensions. Boulder, Colo.: Westview Press. Pp. 103-136. SCHMIDT, Henry C. (1986) "The 'Campaign Against Mexico': The Public Dimension of Mexican-U.S. Relations, 1982-86." Texas fournal of Political Studies & (Spring/Summer): 8-28. 7. STOCKTON, William (1986) "Ambassador Puts Happy Face on U.S.Mexico Relationship." Houston Chronicle (December 28), sec. 1, p. 26. 8. STOCKTON, William. (1986) "Mexicans Proud of Moral Values." Houston Chronicle (November 17), sec. 1, p. 1. 9. WILLIAMS, Edward J. (1986) 'The Implications of the Border for Mexican Policy and Mexican-United States Relations." In Roderic A. Camp, ed., Mexico's Political Stability: The Next Five Years. Boulder, Colo.: Westview Press. Pp. 211-33-

Mexican-U.S. Trade Relations DALE STORY

From the Mexican point of view, trade with the United States has been a crucial aspect of Mexico's foreign policy and its domestic development in the postwar period. 1 In the 1940s, 80 percent of total Mexican trade was with the United States; in the 1950s, 75 percent of Mexican exports went to the United States and 77 percent of its imports came from the United States; in the 1960s the same figures were 69 percent for exports and 67 percent for imports and in the 1970s 67 percent for exports and 62 percent for imports (Table 8.1). Despite some diversification, by 1982 the United States still bought over 53 percent of all Mexican exports and supplied 62 percent of all Mexican imports. The United States receives approximately 50 percent of Mexico's crucial petroleum exports and accounts for about 70 percent of Mexico's manufactured imports. Mexico has become an increasingly important trade partner for the United States. By 1980, Mexico was the third largest trading partner of the United States, accounting for some 6 percent of the total, behind only Canada (16 percent) and Japan (11 percent). Of course, Mexican petroleum imported into the United States is by far the most important commodity. Mexico has been the only nation to sell oil to the U.S. Strategic Reserve. It is now the major single supplier of oil imported into the United States (accounting for 20 percent of U.S. oil imports in 1982). The United States and Mexico in 1982 traded $26.5 billion of goods—down somewhat from the peak year of 1981 in which total Mexico-U.S. trade reached 30 billion dollars. The commercial ties have not been of equal benefit to both nations, however. Although often seen in the United States as a simple case of asymmetry, the Mexico-U.S. trade links are a classic 165

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Table 8.1 U.S. PERCENTAGE OF MEXICAN IMPORTS AND EXPORTS

Total Exports Excluding Oil Oil only Total Imports

1975

1976

1977

1978

60.5 58.2

61.9 58.9 77.0

66.6 62.2

70.5 60.9 88.7

73.5

80.5

62.8 62.6 61.0 63.5 Source: Instituto Mexicano de Comercio Exterior.

1979 78.2 72.8 84.1

1980

1981

1982

64.4 69.6 61.5

48.2 63.7 41.0

53.4 n.a. na.

64.9

67.2

66.5

62.2

e x a m p l e of what is w i d e l y perceived in M e x i c o as e c o n o m i c dependence. While those trade links are important to the United States, they are absolutely essential to Mexico. As stated b y one author, "Mexico needs the United States much more than the United States needs Mexico" [11, p. 10]. Without imported U.S. goods and the revenues from its exports to the United States, the Mexican economy w o u l d b e in a disastrous position. For example, reductions of imported U.S. goods in 1982 (caused by the economic crisis within M e x i c o ) contributed to the closing of hundreds of enterprises and the loss of thousands of jobs. A n y cutbacks in Mexican petroleum revenues have immediate repercussions throughout the economy, beginning with the federal budget. Mexico's role in this trading relationship is also indicative of what is commonly seen in the United States as its less d e v e l o p e d status and in Mexico as a dependency status. Mexico's exports to the United States, are almost all natural resource products (led by oil, f o l l o w e d by c o f f e e and cotton), while its U.S. imports are primarily manufactured goods. Thus, Mexico's position in the international division of labor is seen as a seller of primary products and a buyer of finished goods. Finally, the inequalities in the relationship are s h o w n by the almost perpetual trade deficit incurred by Mexico (Table 8.2). This deficit began to rise in 1972, peaked in 1975 at $2,393 million, dropped from 1975 to 1978, and peaked again in 1981 at a record $5,682 million. The Mexican trade balance in 1982 was a surplus of over $4 billion only because the severe e c o n o m i c crisis caused imports to plummet more than 35 percent. T h e only surpluses for M e x i c o in its commercial ties with the United States have b e e n in the areas of tourist trade and border industries. M e x i c o is a major tourist attraction, especially for U.S. travelers, and in 1978 over 3.7 million tourists (86 percent from the United States) came to M e x i c o . Their expenditures in that year represented s o m e $1.1 billion in income for Mexico. Mexicans usually d o not spend nearly that amount in their travels abroad, so tourism is normally a net benefit. In 1979, the net contribution from

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Table 8.2 MEXICO'S TRADE DEFICIT WITH THE UNITED STATES 1970 Trade deficit with U.S. (mn $) % of total trade deficit

1971

1972

1973 983 53.2

580

440

434

53.3

47.2 1977

1978

41.2

1979

1974

1975

1976

2115

2393

1716

65.9 1980

64.5 1981

63.4 1982a

Trade deficit 5682 1324 2564 with U.S. (mn $) 777 792 % of total 36.2 80.2 trade deficit 54.6 37.8 177.9 Source: Instituto Mexicano de Comercio Exterior. a In 1982, Mexico enjoyed a trade surplus overall and with the United States.

-4000 —

tourism to the Mexican balance of payments was some $800 million. The border industries ( m a q u i l a d o r a s ) consist of over 600 assembly plants in Mexico located along the border with the United States. These so-called "in-bond" or "twin" plants benefit from a number of legislative exemptions from both countries. The most important of these are U.S. tariff items 806.30 and 807.00, which allow the deduction of the cost of the U.S. components when calculating the tariff [10, pp. 64-65; 14, pp. 90-911. For its part, Mexico waives import duties and foreign investment restrictions for the maquiladoras. Thus, a Mexican border industry will import duty-free U.S. components, assemble the components, and export them back to the United States—paying a tariff only on the "value added" in Mexico (primarily labor costs). These industries have created over 110,000 jobs for Mexicans, and have produced a net balance of payments surplus for Mexico ranging from $500 to $900 million in recent years. The income from tourism and border transactions does not offset the total trade deficit for Mexico, which continues to feel slighted and disadvantaged in its trading relationships with the United States. Both sides have used protectionist strategies, and the trade initiatives of both countries will be discussed here. However, due to the nature of the relationship, the policies of the United States have undoubtedly had the greater impact and, hence, have been the more controversial. Protectionism in Mexico Despite earlier measures granting some tax exemptions to new industries, expanding public credit institutions, and increasing tariffs

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for some industries, Mexico did not deliberately use e c o n o m i c policies to protect and promote industry until after 1940. T h e protectionist era in Mexican trade policy was ushered in by two dramatic decrees in July 1947: the creation of import controls and a change in the tariff system. The officially declared purpose of these measures was to correct the balance of payments deficits incurred after World War II, but the actual intent (as demonstrated b y the size of the tariff increases and the types of goods subjected to controls) was to protect many Mexican industries from foreign competition. The tariff decree increased a number of duties, and in November of 1947 the method of levying duties was changed from specific to compound (a combination of specific and ad valorem methods), which halted the erosion of the effectiveness of the specific rate. Most of the items selected for the tariff increases, which were as much as 100-200 percent, were basic consumer goods, strongly suggesting a protectionist purpose behind the new tariffs. The import control system had actually b e e n created in 1944 under an emergency war powers act, but it was not applied until 1947. The type of goods subjected to import licensing under the 1944 decree suggests that an underlying purpose was protectionism for import-substituting industries. Until the summer of 1947, the government had one general list and several minor lists of goods requiring permits, and the majority o f these g o o d s w e r e semimanufactured or finished products that were competing with the domestic output. The controls were not applied, however, until July 1947, when a group of luxury goods representing some 18 percent of total imports in 1946 were prevented from entering Mexico in order to correct the balance of payments deficit. Even this ban on luxury goods was adopted with an eye to protectionism. For instance, the ban on automobiles was accompanied by annual quotas o n imports of assembly parts, so that between 1946 and 1948 the number of automobiles assembled in Mexico increased from 10,460 to 21,597. Thus, the 1944 decree and the 1947 application of import controls, along with the 1947 changes in the tariff system, set up the framework for the protectionist system of postwar Mexico. T h e import controls were eased in 1951, but reimposed and extended in 1954 when a number of consumer goods were added to the list o f controlled imports. Beginning in 1959, industrial integration (or "backward-linking" industrialization) was emphasized as a major objective of protectionist policies. Manufacturers were encouraged to buy substantial domestic components, especially in electronics and automobiles.

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169

During the 1960s, the promotion of industrial integration continued to be a major goal of trade policies, though some emphasis was being placed on more efficient production of domestic goods and on the exportation of manufactured goods. No major revisions were made in tariffs, but the number of items in the tariff code subject to import controls increased from 44 percent in 1962 to 60 percent in 1966. The greatest protection was afforded to those items with the largest degree of product elaboration in the internal market. President Echeverría reinforced the system of protectionism in the first half of the 1970s through a general tariff rise and the extension of controls to all imports. Liberalization Trade liberalization received its first impetus under the administration of López Portillo, when the petroleum boom improved the balance of payments picture for Mexico and the demand for imports escalated. López Portillo began to replace import licenses with tariffs and to lower tariff levels gradually. In 1979 he initiated a policy of figuring import duties according to the "normal value" of the imported goods rather than the "official price." This change was an attempt to produce "economically rational" duties that in most cases would be lower than previous duties. The greatest effect of these measures was to increase the imports of durable consumer and capital goods. The process of trade liberalization has not been a steady one. With the deficit in the external sector growing in 1981, new measures were taken in the summer of that year to stem the flow of imports. Tariffs were raised substantially on some 300 "luxury" goods, and import controls were reestablished on almost all items. Of course, the imposition of foreign exchange controls and the general lack of foreign exchange in mid-1982 greatly reduced the level of imports. Although the scarcity of foreign currency continued in 1983, the new government of Miguel de la Madrid revived the goal of trade liberalization. The average level of tariffs was reduced from over 20 percent to about 15 percent, and the policy of granting prior permits on imports was eased. The Secretary of Commerce and Industrial Development, speaking before the National Association of Importers and Exporters, summarized the trade policy of the de la Madrid team when he criticized the "permanent protection" of previous governments and emphasized the goal of making Mexican industries more competitive in international markets [6], By the summer of 1985, import permit requirements had been lifted for 60 percent of Mexican trade commodities.

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Bilateralism. The Gatt decision? Despite the highly protectionist nature of postwar trade policy in Mexico, the United States seldom pressured Mexico to liberalize until the late 1970s. From the U.S. perspective, the most crucial decision in decades was the question of Mexico's entry into the General Agreement on Tariffs and Trade (GATT). After over a year of debate, President Lopez Portillo announced in March 1980 that Mexico was postponing membership "indefinitely." U.S. policymakers were obviously displeased and pointed out that the decision would result in the cancellation of bilateral agreements favorable to Mexico that had been negotiated during the Tokyo Round of trade talks from 1973 to 1979, that countervailing duties on Mexican exports could be more easily applied, and that Mexico would lose other benefits of the multilateral GATT umbrella.. The GATT decision reflected the prevailing Mexican view that a bilateral approach to trade negotiations with the developed nations (rather than the multilateralism of the GATT) was in Mexico's best interests [71. Specifically, Mexican officials argued that Mexico should link its petroleum sales to purchases of Mexican manufactured goods abroad and should pursue a generalized system of preference concessions with individual countries. The new variable of enormous petroleum reserves provided Mexico, it was argued, with the political opportunity to gain trade and other economic advantages through bilateral negotiations. On a multilateral level (as with the GATT), this leverage, it was said, would be diminished. Certainly, at the time of the GATT decision the power of Mexico's oil wealth was an attractive and probably reasonably effective tool in bilateral relations. A North American Common Market. Mexico's preference for bilateralism in relations with industrial countries has also been evident in its strong and persistent rejection of a North American Common Market [7, pp. 142-43; 10, pp. 70-71]. The idea of a regional economic integration scheme linking the United States, Canada, and Mexico first surfaced during the Carter administration, although its chief advocates were U.S. businessmen. Lopez Portillo and other Mexican officials objected that such a scheme would reduce Mexican sovereignty and was only a U.S. subterfuge for acquiring a steadily increasing supply of Mexican oil and for ensuring Mexican markets for U.S. industrial products. Indeed, Mexican critics argued that economic integration schemes historically have created "poles of development" in the advanced nations to the detriment of the lower income nations, and no plan has ever envisaged a common market between such disparate economies as the United States and Mexico

MEXICAN-U.S. TRADE RELATIONS

171

without compensating mechanisms. Realizing the Mexican resistance to such a concept, the Carter administration quickly disassociated itself from the idea and blamed it on individuals outside the government [1], This regional integration plan was one case in which U.S. policymakers were sensitive to Mexican concerns about national autonomy. As was the case with the GATT decision, the Mexican government manifested its preference for international economic negotiations with industrial nations through bilateral channels that provided it some leverage rather than through multilateral institutions that were perceived to favor the developed countries.

U.S. Protectionism U.S. protectionism, trade barriers, and even the removal of trade preferences and concessions have been controversial, undoubtedly because the Mexican economy is so vulnerable to U.S. trade initiatives. Trade policy is a perfect example of the old adage, "whenever the United States sneezes, Mexico comes down with pneumonia." The slightest changes may greatly affect Mexico, and many political actors in that country invariably react with considerable hostility to any new obstacles to Mexican products entering the United States. Our purpose here is not to evaluate the validity of such protests, but to present both the actions and reactions and to underline the political differences that separate the two nations on these issues.

Generalized System of Preferences One of the most conflictual areas has been the application of the U.S. Generalized System of Preferences (GSP). Conceived as a system of trade preferences granted by developed countries to developing countries, the GSP was first discussed under the auspices of the UN Conference on Trade and Development (UNCTAD) as early as 1964. UNCTAD reached agreement on a GSP in 1970, and authority for tariff preferences under the GATT was obtained in 1971. The United States became the nineteenth developed country to enact a national GSP program in 1976, when it designed the GSP to make developing country products more competitive in the United States by exempting the designated products from U.S. import duties (up to certain levels). The United States provides GSP privileges to 114 developing countries and 26 dependent territories. The eligible countries must subscribe to certain rules regarding international trade, expropriated

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foreign property, international terrorism, and illegal drug trafficking. Communist countries are not eligible unless they receive mostfavored-nation treatment and are members of the International Monetary Fund (IMF) and the GATT; and OPEC nations are excluded if they raise vital commodity prices to an "unreasonable level" or withhold supplies. Mexico has been able to receive GSP benefits since the inception of the program in 1976, and the continued eligibility of Mexico is threatened only by congressional pressures to exclude the so-called newly industrialized countries. Some 2,700 different products have received GSP treatment, and the value of these imports has increased from $3 billion in 1976 to $8.4 billion in 1982 (equivalent to 3 percent of total 1982 U.S. imports or 13 percent of the dutiable imports from the 140 nations eligible for GSP). The list of eligible products includes certain agricultural items, most w o o d and paper products, some chemicals, and many manufactured items. Products excluded, to avoid damaging U.S. industries, include some textiles, watches, footwear, and import-sensitive electronic, steel, and glass products. Mexican exports to the United States under the GSP have risen from only $245 million in 1976 to $368 million in 1977, $458 million in 1978, $545 million in 1979, and $599 million in 1982. Competitive need limits. The controversy regarding GSP has centered on the removal of certain products from the program because of the so-called "competitive need limits." T o give the greatest advantages to those countries that are new or smaller suppliers of a given commodity, the law establishing the GSP set two automatic limits. GSP treatment is suspended for a product from a given beneficiary if, during one calendar year, that beneficiary nation provides over 50 percent of total U.S. imports of the product, or if the beneficiary's exports to the United States of that product exceed a certain dollar figure (calculated according to the U.S. GNP; the figure was $53.3 million in 1982). The Trade Agreement Act of 1979 amended the GSP legislation to allow for a presidential waiver of the exclusion due to the 50 percent criterion, so long as the value of the import was less than $1 million. Finally, each year the president may add or remove products according to how "importsensitive" U.S. industries have become. Prior to 1983, forty-four Mexican products had been removed from GSP because of competitive needs standards, and on March 31, 1983 (date of the annual review of GSP), eleven more were removed for competitive need. One additional product, Mexican beer, was removed under the "graduation" principle. (Four advanced developing countries—Korea, Taiwan, Brazil, and Mexico—have been graduated

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from GSP on certain products in response to petitions filed by U.S. producers and labor unions.) Beer was the first Mexican commodity graduated in this manner. The exclusion of seven additional Mexican goods from GSP in March of 1984 brought the total number of Mexican exports removed to sixty-three. The total value of these industries was claimed in Mexico to be close to $2 billion. Mexican sensitivity to GSP changes was made quite apparent by the immediate protests against the 1983 exclusions [13;2;8]. Various Mexican analysts and politicians claimed that the changes were designed to pressure Mexico on its Central American policy, would undercut the economic recovery, and would reduce Mexican sales to the United States by 30 percent in 1983- Many Mexicans also viewed the exclusions as a further blow to an economy facing a second consecutive year of negative economic growth. The beer decision, it was noted, seemed to have a purely political motive. Mexican beer sales, which were valued at $27 million in the United States in 1982, duty-free, were subjected to an import duty of six cents per gallon or about 2.4 percent. This product was selectively "graduated" at the request of U.S. producers (who wanted reciprocity on the Mexican side) even though it did not meet the competitive need criteria for removal. The decision on the other 11 products, however, was mandated solely by the GSP legislation, not by political objectives, and the economic impact on Mexico should not be great. The 12 products removed in 1983 represented $77.6 million of Mexican exports to the United States in 1982, and the total of all 56 Mexican exports removed from GSP was $1.7 billion in 1982. The latter figure was 15 percent of all Mexican exports to the United States and 38 percent of all nonpetroleum exports. However, removing those 56 exports from GSP did not result in a complete cutoff in their sales to the United States, or even in a significant reduction. Rather, they have become subject to the normal import duty, which is usually less than 10 percent. In 1985-1986, the White House and the U.S. Congress were discussing reforms in the GSP, and Mexican officials have expressed concerns over possible changes [4, pp. 12-191. Their fears focus on two issues. One proposed reform is to allow the U.S. president considerable flexibility in excluding products from a country that is not providing "fair and equitable access to U.S. products." A second possible change would involve lowering the competitive need limits from 50 percent to 25 percent and from over $50 million to only $25 million. Any of these moves would be viewed in Mexico as potentially detrimental to the Mexican export picture.

