56. Summary Record of the 509th Meeting of the National Security Council1
SUBJECT
- Latin American Policy
[Here follows discussion of Cuba and Haiti; see Document 377 and Foreign Relations, 1961–1963, volume XI, Document 292.]
Turning to the economic side, the President asked whether there was anything we could do to halt the flight of capital out of Latin America.
Secretary Dillon responded at length and made these points: All of Latin America, minus Cuba, is one problem. We are not making as good use of the Alliance resources as we should for political purposes. We must always move in an overall framework and help the countries that are friendly to us more than we now do. Putting one country against another in solving an immediate problem hurts us; i.e. Brazil, which we have to help economically, does little to help us politically. We must tie aid programs and politics closer together. One way to do so would be to give AID Administrator Bell a larger political role in addition to making him Alternate Governor of the Inter-American Development Bank. We are trying to arrange tax rebates in order to increase the profitability of U.S. investments in Latin America. Such rebates will not do the job alone and we should continue the investment guaranty program in those countries where it is acceptable.
Director McCone asked why the Latin American countries could not do more to protect private investments. Mr. Martin said investments were affected by inflation, by political instability, and by plain bureaucratic harassment.
(Ambassador Stevenson arrived at this point.)
Under Secretary Ball pointed out that the OECD was drawing up an investment code for use in underdeveloped countries.
Secretary Dillon acknowledged that private businessmen in Latin America had been very remiss and had thought only of their selfish interest rather than the national interest. He cited instances in which local Latin American businessmen were now getting into politics to the extent of persuading their governments to act so as to increase internal stability. Mr. McCone said that private businessmen were very helpful in Vene-zuela [Page 133] and Nicaragua and that we should do all we can to promote similar interest by businessmen in other Latin American countries.
In response to Mr. Rusk’s comment that we could not permit Brazil to get away with violating all our economic criteria, Secretary Dillon agreed. He pointed out that the better a country performs economically, the harder our policy toward that country becomes. He thought that we should be easier with those countries which followed economic policies which made sense to us.
Mr. Martin responded to a comment of the President’s which referred to earlier complaints of Ambassador Mann about coordination by citing the close cooperation which now exists between AID and the State Department on Ex-Im Bank matters. As regards the IDB, we do not have a complete veto. Private banks which had been lending heavily to Mexico, responded to our suggestions that they hold down further lending.
Under Secretary Ball called attention to the fact that AID Administrator Bell was now being brought into the main stream of policy as Under Secretary, and that he, in fact, was serving as head negotiator for the Brazilian and Argentine deals.
Secretary Dillon commented that Bell should become a full political officer and it should be understood by Latin America that he is such, not merely an aid dispenser.
[Here follows discussion of independence for British Guiana and Cuba.]