Foreign Relations of the United States, 1969–1976, Volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972

159. Information Memorandum From the Acting Assistant Secretary of State for Inter-American Affairs (Crimmins) to the Under Secretary of State (Irwin)¹

Washington, August 4, 1971.

NSSM 131

Having read the final (and to my mind retrograde) version of the response to NSSM 131,² having been told that Treasury intends to pursue its so-called “hard line” vigorously in the SRG meeting this afternoon,³ and having much in mind my responsibilities in the execution of our policy toward the countries of Latin America, I am obliged to ask you to consider the following observations in your approach to that meeting:

1. We should be clear that we are not simply discussing USG policy on expropriations. We are really talking about a frontal attack on the basic concepts that gave rise to the President’s policies laid down in October 1969 and reaffirmed in his foreign policy messages of February 1970 and 1971 and in the Secretary’s report to Congress of March 1971. These basic concepts were examined exhaustively in connection with NSSM 108 earlier this year.⁴ That inter-agency examination confirmed their validity as the most appropriate and effective means of serving our interests—all our interests—in Latin America. Indeed, the adoption of any option above 3/3b will prejudice seriously, if not render futile, any serious consideration of NSSM 108 by the SRG.

2. The basic judgment in 1969, reconfirmed earlier this year, was that our interests were endangered by the “hegemonic” posture of the past and that the realities required that we seek an easier, more flexible, less directive association with the countries of Latin America. While it was recognized that, given the fundamental forces at work in Latin America, the new policy was damage-limiting and that our interests would suffer some additional impairment while a new equilibrium in our relationship was being reached, it was explicitly and carefully decided that a “harder” or “softer” policy would cause greater damage to our interests.

3. Particularly in light of our present inability or unwillingness to meet our positive commitments given in 1969, the adoption of a “hard line”—whether naked or flimsily veiled—on investment issues (with its play-out into the trade and development assistance sectors), when coupled with the post-Chilean election emphasis on military associations, will give our policy a distinct coercive, repressive cast. Aside from the fact that in present-day Latin America such an approach is destructive of our interests—all our interests—are we not obliged to counsel the President about the costs, abroad and at home, of such an image?

4. Considerable attention is paid in the NSSM 131 paper to the domestic advantages of a stronger line on expropriation. This presumably refers to the points to be made with some important sectors of the investing community. No attention is given to the countervailing fact that the US electorate and the US Congress contain important—and vocal—sectors which would find the path which the Treasury and some others wish to take the Administration down to be disastrous, not to say repugnant.

5. There is still, apparently, attractiveness for some in the thesis that “if you get tough with the Latins, they may not like you but, by God, they respect you and shape up.” I should have thought that this thesis, always of the most doubtful validity, would have been destroyed by the Dominican intervention,⁵ the most direct application of US authority in the recent history of our relations with Latin America, the most superficially successful exercise of that authority, and one of the most destructive in terms of our broad interests.

6. In the same vein, I am very disturbed by suggestions that we have to get “tougher” with Latin America because they are not grateful for or appreciative of what we have done and are doing for them. Leaving aside the questions of who is doing what for or to whom, what forms we expect gratitude or appreciation should take, or the big philosophical debate on the responsibilities of the rich to the poor, I think we should keep in mind the basic purpose of our development assistance and other economic benefits we direct or say we want to direct toward Latin America. Those benefits are not intended as Lady Bountiful largesse. They are intended to serve our calculated national interests. We usually remember that; the Latins never forget it.

7. I am also concerned by the implied adoption, particularly evident in the final version of NSSM 131, of a defensive attitude concerning the Department’s handling of expropriation problems. There is shot through the paper intimations that the Department has been indifferent or supine or that it has not given the expropriation issue proper weight in the calculus of our interests. As you well know, this is simply and demonstrably untrue. It is certain that in dealing with the cases the Department has deliberately chosen to follow the President’s policy prescription of “negotiation not confrontation,” to exert pressures and influence behind the scenes and not from the roof tops, and to relate our real concerns about uncompensated expropriation to the totality of our interests. Such a posture, such techniques are, I submit, marks of a responsible institution charged with the execution of foreign policy—a foreign policy viewed as the pursuit of an intricate composite of interests, not a series of artificially isolatable interests or events. In the face of simplistic, even primitive attacks, this should be a source of pride, not of weak-kneed apology.⁶