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Countervailing

Duties

One of the major consequences of Mexico's decision not to join the GATT was that the U.S. government became obligated to impose a countervailing duty (CVD) on any Mexican exports benefiting from a subsidy, and proof of damage did not have to be supplied. Usually, the impact of the CVD legislation has been minimal in the case of GATT members because one has to show proof of damage against a domestic industry. Such proof has been a severe hurdle in many attempts to enact CVDs. Simply demonstrating that an export enjoys a subsidy is often not difficult, and this was the only criterion applied to Mexico in the immediate aftermath of its GATT decision. Mexican development policies have utilized a number of export subsidies in recent years, including tax exemptions (labeled Cedis, these were temporarily suspended in August of 1982) and preferential export financing through government trust funds (specifically Fomex, Fonai, and Fogain). As of June 1983, thirteen cases had been filed to impose a CVD on Mexican exports (see Appendix). Decisions in three of these cases were pending. No subsidy was found for two products, and for the remaining eight, the CVD ranged from 2.85 to 17 percent (unless the individual producer voluntarily agreed to stop use of the export subsidy). In February 1984, the U.S. Department of Commerce made a potentially significant preliminary decision that Mexico (along with Brazil and Argentina) subsidizes its steel exports to the United States. Depending u p o n the results of the final determination, Mexican steel exports could face a CVD of 4.98 percent [91. "Anti-Dumping"

and Other

Restrictions

One of the most celebrated cases of Mexico-U.S. trade conflict was the 1978 "tomato war." Florida growers filed suit against Mexican producers for "dumping" their tomatoes in the U.S. market at artificially low prices (lower than the prices in Mexico). The Carter administration attempted to have the various parties negotiate an amicable solution, but the negotiations failed. Finally, the Mexican exporters and their U.S. allies (the Arizona distributors of Mexican agricultural products) convinced the U.S. Departments of Treasury and Commerce to apply standards that found no evidence of dumping. The Mexicans then were allowed to sell their tomatoes at their original prices. Despite the resolution of the 1978 tomato conflict, serious problems often arise regarding Mexican fruit and vegetable exports. The bilateral tariff reductions negotiated in 1977 were to b e a

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significant step toward a long-term solution. Essentially, Mexican agricultural commodities were to receive reductions in U.S. tariffs, while U.S. exports of machinery and some farm commodities would enjoy similar reductions in Mexican import duties. These bilateral arrangements had been negotiated in the context of the Tokyo round of multilateral trade negotiations, and were canceled when Mexico decided not to join the GATT. Thus, questions of import tariffs and charges of dumping remained potential problem areas. Aside from the issue of competitive price levels, some Mexican farm exports to the United States have been restricted because they have not met U.S. health or sanitation standards. At times meat and cattle have been prohibited, as well as a variety of fruits and vegetables (including strawberries, peppers, and cantaloupes). In late February 1984, the U.S. Food and Drug Administration imposed rigid new restrictions on imports of Mexican cabbage after finding widespread pesticide contamination (most specifically, DDT and benzene hexachloride, which are illegal in the United States and Mexico).

De la Madrid and a Bilateral Trade Agreement The administration of President Miguel de la Madrid has initiated a number of important changes in Mexican trade policy. As mentioned earlier, de la Madrid has renewed the trade liberalization policies that were begun but then dropped by López Portillo. In addition, the administration has resurrected the notion of GATT membership. Commerce Secretary Héctor Hernández Cervantes, who was the leading advocate of the GATT under López Portillo, began pushing Mexican entry into the GATT again in the summer of 1985. Though such a decision still faced strong opposition from many small and medium-size industrialists, by mid-1985 important members of the de la Madrid administration had made clear their desire to examine seriously any possible advantages of GATT membership. In December 1985, the government announced its intention to negotiate Mexican entrance into the GATT. On April 3, 1985, in a third area of trade policy change, representatives of Mexico and the United States signed an "Understanding on Subsidies and Compensatory [Countervailing] Duties." 3 For its part, the United States recognized that subsidies can be an "integral part of economic development programs," and Mexico promised not to apply any subsidies that would adversely affect the interests of the United States. Specifically, Mexico would

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dismantle the program of Cedis and not engage in preferential pricing practices that affect exports. Furthermore, Mexico agreed to gradually eliminate all export financing with a maturity of two years or less. (By September 1, 1985, one-third of the financing subsidy was to be eliminated; 50 percent by December 31, 1985; and 100 percent by December 31, 1986). Regarding financing with a maturity greater than two years, Mexico agreed to abide by interest rates stipulated by the Organization for Economic Cooperation and Development (OECD—a group dominated by the advanced, industrial nations). Mexico also promised not to include any export subsidies in future development programs and to avoid any nonexport subsidies if they caused or threatened to cause damage to a U.S. industry. In return for these concessions, the United States would use the injury test provision (prueba de dañó) in applying CVDs as if Mexico were already a GATT member. Before applying a compensatory duty, adverse effects on U.S. industries "must be demonstrated through positive proof utilizing formal proceedings and investigations prescribed in U.S. law applicable for determining the economic impact of Mexican exports on a productive sector in the U.S." The agreement concludes by stating that the two nations will begin consultations with the goal of reaching a more comprehensive means for dealing with bilateral trade relations [3, 51. Mexico is making substantial concessions in terms of export subsidies but does gain its principal objective: the injury test. Mexico's remaining preoccupation in its trade relations with the United States is the GSP and what Mexico perceives as unfair and harmful treatment in the elimination from favorable treatment of many Mexican commodities. That Mexico join the GATT remains the major goal of the United States. While the de la Madrid government has now indicated its intention to move in this direction, there is always the possibility that internal opposition could mobilize to block the move. Having gained the injury test in bilateral negotiations with its most important trading partner, Mexican officials have at least minimum protection to fall back on if the plans to join the GATT are not successful.

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Appendix Status of Countervailing Duty (CVD) Cases as of June, 1983 1. Leather Wearing Apparel—Initial CVD of 5 percent set in April 1981, but raised to 13-35 percent after 1982 annual review. The three largest exporters, however, receive no export benefits and thus have no CVD. 2. Ceramic Tiles— Initial CVD of 17 percent set in April 1982. However, twelve Mexican firms were found to have no export subsidies and thus face no CVD. 3. Toy Balloons and Playballs CVD of 5.97 percent for balloons and 6.23 percent for playballs set in December 1982. 4. Polypropylene Film—CVD of 5.68 percent set, but producers agreed to dispense with export subsidies in December 1982. 5. Pectin—CVD of 11.9 percent set, but producers agreed to stop use of export benefits in December 1982. 6. Litharge—CVD of 3.73 percent set in November 1982. 7. Polypropylene Yarn—CVD of 4.28 percent set, but producers agreed to stop use of export subsidies in February 19838. Iron Metal Castings (Manhole Covers)—CVD of 2.85 percent set in February 1983. 9. Anhydrous Ammonia—Investigation concluded in June 1983 that no subsidy applied. Thus, no CVD was imposed. 10. Asparagus—Investigation concluded in May 1983 that no subsidy applied. No CVD was imposed. 11. Carbon Black—Preliminary determination set CVD of 155 percent. 12. Portland Hydraulic Cement and Cement Clinker—Case filed March 7, 1983. 13. Pork Rind Pellets—Case filed April 11, 1983. Sources-. U.S. Embassy, M e x i c o City, and Instituto Mexicano de Comercio Exterior.

Notes 1. Research for this article was conducted in part at the Centro d e Investigación y Docencia Económicas, Mexico City, under a Fulbright grant in 1985. 2. For a more detailed analysis of the Mexican G A T T decision see [12]. (Mexico was formally admitted to G A T T on July 24, 1986—Editor.) 3. The full text of the document was published in 131 and 151.

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References 1. Address by Ambassador Nava at the annual meeting of the American Chamber of Commerce of Mexico. (1980) Mexico City: International Communication Agency, U.S. Embassy, June 5. 2. Address by the Honorable John Gavin, U.S. Ambassador to Mexico. (1983) Graduate School of Management, University of California at Los Angeles, April 28. 3. COMERCIO EXTERIOR. (1985) 35 (No. 6): 609-611. 4. DEL CASTILLO V., Gustavo. (1985) U.S.-Mexican Trade Relations: From the Generalized System of Preferences to a Formal Bilateral Trade Agreement. La Jolla, Calif.: Center for U.S.-Mexican Studies, University of California, San Diego. 5. DIARIO OFICIAL. (1985) May 15. 6. EXCELSIOR. (1983) January 1. 7. HUFBAUER, Gary Clyde, W. N. Harrell Smith IV, and Frank G. Vukmanic. (1981) "Bilateral Trade Relations." In Susan Kaufman Purcell, ed., Mexico-United States Relations. New York: Academy of Political Science. 8. INSTITUTO MEXICANO DE COMERCIO EXTERIOR. (1983) Bolettn Mensual. 9. LATIN AMERICA WEEKLY REPORT. (1984) February 17. 10. RANDALL, Laura R. (1981) "Mexican Development and Its Effects Upon United States Trade." In Robert H. McBride, ed., Mexico and the United States. Englewood Cliffs, N.J.: Prentice-Hall. 11. SMITH, Peter H. (1980) Mexico: The Quest for a U.S. Policy. New York: Foreign Policy Association. 12. STORY, Dale. (1982) 'Trade Politics in the Third World: A Case Study of the Mexican GATT Decision." International Organization 36 (No. 4): 767-794. 13. UNOMASUNO. (1983) April 1, 5, and 8. 14. WICHTRICH, AI R. (1981) "Mexican-American Commercial Relations." In Robert H. McBride, ed., Mexico and the United States. Englewood Cliffs, N.J.: Prentice-Hall.

"Una Cooperación Para las Sodas": Border Problems as Seen from Chihuahua MANUELA. MACHADO,JR.

Smilingly, the official of the Federal Vehicle Registry at the Chamizal International Bridge between El Paso and Ciudad Juárez delivered a long harangue about the inappropriateness of the documents I had presented to admit my car into Mexico. He wagged his finger. Only originals, not certified copies, could be accepted; new regulations (he shoved an illegible photocopy under my nose) had come down since I had last brought the car into Mexico; increasingly, stolen cars found their way into the border areas, had their numbers altered, and then were smuggled into the interior of the country. The official, however, declared that he recognized the difficulty such a regulation could cause, and since my car was from a state from which they had no suspected falsified registrations and titles, an exception could certainly be made this one time provided there was " u n a cooperación para las sodas" (a little help for the cost of the sodas). The cost of sodas certainly had increased! Yet, it was necessary to slip him 1,000 pesos. Weekends are not the time to start censuring minor corruption. There is no one at the consulate general on Sundays, and as a result, the border officials know that most tourists will pay the mordida (bribe) rather than go through the hassle of minor protests. That particular incident, similar to others occurring hourly, clearly underscores much of the problem with contemporary Mexican-U.S. relations. My drinking buddies in Chihuahua believe that the United States and its citizens provide an inexhaustible source of income, licit or otherwise, for Mexico. From the lowly tourist to major companies doing business in Mexico, greasing the skids facilitates the expedition of major and minor affairs. 179

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A Blurred and Troubled Border

Border

Culture

A love/hate relationship exists in northern Mexico and specifically in Chihuahua vis-à-vis the United States. This schizophrenia on the part of the chihuahuenses bears a direct relationship to the way Mexico and the United States interact along the border. El PasoCiudad Juárez constitutes the largest port of entry into Mexico. The free flow of Mexican and United States citizens that cross that border daily is so immense that it virtually obliterates the political delineation. Border culture, often scoffed at as being neither Mexican nor gringo, remains a potent force. The flow of Mexicans into the United States and the pervasive U.S. economic and cultural impact in northern Mexico underscore the essentially bicultural nature of the border region. The use of Spanish and English interchangeably continually demonstrates the persistence of a border subculture. Immigration—An

Old Thorn

Every year, hundreds of thousands of Mexicans clog the border, hoping to get into the United States either legally or illegally. Consequently, the illegal immigrants coming into the United States constitute one of the largest problems facing the two nations. They come to the border for a plethora of reasons, but they all have a single objective: to earn sufficient money to return to Mexico with a higher standard of living. In large measure, they do not come from Chihuahua. The majority of immigrants jammed into hovels along the border originate in central and southern Mexico; they are escaping from the failed land reform programs that do not provide them with even a subsistence income. The grants of twenty-five hectáreas (approximately 65 acres), unaccompanied by concomitant technology to make agricultural production profitable, are not sufficient to allow these small farmers to remain on the land. The result: flight to either the congestion of Mexico City, Guadalajara, or Monterrey, or al norte (to the north) in order to better their existence. The chihuahuenses, who suffer by some counts approximately a 90 percent failure rate on their ejidos (communal landholding systems), have a greater tendency to persevere and only escape to the border in extremis. Perhaps the harshness of the Chihuahua environment accounts for such tenacity. Historically the chihuahuenses have coped with unrelenting extremes.

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Border problems between Mexico and the United States emerge, in great measure, from Mexican domestic problems. The flood of illegal immigrants that enter the United States from Mexico provides a clear example of the failure of domestic programs to satisfy the basic necessities of the rural population. Cooptation of the peasants by the official party, the Partido Revolucionario Institucional (PRI) makes solutions unlikely. The peasants are but another cog in the unwieldy political machinery that the official party has become. To retain political power, balance contending forces, and maintain control, the PRI has had to engage in a constant juggling act between often antithetical forces. Traditionally, the border is an artifact created after the U.S.Mexican War of 1846-1848. After 1848, Mexicans continued to cross into what was once Mexican territory, although the flow was small until the turn of the century. They supplied an important part of the labor for the railroads and the growing cattle, sheep, mining, and agricultural enterprises that were shaping the Southwest. In large measure, the increase of Mexican population along the border between 1910 and 1920 resulted from the bloody revolution that raged in Mexico. Since that time, immigration has reflected economic growth patterns and the consequent demand for labor in both countries. The two world wars provided a strong incentive for Mexican laborers to immigrate to the United States, while the unemployment of the Great Depression and the early 1950s produced mass expulsions. By the same token, the current crisis of the Mexican economy has produced a flood of immigrants. Attempts by the United States to control the flow of immigration from Mexico have failed to stem the migrant wave. Changes in immigration laws in the early twentieth century failed to stop the draw of the border. Mexicans could easily acquire jobs and escape some of the unpleasantness of their homeland. Roundups by the Immigration and Naturalization Service (INS) do little good, for most of those who are returned to Mexico persist and find a way to enter once again. Even during the tenure of the bracero program (19421964), illegal immigrants continued to cross the border in hopes of bettering their existence. During the early 1950s, the INS (or the migra as it is commonly called) conducted massive roundups called Operation Wetback to halt the illegal tide. But the increased migra pressure failed to diminish significantly the pressure of Mexicans seeking entry into the United States. From 1964 to the present, the Mexican border states have continued to serve as "holding pens" for Mexicans hoping to enter the United States. Ciudad Juárez and Tijuana contain the largest congregations of Mexicans awaiting the

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opportunity to cross the border. Mexico has experienced the loss of some of its most ambitious workers who, having failed to make a living in their own country, seek alleviation of their economic woes in the north. Both Mexico and the United States recognize that the persistence of illegal migrants entering the United States constitutes a major problem in Mexican-U.S. relations. The early 1960s saw an attempt to reduce the incentives for the flow: an industrialization program aimed at the creation of light industries along the border. These maquiladoras produced an increasing number of jobs in Mexico. Generally, the factories assemble components produced in the United States. Once assembled, these consumer goods, ranging from television sets to blue jeans, are returned to the United States for sale on the U.S. market. The components enter Mexico free of duty, and the U.S. import tax on the finished product is only on the value added—mainly the labor. The maquiladoras have proven effective in the creation of jobs, but their presence has spurred occasional bursts of nationalism in Mexico, decrying the domination of the border economy by foreigners and pressing consistently for increased Mexican control of the enterprises.

Interdependence Advocates of dependency theory view the border as a classic example of the dependency of a developing nation upon another country that is already developed. Yet, the 1982 devaluation of the peso and its continued downward slide into fiscal oblivion highlight the interdependency that exists on both sides of the border. Prior to the massive devaluation of the peso, Mexicans crossed into border towns to purchase U.S. goods. Suddenly the acquisition of dollars became next to impossible. By mid-1983, according to some estimates, approximately 60 percent of businesses in El Paso had either gone bankrupt or clung precariously to a reduced existence. The demand for U.S. goods in northern Mexico, however, continues unabated. Mexicans in Chihuahua City, for example, accumulate dollars, get them across the border into U.S. banks, and then treat themselves to occasional buying sprees in El Paso. Even the most nationalistic chihuabuenses make shopping forays into El Paso. For those who cannot afford the trip, there is always El Pasito, a district in Chihuahua City where smuggled goods Qa fayuca) can be obtained. There is no real savings. Prices are often higher than in El Paso, but almost every consumer luxury is available. Stereos,

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digital watches, name-brand blue jeans, auto accessories, athletic supplies, and other luxuries abound—for a price. Cattle: Exports and Diseases A principal problem that continues to plague Mexican-U.S. border relations and underscores the mutual dependency of the United States and Mexican border regions can be found in the importation of cattle to the United States from northern Mexico. This problem, too, is fraught with internal political considerations for the Mexican government. Chihuahua, the largest producer of beef cattle in Mexico, has traditionally exported the bulk of its calf crop to the United States. However, Mexican domestic demands have reduced drastically the number of cattle available for exportation. Mexican federal policy juggles annually the number of cattle available for export and occasionally makes additional ad hoc adjustments during any given year. Chihuahua cattlemen consequently decry the limitation on their ability to make substantial profits, for they must sell to Mexico City at fixed prices and absorb transportation costs of cattle s h i p p e d to public slaughterhouses in central Mexico. Conversely, U.S. cattlemen have a chronic need for quality feeder cattle from Mexico, and an atmosphere of tension is the result. The drastic reduction of export cattle to the United States (from about 500,000 head in the mid-1970s to approximately 200,000 animals in 1985) has made the profitability of the Chihuahua cattle industry at best tentative. Valuable dollars become increasingly difficult to accumulate because the demand for red meat in Mexico City sharply restricts the ability of Chihuahua cattlemen to sell their feeder cattle in the United States. Also, the concern of the Mexican government for the welfare of the large blocs of voters in central Mexico outweighs the needs of cattlemen in Chihuahua. The persistence of livestock maladies in Mexico—principally fever ticks and screwworm—complicates the relations between the two countries vis-à-vis the livestock trade. Joint programs for the eradication of these problems have demonstrated the ability of both countries to cooperate when their mutual interests are at stake. At the same time, the severe but necessary restrictions by the United States limit the areas that can find cattle markets north of the boundary. Pollution, Politics, and Rain Occasional spasms of anti-U.S. sentiment manifest themselves in border newspapers. Every conceivable charge makes an appearance. For example, one Chihuahua newspaper in August 1985 accused the

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United States of using Mexico as a dumping ground for outdated goods, principally foodstuffs and medicines. A glaring page one headline screamed that "México es el basurero de los Estados Unidos" (Mexico is the dumping ground of the United States). Environmental pollution is another charge leveled against the United States. From salinity of the Colorado River to atmospheric pollution along the border, Mexicans complain incessantly about a diminution of their environmental quality. In point of fact, environmental pollution could become one of the principal issues in U.S.-Mexican border relations in the late 1980s. Another example might suffice. In the spring of 1984, I was teaching at the Autonomous University of Chihuahua. A student of somewhat leftist leanings tried to bait me in class. He asserted that U.S. cloud seeding to control hurricanes in the Gulf of Mexico was the principal cause of drought in Chihuahua that year. That same allegation appeared in a Chihuahua newspaper in the summer of 1985, a year in which they had an overabundance of water. Such sentiments merely form a part of the underlying animosity toward the United States. Even Mexican internal politics shares in the anti-U.S. schizophrenia. The increasing threat to the PRI by the Partido de Acción Nacional (PAN) and the PAN's victories in municipal elections in Chihuahua contribute to tension in the border areas. The PAN is conservative, private sector, middle-and-upper class, and entrepreneurial. Accusations have been leveled by local PRI leaders that an alliance exists between the PAN and foreign investors who want to take over Mexico. During the 1985 congressional elections in Chihuahua, PRI campaigners harped on this particular allegation to wean supporters away from the PAN. The very entrepreneurial nature of the chihuahuenses, however, made many gravitate toward the opposition party and gave rise to these accusations. PRI leaders validate their assertion by pointing out that the U.S. ambassador to Mexico at the time, John Gavin, met with PAN leaders prior to the July 7, 1985 elections. In a country that values symbolism, the meeting between Gavin and PAN leaders symbolized to the PRI that the United States actively supported the PAN and was, therefore, intervening in Mexican internal affairs.

