Latin America

on the World laden

THE Truman regime has been making an intensive if unspectacular campaign to improve relations and coöperative activities among the republics of the Western Hemisphere. The effort has been highlighted in the news by the strenuous July visit to Brazil of Secretary of State Dean Acheson, on his way back from Berlin and Vienna. Months before the Acheson trip, the ground was being prepared by hard spadework in the United States embassies in Latin America at practically all levels of diplomatic and economic contact.

Total success, of course, has not been won. But for the near future the going on the Hemisphere scene looks safe enough at least to prevent the capture of any sizable Latin American bloc by the Peronist group, or significant defections from the free-world coalition. The net effect of the fence-mending operation has been to strengthen the prospects of continuity in basic Hemisphere programs. The new administration, GOP or otherwise, is likely to find plenty of incentives for continuing policies favoring Hemisphere unity, provided that they are still working reasonably well.

Brazil’s grievances

Brazil is the outstanding example of how the fence-mending technique has worked. Last winter the huge republic of more than 50 million people appeared to be drifting into a permanently hostile attitude toward the United States. Since the end of World War II, powerful political factions with growing newspaper and radio support had been pressing with rising tempo the charge that Washington was letting down a former lighting ally.

Brazil needed help to stabilize her currency, to solve problems of exchange. She looked to the United States for low-priced imports and loans for internal development. Washington was spending billions more, the accusation continued, rehabilitating European allies which had given less to the war cause, and even former enemies. Argentina, the consistent enemy of all that the United States was attempting in Hemisphere and world politics, had herself received a $125 million credit to clear her debts to American exporters. Brazil, the plaintiff’s brief ran on, was obviously the despised and rejected too loyal friend — in effect, the Western Hemisphere’s biggest “sucker” republic.

The sense of frustration back of these injured feelings was further complicated by Brazil’s enormous desire for economic expansion. Between the thickly settled Atlantic coastal regions and the Andes lie more than 2 million square miles of tropical and subtropical wilderness which the republic hopes to develop agriculturally and industrially.

As an American economist who has had some experience with these tremendous frontiers put it recently, Brazil is “a mass of sprawling aspiration.” The development projects which have been dreamed up by the Brazilian government’s wishful planners would require financing running into scores, if not hundreds, of billions of dollars. And for every hope which does not reach the acceptance or even the consideration stage, a new circle of disillusionment with Uncle Sam’s Good Neighbor largesse is created.

Last winter a group of extreme nationalist army leaders, apparently abetted by a conspiracy of proCommunists in the officers’ corps, began sniping at the United Nations and the Korean war in the pages of the authoritative Revista Militar, official organ of the Military club, Brazil’s principal officers association. General Newton Estiliac Leal, the War Minister, was so closely in touch with this operation that he had to be dropped from the cabinet. After his resignation he kept the anti-American hall in the air by announcing his candidacy for the Military Club’s presidency.

Meanwhile, at the turn of the year, President Getulio Vargas locked horns directly with American business interests. Ostensibly to protect Brazil’s always shaky dollar supply, he issued a decree on January 3 limiting profit returns in dollars on American capital investments in Brazil strictly to 8 per cent of registered capital as of late 1945. Inasmuch as the decree branded all returns on capital gains and reinvestments since 1945 as exports of original capital, it could technically have wiped out numerous investors in relatively small business operations and made their Brazilian holdings subject to confiscation by the state.

American businessmen widened the breach in economic relations between the two countries when they demanded instant retaliation — including complete cessation of American loans to Brazil.

Oil on troubled waters

Fortunately, the State Department was in a position to play a somewhat cagier hand. A joint Brazilian-American Economic Development Commission, which went to work in July, 1951, was busy analyzing Brazil’s basic economic needs: modernization and standardization of the Brazilian railroads, improvement in the power facilities of the thickly settled industrial areas, port and warehouse renovation, development of coastal shipping, mechanization of agriculture, and technical aid.

By January of this year, the Commission was driving its corps of Brazilian and American technical experts to put these enterprises into project form for loan requests to the Export-Import Bank and the International Bank for Reconstruction and Development, and had practical assurance that sufficient loans would be forthcoming.

The State Department reasoned that the Brazilians would not wish to jeopardize these benefits for a dead-end squabble over the dollars involved in the capital returns issue. It also played its hunch that President Vargas, with his notorious political showmanship, was perfectly capable of tossing a bold gesture to his nationalist politicians without too much punch in the follow-through.

State, accordingly, threatened no reprisals. The Brazilian government on its part made no examples of heinous offenders against the 8 per cent returns restriction. Instead, within less than two weeks of the publication of the decree, a committee of American and other foreign nationals was meeting with Finance Minister Horacio Lafer to discuss means for settling the controversy.

By early summer a bill was on its way through the Brazilian Congress, which met most of the American objections to the Vargas action and in addition allowed foreign investors to compute their dollar profits in terms of depreciated Brazilian cruzeiros. Meanwhile $98 million has been allotted by the Export-Import and International Banks, with more coming, for loans to further the essential development projects.

