The Price of Misdeeds

There can be small comfort for Washington in the fact that Bolivia's new military government last week professed its pro-American feelings. Thirty-eight years after Franklin Roosevelt's Good Neighbor policy, 18 years after Dwight Eisenhower's Good Partnership, and a decade after the start of John Kennedy's Alliance for Progress, the best that can be said for U.S. diplomacy is that Washington seems finally to have learned not to interfere in Latin American affairs. Now Washington faces a task that demands far more sophistication--maintaining forbearance, and even extending aid, at a time when the U.S. is paying the inevitable price for its past misdeeds on the continent.

Today, the virulent nationalism sweeping the continent most frequently focuses on a highly visible target: the U.S.'s $13.8 billion worth of investments, principally in mining, oil and manufacturing. Venezuela has served notice on foreign oil companies that it has no intention of extending their concessions, which begin to expire in 1983 (see BUSINESS). Peru's left-leaning military junta has already taken over the International Petroleum Co., a Standard Oil of New Jersey affiliate. Socialist Chile has expropriated--with compensation yet to be determined--U.S. copper mines whose worth is estimated at between $500 and $800 million.

"We Latins are not dependent because we are poor," says the socialist-minded Bolivian ex-Minister of Mines, Marcelo Quiroga Santa Cruz. "On the contrary, we are poor because we are dependent." In an effort to decrease its dependence on the U.S., Latin America is now looking elsewhere for economic and military aid, chiefly to Europe, Japan and even the Soviet Union. In the past few years Moscow has established diplomatic relations with eight Latin American countries and sharply increased its trade with them to more than $300 million annually. France has invaded a traditional U.S. aircraft market with Mirage jets. In all, European armament firms have sold Latin Americans $1.1 billion worth of arms.

Noble Goals. In part, Latin America's search for other friends stems from a deep disillusionment with the Alliance for Progress. Designed to promote social reform and correct economic inequalities, it can today be credited with helping to raise per capita income by a laudable average of nearly 2.5% per year. The trouble is that the Alliance has fallen far short of its own noble goals. "The Alliance raised high hopes that Washington was not prepared to fulfill," says the head of a Peruvian research organization. "Many Latins soon realized that the Alliance was just John Kennedy's crash reaction to Fidel Castro."

Unhappily, the Alliance today is remembered less for its successes than its failures. Much of the benefit accrued to the moneyed classes, who transferred an estimated $15 billion to havens like New York, Miami and Switzerland. Then there was also some poor planning. For example, a $47 million synthetic rubber plant was transported from Louisville, Ky., where it had outlasted its usefulness, to Brazil. It provided work for 500 Brazilians, but polluted nearby streams so badly that 1,000 fishermen had to find jobs elsewhere.

Low Profile. For the past 2 1/2years President Nixon has sought to present a "low profile," an understandable attitude on the part of a man who had rocks thrown at him in Lima and Caracas in 1958. Noting the tenth anniversary of the Alliance a fortnight ago, Nixon pointedly observed that "each nation must take the initiative and primary responsibility for meeting the challenges of its development."

Nixon, however, has done little to put into effect even his own unambitious promises. The Administration has not yet proposed to Congress a preferential tariff, which was promised in 1969 and which Japan and the European Economic Community extended to Latin America this summer. Of the $1 billion pledged to the Inter-American Development Bank a year ago, Congress has appropriated only $100 million.

Far more important in terms of long-range relations between the U.S. and Latin America will be Washington's response to the wave of nationalism now sweeping the continent and to the expropriation of U.S. companies. The U.S. avoided a confrontation with Peru over I.P.C. and is now working out an agreement. Recently, however, U.S. policy has taken a harder line toward any country that expropriates American property and fails to promise "prompt and adequate compensation." The chief spokesman for that point of view is Treasury Secretary John Connally. He had the U.S. pointedly abstain from voting for World Bank loans to Bolivia and Guyana, and had the Export-Import Bank refuse a $21 million credit to Chile for the purchase of three Boeing passenger jets. Although he denies it publicly, Connally has been heard to say in private that "the U.S. can afford to be tough with Latin Americans because we have no friends left there." Apparently acting in a similar spirit, Congress allowed the coffee support agreement to lapse. The move was meant to punish Brazil for insisting on a 200-mile sea sovereignty, but it could hurt every coffee-producing nation in the world.

Some State Department men, and other experts such as Sol Linowitz, former U.S. ambassador to the Organization of American States, advocate a more flexible line. The O.A.S. issued in August an analysis of the past decade in which it urged the U.S. to accept and even support socialist economic systems in the Western Hemisphere.

The U.S. still has a considerable reservoir of good will in Latin America, where understanding is treasured at least as much as aid. But that good will could evaporate if the U.S. pursues the search for compensation for nationalized U.S. companies to the point of economic reprisals. History furnishes examples of how such policies can fail. In 1938, Mexico expropriated American oil companies, which retaliated with an attempt to prevent the Mexicans from buying pipe or selling oil abroad. Today Mexico celebrates the expropriation as a day of national emancipation, an event that is now largely symbolic. The U.S. and Mexico have long since resolved their differences. In view of the current wave of Mexican-style expropriations, U.S. relations with the rest of Latin America can be equally good--if past misdeeds are not repeated.

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