Conclusions A combination of factors contributes to the tensions that affect Mexican-U.S. relations: corruption, from petty border officials to

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powerful political figures; illegal immigrants; continuing interdependence in border enterprises ranging from retail sales to maquiladoras to cattle; and the persistence of a distinct border culture. The failure by both countries to recognize the oneness of the border area results in sporadic assertions of nationalist sentiments by both sides. In 1987, the overriding problem afflicting U.S.Mexican border relations stems from Mexico's economic crisis. The paucity of dollars in Mexico makes it more difficult to acquire goods from the United States. The Mexican government attempts to stem the flow of U.S. goods in order to promote the purchase of national products. Yet, the Mexicans, despite their nationalist assertions, demand goods from the United States and go to great lengths to acquire everything from stereo cassettes to motorcycles. Injected into this situation is the corrupt official who, for a price, will forego regulations and allow the entry of everything from cameras to horses, provided there is enough money to produce the papeles chuecos (forged or counterfeit papers) so indispensable for justification of the presence in Mexico of a particular item.

A Personal Note on Sources An essay of this type proves extremely difficult to compose. One can become bogged down in intricate statistical detail, overwhelming and subsequently boring the reader with the apparatus of scholarship. Or the writer can produce an impressionistic piece, loaded with interpretations and short on details. I opted for the latter. Living in Chihuahua for the academic year 1983-1984 and for the summer of 1985 has left lasting impressions that color the way I view the data. Consequently, I have selected a few books to guide the reader to works that present particular problems in greater detail. In no way is this a definitive selection; rather the titles reflect my own biases both in terms of content and literary grace. The publication of a work by Michael Meyer and William Sherman, The Course of Mexican History (New York: Oxford University Press, 1982) has facilitated the acquisition of some sort of synthesis about Mexican historical development. Contemporary problems between Mexico and the United States fit into a more general perspective. A more recent work by Alan Riding, entitled Distant Neighbors: A Portrait of the Mexicans (New York: Alfred A. Knopf, 1985), places in modern journalistic perspective the evolution of modern Mexico and clearly delineates border problems.

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An abundance of works exists on illegal immigrants in the United States. The problem is also treated in general works on the Mexican American. There are, frankly, too many of these to list. They range from activist Rodolfo Acuña's Occupied America: The Chicano Struggle For Liberation (New York: Harper and Row, 1972, 1981) to my o w n more conservative treatment in Listen Cbicano: An Lnformal History of The Mexican Americans (Chicago: NelsonHall, 1978). Probably the most evenhanded approach is found in Matt Meier and Feliciano Rivera, The Chicanos: A History of The Mexican Americans (New York: Hill and Wang, 1972). Two works address the problem of Mexican immigrants in the El Paso-Ciudad Juárez area: Mario T. Garcia, Desert Immigrants: The Mexicans in El Paso, 1880-1930 (New Haven, Conn.: Yale University Press, 1981); and Oscar Martinez, Jr., Border Boom Town: Ciudad Juárez Since 1848 (Austin: University of Texas Press, 1975). Livestock constitutes a principal element of U.S.-Mexican border relations. For information on that subject see my The North Mexican Cattle Industry, 1910-1975: Ideology, Conflict, and Change. (College Station, Tex.: Texas A&M University Press, 1981). The bulk of the impressions and points of view presented here come from Chihuahua newspapers. They include El Heraldo de Chihuahua, Novedades, El Norte, and, from Ciudad Juárez, El Fronterizo. These sources provide a daily b o m b a r d m e n t of information a n d misinformation. Probably one of the best impressionistic sources, however, can be found in the cantinas that abound in Chihuahua. Popular views can be gleaned there that might not be acquired elsewhere.

SECTION 4

South America's Great Power: Geopolitics, National Security, and Development in Brazil Because of its size and central location bordering most of the South American nations, Brazil has historically played an important role in the foreign relations of South America. The great growth of its economy in the 1960s propelled it clearly beyond its nearest competitor, Argentina, in both economic and military power. Brazil's predominant position and the importance of its policy for its neighbors are clear, but the implications for its own foreign policy and that of other South American nations are not. Whatever direction Brazil takes has considerable importance for U.S. interests in the region. The first article in this section seeks to identify that direction. It examines the nature of Brazilian power and its foreign policy options from a geopolitical perspective, an approach frequently used in Brazil. The author, political scientist Philip Kelly, has written extensively on Brazilian foreign policy in recent years. He examines possible sources of international conflict in South America through the lens of six Brazilian foreign policy roles. He concludes that Brazil "is and will remain a strong contributor to and enforcer of South American stability." Unlike most of its Spanish American neighbors, Brazil has the power necessary to project its influence across the continent. However, it is likely to use this power to enforce regional peace rather than act as an imperialist because it is a "geopolitically satisfied country." In addition to the great power which it potentially can wield in foreign policy, Brazil at times has also been seen as an important model for others to emulate. In particular, the "economic miracle" of Brazil's military rulers after 1964 made its development strategy and military regime an inspiration for several other Latin American militaries. The two decades of military rule were a major source of 187

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controversy. The conservative modernization strategy adopted by Brazil [1, pp. 218-231 gave great advantage to domestic entrepreneurs and increased the nation's already significant dependence on foreign investors and the world market. To avoid challenges to the accompanying austerity programs and changes in the economic structure, the government repressed unions, peasant organizations, and most political opposition. As a bulwark of justification for the harsher side of its economic program, the military developed a concept of national security that linked fears of international communism to opposition to the regime or its policies. Thus, in both economics and politics, domestic and international policies became closely linked. The approach taken, as well as its successes and failures, ensured that the Brazilian military regime would be a major source of controversy. The articles in this section reflect that controversy. In contrast to the friendly and positive view that Kelly takes of Brazilian foreign policy, historian Tarcisio Beal's paper is a harsh critique of the military regime. Beal's central concern is the domestic consequences of Brazil's international and domestic economic policies and the accompanying national security policy during the 1964-1985 period of military rule. A native of Brazil, Beal presents an analysis widely accepted, with some variations, by the Latin American Left. He argues that domestic and international capitalist elites developed a concept of national security that served as a justification both for the repression of dissent against the regime's economic policies and for giving primacy to the interests of foreign and domestic elites over the interests of the mass of the population. . . . The regime produced a significant transfer of income from the poor to the wealthy and a major increase in Brazil's international dependency.

He sees the thinking of the Trilateral Commission as having an important role in creating the internationalization of Brazil's economy. Finally, he argues that one of the few effective voices of opposition in this period was that of Brazil's Catholic Church. Kelly's chapter on Brazilian foreign policy options provides helpful background information for those not familiar with Brazil's international relations. The following information might also be useful in reading Beal's paper. In 1964, the Brazilian military overthrew the constitutional government and ruled until voluntarily returning power to a civilian government in 1985. The military government employed a strategy of conservative modernization featuring a major role and

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considerable freedom for private enterprise. However, it maintained the traditional Latin American pattern of significant state involvement. Foreign investment and exports w e r e strongly encouraged. The military rulers also repressed any groups perceived as threatening e c o n o m i c disruption or political opposition. Internationally, the regime aligned itself with the Western industrial powers, particularly the United States, although as it gained in power and stature, it asserted more independence. Brazil's growth to become one of the world's larger economies made it economically and militarily the strongest nation of Latin America—clearly outdistancing its traditional rival, Argentina. Initially, the military government had considerable e c o n o m i c success. With time, however, its image was tarnished as economic performance and independence diminished. It never dealt effectively with the nation's great social inequality, and large segments of the population were bypassed by the development that benefited the middle and upper classes.

References 1. WYNIA, Gary W. (1984) The Politics of Latin American Development, 2nd ed. New York: Cambridge University Press.

Geopolitical Tension Areas in South America: The Question of Brazilian Territorial Expansion PHILIP KELLY

During the past decade, a number of scholars have predicted increasing conflict among South American nations, despite the region's relative avoidance of major warfare (7, 33, 20, 12, 191. The reality of this conflict potential was seen in the Falklands/Malvinas war of 1983 and two situations of strife that could have led to war—in the Beagle Channel Islands (Chile, Argentina) and the Maran territory (Peru, Ecuador). Other tension zones cited are Antarctica (Chile, Argentina), Patagonia (Chile, Argentina), northern Chile (Peru, Chile, and Bolivia), the Gulf of Venezuela (Colombia, Venezuela), the Essequibo (Guyana, Venezuela), and the New River Triangle (Guyana, Surinam). In addition, Argentina and Brazil have a long-standing rivalry. Because most of these conflicts were linked to regional bloc patterns, those scholars saw a strong likelihood that violent eruptions of one dispute could touch off strife elsewhere in the continent. Several explanations have been posited for this potential for the escalation of violence. Pittman [331 maintained that population growth and immigration, scarcities of natural resources, n e w technologies, and aspirations for e c o n o m i c development were responsible for making vacant land and maritime areas more important, and prompted competition among nations where vaguely defined borders persisted. Furthermore, certain frontier disputes have intensified because clashes in those territories decades and even centuries ago went without diplomatic solution, festered in nationalist memories, and now have risen with renewed vigor and inflexibility [12, p. 1281], The United States' inability to play a peacekeeping role in South America was another reason given for the new violence potential. 190

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This is a reflection of the general worldwide retrenchment of U.S. power, the entanglement of the United States within the Middle America shatterbelt, the new independence of South American governments, and the Latin American preference for North-South economic issues instead of North American-sponsored cold war approaches. Additionally, Child [7] argued that Southern Cone military leaders heightened regional tensions by expounding geopolitical doctrines for attaining national security and development objectives. In my opinion, Brazil could play a dominant role in either the spread or the containment of South American conflict—surprisingly, a point not discussed at length by the cited authors, except Gorman [see also 41, 42]. Brazilian power and position will soon become so great that it could influence, if not dictate, outcomes for most of the territorial antagonisms. Brazil clearly leads other continental states in land and population size and in most areas of industry, technology, transportation, natural resources, government efficiency, and military power projection. It holds mastery over the Amazon basin and shares dominance over the La Plata watershed. The nation's influence extends into the middle and south Atlantic, across the Andes to the Pacific coast, and northward into Caribbean environs. With all of these elements of power, Brazil could in time assume a hegemonic role over the southern hemisphere similar to the authority held earlier by the United States, Great Britain, and the Iberians. If this Pax Braziliana does emerge in the decades ahead, as many scholars predict it will [7, 41, 42, 8, 4, 9, 251, the potential for South American violence could take on a far different complexion from the predictions made by the authors first cited. That is, Brazil could hold the key to whether widespread conflict in South America will in fact erupt. In order to explore Brazil's impact upon South American conflict potential, I will first describe six types of Brazilian foreign policy and relate each of these to potential or actual Latin American violence. I will then estimate in Part II the immediate importance these policies may hold for hemispheric peace. Finally, I will conclude that Brazil favors stability and integration and consequently will exert a strong influence toward lessening regional conflict during future decades. This forecast is at odds with those who have predicted a rise in South American violence.

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Brazilian Foreign Policies and South American Turmoil I propose that a stability-conflict spectrum of Brazilian foreign policies can be used as a rough measure of how Brazil may affect Southern Cone strife. For this, I assume that Brazil will possess sufficient power to contribute to the outcome of most South American territorial disputes. When its foreign policy resembles that of the imperialist category (to the right on Table 10.1), regional instability rises substantially. Its involvement in South American balances of power likewise stimulates tension but not as much. In contrast, with Brazil acting as an integrationist (the other end of the spectrum), a strong probability for peace emerges. Accordingly, this model shows a close relationship between type of Brazilian policy and the extent of South American conflict, a conclusion examined in the pages that follow. As colony, empire, and republic, Brazil traditionally has been viewed with envy, dislike, and suspicion by its Spanish neighbors. To many, Brazil possessed an alien European heritage; it was envied for its potential power and wealth; and above all, it was seen to be a threat to continental stability and even as an aggrandizer of certain bordering territories. Brazil responded in various ways to its place as a "Portuguese American island in a Spanish American archipelago . . . surrounded by latendy hostile . . . neighbors" [22, p. 14]. Sometimes, it separated itself from the rest of Latin America and sought close linkages with the United States or aspired to major power status. Toward Spanish America, it usually played a disinterested or low key role. If activism in South America was perceived as desirable, Brazilian policies ranged from vigorous territorial expansion to hegemonic leadership of South America, and balance of power manipulator to stimulator of interior economic development in union with Spanish neighbors. Brazil could adjust and combine policies according to perceived opportunities for a variety of reasons: it possessed a central South American location; it was able to project power beyond its frontiers; its neighbors were frequently divided, weak, or in turmoil; its borders were largely isolated from external threat; and its diplomats understood geopolitical relationships and usually exploited them to great advantage. By the 1970s, these factors were particularly evident, and Brazil was poised and willing to assert strong leadership among the nations of the Southern Cone. For the six Brazilian policies I describe, it is my premise that each in some way has affected South American stability in the past and could do so in the future. In the following pages, I examine the

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Table 10.1 SPECTRUM OF POTENTIAL BRAZILIAN FOREIGN POLICIES Level of Stability/Conflict in South America Conflict

Stability Regional Integrationist

South American Hegemon

Brazilian Foreign Policy Great United Power States Aspirant Surrogate

Balance of Power Participant

South American Imperialist

relationship between types of Brazilian foreign policy and South American conflict and roughly gauge the extent to which each type contributes to South American stability. 1. Brazil as Imperialist By imperialist, I mean a state that seizes adjacent territory by force. Such areas may be either of clear or disputed title. Much of the earlier expansion of Brazil transpired according to this method of conquest [22, 44, 451. This term differs from the act of extending political and economic influence and order beyond frontiers and the asserting of regional leadership, which I describe as hegemony. 1 Spanish Americans historically have feared Portuguese/Brazilian territorial expansion, in part because their fears have b e e n substantiated by forced territorial transfers, in part because Brazilian statesmen and political writers have continually urged imperialist ventures, and in part because Brazil currently possesses the position, power, and wealth to add valued land to its domain. This persistent thesis of territorial aggrandizement is expressed cogently by Tambs: March to the West; inspired by the spirit of the bandeirantes and guided by the wiles of Portuguese statecraft, Brazil stands poised on the far-flung parapets of its colonial redoubts, tempted by a vision of grandeur. The question is: "Will Brazil take the plunge toward the Pacific and transcontinental empire?" Only time will tell. But, if the past serves as a model for the future, the history of Brazil's expanding frontiers assures that the attempt will be made [44, p.

179]. Four geopolitical doctrines particularly describe Brazilian imperialism: the doctrine of organic frontiers, the South American heartland thesis, the concept of Brazilian manifest destiny, and the law of valuable areas. The organic theory of the state, one of the oldest of geopolitical doctrines, depicts the nation-state to be a living organism, requiring

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sufficient s p a c e for growth, a m p l e natural resources for nutrition, a n d a p u r p o s e for territorial a g g r a n d i z e m e n t , t h e s e c o r r e s p o n d i n g to a life cycle in w h i c h the state "is created, matures, declines, a n d finally d i s a p p e a r s " [7, p p . 20-21]. Within this cycle states naturally c o m p e t e f o r l a n d , t h e v i c t o r i o u s e x p a n d i n g in p o w e r , the v a n q u i s h e d c o n t r a c t i n g in s i z e . T h i s d o c t r i n e h a s i n f l u e n c e d B r a z i l i a n g e o p o l i t i c i a n s a n d s t a t e s m e n b e c a u s e it r a t i o n a l i z e s p r e v i o u s e x p a n s i o n a n d p r o v i d e s a p p r o p r i a t e p a r a m e t e r s for n a t i o n a l i n t e g r a t i o n a n d d e v e l o p m e n t [24, 17, 1]. T h e e x p a n d i n g frontiers thesis has a d d e d to suspicions of Spanish neighbors w h o believe that Brazil s o m e d a y will t a k e a d v a n t a g e of its relative strength, central location, a n d its neighbors' v u l n e r a b l e interior spaces 133, 3, 13, 91. In t h e s e r e s p e c t s , u s e of the o r g a n i c b o r d e r s c o n c e p t b y Brazilian writers has c o n t r i b u t e d to h e i g h t e n e d levels of hemispheric tension. Brazilian s t r a t e g i s t s h a v e a l s o s h o w n interest in the S o u t h A m e r i c a n h e a r t l a n d c o n c e p t s of Travassos's "symbolic" or "magic" triangle, of T a m b s ' s C h a r c a s triangle ( b o t h e n c o m p a s s i n g s p a c e b e t w e e n the Bolivian t o w n s of Sucre, C o c h a b a m b a , a n d Santa Cruz d e la Sierra), a n d of G o l b e r y ' s "continental w e l d i n g zone," w h i c h i n c l u d e s large sections of Bolivia, Paraguay, a n d south central Brazil. B e c a u s e t h e s e central h e a r t l a n d p o s i t i o n s c o n t a i n the c o n t i n e n t a l a x e s of t h e A m a z o n a n d La Plata w a t e r s h e d s a n d the best A n d e a n p a s s e s b e t w e e n t h e Pacific a n d Atlantic O c e a n s , theorists argue that B r a z i l i a n a m b i t i o n s f o r d o m i n a t i n g t h e s e s t r a t e g i c z o n e s will p r o d u c e c o n t r o l of S o u t h A m e r i c a . In d e s c r i b i n g Brazil's a l l e g e d plans, T a m b s utters these dramatic w o r d s : Who rules Santa Cruz commands Charcas. Who rules Charcas commands the heartland. Who rules the heartland commands South America [43, p. 36]. C u r r e n t d e s i g n s a t t r i b u t e d to Brazil for c o n q u e s t of t h e Bolivian h e a r t l a n d a r e t h e s e : c o n s t r u c t i o n of i n t e r i o r t r a n s p o r t a t i o n c o m m u n i c a t i o n n e t w o r k s [3, 9, 35, 46], i m m i g r a t i o n i n t o t h e d e v e l o p m e n t of v a c a n t f r o n t i e r r e g i o n s , 2 a n d e n c o u r a g e m e n t of s e p a r a t i s t m o v e m e n t s in the Santa Cruz p r o v i n c e of Bolivia [13, 9, 28], T h e m a n i f e s t destiny t h e m e p r e s c r i b e s a Pacific O c e a n role for Brazil in w h i c h e v e n t u a l p o s s e s s i o n of coastal lands a n d islands is a s s u m e d . 3 A s t a t e m e n t b y Bailey a n d S c h n e i d e r is a characteristic description: " O n c e Brazilian p r e s e n c e is m o r e firmly e s t a b l i s h e d o n t h e Pacific C o a s t of South America (particularly by w a y of Bolivia a n d Ecuador), relations with Australia s h o u l d gain in importance" [2,

