Foreign Relations of the United States, 1961–1963, Volume XII, American Republics

39. Research Memorandum From the Director of the Bureau of Intelligence and Research (Hughes) to the Assistant Secretary of State for Inter-American Affairs (Woodward)¹

INR-35

Washington, January 19, 1962.

SUBJECT

• Creating Allies for Socio-Economic Progress With Political Stability in Latin America

Since RAR-6 on the polarization of political forces presented a rather bleak picture,² we have tried to do some thinking which may be of interest to you on the positive aspects of the Alliance.

Abstract

Organized political forces in most Latin American countries are polarized on the status quo right and the far left. There is an uneasy balance between left and right which is unfavorable to prospects for orderly advancement. Success of the Alliance for Progress may therefore depend on the ability of the Alliance to build its own organized support of moderate groups by directing a substantial part of the available foreign funds to projects that specifically aim at strengthening major groups and institutions in the center at the same time that they contribute directly to socio-economic progress. Organized groups that may with particularly successful results be involved in the process of development are moderate labor unions and military organizations. The power of the revolutionary left among students may be reduced if AID can involve chosen educational institutions more fully in its program. The disbursing of aid through organizations somewhat independent of the government also minimizes US reliance on the current government as the only purveyor of evolutionary change.

The Problem

In Latin America the United States desires to promote orderly evolution avoiding the extremes of castrista revolution and maintenance of the status quo. For such evolution to proceed in changing the face of Latin America the Alliance for Progress must have strong, well-organized local allies. Yet, in most countries the organized politico-economic groups tend to polarize at the extremes of the revolutionary left and the status quo right (see RM-RAR-61-6, 8, and 10). These poles are especially powerful because each is based on a hard-core of experienced political tacticians: the left on the communists, the right on the less formally organized but for the time being more powerful socio-economic landowning and business interests. To offset these extremes the Alliance for Progress needs support from other organized power groups in the community.

The Proposal

Four potential allies in most Latin American countries are the labor unions, the military, the universities and secondary schools, and the church. Now the extreme power groups usually control most of these institutions or at least make them ineffective in political power. In general the military and the church are strongly influenced by the vested interests of the right, while extreme leftists have gained leadership in many universities and labor unions. Yet these groups are potentially centrist; and, if the Alliance for Progress can wean them from the control of the extremists and strengthen their independence and power, it can build its own consistent reliable support.

The possible methods of using the Alliance for Progress to build support for evolutionary development vary enormously among the countries and among various groups. The basic method would be to channel financial assistance through actual or potential allies in labor, the military, and the educational system, when such assistance would strengthen the underlying bases of moderate political action at the same time that it served specific goals of the Alliance for Progress. The church, which is not considered in detail in this paper, could be counted on more and more to push social action favoring political stability as the programs of other responsible agencies gained momentum. As a general rule Alliance funds will be just one additional means of steering crucial elements toward support of moderate but steady socio-economic progress. The many other programs, like information, educational exchange, and direct personal contact, could also be speeded and coordinated. Not only the church but numerous other private groups in Latin America, both national and foreign, are ready to join in these programs if given a lead in the right direction.

Some US financial and technical aid now goes to labor and military groups in Latin America. What is proposed is a very high priority to these groups as a means of directly improving the political environment for the Alliance for Progress.

In those Latin American countries—Mexico, Argentina, Venezue-la—where substantial socio-economic change has occurred during the last three decades, the process has involved a bureaucratic centralization of power in the government, accompanied by Parkinsonian inefficiency (see RM-RAR-62-11). The decentralization suggested here for some development efforts is not an attempt to stop centralization of power altogether, for centralization is essential for rapid development in the Latin American cultural and economic environment. Rather, the building of moderate centrist groups will supplement and modify the inevitable concentration of power in three ways: (1) by providing articulate political demands for creation and use of desirable central government power, (2) by reducing slightly the strain of increasing demands on the civilian central bureaucracy through dispersion of control over a small part of the development program to independent power centers, (3) by providing independent guidance and criticism of the dominant central authority so as to limit inefficiency and diversion from the central task of development.

Selection of Aid Recipients

U.S. aid to Latin America has been directed through the local civil authorities except for substantial quantities to selected local businesses of either foreign or domestic ownership. Aid directed to or through the government tends to gain immediate support for US policy, but it also tends to build animosity among those groups that oppose the government, because they find US aid supporting (directly or indirectly) the political “ins.” In the past, when the opposition assumed power, it quickly turned to the United States despite past bad feeling, because there was no alternative source of the aid necessary to maintain the new government in power. Now, however, as its economic power increases, the USSR becomes an alternative source of economic aid—and a source whose ideology appeals to the far leftists more than the American politico-economic ideology appeals to the status quo right.

To strengthen the supporters of present governments exclusively is by no means vital to long-term interests of the United States. In fact, the United States is best able to work with a country where any government will be backed and controlled by a selection of moderate groups. Thus, to create and strengthen moderate groups in a society serves the United States long-term interests, whether or not these groups are in power at a given moment. To the extent that aid is not controlled by the political “ins” the United States avoids building potential enemies among the political opposition. It remains true, of course, that much aid must in any case be channeled through the existing government because in many fields it is the only organization which can carry out the programs. In some countries such as Chile, Peru, Paraguay, and Nicaragua aid to the governments may be needed as a lever to gain permission for the United States to extend aid to groups or institutions that are not controlled by the political incumbents.