General Estillac Leal was overwhelmingly defeated for the Military Club presidency in May; members of the pro-Communist officer groups were purged, put on trial, or placed under security police observation. Anti-Americanism in military politics declined so far, in fact, that by the time Secretary Acheson arrived, the Brazilian Senate was moving toward ratification of a bilateral military agreement with the United States without any announced opposition.

Then, as a further act of cordiality, the Brazilian Congress passed a bill in early summer permitting the government-attached Brazilian labor unions to join ORIT, the confederation of Latin American organized workers being built up under the sponsorship of the American Federation of Labor. This action, incidentally, was a decisive stroke against Argentina’s Perón, who has been trying all year to affiliate the Latin American labor movement with an organization formed by his stooge unions in Paraguay last February, the Latin American Committee for Syndical Unity. ORIT has now returned the compliment by accepting the Brazilian unions’ invitation to hold its next international convention at Rio in December.

Acheson, the good neighbor

Secretary Acheson came to Brazil, then, on the wave of these improvements. Things were going so well, in fact, that in his four major speeches and his all but incessant conferences with high public officials he had few specific issues to discuss. Thus he confined himsell mainly to interAmerican generalities and pep talks explaining the stake Brazil in thesecurity program of the free world.

“For Western Europe or IndoChina or Turkey to fall into the hands of the Soviet Union,” he reminded his Brazilian audiences, “would be just as catastrophic for a citizen of Belo Horizonte or Recife as for a citizen of Boston or San Francisco.” He left the inference that huge emergency aid to countries nearer the line of Soviet aggression was fully as vital to the future of Brazil as any credits which can now be adv anced to assist in its internal development.

In his conferences with Brazilian officials the Secretary hammered home the point that the Joint Economic Development Commission is doing its job the right way by confining its aid projects to the basic needs of Brazil’s fully settled areas. He thus reinforced the Commission’s view that the opening up of the hinterland should automatically follow the creation of a prosperous and efficient economy for industry and agriculture where they are already established.

Two developments which occurred within a few days after Acheson’s return to the United States perhaps point up the significance of his mission. Brazil established a Development Bank, to be financed by income and excess-pro fits surtaxes, with Dr. Ary Torres, Brazilian head man on the Joint Commission, as its president. It looks forward to channeling Brazilian credit resources into hinterland development when the time is ripe. Two days later an American technical mission arrived in the republic to advise Brazilians on setting up an atomic energy research project and to assist in the development of uranium fields recently discovered in the state of Minas Gerais.

Signs of improvement

Secretary Acheson made at least one important effort to improve overall inter-American relations. “The essence of the inter-American system,” he said in a speech to the Chamber of Deputies, “is collective responsibility plus absolute nonintervention in the affairs of other states.”And he added in another address the assurance that “whichever candidate of whichever party comes into office next year” in the United States will respect this basic policy.

The Secretary could see signs of improvement in many directions. Chile, angered at the termination of her copper contract with the United States soon after the beginning of the year, has been mollified by a 35½ cents a pound purchase arrangement. The Chilean Senate in July ratified one of the inter-American bilateral military agreements by an unexpectedly large vote of twenty to six. Since ratification was violently opposed by General Carlos Ibañez, a Perón imitator who is a strong candidate for president in the elections due September 4, the majority is considered significant.

All the west coast republics and Mexico have had a major grievance eased by the defeat of a high tariff on tuna fish in the United States Senate. Two new South American presidents, Paz Estenssoro, brought in by a Bolivian coup in April, and José Velasco Ibarra, constitutionally elected in Ecuador in June, were rated as Perón stooges because they had spent several years of exile together in Buenos Aires. Now intimate advices from their capitals have convinced Washington officials that too much proximity to Perón has soured them.

Paz Estenssoro, for example, has dawdled in his project of nationalizing Bolivia’s tin mines and is pressing amiably for a settlement of the yearold controversy over tin prices with Washington. He has encouraged a United Nat ions technical mission with strong American backing to stay on in the country and seemingly is disposed to carry out many of its recommendations.

Mexico on July 6 elected a new president, Adolfo Ruiz Cortines, by something like a ten to one majority over opponents who based their campaign largely on anti-gringo agitations. Guatemala, center of Communist experimentations in Latin America, recently has sent an anti-Communist, pro-American ambassador to Washington.

Washington officials are plainly not too happy about the strong-arm methods of the Venezuela and Colombia dictatorships, and the new one of President Fulgencio Batista in Cuba. But these and all other dictators except Perón are collaborating almost spectacularly with Washington’s basic inter-American and world policies. Most Washington experts agree that there is nothing that can be done about dictatorships except to apply economic and political sanctions, which would probably cost more in Hemisphere disturbances than they are worth — and not get rid of the dictators.

With Perón’s Argentina, relations are so cold and correct that, as one diplomat recently put it, “you could almost say there aren’t any relations.” For impressions on the other republics, however, keeping Perón in a practically noiseless deep-freeze is simply an adroit form of diplomacy.