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pp. 13-14; see also 33, pp. 50-53; 9, pp. 57-58; 39, pp. 41-42], Brazilian geostrategists Travassos [46], Golbery [18], and Meira Mattos [24, 25] all contributed important space in their writings to Andean passes to the Pacific, and some commentators allege that contemporary Amazonian highway construction points toward possible Brazilian access to Pacific ports [33, pp. 36-44; 9, pp. 55-56]. In addition, recent Brazilian interest in Caribbean affairs via Guyana and Surinam [7, p. 165; 8; 33, pp. 45-54] and in the South Adantic, Antarctica, and the west coast of Africa [39, 11, 24] resemble the manifest destiny format. Setdement of valuable but vacant interior territories by Brazil, a final imperialist motive, allegedly follows these expansionist phases: private exploitation of isolated lands (those of unclear title or of valid ownership by Spanish neighbors), followed by eventual government protection and sponsorship and, finally, acquisition by arbitration and annexation [7, 33, 44, 451. This progression appears to typify much of historic Brazilian movement westward. Contemporary cross-border settlements, which may be following the first phase, could be these: the northern provinces of Uruguay, in which an estimated 30 percent of the land is owned by Brazilians [9, pp. 54-55; 2, p. l6; 35, p. 151]; eastern Paraguay, through agricultural colonization and hydroelectric facilities [10, 31]; and the Santa Cruz region of Bolivia, through colonization, investment, and political intrigue [13, p. 158; 28, pp. 163-64; 9, pp. 52-54; 35, p. 151]. Perceived Brazilian expansion into vacant Peruvian, Colombia, and Venezuelan tracts apparently influenced the establishment of the Andean Pact [13, p. 155]. Brazilian exploitation of the Amazon during the 1970s drew hostile reaction by Spanish states who feared loss of the basin's "buffer" cushion against alleged Brazilian ambitions toward their interior domains [3, p. 128], If Brazil were in fact imperialist, South American violence levels clearly would heighten, for Brazil possesses the means for extensive territorial aggression. In decades past, its imperial activities across the continent were indeed aggressive. Nevertheless, I am convinced that contemporary policymakers have not chosen the imperialist mode. In fact, they appear to be exerting themselves to dispel these images of the past and to prove their present restraint [37, 42, 13, 31. Most literature on Brazilian foreign policies is replete with such descriptions as "pragmatism," "good neighborliness," "low-key," "constructive role," "friendly competition," and "a moderating force." Most official actions of the Republic since the turn of the century substantiate these assessments. In sum, the imperialist mode does not now seem to be dominant in Brazil, and its absence contributes significantly to a climate for containing South American conflict.

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2. Brazil as South American Balance of Power Participant Two historians of South American diplomacy, Burr [6] and Seckinger [40], discovered a balance of power configuration among Southern Cone nations operating during the nineteenth and early twentieth centuries. Child [7, pp. 175-791 suggests this pattern can be applied to contemporary politics and extended to Caribbean South American states as well, thus forming a continental linkage of alliances and antagonisms. Figure 10.1 is a diagram of the contemporary power balance, with perpendicular dashed lines representing antagonisms and diagonal solid lines signifying alliances. Child argues that the nineteenth century pattern, centered on Brazil, has returned to South American politics because strife between traditional antagonists continues, United States power in the region has weakened, and geopolitical themes have infiltrated foreign policies. Of particular importance is the fact that conflict in one subregion could spread to another subregion, stimulating hemisphere-wide escalation of warfare. In earlier decades, Brazil actively sought a stable South American balance, placing particular emphasis upon maintaining Chilean independence against threats from Peru and Argentina [36, p. 256; 5, p. 1931- This balance of power policy aimed to prevent Spanish encirclement, to maintain the independence of the buffer states (Bolivia, Uruguay, and Paraguay), and to allow pursuit of grandeza or major world power status in overseas diplomacy. Nevertheless, the balance likewise created the potential for serious escalation, particularly with Argentina, either through rivalry in the buffer states or in conventional or nuclear arms races [30, pp. 881-831Although certain features of the traditional balance may be observed in contemporary diplomacy (the Spanish American rivalries, for instance), I think the return to its older form is not likely. Brazil is simply too strong in relation to the other major states, and its diplomacy has substantially lessened tensions with former antagonists. No real basis consequently exists for resuming of the classical South American power balance, and as a result the chances for regional escalation of conflict have diminished. 3. Brazil as United States Surrogate From a variety of ideological and national perspectives, Brazil commonly has been accused of having struck a barganha leal or "loyalty deal" with the United States [7, pp. 35-36; 32, pp. 39-431, a collaboration benefiting both nations. Brazil allegedly gained status, economic assistance, and protection from its northern benefactor,

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Figure 10.1 SOUTH AMERICAN BALANCE O F P O W E R

Source: Adapted from [7] by the author. Dashed lines - antagonisms; solid lines - alliances.

while the United States satisfied its objectives of security and private investment. A dependency interpretation of the relationship is taken by many on the Left. Under this radical interpretation, The holy alliance of repression, whose strategic epicenter is the Pentagon and whose economic resonance box is Wall Street, claims that the boundaries between states are no longer national but ideological. This imperialism, intolerant and totalitarian, has been humbly accepted by the Brazilian . . . military strategists in order to create a permanent antipopular armed force at the service of the Pentagon [21, pp. 42-431

Apparently designed for suppressing revolutionary threats beyond Brazilian frontiers—in Chile, Bolivia, Uruguay, and Surinam—these "sepoyan armies" as visualized by radicals protect international capitalism in the southern hemisphere [291. A less extreme image of Brazilian surrogate status is found in the "key nation" concept. The policy was allegedly invented by Secretaries of State Dean Acheson and Henry Kissinger but is described by other commentators as well [7, 30, 19, 29, 51. Under it, the United States is charged with focusing its economic and military aid toward certain favored intermediary powers (Brazil, Iran, India, Israel, and Nigeria), better enabling them to enforce regional peace and thus fulfilling U.S. conservative interests. Usually, the viewpoint

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portrays Brazil intervening against subversion and conflict perpetrated by other nations in a more autonomous manner than is visualized by the radicals. The traditional Brazil-United States "special relationship," prominent in the diplomacy of the Baron Rio-Branco (1902-1912) and extending beyond the 1964 coup, satisfied several Brazilian goals, while, in appearances at least, binding Brazil to U.S. hemispheric and world interests [37, 51. This choice to maintain cordial ties with the United States offset Brazil's ostracism in South America, increased its prestige in world affairs, assisted in consolidating its frontiers, and brought economic benefits in trade and investments. From this pragmatic association, Brazil acquired a widespread but probably unfair "subimperialist" label from detractors in South America. Never completely consistent, this close relationship with the United States waned during the 1970s. Brazil was plagued with higher petroleum costs, nuclear energy requirements, foreign debt, and other trade and diplomatic difficulties—problems that the United States was unable or unwilling to ameliorate. Shifting to a "dual track" set of policies, which sought ties with developed and Third World countries alike, Brazil's leaders perceived for perhaps the first time during this century "a clear advantage to closer ties with Latin America" [3, p. 123; 13, p. l60]. Today, Brazil's foreign activities are distinctly independent of U.S. influence and in the case of South America are fastened upon internal development, to which the Spanish neighbors are considered important contributors. Although Brazil never intervened across frontiers at U.S. command, awareness of this possibility likely heightened tensions in certain instances, particularly among reformist governments. Without suspicions of a surrogate tie, Brazilian statesmen would possess added flexibility for developing continental strategies more attuned to regional integration and to conflict abatement, and this appears to be the direction they currently are taking. 4. Brazil as Major Power Aspirant Although expressed since colonial times, the goal of grandeza or ufanismo, that is, major world power status for Brazil, reached high fervor during the middle twentieth century. As an emerging industrial state, Brazil gained notoriety because of impressive strides in trade, technology, and resource exploitation. Brazil's aspirations for higher status were further stimulated by U.S. endorsement and by the stagnation of South American rival, Argentina. Pronouncements of new prestige, similar to Secretary of State Richard Olney's 1895

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declaration of United States ascendancy, have come from a variety of public and private Brazilian sources. A good example is this claim by the prominent geopolitical theorist, Carlos de Meira Mattos: We will be a world power, reaching this goal in our development by [the year] 2000, and this will be independent from our vocation or enjoyment of such power. We must be, therefore, prepared also to exercise this power, protecting our interests whose dimensions in terms of economic and geostrategy will acquire world amplitude [25, p. 1431.

Such status, which Brazilians have always assumed to be their special destiny, derives, as Meira Mattos contends, from economic development and national integration, and is much less based upon military power [24, 25, 39, 2], At best, explanations for such claims can only be surmised. Some certainly arose from nationalist pride in actual accomplishment. Legitimizing official programs, particularly those of military governments since 1964, probably accounted for many of the pronouncements also. Additional motivations may have included providing a medium for attracting foreign investments and markets for trade, and a perception of superiority over and aloofness from Spanish America. Whatever the motives, some Latin Americans interpreted grandeza as a threat of territorial expansion despite Brazil's perception that Spanish countries had little to offer to its international economic strategies [3, 4, 15, 2], A reassessment of grandeza transpired after the economic difficulties of the 1970s. Consequently, as Bond reports, "Brazilian foreign policymakers no longer consider that the nation's long-term objectives are clearly linked to those of the developed nations, and they no longer believe that Brazil can attain major power status by the end of the century" [3, p. 133]. Seeking a broader solution to internal problems, Brazil recently has opted for greater participation in South American economic integration, as was indicated by its active presidential diplomacy and by its Amazon basin treaty of 1978 [131. A shift away from isolation to involvement by Brazil in South American affairs clearly would affect the tempo of regional conflict, but whether this change is toward escalation or containment of violence is obviously dependent upon subsequent policies. That Brazilian leaders seem to have strongly endorsed economic ventures and stressed reduction of tensions in recent diplomacy augurs well for peace in the hemisphere [41, 42, 37, 13].

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5. Brazil as South American Hegemon Among descriptions of Brazil's role in the South American political system, clearly that of h e g e m o n is the most widespread. A hegemonic Brazil usually is depicted in a leadership, stabilizing, and integrative fashion, as opposed to the imperialist mode noted above. I characterize a regional hegemon as: (1) the strongest military and economic power of an area; (2) the primary designer and enforcer of the political and economic "rules of the game" as recognized by the region's other members; and (3) the guarantor of territorial integrity and national independence and the key opposition to any form of serious conflict, either within or among the region's states [27, 38, 171. In these respects, a hegemon aims for order, whether oppressive or enlightened. In military potential, Brazil easily surpasses the other South American states. A study by Manwaring found it to be a Latin American "superpower" with a "capabilities position that would justify an expanding role in international security affairs" [23, pp. 7172, 95-96], Table 10.2 shows his evaluation of Brazil's leadership in this area. Since the turn of the century, Brazil usually has maintained a nonbelligerent stance toward its neighbors, despite its significant military potential. Roett [36, p. 2631 suggests that this low-keyed armed forces presence "would help legitimize Brazil's eventual leadership role in economic and diplomatic areas; a modest defense force poses little threat to neighbors or allies." Nevertheless, its military has steadily grown in strength and efficiency during past decades [23, 4, 32] and has been carefully used against perceived security threats along its frontiers. Data arranged by Selcher (Table 10.3) show a growing economic gap between Brazil and its main South American rival, Argentina, another indicator of surfacing Brazilian hegemony. Examination of other data shows that in most areas of industry, technology, national resources, transportation, communications, and g o v e r n m e n t administration, Brazil leads its South American neighbors by a substantial margin. Another example of Brazil's possible drive for continental h e g e m o n y is its recent moves toward relaxing Southern Cone tensions and cooperating in regional development [42, 37, 13, 31. Sharply reversing its traditional aloofness toward hemisphere affairs since the 1970s, Brazil has initiated a variety of fraternal policies toward Spanish neighbors: rapprochement with Argentina and Venezuela, sponsorship of the Amazon Pact, provision of economic assistance, presidential visits to neighboring countries, heightened

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Table 10.2 RELATIVE MILITARY CAPACITY SCORES AMONG MAJOR LATIN AMERICAN POWERS 1. Brazil 2 Argentina 3. Cuba 4. Mexico 5. Peru 6. Venezuela Source. [23].

13,406 2,021 11039 918 185 140

Table 10.3 SELECTED COMPARISONS OF ECONOMIC GROWTH: BRAZIL AND ARGENTINA (Billions of 1982 Dollars) 1960

1970

Gross Domestic

1980

Product

Brazil Argentina

$ 55.0 32.7

$ 100.0 49.0

$ 229.0 62.6

RATIO

1.7:1

2.0:1

3.7:1

Value Added

to Economy

by

Manufacturing

Brazil Argentina

$ 13.7 8.0

$ 26.7 132

$ 63.0 15.5

RATIO

1.7:1

2.0:1

4.1:1

Gross Domestic Brazil Argentina RATIO Source. [42, p. 27].

Investment

$ 10.5 6.5

$ 22.7 10.4

$ 52.7 14.9

1.6:1

2.2:1

3.5:1

participation in multilateral diplomacy, increased harmony in joint economic projects with adjoining states, and preference for Third World viewpoints instead of strong ties with the the United States. These ventures in leadership are typical of rising hegemonic states. Nevertheless, Brazil has assertively used its diplomacy and armed forces against potential subversion along its frontiers or in pressing for settlement of disputes in which it possesses a strong interest. The

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following instances of hegemonic enforcement stand out: •

• •

•

•

•

•

Uruguay: Threats of Brazilian invasion against Tupamaro guerrillas and the Frente Amplio coalition if either were on the verge of coming to power. Reports of troop maneuvers north of the border [28, pp. 176-77; 32, p. 46; 291 Surinam: Official warnings to reduce Cuban influence after the 1980 Sergeants' revolt [7, p. 165; 8, p. 1651. Guyana: Brazilian troop maneuvers on its frontier and military assistance and diplomatic backing given Guyana in Essequibo dispute with Venezuela [7, p. 165; 32, p. 44], Chile: Brazilian diplomats working behind the scenes against Salvador Allende government [32, p. 44]; later support for Chile in Beagle Islands dispute which "probably did restrain Argentina" [19, p. 66]. Bolivia: Intrigue against Juan José Torres government and support for successor administration of Hugo Banzer [28, p. 163; 9, pp. 52-54; 35, p. 151]. Paraguay: Military occupation by Brazil of disputed territory relative to hydro-electric power sources at the Guaira Falls [31, pp. 120-21], Argentina: Fear that either defeat or victory in the Falklands/Malvinas conflict with Great Britain could destabilize Argentina. Careful Brazilian attention taken in hopes of moderating subsequent policies [41, p. 114],

In most cases, Brazil was quite successful not only in fulfilling these policy objectives but also in doing so "without arousing an anti-Brazilian anxiety among its neighbors" [41, p. 101]. Although it may be p r e m a t u r e to proclaim Brazilian paramountcy in South America, these examples of economic and military power and of recent moves toward designing and enforcing a new regional system suggest that such a hegemonic presumption could arise. Ample motivations pressing Brazil to this n e w status clearly exist: the ending of U.S. hegemony; Argentina's apparent willingness to play a secondary role to Brazil in Southern Cone politics [42, p. 32; 41, p. 108]; Brazil's fear of radical encirclement [28, p. 165; 32, p. 37]; and Brazil's possession of sufficient power, particularly in the southern hemisphere, for playing a more aggressive role in foreign affairs. 4 Furthermore, the n e e d for cooperation in developing the Amazon, for expanding trade to Latin America, and for controlling potential Southern Cone violence all may have encouraged more assertive continental involvement. Several commentators credit recent Brazilian activism with

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reducing regional tensions,5 a distinct hegemonic trait. For example, Gorman makes this assertion: Not U.S. intercession but Brazilian power diplomacy seems most responsible to date for preventing the outbreak of violence in the region. If this is true, there may exist some basis for beginning to think of South American relations in terms of a regional balance of power (in which Brazil plays the role of balancer) rather than in the more conventional framework of North American hegemony [19, p. 531.

Selcher [42, pp. 32, 52] and Child [7, pp. 100, 1791 see some possibility of a Brazilian-led condominium with Argentina which would enforce peaceful relations among regional states. In this regard, Selcher writes: If properly managed, the spirit of bilateral c o o p e r a t i o n now apparent between [Brazil and Argentina] has the potential to divert South American politics away from its propensity for conflict, so evident at the beginning of the decade, toward a n e w era of amicable, mutually beneficial relations [42].

In sum, Brazilian hegemony could substantially dampen regional strife in a fashion similar to the imposed tranquility that Pax Americana held over the hemisphere a century earlier. 6. Brazil as

Integrator

Recently, Brazil has experienced a series of economic difficulties: foreign debt, trade deficiencies, slower growth rates, energy scarcities, 6 and demographic imbalances. They seem to have convinced Brazilian policymakers that "interior South American development" may offer a promising path toward recovery. For this, its leaders apparently believe Brazil must integrate its hinterlands with coastal areas and expand trade with Third World countries, including those of the hemisphere [37, pp. 9-11]. Such a policy stresses cooperation with South American neighbors on various projects designed to resolve problems that transcend national borders [26, 34], Two particularly good recent examples of Brazil as Southern Cone integrator are the Amazon Basin Treaty [131 and the several hydro-electric power agreements with Paraguay and Argentina [42,10], which in both instances were made possible by conciliatory Brazilian diplomacy. In the case of Brazil, successful integration policies require careful, low-keyed, non-threatening diplomacy, and this appears to

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be precisely the formula of Brazilian statesmen during the past decade [37,36,41,42]. For instance, former president Joao Baptista Figueiredo firmly renounced hegemonic intentions in this statement during a state visit to Colombia: "Brazil does not want, it does not wish, it rejects any idea that it may become South America's leading nation. . . . I repeat that Brazil rejects any type of hegemony, any kind of leadership, any kind of bloc" [36, p. 264], Similarly, Brazil has intentionally kept its armed forces rather small and in low visibility [36]; it has taken Third World stands on economic issues; and it generally has deemphasized political questions in preference for cooperative ventures with Spanish America. Consequently, integrationist approaches, which Brazil seems to have adopted, in my opinion have lessened the potential for Southern Cone conflict and may be laying foundations for a new era of regional harmony.

Analysis For the present and the immediate future, I believe that Brazil is and will remain a strong contributor to and enforcer of South American political stability. As depicted in Table 10.4, I estimate that fully 80 percent of its foreign policy emphasis resides toward the "peace" side of the stability spectrum; only 5 per cent is focused toward the conflict extreme. Furthermore, I suggest that for the remainder of this century, percentages will continue to congregate in the stability area and decrease toward the violence end of the model. 7 The chances are quite good that Brazil, during the immediate future, will react strongly against conflict within the southern cone and that its power will be sufficient to contain the escalation of violence. Table 10.4 CURRENT BRAZILIAN FOREIGN POLICY EMPHASIS3 Level of Stability/Conflict in South America Stability

Conflict Present Importance in Brazilian Foreign Policy

Regional Integrationist 40% a

South American Hegemon

Great Power Aspirant

United States Surrogate

Balance of Power Participant

40%

10%

5%

5%

Based on author's judgment.