Labor unions and the military are the two groups which may most easily be built into strong auxiliaries of the Alliance for Progress in Latin America. Both the unions and the military influence large numbers of people. Both are usually lower-class organizations with middle-class leadership. Both have continuing organizations and patterns of leadership, an established continuing function, and a desire to maintain at least some independence from the politicians of the current government. The course of the Cuban revolution is making the leaders of both groups realize that non-communist labor leaders and the traditional armed forces are among the first to be liquidated by a Castro-communist regime.

Labor

Programs to build moderate labor unions might center on making loans and grants directly to selected union federations and locals for cooperative socio-economic projects that benefit their members. An example is the project now under way through which AID will contribute $350,000 toward constructing, furnishing, and operating labor temples in Guayaquil and Quito, Ecuador. The labor centers will house headquarters of individual unions, provide meeting places, and offer services such as training courses and legal aid. In some cases directly productive investments can be channeled through labor organizations. For example, the Inter-American Bank recently loaned $640,000 to a cooperative of 4000 meat-packing workers in Montevideo to expand the operations of a plant abandoned by private enterprise and reopened by the workers’ cooperative. The cooperative has been under attack from a rival communist-controlled union.

Such projects as union housing cooperatives might receive IDB loans. A combination of AID loans and grants might finance such community projects as worker clinics, trade schools, and meeting halls. Export-Import Bank loans might provide tools of the trade to such unions as those of taxi drivers—for example the dynamic but moderate Chauffeurs of the First of May in Bolivia. The DLF, IDB, or IFC might finance worker cooperatives that have been taking over various enterprises previously owned by governments. Similar financing might be available for union cooperative stores, whose buying power can effectively reduce living costs for workers as they have in Argentina. Technical and financial assistance could be given to members of farm unions who purchase their own land and equipment, and to marketing cooperatives.

Increasing support for unions would primarily be a matter of giving selected unions priority in the disbursement of AID and IDB assistance for housing, health, education, and cooperative productive enterprises. (Financial assistance to unions is supported in item III,4,b of the Latin American Guidelines for Policy and Operations.) Careful selection of the unions to receive Alliance aid would be essential to insure that only strongly based unions with non-communist but dynamic leadership are assisted in extending their benefits and thus their membership and strength. There are many unions in Latin America that deserve US support, as, for example, Aprista unions in Peru (like the Federation of Textile Workers and the Lima Union of Bus Workers), democratic unions in Argentina (General Confederation of Commercial Employees and Confederation of Municipal Workers), progressive industrial unions in El Salvador (Cigarette Factory Union and Brewery Union), and budding moderate unions in Brazil (the S#o Paulo clothing workers and metallurgical workers). The labor attache and other members of the Embassy and USOM staff should be able to select such unions and in many cases informally to generate planning and preparation of project plans and loan or grant applications.

The increase in cooperative socio-economic activity will in itself lessen the importance to unions of activity in politics as the main means of accomplishing union goals. The improvement of living standards through cooperative action will give immediate meaning to union membership and tend to direct union interest to productive activity. Moreover, by actually participating in the Alliance unions will tend to become supporters for other aspects of the Alliance program in their country.

All the financing would not have to be furnished by the United States; as loans to union cooperatives become accepted, local banks, government agencies, and employers will find it desirable and even necessary to assist.

The Military

The possible military role in the Alliance for Progress is quite different from that of free trade unions. At present, military support for the Alliance is fostered by the US information program, trips to the United States, attendance at US service schools, and the work of US attaches; this military support can be increased if the military becomes directly involved in bringing the benefits of the Alliance to the people, especially in rural areas. A program of this sort would require a large-scale expansion of the present limited civil action programs (as suggested in item 62 of the Latin American guidelines and supported by General Lemnitzer in his November 9 and November 30 memos to the President).

Bolivia now has a civil action program of this sort under way. About one-third of its small army is said to be engaged in colonization and road building in eastern Bolivia and another one-third is working on agricultural projects in the Altiplano. However, the effectiveness of military civil action programs in Bolivia is severely limited by the lack of trained personnel and necessary equipment.

Development loans from the IDB and AID loans and grants as well as technical assistance from the US military might be used to train and equip construction battalions to build roads, irrigation facilities, schools, and other public works in rural areas. Small military groups might be trained and equipped to conduct on behalf of civilian ministries the cadastral surveys which are a vital part of any agrarian reform program. Training of military recruits might include teaching in elementary agricultural skills. In conjunction with their public works programs in rural areas the military might conduct adult education courses and thus contribute to spreading literacy and elementary agricultural techniques.

It may well be that a most valuable return from Alliance for Progress reforms, once they are underway, will be in terms of political stability—with an indirect byproduct in confidence favoring continued economic growth. Social pressures would be much reduced if the use of middle class energies in the execution of reforms should expand the proportionate size of those middle class elements which subscribe to moderate political action and take a responsible part in national political life. In political terms it would mean new opportunities to effect peaceful evolution from the present narrowly-based political systems to government based on more active cooperation of classes and wider agreement on national goals. The political system produced by such a mutation could in many ways be more in accord with US interests than one achieved by radical change which forced the propertied class to hand over their dominant position to the middle class as the leader of extremist mass-supported organizations.

1. Source: Department of State, S/P Files: Lot 69 D 121, American Republics, 1962. Limited Official Use; Noforn. Also sent to the members of the Secretary’s Policy Planning Committee under cover of a February 9 memorandum from Rostow. It was intended to serve as the basis for a discussion by the Committee held February 13; see Document 40.
2. See footnote 1, Document 38.