8. Does anyone with even the most superficial knowledge of the psychological drives and the economic and political imperatives of the developing countries seriously believe that the invocation of Hickenlooper in Peru would have produced compensation for IPC or have prevented Velasco from taking any other restrictive measures or deterred Allende from expropriating copper or kept the OPEC countries from moving against the oil companies?⁷ Does one seriously believe that we would have seen the limited but positive developments, carefully and painfully nurtured, in our relations with Peru—so important in terms of our broad policy concerns in Chile—if we had shouted threats at Peru and publicly flaunted our economic pressures against the Velasco Government?

9. I am convinced that the “hard” or “quasi-hard” line will, at best, provide us a few quick, cheap victories over some of the weaker Latin American countries, with the costs in terms of intensified economic nationalism, wider anti-Americanism and increased opportunities for the Soviets and their friends throughout the Hemisphere to follow almost immediately.

10. We must bear clearly in mind that the prosecution of a “hard line” is an invitation—even a request—to well-known sectors of Congress to load impossibly restrictive provisions on legislation that by any stretch of the imagination might confer “benefits” on the less-developed countries. Is that what the Administration wants? Do we want, for example, an anti-expropriation amendment on the generalized preferences bill? How could we, with consistency, argue against a flood of such measures?

11. If Secretary Connally really said: “The US can afford to be tough with Latin Americans because we have no friends left there any more”—and there has been no repudiation of the attribution—he has demonstrated only that he is a master of the self-fulfilling prophecy.⁸

12. In sum, I believe it essential that we turn back the onslaught of Treasury and its allies which is directed not only against the basics of the President’s policy toward Latin America but also against the primacy of the Department in the formulation and execution of foreign policy. Our objective should be to preserve the maximum flexibility in handling expropriation cases so that all our national interests can be assessed and so that we can consider, as we must if we are to be responsible, not only the short-term but also the middle and long-term play of those interests.

1. Source: National Archives, RG 59, S/S Files: Lot 80 D 212, NSSM 131. Confidential. Drafted by Crimmins on August 4. Copies were sent to Samuels, Trezise, Aldrich, Weintraub, and Newsom.
2. Document 157.
3. In a July 21 briefing memorandum to Kissinger for a meeting with Connally later in the day, Ernest Johnston noted that Connally had “very strong views” about expropriations and advocated a “hard line” such as pressing for abstentions or negative votes in the IBRD and IDB on loans for Guyana and Bolivia. Johnston recommended that if Connally raised the question, Kissinger should indicate he shared Connally’s “concern that we determine the most effective methods of protecting U.S. economic interests abroad; but that we must not lose sight of the broader foreign policy considerations. While there are important domestic imperatives in protecting the interests of U.S. investors in these countries, there are foreign policy and perhaps strategic costs to our actions which should be considered.” Johnston further recommended that Kissinger “emphasize the leverage we have … in shaping the overall policies of (the IFIs) and point out that not only are they keenly aware of the political problems faced by the USG with regard to expropriations, but are willing to work closely with us to develop a policy which meets some of our concerns. It may be that the multilateral framework will ultimately provide stronger leverage than U. S. unilateral actions for settling the expropriation problem.” (National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 289, Treasury, Volume II 1971)
4. Entitled “Review of U.S. Policy Toward Latin America,” dated January 10, 1970.
5. In the margin next to this paragraph, Irwin’s Executive Assistant, B. Scott Custer, wrote: “Also Cuba?” He also underscored the last phrase in the paragraph with an exclamation point in the margin.
6. Custer wrote in the margin: “JNI: I think this is a point which really should be made at the SRG meeting.”
7. Libya and several other oil-exporting countries had acted against U.S. and foreign oil companies in 1970 and 1971.
8. Connally made this statement in Business Week, July 10, 1971, p. 65. In the margin next to this paragraph, Custer wrote: “JNI—Connally denied he said this or anything like it (per Ken Langley who met with Connally with other WH fellows).”