South American Imperialist 0%

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Why should Brazil enforce regional order? First, among South American nations, Brazil is a geopolitically satisfied country. It has the most to lose from uncontrolled regional strife, which could damage its international prestige, economic prosperity, internal development, and even its control over Amazon territories. With these strong interests at stake, Brazil has ample incentive for performing pacifier and integrationist roles. Second, Brazil has the necessary power for projecting influence across the continent. Its central location, bolstered by an improving transportation network, further enhances this qualification. Third, its Spanish American neighbors lack sufficient unity or power to form an effective bloc against Brazilian hegemony, and in most cases incentives for cooperating with Brazil outweigh any advantages for opposing its hemispheric objectives. Last, South America no longer is under outside Great Power political control, making it feasible for Brazil to occupy the strategic vacuum that has ensued. Finally, what factors might alter present trends, making South America a fertile area for violence? Brazil itself could revert to imperialism and follow its alleged manifest destiny to ownership of Pacific and Caribbean territory through conquest in Bolivia, Ecuador, Guyana, and elsewhere, spreading turmoil across the continent by doing so. Such a reversal could derive from domestic influences within the Brazilian system, although opportunities for annexing strategically positioned or resource-rich regions lying adjacent to Brazil could stimulate an appetite for aggression. Another scenario could show a united and militarily stronger Spanish America aligned against Brazil and poised not only to contain its expansion but to take from Brazil or others their previously claimed territories. Restoration of U.S. paramountcy linked to Brazilian surrogate status or to Brazilian opposition toward such a role could be a further source of possible violence. All three of these cases could be linked to technological advances, resource deficiencies, resumption of geopolitical foreign policies, or similar contingencies, as Child [7] and Pittman [33] suggest. Nevertheless, none of these alternatives, in my opinion, is realistic during the immediate decades when one examines the current political and economic trends of the nations involved. In sum, I argue that South American stability, and not conflict, will characterize the region in decades ahead, because Brazil has decided that its interests will be best fulfilled in such an environment and that it possesses the power and position to bring this about.

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Conclusions I have concluded in the preceding pages that: • Brazil holds an increasing ability to influence conflict levels in South America. • Brazil's present foreign policies are distinctly stabilizing ones, based upon its growing hegemonic role in South America, its encouragement of regional integration, or a combination of these two approaches. • The potential is quite good for Brazil to continue as continental peacemaker and integrator. • Consequently, Southern Cone nations are much more likely to be engaged in peaceful relations than in conflict during the immediate future despite predictions of war by numerous scholars in recent years. If these projections hold true, what does a Pax Braziliana mean to South Americans for the remainder of the century? I forecast these possibilities: more rapid development of interior regions and closer economic integration of the continent; diminished domestic unrest and the strengthening of democratic infrastructures and of hemisphere arms control; settlement of most traditional territorial disputes; establishment of Brazil as South American hegemon and as a recognized world power; and increased economic and political rivalry between North and South America. Based upon Brazilian power and diplomacy, peace may emerge and remain for some time in South America. Within the success of this reality lies as well the hope of Brazilian altruism, for its destiny and international responsibility may in fact be that of regional benefactor as well as peacekeeper.

Notes 1. The distinguishing characteristic of an imperialist is territorial conquest; that of a hegemon territorial stability. Because hegemony is frequently mistaken for imperialism, I argue that the two terms, when erroneously merged, exaggerate South American perceptions of Brazilian expansion. 2. Tambs [43, p. 42] claims that relocation of the national capital to Brasilia was part of a carefully designed strategy for eventually annexing the Charcas heartland and for dominating South America as a consequence. 3. Reflecting Spanish dread of this advance, Child [7, p. 98] reported hearing this from a Peruvian official: "Brazil, which is like the United States a

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hundred years ago, believes she has a manifest destiny to occupy the continent and reach the Pacific, and Peru is California." Tambs [44, p. 179] writes of a recent attempt by Brazil to purchase basing rights in the Galapagos Islands. 4. Myers [30, p. 881] asserts that ambitions for dominating South America "may propel Brazil in the direction of producing nuclear weapons," particularly if an Argentine military threat arises. 5. These claims must be balanced, nevertheless, with the fact that violence frequently occurs during the early stages of the hegemonic cycle, a phase in which the hegemon is beginning to attain its supremacy. 6. Significant offshore oil discoveries, nevertheless, have altered energy projections, probably making Brazil self-sufficient by the early 1990s [16]. This should reduce fears by some Spanish neighbors that Brazil will seize their interior petroleum reserves. 7. It is possible that Brazil's turn to civilian, democratic government will strengthen even further its present trend toward enforcing South American stability and encouraging regional integration.

References 1. BACKHEUSER, E. (1952) A Geopolitica Geral e do Brasil. Rio de Janeiro: Biblioteca de Exército. 2. BAILEY, N. A. and R. M. Schneider. (1974) "Brazil's Foreign Policy: A Case Study in Upward Mobility." Inter-American Economic Affairs 27: 3-253- BOND, R. D. (1981) "Brazil's Relations with Northern Tier Countries." In W. A. Selcher, ed. Brazil in the International System: The Rise of a Middle Power. Boulder, Colo.: Westview Press. Pp. 123-41. 4. BRIGAGAO, C. (1981) "The Case of Brazil: Fortress or Paper Curtain?" Impact of Science on Society 31: 17-31. 5. BURNS, E. B. (1966) The Unwritten Alliance: Rio-Branco and BrazilianAmerican Relations. New York: Columbia University Press. 6. BURR, Robert N. (1955) "The Balance of Power in Nineteenth Century South America: An Exploratory Essay." Hispanic American Historical Review 35: 37-60. 7. CHILD, J. (1985) Geopolitics and Conflict in South America: Quarrels Among Neighbors. New York: Praeger. 8. CONDE, C. (1983) "Brazil in Surinam: See How a Regional Power Acts." World Paper 5: 10. 9. D'ALESKY, S. (1979) "Brazil's Rise to Dominance in Latin America." Fletcher Forum 3: 46-65. 10. DA ROSA, J. E. (1983) "Economics, Politics, and Hydroelectric Power: The Parana River Basin." Latin American Research Review 18: 77-107. 11. De CASTRO. T. (1976) Rumo A Antàrtica. Rio de Janeiro: Freitas. 12. ENGLISH, A. (1981) "Latin American Power Balances and Potential Flash Points." International Defense Review 14: 1273-81. 13. FERRIS, Elizabeth. G. (1981) "The Andean Pact and the Amazon Treaty:

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24. 25. 26. 27.

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Reflections of Changing Latin American Relations." Journal of Interamerican Studies and World Affairs 23: 147-75. FISHLOW, A. (1982) "United States and Brazil: The Case of the Missing Relationship." Foreign Affairs 60: 904-23. FONTAINE, R. W. (1974) Brazil and the United States: Toward a Maturing Relationship. Washington, D.C.: American Enterprise Institute. FRANCIS, D. R. (1985) "Latin American Oil Finds Come at the Right Time." Christian Science Monitor 9 (September): 11. GILPIN, R. (1975) U.S. Power and the Multinational Corporation. New York: Basic Books. GOLBERY, C. S. (1967) Geopolitica do Brasil. Rio de Janeiro: Livraria José Olympio Editora. GORMAN, S. M. (1979) "Present Threats to Peace in South America: The Territorial Dimensions of Conflict." Inter-American Economic Affairs 33: 51-71. GRABENDORFF, W. (1982) "Interstate Conflict and Regional Potential for Conflict in Latin America." Journal of Interamerican Studies and World Affairs 24: 267-95. GUILLEN, A (1966) Estrategia de la Guerrilla Urbana. Montevideo: Ed. Manuales del Pueblo. HILTON, S. E. (1975) Brazil and the Great Powers, 1930-1939: The Politics of Trade Rivalry. Austin: University of Texas Press. MANWARING, M. G. (1981) "Brazilian Military Power: A Capability Analysis." In S. A. Selcher, ed. Brazil in the International System: The Rise of a Middle Power. Boulder, Colo.: Westview Press. Pp. 65-98. MEIRA MATTOS, C. (1975) Brasil: Geopolitica e Destino. Rio de Janeiro: Livraria José Olympio Editora. MEIRA MATTOS, C. (1977) A Geopolitica e as Projecòes do Poder. Rio de Janeiro: Livraria José Olympio Editora. MEIRA MATTOS, C. (1980) Urna Geopolitica Pan-Amazònica. Rio de Janeiro: Livraria José Olympio Editora. MODELSKI, G. (1981) "Long Cycles, Kondratieffs, and Alternating Innovations: Implications for U.S. Foreign Policy." In C. W. Kegley, Jr. and P. McGowan, eds. The Political Economy of Foreign Policy Behavior. Beverly Hills and London: Sage Publications. Pp. 63-83. MONETA, C. J. and R. Wichmann. (1981) "Brasil and the Southern Cone." In W. A. Selcher, ed. Brazil in the International System: The Rise of a Middle Power. Boulder, Colo.: Westview Press. Pp. 143-80. MUTTO, C. A. (1971) "Brazil's Manifest Destiny." Atlas 20: 21-24. MYERS, D. J. (1984) "Brazil: Reluctant Pursuit of the Nuclear Option." Orbis 27: 881-911. NICKERSON, R. A. (1981) "Brazilian Colonization at the Eastern Border Region of Paraguay." Journal of Latin American Studies 13: 111-31. PERRY, W. (1976) Contemporary Brazilian Foreign Policy: The International Strategy of an Emerging Power. Beverly Hills and London: Sage Publications. PITTMAN, H. T. (1984) "The Relationship Between Geopolitics and

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34. 35.

36. 37. 38. 39. 40. 41.

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Technology in Tropical South America: Aid to Integration, or Generator of Disputes?" Paper presented at the Conference of Latin Americanist Geographers, Ottawa, Canada. QUAGLIOTTI de BELLIS, B. (1979) Geopolítica del Atlántico Sur. Montevideo: Fundación de Cultura Universitaria. ROETT, Riordan. (1975) "Brazil Ascendant: International Relations and Geopolitics in the Late 20th Century." Journal of International Affairs 29: 139-54. ROETT, Riordan. (1982) "Review Essays." Orbis 26: 257-67. ROETT, Riordan. (1985) "Brazil and the United States: Beyond the Debt Crisis." Journal of Interamerican Studies and World Affairs 27: 1-15. ROSTOW, W. W. (1978) The World Economy. Austin: University of Texas Press. SCHNEIDER, R. M. (1976) Brazil: Foreign Policy of a Future World Power. Boulder, Colo.: Westview Press. SECKINGER, Ron. (1976) "South American Power Realities During the 1820's." Hispanic American Historical Review 56: 241-67. SELCHER, W. A. (1984) "Recent Strategic Developments in South America's Southern Cone." In H. Muñoz and J. S. Tulchin, eds. Latin American Nations in World Politics. Boulder, Colo.: Westview Press. Pp. 101-118.

42. SELCHER, W, A. (1985) "Brazilian-Argentine Relations in the 1980's: From Wary Rival to Friendly Competition." Journal of Interamerican Studies and World Affairs 27: 25-53. 43. TAMBS, L. A. (1965) "Geopolitical Factors in Latin America." In N. A. Bailey, ed. Latin America: Politics, Economics, and Hemispheric Security. New York: Praeger. Pp. 31-49. 44. TAMBS, L. A. (1966) "Brazil's Expanding Frontiers." The Americas 23: 16579. 45. TAMBS, L. A. (1966) "Rubber, Rebels, and Rio Branco: The Contest for the Acre." Hispanic American Historical Review 46: 254-73. 46. TRAVASSOS, M. (1947) Projecao Continental do Brasil. Sao Paulo: Companhia Editora Nacional. 47. TYSON, B. B. (1975) "Brazil." In H. E. Davis and L. C. Wilson, eds. Latin American Foreign Policies. Baltimore: Johns Hopkins University Press. Pp. 221-60. 48. WAGLEY, C. (1974) Man in the Amazon. Gainesville, Fla.: University of Florida Press.

The Militarization and Internationalization of an Economy: Brazil, 1964-1985 TARCISIO BEAL

"There is nothing more to learn about the Amazon." "We cannot afford the luxury of conserving half a dozen Indian tribes." The first of these statements was by General Tasso Villar de Aquino, Secretary of the Federal Environment Protection Agency, in denying permission for the Fifth International Symposium of the Tropical Biology Association to be held in Brazil. The General saw the symposium as a threat to Brazil's national security because its topic for debate was the Amazon. The second statement came from Helio Campos, a retired army officer and federal deputy for the Amazon area of Roraima, in justifying a highway which was to cut through Indian reserves [14, pp. 17-18]. Both reflect the concepts of development and security imposed on Brazil by the military government from 1964 to 1985. This article argues that the military regime is best understood as an attempt by domestic and international capitalist elites to protect and further their economic interests. To that end, a concept of national security was developed that served as a justification both for repressing dissent against the regime's economic policies and for giving primacy to the interests of foreign and domestic elites over the interests of the mass of the population. The consequences of the policies the military government pursued were the militarization and internationalization of the Brazilian economy. The regime produced a significant transfer of income from the poor to the wealthy and a major increase in Brazil's international dependency. In addition, the record of corruption, torture, and killing that accompanied the 210

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economic policies is unequaled in Brazilian history. The climate of violence those policies produced still grips the vast expanse of the Amazon. One of the leading opponents of the regime and its policies has been the Catholic Church. In the early 1960s, the Catholic bishops of Brazil began denouncing "developmentalism," a peculiar brand of "progress" carried out by the Brazilian government with financing by the United States and international agencies controlled by the developed capitalist nations, such as the International Monetary Fund (IMF). This approach turned Brazil into a major exporter of dollars to the industrialized nations, notably the United States. The aid provided by national and international agencies reinforced rather than weakened Brazil's dependency. During the decade 19641974, 75 percent of the bilateral aid granted to the Third World was tied to purchases in the donor country; 93 percent of the funds from the U.S. Agency for International Development, for example, were spent in the United States. Moreover, financing from major international institutions like the IMF and the World Bank is primarily designed to encourage a capitalist pattern of economic growth, which tends to produce greatest benefits for capitalist elites [11, p. 41. Militarization: The Primacy of National Security The 1964 Brazilian "revolution" was carried out by army officers urged on by the United States. Constitutional President Joao Goulart's administration had embarked upon a path threatening to foreign interests and their domestic allies when it proposed to the Brazilian Congress a law that would limit the remittance of profits by foreign corporations to 10 percent; remaining profits would have to be reinvested in Brazil. The new military rulers not only prevented this but threw the country's borders open to international capitalism. Under their guidance, the gap between the few rich and the many poor widened. Behind their actions lay a theory of progress developed at the War College (Escola Superior de Guerra—ESG) and spelled out as the doctrine of national security. It became the ideology of the 1964 revolution. The ideology stipulated that the economy must come first. Above all, Brazil must export significantly more than was imported, reduce the foreign debt by a more intense concentration of income, and attract foreign investments on a large scale. To carry these goals forward, military officers assumed the key positions of command and

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control, assisted by those civilians who followed the capitalist model of Milton Friedman and the Chicago School of Economics. A new concept of democracy was formulated, which required that all social and psychological elements of the nation be placed at the service of the state. Among those elements, the Catholic religion stands out. Hie Brazilian state was portrayed as a Western, Christian nation intensely devoted to fighting its mortal enemy, and the enemy of Western civilization—international communism [1, p. 120]. The main points of the doctrine of national security (Lei de Seguranca Nacional—LSN) were developed at the ESG from 1965 to 1968 and came to public attention during the latter part of 1968 when they were outlined in the military review, Seguranca e Desenvolvimento (Security and Development). By then, the preoccupation with communism had evolved into an obsession with national security that justified any curtailment of rights. Communism was painted as a monstrous wolf ready to subvert public order and national institutions. A total and permanent war was to be waged against it. The speech opening the school year at the ESG on March 13, 1967 was by Marshall Humberto de Alencar Castelo Branco, the man who led the 1964 military coup and became president. In it, he spelled out the doctrine of national security (LSN)This doctrine had already inspired the so-called "Institutional Acts" of the 1964 regime, the presidential decrees which since 1965 had canceled the civil and political rights of those deemed enemies of the revolution. The lecture was delivered at a time when urban guerrillas, few in number but persistently annoying, were resorting to kidnapings and bank robberies in an attempt to destabilize the regime. In his speech, Castelo Branco extended the concept of internal security to include "psychological aspects, the preservation of internal development and of political stability" [9, p. 281. He justified excesses and violent means in fighting "subversion" by placing them under the principles of the jus belli—the right under Article 51 of the United Nations Charter to make war against an external enemy (communism). From this, the state had the right to suspend the application of ordinary law and the Universal Declaration of Human Rights, of which Brazil was a signatory. What the new concept of national security did was to transfer the rights of legitimate defense and of retaliation recognized in relations among states to relations between the state and its citizens. The use of imprisonment, torture, and the death penalty against anyone considered to be dangerous to the government was thus declared legitimate and justified. In short, "the national interest comes before

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the private or individual interests" [9, p. 30]. This thesis was quite similar to Mussolini's fascist rationalization. Colonel Sebastiao Chaves, who played a prominent part in the application of the LSN, explained it this way: "Under the justification that it was fighting an internal war, the government began to implement the regulations concerning 'Civil Matters and Military Government,' which were designed for enemy territory under occupation" [9, p. 311. No wonder, then, that the security forces justified torturing their victims by saying: "We are in a war, and in war anything is permissible" [9, p. 32]. When two French Catholic priests were imprisoned in 1982 under the LSN, the Commission on Human Rights of the Archdiocese of Sao Paulo pointed out the extreme and simplistic arguments used by the Brazilian government to justify the LSN: 1. Brazil is at war against Communism. The whole world is divided between Communists and anti-Communists. He who does not wage war on Communism plays the game of the Communists or is a Communist himself. 2. Communism is an internal enemy. It is hidden within the population. There are many Communists who hide their real identity. Many who claim to be Catholic are in fact Communists who are to be found especially in the Church, the labor unions, and the universities. 3. The National Information Service (SND is the vanguard of the war against Communism. Any means to find out who and where the Communists are, including torture, is legitimate. 4. The war against Communism is total and a dirty one; in this war the enemy has no rights. 5. Any suspect shall be treated as a Communist. It is more prudent to torture or kill an innocent than to run the risk of letting escape a person who can destroy Brazil by delivering it to the Communists. 6. There is no development without security. Development demands order first of all. Therefore, workers who go on strike, slum dwellers who complain about their living conditions, and all those who oppose the government play the Communist game and probably are Communists in disguise. Any social struggle must be viewed as a threat to national security [17]. Thus the doctrine of national security and the LSN became more important than the Brazilian constitution, the Universal Declaration on Human Rights, and the teachings of the Catholic Church. Subversion became the number one word in the vocabulary of

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Brazil's security forces, the political Right, and the paramilitary organizations that saw the government's offensive as a license to hunt down "Reds" and "subversives." "From this perspective," said Paulo E. Arns, cardinal-archbishop of Sao Paulo, "it is quite understandable why the Church's effort in defense of the poor and the weak, the landless in the Amazon and in Mato G rosso, the marginalized in the cities, political prisoners and all in need of justice is seen as subversion" [1, p. 221]. The LSN became the government's primary juridico-political instrument of self-maintenance. Any journalist, politician, or clergyman who dared to criticize a high government official could be charged with violating the LSN. Bishops and priests who instructed the people about their rights to lands being coveted by large corporations and multinationals were attacked as subversives or communists, especially in areas where large projects in mining and cattle-raising were being undertaken. The LSN was clearly incompatible with the principles of democracy to which the Brazilian government claimed to adhere. It was written in such vague and indefinite terms that it often became a tool in the hands of an unscrupulous and amoral state. It spoke of "national objectives," "subversive organizations" (Article 13); of "a fact of importance to national interests" (Article 23), and of "subversive propaganda" (Article 42). A 1967 decree-law spelled out rules that favored security over liberty and placed civilians under the jurisdiction of military courts. Decree-law 898 established the death penalty and life imprisonment for crimes against the security of the state. Both decrees continued in effect until December 1978, when they were abolished. In the long run, the LSN was imposed on the country because without it the grip of the military on the government would have been frequently challenged. Before the LSN was put together by the ESG, the constitution of 1946 and a law added in 1953 left crimes against the political and social order or the state entirely to civilian tribunals. The LSN, as an appendage to the 1969 constitution, clearly undercut this principle. The government easily qualified as crimes against the state any criticism or opposition that it disliked. In September 1982, for example, the publisher of O Estado de Sao Paulo was accused by Joao Leitao de Abreu, chief of protocol to President Joao Figueiredo, of a crime against national security. The publisher's crime? To have called the chief of protocol a "false liberal" and the man behind the government's electoral package that made it almost impossible for the government to lose the coming congressional elections [16],

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Internationalization Another major aspect of the military regime that controlled Brazil from 1964 to early 1985 was the internationalization of the economy, which benefited the large corporations and Brazil's creditors rather than its own people. Brazil, especially after 1965, became the new El Dorado of the multinational corporations. One can entertain doubts about the forces behind the overthrow of the Goulart regime in 1964, but there can be no doubts about Brazil having become the paradise of foreign investors. Under the military, Brazil was more than Mexico in the days of Porfirio Diaz, the "mother of foreigners and the stepmother of her own children." Hanna Mining Company, for example, has been one of the major beneficiaries of the 1964 military coup, which came at a time when Hanna men were high officials of the United States government. Hanna's involvement in Brazilian politics goes back to at least August 1961, when President Janio Quadros expropriated Hanna's vast gold and iron mining assets in central Brazil. Soon after, President Quadros abruptly resigned. His successor, Joao Goulart, who refused to annul the expropriation decree, was in turn thrown out of office on March 31, 1964. The new, military government was loaded with Hanna men, including the country's vice-president and three ministers of state. Hanna immediately cashed in. President Castelo Branco, by decree of December 24, 1964, gave Hanna Mining Company the vast iron ore deposits of the Paraopeba Valley in Minas Gerais, plus government subsidies for Hanna to build its own port and railroad to export the mineral. In September 1965, Hanna and Bethlehem Steel joined in a consortium to jointly exploit the iron ore deposits of central Brazil. The previous year, Bethlehem had received the rights to exploit the enormous deposits of manganese in the Amapa Territory and was allowed to keep $88 out of every $100 it made extracting minerals. Taxes were only 12 percent of profits. U.S. Steel, meanwhile, was able to obtain 49 percent of the stock of Vale do Rio Doce Company, Brazil's largest mining organization [10, pp. 16870], Brazil's national industry suffered heavily from the generosity of the government toward foreign corporations after 1964. Fifteen manufacturers of auto parts or engines were purchased by Ford, Chrysler, Willis Overland, Volkswagen, or Alfa Romeo, and three major manufacturers of electrical equipment were eliminated by Japanese competition. In the pharmaceutical sector, Wyeth, Bristol, Mead, Johnson, and Lever gobbled up so many laboratories that

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national production of medicine was reduced to one fifth of its pre1964 total. Meanwhile, Anaconda was allowed to take over the nonferrous metals concerns and Union Carbide the plastics industry (plus chemical and petrochemical products). American Machine and Foundry absorbed six national firms in the mechanics and metallurgy sector, and the Companhia de Mineracao Geral, one of Brazil's largest foundries, was bought at bankruptcy prices by an international cartel, which included Bethlehem Steel, Chase Manhattan Bank, and Standard Oil Corporation [10, p. 2351. Complaints against foreign domination of Brazil's economy were so vocal that in 1968 the Congress ordered an investigation. Its findings revealed that foreign concerns controlled 40 percent of all capital investments, 62 percent of foreign trade, 100 percent of automobile production, 82 percent of maritime transport, close to 80 percent of pharmaceutical manufacturing, 67 percent of air transport to other countries, 62 percent of auto parts manufacturing, 50 percent of machinery production, about 50 percent of the chemical industry, and 48 percent of aluminum products. One half of foreign ownership was by U.S. corporations, followed by West German capital, which was prominent in the auto industry and the chemical-pharmaceutical industry. Because this was obviously the kind of information that could awaken strong nationalistic protest, the government prohibited the publication of the congressional findings [10, p. 235J. It should come as no surprise, then, that The New York Times observed soon after that very few countries treated foreigners as generously as did Brazil. It placed no restrictions in terms of the investors' nationality, no limit to investment profits, no barriers to the repatriation of capital, and allowed reinvestment profits to be added to the original investment tax-free [151. Foreign investment and control increased even more after 1974, when Brazil began offering sizable fiscal incentives. For example, a study made by Brazil's Economic and Social Planning Institute (IPES) revealed that 58 percent of net global profits of 319 corporations involved in the industrial sector was taken by multinationals, while 26 percent was left for Brazilian private firms, and 16 percent for state-owned corporations. Multinationals increased their control to 98 percent of the transportation industry, 93 percent of pharmaceutical products, 76 percent of the manufacturing of electrical equipment, and 74 percent of the plastics sector. These were dynamic sectors, which were more profitable and provided short-term returns for investments [131Roberto Campos, then the chief economist of the Brazilian

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military government, explained the rules of the game to the Congressional Investigating Committee on September 6, 1968: Anybody c a n see that the world has not been m a d e equal. Some are born intelligent, s o m e dumb. Some are physically fit, others are crippled. T h e world is m a d e u p o f big a n d of small businesses. Some die early, in the height of life, others drag on criminally, in long a n d useless existences. There is a fundamental inequality in nature, in the state o f things. This is also true o f the credit m e c h a n i s m s . T o s u p p o s e that national enterprises must b e given equal c h a n c e with foreign enterprises regarding e x p o r t credits is simply to ignore the basic realities of e c o n o m i c s [10, pp. 237-38].

This big-fish-eats-small-fish mentality produced what Brazilian critics have called "Wild Capitalism," a system anchored in transnational corporations that find enough wolves within the country to share in the prédation of Brazil's national economy. Roberto Campos was also a key figure in developing the policies of the IMF regarding Brazil. One of the major policies of the IMF is to tie its loans to a devaluation of the national currency. Desperately in need of more loans to pay the interest on its debts, Brazil has been forced to periodically return to the IMF and the World Bank for more loans. The IMF argues that a devaluation would return the national currency to its true value vis-à-vis the dollar and thus stimulate exports. These in turn would provide Brazil with the foreign exchange to keep on paying the interest on its foreign debt. The reality, however, is that currency devaluation facilitates domestic concentration of capital and the absorption of national enterprises by multinational corporations that have dollars at hand [10, p. 238], The Alliance for Progress, President Kennedy's great hope for Latin America, was itself used as a political tool to buttress the friends of U.S. capital in Brazil. Although the Alliance program was put into effect during the Goulart administration, its funds were seldom allocated for the most needy Brazilian states. Carlos Lacerda, the fiery paladin of anticommunism and the extreme Right, received seven times more funds for his diminutive state of Guanabara (the city of Rio de Janeiro) than the nine states of the northeast combined [10, p. 249].

The Trilateral Commission By 1973, the internationalization of the Brazilian economy was so thorough that the policies of the Trilateral Commission could be

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applied with little opposition. Established after a tour of Latin America by New York Governor Nelson Rockefeller, the Trilateral Commission designed a new strategy to guarantee the continued success of capitalism on a transnational basis. The Commission is closely associated with the Bilderberg Circle, a European think tank funded by multinational corporations, and with the U.S. Council on Foreign Relations, which has helped shape U.S. foreign policy since 1921 [2, pp. 30ffl. The first president of the Trilateral Commission was David Rockefeller, head of Chase Manhattan Bank. On the 1974 list of U.S. members were thirty-two chairmen of the board or high officials of business corporations, six directors of research or teaching institutions, ten university professors, ten congressmen, three former state governors, and major publishers of magazines such as Time and Foreign Policy. During the Carter administration, Trilaterial Commission members included the president himself, Vice-President Mondale, Secretary of State Vance, Treasury Secretary Blumenthal, and National Security Adviser Brzezinski [2, pp. 31-431Richard Ullman defines trilateralism as a united front made up of the most advanced industrial nations of the West and Japan whose purpose is to counteract the increasing demands for militant action by the Third World [21, pp. 1, 5, 11, 17], The Trilaterial Commission reflects the conviction of many of the leaders of the developed world that the major threat to the health of capitalism no longer comes from communism but rather from an explosive condition of poverty in the Third and Fourth Worlds, whose populations far outnumber those of the affluent nations. In a memorandum of September 1973, Trilateral Commission Secretary Brzezinski wrote: Today's most visible conflict is between the d e v e l o p e d world a n d the w o r l d in d e v e l o p m e n t rather than b e t w e e n the trilateral d e m o c r a c i e s a n d the C o m m u n i s t c o u n t r i e s b e c a u s e the n e w aspirations o f the Third and Fourth Worlds, as a whole, represent, in my understanding, a greater threat to the nature of the international system and, in fact, to our o w n societies. Their threat is that they might refuse t o c o o p e r a t e [20, p. 12],

In Memo No. 14, the fears are made even clearer: T h e distrust o f less d e v e l o p e d countries t o w a r d the d e v e l o p e d nations is also a fact. This c o m e s , in part, from the fact that they p e r c e i v e the world e c o n o m i c system as having b e e n set by the d e v e l o p e d c o u n t r i e s for their o w n profit, a n d from w i d e s p r e a d distrust a m o n g t h e elites o f the less d e v e l o p e d c o u n t r i e s o f international c o m m e r c e [7, p. 51-

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This m e m o also belittles d e l e g a t e s from u n d e r d e v e l o p e d countries at international trade meetings in this manner: "These representatives do not know the issues and, understandably, hesitate to agree on technical points" [2, pp. 28-291. The warning sounded by Report No. 14 led Brzezinski to advise a "comparative study of the reciprocal attitudes of the elites in order to know whom one can count on" [2, p. 10]. In fact, one of Brzezinski's earlier internal memos p r o p o s e d research on "Control o f D e v e l o p m e n t and Human Behavior" to examine the "politico-constitutional implications of the availability, especially in more advanced societies, o f means of social control" and of the socioeducational implications of the malleability of the human being [2, pp. 8-91. By making u s e of reformist language calling for profound revisions in the system of capitalism, trilateralists try to hide their real intentions. They call for a new international economic order, a more equitable distribution of wealth among nations, a more just relationship between the prices of raw materials and industrialized products in the international market, appropriate transfer o f technology, exchange rates more favorable to the underdeveloped countries, and aid to the poorer nations [5, pp. 108-91. The objective of these proposals is to prevent the poverty of the underdeveloped nations from degenerating into a serious threat to the health of capitalism 14). When the international economic crisis deepened at the end of 1977, the Trilateral Commission put aside s o m e of its original philanthropic rhetoric and embarked upon a more forceful program to strengthen international capitalism. It set up specific objectives in the areas of economics, finance, technology, science, and politics. T h e e c o n o m i c g o a l was to e x p a n d , through multinational corporations, the internationalization of capital. By integrating all capitalist e c o n o m i e s into the world e c o n o m y , national economies and nationalistic policies would b e undermined. T h e financial objective was to strengthen the international monetary and financial system through the organs that deal with Third World countries, i.e., the World Bank, GATT, IMF, Inter-American Development Bank, and the various transnational banks such as the Bank of America and CitiCorp. The technological goal was to transfer old and polluting technology to underdeveloped countries while keeping the most productive and profitable in trilateral nations. O n the political level, the Trilateral Commission decided to c h o o s e a few "viable" countries that were to b e rescued from the inevitable e c o n o m i c catastrophe. T h e vast majority o f Third and Fourth World countries, so the thinking went, could not b e fully

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integrated into the system. Over time, they would deteriorate into worse conditions of hunger and poverty [6, p. 891. In Latin America, the "viable" countries, whose ties with the trilateral nations ought to be strengthened, were Brazil, Venezuela, Mexico, and Argentina. These were to receive special attention and would come to share the values deemed vital by trilateralists. The values that the Trilateral Commission wants to share with the "viable" countries are all ultimately related to the stabilization of the marketplace, values without which there cannot be a "functional world order." The most important of these values are "interdependence" and "cooperation": "The management of interdependence is the central problem of the world order for the future," stated Memo No. 14 in 1973 [7, p. 51. Brzezinski uses the expression "planetary humanism" for his new world order, which he calls a "new democracy," that is, a limited, viable, governable, tutored democracy anchored in the ideology of national security on a world scale, a democracy in which the nation-state subjects itself to interdependence and international "cooperation" and thus plays a decisive role in bailing out of trouble a tottering capitalist system [6, p. 48], This "new democracy" would ensure the cooperation of Third World nations. Consequently, state monopolies (such as Brazil's Petrobras and Eletrobras) are to be welcomed as partners of international capitalism, since they develop the infrastructure and provide the services that benefit the high technology operations of foreign enterprises and facilitate the exportation of national goods and raw materials. The national state not only underwrites these state monopolies but also becomes the chief guarantor of the private sector [2, p. 158], To ensure the stability of these "new democracies," the Trilateral Commission advises them to work on the relative improvement of wages to enhance the buying power of the population and to create a domestic market to ease the pressures of a saturated international market; to defend and promote human rights in order to clean up the "barbarous face" of the National Security State that is upsetting to "Western democracies"; and to encourage land reform and agriculture in order to prevent a world famine that could destabilize the international order [5, pp. 108-91. Brazil became the darling of the Trilateral Commission and its most successful guinea pig, at least until early 1985. The internationalization of the Brazilian economy was one of the trilateralists' greatest success stories. As the country's foreign debt skyrocketed to the $100 billion mark, the government was compelled to find means to improve its foreign trade balance and to obtain

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loans to pay the interest on the debt. This led to a reshuffling of the economy, facilitation of foreign investments to carry on massive exploitation o f national resources, and monitoring of implementation by the IMF.

The Macro-Projects Brazilian economists who disagree with the thinking of Milton Friedman and of the Trilateral Commission have been highly critical of governmental policies that have concentrated income in the hands of a few giants who supposedly can provide larger and quicker returns to the national coffers. These policies also emphasize indirect investment through financial intermediaries rather than direct investment—a pattern that has encouraged speculation by the credit institutions [13, p. 13]. The military government consistently gave preference to macroprojects in which billions of dollars were invested with little immediate economic return. Benefits of the projects went primarily to large, often foreign, corporations, while losses to the nation included increasing foreign debt, depletion of natural resources, and diversion of capital from productive, labor-intensive investments. The macro-projects, financed by foreign loans, were one of the major reasons for Brazil's huge debt. The most advertised were the Itaipu Hydroelectric Complex on the Paraná River on the border between Brazil and Paraguay, completed in 1982 but not yet used by Brazil because it does not need its 12 million kilowatts of electricity; the nuclear power plant at Angra dos Reis, on the coast between Rio de Janeiro and Sao Paulo; and the Great Carajás Mining Project in Southern Pará. In all, the Brazilian government was supposed to invest $318 billion (including interest on the loans) in thirty-three projects representing a bonanza for the large corporations, whether national or multinational. A study by the Brazilian Institute for Social and Economic Analysis (IBASE) concluded that the projects benefited the already-rich and the economic giants, while their cost was borne by the average taxpayer [18]. Several of the macro-projects were conceived abroad. The Program for the Development of the Savannah Region (central Brazil), for example, was put together by the Japan International Corporation Agency QIC A). It reproduces, although on a smaller scale, the famous Jari Project of the U.S. financier Emil Ludwig. As a result, decision power over large areas of Brazil and over important

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sectors of the national economy were placed in foreign hands. The results and benefits of these projects were appropriated by transnational capitalists, w h i l e Brazil's natural resources w e r e devastated or carried away. The destruction of the Amazon forest was the most frightening example of this policy. Worse yet, the ultimate goal of many of these macro-projects is to furnish raw materials for the industrial machine and markets of the developed nations. Furthermore, some of the macro-projects will render services at l o w prices and on the needed scale to the larger foreign companies operating in Brazil or will support programs of predation of raw materials. This is true of the huge hydroelectric plant of Tucurui, which is benefiting especially Alcoa Corporation and the Nippo-Brazilian Albras-Alunorte. Similar cases are the Soybean Highway in Paraná, the Steel Railroad for the exportation of iron ore from central Brazil, and most probably the future Carajás Railroad. These macro-projects have been financed through the transfer of capital from productive and service sectors to the finance sector and from the transfer of resources from the domestic to the transnational sector. For such large projects, external financing is essential, not complementary. Fifty per cent of the total financing of the macroprojects comes from outside the country, with the World Bank in the forefront. The size of the foreign debt means that decision power over the macro-projects ultimately rests in foreign hands, even though all costs are the responsibility of Brazil's government. Thus the real beneficiaries of the macro-projects do not pay the financial costs, nor are they made responsible for the debt incurred. Rather, Brazilian society in general and the wage earner in specific bear the brunt of responsibility.

Agrarian Land Policy Closely associated with the macro-projects were the land policies of the military government. As in almost every facet of the economy, militarization of the problem was seen as the key to its solution. In August 1982, President Figueiredo created the Extraordinary Ministry of Land Affairs and placed it under the direction of General Danilo Venturini, Secretary of the National Security Council, the organ that decided when and where the military was to take direct control. The decision to create the new ministry and to place it under the military was in line with policies carried out since 1964. The g r o w i n g organization of the peasants in the late 1950s and early 1960s had

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been seen as a threat. Throughout its reign, the military government sought to avoid the political "conscientization" of the peasantry and the growth of land conflicts. The Land Statute and the Agrarian Reform Institute (IBRA) created early in the military government gave large proprietors and investors access to land but practically closed it to the millions of landless farmers. Expropriation was to take place in cases of conflict or serious social tension. Yet, from 1965 to 1981, the federal government decreed only 124 expropriations for land reform purposes, i.e., less than 8 per year in a country where land tenure was heavily concentrated and where land conflicts of a serious nature numbered about 70 per year. The Amazon In 1971, President Emilio Garrastazu Mèdici placed under the control of the National Security Council one hundred kilometers on each side of all federal highways, whether completed, under construction, or projected in the "Legal Amazon," i.e., in almost two thirds of the Brazilian territory.1 That same year the IBRA was abolished and replaced by the INCRA, which was officially tied to the Ministry of Agriculture but run by a military officer. Thereafter, instead of government-sponsored colonization, emphasis was placed on colonization by private groups. The small and medium land proprietors had seldom benefited from the IBRA policies, and things did not change under the INCRA. Then, during the mid-1970s, land policy was tied directly to macroeconomics, and large corporations were allowed to increase their monopolization of land in the Legal Amazon. The hundreds of thousands of farmers who had left the poverty-stricken northeast or the south to settle in Brazil's back country in the late 1950s now found themselves encroached on and often thrown off the land they had made their own with so much sacrifice. The struggle for land cost thousands of lives. In the early 1960s, there were 10,000 Nambiquara Indians in the Amazon; today, they are reduced to 530, many in poor health [14, p. 191. The Brazilian Bishops Pastoral Land Commission estimated that 82 percent of all land conflicts in Brazil from 1979 to 1981 took place in the Amazon and involved 75,000 people. Half of the land conflicts ended in murder. Three hundred persons were reported killed in 1979 in Alta Floresta, Mato Grosso, by gunmen hired by a Sào Paulo businessman [14, p. 20]. The run for Amazon land picked up tempo after 1966, when the United States Air Force made an aerial survey of the Legal Amazon

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that revealed the presence of major deposits of tin, iron, bauxite, gold, and other minerals. The multinationals and a few large Brazilian concerns flocked to the region to engage in mining and cattle-raising. By August 1974, a total of 315 projects in cattle-raising had been approved for the Legal Amazon, covering an area of 17,297,000 acres and designed to produce 5.1 million head of cattle. The SuiS-Missu Ranch in Mato Grosso, owned by the Italian corporation Liquiforma, acquired 1,874,238 acres; King's Ranch obtained 247,100 acres in Para; and Volkswagen's Vale do Rio Cristalino Company purchased 345,940 acres, where it intended to raise 110,000 cattle. [12 passim]. The internationalization of the Brazilian Amazon accelerated dramatically after the mid-1970s. The Rockefeller conglomerate obtained 1,312,101 acres in Mato Grosso, and the multinational Brazilian Land and Cattle Packing acquired 7,100,743 acres in Minas Gerais. Foreigners purchased 3.5 percent of the area of the state of Goiis and more than 10 percent of Bahia's territory. The largest landowner in the territory of Amapi was Bethlehem Steel [3, pp. 176-77]. The Jari Project of U.S. financier Emil Ludwig comprised lands the size of the states of Connecticut and Massachusetts together and had such an impact on the ecology of the region near the mouth of the Amazon that it changed even its climate [14, p. 20], The Church and Land The increasing monopolization of land multiplied the conflicts in the Legal Amazon and forced the Catholic church into direct confrontation with the government. The military authorities saw this as a threat. Not only did it challenge government land policies, but the church's defense of the peasants and Indians also strengthened the church and its base communities. The government had long feared the base communities because of their political militancy. To deal with the threat, the government followed two strategies— cosmetic concessions, and attacks on Catholic church personnel aiding the peasants. Initially, the government consistently invoked the LSN, ordered some expropriations, and decreed agreements between large landholders and peasants living on the land. The Indians and peasants, however, continued to be consistent losers. Two days before the National Bishops Conference was to meet to discuss "The Church and Land Problems," the government took another tack, establishing the military-controlled Executive Group in Charge of the Araguaia-Tocantins Lands (GETAT). The essential purpose of the agency was to convince peasants either to accept much smaller parcels of land than their legal entitlement or to move

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[3, p. 177]. The GETAT was nothing more than military intervention in the INCRA and a victory for large landowners and corporations. The second strategy to exclude the Catholic church from land issues was to eliminate or demoralize both ecclesiastical and peasant union leadership. The assassination of Father Joao Burnier in Mato Grosso, the arrest and imprisonment of dozens of priest and peasant leaders, and the blacklisting of Bishops Pedro Casaldiliga, Patrick Hanrahan, and others who tried to protect the Indians and peasants were indications that the military would not tolerate church "interference" in matters of national security. These measures did not stifle the voice of protest raised by the church, but they did neutralize much of its effectiveness in the Amazon.

Income and Housing: The Urban Conflict Much has been made of the "economic miracle" carried out by the military government. In the early 1970s the GNP growth rate, for example, reached 11 percent per year. Yet only a small part of the total population benefited from this growth. The majority of Brazilians saw their economic situation go from bad to worse. In I960, before the "miracle," the poorest 50 percent of the population received 17.7 per cent of the national income. In 1976, after thirteen years of military rule, their proportion had dropped to 11.8 percent. The next higher 30 percent of Brazilians also saw their share of national income decline. Only the wealthiest 20 percent of the population experienced an improvement in their p o s i t i o n — f r o m 54.4 percent to 67 percent (Table 11.1). Even these gains went disproportionately to the very wealthy. From 1967 to 1977, the richest 10 percent of Brazil's population became 17 percent richer, while the remaining 90 percent saw a 6.4 percent decline. The trend had not b e e n reversed by 1986. No wonder the new civilian government resisted IMF demands for more belt tightening! The increasing gulf between the rich and the poor is made even more graphic if one looks at actual income. Although the cost of such items as clothing, appliances, and rent is relatively higher in Brazil than in the United States, the minimum wage in Brazil in 1985 was about U.S. $100 per year. The average real income per year of the poorest 50 percent of the population did increase during the "economic miracle," but only from $73.40 in I960 to $140.40 in 1976 (base year 1965). Thus, the absolute level remained very low. For the richest 5 percent, however, average real income went from $1,131 to $4,637. Thus, the wealthiest Brazilians made fifteen times more than

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Table 11.1 DISTRIBUTION OF NATIONAL INCOME (percentage of income received by population segment)

Poorest 50% Next 30% Richest 20%

I960

1970

1976

17.7 27.9 54.4

14.9 22.9 62.2

11.8 21.2 67.0

Source. [12, p. 8].

the poorer half in I960 but thirty-three times more in 1976 [12, p. 91. Although comparable data for the subsequent years is lacking, it appears that the gulf between rich and poor has continued to widen. T h e meaning of these figures is seen graphically in the conditions of the w o r k i n g poor. A family of four living on the minimum w a g e has a minimal diet—mostly beans and rice. They can afford meat at most once a month and must buy the cheapest and often least healthy foods. Even this income is precarious, for there is little stability in their jobs. At the lower pay levels, employment is typically short-term. Even where the work is long-term, employers often dismiss e m p l o y e e s before they complete five years to avoid paying the higher salaries and benefits required for those with that length of tenure. Not surprisingly, social indicators provide a stark picture. In 1980, it was estimated that 75 percent of Brazilians lived in relative "marginalization," that 10 million w e r e mentally retarded, 8 million had schistosomiasis, 650,000 had tuberculosis, and 25,000 were lepers [19, pp. 10-11]. The economic and political weakness of the poor is starkly seen in the squatter settlements created by land invasions. Migrants from the countryside and city poor squeezed out by urban development stream to the settlements. The catastrophic shortage of low-income housing in Sao Paulo, which absorbs thousands of migrants every w e e k , has resulted in continuous invasions of vacant lots and large areas of the city's periphery. Although the land is unused at the time of invasion, the owners quickly demand protection of their property. Sometimes a m o n g the invaders are professional agitators or members of the proscribed Communist party, w h o s e presence provides more than enough excuse to justify bringing in the security forces. A typical case of conflict stemming from the shortage of urban land and housing took place in August 1981, w h e n 3,000 squatters invaded 276 acres belonging to the Social Security Institute of Sao Paulo (LAPAS). After five days, Governor Paulo Maluf ordered them evicted by 3,000 cavalrymen, an extraordinary show of force. T h e mayor of Sao Paulo sought to buy the land from the federal

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government and give it to the landless but was rebuffed by the IAPAS president: "This is not a matter to be solved by the municipalities but rather by the security forces who think it dangerous to establish a precedent" [22, pp. 20-24], As we saw in the case of rural land problems, government programs ostensibly aimed at helping the poor often do not reach them or are of most benefit to the relatively more affluent. In the city of Sao Paulo, for example, 40 percent of the workers entitled to medical care through the Social Security Institute (INPS) in the mid1970s were turned away by the state hospitals; this amounted to 4 million visits. These people were effectively denied care, because the private hospitals would not honor their INPS cards. The story of the Federal Housing Authority (BNH) is similar. While 55 percent of the housing needs of Sao Paulo came from persons who earned up to four times the minimum wage, 80 percent of BNH loans went to those of medium or high income (who earned five times or more the minimum wage). Moreover, the housing furnished by the BNH was affordable only to persons earning almost twelve times the minimum wage [8, pp. 55, 59-601. Attempts by workers to better their own situation through organization were strongly repressed under the military's economic and security philosophy. Until 1985, labor unions were under tight government control and were not consulted regarding wage raises or cuts, which were set by the Department of Labor. The right to strike was denied, and the federal government could dismiss labor leaders elected by union members. Such dismissals occurred 536 times between 1964 and 1970 [8].

Conclusions The internationalization of the Brazilian economy under the guise of national security produced radical inequality and growing poverty in city and countryside and continuing violence in the Amazon. The development strategy that emphasized megaprojects and large landholders squeezed out the rural poor, while the urban environment to which they fled grew more hostile. Income inequality, lack of housing, and the inaccessibility of government services for the very poor contributed to increasing misery. After the 1968 Conference of Latin American Bishops in Medellin, the bishops of Brazil, led by the National Bishops' Conference, became a strong voice for radical change in the structures of Brazilian society. The Church, the most vocal critic of the direction taken by the Brazilian

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e c o n o m y u n d e r the military, c a l l e d for a b r e a k from the contemporary capitalist order. Its voice was particularly strong with respect to urban issues. Although several leaders of the military regime are now facing prosecution for corruption and violation of human rights, the military and their civilian allies are still obsessed with the doctrine of national security and the threat of communism. The Right is well financed, including support from transnational corporations. If the government of José Sarney, which took office in 1985, does not fare well in reshaping the e c o n o m y to benefit the majority of the people and not just the privileged few, social conflict and the call for a military solution will rise once again.

Notes 1. The Legal Amazon includes the territories of Amapa, Roraima, and Rondonia; the states of Amazonas, Para, and Acre; and the largest part of the States of Maranhao, Goiis, and Mato Grosso.

References 1. ARNS, Paulo Evaristo. (1978) Em Defesa dos Direitos Humanos. Rio de Janeiro: Editora Brasilia. 2. ASSMANN, Hugo, ed. (1982) A Trilateral, Nova Fase do Capitalismo Mundial. Rio de Janeiro: Civilizacäo Brasileira. 3- BANDEIRA, Moniz. (1975) Cariéis e Desnacionalizacào. Rio de Janeiro: Civilizacäo Brasileira. 4. BERGSTEN, C. Fred. (1973) "The Threat of the Third World." Foreign Policy 11 (Summer): 102-24. 5. BOFF, Leonardo. (1981) O Caminhar da Igreja com os Oprimidos. Petrópolis: Vozes. 6. BRZEZINSKI, Zbigniew. (1970) La Era Tecnotrònica. Buenos Aires: Paidós. Translation of Between Two Ages. New York: Penguin, 1970. 7. COOPER, Richard N., Karl Kaiser, and Kosaka Masataka. (1977) "Towards a Renovated International System." Mimeographed. 8. DE CAMARGO, Càndido P. F., et al. (1981) Säo Paulo 1975—Crescimento e Pobreza. Säo Paulo: Editora Loyola. 9. FON, Antonio Carlos. (1979) A Historia da Repressäo Política no Brasil. Säo Paulo: Editora Parma. 10. GALEANO, Eduardo. (1979) As Veias Abertas da América Latina. Rio de Janeiro: Paz e Terra. 11. HOUTART, Francois. (1981) "The Global Aspects of Dependence and Oppression." Concilium 144 (April): 3-10. 12. IBRADES. (1981) [Brazilian Institute for Development). Estudos da CNBB.

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13 14. 15. 16. 17. 18. 19. 20.

21. 22.

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Pastoral da Terra: Posse e Conflitos. Sao Paulo: Paulinas. IBRADES. (1982) Subsidios para uma Politica Social. Sao Paulo: Paulinas. LERNOUX, Penny. (1981) "The Great Brazilian Land Grab." Inquiry (February 2): 10-20. NEW YORK TIMES. (1969) January 19. O ESTADO DE SAO PAULO. (1982) October 20-22. O SAO PAULO. (1982) [Weekly newspaper of the Archdiocese of Sao Paulo], July 30-August 5O SAO PAULO. (1982) September 3-9. O'GORMAN, Frances, and Equipe NUCLAR. (1982) Promocao Humana. Sao Paulo: Paulinas. TRIALOGUE. (1975) [Review of the Trilateral Commission], No. 9. In Hugo Assmann, ed. A Trilateral, Nova Fase do Capitalismo Mundial. Rio de Janeiro: Civilizacao Brasileira, 1982. ULLMAN, Richard H. (1976) "Trilateralism: 'Partnership' for What?" Foreign Affairs 55 (October): 1-19. VEJA. (1981) [Weekly magazine on politics and society], Sao Paulo (September 16): 20-26.

Index Adaptation patterns of small states, 24 ADO (Movement of Worker Self Defense [ColombiaD, 85, ll6n.5 Agrarian reform: Brazil, 121, 126-132, 222-225; El Salvador, 39; Mexico, 180. See also Agriculture in Brazil; individual countries Agriculture in Brazil, 120-138; exports, 121, 126-132; exports vs. food production, 125-132, 135; IBRA (Agrarian Reform Institute), 223; import substitution vs. food, 132-133, 135; INCRA, 223, 225; industry vs., 123, 126; land conflict, 223, 224-225; Land Statute, 123, 223; land tenure, 121, 133, 134, 222-225; policy, 121-123, 126, 134135; production, 120, 122-123, 128-132, 133; role in economy, 120-122. See also Agrarian reform; Brazil; Brazilian foreign policy Alianza Revolucionaria Democrática, 37. See also Contras Allende, Salvador, 11 Alliance for Progress, 29-30, 31, 32, 217 Alvarez Martinez, Gustavo, 13, 48-54, 67, 72n.2; ouster, 53, 55- See also Honduras; U.S. military presence in Honduras Amazon, 210, 223-224; environment, 222, 224; Legal Amazon, 223, 228n.l; resources, 223-224. See also Brazil American Institute for Free Labor Development, 29 Anti-Communism See Communism APROH (Association for the Progress of Honduras), 50, 72n.3 Arbenz, Jacobo, 28-29. See also

Guatemala Argentina: Brazil, 202; economic crises, 139, 148, 152, 155, 157; economic growth, 201. See also Foreign investment; Railroads in Argentina Arias, Oscar, 21 Arms sales. See Military aid Asymmetry in inter-American relations, 8-10, 14, 77; Central America-U.S., 22, 23; Mexico-U.S., 159, 165, 171 Azcona del Hoyo, José, 20, 47, 64-65, 67. See also Honduras; U.S. military presence in Honduras Bagley, Bruce Michael, 76, 88, 91, 93n.l Betancur, Belisario, 20; aid to Contras, 110; economic policy, 88; foreign policy, 3, 13, 19, 76-77, 81, 91-92, 102; as populist, 3- See also Colombia; Colombian foreign policy; Colombian peace process; Colombian-U.S. relations Bipartisan National Commission on Central America, 41 Bracero Program, 181 Brazil, 120-138, 187-229; capitalism, 210, 211, 216-217, 222; Catholic Church, 188, 211, 213-214, 224-225, 227; Communism, 212-213, 226, 228; debt crisis, 124-125, 133-136; democracy, 214; development model, 124, 126, 187189, 210-211, 212; economic miracle, 123, 187, 189, 203, 225; foreign debt, 120, 124-125, 220-221, 222; Friedman, Milton, 212, 221; geographic position, effect of, 187; health care, 227; housing, 225-226; income distribution, 221, 225-

230

INDEX

226; internationalization of economy, 215-217; land invasions, 226; megaprojects (macro-projects), 124, 221-222; militarization, 210, 211-214, 222, 224-225, 226-227, 228; military regime, 3, 122, 187-189, 211; nationalism, 216; national security doctrine (LSN), 210, 211-214 , 224, 228; 1964 revolution, 188, 211; oil, 124-125, 133, 207n.6; poverty, 120, 121, 135, 189, 210, 226, 227; power, 2, 3, 187, 191, 192, 200-203; repression, 188, 212-214, 223, 224-225, 226-227; rural inequality, 121— 122, 126, 133, 139, 223, 224-225; violence, 210-211, 223. See also Agriculture in Brazil; Amazon; Brazilian foreign policy; Debt crisis Brazilian foreign policy, 187; balance of power, 196—197; Charcas Triangle, 194, 206n.2; dependency, 11, 188, 197, 210211; domestic policy, relation to, 188; foreign aid, 211, 217; foreign investment, 189, 211, 215-217, 221-222; geopolitics, 187, 191, 193-195, 204; grandeza, 198-199; hegemon, 200-203; International Monetary Fund, 125, 133136, 211, 217; imperialist, 193-195, 205; integrator, 203-204; international stability, 187, 195, 196, 200, 202-203, 204-206; key nation concept, 197-198; major power aspirant, 198-199; Pax Braziliana, 191, 206; relations with Spanish American nations, 192, 193, 199, 200, 202, 203-206; relations with United States, 9, 11, 189, 196-198, 211, 217; Trilateral Commission, 188, 217221; types, 191-193. See also Agricultural policy in Brazil; Brazil Brzezinski, Zbigniew, 218-220 CACM (Central American Common Market), 29-30, 32 Campos, Roberto, 216-217 Capabilities. See Power Capital flight, 32, 39 Capitalism, 6-7; in Brazil, 210, 211, 216217, 222; debt crisis, 97; international, 7, 11, 188, 210, 211, 222; and Trilateral Commission, 218-219 Carter administration: Central American policy, 31-32; human rights policy, 32, 34, 35; and Mexico, 170; and Sandinistas, 20, 35; and Trilateral Commission, 218. See also U.S. foreign policy Castelo Branco, Humberto de Alencar, 212, 215 Castro, Fidel, 1, 9, 29. See also Cuba

231

Catholic Church: in Brazil, 188, 211, 213214, 224-225, 227 Central America: before 1945, 25-28; 1945-1969, 28-31; 1969-1979, 31-35; after 1979, 35-37. See individual administrations-, countries Central American Democratic Community, 37-38 Cepeda, Fernando, 82 Cerezo, Vinicio, 37 Charcas triangle, 194, 206n.2 CIA (U.S. Central Intelligence Agency): Cuban invasion, 30 Club of Regional Powers, 100 CODEH (Commission on Human Rights [HondurasD, 59, 60, 62 Cold War, 7; and Central America, 28; 1945-1969, 28-31; 1969-1979, 31-35; after 1979, 35-37. See also Containment policy; Communism; individual countries Colombia, 20; debt crisis, 101-102, 108109, 111-113, 114-115; development model, 78; economic policy, 103-106, 108-109, 111-113, 114-115; guerrillas, 20, 76, 77, 78, 79-80, 107, ll6n.5; National Front, 78, 93n.2; presidents, 20; regime crisis, 78. See also Colombian foreign policy; Colombian peace process; Colombian-U.S. relations; individual presidents Colombian foreign policy, 76-96, 100-119; Cuba and Nicaragua, 13, 76, 77, 80-81, 104, 107; domestic policy, 81-82, 87, 88, 91-92, 111, 117n.l3; Falkland/Malvinas conflict, 81; International Monetary Fund, 88-89, 109, 111, 112, 115-116; international reserves, 104, 111-112; nonalignment, 77, 81, 82; as regional power, 76, 91-92, 100-101, 102; relations with Soviet Union, 86. See also Betancur, Belisario; Colombia; Colombian peace process; ColombianU.S. relations; individual presidents Colombian peace process, 84, 85, 88-89, 102-108; amnesty, 80, 104, 105; ceasefire, 80, 85, ll6-117n.5, 117n.8; democratic opening, 77, 80, 105, 107; foreign policy component, 81-88, 8891, 91-92, 102, 104, 106-107. See also Colombia; Colombian foreign policy; Colombian-U.S. relations; ELN; EPL; FARC; M-19; UP; individual presidents Colombian-U.S. relations, 2, 80-81, 88-89, 92, 93n.5; and Central America, 89-90, 104, 106; debt crisis, impact of, 9; drug traffic, 89, 94n.l0, 110; extradition, 107, 110, 117n.7; independence of

232

INDEX

Colombia, 76-77, 81-82, 88-92, 93n.5, 104, 106-107, 109-111; International Coffee Agreement, 90-91; OPIC (U.S. Overseas Private Investment Corporation), 110-111. See also Colombia; Colombian foreign policy; Colombian peace process; individual presidenti Communism: in Brazil, 212-213; effect on U.S. policy, 28, 31; perspectives on, 7-8, 31. See also individual countries-, organizations CONDECA (Central American Defense Council), 30, 31 Conflict, international, 190-191, 195 CONSUFFAA (Superior Council of the Armed Forces [HondurasD, 50, 53 Contadora: Colombia in, 76, 77, 83-84, 106; formation of, 21, 39; success/failure of, 84, 91-92, 94n.ll; and United States, 77, 84. See also Betancur, Belisario; Colombian foreign policy Containment policy, 31, 33, 34 Contras, 18, 40; legality, 43-44n.6; origins, 20, 36. See also Alianza Revolucionaria Democràtica; FDN; Nicaragua; Reagan administration, Sandinista regime Costa Rica: development model, 17-18; foreign assistance from U.S., 37, 54; income distribution, 17-18, 30, 32; 1948 civil war, 28; public opinion, 62-63, 68— 71; relations with Nicaragua, 8, 34, 37, 38; relations with United States, 39, 42 Cuba: perspectives on, 8, 29, 31, 35-36, 63, 68, 70; perspectives on revolution, 84; relations with Colombian guerrillas, 13, 85; relations with Soviet Union, 41; relations with United States, 30; Western support, 41. See also Castro, Fidel CVD (Countervailing duty [U.S.D, 174, 175, 177 D'Aubuisson, Roberto, 20 Death squads: Central America, 30, 32; El Salvador, 30, 35, 39. See also individual countries. Debt crisis: Argentina, 139, 148, 152, 155, 157; Brazil, 124-125, 133-136; Colombia, 101-102, 108-109, 111-113, 114-116; independence, effect on, 9, 114, 115; origins, 97, 124-125; perspectives on, 97-98; U.S. role, 116. See also individual countries de la Madrid, Miguel, 161, 169, 175 Dependency, 114; Brazil, 188, 197, 210211; Mexico-U.S., 166, 171, 182; theory, 6, 11. See also Interdependence Development models, 3, 5; Brazil, 124,

126, 187-189, 210-211; Central America, 17-18; Colombia, 78, 106; and disorder, 17-18. See also individual countries Diversity in Latin America, 2-4, 18-19 Dollar diplomacy, 27 Dominican Republic: 1965 U.S. intervention, 30-31, 113 Domino theory, 13, 82, 106 Duarte, José Napoleón, 20, 36, 38. See also El Salvador Echeverría, Luis, 161 ECLA (United Nations Economic Commission for Latin America), 13, 29, 106 Economic development: and disorder, 17-18; as key goal, 15, 17 ELN (National Liberation Army [Colombia]), 79-80, 87-88 El Salvador: civil war, 20, 34; CONDECA (Central American Defense Council), 30; development model, 18; economy, 39; elections, 33, 36, 38; FDR (Democratic Revolutionary Front), 20; FMLN (Farabundo Marti National Liberation Front), 20, 39, 40; foreign policy, 37, 38; human rights, 35; military assistance, 33, 35, 36, 43n.3, 54; public opinion, 62-63, 68-71; reform, 34, 39; relations with Honduras, 30, 51; repression, 30, 32; U.S. influence, 42. See also Carter administration; Death squads; Duarte, José Napoleón; FDR; FMLN; Reagan administration; U.S. foreign policy EPL (Popular Liberation Army [Colombia]), 79-80, 85, 87, ll6-117n.5 Falkland/Malvinas conflict, 113; Brazil, 202; Colombia, 81 FARC (Revolutionary Armed Forces of Colombia), 79-80, 85-87, 102; ceasefire, 108, ll6-117n.5; origins, 85; and PCC (Communist Party of Colombia), 85-86; and Soviet Union, 86; and UP (Patriotic Union), 86-87, 108, ll6n.5. See also Colombia; Colombian foreign policy; Colombian peace process FDN (Nicaraguan Democratic Front), 36. See also Contras FDR (Democratic Revolutionary Front [El Salvador]), 20. See also El Salvador; FMLN Federal Reserve Board (U.S.), 14, 116. See also Debt crisis; IMF Figueiredo, Joäo, 135, 214, 222 Figueres, José, 28 FMLN (Farabundo Marti National

INDEX

Liberation Front [El SalvadorD, 20, 38, 39, 40. See also El Salvador; FDR; Reagan administration; U.S. foreign policy Foreign aid: to Brazil, 211, 217. See also Military aid Foreign investment: Alliance for Progress, 29-30; in Argentina: 2, 99, 139-158, amount, 144, 147, 149, 151, 153, British, 139, 140-146, economic growth, 154, 156, incentives for, 140-145, 146, 154156, 156-157, indirect vs. direct, 142, 157-158, national policy, 145, 154, 156158, types, 141, 143-144; in Brazil: 189, 215-217, 221-222; British in Latin America, 140-145; economic growth, 154, 156; indirect vs. direct, 142, 157158, 221; national policy, 145, 154,156158; in railroads, 139-158; U.S. in Central America, 25, 27-28. See also individual countries Foreign policy: relation to economic situation, 115- See also individual countries Frente Ricardo Franco (Colombia), 88, 108 Friedman, Milton, 212, 221 FSLN (Sandinista National Liberation Front [Nicaragua]), 34, 40, 43. See also Carter administration; Contras-, Nicaragua; Sandinista regime; Reagan administration; Somoza regime FUSEP (Honduran police), 49, 59 Garrastazu Mèdici, Emilio, 223 GATT (General Agreement on Tariffs and Trade), 170, 174, 175-176, 177n.2, 219. See also Mexican-U.S. trade relations Gavin, John, 163, 184 Geopolitics: Brazil, 187, 191, 193-195, 204; heartland concept, 193, 194; law of valuable areas, 193, 195; manifest destiny, 193, 194-195; organic theory, 193-194. See also Brazilian foreign policy Goulart, Joào, 211, 217 GSP (Generalized System of Preferences [U.S.D, 171-173- See also Mexican-U.S. trade relations Grenada: U.S. invasion of, 37, 42, 113 Guatemala: CONDECA (Central American Defense Council), 30; counterinsurgency, 31, 32; death squads, 30, 32; development model, 17-18; elections, 33, 37; foreign policy, 38; human rights, 37, 39, 40; military aid, 31, 32, 37, 39, 54; 1954 coup, 28-29; public opinion, 63; relations with U.S.,

233

39, 42, 43n.3; repression, 32. See also Reagan administration; U.S. foreign policy Guerrilla war, 18. See also individual countries Hanna Mining Company, 215 Honduras, 2, 20; CONDECA (Central American Defense Council), 30; Congress, role of, 52, 72n_6; Contras, 49, 56, 63-65; democracy, 18, 41, 47, 66; election, 1985, 63-67; foreign policy, 37, 38, 39; human rights, 58-62; income distribution, 30, 32; political parties, 50, 56-58, 63-67; public opinion, 62-63, 6871; relations with El Salvador, 30, 49, 51, 55, 63, 72n.9; repression, 49. See also Alvarez Martinez, Gustavo; Azcona del Hoyo, José; U.S. military presence in Honduras Human rights. See Carter administration; individual countries IMF (International Monetary Fund): Brazil, 125, 133-136, 211, 217; Colombia, 88-89, 109, 111, 112, 115-116; debt crisis, 98; Honduras, 41; linkages, 13-14; Trilateral Commission, 219. See also individual countries Imperialism, 193, 206n.l; Brazilian, 193195, 205, 206n.l; U.S., 9-10, 26-27, 98 Inter-American system, 12-13, 113-114 Interdependence, 10-12, 24; Brazil, 11-12; Central America-U.S., 10, 11; debt crisis, effects of, 11; Honduras-U.S., 10; limiting effects of, 11; Mexican-U.S. border, 10-11, 182-183, 185; U.S. power, decreased, 19. See also Dependency Knowledge, level of, 4 Latin American studies, 1 Latin American-U.S. relations, 8. See also U.S. foreign policy; individual countries-, Linkages, 13-14; Brazil-international capitalists, 210; Central America, 17; Colombian guerrillas, 13, 19, 79, 82-83, 85-86, 87, 91-92; Mexico-U.S., 13; Honduras-U.S., 13- See also individual countries López Michelsen, Alfonso, 20, 93n.5, 104 López Portillo, José, l6l, 169, 170 López Reyes, Walter, 53, 62, 65, 66, 72n.8 LSN (Lei de Seguranca Nacional [Brazilian national security doctrineD, 210, 211-214, 224, 228. See also Brazil

234

INDEX

Malvinas War. See Falkland/Malvinas conflict Maquiladoras (Mexican border industries), 166-167, 182. See also Mexican-U.S. border Mejía Víctores, Oscar Humberto, 37, 39, 40 Mexican-U.S. border, 163, 179, 180, 181; interdependence, 10-11, 182-183, 185. See also Maquiladoras-, Mexican-U.S. relations; Mexican-U.S. trade; Mexico Mexican-U.S. relations, 159-186; asymmetry, 159, 165, 171; Bracero program, 181; campaign against Mexico, 159, 163; Central America, 26, 27, 34, 40, 161-162, 163; Cuba, 161-162; debt, 161-162; difficulty of, 2, 159-160; immigration, l6l-l63, 180-182; INS (U.S. Immigration and Naturalization Service), 181; paradox of, 159; pollution, 183-184; public vs. private communications in, 159. See also Mexican-U.S. border; Mexican-U.S. trade; Mexico; Reagan administration Mexican-U.S. trade, 160, 165-178; asymmetry, 165-166, 171; bilateralism, 170-171; cattle, 183; Cedis (Mexican tax exemption), 174—176; competitive need limits, 172—173; CVD (countervailing duty), 174, 175, 177; differing perspectives, 165-166; dumping, 174175; GATT (General Agreement on Tariffs and Trade), 170, 174, 175-176, 177n.2; GSP (Generalized System of Preferences), 171-173; health and sanitation, 175, 183; injury test, 176; liberalization, 169; negotiations, 163, 170-176; North American Common Market, 170-171; protectionism, Mexican, 167-171; protectionism, U.S., 171-175; tomato war, 174; tourist trade, 166-167; UNCTAD (United Nations Conference on Trade and Development), 171; volume, 165-167, 172. See also Mexican-U.S. border; Mexican-U.S. relations; Mexico Mexico: agrarian reform, 180; Chihuahua, 180; corruption, 179, 184-185; economic crisis, 182, 185; foreign policy, 34, 40, 160-163; history, 163-164; nationalism, 159-160; presidents, l6l, 164. See also individual presidents-, Mexican-U.S. border; Mexican-U.S. relations; Mexican-U.S. trade Military aid: Central America, 30, 33, 54; Contras, 36; Costa Rica, 37, 54; El Salvador 35-36, 38, 54; Guatemala, 31, 32, 37, 39, 54; Honduras, 50-52, 54, 55-

56, 57; Nicaragua, 33. See also individual countries Military intervention, 17, 27, 42-43 M-19 (April 19 Movement [Colombia]), 79-83, 102; and cease-fire, 85, 108, 116117n.5, 117n.8; Dominican embassy raid, 102; Palace of Justice raid, 89-90.; relations with Cuba, 85, 87, 104; relations with Nicaragua, 89-90, 104. See also Colombia; Colombian foreign policy; Colombian peace process; Colombian-U.S. relations Monroe Doctrine, 27, 28 Multipolarity, 31 Nassau Group, 100-101, 104 Nationalism, 5-6, 216 Negroponte, John, 13, 48, 50, 53, 60 NIC (Newly Industrialized Country), 3 Nicaragua: economic conditions, 38; elections, 40; El Salvador, 36; intervention by U.S., 17, 27, 42-43; linkages, 13; perceptions of, 63, 68, 70; relations with Costa Rica, 8; relations with Soviet bloc, 41; relations with United Sûtes, 26, 27, 33, 34, 37, 38, 113; repression, 30, 32; Western support, 41. See also Carter administration; Contras; FSLN; Reagan administration; Sandinista regime; Sandino; Somoza regime Nixon administration: Central America, 31—33 See also Nixon Doctrine Nixon Doctrine, 100 OAS (Organization of American States), 28,40 OPEC (Organization of Petroleum Exporting Countries), 32 OPIC (U.S. Overseas Private Investment Corporation), 110-111 PAN (National Action Party [MexicoD, 164, 184 Panama, 26, 34, 36, 44n.l0. See also Panama Canal Panama Canal, 26, 27, 30 Paz Barnica, Edgardo, 47, 56, 62 PCC (Communist Party of Colombia), 85-86. See Communism; FARC; UP Perspectives, Latin American, 1, 4-8, 15 Peru, 13-14 PETROBRAS (Brazilian national oil monopoly), 124, 220 Pilliod, Charles, Jr., 163 PIN (Program for National Integration [Brazil]), 123, 127 PNA (National Alcohol Program [Brazil]),

INDEX 122, 132-133 Power, international, 23-25, 201; Brazil, 187, 191, 192, 200-203; declining U.S., 8, 11, 33-34, 41, 42—43, 113,190-191; limits, 24-25; military capacity, 201; tools, 2324 PRI (Institutional Revolutionary Party [Mexico]), 163, 181, 184 PROTERRA (Program of Land Redistribution and Stimulation of Agriculture and Cattle Activities in the Northeast and North [BrazilD, 123 Public opinion: in Central America (Costa Rica, El Salvador, Guatemala, and Honduras), 62-63, 67, 68-71; civil war in El Salvador, 69; Cuba and the Soviet Union, 62-63, 68, 70; foreign involvement, 68, 70-71; in Mexico, 160; military threats, 68; Nicaragua, 63, 68, 70; United States, 62, 71, l60 Quadros, Jänio, 215 Quintin Lame, 88 Railroads in Argentina: authorization vs. completion, 148-153; branchlines vs. trunklines, 154; British investment in, 144; eras, 148-154; and growth, 145-146; lag factor, 151; network, 145; pampa vs. interior, 145-156; private vs. public builders, 147-148, 150-153; sections vs. kilometers, 152-153- See also Argentina; Foreign investment in Argentina Reagan administration: capitalism, 6; Central America, 9-10, 11, 35-37, 38, 41, 42-43, 55, 67, 72n.8, 101; Conira funding, 20; debt crisis, 9, 10; domino theory, 13; irregularities in military aid, 51-52; as an issue in Honduras, 54, 57, 63-64; limits on, 41—42; Mexico, 5, 163; military intervention, 42—43; Nicaragua, 36, 38, 42—43- See also individual countries-, Military intervention; U.S. foreign policy; U.S. military presence in Honduras Regional power concept, 100-101. See also Colombian foreign policy Rio Treaty, 28 Rios Montt, José Efrain, 39, 40 Rippy, J. Fred, 140-141 RMTC (U.S. Regional Military Training Center), 50-51, 52, 55, 72n.9 San Andrés and Providencia, 80-81, 107 Sandinista regime: Contra war, 40; development model, 3; perspectives on, 8, 63, 68, 70; relations with United States, 18, 20. See also Carter administration; Contras-, FSLN;

235

Nicaragua; Reagan administration; Sandino; Somoza regime Sandino, Augusto C., 26, 27, 43n.3 Sarney, José, 120, 135-136, 228 Self-determination, 14, 18 Simón Bolivar Coordinating Board, 79 Somoza regime: establishment, 28; linkages to U.S., 13, 18, 33; overthrow, 33-34. See also Carter administration; FSLN; Nicaragua; Sandinista regime; Sandino Soviet bloc: Central America, 36; Colombia, 86; and interdependence, 10; perspectives on, 7-8; perspectives on revolution, 84. See also Cold War; Communism; Cuba; FARC; FMLN; FSLN; Nicaragua; PCC; Sandinista regime Suazo Córdova, Roberto, 20, 72n.l0; election, 48; foreign policy, 47—48; military, 49; 1985 campaign, 66-67; U.S. involvement, 56-57, 67. See also Honduras; U.S. military presence in Honduras Third National Development Plan (Brazil), 121 Tokatlián, Juan Gabriel, 76, 88, 91 Trade. See individual countries Trilateral Commission, 4, 31; Brazil, 188, 217-221; capitalism, international, 218219; linkages, 13; strategy, 218-220 Turbay Ayala, Julio César, 20, 78-79, 80-81, 102-103, 104. See also Colombia; Colombian foreign policy; Colombian peace process; Colombian-U.S. relations UNCTAD (United Nations Conference on Trade and Development), 171 United Fruit Company, 28-29 UP (Patriotic Union [Colombia]), 86-87, 93n.9, 108, ll6n.5. See also FARC; PCC U.S. foreign policy: communism, 7-8, 28, 31; key nation concept, 197-198. See also Asymmetry in inter-American relations; Carter administration; Cold War; Containment policy; Debt crisis; Foreign investment; Linkages; Military aid; Nixon administration; Power, international; Public opinion; Reagan administration; U.S. foreign policy in Central America; U.S. military presence in Honduras; individual countries U.S. foreign policy in Central America, 17, 19, 23-25, 42-43, 84; before 1945, 25-28; 1945-1969, 28-31; 1969-1979, 31-35; after 1979, 35-37; Nicaragua, 17, 45-44,

236

INDEX

113; successes and failures, 37—41; tools used, 23- See also U.S. foreign policy; individual countries U.S. military presence in Honduras, 19, 36-38, 47-75; bargaining, 48, 50-52, 54, 55-56, 64, 67, 72n.8; irregularities of, 5152; as an issue, 63-65; joint military exercises, 50-51, 62, 72n.4; military assistance, 50-52, 54, 55-56, 57; number personnel, 51; parties, impact on, 56-

58. See also Honduras; Military aid; RMTC Venezuela, 12, 34, 41; foreign policy, 3, 40; perspectives on, 70. See also Contadora; Regional power concept Walker, William, 26 World Bank: Brazil, 211, 222; Trilateral Commission, 219